Because our macroeconomic policies have false targets and actually incentivize short term strategies the Fed has directly led us off of an economic cliff. Now that the Fed has boxed itself out of any further action, the market is at the peril of a collapsing, breadwinner-job-less and debt ridden economy and so prepare yourself for the largest market ‘correction’ the world has ever faced.
The prospect that the leaders of our monetary politburo are about to be tarred and feathered by economic reality might be satisfying enough if it led to the repudiation of Keynesian central planning and a thorough housecleaning at the Fed. Unfortunately, it will also mean that tens of millions of retail investors and 401k holders will be taken to the slaughterhouse for the third time this century. And this time the Fed is out of dry powder, meaning retail investors will never recover as they did after 2002 and 2009.
According to the just revealed latest forecast by the most accurate forecaster of GDP, the Atlanta Fed, with all the latest data in hand, the US economy is now estimated to have grown just 1.3% in the fourth quarter, down from 1.9%, and the lowest print it has had throughout the forecast period which started in late October.
The end result was that in November personal savings was $748 billion, a $9.4 billion decline from the $757 billion a month ago, which translates into a 5.5% savings rate, down from last month's 5.6%, however well above the average rate seen over the past 12 months as consumers continue to be unwilling to dip into their savings despite the so-called "gas" tax cut.
Santa Rally Lifts Global Stocks For Third Day: Will Volumeless Levitation Push The S&P Green For 2015?Submitted by Tyler Durden on 12/23/2015 07:55 -0400
With just a handful of trading sessions left in the year, this is how the major global markets look as 2015 is about to close. As of this moment, and in keeping with the Christmas spirit, the biggest question is whether the S&P500 will close green or red for the year.
In yet another government SNAFU, the US commerce department has released spending data prematurely. Instead of tomorrow morning, its website released the data at 1923ET.. and it is not good. Despite a 0.3% rise in November, thanks to downward revisions, the YoY growth in Spending was just 2.9%. May 2013 was the last time YoY growth was weaker than this and corresponds with spending weakness seen in each of the last 3 recessions.
Fyodor Dostoyevsky’s seminal masterpiece Crime and Punishment is often thought of as one of the longest classics at more than 200,000 words. The Consolidated Appropriations Act of 2016, which was signed into law on Friday, is nearly twice as long. At 887 pages, the bill allocates $1.15 trillion in war and discretionary spending for fiscal year 2016 which began almost three months ago. (That’s an average of $1.3 billion in spending PER PAGE of the bill.) In making it public law, President Obama has effectively signed the death warrant of the US government’s finances.
Futures Jump After Friday Drubbing, Despite Brent Sliding To Fresh 11 Year Lows, Spanish Political UncertaintySubmitted by Tyler Durden on 12/21/2015 07:55 -0400
In a weekend of very little macro newsflow facilitated by the release of the latest Star Wars sequel, the biggest political and economic event was the Spanish general election which confirmed the end of the PP-PSOE political duopoly at national level. As a result, there was some early underperformance in SPGBs and initial equity weakness across European stocks, which however was promptly offset and at last check the Stoxx 600 was up 0.4% to 363, with US equity futures up nearly 1% after Friday's oversold drubbing. In other key news, the commodity slide continues with Brent Oil dropping to a fresh 11-year low as futures fell as much as 2.2% in London after a 2.8% drop last week.
With sadly ironic timing, we noted just last week that the blowback from "unequivocally good" low oil prices was set to cross the border from an increasingly suicidal Canada, and so, as AP reports, it appears Alaska is facing the toughest of times. As oil prices make new cycle lows, Alaska Gov. Bill Walker has called for the state's first income tax in 35 years in order to close a $3.5-billion-dollar deficit the state is carrying. Alaska is currently the only state that does not have a state sales tax or personal income tax, having relied on oil income but, as Walker tweeted, "now is the time for Alaskans to pull together."
While US floor markets are closed for the Thanksgiving holiday (equity, rates and energy futures are open until 1pm Eastern), Europe and Asia (as well as US equity futures) were busy rebounding overnight on strength in the commodity complex following yesterday's news that China's metals producers have asked for a wholesale government bailout or the "QEmmodity" as we have dubbed it, for the first time since 2009, which together with news that China would soon start arresting "malicious metal sellers" has provided a push for commodity prices across the board.
Just when you thought it was safe to hike rates, The Atlanta Fed takes an ax to its Q4 GDP forecast, smashing it to cycle lows following this morning's unexpected weakness in consumer spending.
If this data is accurate, and keep in mind the BEA has a habit of revising spending higher after it revises income, to "boost" GDP as we revealed last year, this means that the US consumer is hunkering down at an unprecedented pace, and the 5.6% savings rate is now the highest since 2012, suggesting not only are US consumer unwilling to spending much money, but are actively worried about what is coming just around the corner.
Following yesterday's dramatic geopolitical shock, U.S. equity index futures rise as Russia has not escalated the confrontation with Turkey as some had feared, while Asian shares fall, reversing earlier gains. European stocks are rallying and the euro is falling on the back of a Reuters report that the ECB is mulling new measures to prop up lending, although it’s not clear at this point what the real impact from these measures would be.
It’s quite interesting indeed when both progressives and conservatives seem to be nostalgic for those good ol’ days in the 1950s, for different reasons, of course. Conservatives want to go back to the nuclear Leave It to Beaver family and what not while liberals like to talk about those 90-percent tax rates that we owe our prosperity to. Or something like that. However, what a tax rate is and what is actually paid are two very different things.
Bring On 'Operation Switch' - Bill Gross Calls For A Reverse 'Operation Twist' To "Benefit Savers And The Economy"Submitted by Tyler Durden on 11/03/2015 09:49 -0400
"But they won’t, you know. Yellen and Draghi believe in the Taylor model and the Phillips curve. Gresham’s law will be found in the history books, but his corollary has little chance of making it into future economic textbooks. The result will likely be a continued imbalance between savings and investment, a yield curve too flat to support historic business models, and an anemic 1-2% rate of real economic growth in even the most robust developed countries."