Global Economy

Morgan Stanley Asked Analysts How Companies Were "Exceeding Estimates", The Answer Is Disturbing

According to a survey by Morgan Stanley, analysts responded that if firms exceed expectations to the upside, it was typically due to lower costs than higher revenues. Said otherwise, companies are not generating the top-line growth necessary to beat even the lowest of analyst expectations, and have focused on driving cost out in order to meet the street's expectations. After all, if the numbers miss, executives don't get as much out of those options and RSUs, and we can't be having that.

Global Stocks Sharply Lower As Bond Yields Hit New Record Lows; Oil Slides Below $50

Global stocks, U.S. index futures are sharply lower pressured by fears of another day of record low bond yields, as investors start to worry about numerous risk catalysts in the coming weeks, from the Brexit vote to Fed meeting. The Dollar spot index rose for the second day in a row, pushing commodities lower for their first two-day decline since May 24, while WTI has dipped back under $50.

Pity Poor China: There's No Easy Fix To The S-Curve

This decline is inevitable in fast-expanding economies that depended on export growth and investment booms. Everything that worked so well for 30 years is only making the economy more precarious.

And An Even Louder Warning From Goldman: The "Yellen Call" Is Back And Will Limit Further Market Upside

With financial conditions having significantly recovered, it is reasonable to expect that the Yellen call will soon be back in the money following the June FOMC meeting. We believe June is largely off the table given the weakness of Friday’s employment report and the UK referendum on its EU membership in June. But we think the July meeting is live, without our US Economics team seeing a 40% probability of a second hike. With equity markets posting new highs this week, we think the ‘Yellen call’ is on track to move back into the money in 2016H2.

With Daily Record Lows, Here Is A Chart OF German Bund Yields Since 1977

Two stunning statistics: according to Commerzbank almost two-thirds of all German sovereign debt outstanding now yields below minus-0.4%, which makes it ineligible for central-bank purchases. Additionally, as DB adds, Bund yield across the whole curve has gone negative for the first time.

Futures Slide On Rising Dollar As Global Bond Yields Hit Fresh Record Lows

Please do not adjust your screens: that off-green color you are seeing, that is not a malfunction. Yes, for the first time in six days, global stocks are lower with the MSCI all-country world index dipping from a 6 month high dragged down by lower European and Japanese equity markets, as the USDJPY dropped to a fresh five-week low while Treasury yields continued to hit new record lows because, as Bloomberg explains, "traders assessed the outlook for the global economy."

The Federal Reserve's Strange Behavior Makes Perfect Sense

If you think the Federal Reserve’s goal is to maintain or repair the U.S. economy, then you will never understand why they do the things they do or why the economy evolves the way that it does. The Fed’s job is not to protect the U.S. economy. The Fed’s job is to DESTROY the U.S. economy to make way for a truly global system.

China Oil Imports Drop To Four Month Low As Demand Is Expected To "Moderate Significantly" In 2016

Oil imports by China fell to a four-month low in part due to congestion at one of its biggest ports curbed purchases from independent refiners. Inbound shipments in May totaled 32.24 million metric tons. That’s equivalent to 7.62 million barrels a day , down 4.3 percent from the previous month, and the lowest since January. It gets worse; according to an analysis from S&P Global Platts "China's oil demand growth is expected to moderate significantly in 2016 as gross domestic product growth slows on the back of economic rebalancing."

Bernanke Blew It Big-Time: He Should Have Raised Rates Three Years Ago

It is now painfully obvious that Ben Bernanke blew it big-time by not raising rates three years ago when the economy and markets enjoyed tailwinds. The former Federal Reserve chairperson, who has claimed the mantle of savior of the global economy, foolishly kept rates at zero until tailwinds turned to headwinds, at which point he handed Janet Yellen the unenviable task of raising rates as the headwinds are strengthening.

Futures Flat Following Friday's Jobs Fiasco: All Eyes On Yellen Again

Every ugly jobs report has a silver lining, and sure enough following Friday's disastrous jobs report, global mining and energy companies rallied alongside commodities after the jobs data crushed speculation the Fed would raise interest rates this month.  “The disappointing U.S. jobs report on Friday means that a summer Fed rate hike is off the table,” said Jens Pedersen, a commodities analyst at Danske Bank. “That has reversed the upwards trend in the dollar, supporting commodities on a broader basis. The market will look for confirmation in Yellen’s speech later today.”

Morgan Stanley Is Confused: "The Probability Of A Global Recession Still Dominates Our Discussions On The Economy"

In Morgan Stanley's Sunday Start note explaining "what's next in global macro", the firm's go-head of economics, Chetan Ahya notes that he remains confused by a "unique cycle" in which "our current conversations would have been centred on whether the global economy is overheating. Instead, the probability of a global recession and possibility of further stimulus still dominate our discussions on the global economy."