Gross Domestic Product

The Fed insists that Cinderella's carriage is forever golden, ignoring the increasingly obvious reality that the carriage is turning back into a pumpkin before our eyes. The Fed's magic was always a short-term fix, akin to over-fertilizing and over-poisoning our economy to create the illusion of massive growth in profits and stock, bond and home valuations. Now that the magic is wearing off, the reality is going to hit everyone who believed the fantasy of permanent asset bubbles especially hard.

It's official: after seeing it work so well for years in China, the US Department of Commerce's Bureau of Economic Statistics has officially replaced all of its excel models with just one function. The following.

No matter what investors SAY they will do, they will almost always succumb to the emotional investment mistakes caused by being human.

"German Finance Minister Wolfgang Schaeuble conceded the possibility that Greece may need a parallel currency alongside the euro if the country’s talks with creditors fail," Bloomberg reports. Meanwhile, "sideline" negotiations between Greek PM Tsipras and Angela Merkel breakdown in Riga.

The rising risk to the housing recovery story lies in the Fed's ability to continue to keep interest rates suppressed. It is important to remember that individuals "buy payments" rather than houses. With each tick higher in mortgage rates so goes the monthly mortgage payment. With wages remaining suppressed, 1 out of 3 Americans no longer counted as part of the work force or drawing on a Federal subsidy, the pool of potential buyers remains tightly constrained. While there are many hopes pinned on the housing recovery as a "driver" of economic growth in 2015 and beyond - the lack of recovery in the home ownership data suggests otherwise.

"The government agency charged with calculating the nation's growth rate is acknowledging problems with its numbers and pledging a series of fixes over the next several months", Steve Liesman reports, confirming that the BEA is about to do precisely what we predicted two days ago and seasonally adjust its seasonally adjusted data in what might very well be the most blatant instance of goal-seeking in the history of statistical analysis.

London’s property market is still hell bent on going crazy as if it has overeaten and become over inflated yet again.

It’s no secret that the protracted negotiations between Athens and its creditors are taking a toll on the Greek economy in general, on the Greek banking sector more specifically, and on Greek citizens most tragically. Now, thanks to a new report from the Hellenic Confederation of Commerce and Enterprises, we can quantify the daily economic toll of failed negotiations.

It takes a lot to kick a dying ailing man in the guts as he is already agonizing on the floor, but nobody wants to do it to poor old Uncle Sam, do they?

• Tsipras Endgame Nears as Greek Bank Collateral Evaporates (BBG)
• Shi'ite forces ordered to deploy after fall of Iraqi city (Reuters)
• Ratings agency Fitch to downgrade many European banks (Reuters)
• Bubble Blowing to Continue So Long as Yellen Isn’t Raising Rates (BBG)
• Greece's Debt Battle Exposes Deeper Eurozone Flaws (WSJ)
• Obama to set new limits on police use of military equipment (Reuters)
• China April home prices fuel hopes of bottoming out, but long road to recovery (Reuters)
• Hedge Funds Close Doors, Facing Low Returns and Investor Scrutiny (NYT)
• ASIC's Greg Medcraft 'quite worried' about Sydney, Melbourne house prices (Fin Review)

Spain's economic data lost all credibility once the local bureau of economics, statistics and other goalseeked numbers decided to arbitrarily start adding what it estimated was the "contribution" from not only local drug dealers but also hookers. No surprise then that the government has proudly declared quarter after quarter that Spain is one of Europe's most boom economies. And yet, while the GDP data was clearly fabricated, Spain's job numbers did seem impressive. And then we looked at the following chart of full-time versus part-time Spanish workers, and it all quickly fell into place.

While we are sure President Obama will find a way to comment on today's jobs number (focusing on the unemployment rate we suspect and not the quality of jobs or record number of people out of work), his main topic of discussion is how wonderful the ultra-secret "Trans-Pacific Partnership" deal is for Americans... and why congress must pass it asap.

The politicians like the bankers and the central bankers, are happy to kick the can down the road and let their successors and future generations pick up the tab and pay for the economic mess that they refuse to address.

In the eight years that the Fed has issued GDP forecasts in the prior Fall, only once, in 2010, did the actual economic performance come in the range of its expectations. A more sinister possibility is that the Fed is not really forecasting at all but cheerleading. By forecasting strong growth, the Fed may be hoping to engender optimism, with more spending and hiring hopefully to follow. Kind of like a field of dreams recovery -- if the Fed forecasts it; it will come. Based on what we have seen thus far in the year, fantasies about a 2015 recovery should be evaporating.