• Marc To Market
    11/22/2014 - 10:16
    Contrary to the death of the dollar chatter, the US currency continues to appreciate.  Here's why there is still punch left in the bowl.  
  • Tim Knight from...
    11/21/2014 - 21:06
    As you can see by this view of the NQ, this massively bullish news has not, as of yet, represented any kind of sea-change in the markets. Before the day was even out (again, in some, not all markets...

Personal Consumption

Tyler Durden's picture

Destroying The Myth That Lower Gas Prices Boost Consumption





While the argument that declines in energy and gasoline prices should lead to stronger consumption sounds logical, the data suggests that this is not actually the case.

 
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"My Helicopters Are Ready. You Will All Be Trillionaires!" - Mario Draghi, ECB





“Unconventional measures might entail the purchase of a variety of assets, one of which is sovereign bonds,” the ECB president said in Brussels yesterday in answer to a question during his quarterly testimony to lawmakers at the European Parliament. Draghi and the uber doves appear determined to ignore the failure of QE in both the U.S. and Japan.

 
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Japan Goes Full Helicopter-Ben: Prints "Free Gift-Cards" To Spark Consumption





Since Ben Bernanke reminded the world of the existence of government printing-presses, echoed Milton Friedman's "helicopter drop" solution to fighting deflation, and decried Japan for not being as insane as it could be... it has only been a matter of time before some global central bank decided that the dropping of cash onto the populace was the key to economic recovery. Having blown their wad on QQE (and been left with a triple-dip recession), it appears Japan has reached that limit. As Japan's News47 reports, Prime Minister Shinzo Abe has instructed his cabinet to develop economic measures such as handing out 'gift certificates' to the poor to "support personal consumption directly."

 
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Debt, Propaganda And Now Deflation





Our world, our life, has been built on debt and propaganda for many years. They have kept us from noticing how poorly we are doing. But now a third element has entered the foundation of our societies, and it’s set to eat away at everything that has – barely – kept the entire edifice from crumbling apart. Deflation.

 
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Why The Stock Market Is Detached From The Economy





The recent mid-term elections sent a very clear message to Washington, D.C., which was simply "the economy sucks."  While statistical economic data suggests that the economy is rapidly healing, it has only been so for a very small percentage of the players. For most American's they have only watched the "rich" prosper as the Federal Reserve put Wall Street before Main Street. Stock buybacks, dividends and acquisitions are great for those that have money invested in the financial markets, however, for the rest of America it is only a spectator sport. The risk to the markets currently is that the wave of deflationary pressures engulfing the globe have only begun to wash back on the domestic economy. The drag on exports, combined with the potential for extremely cold winter weather, puts both economic and earnings growth rate projections at risk. With the markets in extremely overvalued territory, the risks to investors clearly outweigh the rewards over the long-term.

 
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Q3 GDP Rises 3.5% Despite Sharp Slowdown In Consumption, Pushed Higher By Government Spending Spree





Moments ago, the market was expecting Q3 GDP to print at 3.0%, and was pleasantly surprised when instead it got a 3.5% print, sending all risk assets kneejerk higher. However, a quick glance into the components revealed that things were certainly not as they seemed, with Personal Consumption in Q3 actually decreasing notably from Q2's 2.5%, to just 1.8% in Q3, below the 1.9% Expected, and accounting for 1.22% of the 3.54% Q3 GDP, the lowest Personal Consumption boost to GDP since Q2 2012 excluding the infamous Q1 winter vortex quarter. So what happened to boost Q2 GDP if that core driver, the US consumer was not there? Simple. Government stepped in, and stepped in hard, with its 0.83% boost to the bottom line GDP the highest since Q2 of 2009!

 
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Sudden Bout Of Risk-Offness Sends European Shares Sharply Lower, US Futures Not Happy





To summarize (even though with liquidity as non-existant as it is, this may be completely stale by the time we go to print in a minute or so), European shares erase gains, fall close to intraday lows following the Fed’s decision to end QE. Banks, basic resources sectors underperform, while health care, tech outperform. Companies including Shell, Barclays, Aviva, Volkswagen, Alcatel-Lucent, ASMI, Bayer released earnings. German unemployment unexpectedly declines. The Italian and U.K. markets are the worst-performing larger bourses, the Swiss the best. The euro is weaker against the dollar. Greek 10yr bond yields rise; German yields decline. Commodities decline, with nickel, silver underperforming and wheat outperforming. U.S. jobless claims, GDP, personal consumption, core PCE due later.

 
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Hilsenrath Warns: Fed's "Vote Of Confidence In US Economy" Means Mid-2015 Rate Hike Possibility





Pointing to “solid job gains” and a falling unemployment rate, the Fed said a range of labor market indicators suggest that labor market slack is “gradually diminishing.” In the process it struck from the statement an earlier assessment that labor market slack was substantial, a phrase investors have been watching closely for signs the Fed is becoming more confident about the economy. If all goes as they plan, officials will turn their attention in the months ahead to discussions about when to start raising short-term interest rates and how to signal those moves to the public before they happen. Many expect to move on rates by the middle of 2015.

 
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3 Things Worth Thinking About





Caution is advised.

 
Tyler Durden's picture

The Four Questions Goldman's "Confused, Understandably Frustrated" Clients Are Asking





One would think that after last week's market rout, the worst in years, that Goldman clients would have just one question: why just a month after you, chief Goldman strategist David Kostin said to "Buy Stocks Because Hedge Funds Suck; Also Chase Momentum And Beta", are stocks crashing? No really: this is literally what Kostin said in the first days of September: "investors should buy stocks which should benefit from a combination of beta, momentum, and popularity as funds attempt to remedy their weak YTD performance heading into late 2014." Turns out frontrunning the world's most overpaid money losers wasn't such a great strategy after all. In any event, that is not what Goldman's clients are asking. Instead as David Kostin informs us in his weekly letter to Jim Hanson's beloved creations, "every client inquiry focused on the same four topics: global growth, FX, oil, and small-caps."

 
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Obama's Economic Recovery In Pictures





The last two days have seen President Obama will give speeches on the economy. This issue is critical going into the mid-term elections as virtually every poll shows this is a top concern of voters. The question of economic recovery is interesting in the context of where that recovery has occurred.  As we discussed recently in "For 90% Of Americans, There Has Been No Recovery," while the ongoing interventions by the Federal Reserve have inflated asset prices, the only real accomplishment has been a widening of the wealth gap between the top 10% of individuals that have dollars invested in the financial markets and everyone else. Unfortunately, the facts are going to make promoting an "economic success" story rather difficult. Let's review Obama's economic scorecard in terms of the things that truly matter to the average American...

 
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Final Q2 GDP Surges 4.6% Thanks To Profit Definition Change; Personal Consumption Weaker Than Expected





The good news in the just released final Q2 GDP estimate soared by 4.6%, just as Wall Street expected, which was the biggest quarterly jump since 2011 Q4 2011, driven by gains in business spending, where mandatory forced Obamacare outlays led to a $17.5 billion chained-dollars increase in Healthcare spending to $1815.9 billion. Also helping were corporate profits which rose 8.4% in Q2, the most since Q3 2010, once again courtesy of adjustment in definitions (recall the IVA vs CCAdj change we discussed previously). 

 
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Frontrunning: September 26





  • Mystery Man Who Moves Japanese Markets Made More Than 1 Million Trades  (BBG)
  • Draghi’s Trillion-Euro Pump Finds Blockage in Spain: Euro Credit (BBG)
  • Apple plays defense on iPhone 6 bending, software concerns (Reuters)
  • U.S. to Shield Military From High-Interest Debt (WSJ)
  • U.S. Outgunned by Extremists on Social Media Battlefield (BBG)
  • Yen Weakens on Pension Fund Reform; Aussie Drops to 7-Month Low (BBG)
  • Secretive Russian oil giant has no fear of sanctions (Reuters)
  • Ride-Sharing Services Face Legal Threat From San Francisco, Los Angeles (WSJ)
  • Putin’s Sell-Treasuries-for-BRICS Bonds Plan Has Limits (BBG)
 
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Futures Rebound Following Yesterday's Rout





It was all up to the Japanese banana market to fix things overnight: after the biggest tumble in US equities in months, and Asian markets poised for their third consecutive weekly drop, the longest streak since February, Japan reported CPI numbers that despite still surging (for example, in August TV prices soared 9.5%, but "down" from 11.8% the month before), when "adjusting" for the effects of the April tax hike, missed across the board. As a result the USDJPY was at the lows and threatening to break the recent parabolic surge higher which has helped move global equities higher in the past few weeks when the usual spate of GPIF-related headlines, because apparently the fact that Japan will and already has begun sacrificing the retirement funds of its citizens just to keep Abe's deranged monetary dream alive for a few more months has not been fully priced in yet, sent the USDJPY soaring yet again.

 
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Key Events In The Coming Week





With the snoozer of an FOMC meeting in the rearview mirror, as well as Scotland's predetermined independence referndum, last week's key events: the BABA IPO and the iPhone 6 release, are now history, which means the near-term catalysts are gone and the coming week will be far more relaxed, if hardly boring. Here is what to expect.

 
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