| | | Hi Bob, I am looking at intermarket relationships...... It's a Holy week and a short week... Not expecting this to get sorted out this week.
the EUR/JPY has lost money being long EUR the past 2 days.... We went right through 200 DMA ....so it either a fake out.... or signalling problems
the Yen is too strong and the TNX is too low... Gold is going up significantly and took out it's 200 dma for first time in a number of weeks.
The VIX has come to life... the geo Military situation in the world is Not good.
This feels like the stormy lighting riddled night in the movie Tombstone.... It was not a good night... Wyatt Earp's brother Morgan was shot and killed......
Thomas Peterffy, the CEO of InterActive Brokers will be proven to be prescient is my suspicion.
A 5% vacuum could also be a 12% vacuum.....
GS is acting bad... I had AJ send me a PM voicing his bearish concerns on the weekly Financial Sector.
the margin compression in banking is collapsing profits. Loan growth is slowing... Not sure about positive guidance.
The TiPS trade in bond has collapsed while Gold, SIlver and the VIX is going up...
The United States1. Let’s begin with the slowdown in credit growth (discussed yesterday: #2 here). The chart below shows just how broad this trend has been. This is not what one would expect from a banking system that is about to undergo meaningful deregulation.
Source: BMI Research
2. When will the new housing construction activity in the US get back to the levels we saw during the bubble? Don’t hold your breath, says John Burns Real Estate Consulting. The firm forecasts new single-family unit construction permits to peak in a couple of years and start declining after that.
Source: John Burns Real Estate Consulting
4. The Fed’s labor market conditions index missed projections again.
5. This chart shows a sharp divergence between the Bloomberg economic surprise index and the Atlanta Fed GDP forecast (GDPNow). Something has to give here.
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The multifamily construction activity may have already peaked.
Source: John Burns Real Estate Consulting
3. The headline unemployment rate has punctured through the “natural” rate of unemployment. Economists are eagerly anticipating wage pressures, which have not materialized broadly thus far.
• The 2-year French – German government bond spread hit another multi-year high (the widest since the Eurozone crisis).
6. US market-based inflation expectations continue to drift lower. Many economists blame softer oil prices. Perhaps.
7. US cars and light truck sales have diverged dramatically. Is cheap gasoline the cause here or is there more to it?
Source: Capital Economics
8. This chart shows how difficult it will be to balance the budget when additional defense expenditures and tax cuts are taken into account. Will a stronger economic growth compensate for lower base tax revenue?
Source: Goldman Sachs, @joshdigga
9. Finally, we have a couple of letters to the editor.
The first one is in reference to under-water car trade-ins discussed last week.
• Re your “the average vehicle loan size continues to rise, potentially indicating better sales in luxury autos,” this also reflects the rollovers from prior loans from the increasing number of buyers who are belly-up on their loan when they trade their vehicle in, this in turn due to vehicles being increasingly financed over six or more years. (Think of boat loans which are commonly financed over 10-15 years: this practically guarantees that you’ll owe more on that boat than it’s worth on that happy day when you sell it).
Jim
The second is regarding the lack of media coverage of the student loan problem.
• Here is a question I would like to see addressed: The chart from today’s Shot shows that student loans have roughly tripled in the about the last ten years. This seems like a huge story that no one is covering anywhere in the press. I doubt most Americans think we made some policy decision to do this. What is going on here?
Rick
• The one-month EUR/USD risk reversal dropped below the worst levels after the UK Brexit vote. The chart shows that put options on the euro are becoming much more expensive than call options.
2. Despite the short-term risks, equity investors are becoming more optimistic.
5. While the longer-term US and German government bond yields are highly correlated, the correlation has broken down on the short end of the curve. The ECB buying more German paper and the French elections uncertainty (above) are the primary reasons (note that last year’s Italian referendum fears lowered the correlation as well).
Source: Natixis, @joshdigga
Back to Index
The United KingdomWill the consumer continue to carry the nation’s GDP expansion as the savings rate and wage growth stalls?
Source: Natixis, @joshdigga
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back to Russia
Emerging Markets1. The Russian stock market remains under pressure.
 7. As growth in China’s excess liquidity slows, will asset prices follow?
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Global DevelopmentsThe slowdown in credit growth we saw in the US is also visible on a global basis.
Source: Capital Economics
Back to Index
Equity Markets1. According to TD Ameritrade, retail investors remain extremely long on stocks.
2. Are US equity flows turning negative (ETP = exchange-traded product, MF = mutual fund)?
Source: Credit Suisse
3. High-dividend shares continue to underperform.
4. The VIX curve flattened further on Monday. At least a part of the move is the uncertainty around the French elections. But also the Military uncertainty and the question of what and when something happens on US Tax policy
It's been quite a while since we have seen an inversion in the VIX Futures Curve. The Commercial Firms were heavily short stock futures while the small speculator was very long.
Mixed signals for me...
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