Market Conditions

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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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Brazil Consumer Confidence Collapses To Lowest. Ever.





It appears all the emerging/emerged economies of the world that are supposed to be the dynamic growth engines to lead the world to escape velocity are, well, not. Perhaps no better example is Brazil where hyper-growth expectations have disappeared into a black hole as business and consumer confidence collapsed this week to historical lows. As Goldman noted, "This poses major headwinds for private consumption and overall activity in the coming months."

 
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14 Signs That Most Americans Are Flat Broke And Totally Unprepared For The Coming Economic Crisis





With more than 60 percent of all Americans are living paycheck to paycheck, and a whopping 24 percent of the country has more credit card debt than emergency savings, when the coming economic crisis strikes, more than half the country is going to be financially wiped out within weeks. If you are trusting in the government to save you when things fall apart, you will be severely disappointed.

 
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US Macro Crashes Near 1-Year Lows, February Running At 90% Data Miss Rate





Despite this morning's US Services PMI rise, US macro data is running at a 90% miss rate in February and Richmond Fed's tumble from 6 to 0 (11mo lows) along with The Conference Board's Consumer Confidence dropping the most since Oct 2013 merely confirm this trend. This is the biggest 4-month slump in Richmond Fed since 2010 as practically every sub index deteriorated. California, Florida and New York saw over consumer confidence collapse and Texas saw 'present situation' plunge. US Macro data is now nearing its lowest in a year...

 
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Services PMI Surge "Puts June Rate Hike Firmly Back On Table"





Worst. Case. Scenario. Markit US Services (flash) PMI printed an impressive 57.0 (smashing 54.5 expectations), well up from January's 54.2 as combined with the Manufacturing (soft survey data) suggests, according to Markit, that GDP is growuing around 3.0% annualised. Of course both these 'surveys' print positive amid one of the biggest declines and series of misses in US macro data of the last few years. As Markit notes, “The Fed will no doubt be encouraged by the resilience of the economy...and increasingly minded to start the process of normalising monetary policy in June."

 
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"You Don't Buy Home Insurance After The Roof Catches Fire"





US stock markets reached record highs last week. Question: does that make them riskier, or less risky? We think the former.

 
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Record Low Baltic Dry Casualties Emerge: Third Dry-Bulk Shipper Files For Bankruptcy In Past 3 Weeks





The unintended consequences of a money-printed, credit-fueled, mal-investment-boom in commodities (prices - as opposed to physical demand per se) and the downstream signals that sent to any and all industries are starting to bite. The Baltic Dry Index has plunged once again to new record lows and the collapse of the non-financialized 'clean' indicator of the imbalances between global trade demand and freight transport supply has the real-world effects are starting to be felt, as Reuters reports the third dry-bulk shipper this month has filed for bankruptcy... in what shippers call "the worst market conditions since the '80s."

 
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Paul Craig Roberts: The Cancer Of Financial Repression (And Why You Can't Do Anything About It)





Financial repression "is going on on several fronts conducted by different people for their own agendas, though they all seem to be mutually supporting... There is a lot of collusion - the cancer which started in the US Financial System has spread globally... You now have two parties with the same head and reporting to the same masters. There is no longer any countervailing power."

 
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Europe "Isolates" Putin? Considers "Reframing" Energy Relations With Russia





It appears President Obama's "costs" imposed on Russia have boomerang'd just too much for Europe to take. As Reuters reports, The EU is seeking to create a single energy market, based on cross-border connections to improve security of supply and reduce dependence on Russia, which supplies roughly one third of EU energy. The headline pivot away from Putin, likely misses the fact that there is very little a stagnating Europe can do, even in the medium term, to 'reduce' dependence on Washington's nemesis.

 
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Moody's "Junks" Russia, Expects Deep Recession In 2015





Having put Russia on review in mid-January, Moody's has decided (somewhat unsurprisingly) to downgrade Russia's sovereign debt rating to Ba1 (from Baa3) with continuing negative outlook. The reasons:

*MOODY'S SAYS RUSSIA EXPECTED TO HAVE DEEP RECESSION IN '15, CONTINUED CONTRACTION IN '16
*MOODY'S SEE RUSSIA DEBT METRICS LIKELY DETERIORATING COMING YRS

We assume the low external debt, considerable reserves, lack of exposure to US Treasuries, and major gold backing were not considered useful? Moody's concludes the full statement (below) by noting that they are unlikely to raise Russian sovereign debt rating in the near-term.

 
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US Macro Collapses To 11-Month Lows, 88% Of Data Has Missed In February





Despite the total and utter cognitive dissonance of talking-heads on mainstream media channels, the US economic data is not 'strong', is not 'goldilocks', is not 'decoupled', is not 'solid'. In fact, it's absolutely terrible. Bloomberg's US Macro data indicator which tracks both beats-and-misses and improvement/deterioration in data - is at 11-month lows. February alone has seen 29 data items miss expectations (from retail sales to industrial production) with only 4 data points beating expectations (including the constantly revised nonfarm payrolls data which so many hang their hat on). But apart from that... everything is awesome.

 
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FOMC Minutes Show Patient-er-For-Longer, "Foreign Risks"-Fearful Fed





The January statement had only modest changes so reading the tealeaves of the FOMC Minutes 'should' provide little additional color with the main focus on the meaning of 'patient', fears over 'international developments', the 'right' gauge of inflation, and pace of rate lift-off...

  • *MANY FED OFFICIALS INCLINED TO STAY AT ZERO LONGER: MINUTES
  • *MANY OFFICIALS FELT DROPPING `PATIENT' MAY LEAD TO DATE FOCUS
  • *MANY FED OFFICIALS SAW RISKS IF FOREIGN WEAKNESS WORSENED
  • *FED OFFICIALS AGREED POLICY SHOULD STAY DATA DEPENDENT

It appears The Fed is 'worried' again... lower for longerer. Pre-FOMC Minutes: S&P Futs 2091.25, 10Y 2.122%, Gold $1201.50, WTI $52.05

 
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Market Wrap: Stocks Drift, Dollar Stronger, Oil Snaps Rally, Treasurys Slide On Microsoft Deal





So far it has been largely a repeat of the previous overnight session, where absent significant macro drivers, the attention again remains focused both on China, which reported some truly ugly inflation (with 0.8% Y/Y CPI the lowest since Lehman, just call it deflation net of the "goalseeking") data (which as usually is "good for stocks" pushing the SHCOMP 1.5% higher as it means even more easing), and on Greece, which has not made any major headlines in the past 24 hours as patience on both sides is growing thin ahead of the final "bluff" showdown between Greece and the Eurozone is imminent. The question as usual is who will have just a fraction more leverage in the final assessment - Greece has made its ask known, and it comes in the form of 10 billion euros in short-term "bridge" financing consisting of €8 billion increase in Bills issuance and €1.9 billion in ECB profits, as it tries to stave off a funding crunch, a proposal which will be presented on the Wednesday meeting of euro area finance ministers in Brussels. The question remains what Europe's countrbid, if any, will be. For the answer: stay tuned in 24 hours.

 
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Frontrunning: February 9





  • Greek Risk Draws Global Concern on Lehman Echo Warnings (BBG)
  • Merkel to urge caution in U.S. as pressure builds to arm Ukraine forces (Reuters)
  • West Races to Defuse Ukraine Crisis (WSJ)
  • German-French Push Yields Ukraine Summit Plan With Putin (BBG)
  • Swiss Leaks lifts the veil on a secretive banking system (ICIJ)
  • Italy Lenders Seen Cleansing Books Amid Bad-Bank Plans (BBG)
  • G-20 Finance Chiefs Face Tough Test in Istanbul (WSJ)
  • Demand for OPEC Crude Will Rise This Year, Says Group (WSJ)... or rather prays
  • U.S. Banks Say Soaring Dollar Puts Them at Disadvantage (WSJ)
 
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