The dance of the zombies goes on... During the 10 years between 2005 and 2014, these four retailers spent $34 billion on stock buybacks and dividends. But, alas, their cumulative net income during the period was only $13 billion. So they pumped 2.6X more into the casino than they earned! Last week’s tepid retail reports were not only a reminder that QE and ZIRP have by-passed main street entirely. The faltering department store sector is also a reminder that the monumental amount of Fed confected cash pooling-up in the canyons of Wall Street is breeding debt-laden zombies throughout the length and breadth of the land.
"CNBC is an electronic shaman for investors... The situation resembles George Orwell’s Nineteen Eighty-Four, where the protagonist Winston Smith tuned out the massive telescreen on his apartment wall that issued endless streams of positive news."
U.S. companies announced $141 billion of new stock buyback programs last month and $243 billion of new M&A deals. Both figures are all-time records, and according to bubblevision are further evidence that CEOs are bullish on their companies and the economic outlook. You might say that. Then, again, it might put you in mind of swarming moths heading for a light bulb. The baleful truth is this. In its arrogant and misbegotten seizure of all financial power, the nation’s central bank has turned the C-suite of corporate America into a destructive agent of bubble finance. That’s ‘dumb money’ with a vengeance.
As the following update of CNBC's perhaps most popular (if least watched, lagging even Mad Money) day breaking segment, SquawkBox, the show that features Joe Kernen, Becky Quick and Andrew Ross Sorkin just suffered its worst quarterly Nielsen rating in the show's history.
The inevitable death of the dollar may have been delayed. The reason is simply that the other three big economies of the world - Japan, China and Europe - are in even more disastrous condition. Worse still, their governments and central banks are actually more clueless than Washington, and are conducting policies that are flat out lunatic - meaning that their faltering economies will be facing even more destructive punishment from policy makers in the days ahead. The current malignant monetary regime does not merely imply that the Wall Street casino is a dangerous place for your money. No, it screams get out of harms’ way. Now!
"...we have now graded two years worth of Cramer’s picks: those made from January 2011 through December 2012. That amounts to 552 calls overall, of which 254 outperformed the index (46% hit rate). On average, Cramer’s picks returned -0.08% versus the 1.35% S&P 500 return over the corresponding period. That amounts to 142 basis points of quarterly underperformance, or 568 basis points on an annualized basis, which amounts to an F grade in our grading system."
On Monday - after the close - after a big dead-cat-bounce off the post-Greek-election overnight lows, none other than CNBC's Jim Cramer announced to his dwindling audience that "he's calculated that it's actually a remarkably healthy" market... The Dow is now over 300 points lower, despite his showing investors the "eight signs of a healthy market." However, it is his energetic pitch for the looming Shake Shack IPO on the heels of the "home-run" Box IPO (which is now below its release price and down well over 20% from the highs in 3 days) that, we suspect, confirms the utter collapse of his listening or viewing audience (no matter how 'wrong' the surveys are).
"Don't fall for the trap of myopically following yesterday's winners. Protect yourself, keep your powder dry, and wait for a better day. Think more about getting rich in 2020 or beyond... The Fed has turned the entire investing population into zombies (with a gambling addiction, I might add) wandering aimlessly in search of any tiny extra return to ravenously consume... This has left stock markets as elevated and overvalued as they’ve been since the dot-com mania (and more than they were in 1929 and 2007), which history has shown will likely lead to significant declines ahead."
Another year of putting lipstick on the zombie known as the global economy, kept walking only thanks to $11 trillion in liquidity injections by the world's central banks and tens of trillions of new Chinese credit created out of thin air and promptly misallocated and embezzled, and the results are in. The bottom line: according to Nielsen, is that despite the S&P recording a whopping 53 all time highs, and the Dow rising over 18,000, the channel that was once must watch financial TV for mom and pop, and has since devolved into endless cheerleading of failed policies and rigged markets, namely CNBC, just suffered its worst year in, well, ever.
The worldwide economic and industrial boom since the early 1990s was not indicative of sublime human progress or the break-out of a newly energetic market capitalism on a global basis. Instead, the approximate $50 trillion gain in the reported global GDP over the past two decades was an unhealthy and unsustainable economic deformation financed by a vast outpouring of fiat credit and false prices in the capital markets. In short, when the classical Austrians talked about “malinvestment” the pending disasters in the global steel and iron ore industries (and also mining equipment and other supplier industries) are what they had in mind.
If the BOJ’s mad money printers were treated as monetary pariahs by the rest of the world, it would at least imply that a modicum of sanity remains on the planet. But just the opposite is the case. Establishment institutions like the IMF, the US treasury and the other major central banks urge them on, while the Keynesian arson squad led by Professor Krugman actually faults Japan for being too tepid with its “stimulus”. Now comes several new data points that absolutely confirm Japan is a financial mad house...
Virtually every day there is an eruption of lunacy from one central bank or another somewhere in the world. In short, the central banks of the world are embroiled in a group-think mania so extreme and irrational that it puts one in mind of the spasm of witchcraft trials that erupted in the Massachusetts Bay Colony nearly four centuries ago. As a practical matter, this mania amounts to a race to the currency bottom and the final extinguishment of the price discovery mechanism in every financial market on the planet. Flying blind, the financial markets are thus bubbling - in the delirium phase - like never before. That is, until they don’t.
One thing is certain about the ensuing “race to the bottom”. Japan’s retirement colony will end up with the hindmost. And they will surely burn professors Krugman and Summers in effigy—-even if driftwood is the only fuel they have left.
The central banks are now out of dry powder - impaled on the zero-bound. That means any resort to a massive new round of money printing can not be disguised as an effort to “stimulate” the macro-economy by temporarily driving interest rates to “extraordinarily” low levels. They are already there. Instead, a Bernanke style balance sheet explosion like that which stopped the financial meltdown in the fall and winter of 2008-2009 will be seen for exactly what it is—-an exercise in pure monetary desperation and quackery. So duck and cover. This storm could be a monster.
The Federal Reserve and its owners print and party, while the rest of us work and weep..................