As Europe jerks from one political debacle to another, the French (mired in the PR disaster of Cahuzac - a tax tzar guilty of tax fraud) have decided forced honesty is the only policy left if they are ever to regain any credibility. From the Commission for Financial Transparacency, below is the full list of all French ministers assets - from cars and property to stocks and bonds.
According to Central Banker thinking, if something doesn’t work for 20 years the only answer is to do even more of it. So the Bank of Japan attempted a “shock and awe” move with an unprecedented QE equal to $1.2 trillion. Japanese bonds, already strained as investments by the demographic and economic issues plaguing Japan, have since become extremely volatil
For the fourth month in a row, NAHB's sentiment index missed expectations. With 'real' data on the housing recovery beginning to fade, we now see confidence in the sustainability of the 'recovery' starting to fade. Today's NAHB print is the lowest in six months and is the fastest 3-month drop since June 2011.
- Venezuela Says Chávez Successor Wins Vote (WSJ)
- China growth risks in focus as first quarter data falls short (Reuters)
- Japan Gets Calls From U.S. to Europe Not to Drive Down Yen (BBG)
- EU Set to Clash on Bank Deal as Germany Sees Treaty Limit (BBG)
- Dish Launches $25.5 Billion Bid for Sprint (WSJ)
- Commodities Tumble, Stocks Slide as China Growth Slows (BBG)
- Top fund managers take home $8bn less (FT)
- Obama Programs Derided by Republicans as Pejorative Entitlements (BBG)
- Gene swapping makes new China bird flu a moving target (Reuters)
- McDonald's Cranks Up The Volume on 'Value' (WSJ)
- UK pension deficits set to rise by £100bn (FT)
While China's trifecta miss of GDP, Retail Sales and Industrial Production all coming lower than expected was likely a factor in the overnight rout of gold, the initial burst of selling started well before the Chinese data hit the tape, or as soon as Japan opened for trading with forced financial institution selling to prefund cash for any and all future JGB VaR-driven margin calls. It was all downhill from there, literally, with overnight selling of gold punctured by brief burst of targeted stop hunting, sending the metal down $116 per ounce, as spot touches $1385 after trading nearly at $1500 yesterday and down $200 in 4 days. End result, whether due to a re-collapsing global economy, margin calls, fears forced Cyprus gold selling will be imposed on all other insolvent European countries, coordinated central bank slams, hedge fund positioning, long unwinds, liquidations, fears about future demand, or whatever the usual selling suspects are, is that gold tumbles an unprecedented 7.8% on 230,000 contracts in one day, and well over 10% in two days, pushing the yellow metal 14 day RSI band to 18, meaning it is now most oversold since 1999. In brief, it is an all out panic, with Goldman still telling clients to sell, i.e., buying every shiny ounce all the way down (not to mention India, where accordingto UBS Friday demand was double the average).
A high level overview of the drivers of the capital markets.
Last week we laid out the apparent 'blueprint' from the EU Commission for every other country with a banking system in which non-performing loans are soaring. With Mario Draghi's patsy in place at the Cypriot Central Bank, happy to hand over the nation's gold at the beck-and-call of the EU leaders - despite the Cypriot President's disgust at the 'coercion' of the new deal chiding the central bank for "catching the government by surprise," it now seems, as this Cyprus Mail op-ed explains, that the people of this nation are ready for change - real change, , otherwise, "we may wake up one morning and find the country has completely shut down, crushed under the weight of its mounting, unserviceable debts with no banks, businesses or services able to operate."
The strength of the recovery of US equity prices since the 'end' of the recession is equalled only by the post-1982 recovery. The path of recovery so far is eerily similar also. The chart below shows just what happens next - an insance melt-up followed by a purge unlike any other. 1987 deja-vu can't happen all over again? It's different this time.
Curious how Abenomics is progressing six months after its announcement? These charts courtesy of Diapason should provide a convenient status update.
Curious why the USDJPY is in freefall after hours? Thank Jack Lew, and the after the close release of the semi-annual "Report to Congress on International Economic and Exchange Rate Policies." Traditionally the place where many have looked to see if the US would declare China a currency manipulator (which will never happen for obvious reasons), this time there was a big Easter egg lying in wait for those who did a word search for "competitive devaluation" - namely that it was located in the section discussing Japan.
This must be bullish. While the rise in railcar loadings (whether driven by the rotation from pipelines to rail or a 'real' recovery in the economy) has been impressive off the lows and had got back to pre-recession levels, this year is not looking so good. The typical seasonal pattern - somewhat obviously - starts around mid January and rises all year tending to roll over around the start of November into holiday season. 1995 was the last year that intermodal railcar loadings rolled over notably away from this pattern. Since mid-January, 2013 has seen a notably different pattern from the norm - worse than 2009's abrupt plunge.
Did you know that there are thousands upon thousands of homeless people that are living underground beneath the streets of major U.S. cities? It is happening in Las Vegas, it is happening in New York City and it is even happening in Kansas City. As the economy crumbles, poverty in the United States is absolutely exploding and so is homelessness. In addition to the thousands of "tunnel people" living under the streets of America, there are also thousands that are living in tent cities, there are tens of thousands that are living in their vehicles and there are more than a million public school children that do not have a home to go back to at night. The federal government tells us that the recession "is over" and that "things are getting better", and yet poverty and homelessness in this country continue to rise with no end in sight. So what in the world are things going to look like when the next economic crisis hits?
Remember when JPM's cuddly permabull Tom Lee called for a correction less than 2 months ago in a note titled "Stepping Aside Short-Term; Fade Strength and Look for Better Entry Point Around 1400-1450; Big Picture Constructive"? Apparently he did not take into account the $80 billion monthly hot money injection from the BOJ, which has made any fundamental analysis utterly irrelevant, and has completely destroyed any ability of the market to reflect reality or discount any other future other than that of hundreds of billions in new monthly liquidity injections. Which is why moments ago he "capitulated" on his correction call.
Nearly one-fifth all people with a 401(k) plan have at least one outstanding loan from it with those under 30 years old having taken an average 38.2% of their remaining untouched balance as the new ATM to maintain the credit-fueled standard of living. In a press release from Wells Fargo, data based on 1.9 million 401(k) holders shows that Q4 2012 saw a stunning 28% surge in the number of people taking loans from their retirement plans. While the numbers are scary for younger people, the older generation is taking more loans with 34.2% of those in their 50s and 28.9% of those in their 60s having taken loans from their retirement plans. Yet another example of the 'strength' of the recovery as those with at least one loan outstanding had an average balance in their retirement plan of $7,764! So much for the wealth effect.
- Korean Nuclear Worries Raised (WSJ)
- Och-Ziff, With Strategy from a 30-Year-Old Debt Specialist, Racks Up Big Score (WSJ)
- Japan's big "Abenomics" gamble: how to tell if it's paying off (Reuters)
- Kuroda walks a two-year tightrope (FT)
- China Rebound at Risk as Xi Curbs Officials’ Spending (BBG)
- BOJ Said to Consider Boosting Outlook for Inflation (BBG) - for energy prices? Absolutely: by double digits
- Cyprus May Loosen Bank Restrictions in Days (WSJ)
- Cyprus mulls early EU structural funds (Reuters)
- Russia slashes 2013 growth forecast (FT)
- Japan, U.S. Agree on Trade-Talks Entry (WSJ)
- IMF Trims U.S. Growth Outlook in Draft Report Citing Fiscal Cuts (BBG)
- Mexico Is Picking Up the Peso (WSJ)