“Truth is treason in the empire of lies.” – Ron Paul
An establishment embrace of a rule-or-ruin course - Better to lose, than win with Trump! - seems irrational. But it is not irrational if one’s preeminence and position are the summum bonum of one’s political existence.
Barack Obama recently stated that anyone that is claiming that America’s economy is in decline is “peddling fiction“. Well, if the economy is in such great shape, why are major retailers shutting down hundreds of stores all over the country?
- Europe shrugs off pre-G20 China stocks slump, sterling steadies (Reuters)
- China Unveils Its Deliverables for G-20 -- And No Plaza Pact (BBG)
- Foreign Money Could Be Slow to Enter China’s Bond Markets (WSJ)
- China Urged to Stomach Much Higher Fiscal Deficit (WSJ)
- Trump's Momentum Has Republicans in Congress Confused and Cowed (BBG)
While 'our' President was out this week patting himself on the back and taking victory laps over the "supposed" 4.9% unemployment rate, he forgot to mention a few important tidbits about what is really going on.
- Oil Drops as Saudis to Maintain Spending, China Diesel Use Falls (BBG)
- Saudi Arabia is able to withstand low prices says Saudi Aramco Chairman (WSJ)
- Recession Warnings May Not Come to Pass (WSJ)... or they May
- Stocks moving in tandem are squeezing short sellers (FT)... as first noted here in 2013
- Problems Found at Theranos Lab (WSJ)
- New York rebounds after blizzard, Washington shuts down government (Reuters)
- China business confidence, recruitment hit record lows in January - SMI survey (Reuters)
In March 2014 Wall Street’s ex-items S&P 500 earnings forecast for 2015 was about $133 per share; it ended up 20% lower at $106. Yet here they go again - the consensus for 2016 started out at $137 per share last spring, and is just now beginning to make its way back toward the high $120s. It is a barometer of the abject complacency and intellectual sloth that has descended on the casino owing to two decades of Fed coddling and seven year of free money for the carry trades. In the case of Chipotle, it was always just a burrito. In the case of the US and world economy and financial markets, it’s not even that.
With more financing in place, the world’s tallest skyscraper is moving forward. Saud Arabia's Kingdom Tower in Jeddah is only the latest phase in an enormous boom that began setting new records in 2014, raising another 'skyscraper alert' as the completion of record-setting skyscrapers has long seemed to indicate the beginning of economic crises.
It has come down to this: a year in which the US stock market (led by a handful of shares even as the vast majority of stocks has dropped) has gone nowhere, but took the longest and most volatile path to get there, is about to close either red or green for 2015 based on what happens in today's low-volume session following yesterday's unexpected last half hour of trading "air pocket" which brought the S&P back to unchanged for the year.
My overriding theme and the central drama for the coming year is that unexpected events can take on greater importance as the Federal Reserve ends its near-decade-long Zero Interest Rate Policy. Consensus premises and forecasts will likely fall flat, in a rather spectacular manner. The low-conviction and directionless market that we saw in 2015 could become a no-conviction and very-much-directed market (i.e. one that's directed lower) in 2016. There will be no peace on earth in 2016, and our markets could lose a cushion of protection as valuations contract. (Just as "malinvestment" represented a key theme this year, we expect a compression of price-to-earnings ratios to serve as a big market driver in 2016.) In other words, we don't think 2016 will be fun.
- The Jobs Report Probably Won't Change the Fed's Mind on Liftoff (BBG)
- U.S. authorities look for militant links to shooters in California mass slaying (Reuters)
- Neighbors, Acquaintances Shocked That Couple Are San Bernardino Shooting Suspects (WSJ)
- ECB Fumbles the Stimulus-Baton Hand-off, Mussing Up Fed’s Plans (WSJ)
- OPEC Heads for Status Quo as Members Clash Over Crude Output Cut (BBG)
- Foreigners drawn in as fear and loathing grip China's finance industry (Reuters)
- Turkey downs Russian warplane near Syria border, Moscow denies airspace violation (Reuters)
- Investors seek safety in bonds, yen after Turkey downs Russian jet (Reuters)
- Donald Trump Is Not Backing Down (BBG)
- Uber's Exposure May Grow as U.S. Drivers Seek 57.5 Cents a Mile (BBG)
- U.S. issues global travel alert as manhunt continues for Paris attackers (Reuters)
- Stung by Oil, Distressed-Debt Traders See Worst Losses Since '08 (BBG)
The Western world consists of a tyranny in which brainwashed nonentities live in a constructed reality. Can enough of these people be rescued to make a difference? That is the question.
If it looks like a recession, walks like a recession and quacks like a recession, it’s a recession.