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While the so-called “experts” were adamant in repeating that one must ignore all Q1 economic data (because of harsh weather you know), one thing the same “experts” pounded the table on was the earnings growth in 2014 which confirmed that the Fed was correct in tapering and that the corporate sector was well on its way to achieving “escape velocity” and a stable recovery. And then this happened…
Oh, and this too.
h/t @Not_Jim_Cramer
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Last week on
The Independents, Reason
contributor Thaddeus Russell—who teaches at Occidental College,
ground zero for
campus rape politics—joined panelist Remi Spencer (a defense
attorney and former prosecutor) to discuss a
proposal by Sens. Kirsten Gillibrand (D-N.Y.) and Claire
McCaskill (D-Missouri) to have the federal government spend an
additional $100 million-plus to combat sexual assault on
campus.
This is the kind of subject tailor-made for simplistic,
finger-wagging politics—what kind of moral monster
wouldn’t want to reduce campus rape?—but at The
Independents, as at Reason, we are always interested
in unintended consequences and individual rights, and do not take
at face value the moral superiority of those who would spend our
money and enable prosecutors (including de facto prosecutors with
zero track record of criminal investigation). Take a look:
The classic treatment of this topic is Cathy Young’s January
cover story, “Guilty
Until Proven Innocent: How the government encourages kangaroo
courts for sex crimes on campus.” One of many reasons you
should subscribe to
Reason today!
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Look
around the country and you’ll find a strong correlation between
e-cigarette bans and progressivism, writes Matt Welch. Los Angeles
joined New York, Boston, and Chicago with its prohibition, and now
D.C. is threatening to get into the act with regulation from the
Food and Drug Administration. The same moralizing impulse is
leading to blue-city bans on everything from plastic bags to fried
chicken joints to bottled water. These are puritan progressives and
they will take the fun out of anything.
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One look at the level of Citigroup stock pre-open and one could get the impression that the bank had a whopper of a result. And, on the surface at least, it did, after it reported $1.30 in EPS, beating the $1.14 expected and revenues of $20.1 billion also beating the $19.4 billion expected if still a modest decline from the comparable result a year ago. What was not emphasized is that the bulk of the revenue, and thus earnings, upside was courtesy of the insolvent and bailed out Citi Holdings, where the top line increased by 58% from $914MM to $1.442Bn and the Net Loss shrink from $0.8 billion to $0.3 billion, while Citicorp – the main operating subsidiary – saw revenues decline by 5% from $19.7 billion to $18.7 billion, as Net Income dropped by 8% from $4.8 Billion to $4.4 billion.
In other words the entire beat was due to fudging the holdings and income statement in the rolloff, bailed out Holdings division (without which Citi wouldn’t exist).
Why did Citi have to resort to such an algo-fooling cheap shoot? Simple: operations in its core banking group, the bread and butter of New Normal banks, Investment Banking and Fixed Income Markets, both declined by 10% and 18% respectively, as the US capital markets continue to deteriorate, leading to an 11% dump in the most important, Institutional Clients Group, EBT.
But what was worst, and naturally will not be discussed at all by the peanut gallery, about Citi’s just announced results is that the amount of Citigroup mortgage originations – that key aspect of the trumpeted “housing market recovery” – did what it has done at every other bank. It plunged. Only at Citigroup, it plunged so badly, it just reached a new record low which at $5.2 billion is a 71% drop from a year ago! Long live the housing recovery… in which nobody seems to be participating.
And speaking of loan creation, based on reported data, so far in Q1, three of the four big banks: Citi, Wells and JPM have reported that total loan issuance is negative, something which drastically differs from what the Fed reports in its weekly commercial bank update report.
We eagerly look forward to the rest of the banks to conclude reporting Q1 numbers so we can determine just how wildly the Fed’s H.8 statement is fabricating data.
via Zero Hedge http://ift.tt/1hAYgaC Tyler Durden
I had a review out in this
weekend’s
Wall Street Journal about the new book from Matt Taibbi,
The Divide: American Injustice in the Age of the Wealth
Gap. Here’s how the review begins:
When the polemicist who made Goldman Sachs synonymous with
a “vampire squid” writes a book called “The Divide,” with a
subtitle that references “the wealth gap,” one may reasonably
anticipate some undergraduate-style fist-shaking about income
quintiles and the predatory rich. But one would be wrong. Matt
Taibbi’s “The Divide” is primarily concerned with the grotesquely
unequal application of American justice, between the
too-big-to-jail Wall Street elite and the too-poor-to-fight
minority underclass. “The cleaving of the country into two
completely different states—one a small archipelago of
hyperacquisitive untouchables, the other a vast ghetto of
expendables with only theoretical rights,” Mr. Taibbi maintains,
“is a terrible story, and a crazy one.” The characterization is
typically overwrought, but the general indictment is broadly
correct.
And here is how it ends:
But at heart “The Divide” is a face-slap, not a legal brief.
Though Mr. Taibbi doesn’t couch it in these terms, his warning is
all about moral hazard, in two senses of the phrase. When swindlers
know that their risks will be subsidized, and their potential
crimes will be punishable only through negotiated corporate
settlements, they will surely commit more crimes. And when most of
the population either does not know or does not care that the
lowest socioeconomic classes live in something akin to a police
state, we should be greatly concerned for the moral health of our
society.
Reason on Taibbi
here, including this
2007 interview.
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Not entirely surprising given the data from the automakers in recent weeks, but the 3.4% jump in auto dealer sales provided enough juice to push overall retail sales in the US up 1.1% MoM (beating expectations of 0.8% and with last month’s data revised higher). This is the biggest month-over-month jump in retail sales since Sept 2012. The question, of course, is whether this auto spike is sustainable to support the overall sales environment or will the ever lowering credit standards of the subprime auto loan market lead to the inevitable collapse in a few months?
So now we must hope for more bad weather so that we can have more pent-up demand for over-allocation to dealer lots?
One place there was no pent up demand overflow was in electronics sales, which in addition to gas stations (expected following the drop in gas prices), and miscellaneous store retailers, posted the largest M/M drop in March, declining by 1.6%.
Finally, putting the long-term retail sales trajectory in perspective, here is the M/M and Y/Y change in the retail sales control group:
via Zero Hedge http://ift.tt/1gvFr4h Tyler Durden
Brendan
Eich’s departure as CEO of Mozilla in the backlash over his 2008
donation of $1,000 to the campaign for Proposition 8, the
California initiative that limited marriage to opposite-sex
couples, has sparked a new backlash—over free speech. There has
been some absurdly overheated rhetoric on the right, with mentions
of the gulag, fascists, jihad, and Torquemada. But even gay authors
who champion marriage equality, such as Andrew Sullivan, Frank
Bruni, and Dale Carpenter, have assailed a new orthodoxy and
intolerance in the liberal camp.
There is no question that Eich’s resignation under pressure
highlights a larger trend: the increasingly prevailing view that
all opposition to same-sex marriage is bigotry akin to racism. In
many ways, this attitudinal shift has helped same-sex marriage (for
instance, by advancing the judicial opinion that discrimination
against gay unions has no rational basis). But if it turns to
persecution of dissent, warns Cathy Young, the consequences will be
bad not only for intellectual freedom and the cultural climate but
ultimately, perhaps, for gay equality as well.
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The last few days have seen Western anti-Russian rhetoric and red lines escalate dramatically as the military and economic issues come to light in any push back against Putin’s pressure. From NatGas export fallacies to “boomerang”-ing sanctions, the west seems stuck (for now).. which brings up the question – why is China and Russia making huge investments in commodity-miners? Russia’s largest gold miner Polyus Gold is considering a complete onshoring of its activities and China is buying a huge Peruvian copper mine from Glencore. The outcome would appear to enable both firms to do away with USD but not having to buy this resource in the market… just mine it?
Russia is onshoring its commodity miners…
Polyus Gold, Russia’s biggest gold miner, is considering state proposals to encourage the rebasing of Russian firms currently owned by offshore entities and intends to explore these issues with the government, the company said on Friday.
…
Russian President Vladimir Putin has been pushing for the so-called “de-offshorisation” of the Russian economy, whereby companies with offshore entities re-register them in Russia and pay taxes in Russia.
…
Earlier this week First Deputy Prime Minister Igor Shuvalov urged companies listed on foreign stock exchanges to consider relisting in Moscow to protect themselves from sanctions imposed by the West over Russia’s annexation of Crimea.
Polyus’s biggest shareholder is Russian tycoon Suleiman Kerimov, who owns 40.22 percent.
and China is buying commodity miners…
A Chinese consortium is buying Glencore Xstrata’s copper mine in Peru in a $6bn (£3.6bn) all-cash deal, marking one of China’s largest mining acquisitions.
The consortium is led by MMG Limited and includes China’s Citic Metal.
The acquisition is subject to regulatory approvals but all parties expect the deal to be done by the end of September.
Analysts expect Glencore to use the proceeds from the sale to reduce its debt.
The mine is expected to produce more than 450,000 tonnes of copper a year in its first five years.
China relies heavily on the metal, which is used in electronics production.
Another peg in the anti-USD hegemony board? Shift each nation’s need to use USD to purchase critical resources and instead own them away from control by western states…?
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While US equities have spent much of the past several weeks under pressure (the NASDAQ bio tech index has fallen over 21%, the NASDAQ Comp is down over 8% and the S&P500 is down over 4%), BofAML’s Macneil Curry is concerned that the VIX index suggests conditions should deteriorate further before greater signs of a base materialize.
Since 2012 most tradable market lows have come only after the VIX has pushed north of 20%. It is currently only 17%.
In such an environment, US Treasuries should rally further. Indeed, US 10yr yields have broken below key resistance at 2.608%/2.632%, exposing the long term pivot zone of 2.469%/2.399%. The Japanese ¥ should benefit as well. The 200d in $/¥ is key (100.81) A break below would do significant psychological damage and force out many trend followers.
Chart of the week: The VIX is not where it needs to be
While US equities have fallen sharply, the VIX index still shows signs of complacency. Historically, most tradable equity bottoms transpire after the VIX Index trades above 20%.
With it currently residing at 17%, the S&P500 can deteriorate further towards 9m trendline support / 200d avg at 1792/1761
Source: BofAML
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