While equities are credit closed almost unch from last Friday but at their lows/wides of the week, there was plenty under the surface that clearly signals derisking is rife and discrimination active. HY dispersion and CMBX tranches among others point to some cyclical turning points that do not auger well.
Brief and comprehensive summary of the week's key bullish and bearish events
Today's Economic Docket: Deteriorating Case-Shiller, Confidence And Richmond Fed, $35 Billion In 2 Year BondsSubmitted by Tyler Durden on 04/26/2011 07:21 -0500
The trend in house prices appears to be worsening. We expect an acceleration in the decline in the Case-Shiller measure for February. Modest POMO closing at 11am will do little to offset the $35 billion in 2 Year notes to be auctioned off at 1 pm.
The most concise summary of the key positive and negative events over the past week.
Putting aside the S&P threat to downgrade U.S. debt for the moment, consumer and business confidence is weakening, which would be consistent with other data we are seeing about such diverse things as retail sales and industrial production. This is consistent with our forecast for stagflation.
For anyone wondering why a hypothetical situation in which Bill Dudley met with former colleague Jan Hatzius and told him "ok, we bailed you guys out, now it's your time to kill oil" seems all too possible in our day and age, the latest news on the economy from Gallup should make it all too clear. As of April 11, the polling agency's Economic Confidence Index has dropped to -37: the lowest reading since August of 2010. It appears that disgust with $4+ gas (Poverty Effect for all) is more than offsetting Brian Sack's attempt reclaim the Russell 36,000 (Wealth Effect for some). Gallup's conclusion is absolutely spot on: 'Global events, continued political battles about the budget in the
nation's capital, and a weak, if modestly improving job market add to
consumer uncertainties. As a result, it is not surprising that consumer confidence plummets even as Wall Street continues to do well. However,
if consumers continue to lack confidence and spending doesn't increase,
it is hard to see how the U.S. economy can continue its modest
improvement. In turn, it would seem Wall Street and Main Street will
have to align at some point going forward. Either Wall Street will prove
right and economic conditions on Main Street will improve or the
reverse will prove to be the case."
Some more thoughts on companies fleeing defined benefit plans...
Another warning about Canada's "demographic time bomb". But I'm more concerned about bombs waiting to explode in the near-term...
Your one stop summary of the week's key bullish and bearish developments.
While everyone knows that the CPI in the US is manipulated beyond repair (a topic far too broad to be discussed here suffice to say that as disclosed previously true inflation in the US is currently runrating at over 8%), inflation as actually represented by US consumers and reported by Zero Hedge earlier, in the form of the 1 year inflation expectation index of the Conference Board lack of confidence index, is near all time highs. So if one takes this data series and adds to it the narrow unemployment definition (U3) one would get an adjusted Misery Index for US citizens (using inflation expectations instead of manipulated CPI). As the chart below shows, the Misery Index, which is merely inflation plus unemployment, constructed as such, would now be at an all time high. Hardly in keeping with Bernanke's wealth effect prerogative, but surely in line with record food stamp usage reported month after month. That said, the silver lining to that particular mushroom cloud is our confidence that as the bulk of Americans live in record "misery", they will be comforted to know that their 20 shares of NFLX are trading at a four digit EPS multiple. And the other good news is that we have the Brits beat again: whereas the US is at a record, the UK is merely at a 20 year high, proving once again that only the US never does anything half-assed.
Markets worldwide are negative this morning on the news of a possible increase in European bank capital levels while U.S. futures are still in positive territory. The U.S. Treasury Dept. has announced that it will publically grade mortgage providers on response quality to homeowners that need payment reductions. Italian bank equities dropped on UBI Banca announcing a €1B capital increase in order to boost its core Tier 1 capital. As a result of the announcement, speculation that other banks would follow suit resulted in a selloff in the equity markets. Increases in commodity prices sent New Zealand’s February trade balance surging to +NZD194MM v -NZD3MM prior, making it the country’s first trade surplus in eight months. Japan’s Vice Finance Minister said yesterday that the government may have to abandon a planned five percentage point cut in corporate taxes to help pay for earthquake damage. PM Kan followed that up today signaling that multiple government spending plans may be needed to pay for disaster rebuilding.
The decline in house prices may have slowed in January, but consumer confidence probably dropped in March. Daily POMO viagra today is in midget dose, with just $1.5 billion in monetization.
Bloomberg Consumer Comfort Index Plunges To Seven Month Low As Wealth Effect Trounced By Poverty EffectSubmitted by Tyler Durden on 03/24/2011 09:05 -0500
After staging a brief recovery in the last few weeks following the undeterred pursuit of the successful completion of Bernanke's wealth effect crusade (Russell at 36,000 or bust), consumer confidence has once again realized that while the rich are getting richer, it means jack for everyone else. As a result the Consumer Comfort index, which recently was moved from ABC to Bloomberg, has just plunged to a 7 month low, indicating comparable slides are coming in the other two reflexive market indicators, the UMich and the CONference Board. "Consumer confidence in the U.S. fell last week to the lowest level since August as more Americans became despondent over the economy. The Bloomberg Consumer Comfort Index dropped to minus 48.9 in the period to March 20 from minus 48.5 the prior week. The measure of the current state of the economy slumped to a 15-month low." And contrary to Central Planning assumptions that Americans are mostly idiots, the recent surge in gasoline prices to near 3 year highs was not missed: "“Given the rise in fuel and food costs, households are clearly indicating frustration over the need to reduce discretionary spending to meet demand for basic necessities,” said Joseph Brusuelas, a senior economist at Bloomberg LP in New York. “Even better-off households are feeling the pinch of rising prices, primarily at the pump.”"
A concise summary of the past week's key bullish and bearish events.
It was just earlier this week that a bunch of irrelevant confidence trackers said that US consumer confidence had hit 3 year highs. Oddly enough, ground data not only does not confirm this data, but says it is merely more baseless propaganda. According to Gallup, which actually knows how to poll, "Americans have become much less confident in the U.S. economy over the
past two weeks, with Gallup's Economic Confidence Index falling from -18
to -30 during that span. The -18 Index score from two weeks ago was the
most positive Gallup had measured in the last three years." And as we suspected when we reported the latest confidence data "These results ... indicate the Thomson Reuters/University of Michigan Index of
Consumer Sentiment, released Friday but based mostly on interviewing
from early and mid-February, was essentially out of date when it was
released. The Index of Consumer Sentiment showed consumer confidence to
be the highest it has been since January 2008, similar to what Gallup
showed two weeks ago. But Gallup's latest weekly update suggests
consumer confidence has fallen back to where it was in early December." Luckily bad news no longer matters, because if it did Gallup's forecast would guarantee QE3,4, and so forth: "The short-term prospects for a turnaround in consumer confidence do not appear great, with gas prices likely to continue to rise, with state and federal governments facing increasingly difficult budget situations, and unemployment remaining high."