Miercoles 29/04/25 la decisión del Fed

[Fenix]

5:24 Ministro de Interior griego señala la posibilidad de nuevas elecciones
El ministro de Interior griego ha planteado la posibilidad de celebrar nuevas elecciones para dar griegos la última palabra sobre la política económica del gobierno.

Nikos Voutsis dijo durante un debate en el parlamento:

"Aquellos que imaginan que el actual gobierno es un interludio... están equivocados; la gente habló y, si si fuera necesario, lo hará de nuevo."

Voutsis no es el primero en señalar la perspectiva de nuevas elecciones. En marzo, el ministro de Finanzas, Yanis Varoufakis también se refirió a la misma, o un referéndum sobre cualquier nuevo acuerdo con los acreedores.

5:16 Los billetes de 500 euros en circulación bajaron un 8,5% en marzo
La cuantía de los billetes de 500 euros en circulación en España se situó en 35.916 millones de euros en marzo, el nivel más bajo desde enero de 2005 (35.169 millones).

[Fenix]

6:17 La corona sueca sube más del 1% después de la decisión del banco central
La sorpresiva decisión del banco central de Suecia de mantener las tasas de interés sin cambios las tasas ha impulsado a la corona alza frente al dólar estadounidense.

La moneda sueca sube un 1,23 por ciento a 8,4096 por dólar - su nivel más alto desde principios de marzo - después de que el Riksbank desafiara las expectativas de los economistas que esperaban un recorte de su tasa de endeudamiento de referencia.

6:12 Hilton obtiene un beneficio por acción de 0,12 dólares
En línea con lo esperado
Los ingresos se sitúan en los 2.600 millones de dólares en el primer trimestre frente a 2.470 millones consenso. La compañía eleva su previsión para el conjunto del año.

[Fenix]

Las rentabilidades de la deuda alemana a 10 años se triplican en una semana

Miércoles, 29 de Abril del 2015 - 6:35:51

Un título agresivo, ¿verdad?. Pero, es real. Vean este gráfico. Bueno, aunque si lo vemos en perspectiva podríamos matizar parte de la alerta.

¿Por qué la subida de tipos en la deuda alemana? No sólo el 10 años, ya que las rentabilidades negativas ahora sólo alcanzan al 6 años desde el 7 años hace unos días.

Los analistas aluden a dos factores que, en el fondo, es sólo uno: menor preocupación sobre Grecia.

¿Mi opinión? Demasiado simple.

Por el contrario, sin desmerecer la excusa anterior, es también importante resaltar las ventas que vemos en la deuda norteamericana ante el FOMC de hoy. Y la pobre subasta de 5 años hoy: 3.2 bn. emitidos por debajo del objetivo y de los 5.4 bn. de la subasta previa. Escaso interés, con un btc de 1.1 veces desde el 1.6 anterior. Naturalmente, ¿puede estar influyendo el “éxito” que hasta el ECB resalta del QE en la economía europea? Veremos.

José Luis Martínez Campuzano
Estratega de Citi en España

[Fenix]

7:09 International Paper obtiene un BPA de 0,84 dólares vs 0,80 esperado
La papelera estadounidense publica unos ingresos del primer trimestre de 5.500 millones de dólares vs 5.820 millones consenso.

7:05 Time Warner: BPA 1,19$ frente 1,09$ esperado
El BPA de Time Warner en el primer trimestre del año cae a 1,15$ frente 1,42$ de un año antes. El BPA ajustado fue de 1,19$ frente 1,09$ esperado.

Ingresos 7.130 millones de dólares frente 6.800 millones de dólares anterior y 6.990 millones esperados.

En preapertura los títulos de Time Warner suben un 1,2%

7:03 Solicitudes de hipotecas semanales EE.UU. -2,3% vs +2,3% anterior

7:43 Libra/dólar: Atento a un cierre semanal por encima de los 1,5177
La libra/dólar cotiza en 1,5393. Los analistas de Citi señalan que en caso de que haya un cierre semanal por encima de 1,5177, lo que probablemente sucederá, abriría las puertas a un movimiento alcista hacia la resistencia del rango 1,5542-1,5552.

[Fenix]

8:24 Los depósitos bancarios griegos caen a mínimos de diez años
No hay respiro para los bancos griegos. El dinero siguió saliendo del sistema bancario de Grecia, ya que los depositantes retirando dinero en medio de las continuas disputas entre Atenas y sus acreedores de la eurozona.

Los depósitos en el sistema bancario griego cayeron a su nivel más bajo desde mayo de 2005 el mes pasado, según datos del Banco Central Europeo, bajando a 145.000 millones de euros, 147.500 millones en febrero.

Esa caída de 2.500 millones de euros se compara con salidas mucho mayores en los tres meses anteriores, sin embargo (ver gráfico adjunto vía FT) sugiere que los ricos ahorradores griegos y las grandes empresas capaces de mover dinero al extranjero, lo están haciendo.



The Financial Markets Now Control Everything
04/29/2015 18:45

Submitted by Charles Hugh-Smith

The entire economic and political structure is now dependent in one way or another on the continued expansion of financial markets.

The financial markets don't just dominate the economy--they now control everything. In 1999, the BBC broadcast a 4-part documentary by Adam Curtis, The Mayfair Set ( Episode 1: "Who Pays Wins" 58 minutes), that explored the way financial markets have come to dominate not just the economy but the political process and society.

In effect, politicians now look to the markets for policy guidance, and any market turbulence now causes governments to quickly amend their policies to "rescue" the all-important markets from instability.

This is a global trend that has gathered momentum since the program was broadcast in 1999, as The Global Financial Meltdown of 2008-09 greatly reinforced the dominance of markets.

It's not just banks that have become too big to fail; the markets themselves are now too influential and big to fail.

Curtis focuses considerable attention on the way in which seemingly "good" financial entities such as pension funds actively enabled the "bad" corporate raiders of the 1980s by purchasing the high-yield junk bonds the raiders used to finance their asset-stripping ventures.

This increasing dependence of "good" entities on players making risky bets and manipulating markets has created perverse incentives to keep the financial bubble-blowing going with government backstops and changing the rules to mask systemic leverage and risk.

The government must prop up markets, not just to insure the cash keeps flowing into political campaign coffers, but to save pension funds and the "wealth effect" that is now the sole driver of "growth" (expanding consumption) other than debt.

To maintain the illusion of growth and rising wealth, the financial markets must continually reach greater extremes: extremes of debt, leverage, obscurity and valuations. These extremes destabilize markets, first beneath the surface and then all too visibly.

The technological advances of the past decade have enabled a host of financial schemes that together have the potential to destabilize the markets globally.Technology enables high-frequency (HFT) traders to only suffer one losing day per year, complex reverse-repo swaps/trades, huge derivative bets and shadow banking, where all the risks generated by these activities can pool up outside the view and control of regulators.

The entire economic and political structure is now dependent in one way or another on the continued expansion of financial markets.

This spells the end of the electoral-political control of the economy, as politicians of all stripes quickly abandon all their ideologies and policies and rush to "save" the markets from any turmoil, because that turmoil could destabilize not just the financial markets but the economy, pensions and ultimately the government's ability to finance its own profligate borrowing and spending.

This dependence on the markets is pushing central banks and states into ever-more extreme policies, even as the risks of complex swaps and trades is rising beneath the surface.

A case can be made that the technologically-enabled complexity of the shadow-banking markets is now beyond the control of the state or central bank, which leads to a sobering conclusion: the next crisis will not be controllable, and destabilized markets will not be "saved" by tricks such as lowering interest rates to zero and increasing liquidity.

The structural problem with everyone and everything now depending on the speculative returns of the financial markets is there can never be any market clearing event that exposes phantom collateral and forces the liquidation of bad debt and excess credit.

I explain the danger of continually 'saving" the markets from any market clearing event in The Yellowstone Analogy and The Crisis of Neoliberal Capitalism (May 18, 2009).

When a forest is never allowed to burn away the accumulation of dead branches and underbrush with a limited fire, the forest eventually catches fire anyway. The deadwood (of bad debt, excessive credit and leverage and phantom collateral) is now piled so high, the entire forest burns down to ashes.

This is the eventual cost of never allowing any clearing of financial deadwood because everyone is now so dependent on financial markets that the slightest swoon will bring down the entire system. This vulnerability only increases with every "save" and every new bubble.


All the "saves" have done is guarantee the financial system will burn down in a conflagration ignited by a seemingly trivial spark somewhere in the vast global system of phantom collateral

[Fenix]

PIB EEUU primer trimestre +0,2% vs +1,0% esperado

Consumo personal +1,9% vs +1,7% esperado
Miércoles, 29 de Abril del 2015 - 8:30:29

Los EE.UU. crecieron a un ritmo anual del 0,2% en los tres primeros meses de 2015 (vs. +1,0% esperado), un período marcado por el mal tiempo y un dólar al alza que frenó las exportaciones estadounidenses.

El gasto del consumidor, el principal motor de crecimiento, se desaceleró bruscamente a 1,9% (+1,7% esperado), por debajo del promedio del 2,3% desde el inicio de la recuperación a mediados de 2009.

La inversión empresarial en "estructuras", tales como minas y los pozos se hundió un 23,1% en el primer trimestre, lo que refleja un menor gasto de las empresas de energía estadounidenses.

Las exportaciones cayeron un 7,2% mientras que las importaciones subieron un 1,8%. Un déficit comercial más grande resta al PIB. El gasto en construcción de casas nuevas, por su parte, subió un escaso 1,3%.

El valor de los inventarios, que se suma al PIB, aumentó en un sorprendente grande 110,3 mil millones, dijo el Departamento de Comercio.

La inflación medida por el índice de precios PCE cayó a un ritmo anual del 2%, aunque la tasa subyacente, que excluye alimentos y energía subió un 0.9%.

Datos negativos para los mercados de acciones, aunque aleja la probabilidad de una pronta subida de tipos, y para el dólar.

8:38 S&P 500 junio. Los compradores responden y apuntan a 2119
La caída intradía por debajo de la línea ascendente de 8 días "Tenkan-Sen" (2.099) fue respondida por los alcista con una oleada de compras para cerrar al alza, lo que sugiere una extensión del movimiento alcista hacia 2119 y después 2132 y 2146/52.

Resistencias 2119 2121 2132 2146 2152
Soportes 2089 2081 2078 2065 2039

[Fenix]

10:00 Viviendas pendientes de venta marzo +1,1% mensual vs +1,0% previsto
Las viviendas pendientes de venta en EE.UU. en el mes de marzo suben un 1,1% a 108,6 millones frente una subida esperada del 1,0% y 107,4 millones del mes anterior.

Dato positivo aunque tendrá poco efecto en el mercado.

10:15 Fuertes caídas en las bolsas europeas por la ralentización en EE.UU.
Las bolsas europeas pierden más del 2% en estos momentos tras el mal dato de crecimiento en EE.UU. El crecimiento del PIB en el primer trimestre del año ha resultado un decepcionante 0,2% frente 1,0% esperado.

Kevin Kelly, economista jefe de Recon Capital Partners, afirma que "las cifras económicas ciertamente han sido malas, y la verdad es que no lo estamos haciendo tan bien como pensábamos. Se puede ver en la evolución del mercado este año, y la de las ganancias".

10:36 Eurostoxx 50: Los 3.600 puntos clave
Los 3.600 puntos del Eurostoxx 50 es un nivel clave para la evolución del selectivo en el medio plazo. La perforación a cierre de este nivel las caídas de extenderían hacia el rango 3.300-3.400 puntos.

10:30 Inventarios semanales de energía EE.UU.
Inventarios crudo +1,91 millones barriles frente 2,3 millones esperados.
Inventarios destilados -66.000 barriles frente 1,167 millones barriles esperados.
Inventarios gasolina 1,713 millones de barriles frente 217.000 barriles esperados.

[Fenix]

11:15 Deutsche Bank recorta su estimación del PIB de EE.UU.
Prevé ahora una subida del 2,5% en el segundo trimestre frente 4,0% anterior estimación. Para la segunda mitad del año esperan un crecimiento del 3%.

11:27 Flash técnico EURODÓLAR: doble suelo target 1,16
Comprar
Tras completar un suelo en 1,05 durante el último mes y medio, rompe la barrera de 1,11, completando un doble suelo cuya proyección teórica apunta a 1,16

Recomendación: COMPRAR

Eduardo Faus
Original de Renta 4 Banco



The Third And Final Transformation Of Monetary Policy
04/29/2015 19:30 -0400

Submitted by John Mauldin
Thoughts from the Frontline: The Third and Final Transformation of Monetary Policy

The law of unintended consequences is becoming ever more prominent in the economic sphere, as the world becomes exponentially more complex with every passing year. Just as a network grows in complexity and value as the number of connections in that network grows, the global economy becomes more complex, interesting, and hard to manage as the number of individuals, businesses, governmental bodies, and other institutions swells, all of them interconnected by contracts and security instruments, as well as by financial and information flows.

It is hubris to presume, as current economic thinking does, that the entire economic world can be managed by manipulating one (albeit major) subset of that network without incurring unintended consequences for the other parts of the network. To be sure, unintended consequences can be positive or neutral or negative. This letter you are reading, which I’ve been writing for over 15 years and which reaches far more people than I would have ever dreamed possible, is partially the result of a serendipitous unintended consequence.

But as every programmer knows, messing with a tiny bit of the code in a very complex program can have significant ramifications, perhaps to the point of crashing the program. I have a new Microsoft Surface Pro 3 tablet that I’m trying to get used to, but somehow my heretofore reliable Mozilla Firefox browser isn’t playing nice with this computer. I’m sure it’s a simple bug or incompatibility somewhere, but my team and I have not been able to isolate it.

However, that’s a relatively minor problem compared to the unintended consequences that spill from quantitative easing, ZIRP, and other central bank shenanigans. We have discussed the problem of how the Federal Reserve has pushed dollars on the rest of the world and is playing havoc with dollar inflows and outflows from emerging markets. More than one EM central banker is complaining aggressively.

My good friend Dr. Woody Brock makes the case that an unintended consequence of QE is that the Federal Reserve’s normal transmission of monetary policy through periodic changes in the fed funds rate has been vitiated. He contends that soon we will no longer care about the fed funds rate and will be focused on other sets of rates.

This is an important issue and one that is not well understood. Woody has given me permission to reproduce his quarterly profile. For Woody, this is actually a fairly short piece; but as usual with Woody’s work, you will probably want to read it twice.


The Fed Funds Rate: R.I.P.?? The Third and Final Transformation of Monetary Policy

By Woody Brock, Ph.D.
Strategic Economic Decisions, Inc.

The policy announcements of the US Federal Reserve Board are dissected and analyzed more closely than any other global financial variable. Indeed, during the past thirty years, Fed?Watching became a veritable industry, with all eyes on the funds rate. Within a few years, this term will rarely appear in print. For the Fed will now be targeting two new variables in place of the funds rate. One result is that forecasting Fed policy will be more demanding.

To make sense of this observation, a bit of history is in order. During the last nine years, US monetary policy has been transformed in three ways. To date, only the first two have been widely discussed and are now well understood. The third development is only now underway, and is not well understood at all. To review:

First, the Fed lowered its overnight Fed funds rate to essentially zero, not only during the Global Financial Crisis of 2008–2009, but throughout nearly six years of economic recovery thereafter. The average level of the funds rate at the current stage of recovery was about 4% during the past dozen business cycles. It was never 0% as it is in this cycle. In past essays, we have argued that this overutilization of “ultra?easy monetary policy” reflected the failure of the government to utilize fiscal policy correctly (profitable infrastructure spending with a high jobs multiplier), and to introduce long?overdue incentive structure reforms. It was thus left to monetary policy to pick up the pieces after the global crisis of 2008. This development was true in most other G?7 nations, not just in the US.



Second, the Fed inaugurated its policy of Quantitative Easing whereby it increased the size of its balance sheet five?fold from $900 billion to $4,500 billion. Such an expansion would have been inconceivable to Fed watchers during the decades prior to the Global Financial Crisis. In the US, QE is now dormant, and the only remaining question (answered below) is how and when the Fed will shrink its bloated balance sheet back to more normal levels.



Third, the way in which the Fed conducts standard monetary policy (periodic changes in the funds rate) is currently undergoing a complete makeover. In particular, the traditional tool of changing the funds rate via Open Market operations carried out by the desk of the New York Fed no longer works. For as will be seen, the vast expansion of the size of its balance sheet (bank reserves in particular) has rendered traditional policy unworkable. From now on, therefore, the Fed will conduct monetary policy via two new tools that were not even on the drawing board of the Fed prior to 2008.

Summary: In this PROFILE, we explain in Part A why traditional (non?QE) monetary policy has been vitiated by QE. In Parts B and C respectively, we discuss the two new tools that will be used in the future to conduct standard (non?QE) monetary policy: what exactly are these tools, and how do they work? In Part D, we discuss why these new tools will not be required by the European Central Bank, which has a different institutional structure than the US Fed. Finally, in Part E, we turn to QE and discuss when and how the Fed will shrink its balance sheet back to a more traditional size in the years ahead.

In this write?up, we largely rely on the remarks set forth in a recent paper by Fed Vice Chairman Stanley Fischer, formerly chief economist of the IMF, Governor of the Central Bank of Israel, and professor of economics at MIT. We also benefitted from clarifications by Professor Benjamin Friedman at Harvard University.

Part A: So Long to Setting the Funds Rate via Open Market Operations

Prior to the financial crisis, bank reserve balances with the Fed averaged about $25 billion. With such a low level of reserves, a level controlled solely by the Fed, minor variations in the amount of reserves via Fed open market sales/purchases of securities sufficed to move the Fed funds rate up or down as desired. Analytically, the market for bank reserves (Fed funds) consisted of a demand curve for bank reserves reflecting the nation’s demand for loans, and a supply curve reflecting the supply of reserves by the Fed. The so?called Fed funds rate is the point of intersection of these two curves (the interest rate). If the Fed targeted, say a 2% funds rate, it achieved and maintained this rate by shifting the supply curve left or right by adding to/subtracting from the quantity of reserves. As the Fed was a true monopolist in the creation/extinction of reserves, it could always target and sustain any funds rate it chose.

These operations constituted “monetary policy” for many decades. But this is no longer the case, as was first made clear in a FOMC policy pronouncement of September 2014. To quote Dr. Fischer in his 2015 speech, “With the nearly $3 trillion in free bank reserves (up from pre?crisis reserves averaging $25 billion), the traditional mechanism of adjustments in the quantity of reserve balances to achieve the desired level of the Federal funds rate may not be feasible or sufficiently predictable.” What new mechanisms will replace it? There are two.

Part B: The Use of Interest Rates Paid by the Fed on Free Bank Reserves

“Instead of the funds rate, we will use the rate of interest paid on excess reserves as our primary tool to move the Fed funds rate.” The ability of the Fed to pay banks an interest rate on their free reserves dates back to legislation of October 2008. This rate has been set at 0.25% during the past few years. (“Excess” or “free” bank reserves are defined as the arithmetic difference between total reserves and required reserves. Currently, as of March 30, required reserves were $142 billion, and total reserves were $2.79 trillion.)

The Logic: Whatever the level of the reserve interest rate that the Fed chooses, banks will have little if any incentives to lend to any private counterparty at a rate lower than the rate they can earn on their free reserve balances maintained at the Fed. The higher the reserve remuneration rate is, the greater will be the upward pressure on a whole range of short?term rates.

Part C: The Use of the Reverse Repo Rate

“Because not all institutions have access to the excess reserves interest rate set by the Fed, we will also utilize an overnight reverse repurchase purchase agreement facility, as needed. In a reverse repo operation, eligible counterparties may invest funds with the Fed overnight at a given interest rate. The reverse repo counterparties include 106 money market funds, 22 broker?dealers, 24 depository institutions, and 12 government?sponsored enterprises, including several Federal Home Loan Banks, Fannie Mae, Freddie Mac, and Farmer Mac.”

The Logic: Fischer continues: “This facility should encourage these institutions to be unwilling to lend to private counterparties in money markets at a rate below that offered on overnight reverse repos by the Fed. Indeed, testing to date suggests that reverse repo operations have generally been successful in establishing a soft floor for money market interest rates.”

Summary

Due to the explosion of the size of its balance sheet (bank reserves in particular), the Fed has been forced to abandon management of the Fed funds rate via traditional open market operations. This activity is now being replaced by two new policy tools, both of which are somewhat “softer” than the older tool. First, bank’s free reserves now earn an interest rate on excess bank reserves which is available to banks with access to the Fed’s reserve facility. Second, financial institutions such as money market funds lacking access to the reserve facility will be able to lodge funds overnight (not necessarily merely one night) at the Fed and receive the reverse repo rate offered by the Fed.

Part D: Irrelevance of these Developments to the European Central Bank

Interestingly, the European Central Bank does not need and will probably not implement the policy innovations now being implemented by the US Fed. The reason is that in Europe, lending is dominated by banks far more than here in the US. Moreover, most all European financial institutions can in effect deposit funds with the central bank. Finally, the ECB has long been able to vary the reserve remuneration (interest) rate that it pays for excess reserves. As a result, the ECB does not need to utilize the reverse repo rate tool that the Fed is introducing.

One final point should be made. Whereas Professor Fischer above asserts that the primary tool of the Fed will be variations in the reserve remuneration rate applicable to banks, other scholars believe it is the reverse repo rate that will be the primary tool of US monetary policy. This is partly because of the ongoing reduction of the role of banks in lending to private sector borrowers, a longstanding development that has accelerated with the new regulations imposed on banks since the Global Financial Crisis.

Part E: Will the Fed Shrink its Balance Sheet Back Down? If So, How?

Professor Fischer answers this point directly. Yes, the Fed will shrink its balance sheet, but not to the size of yesteryear. More specifically:

“With regard to balance sheet normalization, the FOMC has indicated that it does not anticipate outright sales of agency mortgage?backed securities, and that it plans to normalize the size of the balance sheet primarily by ceasing reinvestment of principal payments on our existing securities holdings when the time comes... Cumulative repayments of principal on our existing securities holdings from now through the end of 2025 are projected to be $3.2 trillion. As a result, when the FOMC chooses to cease reinvestments of principal, the size of the balance sheet will naturally decline, with a corresponding reduction in reserve balances.”

Hopefully these remarks have helped clarify past and future changes in Fed policy—changes that amount to a thoroughgoing transformation of US monetary policy that would have been unimaginable a decade ago.

In the future, we suspect that the press will refer to the Fed’s targeting of the “reverse repo rate” in place of the Federal funds rate when analyzing prospective monetary policy.

[Fenix]

11:28 Suben con fuerza las exportaciones de petróleo de Irán
Las exportaciones de petróleo de Irán suben con fuerza en 450.000-500.000 barriles por día en abril, lo que eleva la totalidad de exportaciones a 1,18-1,3 millones de barriles día.

Noticia bajista para el petróleo, más si cabe si le añadimos la noticia que señala que las exportaciones de petróleo de Canadá ha alcanzado un máximo histórico en los primeros meses de este año.

El petróleo sin embargo sube un 1,5% a 65,62 dólares barril.

[Fenix]

Fuerte caída de las bolsas europeas por la ralentización en EE.UU.

Los inversores a la espera de la decisión y del comunicado de la Fed
Miércoles, 29 de Abril del 2015 - 11:41:00

"Hemos sido demasiado optimistas", nos comentaba hace unos minutos un gestor refiriéndose al escenario económico global. "Europa no termina de repuntar y EE.UU. y China crecen a un menor ritmo de lo que se esperaba. Quizás haya que volver a echar números", añadía.

La posibilidad de nuevas elecciones en Grecia, apuntadas por el Ministro de Interior del país, afectaba a las bolsas europeas que se colocaban en terreno negativo poco después de su declaración.

Pero el movimiento más destacado venía después de la publicación del decepcionante dato del PIB de EE.UU. del primer trimestre, que tal y como se rumoreaba, se situó claramente por debajo de las previsiones. Las pérdidas del Eurostoxx 50 tras este dato se acercaban al punto y medio porcentual.

Este dato del PIB muestra una inesperada debilidad económica, que si bien es justificada por factores extraordinarios que no se deberían repetir en el futuro -mal tiempo, lento crecimiento internacional, dólar más fuerte, impacto mixto del bajo precio del petróleo, y caída del gasto del gobierno federal-, si pone una nota de precaución que no deberíamos ignorar.

La parte positiva del dato es que aleja la posibilidad de que la Fed suba tipos en las próximas reuniones.

Este escenario es el que podría el FOMC establecer hoy en su comunicado posterior a la reunión de la Fed.

Los inversores esperan con atención las conclusiones de esta reunión. Tony Crescenzi, vicepresidente ejecutivo de PIMCO, señala los principales puntos a tener en cuenta:

La evaluación de la Fed de las condiciones económicas que dado la debilidad de los últimos datos macro, como el PIB mencionado anteriormente, podría provocar que la Fed haga cambios algunos calificativos del crecimiento económico y del mercado laboral.

Habrá que tener en cuenta las perspectivas económicas. En marzo la Fed calificaba los riesgos económicos como “casi equilibrados”. Es probable que mantenga estos términos, pero habrá que vigilar con atención si son retirados.

Por otro lado, es probable que la Fed mantenga los dos criterios para ejecutar la primera subida de tipos: Mejoras en el mercado laboral y proyecciones a objetivo de la tasa de inflación. De cualquier forma, habrá que estar atentos a ver si hay algún término adicional dado el empeoramiento del mercado laboral en las últimas semanas.

En resumen, clara toma de beneficios en las bolsas europeas ante la posibilidad de unas perspectivas económicas a nivel global menor de lo que se esperaban, y con los inversores a la espera de la decisión y comunicado posterior de la Fed, que como hemos señalado anteriormente, tiene muchas aristas a las que estar atentos.

[Fenix]

14:08 Oracle: nuestro punto de rotación se sitúa en 42.4
CMC Markets

[ ORACLE ]
Punto de rotación se sitúa en 42.4.

Preferencia: la subida se mantiene siempre que el soporte se sitúe en 42.4.

Escenario alternativo: por debajo de 42.4, el riesgo es una caída hasta 41.1 y 40.3.

Técnicamente, el índice de fuerza relativa (RSI) se encuentra por encima de su zona de neutralidad de 50. El indicador de convergencia/divergencia de medias móviles (MACD) se sitúa por encima de su línea de señal y es positivo.

Asimismo, la acción se sitúa por encima de su media móvil de 20 y 50 días (se sitúa a 43.28 y 43.33 respectivamente). Finalmente, Oracle se negocia por encima de su banda superior de Bollinger (se sitúa en 44.16).

14:32 Una diferencia crítica entre el Nasdaq de ahora y el de la burbuja de 2000
A medida que el índice Nasdaq de tecnología se acercó a la marca de 5.000 el mes pasado, algunos analistas sostuvieron que se trataba de una repetición de 2000, antes de que la burbuja punto com estallara.

JC O'Hara de FBN Securities, sin embargo, señala que los traders noestán tan confiados ahora como lo estaban en el 2000.

O'Hara publicó el siguiente gráfico, así como el sentimiento de los inversores.

La Asociación Americana de Inversores Individuales examina la dirección en la que creen los inversores que se moverá el mercado de acciones.

O'Hara escribió: "El Nasdaq Composite copó muchos titulares la semana pasada, ya que superó su máximo de hace unos 15 años.Creemos que el proceso ordenado y la falta de optimismo extremo permitirán que el precio continúe en su avance, ya que la tendencia y el movimiento interno, son ahora más constructivos que en el 2000".

[Fenix]

Integración financiera en la zona euro

Miércoles, 29 de Abril del 2015 - 15:52:00

El ECB publicó ayer su Informe Anual de Integración financiera en Europa. De acuerdo con el indicador sintético de integración financiera FINTEC elaborado por el ECB, el nivel de integración habría ya recuperado los niveles previos a la Crisis.

El indicador, considerando los precios y en cantidad, habría mejorado especialmente en los segmentos de mercado monetario y renta fija. La mejora en la integración de las bolsas ha sido más limitada.

Para el ECB, la mejora en la integración financiera es una consecuencia de la Unión Bancaria y de las medidas monetarias no convencionales aplicadas hasta el momento.

«La integración financiera europea ha mejorado en los dos últimos años, lo que también ha favorecido el acceso de las empresas a la financiación. Nuestras medidas han reducido la fragmentación financiera y, desde el año pasado, tanto el nivel como la dispersión de los tipos de interés aplicados al crédito se han reducido, especialmente en el caso del concedido a las pequeñas y medianas empresas. Queda mucho trabajo por hacer para potenciar la integración financiera. El proyecto de la Unión de los Mercados de Capitales, puesto en marcha por la Comisión, puede contribuir positivamente a alcanzar este objetivo», afirmó Vítor Constâncio, vicepresidente del BCE.

Por tipo de mercado:

· Mercados monetarios: la proporción de operaciones transfronterizas a un día sin garantías ha retornado a los niveles observados antes de la quiebra de Lehman. Asimismo, la dispersión de los tipos de interés del mercado monetario a diversos plazos entre los distintos países de la zona del euro se redujo durante la mayor parte de 2014. El aumento de confianza que viene señalado por este acceso a una mayor financiación a corto plazo transfronteriza también se ve reflejado en los menores niveles de exceso de liquidez en el sector bancario.


· Mercados de renta fija: la fragmentación del mercado (deuda soberana y valores de renta fija privada de entidades de crédito y de sociedades no financieras) volvió a reducirse en 2014, como consecuencia de al menos tres factores principales: a) la aplicación de reformas estructurales en países en dificultades; b) el avance en las reformas de la arquitectura financiera de la zona del euro, y c) las medidas de política monetaria del BCE. La búsqueda de valores de renta fija de alta rentabilidad en el extranjero también puede influir en la convergencia de los tipos de interés de la deuda empresarial y tendría que ser objeto de un estrecho seguimiento desde la perspectiva de la estabilidad financiera.

· Mercados bancarios: La dispersión entre países de los tipos de interés de los préstamos y de los depósitos de las sociedades no financieras continuó disminuyendo, y la diferencia entre los países con dificultades financieras y los países que no atraviesan dichas dificultades se redujo en 2014. El hecho de que el estrechamiento de esta brecha sea especialmente visible para los préstamos minoristas de hasta un millón de euros indica el éxito de algunas medidas de política monetaria encaminadas a restablecer la financiación a las pymes, lo que desempeña un papel fundamental en la recuperación de un crecimiento económico sólido en los países en dificultades.

· Mercados de renta variable: el avance es menos claro que en el caso de los mercados monetario, de renta fija y bancario. Los indicadores basados en precios muestran, por ejemplo, una fragmentación de los mercados de renta variable permanentemente más elevada entre los países en dificultades que entre los que no atraviesan dificultades financieras. Los indicadores cuantitativos de las tenencias de acciones por parte de los países de la zona euro presentan un nivel estable de tenencias de acciones de otros países pertenecientes a la zona. La diversificación que se observa hacia la renta variable de fuera de la zona del euro, en detrimento de las tenencias de acciones internas de cada país, puede beneficiar a la estabilidad financiera.

José Luis Martínez Campuzano
Estratega de Citi en España



Three Hurricanes Are Headed Our Way (And There's Nowhere To Hide)
04/29/2015 18:30

Submitted by Jim Quinn

There are three financial hurricanes hurtling towards our country and most people are oblivious to the coming catastrophe. The time to prepare is now, not when the hurricane warnings are issued.

Hussman makes his usual solid case that stocks and bonds are as overvalued as they have ever been in the history of investing. People are under the false impression that bonds are always a safe investment. The fact that you are already getting a negative real return on bonds doesn’t seem to compute with math challenged Americans. Over the next ten years you will absolutely lose money in bonds.

Liquidity in both the stock and bond markets is thinning considerably. In bonds, quantitative easing by global central banks has resulted in a scarcity of available collateral, a collapse in repo liquidity, and increasing frequency of delivery failures, all of which is shorthand for a bond market that is becoming less liquid and more fragile to any credit event. Meanwhile, risk premiums are minuscule. Avoiding a negative total return on 10-year bonds now requires that interest rates must not rise by even one percentage point over the next three years. Bond yields have historically covered investors against a meaningful change in yields before resulting in negative total returns. On a one-year return horizon, bond yields presently cover investors for a yield change amounting to only about 0.25 standard deviations – matching mid-2012 as the lowest level of yield coverage in history.

The fragility of the economic, financial, and social systems of the U.S. is at extreme levels. The median American household has less real income than they had in 1989. The social fabric of the country is tearing as we speak, with Baltimore and Ferguson as the warning shots of coming chaos and civil strife. The ruling elite control the monetary system, so the rigged financial markets continue to rise and have reached bubble proportions. An unexpected pin will be along shortly to pop the bubble. The next crash will make 2008 look like a walk in the park. It may be decades until markets reach these levels again.

Market crashes always reflect two features: extremely thin risk premiums in an environment where investors have shifted toward greater risk-aversion, and lopsided selling into an illiquid market. Under present conditions, we observe the precursors for both. That doesn’t force or ensure a crash, but it creates the underlying fragility that allows one.

Last week, the Nasdaq Composite finally clawed its way to breakeven, 15 years after its spectacular bubble peak in 2000. It’s a testament to the overvaluation of technology stocks in 2000 that it has required the third equity bubble in 15 years to reclaim that 2000 high, at least briefly. As you may remember, the Nasdaq Composite reached its intra-day high of 5132.52 in March 2000, plunging to 795.25 (down -78%) by October 2002. The Nasdaq 100, representing the most glamourous of the group, peaked at 4816.25 in March 2000, plunging to 795.25 (down 83%) by October 2002. Even a decade later, in 2010, both indices were still 60-65% below their 2000 highs. The 2000-2002 decline also took the S&P 500 down by half, wiping out the entire total return of the S&P 500 – in excess of Treasury bill returns – all the way back to May 1996.



The S&P 500 presently teeters near its all-time high at 2,115. Its fair value, based upon multiple historically accurate valuation models is 940. Therefore, this market would have to drop 56% to reach fair value. In the real world, crashes often exceed fair value to the downside. Is there anyone you know prepared for a 50% to 60% decline in the stock market?

On the basis of valuation measures best correlated with actual subsequent market returns, we can say with a strong degree of confidence that the S&P 500 would presently have to drop to the 940 level in order for investors to expect a historically normal 10-year total return of 10% annually. That 940 figure for the S&P 500 would not represent some extreme, catastrophic outcome. It’s not a level that would even represent undervaluation from a historical perspective. It’s the level that we would associate with average, historically run-of-the-mill long-term equity returns. As we observed at the 2000 peak, “if you understand values and market history, you know we’re not joking.”

Many will call Hussman a prophet of doom or the little investment adviser who cried wolf. But, he has been here before. He didn’t buckle to peer pressure in 2000 or 2007. He analyzed the data and reached a logical conclusion. We all know bubbles can grow to epic proportions based on delusion, hope, and lies. Hussman was right in 2000. Hussman was right in 2007. And Hussman will be right this time.

You’ll recall we also made similarly “preposterous” comments in April 2007 (see Fair Value – 40% Off). Though our measures of market internals would finally turn negative in late-July of that year (see Market Internals Go Negative), the S&P 500 was already within 10% of its pre-collapse high of 1565 by April. At the time, we estimated reasonable valuations to be “about 40% below current levels,” adding:

“Again, that doesn’t imply that stocks have to actually suffer a decline of that magnitude. Nor do we need such a decline in order to justify an unhedged investment stance. It’s just that investors should not expect the S&P 500 to reliably deliver long-term returns of 10% annually or better until it does. You’ll note that there are also points in history when the S&P 500 traded substantially below that 10% valuation line. Those were points where stocks were priced to deliver long-term returns reliably above 10% annually, and in fact, they did exactly that.”

By late-October 2008, the S&P 500 had indeed declined by well over 40% from its peak, at which point we observed that stocks were no longer overvalued (see Why Warren Buffett is Right and Why Nobody Cares).

The numbers speak for themselves. There is no new paradigm. The Fed is not infallible. The economy is already in recession. Corporate revenues and profits are falling. The consumer isn’t consuming. The market is being elevated by nothing but Wall Street hot air and HFT computers. This time is not different.

To fully understand the present valuation extreme, recognize that the market cap/GDP ratio is currently about 1.29 versus a pre-bubble norm of just 0.55, with “secular” lows such as 1982 taking the ratio to about 0.33. To fully understand the present valuation extreme, recognize that the S&P 500 price/revenue ratio is currently about 1.80, versus a pre-bubble norm of just 0.8, with “secular” lows taking the ratio to about 0.45.”

As for other investors, the worst mistake they made prior to the 2000-2002 collapse was to believe Wall Street’s claims that stocks were not in a bubble, and that this time was different. The worst mistake that other investors made prior to the 2007-2009 collapse was to believe Wall Street’s claims that stocks were not in a bubble, and that this time was different. The worst mistake that other investors are making today is to believe Wall Street’s claims that stocks are not in a bubble, and that this time is different.

Even brilliant investors can lose their nerve and capitulate to the trend and to peer pressure. Don’t be stupid. Don’t believe Wall Street. Don’t let them screw you again. Get your money out of the market.

Last month, Stan Druckenmiller recounted his own experience with capitulation and performance chasing when he was the lead portfolio manager for George Soros and the Quantum Fund:

“I’ll never forget it. January of 2000 I go into Soros’ office and I say I’m selling all the tech stocks, selling everything. This is crazy… Just kind of as I explained earlier, we’re going to step aside, wait for the next fat pitch. I didn’t fire the two gun slingers. They didn’t have enough money to really hurt the fund, but they started making 3 percent a day, and I’m out. It’s driving me nuts. I mean, their little account is like up 50% on the year. I think Quantum was up seven. It’s just sitting there.

“So like around March I could feel it coming. I just – I had to play. I couldn’t help myself. And three times during the same week I pick up a – don’t do it. Don’t do it. Anyway, I pick up the phone finally. I think I missed the top by an hour. I bought $6 billion worth of tech stocks, and in six weeks I had left Soros and I had lost $3 billion in that one play. You ask me what I learned. I didn’t learn anything. I already knew I wasn’t supposed to do that. I was just an emotional basket case and couldn’t help myself. So maybe I learned not to do it again, but I already knew that.”

Hussman doesn’t address real estate in his weekly letter, but that is the third hurricane headed our way. Despite home ownership reaching three decade lows, stagnant real wage growth, and an economy that has never truly come out of the 2008/2009 recession, home prices have somehow risen 30% since 2012. The combination of keeping foreclosures off the market, the Wall Street hedge fund buy and rent scheme, Chinese billionaires parking their ill-gotten gains in US high end houses, FHA, Fannie, and Freddie encouraging low down payment mortgages, and the return of flippers has produced an echo bubble in the housing market. Home prices are only 18% from the 2006 all-time high. This bubble will burst congruently with the stock and bond bubbles. Anyone who has bought a house with a low down payment since 2012 is going to be deeply underwater in the next few years. Book it.

Hussman, myself and a few other bloggers will be scoffed at for our warnings. That’s alright. I have thick skin. I don’t really give a shit what anyone thinks about me or my opinions. I deal with facts. As Hussman wrote in 2000, the question now is only about when. It isn’t years. It’s months, weeks or days.

“The issue is no longer whether the current market resembles those preceding the 1929, 1969-70, 1973-74, and 1987 crashes. The issue is only – are conditions more like October of 1929, or more like April? Like October of 1987, or more like July? If the latter, then over the short term, arrogant imprudence will continue to be mistaken for enlightened genius, while studied restraint will be mistaken for stubborn foolishness. We can’t rule out further gains, but those gains will turn bitter… Let’s not be shy: regardless of short-term action, we ultimately expect the S&P 500 to fall by more than half, and the Nasdaq by two-thirds. Don’t scoff without reviewing history first.”

– Hussman Econometrics, February 9, 2000

[Fenix]

1,100 Foreign Donors To Clinton Foundation Never Disclosed & Remain Secret
Submitted by Tyler D.
04/29/2015 - 17:30

The reason this is a politically explosive revelation is because the Clinton Foundation promised to disclose its donors as a condition of Hillary Clinton becoming secretary of state. Shortly after Barack Obama was elected president in 2008, the Clinton Foundation signed a “memorandum of understanding” with the Obama White House agreeing to reveal its contributors every year.

It hasn’t.



The Real Financial Crisis That Is Looming
Tyler D.
04/29/2015 15:50

Submitted by Lance Roberts

There is a financial crisis on the horizon. It is a crisis that all the Central Bank interventions in the world cannot cure. It is a financial crisis that will continue to change the economic landscape of America for decades to come.

No, I am not talking about the next Lehman event or the next financial market meltdown. Although something akin to both will happen in the not-so-distant future. It is the lack of financial stability of the current, and next, generation that will shape the American landscape in the future.

The nonprofit National Institute on Retirement Security released a study in March stating that nearly 40 million working-age households (about 45 percent of the U.S. total) have no retirement savings at all. And those that do have retirement savings don't have enough. As I discussed recently, the Federal Reserve's 2013 Survey of consumer finances found that the mean holdings for families with retirement accounts was only $201,000.

Fed-Survey-2013-NetWorthbyAge-091014

Such levels of financial "savings" are hardly sufficient to support individuals through retirement. This is particularly the case as life expectancy has grown, and healthcare costs skyrocket in the latter stages of life due historically high levels of obesity and poor physical health. The lack of financial stability will ultimately shift almost entirely onto the already grossly underfunded welfare system.

A recent article by Kelley Holland via CNBC addresses this issue:

"Part of the problem with the 4 percent rule is that it was developed in the 1990s, when interest rates were significantly higher. Retirees with their savings in safe instruments such as bonds and annuities were getting more income than retirees today do with similar assets.



Another problem, though one with a positive side as well, is that life expectancies have increased. Americans are living longer after they stop working, which means their savings have to last longer. A man reaching age 65 in 1970 could expect to live 13 more years, but by 2011 that figure was 18 years. A woman's life expectancy at age 65 rose from 17 years in 1970 to 20 years in 2011 (the most recent year for which such data is available from the Centers for Disease Control).



Research published in 2013 by Michael Finke of Texas Tech University, Wade Pfau of The American College, and David Blanchett of Morningstar Investment Management found that using historical interest rate averages, a retiree drawing down savings for a 30-year retirement using the 4 percent rule had only a 6 percent chance of running out. But using interest rate levels from January 2013, when their research was published, the authors found that retirees' savings would grow so slowly that the chance of failure rose to 57 percent."

However, that is for those with financial assets heading into retirement. After two major bear markets since the turn of the century, weak employment and wage growth, and an inability to expand debt levels, the majority of American families are financially barren. Here are some recent statistics:

47% of US households save NOTHING from current incomes.

American families in the middle 20% of the income scale earn less money and have a lower net worth than in 2007.

More than 50% of the children in US public schools come from low-income households.

65% of children live in households on Federal aid programs.

62% of Americans currently live paycheck to paycheck.

53% of wage earners make less than $30,000 per year.

The wealthiest 5% of Americans have 24 times the wealth of the average household in 2013, up significantly from 16.5 times in 2007.

Over 100 million Americans are enrolled in at least one welfare program run by the federal government. This figure does NOT include the 64 million in Social Security or 54 million in Medicare.

It is important to remember that the total population in the US is currently around 320 million. In other words, more than 1:3 individuals in the United States is currently being supported by some form of government assistance. This is at a time when roughly 70 cents of every tax dollar is absorbed by government welfare programs and interest service on $18 Trillion in debt.

Here is the problem with all of this. Despite Central Bank's best efforts globally to stoke economic growth by pushing asset prices higher, the effect is nearly entirely mitigated when only a very small percentage of the population actually benefit from rising asset prices. The problem for the Federal Reserve is in an economy that is roughly 70% based on consumption, when the vast majority of American's are living paycheck-to-paycheck, the aggregate end demand is not sufficient to push economic growth higher.

While monetary policies increased the wealth of those that already have wealth, the Fed has been misguided in believing that the "trickle down" effect would be enough to stimulate the entire economy. It hasn't. The sad reality is that these policies have only acted as a transfer of wealth from the middle class to the wealthy and created one of the largest "wealth gaps" in human history.

The real problem for the economy, wage growth and the future of the economy is clearly seen in the employment-to-population ratio of 16-54-year-olds. This is the group that SHOULD be working and saving for their retirement years.

Employment-16-54-040615

With 54% of this prime working age-group sitting outside of the labor force, it is not surprising that in a recent poll 78% of women in the U.S. want a "man with a J.O.B."

The current economic expansion is already pushing one of the longest post-WWII expansions on record which has been supported by repeated artificial interventions rather than stable organic economic growth. While the financial markets have soared higher in recent years, it has bypassed a large portion of Americans NOT because they were afraid to invest, but because they have NO CAPITAL to invest with.

The real crisis that is to come will be during the next economic recession. While the decline in asset prices, which are normally associated with recessions, will have the majority of its impact at the upper end of the income scale, it will be the job losses through the economy that will further damage and already ill-equipped population in their prime saving and retirement years.

With consumers again heavily leveraged with sub-prime auto loans, mortgages, and student debt, the reduction in employment will further damage what remains of personal savings and consumption ability. That downturn will increase the strain on an already burdened government welfare system as an insufficient number of individuals paying into the scheme is being absorbed by a swelling pool of aging baby-boomers.

At some point, the realization of the real American crisis will be realized. It isn't a crash in the financial markets that is the real problem, but the ongoing structural shift in the economy that is depressing the living standards of the average American family. There has indeed been a redistribution of wealth in America since the turn of the century. Unfortunately, it has been in the wrong direction as the U.S. has created its own class of royalty and serfdom.

For many, retirement years will not be golden. They will simply be more years of working to make ends meet as the commercials of "old people on sailboats," promoted by Wall Street, will become a point of outrage. While the media continues to focus on surging asset prices as a sign of economic health, the reality is far different.

The real financial crisis in the future won't be the "breadlines" of the 30's, but rather the number of individuals collecting benefit checks and the dilemma of how to pay for it all.

[Fenix]

When Exactly Will The Fed Launch QE4?
04/29/2015 15:00

Submitted by Bill Bonner
Money From Nowhere

On Friday, the S&P 500 and the Nasdaq closed at record highs. It’s the first time both indexes have done so since December 31, 1999. Why such optimism? High profits, you say. But where do profits come from?

Households have less money to spend than they did 15 years ago. And companies cannot make money just by selling things to each other. The only explanation is that customers – including the US government – continue to borrow and spend.

Corporations borrow money to buy their own shares. Consumers borrow to buy products. Either way, the money comes “out of nowhere” and falls on balance sheets like manna from heaven.



the-us-federal-reserve-board-building-susan-candelario

The great money temple, from whence fresh pronouncements shall issue today. How long before it floods us with fresh money again?

Photo credit: Susan Candelario
The Limits of Debt

US households appeared to reach “peak debt” in 2007. Now, the corporate and government sectors – not to mention students and auto buyers – are pulling up to their maximum debt limits, too.



Household debt

Credit to US households and non-profits stood at $13.384 trillion as of March 18 2015 – still below the 2007 peak and declining in relative terms – click to enlarge.



“Everybody – including every corporation and government – has a capacity limit for debt,” says Swiss money manager Felix Zulauf. “Once they reach capacity, they stop buying. Then the additional sales turn to additional inventories, employees turn to jobless statistics, and profits turn to losses.”

Maybe the cycle will reverse soon. Maybe it won’t. But US corporate profits – already at record highs – can’t go much higher unless: (a) wages rise, (b) consumer borrowing rises or (c) government borrowing rises. None of which looks likely.

And without the hope of higher earnings in the future, why pay so much for stocks today? The S&P 500 is trading at 27 times the average inflation-adjusted earnings of the previous 10 years. Only twice in history have S&P 500 earnings, measured this way, been so pricey: at the peak of the dot-com bubble and right before the 1929 crash.

Ah, you might say, but this doesn’t account for central banks’ ultra-low interest rate policies. Without the supposedly “safe” income that bonds throw off, what’s an investor to do but reach for dividends and capital gains in the stock market?

But stocks are supposed to look ahead. You don’t buy a stock in anticipation of getting back the same thing you paid. You buy hoping to get more. And if prices have gone up because interest rates have gone down, what will they do now that interest rates are already down near all-time lows?

How much lower can interest rates go? (We’ll leave that question for tomorrow – I think you’ll be surprised.) In the meantime, let’s keep our eye on the US stock market. Why are stocks – and assets generally – so richly valued?



SP-and-PE10

As of April 1, the CAPE (a.k.a. PE-10 or Shiller P/E) stood at 26.8 (chart by Doug Short/Advisorperspectives). Only the 1929 and 2000 mania peaks are still topping the levels of today – click to enlarge.


Here Comes QE4

“Nowhere” has provided a lot of money …

No one earned it. No one saved it. But here’s our prediction: Someone will miss it when it is gone! If the US money supply were a deck of cards, Uncle Sam has been slipping in extra aces for the last 44 years.

Between 1980 and 2008 these aces were in the form of current account deficits. The US bought more from overseas than it sold abroad, and financed the difference on credit. Fiat dollars went to overseas suppliers. Their central banks took the cash and sent much of it back to the US, where it was used to buy stocks and bonds.

From roughly 1990 to 2008, the flow of dollars into US financial markets from trade surplus countries (where exports exceeded imports) averaged about $400 billion a year.

According to the author of The New Depression, Richard Duncan, this money was an important source of the Nasdaq bubble at the end of the last century… and the sub-prime mortgage bubble at the start of this one. When those bubbles popped, the Fed came up with another source of liquidity – QE.

Take QE plus the amount of dollars accumulated overseas as foreign exchange reserves, subtract Washington’s borrowing (which drains liquidity), and you have what Duncan calls the “Liquidity Gauge.” Follow the gauge, he says, and you will know how loaded this deck really is.

For example, in 2013, low government borrowing combined with QE led to near record levels of liquidity. The S&P 500 reflected this with a 30% gain. What’s in store in 2015?

It doesn’t look good. Washington’s budget deficits are estimated to stay at about $500 billion a year until 2020. This will absorb a lot of liquidity to pay zombies. Also, the Fed has put its QE program on pause. If it stays that way, some liquidity would seep in from European and Japanese QE programs. But it would be fairly modest.

The only major source of liquidity would be from dollar foreign exchange reserves overseas. But world trade has slowed, greatly reducing those reserves. The result? Negative net liquidity for the next five years.

The bad news begins in the third quarter, says Duncan. Because income tax returns are due in the second quarter, it always brings in tax revenue to the US government. This reduces Washington’s need to borrow… leaving liquidity available to the stock and bond markets.

But in the third quarter, net liquidity is likely to turn negative. And the stock market is likely to correct. What then? The Fed will panic and announce QE4… and other measures. More on those tomorrow …

* * *

debt monetization

Although this chart is slightly dated (it shows foreign central bank monetization of US treasury and agency debt until December 2012), it illustrates that FCBs are an important factor in the liquidity game. The chart depicts a large portion of the recycling of the US current account deficit by mercantilist nations, which are usually blowing up their domestic money supply in the process. In the past two years, this has slowed down considerably though, as the US trade deficit has declined (chart by Michael Pollaro) – click to enlarge.

[Fenix]

Bonds, Stocks Shrug As Hawkish Fed Sparks Dollar Surge, Commodity Purge
Tyler D.
04/29/2015 14:33

Bonds & stocks seem confused by the somewhat hawkish Fed statement with modest gains for both amid a lot of oscilation around unchanged. The Dollar, however, is quite sure and is surging (EURUSD -100pips) with crude and precious metals sliding.

Stocks undecided for now...

Bonds not sure...

But the dollar is surging (slamming EURUSD back from its big rally)

Commodities fell out of tyhe gate but copper now green post-FOMC...



Jawbone Renormalization: Only 560 Words In FOMC Statement, Fewest Since October 2012
Tyler Durden's picture
Submitted by Tyler D.
04/29/2015 14:16

While the Fed, courtesy of its $4.5 trillion in assets, is boxed in a monetary corner from which there is no "renormalization" exit, at least no exit that doesn't involve an epic market crash, one place where Yellen and her peers are normalizing is the verbal transmission mechanism, aka the statement jawboning. Because after peaking at 895 words in September 2014, the April 2015 statement had a paltry 560 words, barely notable by Fed QE standards.

In fact, at 560 words, this was not only the lowest wordcount of any FOMC statement since October 2012, just before QE3 was launched in December of 2012, but actually had fewer words than Hilsenrath's 608 words "explainer" of what the Fed just said.