Believing they are filling the macroeconomic bathtub with aggregate demand and full-employment jobs, Janet Yellen and her merry band of Keynesian money printers are simply blowing chronic, giant, dangerous bubbles on Wall Street. Easy money is always the wrong medicine, but most especially for an economy that is already and self-evidently saturated with too much debt. The implication of all of this, of course,is that our monetary politburo is out of business; that “monetary accommodation” is nothing more than a one time parlor trick of central bankers.
The next time your friendly, local, asset-gathering, commission-taking, wealth-transferer explains that "you should BTFATH because stock valuations are supported by the fundamentals" - show them these two charts.
The U.S. economy has had six full years to bounce back since the financial collapse of 2008, and it simply has not happened. Median household income has declined substantially since then, total household wealth for middle class families is way down, the percentage of the population that is employed is still about where it was at the end of the last recession, and the number of Americans that are dependent on the government has absolutely exploded. Even those that claim that the economy is "recovering" admit that we are not even close to where we used to be economically. Many hope that someday we will eventually get back to that level, but the truth is that this is about as good as things are ever going to get for the middle class.
The Russell 2000 is -7.5% from July highs, -3% in 2014, unchanged since last October and year-over-year small-cap performance is the worst since July 2012. Despite four valiant momo-pump efforts to rally stocks to VWAP (to cover institutional sellers), they just kept falling back to bond-market-reality as US equities decoupled lower from JPY after Europe closed. The USD closed unch (after major swings intraday around Europe's close) with GBP strength and AUD/CAD weakness leading it lower on the week. Treasury yields dropped 2-3bps across the curve (down 3-5bps on the week) and all below FOMC levels (30Y -11bps). Gold is now up 0.6% on the week with oil and silver rising modestly. Copper found no bid. Financials slipped once again (catching down closer to credit). On the day, the European close signaled risk-off and the ubiquitous Tuesday panic buying in the last hour lifted the S&P to VWAP before a very weak close "not off the lows." Dow down 100+ pts 2 days in row for first time since June. VIX closed just shy of 15 at 7-week highs.
When The New Normal Fails: The "Problem With Traditional Economics" In A Bizarro, Centrally-Planned WorldSubmitted by Tyler Durden on 09/23/2014 15:45 -0400
Who is the world’s No. 3 arms exporter, after the United States and Russia? Surprise. It is Germany, a country bound by law to supply only allies and peaceable folks like (neutral) Switzerland or Sweden. Off limits are “areas of tension” — bad neighborhoods that actually need the stuff. Yet somehow, Israel and Saudi Arabia, both living in the world’s powder keg, are among Germany’s best customers. So are Algeria, Qatar and the United Arab Emirates.
Sometimes, when you go looking for trouble... you find it!
At what point is a drill more than just a drill? Maybe when it is so massive it could be confused for an invasion force, involving a mindblowing 155,000 troops, more than the armies of most sovereign nations, 4,000 armoured vehicles, 632 planes and helicopters and 84 vessels. Those are the staggering numbers taking part in the Vostok-2014 strategic exercises, Russian Defense Minister Sergei Shoigu told President Vladimir Putin on Tuesday, and whose main priority is ti "demonstrate that the degree of combat preparedness in Russian troops has risen." One almost wonders why...
President Obama, speaking at The Clinton Global Initiative, will explain how the administration and its partners are deepening their commitment to defend and strengthen civil society globally... (apart from the bombings and sanctions and FATCA and bank penalties and Fed intervention).
On the surface, earning $174,000 per year, while putting one solidly in the top 10% of all US earners, does not sound like much. This happens to be the 2014 allocated wage of America's elected political representatives, the members of the House of Representatives. And indeed, in the grand scheme of things it isn't much... until one considers that in the 102-day period between August 1 and November 12, this wage will be "earned" for just working a paltry 8 days, which, presuming 10 hour workdays, amounts to a whopping $608 per hour, on par with what some of America's most prominent lawyers earn. It is also several times the hourly compensation of anesthesiologists, one of the highest-earning professions, according to the Bureau of Labor Statistics, at $113 an hour on average.
Since winning the 2009 Nobel Peace Prize, President Obama has now bombed 7 predominantly Muslim countries: Afghanistan, Pakistan, Yemen, Somalia, Libya, Iraq, and now Syria. As Glenn Greenwald notes, Humanitarianism is the pretense, not the purpose.
Sad but true. Current owner of the Twinkies and Ho-Ho brands, Mexico's Grupo Bimbo, had planned to take advantage of an exuberant public stock market by bringing a secondary stock offering to reduce its leverage. Everything was good-to-go on Friday, but with the market now down a stunning 1.5% from pre-BABA IPO levels, they have pulled the offering:
*MEXICO’S BIMBO SAID TO POSTPONE FOLLOW-ON SHARE OFFER: REUTERS
No comment as yet on the reason, though we assume "market conditions" will be cited as the fickleness of capital markets' animal spirits is once again exposed for all to see. Perhaps Grupo Bimbo should rename themselves Grupo Bimbaba?
On one hand today's 2 Year bond auction priced, as expected, at the widest level since April 2011, or 0.589%, on rising concerns that the Fed may, all economic signs to the contrary, raise rates in the coming year. On the other hand, this was arguably the strongest 2 Year auction at this yield, in all of 2014. First, the auction stopped through a substantial 0.6bps through the 0.595% When Issued. Then, the Bid to Cover was a solid 3.564, the second highest of 2014, only lower than February's 3.605. Finally, the internals also were very solid, with Directs taking down 16.11% and Indirects holding 40.91%, the most since March 2014, leaving only 42.98% to the Dealers, which was also the lowest since March.