Behind the public-relations facade of "advocacy" and "justice," much of the American legal system is unproductive regulatory friction and the pursuit of extortionist rentier skims. What else could we have done with the billions of dollars squandered on regulatory friction and the pursuit of questionable claims of damage?
As the U.S. Greater Depression progresses, depicted most vividly in the collapse in the “civilian participation rate” (the number of people working in the economy) and the “velocity of money” (the heartbeat of the economy) - indicating an economy which is not merely in decline, but rather is being sucked downward in a terminal (and accelerating) death-spiral. There is another even more concerning statistic: U.S. “gasoline consumption” – as measured by the U.S. EIA itself – has plummeted by nearly 75%, from its all-time peak in July of 1998. A near-75% collapse in U.S. gasoline consumption has occurred in little more than 15 years... "recovery"
One of the most important, but difficult to measure, concepts in macroeconomics is the natural or equilibrium real interest rate. This is the rate of interest consistent with full employment and stable inflation. The last few weeks have seen bond yields tumble and a rising cacophony of market participants questioning both the Fed's central tendency of terminal or natural rates (around 4%) and the market's perception of how fast we get there. SF Fed Williams models see a 1.8% natural rate, BofA also believes it is between 1.5 and 2%; and now Citi admits, "fair value of long-term rates may be lower than we and other market participants judged them to be."
"...the West, on the other hand, is full of debt and consumption. America’s greatest exports are now infinite quantities of paper currency, drone attacks, and arrogant regulations like FATCA. It doesn’t take a rocket scientist to see where this is going. The West is running out of steam, and the Social Contract subtext is breaking down. Parents are no longer able to provide a better life for their children."
Earlier today, as part of its latest macro markets research roundup, Goldman let a phrase slip, which probably better than anything we have seen in the past few years, captures just how truly broken the "market" is. To wit: "it is important to remember that weak global growth is generally negative for risky assets." That Goldman even had to remind its clients of this dramatic observation, puts to rest any doubts about just how much central banks' central-planning has perverted the cost/benefit analysis of the world.
The Keynesians have failed. Japan has proved it. It’s only a matter of time before the rest of the world… and the markets catch on.
In the footsteps of the smashing success that was the #AskJPM and #MyNYPD social outreach by the two beloved institutions, yet another renowned entity has decided to take its comedic genius to the people: none other than the place where it all started - the Bank of England. So if you have a question for Mark Carney's money printing and housing bubble-forming institution, do no hesitate to tweet it: just remember to add the #AskBoE hash tag.
When American explorers first traveled through north Texas, Oklahoma and Kansas, they referred to it as "the Great American Desert" and they doubted that anyone would ever be able to farm it. But as history has shown, when that area gets plenty of precipitation the farming is actually quite good. Unfortunately, the region is now in the midst of a devastating multi-year drought which never seems to end. Right now, 56 percent of Texas, 64 percent of Oklahoma and 80 percent of Kansas are experiencing "severe drought", and the long range forecast for this upcoming summer is not good. In fact, some areas in the region are already drier than they were during the worst times of the 1930s.
A dispassionate discussion look at the rally in US Treasuries
The complete implosion in volume and vol, not to mention bond yields continues, and appears to have spilled over into events newsflow where overnight virtually nothing happened, or at least such is the algos' complete disregard for any real time headlines that as bond yields dropped to fresh record lows in many countries and the US 10Y sliding to a 2.3% handle, confused US equity futures have recouped almost all their losses from yesterday despite a USDJPY carry trade which has once again dropped to the 101.5 level, and are set for new record highs. Perhaps they are just waiting for today's downward revision in Q1 GDP to a negative print before blasting off on their way to Jeremy Grantham's 2,200 bubble peak after which Bernanke's Frankenstein market will finally, mercifully die.
“Life's greatest comfort is being able to look over your shoulder and see people worse off, waiting in line behind you.” -Chuck Palahniuk
First it was JPM, then it was, surprisingly, none other than NY Fed chief Bill Dudley - the head of the trading desk that proudly boasts trader extraordinaire Kevin Henry, then Citi, and now joining the chorus of banks and Fed presidents blaming all that is wrong in the banking system on near record low volatility resulting in a collapse in trading is none other than Goldman Sachs, whose president Gary Cohn spoke at a Sanford Bernstein conference earlier today, said that fixed income volumes - the bread and butter of Goldman's juggernaut FICC division - are under significant pressure, and blamed low interest rates and, drumroll, the Fed's QE on the drop in volatility, summarizing the current trading environment as "Abnormal." It appears increasingly more are voicing their displeasure with the New Centrally-Planned Abnormal... but only after their balance sheets are full to the brim with some $2.8 trillion in fungible reserves.
If there was some confusion yesterday why in the first quarter, seemingly having no better capital allocation option S&P500 corporate CEOs spent a record $160 billion on stock buybacks, then the following report should explain it: According to a new study by the AP, the median pay package for a CEO rose above eight figures for the first time last year. The head of a typical large public company earned a record $10.5 million, an increase of 8.8 percent from $9.6 million in 2012, according to an Associated Press/Equilar pay study.
With the Fed having tapered its liquidity injections into the stock market from $85 billion to "only" $45 billion per month, retail investors getting burned by the recent high beta and momentum stock flame out and "greatly unrotating" into the renewed safety of bonds, not to mention a churning market that until last week was unchanged for the year, and hedge funds ever shorter into this latest ramp, many are asking themselves: who is buying?
Here is the answer.