Archive - Feb 27, 2015 - Story

Ugly data this morning had stock markets leaking lower into and beyond the open, and then Chicago PMI's total and utter collapse hit the tape... and this happened...

Despite a modest 1.7% rise (after dropping 1.5% in December), Pending Home Sales missed expectations of a 2.0% rise - the 5th monthly miss in a row. It appears NAR's chief economist Lawrence Yun has flip-flopped: On existing home sales, NAR blames drop on lack of supply (as prices drop); on pending home sales, NAR says buyers overcame lack of supply.

Despite modestly beating the flash print earlier in the month, it appears consumers are less enamored with how awesome everything is in America. Printing 95.4 against January's 98.1 - this is the biggest MoM drop since Oct 2013. Both current conditions and future expectations dropped from January with fewer people expecting higher incomes, and a plunge in favorable business expectations over the last few months.

January's brief 'hope' bounce following 3 months of weakness is long forgotten as February's Chinago PMI crashes to 45.9 (missing expectations of 57.5) - its lowest since July 2009. This is the biggest MoM drop since Lehman in Oct 2008. New Orders suffered the largest monthly decline on record, leaving them at the lowest since June 2009. Seems like it is time to blame the weather... PMI says it is "difficult to gauge magnitude of weather and port strike" but blames it nonetheless.

UPDATE: *PIRAEUS BANK CFO DENIES SPECULATION OF CASH SHORTAGE

It appears the worst fears of many Greeks may be coming true following a Stratfor report that Piraeus Bank ATMs in downtown Athens appear to have run out of money - telling "customers that there is no cash and the situation will last through the weekend." However, locals, reporting on Twitter, claim this is false. Greek stocks (especially banks) are down hard, as is the EURUSD.

There was much hope that when Q3 GDP soared to 5%, primarily on the back of Obamacare spending recalendarization and a massive consumption/personal saving data revision, that the US economy would finally enter lift-off mode. Those hopes were reduced by about 60% when moments ago the BEA announced that Q4 GDP was revised from the original 2.64% print to only 2.18%, which while better than expected, was the lowest economic growth rate since the "polar vortex."

Yesterday, when we observed the latest record plunge in the Ukraine currency we predicted that the imploding, hyperinflating nation will "halt currency trading any minute." Well, Ukraine has so far not fully blocked all trading... yet, however hours ago Ukraine’s central bank did the next best thing when it announced it would "boost restrictions on capital operations as it fights to quell panic that has triggered deposit withdrawals and depleted foreign-exchange reserves, Governor Valeriya Gontareva said." The punchline, almost literally, "Panic must be stopped and we are doing that now,” Gontareva said. Because there is nothing that creates more panic than warning "panic must end or else..."

• Central Banks With Negative Rates Spur Question of How Low to Go (BBG)
• DHS to keep running: Congress edges toward domestic security funding patch (Reuters)
• Setbacks for Tsipras Stir Discord in Greek Ruling Party (BBG)
• Greece’s Challenge: Appeasing Its Creditors and Its Population (WSJ)
• Buffett, a cheerleader for America, takes his checkbook abroad (Reuters)
• Oil’s Big Swings Are the New Normal: Market has rarely been more volatile (WSJ)
• Ukraine Left Behind as Russian Stock Gains Are Unmatched (BBG)
• Brent rises to $61, set for first monthly gain since July (Reuters)

If Bild's expectation that its "Nein to more Greek bailout" campaign would lead to a near unanimous vote in the Bundestag for a Greek bailout, then it achieved its goal when a massive majority of lawmakers, some 542 of them, voted in favor of giving Greece the prenegotiated 4 month extension to its current bailout. Still, as many pointed out, of the 32 votes against, a record margin for a euro vote, or 29, came from Merkel's own CDU/CSU block. This was up from 13 voting against the second Greek bailout. Indeed, as the Guardian's Ian Traynor summarizes "Merkel's biggest majority on Greece but also biggest rebellion in her ranks while linke votes for Syriza pals, also a 1st."

If there isone thing that is virtually certain about today's trading (aside from the post Rig Count surge in oil because if there is one thing algos are, it is predictable) is that despite S&P futures being a touch red right now, everything will be forgotten in a few minutes and yet another uSDJPY momentum ignition ramp will proceed, which will push the S&P forward multiple to 18.0x on two things i) it's Friday, and an implicit rule of thumb of central planning is the market can't close in confidenece-sapping red territory ahead of spending heavy weekends and ii) the Nasdaq will finally recapture 5000 following a final push from Apple's bondholders whose recent use of stock buyback proceeds will be converted into recorder highs for the stock, and thus the Nasdaq's crossing into 5,000 territory because in the New Normal, the more expensive something is, the more people, or rather algos, want to buy it.