Outlook for the major currencies in the week ahead.
Democratic strategists have made a blunt declaration in an election-year memo, according to AP, "Don't talk about the economic recovery. It's a political loser." Stan Greenberg, James Carville and others wrote that in head-to-head polling tests the mere mention of the word "recovery" is trumped by a Republican assertion that the Obama administration has had six years to get the economy moving and its policies haven't worked. But, but, but... stocks are at all-time highs?
"...policymaking is dominated by powerful business organizations and a small number of affluent Americans, then America’s claims to being a democratic society are seriously threatened...
...even when 80% of the population favored a particular public policy change, it was only instituted 43% of the time."
As it turns out, in their euphoria to lower EPS estimates, the sellside lemmings forgot all about revenues. Oops. Because according to the Deutsche Bank Q1 earnings tracker, while two thirds may have beat earnings, a stunning 51%, or a majority of the reporting companies have missed Q1 revenue estimates.
After a solid day for risk yesterday, surging higher on a continuation of the rumor that Japan's economy will deteriorate so much the BOJ will have to print more money (even though overnight ex BOJ governor Sekido said Kuroda won't print more) we have a more cautious tone this morning heading into the Easter long weekend. A double earnings miss from Google and IBM following the US market close, comments from the Chinese Premier suggesting that the government will keep its policy settings unchanged, and a press conference from Russia’s President Putin in which the Russian president as expected, has refused to back down, has put a small dampener on sentiment today. Add the fact that due to Good Friday April equities Op-Ex will take place today and trading in the next 9 hours promises to be more unrigged than ever, especially if the NY Fed trading desk manages to slam the VIX into single-digit territory
Five years into the "recovery" and The Atlanta Fed thinks it's time to figure out where jobs come from (spoiler alert: there is no job tree). The Atlanta Fed has investigated trends in a variety of firm types to better understand why labor market progress continued to be slower than hoped for in 2013... the findings - when it comes to job creation, there is no simple solution. But Ben and Janet said?...
We are now entering the fifth season of head-fakes about “escape velocity” acceleration in as many years. Yet the Wall Street stock peddlers and their financial media echo boxes are so fixated on the latest “delta”—that is, ultra short-term “high frequency” data releases—that time and again they serve up noise, not meaningful economic signal. The larger point here is that the Kool-Aid drinkers keep torturing the high frequency data because they are desperate for any sign that the Fed’s $3.5 trillion of QE has favorably impacted the Main Street economy. And that’s important not because it might mean some sorely needed income and job gains for middle America, but because its utterly necessary to validate the Fed’s financial bubble.
*YELLEN SAYS FED COMMITTED TO ACCOMMODATION TO SUPPORT RECOVERY
Markets will be hanging on every word of what is likely Janet Yellen's first monetary policy speech and even more so the Q&A afterwards as she suggests that a considerable time is more than 6 months, and the delicate balance she has to play between admitting the economy is ugly while admitting that QE is over no matter what... all the while maintaining some semblance of credibility. One has to wonder if the ripfest rally of the last 24 hours is a buy the rumor ramp ahead of a sell the Yellen news event as once again she is tested...
It wouldn't be the first time the Fed has "stretched" the truth...
Not much to add here that we haven't already said before about the state of demand for housing by the ordinary American.
While both the Housing Starts and Permits data reported moments ago disappointed - and sorry, you can't blame it on weather this time - with both sets of data missing expectations (Starts 946K, Exp. 970K up from a revised 920K; Permits 990K, Exp. 1010K down from a revised 1014K), the real story was in the composition of single family vs multi-family, or rental units, which showed that the previously reported rental euphoria has well and truly fizzled after a dead cat bounce in last 2013 could not be sustained. And perhaps more importantly, the complete lack of any real bounce in single-family housing, which remains at levels seen in late 2012 for starts, and is now rolling over for permits, confirms that the so-called hosing recovery not only slipped right through the vast majority of normal people, but even Wall Street is finally pulling out as builders themselves realize.
We summarized yesterday's both better and worse than expected Chinese GDP data as follows: "a substantial deterioration of the economy, one which was to be expected yet one which can be spun as either bullish thanks to the GDP "beat", and negatively if the purpose is to make a case for more PBOC stimulus." Sure enough here are the headlines that "explain" the latest overnight futures surge which has once again brought the S&P into the green on the year - a 40 point Spoo move in hours since yesterday's bottom when the Nikkei "leaked" Japan's economy is on the ropes :
- Stocks Rise on China Stimulus Speculation
Here one should of course add the comment that launched yesterday's rebound, namely the Japanese warning that its economy is about to contract, adding to calls for more BOJ stimulus, and finally this other Bloomberg headline:
- The Strengthening Case for ECB Easing
And there you have it - goodbye "fundamental" case; welcome back "central banks will once again bail everyone out" case. Hopefully today's news are absolutely abysmal to add "US economic contraction fear renew calls for untapering" to the list of headlines that should send the S&P to all time highs by the end of today.
Just Like the Financial Crisis and Fukushima: BP and the Government Decided to Temporarily Hide the Oil by Sinking It with Toxic Chemicals … The Gulf Ecosystem Is Now Paying the Price
Earlier today, the NAHB released its latest builder confidence report. Something stood out to us, namely the following data, which shows that while confidence picked up modestly in the Northeast in April, it tumbled in the West and Midwest. What's the explanation for this ongoing deterioration in housing market sentiment in states that had, not only were not impact by the "vortex" but if anything, were "crushed" by the balmy March atmospheric conditions? Why, "it's the weather, duh."
There is no question about it, NYC feels more like “Disneyland for Wall Street” than ever before. The very rich are doing very well, everyone else, not so much. We are often told by charlatans and mainstream media propagandists that this mythical rising tide of wealth lifts all boats. If that’s the case, we find it quite perplexing that the homeless population in America’s financial center is exploding five years into the so-called recovery (homeless people are living in coffin-sized spaces inside the frame of the Manhattan Bridge). Meanwhile, let’s not forget that 22% of the city is on food stamps. How is this possible? Because we have witnessed five years of egregious corruption and crony capitalist theft, not a genuine recovery. That’s how.