"Coins and bills are obsolete and only reduce the influence of central banks," German economist and sole Keynesian member of the German Council Of Economic Experts Peter Bofinger tells Spiegel, becoming the latest central planning proponent to suggest that a cashless society would solve the world's economic problems by allowing the government to control who spends what and when in a futile effort to control the business cycle.
Fed-created bubbles are inevitably going to implode, because they have no relation to economic reality whatsoever. And when they implode, millions of Americans are going to be financially wiped out. Just like David and Jackie Siegel, “America’s time-share king”, America just keeps on making the same mistakes over and over again - we simply can’t help ourselves. And in the end, we will all pay a great, great price for our utter foolishness.
While the US is waking up in anticipation of what is once again said to be the "most important nonfarm payrolls number" at least since the last most important such number, because anything 250,000 and above puts the June rate hike right back on the Fed calendar, while a collapse in this lagging indicator will be explained away with harsh rain showers in April, and send stocks soaring due to yet another delay in tightening expectations despite Yellen's outright warning of overvalued stocks, the UK has been up all night following a dramatic election, whose outcome has been largely the opposite of what the experts predicted, with Conservatives set to win an outright majority, resulting in embarrassment for Labor, the Liberal Democrats and the UKIP, both of which have already seen dramatic changes in their leadership, and moments ago both Nick Clegg and Nigel Farage announced they would stand down as party leaders.
In a quarter in which US GDP is set to decline consumer credit, according to the latest update from the Federal Reserve, increased by just over $45 billion. But how is it possible that with such a massive expansion in household credit there was no actual benefit to the underlying economy? Simple: 98% of the credit lent out in the first quarter, or $44.3 billion, went to student and car loans!
BOND SELLOFF DEEPENS; GERMAN 10-YR YIELD JUMPS 17 BPS TO 0.76%
SPANISH 10-YEAR BOND YIELD CLIMBS TO 2%; HIGHEST SINCE NOV. 24
ITALIAN 10-YEAR BOND YIELD CLIMBS ABOVE 2%; 1ST TIME THIS YEAR
10Y TREASURY YIELD CLIMBS 6BPS TO 2.31%, HIGHEST SINCE DEC. 8
U.K. 10-YR BOND YIELD CLIMBS 8 BPS TO 2.06%; MOST SINCE NOV. 24
JAPAN 10Y YIELD UP 7.5 BPS, SET FOR BIGGEST RISE SINCE MAY 2013
Quickly looking at the potential market moving events this week, US payrolls on Friday will be the clear focus. In terms of expectations, our US colleagues are expecting a +225k print which matches the current Bloomberg consensus, while they expect the unemployment rate to drop one-tenth to 5.4%. Elsewhere, Thursday’s UK Election will be closely followed while Greece will once again be front and center.
- Win or lose, Cameron's political career hangs by a thread (Reuters)
- Greece aims for deal with lenders, IMF hard on reforms: minister (Reuters)
- Greek Jobless Legacy Adds Danger for Tsipras as Funds Dry Up (BBG)
- U.S. Will Change Stance on Secret Phone Tracking (WSJ)
- China April HSBC PMI shows biggest drop in factory activity in a year (Reuters)
- Goldman Sachs in Talks to Sell Its Coal Mines (WSJ)
- Takeover Fuel Begins to Flow as S&P 500 Bull Run Makes History (BBG)
Futures Levitate Following Worst Chinese Mfg PMI In One Year, Brent At 2015 Highs; Bund Slide ContinuesSubmitted by Tyler Durden on 05/04/2015 06:45 -0400
The best news for stocks is twofold: volumes continue to be lethargic with both the UK (May Day bank holiday) and Japan closed until Thursday (Golden Week), while the bulk of the S&P500 has now exited the stock buyback quiet period. As such, ignore record equity outflows - all the matters is that corporate CFOs, flush with brand news bond issuance cash, will tell their favorite Wall Street trading desk to buy stocks at just the right inflection point sending the market surging just as shorts once again test the downtrend and the 50 DMA.
Over the past couple of years, there has been a growing chorus of individuals claiming that the financial markets have finally shaken the shackles of the secular bear market that began at the turn of the century. Bank of America is the latest to jump onto the "new secular bull market" bandwagon; but what they miss is that secular bull markets are not born of price, but rather of a set of fundamental metrics that foster sustained economic growth over long periods of time.
We simply don’t see any time in the future that would see Americans start spending again at a rate anywhere near what would be required for an economic recovery. However, that is by no means a generally accepted point of view in the financial press; and so these issues must be addressed time and again until people begin to understand, and quit making the wrong decisions for the wrong reasons. People have a right to know what’s truly happening to their lives, and their societies. And they’re not nearly getting enough of it through the ‘official’ press.
Futures Flat On Minutes Day; Chinese Bubble Spills Into Hong Kong; Biggest Energy M&A Deal In Over A DecadeSubmitted by Tyler Durden on 04/08/2015 07:00 -0400
While US equity futures are largely unchanged, if only ahead of the now daily pre-open market-wide ramp, things in Asia have continued on their bubbly flurry, where China's Shanghai Composite briefly rose above 4000 for the first time since 2008, but it was the surge in the Hong Kong stock market that showed the Chinese bubble is finally spilling over, in the form of a blistering rally on the Hang Seng which rose nearly 4% on immense volume which at 250 billion Hong Kong dollars ($32 billion) was three times the average daily volume over the past year and nearly 20% more than the previous record volume day in October 2007, at the height of the pre-financial crisis bubble.
Revolving Debt Crashes Most In Four Years, As Student, Car Loans Go Exponential; Bank Lending FreezesSubmitted by Tyler Durden on 04/07/2015 15:20 -0400
There was only bad news in the just released Fed consumer credit report for the month of February. First, the "good credit", the one that consumer should load up on when they feel comfortable about the future, i.e., credit card, or revolving debt, continued its recent plunge, and in February crashed by $3.7 billion, following January's $1 billion plunge. This was the worst month for revolving credit since December 2010 and explains perfectly why the consumer has literally gone into hibernation - it has nothing to do with the weather, and everything to do with the unwillingness to "charge" purchases, which in turn is a clear glimpse into how the US consumer sees their financial and economic future.
Yesterday it was only the US that got the full benefit of the market-wide stop hunt that sent the US market soaring on its biggest opening ramp in 2015 following the worst payroll data since 2013, because Europe was closed for Easter Monday. Which means today it was Europe's turn to celebrate atrocious US data (yes, yes, snow - because somehow tremendous January and February jobs data was not impacted by snow), and in the first European trading session of the week, equities have started off on the front-foot.