Economic Headlines for April 26, 2016

Ouch all the way around. Let's begin with the doctored data from the Atlanta Fed:

Bank of America's largest institutional, private clients are net sellers:

"Bank of America's "smart money" (institutional, private and hedge funds) clients, simply refused to buy anything, and in fact had continued to sell stocks for a near-record 12 consecutive weeks.  In fact, the selling continued despite what we said, namely that "at this point it was about time for the selling to stock, if purely statistically, otherwise said "smart money" would be sending the clearest signal yet that the market rally from the February lows is nothing but a huge gift to sell into."
"BofAML clients were net sellers of US stocks for the thirteenth consecutive week last week—making it the longest uninterrupted selling streak in our data history (since 2008) as clients continued to doubt the market rally."
According to BofA, "net sales were $3.8bn, the biggest in three weeks but the sixth-largest in our data history (since ’08), with sales from hedge funds, private clients and institutional clients alike. This follows a week of net buying by hedge funds the prior week; institutional and private clients have both been consistent net sellers since February. Clients sold stocks in all three size segments, and year-to-date only small caps have seen cumulative inflows."

Global Anarchy Coming When Central Bankers' Shennigans Blow Up?

Societe Generale's Global Strategist Albert Edwards said today that he feels "utterly depressed". He proclaims that  he hasn't "one scintilla of doubt that these central bankers will destroy the enfeebled world economy with their clumsy interventions and that political chaos will be the ugly result. The only people who will benefit are not investors, but anarchists who will embrace with delight the resulting chaos these policies will bring!"

Wow! 

Dow Tops 18,000 Even As Earnings Hit 12-Month Lows

Who needs an economy? Who needs jobs? In a world of digital money, who even needs reality? We have digital prosperity now!

Look Out Belooooow! Fed Slashes GDP Estimate!

Recession alert:
Last month, the Fed slashed the Q1 2016 GDP estimate from 1.2% to just .4%. Now today, it slashed it even further to just .1%! That's barely breathing!

They probably doctored the data just to keep it from dipping into negative territory!

Minimum Wage Hikes! Icarus Rising, Er, Uh, Falling!

Headlines for April 4, 2016

With news like this, the Dow should be up at least 100 points!   /sarc off

The Illusion Continues, With Support By Central Bankers

As earnings continue to show weakness, central bankers continue their interventions to maintain the illusion of prosperity. Eventually, there will be another collapse. It will be historic!

And when will this happen? I don't know! My best guess is that it will occur during the next recession as the following happens:
1) Revenues to the US government collapse due to lay-offs and fewer people are working.
2) Demands for entitlement spending skyrocket, and more and more people require help with housing and food.

Of this I am certain:
1) The interest on US government debt is now about $1/2 trillion per year.
2) The US government will borrow an additional $1/2 trillion this fiscal year.
3) The Congressional Budget Office forecasts that by the end of the next president's first term of office, the US will be borrowing $1 trillion/year! That's about 1/4 of the budget!

This guarantees a debt crisis sometime in the next few years! It will collapse the bond market and the US Dollar. It will bring a depression that will dwarf the Great Depression of the 1930s. It will likely also bring horrible bloodshed as desperate people engage in desperate behavior to survive.

The Power of One Central Banker

This chart shows the market reaction to Janet Yellen's remarks this morning in a speech she gave. The Dow is up 100 points and still climbing. We are once again near the all-time record high levels that we reached last year, despite that corporate earnings have declined since then. That means that price to earnings ratios are now even more stratospheric and bubbly than they were then, because at the same high price levels but with lower earnings, the extremity of the ratio is even higher.

Should any one person have that kind of power to manipulate the market? It doesn't change the magnitude of risk to investors. It only changes the perception of risk, and the willingness to take greater and greater risk. When investors are once again forced to acknowledge that risk, the consequences will be calamitous!

A US Government Debt Crisis Is Ineluctable!

I placed this comment on a finance website earlier today:

• US Government debt is growing more than 2 times faster than GDP.  Q4 2015 GDP = 1.2%, debt growth this year is 2.6%.
• Interest alone on the debt is $.5 trillion this year! And that's with central bank interest rate suppression!
• The US CBO says that by the end of the next president's first term, the US will begin to incur $1 trillion debt per year -- indefinitely.
• If interest rates on the 2-yr bond return to just 2% per year, the interest will consume virtually ALL US government revenue just to pay the interest on the national debt.
• There are now more recipients of government assistance, than there are taxpayers paying for those benefits! And it's not even close!

A debt crisis is coming. Calamity is certainty! Plan and prepare accordingly! When it happens, all US government programs will come to a sudden end.

Delusional Markets

And this is what bubbles are made of!

The Bubble Is Back!

The second chart shows the various central bank interventions since February 1st.

Economic DIchotomy -- Stocks Soar As Earnings Crash

I couldn't help noticing the contradiction today between stocks, which just went positive for 2016, and both employment and corporate earnings! This is what a bubble looks like!

Obama's Legacy

Bad News Is Good News!

Who needs an economy? Who needs jobs? We have PRINTED prosperity now! 

Hey Reuters! How About Some Propaganda?

 

Less than 2 hours later, it was revised to this:

 

The folks at Google caught on to the tomfoolery:

Coming Cataclysm: Negative Interest Rates

This is a sign of desperation by central bankers that they would charge interest to bank depositors and government lenders. And they want to ban the use to cash to prevent runs on the banks. It's going to bring a calamity!

By Stephen Roach today:
NEW HAVEN, Conn. (Project Syndicate) — In what could well be a final act of desperation, central banks are abdicating effective control of the economies they have been entrusted to manage. First came zero interest rates, then quantitative easing, and now negative interest rates — one futile attempt begetting another.
Just as the first two gambits failed to gain meaningful economic traction in chronically weak recoveries, the shift to negative rates will only compound the risks of financial instability and set the stage for the next crisis...
This could be the greatest failure of modern central banking...
...most major central banks are clinging to the false belief that there is no difference between the efficacy of the conventional tactics of monetary policy — driven by adjustments in policy rates above the zero bound — and unconventional tools such as quantitative easing and negative interest rates...
Two serious complications have arisen from this approach.
The first is that central banks have ignored the risks of financial instability.
Drawing false comfort from low inflation, overly accommodative monetary policies have led to massive bubbles in asset and credit markets, resulting in major distortions in real economies. When the bubbles burst and pushed unbalanced economies into balance-sheet recessions, inflation-targeting central banks were already low on ammunition — taking them quickly into the murky realm of zero policy rates and the liquidity injections of quantitative easing.
Second, politicians, drawing false comfort from frothy asset markets, were less inclined to opt for fiscal stimulus — effectively closing off the only realistic escape route from a liquidity trap. Lacking fiscal stimulus, central bankers keep upping the ante by injecting more liquidity into bubble-prone financial markets — failing to recognize that they are doing nothing more than “pushing on a string” as they did in the 1930s.
The shift to negative interest rates is all the more problematic. Given persistent sluggish aggregate demand worldwide, a new set of risks is introduced by penalizing banks for not making new loans. This is the functional equivalent of promoting another surge of “zombie lending” — the uneconomic loans made to insolvent Japanese borrowers in the 1990s.
Central banking, having lost its way, is in crisis. Can the world economy be far behind?

Read the rest here. 

Central Bankers Intervene Again

This was on Bloomberg today!

One Moment of Fed Truth-Telling

"The last duty of a central banker is to tell the public the truth." - Alan Blinder, former Federal Reserve Board Vice Chairman

Economic Data Showing Significant Weakness

First, the bird's-eye view. Thanks to Lance Roberts at Real Investment Advice for this perspective.

More charts showing the dismal reality:

At least this one looks like it may have bottomed:

Dow Loses 600 Pts in 2 Trading Sessions

On Friday, stocks lost about 250 points, and today, the Dow has lost 350 points so far. Perilous times!