FOMC's Bag Of Tricks Is Empty... For Now - Full Statement Redline
The FOMC statement once again had a little for everyone but critically lacked the all-important- "we'll print now and to infinity". Key headlines from the statement, via Bloomberg:- *FED SAYS ECONOMY `EXPANDING MODERATELY'
- *FED SAYS INFLATION `HAS PICKED UP SOMEWHAT' ON ENERGY
- *FED SAYS GROWTH TO STAY MODERATE, `THEN TO PICK UP GRADUALLY'
- *LACKER DISSENTS FROM FOMC DECISION
- *FED SEES `SIGNIFICANT DOWNSIDE RISKS'
- *FED SEES `EXCEPTIONALLY LOW' RATES AT LEAST THROUGH LATE 2014
ES 1382, IG 98.6bps, HY $95.58, 10Y 1.97%, Gold 1639, EUR 1.3200, AAPL 609.5
Immediate Reaction
10Y +3bps, Gold -$10, ES -1pt, EUR -15pips, AAPL -$0.5
Full Statement Redline...
Live Webcast Of The Bernank Press Conference And Updated Fed Forecasts
One
hour ago, the Fed launched on a big stop hunt, sending gold first much
lower, then much higher, even as it released no incremental data, but
merely confirmed that with every other central bank still "easing" (by
which we mean devaluing their currencies of course, most recently seen
in India and Brazil, and shortly, in Japan and of course Europe, once
again) it can delay injecting cash until after the president is
reelected. So with everyone at least superficially pretending there may
be a question about ultimate Fed strategy, Ben will take the podium
shortly to answer Steve Liesman's and several other fawning
'journalists' questions on what the Fed sees for the future, which in
turn will be driven by the just released revised Fed forecasts (see
below).Presenting For Your Correlation Consideration: THE Transfer Payment
We know correlation is not causation, but... Black line is student loan debt; Orange line is AAPL total cash. 2+2 just may ? 5 in this case.Tavakoli: Another Financial Crisis Looming, And You're On Your Own
Today’s Items:
Finally, Please prepare now for the escalating economic and social unrest. Good Day
It does not matter how many rabbits
Geithner, and others, pull out of Bernanke’s backside, there is no
stopping the global financial system from collapsing. The fact that
this system requires more and more debt to continue is a sure sign that
it will end. It is just a matter of time and simple arithmetic before
this magical scheme and the sleight-of-hand are relegated to the dustbin
of history.
One of the first indicator of any real
recovery is the building industry. While some sectors saw home sales
surge, overall, sales of newly built homes plunged over seven percent in
March. Builders claim they do not compete against foreclosures. Home
builder sentiment fell dramatically in April, which may be a sign that
the downward sales trend will continue.
Fifteen percent of Americans owe $870
billion in student loans. Interest rates may about to double which will
would hurt more than 7 million students. Given the bleak job prospects
that young Americans coming out of college face today, things are going
to be very bad folks.
Next…
Are Pawn Shops Running Out of Gold?
http://libertyblitzkrieg.com
http://archive.constantcontact.com
Are Pawn Shops Running Out of Gold?
http://libertyblitzkrieg.com
http://archive.constantcontact.com
Consumers, or suckers, of pawn shops are
using a greater proportion of general merchandise instead of gold to
satisfy their immediate cash needs. Less and less gold and silver is
appearing in pawn shops. When the final remaining scrap in gold and
silver is sold by Pawn shops, into strong hands, that is when the market
will be cleared and a major rally later this year is expected. Perhaps
on June 28th when gold officially replaces the U.S. dollar as the worlds
reserve currency according to Jim Sinclair.
SOPA was decisively defeated when
everyone dog-piled onto the bill; however, there is a new bill… The
Cyber Intelligence Sharing and Protection Act, or CISPA, that is
designed to do much worse. One aspect is that it permits, without
warrant, for private companies, like Google, to hand over private
communications to the government. In short, it puts the resources of
private industry to work against the American people. Even security
experts, claim that this CISPA is not needed and would do more harm than
good.
Unless someone has had a lot of alcohol,
heart attack victims turn blue. So, why was Andrew Breitbart’s skin
bright red with minimal blood-alcohol concentration when he had his
fatal heart attack? Breitbart brought down ACORN and was about to
release something on Obama… In addition, there is the CIA Heart Attack
gun that leaves virtually no traces. No motive here folks.
Next…
Is There a Drone in Your Neighborhood?
http://www.dailymail.co.uk
http://www.dailymail.co.uk
http://maps.google.com
Is There a Drone in Your Neighborhood?
http://www.dailymail.co.uk
http://www.dailymail.co.uk
http://maps.google.com
There are 63 active drone sites, that
include 19 universities, in 20 U.S. states. Keep in mind, these are the
authorized sites. With the recent fitting of machine guns on some
unmanned drones, we now have a possible death from above scenario folks.
While gold demand from western suckers
err… investors fell in recent months, central banks demand continues to
grow as Mexico added 16.8 tonnes and Russia added 16.55 tonnes of gold.
If they are buying, then you should be stacking.
Finally, Please prepare now for the escalating economic and social unrest. Good Day
Gold Stocks: Comparing 2012 to 1976 Today
Eric De Groot at Eric De Groot - 2 hours ago
Hindsight analysis is always easier than forecasting. Probably why talking
heads are a dime a dozen and billionaires are scare. A couple of years from
now, the talking heads will be comparing 2012 to 1976 in gold and gold
stocks. Chart: Large Cap Stocks Capital Appreciation Index to S&P Gold
Mining Ratio (LCSCAIGPMR) and Z Score of Secular...
[[ This is a content summary only. Visit my website for full links, other
content, and more! ]]
Farwell Factory Jobs, Hello Service Sector
Eric De Groot at Eric De Groot - 3 hours ago
The farewell to U.S. factories despite a well-established, obvious trend
continues to surprise the public. The transition from manufacturing,
goods-producing to service-service producing economy has been an on-going
process since 1953 (see chart 1). While hamburger flipping and hospitality
jobs appear to an amiable employment solution for the US, it simply cannot
generate the tax revenues...
[[ This is a content summary only. Visit my website for full links, other
content, and more! ]]
MF Global: The Untold Story of the Biggest Collapse Since Lehman - Reckless Disregard
Which Came First - The Spending Or The Debt?
In
a wonderfully succinct clip, Professor Antony Davies addresses the
oft-cited perspective that Government has a debt problem. While correct
in fact, he examines the data and summarily notes that debt is caused
by deficits leaving the question of what's to blame - too much spending or too little tax revenues?
The dramatic rise in spending per-capita by the government is
exponentially larger than the rise in price levels over the last few
decades and while so much time is spent on Healthcare costs - even that
pales in significance relative to the rise in Federal Government
spending. The lesson, he notes, is that we don't have a debt problem, we don't even have a deficit problem, what we have is a spending problem
- leaving a tax solution impotent. An interesting conclusion on the day
when the Fed once again promises to keep rates low forever implicitly
supporting a government budget via its low interest expense...Market Responds To Market Response To Coy Fed (And Goldman's Take)
It
appears that more even than the Fed, the market, being a perfectly
insane reflexive device, saw the 0.1% knee-jerk drop in stocks, and took
that as a far greater THE NEW QE™ catalyst than anything just released
by the Fed's printer. Gold is now higher than before the FOMC statement and QE-favorites Energy and Financials are notably outperforming.Wordclouding What The Fed Really Said
By now everyone is aware that when it comes to the Fed's "communication" with the public, there is a redacted layer which remains hidden for years, and which just happens to contain the jist of what the Fed truly sees... and then there is what is left for public consumption, such as the just released statement of pre-canned sentences and algo stimulating phrases. However, to get the full transcript of the thinking that went into the policy we have to wait until 2017. Today, courtesy of John Lohman, we fast forward five years for a word cloud of the transcript that backs today's FOMC statement. Enjoy the resulting time travel.
The Latest Economic Fad: Cloud Stuffing
At first we were quite impressed by the following major revenue and EPS beat by Boeing announced earlier today:*BOEING 1Q EPS $1.22 ON 11C REDUCTION IN RESERVE, EST. 93C
*BOEING 1Q REV. $19.38B, EST. $18.31B :BA US
...until courtesy of Sean Corrigan we found out that Boeing is merely the latest company to discover what GM recently discovered as have so many now defunct other companies. That when in doubt - stuff.
What To Expect From Today's FOMC Statement: Nothing, Says Goldman. So - Time To Fade?
Sampling several investment banks' opinions on what to expect out of today's FOMC decision in a few hours, one would be left with the impression that absolutely nothing will happen. Not surprisingly, this is what the official party line reps and warrants as well, as telegraphed by that faithful mouthpiece, Jon Hilsenrath. And yet if the Fed has finally understood that its role is only effective if it is surprising, this gives all us all the opportunity to not only doubt what the media and the sellside wants us to expect, but to naturally fade Goldman - one of the best trades in the past three years - who says: "We expect no clarity from Wednesday's FOMC statement and press conference on additional monetary easing. Fed officials will not close the door but are also unlikely to provide a clear hint of further action. Our forecast of additional easing hinges not on what Fed officials say this week, but on our expectation of continued weakness in the economic data." Of course it is possible that the Fed is merely staying true to its recent creed of being honest and transparent and telegraphing policy from miles away. And is thus forced until the market is actually driven by actual macro data instead of who buys how many gizmos using student loans. Or not. Because when in doubt, always ask i) what would Goldman Sachs sell and ii) what would PIMCO buy. The two are rarely both wrong at the same time.Apple's Post-Earnings Volatility Premium Plunges (Again)
For
the first time in over two months, Apple's implied volatility is now
trading back below its realized volatility as its share price explodes
10% higher and overall implied volatility falls back to a more
normalized level of the last six months. It seems, just as in the few months leading up to January's earnings report, that option-hedgers were very actively bidding up protection only to see it crushed on the miraculous realization of exponential growth. Will
we repeat the same path in the next three months as implied volatility
is once again at 3-month lows relative to realized vol?We're All Nixonians Now
I
often wonder who is worse: George W. Bush — the man who turned a
projected trillion dollar surplus into the greatest deficits in world
history, who bailed out the profligate Wall Street algos and
arbitrageurs, who proceeded with two needless, pointless and absurdly
costly military occupations (even though he had initially campaigned on
the promise of a humble foreign policy), who ignored Michael Scheuer’s
warnings about al-Qaeda previous to 9/11, who signed the
Constitution-trashing PATRIOT Act (etc etc ad infinitum) or his
successor Barack Obama. The answer, by the way, is Richard Nixon. Nixonianism
has been the corporate aristocracy’s crowning achievement. And to some
extent, this period of free lunch economics was a banquet, even for
middle class Americans. The masses were kept fat and happy. But now the game is up — like Nixon’s Presidency — its days are numbered. What Costs How Much, Where? Presenting The "Apple Index"
Forget
Big Macs, the only ubiquitous commodity that counts now in the global
purchasing-power-parity pyramid of currency-wars is the iPhone.
Deutsche Bank has created a comprehensive set of tables on what costs
how much and where around the world so whether it is soft-drinks in
Brazil or Germany (over 690% of New York prices), Beer in Japan (192% of
US prices), or exercise in Russia (sports shoes are 221% of US
prices), it is perhaps evident that the impact of these overseas
revenues in nominal USD may indeed be helping juice US corporates as
they bow to Bernanke's debasement wisdom. But how much longer will
Russians (or the Chinese for that sake) continue to pay around 50% more
for their iGadgets than us lowly Americans.Has America Been Crippled By Intellectual Idiots?
Universities
are today’s centers of connection. They are one of the last vestiges
of American tribalism and community in an age of self isolation and
artificial technological cultism. Adults do not meet face to face much
anymore to share knowledge, or discuss the troubles of the day. The
academic world provides such opportunity, but at a terrible price. To
connect with the world, students must comply. To be taken seriously,
they must adopt, consciously or unconsciously, the robes of the state.
They must abandon the passions of rebellion and become indifferent to
the truth. All actions and ideas must be embraced by the group, or
cast aside. They must live a life of dependency, breeding a culture of
fear, for that which others to keep for us, they can easily take away.
How could anyone possibly sustain themselves on a diet of congealing
fantasy, and personal inadequacy? The intellectual life bears other
fruits as well. Where it lacks in substance, it makes up for in ego,
proving that being educated is not necessarily the same as being
intelligent. The following is a list of common character traits visible
in the average intellectual idiot, a breed that poisons the American
well, and is quickly eroding away any chance of Constitutional revival…Crude Sliding As Iran Promises To Halt Nuclear Expansion
Yesterday
we had Apple sandbagging expectations with yet another round of low
guidance, now it's Iran's turn, which through its Russian Ambassador
just said the country will consider halting nuclear expansion to avert
the EU oil ban. Needless to say, just as the Apple forward guidance so
this "promise" is utterly worthless. But at least it punk'd the algos
for the time being sending Brent and WTI down over $1 in a hurry.March Durable Good Implode, Worse Than Lowest Wall Street Forecast And Biggest Drop Since January 2009
So much for a moderate decline in the economy. As we warned back in February when we noted that the non-seasonally unadjusted collapse in durable goods was historic, now that the aftereffect of a record warm winter is fully gone, the March durable goods data comes in and it was a complete disaster: instead of dropping modestly by 1.7% as the consensus expected, the March actual print was a massive 4.2% decline, worse than the worst Wall Street forecast, or the most since January 2009! And it was not only airplanes as many were expecting (despite Boeing's just announced epic sales): the ex-transportation number was down 1.1%, on expectations of a 0.5% gain; even worse, capital goods new orders slid 0.8% on expectations of a 1% gain. And as usual inventories hit another record high. Overall, a horrendous print which confirms that the entire myth of a recovery in Q1 was warm weather driven, and that about 1% of the 2.5% or so consensus GDP was due to the weather. Expect the downward GDP revisions to come any second.But don't expect the market to react to this news at all: after all if anything, this simply makes NEW QE/LTRO more likely and is to be cheered by all habitual gamblers.
AAPL-on, But Will Ben Drink The Calvados?
All eyes will turn to the Fed and the Fed statement. I think we get a slightly more dovish statement. More language that the economy shows signs of weakening and that the Fed is vigilantly watching the data to determine if additional actions are necessary. No change in low rates for extended period, though maybe their they soften the language further hinting that it could go on longer than 2014 if moderate economic growth continues. I don’t think they will say anything new on inflation, though they might try to hint that it is moderating in their eyes, again, paving way for more QE. So I suspect a dovish statement, but no QE. I think the market will initially like that, but we will see the enthusiasm wane as that seem very well priced in, and without QE, and once AAPL stabilizes, we can get back to focusing that on the whole the data here has been weak, and that the situation in Europe is deteriorating rapidly.Is India Turning 'Paper'? Goldman Sachs Gold ETF in India Sees 11 Fold Surge in Volume
Trading in Goldman Sachs Group Inc.’s gold ETF in India surged almost 11 fold, leading an advance in gold securities, as investors bought gold to mark the auspicious Hindu festival of Akshaya Tritiya. Volumes in GS Gold BeEs, India’s biggest exchange-traded fund backed by gold, was 937,816 units on the National Stock Exchange of India Ltd. at 4:54 p.m. in Mumbai, up from 85,376 units yesterday and more than the 101,914 average daily volumes in the last six months through yesterday, according to data compiled by Bloomberg. This is significant volume. Each unit represents about 1 gram of physical gold and therefore 937,816 units is the equivalent of some 29,170 ounces of gold which at today’s prices is some $47 million of daily volume for just one gold ETF in India. The Goldman Sachs India gold ETF is just one of many new ETFs in India. Trading in Kotak Gold ETF jumped more than eightfold to 226,032 units. Gold demand in India, the world’s biggest importer, may climb as much as 25% to 15 metric tons on Akshaya this year, according to Rajesh Exports Ltd., the country’s biggest gold-jewelry exporter. Assets held by local gold funds reached a record 98.9 billion rupees ($1.87 billion) at the end of March, according to the Association of Mutual Funds in India. GS Gold BeEs had assets worth 29.6 billion rupees (some $563 million (USD)) as of March 31, data from the association showed. Trading in UTI-Gold Exchange Traded Fund climbed more than fivefold, while volumes in Reliance Gold ETF, the second-biggest fund, was up more than sixfold, data shows.German 30 Year Bund Auction "Unsubscribed"
Earlier today, the Bundesbank tried to sneak through some EUR3 billion in long-dated (30Y) paper. It didn't quite succeed, because if one excludes the retention by the German bank which already has its hands full with TARGET2, the auction was technically a failure. As Newedge points out, without Buba retention, the launch of new 30-yr bund would have been undersubscribed which is just a polite way of saying the above. What happened is that the German debt agency sold EUR2.405b of new 2.5% 30Y Jul-44 Bund, at an average Price 101.93 and average yield of 2.41%. Of this, the Bundesbank retained 595 million as the total target was for EUR3 billion in issuance; Total non-Buba based bids were a "weak" EUR 2.747 billion. The bid/cover was modest 1.142x; with the auction tail 18 cents “further underpinning the weakness of demand." Finally, per Newedge, the new paper looked rich vs previous rolls ahead of today’s auction, “explains the sluggishness of today’s demand.” Of course, with the now daily bipolar market, had this auction taken place on Monday when Europe was again imploding, it would have been a stunning success. Instead, today is one of those risk on days. But for anyone who bought into the "safety" of German paper 48 hours ago, today they are being carted out legs first. Until, of course, the attention shifts to the disaster that is the PIIGS, and as of earlier today, the UK once more.UK Economy Double Dips For First Time Since 1970s
For anyone who may have been concerned that the BOE was serious in its recent "admission" that it just may not ease further, or engage in more QE for that matter, we have good news: the UK economy just double dipped for only the first time since the 1970s, following a stunning Q1 GDP release which came in far weaker than expected at -0.2% while the consensus was looking for a 0.1% rise. In other words, the UK has just followed such other pristine example of economic success as Spain and Greece into double dipping. Bloomberg economist Niraj Shah brings even more bad, pardon good, news: 2Q GDP may also contract as a result of additional bank holiday in June. Construction output knocked 0.2 ppt off of quarterly GDP growth. Per Shah, the BOE may point to drop in construction as a possible aberration in data, concerns will remain over the strength of the service sector as output there rose only 0.1% Q/Q. The U.K. has contracted 9 quarters since first falling into recession in 2Q 2008. All in all this is great news for those desperate for bad news and explains why futures, and the EURUSD are spiking.Apple Carries The World On Its Shoulders: Market Snapshot
As we said yesterday, traders could have just slept through the entire day, ignored headlines about mad cows, auctions of European bonds maturing in a few weeks, speculation of Europe's alleged falling out favor with austerity which is very much irrelevant as all that matters is what German taxpayers/voters say, and the SEC's latest laughable scapegoating attempts, and just woken to the 4:30 pm announcement of iPhone sales in China. As expected, the entire world is now reacting. Here is Deutsche Bank's Jim Reid with the global response to the world's ongoing fascination with aspirational cell phones.Europe's New Entente Discordiale: The Other French Connection
While
images of car-chases and Gene Hackman's pork-pie hat may be conjured,
the tough new reality that has emerged this week in Europe's rising
tensions is the decisive development in France as the election proved a
strong showing for both far-right and far-left political parties at the same time. Somewhat surprisingly these extremes are in agreement on critical economic policies: they both want to restrict free-trade and the labor market, and also want to subjugate the ECB.
Together with the Socialists and even most Centrists, the extremes
clearly converge on a very strong consensus for anti-growth structural
policies and massively lax fiscal (fair estimate might be 60% of the
voters) and monetary (ditto, perhaps 90% of the voters) policies. This means that France has given up its ambition to become anything like economically similar to Germany.
Instead, they have reverted towards joining their natural economic
allies in the Eurozone: Italy and Spain. Perhaps this is why French
spreads/yields have risen over 40% in the last few weeks as the
politically pragmatic Anglo-Saxon spirits are starting to seize the
enormity of what is happening: France is no longer any form of supporter of ally of Germany.
The idea that somehow, pragmatic voices will stop this political
groundswell is entirely misplaced: this destructive belief set has
started to run its course. It is now in the Continental blood and the healthiness of economies over the pond is deteriorating fast.
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