The entire theory of monetarism is coming undone in spectacular and empirical fashion, which leaves the entire status quo exposed. All that is left in defense is the same old refrain of “it wasn’t big enough.” That’s great for those in the ivory towers blinding themselves to the reality of a lost generation of Italians, Spaniards, French and now even Germans; a listing to which even the FOMC is worried may yet add Americans. Why anyone ever expected a different outcome is due solely to unrepentant ideology, since these central banks are following almost exactly the Japanese “model.”
To globetrotting investor or expat traveler New Zealand offers a lot more than just Hobbits and Sauvignon Blanc
The price of crude has collapsed by 50% in a few months (and 40% since the end of QE3), which can only mean one thing: the Wall Street penguin brigade is out in full force with its spate of energy sector downgrades, none of which is more bombastic than that of Citigroup's Robert Morris who in 118 pages just crucified the entire energy space, lowering his target price for every single company in his coverage universe, and declaring that "Goldilocks has left the building."
The structure of history is held together by two essential and distinct kinds of links, two moments in time to which no one is immune: moments of epiphany, and moments of catastrophe. Sometimes, both elements intermingle at the birth of a singular epoch. Men often awaken to understanding in the midst of great crisis; and, invariably, great crises can erupt when men awaken. These are the moments when social gravity vanishes, when the kinetic glue of normalcy melts away, and we begin to see the true foundations of our world, if a foundation exists at all. That time is now...
History literally appears to be repeating. The mainstream media and our politicians are promising Americans that everything is going to be okay somehow, and that seems to be good enough for most people. But the signs that another massive financial crisis is on the horizon are everywhere.
"We’ve read a lot of silly articles since oil prices started falling about how U.S. shale plays can break-even at whatever the latest, lowest price of oil happens to be. Doesn’t anyone realize that the investment banks that do the research behind these articles have a vested interest in making people believe that the companies they’ve put billions of dollars into won’t go broke because prices have fallen? This is total propaganda."
"In their discussion of financial market developments, participants observed that movements in asset prices over the intermeeting period appeared to have been importantly influenced by concerns about prospects for foreign economic growth and by associated expectations of monetary policy actions in Europe and Japan."
While the vast majority of mainstream economists and analysts currently expect 2015 to be another robust year for the economy and the markets, there is a rising risk to that forecast. If oil prices, a reflection of global economic demand, remains depressed for a considerable period of time, the negative impacts of loss of employment, reductions in capital expenditures and declines in corporate profitability could outstrip any small economic benefit gained from lower oil prices. As we stated previously, for those who have lived in Texas long enough to remember the oil rout in the early 80's, the greatest fear in 2015 is that oil prices remain low.
No reason to sell. No reason to buy. That about sums it up. Unfortunately, that is about as optimistic a scenario as we can come up with, supported by equally optimistic growth expectations. In reality, the market has no support. We can only hope that it will not crash at the first sign of trouble. There are always good reasons to own a home, a place to raise a family. However, home ownership via extremely leveraged financing carries enormous and unprecedented risk. We think many potential buyers recognize the risk and are correctly staying out of the market. The new normal in real estate terms is unlikely to be what the market is hoping for.
The Russian ruble fell a further 7% Monday. What is the “reason” cited in the Corporate media for this latest, further plunge in its “value” (i.e. exchange rate)? An “economic report” which shows that Russia’s economy is shrinking. Here we see the pattern of the economic terrorism perpetrated by the One Bankexposed.
Things in risk land started off badly this morning, with the worst start to a year ever was set to worsen when European equities came under early selling pressure following news of German unemployment falling to record low, offset by a record high Italian jobless rate, with declining oil prices still the predominant theme as Brent crude briefly touched its lowest level since May 2009, this consequently saw the German 10yr yield print a fresh record low in a continuation of the move seen yesterday. However, after breaking USD 50.00 Brent prices have seen an aggressive bounce which has seen European equities move into positive territory with the energy names helping lift the sector which is now outperforming its peers. As a result fixed income futures have pared a large majority of the move higher at the EU open. But the punchline came several hours ago courtesy of Eurostat, when it was revealed that December was the first deflationary month for the Eurozone since the depths of the financial crisis more than five years ago, when prices dropped by -0.2% below the -0.1% expectation, and sharply lower than the 0.3% increase in November, driven by a collapse in Energy prices.
If you want to know where the global experiment in massive money printing is heading - just take a look at the monetary madhouse in Europe. And that particular phrase has full resonance once again as it becomes more apparent by the hour that Europe and the Euro were not fixed at all. Indeed, beneath the surface of Draghi’s “whatever it takes” time out, the crisis has been metastasizing into ever more virulent deformations.
After seeking doctors, lawyers, and engineers, The Islamic State - expanding on its desire to launch a gold-backed currency - is reported to have opened its first bank in the Iraqi city of Mosul and delivered a budget for its 'territory'. All this is being done, according to Al Jazeera, in an effort to move beyond its image of a terrorist organisation and consolidate its aim of becoming a legitimate state (perhaps stop beheading western media?) "A strategy to make concrete decisions and actions to create a nation state is in place," notes one professor, but as another analyst explains, "ISIS is financing itself partly through a pyramid scheme, and this has begun to falter.”
Think Texas and Pennsylvania have a problem with plunging oil prices, don't look North. West Canada Select (Heavy) crude oil prices have collapsed to below $35 per barrel (the lowest since Feb 2009). This is a 60% plunge in the last 6 months and has left the industry stunned. While US rig counts have fallen for the last few weeks as the lagged response to falling prices finally catches up to reality, the Canadian oil rig count has never been lower for the first week of January. Will the Canadian housing bubble be next?
But the oil-price crash was supposed to goose consumer spending.