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Submitted by Lance Roberts via RealInvestmentAdvice.com,

I noted in yesterday’s post that individuals, while still fully invested in the financial markets, are saying they are extremely bearish on the market. To wit:

“Accordingly, the chart above, investor sentiment suggests the market has just completed a recessionary ‘bear market’ with virtually no substantial losses.”

The problem, of course, is that while prices are rising back towards previous highs the fundamental and longer-term technical backdrop has deteriorated markedly. The answer, to why this is happening, of course, lies with Central Bankers. With the ECB, BOJ and BOC all pushing liquidity directly into the global markets, the only bankers talking about “tightening monetary policy” was the Fed. Of course, the reality is with the Federal Reserve now visibly trapped at the zero-bound, the playing field remains clear for the chase for yield.

As has been often repeated:

“With interest rates at zero, there is simply no other choice available. So, buy stocks.”

As Danielle DiMartino-Booth penned:

“No, perhaps what she [Yellen] is now realizing is the deep trap she is in. Her cabal of economists have long since assured her that government, corporate and household debt service is so low that history itself has been rewritten. But therein lies the mother of all Catch 22’s, wrought by nearly 30 years of central bankers encouraging, enticing and imploring debt-financed spending while punishing, penalizing and all but outlawing saving.

 

Yes, the debt service is at record lows, but the mountain of debt that’s been accumulated dictates that the only thing the economy can withstand is low rates in perpetuity. The alternative is simply unimaginable. There would be widespread ruin and perhaps even the bankrupting of a great nation.”

And there you have it – completely rational confusion. 

Stocks can’t be allowed to go down as the negative “wealth effect” will cripple economic consumption leading to recession. Therefore, Central Banks must keep the “hamsters” on the wheel while they hope the economy will eventually play catch up.

So what do you do? Play the short-term chase the market game or the longer-term wealth devastation game. The choice is yours to make, the consequences will be for all to share.

However, as I discussed earlier this week, markets are made by dissenting views. This weekend’s reading list continues in that fashion.

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CENTRAL BANKING

• Don’t Rule Out Helicopter Money by Ben Bernanke via Brookings Institution
• Federal Reserve’s Clock Just Hit 13 by Tad Rivelle via Trust Co. Of The West
• Funny Things Happen At Zero Rates by Matt O’Brien via Wonkblog
• China In More Trouble Than Fed Thinks by Wolf Richter via BI
• What Would Be Necessary For More QE Or NIRP by Bob Janjuah via ZeroHedge
• Heard At Every Major Peak: This Isn’t A Bubble via Reuters

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THE MARKET – BULL vs BEAR

• Triple Threat Earnings Season by Owen Williams, CFA via Seeking Alpha
• Looking At Shiller’s Cape by Gubb via Gubbmint Cheese
• The Complete Bear Case In Charts by Northman Trader
• Will The Profits Recession Lead An Economic One? by Anthony Mirhaydari via Fiscal Times
• Why Is The Stock Market Acting So Wacky by Larry Light via Forbes
• Suckers Rally Or Bull Market by Paul La Monica via CNN Money
• The New Mediocre by Dr. Ed Yardeni via Dr. Ed’s Blog
• Lack Of Volume Is A Cautionary Sign by Kevin Marder via MarketWatch
• Earnings Recession Will End Soon by Mark Haefele via UBS
• We Are In A Classic Investor Trap by Med Jones via MarketWatch
• Are Bears About To Be Crushed…AGAIN! by Anthony Mirhaydari via Fiscal Times
• S&P Is In “1 Cookie Now Or 2 Later” Zone by Simon Maierhofer via MarketWatch
• Did The Bull Market Just Restart? by Dana Lyons via Tumblr
• Why Short Sellers Are Loving This Market by Victor Reklaitis via MarketWatch

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ECONOMY & OIL 

• Iran’s Massive Oil Fleet Begins To Move by Tyler Durden via Zero Hedge
• The Global Economy Didn’t Change, Views Of QE Did by Jeffrey Snider via Alhambra Partners
• Why Low Oil Prices Didn’t Help The Economy by James Hamilton via OilPrice.com
• An Impossible Trinity For The Economy via Myles Udland via Business Insider
• 10 Biggest Risk To US Economy Rebuked by Nicole Sinclair via Yahoo
• What’s Really Driving Oil Prices by Mark DeCambre via MarketWatch
• Oil Says Economy Improving, Bonds Disagree by Paul Lim via Time/Money
• Expectations For Doha May Be Inflated by Marc Chandler via Real Clear Markets

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MUST READS

• Has The Fed Bankrupted The Nation by Danielle DiMartino-Booth
• Pension Reality Much Worse Than You Think by Joshua Rauh via Hoover Institution
• Uber Rich-U by Salil Mehta via Statistical Ideas
• The S&P 500 Is Obscenely Overvalued by John Hussman via Hussman Funds
• Truth Discovery Takes Time by Vitaliy Katsenelson via Institutional Investor
• Estimating Future Stock Returns by David Merkel via Aleph Blog
• Fading S&P 500 Volatility by IronMan via Political Calculations
• Surpise: ACA Will Cost $136 Billion More, Cover Less by IBD
• What Separates Extraordinary Investors by Jesse Felder via The Felder Report

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“I will tell you my secret: I never buy at the bottom and I always sell too soon.” – Baron Nathan Rothschild

via http://ift.tt/1SQxZmG Tyler Durden

After a week like this:

• Retail Sales Tumble
• Industrial Production Plunge
• Inventories-to-Sales Surge
• 30Y Yield UNCH
• Oil UNCH
• Small Caps +3%

This seemed appropriate:

 

This was the worst two-week period for US Macro surprises since Dec 1st 2015…

 

And GDP expectations plunged…but stocks don't care…

 

On the week it was all about a huge short-squeeze… This was the 2nd biggest weekly short-squeeze since Dec 2011

 

Which left the Small Caps and Trannies top on the week..

 

Energy and Financials had a good week but faded notably the last 2 days…

 

Stocks also decoupled from Oil prices…

 

And Bonds ain't buying it…

 

Treasury yields fell notably today, pressing 30Y all the way back to unchanged on the week, flattening 5s30s by around 5bps on the week..

 

The USD Index had a good week (as China devalued) with Swissy weakness offsetting commodity currency weakness…

 

Copper & Crude slipped lower after China data (so it was all stimulus-based hope?) but the big news was the yuuge divergence between gold and silver… This was Silver's biggest week since May 2015

 

The biggest weekly plunge in the Gold/Silver ratio since Aug 2013…

 

Finally this is the week in crude… Unchanged after an epic ramp early on… but today was Crude's biggest drop in 2 weeks ahead of Doha

 

See you all Sunday for Doha headline hockey.

Charts: Bloomberg

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Authored by Bill Bonner of Bonner & Partners (annotated by Acting-Man.com's Pater Tenebrarum),

Positivist Delusions

[ed. note: this article was originally published on March 5 2013 – Bill Bonner was on his way to his ranch in Argentina, so here is a classic from the archives]

We’re still thinking about how so many smart people came to believe things that aren’t true. Krugman, Stiglitz, Friedman, Summers, Bernanke, Yellen – all seem to have a simpleton’s view of how the world works.

 

A bunch of famous people with a simpleton view of how the world works…who not only seriously think the economy can and should be “planned”, but arrogantly believe they are the ones who should do it. It’s a bit like the crazy guy who doesn’t know he’s crazy.

 

They believe they can manipulate the future and make it better. Not just for themselves… but also for everyone else. Where did such a silly idea come from?

After the Renaissance, Aristotelian logic came to dominate Western thought. It was essentially a forerunner of positivism – which is supposedly based on objective conditions and scientific reasoning.

“Give me the facts,” says the positivist, confidently.

“Let me apply my rational brain to them. I will come up with a solution!”

 

Beyond the Herald’s Cry

This is fine, if you are building the Eiffel Tower or organizing the next church supper. But positivism falls apart when it is applied to schemes that go beyond the reach of the “herald’s cry.”

That’s what Aristotle said: Only a small community would work. Because only in a small community would all the people share more or less the same information and interests.

In a large community, you can’t know things in the same direct, personal way. You have no idea who made your sausage or what they put in it. You have to rely on “facts” that are no longer verifiable by direct observation or personal acquaintance. So it’s hard for people to work together in the same way.

In a large community, central planners’ “facts” are nothing more than statistical mush, wishful thinking, and theoretical claptrap – like WMD, GDP, the unemployment rate, and the Übermensch.

Large-scale planning fails because the facts upon which it is built are always unreliable and often completely bogus. It fails also because people don’t really want it.

 

Hidden Agenda

In a small community, the planners and the people they are planning for are close enough to share the same goals. But in a large community, the planners are a small minority. And in a large community, the planners usually have their own agenda… often a hidden one.

They call for stricter law enforcement… while getting campaign contributions from the prison industry. They seek a cure for cancer… and depend on the pharmaceutical industry for job offers. They promote a united Europe… and hope to be its head man.

Large-scale planning provides almost countless opportunities for corruption. But it’s not the dirty dealing that dooms it. It is that the planners don’t know (or care) what people really want… and don’t have the means or the information necessary to achieve it anyway.

 

Friedrich Hayek did extensive work on the nature and distribution of knowledge as a follow-up to his decade-long debate with socialist economists. The latter were never able to refute the arguments that showed that central economic planning is literally impossible. And yet, here we are, with central planners at the helm everywhere in the world. The explanation is not that they somehow convinced themselves of their own BS (although some of them sure did) – the explanation is that there is a hidden agenda.

 

As Nobel Prize-winning economist Friedrich von Hayek observed, the “public information” used by central planners is empty… and most often misleading. But the problem is much more basic than the quality of the information or the corruption involved.

When we think of what people “want,” we are not talking about their conscious, stated desires. We are speaking of what they might be able to get… if allowed to do so… given the facts on the ground.

People in Hell may want ice cream; they won’t get it. But people will do the best they can with what they have to work with. Large-scale central planners can’t help them. Partly because they don’t know what the conditions in the man’s private Hell really are. And partly because they don’t have any ice cream.

You might better describe this process of getting as much of what you want as possible as the progress wrought by evolution, where trials and errors result in “the best we can do.” Not perfect. Not the end of history. Just another step toward a future that is unknowable.

 

The Fatal Conceit

Large-scale central planners fail because they believe three things that aren’t true.

First…that they understand the current conditions (wants, desires, hopes, capabilities, resources) of the community they are planning for.

Second…that they know what the community’s future ought to be.

Third…that they are capable of creating the future they want.

 

The fatal conceit – the erroneous belief that is it actually possible to plan an entire economy.

 

None of those things is more than mere illusion. Together, they constitute what Hayek described as the “fatal conceit that man is able to shape the world around him according to his wishes.”

Central planners cannot know current conditions because that would require an infinite amount of information. It would require, as British philosopher Samuel Bailey wrote in 1840, “minute knowledge of a thousand particulars which will be learnt by nobody but he who has an interest in knowing them.”

The planners have nothing like that. Instead, they have a body of public knowledge, which, as we have seen, is nothing more than popular theories, claptrap, and statistical guesswork.

As to the second point – that the central planners are blessed with some gift that tells them what the future should be for complete strangers – we pass over it without argument.

 

Waiting for the Future

Of course, each man always does his best, at his own level, to shape his world in a way that pleases him. One will want a fat wife…and likely get one. One will want a fortune…and maybe get it, if he is lucky and diligent. One will want to spend his time playing golf…that too, may be within his means.

Each will try. Each will win, lose, or draw, depending upon the circumstances. And the future will happen. But the central planner steps in to try to impose his version of the future. This is a huge mistake.

 

Have you ever asked yourself why we still don’t have the Jetson’s flying cars? The most likely answer is that progress has been set back by more than a century by the imposition of central economic planning. The amount of capital that has been wasted and consumed because of it is simply staggering. It is quite amazing that with perhaps one third or less of the population actually generating real wealth under extremely hampered conditions today, there is still a remarkable rate of progress overall. It is testament to the power of the market economy. Imagine where we could be if it were unfettered.

 

Where evolution is taking us, no one knows. But the large-scale central planner thinks he knows where it ought to go… and he doesn’t mind giving it a shove, disrupting the plans of millions of people in the process.

And as soon as the smallest bits of time and resources are shanghaied for the central planner’s ends rather than those of individual planners, the rate of evolutionary progress slows.

The trials that would have otherwise taken place are postponed or canceled. The errors that might have been revealed and corrected are not discovered. The future has to wait…

 

Extravagant Schemes

But the real danger is this: People are easy to deceive, especially when they only have access to “public information.” Out of range of the herald’s voice, they have no more idea of what is going on than the planners.

They are encouraged to believe that the collective plans are beneficial. Often, they go along with the gag – for decades – even as the evidence of their daily lives contradicts its premises and undermines its promises.

 

Several of the world’s most ruthless central planners and mass murderers: Hitler, Pol Pot, Stalin, Mao Zedong, Lenin, Kim Il-Sung

 

Even worse: To encourage compliance, ruthless planners – think Lenin, Hitler, Stalin, Mao, Pol Pot, Kim Jong-il – begin purges, cleansings, regulations, famines, deportations, disappearances, tortures, drone attacks, and mass murders.

But their plans are wrecked anyway. Because not only do they retard the future, they also don’t lead to the outcome the planners expect.

 

Breaking a Few Eggs

Typically, the designers argue that the people must make sacrifices but that it will all come right in the end. As Lenin said, “You can’t make an omelet without breaking some eggs.”

People go along with breaking a few eggs (particularly if they belong to someone else) for a while. Ultimately, the problem is the omelet: It never makes it to the table. No “workers’ paradise” ever happens. The War on Drugs (or Poverty…or Crime…or Terror…or Cancer) ends in a defeat, not a victory. Unemployment does not go down.

And if any of these grand programs “succeeds,” it does so at a cost that is far out of balance with the reward. Why do these plans fail? Because that’s not the way the world works.

Life on Earth is not so rational that it lends itself to simpleminded, heavy-handed intervention of the naïve social engineer. Bridges are designed. So are houses. And particle accelerators. Economies are not.

 

Are there actually things the planners are good at? Unfortunately, yes…

Photo credit: Department of Defense

 

It is also true that humans can design and achieve a certain kind of future. If the planners at the Pentagon, for example, decided that a nuclear war would be a good thing, they could bring it about. The effects would be huge. And hugely effective.

But this is the only kind of alternative future that planners are capable of delivering – one that pulverizes the delicate fabric of evolved civilized life.

via http://ift.tt/1SkfnRX Tyler Durden

As the following chart showing the collapse in trading revenue across the banks who have reported Q1 earnings so far shows…

 

… it has been a very bad start to the year for America’s largest, too big to fails/too big to prosecute.

It has been just as bad for bank employees, but while most US banks have seen the occasional drib and drab here and there, nothing compares to Barclays, which in the past 4 months has fired a stunning 8,000 workers.

But while in 2016 the pain is prevalent, as many traders are scared the next round of pink slips may just cost them their job, it’s not all doom and gloom especially when one recalls that, on average, most traders are paid far better than 99% of all other jobs.

And some are certainly more equal than others.

Below we present a breakdown of the highest paying trading jobs, based on an analysis from UK-based Emolument, which has examined London traders’ salary and bonus data at Director level to provide a glimpse into their remuneration profiles. As expected, dealing with more complex financial products provides the best pay. Across every single trading desk, traders receive bonuses that range from 40% (repo traders) to 113% of their annual salary (flow rates traders).

Some other findings:

• Traders specialising in products with a relatively low level of complexity, executed mainly via automated trading systems are paid the least, still totalling an impressive £221,000 annually.
• Predictably, trading in exotics, some of the most intricate products available, relies heavily on highly sophisticated and technical traders.
• Being paid 1.7 times more than more straightforward repo products traders makes up for the extra stress and hard work.

At the end of the day, it’s all about the bonuses:

Across all trading desks, basic salaries are in a similar range. Bonuses is where the real gap occurs. Highly incentivised, trading Directors on an exotics desks will expect a bonus roughly equal to their annual salary, while repo traders are likely to earn bonuses totalling 50% of annual salaries only.

Alice Leguay, COO & Co-Founder at Emolument.com said: ‘Automation is coming to finance – artificial intelligence, robotics and new disruptive technology are taking over some of the traditional trading functions. We have seen many flow credit and flow rates trading desks  being made redundant as banks are under pressure to adopt these new automated solutions in order to cut costs and boost efficiency. For now, the more complex and high value tasks are safe and well rewarded and we do need the human touch in the work place, but there is no telling what technologies will be available to trading floor staff in the coming year. Traders should focus on constantly developing their technical skills and concentrate on high value tasks in order to make themselves indispensable.’

* * *

So for all those traders who still demonstrate a unique skillset (can make money and don’t spend 8 hours a day on twitter) congratulations: you may be in luck for a few more years. For all those others who are about to lose their jobs to Johnny 5 or some malfunctioning Secaucus-based vacuum tube, or a pimply 22 year old Math PhD, our condolences: McDonalds is hiring.

via http://ift.tt/1qZUYWm Tyler Durden

As we’ve covered extensively in the past (here and here), home prices and vacant offices in Calgary have been a complete disaster as a result of the collapse in oil prices. Recall the troubling divergence in home prices that Calgary is experiencing in relation to other major cities in Canada.

And also, vacancy rates ebb and flow with the price of crude.

 

And now with the price of crude hovering around $40/bbl, CBRE Canada estimates that Calgary’s downtown office vacancy rate was 20.2% as of March 31, nearly twice as high as the 11.8% a year ago. This means that one in five offices is now vacant.

It says vacancies are at historic highs, with eight million of the downtown area’s 41 million square feet of office space available and subleases making up close to half of what’s on offer

With three million square feet of office space under construction still, experts say that it could be well over a decade before the market rebalances.

Calgary’s downtown commercial office space vacancy rate has
risen to 20.2%, according to CBRE.

As CTV News adds, “it’s the first time since 1983 that more than one fifth of office space was available in downtown Calgary, and the city is on track to hit a new record above the 22 per cent rate hit that year”, citing Greg Kwong, regional managing director at CBRE.

“It’s going to get a little bit worse before it gets better,” said Kwong. “Unless oil jumps back to $80 a barrel, I don’t think we’ll go down to the teens.”

Or, we may, if oil goes back to $30 or lower.

How bad is the damage: “prices have dropped to an average of $20.97 per square foot for high-end class A office space from $29.23 in the same quarter a year ago, CBRE added.”

The dramatic reversal in the local markets, duly reported here for the past year, has caught Kwong by surprise, and he is stunned at how quickly Calgary’s market has reversed from the 2009-2014 trend, when it had the lowest vacancies and highest rental rates in Canada.

“It was amazing how robust the market was in November 2014, and literally within four or five months it was amazing how ugly it got here,” said Kwong.

Alas, that’s what happens when the one commodity that powers the city’s economy has its price cut by 60%.

Meanwhile, Calgary’s office market has been hit hard as oil and gas companies continue to cut jobs and consolidate office space due to low crude prices. Barclay Street Real Estate released a report Tuesday saying MEG Energy is trying to sublease more than 300,000 square feet, Shell Canada more than 183,000 square feet and Penn West Energy 73,000 square feet.

And once the bankruptcies begin in earnest, it will only get worse.

For now Calgary largely an outlier in Canada’s downtown office market, with Toronto’s vacancies up only slightly in the quarter to 5.3%, while Vancouver’s dropped to 8.8%, according to CBRE. However, we all know the “Vancouver story” by now.

Ultimately the real number is even worse as vacancy rates also don’t account for the unknown amount of near-empty office space that companies haven’t tried to sublease because there’s no market for them, said Kwong. “You’ll see some buildings where there are five people on a 40,000-square foot floor,” he said.

But not for long. As for the immediate future, things are only set to get worse:

Dan Lannon, a senior vice-president at real estate company Colliers International, said with about three million square feet of office space under construction, the downtown core could have 11 million square feet of empty offices in 2018. That’s the equivalent of about 647 NHL rinks.

 

“The fact is we’re adding a lot of office space to our market that our city really doesn’t need,” said Lannon.

With Calgary absorbing an average of about 550,000 square feet of office space per year over the past 15 years, Lannon said it “could be well over a decade before the city returns to a balanced market.”

And that assumes oil returns to its historic prices.

via http://ift.tt/1qv6XKG Tyler Durden

Excerpted from 50-Year Wall Street Veteran Joe Rosenberg's Op-Ed via The Wall Street Journal,

It takes an immigrant like me to parse the poison that Bernie Sanders is peddling to the naive youth of this country. It takes someone who has experienced socialism’s failures firsthand—as I did, initially as a small child, later as a young adult—to see why Sen. Sanders is succeeding: We elders, immigrants and native-born alike, have failed to teach our children and grandchildren about the economic history and false promises of the myriad forms of socialism that infest our world.

More than 75 years ago, I landed at Ellis Island as a 6-year-old child. My family had fled the despotism of National Socialism that had been foisted onto the gullible (albeit literate) German people. We were far from the only victims of collectivism. As all of us know but some refuse to admit, collectivism destroyed the economies of places like China, Russia and Cuba, and ruined the lives of millions of people.

Nine years after I arrived in America, the new state of Israel came into existence, making Jews like me both proud and curious. When I was 18, imbued with idealistic fervor, I decided to help the young nation grow and prosper by working the soil. Off I went to further the goals of social justice by joining a kibbutz, or communal farm. There the painful reality of the maxim Karl Marx popularized, “from each according to his ability, to each according to his needs,” hit home.

As an example of kibbutz ideology: Does it make sense for a person running the washing machines in the laundry to be receiving exactly the same pay and living benefits as someone who might be the community doctor after going to medical school? That may sound like an extreme example, but the same principles apply throughout the economic structure of a collectivist economy. Unlike Chinese or Russian collectivism, Israel’s was voluntary—but insane nonetheless.

I left Israel three years later, in 1954, because I was an American citizen and the time had come for me to serve my country. I was drafted and inducted into the U.S. Army. After two years of active duty, stationed back in my native Germany, I realized that my future lay in the capitalist U.S., not in Israel.

I came to see that I needed a college degree to get ahead in the competitive society of my home country. Because I had to work during the day to support myself and my family, I attended classes in the evening, taking eight years to get a bachelor’s degree in finance and an M.B.A. While going to night school, I got my first Wall Street job.

My Wall Street is the real Wall Street—not the imaginary one that Bernie Sanders demonizes daily. My Wall Street is a place filled with opportunities to succeed, even for an immigrant like me without any connections or relatives in the business. Here, I could reach the pinnacle of my profession based on merit.

Unlike a certain politically ambitious Brooklynite-turned-Vermonter, I did not have to denigrate others to advance my career. To the contrary, I found wonderful mentors who were happy to reward me for hard work. Much of the job was difficult and far from fun. But I rose—and occasionally fell a bit—based on what I produced, not how many people I could get to toe some party line.

My experience is far from unique. I have many colleagues who left supposed paradises, socialist countries like China, Russia and Greece, and now strive to succeed on Wall Street. They’re seeking not a handout but a piece of the American Dream, just as I did. When I entered the business Wall Street was a far clubbier place than today. It has increasingly become a meritocracy open to people of every background.

Sen. Sanders ought to ask some of the immigrants who work on Wall Street what they think about the opportunities that this country affords, rather than going to college campuses and attacking the financial industry to further his own political ends. He should ask some recent immigrants from India and the emerging world what the true meaning of income inequality is.

Bernie Sanders and I are poster children for what poor Jews from Brooklyn or Germany can accomplish in this great land of opportunity. So I ask him: Please stop tearing down the country that has been so good to both of us.

via http://ift.tt/22AdqAl Tyler Durden

“Central bankers may have their hearts in the right place, but no matter how much more they do, they end up with more debt and no progress,” rages CNBC’s Santelli which, as Vine Street’s Yra Harris notes, “is enabled by a potemkin village of counterfactuals,” before embarking on the most vitriolic take-down of the “atavistic remnant of a colonial past” – The IMF. Simply put, as Santelli exclaims, “the world has really lost its way,” and  Harris is in full agreement, concluding with a simple message to the world’s central banks – “Stop!”

 

Put down any sharp objects and ensure there is no fluid in your mouth as Yra and Rick unleash 210 seconds of uncomfortable fact-bombs on the American public… (as Santelli laments “I never saw anyone’s veins pop like that before.”

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