Consumer Credit

Fourth Turning: The Shadow Of Crisis Has Not Passed - Part 2

The dominoes are beginning to fall. The initial spark in 2008 has triggered a series of unyielding responses by those in power, but further emergencies and unintended consequences juxtapose, connect and accelerate a chain reaction that will become uncontainable once a tipping point is reached. The fabric of society is tearing at points of extreme vulnerability, with depression, violence and war on the foreseeable horizon. Mr. President, the shadow of crisis has not passed. The looming shadow of crisis grows ever larger and darker by the day as this Crisis enters the most dangerous phase, where the existing social order will be swept away in a torrent of carnage and ferocious struggle. We are not a chosen people. We are not immune from dire outcomes.

Consumer Credit Growth Misses: Revolving Credit Surges As Student, Car Loans Have Weakest Increase Since February 2012

Following a significant downward revision to November's data, December consumer credit growth printed a gain of $14.755 billion, missing expectations of $15 billion (for the 5th month) and hovering near one-year lows. The most notable aspect was the $5.77 billion surge in revolving credit (e.g. credit cards) as Americans extended and pretended into the holidays - the biggest rise since April.

Frontrunning: February 6

  • RadioShack files for bankruptcy; Sprint to take over some stores (Reuters)
  • Kansas To Issue Bonds and Invest Proceeds to Boost Pension Returns (WSJ)
  • Merkel to Make Last Push With Putin as Pessimism Prevails (BBG)
  • Islamic State in Syria seen under strain but far from collapse (Reuters)
  • Texas Swagger Fades Fast as Oil Town Squeezed Hard by OPEC (BBG)
  • SEC probes Blackberry options trading ahead of Reuters report about Samsung talks (Reuters)
  • Spanish Bonds Underperform Italy’s as Podemos Gains Popularity (BBG)
  • Steelworkers Union Rejects Offer From Refiners (WSJ)
  • Brazil January Inflation at Fastest Pace in Nearly 12 Years (BBG)

Futures Unchanged Ahead Of Payrolls

It has been a quiet overnight session, following yesterday's epic short-squeeze driven - the biggest since 2011 - breakout in the S&P500 back to green for the year, with European trading particularly subdued as the final session of the week awaits US nonfarm payroll data, expected at 230K, Goldman cutting its estimate from 250K to 210K three days ago, and with January NFPs having a particular tendency to disappoint Wall Street estimates on 9 of the past 10. Furthermore, none of those prior 10 occasions had a massive oil-patch CapEx crunch and  mass termination event: something which even the BLS will have to notice eventually. But more than the NFP number of the meaningless unemployment rate (as some 93 million Americans languish outside of the labor force), everyone will be watching the average hourly earnings, which last month tumbled -0.2% and are expected to rebound 0.3% in January.

Market Wrap: Futures Attempt Bounce On Sudden Rebound In Crude

The overnight session had been mostly quiet until minutes ago, when unexpectedly WTI, which had traded down as low as the mid $46 range following the weakest Chinese manufacturing data in two years, saw another bout of algo-driven buying momentum which pushed it sharply, if briefly, above $50, and was last trading about 2.6% higher on the day. In today's highly correlated market, this was likely catalyzed by a brief period of dollar weakness as well as the jump of EURCHF above 1.05, within the rumored corridor implemented by the Swiss National Bank, which apparently has not learned its lesson and is a glutton for a second punishment, after its hard Swissy cap was so dramatically breached, it hopes to repeat the experience with a softer one around 1.05. Expect to see even more FX brokers blowing up once the EURCHF 1.05 floor fails to hold next.

Presenting The 2015 "Shadow Of Crisis Has Passed" State Of The Union - Live Webcast & Full Speech

UPDATE: Full SOTU Speech released - "THE SHADOW OF CRISIS HAS PASSED"

By now it is well known that The State of The Union tonight will be about President Obama's Robin-Hood Agenda. Furthermore, it is entirely clear that his proposals have no chance of becoming law. As WaPo's Marc Thiessen notes, Obama is not delusional, his move is completely and transparently political... And just as Eric Cantor suggests will merely serve to inflame the GOP. From taxes to cyber security and from community college to housing... in 50-65 minutes, all will be clear...

The State Of The Union: What We Know So Far

"Why stand on formalities? Let's get the ball rolling right now," Mr. Obama said at a recent stop in Tennessee. In previous years, As Dow Jones reports, the content of the speech was a closely guarded secret, leaving reporters, politicians, lobbyists and interest groups scrambling for tidbits and gossip in the days and weeks leading up to the event. But this year, much of Mr. Obama's policy wish list and broad themes will be well-known when he walks onto the House floor next week. Here is what the president is widely expected to focus on in his address next week...

Credit Card Debt Tumbles Most In 1 Year As US Households Resume Deleveraging

Once upon a time the health of the US consumer was gauged by one simple thing: how much credit card debt did US households take on in any given month. Which makes sense: American consumers would not go out and spend on credit unless they felt strongly about their future job, income and overall wealth prospects. In simple terms, rising credit card debt was synonymous with confidence and prosperity. In recent years, however, this metric has quietly fallen out of favor with the punditry, for one simple reason: that reason is shown on the chart below, which very likely also shows where the S&P would trade if it weren't for $11 trillion in central bank liquidity injections.

Frontrunning: January 8

  • French policewoman killed in shoot-out, hunt deepens for militant killers (Reuters)
  • The Bold Charlie Hebdo Covers the Satirical Magazine Was Not Afraid to Run (BBG)
  • Evans Says Fed Shouldn’t Rush Rate Rise as Inflation Undershoots (BBG)
  • Oil holds above $51 as traders search for floor (Reuters)
  • Gross Helps Fuel New Fund With His Own Cash (WSJ)
  • ECB warns Greek funding access hinges on keeping bailout (Reuters)
  • Greece Jolts QE Juggernaut as ECB Gauges Deflation Risk (BBG)
  • Analysts Say There's No Telling How Low Oil Prices Could Go (BBG)
  • Scientists find antibiotic that kills bugs without resistance (Reuters)

Market Wrap: Evans' "Catastrophe" Comment Blasts Overnight Futures Into Overdrive, 10-Year Rises To 2%

After subdued trading in the overnight session until a little after 8pm Eastern, algos went into overdrive just around the time the Fed's 2015 voting member and uberdove Charlie Evans told reporters that "raising rates would be a catastrophe", hinting that the first rate hike would likely be - as usual - pushed back from market expectations of a mid-2015 liftoff cycle into 2016 or beyond (but don't blame the US, it is the "international situation's" fault), in the process punking the latest generation of Eurodollar traders yet again. Whatever the thinking, S&P futures soared on the comments and were higher by just under 20 points at last check even as Crude has failed to pick up and the 10Y is barely changed at 2.00%.

Analyzing The Secular Bull Market Thesis

Over the past couple of years there has been a rising chorus of individuals warming to the idea of a new secular bull market. This is not surprising given the seemingly unstoppable rise of asset prices since the financial crisis despite a litany of geopolitical and economic headwinds. But are the "ingredients" that spurred the previous two secular bull market periods in existence today?

Sayonara Global Economy

The surreal nature of this world as we enter 2015 feels like being trapped in a Fellini movie. The .1% party like it’s 1999, central bankers not only don’t take away the punch bowl – they spike it with 200% grain alcohol, the purveyors of propaganda in the mainstream media encourage the party to reach Caligula orgy levels, the captured political class and their government apparatchiks propagate manipulated and massaged economic data to convince the masses their standard of living isn’t really deteriorating, and the entire façade is supposedly validated by all-time highs in the stock market. It’s nothing but mass delusion perpetuated by the issuance of prodigious amounts of debt by central bankers around the globe. But now, the year of consequences may have finally arrived.

This Is For You Steve Liesman... Welcome To Economics

The key is to understand why real median household incomes continue to decline and then how to correct it.  It all comes back to financial policies that incentivize investors to avoid economy-boosting investments and toward financial investments that have no economic benefit.  The result is a narrowing of income distribution exasperating the down spiral, while inflating wealth to the already wealthy.  As long as these policies remain intact the American quality of life will continue to spiral downward while the wealth at the top continues to accelerate until one day when the top pops off and all that wealth goes abroad.  And that Mr. Liesman is what we call economics.

Russian Central Bank Releases 7 Measures It Will Take To Stabilize The Financial Sector

In its latest effort to counter financial instability - and show its commitment to maintaining order and support for the economy - Russia's Central Bank (CBR) has unveiled 7 new measures... Ranging from bank recaps to measures aimed at helping manage interest-rate and credit risks, the reaction in the Ruble is positive for now... as perhaps, taking a lesson from the US, The CBR removes Mark-to-Market accounting for various credit instruments.