Archive - Sep 25, 2015

You'd have to be in full denial mode not to see that it's getting ugly out there in global markets: currencies are melting down, trade and shipping are tanking, commodities are swooning and global stock markets are increasingly on central-bank life support.

When will the “nothing is happening” crowd finally wake up?

NSA Is Making It Easier for Malicious Actors and Hackers to Steal the Family Jewels

As Russia gears up for an offensive designed to rout anti-government forces operating in Syria, the US finds itself in the awkward position of having to partner with two of Washington's fiercest critics in the fight against terror. With the clock ticking on America's Mid-East strategy, Obama is set to sit down for a critical one-on-one with Putin that could have major geopolitical implications.

Just when you thought the idiocy couldn't get any more surreal, it does, courtesy of Reuters:

• BREAKING NEWS: House Speaker Boehner cancels press conference on resignation

And just like that, "folding" Boehner folded one last time, ironically, on folding his Congressional Career.

This is the sort of thing you’d expect to see in a Banana Republic. Which makes perfect sense, because America is a Banana Republic.

Despite the promises of all the central planners that wage growth is coming (any day, week, month, quarter now with the recovery promised originally in first half of 2012 now delayed to the 9th half ), it appears that Americans are starting to give up hope in that one most important economic component: income growth.

Just when the market was confused what event to trade in the last day of the week, here comes, or rather, goes John Boehner and announces he has folded one last time resigning from Congress and as House Speaker, unleashing a new wave of uncertainty in both the GOP and Congress, which as a reminder was blamed by Yellen as one of the reasons the Fed couldn't hike rates, and the FOMC.

Despite rising modestly from the preliminary print, UMich Consumer Sentiment for September finalised at 87.2 - the lowest since October 2014. This is now the biggest 8-month drop since 2011. Inflation expectations fell modestly as "hope" fell to the lowest level since September. Household Income gain expectations continue to slide (now just 1%) back to 13 month lows.

After widespread weakness in global (yes and US) manufacturing PMIs, US Services PMI dipped in September (after 2 months of modest bounce back). The pace of expansion slowed to three-month lows with service sector confidnce close to its lowest in three years. This latest print indicates a slowdown in overall new business growth for the second month running, which brought the pace of expansion down to its weakest since January. Prices dropped for the 2nd month in a row and Markit warns that "various warning lights are now flashing brighter, meaning growth may continue to weaken in coming months."

The combination of another debt limit fight, the defunding of Planned Parenthood, and prospect of another government shutdown tearing his party apart, the GOP just suffered its latest major blow, when news hit that House speaker John Boehner, just 24 hours after getting a visit by none other than the Pope, is folding one last time: according to the NYT, "Speaker John A. Boehner will resign from Congress and give up his House seat at the end of October."

Fed credibility questioned and Yellen sick - Palladium surges 8% - Russia and central banks buy gold - Smart money rebalancing and selling overvalued assets to buy depressed assets especially silver

Yellen just reset the market's expectations, and in fact set the bar for disappointment even higher. As FTN rates strategist Jim Vogel very correctly notes, "financial market risk is calmer this morning, but Yellen actually elevated the stakes with her detailed speech yesterday afternoon."  What does that mean? He explains: "Yellen could be spot on this year but until the hike actually occurs, risk asset volatility veers once again to the upside with respect to US monetary policy."

“There’s a saying that helps explain our mood around here. When the sea is this turbulent, the only thing you can do is sit on the sand and watch. It’s not time to get in a boat."

While the final Q2 GDP revision released moments ago by the Bureau of Economic Analysis is a largely meaningless number looking at the performance of the economy some 3 months ago, it will still set the momentum for today's trade, and with its surging from a 3.7% first revision print to 3.9%, surpassing expectations of a 3.7% print, means that concerns (or perhaps hopes) for a rate hike are once again back on the table.