Gross Domestic Product
One can see that while the traditional 6:00 AM USDJPY buy program is just duying to resume aggressive upward momentum ignition, futures are still leery and confused by the recent post-open high beta selloffs. Then again, things like yesterday's ridiculous no news 3:30pm ramp happen and confused them even more just as momentum is about to take a downward direction. Stocks in Asia (ex-China) advanced amid a reversal in sentiment after Citigroup (+4.15%) inspired positive close on Wall Street, however Shanghai Comp (-1.4%) underperformed as concerns over GDP data on Wednesday following weak money supply data weighed on sentiment. Stocks remained on the back foot (Eurostoxx50 -0.42%), with Bunds supported by the release of lower than expected German ZEW survey and also ongoing concerns surrounding the stand-off between Ukraine/Russia. Short-Sterling bear steepened after UK CPI fell to its lowest level since October 2009, but house prices across Britain posted its biggest rise since June 2010, reviving concerns over an overheating market.
Martin Armstrong "It's Not the Rich – It's The Total Cost Of Government That Is Killing The Economy"Submitted by Tyler Durden on 04/14/2014 18:15 -0400
"It is not what an individual needs that is the issue. Take all the money away from Bill Gates. How will this improve your life at all? The issue is how much is government consuming. But as long as they point to the 'rich' they get to waste your money.
The solution is not to raise taxes on the rich, for government will still spend more than it takes in regardless of who pays... It is taxes that we must address – not how much someone else makes."
Finds the answer is: "very"
Futures are treading water once more now that Ukraine has stormed to center stage from the backburner after everyone was convinced Putin would let the situation cool off after annexing Crimea. Guess not. Adding the renewed geopolitical jitters to what has already been a beta stock bloodbath into a holiday shortened week assures some high volatility fireworks. Cautious sentiment was observed over in Asia (Nikkei 225 -0.36%) amid renewed fears that geopolitical tensions in Ukraine will flare up again following reports of exchange gunfire with pro-Russian militants. This sentiment carried over into the European session with stocks lower across the board (Eurostoxx50 -0.71%). EUR is lower after ECB’s Draghi said any further strengthening of the EUR would warrant further action by the ECB, including non-standard measures such as quantitative easing - it is amazing how frequently and often the Virtu algos still fall for Draghi's jawboning trick which has now become all too clear will never be implemented and certainly not if he keeps talking about it daily, as he does.
We have bad news for hedge funds who, like Hugh Hendry in December of last year, threw fundamentals and caution to the wind and, with great reservations, jumped into this momo bandwagon in which mere buying beget more buying until nobody knew why anyone bought in the first place... and then everything crashed, leading to the worst day for hedge funds in a decade: according to Goldman's David Kostin, whose job is to be a cheerleader for the intangible "wealth effect" leading to all too tangible Goldman bonuses: "The stock market will likely recover during the next few months... but not momentum stocks."
Dispassionate discussion of the macro-political economic climate.
We hear a lot about climate change, especially now that the Intergovernmental Panel on Climate Change (IPCC) has recently published another report. At the same time, oil is reaching limits, and this has an effect as well. How do the two issues fit together? Unfortunately, the real situation is that the laws of physics, rather than humans, are in charge. Basically, as economies grow, it takes increasing complexity to fix problems, as Joseph Tainter explained in his book, The Collapse of Complex Societies. Now we are reaching limits in many ways, but we can’t - or dare not - model how all of these limits are hitting.
The gap between current Q1 reality and forward-looking, hope-stuffed, unicorn-tear-fueled expectations for US economic growth has reached a new peak of Keynesian 'faith'. This week saw "economists" downgrade Q1 GDP expectations once again to a mere 1.6% growth (from 2.6% in January) - meaning that cold weather is responsible for a 46% collapse in US economic growth expectation. As the chart below 'hints' at, it appears we have reached "peak hope."
Chief Economist Of Central Banks' Central Bank: "It's Extremely Dangerous... I See Speculative Bubbles Like In 2007"Submitted by Tyler Durden on 04/11/2014 18:05 -0400
Yet again, it seems, once senior political or economic figures leave their 'public service' the story changes from one of "you have to lie, when it's serious" to a more truthful reflection on reality. As Finanz und Wirtschaft reports in this great interview, Bill White - former chief economist of the Bank for International Settlements (who admittedly has been quite vocal in the past) - warns of grave adverse effects of the ultra loose monetary policy everywhere in the world... "It all feels like 2007, with equity markets overvalued and spreads in the bond markets extremely thin... central banks are making it up as they go along." Some very uncomfortable truths in this crucial fact-based interview.
A look back at the headlines and market movements of the last month provides some useful color for why markets are weak and why now... As Scotiabank's Guy Haselmann warned early last month, there is a threshold point during the Fed’s attempt to normalize policy where the tide reverses and investors join in a sell-off in a race to avoid being left behind. This is why it's called the greater fool theory.
Head Of Asia's Largest Clothing Retailer: "I Don’t Have An Optimistic View About Consumption In Japan"Submitted by Tyler Durden on 04/11/2014 14:43 -0400
Today we get some more on the ground perspective on the abysmal (second) reign of Abe, where the stock market may be approaching bear market territory (after everyone was convinced the Nikkei was set to soar in 2014), but it is really the economy which is about to get it, most likely resulting in Abe's second premature evacuation stage left (with the now traditional Imodium scapegoat) well before the work of Abenomics is completed, in the process sending the USDJPY once again back into double digit territory. The bottom line: “I don’t have an optimistic view about consumption in Japan,” Yanai told reporters yesterday in Tokyo. He said he had yet to see an effect on sales from the tax increase. He will quite soon, and he won't be happy with what he sees.
Ahhh, the smell of "fake" headlines in the morning. It smells like victory, especially as there goes another conspiracy "theory"
The average price of USDA choice-grade beef has soared to $5.28 a pound, and the average price of a pound of bacon has skyrocketed to $5.46. Unfortunately for those that like to eat meat, this is just the beginning of the price increases. Due to an absolutely crippling drought that won’t let go of the western half of the country, the total size of the U.S. cattle herd has shrunk for seven years in a row, and it is now the smallest that is has been since 1951. But back in 1951, we had less than half the number of mouths to feed. And a devastating pig virus that has never been seen in the United States before has already killed up to 6 million pigs in this country and continues to spread like wildfire. What all of this means is that the supply of meat is going to be tight for the foreseeable future even as demand for meat continues to go up. This is going to result in much higher prices, and so food is going to put a much larger dent in American family budgets in the months and years to come.
The Fed’s transmission mechanism to the household sector is blocked. The business credit expansion channel to higher GDP is blocked, too. The flood of demand by which the Fed endeavors to “pull” idle and underemployed workers back into production cannot be activated if the US economy has reached a condition of peak debt, as we strongly believe to be the case. Indeed, when the credit expansion channel is broken and done, all the Fed’s liquidity “accommodation” flows into the Wall Street finance channel where it pulls up the price of existing financial assets, not the employment rate of idle labor. This much is obvious, yet Yellen and her monetary politburo keep on attempting to flood the nation’s macroeconomic bathtub with more “demand”. Worse still, they fail to note that even if they could induce business and households to bury themselves deeper in debt that it wouldn’t necessarily have a salutary impact on the “labor market”— the ostensible target of their strenuous ministrations.
Begging, borrowing or other means. Whatever it takes the US is prepared to get what it wants. Unable to get it any other way because of real clout, the US has resorted to begging these days.