From our friends at Fasanara Capital we get their latest contrarian - and very bearish - Investment Outlook, which can be summarized as follows: "Reflation Phase To Be Temporary, More Downside Ahead", and which also contains four key conviction trade ideas over the next 12 months. "The narrative of reflation is today dominant and can continue to propel markets for a while longer. But as we know the narrative changes fast, and when it does we can expect a quick re-pricing. As we re-assess the validity of the underlying risks, we expect a shift in narrative in the few months ahead and a sizeable sell-off."
“The zero interest [rate] policy is an attack on the assets of millions of Germans..."
Federal Reserve officials are virtually certain to hold interest rates steady when their meeting ends today but they could try to send a message to markets and outside observers about what likely comes next. With no press conference scheduled after this week’s meeting and no new economic forecasts to be released, all the attention will be focused on their words and the market is more aware than ever that the Fed doesn’t act in a vacuum. As Bloomberg's Richard Breslow notes, The Fed is hopeful (that their always-wrong forecasts come true this time) but they're also scared to death on the consequences.
Trading volumes in Chinese exchanges spiked exponentially, with SHFE rebar and DCE iron ore futures becoming the No.1 and No.3 most-traded contracts in the world, surpassing volumes of ICE Brent and NYMEX WTI contracts, which have been the most widely-traded and liquid contracts for three decades.
"We Are Disappointed" - Goldman Removes Apple From "Conviction Buy" List, Cuts Price Target From $155 To $136Submitted by Tyler Durden on 04/27/2016 06:51 -0400
The tide has finally turned on what until recently was every sellside analyst's favorite stock.
Japan has proven that decay can be stretched into decades, but it has yet to prove that gravity can be revoked by central bank monetary games.
"We expect $/JPY to move higher again in the near term and continue to forecast $/JPY at 130 a year from now.... by making the fiscal expansion permanent and funded through money creation (a politically correct phrase for a form of 'helicopter money'), expectations of future inflation should increase and real rates fall"
The fact is, Simple Janet has already proven the end game. Money printing central bankers can’t stop. Were they to allow financial prices to normalize and trillions of bad credit to be liquidated, the whole financial house of cards they have built around the planet would blow sky high. The "soft landing" case is a null set.
Are interest rates low because of the action of central banks or because of unresolved debt deflation?
Japan is heading for a full-blown solvency crisis as the country runs out of local investors and may ultimately be forced to inflate away its debt in a desperate end-game, one of the world’s most influential economists has warned. "One day the BoJ may well get a call from the finance ministry saying please think about us – it is a life or death question - and keep rates at zero for a bit longer."
One thing we could not have simultaneously is both “inflation” and “deflation,” for we could not have simultaneously both an expansion and contraction of the money supply. But we could have a frustrated inflation. We could have simultaneously, as experience in Europe has already proved, both inflation and industrial disruption, inflation and unemployment, inflation and stagnation.
The alienation between Germany and the ECB has reached a new level. Back in deutsche mark times, Europeans often joked that the Germans "may not believe in God, but they believe in the Bundesbank," as Germany's central bank is called. Today, though, when it comes to relations between the ECB and the German population, people are more likely to speak of "parallel universes."... Should it come to helicopter money, Berlin would have to consider taking the ECB to court to clarify the limits of its mandate. In other words: the German government and Draghi's ECB would be adversaries in a public court case.
The market bond market, which is now frontrunning not just what the ECB has announced it will buy but what it may buy, just led to a record European junk bond issuance, when French cable and telecom operator Numericable "stunned the market" (as Reuters put it), when it upsized what was originally supposed to be a $2.25 deal by more than 100% to a whopping $5.2 billion bond deal on Wednesday. This was the largest single high-yield bond tranche ever issued.
It'll be four weeks tomorrow that Draghi fired his quadruple bazooka and yet European markets are in apathetic mode. We show the returns of our usual selection of global assets since the cob the night before the last ECB meeting on March 10th. Perhaps markets haven't been helped by a renewed but unrelated fall in Oil (Brent -9.1%, WTI -6.3%) since this point but it's noticeable that outside of commodities the worst performers have generally been areas of the market that Draghi tried to help.
Whether you define gold as a barbarous relic, a pet rock, "tradition", or "doomed", Russia surely refers to it as a saving grace. As Russia’s foreign reserves dwindled to just under $350 billion in early 2015, many predicted Russia was going to burn through all of their reserves in the not too distant future as they dealt with a depreciating Ruble and plummeting oil revenues. However, this dire prediction did not pan out mainly due to one thing: Russia’s strategic decision to load up on as much gold over the past few years as it possibly could.