Recession

Q2 Earnings Review – Hockey Stick Hopes Remain

There is one commodity that Wall Street always has in abundance, “optimism.” When it comes to earnings expectations, estimates are always higher regardless of the trends of economic data. The problem is that the difference between expectations and reality have been quite dramatic.

"All Eyes On Central Banks" In September, But "No Reason To Smile"

September will be quite a busy month for investors since there are around 30 major central banks meetings scheduled. Since the Bank of England’s last policy announcement, the total monthly amount in global official quantitative easing has reached almost $200 billion, which corresponds, for the purpose of comparison, to Portugal’s annual GDP in 2015. Long-rumoured and oft-discussed, QE infinity is now a reality.

The Central Banks Are Now Ready To Launch Their 'Brave New World'

What analysts out there need to understand, whether they are independent or mainstream, is that a great shift in central bank policy and attitude is coming. Christine Lagarde at the IMF calls it the “economic reset,” some Fed officials, like Atlanta Fed President Dennis Lockhart, state that central banks are entering a “brave new world.” These are highly loaded phrases that represent a drastic overhaul of the global financial system; an overhaul that is quite deliberate and inevitably destructive for certain nations and economies, including the U.S.

Dear Janet... TED Spread Confirms 'Risk', Not 'Policy' Is Driving Rates

Once again FOMC policy is at odds with what is taking place in deeper and far more intellectually-sound money markets. The TED spread confirms risk not policy as the underlying mechanism, while the eurodollar futures price reveals the growing pessimism about what that could mean for the intermediate and long terms in real economic conditions.

Brazil Formally Impeaches Dilma Rousseff In 61 To 20 Vote

As was widely expected, the final step of Brazil's historic impeachment process of former president Dilma Rousseff, concluded moments ago with a decision to formally impeach the former president, with 61 senators voting for her ouster, and 20 voting against. Dilma Rousseff thus becomes the second president to be impeached in Brazil’s 31-year-old democracy, paving the way for what the market hopes is a fundamental shift in economic policy.

This Is The "Bubbly" Chart That Keeps The Fed's Rosengren Up At Night

 “Should a large negative shock occur, firms and households would be exposed to greater losses through their holdings of riskier assets than they would be if they were not reaching for yield.... should prevailing economic conditions change in response to a large negative economic shock, commercial real estate prices could decline relatively quickly, leading to large losses at leveraged firms.”

"The Fed Has Mastered Market Manipulation" - Bill Gross Explains Why He Is Not A "Broken Clock"

"The problem with Cassandras, such as Gross and Jim Grant and Stanley Druckenmiller, among a host of others, is that we/they can be compared to a broken watch that is right twice a day but wrong for the other 1,438 minutes. But believe me: This watch is ticking because of high global debt and out-of-date monetary/fiscal policies that hurt rather than heal real economies. Sooner rather than later, Yellen’s smooth shot from the fairway will find the deep rough."

South Africa's Largest Debt Manager Halts Loans To State Firms, Rand Tumbles

"We’ve observed recent reports that strongly hint of conflict between branches of South Africa’s government, the possible machinations of patronage networks and a seeming challenge to the National Treasury’s independence... It is difficult to make reasoned and defensible decisions to continue providing state-owned companies with additional funding using clients’ money."

Canadian Economy 'Double-Dip' Crashes In Q2 - Worst GDP Growth In 7 Years

The first half of 2015 saw Canada informally enter 'recession' with two quarters of negative GDP but then, everything bounced back and policy shifts were 'proven' effective. However, that dead-canadian-cat-bounce is over as Q2 2016 GDP growth just slumped 1.6% - double-dipping to the worst since Q2 2009. The problem with this plunge is that oil prices actually had their best quarter in 7 years as the economy tanked.

Do Newly Built Skyscrapers Signal The Top Of The Stock Market?

In the market, extreme optimism results in price bubbles. One of the real-life manifestations of extremely positive social mood is the construction of enormous buildings. Market tops and skyscrapers often seem to emerge simultaneously, because both phenomena are the result of the illusion of infinite prosperity. But extreme psychological conditions do not last very long...

An Academic Tries To Explain The Yield Curve, Says "Gloom" Is Irrational

To the academics, “gloom” is irrational and thus requires translation into math to become somehow backwards explanatory for why the economy that “should be” isn’t. In the actual economy, “gloom” is properly called reality. In this world, people know all-too-well that jobs disappeared during and after the Great Recession and never came back. No amount of asset price manipulation can possibly make up that difference. This math is finally welcoming economists to that long run, a place their patron saint, Keynes, said didn’t exist.

Michael Lewitt: "We're In The Late Stages of Ponzi Finance"

“They’ve tried to solve the debt crisis by printing trillions of dollars of more debt, and somehow they expect the economy to grow under the weight of those burdens. We’re just borrowing new money to pay back old money. I would say that we’re in the late stages of Ponzi finance.”