...but still a 'once in a lifetime' opportunity...
The great conundrum of the U.S. economy today is that we have record numbers of working age people out of the labor force at the same time we have businesses desperately trying to find workers. So why aren’t workers filling these available jobs - or getting the skills necessary to fill them. We would posit five impediments to putting more Americans back to work - First, government discourages work...
History is on the market’s side, says DoubleLine's Jeff Gundlach, noting the Fed’s forecast for how much benchmark rates will rise is still too high, even after central bankers lowered their estimates last month. BlackRock’s Jeffrey Rosenberg says the bond market’s too complacent and is poised for a correction, claiming The Fed has "a tremendous ability" to send bond yields higher. But as Bloomberg reports, "if the burden of proof is on anybody, it’s on the Fed," and for now, as Gundlach exclaims, The Fed has "been wrong for so long," that their forecasts have been literally of no value, "the market’s pricing has been closer."
Traditional banks were built to gather deposits. Their design and infrastructure is geared towards that; they are maladapted to today’s interest rate environment. P2P platforms and other non-bank lenders are eating their lunch. Absent some radical rethinking of their operations model, they are about to go the way of the dodo. Of course, markets are not efficient; it will take time for competitors to move in. Traditional banks, however, have few weapons to fend them off: their brands (much less valuable for loan-origination than for deposit-gather purposes) and their (hugely expensive) legacy infrastructure. It took almost a century for the dodo bird to become extinct.
In a world seemingly bereft of consequences for all but the lower classes, the removal of an "illegally rigged gas supply" before a ConEd visit, appears to have been the cause of the deadly explosion in New York's East Village last week. A plumber who worked at the building has allegedly, according to NY Post, admitted to illegally tapping into a gas line there - saying that the landlord’s son ordered him to do it (who, perhaps karmically, was hurt in the blast).
The USA set the tone for 21st century magical finance, in which “wealth” was “created” by digital accounting fraud. The effects at home are visible on our landscape of suburban hyperwaste and decrepitating older towns and cities.
As noted earlier, with equities now a barren wasteland of volume (and liquidity), the last remaining HFT master (of whale order frontrunning) has been forced to go to those asset classes where organic flow is still abundant such as FX, courtesy of central banks engaged in global currency wars. However, HFTs realize it is only a matter of time before FX order flow also dries up as central banks take their trade away from public venues (and dark pools) and as such are always looking for new, untapped markets. One place where they are about to land according to the WSJ, with hilarious consequences sure to follow, will be the one place that HFTs should have felt at home from the very beginning: bitcoin.
With more than three quarters of US workers trapped in what we will call “wage growth hell,” and whose only chance at seeing a pay hike appears to rest on holding out for a promotion that’s probably not forthcoming, it doesn’t exactly come as a surprise that self-reported consumer spending hit a three-year low for March.
In so many ways, Warren Buffett and modern America are the same thing. An idea packaged and marketed so brilliantly, most of humanity unquestionably believes the myth. However, when you look beneath the surface, it becomes increasingly clear that neither of them actually come close to what’s printed on the package.
We can't make this up. Following Friday's dismal payrolls, today's Fed Labor Market Conditions Index (the aggregate index of all Yellen's indicators) collapsed to its lowest in almost 3 years. That was just the news that stocks needed to complete the biggest opening rally of the year so far.