Consumer Confidence

Traveling Circus

After Wednesday’s policy statements by the Fed and Bank of Japan, a harsh light is being shined on the incredible nature of their communications. It would be wise in the current environment to structure investment portfolios with a pro-volatility bias.

The Fed's Missed Window & Failed Realizations

Unwittingly, the Fed has now become co-dependent on the markets. If they move to tighten monetary policy, the market sells-off impacting consumer confidence and pushes economic growth rates lower. With economic growth already running below 2%, there is very little leeway for the Fed to make a policy error at this juncture. Therefore, the Fed remains trapped between keeping the financial markets happy and trying to resolve their monetary dilemma. The problem is that eventually something has to give and it will likely not be the outcome the Fed continues to hope for.

Key Events In The Coming Central Bank-Dominated Week

Central banks will take center stage this week, with the Boj and Fed within hours of each other, then also the RBNZ and Norges all delivering policy decisions. Of the four however, the BoJ will likely steal the spotlight, especially as we expect no changes in policy from the other three.

Global Stocks, US Futures Rebound As Oil Rises, Dollar Drops

Stocks across the board, and US equity futures are broadly in the green this morning as markets shrug off the terror-related events in the NYC area over the weekend.  There wasn’t a single positive “reason” for the green price action but fears about the bond “tantrum” appear to be fading while a stronger dollar helped push oil and the commodity complex higher.

Time To Get Real, Part 2: "We Need Their Drugs"

On the current path, the world is experiencing the largest artificial asset allocation in modern history, one that is driven by a misguided interest rate regime that has lost its efficacy and is producing more harm than good. Yet the fear of withdrawal pain is keeping central bankers from doing the inevitable: Quit. The response is predictable: "I need the drugs!"

Why One Hedge Fund Is Once Again Preparing For The End Of The Euro

"The time for treating the EUR-peg as a taboo may soon be past us, and an open discussion become the dominant narrative, in pursuit of a long-term durable solution to economic stagnation, in an attempt to save the European Union, so to orderly drive the process as opposed to end up being overwhelmed by the trending course of events."

Frontrunning: September 9

  • German jitters weigh on stocks, ECB doubts lift yields (Reuters)
  • Chinese Billionaire Linked to Giant Aluminum Stockpile in Mexican Desert (WSJ)
  • Monte dei Paschi CEO to be replaced as cash call looms (Reuters)
  • German exports plummet in July, hit trade surplus (MW)
  • North Korea conducts fifth and largest nuclear test (Reuters)
  • Hedge Fund and Cybersecurity Firm Team Up to Short-Sell Device Maker (NYT)

Stock Market Bubble Will Pop, Social Mood Will Get Extremely Ugly

Buying equities will put additional pressure on corporate CEOs to cut expenses and to postpone investments, fostering even greater Main Street resentment toward the financial elite. Consumer confidence won’t rise as consumption and economic growth stagnate. Having so clearly sided with owners of capital, rather than the employees of capital, global central banks are likely to become an easy target for populist ire.

Black American Consumer Confidence Just Crashed Most In 15 Years

While consumer comfort among black Americans is more volatile than among white Americans, Bloomberg's confidence survey points to a massive collapse in comfort for black Americans last week (from an exuberant 47.9 to a dismal 37.7). This is the biggest percentage drop since Obama's Syria "red line" in Aug 2012 and biggest absolute drop since Feb 2001.

"All Eyes On Central Banks" In September, But "No Reason To Smile"

September will be quite a busy month for investors since there are around 30 major central banks meetings scheduled. Since the Bank of England’s last policy announcement, the total monthly amount in global official quantitative easing has reached almost $200 billion, which corresponds, for the purpose of comparison, to Portugal’s annual GDP in 2015. Long-rumoured and oft-discussed, QE infinity is now a reality.

Frontrunning: August 31

  • Treasuries Extend Drop in August on Fed Outlook as Dollar Gains (BBG)
  • Oil slips on dollar strength, still set for monthly gain (Reuters)
  • Trump to make dramatic trip to Mexico before immigration speech (Reuters)
  • Rep. Debbie Wasserman Schultz Beats Back Florida Primary Challenge (WSJ)
  • Ban cash because... SWIFT discloses more cyber thefts, pressures banks on security (Reuters)