With everyone hoping that The Fed says something dovish (because after all stocks are 1% off their highs) there was some disappointment as the weakness was shrugged off as transitory:
- *FED SAYS WINTER SLOWDOWN PARTLY REFLECTS `TRANSITORY FACTORS'
- *FED SEES MODERATE GROWTH, JOB GAINS EVEN AFTER 1Q SLOWDOWN
In the end, once again, the dovish Fed provides just enough wealth-creating hope to keep stock dreams alive but knows it has to move sooner rather than later (keeping the "but we think the economy will strengthen" meme alive).
Pre-FOMC: S&P Futs 2099.50, 10Y 2.04%, EUR 1.1175, Gold $1210, Oil $58.85
At 560 words, this was not only the lowest wordcount of any FOMC statement since October 2012, just before QE3 was launched in December of 2012, but actually had fewer words than Hilsenrath's 608 words "explainer" of what the Fed just said.
At a stunning pace of 608 words in just 4 minutes, The Wall Street Journal's Fed-Whisperer, Jon Hilsenrath, has proclaimed his "common knowledge" meme for today's FOMC statement. Confirming that officials "aren’t at this point alarmed about the first quarter slowdown," and in fact stating they are confident of spending picking up due to consumer sentiment (which just fell)... which leaves them signalling no shift in policy stance - i.e. rate hikes are coming whether the economy can handle it or not...
If US inventories, already at record high levels, and with the inventory to sales rising to great financial crisis levels, had not grown by $121.9 billion and merely remained flat, US Q1 GDP would not be 0.2%, but would be -2.6%.
Greek deposits fall €2.5 billion in March to the lowest level since 2005 as the cash crunch intensifies ahead of looming payments to government employees and the IMF. Meanwhile, Deutsche Bank sees a referendum on a "reluctant" reform agreement as the most likely "solution" (although most Greeks reportedly oppose such a step) but says the chances of a less favorable outcome are still at least 30%.
Unlike last year when every single weatherman, pardon "economissed", quickly declared the collapse in Q1 GDP from an initial consensus of 3% to an abysmal -2.5% was due to the weather, and not due to a dramatic tightening in Chinese end demand, this time there is suddenly no silver lining, and one after another, the economisseds are lining up to say that, ooops, they were all wrong.
The news of Navinder Sarao's arrest, the scapegoat for all that is broken with the world's equity markets, may have come, gone and be largely forgotten, but while the CFTC is happy to have washed the corruption and incompetence off its hands by destroying the career of one insignificant trader (whatever happens, redirect public attention from the HFT firm that just came public and boasted of one trading loss day in 6 years) Sarao is facing decades in prison. And, what is worse for the alleged mastermind of the May 2010 flash crash, he won't even be able to enjoy a few weeks in quasi-freedom. Why? Because this lonely 36 year old, who "crashed" the entire market 5 years ago from his parents' basement (literally), can't even afford bail.
The initial euphoria over a small Cushing draw has not stopped as the machines have run WTI crude up over $59, tagging all YTD stops and pushing the front-month to its highest since December 12th.
While the images of Everest's avalanche were stunning, the following chilling clip captures the terror of Tibetans as this week's earthquake shook their world...
As first Bill Gross and then Jeff Gundlach suggest shorting German bonds, so it appears the message has sunk in that at 4.9bps 10 days ago, 10Y Bund yields were the short of a lifetime. Since then they have soared, with a dramatic doubling today from 14bps to over 29bps - the highest yield in 7 weeks. As Commerzbank warns, "a cascade of small events is creating a large splash in a structurally ever-thinner market," which has led to a plunge "similar to US Treasury flash crash of Oct. 15."
Following the plunge in new home sales (and surge in existing home sales), pending home sales rose slightly more than expected in March. Up 1.1% MoM (vs +1.0% exp), this is still a slowing in the pace of appreciation from February's upwardly revised 3.6% jump. A 13.4% surge YoY (NSA) has prompted exuberance from NAR as they throw off any vestiges of weather-related problems and proclaims the spring housing market is back (except Northeast saw sales drop 1.5% - for the 4th straight month; and The Midwest fell 2.5% MoM).
For the first time since November 2014, Cushing saw an inventory decline (-514k) last week. This has promopted a spike up to yesterday's highs in WTI Crude. The total inventgory build was 1.9mm bbl (less than the expected 3.2mm bbl) but continues the record streak to 16 weeks.