Tag: finance

First it was Carl Icahn, then Larry Fink, and now it is Fed “bellwether” Bullard who take the ECB’s NIRP and doubles down with a “Taper”… and NIRP

• BULLARD SAYS THINGS ARE LOOKING BETTER
• BULLARD SAYS JOBS PICTURE LOOKING BETTER
• BULLARD SAYS QUESTION IS WHETHER JOBS PICKUP SUSTAINABLE
• BULLARD SAYS A STRONG JOBS REPORT FOR NOVEMBER WOULD INCREASE PROSPECT TO TAPER IN BOND BUYING IN DECEMBER

Yeah, everyone is falling for that one again. Sure. For now however, EURUSD is buying it, and is down 100 pips on the combined action of the NIRP rumor and the possibilty of a December Taper.

 

But the punchline in the aftermath of the ECB rumor on just this is that the Fed just doubled down on the ECB’s ownc currency war gambit:

• BULLARD WOULD LIKE STUDY OF NEGATIVE RATE FOR EXCESS RESERVES

In other words, it will soon cost everyone to keep money with the bank. As for NIRP on reserves: will banks consider lending out reserves if they have to pay a whopping 25 bps on amounts when they can use the same reserves as deposit-based collateral to buy ES and generate 20% annual returns via the S&P? Why no. They would not.

Finally, we would like to clarify that we were only joking when last night we tweeted that …

Issuance of new $100 bill delayed as Fed decided to add “use by” expiration date on each one

— zerohedge (@zerohedge) October 5, 2010

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/S4FA7JwQp8s/story01.htm Tyler Durden

Given our earlier comment on the collapse of European earnings, it is perhaps unsurprisng that the CEB is throwing everything at the problem of a strong EUR:

• *ECB SAID TO WEIGH MINUS 0.1% DEPOSIT RATE IF MORE EASING NEEDED

Of course, we await the official denial but suspect this is nothing more than attempt to gauge market response to the policy idea (just as Draghi did in May). For now, EURUSD has dumped to 1.3480, and US equities are soaring…

Reaction:

 

 

Deja Vu:

• May 2, 2013: DRAGHI SAYS ECB HAS OPEN MIND ON NEGATIVE DEPOSIT RATE

And the rapid response when the reaction was seen last time:

European Central Bank Governing Council Member Ewald Nowotny told CNBC on Friday that the markets over-interpreted ECB President Mario Draghi's comments on negative deposit rates at Thursday's press conference. "Well I think the markets over-interpreted this point. Of course, there is always some kind of technical discussion about it but there is no specific plan in that direction," Nowotny said in Bratislava. "I personally think this is something where one really has to analyze very carefully the effects, side effects, psychological effects so this is not something that is of relevance in the immediate future."

 

But Nowotny said this was a "very sensitive issue" that would need "much more information, much more analysis than we have available at this moment." He warned it could in fact dry up the flow of credit. "This is one of the possible outcomes," he said.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/bOn3xMGmnK0/story01.htm Tyler Durden

Given our earlier comment on the collapse of European earnings, it is perhaps unsurprisng that the CEB is throwing everything at the problem of a strong EUR:

• *ECB SAID TO WEIGH MINUS 0.1% DEPOSIT RATE IF MORE EASING NEEDED

Of course, we await the official denial but suspect this is nothing more than attempt to gauge market response to the policy idea (just as Draghi did in May). For now, EURUSD has dumped to 1.3480, and US equities are soaring…

Reaction:

 

 

Deja Vu:

• May 2, 2013: DRAGHI SAYS ECB HAS OPEN MIND ON NEGATIVE DEPOSIT RATE

And the rapid response when the reaction was seen last time:

European Central Bank Governing Council Member Ewald Nowotny told CNBC on Friday that the markets over-interpreted ECB President Mario Draghi's comments on negative deposit rates at Thursday's press conference. "Well I think the markets over-interpreted this point. Of course, there is always some kind of technical discussion about it but there is no specific plan in that direction," Nowotny said in Bratislava. "I personally think this is something where one really has to analyze very carefully the effects, side effects, psychological effects so this is not something that is of relevance in the immediate future."

 

But Nowotny said this was a "very sensitive issue" that would need "much more information, much more analysis than we have available at this moment." He warned it could in fact dry up the flow of credit. "This is one of the possible outcomes," he said.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/bOn3xMGmnK0/story01.htm Tyler Durden

It seems, despite the Fed’s efforts to unscamble the treasury complex’s eggs, that the rate shock of a taper/no-taper decision has become sticky in the housing market. With the fast money exiting, existing home sales missed expectations for the 4th month in a row – dropping to the lowest annualized number since June (very much against the trend in recent years). This is the biggest month-over-month drop in existing home sales since June 2012 but, of course, NAR has an excuse… “low inventory is holding back sales.” So, in other words, they could sell loads more houses if only there were more available for sale (or prices were lower…)…

This is not a “seasonal” thing… and in fact is very much against the seasonals of the last few years…

 

 

Via NAR,

Lawrence Yun, NAR chief economist, said a flattening trend is expected. “The erosion in buying power is dampening home sales,” he said. “Moreover, low inventory is holding back sales while at the same time pushing up home prices in most of the country. More new home construction is needed to help relieve the inventory pressure and moderate price gains.”

 

The median time on market for all homes was 54 days in October, up from 50 days in September, but well below the 71 days on market in October 2012. Short sales were on the market for a median of 93 days, while foreclosures typically sold in 46 days, and non-distressed homes took 53 days. Thirty-six percent of homes sold in October were on the market for less than a month.

 

Total housing inventory at the end of October declined 1.8 percent to 2.13 million existing homes available for sale, which represents a 5.0-month supply at the current sales pace; the relative supply was 4.9 months in September. Unsold inventory is 0.9 percent above a year ago, when there was a 5.2-month supply.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/91dmTlIxZTg/story01.htm Tyler Durden

Well that escalated quickly. Just a week ago we noted that President Obama’s approval rating trajectory was following an increasingly Dubya-esque route and sur eneough, today, a CBS poll shows that a mere 37% “approve” of the job Obama is doing. This is the same poor approval rating as Bush II’s second term at this time and perhaps more ironically comes only a month or so after he crowed of the Republicans’ collapsing polling results during the debt-ceiling debacle. In aggregate, as RealClearPolitics shows, Obama’s approval rating has collapsed to the lowest on record (and likewise his disapproval rating has soared). We await the next ‘distraction’ from the administration’s dismal state of affairs…

 

Simply out – it’s been a one-way street since the election.. Over-promise and under-deliver – the mantra of every 2nd term president…

 

Source: RealClearPolitics

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/I0LDSbSG5Sc/story01.htm Tyler Durden

Well that escalated quickly. Just a week ago we noted that President Obama’s approval rating trajectory was following an increasingly Dubya-esque route and sur eneough, today, a CBS poll shows that a mere 37% “approve” of the job Obama is doing. This is the same poor approval rating as Bush II’s second term at this time and perhaps more ironically comes only a month or so after he crowed of the Republicans’ collapsing polling results during the debt-ceiling debacle. In aggregate, as RealClearPolitics shows, Obama’s approval rating has collapsed to the lowest on record (and likewise his disapproval rating has soared). We await the next ‘distraction’ from the administration’s dismal state of affairs…

 

Simply out – it’s been a one-way street since the election.. Over-promise and under-deliver – the mantra of every 2nd term president…

 

Source: RealClearPolitics

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/I0LDSbSG5Sc/story01.htm Tyler Durden

All “recovery watchers” are urged to look somewhere else than the just released monthly Caterpillar dealer retail sales. Because while in September there was some hope that North American industrial demand may finally be picking up when retail sales on the continent posted the first two month sequential increase since 2012 even as the rest of the world was stuck deep in negative territory, that hope too was just been dashed with October North American retail sales posting the first decline of -2% since July. And unfortunately while North American sales just rejected any glimmer of a localized recovery, the rest of the world just keeps getting worse and worse, with negative sales prints across the board for every region – the first time this has happened since February 2010. The only difference is that then the trend was higher. Now, well, it isn’t.

As for the rest of the CAT story: we have covered it more than enough in the past – find more here, here, here and here. And then there is, of course, Jim Chanos.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/jWC0_0w11Iw/story01.htm Tyler Durden

Talking-heads and commission-takers have momentum-chased clients’ hard-earned money into Europe’s ‘what works now’ markets – on the basis of what has now proved to be entirely fallacious macro- and micro-fundamental improvement (as we noted here and here). But, while “whatever it takes” has smashed bond spreads lower and has blown stock prices higher; most critically, the ‘confidence’ has seen the EUR rise almost 15% against the USD from its July 2012 “whatever It Takes” lows. The effect of this EUR strength is to collapse earnings growth expectations as European competitiveness is crushed (core or periphery). Of course, bulls can rest assured, as the following chart shows, 2014 is expected to hockey-stock back to record EPS growth (just like 2013 was supposed to?).

 

So it would seem, “whetever it takes” now means – jawbone the EUR down whenever we can… (and we wonder what that will do to US earnings as the USD is ramped)…

 

Source: UBS

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/l_8LQ0FP5CM/story01.htm Tyler Durden

Talking-heads and commission-takers have momentum-chased clients’ hard-earned money into Europe’s ‘what works now’ markets – on the basis of what has now proved to be entirely fallacious macro- and micro-fundamental improvement (as we noted here and here). But, while “whatever it takes” has smashed bond spreads lower and has blown stock prices higher; most critically, the ‘confidence’ has seen the EUR rise almost 15% against the USD from its July 2012 “whatever It Takes” lows. The effect of this EUR strength is to collapse earnings growth expectations as European competitiveness is crushed (core or periphery). Of course, bulls can rest assured, as the following chart shows, 2014 is expected to hockey-stock back to record EPS growth (just like 2013 was supposed to?).

 

So it would seem, “whetever it takes” now means – jawbone the EUR down whenever we can… (and we wonder what that will do to US earnings as the USD is ramped)…

 

Source: UBS

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/l_8LQ0FP5CM/story01.htm Tyler Durden

Following several months of disappointing retail sales, and two months of missed expectations, October finally saw the best beat in headline expectations since April, with retail sales rising 0.4% vs 0.1% expected. However, as has been the case in all of 2013, the bulk of this beat was driven by car sales, which rose by 1.3%, leaving sales ex autos beating by the tiniest of fractions at 0.2% vs 0.1% expected, and ex autos and gas +0.3%, vs 0.2% expected.

Looking at the components, following month after month of clothing store
sales misses, this category finally posted a modest 1.4%
rebound, together with an increase in Electronic and Sporting goods
sales, amounting to 1.4% and 1.6%, respecitvely. This was offset by the
traditionally strong Building materials sales which declined by 1.9% in
October.

 

Unlike the exuberant inflation-spree that government-provided CPI showed during the Fed’s QE2, since the start of QE3, inflation data (according to the never-manipulated government providers) has been on a downtrend. The latest print  – at expectations of 1.0% year-over-year – is the lowest CPI since October 2009. What is perhaps more notable is the drop into deflation on MoM basis (CPI -0.1% MoM vs +0.1% exp). Of course, the market’s reaction is exuberance as this clearly gives the Fed a green light to provide more life-giving liquidity to enable nominal stock prices to rise. However, a glance at the chart below might just remind traders (and the Fed) of the Einsteinian foolishness that expectation.

 

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/NZhq3jr6m5c/story01.htm Tyler Durden