As previewed earlier today, January CPI data was historic in that, 6 years after Lehman, the US just reported its first negative headline CPI print, with overall inflation, or rather deflation, in January coming at -0.1%, in line with expectations, and down from the 0.8% in December. On a monthly basis, CPI tumbled by 0.7% from December, driven almost entirely by collapsing energy prices. Excluding the Great financial crisis, one has to go back a few years to find the last time the US posted annual headline deflation.... all the way back to August 1955, or just about the time Marty McFly was trying not to dance with his mother.
and more news moving the markets
Following a quiet overnight session in which the main event appears to be a statement by Chinese premier Li for more active fiscal policy, which has pushed the metals complex higher, although technically every other asset class as well, with US equity futures set to open in fresh record high territory, even as 10Y yields around the world continue to decline, attention today will fall on the CPI print due out shortly, because if consensus is correct, January will be the first month this decade when US inflation posts a negative print, mostly due to the delayed effect of sliding commodity prices. As Deutsche recaps, the most important number today is the headline CPI where the headline YoY rate is predicted to be negative by the market (-0.1%) for the first time since 2009. Over this period the YoY rate stayed negative for 8 months. However before this we hadn't seen a full year decline since August 1955. In other words, a few months before what may be the first US rate hike for a new generation of traders, the US is set to print its first annual deflation since Lehman, transitory or not.
Albert Edwards' On The Next Shoe To Drop: The Realization That Core Inflation In The US And Europe Are The SameSubmitted by Tyler Durden on 02/08/2015 21:14 -0400
"The next shoe to drop will be the realisation that the US recovery is stalling and outright deflation is as big a threat there as it is in the eurozone. Indeed my former esteemed colleagues Marchel Alexandrovich and David Owen pointed out to me that if US core CPI is measured in a similar way to the eurozone (i.e. ex shelter), then US core CPI inflation is already pari passu with the eurozone ? despite the former having enjoyed a much stronger economy!"
At 30 basis points yield, a short on this German Bund via the futures market is basically a call option on the utter destruction of this Massive Yield Chasing Strategy on behalf of financial institutions...
I have told you the US dollar was going up for months. Some mocked me. Others insulted me. So what? I tell you the dollar's bull market remains intact.
As we have reiterated very frequently over recent years, the biggest vulnerability in the post crisis environment was that central banks start to make policy errors, by taking activist and precipitous decisions. Thus following on from last year's error by Norges Bank (and noting that we would not call last week's SNB decision a mistake, despite the shockwaves that it caused), the Bank of Canada joins that policy error club.
"...with the large downward revision to its core CPI outlook, the bank is more or less acknowledging a much lower possibility of achieving the 2% price stability target by around FY2015. Yet, at the press conference following the MPM, Governor Kuroda said he still held the view that 2% could be achieved by around FY2015. Domestic investors have been skeptical of the BOJ’s target from the outset, and now foreign investors are also beginning to question the BOJ’s logic and communication with the market. We believe the mixed signals the BOJ is sending may well serve to further undermine confidence in the bank." - Goldman
Market Wrap: Futures Lower After BOJ Disappoints, ECB's Nowotny Warns "Not To Get Overexcited"; China SoarsSubmitted by Tyler Durden on 01/21/2015 07:55 -0400
Three days after Chinese stocks suffered their biggest plunge in 7 years, the bubble euphoria is back and laying ruin to the banks' best laid plans that this selloff will finally be the start of an RRR-cut, after China's habitual gamblers promptly forget the market crash that happened just 48 hours ago and once again went all-in, sending the Shanghai Composite soaring most since October 9, 2009. It wasn't just China that appears confused: so is the BOJ whose minutes disappointed markets which had been expecting at least a little additional monetary goosing from the Japanese central bank involving at least a cut of the rate on overnight excess reserves, sending both the USDJPY and US equity futures lower. Finally, in the easter egg department, with the much-anticipated ECB announcement just 24 hours away, none other than the ECB's Ewald Nowotny threw a glass of cold water in the faces of algos everywhere when he said that tomorrow's meeting will be interesting but one "shouldn’t get overexcited about it."
The US dollar closed higher against all the major currencies during the holiday shortened week. The lack of liquidity may have exaggerated the weakness of Swedish krona and Norwegian krone, the poorest performing major currencies. Both lost about 1.5% against the greenback.
The least weak currencies were in the dollar-bloc. The Canadian and New Zealand dollars were practically flat, and the Australian dollar slipped 0.2%. The euro and sterling slipped about 0.5%, while the yen shed 0.7% of its recent gains.
Chinese Stocks Soar To 4 Year High On Stimulus Hopes As Japan's Economy Implodes; US Futures ReboundSubmitted by Tyler Durden on 12/26/2014 08:08 -0400
One group of Federal workers that is definitely not taking the day off, is the trading desk located on the 9th floor of the New York Fed, responsible for such things as preserving the "fair" value of the bond and the stock market and avoiding any sharp downward moves. Because if there is one thing on the "national security" agenda that must be avoided at all costs, it is a drop in the S&P in today's trading session - after all now is when the official Santa rally begins and judging by the futures, which after a steep selloff in the last minute of trading on Wednesday have restored all their losses and then some, we may finally hit Goldman's year end target of 2100, for 2015.
1. Heightened uncertainty over the achievability of fiscal deficit reduction goals and containing debt
2. Economic growth policy uncertainties and challenges in ending deflation
3. Erosion of policy effectiveness and credibility could undermine debt affordability
While the biggest news of the day will certainly be China's rate cut (and the Dutch secret gold repatriation but more on the shortly), here is a list of all the other central-banking/planning events which have moved markets overnight, because in the new normal it no longer is about any news or fundamentals, it is all about the destruction of the value of money and the matched increase in nominal asset values.
Global Slowdown Confirmed By PMIs Missing From Japan To China To Europe; USDJPY Nears 119 Then SlidesSubmitted by Tyler Durden on 11/20/2014 08:00 -0400
The continuation of the two major themes witnessed over the past month continued overnight: i) the USDJPY rout accelerated, with the Yen running to within 2 pips of 119 against the dollar as Albert Edwards' revised USDJPY target of 145 now appears just a matter of weeks not months (even though subsequent newsflow halted today's currency decimation and the Yen has since risen 100 pips , and ii) the global economic slowdown was once again validated by global PMIs missing expectations from Japan to China (as noted earlier) and as of this morning, to Europe, where the Manufacturing, Services and Composite PMI all missed across the board, driven by a particular weakness in France (Mfg PMI down from 48.5 to 47.6, below the 48.8 expected), but mostly Germany, after Europe's growth dynamo, which disappointed everyone after yesterday's rebound in the Zew sentiment print, printed a PMI of only 50.0, down from 51.4 a month ago, down from 52.7 a year ago, and below the 51.5 expected. And just as bad, Europe's composite PMI just tumbled to 51.4, the lowest print in 16 months!