One interpretation is that we are living in the best of all possible worlds. Another is that we are being led to financial slaughter.
The establishment has done everything in its power to hide the most foundational of economic realities, namely the reality of dying demand. Why? Because the longer they can hide true demand, the more time they have to steal what little independent wealth remains within the system while positioning the populace for the next great con. For now we will only say that the program of manipulation we have seen since 2008 is clearly changing. The fact of catastrophic demand loss is becoming apparent. Such a loss only ever precedes a wider fiscal event.
Who should you believe? Record stock market valuations and consensus spouting, highly paid economists who tell you all as is well...or oil, negative economic indicators, and your own eyes that this is just one more artificial boom desperately trying to run from the inevitable bust?
What people and central bankers do not understand, is that you can't devalue your way to prosperity. Absolutely nothing has changed since the last crisis. The same too big too fail banks have only gotten much bigger. The same people that were in charge leading into the crisis and during it, are the same people who are in charge of fixing it. New regulations were established to try and regulate the industry, but they will be proven to be ineffective. Why? Because the Volcker Rule and Dodd-Frank have had all the important elements removed, thanks to the massive lobbying power of the TBTF banks and the Fed.
- RBS to cut up to 14,000 jobs in investment banking unit (FT)
- Doctors, patients scramble ahead of high court Obamacare decision (Reuters)
- Rajan Cuts India Rates After Modi Agrees to Inflation Target (BBG)
- Russia’s Putin Makes First Public Comments on Killing of Boris Nemtsov (WSJ)
- House breaks impasse, passes security funding without provisions (Reuters)
- How a 25-Year-Old Investor Spurred Lumber Liquidators’ Plunge (BBG)
- Jeff Immelt’s Overhaul of GE Impeded by Falling Oil Prices (WSJ)
- Sahara India Defaults on Luxury Hotel Loans From Bank of China (BBG)
For this commentary to make any sense to most readers; it’s necessary to address the two questions which immediately come to their minds: “what is the Baltic Dry Index?” and “why should I care about it?” Dealing with these questions in order; the Baltic Dry Index measures the prices paid to ship various forms of cargo, in the form of an index.
After three hopeful months of greater-than-50 prints for Japanese Services PMI, February saw it plunge back into contraction with a considerably worse than expected 48.5 print. This drags the overall composite PMI for Japan to 50.0, its weakest reading in 4 months as New Orders drop to May 2014 lows and employment craters to its lowest since Oct 2012. On the heels of last night's weak JGB auction and sell-off in stocks on relatively hawkish comments from economists, tonight is seeing more of the same as the Nikkei 225 is having the worst 2 days in 2 months and JGB yields are jumping once again. Abegeddon is back...
Yesterday we warned that with the BOJ greedily sucking up all gross JGB issuance and stoking volatility in the process, all it will take is a couple of more weak debt auctions for things to go awry — and that’s just what happened overnight as demand was tepid at March's 10-year auction.
To be sure, we’ve written quite a bit lately about the ECB’s upcoming plunge into the world of 13-figure debt monetization (or as we call it, Draghi’s Waterloo), and while we hate to beat a dead horse, the sheer lunacy of a bond buying program that is only constrained by the fact that there simply aren’t enough bonds to buy, cannot possibly be overstated. Here is everything you need to know about Q€ ahead of the ECB's Thursday meeting.
With little newsflow out of Europe, and just as little on deck out of the US (just NY ISM and auto sales later today), the main overnight events were out of Asia where first the RBA decided to leave rates unchanged but not before the announcement was leaked up to a minute early. In China, the rate-cut euphoria lasted just one day, and after a feeble 0.8% bounce on Monday, the SHCOMP was down 2.2% this morning over fears the PBOC is doing too little, too late to halt what is now perceived by many as a massive "tightening" capital flight out of China. Finally, Japan made the newsflow, after it JGBs continued to slide following a weak auction, fears that the BOJ is done easing after Abe advisor Etsuro Honda warned against overheating, and after the biggest jump in base pay in over a decade led some to think the BOJ may soon have to halt easing altogether, especially if real wages proceed to rise
The 2008 worldwide financial crisis was produced due to excessively easy monetary policy, which caused the largest debt driven mal-investment in housing, automobiles, and Chinese produced crap in world history. The consequences of this debt bacchanalia should have been the orderly liquidation of the Wall Street entities that created the crisis, the writing off of trillions in bad debt, corporate and personal bankruptcies of businesses and people who borrowed recklessly, a sharp steep economic decline to cleanse the excesses, and politicians who immediately began the process of reducing budgets and addressing long term unfunded unpayable liability promises. Instead, the psychotic oligarchs did not want to lose any of their power, wealth or control over the proletariat. They have done the exact opposite of what needed to be done.
"The BOJ’s purchases have had a 'huge' impact on the market’s liquidity. Buying bonds at a faster pace would make it more difficult for the BOJ to exit from its easing policy when the time comes to reduce stimulus."
NYC Residents Pay $2-3,000 A Month For “Micro-Apartments” As Luxury Car Sales Outpace Regular Car SalesSubmitted by Tyler Durden on 03/02/2015 14:29 -0500
It’s an oligarch’s world, you’re just living in it. One of the main reasons that hyper-luxury cars are outselling regular cars, is because all of the wealth gains from the oligarch recovery are going to, well, oligarchs ... Global policies implemented since the oligarch created financial melt-down, have been used to cover up its criminality, and further advance the status quo’s consolidation of wealth and power. A continuation of this trend presents the greatest threat to liberty, free markets and an evolution of human consciousness on the planet today.
"None dare call it a “currency war” because that would be counter to G-10/G-20 policy statements that stress cooperation as opposed to “every country for itself”, but an undeclared currency war is what the world is experiencing. Close to the same thing happened in the 1930’s, a period remarkably similar to what many countries’ policies resemble today.... Negative/zero bound interest rates may exacerbate, instead of stimulate low growth rates in all of these instances, by raising savings and deferring consumption... Asset prices for stocks, high yield bonds and other supposed 5-10% returning investments, become stretched and bubble sensitive; Debt accumulates instead of being paid off because rates are too low to pass up – corporate bond sales leading to stock buybacks being the best example. The financial system has become increasingly vulnerable only six years after its last collapse in 2009.... Central banks have gone and continue to go too far in their misguided efforts to support future economic growth."
The best performing asset overall in 2015? Well, just tell Putin "spasibo"...