Having quietly tested the $52 level and brushed with green on the week overnight, crude traders have decided that a surprise European GDP beat is good enough to outweigh all the over-supply fears and pushed WTI to $53 (with Brent breaking above $61 - highest since 12/23).
Import prices dropped 8.0% YoY (modestly beating expectations of an 8.9% plunge) and 2.8% MoM. The last time import prices started to fall at this pace was a month after Lehman Brothers BK'd. Of course the crash of oil prices is largely responsible as imported fuel costs slumped 16.9% YoY - the most since Dec 2008 (petroleum -17.7%). However, even away from that the price of imported capital goods collapsed the most since March 2009 with the biggest rise in Japanese (foreign central banks) exported deflation since April 2013 (when QE really accelerated).
Now that Europe has demonstrated that one can go NIRP and not crash the system, will the Fed - once its silly obsession with hiking rates in the summer only to launch even more easing and/or QE as the ECB did in 2008 and 2011 - follow suit and join a rising tide of "developed" world central banks in punishing savers for hoarding cash? In a note released last night titled "Revisiting Negative Interest Rates in the US", Goldman shares its thought on the matter. It goes without saying that Goldman is important, because whatever Goldman's econ team shares with Goldman's Bill Dudley over at the NY Fed, usually tends to become official policy with a 3-6 month lag.
- Greece will do 'whatever it can' to reach deal with EU (Reuters)
- ECB Urges Greek Political Deal as Emergency Cash Is Tight (BBG)
- Fighting rages in run-up to Ukraine ceasefire (Reuters)
- Eurozone GDP Picks Up, Thanks to Germany (WSJ)
- Two J. P. Morgan Executives Connected to Asia Hiring Probe Pushed Out (WSJ)
- Putin's High Tolerance for Pain and Europe's Reluctance to Inflict It (BBG)
- Indigestion Hits Top U.S. Food Firms (WSJ)
- Alibaba's Jack Ma seeks to reassure employees over U.S. lawsuits (Reuters)
Who would have thought all it takes for Eurozone Q4 GDP to print above expectations, even if by the smallest of possible margins - one which even the Chinese goalseek-o-tron bows its head down to in respect - which at 0.3% Q/Q was above the 0.2% expected and above Q3's 0.2%, was for Europe to admit it has finally succumbed to deflation. Oh, and for the ECB to admit the situation has never been more serious by launching Q€. Oh, and add the "estimated contribution" to GDP from hookers and drugs. Put all that together and on an annualized basis, the European economy grew by 1.4%. Whatever the reason, Q4 GDP was the best print since Q1, even as Germany blew not only consensus of 0.3%, but the highest GDP estimate of 0.6% out of the water when it reported that courtesy of a spike in spending, its economy grew by 0.7% in the fourth quarter, up from the near-recessionary 0.1% in Q3. That, together with QE and ZIRP now raging across the continent, was enough to push the DAX above 11,000 for the first time ever.
The "Catastrophic Shutdown Of America's Supply Chain" Begins: Stunning Photos Of West Coast Port CongestionSubmitted by Tyler Durden on 02/13/2015 00:20 -0400
Yet another weak Japanese bond auction (this time 5Y maturity - lowest bid-to-cover and biggest tail since 2013), on the heels of last night revelations of a growing chorus of JPY-devaluation-fears has many wondering if the faith they placed in The BoJ's grandest experiment was wrong after all. With speculators now net short for Japanese stocks for the first time since Abenomics was unleashed, a series of weak bond auctions and a spike in JGB yields since the ECB unleashed QE, and now a surging JPY (tumbling USDJPY) as carry trader around the world pull back on leverage and exposure... perhaps - the idea that a nation can devalue itself into prosperity on the backs of the rest of the world was total idiocy after all and Kyle Bass' Potemkin Village is about to fall.
The “perfect-storm” of geopolitical instability, diplomatic isolation, severe currency depreciation, and economic decline now confronting Russia has profoundly damaged Moscow's international standing, and possibly for the long-term. Yet, it is precisely such conditions that may push the country’s leadership into taking the radical step that will secure its world-player status once and for all: the adoption of a gold-exchange standard.
Across these United States, a fierce vaccination debate has started to flare up, and straw-man arguments are being paraded around as the truth. Governor Chris Christie of New Jersey said he’s for a balanced approach, in which parents have some measure of choice. Parents living in the Christie regime don’t get full choice, but he is willing to grant them some measure of choice. Perhaps the citizenry’s ability to voice its perspective would suffice for the Governor, as long as they understand that he and his bureaucrat comrades have the final say. The debate to vaccinate or not to vaccinate is a distraction from the more important issue at hand: Who owns your body, you or the government?
Because nothing says "independence" like snuggling up to the newly Republican-controlled Congress. Having, in recent years, been accused of being too closely aligned with Democrats, WSJ reports that the Fed's "Liaison Office" - which lobbies for the bank's interest on Capitol Hill - has begun cultivatinmg relationships with the GOP in a desperate bid to evade Rand Paul's "Audit The Fed" Bill.
Essentially, our analysis suggests that there is a large divergence in the perceptions of both sides but the rational choice is to hold to their respective positions. In other words, our analysis of the payoffs suggest that the EU won’t offer debt relief and Syriza won’t back down from demanding it. Our fear is that the markets, inured by previous bailouts, expect the Greeks to cave, leaving the risk of an unexpected negative outcome in Europe is probably higher than what is currently being discounted. At the same time, EU policymakers are assuming that contagion will not occur, which may not be accurate.
As Steve Ricchiuto explained to a stunned CNBC audience, the US economy is not as awesome as the narrative would proclaim. In fact, based on the underlying data (as opposed to anecdotal perspectives like Jim Cramer this morning dismissing hard data - "I am no longer using these aggregate retail sales reports" - in favor of rose-colored glass half-full CEO expectations from earnings calls) 2015 has seen US macro data deteriorate and disappoint the most since 2006... and weakest absolute start to the year since 2009.
When you accept the fact history is cyclical and continuous linear progress is not what transpires in the real world, you free yourself from the mental debilitation of normalcy bias and cognitive dissonance. Things do get worse. There are dark periods of history and they recur on a regular cycle. And we are in the midst of one of those dark periods. This Crisis will not be resolved without much pain, sacrifice, bloodshed, and ultimately war. The American people have lost their ability to think, reason, question, do math, control their urges, defer gratification, or realize when they are being lied to by the people they elected to public office. A culture of ignorance, celebration of the absurd, salutation of stupidity, honoring of the inane, being mesmerized by electronic gadgets, and satiating their egocentric shallow impulses on social media, is a sure recipe for societal collapse.
Presented with little comment aside to note that a robot burger-flipper would never react like this were he (or she) to be fired from their job at McDonalds...