EURUSD rallied 100 pips into Draghi's press conference as weak shorts covered but the moment he opened his mouth), it collapsed and is now looking to break to a 1.09 handle for the first time since 2003. Despite hockey-stick-like expectations for EU growth, bond yields are compressing (as EU arbs the world) and oil prices are waking up to the reality that China took an ax to its growth expectatiuons overnight. But apart from that, stocks are higher...
Moments ago Mardio Draghi, as part of the ECB's March set of economic forecasts, revealed what is the biggest inflationary hockeystick in history, as European inflation, magically, is now expected to soar from 0.0% to 1.5%!
Following this morning's dire Challenger Job Cuts data, it appears the hard reality that lower oil prices are not unambiguously good for America is setting in. Initial Jobless Claims surged last week (after a big jump the week before) to 320k (far worse than the 295k expectation) to the highest since May 2014. Continuing Claims also rose. Since the end of QE3 and the end of the government's fiscal year, the trend of improvment has clearly ended and a new regime of weakening labor markets has begun.
After what feels like years of anticipation and promises, we found out last month that Q€ will happen. Today we find out exactly how Mario Draghi's magic trillion euro spending spree will occur (or not). Despite all the 'facts' surrounding a lack of liquidity, willing sellers, and available securities we are sure Draghi will have an answer for how he will fit 10lbs of 'stuff' into a 5lb bag. We also expect him to exuberasntly forecast higher inflation (less deflation) and stronger growth - because if he doesn't, what does that say about his optimism that Q€ is anything but more wealth transfers?
Challenger Job Cuts Surge 19%; Energy Sector Is 38% Of Total: "Falling Oil Hasn't Resulted In Higher Retail Spending"Submitted by Tyler Durden on 03/05/2015 - 08:22
According to Challenger, the February total planned job cut were over 50,000 for the second month in a row, or a total of 103,620 in the first two months of 2015, up 19% from the same period last year, with a 38% of the total, or 39,621 of these job cuts, due to plunging oil prices and about to take place in the highest paid oil extraction space.
As is normally the case, the ECB did not provide any details aside from its headline rates decision in the monetary policy decision press release, which as was expected by virtually everyone, were unchanged across the board.
- China Lowers Growth Target to About 7% (WSJ)
- Obesity Is Hurting the U.S. Economy in Surprising Ways (BBG)
- Embattled Hillary Clinton urges State Department to release emails (Reuters)
- Washington Strips New York Fed’s Power (WSJ)
- U.S. Supreme Court split over Obamacare challenge (Reuters)
- Citigroup Loses $800 Million as It Exits Turkey’s Akbank (BBG)
- Justice Who Once Tried to Kill Obamacare Now Potential Savior (BBG)
- Buyers of Espírito Santo Debt Face Financial Uncertainty (WSJ)
It has been a while since we have seen the USDJPY rampathon push US equities higher, so in a day dominated by central banks (first the BOE momentarily), and then the ECB's much anticipated announcement of the actual QE launch at the Draghi press conference at 1:30pm CET (taking place, ironically enough, in the place that was the blueprint for the Eurozone's capital controls, Cyprus), it only makes sense that after weeks of stage fright, the USDJPY algos reminded the world they are alive and well, and proceeded to ramp the key FX pair above 120, even though the currency that everyone will be talking about today is the Euro, hugging 1.10 as of this moment, but the real question is what happens after Draghi gives the asset buying green light: has all of Q€ been priced in already in FX, and will the EURUSD resume its surge higher, or is parity next stop?
Should a tail event such a deflationary spiral or Grexit occur, limits on ECB asset purchases will put Mario Draghi at a disadvantage as other central banks race to the bottom. JP Morgan says this will force the ECB to cut interest rates for cash deposits to minus 3% while the dollar will appreciate by 20%, reaching parity with euro in 2015.
Just over a year ago, we warned that while the world of speculative capital is focused intently on the Twitter and Facebook #Ref/0 fundamental valuations in the publicly-traded equity markets, the real dot-com 2.0 bubble is occurring in the private markets. Few paid attention, prefering the head in the sand "well the music is still playing" meme; but one (or two) billionaires noticed, and with all eyes intently focused on Nasdaq 5,000 (as some indicator that we made it back to Nirvana), Mark Cuban unleashes uncontestible exposition why is this bubble far worse than the tech bubble of 2000.
The establishment has done everything in its power to hide the most foundational of economic realities, namely the reality of dying demand. Why? Because the longer they can hide true demand, the more time they have to steal what little independent wealth remains within the system while positioning the populace for the next great con. For now we will only say that the program of manipulation we have seen since 2008 is clearly changing. The fact of catastrophic demand loss is becoming apparent. Such a loss only ever precedes a wider fiscal event.
It appears some more of the cameras around the Kremlin were working when Boris Nemtsov was assassinated last week. The following, rather stunning clip - given we now know what transpired - shows the immediate (within 3 minutes) aftermath of the murder, the white "getaway" car accelerating, and the garbage truck...
When we arrived to Bangkok the other day, coming down the motorway from the airport we saw a huge billboard - and it floored us. The billboard was from the Bank of China. It said: “RMB: New Choice; The World Currency”
Just 3 days after "Under The Dome" went massively viral (152 million views on China's Tencent alone), exposing the reality of China's disastrous pollution in an in-depth 104-minute documentary, The FT reports Chinese censors have moved to tamp down discussion domestically. We had previously noted with surprise just how 'big' the story had got without Beijing's intervention and now we see propaganda authorities directed news outlets on Monday not to publish stories about Under the Dome.
Just as everyone supports "solutions" until the solutions crush their share of the swag, everybody supports innovation and transparency until it disrupts their share of the swag. Then they scramble to hide the ugly truths and suppress the spread of threatening innovation. This parallel rejection of swag-crushing solutions and innovation/transparency by vested interests is not coincidental: innovation and transparency are the heart of real solutions.