As noted earlier, after last week's snoozefest, this week starts off with a bang when the IMF announces in a few hours it will accept the Chinese Yuan in the pantheon of world reserve currencies alongside the USD, EUR, GBP and JPY the only question being what the alotted weighing of the currency will be. Things then progress to tomorrow's global PMI numbers, Yellen speeches on the economy to the Economic Club of Washington and Congress (Weds/Thurs), the eagerly anticipated ECB meeting on Thursday and finally Friday's OPEC meeting and US payroll print - the last before the FOMC in 2 weeks time.
Dear Mr. President, your country faces a stagnating economy... The truth is it is too late for our politicians to act, because the speculative peak that precedes the crisis is already upon us.
Evidently, voters are in a very bad mood just about everywhere. Unfortunately, they are bereft of good choices in most places. Usually one essentially gets to exchange one bunch of psychopathic looters for another – so it is like jumping from the frying pan into the fire. Very often, things will simply go from bad to worse, as the underlying basic problems are usually misdiagnosed, resp. there is no-one willing to actually tackle them. Investors should pay very close attention to this trend...When the performance of financial markets diverges from underlying social mood trends, it is usually time to be very careful.
In the aftermath of the Volkswagen emissions manipulation scandal, things for the giant German car maker appear to be going from bad to worse with every passing week.
If there was any confusion where all those soaring new car sales are coming from, we now have the definitive answer: moments ago the latest consumer credit data for September was released, and surging by $28.9 billion - a 4.9% jump Y/Y - not only did this smash expectations of a "modest" $18 billion rise, this was the biggest monthly increase ever!
As DB so well-puts it, "Welcome to random number generator day also known as US payrolls." Consensus expects 185k jobs to have been added in October but it’s fair to say that the whisper number has edged up this week with slightly firmer US data. It is also fair to say that even if one knew the number beforehand, it would be impossible to know how the market will react.
Last week it was all about central banks, when both the ECB and the PBOC unleashed a massive market rally. This week it will be about even more central banks, this time the Fed, which won't hike, and the BOJ, which may but most likely won't as the Fed and the ECB already did its work for it, sending the Yen tumbling with their actions and/or jawboning.
Paul Volcker announced his intention to squeeze inflation out of the system soon after he became Fed chairman. Too bad he didn’t save a better system. Not many men can resist the appeal of free money. Americans proved they were no better at it than others. Falling interest rates and the paper dollar gave them a way to impoverish themselves – by spending money they hadn’t earned. They took the opportunity offered to them. They borrowed and spent... and drove the entire world forward at a furious pace. But now that stage is over.
Fed Quietly Revises Total US Debt From 330% To 350% Of GDP, After "Discovering" Another $2.7 Trillion In DebtSubmitted by Tyler Durden on 10/11/2015 19:26 -0500
The Fed has managed to kill two birds with one stone: it no longer provides a simple, one-stop-shop way to reconcile the total US credit stock, and it quietly boosted total US consolidated credit by $2.7 trillion to $62.1 trillion as of June 30, 2015.
As the following chart shows, after langushing between $70 and $800 billion in the second half of the last decade, since Q2 2010 US auto loans have been on an absolute tear, and have increased by over 40% in the past five years alone, to just shy of $1 trillion as of June 30!
The big overnight story was certainly the BOJ's announcement at 11pm Eastern whether or not the Japanese central bank would boost QE. This is how we previewed it: "now all eyes to the BOJ when tonight around 11pm Eastern, Japan's central bank is expected do and say precisely... nothing." Sure enough, nothing is precisely what the BOJ delivered, leading to a big, if brief tumble in the USDJPY suggesting many were expecting at least a little tip from the BOJ.
What the pundits attempt to do is have you focus on the forest from an inch away. While the endless optimism of the talking-heads, most recently that the selloff in developed equity markets has gone too far, each offering up various 'narrative' reasons to support their claim; simply put, they are full of tragic flaws. Allow us to color-code this for all those market "pros" and PhD "economists" who haven't been able to follow the premise over the past several months...
- Global stocks rally as investors scent fresh stimulus (Reuters)
- Japan's Nikkei 225 Rises 7.7% for Biggest Gain Since October 2008 (BBG)
- China's Stocks Advance for Second Day Amid Stimulus Speculation (BBG)
- Abe Pledges Corporate Tax Cut as Investments Slump (BBG)
- U.S. to shift 50 staff to boost office handling Clinton emails (Reuters)
- Chinese Premier Li Keqiang Says China Doesn't Want a Currency War (BBG)
- One Thing China Got Right (BBG)
Global Risk-On Euphoria: Japan's Nikkei Soars 7.7%, Biggest One Day Move In Seven Years; Futures SurgeSubmitted by Tyler Durden on 09/09/2015 05:53 -0500
And to think all it took was Gartman going short of stocks in 25% correction terms yesterday...