I’ve said many times before that QE 3 won’t be coming any time soon unless the market Crashes or a major bank goes under. The reason is that QE (and Ben Bernanke for that matter) have been politically toxic: we’ve already seen that the Fed will be a major political issue in the 2012 Presidential election.
The second economic disappointment of the day comes from the Dallas Fed, which dropped from -2.0 to -11.4 on expectations of -9.0- this was the 4th consecutive negative print month. The report was, in a word, horrible, with just 2 of the 15 constituent indices posting an increase, and the bulk solidly in the red, led by Unfilled and New Orders which dropped 16.8 and 11.2, respectively: not good for economic growth. On the employment side there was nothing good either, with both employment and hours worked declining by -6.7 and -10.1, respectively. The only components rising were materials Inventories (must.restock.always), and CapEx, up 10.7. The most critical Production index declined by 9.7, just barely positive at 1.1, and the second lowest in 2011, with a worse number before that printing all the way back in 2009. Yet the most descriptive are the responses from the survey respondents themselves: two words "peak gloom." And why not: the ISM will print in the mid 40s and the NFP could well be negative. Which of course will send stocks soaring even higher on QE3 being priced in for the 666th time.
Three B-grade economic updates today to serve as an appetizer to the ISM release on Thursday and the NFP data (very likely negative - more shortly) on Friday.
The political and social environments in the US are growing increasingly anti-loose money from the Fed. The Fed knows this which is why we’re seeing dissent internally (see Dallas Fed President Dick Fisher’s comments from earlier today).So absent some kind of catastrophic event, QE 3 isn’t coming any time soon. Which means the floor has come out from under stocks (it just did). Which means…
With no major newsflow out of Europe, and no notable economic news in the US (except for PPI), we assign a probability of 99.9% to another no-volume melt up (absent news flow, because any news is bad news) as HFTs bid up every offer while collecting rebates, afterwards getting petted behind the ears for doing Brian Sack's work.
Your one stop summary for all the major bullish and bearish events in the past week.
Today's Economic Data Docket - Case Shiller, Consumer Confidence, Richmond Fed, New Home Sales, And POMOSubmitted by Tyler Durden on 07/26/2011 07:45 -0400
After yesterday's economic data drought, today brings the flood as we get new home sales and Case-Shiller prices, consumer confidence and the Richmond Fed index. We also get a small POMO as part of QE Lite and also two bill and one note auctions, sucking a combined $73 billion in capital out of the market.
Despite frantic efforts to reach an agreement to raise the US debt ceiling, no concrete measures emerged during the weekend, which allied with Moody's downgrade of Greece's sovereign rating by three notches today, promoted risk-aversion in the market. European equities traded under pressure, weighed upon by financials, which in turn provided support to Bunds, whereas the Eurozone peripheral 10-year government bond yield spreads widened across the board. Particular widening was observed in the Belgian/German spread leading up to the bond auctions from Belgium, however the spread narrowed somewhat after they went through successfully. Elsewhere, CHF and JPY emerged as major beneficiaries of the risk-averse trade, whereas commodity-linked currencies traded lower. Moving into the North American open, the economic calendar remains thin, however Chicago Fed National Activity and Dallas Fed Manufacturing reports are scheduled for later in the session. Also, Texas Instruments, and Anadarko Petroleum are among some of the companies reporting their corporate earnings today.
And The Winner, After Bernanke's Humphrey Hawkins Dog & Pony Show, By Unanimous Decision Is.... GoldSubmitted by Tyler Durden on 07/14/2011 12:52 -0400
Stocks dumping, dollar at all time lows against a plethora of FX pairs, while gold (and silver) is sticky as superglue and remains just a few dollars away from its all time nominal highs, and just short of $1,600, which we expect will be taken out as soon as the world realizes that the Greek 2 Year spread to Bunds is now over 30% and that Europe is not fixed. Perhaps Bernanke would like to take another stab at that whole "is gold money" question...
With several economic items on the docket, the key event today is the start of Ben Bernanke's Humphrey Hawkins semi-annual report on the monetary policy to Congress (tomorrow an identical one will be delivered to the corrupt, brain dead zombies in the Senate). Look for select key words such as "QE3", "Ponzi", "Catastrophe", "Pray", and, of course, "Get tu da choppa"
The collapse in the manufacturing base continues: the Dallas Fed general business activity index just printed at a whopping -17.5 on expectations of -3.2, number that was supposed to be a gain from before, and yet another confirmation that Wall Steet is populated by a bunch of illiterate lemmings. From the report: "Perceptions of general business conditions were mixed in June. The general business activity index pushed further negative, falling from –7.4 to –17.5. Twenty-eight percent of respondents said activity weakened this month, the highest share in nine months. However, the company outlook index rose from 3.2 to 7.2, suggesting manufacturers were more optimistic about their firms’ prospects for the near future." Ah, back to consuming hopium. We wonder how many of these manfucturers were optimistic back in Q1 when the the index was printing in the 20 range only to see a near-historic collapse. We are now certain the ISM will pring sub-50, with a print as low as 46 most certainly possibly.
- Uncertainty persisted over the outcome of Greece’s 5-Year austerity package vote in the Parliament on Wednesday as lawmakers continued to switch sides
- French Finance Minister Lagarde said that the government has a first draft for a deal with French banks on a Greek debt rollover
- According to ING, Fitch could downgrade Italy after Moody’s placed the country’s sovereign rating on watch negative earlier this month
- According to the Bank for International Settlements, global interest rates must rise to avoid high inflation becoming entrenched
Today's Economic Data Docket - Nothing: A Few Speeches, One POMO And BOJ Begins Two-Day DeliberationsSubmitted by Tyler Durden on 06/13/2011 07:43 -0400
European holiday, blank US economic data docket and just two speeches from a few Fed officials today:
- 9:30: Richmond Fed President Jeffrey Lacker on “Manufacturing in the New Southern Economy”. Event will include media Q&A.
- 11:00: POMO buying $4 - $5 billion in bonds due 08/15/2018 - 05/15/2021; $55 billion left in remaining 13 POMOs.
- 19:00: Dallas Fed President Richard Fisher on “Federal Reserve Functions and Economic Update”. Mr. Fisher is a voting member of the FOMC this year.
- The Bank of Japan Policy Board began a two-day meeting last night. The Bank will maintain its bias towards easing, but further measures to provide liquidity -- if any -- will probably be confined to the areas that directly felt the impacts of the earthquake and tsunami.
Absolutely nothing on the US economic docket today means stocks will fluctuate based on liesflow out of Europe, and Greece. Since today's 13th consecutive protest in Athens is expected to commence at around noon, it should be in full swing by the time NYSE circuit breakers are turned off around 2:30 pm EDT.