- China’s Biggest Banks Are Squeezed for Capital (NYT)
- Greeks detect hypocrisy as Dutch coalition stumbles (Reuters)
- Hollande Blames Europe’s Austerity Plan for Le Pen’s Rise (Bloomberg)
- In a Change, Mexico Reins In Its Oil Monopoly (NYT)
- China Tire Demand Slows as Economy Decelerates, Bridgestone Says (Bloomberg)
- Social Security’s financial forecast gets darker; Medicare’s outlook unchanged (WaPo)
- Fed’s 17 Rate Forecasts May Confuse More Than Clarify (Bloomberg)
- Senate to vote on array of Postal Service overhaul proposals (WaPo)
- Weidmann Says Bundesbank Is Preserving Euro Stability (Bloomberg)
If Goldman's recent predictive track record is any indication, tomorrow's NFP will be a disaster.
Any and all negative overnight news are now completely ignored as the scramble for risk hits the usual fever pitch following Bernanke's latest attempt to transfer cash from safe point A to ponzi point B, aka stocks. First, China's industrial firms suffered a rare annual drop in profits in the first two months of 2012 mainly in petrochemicals, metals and auto firms, the latest signs of weakness in the world's No. 2 economy and reinforcing the case for policy easing, according to Reuters. This was the first Jan-Feb profits downturn since Jan-Aug 2009. Profits fell 5.2 percent so far in 2012, according to the industrial profitability indicator, published by the National Bureau of Statistics (NBS) every month. The last period that China reported nationwide industrial profit fall was in the first eight months of 2009. Then there was the German GfK Consumer Confidence which unlike yesterday's IFO, missed: nobody cares. Also on the negative side was an earlier auction of Spanish Bills which sold EUR 2.58 billion, just barely off the low end of a target issuance of EUR 2.5-3 billion. As noted however, neither this, nor the series of US disappointments which looks set to end March with 15 of 17 estimate misses is relevant. To wit: French consumer confidence soared to 87 on expectations of 82, as the easiest and lowest common denominator to boost risk assets is now abused everywhere, by UMich, by Germany and now by France. And why would people not be confident - stocks everywhere are higher despite fundamentals. After all if something fails, there is a central planner to fix it. Never forget - the taxpayer credit card has no limits. Net result - green across the board.
Treja Vu: Albert Edwards Expects New Lows On Bond Yields, Equity Rally Turning To Dust, "Just As It Did In 2011"Submitted by Tyler Durden on 03/21/2012 13:38 -0500
Nothing that we haven't said already many times, but always good to hear someone, in this case SocGen's Albert Edwards, observe what is patently obvious - namely that the start of every year now sends a consistently wrong signal that the economy is improving due to seasonal adjustments that no longer are applicable in the New Normal. This coupled with the liquidity boost that takes places just prior to each and every run up completely explains why 2012 is not only deja vu, as it continues to be a carbon copy replica of 2011 (when the market peaked in late April), but is really a treja vu, mimicking the action of 2010. After all it was none other than Reuters who in its puff spin piece tried to caution readers that we have been here before: "This time last year, the U.S. economy was adding jobs at a similar pace of more than 200,000 a month between February and April...Growth was nipped in the bud by the Arab uprising, which sent oil prices soaring. In 2010, prospects had looked even stronger. Between March and May, companies were adding a net 309,000 new jobs each month, and first-quarter growth came in at a 2.7 percent. The rebound proved temporary." And yet here we are, wondering if this time it's different. It isn't. Albert Edwards explains: 'With bond yields breaking out to the upside and the equity bull run continuing, investors are back to their same old hopeful habits. Many are thinking that if we have seen the all-time lows on bond yields investors will be forced into equities. We already can observe leading indicators rolling downwards in exactly the same way as they did in 2011." And here is why Edwards will once again be unpopular with the permabull, momentum chasing crowd: "Expect new lows on bond yields by Q3 and this equity rally to turn to dust – just as it did in 2011."
The Ministry of Propaganda and its media minions are announcing that "job growth is on a tear" and the "best growth since 2006." How about we look under the hood of the employment euphoria? Here is an example of the Ministry's work: Best U.S. employment growth in 12 years Almost all the data agree — labor market’s on a tear.
Over the past six months, the number of people who are employed has risen by 2.3 million — an average of 385,000 per month. That’s the best growth since early 2000, when the dot-com bubble was in full flower. Since August, the unemployment rate has fallen by 0.8 of a percentage points, to 8.3%. For adults over 25, the jobless rate has fallen to 7%.
In other words, people who generally work full time so they don't have to share a bunk in a flop house or live in their parents' basement are almost fully employed, as 'full employment" typically generates an unemployment rate of 5% just due to churn. Would we as a nation be better off dealing with the truth rather than believing fantasies that prop up the Status Quo and the Fed's dearly beloved measure of the economy, the stock market? How often does accepting illusion help us navigate real life? Short answer: never.
The phenomenon of market and confidence reflexivity is quite well known to the US, where not one but two indices, the UMichigan and Conference Board, provide upward boosts to the market when the market is going up, which in turn boosts confidence even more, and so on in a closed loop well used by agents of the central planning bureaus, especially during economic slides, when the "economy" is nothing but the Russell 2000. Europe is no stranger to this, and early this morning despite Germany's recent economic data coming out nothing short of atrocious, Germany announced its business managers are quite confident, and more so than expected whatever that means, after the IFO Business Survey printed at 109.6 on expectations of 108.3 - the highest reading since July 2011. As a reminder, 9 days ago "The German Industrial Output Slides More Than Greek, Despite Favorable ZEW" - in other words, the propaganda machine is out in full force, desperate to break the linkage between Europe's recessionary economy, and the market which has soared over the past 4 months for one reason only - trillions in central bank liquidity. Alas, the bill has now come in in the form of record Brent in British pounds, fresh all time highs in energy prices, and WTI which if Goldman is right, will hit $120 this summer and send Obama's reelection chances down the toilet. Anyway, here is Goldman with a note on the German confidence index which briefly sent the EURUSD up 80 pips to a high of 1.3340, showing just how volatile the fulcrum security now is with 148K net shorts, since retracing most of the gains as apparently not even the market is that stupid to believe the confidence is more important than hard data following the EU's announcement that the Eurozone will officially see a GDP decline of -0.3% in 2012 vs previous expectations of +0.5% rise.
A one-stop shop summary of bullish and bearish perspectives on this weeks news, data, and markets.
Busy day for headline chasers (which these days is everyone) with the ISM-leading Chicago PMI taking center stage at 9:45 am. At some point the economy will have to start 'confirming' the Bernanke Bear case or else one may get the impression that the Chairman was merely posturing with providing a perpetual LSAP open backstop to the Russell 2000. Also, the Case Shiller index which will report the 7th consecutive home price drop will likely not get a whole lot of attention.
Today's key economic data comes early in the day. The rest will be punctuated by ongoing rumors out of Europe and Iran.
Hope is soaring. But the toughest creature out there, the one no one has been able to subdue yet, has other plans.
Even as everyone is glued to webcasts out of Athens, there will be some secondary data in the US, first of which is the Case-Shiller index, as usual about 3 months delayed, and thus very much irrelevant, and second is the circular loop of an indicator that is the Conference Board (it's up when the market is up, it's up when the market is down but when the respondents are Wall Street CEOs, it's up when stocks plunge but when gas is down a cent, and in fact, it is never down). More importantly, the third to last POMO in QE2 will be completed at 11 am. Lastly, $35 billion in 5 year notes will be "sold" to Primary Dealers.
As Conference Board/UMichigan Find Confidence At 3 Year High, Rasmussen Says Investor Confidence Plunges To 2011 LowsSubmitted by Tyler Durden on 02/25/2011 11:42 -0500
Is it about the time that everyone agreed that all "consumer confidence" is politicized, circular, irrelevant, and just as credible as the next lie to come out of Larry Yun's mouth? While a few days Thomson Reuters/University of Michigan "found" that Consumer Confidence had surged to a According to Rasmussen, "investor confidence sinks to another 2011 low." Ok, enough. It is more than obvious to anyone with half a brain that "confidence" is nothing more than a gamed, goal seeked indicator, which is a function purely and entirely of the political agenda of the entity collecting the data. Another great example: while the Consumer Comfort index was managed by ABC until last week, it was scraping all time lows. Then the week it starts being managed by Bloomberg, and, lo and behold: "Consumer Comfort Increases to Highest Level Since 2008." A surge in confidence? Really? On gasoline passing $4? Luckily even Bloomberg admits the credibility of this latest propaganda index is suggest to say the least: "The four-point gain last week follows a five-point increase
in early January. The gauge dropped five points in the week
ended Feb. 6, the biggest setback since January 2010. Movements of that magnitude are unusual because the index
is based on a four-week average, Langer said. Nonetheless, the
gauge is mimicking the shifts seen in a 10-week span in mid-
1993, when the economy was also recovering from a recession." Ah, the good old Bloomberg "assumption taken as fact" Jedi mind trick. Last time we checked the only "recovery" was that in the debt ceiling, er, target, assuming its achievement of $100 trillion in under 10 years is considered "recovery." Was the "also recovery" driven by the biggest global deficit spend in the history of the world, and the first outright debt monetization episode since the advent of Weimar? Guess we won't read that in the Bloomberg piece.
Confused yet: a few days ago the Conference Board came out with a confidence number which was a massive miss, and which drove market higher on expectations of QE2. Today, to prove that nothing coming out of the government is even remotely credible anymore, the UMichigan Confidence index came at 68.2, beating expectations of 67.0, and compared to a previous read of 66.6. Once again, our condolences to all those who trade the candles in this joke passing for a market.
ABC Consumer Confidence Misses Estimates, Stays Near Record Lows, Divergence With Conference Board Is Now CompleteSubmitted by Tyler Durden on 01/26/2010 18:11 -0500
What a difference two presumably unmanipulated data series show. Earlier, the Conference Board showed that its index had hit the highest since September 2008, based on "improved economic conditions" (god bless them, and here we were thinking that 17.3% unemployment is indicative of just slight deterioration). However, after the close, ABC Consumer Comfort came out, and, lo and behold, demonstrates that another index of so-called consumer confidence in the current "economic improvement" is at an all time low. So seriously, who should we believe anymore? And is it time the Census bureau released an index that keeps track of lies, manipulation and discrepancies between reality and "economic index indicators?"