• EconMatters
    11/24/2015 - 14:25
    Focus on policies promoting economic growth, lower taxes, and spending tax receipts more efficiently and not on one`s sexual orientation in the bedroom.

San Francisco Fed

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9 Regional Feds Pushed For Discount Rate Hike In October

In July it was 5, then in October the number rose to 8, and moments ago we learned that during the meetings on October 15 and 22, a total of nine regional Feds had asked to increase the Fed's discount rate from 0.75% to 1.00%, with Boston joining the St. Louis, Atlanta, San Francisco Fed, Cleveland, Dallas, Philadelphia, Kansas City and Richmond Fed. Two banks, the Chicago and NY Fed wanted to keep rates at 0.75%, while the domain of Fed's uber dove Kocherlakota, the Minneapolis Fed where former Goldmanite Neel Kashkari will soon operate, asked for a Discount Rate cut to 0.50%.

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Global Stocks Fall For First Time In Six Days As Commodity Rout Spills Over Into Stocks

As a result of the global commodity weakness, global stocks have fallen for the first time in six days as the sell-off in commodities continued, dragging both US equity futures and European stocks lower. However, putting this in context, last week the MSCI All Country World Index posted its biggest weekly gain in six weeks: alas, without a coincident rebound in commodity prices, it will be merely the latest dead cat bounce.

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Japan To Unleash Inflation... By Fabricating Data

What do you do when you're a government statistician and the economic data doesn't say what you want it to say? Why you "adjust" it of course.

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Is The Fed About To Become "Weather Dependent?" Goldman Says El Nino To Boost Winter Growth

There's been no shortage of discussion about the weather among economists this year as "snow in the winter" took the blame for a bevy of bad data in H1 while summer is Citi's new scapgoat for any weakness in August and September payrolls. Meanwhile, unseasonably mild temps took the fall for poor October retail sales and now, going into the winter, it's all about El Nino.

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Emerging Markets Slide On Strong Dollar; China Surges On Bad Data, IPOs; Futures Falter

Once again, the two major macroeconomic announcements over the weekend came from China, where we first saw an unexpected, if still to be confirmed, increase in FX reserves, and then Chinese trade data once again disappointed tumbling by 6.9% while imports plunged 18.8%. So how did the market react? The Shanghai Composite Index rose for a fourth day and reached its highest since August 20because more bad data means more easing from the PBOC, and just to give what few investors are left the green light to come back into the pool, overnight Chinese brokers soared after Chinese IPOs returned after a 5 month hiatus. Elsewhere, Stocks and currencies in emerging markets slump on prospect of higher U.S. borrowing costs before year-end and after data underscored slowdown in Asia’s biggest economy. Euro strengthens.

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Bring On 'Operation Switch' - Bill Gross Calls For A Reverse 'Operation Twist' To "Benefit Savers And The Economy"

"But they won’t, you know. Yellen and Draghi believe in the Taylor model and the Phillips curve. Gresham’s law will be found in the history books, but his corollary has little chance of making it into future economic textbooks. The result will likely be a continued imbalance between savings and investment, a yield curve too flat to support historic business models, and an anemic 1-2% rate of real economic growth in even the most robust developed countries."

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Futures Rebound From Overnight Lows On Stronger European Manufacturing Surveys, Dovish ECB

On a day full of Manufacturing/PMI surveys from around the globe, the numbers everyone was looking at came out of China, where first the official, NBS PMI data disappointed after missing Mfg PMI expectations (3rd month in a row of contraction), with the Non-mfg PMI sliding to the lowest since 2008, however this was promptly "corrected" after the other Caixin manufacturing PMI soared to 48.3 in October from 47.2 in September - the biggest monthly rise of 2015 - and far better than the median estimate of 47.6, once again leading to the usual questions about China's Schrodinger economy, first defined here, which is continues to expand and contract at the same time.

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Fed Admits "Something's Going On Here That We Maybe Don't Understand"

In a somewhat shocking admission of its own un-omnipotence, or perhaps more of a C.Y.A. moment for the inevitable mean-reversion to reality, Reuters reports that San Francisco Fed President John Williams said Friday that low neutral interest rates are a warning sign of possible changes in the U.S. economy that the central bank does not fully understand. With Japan having been there for decades, and the rest of the developed world there for 6 years, suddenly, just weeks away from what The Fed would like the market to believe is the first rate hike in almost a decade, Williams decides now it is the time to admit the central planners might be missing a factor (and carefully demands better fiscal policy).

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Futures Halt Three-Day Rally, Drop On Energy Weakness, IBM Earnings

After yesterday's closing ramp "prudently" just ahead of an abysmal IBM earnings report with the lowest revenues since 2002, and the latest rally in capital markets which sent European stocks to their highest level since August on the back of a barrage of global bad data which has unleashed the Pavlovian liquidity dogs screaming for moar central bank bailouts, this morning has seen a modest decline in the Stoxx 600 driven by energy names, while S&P500 futures are set to open lower on IBM's disappointment at least until the latest massive BOJ USDJPY buying spree sends the pair to 120 and the S&P solidly in the green. The biggest political event overnight was the Canadian election, where Trudeau's liberals swept PM Harper from power, capping the biggest political comeback in the country's history; the Canadian dollar is largely unchanged after initially weakening then rising.

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Biggest Weekly Stock Rally Since 2012 Continues Driven By Tumbling Dollar, Dovish Fed; Commodities Surge

The global risk on mood (which is really anything but, and is merely an unprecedented short covering squeeze as we will report momentarily) launched by an abysmal jobs report one week ago and "validated" yesterday by the surprisingly dovish FOMC minutes, which said nothing new but merely confirmed what most knew, namely that a rate hike is almost certain to not occur until mid-2016 if ever, and accelerated by a Fed-driven collapse in the dollar which overnight has led to a historic 3.4% move in the Indonesian Rupiah the most since 2008, has pushed global stocks even higher in their biggest weekly rally since 2012, despite the start of an earnings season where virtually every single company reporting so far has stumbled on earnings reports that were far worse than even gloomy consensus had expected.

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Citi Discovers The Culprit For Poor Jobs Data...

The shark jumping continues as Citi says its analysts "have found serious residual seasonality in payroll reports for the period from August through October"...

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Asian Equities Tumble On Commodity Fears; US Futures Rebound After India "Unexpectedly" Eases More Than Expected

It was a tale of two markets overnight: Asia first - where all commodity hell broke loose - and then Europe (and the US), where central banks did everything they could to stabilize the already terrible sentiment.

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US Equity Futures Hit Overnight Highs On Renewed Hope Of More BOJ QE

After sliding early in Sunday pre-market trade, overnight US equity futures managed to rebound on the now traditional low-volume levitation from a low of 1938 to just over 1950 at last check, ignoring the biggest single-name blowup story this morning which is the 23% collapse in Volkswagen shares, and instead have piggybacked on what we said was the last Hail Mary for the market: the hope of more QE from either the ECB or the BOJ. Tonight, it was the latter and while Japan's market are closed until Thursday for public holidays, its currency which is the world's preferred carry trade and the primary driver alongside VIX manipulation of the S&P500, has jumped from a low of just over 119 on Friday morning to a high of 120.4, pushing the entire US stock market with it.

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Fed's Lacker Says "Strong Case For Rate Hike... August Jobs Data Won't Change Decision"

With just 20 minutes to go until the latest most important jobs report ever in the history of man, Richmond Fed Chief Lacker just explained why "the case for raising rates is still strong"...


But perhaps most crucially, Lacker explains "recent financial market volatility is unlikely to affect economic fundamentals in the United States and thus has limited implications for monetary policy," removing the one last leg for permabulls to rely on (that is if you velieve The Fed is not Dow-Data-Dependent).

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