Janet Yellen once again repeats that the economy is “looking stronger” although still it has yet to manifest into actual strength. In fact, it is still so weak that the Fed cannot even suggest that rates will raise anytime over the next several FOMC meetings. In short, the economy is still very sick. The Pundits (Liesman) are suggesting Janet feels the economy is strong but that the “data just isn’t cooperating”. What does that even mean?? The market is a red herring of sorts keeping our attention away from the reality of the economy. And so, to give up the market strength would be synonymous to removing the one remaining support holding up that 100 storey building that is otherwise completely rotted. Only when the economy is able to withstand a market repricing will the Fed allow the market to reprice.
Dallas Fed President Richard Fisher proclaimed that he and some esteemed colleagues in the business community believe the collapse in oil prices is a net positive for Texas, while "we will lose about 150,000 [oil-based] jobs, but we will pick them up elsewhere since we are a consumer society," and low oil prices is good for everyone... so far he is absolutely wrong!
And just like that, instead of praising the January jobs report, Goldman's Jan Hatzius is far more interested in pounding the table on its one scariest chart...
Today what we’ve come to know as “mainstream financial media” has provided nothing more than a vehicle for the exponential rise of group-think. All at the suffering of critical thought. In what seems like the blink of an eye most anything to do with financial insight whether it be the reporting of, as well as investigative analysis; has morphed into some version of a stylized regurgitation of Central banking dogma. (this also includes many of the so-called “experts” brought on to fortify the sermons).
For those of you not familiar with the giant con, it is the idea that our economy is growing when, in fact, it hasn’t had growth in decades with the exception of the late 1990?s. The giant con is entirely a function of debt. The cost to the working class of falsify economic growth is beyond redemption. In the end, the path is set and there is no escaping from the debt trap in which we snagged ourselves. And so we bide our time until the weight of exponentially increasing debt collapses in on us. But then we rebuild.
"Some Folks Are Buying Cars..." President Obama Explains Why Subprime Auto Loans Are Great For America - Live FeedSubmitted by Tyler Durden on 01/07/2015 16:27 -0500
This should be good... On the same day as the administration pushes through 3% down FHA loans for some insane reason, President Obama is in Michigan to discuss the renaissance of the US Autoo industry (or more correctly described- the rebirth of the subprime lending bubble)...
The car is at the center of the biggest boom in subprime lending since the mortgage crisis, and The NY Times reports, similar to how a red-hot mortgage market once coaxed millions of borrowers into recklessly tapping the equity in their homes, the new boom is also leading people to take out risky lines of credit known as title loans. Will we never learn?!!
The key is to understand why real median household incomes continue to decline and then how to correct it. It all comes back to financial policies that incentivize investors to avoid economy-boosting investments and toward financial investments that have no economic benefit. The result is a narrowing of income distribution exasperating the down spiral, while inflating wealth to the already wealthy. As long as these policies remain intact the American quality of life will continue to spiral downward while the wealth at the top continues to accelerate until one day when the top pops off and all that wealth goes abroad. And that Mr. Liesman is what we call economics.
Every year, David Collum writes a detailed "Year in Review" synopsis full of keen perspective and plenty of wit. This year's is no exception. "I have not seen a year in which so many risks - some truly existential - piled up so quickly. Each risk has its own, often unknown, probability of morphing into a destructive force. It feels like we’re in the final throes of a geopolitical Game of Tetris as financial and political authorities race to place the pieces correctly. But the acceleration is palpable. The proximate trigger for pain and ultimately a collapse can be small, as anyone who’s ever stepped barefoot on a Lego knows..."
On one hand, global growth is slowing down. And on the other, the cost of living is rising. That’s a bad combination, but we’ll make it. While you’re waiting for QE4 to see how it all goes down, remember to hold on to your assets… if you have any.
As yet another fed speaker takes the jawboning lectern today, it is becomingly increasingly clear that The Fed truly has only one mandate - to keep stocks up. While claiming to be "data-dependent", which judging by the general trend of government-supplied data (and President Obama), things are going great; Jim Bullard joins his intervention-prone colleague Williams: BULLARD SAYS BOND PURCHASES SHOULD BE DATA DEPENDENT and SAYS 'U.S. FUNDAMENTALS REMAIN STRONG' but BULLARD SAYS FED SHOULD CONSIDER DELAY IN ENDING QE. So much for data-dependence...
When you see the headlines touting strong retail sales, you need to consider what you are actually seeing in the real world. RadioShack will be filing for bankruptcy within months. Wet Seal will follow. Sears is about two years from a bankruptcy filing. JC Penney’s turnaround is a sham. They continue to lose hundreds of millions every quarter and will be filing for bankruptcy within the next couple years. Target and Wal-Mart continue to post awful sales results and have stopped expanding. And as you drive around in your leased BMW, you see more Space Available signs than operating outlets in every strip center in America.
We have now done the math and compiled the Q2 earnings for the S&P 500 and we can indeed confirm that (at least in the second quarter) the buyback part is not only over but has ended with a thud, with the total notional amount of buybacks completed in Q2 plunging by 27% in Q2 to "only" $117 billion - the lowest since Q1 of 2013!
Judging by the just released personal income and spending data, consumers are already forecasting a long, harsh winter. With incomes and outlays expected to rise by 0.3% and 0.2% respectively, the July data was a big dud, missing on both expectations, and while income rose by a modest 0.2%, far below the 0.5% in June, it was personal spending which in fact declined by 0.1%, a major drop from the 0.4% increase in the prior month, and the first outright decline in spending since January. As CNBC's Steve Liesman explained the disappointing data: "weather."
"two landmark firsts have occurred only recently, with the S&P500 breaking above 2,000 and the 10y bund yield breaking below 1%. Our Ice Age thesis has long called for sub-1% bond yields and I see this extending to the US and UK in due course. It is the equity markets where I have been consistently surprised. QE has been an essential driver for the equity market, providing the fuel for the heavy corporate bond issuance being used for share buybacks. Companies themselves have been the only substantive buyers of equity, but the most recent data suggests that this party is over and as profits also stall out, the equity market is now running on fumes." - Albert Edwards