• Sprott Money
    03/01/2015 - 23:51
    Clearly if Western governments were ‘merely’ drowning in debt-to-GDP ratios of roughly 100%, then theycould still argue that attempting to manage these debt-loads was legitimate rather than...

Lehman

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This Is What The Entire World Frontrunning The ECB Looks Like





When everyone, truly everyone, decides to frontrun the ECB's monetization of European assets (first bonds, and soon everything else too), this is what the outcome looks like.

 
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Lehman Moment For Austrian "Bad Bank" Means Worse Coming





Not "contained." Just six short months ago, the 2Y bonds of Austria's bank bank - HETA Asset Resolution AG - were trading well above par as the world and his mom reached for yield (~6%) in all the wrong places. Today, following the "spectacular development" over the weekend that the bank will be wound down due to the discovery of an $8.5bn "hole" in its balance sheet, the 2Y HETA bonds are trading below 50c on the dollar (at a yield of 54%). This is indeed Austria's "Lehman" moment as for the first time in the new European 'bail-in' era, senior debt is getting a massive haircut.

 
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Here Is The Reason Why Stocks Just Had Their Best Month Since October 2011





If not the economy or fundamentals, and if not the Fed, which as we know is still on sabbatical after its massive QE1-2-Twist-3 $3 trillion liquidity injection, just what has pushed stocks up to jawdropping all time highs? Here, courtesy of Deutsche Bank, is the answer...

 
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"Massive Mis-Governance" - Q4 Obliterates The Case For QE And ZIRP





Another quarter of no “escape velocity” on main street and a further round of Kool Aid drinker speculation on Wall Street takes us just that much closer to the brink. Yet the Fed remains oblivious and continues to manufacture excuses and equivocations as to why ZIRP should extend into its 80th month and beyond. This is mis-governance on a colossal scale. So when the next thundering crash occurs - it is devoutly to be hoped that “audit the Fed” turns out to be the least of the threats descending on the Eccles Building.

 
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China Cuts Interest Rates, Takes Number Of Central Banks Easing In 2015 To 21





And then there were 21. Hours ago on Saturday, the country whose currency is largely pegged to the dollar which itself is now anticipating a rate hike in the coming months, surprised the world by confirming its economic slowdown yet again following a recent rate cut just this past November when it lowered its benchmark rate by 40 bps, after it again cut benchmark lending and deposit rates by 25 bps starting on March 1. Specifically, the PBOC will lower the one-year lending rate to 5.35% from 5.6% and its one-year deposit rate to 2.5% from 2.75%. It also said it would raise the maximum interest rate on bank deposits to 130% of the benchmark rate from 120%.

 
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"Monetary Policy Is Bankrupt" Dr. Lacy Hunt Warns "Bonds, Not Stocks, Are A Good Economic Indicator"





"While the wealth effect is a theoretical possibility, it is not supported by economic fact. The stock market is not a good guide to the economy, but...the bond market is a very good economic indicator. When bond yields are very low and declining it’s an indication that the same is happening to inflation and that economic activity is weak. The bond yields are not here for any fluke of reason. They are here because business conditions in the US and abroad are quite poor."

 
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Stocks Head For Best Month Since Oct 2011 As US Macro Crashes To 12-Month Lows





US Macro data has collapsed to 12-month lows with 38 data 'misses' and only 6 'beats. Earnings expectations have plunged most since Lehman (over 5% in the last 3 months) hovering at 10-month lows. So it makes perfect sense that, unless we see a late-day collapse today, the S&P 500 will post the best monthly performance since October 2011.

 
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Chicago PMI Crashes Most Since Lehman To Lowest Since July 2009





January's brief 'hope' bounce following 3 months of weakness is long forgotten as February's Chinago PMI crashes to 45.9 (missing expectations of 57.5) - its lowest since July 2009. This is the biggest MoM drop since Lehman in Oct 2008. New Orders suffered the largest monthly decline on record, leaving them at the lowest since June 2009. Seems like it is time to blame the weather... PMI says it is "difficult to gauge magnitude of weather and port strike" but blames it nonetheless.

 
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The Pathetic 'Talk Therapy' Of Janet Yellen





What in god’s name does Janet Yellen think she is doing? Just a few weeks ago she established the ridiculous Fedspeak convention that “patient” means money market rates will not rise from the zero bound for at least two meetings. Now she has modified that message into “not exactly”.

 
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The One Number The Market Is Focused On: Real Hourly Wages Surge Most Since Lehman Deflationary Shock





In today's deluge of macro data, one number stood out: the parallel release by the BLS of the real average hourly earnings, which is simply taking the previously reported nominal hourly wage data, and applying whatever deflator gets released in parallel by the BLS. And, not surprisingly, after the nominal jump in January wages, a number which may very well be revised lower as has been the case so often before, courtesy of the headline deflation, the real jump in hourly wages was even higher. In fact, rising to an inflation adjusted $10.55/hour from $10.42 in December, it meant real wages rose by 1.2%, which was the best jump in hourly wages since... the months following the Lehman collapse. Because everyone remembers how the deflationary vortex in the aftermath of the Lehman bankruptcy led to a sense of wealth and eagerness to spend deflation adjusted wages.

 
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US Posts First Negative Inflation Print Since Lehman On Gas Price Plunge





As previewed earlier today, January CPI data was historic in that, 6 years after Lehman, the US just reported its first negative headline CPI print, with overall inflation, or rather deflation, in January coming at -0.1%, in line with expectations, and down from the 0.8% in December. On a monthly basis, CPI tumbled by 0.7% from December, driven almost entirely by collapsing energy prices. Excluding the Great financial crisis, one has to go back a few years to find the last time the US posted annual headline deflation.... all the way back to August 1955, or just about the time Marty McFly was trying not to dance with his mother.

 
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Stocks Resume Rise To New Records As US Prepares For First Annual Deflation Since 2009





Following a quiet overnight session in which the main event appears to be a statement by Chinese premier Li for more active fiscal policy, which has pushed the metals complex higher, although technically every other asset class as well, with US equity futures set to open in fresh record high territory, even as 10Y yields around the world continue to decline, attention today will fall on the CPI print due out shortly, because if consensus is correct, January will be the first month this decade when US inflation posts a negative print, mostly due to the delayed effect of sliding commodity prices. As Deutsche recaps, the most important number today is the headline CPI where the headline YoY rate is predicted to be negative by the market (-0.1%) for the first time since 2009. Over this period the YoY rate stayed negative for 8 months. However before this we hadn't seen a full year decline since August 1955. In other words, a few months before what may be the first US rate hike for a new generation of traders, the US is set to print its first annual deflation since Lehman, transitory or not.

 
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Janet Yellen Is Freaking Out About "Audit The Fed" – Here Are 100 Reasons Why She Should Be





Janet Yellen is very alarmed that some members of Congress want to conduct a comprehensive audit of the Federal Reserve for the first time since it was created. During testimony this week, she made “central bank independence” sound like it was the holy grail. Even though every other government function is debated politically in this country, Janet Yellen insists that what the Federal Reserve does is “too important” to be influenced by the American people. Does any other government agency ever dare to make that claim? If the Fed is doing everything correctly, why should Yellen be alarmed? What does she have to hide?

 
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This Is The Biggest Problem Facing The World Today: 9 Countries Have Debt-To-GDP Over 300%





This is the biggest problem facing the world today, namely that at least 9 countries have debt/GDP above 300%, and that a whopping 39% countries have debt-to-GDP of over 100%!

 
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