I often wonder who is worse: George W. Bush — the man who turned a projected trillion dollar surplus into the greatest deficits in world history, who bailed out the profligate Wall Street algos and arbitrageurs, who proceeded with two needless, pointless and absurdly costly military occupations (even though he had initially campaigned on the promise of a humble foreign policy), who ignored Michael Scheuer’s warnings about al-Qaeda previous to 9/11, who signed the Constitution-trashing PATRIOT Act (etc etc ad infinitum) or his successor Barack Obama. The answer, by the way, is Richard Nixon. Nixonianism has been the corporate aristocracy’s crowning achievement. And to some extent, this period of free lunch economics was a banquet, even for middle class Americans. The masses were kept fat and happy. But now the game is up — like Nixon’s Presidency — its days are numbered.
Forget Big Macs, the only ubiquitous commodity that counts now in the global purchasing-power-parity pyramid of currency-wars is the iPhone. Deutsche Bank has created a comprehensive set of tables on what costs how much and where around the world so whether it is soft-drinks in Brazil or Germany (over 690% of New York prices), Beer in Japan (192% of US prices), or exercise in Russia (sports shoes are 221% of US prices), it is perhaps evident that the impact of these overseas revenues in nominal USD may indeed be helping juice US corporates as they bow to Bernanke's debasement wisdom. But how much longer will Russians (or the Chinese for that sake) continue to pay around 50% more for their iGadgets than us lowly Americans.
Universities are today’s centers of connection. They are one of the last vestiges of American tribalism and community in an age of self isolation and artificial technological cultism. Adults do not meet face to face much anymore to share knowledge, or discuss the troubles of the day. The academic world provides such opportunity, but at a terrible price. To connect with the world, students must comply. To be taken seriously, they must adopt, consciously or unconsciously, the robes of the state. They must abandon the passions of rebellion and become indifferent to the truth. All actions and ideas must be embraced by the group, or cast aside. They must live a life of dependency, breeding a culture of fear, for that which others to keep for us, they can easily take away. How could anyone possibly sustain themselves on a diet of congealing fantasy, and personal inadequacy? The intellectual life bears other fruits as well. Where it lacks in substance, it makes up for in ego, proving that being educated is not necessarily the same as being intelligent. The following is a list of common character traits visible in the average intellectual idiot, a breed that poisons the American well, and is quickly eroding away any chance of Constitutional revival…
Yesterday we had Apple sandbagging expectations with yet another round of low guidance, now it's Iran's turn, which through its Russian Ambassador just said the country will consider halting nuclear expansion to avert the EU oil ban. Needless to say, just as the Apple forward guidance so this "promise" is utterly worthless. But at least it punk'd the algos for the time being sending Brent and WTI down over $1 in a hurry.
March Durable Good Implode, Worse Than Lowest Wall Street Forecast And Biggest Drop Since January 2009Submitted by Tyler Durden on 04/25/2012 - 07:53
So much for a moderate decline in the economy. As we warned back in February when we noted that the non-seasonally unadjusted collapse in durable goods was historic, now that the aftereffect of a record warm winter is fully gone, the March durable goods data comes in and it was a complete disaster: instead of dropping modestly by 1.7% as the consensus expected, the March actual print was a massive 4.2% decline, worse than the worst Wall Street forecast, or the most since January 2009! And it was not only airplanes as many were expecting (despite Boeing's just announced epic sales): the ex-transportation number was down 1.1%, on expectations of a 0.5% gain; even worse, capital goods new orders slid 0.8% on expectations of a 1% gain. And as usual inventories hit another record high. Overall, a horrendous print which confirms that the entire myth of a recovery in Q1 was warm weather driven, and that about 1% of the 2.5% or so consensus GDP was due to the weather. Expect the downward GDP revisions to come any second.But don't expect the market to react to this news at all: after all if anything, this simply makes NEW QE/LTRO more likely and is to be cheered by all habitual gamblers.
All eyes will turn to the Fed and the Fed statement. I think we get a slightly more dovish statement. More language that the economy shows signs of weakening and that the Fed is vigilantly watching the data to determine if additional actions are necessary. No change in low rates for extended period, though maybe their they soften the language further hinting that it could go on longer than 2014 if moderate economic growth continues. I don’t think they will say anything new on inflation, though they might try to hint that it is moderating in their eyes, again, paving way for more QE. So I suspect a dovish statement, but no QE. I think the market will initially like that, but we will see the enthusiasm wane as that seem very well priced in, and without QE, and once AAPL stabilizes, we can get back to focusing that on the whole the data here has been weak, and that the situation in Europe is deteriorating rapidly.
European equities are seen making modest gains at the midpoint of the European session; however underperformance is observed in the FTSE 100, with the UK economy falling back into a technical recession with an advanced Q1 GDP reading of -0.2%. Data from the ONS has shown that the UK’s weak construction sector weighed down upon the relative strength in services and manufacturing, pushing the economy into contraction during the first three months of the year. Following the UK GDP release, GBP/USD spiked lower by around 40 pips and the Gilt moved around 30 ticks higher, with GBP remaining weak as the US comes to market. Elsewhere, the Bundesbank held a technically uncovered 30-yr Bund auction, with the German Debt Agency commenting that the results reflect volatile and uncertain market conditions. Following the results, the Bund printed session lows and remains in negative territory. Looking ahead in the session, participants look forward to the FOMC rate decision, and the Fed’s projections release.
Trading in Goldman Sachs Group Inc.’s gold ETF in India surged almost 11 fold, leading an advance in gold securities, as investors bought gold to mark the auspicious Hindu festival of Akshaya Tritiya. Volumes in GS Gold BeEs, India’s biggest exchange-traded fund backed by gold, was 937,816 units on the National Stock Exchange of India Ltd. at 4:54 p.m. in Mumbai, up from 85,376 units yesterday and more than the 101,914 average daily volumes in the last six months through yesterday, according to data compiled by Bloomberg. This is significant volume. Each unit represents about 1 gram of physical gold and therefore 937,816 units is the equivalent of some 29,170 ounces of gold which at today’s prices is some $47 million of daily volume for just one gold ETF in India. The Goldman Sachs India gold ETF is just one of many new ETFs in India. Trading in Kotak Gold ETF jumped more than eightfold to 226,032 units. Gold demand in India, the world’s biggest importer, may climb as much as 25% to 15 metric tons on Akshaya this year, according to Rajesh Exports Ltd., the country’s biggest gold-jewelry exporter. Assets held by local gold funds reached a record 98.9 billion rupees ($1.87 billion) at the end of March, according to the Association of Mutual Funds in India. GS Gold BeEs had assets worth 29.6 billion rupees (some $563 million (USD)) as of March 31, data from the association showed. Trading in UTI-Gold Exchange Traded Fund climbed more than fivefold, while volumes in Reliance Gold ETF, the second-biggest fund, was up more than sixfold, data shows.
- Merkel Pushes Back Against Hollande Call to End Austerity Drive (Bloomberg)
- ECB's Draghi throws crisis ball back to governments (Reuters)
- Greek Bank Chief Warns of a Possible Euro Exit (WSJ)
- China’s Wen Says Economy Will Maintain Robust Expansion (Bloomberg)
- North Korea's nuclear test ready "soon" (Reuters)
- Hong Kong Peg Architect Says Convertible Yuan `Long Way Off’ (Bloomberg)
- Hollande seeks wider EU fiscal pact (FT)
- Gavyn Davies: Why UK GDP continues to lag the G7 (FT)
- U.S. Lost AAA on Danger of Liquidity Crisis, S&P’s Kraemer Says (Bloomberg)
S&P threatening to downgrade India... UK double dipping... Germany having a failed auction. It is all irrelevant, for the great fruit has spoken and people are buying iGadgets at record levels, which can only mean that once the great credit spree ends, Apple will likely be forced to use its $110 billion cash hoard to start an in house "Acceptance Corporation" vendor financing purchases of its products directly. And while the AAPL earnings beat has become a contrarian bet, now that even Gartman has said he is turning bullish on stocks, here is a summary of what happened and what will happen. In a nutshell, just like Apple was the only thing that mattered yesterday, today it is only the Fed and the subsequent press conference that matter, with the market likely to only take away whatever it wants to take away.
Earlier today, the Bundesbank tried to sneak through some EUR3 billion in long-dated (30Y) paper. It didn't quite succeed, because if one excludes the retention by the German bank which already has its hands full with TARGET2, the auction was technically a failure. As Newedge points out, without Buba retention, the launch of new 30-yr bund would have been undersubscribed which is just a polite way of saying the above. What happened is that the German debt agency sold EUR2.405b of new 2.5% 30Y Jul-44 Bund, at an average Price 101.93 and average yield of 2.41%. Of this, the Bundesbank retained 595 million as the total target was for EUR3 billion in issuance; Total non-Buba based bids were a "weak" EUR 2.747 billion. The bid/cover was modest 1.142x; with the auction tail 18 cents “further underpinning the weakness of demand." Finally, per Newedge, the new paper looked rich vs previous rolls ahead of today’s auction, “explains the sluggishness of today’s demand.” Of course, with the now daily bipolar market, had this auction taken place on Monday when Europe was again imploding, it would have been a stunning success. Instead, today is one of those risk on days. But for anyone who bought into the "safety" of German paper 48 hours ago, today they are being carted out legs first. Until, of course, the attention shifts to the disaster that is the PIIGS, and as of earlier today, the UK once more.
For anyone who may have been concerned that the BOE was serious in its recent "admission" that it just may not ease further, or engage in more QE for that matter, we have good news: the UK economy just double dipped for only the first time since the 1970s, following a stunning Q1 GDP release which came in far weaker than expected at -0.2% while the consensus was looking for a 0.1% rise. In other words, the UK has just followed such other pristine example of economic success as Spain and Greece into double dipping. Bloomberg economist Niraj Shah brings even more bad, pardon good, news: 2Q GDP may also contract as a result of additional bank holiday in June. Construction output knocked 0.2 ppt off of quarterly GDP growth. Per Shah, the BOE may point to drop in construction as a possible aberration in data, concerns will remain over the strength of the service sector as output there rose only 0.1% Q/Q. The U.K. has contracted 9 quarters since first falling into recession in 2Q 2008. All in all this is great news for those desperate for bad news and explains why futures, and the EURUSD are spiking.