Archive - Mar 11, 2015

As Ronald Reagan said, trust, but verify!

The BoJ has now gone full intervention-tard - buying Japanese stocks on 76% of the days when the market opened lower.

As we spelled out explicitly and succinctly late last month, there is one overriding and extremely simple reason why seemingly every central bank in the developed world is bound and determined to move heaven and earth in the pursuit of generating a “healthy” level of inflation. With 9 countries sitting on debt-to-GDP ratios of 300%+, it’s either inflate the debt away or be crushed under the sheer weight of it. Here is a map showing where all the red ink is concentrated.

As crude prices drop back to cycle lows, breaking the back of the stability-meme, we thought a quick reminder of the world's major energy projects that are completely FUBAR given the current prices, record production, and record inventories...

Who could have seen this coming? The French government, having deployed military to its streets during the attacks by Islamic extremists last month, has  - just as every other government in the world in the new normal - decided that this temporary militarization of French streets is now permanent. As RT reports, President Hollande has decided to "maintain the level of the army on the national territory at 10,000 troops," with a total of 7,000 troops monitoring (and protecting) religious buildings.

After all 31 banks passed Dodd-Frank's "stress"-test with flying colors and awaited The Fed's CCAR blessing to spread the wealth to shareholders, we thought ironic that The Fed's Tarullo had previously commented that "we don't want banks to know the stress-test scenarios and tailor their portfolios to meet our goals," because that would never happen. The CCAR results are now out and 28 of 31 passed. Deutsche Bank, Santander failed for "qualitative" reasons (with significant and widespreasd deficiencies in risk management) and Bank of America will need to resubmit their proposal.

Is this the end of the last great run for the U.S. stock market?  Are we witnessing classic “peaking behavior” that is similar to what occurred just before other major stock market crashes?

As part of Obama's most reent push to change the bankruptcy law and promote legislation that facilitates the reduction or outright forgiveness of student debt, the White House provided a full state-by-state breakdown of where the 43.2 million borrowers on the hook for some $1.135 trillion in student loans. Here are the results...

Simply put -  the Greek economy still consumes more than it earns. Despite a 25% contraction in its economy, a plunge in domestic consumption and a sharp decline in imports, as WSJ reports, Greece is still exporting less than it imports, i.e. its current account is still negative. The reason... Shipping.

Predicting and diagnosing the trajectory of oil prices has become something of a cottage industry in the past year. But along with all of the excess crude flowing from the oil patch, there is also an abundance of market indicators that while important, tend to produce a lot of noise that makes any accurate estimate nearly impossible.

Financial markets should actually be begging the Fed for a June 25 basis point rate hike, the alternative is going to hurt a lot more... 

A sudden plunge in EURUSD - bashing it down towards the 1.04 handle (which would be the lowest since Jan 2003) has sparked a recoupling of equity fantasy down to everything else's reality. Given its weight in EUR, The USD Index has surged to 100.00 - highest since March 2003. EURUSD is now down 35 handles since Draghi started jawboning... when does this "good" collapse morph into "capital flight" concerns?

Fed's Fisher: "[the stronger the dollar]... the better it is for our companies big and small to go out and hire American workers."

Goldman's Cohn: "the effects of the soaring dollar are just starting to be felt; for US exports, manufacturing, and jobs - it is not going to be positive."