For those who thought that the world's biggest company losing over $40 billion in market cap in an instant on disappointing Apple earnings, would have been sufficient to put a dent in US equity futures, we have some disappointing news: with just over 7 hours until the FOMC reveals its April statement, futures are practically unchanged, even though the Nasdaq appears set for an early bruising in the aftermath of what is becoming a disturbing quarter for tech companies. Instead of tech leading, however, the upside has once again come from the energy complex where moments ago WTI rose above $45 a barrel for the first time since November after yesterday's unexpected 1.07 million barrel API inventory drawdown.
Unfortunately, when central-planners "drag forward" future consumption today, you leave a "void" in the future that must be filled. That future "void" continues to expand each time activity is dragged forward until, inevitably, it can not be filled. This is currently being witnessed in the overall data trends as seen in the deterioration in corporate earnings and revenues. The only question is whether Central Banks can continue to support asset prices long enough for the economic cycle to catch up. Historically, such is a feat that has never been accomplished.
Every day there is more confirmation that the casino is an exceedingly dangerous place and that exposure to the stock, bond and related markets is to be avoided at all hazards. In essence the whole shebang is based on institutionalized lying, meaning that prouncements of central bankers, Wall Street brokers and big company executives are a tissue of misdirection, obfuscation and outright deceit. And they are self-reinforcing, too.
America's New Impossible Trinity: You Can't Have Higher Wages, Steady Inflation And High Profits At The Same TimeSubmitted by Tyler Durden on 04/13/2016 11:57 -0400
America’s ongoing labour productivity slump has created a new impossible trinity – policymakers can only choose two of the following three desirable outcomes: higher nominal wage growth, steady inflation and high corporate profits. The theory behind this new ‘impossible trinity’ is intuitively simple. If workers’ wages rise faster than their productivity, the companies paying those higher wages face two choices. They can either pass on the extra costs to customers, thereby leading to higher overall prices and rising inflation, or they can absorb the extra costs resulting in lower profit margins.
At the end of the day, Trump has petrified the Wall-Street Washington establishment for good reason. He loudly rejects the War Party consensus on foreign intervention. And he has tapped into a deep vein of main street alienation from the phony recovery and economic fixes promulgated by the Fed and its beltway henchman.
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.
“There have been three great inventions since the beginning of time: fire, the wheel, and Central Banking.” – Will Rogers
"Data Dependent" Fed Chickens Out Again: Blames "Global" Risks For Unchanged Rates, Cuts Rate Hike ForecastSubmitted by Tyler Durden on 03/16/2016 15:32 -0400
Not too dovish (upgrade uncertainty), not too hawkish (lowered rate hikes), a goldilocks statement, with just a little less inflation and just a little less GDP growth, and just two more quarter of near-ZIRP rates is what it takes for the world to get it all together.
If it sounds like history repeating itself, it most surely is. The coming recession will again obliterate the sell side hockey sticks, which this time started last spring at $135 per share for 2016 and are already being reduced at a lickety-split rate not seen since the fall of 2008. But this time there is one thing that decisively different, and it will make all the difference in the world. As will be reinforced once again by the post-meeting contretemps on Wednesday, the Fed has painted itself into a deathly corner and is utterly out of dry powder. It has nothing left but to hint at the prospect of negative interest rates. And that will be usher in its thundering demise.
Remember that once-in-a-lifetime, "don't worry there's plenty of liquidity" flash-crash in japanese Government Bond futures on Tuesday night (Wednesday morning Japan time)... well it happened again...
Former Federal Reserve Chairman Alan Greenspan resurfaced this week. We couldn’t recall the last time we’d heard from him. But, alas, the old fellow’s in desolate despair. Any remorse he now has is too little too late. Like a pickled cucumber, his actions, and the actions of his predecessors, can never be undone. Today we’re all living with the exacting consequences of Alan Greenspan’s pickled economy.
"While buybacks work great during bull market advances, as individuals willfully overlook the fundamentals in hopes of further price gains, the eventual collision of reality with fantasy has been a nasty event..."
Let me be blunt: this next crash will be far worse and more dramatic than any that has come before. Literally, the world has never seen anything like the situation we collectively find ourselves in today. The so-called Great Depression happened for purely monetary reasons. Before, during and after the Great Depression, abundant resources, spare capacity and willing workers existed in sufficient quantities to get things moving along smartly again once the financial system had been reset. This time there’s something different in the story line...
“Are we closer to an economic recession or a continued expansion?” With the Fed hiking interest rates, and talking a tough game of continued economic strength, the risk of a “policy error” has risen markedly in recent months. The markets, falling inflation indicators, and plunging interest rates are all suggesting the same.
Is the economy “nowhere near recession?” Maybe. Maybe not. But the charts above look extremely similar to where we were at this point in late 2007 and early 2008. Could this time be “different?” Sure. But historically speaking, it never has been.