Recession

Blackstone's Byron Wien Unveils 10 Surprises (Non-Predictions) For 2015

While the predictions of Blackstone's Byron Wien (born in 1933) have been all over the place in the last few years, they nevertheless provide some color on just what the mainstream does not believe... This is the 30th year Byron has given his views on a number of economic, financial market and political surprises for the coming year. From "our luck running out on cyberterrorism" to "shock and awe no longer working in Japan", Wien's non-predictions range from The Fed to China and from Oil to Hillary Clinton...

"Now There's Not Even Soap" Maduro Heads To China To 'Save' Socialist Utopia Venezuela

Social media is awash with striking images of #EmptyShelvesInVenezuela (#AnaquelesVaciosEnVenezuela) as the evaporation of basic human staples such as toilet paper has now been hyperinflated to total chaos at warehouses and supermarkets. As President Maduro decries the loss of $100 oil "stability", vowing to return oil prices to their rightful places (and heads to China for help), lines reach for miles for milk and soap... and the people defy governmental bans on photographing empty market shelves... "We couldn't find shampoo, so we washed our hair with soap. Now there's not even soap."

David Rosenberg Has A Question For His Clients

David Rosenberg, formerly of Merrill Lynch and currently of Gluskin Sheff, who famously flip-flopped from being a self-described permabear to uber-bull last summer for the one reason that has yet to manifest itself in any way, shape or form, namely declaring that wage inflation as imminent (it wasn't, but perhaps Mr. Rosenberg was merely forecasting the trajectory of his own wages) and generally an end to deflation, has a rhetorical question for his paying clients, as asked in his letter to investors from January 2. To wit: "THIS IS WHAT PASSES FOR ANALYSIS?" We too follow up with an identical question not only for Mr. Rosenberg's clients, but for our own readers.

Only Stocks Are Left Minding The 'Recovery'

Commodities broke first because there was the direct link to actual rather than imagined activity; inflation breakevens next; followed by the yield curve in November 2013. Either stocks have permanently decoupled, continuing exclusively within the realm of central bank omniscience that has been rebuked time and again, or there will be a period soon where full harmony is restored; that is everyone’s greatest fear.

2015: The Year Of Living Uncertainly

The rash of “unexpected” declines in PMI’s this morning in the US, of all places, seems to have abraded at least somewhat the pervasive belief in the American “decoupling.” But... The FOMC sees 5% GDP and a serious workdown in the unemployment rate; credit markets are worried about how continued mistreatment of economic fundamentals may mean another disastrous trip like the one from the housing bust to the Great Recession. Worse than that, the treasury curve, in particular, may be going a step further by envisioning that we may already have replicated that period and are now very deep within it.

Draghi Launches New Year With More QE Jawboning, Sending Euro To New 4 Year Low, Yields Lower, US Futures Higher

The new year has officially started because it wasn't even a day in and Mario Draghi was once again out and about, jawboning the Euro to a lower level than where it was when he said back in 2012 he would do "whatever it takes" to push it higher. The reason, as Reuters reports, why the Euro sank to a nearly 5 year low against the USD, was "clear indications that the European Central Bank will soon embark on outright money-printing." Actually, it was on just more hollow rhetoric by Draghi, who told German Handelsblatt that "the risk that we don’t fulfill our mandate of price stability is higher than it was six months ago." He also added that "it’s difficult to say” how much the institution will have to spend on government-bond purchases.

A Mania Of Manias

If the tech mania was based on magic, and the housing mania was based on a supposed fact that was historically untrue, today’s mania is a mania of manias, interlinked and resting on premises that are patently illogical, contradicted by both the historical record and current experience. Those premises are: central planning works, government debt promotes prosperity, and economic growth stems from central banks buying that debt with money they create from thin air. On these premises rest manias in governments, their debts, and central banking.

Occam's Oil

We are once more in the hands of Occam’s Razor, namely that oil prices are falling hard because demand is falling hard. The scale gives us insight into the nature of the slowing of the global economy, to which the US is a full part, meaning that comparisons only with past and serious downslopes is not a welcome development; nor should it be “unexpected.” Mainstream commentary seeks to reject this simple and basic argument because it cannot fathom, predicated on its penchant for nothing but parroting economic “authority”, that the world could fall so deeply into recession once more drowning not just in oil but also “stimulus.” Once you get past the idea that “stimulus” isn’t, logical sense is restored.

Guest Post: 2014 - A Russian Viewpoint

"As a former military analyst myself I can tell you that by now the Russian intelligence community's "indicators and warnings" should be "flashing red" and that in all likelihood Russia is already preparing for war..."

Paul "Orwell" Krugman Touts Job Growth in the Obama Recovery

If you have a strongly held economic theory, you can always concoct a story ex post to “explain” the data. Rather, what I’m saying is that on the very terms Krugman himself chose to show the virtues of government spending, I can make a much more compelling argument that cutting government spending won’t hurt private sector hiring, and if anything will stimulate it.

Frontrunning: December 31

  • Behind the Scenes at Sony as Hacking Crisis Unfolded (WSJ)
  • Oil Set for Biggest Slump Since 2008 as OPEC Battles U.S. Shale (BBG)
  • Praet Warning of Oil Effects Signals Higher Chance of ECB QE (BBG)
  • U.S. Opening Door to More Oil Exports Seen Foiling OPEC Strategy (BBG)
  • Venezuela confirms recession, inflation hits 63.6 percent in Nov (Reuters)
  • U.S. to station 150 armored vehicles in Europe (Reuters)
  • China Stocks Rise to Finish Off Big Year (WSJ)
  • RBS Suspends Bonuses of 18 Traders Amid FX Rigging Fine (BBG)

Japan Is Writing History As A Prime Boom And Bust Case

The fate of countries like Japan is really in the hands of central bankers. However, central planners are not able to manipulate markets infinitely. At a certain point, something has to give. That is when the markets will give up and disbelief will replace trust. In such a bust scenario, people flee down the Golden Pyramid of asset classes to their safe haven, being gold.

Texas Is Not Greece But... Crude Bust Leads To Olive Oil Boom

Texans know all too well that relying too heavily on the oil industry can lead to trouble, and so, as Bloomberg reports, as crude prices tumble, landowners across Texas are accelerating production of a different kind of oil -- olive oil. "I can't look, it's depressing," mourns one Eagle Ford rancher over oil's demise, but "I love the trees," he brightens up as about 70 farmers across the state - up from 24 in 2008 - are hoping to cash in on America’s growing appetite for olive oil.