Japan

Meet The Millennials: All You Ever Wanted To Know About America's Youth, In Charts

When it comes to the future of the US, the biggest question mark by far is anything relating to the Millennial generation, those Americans born between 1980 and 2000, which happens to be one of the biggest generations in US history. Here are the most relevant charts seeking to answer some of the outstanding questions.

QE, Parallel Universes And The Problem With Economic Growth

"While monetary weapons can be a good first step to remedying an economic crisis, they are clearly not enough on a standalone basis to return an economy to stability and growth. My concern is that there has been an almost total academic capture of the mechanism of the Fed and other central banks around the world by neo-Keynesian thinking and hence policymaking, while the executive and legislative branches of the government have turned a blind eye to the necessary reforms. So while the plan has thus far worked brilliantly for Wall Street, what central bankers have succeeded in doing is preventing, or at least postponing, the hard choices and legislative actions necessary by our politicians to fully implement a sustainable and prosperous future for our children—and theirs...Today I view the world as “risk-uncertain,” and in these instances I recommend the armored vehicle."

5 Things To Ponder: To QE Or Not To QE

Over the last few weeks, the markets have seen wild vacillations as stocks plunged and then surged on a massive short-squeeze in the most beaten up sectors of energy and small-mid capitalization companies. While "Ebola" fears filled mainstream headlines the other driver behind the sell-off, and then marked recovery, was a variety of rhetoric surrounding the last vestiges of the current quantitative easing program by the Fed. “You will know that the financial markets have reached peak instability and volatility when Britney Spears rings the opening bell.”

Van Hoisington And The Fed's Bubble: "Overtrading" And "Discredit" Always End In "Revulsion"

The U.S. economy continues to lose momentum despite the Federal Reserve’s use of conventional techniques and numerous experimental measures to spur growth. As Kindleberger clearly stated, the process of excess liquidity fueling higher prices in the face of faltering fundamentals can run for a long time, a phase Kindleberger called “overtrading”. But eventually, this gives way to “discredit”, when the discerning few see the discrepancy between prices and fundamentals. Eventually, discredit yields to “revulsion”, when the crowd understands the imbalance, and markets correct.

3 Things Worth Thinking About

"I believe that the Last Great Bubble is bursting — faith in central banks to solve all problems."

40% Of Eurozone Banks Are In Bad Shape

130 banks are being tested. 12-18 will fail. And on top of that, almost a third of 130, that’s over 40, will pass while still getting their feet wet. That means anywhere between 40% and 44% of Eurozone banks either fail or are in bad shape.  If 40% of your banks are either dead in the water or barely floating, I’d say you have a major problem. We all know our world, be it politics or economics, consists almost exclusively of spin these days, but in the face of these numbers we very much wonder how many people will be willing to bet their own money that Europe can get away with another round of moonsmoke and roses come Monday.

The Market Says Markit Is Full Of It: Global PMIs Are Painting An Unrealistically Rosy Picture

Why would one even look at a self-reported survey as an indicator of coincident activity: after all isn't it beyond obvious that every response will be full of confirmation bias and colored by the respondent's inherent optimism about the present and the future? Apparently it isn't, and neither is it obvious that for all business participants, hope dies last, something which always influences their responses. The problem is that in a world in which central banks have made a mockery of all other coincident signals, one has to dig very low. "We've used this measure less over the last couple of years as central banks have increasingly distorted the relationship between fundamentals and  valuation" says Deutsche Bank's Jim Reid. And as Jim Reid shows in the table below, the various regional PMIs have so consistenly overshot in their expectations of where the manufacturing and service sector of a given country is throughout 2014, that not even the market believes, well, Markit.

Futures Bounce On Stronger Europe Headline PMIs Despite Markit's Warning Of "Darker Picture" In "Anaemic" Internals

Perhaps the most interesting question from late yesterday is just how did the Chinese PMI rebound from 50.4 to 50.2, when the bulk of its most important forward-looking components, New Orders, Output, New Export Orders, posted a material deterioration? When asked, not even Markit could provide an explanation that seemed remotely reasonable so we can only assume the headline was goalseeked purely for the kneejerk reaction benefit of various algos that only focus on the headline and nothing else. Luckily, we didn't have much time to ponder this quandary as a few hours later we got the latest batch of Eurozone PMI numbers.

United States Of China: In Which States Is Your Landlord Most Likely To Be Chinese

America's #1 landlord may be private equity giant Blackstone, but closing in rapidly is none other than America's very own arch nemesis and ascendent superpower, China. But while until recently China's grand ambitions on US multi-family housing had largely flown under the radar, the recent sale of the Waldorf Astoria to a Chinese company has finally put the US on "China is coming" alert... and reincarnated a lot of the same jokes that swept the country by storm in the mid-80s when it appeared Japan, itself nursing a massive asset bubble, would run over Manhattan (everyone knows how that ended).

The "China-And-Japan-PMI-Beat-So-Things-Must-Be-OK" Meme In 2 Simple Charts

The reactions in USDJPY, Nikkei 225, S&P futures, Gold, Treasury futures, and oil (in a word - none!) tells you all you need to know about the market's total loss of faith in the soft-survey-based PMI data from around the world (and in particular China and Japan). Despite dramatic weakness in a slew of hard-date economic indicators for both nations, the PMIs rose and beat. Japan's to 7-month highs (so much for moar QQE?) but New orders and Output tumbled. China rose and beat but all key components dropped. As the two charts below suggest... things in PMI data production-land need some better "adjustments" if they are to keep the dream alive...

Central Banker Admits Central Bank Policy Leads To Wealth Inequality

Six years after QE started, and just about the time when we for the first time said that the primary consequence of QE would be unprecedented wealth and class inequality (in addition to fiat collapse, even if that particular bridge has not yet been crossed), even the central banks themselves - the very institutions that unleashed QE - are now admitting that the record wealth disparity in the world - surpassing that of the Great Depression and even pre-French revolution France - is caused by "monetary policy", i.e., QE.