Simply put, either large cap Financials are cheap, or the entire U.S. equity market is still overpriced. Their precipitous decline year to date means markets fear they are both the transmission mechanism for a global slowdown/recession to come and a primary victim of that event.
In the USA, that economy has bled out like a hapless bystander with a sucking chest wound for the last eight years. Despite all the patriotic sanctimony on view at the Superbowl, the nation appears to be visibly cracking up, along with the fantasy of a permanent global economy. None of the desperate work-arounds since 2008 have worked around the predicaments of our time.
The political class has completely disrupted the American structure of production, made American workers uncompetitive, snuffed the life out of entrepreneurs, and burdened the entire nation with a debt obligation the size of Jupiter. The US economy is not the strongest and most durable in the world — it is an unskilled thirty-two-year-old waiter crashing at his parent’s place and trying to pay down an $80,000 international relations degree.
Despite a collapse in yields and implicit plunge in the odds of a rate-hike anytime soon, asset-gathering, commission-taking talking-heads continue to spew unrealities about the economy and where it goes next as excuse after excuse (low oil is good, services trump manufacturing etc) are discarded. What is worse is that none other than The Fed's "owners" - the primary dealers - refuse to play along with The Fed's transitory narrative as their Treasury Bond position is the longest since 2013.
"The US Treasury curve is still steep by historical standards. Taken at face value, this may suggest recession odds are small. However, we argue this logic is flawed because the curve is structurally steep when the Fed Funds rate is close to zero. When adjusted for the proximity of rates to zero, the curve may already be inverted and therefore may already be priced for a recession./// Implied recession odds are as high as 64% if the adjusted OIS curve is used"
What is the role of government in society? The answer determines the nature of the social order and how people are expected and allowed to interact with one another – on the basis of either force or freedom. The alternatives are really rather simple. Government may be narrowly limited to perform the essential task of protecting each individual’s right to his life, liberty, and honestly acquired property. Or it may be used to try to modify, influence, or dictate the conduct of the citizenry.
“...parts of the U.S. jobs report for January seem fishy...”
When the results are announced this primary season amid cheers and celebration, then, remember what it all represents: the triumph of compulsion over cooperation, coercion over freedom, and propaganda over truth.
In a year in which AAPL not only entered a bear market, but dropped to multi-year lows, the SNB almost doubled its total AAPL holdings, which as of December 31, 2015 amounted to 10.4 million shares, up from 5.6 million a year earlier
Freedom is an action word. It means turning off your screen devices - or at least greatly reducing your viewing time - and getting active to take to stave off the emerging authoritarian government. Aldous Huxley, George Orwell, and the countless science fiction writers and commentators have warned that we are in a race between getting actively involved in the world around us or facing disaster. If we’re watching, we’re not doing.
Mass immigration is continuing to claim victims in Sweden. Murder, assaults and rape have become everyday occurrences in this small country, with a population just short of ten million, which last year opened its doors to almost 163,000 immigrants. The atmosphere on Swedish social media is now almost revolutionary.
The volatility in crude oil trading has reached the highest levels since Lehman's systemic crisis in 2008. Intraday swings of 5-10% are now de rigeur with OPEC and geopolitical headlines jockeying for narrative amid collapsing fundamentals.. but there is another, much bigger driver of this sudden chaos. As Reuters reports, the sudden liquidation of a $600 million triple-levered fund bet on falling prices wreaked havoc through the entire crude complex.
The head of one of the biggest high-frequency trading companies has warned that there are several faultlines in the structure of increasingly electronic, automated financial markets that could lead to a “catastrophe” in the long run. "We’re creeping in the right direction, but unless we proactively address these issues, sometime in the next several decades we are going to experience a catastrophe due to runaway computerised trading,” Tower Research's Mark Gorton said.
Shale Shock: Another Leg Lower In Oil Coming After Many Producers Found To Have Far Lower BreakevensSubmitted by Tyler Durden on 02/03/2016 20:32 -0500
According to a report by the Bloomberg Intelligence analysts William Foiles and Andrew Cosgrove, Saudi Arabia may have its work cut out for it as it will be far harder to kill many U.S. E&Ps than analysts originally thought. The reason: a break-even model for the Permian Basin and Eagle Ford shows that oil production across five plays in Texas and New Mexico may remain profitable even when WTI prices fall below $30 a barrel, according to a 55-variable Bloomberg Intelligence model for horizontal oil wells.
“The retail investor waded in again. The sheep lined up and, unfortunately, are heading for the slaughter one more time. I think it is very hard to see how this Baby Boom generation, with 10,000 of them retiring a day, can afford one more devastating crash in their stock holdings. That is, unfortunately, what we are heading for. That’s why I say it’s dangerous. When the bubble breaks, it will spill and flow throughout the Main Street economy.”