Archive - Mar 2015 - Story

January's "optimistic" +0.13 print for CFNAI was revised drastically lower to -0.10 and now February prints -0.11 against an expectation of +0.10 for the 3rd miss in a row - the worst run since Q3 2011. The Chicago Fed National Activity Indicator (which has gained in prominence in recent months) indicates a 3rd month of "below trend growth," for the first time since June 2011.

Following Friday's manic quad-witching melt-up in oil (and everything else), the exuberance (surprise surprise) is fading as fundamental reality is slapped back onto the face of the energy complex by Saudi Arabia. As Reuters reports, Saudi oil minister Ali al Naimi also said the kingdom was now pumping a record high 10 million barrels per day (bpd), and would only cut if non-OPEC countries cut production. The 'supply' weakness in crude has been tempered somewhat by a tumbling USD (EUR surging) for now (and also by news from Sinopec of major capex cuts).

Former Dallas Fed president Dick "Feral Hogs" Fisher may be worried about a major correction in a market that is "hyper overpriced", and he may be confused and unable to grasp that the only reason "traders are lazy" is because the Fed's Chief Risk Officer has made risk, and selling, illegal but when it comes to finding sources of funding there are no conerns or confusion at all. Because promptly after he officially resigned from the Dallas Fed, on Thursday March 19, the very next day the board of Pepsi announced that "On March 20, 2015, the Board of Directors (the "Board") of PepsiCo, Inc. ("PepsiCo") elected Richard W. Fisher as an independent member of the Board, effective March 23, 2015. Mr. Fisher will serve on the Audit Committee of the Board, effective March 23, 2015."

• Saudis keep on pumping, oil prices keep on slumping (Reuters)
• Tenet Healthcare Nearing Deal to Buy United Surgical Partners (WSJ)
• Dizzying Pre-IPO Tech Values Spurred by Rush of Hedge-Fund Money (BBG)
• Russia threatens to aim nuclear missiles at Denmark ships if it joins NATO shield (Reuters)
• Torrent of Cash Exits Eurozone (WSJ)
• Draghi Cheerleads for Euro-Area Economy as Greek Risk Looms (BBG)
• Fortescue Mines for More Financing Options (WSJ)
• Topix Charts Evoke Calm Before ’13 Rout as Momentum Gains (BBG)

As previously observed (skeptically), a main reason for the surge in the DAX, and thus the S&P, on Friday was premature hope that the Greek talks earlier were a long-overdue precursor to a Greek resolution, and as we further noted yesterday, subsequent bickering and lack of any clarity as we go into today's critical "final ultimatum" meeting between Merkel and Tsipras, is also why the Dax was lower by 1.1% at last check, even if the EURUSD continues to trade like an illiquid, B-grade currency pair whose only HFT purpose is to slam all stops within 100 pips of whatever the current price may be.

"The Obama administration, facing defiance by allies that have signed up to support a new Chinese-led infrastructure fund, is proposing the bank work in a partnership with Washington-backed development institutions such as the World Bank." And with that, one giant shift towards de-dollarization is now in the books.

The divide between the rich and the poor is not only getting wider thanks to the central bank's efforts to inflate the value of the very types of assets that the poor are unlikely to own, but is in fact now destroying the American family.

"The web has enabled virtually anyone with Internet access to create a nearly-free global distribution network. Critics of this democratization feel that this has unleashed an avalanche of mediocrity that is judged on "likes" and pages views. The other side of the debate sees the demise of the gatekeepers, who could enforce their own view of what was valuable culturally and economically, as freeing all those who could never get past the gatekeepers.

Just as The Fed folded this week on ending the nation's booming income inequality problem (by reinforcing the Yellen put for longer), so Starbucks has folded in its effort to fix the other growing divide in America - racism. Careful not to admit that it was due to pressure from the avalanche of less-than-positive social media reactions, AP reports Starbucks baristas will no longer write "Race Together" on customers' cups. "Nothing is changing," Starbucks claims it was all part "of the cadence" of the plan - hhmm. "Most people come to Starbucks for coffee," concludes one young African-American, adding "race is an uncomfortable thing to bring up, especially in a Starbucks."

Presented with no comment...

It appears clear that the war reparations 'issue' will not go away anymore. Either Berlin pays what legal experts determine should be paid, or it risks becoming a pariah in its own neighborhood. That the Germans in the 1950s and 1960s, at home and in schools, chose not to tell their children anything about their crimes cannot serve as an excuse to silence the children of its victims. It seems the only way to save the European Union, that Germany has made its economy so dependent on, is for Germany to pay up.

We hate to spoil the surprise, but the answer, as clearly shown by the first blue bar on the chart below, is "Energy"...

What happens in the event a Fed rate hike triggers widening corporate credit spreads in a corporate bond market devoid of liquidity? Could it indeed be the case that the Fed’s highly anticipated “lift-off” will serve as the catalyst for credit market carnage? Some traders think so.

At the current rate of record oil production, storage will be exhausted in under two months, some time in mid-May. At that point, with no more storage to buffer the record oil production, the open market dumping begins and prices of WTI will crater as every barrel will have to be sold at any clearing price, since the producers will have no other choice than to, literally, dump the oil. In other words, a perfect storm is shaping up for oil some time in late May, early June. And then we learned something even more startling.