Archive - Feb 5, 2015

They are at it again... The 'smartest people in the room' have once again taken the big board-eraser to GDP growth expectations... but have no fear, for what Keynesian aggregate demand can't pull forward into Q1 will surely unleash pent-up demandedness in H2 to save the year...

With an increasingly vitriolic tone, the new Greek government has come out swinging today with leader Alexis Tsipras making it clear that he will implement the election pledges the people of Greece voted for:

A NEW GREEK GOVT WILL BARGAIN TOUGH, AND PUT A FINAL END TO THE TROIKA AND ITS POLICIES, WE MANAGED TO DECONSTRUCT THE EUROPEAN STATUS QUO THAT WANTS MORE AUSTERITY AND LESS DEMOCRACY

"We will make the impossible, possible to turn things around in Greece" It took one week, Tsipras chides, to get European leaders to talk about the real problems and Greece will negotiate hard to "put an end to Troika," and "rebuild the country from the beginning."

And so after that epic 5.0% Q3 GDP print, driven largely by Obamacare, the payback begins, and the annualized Q4 GDP print, which came in at nearly half the previous quarter run rate, or 2.6%, is about to tumble by another ~0.5% following the just released trade data for December which saw a 17.1% surge in the US trade deficit from $39 billion (revised to $39.8 billion) to a whopping $46.6 billion in December, the widest deficit since 2012, as US exports declined 0.8% to 4194.9Bn from $196.4 Bn, while imports rose notably from $236.2Bn to $241.4Bn in the month before. All of this brought to you courtesy of the soaring USD. This was also the biggest miss to expectations of $38.0 billion since July of 2008. If this does not force policymakers to reassess the impact of the soaring dollar on US trade, nothing will.

It all makes perfect sense. Challenger announced this morning that layoffs in January soard 17.6% year-over-year with planned job cuts at the highest level in almost 2 years... Jobless claims in Shale states continues to trend higher as oil prices collapse... but initial jobless claims beat expectations - hovering near cycle lows - though did rise modestly WoW.

With one of the world’s leading dry bulk shipping companies, Copenhagen-based D/S Norden, having made huge losses for the last 2 years and expected to report dramatic losses in 2014 also, it is hardly surprising that the smaller bulk shipping firms are struggling as The Baltic Dry Index collapses ever closer to record all-time lows. As Reuters reports, privately-owned shipping company Copenship has filed for bankruptcy in Copenhagen after losses in the dry bulk market, with the CEO exclaiming, "we have reached a point where there is not more to do." We suspect, given the crash in shipping fees, that this is the first of many...

SCHAEUBLE: "MY PRESS SPOKESMAN ADVISED ME TO SAY "WE AGREED TO DISAGREE"

VAROUFAKIS: "WE DIDN'T EVEN AGREE TO DISAGREE"

And so another central bank admits defeat to the forces of market supply and demand.