HELD RESPONSIBLE

Central bankers have been much in the news of late, given the meetings of two global heavy hitters last week, the Federal Reserve and the Bank of Japan. The risk on-again-off-again has been one of the popular themes of the market for some time now. Sort of like one of my old girlfriends, is she staying or going? Confusing to be sure, especially two years after her initial announced departure.

And that brings us to the Fed and it's current strategy when one doesn't have a clue any longer. Will they hike interest rates this year or won't they? And if so, how many times and when does it all start?

One time when it doesn't for sure start is just before what could be one of the most volatile, contentious presidential elections in the nation's history.

Just look at the market's reactions to the recent Bank of Japan's do nothing stance at it last meeting, it wasn't what those central bankers hoped for. And the same can be said for the ECB. Factor in this little riddle, too: The Fed's abrupt on-again-off-again recent concern about the global economy. We all know that the Yellen-led Fed claims to be data driven. But when that data are not driven in the direction you want or hoped for, what do you do then? Obfuscate.

The lesson here for investors and all those linear-thinking central bankers is not all markets are groupies. Recall too in the last few months how many Fed emissaries have been sent forward to give conflicting are-they-or-aren't-they messages about interest rates in the media. The shelves in the Global Monetary Policy store are empty. What's left is what's going on now.

When you can't find any inflation because your inflation-doctored data is now returning to bite you in the butt, when you no longer have a clue, confuse and obfuscate, and with a little luck somehow the problem just might disappear. But then as economists are so fond of saying: On the other hand.....!

As for that old girlfriend, that strategy didn't work. But a court ordered eviction notice did. And that's why in the future, the Fed, if there is one, ought to be held responsible for its actions. Around the globe these bureaucrats hold in their tiny linear and often pathetic econometric-laden minds the financial future of too many lives for a group of non-elected bureaucrats to escape responsibility.

OVERNIGHT

Doing nothing like every other strategy can have its shortcomings, too, as the Bank of Japan found out Friday when many Asian markets turned down just one day after the BOJ's decision to stand pat for now on any further easing of monetary policy.

While Hong Kong's Hang Send fell 1.2%, Korea's Kospi shed 0.6% and the Australian S&P/ASX 200 eked out a 0.3% gain. The Japanese market was closed for a holiday. Asian investors continue to show concern about prospects for global economic growth.

Market activity Thursday in the U.S. didn't do Asian shares any favors as the Dow Jones Industrial Average declined to its largest percentage loss since early February. And the yen hit an 18 month high against the dollar at 107.13, its strongest level since last 2014.  Another financial shoe that hit the floor Thursday was the first quarter slowdown the U.S. economy when GDP grew at a miserly 0.5% annual rate, lower than analysts were expecting.

It was the third time in a row that the GDP declined compared to the previous quarter and fits into the pattern of slow GDP growth in the U.S. for nearly a year. In fact, as one observer noted this slow economic growth during this administration's tenure will likely be the fourth worst in recorded history. Keep in mind this indicator has been changed many times recenlty and the changes favor the government not you and me.

But don't expect this to get accurately reported by MSM or central bankers. You also should realize just how desperate these people are to scavenger up some inflation. People who get so upset with Trump for saying anything apparently don't realize he's just doing what MSM and central bankers do every day. Say anything to keep this puppet show going.

And that  brings us back to our opening: Doing nothing like every other strategy has its shortcomings, too.

"THE SON OF A BITCH COULD PLAY FOR ME!"

Love or hate Bobby Knight, he says what's on his mind.

Campaigning for the Donald earlier today in Evansville, Indiana, Knight pointed out he was quite selective when he coached at IU in picking his players. Well, there's another guy, no less controversial than Knight, who speaks his mind. He's running for president. Here's what Knight had to say about him: "The son of a bitch could play for me."

Pancakes for breakfast anyone?

businessinsider.com/bobby-knight-donald-trump-2016-4?

OVERNIGHT

First there was the Fed's statement Wednesday that drove the yen lower and then when the BOJ decided to stand pat on any further monetary easing for now the yen rose sharply against the dollar, rallying 2.4% to 108.8770 chalking up its biggest one-day increase, according to the WSJ, since late August 2015.

The BOJ announcement came during lunch time Thursday, but when the market reopened the Nikkei headed south surrendering earlier gains of 1.6% that turned to losses of 3.2%. For many the announcement caught investors by surprise since there was a feeling the BOJ would take some action to further weaken the yen. The yen has been rising much of the year against the dollar, hurting Japanese exporters.

Others speculated that the market's negative reaction to the bank's previous easing could have affected their decision to hold off until they have more data. The strength of the yen against the dollar also caught many off guard, but the Fed's decision to hold off on what was earlier projected to be four interest rates hikes this year to possibly only two no doubt gave the yen a boost.

According to the report, consumer prices in Japan were down lending further confusion since any sign of inflation appears to be harder to find than a four leaf clover. Apparently, deflation still rules the day after massive and unprecedented monetary easing policies by the BOJ, leaving officials there to ponder their next move.

What's next is anyone's guess, but a confidence crisis might be a good guess as it appears not just Japanese central bankers have no clue. In the U.S. many believe there is a concerted ploy to keep the market afloat until after the November election. Meanwhile, other markets faded as the news spread with the Shanghai Composite off 0.7%, the Hang Seng down briefly before rallying 0.3% and the Kospi shedding 0.6%

OVERNIGHT

Not much was expected ahead of some central bank releases today and Thursday as Asian markets mostly traded lower, but crude oil owing to a supply draw down report held strong,  settling near 2016 highs.

MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS retreated 0.5 percent while Australian shares remained flat owing to weak inflation data as the Reserve Bank of Australia kept its rates unchanged though some investors feel a further cut could be in the works soon. One of the big questions is what will the Bank of Japan do Thursday. Some are expecting officials to further ramp up its monetary stimulus package.

 U.S. crude traded at $44.50 a barrel, not far from $44.83, the highest since early November. Tuesday, Brent crude was at $46.30 a barrel after rising to a five-month peak of $46.49 overnight. Energy shares are up 14% over the past three months, not necessarily what investors were anticipating, a move that outperformed most other sectors. In other Asian markets, the Shanghai Composite Index was flat, while Hong Kong’s Hang Seng Index fell 0.3% and South Korea’s Kospi was down 0.2%.

The WSJ reported: Stocks in Japan fell Wednesday amid disappointing corporate earnings ahead of decisions by central banks in the U.S. and Japan, while elsewhere in the region, energy shares rallied as oil prices reached new highs.

The Nikkei Stock Average fell 0.5% as traders were reluctant to put on big trades. Among individual stocks, bicycle parts maker Shimano dropped 4.4% after the company cut its net-profit projection for 2016, citing a weaker U.S. dollar against the yen.

IT HELPS TO HAVE FRIENDS

If there's a Wall Street firm more worthy of your contempt than Goldman Sachs, we have yet to see it.

This is a firm in the back pocket of the Federal Reserve, an advisor to billionaires and some of the world's largest corporations. It is an investment bank that loves to throw its political clout around. Just ask one of the major candidates in the current presidential circus. And see it's position on Brexit where it stands to take a big hit if the yes voters carry the day.

You know, despite their shilling for the fantasy global economic recovery meme, things are tough when GS goes after "cash-cushion" money. This is an haughty 150 year old, stuffy outfit so full of itself that they most likely wouldn't let the common guy step indoors during a downpour. Such rabble would sully the lobby.

Now this arrogant, elitist firm comes sniveling after what can only be called quasi-deposit monies. A recent purchaser of GE Capital Bank's online deposit platform, GS is going after the retail trade. Sort of. And that's what one has to be chary of. These folks aren't your friends by any stretch. Revenue from their investment banking and trading business hit the wall recently. In other words, bad economic times in the long run catch up with all of us.

The excuse floated by their MSM friends is recent tougher regulations. To attract business--see The Art of Coney Catching 18th Century UK literature--their offering high rates, 1.5% on savings accounts, a whopping 1% on CDs and, hold on to your passbook, 2% on five-year CDs, according to the WSJ.

What's the catch? There's only one way to get your money out and at that only six allowed withdrawals per billing cycle is by electronic transfer to another financial institution. No mention as far as one can tell whether these transfers like most things in the investment banking world come with a fee. It's near impossible to imagine two banks involved in a transaction without any fees.

Goldman is trying to catch up with other large Wall Street firms with fairly large deposit bases. Consumers in the eyes of big investment bankers are hardly the smartest people on the planet. Deposit funds are known for being really sticky. Given that and some stringent withdrawal rules and you got yourself a steady flow of low-cost, long-term funds to toy with.

It's a great gig if you can get it. But first you have to get approval from your friends in Congress and at the Fed. But after all, that's what friends are for, isn't it?

OVERNIGHT

Some are calling it caution before Tuesday's Fed meeting and well it might be with most Asian shares down overnight.The Nikkei was off 1% , the Kospi flat and the Australia's S&P/ASX was down 0.3%. The Hang Seng dropped 0.6% and the Shanghai Composite Index traded flat.

The BOJ has a two-day meeting starting Wednesday where many expect more monetary easing from officials to try to boost their economy, hoping in the process to weaken the yen and conjure up some inflation. It's been a see-saw for Japanese financials as one day they're stronger and like today they lead the market down.

Part of the trouble stems from the big state investment fund in Malaysia that defaulted on a $1.75 billion bond issue as news of it rippled through markets. Japan's automakers, which rely heavily on export sales for profits, felt some of the pain, with Toyota Motor Corp slipping 1.1 percent while Honda Motor Co Ltd slid 1.4 percent and shares of Nissan Motor Co Ltd were 1.5 percent lower.

Here's an interesting chart from davidstockmanscontracorner.com/another-gary-cooper-rebound-it-isnt-on-the-level



No matter. The madcap money printers at the BOJ have already bought up every Japanese government bond that can be pried loose and owns nearly 50% of Japanese issued ETFs. And now comes word that the BOJ has bought so much stock through ETFs and directly that it has become a top holder of most of the stocks in the Nikkei 225.

Some observers expect Japanese officials to extend their ETF purchases rather than cut rates lower or buy more bonds. For more on the mess called the Japanese economy, the yen and the BOJ read this.
zerohedge.com/news/2016-04-24/why-goldman-expects-japanese-yen-collapse-within-12-months

A CAN OF WORMS

If you want to know why the Republican Party is headed for extinction, here's why. Their willingness to stop at nothing to stop the Donald shows you how scared and pathetic they are. But way more important, they're telling all those who support Trump what they want doesn't matter. Besides that, they are calling all who disagree with them ignoramuses, xenophobes, hate mongers, racists and any other nasty epithets they think up.

This should help carry a long memory. This is indeed a watershed moment. They are now showing their true colors. It's their way or no way. Ask yourself if you want to belong to a party like that? And for all you independents and others who get the Trump message or simply want something different from the bores of the past in both parties, understand what this is, a frontal in-your-face assault on your liberty and your freedom of choice.

You can lay down and roll over on your back with all four paws in the air they way they want you to or you stand up fence-post straight, look them steady in their pupils, something they can't do, and let them know you're going to be heard. You're not going anywhere. This indeed is your can of worms. Let's get it opened.

As for the good campaign manager's concern about setting the party back, it would be difficult to set a party back a generation that hasn't been inclusive since Abraham Lincoln. In their conceit and arrogance they never expected this. Note the term "unlikely rise" in the story. They took you and your franchise for granted. 

PROVIDENCE, R.I.—Donald Trump’s rivals are joining forces to deny him the necessary delegates to win the Republican presidential nomination, the latest display of strife in a convulsive 2016 GOP race.

Ted Cruz and John Kasich issued near-simultaneous statements Sunday outlining an extraordinary compact that may be unprecedented in modern American politics. Under the arrangement, the Kasich campaign will give Cruz “a clear path in Indiana.” In return, the Cruz campaign will “clear the path” for Kasich in Oregon and New Mexico.

The arrangement does not address the five Northeastern states set to vote on Tuesday, where Trump is expected to add to his already overwhelming delegate lead. Kasich and Cruz had already retreated to Indiana, which holds its primary on May 3. Yet the shift offers increasingly desperate Trump foes a glimmer of hope in their long and frustrating fight to halt the former reality television star’s unlikely rise.

“Having Donald Trump at the top of the ticket in November would be a sure disaster for Republicans,” Cruz’s campaign manager, Jeff Roe, said in a statement explaining the new plans. “Not only would Trump get blown out by Clinton or Sanders, but having him as our nominee would set the party back a generation.”

FINANCIAL HUMPTY DUMPTY

For as long as we can remember we've been saying academics don't live in the real world. People for the most part are extensions of their upbringing. For economists it's their econometric models and Keynesian theories.

There's a difference between academic and real worlds, one most academics never seem to get. People don't always act rationally. In fact, an interesting thought might be what if irrational is the norm, at least in certain situations? Whoever dreamed up the rationale for putting a human being behind the steering wheel of a 2000 pound part metallic object that can exceed 100 miles per hour speed?

Yes, we now have behavioral economics. But that get's modeled also. If you start with a false premise it's likely any conclusion you come up with will also be false. The biggest false premise of all just might be human behavior is understandable. So we come up with exceptions and excuses like neuroses and such--iconoclastic, eccentric or just plain different.

These might make us feel better, but that hardly makes them facts. In the stock market most investors disdain volatility. Volatility is to chaos as psychology today is to people. You find one you'll find the other. So why wouldn't China which has been the locomotive for a large part of global growth the past decade or so doctor it's GDP numbers once the economic winds start to leave those sails?

It might surprise you, but China is run by people, too, people who wish to not only stay in power but consolidate that power. The meme that we in the Western world are any different is just that--a fanciful meme officials hope the gullible with continue purchasing. Don't forget every generation brings with it a number of the new gullible set. Some believe that if China's GDP numbers were any more doctored they'd be a shingle hanging outside a new office building.

For those who care to carefully look few of the basic problems that punctuated this mess have been corrected. A cynic might say none. Swept under a convenient carpet or just kicked down the road, that's still the official solution of the times. Wallpaper it over. You know that by the growing attack against austerity. The globe is awash in debt and nobody dares to stick his finger in the dike. That's akin to cutting your throat just to watch yourself bleed. In the ken of politicians and bureaucrats hemophilia is an afflictions only for the masses.

So the debasing continues. Not just the currencies, but the social, political and educational. Rumor has it Diogenes picked up his lantern one dark night and strolled out into the blackness searching for an honest soul. Somewhere he made a wrong turn and wound up in Washington DC where after just a few minutes he tossed his lantern away and, reportedly was heard to utter: "Screw it!"

That's what more and more people around the globe are saying today. And there will be tons more once this financial Humpty Dumpty falls. It's the hard landings that crack the egg.

DRAGHI SPEAKS

Today was to be an important day for the European Central Bank and what President Mario Draghi would do and say about monetary policy. Here a brief note from Business Insider:

• The euro is up 0.8% at 1.1385 after the European Central Bank left both its key interest rate and deposit rate unchanged at 0% and -0.40%, respectively. The inaction was expected after the ECB cut rates and increased its asset purchases at the March meeting. 

In the Q&A session here are some of his responses:

On inflation, Draghi says inflation rates could slip back into negative territory in coming months but that the ECB expects inflation to pick up in the second half and futher recover in 2017 and 2018. That’s in line with the ECB staff forecasts.

Draghi is asked if he worries German criticism of the ECB’s policies could have a negative impact on investment and business activity.

Draghi says a “polite, lively debate” helps the ECB better explain its policies. But he says criticisms “of a certain type” could be seen “endangering the independence of the ECB.”

That could lead to delayed investment and risk taking, he says, but the ECB will continue mplementing policies it deems appropriate. The only impact will be to delay the achievement of the ECB’s objectives and to require even more policy expansion, he says.

On a related question about Britain’s upcoming referendum on whether to remain in the European Union, Draghi says Brexit concerns have already produced significant market consequences.

Draghi is asked about the prospect of “helicopter money”–a program in which a central bank injects money directly into the economy.

Draghi expresses surprise that his response to an earlier question about the extreme monetary policy measure has drawn so much attention. “The bottom line is that we have never discussed it,” he says.

But what about pensioners? Draghi is asked what he would say to German citizens worried about the fate of their pensions given ultralow and negative interest rates.

Draghi says there’s no doubt pensions and insurance firms are affected, but urges them not to blame everything wrong in the sector on low rates.

He also notes that they’ve also reaped the benefit of large captial gains on their bond holdings as a result of the ECB’s asset-buying program. Also, it’s not just a function of the ECB, he says, noting the U.S. long had rates near zero before the ECB.

Low interest rates are a “symptom of low growth and low inflation, it’s not the monetary policy consequence,” Draghi says. “If we want to return to higher interest rates,” higher growth and inflation is required, he says. Getting back to growth requires the current monetary policy stance.

At the same time, its worth noting real rates–interest rates minus inflation–are higher than they were 20 or 30 years ago, but that’s difficult to explain to savers, Draghi says, telling he questioner, “perhaps that’s your job.”

As you can see his responses were laced with the usual bureaucratic speak. Nobody in their right mind among average consumers cares about inflation adjusted interest rates. That's about as far form the real world as are these bureaucrats. It's a condescending remark, the same ploy used against the price of gold not being higher than it was in 1980.

His comment about pension and insurance funds is another dodge. A recent report noted there are something like 153 underfunded country pension funds today. Did the same savers who it would be sol difficult to explain real rates to cause this also?

And then there's  his "broadly positive" comment about the ECB's experience with negative interest rates. It's right of the waffle iron.

OVERNIGHT

Chinese shares overnight traded in a see-saw fashion as they seemed to be caught between two forces., more liquidity and the possibility of officials turning down the spigot for more monetary stimulation.

The Shanghai Composite Index opened down but veered into positive territory and last traded up 0.2%. The smaller Shenzhen Composite also gained 0.5%. Early trading showed an absence of Wednesday's drama when shared took a bit hit, declining at one point 4.3%.

According to one observer, there's a concern about liquidity and central bank easing policy. The PBOC has been dumping money into the system with various purchases to quell investor concerns about any liquidity squeeze and the possibility that the central bank at some point with have to back off these moves to add further market stimulation sooner rather than later.

In other markets, the Nikkei was up 2%, the Korean Kospi edged 0.5% higher, the Hang Send rallied 1.6% and the Australian S&P/ASX 200 traded 1% higher. The yen traded at 109.75 to the dollar providing some relief to the country's exporters. Oil traded down near $45.60 for Brent. But it was up on other news, taking some of the sting out of the breakdown of  a possible cut in production over the weekend in Kuwait

The rise in the Nikkei lifted shares to a 5 1/2 week high partly on the weakness in the yen and partly on investor hopes for more easing by  the BOJ. At one point the index hit 17,265.67, a high not seen since mid-March.

THE FICTION PEDDLERS

Here's more on the horrible state of the Chinese economy which is the major reason--though it will be denied--for the Fed's abrupt reversal on interest rates. It also part of the cheerleading from the closest friends of the Fed at the big Wall Street banks and MSM parrots who repeated what they're told.

China's credit growth in March (and $1 trillion surge in total social financing in Q1) is a "warning sign"according to billionaire George Soros, "because it shows how much work is needed to stop the slowdown." Speaking at an event in new York this evening, Soros commented on "troubling developments" in China, the anti-corruption drive's impact on capital outflows and the real-estate bubble "feeding on itself." His conclusion, rather ominously, was that despite all the naysayers and fiction-peddlers, China "resembles US in 2007-8," before credit markets seized up and spurred a global recession.

As Bloomberg reports, Billionaire investor George Soros said China’s debt-fueled economy resembles the U.S. in 2007-08, before credit markets seized up and spurred a global recession.

zerohedge.com/news/2016-04-20/george-soros-warns-china-resembles-us-2008-hard-landing-practically-unavoidable

WHEN IS EXACT HARDLY EXACT?

Yesterday we wrote about big banks and their reporting earnings that were made to look much better than they are by coming in above a lower benchmark, in some cases a lower one that had been revised down at least three or four times.

Well, here's a take from a report on the market today from Reuters that clearly shows how MSM tries to paint a rosier picture than the facts. It's an ongoing process and one as a savvy investor you need to be aware of. Here is our piece posted yesterday, IT WILL CONTINUE OR IT WON'T? 

Keep in mind as you read the below that the person quoted is from JP Morgan, one of the big six, and JPM and its fellow traveler Goldman Sachs just came out with more positive views about the economy and China. Yet, it would be harder than hard to find two firms more closely tied to the Fed.


Here are a couple of paragraphs from the site we've cited below you can read for yourself about what a train wreck China really is.

 
If there’s one thing global investors have come to expect over recent years, it’s China’s ability to generate unbelievable rates of economic growth.

Like clockwork, economic growth in the March quarter increased by 6.7% compared to a year earlier, smack in line with forecasts and continuing a trend seen in the previous five GDP reports — in which the figure either met or exceeded expectations by 0.1%.

This regularity is an irregularity in itself, ensuring widespread scepticism from many in financial markets, particularly as it takes just 15 days to generate the figure.

Whether you believe the validity of the government’s growth figures or not, the more overarching question many investors have is whether China will live up to its reputation as the global growth driver in the decades to come.

For every China bull out there, there now seems to be a bear — a complete about-face from only a few years ago when almost everyone was singing China’s economic credentials.

To Roy Smith, an academic at New York University, the breakneck growth seen in recent decades may be nearing its end, suggesting that he sees parallels with Japan’s build-up of bad loans in the late 1980s, which ended up hobbling the once high-flying economy.

We questioned these figures when they were first announced, especially the exact 6.7% one. With the second largest economy in the world to be that exact is most likely an impossibility. That's for openers. But here's another point about such excitability. Back in those high-flying dot.com bubble days, one of the largest darlings of the time, a big firm still around and highly recognized but hardly the big flyer it was then, reported earnings that for 14 straight quarters beat Wall Street expectations by a single cent.

Anyway, here the Reuters excerpt.

U.S. stock indexes were little changed on Wednesday as encouraging earnings reports offset oil prices sliding on renewed concerns about global oversupply.

Crude fell about 2 percent after Kuwaiti oil workers called off a strike that drove up prices and helped the S&P 500 breach 2,100 on Tuesday, about 30 points shy of its record high. A recent rebound in oil and the U.S. Federal Reserve's accommodative monetary policy helped the index recover from a steep selloff earlier this year. Investors are focused on the earnings season as they seek catalysts to drive stocks higher. Big-bank earnings reports last week were better than expected and helped lift sentiment.

"If earnings continue to surprise on the upside, you could see people ... join the rally and that money from the sidelines will move into the market," said Nadia Lovell, U.S. Equity Specialist at J.P. Morgan Private Bank.

Lovell expects the market to edge up on Wednesday, but cautioned that investors remained wary.First-quarter earnings at S&P 500 companies are expected to have fallen 7.6 percent on average and revenues are seen dipping 1.3 percent, according to Thomson Reuters I/B/E/S. http://www.businessinsider.com/china-economy-train-wreck-2016-4?utm

OVERNIGHT

What's was down on Monday, rallied on Tuesday and faded again on Wednesday. That's what Asian stocks looked like so far this week. Confusing to many and just plain upsetting to others. An end to a three-day strike by oil workers in Kuwait contributed to the chaos as many investors try to figure out what's their next move.

Reuters reported: Oil prices again led the way by reversing much of Tuesday's sharp gains. Brent crude LCOc1 shed 83 cents to $43.20 a barrel, while U.S. crude oil CLc1 sank $1.02 to $40.11.

"In the near term we are going to see more downward pressure than upward," said IHS analyst Victor Shum. [O/R]

The retreat dulled risk appetites and dragged MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS down 0.5 percent. It had started at its highest since early November.

Chinese markets were no help as stocks in Shanghai .SSEC slipped 2.5 percent, with every sector from financial to telecoms in the red.

Japan's Nikkei .N225 clung to a 0.3 percent gain thanks to the recent pullback in the yen but was running into profit taking above the 17,000 barrier.

On Wall Street the Dow .DJI ended Tuesday with gains of 0.27 percent, while the S&P 500.SPX rose 0.31 percent to close above 2100 for the first time in 2016.

Gold moved higher hitting $1,252.30 an ounce while other commodities copper, iron ore and silver made gains. The upswing in such aided commodity currencies like the Australian dollar as it moved to $0.7827 while the U.S. dollar against the yen traded at 108.93. The euro moved to the $1.1369 level as traders await the ECB meeting this Wednesday.

IT WILL CONTINUE OR IT WON'T?

If you've hung around markets for a while you're most likely familiar with much of the jargon.

With the Dow recently crashing the 18,000 level, the index is up 15% since it's early 2016 low in February, supposedly because investor fears have receded at least for now about the U.S. economy not to mention a host of other things like what's up the Fed's sleeve on interest rates.

Recession worries were rampant and everything the Fed has done with its usual doctored data has been to quell that perception. Recent earnings reports are another case in point as MSM one of the Fed's major supporters spins these reports as favorable as they think they can get away with. Two recent examples were IBM and Bank of America.

Another case is big bank Morgan Stanley which beat analysts' expectations for the quarter, but who cares where those expectations end if they were ratcheted down, as frequently is the case, beforehand. Profits at the firm dropped 53%. This is an ongoing Wall Street game a lot like whistling past the grave yard at night. Both have their purpose.

It turns out JP Morgan and Wells Fargo turned in similar performances, hailed by MSM as besting phony expectations. Today, Goldman Sachs became the last of the six U.S. big banks to report pathetic profits.www.yahoo.com/news/goldman-sachs-profit-slumps-fourth-straight-quarter-114645813--sector.

(Reuters) - Goldman Sachs Group Inc's <GS.N> quarterly profit fell by more than half and revenue slumped to its lowest in more than four years as market volatility hit the Wall Street bank's bond trading and investment banking businesses.

Goldman, wrapping up a dismal quarter for big U.S. banks, reported a 40 percent drop in net revenue, reflecting declines in all of its main businesses.

As with other banks, Goldman's trading revenue was hit by sliding commodity and oil prices, worries about the Chinese economy and uncertainty about U.S. interest rates.

Highlighting the challenges facing the bank, Goldman's return on average common equity - a measure of how well the bank uses shareholder money - was 6.4 percent in the quarter, down from 14.7 percent a year earlier. (http://bit.ly/22KtaAI)

Many investors think ROE should be at least 10 percent to cover the cost of capital.

Longtime traders know you take markets down to shake out the weak hands and you push them up to bring in the fear-of-missing-out greedy ones. No one knows for sure when this is going to happen, but it will.

If one looks at this market on an historical evaluation it is rich by nearly every measure. Part of the MSM meme to explain away these dangers is the risk on, risk off one. It's a perverse form of going further out on the limb to capture yield only here it's about capturing some dependable yield with perhaps some growth tossed in along the way.

That meme alone is pushing up valuations to questionable sustainable levels. Most of these stocks are part of the Dow and S&P 500. A recent example of this is the largest PC state retirement fund in the largest PC state, California, is now considering investing in tobacco companies. Phillip Morris International, Inc. now trades at 21 times forward earnings estimates and carries a decent dividend. That P/E is the highest since the bubble era of the late 1990s.

And despite all the PC rants against smoking and smokers, it appears the decline in those who imbibe has tailed off and now even among the younger crowd it's becoming at least somewhat fashionable again. Like this upcoming presidential election, this form of investing is all about the status quo. It will continue or it won't?

OVERNIGHT

It was an up day of trading for most Asian markets overnight as shares in the Nikkei 225 led the way, advancing 3.5% gaining back most of what it gave up a day earlier. The deal that turned into a no deal among oil producers over the weekend sent downward ripples through Monday's markets coupled with the earthquake that tore through earlier in the week.

The yen weakened against the dollar helping fuel Tuesday's rally. Exporters rebounded owing to the weaker yen as did bank shares.The dollar gained 0.2% against the yen at 109.10 after hitting a one-week low Monday at 107.75.

Two other markets that rallied were the Australian ASX 200, up 1.13%, and the Hang Send, up 0.84%. The Kospi also edged slightly higher by 0.15%.  For China it was a slightly different tune with the Shanghai Composite down 0.1% while the Shenzhen Composite fell 0.12%.

Brent crude trade at $42.83 a barrel down slightly as some were saying the correlation between share and energy price broke down. The WSJ reported the following:

Remember when what was bad for oil was bad for stocks, and vice versa? That isn’t true anymore.

For investors, this indicates the adverse feedback loops that were rattling markets earlier this year have, for the moment, been broken. A good thing—though it may also make the Federal Reserve more comfortable about raising rates.

Not so long ago, the easiest way to figure out where U.S. stocks were headed was to look at oil. There were only two days in the 20-day trading period that ended Feb. 12 that the front-month Nymex crude oil contract and the S&P 500 went in opposite directions. The correlation between daily oil and stock price changes during that period was an atypically high 0.74, with 1 representing perfect correlation and zero no relation whatsoever.

SIR ALAN SPEAKS

Sir Alan speaks again.

This time in a rare incident of truth-telling. Maybe he's full up on $100K and higher honorariums to deliver what the in-crowd loves like to hear. Quantitative easing had only one purpose, that of wealth transfer.

He conveniently leaves out it was a direct hit on the pocketbooks of the retired, the poor and the less fortunate. War on the poor, the disenfranchised and the fixed-income group. They probably won't want to utter it, but we'll do it for them: Thanks, Alan. Thanks, Janet. Thanks, Ben.

Now you know in part why the Federal Reserve Bank is the most dangerous institution in America when it comes to your liberty, your independence and your financial future.

To paraphrase Voltaire: If you see a central banker jump out of a window, it's probably a good idea to follow because there's most likely a profit in it for them and their wealthy friends.

zerohedge.com/news/2016-04-18/greenspan-admits-feds-plan-was-always-pushing-stocks-higher

SCANDAL WITHIN A SCANDAL

Like any good political scandal there's usually a scandal within a scandal

In the wake of the phony leaked Panama Papers scandal here is a brief excerpt from The Daily Bell that accurately depicts what all the sudden outrage is really about. Once again it's another version of the old ploy of tightening the garrote around the windpipe of the many to catch the so-called evil few.

Since some of the greedy wealthy crowd have abused their rights to privacy, we'll take away yours along with theirs. It's part and package of the giant globalization condom--one size fits all.

From U.S. Treasury officials arbitrarily rewriting the rules to big bureaucrats from the International Monetary Fund to the G20 to the World Bank, all were in a staged, indignant huff much of last week. Something must be done. And now. Now, now is a word we didn't realize was even in the vocabulary of this noted foot-dragging bunch. We'd say go figure, but that would date us. Besides, that's what we're suppose to let them do.

We are supposed to believe that the entire spectrum of international political and financial executives were so incensed with what the Panama Papers revealed that they were able to act in concert within a couple of weeks of the initial hacks.

This is in stark contrast to most international gambits that take months and even years to orchestrate.

And, yes, it is really unbelievable.

The entire Panama Papers leak is unbelievable. The 11.5 million email leak seems carefully calibrated to embarrass US and British “enemies” – especially political opponents such as Boris Yeltsin.

And accusations that Russia itself organized the leak are almost laughable given the recent reactions emanating from Washington DC.

More and more it becomes difficult to deny that a sub stratum of organized globalism exists that is orchestrating a global regime of rules and regulations. These will affect seven billion people around the world while exempting a relative handful of families and individuals doing the orchestrating.

The mainstream media is habitually blasé about what’s taking place and the way the global regime is growing – quickly and powerfully.

It is the biggest story in the world and yet only the alternative ‘Net media gives it the singular urgency it deserves. And even then there are plenty of evolutions that are not fully noted.

This would seem to be one of them. The ramifications of what just happened in DC are enormous. Financial and investment privacy – a hallowed right for centuries if not millennia – has just been outlawed.

You, of course, are reading this article, and perhaps you do understand the heinous ramifications of what just occurred.

For anyone who believes this was anything but a planned, staged event, keep on smoking what you've been smoking. It's working.

IT'S ENDEMIC

There's a lot of screaming of late on both sides in what could be labeled the pot calling the kettle black among the wealthy, left and right. And the recent Panama Papers added to the fray.

Here's an  interesting take on the subject from the UK. This time those wealthy on the left being called out.

The Left-wing war on privilege is hypocritical to say the least. Labour is not a vanguard of equality. Its ranks are stuffed with well-heeled family members, including the sons of former leaders – such as Stephen Kinnock MP, who is also married to a retired Danish prime minister. Lord Kinnock, his father, reportedly earned a total salary of £1.85 million as an EU commissioner and was much criticised for the pay-off he took when he stepped down. The Miliband brothers rewrote their late father’s will, cutting their inheritance tax bill.

“Crusaders for comprehensive schools send their children to grammars and private schools. Defenders of meritocracy put their own children on the payroll.”

The Left ought to be a lot more careful when talking about tax. Jeremy Corbyn has tried to exploit David Cameron’s perfectly legal and ethical investment in an offshore company to trigger a phony war against tax dodging. But recent investigations into the arrangements of another former Labour leader suggest that the Left might be casting stones inside a fragile glass house. It has emerged that Tony Blair used a secret trust to manage his multi-million pound fortune. Interest-in-possession trusts do not have to file accounts, and can offer significant tax advantages, including the possibility of passing on wealth to children free of tax. Mr Blair’s lawyers, however, spoke only of his desire for privacy in setting up the trust and insist that it does not give him a tax advantage. More:

telegraph.co.uk/opinion/2016/04/17/the-left-has-double-standards-on-wealth

The same can be said for the U.S. People get it.