Following the weakness in Philly and Dallas Fed regional - fading off Feb/Mar dead cat bounces - Richmond Fed's epic 9-standard-deviation biggest spike ever to 7 year highs in March appears to have been a one of as it fell back from 22 (3rd highest ever) to 14 (still above expectations) - the biggest drop since August. Of course how one can take this seriously is anyone's guess as shipments , new orders, wages, and workweek all crashed from March's embarrassing spike as did inventory levels for finished and raw materials (not good for Q2 GDP). Worse still outlook for six months ahead saw wages, workweek and new orders collapse further.
With the Fed decision just one day away, followed the very next day by the increasingly more irrational BOJ, stocks had no desire to make significant moves and overnight's boring session was the result, as European stocks and U.S. index futures rose modestly but mostly hugged the flatline while Asian declined 0.2% for a third day as raw-material shares declined and Tokyo equities slumped before central bank meetings in the U.S. and Japan this week. China’s stocks rose the most in almost two weeks, up 0.6% but failed to rise above 3000 on the Shanghai Composite, in thin trading.
"This Is Not A Good Time To Be In Business": Dallas Fed Disappoints, Contracts For 16th Straight MonthSubmitted by Tyler Durden on 04/25/2016 10:41 -0400
Following the death of Philly Fed's dead-cat-bounce, Dallas Fed did the same with a disappointing thud back to -13.9 (missing expectations of a rise to -10.0). This is the 16th consecutive month in contraction (below 0) and respondents are increasingly depressed, "it is a bad time for manufacturing, agriculture and mining - the only sectors that actually create wealth." What kind of fiction are these real average joes peddling? Have they not seen the jobs data?
The April FOMC gathering headlines a crowded economic events calendar this week. The post-meeting statement, released Wednesday afternoon, should continue to strike a cautious tone. There will be no press conference and updated economic and financial forecasts will not be released. Few expect the FOMC to add the “balance of risks” sentence back into its communiqué at this point. Doing so would be quite bearish for risk assets as it would definitely open the door for a June rate hike.
Futures are currently unchanged, but the E-mini was down as much as 12 points less than two hours earlier after the European open when this time it was up to the PBOC to intervene in global markets by pushing the Yuan higher (selling USDCNY via intermediary banks) sending global stocks sharply higher off session lows and leaving the S&P futures virtually unchanged. As Bloomberg reported, there has been increasing USD/CNY selling in afternoon session as Dollar Index edged lower. This is the PBOC entering the building and levitating stocks.
In 1977, the total indebtedness of U.S. government, corporate and household borrowers was $323 billion. By 1985, that figure had grown to $7 trillion. Volcker left the Fed in August of 1987 after handing the reins over to Alan Greenspan. By year’s end 2015, U.S. indebtedness had swelled to $45.2 trillion. Tack on financials, which few do, and it’s $64.5 trillion and unabashedly growing. We are a nation transformed. What has today’s vast store of debt purchased? Certainly not freedom.
"In September, regulators from the OCC, the Federal Reserve and the Federal Deposit Insurance Corp. met with dozens of energy bankers at Wells Fargo’s office in Houston... Regulators pushed lenders to focus instead on a borrower’s ability to make enough money to repay the loan, according to the person familiar with the discussions."
OPEC came out this morning with a warning on perhaps the biggest wildcard of all: global demand for oil, which OPEC now declining. The now defunct cartel sees 2016 demand growth ~1.2m b/d vs previous estimate of 1.25m b/d. "Current negative factors seem to outweigh positive ones and possibly imply downward revisions in oil demand growth, should existing signs persist going forward," the organization’s Vienna-based secretariat said in its monthly market report. "Economic developments in Latin America and China are of concern."
It's not just the shale drillers who are in danger as they see their liquidity evaporate. As the WSJ writes today, and as covered here since January, it is the lenders themselves whose unfunded revolver exposure may suddenly become funded and expose them to even greater risks from the energy sector should oil not rebound far more forcefully and put US oil and gas companies back in the black. How big is the exposure? Very big: $147 billion.
In recent days, we have observed a distinct trading pattern: a ramp early in the US morning, usually triggered by some aggressive momentum ignition, such as today's unexplained pump then dump in the EURUSD with stocks rising after the European open, rising throughout the US open, then peaking around the time the US closed at which point it is all downhill for the illiquid market. So far today, the pattern has held, and after trading flat for most of the overnight session, with Europe initially in the red perhaps on disappointment about the Italy bank bailout fund, a bout of early Europe-open associated buying pushed US futures up, following the first rebound in the USDJPY after 7 days of declines which also helped the Nikkei close 1.1% higher.
While the market is still enjoying the post-NFP weekly data lull, economic data starts to pick up again in the coming days, alongside the start of the reporting season. Below are this week's key events.
Whenever the topic of recession comes up, the mainstream and especially economists (redundant) become quite defensive about the possibility. Just a few days ago, presidential candidate Donald Trump claimed the US was headed for “a very massive recession” and that it was “a terrible time right now.” The Washington Post, as you would expect, was skeptical of the claim because orthodox economics will have none of it, writing that Trump is “embracing a distinctly gloomy view of the economy that counters mainstream economic forecasts," because there is no obvious recession, only unexplained (to the mainstream and economists) slowdowns, nobody feels the boiling water...
Key economic releases for the coming week include the ISM non-manufacturing report on Wednesday. There are several scheduled speeches from Fed officials this week. Fed Chair Yellen will take part in a discussion with former Fed Chairs on Thursday.
Former Fed President: "Living In Constant Fear Of Market Reaction Is Not How You Manage Central Bank Policy"Submitted by Tyler Durden on 03/30/2016 09:29 -0400
Back in January Fisher said (what even Liesman has now suggested) that "We Frontloaded A Tremendous Market Rally" and there is "No Ammo Left", followed by a second appearance earlier this month when he said that the Fed "Injected Cocaine And Heroin Into The System To Create A Wealth Effect." This morning Fisher was again on CNBC to discuss Yellen's dovish speech at the Economic Club of NY, and said that the Fed is "living in a constant fear of a market reaction. This is not how the way you manage central bank policy."
At the end of the day, it was all about the dollar and the reason for this morning's stock surge around the globe, as we noted last night, is absurdly delightful: Yellen signaled "weakening world growth" and "less confidence in the renormalization process." In other words, the "bad news is good news" mantra is back front and center.