2015 has been marked by increasing volatility, prompting Third Point's Dan Loeb to characterize this as a “haunted house market” where a new scary event lurks around each corner. Out of this year’s 25 trading days, 22 have had intra-day moves in the market of more than 1%..."Avoiding dramatic downside in individual names and sizeable losses during inevitable sell-offs will be key to succeeding in this market and navigating successfully through the haunted hallways of 2015."
For the 34th month in a row, Chinese Producer Prices (PPI) fell YoY (dropping 4.3%, missing expectations of a 3.8% deflation). This is the biggest YoY drop in prices since October 2009 led by a 9.9% plunge in fuel costs. Chinese Consumer Prices are also showing continued deceleration with a 0.8% rise YoY (missing expectations of a 1.0% rise YoY) - the weakest CPI low-flation since November 2009. Great news for the average Chinese person is that food prices rose at the slowest pace in years (and even better the cost of alcohol & tobacco fell YoY again).
Only the people of Japan and Spain trust their government less than the people of the U.S. trust our government. The confluence of government and business has created a corporate fascist surveillance state. Trust in government, politicians, bankers, and the media is plummeting.
The recent rally in crude prices looks more like a head-fake than a sustainable turning point, suggests Citi's Ed Morse, noting that short-term market factors are more bearish, pointing to more price pressure for the next couple of months and beyond. While the shape of the oil price recovery is unlikely to be 'L'-shaped in their view (more likely 'U', 'V', or 'W'-shaped recovery), Citi warns the oil market should bottom sometime between the end of Q1 and beginning of Q2 at a significantly lower price level in the $40 range (perhaps as low as the $20 range for a while) - after which markets should start to balance, first with an end to inventory builds and later on with a period of sustained inventory draws.
In the absence of any notable developments overnight, the market remains focused on the rapidly moving situation in Greece, which as detailed over the weekend, responded to Europe's Friday ultimatum very vocally and belligerently, crushing any speculation that Syriza would back down or compromise, and with just days left until the emergency Eurogroup meeting in three days, whispers that a Grexit is imminent grow louder. The only outstanding item is what happens to the EUR and to risk assets: do they rise when the Eurozone kicks out its weakest member, or will they tumble as UBS suggested this morning when it said that "the escalation of tensions between the Greek government and its creditors is so far being shrugged off by investors, an attitude which is overly simplistic and ignores the risk of market dislocations" while Morgan Stanley adds that a Grexit would likely lead to the EURUSD sliding near its all time lows of about 0.90.
Albert Edwards' On The Next Shoe To Drop: The Realization That Core Inflation In The US And Europe Are The SameSubmitted by Tyler Durden on 02/08/2015 20:14 -0500
"The next shoe to drop will be the realisation that the US recovery is stalling and outright deflation is as big a threat there as it is in the eurozone. Indeed my former esteemed colleagues Marchel Alexandrovich and David Owen pointed out to me that if US core CPI is measured in a similar way to the eurozone (i.e. ex shelter), then US core CPI inflation is already pari passu with the eurozone ? despite the former having enjoyed a much stronger economy!"
In 12 U.S. states, over half of 25-year-olds lived with their parents in 2012-13. The states: York are: New York, New Jersey, California, Florida, Illinois, Maryland, Delaware, Pennsylvania, Connecticut, Massachusetts, New Hampshire and Washington D.C.
Post-Crisis Scorecard: Debt Up $57 Trillion, 60% Of Jobs Created Are Low Level, Record Youth Living With ParentsSubmitted by Tyler Durden on 02/08/2015 14:15 -0500
Overview of the investment climate
It took a while, but three months after we wrote "How The Petrodollar Quietly Died, And Nobody Noticed", someone finally noticed.
Chinese imports collapsed 19.9% YoY in January, missing expectations of a modest 3.2% drop by the most since Lehman. This is the biggest YoY drop since May 2009 and worst January since the peak of the financial crisis. Exports tumbled 3.3% YoY (missing expectations of 5.9% surge) for the worst January since 2009. Combined this led to a $60.03 billion trade surplus in January - the largest ever. But apart from these massive imbalances, everything is awesome in the global economy (oh apart from The Baltic Dry at record lows, Iron Ore near record lows, oil prices crashed, and the other engine of the world economy - USA USA USA - imploding).
The world is going to be about $2.37 trillion smaller in 2015 than most expected at the start of the year as a consequence of the USD strengthening. This is not insignificant, as it represents 3.2% of last year’s estimated global GDP. For perspective, that would be as if an economy of the size between Brazil’s and the UK’s would have just disappeared.
Put on the a tin foil hat if you must, but US dollar's rally is resuming after short consolidation phase. I think the rally is only about 1/3 of where it is eventually going.
At the end of the day, the issue here is one of freedom, and freedom is the freedom to choose – even if we make a bad choice. The argument that I must vaccinate my children for the good of the community is not only scientifically questionable, it is an unethical precept. It is the argument all dictators and totalitarians have used. “Comrade, you must work tirelessly for the good of the collective. You must give up your money and property for the good of the collective, and now … you must allow us to inject your children with what we deem is good for the collective.” If American’s don’t stand up against this, then we are lost. Because we have lost ownership of ourselves. Our bodies are no longer solely ours – we and our children are able to be commandeered for the “greater good.”
Needless to say, Greece is only the poster child. The McKinsey numbers above suggest that “peak debt” is becoming a universal condition, and that today’s Keynesian central bankers and policy apparatchiks are only pushing on a giant and dangerous global string. So now we get to ground zero of the global Ponzi. That is the monumental pile of construction and debt that is otherwise known on Wall Street as the miracle of “red capitalism”. In truth, however, China is not an economic miracle at all; its just a case of the above abandoned Athens stadium writ large.