The last week has been dominated by sell-side strategists raising hawkish concerns about this week's FOMC with a focus on the drop of the "considerable time" language describing the period from the end of QE to the start of rate hikes. The Wall Street Journal's Fed-whisperer Jon Hilsenrath just dropped a rather large hint that that the "considerable period" language will remain... “Given the economic backdrop, they don’t want to send a signal right now that rate increases are imminent." Here's what the street thinks...
Because what's two weeks between propaganda spewing friends?
Following last month's biggest plunge in 2 years to 4-month lows, it is likely no surprise that the soft-survey-based Empire Fed index exploded to 27.5 (smashing 15.71 expectations) to its highest since October 2009. Of course - away from the headline exuberance, employment plunged to its lowest since 2013, the average workweek slipped, and new orders barely rose (while Prices Received soared). Seems like seasonal adjustments played a strong hand in this exuberance... given hardly any sub indices jumped.
When you see the headlines touting strong retail sales, you need to consider what you are actually seeing in the real world. RadioShack will be filing for bankruptcy within months. Wet Seal will follow. Sears is about two years from a bankruptcy filing. JC Penney’s turnaround is a sham. They continue to lose hundreds of millions every quarter and will be filing for bankruptcy within the next couple years. Target and Wal-Mart continue to post awful sales results and have stopped expanding. And as you drive around in your leased BMW, you see more Space Available signs than operating outlets in every strip center in America.
What will $1 million buy in New York City? A diamond-encrusted Cartier men’s watch. A small fleet of 2014 Bentley Continentals. Or maybe your very own parking spot in SoHo... "Parking is in serious demand and has proven an excellent investment with no sign of a decline."
For the 3rd day in a row, the USDollar flatlined as JPY & AUD weakness offset GBP & EUR strength (following Kuroda's speech this morning). Stocks dipped-and-ripped once again - as they always do into and after the EU close - with the S&P managing to scramble back into the green (but not 2,000 for 3rd day in a row) in a late-day buying panic (after some Draghi headlines saying nothing new). Not everyone was drinking the same bounce-back juice as stocks with HY credit, and JPY-carry not supportive at all. Stocks seemed to track WTI crude most closely today as oil jumped higher (abov $93) compressing the Brent-WTI spread to $5. Gold, silver, and copper slipped lower once again. The Treasury curve continued to bear flatten led by 5Y weakness.
This is why Capitalism is failing in the US: because not only is it now clear that the US economy is, for the most part, a rigged game… but that NO ONE involved in the rigging is punished.
Today, the 13th Anniversary of 9/11 will see many people recall how things were. To remember that day and the heroes it spawned who better than UBS' Art Cashin - who thought it simplest to repeat what he wrote back then.
A farce, a tragic comedy and a travesty...
One Bank Has Had Enough: FBN Says "Time To Turn The Boat Around" Switching To Bearish Outlook, 1870 TargetSubmitted by Tyler Durden on 09/10/2014 07:26 -0500
The sensitivity to headlines reflects an attempt by many firms to salvage performance for 2014 by augmenting their exposure aggressively over the past several weeks. Similar to the countless number of jockeys who have failed in the grueling 1.5 mile Belmont Stakes by asking for their horse to start its kick too far in front of the finish line, these funds moved too soon as year-end still sits far off on the horizon. This incremental positioning grossly inflated the average monthly NYSE closing TICK which extended to +338 on Monday. Thus, the muscle for a protracted selloff is intact.
“At This Point You Just Have to Laugh”. In every important respect, the Fed and the ECB and their brethren are no longer central banks at all. They are Ministries of Markets, no different from a Ministry of Industry or – even more eerily similar – the Ministry of Culture you would find in most European governments. At this point the Narrative hegemony is complete. There’s no longer even a cursory bow to the idea that fundamentals matter. So I’m calling a top. Not a top in markets, because I honestly have no idea what’s going to happen next. But I’m calling a top in the Narrative of Central Bank Omnipotence because it has, in fact, reached its asymptotic limit of influence and belief.
For those just catching up on the main news event of the weekend, namely the sudden surge in Scotland "Yes" vote polling surpassing 50% for the first time, here is a complete round up of the background, updates and expert reactions from RanSquawk, Bloomberg and AFP.
When Lee Goldsmith drives by one of the many fake cellphone towers being discovered throughout the U.S., his $3,500 CryptoPhone 500 will immediately display the warning message in the thumbnail image to the left. When you drive by the same fake towers, known as “interceptors,” your run of the mill iPhone or Samsung Galaxy won’t alert you to any potential security breach. And that’s exactly how those people who installed these interceptors, whoever they are, like it. What Lee Goldsmith and other users of the CryptoPhone 500 have discovered while driving across part of America will shock and disturb you.
It has been an odd session: after yesterday's unexpected late day swoon despite the ECB launch of "Private QE", late night trading saw a major reversal in USDJPY trading which soared relentlessly until it rose to fresh 6 year highs, briefly printing at 105.70, a level not seen since October 2008, before giving back all gains in overnight trading. It is unclear if it was this drop, or some capital reallocation from the US into Europe, but for whatever reason while Europe has seen a stable - if fading in recent hours - risk bid, and European bonds once again rising and Irish and Italian yields both dropping to record low yield, US equity futures have slumped and are now trading at the lows of the session ahead of a US nonfarm payroll print which is expected to rise and print for the 7th consecutive time above 200K, at 230K to be precise, up from 209K in July (down from 288K in June). It is unclear if the market is in a good news is bad news mood today, but for now the algos are not taking any chances and have exited risky positions, with the ES at the low end of the range the market has been trading in for the past week centered aroun S&P 2000.
Even as the NATO summit began hours ago in Wales, conveniently enough (for Obama) at the venue of the 2010 Ryder Cup, so far today geopolitics has taken a backseat to the biggest event of the day - the ECB's much hyped and anticipated announcement. So anticipated in fact that even as it has been priced in for the past month, especially by BlackRock which is already calculating the Christmas bonus on its "consultancy" in implementing the ECB's ABS purchasing program and manifesting itself in record low yields across Europe's bond market, Reuters decided to milk it some more moments ago with the following blast: "Plans to launch an asset-backed securities (ABS) and covered bond purchase programme worth up to 500 billion euros are on the table at Thursday's European Central Bank policy meeting..." The notable being the size of the program, which at €500 billion, is precisely what Deutsche Bank said a week ago the size of the ABS program would be. Almost as if the bank with the world's biggest derivative exposure is helping coordinate the "Private QE"...