Archive - Sep 2015 - Story

If it was Janet Yellen's intention when deciding not to hike rates to stop the surge of the USD against emerging market currencies in hopes of halting the relentless global capital outflows and the resulting Quantitative Tightning, to avoid a new global currency crisis... she failed.

It just keeps getting worse, and worse, and worse...

At 522,000 new homes sold (SAAR) in August - the highest since February 2008 - it is perhaps worth noting that this 'recovery' remains 60% below the prior bubble peak. Furthermore, this surge to new cycle highs comes in the same month as existing home sales plunged.

Francis will be the first pope ever to address Congress, and as NY Times reports, a milestone in the journey of the Catholic Church in the United States. Mr. Boehner, a proud Catholic, has invited three popes over 20 years to come to Capitol Hill, with this being his first success. The papal address to the Republican-controlled Congress may make some squirm as Francis isn’t shy about tackling controversial topics or upending conventional orthodoxies about Catholics and politics — a prospect that makes U.S. conservatives especially nervous, given Francis’ insistence on raising concerns about issues such as economic justice, climate change and immigration.

Like on many previous occasions, the Muslim pilgrimage to Mecca once again led to a tragic loss of life in what may be the deadliest stampede in pilgiramge history when at least 717 people died and another 805 were injured.

Perhaps Volkswagen is the best most recent example of "lying when it's important" but as Martin Armstrong, the European Union's leadership (elected and unelected) are the kings of hiding the truth when it matters. As he warns, "if you do not know whom to trust, distrust everyone." The motto of the ECB is plain and simple: why reform when we still have some power? Governments will fight until the last drop of blood is spilled; they assume it will be your blood, not theirs.

From Dallas to Philly, and from New York to Richmond, the regional Fed surveys have been ugly. So not to be outdone, Chicago Fed's National Activity Index collapsed from +0.34 to -0.41 (dramatically missing expectations of 0.24) and testing 6-month lows. The CFNAI has now missed expectations for 7 of the last 9 months. The reading below zero indicates below-trend growth in the national economy and easing pressures of future inflation.

Durable Goods New Orders dropped 2.0% MoM in August, the biggest drop since March (but modestly beat expectations of a 2.3% drop). This extends the ex-transports YoY losing streak to 7 months of declines flashing recessionary warnings left and right. Perhaps most notable is the 0.2% drop in Capital goods Shipments (dramatically missing expectations of a 0.5% rise) and the weakest print since May.

Another rip sold. Dow futures are down over 140 points in the pre-open (as it appears Cramer's pajama-wearers are derisking again). Following the 4th day of Yuan weakness, EUR-based carry trades continue their unwind and that pressure is driving USD Index notably lower, bond yields gapping lower, and commodities tumbling... except gold

Martin Winterkorn, engulfed by a diesel-emissions scandal at Volkswagen AG, amassed a $32 million pension before stepping down Wednesday, and may reap millions more in severance depending on how the supervisory board classifies his exit.

The global race to the bottom continued on Thursday as Norway and Taiwan moved to cut rates sending NOK plunging to its weakest level against the dollar in 13 years and pressing Tawain dollar forwards to six year lows. 

• Stocks slip for fifth straight day, euro holds steady (Reuters)
• VW recall letters in April warned of an emissions glitch (Reuters)
• VW Cheating Scandal Threatens to Ensnare BMW as Probe Widens (BBG)
• Pope Francis set to address fractious U.S. Congress (Reuters)
• Norway Cuts Rates to Record Low to Save Economy From Oil Slump (BBG)
• Taiwan Cuts Rate for First Time Since 2009 as Exports Falter (BBG)
• Janet Yellen to speak at UMass on Thursday (Daily Collegian)
• A Big Bet That China’s Currency Will Devalue Further (NYT)
• Debt Relief for Students Snarls Market for Their Loans (WSJ)

European equity have been weighed on by BMW after reports in German press that the Co.'s emission tests for their X3 model could show worse results than that of the Volkswagen Passat. The Norwegian and Taiwanese central banks have both cut interest rates, taking the number of central banks to cut rates this year to 40. Today's highlights include US weekly jobs data and durable goods orders as well as comments from ECB's Praet and Fed's Yellen. Of note US data, including jobless claims, durables and home sales will be delayed today & not released to newswires 1st due to Pope's visit

As Bloomberg reports, "President Vladimir Putin, determined to strengthen Russia’s only military outpost in the Middle East, is preparing to launch unilateral airstrikes against Islamic State from inside Syria if the U.S. rejects his proposal to join forces, two people familiar with the matter said."