recovery

It becomes ever more tempting to conclude that the timing of the Fed’s rate hike was really quite odd, even from the perspective of the planners...

Because we squandered our opportunity to correct our own problems, our problems shall be our legacy. It’s wretched how dumb we are in our greed to have everything right now in the cheapest way possible and how willing we are to force the debts of that consumption upon our grandchildren and to pretend that won’t hurt them. We live in economic denial.

Banks have finally woken up to the risk their billions in C&I loans issued to fund "financial engineering" are exposed to. The reaction: an unprecedented surge in loan collateralization, with the percent of total loans secured by collateral soaring by nearly 50% in the past quarter to a record 55.9%, the highest ever!

"We don't gloat or feel terribly excited about the economic conditions right now. We approach every single repo and seizure as an opportunity to help respect the dignity of the debtor."

In the case of the car business, longer loans have been the key to maintaining the facade of this Potemkin village on wheels. But this dodge only works when the cost of the loan – interest – is low. And with cars – unlike houses – there is a built-in limit to how far out the loan can be stretched as way to tamp down the month-to-month costs down. Eight or nine years is probably the absolute maximum, because cars – unlike houses – always decrease in value over time and because unlike houses, cars are fundamentally throw-aways.

In the world of fiction, the most famous threshold may be that of 88 miles per hour. In the non-fictional world of economics and finance, however, an even more important threshold is that of 5% unemployment. At that moment everything changes. Wall Street's most prominent former converted permabull, Jim Paulsen, explains.

Three years after 2012, Goldman has finally admitted that all the talk about a major exodus of your Americans from parental houses and into the harsh crony capitalist world, was nothing but hot air. As the chart below shows, the share of 18-34-year-olds living with their parents has never been higher.

Every year, Pew Research Center looks back at the most memorable facts that illustrate important trends shaping our world. From faltering faith in government to the decline of Christians in America and from increased racial tensions to the shrinking American middle-class, here are some of our most striking findings of 2015.

On Monday, Zimbabwe announced that this small, economically devastated country would officially make the Chinese Yuan its legal tender as it seeks to increase trade with Beijing. In exchange for becoming not only a military but also financial colony of China, $40 million of its debts to Beijing would be canceled.  China was delighted it cost it only a $40 million debt write off to acquire its first official African colony.

After a furious three day "dash for trash", no volume, no breadth, commodity-driven rally, even Santa is now exhausted and overnight US equity index futures were little changed with European and Asian shares mixed. The dollar has declines as gold, silver gain, with WTI initially continuing its recent meteoric rise (up over 8% in the past three days, nearly hitting $38), only to reverse and give up all overnight gains moments ago. Copper falls after Chinese stocks see a second day of weakness, down 0.7% while an unexpected tumble in the USDJPY to 7 weeks lows has dragged the Nikkei (-0.5%) and its futures down.

At the end of the day, the Fed led central bank money printing spree of the past two decades resulted in what is functionally a massive dollar short. Once the Fed stopped expanding its balance sheet when QE officially ended in October 2014, it was only a matter of time before all the “near-dollars” of the world would come under enormous downward pressure in the FX markets. Our Keynesian witch doctors believe that sinking currencies are a wonderful thing, of course. They claim making your country poorer is a good way to stimulate export growth and a virtuous cycle of spending and growth. But there is another thing. It is also a good way to generate capital flight and the ensuing chaos that creates.

Not only were there downward revisions between the November and October "government data", but as the chart below shows, over the past 5 months the data has been consistently "revised lower" with every incremental release.

With just a handful of trading sessions left in the year, this is how the major global markets look as 2015 is about to close. As of this moment, and in keeping with the Christmas spirit, the biggest question is whether the S&P500 will close green or red for the year.

There are a few correlations that we find particularly compelling...