St Louis Fed
If yesterday's market action was boring, today has been a virtual carbon copy which started with the usual early Chinese selloff levitating into a mildly positive close, with the SHCOMP closing just above the psychological 4,000 level: the next big hurdle will be 4058, the 38.2% Fib correction of the recent fall. In the US equity futures are currently unchanged ahead of a day in which there is no macro economic data but lots of corporate earnings led by Microsoft, Verizon, UTX and of course Apple. Most importantly, some modest USD weakness overnight (DXY -0.1%) has helped the commodity complex, with gold rebounding from overnight lows, while crude has at least stopped the recent carnage which sent WTI below $50.
It's true that “the authorities” want the price of financial assets (stocks, bonds) to go up, and the price of hard assets (commodities) to go down… which is exactly what has happened. So do governments and central banks ever lose? In the old days, they lost all the time. In one extreme example, an individual hedge fund took out the entire Bank of England. But central banks are currently on a massive winning streak. So to answer the question, “Will we ever have a crisis,” you need to answer the question, “Will we ever be allowed to have one?”
With all eyes on Greece it would seem another crisis relating to unpayable debt is brewing in the Caribbean. The governor of Puerto Rico, Alejandro García Padilla, has warned that the island is unable to pay its debts of $72 billion.
So much going on that by the time an article is prepared, everything has changed and it has to be scarpped. But, in any event, here is an attempt to summarize all that has happened in another turbulent overnight session.
After seven long years of aggressively defending a monetary policy regime that's served to exacerbate the divide between the haves and the have-nots, the Fed looks at whether "the legend of Robin Hood" offers any helpful pointers about how to reignite America's economic growth engine. Spoiler alert: the Fed doesn't think "taking from the rich to give to the poor" would be very productive.
With The IMF (and Germany to a less extent) apparently peeing in the Greek Deal pool, perhaps it is worth considering what happens next if this "Greece is rescued" deal is not done. Who can save Greece? Who will pay The IMF? Why, that's simple, the good ol' American taxpayer thanks to The Fed's lifeline...
One hoary old myth claims the interest rate you see isn't real. You see, it’s only nominal. To calculate the real rate, you're supposed to adjust the nominal rate by inflation.
An Important Economic Indicator – Money Velocity – Crashes Far Worse than During the Great DepressionSubmitted by George Washington on 06/05/2015 10:39 -0400
Underneath the Propaganda, the Economy Is In BAD Shape …
FTW (For Those Who Say I Just Don't Get It... Get This!) There seems a shift showing itself in dramatic fashion unseen since the 2008 financial meltdown. Not only are some key players, or institutions beginning to notice some troubling signs; but rather; those very signs that everyone was told 'won’t or shouldn’t happen', not only are, they’re starting to rear their ugly heads in much greater frequency.
For once Mario Draghi was right. A day after the European central bank head warned of a spike in volatility, volatility did just that, with markets everywhere from China to Europe seeing volatility explode.
One might be predisposed to thinking that monetary policies aimed explicitly at inflating prices for the assets most likely to be concentrated in the hands of the wealthy would have a high likelihood of exacerbating the wealth divide. Not so, says Ben Bernanke in a new blog post. "Certainly, inequality and lack of social mobility are issues of first-order significance for economic policy in general. Should they also be first-order considerations for the making of monetary policy? I have my doubts."
"The Fed Has Been Horribly Wrong" Deutsche Bank Admits, Dares To Ask If Yellen Is Planning A Housing Market CrashSubmitted by Tyler Durden on 06/01/2015 10:06 -0400
When the "very serious people" start to admit that the entire house of cards was held together with nothing but bullshit and propaganda, it may be a time to panic...
The most prominent market event overnight was once again the action in China's penny-index, which after tumbling at the open and briefly entering a 10% correction from the highs hit just two days ago, promptly saw the BTFDers rush in, whether retail, institutional or central bankers, and after rebounding strongly from the -3% lows, the SHCOMP closed practically unchanged following a 2% jump to complete yet another 5% intraday swing on absolutely no news, but merely concerns what the PBOC is doing with liquidity, reverse repos, margin debt, etc. Needless to say, this is one of the world's largest stock markets, not the Pink Sheets.
Put simply: the market is quickly running out of props. Eventually we’re going to get a correction. But with so little buying power in the markets that could correction would very easily become a Crash.