Archive - Sep 2015

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.

"The big upside for both corporate bonds & corporate stocks has subsided as the liquidity story has peaked. Of greater note, the recent big reversal in the performance of assets directly linked to the bull market on Wall Street. Private equity managers and large asset managers saw their stocks appreciate 36% & 32% respectively between QE1 and the end of QE3. Since the end of QE3, the annualized returns are -10% & -18% respectively."

"By relaxing constraints on other economic actors, central-bank support may create opportunities for them to shirk their responsibilities. In turn, this may render it more difficult for the central bank to withdraw its exceptional measures. The road to central bankers’ hell may be paved with good intentions."

• Global Markets Rebound on Yellen Speech (WSJ)
• Obama and Putin to meet; Syria and Ukraine vie for attention (Reuters)
• Obama to host China's President Xi amid simmering tensions (Reuters)
• Don't Fall for It, Xi! Chinese Take to Web to Scorn U.S.—and China, Too (BBG)
• Yellen Confirms Fed Still on Track to Raise Rates This Year (BBG)... but is still China dependent?
• Abe's New Economic Plan Confounds Analysts (BBG)
• It's All `Perverted' Now as U.S. Swap Spreads Tumble Below Zero (BBG)

The market, which clearly ignored the glaring contradictions in Yellen's speech which said that overseas events should not affect the Fed's policy path just a week after the Fed statement admitted it is "monitoring developments abroad", and also ignored Yellen explicit hint that NIRP is coming (only the size is unclear), and focused on the one thing it wanted to hear: a call to buy the all-critical USDJPY carry pair - because more dollar strength apparently is what the revenue and earnings recessioning S&P500 needs - which after trading around 120 in the past few days, had a 100 pip breakout overnight, hitting 121 just around 5am, in the process pushing US equity futures some 25 points higher at last check.

Did Goldman just hand out the blueprint to crush the next "Lehman" and unleash the next global bailout? Read on to find out.

"Yellen faltered at end of her speech. Last page was agonizing. I don't think she felt well but she seemed better when she left the stage."

The phrase New World Order is largely derided as a sophomoric conspiracy theory entertained by minds that lack the sophistication necessary to understand the nuances of geopolitics. But it turns out the core idea — one of deep and overarching collusion between Wall Street and government with a globalist agenda — is operational in what a number of insiders call the “Deep State.”