Not even this morning's mandatory European open ramp has been able to push US equity futures higher, and as a result moments ago the E-mini hit session lows on rising concerns about Brexit as talks drag on in Brussles, but mostly as a result of overnight confusion about China's loan explosion and whether the PBOC has lost control over its maniacally-lending banks.
No society wants to admit economic failure or economic sabotage, and this is why the con-game is able to continue in the face of so much concrete truth. Ultimately, the market trends and economic trends will flow into the negative. In the meantime, expect massive market rallies, rallies which will then disintegrate in a matter of days. And, whatever happens, never take what mainstream economists say very seriously. They have failed the public for long enough.
Biggest Short Squeeze In 7 Years Continues After Bullard Hints At More QE, OECD Cuts Global ForecastsSubmitted by Tyler Durden on 02/18/2016 08:00 -0400
Just when traders thought that the biggest and most violent 3-day short squeeze in 7 years was about to end a squeeze that has resulted in 3 consecutve 1%+ sessions for the S&P for the first time since October 2011, overnight we got one of the Fed's biggest faux-hakws, St. Louis Fed's Jim Bullard, who said that it would be "unwise" to continue hiking rates at this moment, and hinted that "if needed", the most natural option for the Fed going forward would be to do further Q.E.
Another month and another massive deflationary print for Chinese Producer Prices. Year-over-year, PPI dropped 5.3% ('better' than the 5.3% drop expected and the 5.9% plunge last month) making this the 47th month in a row of deflation with mining's collapse picking up again to -19.8% YoY. On th emore worrisome side, CPI rose 1.8% YoY, below expectations of +1.9% but still the hottest consumer price rise since August (and this was amid the greatest credit binge in history) driven by the biggest jump in food prices since 2013.
It has been a morning session of two halves. In Asia, the mood was somber, and stocks fell with the Shanghai Composite (+1.1%) outperforming on another late session binge-fest by the National Team. The European session on the other hand surged higher and did not look back when the USDJPY proceeded to soar 100 pips from overnight lows, and push the Stoxx 600 +1.7% and US equity futures up with it, with the ES trading above 1900 as of this posting, adding to the best 2-day rally in the S&P in five months.
If China's new debt in January were a country, it would be the world's 27th-biggest economy.
One day after markets saw a violent return of optimism, which sent stocks around the globe and US equity futures soaring (the US was closed for President's Day) driven by terrible Japanese and Chinese economic data which in turn hinted at more central bank easing, animal spirits have cooled off despite some truly unprecedented Chinese credit numbers.
Finally, China’s Alan Greenspan, Mr. Zhou Xiaochuan speaks out in an interview with Caixin Magzine. The market has been waiting for his comment on Yuan since the RMB exchange rate reform in Aug 2015. However, he has been hiding and did not “give a clear message” as asked by IMF chief Lagarde. Just before the lunar new year holiday, even the Chinese local media started to ask him to show up, which is really unusual in China. And last Friday, Caixin published its 12000 words interview with Mr. Zhou Xiaochuan. This is the most important interview for China’s economy and Yuan in 2016.
Fundamentally, Credit is unstable. It is self-reinforcing and prone to excess. Credit Bubbles foment destabilizing price distortions, economic maladjustment, wealth redistribution and financial and economic vulnerability. 'Activist' government intervention and manipulation have pushed protracted Bubbles to the point of precarious systemic fragility.
"The world has fundamentally shifted over the last decade, especially since we’ve emerged from the Great Recession... But the professional class has been very slow to understand what is going on, not just quantitatively but qualitatively in a new generational configuration that I call the Fourth Turning. They don’t accept the new normal. They keep insisting, just two or three years out there on the horizon, that the old normal will return – in GDP growth, in housing starts, in global trade. But it doesn’t return."
Abenomics has failed. That's just all there is to it. We'll now sit back and wait for the day when Abe and Kuroda finally take a long bow and fall (figuratively speaking we hope) on their swords.
With China celebrating the Lunar New Year and offline until next weekend, and with the US in the usual post-payrolls macro newsflow lull, the markets will have more than enough time to stew in the latest source of contagion fears, namely Europe, the same Europe which until recently was fixed but is broken all over again.
Everything went from bad to worse once Europe opened, and things started going "bump in the morning" across the European banking sector, where not only has it been more of the same with CDS spreads for major banks - most notably Deutsche Bank - continuing their surge wider, but also EM spreads to Bunds all following, with the Portugal-Germany Yield spread blowing out above 300 bps for the first time since 2014, and other peripheral nations following.
America has changed a lot since Super Bowl 1 in 1967 but, as the cost of tickets, airfare, commercials, and beer have soared, real median incomes have risen just 9%... is it any wonder the 'people' are revolting.. towards Bernie and The Donald? However, the economics of Super Bowl 50 are every bit as cloudy as the general American economy... which looks set to be re-named "The Unicorn Bowl."
Some people say that gold is dead. They point to deflationary pressures and a bear market that started back in September of 2011. The bulls have been wrong for years; however, that may be about to change…