After forensically analyzing Morgan Stanley's balance sheet (which is very much like the rest of Wall Street's balance sheet) I can draw direct parallels to that of Lehman and Bear Stearns in 2007. It's a party!
Whether it’s intentional or accidental. The more Mom and Pop tunes out – the less to feed on for the HFT’s till eventually there’s no one left to feed on except for themselves – and I believe you are witnessing in real-time this exact phenom which will be brought on not only quicker, but with more ferocity moving forward. For Mom and Pop are not coming back to either the “markets” or CNBC. They’re done.
News That Matters
At a certain point, we suppose Joe Biden took a look at the state of the 2016 race for The White House and thought: "why not me?"
Want further evidence of the misappropriation of taxpayer funds to post-secondary education? Look no further than the Pell grant program.
Following the end of a horrible week for petroleum importers (not to mention shale producers) despite WTI briefly dipping under $40 (wasn't this supposed to be great news for the US economy?) we have the start of a just as ugly week for the Persian Gulf oil exporters, whose Sunday market open can be described as a continuation of last week's broad risk carnage, and where Saudi Arabia, until recently the region's best performing market, is now down 10% for the year and down 30% compared to 12 months ago.
Last week, in the global currency war’s latest escalation, Kazakhstan instituted a free float for the tenge causing the currency to immediately plunge by some 25%. The rationale behind the move was clear enough. What might not be as clear is how recent events in developing economy FX markets stem from a seismic shift we began discussing late last year - namely, the death of the petrodollar system which has served to underwrite decades of dollar dominance and was, until recently, a fixture of the post-war global economic order.
Imagine that the Food and Drug Administration (FDA) was a corporation, with its shares owned by the nation's major pharmaceutical companies. How would you feel about the regulation of medications? Whose interests would this corporation be serving? Or suppose that major oil companies appointed a small committee to periodically announce the price of a barrel of crude in the United States. How would that impact you at the gasoline pump? Such hypotheticals would strike the majority of Americans as completely absurd, but it's exactly how our banking system operates.
Even if it is short term oversold, this is actually a quite dangerous market – caveat emptor, as they say.
News That Matters...
Persistently low oil prices have already inflicted economic pain on oil-producing countries. But with crude sticking near six-year lows, the risk of political turmoil is starting to rise. There are several countries in which the risks are the greatest – Algeria, Iraq, Libya, Nigeria, and Venezuela – and, as we noted previously, RBC Capital Markets has labeled them the “Fragile Five.”
If there’s anything Brazil certainly does not need, it’s more bad news. The country is, in many ways, a symbol of the great EM unwind and the situation is made immeasurably worse by political instability. The economic outlook - which was already bad enough between a harrowing bout of staglflaton and dual deficits on the fiscal and current accounts - just got a lot worse as unemployment spiked to 7.5%, well ahead of consensus and the worst in five years. How bad is it you ask? Bad enough that BofAML now says the "key" stat to focus on is the number of participants in recurring street protests.
The central bank has injected new capital into the China Development Bank (CDB), which provides medium and long term financing to major national projects, in a bid to reinforce its capital adequacy.
The story behind the deadly chemical explosion that rocked China’s Tianjin port last Wednesday continues to evolve amid fears that the public could be at risk from the hundreds of tonnes of sodium cyanide stored at the facility. Indeed, new samples show that the cyanide level in the water around the site is some 28 times the safety standard. It looks as though determining who actually owns Ruihai will be complicated by the fact that in China, it’s not uncommon for front men to hold shares on behalf of a company’s real owners. In an effort to pacify the country’s censored masses, party mouthpiece The People’s Daily said 10 people, including the head and deputy head of Ruihai had been detained since Thursday. Finally, initial estimates put the cost of the blast at bewteen $1 billion and $1.5 billion.
What happens when we roll back into the next official recession, unemployment soars, and consumers really stop spending? What is revealed when you look under the hood of this economic recovery is that it is a complete and utter fraud. The recovery is nothing but smoke and mirrors, buoyed by subprime auto debt, really subprime student loan debt, corporate stock buybacks, and Fed financed bubbles in stocks, real estate, and bonds. The four retailers listed below are nothing but zombies, kept alive by the Fed’s ZIRP and QE, as they stumble towards their ultimate deaths. The coming recession will be the knife through their skulls, putting them out of their misery.