When Will Bad News Cease to be Good News for Stocks? It is quite amazing to watch this. Even as one economic datum after another indicates that a major slowdown is underway that could well turn into a recession (keep in mind that this is not a certainty – at similar junctures in recent years, aggregate economic data recovered just in the nick of time), the US stock market continues to take everything in stride. The longevity, intensity and persistence of a bubble is per se not proof that it will inevitably continue – it is only an indication of the likely amount of pain the market will eventually dispense.
First it was Jim Bullard in October, after US equity markets had fallen almost 10%, dropping the only word that matters to headline scanning algos, i.e., "QE4" and suggesting that asset purchases will make a comeback if the market drop continues. And now, with stocks fractions-of-a-percent off record highs, Minneapolis Fed president Narayana Kocherlakota spouts this idiocy: KOCHERLAKOTA: THERE IS EVEN A THEORETICAL ARGUMENT TO BE MADE FOR MAKING ASSET PURCHASES NOW IF ECONOMY FALTERED.
Stocks, rather stunningly, appear to have finally given up responding to this utter farce, and are falling.
It appears time for the Oracle of Omaha to start pressing his bought-and-paid-for Washington well-be-dones as his immensely profitable rail freight business - built on the back of massive deflation-inducing malinvestment in US Shale businesses thanks to ZIRP and QE - is running out of steam. As WSJ reports, in March, oil-train traffic was down 7% on a year-over-year basis amid safety concerns and with lower crude prices, "the extra cost of rail makes it a tougher choice," notes on analyst, adding that the WTI-Brent spread needs to increase "for the economics of crude by rail" to make sense.
Russia may offer Greece a discount on gas deliveries and new loans when Greek Prime Minister Alexis Tsipras visits Moscow this week, the Kommersant business daily reported on Tuesday, citing one source in the Russian government. A Kremlin spokesman said last week that Russian President Vladimir Putin and Tsipras planned to discuss economic ties and EU sanctions on Moscow when they meet for talks, which Kommersant said would take place on Thursday. "We are ready to consider the issue of a gas price discount for Greece," the newspaper said quoting an unnamed Russian government source.
Unfortunately there is not enough macro data for the algos to consider bad enough to be good today...
Since Mario Draghi's "whatever it takes" threat, it has been a non-stop buying frenzy of Spanish debt by foreigners, and after bottoming in the low-30%'s in 2012 and early 2013, foreign holdings of Spanish debt have once again shot straight up until, moment ago, we learned courtesy of the latest Bank of Spain update that as of February, International investors once again hold a majority of Spanish debt, or 50.5% to be precise, in the form of €333.5 billion of the unstripped Spanish government bonds of the total €660.4 billion.
Corporate profits are back at the levels reached in 1990, 1999 and 2008 that presaged recessions and a sharp downturn in sales and employment.
When it comes down to it, all that matters is 'the market'. With European consumer confidence at its highest since 2007, and European unemployment barely off record highs, there is only one thing that European policymakers really care about... and it's not 'the people'.
- Israel, U.S. Lawmakers Press Case Against Iran Nuclear Deal (WSJ)
- Rand Paul tries to broaden libertarian appeal (Reuters)
- Fewer Oil Trains Ply America’s Rails (WSJ)
- Chicago voters go to polls in first ever mayoral runoff (Reuters)
- FedEx to buy TNT to expand Europe deliveries (Reuters)
- Mohamed El-Erian Has Most of His Money in Cash (BBG)
- In Surprise Move, Australia Holds Rates (WSJ)
- Oil falls as Iran, China discuss more supply (Reuters)
For the third month in a row, FX 'traders' in AUD "guessed" the Reserve Bank of Australia's decision in the seconds before it was released to the public. Aussie regulators, seemingly furious at the blatant-ness of the front-running, confirmed they will be investigating the price spike overnight...
Yesterday it was only the US that got the full benefit of the market-wide stop hunt that sent the US market soaring on its biggest opening ramp in 2015 following the worst payroll data since 2013, because Europe was closed for Easter Monday. Which means today it was Europe's turn to celebrate atrocious US data (yes, yes, snow - because somehow tremendous January and February jobs data was not impacted by snow), and in the first European trading session of the week, equities have started off on the front-foot.
Hedge Fund Legend Julian Robertson Warns Of A "Complete Explosion" Unless Fed Contains "Boiling, Bubble" MarketSubmitted by Tyler Durden on 04/06/2015 23:28 -0400
According to hedge fund legend Julian Robertson, the Fed must act and hike rates soon because “the economy warrants it and I think [the Fed is] not crazy enough just to let this thing boil over into complete explosion. I am looking at a bubble that is almost sure to pop at some time and I don't know when it's going to happen, but I know it's going to happen. The bigger this bubble gets, the bigger the burst." What happens then: "I don't think it's at all ridiculous to think of a selloff like we saw in 2008."
Politicians who vote for warfare abroad and welfare at home yet claim they want to shut down the IRS should not be taken seriously. Freeing the people from the IRS’s tyranny is one of the best reasons to end the welfare-warfare state and return the federal government to its constitutional limitations.