Archive - Jan 2015

"...with the large downward revision to its core CPI outlook, the bank is more or less acknowledging a much lower possibility of achieving the 2% price stability target by around FY2015. Yet, at the press conference following the MPM, Governor Kuroda said he still held the view that 2% could be achieved by around FY2015. Domestic investors have been skeptical of the BOJ’s target from the outset, and now foreign investors are also beginning to question the BOJ’s logic and communication with the market. We believe the mixed signals the BOJ is sending may well serve to further undermine confidence in the bank." - Goldman

• Obama Targets Income Gap in Address That Shapes 2016 Election (BBG)
• Republicans Reject Obama’s Main Economic Proposals (WSJ)
• Senate’s Shelby Says White House Bank Tax Is Dead on Arrival (BBG)
• Is Dollar Next? Investors Reassess After Swiss Shock: Currencies (BBG)
• Bank of Japan Cuts Price Forecast, Maintains Record Stimulus (BBG)
• Pound Weakens After BOE Policy Makers Drop Call to Raise Rates (BBG)
• Putin not flinching on Ukraine despite economic crisis (Reuters)
• Indonesia will not make public full preliminary AirAsia crash report (Reuters)
• Party Hasn't Stopped for Russians at Davos Even With Ukraine Sanctions (BBG)

Three days after Chinese stocks suffered their biggest plunge in 7 years, the bubble euphoria is back and laying ruin to the banks' best laid plans that this selloff will finally be the start of an RRR-cut, after China's habitual gamblers promptly forget the market crash that happened just 48 hours ago and once again went all-in, sending the Shanghai Composite soaring most since October 9, 2009.  It wasn't just China that appears confused: so is the BOJ whose minutes disappointed markets which had been expecting at least a little additional monetary goosing from the Japanese central bank involving at least a cut of the rate on overnight excess reserves, sending both the USDJPY and US equity futures lower. Finally, in the easter egg department, with the much-anticipated ECB announcement just 24 hours away, none other than the ECB's Ewald Nowotny threw a glass of cold water in the faces of algos everywhere when he said that tomorrow's meeting will be interesting but one "shouldn’t get overexcited about it."

Big Corporations Are Only Part of the Problem …

The old joke is "In America, you correct newspaper, but in Soviet Union, newspaper corrects you.” Switzerland is now experiencing the bond market equivalent.

People have been asking me why we spend so much time in New Zealand, so here you go...

The only thing we did not get from tonight's State of The Union speech was a "Mission Accomplished" flag... oddly some of the 6,493 words (the lowest word-count of his Presidency) were not entirely 'factual'...

Despite tactical, rhetorical opposition to further expansion of the entitlement state by many voices in Washington, and firm resistance by an honorable and principled few, collusive bipartisan support for an ever-larger welfare state is the central fact of politics in our nation’s capital today, as it has been for decades. Until and unless America undergoes some sort of awakening that turns the public against its blandishments, or some sort of forcing financial crisis that suddenly restricts the resources available to it, continued growth of the entitlement state looks very likely in the years immediately ahead. And in at least that respect, America today does not look exceptional at all.

Major central banks claim to be independent, but they are totally under the control of politicians. Many developed countries have tried to anchor an independent central bank to offset pressure from politicians and that’s all well and good in principle until the economy spins out of control – at zero-bound growth and rates central banks and politicians becomes one in a survival mode where rules are broken and bent to fit an agenda of buying more time. What comes now is a new reality...

UPDATE: Full SOTU Speech released - "THE SHADOW OF CRISIS HAS PASSED"

By now it is well known that The State of The Union tonight will be about President Obama's Robin-Hood Agenda. Furthermore, it is entirely clear that his proposals have no chance of becoming law. As WaPo's Marc Thiessen notes, Obama is not delusional, his move is completely and transparently political... And just as Eric Cantor suggests will merely serve to inflame the GOP. From taxes to cyber security and from community college to housing... in 50-65 minutes, all will be clear...

"make-or-break" again...

In Zero Hedge tradition we provide the thinking man's (unfortunately The State of the Union has just got dumber and dumber over the years) and drinking man's (for those who need libation to persevere through the populism) guide to tonight's imperial leader's prognostications of wealth redistribution. Last year's SOTU saw the most uses of the word "folks" and we are betting (figuratively of course) that tonight's speech will top that for "Peak Folks". Obama has used "love" more than Clinton and "Energy" more than Bush...

Expectations for global economic growth in 2015 have been falling for almost 2 years... and so the ever hockey-stickian IMF has finally started to catch down to that consensus trend - don't worry though, we are sure 2016 (or 2116) will be a great year...

When President Obama ascends to the podium this evening to deliver his State of the Union address, he’ll undoubtedly shine a spotlight on the many strengths of America. The real issue, however, isn’t where the United States is today. The problem is where it’s going. And quickly...

Global markets face three risks, according to Edwards: bearishness in the U.S. government bond market, a flawed confidence that the U.S. is in a self-sustaining recovery and undue faith in the relationship between quantitative easing (QE) and the equity markets. “It doesn’t matter how much QE is spewing out of the US,” he said. “The markets will lose confidence that the policymakers are in control of events, just as they did in 90's Japan. They lost faith that the policymakers were in control. This is the biggest risk out there.”