Following last week's economic data tempest, capped with the disappointing US nonfarm payrolls, which has provided virtually no clarity on just what the "(Dow Jones) data-driven" Fed will do in a world in which not only is the US economy rolling over, but China is imploding, commodity deflation is raging, and global stock markets are propped up by a handful of stocks, the coming week will be far less exciting (which is just how the Hamptons crowd wants it).
- Grim China data keeps stimulus hopes alive (Reuters)
- Berkshire Hathaway to Buy Precision Castparts for About $37 Billion (BBG)
- Greece, lenders in final push to seal new bailout (Reuters)
- Quantitative Easing With Chinese Characteristics Takes Shape (BBG)
- Greece nears €86bn accord with creditors (FT)
- Oil Futures Signal Weak Prices Could Last Years (WSJ)
- Drop in long-term investment hinders eurozone recovery (FT)
- Two shot in Ferguson amid standoff between police, protesters (Reuters)
Following last week's bad news for the economy (terrible ADP private payrolls, confirmed by a miss in the NFP) which also resulted in bad news for the market which suffered its worst week in years, many were focused on how the market would react to the latest battery of terrible economic news out of China which as we observed over the weekend reported abysmal trade data, and the worst plunge in Chinese factory prices in 6 years. We now know: the Shanghai Composite soared by 5%, rising to 3,928 and approaching the key 4000 level because the ongoing economic collapse led Pavlov's dog to believe that much more easing is coming from the country which as we showed last night has literally thrown the kitchen sink at stabilizing the plunge in stocks.
We've been brainwashed into financializing the human experience. This is not a problem that can be fixed by tweaking state-cartel policies (Obamacare, banking, etc.) i.e. fake fixes. This is a problem that requires a complete rethinking of centralization, money creation, empire, wealth, prosperity, consumption and how we live.
Here is an overview of next week's events and data placed in the larger context.
If Tesla doesn't start to get its act together with respect to delivering new products and getting their service back into its former tip-top shape, I suspect the symbol TSLA will make a long, tortured trip back down to the double digits.
Elements of the financial media are either unbelievably lazy or completely complicit in helping to maintain the illusion of success for the Centralized powers (large governments and Central Banks).
Here comes today's main event, the July non-farm payrolls - once again the "most important ever" as the number will cement whether the Fed hikes this year or punts once again to the next year, and which consensus expects to print +225K although the whisper range is very wide: based on this week's ADP report, NFP may easily slide under 200K, while if using the non-mfg PMI as an indicator, a 300K+ print is in the cards. At the end of the day, it will be all in the hands of the BLS' Arima X 12 seasonal adjusters, and whatever goalseeked print the labor department has been strongly urged is the right one.
Six years ago, hardly anybody outside financial circles had any idea what Quantitative Easing was – hell, many within financial circles had no idea what QE entailed. The success of the narrative created around QE; that it is the mythical ‘free lunch’ that we all intuitively know can’t exist but secretly hope does, has played perfectly to the public and now, having endured for two electoral cycles, the next wave of politicians also believe it will have no consequences and are actually using it when planning the message they feel will endear them to the electorate. What plays better than free money?
WTI Crude is back below $45 again this morning - pressing towards 2015 and cycle lows -after Goldman Sachs' Jeffrey Currie warns 'lower for longer' is here to stay, with price risk "substantially skewed to the downside." His reasoning are manifold, as detailed below, but overarching is oversupply (Saudi Arabia has a challenge in Asia as it battles to maintain mkt share, the Russians are coming, andother OPEC members want a bigger slice) and, even more crucially, storage is running out. As Currie concludes, this time it is different. Financial metrics for the oil industry are far worse.
- Trump at center stage as Republicans square off in first debate (Reuters)
- Cleveland Debate Offers GOP Hopefuls a Chance to Break Away from the Pack (WSJ)
- Bank of England Keeps Key Interest Rate at 0.5% in 8-1 Vote (BBG)
- Emerging stocks submerged, UK gears up for 'Super Thursday' (Reuters)
- No IMF decision on Greek bailout until autumn, Swedish rep tells paper (Reuters)
- Japan Heads Toward Nuclear Unknown With Post-Fukushima Restarts (BBG)
- Activist Ackman Takes $5.5 Billion Stake in Snacks Giant Mondelez (WSJ)
Debt is a fickle witch. When left to its own devices, which it has been for nearly seven years with interest rates at the zero bound, it tends to get into trouble. Unchecked credit initially seeps, and eventually finds itself fracked, into the dark, dank nooks and crannies of the fixed income markets whose infrastructures and borrowers are ill-suited to handle the capacity. Consider the two flashiest badges of wealth in America - cars and homes...
From our perspective, the fundamental reason for economic stagnation and growing income disparity is straightforward: Our current set of economic policies supports and encourages a low level equilibrium by encouraging debt-financed consumption and discouraging saving and productive investment. We permit an insular group of professors and bankers to fling trillions of dollars about like Frisbees in the simplistic, misguided, and repeatedly destructive attempt to buy prosperity by maximally distorting the financial markets.
The reality might just be that the collective "we," and quite possibly sooner than we think, really will need a bigger boat. That is, as it pertains to the global debt markets, which have swollen past the $200 trillion mark this year rendering the great white featured in Jaws which can be equated with past debt markets as defenseless and small as a small, striped Nemo by comparison. The question for the ages will be whether size really does matter when it comes to the debt markets...
"I am speechless. Not since yesterday or last week. I have been speechless since July 13th when the Greek left-wing coalition government agreed to burden the country and the people with a new loan, the third bailout for Greece since 2010 together with the strictest austerity program ever. I really don’t care if Varoufakis wears tasteless shirts and why he wanted to ‘hack’ taxpayers’ numbers while sitting with his team of skilled hackers and childhood friends... I just don’t care. It doesn’t affect my life, not even a tiny little bit. I give neither a a whole dam nor half of it for this so-called Greek political agenda after July 13th. What do I care about is watching my country and the people falling into pieces."