It's shaping up to be a rough year for CEOs at Europe's most notorious rate rigging, scandal laden investment banks. Just three months after Brady Dougan left Credit Suisse and barely 30 days since Anshu Jain and Jürgen Fitschen tendered their resignations at Deutsche Bank, Barclays has shown CEO Antony Jenkins the door.
Spin revolving door, spin...
If the United States and China are supposed to be such “great friends”, why are both sides acting as if war is in our future? There were years of diplomatic troubles before Japan finally made the decision to launch a “surprise” attack on Pearl Harbor. Right now, it appears we are moving into a similar period of diplomatic trouble with China.
Stanley Kubrick's highly-disturbing film-version of A Clockwork Orange takes place in a dystopian futuristic London and exposes the extreme battle of good versus evil. Extracting out the violence, we can’t help but notice the symbolic similarities of the motif-ridden story with the 2008 financial market fallout and subsequent attempts at economic rehabilitation. The film forces us to consider how much liberty we are willing to give up for order, and how much order we are willing to give up for liberty. The central idea of the film has to do with the freedom of the individual to make free choices, but free choice becomes problematic when it undermines the safety and stability of society. It reminds us of the markets price discovery mechanisms (or lack thereof).
For the second week in a row, initial claims were worse than expected and increased year-to-date, While still below the magic 300k levels, claims printed 295k against expectations of 288k confirming the stagnation of the job market since the end of QE3 and the government's fiscal year. California and New York saw the biggest rise in initial claims with only Illinois seeing a drop; notably Texas saw layoffs across various sectors as it seems it ius not as 'diverse' as Richard Fisher propagandized. After 4 straight weeks of decline, continuing claims rose this week by the most in almost 3 months (but remains close to 15 year lows).
With the Fed supposedly steeling itself at last to remove a little of its emergency ‘accommodation’, it has suddenly become fashionable to warn of the awful parallels with 1937 as an excuse The Fed must not act today. We strongly refute the analogy. Instead, the real Ghost of ’37 takes the form of mean-spirited and, counter-productive 'pitchfork populism' politics and the spectre should not be conjured up to excuse the central bank from further delaying its overdue embarkation on the long road back to normality and policy minimalism.
Dallas Fed's Richard Fisher had his credibility (whatever is left) crushed for the 4th month in a row. After explaining carefully to no lessor status quo glad hand than Steve Liesman that the Texas economy will see a net positive from low oil prices, Dallas Fed data has utterly collapsed - at its fastest pace since Lehman. Printing a stunning -17.5 (over twice as bad as expected -8.5), this is the 4th miss in a row (and increasingly worse misses). The Dallas Fed was last lower than this in Jun 2011. Across the board, the components were an utter disaster... employees contracted, prices paid and recoeved tumbled, production plunged, and new orders collapsed. More worryingly, furture capex tumbled once again.
In response to questions posed by Santelli, former Dallas Fed president Richard Fisher made two points which were both salient if not downright prophetic. The first: “Well, what worries me is how totally lazy investors have gotten, totally dependent on the Federal Reserve and I find this to be a precarious situation.” The second: “Are we vulnerable in my opinion to a significant equity market correction? I believe we are. Not only has the Fed painted themselves into an even tighter corner – they’ve left no clear path as to now kick the empty can.
Recently retired Dallas Fed chief Richard Fisher tells CNBC that "lazy" retail investors have become completely dependent on the Fed and shouldn't expect a "diminutive" Janet Yellen to be able to save the day in the event of a significant correction.
With all deference to Dr. Richard Fisher, the surging dollar is not good for either the economy or ultimately a stronger labor market. This is particularly the case when the dollar is only stronger because the rest of the world is on the brink of recession and or deflation. The negative impact of a surging dollar in a weak economic environment will more than likely outweigh any positive inputs for the U.S. consumer. Time will tell, but the evidence is mounting that the we are likely closer to the end of the current economic cycle than the beginning.
Fed's Fisher: "[the stronger the dollar]... the better it is for our companies big and small to go out and hire American workers."
Goldman's Cohn: "the effects of the soaring dollar are just starting to be felt; for US exports, manufacturing, and jobs - it is not going to be positive."
White House Admits "Strong Dollar Is Headwind For Growth" As Greenback Surges At Fastest Pace In 34 YearsSubmitted by Tyler Durden on 03/10/2015 08:51 -0400
Forget 2013's "taper tantrum", FX markets are roiling over a full-blown "rate-hike-rage" as the USD Index surges to a new 12 year high, rising 23% in the last 8 months - the fastest surge since 1981. Not only is this dramaticaly bad for the US equity earnings picture but the carnage being unleashed across developed and emerging market currencies is almost unprecedented. Despite reassurance from The Fed that a strengthening dollar is positive for US jobs, The White House has now issued a statement that a "strengthening USD is a headwind for US growth."
What people and central bankers do not understand, is that you can't devalue your way to prosperity. Absolutely nothing has changed since the last crisis. The same too big too fail banks have only gotten much bigger. The same people that were in charge leading into the crisis and during it, are the same people who are in charge of fixing it. New regulations were established to try and regulate the industry, but they will be proven to be ineffective. Why? Because the Volcker Rule and Dodd-Frank have had all the important elements removed, thanks to the massive lobbying power of the TBTF banks and the Fed.
Euro-denominated emerging market sovereign issuance will soar to its highest levels in 10 years on the back of the European Central Bank's quantitative easing programme, as issuers outside the eurozone seek to take advantage of falling euro yields, according to bank analysts.