After Japan's Tankan disappointed greatly and various talking heads from Japan came out to deliver the credibility-destroying-phrase of the day: that "the economic recovery is progressing smoothly" despite all evidence to the contrary... USDJPY took a dive. And when USDJPY takes a dive, all its risk-on, carry-trade-imbibed friends take a dive. Dow futures cratered 230 points in minutes only to bounce back modestly when some enterprising sell-side analyst reminded the machines that "bad news is good news." But that didn't last and US equity futures are sliding rapidly in the overnight session...
OECD Economic Review Chair Warns, Central Bankers "Are Doing More Harm Than Good, Policy Must Be Reversed"Submitted by Tyler Durden on 03/31/2015 21:30 -0400
"I fear that central bankers may have been inadvertently drawn into what they are currently doing... [QE] won't work and may have many undesired side effects that will build up over time. Many of the central bankers at Davos this year said explicitly that they were only buying time for governments to act but, seven years into the crisis, it already seems we have been waiting forever... the effectiveness of monetary policy in terms of stimulating aggregate demand goes down with time, because you're constantly bringing spending forward from the future... Logically, at this point, central bankers should say, "We are doing more harm than good. This policy must be reversed." But I don't see anybody actually doing it."
The story is the same every time: some nation, due to a confluence of lucky circumstances, becomes powerful—much more powerful than the rest—and, for a time, is dominant. But the lucky circumstances, which often amount to no more than a few advantageous quirks of geology, be it Welsh coal or West Texas oil, in due course come to an end. In the meantime, the erstwhile superpower becomes corrupted by its own power. As the endgame approaches, those still nominally in charge of the collapsing empire resort to all sorts of desperate measures—all except one: they will refuse to ever consider the fact that their imperial superpower is at an end, and that they should change their ways accordingly.
Bad news isn't even good news anymore in Japan. A sushi-boat-load of data this evening show once again that Abenomics is failing dismally. In no particular order... Large Manufacturing Index MISS (lowest in 9 months), Large Manufacturing Outlook BIG MISS, Large Services Outlook MISS, Small Manufacturing Index MISS, Small Manufacturing Outlook BIG MISS, and drum roll please... Tankan Large Industry Capex Outlook crashes to -1.2% (from +8.7%) - the lowest in 2 years (since Abewrongics was unleashed). The response... USDJPY and Nikkei are dumping...
The key feature of age is that it happens no matter what you think. What does this mean? It means the “old countries” – their assets and their institutions, at least the ones that depend on population, income and credit growth – are “fastened to a dying animal” and are not likely to survive in their present form. Today, these countries, including the US, are victims of demography. Older people get more money from the government. And they pay less in taxes. Old people also slow the rate of GDP, for obvious reasons: They are not adding to output; they are living on it.
While we doubt that the ECB will, of its own volition, elect to scale back PSPP out of a highly uncharacteristic respect for sanity and prudence, there are a variety of factors which could lead to a forced taper. Some market participants are already betting that the ECB scales back purchases by the end of the calendar year.
The Fed may engage in a symbolic rate hike... but we will not enter a truly hawkish period... not when the TBTFs have $551 trillion in interest rate based derivatives outstanding.
Did stocks window dressing come one day early in this volatile, bipolar, stop-hunting, HFT-infested market? Looking at futures this morning, which are down about 12 points already on yet another surge in the USD which has sent the EURUSD just above 1.07, the lowest since March 20 , and the USDJPY back under 120 now that the "strong dollar is bad for stocks after all" algo seems to be back from vacation, all those hedge funds who chased risk higher yesterday because their peers did the same, may find they are all selling on the way down. It will be oddly ironic if all of yesterday's widely touted gains evaporate comparably in the first 10 minutes of trading today, and lead to an end in the longest streak of quarterly increases in two decades.
The exuberance of illiterate Chinese citizens knows no bounds as Shanghai Composite surges once again to record-er highs (now up over 15% in March alone) with some modest give back off the highs of the day. Japanese stocks on the other hand have folded like a cheap lawn-chair, giving up all their US session gains and down over 200 points from the US cash close. A similar pattern is seen in crude oil which has retraced most of the idiotic NYMEX close ramp.
In what FT correctly notes is the "biggest coup yet for China," Tokyo looks set to break ranks with Washington and join the China-led AIIB.
This is one of those sad times when The Onion realizes it has badly, and permanently, missed its IPO window.
A number of economists have proposed the implementation of what has been dubbed "QE for the people." They seem to prefer to apply the principle "When in trouble, double." Given the massive mistakes which were made by central banks from Weimar to Bernanke and the relentless attempts to use the printing press to finance governments, it probably shouldn't take much to convince people of alternatives, and not more of the same, right?
What Titanic? The RMS Titanic, or any of the following:
Regarding the major problem of the more domestic issue of economic recovery, unless we would agree, which we really shouldn’t, that making a small group of the population richer while the much larger rest is made poorer, is how we define ‘recovery’, we have no recovery. But it is still accepted and proclaimed like a gospel: our economies are in recovery. If you take a step back and watch things from a distance, it’s truly too silly to be true, but endless repetition of the same lines, be they true or not, has them accepted as being cast in stone. It’s like selling detergent. Of course it doesn’t hurt that people very much want to believe a recovery is here. The stories we are bombarded with 24/7 under the quite hilarious misnomer ‘News’ have been prepared, pre-cooked and pre-chewed for our smooth and painless digestion, and as such they contain only tiny little flakes of reality. They are designed to make us feel good, not understand the world around us. And, as Scott Minerd says, the economic future for your entire families will look utterly bleak. Because that recovery they talk about? It’s not for you.
With the rest of the developed world's central banks waiting for the Fed to admit defeat for one more year and delay its proposed rate hike (or launch NIRP/QE4 outright) it was all about China (the same China which a month ago we said would launch QE sooner or later) and hope that its central bank would boost asset prices, when over the weekend the PBoC governor hinted that more easing is imminent to offset the accelerating drag after he admitted that the nation’s growth rate has tumbled "a bit" too much and that policy makers have scope to respond. How much scope it really has now that its bad debt is rising exponentially is a different question. It got so bad, Shanghai Securities News leaked a false rumor earlier forcing many to believe China would announce an unexpected rate cut as soon as today, in the process sending the Shanghai Composite soaring by 2.6%.