recovery

The (Other) Truth About The Financial Crisis: 10 "Geithner-Sized" Myths Exposed

After the crisis, many expected that the blameworthy would be punished or at the least be required to return their ill-gotten gains—but they weren’t, and they didn’t. Many thought that those who were injured would be made whole, but most weren’t. And many hoped that there would be a restoration of the financial safety rules to ensure that industry leaders could no longer gamble the equity of their firms to the point of ruin. This didn’t happen, but it’s not too late. It is useful, then, to identify the persistent myths about the causes of the financial crisis and the resulting Dodd-Frank reform legislation and related implementation...."Plenty of people saw it coming, and said so. The problem wasn’t seeing, it was listening."

Recovery Watch: Global Trade Tumbles Most In 5 Years

Do not look at this chart if you remain of the opinion that everything is fine in the world. For the 3rd time in the last 4 months, world trade volumes dropped. The 0.5% fall in March - it must have been weathery all over the world? - continues the biggest plunge in global trade since May 2009. As WSJ reports, exports from developing economies in Asia recorded the largest decline, a drop of 4.5%. Central and Eastern Europe was the only region to record a rise in exports as the decline in trade flows is consistent with other evidence that suggests the global economy got off to a weak start this year. So, $12 trillion of global money printing and world trade is unable to sustain growth...

The Complete Ukraine Election Preview (In 1 Simple Chart)

With relative front-runner Yulia Tymoshenko suggesting Ukraine hold a referendum on joing NATO in June - exactly the event that Putin has expressed grave concern about - this weekend's elections in the troubled nation are considerably more crucial to global geopolitical anxiety than the record low levels of implied volatility across FX, bond, and stock markets would suggest. AS Deutsche explains, Ukraine's new president will face challenges in almost all key spheres – in particular, de-escalating tensions within Ukraine, especially in the eastern provinces; conducting deep economic reforms in order to move Ukraine on the path of recovery along with dealing with the international lenders; finally, improving relations with Russia and the European Union. Below we outline the policy agendas of the candidates and assess the probable scenarios of further political development.

5 Things To Ponder: Hookers, Bubbles & Memorial Day

"Artificial, credit-stained activity will never be more than a fleeting substitute for fundamental demand. And when the artificiality inevitably subsides, what is left is far worse than not having entertained it at the start. That too is a testament against the illicit concept of neutrality. We may all be dead in the long run, but it used to be nice to enjoy the fruits of free economic expansion whilst awaiting the unavoidable."

Citi Explains Kuroda's Dilemma: "Please Sell More Yen Cause I Can't"

"Words speak louder than actions until words stop working then we promise some actions... or more talk about actions." That appears to be the communication method-of-choice for the world's central bankers and The Bank Of Japan's Kuroda stepped into the breach today with his own demands. As Citi's Steven Englander translates, Kuroda is telling investors not to buy JPY just because the BoJ is being very reticent on policy ease (do as we say, not as we do). However, there is an important second message which is intended to be delivered to the Japanese bureaucracy - "Mr. Kuroda also acknowledged limits to what the BOJ can do to generate long-term growth."

New Home Sales Post Tepid April Bounce As Average, Median Home Price Drops From Year Ago

Last month's dramatic miss of expectations for a modest post-weather pop in new home sales (having dropped 14.5% month-over-month) so it was inevitable that there would be a bounce. Modestly beating expectations, 433k annualized new home sales in April was only a 6.4% gain MoM thanks to the upward revision of the big miss in March. This 'recovery' remains well below the peak see in January - right in the middle of the worst weather impacted time in US history if one is to believe what the media is spewing. Before the 'housing recovery is back on track' meme gets going though, there is the fact that homes sold in the Northeast fell to the lowest since June 2012... as the average home price fell to $320,100 - the lowest since August 2013.

Frontrunning: May 23

  • The Fed can't print trade? World Trade Flows Fall in First Quarter (WSJ)
  • PBOC’s Zhou Says China May Have Housing Bubble in ‘Some Cities’ (BBG)
  • ECB's Weidmann - Reviving ABS market not task for central bank (Reuters)
  • LOL: Fitch upgrades Greece by a notch to 'B'; outlook stable (Reuters)
  • LOL x2: Spain Sovereign Debt Rating Upgraded by S&P (BBG)
  • China Will Vet Tech Firms After Threatening U.S. Retaliation (BBG)
  • US to claim victory over China in WTO car dispute (BBG)
  • Obama urges Democrats to vote in midterms, attacks Republicans (Reuters)
  • U.S. Military Pushes for More Disclosure on Drone Strikes (WSJ)

USDJPY Desperate To Drag S&P To All Time High

Following the only major overnight econ event, which was the May German IFO Business Climate Index which dropped from 111.2 to 110.4 missing expectations of 110.9, the USDJPY has been on a soaring rampage higher hoping to push equities along with it (because now that gold manipulation is a proven fact, it is only a matter of time before the link between manipulating the USDJPY on thin volume with massive leverage and rigging the equity market is uncovered too), and at last check was just shy of 102.000. For now equity futures have failed to be dragged along although with the S&P all time high just around the horizon, the psychological level of 1900 staring the rigged market in the face, and the weekend just around the corner, it is virtually assured that the S&P will close at an all time high today - after all the people need to be confident when they go shopping at malls with money they don't have (but delighted by paper profits they haven't booked) so they boost the US non-GAAP GDP (at least before like Italy, the BEA too changes the definition of GDP to include cocaine and hookers). Finally, assuring a (record?) low-volume levitation today is the early closure of the bond pit ahead of Memorial Day holiday which also means only a skeleton crew of algos will be frontrunning each other to push the S&P over 1,900.

"Our Industry Is Absolutely Crazy": The Subprime Wolf Of Wall Street In 125% Interest Clothing

The last time we wrote about the number 125% it was in the context of the return of that old Subprime 1.0 staple home loans that cover more than the purchase price of the home (because one must always have some leftover cash for improvements), i.e. 125% loan-to-value loans. Today 125% comes back and again it is in the context of subprime, only this time it is about the second coming of the credit bubble when, as Bloomberg writes, a certain group of distinguished individuals is now offering loans to troubled Americans at the whopping annual interest rate of 125%.

This Is Why Hewlett Packard Just Announced Another 16,000 Job Cuts

Want to know why HPQ is forced to fire so many well-paying jobs it once again makes a mockery of anyone who claims there is some economic recovery going on? The chart below, which compares the company's quarterly CapEx, declining (so no, not increasing as some clueless sellside analyst hacks claim) by 16% from last quarter to $840 million and thus leading to less growth opportunities for the company and resulting in tens of thousands of pink slips, and the soaring amount of stock buybacks, which rose by nearly 50% in Q2 from Q1 to $831 million, the most since 2011, should provide all the answers.

"What Could Go Wrong" - China's "Worst Case Negative Loop"

A simple way of grasping the precarious situation China has found itself in is with this useful diagram which summarizes the negative loop that China's economy (which essentially means housing market which as SocGen recently explained is indirectly responsible for 80% of local GDP) could fall into should the government not promptly move to address the emerging dangerous situation, i.e., resume aggressive easing.

Echoes Of 1937 In The Current Economic Cycle

It is not too early to ask how the present US business cycle expansion, already more than five years old, will end. The history of the last great US monetary experiment in “quantitative easing” (QE) from 1934-7 suggests that the end could be violent. Autumn 1937 featured one of the largest New York stock market crashes ever accompanied by the descent of the US economy into the notorious Roosevelt Recession. As we noted previously - it's never different this time...

All That Is Wrong With The US Housing Market In One Chart

If there was one chart that shows best what is happening with the bifurcated US housing market, it is this NAR breakdown of sales by pricing bucket. It shows beyond a doubt that courtesy of the Fed's policies there is not one but two housing markets in the US: that for the 1%, or those who purchase mostly homes in the top price buckets ($500 and certainly above), and that for everyone else. Guess where the bulk of the activity (i.e. flipping) is, and worse for the so-called recovery, where it isn't.

Existing Home Sales Miss; Worst Start To Year Since 2007

After 6 months of missed expectations, last month's fragile beat of dismal expectations (even though it was the worst existing home sales SAAR in 21 months) provided just enough of a glimmer of hope to stoke more short squeezes in homebuilder stocks and strengthen the pillar of the US economic recovery. Now we are in April... the start of the key seasonal selling season... and existing home sales rose modestly MoM (but fell for the 6th month in a row YoY) and missed expectations. There is - simply put - no post-weather bounce.. and still NAR is blaming slow April sales being delayed due to Winter weather! This is the worst start to a year since 2007.