Consumer Confidence

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Frontrunning: May 16





  • Facebook's selling shareholders can't wait to get out of company, increase offering by 25% (Bloomberg)
  • Boehner Draws Line in Sand on Debt (WSJ)
  • Romney Attacks Obama Over Recovery Citing U.S. Debt Load (Bloomberg)
  • BHP chairman says commodity markets to cool further (Reuters)
  • Merkel’s First Hollande Meeting Yields Growth Signal for Greece (Bloomberg)
  • Greek President Told Banks Anxious as Deposits Pulled (Bloomberg)
  • EU to push for binding investor pay votes (FT)
  • Martin Wolf: Era of a diminished superpower (FT)
  • China’s Hong Kong Home-Buying Influx Wanes, Midland Says (Bloomberg)
  • U.N. and Iran agree to keep talking on nuclear  (Reuters)
  • US nears deal to reopen Afghan supply route (FT)
 
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Daily US Opening News And Market Re-Cap: May 15





European bourses are trading in modest positive territory ahead of the US open with early trade seeing moves higher across equities as Germany printed an expectation-beating 0.5% growth in their flash Q1 GDP. Elsewhere, Eurozone growth surprised to the upside somewhat, coming in flat against the expected contraction of 0.2%. However, as time passed, Greece garnered the focus of markets once more as they face a EUR 435mln foreign-law bond redemption today. Government source comments have somewhat reassured markets that the payment will be made, but participants await official confirmation. Further assisting the moves off the highs was a lower-than expected ZEW survey from Germany, with economists noting that the French and German elections have knocked confidence in the country over the past month.

 
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New Level Of Stock Market Quote Insanity





We knew something was different about today. The following graphic neatly captures it. It shows the 15 minute average percentage of quotes considered excessive each minute (over 500 quotes per second per stock) between January 2010 and 11-May-2012 (plotted as thick red line). Note how this line was persistently high the entire day relative to trading days in the past. This probably explains the crazy high quote rates and prices shown in the charts below.

 
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Frontrunning: May 11





  • China Industrial Output Growth Slows Sharply In April (WSJ)
  • Indian industrial output shrinks unexpectedly (AFP)
  • China’s Inflation Moderates, Adding Room for Easing (Bloomberg)... a nickel for every "imminent RRR-cut" prediction
  • Drew Built 30-Year JPMorgan Career Embracing Risk (Bloomberg)
  • Spain Offered Time to Curb Deficit (FT)
  • France Entrepreneurs Flee From Hollande Wealth Rejection (BBG)
  • Venizelos Eyes Unity Deal After Agreement With Democratic Left (Ekathimerini)
  • Berlin Reaches Out to the Periphery (FT)
  • Bernanke Speaks About Risks From End of Pro-Growth Plans (Bloomberg)
 
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Guest Post: 3 Likely Triggers Of The Next Recession





sta-eoci-recessionindicator-050212There is really no argument whether there will be a recession in our future — the only question is the timing and cause of it. The latter point is the most important. Recessions do not just happen — they need a push. In 2011 the economy was just a breath away from a recession due to the dual impact of the Japanese earthquake and tsunami and the European debt crisis. Had it not been for the combined efforts of the Fed through "Operation Twist" and the Long Term Refinancing Operations via the ECB, a drop in oil prices and a plunge in utility costs due to the warmest winter in 65 years, it is entirely likely that that we may have already been discussing a "recession." The ECRI launched a debate that was literally heard around the world with their recessionary call in 2011. The weight of evidence as shown by our composite economic output indicator index shows that the ECRI call was most likely correct. However, the restart of manufacturing, primarily automotive, after the crisis in Japan combined with an effective $90 billion tax credit due to lower oil and utility costs, turned the previously slowing growth rate of the economy around over the last couple of quarters. Sustainability is becoming the question now as weather patterns return to a more normal cycle and the effects of the lower energy costs began to dissipate. In a more normal post recessionary recovery the third year should be closer to a 6-8% economic growth rate versus 2%. While 2% growth is much better than zero — the current sub-par pace of growth leaves the economy standing on the edge of the pool with very little stability to offset any unexpected "push" into the cold waters of recession. The problem is identifying what that "push" could likely be.

 
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Goldman Slashes April NFP To 125,000, Concerned By "FOMC’s Apparent Reluctance To Deliver"





The good days are over, at least according to Goldman's Jan Hatzius. Now that "Cash For Coolers", aka April in February or the record hot winter, has ended, aka pulling summer demand 3-6 months forward, and payback is coming with a bang, starting with what Goldman believes will be a 125,000 NFP print in April, just barely higher than the disastrous March 120,000 NFP print which launched a thousand NEW QE rumors. But before you pray for a truly horrible number which will surely price in the cremation of the USD once CTRL+P types in the launch codes, be careful: from Hatzius - "Despite the weaker numbers, we have on net become more, not less, worried about the risks to our forecast of another round of monetary easing at the June 19-20 FOMC meeting. It is still our forecast, but it depends on our expectation of a meaningful amount of weakness in the economic indicators over the next 6-8 weeks. In other words, our sense of the Fed’s reaction function to economic growth has become more hawkish than it looked after the January 25 FOMC press conference, when Chairman Bernanke saw a “very strong case” for additional accommodation under the FOMC’s forecasts. This shift is a headwind from the perspective of the risk asset markets....So the case for a successor program to Operation Twist still looks solid to us, and the FOMC’s apparent reluctance to deliver it is a concern."

 
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UMich Confidence Beats But Current Conditions Drop Most In 8 Months





The University of Michigan Consumer Confidence headline data beat expectations and rose to its highest level since February 2011. However, the somewhat surprising drop in 1-year inflation expectations (to four-month-lows) and drop in Current Economic Conditions index to four-month-lows that underlies less exuberance. Perhaps it is the fact that this current economic conditions index dropped by its largest amount in eight months that is fading equities.

 
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Frontrunning: April 27





  • Hollande Says Germany Can’t Make Europe’s Decisions Alone (BBG)
  • Monti Hits at Eurozone Austerity Push (FT)
  • Firm that made loans to Chesapeake CEO defends them (Reuters)
  • Bo Xilai's Son Doesn't Drive a Ferrari. He drives a Porsche (WSJ)
  • Geithner Urges China to Loosen Hold on Finance System (BBG)
  • and yet... Son of Bo Xilai Says Father’s Ouster ‘Destroyed My Life’ (BBG)
  • U.S. growth slows as inventory accumulation wanes (Reuters)
  • S&P 500 Dividend Payers Climb to Highest in 12 Years (BBG)
  • Lacker Sees Fed May Need to Raise Rates in Mid-2013 (BBG)
  • Ireland Passes Latest Bailout Review (WSJ)
 
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Frontrunning: April 26





  • Fed Holds Rates Steady, But Outlooks Shift (Hilsenrath)
  • Has Obama Stacked the Fed? Not Really (Hilsenrath)
  • High Court Skeptical of Obama’s Use of Power as Campaign Starts (Bloomberg)
  • Europe Seen Adding Growth Terms to Budget Rules as Focus Shifts (Bloomberg)
  • China Reaches Out to Its Adversaries Over Rare Earths (WSJ)
  • Iran Says It May Halt Nuclear Program Over Sanctions (Bloomberg)
  • Europe Shifts Crisis Focus to Growth as Merkel Backs Draghi Call (Bloomberg)
  • Merkel Wants Rules for Raw Material Derivative Trade (Reuters)
  • Evercore Profit Falls 62% as Investment Banking Expenses Rise (Bloomberg)
 
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Economic Data Dump Round Up





Quite a data dump took place at 10 am. Here are the highlights:

 
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