New Normal

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In Which We Learn That US GDP Actually Contracted In The First Quarter





Curious why after inexplicably turning red earlier today (because as everyone knows in the New Normal selling is largely forbidden and the Caracas stock market is the model to imitation), the DJIA is about to turn green again and press on new all time record highs? Simple. Following the earlier disastrous construction spending report which feeds directly into the GDP calculation, banks promptly revised their Q1 GDP estimates. To negative.

 
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Chicago PMI Jumps To 6-Month High; 5 Sigma Beat





Following last month's biggest miss in a year, Chicago PMI resurged to its highest level (and biggest beat) since October 2013. Optimism is rife in the report as the rise in new orders and production is now instantly extrapolated into escape velocity growth (as opposed to catch-up demand). Prices Paid dropped... which is odd if there's so much awesome demand? Employment improved, but did not offset March's decline. Of course, the 5 standard deviation beat of expectations is now considered the new normal...

 
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Bill Gross Contemplates Sneezing





Last month it was a tribute to his cat. This month, the manager of the world's largest bond fund discusses sneezing: "A sneeze is, to be candid, sort of half erotic, a release of pressure that feels oh so good either before or just after the Achoo! The air, along with 100,000 germs, comes shooting out of your nose faster than a race car at the Indy 500. It feels sooooo good that people used to sneeze on purpose." He also discusses the aftermath: "The old saying goes that when the U.S. economy sneezes, the world catches cold. That still seems to be true enough, although Chinese influenza is gaining in importance. If both sneezed at the same time then instead of “God bless you” perhaps someone would cry out “God have mercy.” We’re not there yet, although in this period of high leverage it’s important to realize that the price of money and the servicing cost of that leverage are critical for a healthy economy. " He also talks about some other things, mostly revolving around long-term rates of return assumptions and what those mean for investors.

 
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Rents Soar To Record High As Homeownership Rate Plunges To 19 Year Low





The US non-recovery summarized in a nutshell: nobody can afford to buy anymore, so everyone is forced to rent. The result: homeownership rate plunging to 19 year lows, while median asking rents just soared to a new all time high. Thank you Ben Bernanke for the "New Normal American Dream."

 
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Tit For Tat: Ukraine Blocks Crimea Water Supply With Russia Set To Halt Ukraine Gas





Moments ago, Russia casually hinted that Ukraine should use part of the IMF aid (which has been promised in virtually all increments between $1 billion up to $18 billion, but at last check not one penny has been wired) to repay Gazprom's debt, which is anywhere between the $2.2 billion Gazprom has said Ukraine is delinquent on for 2014 gas supplies, and an additional $11.4 billion which is what Gazprom said Ukraine's state-owned energy firm Naftogaz owes for unused take-or-pay arrangements in 2013. This happened just hours after Ukraine reportedly used the 'nuclear option' and halted the bulk of water supply to Russia's newest territory: Crimea.  Tit for tat?

 
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Guest Post: Demography + Debt = Doom





A ‘Perfect Storm’ of demography and debt will economically and financially doom almost every country on earth. It will be TEOTWAWKI – ‘The End Of The World As We Know It’. No, it’s not the end of life or even the end of civilization. However, when it’s all over, nothing will ever be the same and that includes the disappearance of much of the middle class.  The good news - The storm won’t last forever. The bad news is there will be much more pain before it ends unless you make an effort to understand what’s happening and why.

 
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This Is "Why" Caterpillar Is Trading At Two-Year Highs





Moments ago CAT stock touched 52 week highs, or a level not seen since April 2012. Why? The chart below which shows Caterpillar dealer retail sales by region surely has something to do with it. With global sales sliding again now that the third consecutive dead cat bounce is over, and dumping the most since February of 2013 or 12% from a year ago, when sales had in turned dropped 11% from 2012, driven by a collapse in Asian-Pacific, Latin American and EMEA sales, all of which crashed by more than 20%, we can only assume the company is well on its way to an epic collapse in its top and bottom lines as well.

 
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Retail Store Closures Soar In 2014: At Highest Pace Since Lehman Collapse





What a better way to celebrate the rigged markets that are telegraphing a "durable" recovery, than with a Credit Suisse report showing, beyond a reasonable doubt, that when it comes to traditional bricks and mortar retailers, who have now closed more stores, or over 2,400 units, so far in 2014 and well double the total amount of storefront closures in 2013, this year has been the worst year for conventional discretionary spending since the start of the great financial crisis!

 
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"Holy Grail" HFT Firm Virtu Questioned By NY AG





Having the trade record of Bernie Madoff and the braggadocio of a WWF wrestler was just too much for New York Attorney General Eric Schneiderman to ignore. Rigged Market HFT Poster-child, and recent-delayed IPO, Virtu Financial has received a letter of inquiry from the AG's office requesting information about its business. As Bloomberg reports, a person with knowledge of the matter said this week that six high-frequency trading firms have received subpoenas as part of Schneiderman’s investigation and Virtu was asked for similar information in a letter of inquiry which could be escalated to a subpoena if the company doesn’t comply voluntarily.

 
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The Great Stock Buyback Craze Is Finally Ending





As we reported last night, whether as a result of Snowden revelations and NSA blowback by BRIC nations, or simply because the global economy is contracting far faster than rigged and manipulated markets worldwide will admit, IBM's Q1 revenues not only missed consensus earnings, but dropped to their lowest level since 2009. And yet, IBM stock is just shy off its all time highs and earnings per share have been flat if not rising during this period, leading even such acclaimed investors who never invest in tech companies as Warren Buffett to give IBM the seal of approval. How is that possible? Simple: all that investment grade companies like IBM have done in the New Normal in order to preserve the illusion of growth, is to use cash from operations, or incremental zero-cost leverage, to fund stock buybacks. In essence a balance sheet for income statement tradeoff. However, that "great stock buyback gimmick" as we call it, is finally coming to an end.

 
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HFT Firm CEO Seeks Taxpayer Dollars To Save His Hockey Team





The Florida Panthers finished this season with the 2nd lowest points total in the NHL and drew the 2nd lowest average attendance of 14,200 fans per home game. The team is losing $25 million annually. All of this is the exact opposite situation of the team's owner - Vincent Viola of HFT firm Virtu Financial infamy. As Bloomberg reports, Viola, whose high-frequency trading firm plans to raise millions in an initial public offering next month, is seeking tax dollars to help cover the bills for the hockey team he bought six months ago. Viola asked lawmakers in South Florida’s Broward County to use $64 million in taxpayer funds for arena bond payments owed by the team. In addition to taking over bond payments, which would be made over the next 14 years, the team wants concessions that would cost county taxpayers another $14 million in the same period.

 
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Gold Futures Halted Again On Latest Furious Slamdown





It seems the two words "fiduciary duty" are strangely missing from the dictionary of the new normal's asset management community. This morning, shortly before 8:27am ET, someone decide that it was the perfect time to dump thousands of Gold futures contracts worth over half a billion dollars notional. This smashed Gold futures down over $12 instantaneously, breaking below the 200DMA and triggered the futures exchange to halt trading in the precious metal for 10-seconds. Palladium also got clobbered and was also halted. This is gold's worst since Bernanke 'tapered' in December.

 
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Citi Mortgage Originations Drop To Record Low





What was worst, and naturally will not be discussed at all by the peanut gallery, about Citi's just announced results is that the amount of Citigroup mortgage originations - that key aspect of the trumpeted "housing market recovery" - did what it has done at every other bank. It plunged. Only at Citigroup, it plunged so badly, it just reached a new record low which at $5.2 billion is a 71% drop from a year ago! Long live the housing recovery... in which nobody seems to be participating.

 
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JPM Misses Top And Bottom Line, Slammed By Collapse In Mortgage Origination, Slide In Fixed Income Trading





So much for the infallible Mr. Dimon.

Moments ago, JPM reported Q1 earnings which missed across the board, driven by the now traditional double whammy of collapsing mortgage revenues - the lifeblood of any old normal bank - and fixed income trading revenues  - the lifeblood of new normal banks. Specifically, JPM reported revenues of $23.9 billion, well below the expected $24.5 billion, matched by a reported earnings miss of $1.28, down from $1.59 a quarter ago (and down $0.02 from Q4, 2014), also missing consensus estimates of $1.38. The breakdown was as follows.

 
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It's On: Gazprom Prepares "Symbolic" Bond Issue In Chinese Yuan





Curious what the fate of the petrodollar is? Look no farther than this Interfax update blasted moments ago by Bloomberg: "Gazprom Considers 'Symbolic' Yuan Bond Issue, Interfax Says."

 
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