This week, markets are likely to focus on US ISM Nonmanufacturing, services and composite PMIs in the Euro area (expect increases), ECB’s Monetary Policy Decision (expect no change in policy until further ahead), and Congressional testimony by Fed’s Yellen.
India has long been an economic laggard to China but that may be about to change.
This is an impressive, comprehensive analysis of the February 2014 Ukraine coup from the perspective of a senior Russian academic. It details the interests and affiliations of the main Ukrainian domestic players - oligarchical clans many of whose leaders have dual nationality - with some shocking and little known detail. It exposes the glaring hypocrisies and double standards of the western sponsors of the coup and their Russian/Ukrainian '5th Column traitors'. It sees the coup and Russia's successful incorporation of Crimea as major game-changing events in the on-going, US-lead post-WWII machinations of the West to subdue Russia to its own agenda and outlines how Russia should now respond. All-in-all a must-read for westerners needing to understand what is really happening in both the Ukraine and the wider Anglo-US-NATO globalisation drive which it brings into sharp focus
The coming week will be busy in terms of data releases in the US; highlights include an improvement in consumer confidence, anemic 1Q GDP growth, and solid non-farm payrolls (consensus expects 215K). Wednesday brings advanced 1Q GDP - consensus expected a pathetic 1.1% qoq, on the back of what Goldman scapegoats as "weather distortions and an inventory investment drag", personal consumption (consensus 1.9%), and FOMC (the meeting is not associated with economic projections or a press conference). Thursday brings PCE Core (consensus 0.20%). Friday brings non-farm payrolls (consensus of 215K) and unemployment (6.6%). Other indicators for the week include pending home sales, S&P/Case Shiller home price index, Chicago PMI, ADP employment, personal income/spending, and hourly earnings.
Bad Government and Central Bank Policy Are the MAIN CAUSE of Runaway Inequality
In a rhetorical self-QE released by its strategist Peter Oppenheimer, discussing recent changes to long-running market trends, among which the crash in momo stocks, and the EM to DM inversion, the punchline was the most important. To wit: "We see less scope for this peripheral index... Peripheral spreads may narrow further, but more now via higher bund yields. After all, 5-year Spanish and Italian bond yields have converged to the same levels as the US. We still like selected parts of the peripheral markets, particularly the banks, but would prefer to express this via single names than via index overweights... the drivers of returns may have shifted away from some areas such as US growth and European periphery towards more of a cyclical bias across markets, with a particular focus on exposure to a DM macro recovery." In other words, while the momentum bubble may have popped (if still has a loooooong way to go before it deflates) the European peripheral bubble is about to go pop as well. For all those who just bought Spanish 10 Years at a record low yield (yes, record low) yesterday, our condolences. Then again, it's only other people's money.
Since the centrally-planned market is so broken it no longer has the capacity to evaluate and respond to any geopolitical threats and shocks, here - lest anyone think that with the S&P a hair away from all time highs there is nothing to worry about - is a summary of all the simmering, and in some cases, searing and/or scorching geopolitical conflicts and other tensions around the world including Ukraine, Hamas, the US-Japan defense treaty, Syria, South Sudan, Catalonia, Scotland, Thailand, Nigeria, Turkey, Venezuela, Ivory Coast, Bolivia, South Africa, Argentina, Brazil, Tunisia, Yemen, Libya, Iraq, Lebanon, Bahrain, Algeria, Pakistan, Moldova, Cyprus, Bosnia and Herzegovina, Greece and more.
Moving onto overnight markets, apart from China we are seeing broad based gains across most Asian equities. Bourses in Japan, Korea and Australia are up +0.2%, +0.2% and +0.5% respectively whereas the Hang Seng and the Shenzhen Composite indices are down -0.2% and -1.1% as we type. The gains in broader Asia Pacific followed what was another constructive session for risk assets yesterday during US trading hours. The S&P 500 (+0.38%) rose for its 5th consecutive day partly driven by better corporate earnings from the likes of GE and Morgan Stanley. Staying on the results season, we’ve had 70 of the S&P 500 companies reporting so far and the usual trend is starting to emerge in which earnings beats are faring better than revenue beats. Indeed the beat:miss ratio for earnings has been strong at 77%:23% whereas revenue beats/misses are more balanced at 50%:50%. Looking ahead, markets should get ready for another big week of US earnings.
Dear Gennady, ...So you see, Gennady, we are actually quite prepared to see the stock market crash, to see all the stock markets in the world crash, and the yields on our dollar bonds rise to whatever level. We are prepared for much worse things... The inevitable economic setback may result in some political opposition within Russia itself, but in the context of an escalating confrontation with Europe it shouldn’t be too difficult to cope with.... I hope that makes things a little clearer. Yes, it is a risky strategy, but a Europe dominated by Russia, or at least detached from the United States and disunited, is a prize worth risking everything for. Beppo is worth a crash.... Think about what I’ve said – some of it may come as a shock, but in the end, I think you’ll agree that it’s actually good news that the long tense period of waiting is finally over. We can’t win a conventional or a nuclear conflict, but this plan really might succeed. If not, well, we Russians are used to overcoming adversity.. Your Friend, Sasha
It's not just beef, pork, shrimp, eggs, and orange juice... If you think that the price of food is high now? Just wait. If current trends continue, many of the most common food items that Americans buy will cost more than twice as much by the end of this decade. Even if nothing else bad happens (and that is a very questionable assumption to make), our food prices are going to be moving aggressively upward for the foreseeable future. But what if something does happen? In recent years, global food reserves have dipped to extremely low levels, and a single major global event (war, pandemic, terror attack, planetary natural disaster, etc.) could create an unprecedented global food crisis very rapidly.
The majority of global growth in the next decade will instead be generated by "frontier markets". in fact, over the past five years, 43 of the 47 highest-growth economies have come from the frontier.
You know when you want to read that last page of the book just before you fall off into the Land of Nod and the Sandman comes and sandbags you to fall asleep?
The BRICS countries (Brazil, Russia, India, China and South Africa) have made significant progress in setting up structures that would serve as an alternative to the IMF and the World Bank (which are dominated by the U.S. and the EU), according to RBTH. As WSJ reports, the U.S. would lose its veto power on the International Monetary Fund's executive board under a plan being considered by some emerging economies. The countries are fed up with the United States' failure to ratify a four-year-old deal to restructure the emergency lender. Yet more loss of credibility on the global stage and, as Brazil's FinMin Mantega sums up, "the IMF cannot remain paralyzed and postpone its commitments to reform."
Curious why after nearly touching $200 in early trading IBM is down 4% in after hours trading? Perhaps this has something to do with it: as the chart below shows, in Q1 IBM reported only $22.5 billion in sales, well below the $22.9 billion expected by the street, and down 3.9% from a year ago. In fact, this quarter's revenue was the lowest for IBM since the first quarter of... 2009. Net Income (non-GAAP of course), which was $2.6 billion and which met reduced estimates, was down a whopping 22% from a year ago. But the punchline, one which Cisco is very familiar with, was this:"Revenues in the BRIC countries — Brazil, Russia, India and China — decreased 11 percent."
We believe Fed’s actions would be more appropriately described as permitted cancerous beliefs to spread throughout the financial system, thereby killing Democratic Capitalism which is the basis of the capital markets.