Consumer Confidence

Futures Flat After News Greek Deal Distant As Ever, Dollar Surge Continues

It had been a painfully quiet session in Asia (where Chinese levitation continues with the Shanghai Composite up another 0.6% oblivious of yesterday's rout in the US, because as we explained for China it is now critical to blow the world's biggest stock bubble) and Europe, where the only notable news as that for the first time in months the ECB had not increase the Greek ELA, keeping it at €80.2 billion on conflicting reports that Greek deposit withdrawals had halted even as Kathimerini said another €300MM had been pulled just yesterday, suggesting the ECB has reached the end of its road when it comes to funding nearly two-thirds of what Greek deposits are left in local banks. But the punchline came moments ago when Bloomberg reported that "Greece will likely miss a deadline for a deal with creditors by the end of the week as the two sides have made little progress during talks in recent days."

Today's Economic Data Enough To Push Q2 GDP By Whopping 0.1% To 0.8%

... at least according to the Atlanta Fed. Based on the one GDP model which hasn't lost all credibility and which for the past 3 months has captured the attention to wannabe weathermen and other Wall Street strategists, today's bevy of stronger than expected data, everything from Durable Goods, to core CapEx, to New Home Sales, to Case Shiller, to Consumer Confidence, and even the Richmond Fed was sufficient to push Q2 GDP... by 0.1% to 0.8%.

Dallas Fed Crashes To Six Year Lows As Employment Collapses

Having missed for a record 5 months in a row, Dallas Fed Manufacturing Outlook collapsed further in May to -20.8 (against expectations of -12.4). Thisis the 5th drop in a row (only ever seen in a recession) and 6th monthly miss in a row (never seen before) as it appears Former Dallas Fed Fisher was talking crap once again when he said "net, low oil prices were good for Texas." Despite Consumer Confidence indicating, somehow, that Texans are the most confident in a year (up from 121 to 130 in May), business survey continues to point to notable weakness with employment collapsing, hours worked crashing, and production plunged. However, on a bright note, expectations for the future jumped from -5.9 to +4.9 - hope springs etermal eh?

GoldCore's picture

In an important interview with Reuters in 2012, John Butler suggested that if one country - he cited Russia - were to back its currency with gold it could cause a 20% collapse in the dollar in just 24 hours. In order to stabilise the currency and in an attempt to preserve the reserve currency status of the dollar, the U.S. would be forced against its will to back its currency with gold.

Futures In The Red On Europe Jitters Ahead Of Obligatory Low-Volume Levitation

While yesterday most markets were closed and unable to express their concerns at the very strong showing of "anti-austerity" parties in Spain's municipal election from Sunday, then today they have free reign to do just that, and as a result European stocks are broadly lower, alongside the EURUSD which dripped under 1.09 earlier today, with Spanish banks among the worst performers: Shares of Banco Sabadell, Bankia, Caixabank and Popular were down 1.8 to 2.3% earlier this morning, and while the stronger dollar was a gift to both the Nikkei and Europe in early trading, after opening in the green, Spain's IBEX has since slid into the red on concerns of what happens if the Greek anti-status quo contagion finally shifts to the Pyrenees.

With All Major Markets Closed For Holiday, Here Are The Major News

With US markets closed for the Memorial Day holiday, and some of the key European markets likewise shuttered for public holiday including the UK, Germany and Switzerland, it is difficult to find where one can observe or trade the weekend's newsflow, which is once again centered on developments in Europe, where on Sunday Spanish Prime Minister Mariano Rajoy’s People’s Party suffered its worst result in a municipal election in 24 years while Greece continues to threaten with default 5 some years after it should have officially pulled the plug.

Chinese Stock Bubble Frenzy Returns; US Futures Flat Ahead Of Today's Pre-Holiday Zero Volume Melt Up

The highlight of the overnight newsflow may have been the BOJ's preannounced statement that it is keeping its QE unchanged (which comes as no surprise after a few weeks ago the BOJ adimitted it would be unable to keep inflation "stable" at the 2% in the required timeframe), but the highlight of overnight markets was certainly China, where the Banzai Buyers have reemerged, leading to another whopping +2.8% session for the Shanghai Composite which has now risen to a fresh 7 years high.

The Fallacy Of Unequivocal Faith In The Fed's Babbling Bubble-Blowers

To preserve any idea that the US is not heading into recession, the FOMC is now wholly reliant on statistical processes within the BEA’s use of the Census Bureau’s updated ARIMA-X13 modeling system. It is amazing to see this policy body that once proclaimed, unequivocally and forcefully, that it could perform the monetary equivalent of sorcery and alchemy reduced to quivering about winter. The latest policy statement, a silly farce of its own accord, is, quite simply, an embarrassment.

 

Despite Weak Economic Data Overnight, Futures Slide On Rate Hike Concerns

The big news overnight was neither the Chinese manufacturing PMI miss nor the just as unpleasant (and important) German manufacturing and service PMI misses, but that speculation about a rate hike continues to grow louder despite the abysmal economic data lately, with the latest vote of support of a 25 bps rate increase coming from Goldman which overnight updated its "Fed staff model" and found surprisingly little slack in the economy suggesting that the recent push to blame reality for not complying with economist models (and hence the need for double seasonal adjustments) is gaining steam, and as we first suggested earlier this week, it may just happen that the Fed completely ignores recent data, and pushes on to tighten conditions, if only to rerun the great Trichet experiment of the summer of 2011 when the smallest of rate hikes resulted in a double dip recession.

Recession Check: Updating The Indicators

The largest problem with the data sets below is that they are all subject to large historical revisions. This is why the NBER is ALWAYS well after the fact in pronouncing the start and end of recessions in the U.S. economy. Given the ongoing interventions from the Federal Reserve and the current administration, it is likely that many of the statistics, and seasonal adjustment metrics, have been skewed in recent years. In the quarters ahead it is likely that we could see rather sharp adjustments to historical data which may suggest the economy has been far weaker than headline statistics have suggested.

Is The Dam Bursting?

It is a cornerstone of orthodox economics that recessions are not just emotion and pessimism but spring out of an exogenous “shock.” There is none to be found here in sharp contrast to 2008 which at least had a deep financial panic. However, the trajectory of the economy since 2012 has been seeded by a distinct lack of growth especially in wages and incomes – what economists have been taking as slow but steady growth was actually much more nefarious. We may find out that recession shock includes just generic and basic attrition; that “demand”, despite all the attention and “stimulus” given it, can only hold out for so long without any actual (as opposed to purely statistical) alleviation.

Riddle Me This: The Difference Between Headlines And Reality

What is extremely clear is that there is something amiss with the statistical headline employment and economic data. While there are indeed pockets of improvement, which should be expected following a recessionary contraction, there is a lack of widespread recovery. That sentiment is clearly reflected in every major poll of American's over the last year. What is important is that there is a clear disconnect between the financial markets, statistical economic headlines, and the reality of the vast majority of American consumers. So, riddle me this - what happens when that disconnect is eventually resolved?