In order to attract and retain small and big business alike, it's long been a tactic by states and local governments to offer tax breaks. However, as times have got tough - and rules have changed - in Obama's "recovery", government subsidies to their cronies - of at least $50 million - have plummeted by 70% Bloomberg reports.
With the Fed decision just one day away, followed the very next day by the increasingly more irrational BOJ, stocks had no desire to make significant moves and overnight's boring session was the result, as European stocks and U.S. index futures rose modestly but mostly hugged the flatline while Asian declined 0.2% for a third day as raw-material shares declined and Tokyo equities slumped before central bank meetings in the U.S. and Japan this week. China’s stocks rose the most in almost two weeks, up 0.6% but failed to rise above 3000 on the Shanghai Composite, in thin trading.
- After big New York wins, Trump and Clinton cast themselves as inevitable (Reuters)
- Eastern States Take Turn in Presidential Primary Spotlight (WSJ)
- China's Stocks Tumble Most in Seven Weeks to Break Trading Calm (BBG)
- Oil falls on end to Kuwaiti strike, supply outlook (Reuters)
- Oil price's decline weighs on global stock markets (Reuters)
It's all fun and games until someone is caught cheating. That is the lesson that Volkswagen learned last fall, when the German car manufacturer was caught using software that could detect when an emissions test was taking place in order to give better results. Today, it looks like Mitsubishi Motors will learn that very same lesson. "We express deep apologies to all of our customers and stakeholders for this issue," Mitsubishi said in a statement, also saying that the company "conducted testing improperly to present better fuel consumption rates than the actual rates."
A new study finds there were more than twice as many big earthquakes in the first quarter of 2014 as compared with the annual average since 1979... “We have recently experienced a period that has had one of the highest rates of great earthquakes ever recorded..."
Following yesterday's OPEC "production freeze" meeting in Doha which ended in total failure, where in a seemingly last minute change of heart Saudi Arabia and specifically its deputy crown prince bin Salman revised the terms of the agreement demanding Iran participate in the freeze after all knowing well it won't, oil crashed and with it so did the strategy of jawboning for the past 2 months had been exposed for what it was: a desperate attempt to keep oil prices stable and "crush shorts" while global demand slowly picked up. And whether it is central banks, or chronic BTFDers, just 12 hours after oil opened for trading with a loud crash, the commodity has nearly wiped out all losses, and both brent and WTI were down barely 2%, leading to both European stocks and US equity futures virtually unchanged on the session.
On Sunday Toyota was one of many Japanese companies to announce that it will suspend most car production across Japan as a result of critical supply chain disruption caused by the recent destructive earthquake and numerous aftershocks. The earthquakes reflected the vulnerability of Japanese companies to supply chain disruptions caused by natural disasters, and also highlighted the "just in time" philosophy pioneered by Toyota and followed by many others.
Just as we predicted, it seems - despite the "everything is awesome" jobs data - that auto sales exuberance has hit the wall of credit saturation. Despite a surge in incentives in Q1, GM US auto sales rose just 0.6% (drastically lower than 6.0% rise expectations) and Ford rose 7.8% (missing expectations of a 9.4% surge). As J.D.Power notes "there are worrisome trends below the surface" of auto sales and with inventories at levels only seen once in the last 24 years (and tumbling used car prices), the automakers have a major problem if this is anything but 'transitory'.
At the end of the day, it was all about the dollar and the reason for this morning's stock surge around the globe, as we noted last night, is absurdly delightful: Yellen signaled "weakening world growth" and "less confidence in the renormalization process." In other words, the "bad news is good news" mantra is back front and center.
Those who forget that “liberty is the mother not the daughter of order, will be tempted to favor state-imposed order. How ironic since the state is the greatest creator of disorder of all.”
- Stocks knocked back as oil rally falters (Reuters)
- Still no deal for Britain on EU reforms after all-night talks (Reuters)
- Oil Falls Near $30 as Rising U.S. Crude Stockpiles Expand Glut (BBG)
- PBOC to Raise Reserve Ratios for Banks That Don't Meet Criteria (BBG)
- China’s Top Securities Regulator to Step Down (WSJ)
It has been a morning session of two halves. In Asia, the mood was somber, and stocks fell with the Shanghai Composite (+1.1%) outperforming on another late session binge-fest by the National Team. The European session on the other hand surged higher and did not look back when the USDJPY proceeded to soar 100 pips from overnight lows, and push the Stoxx 600 +1.7% and US equity futures up with it, with the ES trading above 1900 as of this posting, adding to the best 2-day rally in the S&P in five months.
- Stocks cautious after rocky China data, bonds fly high (Reuters)
- Oil falls on China data, fading prospect of OPEC action (Reuters)
- Republican Vote in Iowa Caucus Hinges on Newcomer Turnout (WSJ)
- When Trump tells supporters not to donate, they mostly listen (Reuters)
- Goldman Sachs Employees Shift to Rubio as Bush Support Fades (BBG)
- Four Theories on How Oil Has Hypnotized the Global Stock Market (BBG)
Our quarterly survey of “Off the Grid” economic indicators finds that the U.S. economy is still growing, but the pace seems to be slowing from Q3 2015.
There’s only one investment we can think of that many people either love or hate reflexively, almost without regard to market performance: gold. And, to a lesser degree, silver. It’s strange that these two metals provoke such powerful psychological reactions - especially among people who dislike them. Nobody has an instinctive hatred of iron, copper, aluminum, or cobalt. The reason, of course, is that the main use of gold has always been as money. And people have strong feelings about money. From an economic viewpoint, however, money is just a medium of exchange and a store of value. Efforts to turn it into a political football invariably are signs of a hidden agenda, or perhaps a psychological aberration. So, let’s take some recent statements, assertions, and opinions that have been promulgated in the media and analyze them.