Back in November, Nils Smedegaard Andersen, CEO of Maersk, the world’s largest shipping company, gave the world a reality check when it comes to global growth and trade. “The world’s economy is growing at a slower pace than the International Monetary Fund and other large forecasters are predicting” Andersen told Bloomberg. On Wednesday, we got a look at how the challenging environment affected Maersk's bottom line in 2015. The picture wasn't pretty.
Let me be blunt: this next crash will be far worse and more dramatic than any that has come before. Literally, the world has never seen anything like the situation we collectively find ourselves in today. The so-called Great Depression happened for purely monetary reasons. Before, during and after the Great Depression, abundant resources, spare capacity and willing workers existed in sufficient quantities to get things moving along smartly again once the financial system had been reset. This time there’s something different in the story line...
WTI keeps dead-cat-bouncing thanks to the algos and crashing thanks to reality. This morning's reality check on the overnight ramp comes courtesy of a double-whammy from Goldman ("wouldn't be surprised to see WTI in the teens") and The IEA which increased its estimate of excess-supply drastically. This has dragged WTI back below $30 once again and where oil goes, stocks go...
Not only has free speech become a four-letter word - profane, obscene, uncouth, not to be uttered in so-called public places - but in more and more cases, the government deems free speech to be downright dangerous and in some instances illegal. Yet by allowing the government to whittle away at cherished First Amendment freedoms - which form the backbone of the Bill of Rights - we have evolved into a society that would not only be abhorrent to the founders of this country but would be hostile to the words they used to birth this nation.
Lies are always misrepresentations of reality, and reality always wins. The US government rests on an inherently unstable foundation of whoppers - big lies so huge they would make big lie proponent Adolf Hitler blush. The first trick to defeating an enemy is to ascertain its biggest weaknesses and the lies, which it feeds itself, flowing from those weaknesses.
The United States Preventive Services Task Force recently recommended mandatory depression screening for all Americans. Government health care mandates undermine the basic principles of a free society. If it is legitimate for government to tell us what types of health care we must receive, then it is also legitimate for the government to tell us what to eat, when to exercise, and even how to raise our children. To paraphrase C.S. Lewis, a tyranny imposed for our own good is the worst form of tyranny because it is a tyranny without limits.
We already suspected in mid 2013 (worrying about the market far too early as it has turned out in hindsight) that there were parallels to what happened in the late 1990s bull market, specifically near its end in the year 2000. However, in the meantime, even more such parallels have become noticeable.
The US Treasury yield curve has plunged further today (2s10s -5bps at 107bps) breaking to its flattest since January 2008. The curve has been flattening since The Fed began to taper QE3 and as financials begin to catch down to that ugly reality, one wonders just what The Fed can do about this...
Following Madeleine Albright's ugly statements, it is very clear from today's outbursts from Bill Clinton that Hillary is growing more and more desperate as Bernie Sanders' bumbling socialism trumps a lying, cheating, crony capitalist... "Vicious trolling," Clinton dubbed apparent Sanders' comments made towards female Clinton supporters, "that are literally too profane often - not to mention sexist - to repeat."
FANG stocks are collapsing in the pre-market as faith in the "growth at any cost" meme crashing on the shores of reality once again. Now down over 16% from their post-Fed-rate-hike highs, the stocks you should never sell are being sold in size as large crowds and small doors press NFLX and AMZN (and TSLA for good measure) down over 30% year-to-date. Even Mark Cuban is hedging...
Like a phoenix rising from the ashes of the post Dot-Com ruins people were told not only was it “different this time,” they were also instructed to observe even the phoenix bird itself had morphed into what is now commonly referred to as a “Unicorn.” And any comparisons to the prior meltdown in the land of Dot-Com were met with howls and scowls of, “You just don’t get it!” or worse. The real issue was, it had nothing to do with “getting it.” It’s all been about Silicon Valley itself acting and arguing as if the past were irrelevant. Now many are coming to a very stark realization that the Valley may in fact once again have repeated all the same mistakes.
A multi-decade Credit Bubble is coming to an end. The past seven years has amounted to an incredible blow-off top and the ongoing worldwide collapse in financial stocks provides powerful support for the bursting global Bubble thesis. Few are yet willing to accept the harsh reality that the world has sunk back into crisis as mal-investment, over-investment and associated wealth destruction remain largely concealed so long as financial asset inflation persists. This is true as well for wealth redistribution. The unfolding adjustment process will deflate asset prices so as to converge more closely with deteriorating underlying economic fundamentals.
While 'our' President was out this week patting himself on the back and taking victory laps over the "supposed" 4.9% unemployment rate, he forgot to mention a few important tidbits about what is really going on.
It seems monetary policy is exhausted and the next exogenous lever to pull would be political fiscal initiatives. If/when they fail to stimulate demand, there would be only one avenue left – currency devaluation. If/when confidence in the mightiest currency wanes, we would expect the US dollar to be devalued too - not against other fiat currencies, but against a relatively scarce Fed asset.
Ted Cruz is no libertarian, Ron Paul rages, adding that "You take a guy like Cruz, people are liking the Cruz - they think he’s for the free market, and [in reality] he’s owned by Goldman Sachs. I mean, he and Hillary have more in common than we would have..."