At the height of the financial crisis, the unprecedented decline in swap rates below Treasury yields was seen as an anomaly. The phenomenon is now widespread, as Bloomberg notes, what Fabozzi's bible of swap-pricing calls a "perversion" is now the rule all the way from 30Y to 2Y maturities. As one analyst notes, historical interpretations of this have been destroyed and if the flip to negative spreads persists, it would signal that its roots are in a combination of regulators’ efforts to head off another financial crisis, massive corporate issuance (which we are seeing), China selling pressure (and its impact on repo markets) and "broken" wholesale money-markets.
The growth of poverty in the United States is wildly out of control. It turns out that there is a tremendous amount of suffering in “the wealthiest nation on the planet”, and it is getting worse with each passing year. During this election season, politicians of all stripes are running around telling all of us how great we are, but is that really true?
While understandably all eyes have been fixed on every monthly capital outflow update from China (even the ones that the Politburo is clearly massaging), few have noticed that one of the biggest total outflows currently in the global developed economy is taking place right in America's own back yard.
A Brief History Of Crime: How The Fed Became The Undemocratic, Corrupt & Destructive Force It Is TodaySubmitted by Tyler Durden on 11/02/2015 22:20 -0500
Our ancestors were wiser and far more educated than modern Americans about the dangers posed by a centralized, monopolistic system charged with the creation and distribution of money, and our society and economy have paid a very heavy price for its ignorance. Indeed, some of today’s Fed critics aren’t even aware that the U.S. Central Bank originally had far less power than it does today. As concerned as they were, its early critics could never have imagined how perverted its mandate would become in the subsequent 100 years. A mandate that has now made it the single most powerful and destructive force on planet earth.
Update: CME DIRECT ISSUES NOW RESOLVED, EXCHANGE SAYS
CME Group's online trading platform CME Direct will be unavailable until further notice due to a technical issue, the exchange said in a member notice this morning sent at 0857ET. While volumes look largely unaffected, Reuters reports that the outage came on the first day that CME migrated many users of its EOS Trader platform over to CME Direct, and also coincided with an upgrade to CME Direct's technology, sources familiar with the matter said.
The Fed's confidence trick this week was, once again, the Keyser Soze gambit (via Beaudelaire)- "convincing the world of Yellen's hawkishness, when no such character trait exists." However, unlike the movies, stocks and FX markets have already seen through the con, leaving Fed Funds futures alone to believe the hype. As we noted previously, "The Fed Can't Raise Rates, But Must Pretend It Will," repeating its pre-meeting hawkishness to dovishness swing time and again in a "Groundhog Day" meets "Waiting For Godot"-like manner. Time is running out Janet, tick tock...
“It wasn't raining when Noah built the ark.”
To believe this isn’t a bubble is to believe that all of the hot momo money from insti’s, high/biotech, flipper, flappers, fraudsters, and foreigners buying houses is fundamental and here to stay, which is exactly what everybody thought in 2006. Or, to believe that interest rates will keep falling 1% per year going forward, which would lend an element of support to prices.
Investors are aware that the market is manipulated... and it doesn’t seem to worry them. They don’t fight the Fed; they sit down at the table with it. They play the game. And so far, they have done well. But now... She will signal that, soon, the central bank will begin the long return to “normalcy.” Don’t believe it. The entire system depends on abnormality.
The Ghost Cities Finally Died: For China's Steel Industry "The Outlook Is The Worst Ever Amid Unprecedented Losses"Submitted by Tyler Durden on 10/29/2015 21:35 -0500
In late 2014 something happened: for whatever reason the most unregulated aspect of China's financial system, its shadow banks, not only stopped lending money but actually went into reverse, thus putting a lid on China's Total Social Financing expansion, which had been the world's "under the radar" growth dynamo for so many years. At that moment not only did China's ghost cities officially die, but it meant an imminent collapse for China's steel industry. That collapse has arrived.
AsiaPac Calm Before BoJ Storm, Japanese Household Spending 'Unexpectedly' Drops As China Releveraging ContinuesSubmitted by Tyler Durden on 10/29/2015 20:27 -0500
As all eyes, ears, and noses anxiously await the scantest of dovishness from Kuroda and The BoJ tonight (despite numerous hints that they will not unleash moar for now), the data that was just delivered may have helped the bad-news-is-good-news case. Most notably Japanese household spending dropped 0.4% YoY (with tax hike issues out of the way) missing expectations by a mile as the 'deflationary' mindset remains mired in Japanese heads. AsiaPac stocks are hovering at the week's lows unable to mount any bid as China fixed the Yuan notably stronger and instigated a new central pricing plan for pork prices (which suggests concerns about inflation domestically). Once again Chinese margin debt reaches a new 8-week high as 'stability' has prompted releveraging among the farmers and grandmas.
Bernie Sanders supporters seem to be everywhere. 49% of Democrats now have a favorable view towards socialism. This is scary. And sad. No matter how it is wrapped, socialism is still the belief that we can raise people out of poverty by taking money out of the hands of those who have learned how to produce. And it has never worked. Socialism always fails because at some point people realize they don’t have to work as hard to get the same amount of stuff. It takes all the incentive away to really succeed.
Those were just excuses, it’s not like any of those factors suddenly changed and were fixed magically on October 1st.
Here is our question: on May 7, the Price-to-Sales ratio of the stock market was 1.8264x. As of this moment it is higher at 1.8408x. So, dear Janet, can you please confirm what the attached chart shows, namely that "equity market valuations" are now even higher than when you said they were "generally quite high", and if so, should we still be buying stocks and why?
For six years, the world has operated under a complete delusion that Central Banks somehow fixed the 2008 Crisis.