OVERNIGHT

It looks as if the stocks down under did just that overnight and went down under as the Bank of Japan held steady on its current monetary policy.

The Australian market closed lower.

• S&P ASX 200: 5,111.40 -74.06 -1.43%
• All Ordinaries: 5,168.60 -73.77 -1.41%
• AUD/USD: 0.7490 -0.0025 -0.33%

The gains of Monday were wiped out, with nine out of ten sectors losing ground. Energy stocks and big miners drove the slide. The major banks followed, creating more drag on the market.

The ASX 200 is sill up 4.7% since the start of the month but is 3.4% weaker than at the start of 2016.

Today all four major banks went backwards with the NAB closing at $27.79, down 1.8%. BHP dropped 3.4% to $17.13, Woodside Petroleum 3.9% to 425.72 and Santos 3.6% to $3.86.

Investors continue to remain chary facing the Federal Reserve meeting this week and Australian markets were not the only ones selling off, according to Reuters.

Regional stock markets maintained a weak bias with MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS down 0.7 percent, near the day's lows and backing off a 2-1/2-month high on Monday.
 
It was dragged lower by more than a one percent drop each in China, Australia and Taiwan. Japanese stocks .N225 extended losses to be down 1.0 percent after the decision.
With the global economy slowing and many countries facing deflationary pressures, investors' focus remained squarely on policy decisions from the world's major central banks.
Up next on the central bank roster is the U.S. Federal Reserve on Wednesday and the Bank of England and the Swiss National Bank on Thursday.

Notwithstanding the BOJ's decision, Steven Englander, global head of G10 FX strategy at Citibank, reckons investors are more interested in the Fed statement on Wednesday to gauge how important global vulnerabilities stack up against an upswing in domestic activity for U.S. policymakers.

The Fed is unlikely to raise rates this week but it will likely make clear that as long as U.S. inflation and jobs continue to strengthen, economic weakness overseas won't stop rates from rising fairly soon.

A consensus in the market is that fresh forecasts from the Fed's 17 officials released after the meeting will signal perhaps two or three rate hikes this year, a retreat from their projection in December for four or more increases in 2016. 

Financial markets are much more cautious with Fed fund futures <0#FF:> are pricing in a 50 percent probability of a rate increase by June and one full rate hike by December.
The mood in credit markets also was noticeably more subdued, with investors happy to stay in high quality government debt such as U.S. Treasuries and German Bunds rather than venturing into higher-yielding corporate paper.

In its statement, according to the WSJ, "...the BOJ devoted more attention than usual to overseas conditions. It said risks to its optimistic outlook in Japan included the “European debt problem” and “developments in the U.S. economy and the influences of its monetary policy response to them on the global financial markets.”

THE FOURTH ESTATE

Those WSJ editorial folks love to spread the mayonnaise, thick and often.

There at it again. Today's opinion piece went after their favorite target of late, Trump.

Again, the subject was his so-called inflammatory use of the English language: Using uncivil speech to tell to truth. Here's a quote from them: What’s as disturbing, however, is Mr. Trump’s apparent instinct to respond to the protesters in kind. This includes his denunciations of free political speech. A few weeks ago he said he would rewrite the libel laws to sue the press to muzzle his critics. He has threatened this newspaper with a defamation suit merely because we noted his evident lack of knowledge about the Pacific trade deal. In Kansas City on Saturday he assailed “lying, thieving reporters.”

Now let's just take a look at those three words that apparently so upset these bright editorial boys and girls, "...lying, thieving reporters." Either these so-called take-the-moral-high-ground members of the Fourth Estate are ignorant of their own profession's history or just flat out ashamed of it.

So let's just remind them a bit. Not so long ago the prestigious Washington Post had an intern,  though supposedly under direct guidance of  a Pulitzer Prize winning writer for his Watergate reporting, who wrote a completely phony story about a minority kid that didn't exist. Not only did she write it, but the story itself was up for an award.

And again not too long ago a foreign correspondent for USA Today routinely turned in bogus stories. We used the plural case here. One only need exhume the name Hearst and the famous yellow journalism days of the 1920s. But let's press that fast forward button to more current times. 

During the tragedy that became Katrina, a well-known television anchor man claimed from the comfort of his Ritz Carlton hotel window he espied dead bodies floating past. There was only one problem, his hotel and the actual flooding were miles apart. This same upstanding journalist had a helicopter incident, no he's not a former central banker, that turned out to reportedly cost him his job.

We're only citing you here a few of the lessors offenses of journalists and their journalism. The WSJ's Heard on the Street popular column itself once had to relieve the journalist penning the column for his improprieties. Some might deem that lying and thieving since he was profiting from the inside information. 

There's an old saying: Never go to a gun fight with only a knife. But that's exactly how MSM views you and the rest of us. They think they're the only people who ever read and lived history.

wsj.com/articles/trump-and-the-protesters-1457909062
 

SMART PEOPLE

There are some smart people out there. We don't claim to be one of them.

Where is out there?  As one drives around the Internet, it's amazing just how many people are paying attention. We know, it's the worst nightmare of bureaucrats and politicians. But, Oh,Well! Here's just one example from dailyspeculations.com/wordpress/?p=10950
In the last four weeks U.S. equities have risen nicely. Some were lucky or good enough to forecast what happened (check their records). And there are some who are apprehensive about where the market is now. I cannot guess everyone's motive, but I believe more than a few of the hesitant are so because they fear a further bursting of the Chinese Bubble. However I present to you a brief phantasmagorical tour showing that the Chinese Bubble has already deflated.

In terms of three usable commodities (copper, wheat and cotton) the Shanghai Stock Exchange has mean-reverted to its price in mid-2014. If you are betting on a further Chinese decline, be cautious.

ECONOMIC MYTHOLOGY

Most recall an old joke about looking for one-handed economists.

Most economists are noted for their, "then-on-the-other-hand" commentaries. If these people hedged their so-called considered edicts anymore they'd be running hedge funds instead of pretending they and their econometric models have any actual predictive power other than predicting the topic of conversation at their next soirée this summer with their fellow erudite members of the dismal science.

Some people call it academic ping pong. There's another more descriptive name for it but we hesitate to utter it in mixed company.

Two percent inflation targets, the apparent economic Foutain of Bliss for cental bankers, has been a point of discussion for a while now. Why that number? Who thought it up? What's its special magic? And so on. Since its inception two percent has proved more elusive than a first round running back in the upcoming NFL draft.

Politicians get much flak--nearly all of it well deserved-- for gridlock. When it comes to gridlock--as this post proves--politicians ain't got nothing on economists. They been debating for years what's the ideal inflation benchmark. Prisoners of their own academic subterranean thinking, as usual they miss the obvious answer: There ain't one.

Sports is not the only activity drenched heavily in mythology. In fact rumor has it, sports has been taking most of it leads from politicians and economists.

wsj.com/articles/inflation-target-draws-fire-from-all-sides-

OVERNIGHT

 Asian shares opened higher Monday ahead of central bank meetings this week in Japan, Tuesday, the Federal Reserve, Wednesday, and the Bank of England, Friday.

Though mood is cautious, China's markets opened up with the Shanghai Composite Index up 2%, an exact retracing of what it surrendered last week. The Nikkei was also up 1.7% and Asia-Pacific outside Japan MSCI index traded 0.8% higher. Hong Kong’s Hang Seng Index gained 0.8%. Australia’s S&P/ASX 200 was up 0.7% and South Korea’s Kospi was essentially flat.

Reuter's reported:

The BOJ began its own two-day meeting on Monday, and is expected to keep policy unchanged after stunning markets by adopting negative interest rates in late January.
However, its board could discuss whether to exempt $90 billion in short-term funds from the BOJ's newly imposed negative rate, people familiar with the matter said, after the securities industry warned that investment money would be driven into bank deposits.

The Fed and BOE are also seen standing pat at their respective meetings later this week, in the wake of the ECB's move last week to expand its easing program.


"I don't think investors are expecting anything drastic from the BOJ, especially given the fact that they are meeting before the FOMC and will be reticent about making a big aggressive gamble ahead of a Fed meeting," said Stefan Worrall, director of Japan equity sales at Credit Suisse.

China data on Saturday showed further weakness in much of the economy, but also contained a few bright spots.
The January and February manufacturing numbers were bleak, the weakest since 2008. The dollar held steady with the index at 96.175 and traded against the yen at 113.78 while oil prices backed off a bit from last week's gains.

DECLIING U.S. ECONOMIC FREEDOM

Gene Epstein, the longtime economist-columnist at Barron's has at least in part as far as we know an Austrian bent, recently wrote an excellent piece about economic freedom and it's decline in the U. S.

He describes two eras, 1970 through 2000 and 2000 up to 2015, using the Frasier Institute's freedom index to show a similar trend. The index, in short, tracks the "degree to which free-market capitalism is allowed to work," he writes. Point is, since 2000 the index has been declining, all other things considered.

The last year, 2013, full data is available, but here's the bottom line, as Epstein notes: "Rich countries enjoy higher levels of freedom and vice versa." An important element of any index is objectivity. Epstein says: "The data that drive it are not retrofitted to reflect anyone's hobbyhorse." Think Federal Reserve data. It's less objective than a Bernie Sander's campaign worker. Epstein discusses Sanders and his so-called plan, but we will leave that for later.

The index is composed of five components, equally weighted: size of government;legal system and security of property rights; soundness of money; freedom to trade internationally; and regulations of credit, labor, and business.

What Epstein leaves out but what's obviously implied is that economic freedom is inextricable from personal freedom and, yes, personal sovereignty. Whereas globalism was once all the rush, a panacea for all and everything with its emphasis on free trade and open borders, people are having second thoughts. The UK upcoming election in June is an example.

Despite the criticism people with second thoughts are unjustly getting, second thoughts are hardly a bad thing. If more government and more regulation is the answer--and so far it's track record has hardly proved the case--people are waking up, just another example of what goes around.

"It is therefore noteworthy," Epstein concludes, "that while all five components of the U.S. Index have fallen since 2000, the largest decline by far has been in the quantitative measures underlying our legal system and property rights."

The U.S.in this category is now behind several the of "so-called socialism of Scandinavian countries," Epstein says, taking an obvious shot at Sanders who has claimed he wants to emulate their kind of socialism. 

WHAT THOSE GERMANS ARE ASKING

Republican Presidential hopeful Donald Trump isn't the only one catching hell over his immigration views. If you're a female, your name is Angela Merkel and you're Chancellor of Germany, join the fray.

Merkel, once a booster when migrants started flooding into Germany enjoyed public support for her support of migrants. But as they say: "Oh, how things can change!" Six months ago Merkel opened the doors of Deutschland to throngs, hundreds of thousansd, according to media reports.

Criticism, often cynical of Trump and his supporters, is popular in MSM and among airway talking bobble heads. But from reports we see--and this is just one of many--"Today, the hospitality is wearing thin. As hundreds more arrive each day, Germans worry the influx will permanently change their towns and seed crime or terror."

As a result, Merkel's power base--"middle class sometimes called Mittelschecht--is growing estranged from her and her generous policy. Many economists there are predicting the influx will cause higher spending, unemployment and more taxes."

Are these Germans just loco? Are all the Americans, unlike their elected politicians, who bother to consider unintended consequences all racists and hate mongers? Well, here from Reuter's are the election results Sunday in Germany.

Chancellor Angela Merkel's conservatives lost in two out of three state elections on Sunday as Germans punished her accommodative refugee policy with a big vote for the anti-immigration Alternative for Germany (AfD), exit polls showed.

The losses in both Baden-Wuerttemberg and Rhineland Palatinate represented a worst-case scenario for Merkel, who has staked her legacy on her decision last year to open Germany's doors to over 1 million migrants - a move voters snubbed.

The backlash was also visible in Saxony-Anhalt in former East Germany, where Merkel's conservative Christian Democrats (CDU) remained the largest party but saw the AfD grab 21.5 percent of the vote as it burst into all three regional parliaments.

No doubt many will claim those Germans who voted their conscience in Germany are just a bunch of racists. But that's the easy, cheap way out. Is cancer more real to you or the guy next door who actually has it and has to live with it.

Now we're not labeling immigration a cancer, for all of you conclusion-jumpers out there. We're just asking this question: How many of you think Merkel, Obama, Trump, Sanders, Clinton, Warren, Pelosi, Cruz, Rubio, Boehner , Reed, Schumer, Bush, one, two and three, Romney and their like will have to live with that migration?

That's what those Germans are asking.

POLITICAL DIRTY LAUNDRY?

The alleged laundry list of dirt against the Clintons is longer than Vince Foster's been dead.

So what's new, some will say? Well, here's something new that just might catch up with her at the worst of times.

Here is a WSJ piece that in this election year deserves more public light. To be sure, from our readings the WSJ is no friend of the Clintons. But to be even surer, it's no friend of ours either.

The public needs to know before not after this election, for example, just who is this Byron Pagliano, the guy who supposedly handled Hillary's IT needs for her 2008 presidential run. Pagliano later worked for her both in private and at the State Department. According to the Journal, she carved out a
special government position for him just and claims he came just months after she arrived and exited when she did, not necessarily unusual but there's more to the story.

What makes it even more important he allegedly received pay from her and the State Department. He is now one of many insiders allegedly "who were compensated to work simultaneously for the government and the Clintons." There's a conflict of interest not just in time.

What makes it even more important he allegedly received pay from her and the State Department. He is now one of many insiders allegedly "who were compensated to work simultaneously for the government and the Clintons." There's a conflict of interest not just in time.

Mr. Pagliano reportedly recently received immunity from the Justice Department to presumably find out what he knows that would have, if certain allegations are true, serious implications. The public in this election year needs to know, again, before not after.

And there is another tentacle that may come to light and explain why so many fear a Trump versus Hillary race. What if anything does a supposedly loose canon like him know and perhaps not be intimidated from blabbing during the heat such a campaign will surely cause?

Leftists over the years love to cite Nixon's erased tapes during the Watergate scandal. We don't recall what Nixon's feeble excuse was. What we do know is someone erased 31,830 of former Secretary of State Hillary Clinton's e-mails. But even the little of what got turned over has raised serious questions about improprieties.

 Here is her comment from a recent debate with Sanders when the subject came up.
The issue’s potential for bursting into the campaign was highlighted in this week’s Democratic debate, when moderator Jorge Ramos asked Mrs. Clinton if she would drop out of the race if she is indicted.

“Oh, my goodness. That is not going to happen. I’m not even going to answer that question,’’ she said.

And that raises a serious question for Bernie Sanders supporters. Is he just another dishonest politician or he does he really believe in the public's right to know? Especially before an election of this posited import.

Here's the link to the WSJ piece. Read it and decide for yourself. Read it with this question in mind: Do you want to know? How you answer that question will say much about who you are and much of the sincerity of the clamoring for an honest and transparent government so popular these days.

wsj.com/articles/hillarys-other-server-scandal

There is another concern here as this link points out, the Justice Department might back off during the election. In other words, not do what you the people of this nation are paying them to do in their job, but decide when and where they want to do it.

 wsj.com/articlesclinton-email-probe-enters-tricky-phase-as-election-intensifies

THE SMELL OF FEAR

 
Holman W. Jenkins, Jr. is a heavyweight big-time editorial hitter for the powerful, prestigious WSJ. We don't know for sure, but we suspect an Ivy League pedigree lurks somewhere in his elitist DNA.

What we do know is his last two articles focused on the Trumpster. That's a lot of attention. Keep in mind people like Jenkins accuse this guy they so clearly fear of using crude, uncivil, deprecating language. We know not Mr. Jenkins' religious belief or even if he has one. We suspect, however, to justify his consistent rantings, he's an eye-for-an-eye guy.

So here are a few paragraphs from his recent attack: "Can Trump Start a Trade War?"
Discussing Trump's claim to be a businessman, Jenkins writes:

"Not that he actually reminds us of any business great we've heard of--Steve Jobs, Bill Gates, Jack Welch or Indra Nooyi, say." So let's just take Nooyi, the current CEO of Pepsi. Jenkins obviously tossed her name in, a token to the fairer gender. But not everyone concedes she's a great business leader. Someone might want to query a billionaire named Nelson Peltz. Maybe even a few thousand Pepsi shareholders.

The heavy handed, imperious Jack Welch just came out as recently as this week as a Trumpster critic. We call them Trumpster Dumpsters; that's where they'd like deposit him. His next paragraph is almost too cute to deserve a response let alone a grade higher than C- in a decent freshman composition class if any are around these days.

"Countless have been the incoming e-mails suggesting that any doubts voiced about President Trump are but the wailings of a deranged and impotent 'establishment.' Countable--in fact, the number is zero--have been those laying out an actual case for a Trump presidency."

With all due respect we hope Mr. Jenkins didn't compose that paragraph while sitting on the can because there's a lot of literary straining in there to make his point. But we will make the point for you, Mr. Jenkins, indirectly. We as did millions of other Americans have the same feeling about Obama, Bush II, Carter, LBJ, Nixon and a raft of others. Who gets to define qualifications, the WSJ editorial staff? And who gets to define case?

Then with his arresting prose, fantasizing what a Trump presidency would be like, he reels off this gem of solid reasoning. "What would President Trump do in office? He may be the narcissist his critics say, but he would arrive in the White House looking for something to do consistent with his promises and his supporters' expectations, and his own penchant for action."

We don't want to linger on the silliness of this construction. It's the obvious straw man. We'll just respond with this question: Name a president who didn't didn't arrive with these aspirations?

Such aspirations were not dangerous with those others guy. But Trump?

Jenkins then rolls out the benchmark for all these wise guys, a comparison with Ronald Reagan. We have to concede we called a Las Vegas bookies about the odds on this one. As you might suspect it's about a buzz word all the rage of editorialists, corporates, politicians and government bureaucrats today, outcomes.

As a successful business associate and longtime WSJ editorial page reader recently told us: "We're just one of the ignorant members of the masses who never saw the light at the end of a high school tunnel, one of those you and your elitist colleagues have such contempt for."

And as for the mighty Trump versus the mighty Reagan comparison, it's spring time so we'll take some license from what was once America's favorite pastime.

...It shook upon the mountain top, it rattled in the dell. Oh, somewhere bands are playing and somewhere children shout.

...With mighty Trump versus mighty Reagan....well, .......to Mr.Jenkins' kind...we all know how that came out.

You can smell the fear from here.

WHAT THE WORLD NEEDS NOW

Big guns are often overrated. You see it in nearly every aspect of life from academia to fashion to entertainment to politics to sports to Wall Street.

Another big gun, Mario Draghi, spoke yesterday as the ECB played its version of Texas Hold 'Em and went all-in. All-in to what? Well, that's the part nobody really--especially Magic Mario--knows. Quite often in life we look for one thing and get another. A business associates says it reminds him of his ex-wife.

We could be PC and say a lot of the feminine gender probably could claim the same concerning thier ex-significant other, but we're fresh out of--much like the globe's central bankers--PC props. What we're interested in is rubber and roads.

To recap, the ECB cut it's main interest rate to zero and it's deposit rate ti minus-0.4% and upped its asset purchasing scheme (Yes, that's the correct term!) to $88 billion or 80 billion euros a month. We can only hope the television cheap shot artist Keith Olberman wasn't paying that much to lounge in one of the Trumster's tony towers.

Also on their plate is "ultra cheap" long term financing for those anemic shells known as EU banks where under certain conditions the banks will get paid for borrowing money from the ECB. The new twist, however, is buying corporate bonds--note the sell off in Treauries and the run-up in corporate bonds after the announcement--while equities pretty much shrugged briefly and went back to snoozing.

Some say this is about credit-- credit, you might recall, equals demand and demand with too much credit chasing too few things, equals inflation. Others say this changes focus from interest rate differences and foreign exchange rates as the path to the Yellow Brick Road of Inflation.

Meretricious is an interesting word. Webster's defines it as tawdry, cheap decorations and that's what Europe's banks are--the deep, ugly pockmarks below all the ECB's cheap makeup. The problem with cheap makeup is its difficult to wash off. U.S. corporations will likely issue more corporate debt in euros since the price of debt service is right to fund equity buybacks to pump more air in what is already the second longest U S. bull market in history.

Sounds like just what the world needs now.