First it was Zero Hedge. Then Ron Paul joined in. Now it is the turn of a former Dallas Fed Vice President, Gerald ODriscoll, to outright accuse the Fed of bailing out Europe courtesy of "incomprehensible" currency swaps, and implicitly accusing Bernanke of lying that he would not bail out Europe even as he has done precisely that. And not only that: by cutting the USD swap spread from OIS+100 to OIS+50, the Fed has made sure it gets paid less than ever for extended Europe the courtesy of bailing it out all over again. Incidentally, O'Driscoll says, "America's central bank, the Federal Reserve, is engaged in a bailout of European banks. Surprisingly, its operation is largely unnoticed here." One thing we can say proudly - it has been noticed loud and clear here...
UPDATE: And then Dallas Fed manufacturing misses (at -3.0 vs +4.8 expectations) as expectations for future finished goods plunge as do current inventories.
As if we needed yet further evidence of the dichotomous macro data that seems to provide as much bearish fodder as bullish decoupling confidence, today sees a near-record two-month jump in conference board confidence at the same time as S&P/Case-Shiller prints at a seasonally-adjusted 103 month low. With the Richmond Fed also missing expectations (though positive), we remain in the miasma of CONfidence uninspiring macro data as the underlying sub-indices of the conference board data show little to no shift in purchasing decisions despite some seemingly incredulous ramp in confidence that incomes will rise more than they decline in the next six months.
Prior to 2008 it was generally understood that the profession hardly merited its claims of its own predictive utility. So the failure to assign enough risk to such a crisis as befell the developed world in 2008 was, frankly, no surprise. But in the aftermath of the crisis, economics, in its professional form, has revealed itself to be damagingly disconnected from observable reality. A glaring example of this is how it cannot come to any agreement as to how the debt crisis occurred, and accordingly remains quite confused in its proffered solutions. Mostly the profession remains curiously naive about the nature of debt, an understanding of which is more critical than ever as the developed world enters a 'slow' to 'no-growth' phase of its history. Indeed, many of the papers, interviews, and op-eds from central bankers and economists in the face of our present-day sovereign debt crisis are little more than an eerie restatement of the discussions which took place about private-sector debt from 2006-2008.
The only thing that matters is the November Employment Report and a few comments from Fed officials.
- According to La Stampa, the IMF is preparing a EUR 600bln loan for Italy, in case its debt crisis worsens, although the report was swiftly denied by IMF officials
- Several papers reported that Germany is considering the option of joining the five other AAA-rated Eurozone member states to issue common bonds. However, the German finance ministry dismissed the report later in the session
- Particular narrowing was observed in the Belgian/German 10-year government bond yield spread partly after Belgian negotiators reached an accord on the country's 2012 budget during the weekend, together with well received OLO bond auctions from Belgium
In addition to the usual headline barrage from a broke continent, the first of many, we have a very busy data schedule, highlighted by October retail sales.
While as usual only headlines will be market moving, today we get the always completely irrelevant and very much worthless October ADP report, followed by the FOMC statement and press conference this afternoon.
The only thing that will rally the market is another bailout rumor. Nobody asks who's going to pay for it.
ISM manufacturing index, construction outlays and vehicle sales/GM channel stuffing.
Art Cashin On European Political Alliances, Marrying Your Best Friend's Sister, And Fed Fisher's EnlightenmentSubmitted by Tyler Durden on 09/28/2011 08:48 -0500
In his typically anti-prosaic manner UBS' Art Cashin draws the parallels between Caesar's political alliances & apolitical dalliances and the refreshing honesty of Dallas Fed's Fisher with the hope of a new spirit of cooperation blossoming among European leaders and how we lost some belief yesterday afternoon.
Still confused by the 500 DJIA point rally in 48 hours? You are not alone. Here is David Rosenberg guaranteeing that your confusion will be even greater when you realize that nothing has really changed, suffice to say that the record confusion has provided the best smokescreen for nothing short of a collusive global window dressing session for massively underwater hedge and mutual funds.
Some economic data out which has absolutely no impact on anything anymore. All that matters are lies and rumor. And headlines. THE BIGGER, THE MORE BOLDED AND UNDERLINED THE HEADLINES THE BETTER. Also, never forget, the better the news, the better; the worse the news, the best.
The Dallas Fed Manufacturing Index joined a long and distinguished list of recently disappointing macro prints by missing expectations - coming in at -14.4 versus an expectation of -11.4 (the fifth negative print in a row). While the Production sub-index was up and will provide fodder for bulls (it is still half what it was in July 2011), it is the drop in the outlook for future business activity to a -1.5 (the first such negative print since April 2009) that should have central planners the most concerned as borrowing demand is surely bound to drop further on these weak expectations. This combined with the Philly and Empire prints implies a sub-50 ISM print is forthcoming.