Archive - May 13, 2014 - Story

When it comes to the Goldman team of crack freaconopenguins the fun never ends.

 Presented with no comment: "Burisma Holdings, Ukraine’s largest private gas producer, has expanded its Board of Directors by bringing on Mr. R Hunter Biden as a new director."

Mixed data from around the world's economies - irrelevant. More promises from Europe - unimportant. Earnings misses and weather forecasts - useless. Knowing it's a Tuesday - Priceless.

Here is the spin: tapped out US consumers simply did not have money to go out and splurge after the March spending bonanza, which sadly fell in a quarter which as we already know, will have a negative GDP print and thus is a wash (due to weather, remember). However, as a result of the blamy (sic) spring weather, US consumers didn't spend online either, as they were forced to go outside and enjoy the lovely weather... where as already noted they didn't spend any money either.

Having been revised up to a 1.5% growth for March (the most since March 2010), retail sales crumbled across the board in April as the promise of un-harsh weather rebounds evaporated into the reality of a one-off pent-up demand pop. All sub-series of retail sales missed expectations with Ex-Auto/Gas actually dropping 0.1%. The broad weakness was led by furniture (-0.6%) and electronics stores (-2.3%).

While Asia in general may be slowing now that China's epic debt creation machine is starting to break down, when it comes to trends within Asia not everyone is equal. And nowhere is this more visible than when comparing Japan, that dynamo of Asia in the 1980s and 1990s, and China, that other "New Normal" dynamo which carried the world across the Great Depression chasm. For the best representation of Japan's epic fall from economic relevance and, inversely, China's superpower ascendancy, here is one chart showing how vastly more relevant to Asia China now is compared to Japan just under 20 years ago.

• EU Court: Google Must Remove Certain Links on Request (WSJ), people have right to be forgotten on Internet (Reuters)
• Harsh weather: German Investor Confidence Drops for Fifth Straight Month (BBG)
• More harsh weather: China Slowdown Deepens (BBG)
• Harsh weather as far as the eye can see: China’s New Credit Declines (BBG)
• "Alien" artist, surrealist H.R. Giger dies aged 74 (Reuters)
• Pfizer urges AstraZeneca to talk as UK lawmakers slam offer (Reuters)
• Property sector slowdown adds to China fears (FT)
• Russia says EU sanctions will hurt Ukraine peace efforts (Reuters)
• U.S. Considers Relaxing Crude Oil Export Restrictions (WSJ)

Just in case the EURUSD didn't price in enough of the possibility of a June ECB rate cut (because with even Goldman saying no, there is zero chance Draghi will engage in QE) disclosed last week when Mario Draghi broke the ECB's cardinal rule and gave a hint at what is coming next month, an hour ago the WSJ, citing a "person familiar" and we would add likely person who also happens to be short the EURUSD, helped double down on the end of forward guidance (since going forward market will expect action from the ECB instead of mere talk) by saying that the Bundesbank "is willing to back an array of stimulus measures from the European Central Bank next month, including a negative rate on bank deposits and purchases of packaged bank loans if needed to keep inflation from staying too low, a person familiar with the matter said."

If, in the New Normal, newsflow and facts mattered, facts such as the German Zew Investor Expectations index crashing from 43.2 to 33.1, smashing expectations of a 40.0 print to the downside and down to the lowest since January 2013 nearly half the 7 year half reported as recently as December confirming Germany can no longer be Europe's growth dynamo courtesy of a still nosebleed high EURUSD, or facts such as overnight Chinese data missed in every category with industrial output up 8.7% y/y in April vs an estimated 8.9%, retail sales up 11.9% below the estimated 12.2% rise and ; Jan.-April fixed-asset investment growing 17.3% vs est. 17.7%, then futures may just posted a downtick. However, since it is a Tuesday, with a ~$1 billion POMO, one can ignore the fundamentals and proceed straight to buying anything and everything with indiscriminate abandon. The only question is whether the NY Fed orders Citadel to slam the VIX under 11 to start off the morning S&P rampage which should push the broad market index above Goldman's 1900 price target for the end of the 2014.