India

The future of Europe now depends on something apparently impossible: Greece and Germany must strike a deal.

Only the people of Japan and Spain trust their government less than the people of the U.S. trust our government. The confluence of government and business has created a corporate fascist surveillance state. Trust in government, politicians, bankers, and the media is plummeting.

It took a while, but three months after we wrote "How The Petrodollar Quietly Died, And Nobody Noticed", someone finally noticed.

Taking interest rates so negative that they threaten a run on bank deposits should not be seen as success --- it is failure. Creating bank reserves at that pace should not be seen as success --- it is failure. The next failure may well be some government-inspired restriction on capital inflows. Well, you could call such restrictions, and risking the liquidity of banks, monetary success if you like, but then you probably also think it’s a success to throw the ball one yard from the touchline.

Deflation remains the enemy thanks to debt, deleveraging, demographics, tech disruption & default risks. US aggregate debt is today a staggering $58.0 trillion (327% of GDP); the number of people unemployed in the European Union is 23.6 million; Greece has spent 90 of the past 192 years in default or debt restructuring. 7 years on from the GFC... The massive policy response continues. Central bank victory means that lower rates, currencies, oil successfully boosts global GDP & PMI’s in Q2/Q3, allowing Fed hikes in Q4. Bond yields would soar in H1 on this outcome. Defeat, no recovery, and currency wars, debt default and deficit financing become macro realities.

ECB putting interests of banks over those of people … again.

People versus the banks ... time to take a stand ...

Six years on from the financial crisis and central banks are still hacking away at interest rates. Australia and Romania's did this week and while Poland and India held off, both are expected to prune rates later in 2015.

Marc Faber warned at the weekend that 2015 may be the year that investors will lose confidence in central banks and that investors will “suddenly realise what a scam that central banking is”.

• Arab World Unites to Condemn ‘Barbaric’ Death of Jordanian Pilot (BBG)
• Jordan hangs two Iraqi militants in response to pilot's death (Reuters)
• As Oil Prices Climb, Some Harbor Doubts (WSJ)
• Taiwan plane cartwheels into river after take-off, killing at least 19 (Reuters)
• Seven dead as commuter train hits car near New York City (Reuters)
• Apollo’s 600% Profit on Oil Company Leaves Rivals Behind (BBG)
• Greece's rock-star finance minister Yanis Varoufakis defies ECB's drachma threats  (Telegraph)

Moments ago the number of central banks who have eased so far in 2015, most of them unexpeted, rose by one more from 15 to 16, when in addition to Singapore, Europe, Switzerland, Denmark, Canada, India, Turkey, Egypt, Romania, Peru, Albania, Uzbekistan and Pakistan, Russia and, most recently, Australia it was China's turn to do what so many banks had said was inevitable, even if meant backtracking on all its blustery talk about limiting bad debt expansion, and cut its reserve requirement ratio for bank by 0.5% effective Thursday, to boost liquidity and support the economy.

• RBA cuts interest rates to record low of 2.25% (SMH)
• RBI keeps rates on hold (Reuters), India allows banks flexibility on big projects to reboot growth (Reuters)
• BP slashes capital spending by 20% (FT)
• Greek Retreat on Writedown May Move Fight to Spending (BBG)
• Rosneft accounting move helps BP beat profit forecast (Reuters)
• Amazon in Talks to Buy Some of RadioShack's Stores (BBG)
• Behind Obama's budget proposals, a gloomy view of the future (Reuters)
• How the Justice Department, S&P Came to Terms (WSJ)
• Staples, Office Depot in Advanced Talks to Merge (WSJ)

The rally that was sparked by yesterday's late-day FT report had all but fizzled overnight, replaced by more concerns about the state of the global economy when Austrialia's central bank surprised the world (just 9 of 29 analysts had expected this move) by becoming the 15th in a row to ease in 2015 (the list: Singapore, Europe, Switzerland, Denmark, Canada, India, Turkey, Egypt, Romania, Peru, Albania, Uzbekistan and Pakistan, Russia and now Australia), cutting the cash rate to an all-time low of 2.25%, and sparking more concerns about a global currency war or rather USD war against every other currency, when the USDJPY algos woke up again, and did everything they could to re-defend the critical 117.20 level in the USDJPY which has proven critical in supporting the market in recent weeks, once again using the Greek "softening tone" story as the basis for the ramp as Europe woke up, which in turn sent the DAX promptly to new all time highs, while the Athens stock market surged by 9% at last check.

UPDATE: *INDIA'S CENTRAL BANK KEEPS BENCHMARK POLICY RATE AT 7.75%, CUTS SLR TO 21.5% OF NDTL FROM 22%

UPDATE: Dow Futs -80 points, S&P Futs -9pts

Following the 15th surprise rate cut of 2015 (Singapore, Europe, Switzerland, Denmark, Canada, India, Turkey, Egypt, Romania, Peru, Albania, Uzbekistan and Pakistan, Russia and now Australia), the Aussie Dollar has cratered to its lowest since May 2009 against the US Dollar at 0.7650 (and bond yields crashed by the most since 1997 to record lows). Aussie stocks kneejerked higher (on an extremely dovish RBA statement) but are fading (as are Chinese stocks). Perhaps even more concerningly indicative of the central banks losing control, following this morning's weak Japanese auction (or more properly expressed - BoJ monetization farce), USDJPY (under 117), Japanese stocks (down 350 points from US session highs), and JGBs (yields up 6-8bps) are all being sold.

The fundamental problem with real estate is cost.  The average household, whether renters or homeowners, is allocating too much of its income to housing.  As a result, public policies are likely to continue in the direction of more subsidies, such the Federal Reserve’s manipulation of long term rates, and more regulations, such as eviction and foreclosure prevention, and rent controls.  Real estate, could become a lot less “real” in the foreseeable future. As the market has witnessed since 2007, the Government could dictate the conditions of real estate ownership, even when it was not the lender.  Today, it is in full control.