Tag: news

JPM’s head quant Marko Kolanovic is best known for timing the market’s inflection points and quantifying – in plain English – the marginal buying and selling technicals at any given moment. In his latest overnight note he does not disappoint, explaining in simple terms “what the fate of the market rally is.” We will give readers his answer… tomorrow.

For now we wanted to focus on something we have never seen from Kolanovic before: an outright foray into both social commentary and politics with his demolition of Buffett’s insipid, hackneyed, and, according to some, downright idiotic, assessment that “the babies being born in America today are the luckiest crop in history.“

Here’s why:

Babies born in America today – the luckiest crop in history?

This statement has been used recently in the context of the outlook for the US economy (W. Buffet’s annual letter) and upcoming US presidential elections (M. Romney). The statement encapsulates a positive view on the US economy and downplays prospects of significant political changes in the US (it also assumes a link between an individual’s luck and US GDP growth).

 

While we do not take either a glass half-full or glass half-empty view on the current state of US economy, there are good reasons to believe that ‘the luckiest generation in history’ statement is overly optimistic. US primary results show a very strong lead for D. Trump in the Republican Party, and a surprisingly good showing for B. Sanders. We believe this indicates that a significant part of the electorate disapproves of the current political establishment and feels left behind by the new economy (e.g. voters may not agree with W. Buffet that an average upper-middle class American today has a better living standard as compared to John D. Rockefeller Sr.).

 

Over the coming months, uncertainty about the US election outcome may result in increased risk aversion and volatility in certain segments of the US Equity market.

Needless to say, we fully agree with Kolanovic.

via Zero Hedge http://ift.tt/21O6Ivl Tyler Durden

“There are no signs of a US recession anytime soon”… apart from these nine charts that is..

 

Source: @DonDraperClone

Of course, even The Fed is forced to admit that recession probabilities are rising fast…  

The latest reading
from last November is higher than all but 3 months (in the last 50
years) when a recession did not immediately proceed.

via Zero Hedge http://ift.tt/1X2X5C9 Tyler Durden

Submitted by Andrew Bacevich via TomDispatch.com,

Whether or not Donald Trump ultimately succeeds in winning the White House, historians are likely to rank him as the most consequential presidential candidate of at least the past half-century. He has already transformed the tone and temper of American political life. If he becomes the Republican nominee, he will demolish its structural underpinnings as well. Should he prevail in November, his election will alter its very fabric in ways likely to prove irreversible. Whether Trump ever delivers on his promise to "Make America Great Again," he is already transforming American democratic practice.

Trump takes obvious delight in thumbing his nose at the political establishment and flouting its norms. Yet to classify him as an anti-establishment figure is to miss his true significance. He is to American politics what Martin Shkreli is to Big Pharma. Each represents in exaggerated form the distilled essence of a much larger and more disturbing reality. Each embodies the smirking cynicism that has become one of the defining characteristics of our age. Each in his own way is a sign of the times.

In contrast to the universally reviled Shkreli, however, Trump has cultivated a mass following that appears impervious to his missteps, miscues, and misstatements. What Trump actually believes — whether he believes in anything apart from big, splashy self-display — is largely unknown and probably beside the point. Trumpism is not a program or an ideology. It is an attitude or pose that feeds off of, and then reinforces, widespread anger and alienation.

The pose works because the anger — always present in certain quarters of the American electorate but especially acute today — is genuine. By acting the part of impish bad boy and consciously trampling on the canons of political correctness, Trump validates that anger. The more outrageous his behavior, the more secure his position at the very center of the political circus. Wondering what he will do next, we can’t take our eyes off him. And to quote Marco Rubio in a different context, Trump “knows exactly what he is doing.”

Targeting Obama's Presidency

There is a form of genius at work here. To an extent unmatched by any other figure in American public life, Trump understands that previous distinctions between the ostensibly serious and the self-evidently frivolous have collapsed. Back in 1968, then running for president, Richard Nixon, of all people, got things rolling when he appeared on Laugh-In and uttered the immortal words, “Sock it to me?” But no one has come close to Trump in grasping the implications of all this: in contemporary America, celebrity confers authority. Mere credentials or qualifications have become an afterthought. How else to explain the host of a "reality" TV show instantly qualifying as a serious contender for high office?

For further evidence of Trump’s genius, consider the skill with which he plays the media, especially celebrity journalists who themselves specialize in smirking cynicism. Rather than pretending to take them seriously, he unmasks their preening narcissism, which mirrors his own. He refuses to acknowledge their self-assigned role as gatekeepers empowered to police the boundaries of permissible discourse. As the embodiment of “breaking news,” he continues to stretch those boundaries beyond recognition.

In that regard, the spectacle of televised “debates” has offered Trump an ideal platform for promoting his cult of personality. Once a solemn, almost soporific forum for civic education — remember Kennedy and Nixon in 1960? — presidential debates now provide occasions for trading insults, provoking gaffes, engaging in verbal food fights, and marketing magical solutions to problems ranging from war to border security that are immune to magic. For all of that we have Trump chiefly to thank.

Trump’s success as a campaigner schools his opponents, of course. In a shrinking Republican field, survival requires mimicking his antics. In that regard, Ted Cruz rates as Trump’s star pupil. Cruz is to Trump what Lady Gaga was to Amy Winehouse — a less freewheeling, more scripted, and arguably more calculating version of the original.

Yet if not a clone, Cruz taps into the same vein of pissed-off, give-me-my-country-back rage that Trump himself has so adeptly exploited. Like the master himself, Cruz has demonstrated a notable aptitude for expressing disagreement through denigration and for extravagant, crackpot promises. For his part, Marco Rubio, the only other Republican still seriously in the running, lags not far behind. When it comes to swagger and grandiosity, nothing beats a vow to create a “New American Century,” thereby resurrecting a mythic past when all was ostensibly right with the world.

On two points alone do these several Republicans see eye-to-eye. The first relates to domestic policy, the second to America’s role in the world.

On point one: with absolute unanimity, Trump, Cruz, and Rubio ascribe to Barack Obama any and all problems besetting the nation. To take their critique at face value, the country was doing swimmingly well back in 2009 when Obama took office. Today, it’s FUBAR, due entirely to Obama’s malign actions.

Wielding comparable authority, however, a Republican president can, they claim, dismantle Obama’s poisonous legacy and restore all that he has destroyed. From “day one,” on issues ranging from health care to immigration to the environment, the Republican candidates vow to do exactly this. With the stroke of a pen and the wave of a hand, it will be a breeze.

On point two: ditto. Aided and abetted by Hillary Clinton, Obama has made a complete hash of things abroad. Here the list of Republican grievances is especially long. Thanks to Obama, Russia threatens Europe; North Korea is misbehaving; China is flexing its military muscles; ISIS is on the march; Iran has a clear path to acquiring nuclear weapons; and perhaps most distressingly of all, Benjamin Netanyahu, the prime minister of Israel, is unhappy with U.S. policy.

Here, too, the Republican candidates see eye-to-eye and have solutions readily at hand. In one way or another, all of those solutions relate to military power. Trump, Cruz, and Rubio are unabashed militarists. (So, too, is Hillary Clinton, but that’s an issue deserving an essay of its own). Their gripe with Obama is that he never put American military might fully to work, a defect they vow to amend. A Republican commander-in-chief, be it Trump, Cruz, or Rubio, won’t take any guff from Moscow or Pyongyang or Beijing or Tehran. He will eradicate "radical Islamic terrorism," put the mullahs back in their box, torture a bunch of terrorists in the bargain, and give Bibi whatever he wants.

In addition to offering Obama a sort of backhanded tribute — so much damage wrought by just one man in so little time — the Republican critique reinforces reigning theories of presidential omnipotence. Just as an incompetent or ill-motivated chief executive can screw everything up, so, too, can a bold and skillful one set things right.

Juan and Evita in Washington?

The ratio between promises made and promises fulfilled by every president in recent memory — Obama included — should have demolished such theories long ago. But no such luck. Fantasies of a great president saving the day still persist, something that Trump, Cruz, and Rubio have all made the centerpiece of their campaigns. Elect me, each asserts. I alone can save the Republic.

Here, however, Trump may enjoy an edge over his competitors, including Hillary Clinton and Bernie Sanders. With Americans assigning to their presidents the attributes of demigods — each and every one memorialized before death with a library-shrine — who better to fill the role than an egomaniacal tycoon who already acts the part? The times call for strong leadership. Who better to provide it than a wheeler-dealer unbothered by the rules that constrain mere mortals?

What then lies ahead?

If Trump secures the Republican nomination, now an increasingly imaginable prospect, the party is likely to implode. Whatever rump organization survives will have forfeited any remaining claim to represent principled conservatism.

None of this will matter to Trump, however. He is no conservative and Trumpism requires no party. Even if some new institutional alternative to conventional liberalism eventually emerges, the two-party system that has long defined the landscape of American politics will be gone for good.

Should Trump or a Trump mini-me ultimately succeed in capturing the presidency, a possibility that can no longer be dismissed out of hand, the effects will be even more profound. In all but name, the United States will cease to be a constitutional republic. Once President Trump inevitably declares that he alone expresses the popular will, Americans will find that they have traded the rule of law for a version of caudillismo. Trump’s Washington could come to resemble Buenos Aires in the days of Juan Perón, with Melania a suitably glamorous stand-in for Evita, and plebiscites suitably glamorous stand-ins for elections.

That a considerable number of Americans appear to welcome this prospect may seem inexplicable. Yet reason enough exists for their disenchantment. American democracy has been decaying for decades. The people know that they are no longer truly sovereign. They know that the apparatus of power, both public and private, does not promote the common good, itself a concept that has become obsolete. They have had their fill of irresponsibility, lack of accountability, incompetence, and the bad times that increasingly seem to go with them.

So in disturbingly large numbers they have turned to Trump to strip bare the body politic, willing to take a chance that he will come up with something that, if not better, will at least be more entertaining. As Argentines and others who have trusted their fate to demagogues have discovered, such expectations are doomed to disappointment.

In the meantime, just imagine how the Donald J. Trump Presidential Library, no doubt taller than all the others put together, might one day glitter and glisten — perhaps with casino attached.

via Zero Hedge http://ift.tt/21NYZNQ Tyler Durden

Late last month, Norwegian PM Erna Solberg proclaimed that if she became convinced that Sweden’s refugee crisis was set to spiral out of control or “break down” (as she called it), she may be prepared to close her country’s borders altogether in what would quite possibly amount to a contravention of Norway’s duties under the Geneva Convention and in a move that would almost surely trigger a rash of human rights violations. 

(Solberg)

It underscored how desperate some Europeans had become and ideed, it was just days later when EU migration commissioner Dimitris Avramopoulos warned that the bloc has just 10 days to implement a plan that will bring about “tangible and clear results on the ground” or else “the whole system will completely coallpse.”

The 10-day “countdown” is a reference to the leadup to an EU/Turkey Summit where Erdogan, as usual, stands in the way of progress.

He’s determined to extract money and political concessions from Brussels in exchange for his country’s help in stemming the flow of Asylum Seekers from neighboring Syria. A transcript from a leaked discussion between himself and European Commissioner Jean Claude Juncker and President of the European Council Donald Tusk on 16th November 2015 during the G20 Summit in Antalya suggests that Erdogan told Junkcker that Turkey can simply: “put them [the migrants] on busses.” That’s a rather theinly-velied threat to simply pass the migrants straight through to the gates (and we mean “gates” both that figuratively and literally at this juncture) of the Balkan rout noth.

The Summit begins on Monday and somehow we don’t have much in the way of hope. After all, in order to guard the bloc’s external border you need buy in from Erdogan (when he’s actually looking for buy out quite literally), and somehow poor Alexis Tsipras is expected to control the bottleneck after having been left for broke by the very same Brussels eurocrats who now want (no, demand) his help.

As KeepTalkingGreece puts in thousands of refugees and migrants wandering from Athens to Idomeni without knowing where to sleep and what to eat, where to lay their kids and elderly to sleep. What happens when they get to Idomeni, you ask? Well they try to beat down border gates with homemade bettering rams. Like so: 

If they can’t break through and make a run for it north, the end up simply stranded in Greece.

Victoria square #athens #greece #refugeesGr #RefugeesCrisis #refugees http://pic.twitter.com/wYD6x9KM4K

— prezatv (@prezatv) February 28, 2016

This has infuriorated the Greeks, who last month recalled their Amabassador to Austria after the country helf a series of meetings with Balkan countries without inviting the Greeks.

So don’t hold your breath for a solution (or for a harrowring raft ride across the Meditteranean) to the “safe shores” of Eruope. The is one crisis that is simply going to fester until it boils over. The Barbarians (and no, not in the perjorative sense, in the classic literary sense) are the gates – and they’re coming “home,” Frau Merkel, whether you like it or not.

But in any event, below is a draft document obtained by derStandard.at (Googel translated) which suggests EU officials are now set to mark a turning point: “The Closure of The Balkan Route.”

*  *  * 

Thomas Mayer. At the EU summit on Monday the immediate termination of the illegal flow of migrants and by Wave of Greece should be explained to Germany as a top priority of EU policy. This goes forth from one to the STANDARD present draft. Athens must immediately 50,000 places for potential asylum realize Greece gets “any help” the Union. Migrants with no chance of asylum should also be deported immediately to Turkey.

The EU summit with Turkey on Monday in Brussels and subsequent meetings of the 28 heads of state without the Turkish Premier Ahmed Davutoglu is expected to bring a dramatic change in the current policy and in dealing with refugees and migrants. This is at least the result of a yet secret declaration that Saturday evening was coordinated between the government headquarters in the capital cities. In the paper, which is pending before STANDARD, it literally means: “The irregular flow of migrants along the West Balkan route comes to an end this route is closed from now..”

Fine tuning still needed

The final declaration of the EU-28 will be voted on today in Brussels in the group of EU ambassadors still fine. At the core of the decisions will, however, change anything, according to diplomatic sources. Many of the measures that will be implemented immediately after the meeting train to train, based on agreements to be concluded with the Turkish side. Despite the excitement about the actions of the Turkish government against an opposition newspaper on Friday, the storm of the editorial by police, you go in Brussels expect that Davutoglu will appear on Monday and negotiated in recent days Agreements are then confirmed.

Repatriation agreements planned with Turkey

Nuclear case will be that Turkey immediately constructively participates in controlling the EU’s external borders in the Aegean and those migrants who can not hope to seek asylum in Europe, will resume in the course of recycling. The plan is a private repatriation EU-Turkey agreement, which should be in force from 1 June. Before that you will operate on the basis of the bilateral agreement of Greece. As reported, also the EU-Turkey action plan be promoted. The EU member states undertake the special summit to the Resettlement – to start – the direct settlement of Syrian refugees from Turkey in EU countries.

With regard to the measures in the area of ??Union, in forceful language describes the explanation of the Government a package of measures to be set in the coming weeks. To the consequences of closing the Balkan route, catch the jam thousands incoming refugees, the EU agreed to “do the maximum to assist Greece in this difficult moment.” If it were “a collective responsibility of the community, which requires fast and efficient mobilization of all available resources”, but “also the contributions of the Member States”.

A billion for refugee assistance

The Arenberg by the European Commission last week “emergency plan” for humanitarian aid is unconditional support of the government. For 700 million euros have been earmarked, 300 million in 2016. The Council of Ministers should decide the plan before the next EU summit on March 18 and take shape, according to the statement. Together with all previously agreed measures so could be invested in aid to refugees in the coming months about one billion euros from the EU.

strengthen Frontex

The second major issue is security. The EU will send over their border protection agency Frontex once more officials to Greece, which will be based on the borders with Macedonia and Albania. They should also ensure that the reception centers (hotspots) function in Greece, where the refugees are first recorded and prepared for the allocation of EU countries where they are to get proper asylum procedure. Until later than 1 April, the EU countries should make more, going beyond existing commitments officials for Frontex available. Europol is to strengthen the fight against smuggling. In March summit in ten days, the progress will be evaluated.

divide refugees in EU countries

Until then, the Government hope under its declaration to the fact that the hitherto has come in transition “Distribution Program” of refugees operates in the Member States. It is apparently planned with regard to states not in Eastern Europe, that not all countries have the same time by starting with the “relocation”. For in the secret document is also talk that some states are encouraged to voluntarily offer higher rates of refugees as provided. In any case, the burden on Greece would be alleviated if more immigrants coming into the country.

Finally, the EU summit will ensure that by the end to “a Back to Schengen” is coming. Until then, no later than intended in accordance with the recent proposals of the European Commission which checks at internal borders, as they are currently conducted in eight states, again belonging to the past. (Thomas Mayer from Brussels, 03/05/2016) 

via Zero Hedge http://ift.tt/1Qtnw29 Tyler Durden

Nomura's Bob Janjuah warend in January that "the bubble implosion can't be fixed this time," and, as he explains in his latest note, he is pleased with all six of his key forecasts for 2016…

In particular on Commodities, with his expectation that crude would trade below $30 (the price per barrel fell from $37 in early January to a low so far of $26 in February).

 

And on Rates, the 30yr UST yield fell from 2.95% in early January to a low so far of 2.49% in February, below his 2.5% target for 2016, and the 10yr UST yield fell from 2.2% in early January to a low so far of 1.66% in February, in line with his expectation over 2016 of a move in yields down from 2% towards 1.5%.

The reasons for his latest note are:

1.     To reiterate my bearish views on risk assets for H1 2016 – I continue to see much lower equity prices, lower core bond yields, wider credit spreads, and weakness in EM and commodities over the next four months (at least). In January I said that the S&P500 would fall from 2000/2050 to the 1500s as my target over 2016. I reaffirm this view. I note with interest that at the global equity market ”lows” so far in 2016, seen earlier in February, virtually all major global stock markets were in official bear market territory. For example, the Eurostoxx 50 fell over 30% from its 2015 high to its (so far) 2016 low. The MSCI World fell 20% from its 2015 high to its (so far) 2016 low. The key exception to this move into official bear market territory has been the major US indices, but I expect this to correct itself over the next four months or so.

 

2.     To highlight that, in my view, stocks’ countertrend bounce off the February lows has now run its course and I believe we are – in early March – likely to see the onset of the next leg weaker in risk, vs stronger in core duration. I expect this next leg of weakness to last three to five weeks and to result in new lows so far in this cycle in stocks (S&P500 into the 1700s) and new lows in core government bond yields (target 1.5% in 10yr USTs). It is important to remember that in bear markets the strength is to the downside, the violence is to the upside, with countertrend rallies in bear markets often being the most painful. Markets simply do not go down (or up) in straight lines. But if I am right that this bounce is over, we should continue to see a series of lower lows and lower highs in stocks around the globe.

 

 

To protect against being wrong, particularly with respect to timing, it is prudent to put in place a stop loss, triggered if/when we see a consecutive weekly close in the cash S&P500 index above 2040.

 

3.     To admit that even I am a little surprised by the desperation already evident among central bankers. As per my January note, I expected the BOJ to ease in Q1, but going straight to negative rates has seriously harmed the BOJ’s credibility and the credibility of Abenomics. ECB QQE has clearly failed to create the inflation Mario Draghi promised us, but I have no doubt the ECB will ease again this month. And even the Fed is now “drip-feeding” negative rates into the market through its usual channels. The Fed has made a major policy error already, and I remain convinced that the Fed will be easing by the end of the year. But I would not be surprised if Fed hubris “forces” it to tighten once more before end-June. Focusing so much on an extremely lagging and “technically created” number like the unemployment rate is at the root of this policy error. The Fed is simply not focusing enough on important issues like weak earnings, poor quality jobs, imported deflation, weakness in investment spending, weakness in corporate revenue and profit (not EPS) growth, and deeply scarred consumer behaviour. I could go on, but suffice it to say that I think the Fed has backed itself into a corner, and will only be able to free itself to get ahead of the curve (rather than as it is now, way behind the curve) once the data and markets truly hit some form of capitulation bottom. As I have written in the past, I don’t see a “Fed put” until the S&P500 trades down into the 1500s.

 

4.     To stress that central bank credibility is draining fast and, assuming that the BOJ and ECB go again this month, I now see a risk of a breakdown in markets and outcomes that are the opposite of what central bankers are trying – and have been failing for over seven years now – to achieve, i.e. nominal GDP at 5%, EVEN IF THIS 5% CONSISTS OF 0% REAL AND ALL 5% FROM INFLATION. We are entering an extremely worrying time and we have got here even faster that I had feared – a place where monetary policy and central banks become the problem and not the cure. As discussed above, the Fed is in a hole of its own making by using self-serving metrics to fix a debt and asset bubble crisis with a policy that relies on more debt and even bigger asset bubbles. But in the short term – this next month – I am concerned that markets will react badly and contrary to policymaker expectations when both the BOJ and the ECB attempt to ease further this month. I suspect the ECB and the BOJ are – as far as markets are concerned – “damned if they do, and damned if they don’t” with any residual credibility likely to decay away this month. But both institutions should realise this is down to their own mistakes, whereby (like the Fed) they have sought to fix the ills of excessive debt, asset bubbles and a lack of competitiveness thorough policies which merely result in a zero-sum outcomes (FX wars) and/or which rely on the “greater fool” theory requiring “someone” to take on more debt to continually speculate on an un-burstable asset price bubble. Sadly, of course, mankind has so far failed to create un-burstable bubbles, especially where the underlying foundations are so flimsy. This competitiveness issue is global and critical. Since the global financial crisis (GFC) very little production capacity reduction has been allowed to occur in the DMs (courtesy of QE and ZIRP, which together facilitate the avoidance of default cycles, which are central to reducing capacity). At the same time, globally, particularly in places like China and in industries like Energy and Shipping, we have seen significant production capacity added since the GFC. Again, in part due to QE and ZIRP policies in DMs. Of course, this would be less of a problem if global aggregate demand growth had increased strongly over the last seven years, but this has clearly not happened. In particular, the debt-driven consumption frenzy of the years leading up to the GFC in the DMs has barely come back, while at the same time demand growth in the EM sphere has been much slower than hoped for (and needed), and latterly severe economic downturns in places like Russia, China, the Middle East and Brazil have hampered this handover even more. So the response to all of this has been the zero-sum game referred to above, FX wars, which merely operate to allow temporary and transitory relative shifts in competitiveness but with severe (unintended?) consequences.

 

5.     To stress that, in a world of NIRP and QE, and where the bid for liquidity in markets is many multiples of the levels of liquidity the sell-side can offer, I find it extremely difficult to get any visibility in FX markets. FX markets are the most exposed to central bank credibility and are also where significant flows can drive markets most immediately, more so than in other markets like Rates or Equities. My bias is to believe that the USD is the least worst “long” until the Fed flips on its current policy path. But as with the BOJ's recent easing and the market’s response (the opposite of what was trying to be achieved), the credibility issue of central banks in general, and of some central banks more than others at any given time, has now become a major uncertainty factor. As such, I feel that this is an extremely difficult market to call on anything other than a very medium-term basis. I am not alone here – the 20% rally in gold since December testifies to this. My key message for 2016 remains unchanged in terms of FX markets (strong USD until the Fed reverses course), but I am increasingly inclined to look at gold again as a safe haven for 2016, and am increasingly inclined to avoid tactical calls on FX markets.

Janjuah concludes by noting that his inclination when thinking about this note was to consider even more bearish targets for risk assets/even more bullish targets for core bond yields.

For now, I have decided to stick with what I published in January, but now I think we are facing an even more difficult 2016 than I had anticipated at the outset of this year.

 

The over-reach of central bankers and their failed policies is not news to me. What is news to me, especially after the BOJ's easing in January, is that markets are now either at or very close to losing all confidence in the post-GFC policy response crafted by the Fed/ECB/BOJ et al much earlier in 2016 than even I had expected.

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By EconMatters

The British Pound has a Brexit Referendum on Thursday the 23rd of June which is putting downward pressure on the currency. The ideal trading scenario would be the United Kingdom votes to leave the European Union, the Pound gets hammered in the short term after this event, and this represents a long term value going forward, a strong buy in my book.

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