The rationale for today’s easy money policies is pretty straightforward: Falling interest rates and rising government deficits will counteract the drag of excessive debts taken on in previous stimulus programs and asset bubbles, enabling the developed world to create wealth faster than it takes on new debt. The result: a steady decline in debt/GDP to levels that allow the current system to survive without wrenching changes. That’s a seductive, free-lunchy kind of idea — if it actually worked.
- U.S. readies bank rule on shell companies amid 'Panama Papers' fury (Reuters)
- Co-Founder of Mossack Fonseca Defends Law Firm at Center of ‘Panama Papers’ (WSJ)
- Fed's Cautious Approach on April Rate Hike Raises Stakes for June (BBG)
- Dollar sinks again after Fed remains cautious (Reuters)
- New Tax Rules on Inversion Deals Are Met With Protest (WSJ)
- Fed Chairs Since 1979 Offer Peek Into Central-Bank Philosophy (BBG)
- Cruz, Sanders score decisive victories in Wisconsin (Reuters)
- Clinton Can’t Get to New York Fast Enough After New Sanders Win (BBG)
- Trump, Clinton Have Single-Digit Leads in Pennsylvania (BBG)
- Panama law firm says data hack was external, files complaint (Reuters)
- ‘Panama Papers’ Puts Spotlight on Boom in Offshore Services (WSJ)
- Barclays partners with Goldman-backed bitcoin payments app (FT)
Unlike yesterday's overnight session, which saw some subtantial carry FX volatility and tumbling European yields in the aftermath of the TSY's anti-inversion decree, leading to a return of fears that the next leg down in markets is upon us, the overnight session has been far calmer, assisted in no small part by the latest China Caixin Services PMI, which rose from 51.2 to 52.2. Adding to the overnight rebound was crude, which saw a big bounce following yesterday's API inventory data, according to which crude had its biggest inventory draw in 2016, resulting in WTI rising as high as $37.15 overnight
While all eyes on fixated on global stock markets as the measure of "prosperity" and "growth" (or is it hubris?), the larger force at work beneath the dovish cooing of central bankers is foreign exchange. The reality is that we're one panic away from foreign-exchange markets ripping free of central bank manipulation.
The market's slumberous levitation of the past month, in which yesterday's -0.3% drop was the second largest in 4 weeks and in which the market had gone for 15 consecutive days without a 1% S&P 500 move (in March 2015 the sasme streak ended at day 16) may be about to end, after an overnight session, the polar opposite of yesterday's smooth sailing, which has seen a sudden return of global risk off mood.
The longer the Fed perpetuates today’s massive 24X bubble with soporific open mouth interventions like Yellen’s pathetic speech last week, the more violent and traumatic the risk asset implosion will ultimately be. You would think our monetary politburo might at least notice that after trading in no man’s land between 1870 and 2130 on the S&P 500 for the past 700 days, the casino is positioned exactly where it stood in 2007 and 2000. Simple Janet has attained a new milestone as a public menace with her speech to the Economic Club of New York. It amounted to yelling “stay” in a burning theater!
It’s not the more fickle and systemic nature of the FIRE economy that makes manufacturing particularly important. It goes well beyond that...
The Narrative Changes: Goldman "Explains" That Higher Oil Prices Are Actually Better For The EconomySubmitted by Tyler Durden on 04/03/2016 13:40 -0400
"Cheap oil has become “too much of a good thing” for growth", according to Goldman which in an "analysis" concludes "that the net effect of cheap oil on growth has probably been negative so far, with the capex collapse outweighing the consumption boost. Which is a confirmation of everything we have said since late 2014.
"I believe that this is the best plan the state has produced in decades"...
Global trade contracting, Wal-Mart posting its first ever decline in revenues... stocks on the edge of a cliff.
The credit markets are signaling that the debt fueled expansion that began in 2010 is turning to bust. This is the most precarious moment in financial market history because as the world slides into recession global central banks have no ability to soften the oncoming recession with debt creation. The world economy is on the precipice of another Great Depression.
Chinese President Xi appears to have moved on from currency wars to protectionism as WSJ reports China is tightening its grip on cross-border e-commerce, imposing a new tax system on all overseas purchases. While Trumpian tariffs are dismissed as crazy talk by America's establishment, it seems China took first-mover advantage to boost "Made-in-China" products at the expense of the rest of the world.
"In our “Top 10 market themes for 2016”, we argued that the ‘Bernanke put’ might gradually be replaced by the ‘Yellen call’. Recall, the ‘Bernanke put’ was the idea that meaningful declines in market sentiment would be met with aggressive monetary action, thus providing a buffer to downside risk. Our notion of the ‘Yellen call’ was the converse of this – that with labor markets approaching full employment and core PCE inflation rising towards target, meaningful rallies in market sentiment would likely be met with a more robust withdrawal of policy accommodation.... It hasn’t happened."
Gold's 16.1% surge in Q1 2016 ias the best start to a year since 1974. Overall, this is the best quarter since Q3 1986 and is the best performing major commodity of the year. Gold rallied this year as it cemented its status as a store of value amid financial market turbulence and concern about the global economy, which led to speculation that the Federal Reserve would pause on tightening monetary policy in the U.S. Having seen BlackRock's gold ETF halted due to inability to meet physical demand, it appears pet rocks and barbarous relics are 'worth' something after all.