Forget Shanghai and its roaring stock market, there's a new centre for speculative excess in China. Nothing says sustainable capital formation like a stock index that trades at a valuation of 67.2 times earnings, is up 166% in the last year and whose components regularly see 500% rallies (and recently epic collapses). Welcome to Shenzhen.
- Clinton aides sometimes blocked release of documents requested under public-records law (WSJ)
- House Benghazi panel subpoenas former Clinton White House aide (Reuters)
- Cash Crunch, for Many, Is a Monthly Woe (WSJ)
- Doubts over Greece add to euro's ECB-driven frailty (Reuters)
- For Many American States, It's Like the Recession Never Ended (BBG)
- Japan debt plan needs BOJ to keep rates low for years (Reuters)
- Euro Continues to Fall; European Bonds, Stocks Broadly Steady (WSJ)
- Los Angeles gives preliminary approval to $15 minimum wage (Reuters)
- China’s Record Capital Outflows Spark Financial Stability Fears (FT)
- U.K. Inflation Falls Below Zero for First Time Since 1960 (BBG)
- Islamic State Solidifies Foothold in Libya to Expand Reach (WSJ)
- Judge sentences 11 Afghan police over lynching of woman in Kabul (Reuters)
- The $18 Trillion Global Economic Boost If Everything Went Right (BBG)
- Eurozone Prices Confirmed Flat Year-on-Year in April, Core Inflation Inches Higher (Reuters)
- Greek Finances to Stagger On Longer Than You Think (BBG)
- Athens sees EU deal soon, Greeks' approval of government stance dwindles (Reuters)
Was that it for the "reflation" aka Bund-rout trade? One look at German bonds this morning and the sharp, panic selloffs seen in recent days are completely gone making one wonder if the ECB is done selling Bunds the CTAs who were riding the momentum train have all been squeezed out of their long positions and now the trend back to -0.20% can resume only to be followed by another abrupt 6-sigma move as the ECB once again sells inventory to buy itself more monetization runway. As a reminder, the ECB has to buy debt until September 2016 and it won't be able to if the 30-Year Bund is at -0.20% in a few months (or weeks).
Everything was going fine for Beijing Baoefung Technology and then, the unthinkable happened...
Marc Faber Contrarian Bet Against Market Consensus - US Treasuries
Special thanks to Dr. Marc Faber for giving us permission to publish excerpts from his May Gloom Boom & Doom Report.
- Bonds Extend Global Rout as Europe Stocks Slide, Dollar Weakens (BBG)
- Verizon Communications to Buy AOL for $4.4 Billion (BBG)
- Fresh Nepal earthquake kills dozens, triggers panic (Reuters)
- Sen. Shelby to Unveil Legislation Heightening Fed Scrutiny (WSJ)
- Bill Gross: The Amount of Money I'll Give Away 'Is Staggering, Even to Me' (BBG)
- U.S. rejects notion that Gulf rulers snubbing Obama summit (Reuters)... what about AIIB?
- In Asia, Debt Market Gets Tougher (WSJ)
- Iran’s Mahan airline defies sanctions in shadowy aircraft deal (FT)
In 2003, Kevin Flanagan was an information technology employee at Bank of America. They told him he was being replaced with foreign labor, and he was ordered to train his replacement. After he completed his assignment, he was laid off. Then he went to the parking lot and shot himself. That's "free trade."
While we are sure President Obama will find a way to comment on today's jobs number (focusing on the unemployment rate we suspect and not the quality of jobs or record number of people out of work), his main topic of discussion is how wonderful the ultra-secret "Trans-Pacific Partnership" deal is for Americans... and why congress must pass it asap.
Since robots entering the workforce is probably one of the most significant economic trends in the decades ahead, we should all start thinking about how to deal with what will be a major adjustment for hundreds of millions, if not billions, of people.
"If you want to hear the details of the Trans-Pacific Partnership trade deal the Obama administration is hoping to pass, you’ve got to be a member of Congress, and you’ve got to go to classified briefings and leave your staff and cellphone at the door. If you’re a member who wants to read the text, you’ve got to go to a room in the basement of the Capitol Visitor Center and be handed it one section at a time, watched over as you read, and forced to hand over any notes you make before leaving. And no matter what, you can’t discuss the details of what you’ve read."
As a result of constant jawboning that the PBOC may not only cut rates even more but proceed to launch QE (which it will ultimately, just not for a while), both the Shanghai Composite has been trading at multi-year highs and oil has found a bid strong enough that in the past two months it has surged by some 50% on hopes that Chinese demand will finally come back once the local economy is so weak it leaves the PBOC no other choice. However, two things suggest that the great "reflation" trade is ending.
- Win or lose, Cameron's political career hangs by a thread (Reuters)
- Greece aims for deal with lenders, IMF hard on reforms: minister (Reuters)
- Greek Jobless Legacy Adds Danger for Tsipras as Funds Dry Up (BBG)
- U.S. Will Change Stance on Secret Phone Tracking (WSJ)
- China April HSBC PMI shows biggest drop in factory activity in a year (Reuters)
- Goldman Sachs in Talks to Sell Its Coal Mines (WSJ)
- Takeover Fuel Begins to Flow as S&P 500 Bull Run Makes History (BBG)
A look at the drivers for the week ahead.
We know it's a little early for humor... but seriously, meet Beijing Baofeng Technology...