Archive - Mar 16, 2015

It's getting old but the percentage of missed expectations in economic data is now over 90% since the start of February with three more added to the long list today. This has pushed Bloomberg's US Macro Surprise index to its worst start to a year on record.

In what most traders dubbed an "extremely disappointing" performance, stocks ended Monday's session with modest gains of 1.35%... "Honestly, what more could the market ask for'?" queried one frustrated floor trader. "When the market can't gain at least 2% on disappointing manufacturing and housing data, something is very wrong."

Goldman is so confident in the upside for shares of company which "saves lives" by helping cars drive themselves that the bank sells 4.6 million shares to muppets. 

Moments ago the January TIC data update was released, and while China continued selling US paper, liquidating another $5.2 billion in January and bringing its new total to the lowest since January 2013, Japan - yes that Japan whose central bank is now moentizing 100% of its own debt issuance because the country is now effectively insolvent and absent constant monetization of its debt it is finished - bought $8 billion in US debt, in the process trying China as America's largest foreign creditor for the first time in history, with both nations holdings $1.239 trillion in US TSYs.

The overall economic data has been significantly weaker than expected as of late, and it now looks like Q1-GDP will print somewhere below 2%.  The strong dollar is negatively impacting corporate earnings as exports are hit, and there is early evidence that the ECB's QE program will not likely be the success that many had hoped for. As stated previously, with market momentum now waning a bit of caution in relation to portfolio exposure seems prudent.  But then again, being prudent seems a bit ridiculous in a market that has been quoted as one that "can't go down." Of course, that has always been the case, just before it has.

unlike the late summer and early fall of 2014, when the rise in the Chinese stock market could be attributed to the PBOC's PSL "QE Lite", the relentless buying leg that started in mid-November has stunned most people, as nobody has been able to figure out just who is responsible for all this buying. Until now. According to Reuters, it is precisely China's trust firms, with total assets of $2.2 trillion, and who together with Banker Acceptances comrpise the bulk of China's shadow banking pipeline, are shifting more cash into frothy capital markets and over-the-counter (OTC) instruments instead of loans. In other words, instead of using their vast cash hoard of over $2 trillion to re-lend and stimulate China's economy, China's unregulated, shadow banking conduits are now directly buying stocks!

Deputy Riksbank Governor Per Jansson "doesn't know why" Paul Krugman insists on equating Sweden with Japan but thinks "mystery" may be related to Krugman doing too much writing and not enough reading.

From October 2012 to May 2014, the CFTC found that ICE Futures exchange submitted reports and data containing errors and omissions on every reporting day, with cumulative inaccuracies totaling in the thousands. The CFTC stated unequivocally that, those "who fail to meet their reporting obligations will be held accountable," and required ICE to pay a $3 million civil monetary penalty. With expectations of over $4 billion in revenues for FY 2015, the $3 million fine represents just 0.75% of the exchange's income... that will teach them!!!

The new "paranormal"...

Having re-emerged from his hibernation, Vladimir Putin is wasting no time getting back to business. Having paced 40,000 troops on "snap-readiness," AP reports that a documentary which aired last night shows Putin explaining that Russia was ready to bring its nuclear weapons into a state of alert during last year's tensions over the Crimean Peninsula and the overthrow of Ukraine's president, and admitted well-armed forces in unmarked uniforms who took control of Ukrainian military facilities in Crimea were Russian soldiers. In the documentary, which marks a year since the referendum, Putin says of the nuclear preparedness, "We were ready to do this ... (Crimea) is our historical territory. Russian people live there. They were in danger. We cannot abandon them."

With the bond market appearing ripe for a dramatic correction, many are wondering whether a crash could drag down markets for other long-term assets, such as housing and equities. Bond-market crashes have actually been relatively rare and mild. According to our model, long-term rates in the US should be even lower than they are now, because both inflation and short-term real interest rates are practically zero or negative. Even taking into account the impact of quantitative easing since 2008, long-term rates are higher than expected. Regarding the stock market and the housing market, there may well be a major downward correction someday. But it probably will have little to do with a bond-market crash.

I would say Apple is the most dangerous holding on the street right now for portfolio managers.

Active managers, stinging from the proliferation of passive indexing, are utilizing robots to transform active strategies into "passive" ones, capturing 20% of the US ETF market in the process.

Happy Saint Patricks Day ! Thanks to all ZeroHedge readers for interaction, shares and indeed business.

For the third largest issuer of sovereign bonds in the world, Italy - the country all eyes will focus on once Greece and/or Spain exit the Eurozone - when it comes to NPLs things are going from bad to worse because as Reuters reported earlier, citing ABI, gross bad loans at Italian lenders continued to rise, totalling 185.5 billion euros ($196.5 billion) in January from 183.7 billion euros a month earlier.As the chart below shows, Italy now has over 10% of its  GDP in the form of bad debt.  And just as bad, even as NPLs rose, total debt issuance contracted once more, lending to families and businesses decreased 1.4 percent year-on-year in February, the 33rd consecutive monthly fall.