Even Hellicopter Ben would have balanced remarks. However, Janet Yellen has taken dovishness to an all-time high or low dpending on your perspective.
There is much hope pinned on continuing economic recovery in the United States despite a deterioration of the global economy virtually everywhere else. While it was not surprising to see a bounce back in activity after a contractionary first quarter, there are several economic data points that suggest that sustainability of the bounce is unlikely. Expectations are very likely well ahead of reality at the current time. This increases the risk of disappointment in the months and quarters ahead which could be a negative for the markets.
With the impasse over the latest Argentina default going nowhere fast, late last night president Kirchner stunned its creditors when she announced what amounts to a cramdown plan for holdouts, in which all bonds would be stripped of their existing indentures and converted to local law bonds. Or, as some would call it, a "scorched earth" transaction that burns all bridges, and goodwill, with the international creditor community and likely leaves Argentina unable to access global capital markets for the foreseeable future.
As they say, you're the average of the five people you spend the most time with...
Ukraine’s next crisis will be a devastatingly economic one, as violent conflict destroys critical infrastructure in the east and brings key industry to a halt, furthering weakening the energy sector by crippling coal-based electricity production.
Of all the awful tensions roiling and coiling in American society, it’s only a little bit surprising that the racial module is blowing off now rather than, say, the stock market. Perhaps it’s a seasonal thing: race riots in the summer; stock market crashes in the fall, revolutions in the spring.
The stock market is presently a roulette wheel with dimes on black and dynamite on red... The ‘buy the dip’ mentality can introduce periodic recovery attempts even in markets that are quite precarious from a full cycle perspective. Galbraith reminds us that the 1929 market crash did not have observable catalysts: “the crash did not come – as some have suggested – because the market suddenly became aware that a serious depression was in the offing... for it is in the nature of a speculative boom that almost anything can collapse it."
While the markets are currently suggesting that the "dip" is over, there are several immediately prevailing risks that could catch unwitting investors.
While there have been many socio-economic 'explanations for the recent events in Ferguson, many of which have exceeded the realm of the factual and have brazenly encroached on feelings, emotions, heartstrings, and so on, the unpleasant reality is that much of what has transpired not only in the small 21,000-person St. Louis suburban community, but what is taking place across all of America has to do with a far simpler phenomenon: the rise of poverty and the destruction of America's middle class.
I was left slack-jawed as I listened to an interview on financial media between the host and guest. I have always enjoyed as well as respected the host even though many times I may totally disagree. However, as for the guest being interviewed, not only did I disagree: I lost quite a bit of respect for. During the interview the questions were posed as to why people (investors et al) harbor these feelings of angst as to whether or not they should get in, get out, etc,, etc. The guest then went on to use data points, math, trend references, and any other metric available within a snake oil sales bag as to prove his point: Where people not believing in this market rally along with those who’ve not participated are, (and I quote) “Idiots.” I have only one answer to that statement: What you’ve just demonstrated is exactly why people with more than half a brain aren’t buying your message: You are insulting their/our intelligence.
It is the effective manipulation of our belief systems that enslaves us to the present day insanity.
Why can't, or rather won't, the Fed let the bubble market collapse once again? Simple - as the following chart shows, the illusion of wealth is now most critical when preserving the myth of the welfare state: some 50% of all US pension fund assets are invested in stocks and only 20% in Treasurys.
President Obama has once again proved his irrelevance and uselessness by failing to say anything meaningful on the disturbing events of the past week. In fact, he only decided to address it personally and publicly yesterday after being heavily criticized for issuing a press release about the party he attended in Martha’s Vineyard as civilians in Missouri clashed with a paramilitary police force. Despite Obama’s complete apathy, there are some Congressmen forcefully speaking out against the trend from “both sides” of the increasingly meaningless Republican and Democrat divide. The most noteworthy thus far appears to be Democrat Rep. Hank Johnson of Georgia’s 4th Congressional district. In fact, he has sent a Dear Colleague letter to fellow representatives of his intention to introduce the Stop Militarizing Law Enforcement Act in September when Congress returns from recess.
After surging all week on the worst volume of the year, US equities hit an air-pocket of reality this morning as last night's news of a Russian 'invasion' was confirmed by Ukraine (and UK reporters), denied by Russia, and met with silence from the US. Of course, thanks to a handy VIXnado, stock bounced back to VWAP, stabilized and closed the week in the green. The last two weeks have been the best for 7Y bonds in 10 months as it closes back under 2% for the first time since Oct 2013. Amid all this chaos, the US dollar closed unchanged on the week (giving up mid-week gains) as AUD and CAD strength dominated EUR weakness. Gold and silver - after a quiet week - was clubbed lower in the pre-open. Gold and oil surged higher on the Ukraine news - closing marginally lower on the week. VIX was cranked down to an 11 handle before Ukraine hit, surged back over 14.5, then jerked lower to close 'weaker' than stocks imply. Once again, US stocks surged once Europe closed (and of course, the panic buying into close makes perfect sense).
Chinese Power Consumption Crashes: Lowest Growth In 16 Months, Tumbles 10% In Shanghai, As Much As 22% ElsewhereSubmitted by Tyler Durden on 08/15/2014 15:02 -0400
When it comes to Chinese (or any other in these centrally-planned, fabricated days) economic data, there is GDP and then there is reality. And as the current premier of China himself has admitted, there is no more accurate indicator of real, not bullshit "growth", than China's monthly power consumption. It is here that another rather massive divergence from China's official data (which has the world believe China GDP rose 7.5% in Q2) has appeared. According to Economic Information Daily, power consumption in Shanghai and Jiangsu fell by more than 10% y/y in July, compared with double-digit growth a year ago, sources said. And it gets worse: other provinces, including Zhejiang, Anhui, Hubei, Hunan and Guizhou, reported a power consumption declines of up to 22 percentage points. One could almost say the Ukraine ministry of YouTube clips has been put in charge of China's GDP calculation.