In what has been an approximate repeat of the Monday overnight session, global stocks and US futures rose around the world as oil prices climbed toward $44 a barrel, with risk-sentiment pushed higher by another plunge in the Yen which has now soared 300 pips since the Friday post-payroll kneejerk reaction, and was trading above 109.20 this morning. At the same time base metals regained some of Monday’s steep losses following Chinese CPI data that came in line while PPI declined for 50 consecutive months however showed a modest rebound from the prior month on the back of China's recent, and now burst, speculative commodity bubble.
Happiness is never just a matter of material wants or needs. We humans are wired to compare what we have to what others have... and to always try to find ways get one up on our neighbors. If we earn more than the guy next door, we are tempted to try to make him feel bad by flaunting it. If he earns more than we do, we will want to take something away from him... to bring him down a peg. That is the emotional foundation underlying socialist politics – envy, dressed up as social justice. The trouble with taking something away from your neighbor is that then he tries to take something away from you. Pretty soon, you are both spending so much of your time trying to enact rules and regulations that penalize one group and reward another that neither of you is producing more wealth.
"At the end of the day, negative interest rates are taxes in sheep’s clothing. Few economists would ever claim that raising taxes on households will stimulate spending. So why would they think negative interest rates will?"
Poland Refuses To Accept Any Refugees "As They Pose A Threat To Security", Will Not Comply With European "Blackmail"Submitted by Tyler Durden on 05/09/2016 13:17 -0400
Seemingly unfazed by the recent European Commission proposal to punish countries which refuse to comply with "fair" refugee allocation quotas with fines as high as €250,000 per asylum seeker, the head of Poland’s ruling Law and Justice party and former PM Jaroslaw Kaczynski said that no refugees will be accepted in Poland "as they pose a threat to security" adding that Poland will oppose any law forcing EU members to pay €250,000 per refused refugee.
In the traditional post payrolls data lull, we’re kicking off what’s set to be a much quieter week for data this week with nothing of note due to be released in the US on Monday, however the week picks up with notable economic dataon NFIB small business cofidence, Import prices, PPI and culminates with Friday's retail sales report, UMichigan sentiment and business inventories.
- China stocks plunge again as hopes for economic recovery fade (Reuters)
- European Stock Gains Defy China Data That Hurt Metals; Oil Rises (BBG)
- Yen falls after Tokyo warning (Reuters)
- Soros Chart Signals BOJ Bond Buying Already Enough to Weaken Yen (BBG)
- Dollar Jump Catches Traders Short in One More Currency Calamity (BBG)
- Even China's Party Mouthpiece Is Warning About Debt (BBG)
The overnight session has been one of alternative weakness and strength: it started in China where stocks tumbled 2.8% to a two month low following some unexpected warnings in the official People's Daily newspaper and poor trade data. Concerns about China, however, were promptly forgotten and certainly not enough to keep global assets lower, with European stocks gapping higher at the open and rallying from a one-month low, driven by a "surprising" surge in the USDJPY which has moved nearly 200 pips higher since its post-payrolls low. Another driver is the jump in oil, which rallied just shy of $46 a barrel, buoyed by Canadian wildfires that are curbing production and speculation that the Saudi Arabian oil minister succession will be bullish for oil prices.
We are all living in Hybrid War time. From R2P (“responsibility to protect”) to color revolutions, from currency attacks to stock market manipulations. From judicial-financial-political-media enabled “soft” coups – as in Brazil – to support for “moderate” jihadis, multiple stages of Hybrid War now cross-pollinate and generate a vortex of new mutant viruses. This is the new normal; Cold War 2.0, 24/7.
After some pointless debate, Greece promised to do even more of what has not worked at all in the past 5 years just to access some more European "bailout" money, the bulk of which will promptly be used to repay (after some more posturing by the Eurogroup in the coming weeks) maturing debt, held by the ECB.
Massive capital outflows from China in an effort to preserve capital is something that we've covered extensively in the past (here and here for example). Last month, China's Ministry of Commerce (MOC) came out to do some damage control, and downplayed the extent of the activity. It also hinted that the government would "help" Chinese companies with overseas M&A in the future...
On 23 June the British will vote in a referendum to decide whether their country should remain in or leave (BREXIT) the European Union (EU). The importance of this event cannot be overstated, since it will impact the future of the UK – and very likely that of Europe – for decades to come. The polls suggest that this will be a close contest. This means that a significant proportion of the population will be deeply unhappy with the outcome of the referendum, not really an encouraging sign given its profound implications. But why on Earth are the Brits questioning their membership of the EU in the first place? Why can’t they just settle down like everyone else?
The EU should thank its lucky stars that Erdogan will not uphold his end of the deal and gratefully cancel it. Coupled with the cancellation (for which the EU can blame Erdogan), the EU should announce an Australia-type plan forcing back all boats, while arresting and prosecuting smugglers. Call out the military to enforce the borders. That’s what Australia did. Making a deal with the devil then letting the devil renege on a critical piece of his end is not a viable option. Accepting Erdogan’s new demands would do four things, all unsavory...
Things are getting ‘weird’ out there if you’re trying to be polite, and downright 'chaotic' if you're being blunt. Everywhere we look, we see signs that the systems that support us are breaking down.
This report goes on to document, essentially, that US President Barack Obama is continuing his efforts to replace the the only secular, non-sectarian government in the Middle East, that of the Ba’athist Party, which has always been the only non-religious political party in the Arab world – everything else in Arabia has been fundamentalist-Sunni, to at least some extent.
It’s showdown time. The IMF has threatened it will pull out of the Greek bailout program unless Greece gets debt relief. German Chancellor Angela Merkel, Austria, Finland, and the other Eurozone creditors will not like today’s development one bit.