Alongside the CPI data released earlier which showed the smallest possible broad price increase, when considering that previously the BLS reported flat nominal hourly wages in September, it implied that real wages declined once again. Sure enough, in a separate report today, the BLS announced that real average hourly earnings (in constant 1982-1984 dollars) declined once again, this time from $10.34 to $10.32, a -0.2% drop from past month. This also means that since March, there has been just one month in which real hourly wages have increased, and that was mostly due to the outright deflationary print the BLS reported last month.
After last month's shocking 0.2% drop in CPI, driven almost entirely by plunging gasoline prices, September CPI once again posted a modest rebound, rising 1.7% from a year ago, or 0.1% month over month, just above the 0.0% expectation, with core prices excluding food and energy rising precisely in line with the 0.1% expected. Broad prices were pushed lower by another month of declining energy prices (Gasoline -1.0%, Fuel Oil -2.1%), however offset by rising food prices which increased by food up 0.3% and Utility bills, rising 1.6% in September - the highest price increase in Utility bills since the 7.5% surge in March. Then again, one wonders how food inflation is so subdued when the report itself notes that "the index for beef and veal rose 2.0 percent in September and has now risen 16.7 percent since January. The index for dairy and related products increased 0.5 percent, its tenth increase in the last 11 months." But hey: there is always artificial food in a box which is plunging.
It will be the plotline of scary stories parents tell their children for decades to come: in Q1 2014, the US economy was supposed to grow 3%... and then it snowed. This led to a -2% collapse in the world's largest economy. Yes, inconceivably heavy snowfall (in the winter), and frigid temperatures (in the winter), were the reason for a $100+ billion swing in US GDP. Well, as the following chart from DB's Torsten Slok shows, of the roughly $2 trillion in GDP the global economy is expected to grow in 2015, about 90% of that is expected to come from China and the US!
- Russia Loses Oil Ally in De Margerie After Moscow Crash (BBG)
- Austria's Erste denies report it has failed stress tests (Reuters)
- Sweden gets two new sightings, as hunt for undersea intruder goes on (Reuters)
- Companies Try to Escape Health Law’s Penalties (WSJ)
- Mud and Loathing on Russia-Ukraine Border (BBG)
- NOAA employee charged with stealing U.S. dam information (Reuters)
- Lower Oil Prices Seen Easing Japan’s Trade Pain (WSJ)
- Michigan becomes 5th U.S. state to thwart direct Tesla car sales (Reuters)
- Maglev Train Seen Making Washington-to-Baltimore Trip at 311 MPH (BBG)
Equity Levitation Stumbles After Second ECB Denial Of Corporate Bond Buying, Report Of 11 Stress Test FailuresSubmitted by Tyler Durden on 10/22/2014 - 06:57
If the ultimate goal of yesterday's leak was to push the EUR lower (and stocks higher of course), then the reason why today's second rejection did little to rebound the Euro is because once again, just after Europe's open, Spanish Efe newswire reported that 11 banks from 6 European countries had failed the ECB stress test. Specifically, Efe said Erste, along with banks from Italy, Belgium, Cyprus, Portugal and Greece, had failed the ECB review based on preliminary data, but gave no details of the size of the capital holes at the banks.
Just when you thought it was safe to BTF-Ebola-Is-Fixed-Dip... ABC7 Chicago reports, two unrelated passengers (one child - vomiting, no fever; one adult - nausea, diarrhea, no fever) originating from Liberia became ill en route to O'Hare International Airport. The two patients are being monitored in isolation at The University of Chicago Medical Center and Rush University Medical Center but based on the latest reports and risk exposures (from the Chicago Ebola Resource Network), the CDC has determined not to test them for Ebola... (perhaps they are waiting for Ron Klain to start work tomorrow to give them the go-ahead).
"...the American scheme of world domination through military aggression and unlimited money-printing is failing before our eyes. The public has no interest in any more “boots on the ground,” bombing campaigns do nothing to reign in militants that Americans themselves helped organize and equip, dollar hegemony is slipping away with each passing day, and the Federal Reserve is fresh out of magic bullets and faces a choice between crashing the stock market and crashing the bond market. In order to stop, or at least forestall this downward slide into financial/economic/political oblivion, the US must move quickly to undermine every competing economy in the world through whatever means it has left at its disposal, be it a bombing campaign, a revolution or a pandemic..."
Exchange Traded Funds are becoming an important market for hedge funds as BofAML notes, they have shifted their profiles from shorting single stocks to more actively using ETFs as a hedge. On aggregate, BofAML reports that hedge funds owned $36.9bn worth of ETFs at the beginning of 3Q 2014, up notably from $33.8bn in the previous quarter, and these are the top 25 by market value.
Contrary to the opinion of Obama the Great, The One True Indispensable Chief of the NWO, the three principal threats we currently face are not Ebola, but QE-bola; not the locally disruptive Islamic State but the globally detrimental Interventionist State; and definitely not the Kremlin’s alleged (though highly disputable) revanchism being played out on Europe’s ‘fringe’ but the Kafkaesque reality of stifling and undeniable regulationism at work throughout its length and breadth. We might end by reminding the would-be wearer of the One Ring, as He lurks warily, watching the opinion polls from His lair in the White House, that in being so active in propagating each one of these genuinely existential threats to our common well-being, he will not so much ‘help light the world’ as help extinguish what little light there still remains to us poor, downtrodden masses.
"The Fed is really holding the market up.... The Fed turned this market around here because it let it be known that the Fed funds rate isn't going to be raised in March. I am concerned about the high yield market, I think that's in a major bubble, but nobody knows when it's gonna burst." - Carl Icahn
Barack Obama and the Federal Reserve are lying to you. The "economic recovery" that we all keep hearing about is mostly just a mirage... For those out there that still believe that we are doing "just fine", here are 19 more facts about the messed up state of the U.S. economy.
The Japanese Yen's real effective exchange rate (REER) has collapsed to the weakest since 1982, according to Mitsubishi UFJ Morgan Stanley Securities. Simply put, REER is a trade-weighted measure of Yen strength (or weakness) against, in this case, 59 trading partners; and as the nation posts an unprecedented 27th straight month of trade deficits, Bloomberg reports MUFJ indicates "a structural shift" has taken place. As MUFJ chief FX strategist warns, "If the trade deficit doesn’t noticeably narrow from here, the yen’s real effective rate could fall to levels never seen before," and, ominously, "from a supply and demand perspective, yen selling for foreign currency by Japanese importers will just continue endlessly." And Japan becomes Venezuela...