The current rash of cautious ignorant optimism is so very reminiscent of the period right after Bear Stearns in 2008. Ben Bernanke as late as June 2008: "The risk that the economy has entered a substantial downturn appears to have diminished over the past month or so." Janet Yellen said, “the strong incoming data on spending eased my fears that we are in or are approaching a recession regime” before expressing confidence in rate hikes starting in December 2008! The mainstream takes the absence of further liquidation as if there will be no more liquidations when in fact the likelihood of more of them only rises the more they are artificially “contained.”
Never before have central bankers done so much to achieve so little... and yet they continue to propagandize more of the same...
Liquidity Problems? Deutsche Bank Offers 5% Yields If Depositors Lock Up Their Money For Three MonthsSubmitted by Tyler Durden on 05/14/2016 21:53 -0400
We were surprised to find that in a promotional offer by Europe's biggest (and by many accounts most insolvent) bank, Germany's Deutsche Bank is not only not rushing to penalize depositors, on the contrary it is offering its Belgian clients a 5% gross return for new €10,000 - €50,000 deposits if this money is locked up for the next three months. The offer is only valid for the next 40 days, until June 24.
On March 10, 2016 when the ECB announced the biggest expansion to quantitative easing in European history, when it shocked the market by announcing not only a reduction in its negative rate and expansion in the TLTRO program, but also the launch of a corporate bond monetization program.Well maybe not "shocked" the market, because as Bloomberg writes, ECB board members met with representatives of banks and investment managers including Goldman Sachs, BlackRock, Credit Suisse and Moore Europe Capital Management in February, just days before the ECB's March 10 announcement.
Another week goes by and another gaggle of Fed guffaws pukes out the same old 'we are data-dependent' meme, the same old 'everything is on track' narrative, and the same old 'bonds are wrong, stocks are right' idiocy. Do they not see what this constant nonsense has done to Kuroda and The Bank of Japan's credibility - propagandizing in the face of overwhelming facts. In order to help those who just can't seem to shake off the "well The Fed said it so it must be true" denial pysche, we offer the following chart...
XOM is trading as a Bond in this yield chasing QE inspired Central Bank World, and FB is your classic momentum stock
What we’re looking at is going to be much more serious than any past crisis, partly because America has already evaporated, like the morning haze on a hot summer's day. You're not in Kansas anymore. Kansas isn't in Kansas anymore.
We have deviated so far from free markets at this point that even the top financial minds no longer have any understanding of what is meant by capitalism. It must be true, for anyone who understands capitalism could never have published such a letter. The logic in Mr. Gross’s argument is beyond invalid, in fact, it is so ludicrous it borders on insane. We mean this quite literally...
The biggest concern for China, and the world, is that now that China's credit impulse is gone, it means that the it is only a matter of time before the impetus behind Chinese, and global growth, evaporates as per the timeline persented in the following Goldman chart, which explained the surge in Q1 economic activity, and which now anticipates a steep slowdown in the second and subsequent quarters unless China manages to stoke its unsustainable credit growth once again.
Gundlach told Reuters that the with the S&P500 rangebound around 2,050 for some time, "it's tough to get much of a rally off of price-to-earnings this high with earnings falling and the Fed itching to tighten with GDP growth already projected to decline," he said. In keeping with his recent skepticism, he said that his forecast on the market remains a gloomy one: "I'm sticking with my '2 percent upside and 20 downside' prediction on U.S. stocks.... it's working, I can see it going to 1,600."
One recurring question over the past few weeks has been "who is buying" stocks in a world in which not only the smart money, but everyone else too is selling. The latest Lipper data will not provide the answer because as BofA reports, in the latest week there was another $7.4bn in outflows (the 5th straight week) driven by $4.8bn in mutual fund outflows and $2.7bn ETF outflows, leading to a $44bn equity exodus past 5 weeks, which as Michael Hartnett points out is the "largest redemption period since Aug’11", or when the US downgrade sent US stocks into a bear market tailspin.
Global stocks have started Friday the 13th on the wrong foot, with not only Hong Kong GDP unexpectedly tumbling by 0.4%, the worst print in years while retail sales fell for a thirteenth straight month in March, the longest stretch since 1999 as the Chinese hard landing spreads to the wealthy enclave, but also following a predicted collapse in Chinese new loan creation, which will reverberate not only in China but around the globe in the coming weeks. The latest overnight drop in the Yuan hinted that should the recent USD strength continue, China will have no choice but to repeat its devaluation from last summer and winter.
Unpersuaded by either the plight of the pensioners or the prospect of business growth in Arizona, Ducey vetoed gold. This is his second time to shoot down gold.