The market is currently engaged in the longest bull run in history without a 10% correction. The decline in momentum, the weakness in economic underpinnings and lack of Central Bank interventions (not to mention the threat of an increase in overnight lending rates) certainly provide the necessary ingredients for a sharper than expected correction this summer.
There is a practical benefit to shifting our attention away from the stock market. Any market that can yo-yo 10% within a day for no apparent reason, or undergo multiple booms and busts in a 20 year period should not be given too much credibility. The wealth-effect on the way up always turns into the wealth-destruction effect on the way down.
Despite record-er stock prices, weather excuses for current economic weakness, and The Fed promising that growth is here and everything will be awesome, it appears the message has not reached the US Consumer. Gallup's U.S. Economic Confidence Index plunged 9 points last week (the largest week-to-week drop since last July) to its lowest weekly score since December. The main driver was a collapse of hope as 'outlook' fell to November lows.
Not long ago we noted that contrary to the old adage, money can indeed buy happiness. Given this, it stands to reason that the converse is likely true as well. That is, no money probably contributes to unhappiness. Sure enough...
Earlier today the US Census released its latest quarterly data, which confirmed that for what is left of America's middle class, owning a home has become virtually impossible, with the homeownership rate tumbling from 64.0% to 63.7%, which is tied for the lowest historic print since the first quarter of 1986, with the only difference that then the trendline was higher. Now, as can be seen on the chart below, it isn't. At this rate, by the end of the 2015 and certainly by the end of Obama's second term, the US homeownership rate will drop to the lowest in modern US history.
USA USA USA #15? Despite aerial bombardment, growing tensions with every neighbor, and the almost ubiquitous daily car-bombs, Israelis are "happier" than Americans according to Bloomberg's world happiness index. Happiness, it appears, is most abundant a long way from the equator with Switzerland, Iceland, Denmark, Norway, and Canada all topping the list; whereas the unhappiest nations are all in Saharan or sub-Saharan Africa (apart from war-torn Syria and Afghanistan).
What do retail investors do on volatile days like Friday’s jolt lower on the S&P 500? Thanks to one very large online broker’s publicly available order flow, we now know...
Noam Chomsky: "The Idea Of A Media Which Does Not Repeat US Propaganda Is Intolerable To American Leaders"Submitted by Tyler Durden on 04/20/2015 21:32 -0400
"Take the New York Times -- the greatest newspaper in the world. Take one example, at the first article that appeared today, that the tentative [nuclear] agreement with Iran was reached. It’s a thinkpiece, by Peter Baker, one of their main analysts. He discusses in it the main reasons to distrust Iran, the crimes of Iran. It’s very interesting to look at. The most interesting one is the charge that Iran is destabilizing the Middle East because it’s supporting militias which have killed American soldiers in Iraq. That’s kind of as if, in 1943, the Nazi press had criticized England because it was destabilizing Europe for supporting partisans who were killing German soldiers."
After Spate of Mass Shootings, Americans Turn Pro-Gun
Extreme optimism - whether in the form of stock valuations, consumer spending, or happiness surveys like the one mentioned below - tends to be followed by corrections; because to get to an extreme point in a data series, extreme behavior is usually required. That is, a lot of really optimistic investment decisions have to be made to push financial markets to cyclical highs, and these kinds of moves tend to exhaust themselves and produce big moves in the other direction. Hence the 2008 low following the 2007 high.
The economic data has continued to disappoint on virtually all fronts, earnings are weak and markets are grossly extended. Yet, investors are more bullish than ever...
The American people remain eager to be persuaded that a new president in the White House can solve the problems that plague us. Yet no matter who wins this next presidential election, you can rest assured that the new boss will be the same as the old boss, and we - the permanent underclass in America - will continue to be forced to march in lockstep with the police state in all matters, public and private. It really doesn’t matter what you call them - the 1%, the elite, the controllers, the masterminds, the shadow government, the police state, the surveillance state, the military industrial complex - so long as you understand that no matter which party occupies the White House in 2017, the unelected bureaucracy that actually calls the shots will continue to do so.
Capitol Locked-Down After Mailman Lands Gyrocopter On Lawn To Deliver Campaign Reform Letter To CongressSubmitted by Tyler Durden on 04/15/2015 13:51 -0400
Update: *LOCKDOWN LIFTED AT U.S. CAPITOL AFTER GYRO COPTER ARREST
US Capitol Police have locked-down buildings after a man landed a gyrocopter on the lawn. As The Tampa Bay Times reports, the man is a mailman from Ruskin named Doug Hughes who was attempting to deliver campaign reform messages to Congress.
A funny thing happened in Britain... as calorie intake has fallen by 8% in the last decade and 4.4% since 2010, driven both by eating out less and eating healthier at home, so obesity levels are stabilising versus recent years with the number of patients diagnosed as obese also declined by 15% yoy in 2013/14, following a 7% decline in 2012/13. In the US, however, the latest data shows that obesity is still rising...
With more than three quarters of US workers trapped in what we will call “wage growth hell,” and whose only chance at seeing a pay hike appears to rest on holding out for a promotion that’s probably not forthcoming, it doesn’t exactly come as a surprise that self-reported consumer spending hit a three-year low for March.