Japanese stocks have been bouncing back higher in the last few days as considerably worse data than expected combined with the looming consumption tax hike (which the government has to do to show the market that is, at a minimum, somewhat fiscally responsible) are driving both stocks and JPY to discount a near future dominated by an even bigger stimulus by the BoJ. However, casting a big shadow over all this is what happened the last time Japan raised its consumption tax...
China General Says "War With Japan Increasingly Likely" As Russia Conducts New Army Drill Near Latvia, EstoniaSubmitted by Tyler Durden on 04/03/2014 17:02 -0400
Just in case escalating tensions along Russia's western border - and one can be certain Estonia and Latvia will scream bloody murder any second - here is a retired Chinese general who just told SCMP that a "war with Japan over territorial disputes is becoming increasingly likely" and that China is more than capable of defending itself.
Has the United States ever experienced a time when a foreign nation has attempted to buy up so much of our land all at once? As Michael Snyder details below, it appears the Chinese are on a real estate buying spree all over America as they are now the dominat 'buyers' of investment green cards. This is occurring as private equity buyers and hedge funds exit the buy-to-rent business en masse and are, as Mike Krieger explains, are desperate to pitch American property to anyone willing to keep Housing Bubble 2.0 inflated... it seems Zillow is more than happy to enable that, "Zillow agreed to make its U.S. property listings available to Chinese consumers through a partnership with a Beijing-based website."
The risk that creditors, savers and bondholders, rather than taxpayers will bear the brunt of rescuing a bank in trouble form part of the first credit ratings given to 18 of Europe's biggest banks yesterday by new ratings agency, Scope.
So much for those already abysmally low Q1 GDP forecasts. Moments ago, the Census Bureau released trade data for February which crushed expectations of an improvement from $39.1 billion (revised to $39.3 billion) to $38.5 billion, and instead rose 7.7% to $42.3 billion, the highest monthly trade deficit since September. This was driven by a 0.4% increase in imports to to $231.7 billion offset by a drop in exports of 1.1% to $192.5 billion. The goods deficit increased $2.2 billion from January to $61.7 billion in February; the services surplus decreased $0.8 billion from January to $19.4 billion in February. Most notably however, is that as a result of this "unexpected" surge in the deficit, the Q1 GDP forecast cuts, anywhere between 0.2% and 0.4% are set to begin.
- Russia says expects answers on NATO troops in eastern Europe (Reuters)
- Dealers say GM customer anxiety rising, sales may take hit (Reuters)
- China Unveils Mini-Stimulus Measure (WSJ)
- Londoners Priced Out of Housing Blame Foreigners (BBG)
- New earthquake in Chile prompts tsunami alerts (Reuters)
- Ukrainian Billionaire Charged by U.S. With Bribe Scheme (BBG)
- Chinese Investments in U.S. Commercial Real Estate Surges (BBG)
- Old Math Casts Doubt on Accuracy of Oil Reserve Estimates (BBG)
- US secretly created 'Cuban Twitter' to stir unrest (AP)
Being that markets are unrigged and all, at least according to every single proponent of HFT that is, futures have done their overnight levitation as they have every day for the past month driven by the one staple - the Yen carry trade - even if in recent days the broader market slump during the actual daytrading session mostly impacted biotechs yesterday. And since any news is good news, we don't expect today's main event, the ECB's rate announcement and Draghi press conference, both of which are expected to announce nothing new despite Europe's outright inflationary collapse which most recently dropped to 0.5%, the lowest since 2009.
The Single Most Important Issue For the Power Elite In China… And What It Means For the Global EconomySubmitted by Phoenix Capital Research on 04/02/2014 23:13 -0400
The reason for the economic gimmicking pertains the political perspective of China’s economic data. As a communist regime, China’s government has one focus and one focus only. It’s not economic growth for growth’s sake, nor is it improving the quality of life for China’s population...
For the 4th month in a row, China's composite PMI fell (with new orders tumbling) - this time to the lowest levels since Nov 2011 and firmly in contractionary territory. However, in the exact antithesis of the manufacturing PMI data, tonight's non-manufacturing data saw the official government data miss expectations and drop (manufacturing rose) while HSBC's services PMI rose (HSBC's manufacturing dropped). This was enough (along with an Aussie retail data miss) to send AUDJPY into conniptions jerking lower then higher then lower as the algos just could not comprehend the levels of absurdity that was flooding their valves. Japanese PMI strolled along in its neither here nor there zone and Aussie PMI tumbled back into contraction after one month of exuberance. In the famous words of Frank Valli, oh what a night.
As he visited clients around the nation, JPMorgan CIO Michael Cembalest noted a number of questions repeated... why can’t the US spend more on infrastructure? why can’t the US spend more on worker retraining? why is less money being spent on training, employment and related social services? why is energy spending falling? The answer, ne explains below, to all these questions is the same: these categories are declining since they are being squeezed out by the inexorable rise in entitlement payments.
Spot what is missing in the just blasted headline from Bloomberg:
IRAN, RUSSIA SAID TO SEAL $20B OIL-FOR-GOODS DEAL: REUTERS
If you said the complete absence of US Dollars anywhere in the funds flow you are correct. Which is precisely what we have been warning would happen the more the West and/or JPMorgan pushed Russia into a USD-free corner.
Though the mainstream financial media and the blogosphere differ radically on their forecasts - the MFM sees near-zero systemic risk while the alternative media sees a critical confluence of it - they agree on one thing: the Federal Reserve and the “too big to fail” (TBTF) Wall Street banks have their hands on the political and financial tiller of the nation, and nothing will dislodge their dominance. In addition, the U.S. dollar’s status as a reserve currency is a key component of U.S. global dominance. Were the dollar to be devalued by Fed/Wall Street policies to the point that it lost its reserve status, the damage to American influence and wealth would be irreversible. What if there is another possibility to the consensus view that the Fed/Wall Street will continue to issue credit and currency with abandon until the inevitable consequence occurs, i.e. the dollar is devalued and loses its reserve status. What if Wall Street’s power has peaked and is about to be challenged by forces that it has never faced before. Put another way, the power of Wall Street has reached a systemic extreme where a decline or reversal is inevitable.
Jim Rickards said that gold should remain an essential part of diversified portfolios and Mark Faber pointed out that the question should be “how could you NOT own gold?” Faber has said that he favors owning gold in fully allocated gold accounts in Singapore and Switzerland.
As the world's investors wait anxiously for the next piece of bad news from Japan, China, Europe, or US as a signal to buy, buy, buy on the back of a renewed "stimulus" of freshly printed money that has comforted them for 5 years, it seems the Fed is turning its attention elsewhere:
- BULLARD SAYS MONITORING FOR ASSET BUBBLES `IMPORTANT CONCERN'
- BULLARD SAYS ASSET PRICE BUBBLES MAY BECOME `BIG CONCERN'
For now though, of course, the Fed's Bubble-o-meter has no batteries. Pointing out the irony that the Fed creates the bubbles... and then when it becomes a "big concern" it promises to do something about it if it every sees one. Finally, we are delighted that the schizhophrenia of the central planners continues to be exhibited for all to see: first Yellen tells everyone to buy stocks on Tuesday with an uber-dovish retracement of her "6 month" flub, and now Bullard is saying to watch out for bubbles. What can one say but... economists.
One way to understand why the global financial meltdown occurred in 2008 and not in 2012 is all the oxygen in the room had been consumed. In the U.S. housing market, there was nobody left to buy an overpriced house with a no-document liar loan because everyone who was qualified to buy a McMansion in the middle of nowhere had already bought three and everyone who wasn't qualified had purchased a McMansion to flip with a liar loan. Once the pool of credulous buyers evaporated, the dominoes fell, eventually circling the globe. Right now China is at the top of the S-Curve, and the problems of stagnation are still ahead.