Consumer Confidence

Frontrunning: February 23

  • Risk rally fades as stocks, oil slip back into the red (Reuters)
  • Syrian govt. accepts halt to 'combat operations' in line with U.S.-Russian plan (Reuters)
  • Earliest Chinese Data Signal Slowdown Hasn't Bottomed Out Yet (BBG)
  • The Trickle of U.S. Oil Exports Is Already Shifting Global Power (BBG)
  • Greek police remove migrants from Macedonian border as more land in Piraeus (Reuters)
  • Clinton, Sanders race takes on angrier tone after Nevada (Reuters)

Is The Short Squeeze Over? Global Rally Fizzles, Futures Lower

The biggest question on all traders' minds will be whether the bear market short squeeze that sent the S&P higher by 130 points in 6 days, is finally over - with most global market rolling over and with US equity futures unable to find their  solid early morning footing, it may finally be time to cash out of the bear market rally which so many predicted, and which GSBank yesterday may have top-ticked with perfection.

The Good, The Bad, & The Ugly

The OPEX game is back in full swing and brought back hope amongst signs of bullish capitulation everywhere.... but there is plenty of bad (and even ugly) to consider.

Consumer Confidence Crashes To 23-Year Low In Norway As Growth Grinds To A Halt

When last we checked in on Norway, we documented the country's currency conundrum which is keeping the krone from depreciating as much as the Norges Bank would probably like in the face of flagging economic growth. On Tuesday we get the latest data out of the country and sure enough, GDP growth has flatlined. A rate cut next month is now virtually assured. 

The 4 Key Themes From Q4 Conference Calls

  • Theme 1: US economy appears insulated from global weakness
  • Theme 2: Strong domestic consumer demand persists
  • Theme 3: Managements remain devoted to share repurchases
  • Theme 4: Outlook for China is positive despite recent turmoil

$7 Crude? Deutsche Bank Downgrades Oil 'Lower For A Lot Longer'

Oil prices around USD 30/bbl mean that an increasingly significant volume of future oil projects no longer make sense. Although Deutsche Bank does not expect US crude inventories to reach capacity, rising US inventories and high US crude imports may heighten downside pressures to push prices closer to marginal cash costs of USD 7-17/bbl for US tight oil, with few plausible scenarios for a strong price recovery in the short term,

Futures Bounce Fades As Oil Treads Water, Italian Banks Turmoil, Chinese Stocks Won't Stop Falling

Following the Fed's disappointing "dovish, but not dovish enough" statement which effectively admitted Yellen had committed policy error by hiking just as the US economy "was slowing down" which in turn lowered the odds of a March rate hike to just 18%, it was up to oil to pick up the correlation torch, and so it did, rising in an otherwise mixed session which has seen European stocks slide on continued weakness surrounding Italian banks, many of which have been halted limit down, while Asia was treading water following news of the resignation of Japan’s "Abenomics" minister Akira Amari to over a graft scandal, and yet another day of Chinese stock dropping.

Is China About To Drop A Devaluation Bomb?

In concert with denial and obfuscation, pride and hubris may be clouding the image the Chinese have of themselves and their economy. What they are trying very hard NOT to communicate is how much pain their Ponzi debt burden has put them in. It’s not even fully clear to what extent Xi himself is aware of this, but he knows at least enough to keep his mouth shut on the topic. It’s quite possible that some of his top aides dare not reveal the real tally to their boss for fear of their jobs and heads. Beijing might solve some of these problems by devaluing the yuan by 30%, or even 50%, but it would invite a large amount of other problems in the door if it did. Like a full-blown currency war. Still, it’s just a matter of time till Xi and Li either do it voluntarily or are forced to by ‘the market’.

Futures Slide On Apple Disappointment, Oil Slumps Ahead Of Fed Decision

"Nobody is really sure where we go from here, and nobody is brave enough to make the call,” Peter Dixon, Commerzbank AG’s global equities economist in London told Bloomberg. “Corporate earnings season won’t provide much of a support - markets may find a floor if the Fed is extremely dovish tonight. At least investors will have time to think and reassess valuations."

Consumer Confidence Surges & Plunges

Everything is awesome... or terrible - depending on when you were asked. The Conference Board's consumer confidence surged to its highest since October 2015 at 98.1 (beating expectations of 96.5). However, Gallup shows economic confidence crashing back from a post-State of the Union bounce to its lowest since November 2015. Take your pick...

Key Events In The Coming Week: Fed, BOJ And More

Following a rerun of September 2015, when Draghi sent market expectations about ECB action sky-high only to massively disappoint in December (we will have to wait until March to see if it is deja vu all over again) last week, this week is just as big for central bank jawboning with the FOMC (Wednesday) and the BoJ meeting on Friday, with hopes that they will at least hint of more easing if not actually do much.

Exposing The Fiction Of Mainstream Macroeconomics (In 9 Simple Questions)

The game is simple: we know that macroeconomics is a fiction from top to bottom, the challenge is to expose it as such. Here are some apparently innocent questions to ask of economists, journalists, financial commentators and central bankers, which are designed to expose the contradictions in their economic beliefs. A pretence of economic ignorance by the questioner is best, because it is most disarming.