• Pivotfarm
    04/18/2014 - 12:44
    Peering in from the outside or through the looking glass at what’s going down on the other side is always a distortion of reality. We sit here in the west looking at the development, the changes and...

recovery

Phoenix Capital Research's picture

We've Yet To See The Fed's GREATEST Failure





For the Fed the failure to address any of the underlying causes of the Financial Crisis has been a great success story. After all, all it had to do was pump the financial system full of more money (increasing the amount of leverage) and push for the suspension of accounting standards (so the crap debt is still there, but no longer is visible).

 


Tyler Durden's picture

The First Great Depression: Blow By Blow, From The BIS, And How It Mirrors Our Ongoing Second Great Depression





After surviving the start of the Second Great Depression, and living in its first great bear market bounce/short squeeze, where now all the attention is focused on a collapsing Europe, many could be wondering how, if at all, it would have been different to have lived through the first Great Depression. Luckily, courtesy of the recent release of the BIS's full annual reports, history buffs can now replay, year by year, the events in world capital markets from 1931 onward. We have put particular emphasis on the dark days of the 1930s. Below we present the first several such years as seen from the perspective of the BIS. Note the endless similarities - in fact one could say the only difference between then and now is the lack of "liquidity providing" algos (soon, there will be an iPad app for that) to front run slow and stupid retail/pension/mutual fund money. Pay particular attention to the role of gold in the crisis period, the amusing reference to FDR's confiscation of gold in 1933, and how the mood of insecured optimism shifts to one of endless gloom, and ends, as everyone knows, with World War 2.

 


Phoenix Capital Research's picture

The Fed Failed... But We've Yet to See Its ULTIMATE Failure





For the Fed the failure to address any of the underlying causes of the Financial Crisis has been a great success story. After all, all it had to do was pump the financial system full of more money (increasing the amount of leverage) and push for the suspension of accounting standards (so the crap debt is still there, but no longer is visible).

 


Tyler Durden's picture

Japanese "Consumers" Scramble To Spend... And Buy Cash Safes In Which To Hide Trillions In Cash





Japan's attempt to restimulate the economy through consumer spending (something that has so far failed in the US and everywhere else courtesy of a third consecutive year of global household sector deleveraging) appears to be going horribly wrong. Exhibit A: "Japanese safe maker Eiko Co. says sales jumped more than 40 percent after the March earthquake and tsunami, a sign that consumers will hoard more cash at home and restrain an economic rebound...“The television footage of the tsunami destroying everything in its path must have served as a warning for cash- rich people,” said Tsutomu Ishii, head of sales for the Tokyo- based company. “They have cash at home and they don’t want to leave it without any protection anymore."" If economic recovery is based on spending for cash hoarding devices that the BOJ has done an amazing job. Alas, we are fairly confident not even Keynes has a footnote in any of his theories suggesting that consumers buying up safes, mattresses, socks or other cash storage devices is in any way stimulative of GDP. Alas, the bottom line (and as we have been claiming since the beginning of May) is that the BOJ will have no choice but to step in yet again to take the place of Japan's consumers who are not only disenchanted with stock returns, but now have to worry about natural disasters. "Households aren’t ready to help the economy by spending" said Hiroshi Miyazaki, chief economist at Shinkin Asset Management Co. in Tokyo.

 


Tyler Durden's picture

Goldman Presents Three Scenarios For Where The WTI-Brent Spread Is Headed (And Why The Firm Has Been Wrong So Far)





Back in January, when collapsing the Brent-WTI trade was all the rage after the spread had hit all time wides, we cited a JPM report which contrary to Goldman (which 6 months ago had seen WTI higher than Brent) warned that the spread was likely to persist and even widen, and for once, agreed with Jamie Dimon's firm, cautioning: "those who believe that a compression trade between the spot curves is a slam dunk: be very careful." Sure enough, some decided to be brave and sell Brent while buying WTI. Considering today the spread just hit a new all time record of over $23, those brave souls have now been wiped out. Yet that does not explain why the spread continues to diverge, and has recently taken a sharp $7 jump in just the past few days. Below we present David Greely's latest thoughts on what the reason for this unprecedented divergence is, on why he has been dead wrong, and why he believes, eventually, he may be proven right, even as Goldman's prop desk has almost certainly milked this move for its entire duration.

 


Tyler Durden's picture

Japan's First Post Earthquake Stimulus Is Here In The Form Of A Tiny 500 Billion Yen Loan Program





The BOJ just concluded its two-day operation, and while not announcing any new monetary program or changing its interest rate, both of which had been widely anticipated, it did announce a new Y500 billion loan program for "growth industries" the result of which is some substantial strength in overnight equity markets. Alas, just like everything else by BOJ terms, this stimulus will prove largely insufficient, and will be followed by yet another loan program, until finally Shirakawa relents and restarts the printers. And in other ridiculous news, the BOJ raised its outlook of the second half, saying the economy was "picking up." There is no point in even commenting on this, suffice to say that instead of engaging in what it does best, i.e., monetary stimulus, Japan, and of course the US, will now be delighted to live in bizarro world that things will improve on their own. Best of luck with that.

 


Phoenix Capital Research's picture

What Happens When The Market Props Are Gone?





Remember, stocks tanked 16% after QE 1 ended in 2010. So far, we’re already down 6% and QE 2 hasn’t even ended yet! If we match last year’s post-QE correction, the S&P 500 will be at 1,144 soon after QE 2 ends. And given the numerous disasters (economic and financial) occurring in the world today, we could easily drop a lot further than that.

 


ilene's picture

To Kill a Dollar





What we have now is an economy that is almost entirely driven by Banking Interests so, if we want our markets to be strong, we need to do what is good for the banks. At the moment, that means keeping the Dollar as weak as possible.

 


Tyler Durden's picture

On The Linkage Between Politics And Markets





On a very slow trading day, some big picture observations from Russ Certo of Gleacher: "Good afternoon. The S&P 500 slid for a sixth straight week, its longest swoon since July 2008. The Dow closed below 12,000 for the first time since March, and 6.7% off the highs and has been bantering around all day today. Declining stocks outpaced advancing ones by 4-to-1 ratio on Friday. Stock, money market and muni funds had a weekly net outflows averaging $4.2 billion, $1.1 billion and 141 million respectively, in the latest four weeks. Investment grade corporate issuance fell to its slowest pace of the year last week spooked by a host of global, sovereign and geopolitical items. Just $6.3 billion in new investment grade bonds were sold last week in this climate. The “Sell in May and walk away” mantra is on trader’s minds as last year the Dow receded nearly 14% from late April through early July. Remember the calls to attention to the Hindenburg formations which cast a cloud over markets before they climbed a wall of worry since?"

 


Tyler Durden's picture

Tomorrow Is The 6 Month Anniversary Of S&P's Threat To Downgrade Belgium "Within 6 Months"





While everyone is focusing on the by now default (pardon the pun) assumption that Greece will default, it may be time to redirect attention to the core of the Eurozone, where tomorrow will mark the 6 month anniversary of S&P's threat that it will downgrade a still government-less and AA+ rated Belgium. From December 14: "If Belgium fails to form a government soon, a downgrade could occur, potentially within six months." Newsflash, at least for S&P which appears to need reminding of what garbage it has published in the recent past: tomorrow is the 6 month anniversary of this report. And the conditions for the downgrade are still there. So instead of continuing the "high and mighty" charade with now weekly downgrades of Greece, perhaps it is time to really throw the Eurozone in a loop and remind the world that the line between the PIIGS and the "developed" nations is relaly non-existent.

 


Tyler Durden's picture

Rosenberg On Why "Things Are Getting Interesting" And What Is Ailing The Market





David Rosenberg provides the key bulletized market observations that have marked the broad capital markets over the past few months.

  • $950 billion of paper equity wealth has been wiped off the map in the past six weeks.
  • The Dow is below 12,000 for the first time since March 18th.
  • The Transports are down more than 8% from the nearby highs and are down for the year as well
  • The Transports/Utilities ratio has broken down to its lowest level since November 9th of last year.
  • The Nasdaq is now down for the year (-0.3%)
  • The Russell 2000 index is also down for the year (-0.5%).
  • The S&P 500 is just 1.1% away from seeing the same fate.
  • The S&P 500 has declined in each of the past six weeks, the longest losing streak since June-July 2008.

...And much more

 


Tyler Durden's picture

Greece Gets Triple Hooked: S&P Downgrades Country To CCC, Outlook Negative





And there goes the EUR again. Furthermore, "Outlook Negative" on CCC means CC is next, then C, and lastly, D. "The downgrade reflects our view that there is a significantly higher likelihood of one or more defaults, as defined by our criteria relating to full and timely payment, linked to efforts by official creditors to close an emerging financing gap in Greece. This financing gap has emerged in part because Greece's access to market financing in 2012 and possibly beyond, as envisaged in the current official EU/IMF program, is unlikely to materialize. This lack of access, in our view, creates a gap between committed official financing and Greece's projected financing requirements. Greece has heavy near-term financing requirements, with approximately €95 billion of Greek government debt maturing between now and the end of 2013 along with an additional €58 billion maturing in 2014... and this "based on recent statements made by the German government ahead of the June 20, 2011 Eurogroup meeting, we believe some official creditors will see restructuring of commercial debt as a necessary condition to such additional funding. We believe that private sector burden sharing could take the form of a debt exchange offer or an extension of debt maturities. In our view, any such transactions would likely be on terms less favorable than the debt being refinanced, which we, in turn, would view as a de facto default according to Standard & Poor's published criteria. In that event, under our criteria, this would result in the rating on the affected instruments being lowered to 'D,' while Greece's credit rating would be lowered to 'SD'(selective default)."

Moreover, the downgrade reflects our view that implementation risks associated with the EU/IMF program are rising, given the increasingly complicated political environment in Greece coupled with its current difficult economic climate.

 


Tyler Durden's picture

Guest Post: Where Is The Recovery? I Cannot Seem To Find It





Ask a fund manager with $5 billion in assets under management (AUM) if the economy is recovering and they will say yes. They will say this soft patch is transitory, it is a function of Japan and the revolution in MENA (Middle East and Northern Africa). They will tell you Greece is contained. They will tell you housing is bottoming. They will tell you stocks are cheap. Do they believe that? Aside from group think I certainly hope not but if the group says that red shirt you are wearing is in fact blue well dammit that shirt is blue. No one believes they are a lemming, that they are part of the herd. The word sheeple does not include them. Then why does history always show the majority to be wrong? As the market rolls over investors are beginning to question the color of that shirt. Perhaps it is red after all. The Federal Reserve has a horrible record at economic forecasting, absolutely horrid yet with each new forecast we are expected to believe "this time it is different." With each passing day more data tells us they are wrong yet again. As investors we must be diligent in our work, diligent in understanding the issues. We must think for ourselves, beyond the noise, beyond the pressure to conform.

 


Tyler Durden's picture

Frontrunning: June 13





  • US banks to cut Treasuries use (FT)
  • Obama Seeks to Win Back Wall Street Cash (NYT)
  • Banks battle over US tax law (FT)
  • In Greece, Some See a New Lehman (NYT)
  • Treasury Strips Emerging as Wall Street Favorite as U.S. Recovery Falters (Bloomberg)
  • Lagarde strengthens IMF bid with Indonesia backing (Reuters)
  • Why Not Go For 5% Growth? (John Taylor)
  • ‘Perfect Storm’ May Threaten Global Economy: Roubini (Bloomberg)
  • Powerful quakes rattle New Zealand city, six injured (Reuters)
  • Syrian forces take border town as inhabitants flee (Reuters)
  • Flawed Titan of the Fed (Newsweek)
 


ilene's picture

Stock World Weekly: Snakebit





The global economy is so rattled by price inflation, unemployment, natural disasters and global financial and political instability that it doesn’t know if it’s been “shot, f@*#ed, powder-burned or snakebit,”...

 


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