The Beige Book may well be renamed the Boring Book due to the uniformity of its monthly pronouncements, but a few things stands out in a report that saw moderate expansion in the economy across most of the US:
- the Fed said most districts reported increases in home sales... except we assume for San Francisco where home sales plunged to 6 year low,
- the Fed sees "very few reports of staff cuts of plant closings"... which we guess ignores the December jobs reports where the least jobs were added since January 2011,
- the Fed said nine districts reported an increase in retail spending... which is curious considering retail traffic plunged and the holiday spending season was the worst since 2009,
- the Fed said almost half of district reported prices were stable... which probably means the Fed's inflation benchmark is now well below 2%
- and Finally, the Fed said eight district reported upward movement in wages... which also is confusing considering real disposable income per capita just dropped into the negative.
Oh well: we suppose we will take the Fed's word for it.
What could be worse than a falling cost for things that the increasingly cash-strapped consumer desires? We are not entirely sure but Christine Lagarde is deathly afraid of it...
- *LAGARDE SAYS RISING RISK OF DEFLATION MUST BE FOUGHT DECISIVELY
- *LAGARDE URGES OFFICIALS TO `FORTIFY THE FEEBLE GLOBAL RECOVERY' *LAGARDE SAYS U.S. MUST AVOID EARLY WITHDRAWAL OF FED SUPPORT
- *LAGARDE: JAPAN'S INITIAL BOOST FROM `ABENOMICS' WEAKENING A BIT
- *LAGARDE SAYS EURO-AREA MONETARY POLICY `COULD STILL DO MORE'
In other words, 5 years of debt monetization on an unprecedented scale were not enough! Get back to work Mr Draghi, Mrs Yellen, and Mr Kuroda.
When Google bought Nest (for its smart, intrusive thermostat technology that gives the NSA a front-row seat into the heating requirements of Americans), little did it know that it was purchasing an OTC penny stock with the ticker NEST and a market cap of a few hundred thousand. Or maybe, Google knew very well what it paid $3 billion for, and it was the increasingly prevalent idiots that make up the stock market that were confused. Either way, just like TWTRQ was TWTR for a few short days, so NEST (not to be confused with the GOOG acquisition target if even that is precisely what happened) is now the second coming of the unmitigated idiocy that defines the "market" NEST was up 4900% at its peak yesterday on massive volume.
As long as we ignore that data last week, the jobless recovery is mediocre at best... let's see how great it really is as President Obama explains how exceptional America still is...
Among the epicenters of the echo-bubble in the US housing 'recovery' is the San Francisco (and Bay Area) region. Between the weather, the frenzied IPOs of non-profitable tech firms, and free-money-funded hedge fund speculation, prices have surged - as DataQuick reports up 23.9% YoY in December! However, it seems perhaps the laws of economics may just have some relevance; as this price spike has had the following impact:
- *SAN FRANCISCO AREA HOME SALES FELL 12.7% IN DEC VS YR AGO
- *DATAQUICK: SAN FRANCISCO AREA DEC HOME SALES DROP TO 6-YR LOW
We are sure this is nothing to worry about. All we need is one marginal home to sell for more than the median $548,500 that San Francisco homes went for and we all feel the wealth effect...right?
Americans have never had less economic freedom than they do right now. The 2014 Index of Economic Freedom has just been released, and it turns out that the level of economic freedom in the United States has now fallen for seven consecutive years. But of course none of us need a report or a survey to tell us that. All we have to do is open our eyes and look around. At this point our entire society is completely dominated by control freaks and bureaucrats. Our economy is literally being suffocated to death by millions of laws, rules and regulations and each year brings a fresh tsunami of red tape. As you will see below, the U.S. government issued more than 80,000 pages of brand new rules and regulations last year on top of what we already had. Even if we didn't have all of the other monumental economic problems that we are currently facing, all of this bureaucracy alone would be enough to kill our economy.
First the Volcker Rule was defanged when last night the requirement to offload TruPS CDOs was eliminated, and now here comes Europe where the ECB just lowered the capital requirement for its "stringent" bank stress test (the one where Bankia and Dexia won't pass with flying colors we assume) by 25%. From the wires:
- ECB SAID TO FAVOR 6% CAPITAL REQUIREMENT IN BANK STRESS TEST
- ECB SAYS DECISION ON CAPITAL REQUIREMENT NOT YET FORMALLY MADE
Why is this notable? Recall from three short months ago: "the ECB confirmed that it will require lenders to have a capital ratio of 8 percent."
China Broad Credit Grows By Record RMB17.3 Trillion In 2013; FX Reserves Increase By Record $508 BillionSubmitted by Tyler Durden on 01/15/2014 13:12 -0400
So much for China's mission to gradually deleverage in 2013. Despite two near-taper episodes, one in June and one in December, which send short-term lending rates soaring, the PBOC party line has been that the Chinese banking system is slowly but surely issuing less debt as it already has an epic debt overhang, much of which is turning sour at an accelerated pace. One needs to look nowhere else than the country's declining GDP to visualize the declining marginal utility of every dollar in newly credit loans. And yet following last night's release of Chinese lending data we found that in 2013, the broadest measure of Chinese credit issuance, the so-called aggregated financing, just hit a record high of 17.3 trillion, a 9% increase from the prior year if still slower than the 23% increase in 2012. So much for the deleveraging myth.
UPDATE: USDJPY retraced the POMO spike... So VIX takes over...
The S&P 500 is screaching back towards its record all-time highs with a little help from a USDJPY-sparked momentum ignition and a $4-5 Billion POMO... behold the efficient markets...
Between lack of cash flows, insurmountable liabilities, an untenable pension funding, even insider fraud, we thought we had seen all the various reasons for filing for Chapter 11 bankruptcy protection. And then along came the Catholic Diocese of Stockton which announced that it would join its host city and seek bankruptcy protection "in the wake of the church's sexual-abuse scandal." As WSJ reported, Bishop Stephen E. Blaire said in a news release Monday that the diocese would seek bankruptcy protection Wednesday, explaining that reorganization was the only option for dealing with mounting legal costs related to abuse by priests. The bishop said the diocese has spent $14 million in legal settlements and judgments over the past 20 years dealing with abuse allegations, and doesn't have funds available to settle pending lawsuits or address future allegations. The punchline: "Very simply, we are in this situation because of those priests in our diocese who perpetrated grave, evil acts of child sexual abuse."
As equity markets revert to their new normal BTFATH, Japanese-Yen-pinned reality, we thought a gentle reminder of the longer-term state of the real (not financial) economy would prod more than a few into the realization of just how 'encouraged' they should be by the nominal high after nominal high that is gloated over day after day...
Yesterday, Deutsche's Jim Reid was kind enough to put modern capital markets in their most proper context: "in these artificial markets the percentages are skewed towards the bulls for now." Today, for everyone confused how to navigate the "artificial market", Reid has the much needed explanation. To wit: "So far this year markets have gone down on good data, gone up on good data, gone down on concerns over weaker data and also gone up on weaker data."
And now you know everything there is to "know."
Either the Fed and the OCC are unaware of this thing called "computers" which allows them to find out what a bank's trading desk somewhere, anywhere in the world has done at any point in the past 30 or so years, or they really felt the need to stretch their legs around London's Canary Wharf, or they heard very good news about Citi's seafood buffet at its London HQ, but whatever the reason Reuters reports that "the U.S. Federal Reserve and Office of the Comptroller of the Currency have sent investigators to Citigroup's London headquarters as part of an international investigation into alleged manipulation of the global currency market, a source familiar with the matter told Reuters on Wednesday."
For now unsupported by the usual VIX slam or JPY smash, US equities are spiking higher. The Dow and The S&P 500 remain in the red for the year still but Russell has now surged to new highs and joined Trannies and NASDAQ in the green for 2014.