Has the market bottomed? Are stocks poised to rally to new highs? Let's find out!
- Global stocks, dollar struggle ahead of Fed as oil falters (Reuters)
- Bond Bulls Bank on Fed Mention of Market Chaos as Drag on Growth (BBG)
- Fees on Mutual Funds and ETFs Tumble Toward Zero (WSJ)
- China Climbs Back Up Janet Yellen's Worry List (BBG)
- The World’s Favorite New Tax Haven Is the United States (BBG)
- New Jersey Gov. Christie backs Atlantic City takeover plan (Reuters)
"Nobody is really sure where we go from here, and nobody is brave enough to make the call,” Peter Dixon, Commerzbank AG’s global equities economist in London told Bloomberg. “Corporate earnings season won’t provide much of a support - markets may find a floor if the Fed is extremely dovish tonight. At least investors will have time to think and reassess valuations."
The financial engineering that has been made possible by zero percent interest rates is no longer available to paper over weak corporate results in the U.S. Our economy is addicted to QE and zero rates, and without those supports, we will spiral back into recession. This is the reality that the mainstream tried mightily to ignore the past several years. But the chickens are coming home to roost, and they have a great many eggs to lay. In the end, stimulus does not create actual growth, but merely the illusion of it.
$681 Million In Mystery Money Found In Malaysia PM's Bank Account Was "Personal Donation" From SaudisSubmitted by Tyler Durden on 01/26/2016 13:36 -0500
“The four-page statement didn’t address several issues that Malaysians have sought answers to, such as: Who specifically donated the money?; Why was it donated?; And what happened to the money that wasn’t returned?'...
Ben Bernanke is no longer the Fed's chairman, but this article is even more relevant today then it was when I wrote it
As of June 2008 no Wall Street banking house was predicting a recession, yet by then the Great Recession - the worst economic downturn since the 1930s - was already six months old, as per the NBER’s subsequent official reckoning. Wall Street never predicts a recession. And that’s basically why the stock market goes up for 5-7 years on a slow escalator, and then plunges down an elevator shaft during several quarters of violent after-the-fact retraction when an economic and profits downturn has already arrived.
It has been another volatile, illiquid, whipsawed session, driven by the only two things that have mattered so far in 2016, China and oil.... and stop-hunting algos of course.
Following the afternoon weakness in US equities, Offshore Yuan has been limping lower into the fix, not helped by comments from a MOFCOM researcher that "China is able to withstand currency fluctuations" implicitly warning carry traders to stay away and suggesting the dollar's dominance would not last long. CNH is now at 3-week lows against CNY, over 300pips cheap - which prompted the major short squeeze last time. Chinese stocks are modestly lower but more worrying is the 7-day slide in Chinese corporate bond yields - the most in 2 months - hinting perhaps that the last bubble standing is bursting.
In just 44 somewhat anger-and-frustration-filled seconds, DoubleLine's bond guru Jeffrey Gundlach unleashes some very uncomfortable truths on Janet Yellen and the "idiots" at The Fed... "they have got to dial this [hawkish] rhetoric back or the markets are going to humiliate them."
Contrary to those blaming the Fed for causing stocks to fall by “raising rates” (which Joe Salerno reflects on here) we want to stress the fact that, in raising rates, the most that the Fed could do is unravel previously made mistakes. In other words, there is nothing praiseworthy in the first place about artificially propped up stock market levels. We have no interest in lauding the longevity of the bubble, because the bubble is the enemy of the healthy economy. The collapsing equity markets reveal where bubbles were formed and that our alleged prosperity is an illusion. And this is precisely what former Dallas Fed Chairman Richard Fisher stated in a conversation on CNBC last week when he confessed: “We frontloaded a tremendous market rally to create a wealth effect.”
The world has yet to fully digest what is currently happening in Japan.
"Do not worry," investors are told day after day, this is just a swoon because companies are blacked out from buying back their own shares and supporting the irrational valuations in stock markets. Well, Credit Suisse just smashed another leg on the 2-legged stool of equity market perma-bullishness as they explain in their daily note that "talk of seasonal oscillation in buyback activity is over-exaggerated."
After the white-knuckle sell-off of global equities that was finally punctuated by a rally late last week, everyone wants to know: Was this the bottom for stocks? And now Moody’s weighs in with an unwelcome warning... "it’s hard to imagine why the equity market will steady if the US high-yield bond spread remains wider than 800 basis point."