It started off as the perfect storm for futures: after Sunday night's latest plunge in WTI, which saw it drop to the lowest price since Lehman, the double whammy that has now forced Deutsche Bank to become the first major institution to forecast no growth for S&P500 EPS in 2015, namely the strong dollar, reared its ugly head and the EURUSD seemed dangerouly close to breaching the all important 1.04-1.05 support level we first noted last week. However, overnight parties tasked with preserving "financial stability" appear to have once again stepped in, and not only has the EURUSD rebounded off 1.05, but crude is now just barely down from the Friday close as all firepower is put to the same use, that sent the Shanghai Composite soaring by 2.3% overnight, and which sent the Dax over 12,000 for the first time ever.
I am not sure how long Mario Draghi can carry on this QE Charade, but it is quite obvious that there is nothing more to be gained from the program.
This anti-capitalistic mentality has brought about today’s essentially bankrupt “middle of the road” welfare state system, in which governments and big business are in a tight embrace that utterly deadens economic progress. The EU’s latest “Four Year Plan” is yet another in a long list of examples of this prototypical continental tradition (incidentally, Europe’s moribund banking system is one of the end results of these economic policies as well). What is really required is a return to free market principles, not yet another “government plan”.
There is no mystery anywhere to be found in the fact that US retail sales don’t follow the jobs trend. Not if you look at what kind of jobs they are, let alone at all the other made up and manipulated numbers that are being thrown around about the US economy. The only mystery is why everyone persists in talking about a recovery. That recovery will never come, simply because all 90% of Americans do is pay for the other 10% to get richer. There are many other factors, but that all by itself makes a recovery a mathematical mirage.
"I was shocked today by the absolute gaul of the Fed releasing a statement about Net Worth in America reaching record levels. Now I get that they are under extreme pressure to sell the story that everything is rainbows and butterflies. The ugly reality is that the bottom 80% of Americans experienced none of that gain. And so when the Fed via its ass pamper boy, Steve Liesman, start banging on about the fact that some sliver of society is being handed extraordinary wealth while the working class has lost 40% of their net worth since 2007, well a big F### you right back at ya bub!...And for those of you that think I’m an ass for being so harsh on us, well stuff it. Get up off your stool you lazy drunk, shut your damn mouth and start fighting these political parasites like a damn man, like a damn American."
And so the first week of Draghi Open Market Operations (DOMO) ends and while yields have been pushed lower, the benefits of massive money printing are very much skewed to The North and not The South. Spanish sovereign bond risk ended the week unchanged (not exactly the exuberance Draghi hoped for) and Italy only 2bps lower. In equity land, the divergenes were enormous - German stocks soared to new record highs (up 3% this week and 21% year-to-date) as the rest of the majors rose less than 1%. Spanish stocks fell 0.6% but Greek stocks cratered over 9% on the week. Inflation breakevens also fell 6bps on the week...and Europe's VIX rose 0.3 to 18.85... oops.
"Race To The Bottom" In Oil Continues: ENI (Europe's "Chevron") Halts Buyback, Raises Production, Slashes CapexSubmitted by Tyler Durden on 03/13/2015 10:55 -0400
Oil prices legged lower in the last few minutes as Italy's largest energy company ENI has made a series of rather major announcements (following Chevron's decision in January). The company plans to sell EUR8bn in assets, slash capex by 17%, and suspends buybacks. But perhaps most worryingly for the oil-patch, ENI plans to increase production 3.5% each year until 2018 as the race to the bottom in energy markets continues.
With Greece on the edge of being kicked out of the Eurozone , either voluntarily or otherwise, with an anti-austerity party on the verge of taking over the reins of power in Spain, with Beppe Grillo waiting in the corridors for his chance to pounce in Italy and with Marine le Pen and her nationalist party on the verge of becoming the biggest shocker of Europe over the coming years, here, according to Daniel Hannan, is what killed democracy in Europe. Europe itself.
FX Volatility Spikes As More Countries Enter Currency Wars; Euro Surges On Furious Squeeze After Touching 1.04Submitted by Tyler Durden on 03/12/2015 06:57 -0400
The global currency wars are getting ever more violent, following yesterday's unexpected entry of Thailand and South Korea, whose central banks were #23 and #24 to ease monetary conditions in 2015, confirming the threat of a global USD margin call is clear and present (see "The Global Dollar Funding Shortage Is Back With A Vengeance And "This Time It's Different"). But the one currency everyone continues to watch is the Euro, which the closer it gets to parity with the USD, the more volatile it becomes, and moments after touching a 1.04-handle coupled with the DXY rising above 100 for the first time in 12 years, the EURUSD saw a huge short squeeze which sent it nearly 150 pips higher to 1.0643, before the selling resumed.
"Neither Central Bankers Nor Market Participants Can Extract Any Information From Current Bond Valuations"Submitted by Tyler Durden on 03/11/2015 09:46 -0400
All is not what it seems. Markets are upside down. Some ‘risk?free’ assets can be purchased for a guaranteed loss. EU asset markets (ex?Greece) are soaring at the same time that EU disunity is rising. An interest rate hike by the Fed is likely to cause a rally in Treasury bonds and a steep correction in US equities.
While the dollar strength this morning, which has pushed it to a fresh 13 year high and has accelerated the EURUSD plunge to under 1.06 - a drop of over 300 pips since the start of the week - has been a recap of yesterday's trading action, the main difference is that unlike yesterday, the USDJPY has managed to find a strong bid in the overnight session, pushing not only the Nikkei up by 0.4%, but also lifting US equity futures as the entire global marketplace is now merely a sandbox in which the central banks try to crush their currencies as fast as possible.
To some (mostly those in the 1-10% wealth bucket) the main event today is the iWatch unveiling. To others (mostly those not in the 1-10% wealth bucket) it is the Eurogroup meeting in which the fate of Greece will be discussed and perhaps decided. One thing is certain: virtually nobody will care when the Fed's Mester and Kocherlakota speak later today as the Fed is now - supposedly - set to hike no matter what. Here is what the other main events are for the balance of the week.
It was not all smiles and jokes as Mario Draghi's European QE officially launched in Europe, with Greece leaving the proverbial turd in the monetary punch bowl.
Back in 2009, the United Nations Statistical Commission endorsed a revision to the System of National Accounts (SNA), which sets the international standards for the compilation of national accounts. As a consequence, Eurostat has amended the European equivalent of the SNA, the European System of Accounts (ESA) leading to a revision of GDP figures. Out of nothing but accounting smoke and mirrors, the reclassification has had a positive effect on GDP, increasing it on average by 3.5 percentage points for the EU and the Euro area as whole.
This absence of moral values is something Europe in its present form will never be able to claim back. Never. The EU has shown itself to be a gross moral failure, and that’s it: the experiment is over. What will undo Europe from within is its economic policies. Which are strongly linked to the same moral values issue: inside a union, you cannot let thousands of people go without food and health care while others, a few hundred miles away, drive new Mercs and Beamers over a brand new Autobahn. That’s not a union. That’s a feudal society. And those don’t hold.