OVERNIGHT

The dollar seemed to be the story in overnight trading coupled with stronger GDP numbers for Japan than many expected. After hitting an 18 month low at yen 105.55 May 3, the dollar has been range bound  between 108-109 since last week, a support level some traders view as solid.

While economists in a WSJ survey expected GDP growth of 0.3%, the first quarter number surprised, coming in at 1.7%. That compared with a revise fourth-quarter one of negative 1.7% on an annualized basis. The stronger number most likely delayed for now any further monetary easing from the Bank of Japan and lent further doubt about a proposed sales-tax increase planned for next year. A weaker number investors believe would put pressure on officials to hold off that plan. Meanwhile, despite the comments of two Federal Reserve presidents about the June meeting being open to interest rate hikes, the dollar failed to rise suggesting traders have a different view.

Japan's economy suffered slow wage growth that hurt private consumption last year while exports also suffered from sluggish emerging market demand and a strong yen. Prime Minister Abe in 2014 raised the sales tax to 8 percent from 5 percent which tipped the economy into recession. That led Abe to delay a second tax hike to 10 percent by 18 months. Japan like a lot of other countries faces social security and high debt problems. The Nikkei 225 at 16,644.69 was down slightly.

The WSJ reported: Across the region, stocks were hit by worries about the potential fallout of higher U.S. interest rates on riskier assets. Upbeat U.S. economic data and comments from U.S. Federal Reserve officials helped to heighten investor expectations that interest rates there will rise as early as June. Australia’s S&P ASX 200 fell 0.7% and South Korea’s Kospi was off 0.6%. Both the Thai bahtand South Korean won reached two-month lows against the U.S. dollar, while Indonesia’s rupiah was also weaker. Investor sentiment toward China is turning gloomy for a number of reasons. Several state and local media reports suggested Beijing is tightening its grip on financial markets, ranging from getting tougher on the amount of leverage investment products can take on, to clamping down on speculation surrounding backdoor listings and false buyout announcements among listed firms.

The Shenzhen Composite Index finished the day 2.7% lower, falling from the morning, after high-ranking Chinese official Zhang Dejiang failed to mention the launch of a trading link between the Hong Kong and Shenzhen stock markets, which traders hope will generate excitement about China equities. Hong Kong’s Hang Seng Index ended 1.5% lower and stocks in Shanghai fell 1.4%.

HEAVY BAGGAGE

 
In America there's supposed to be something called anti-trust laws. In fact, a fellow named Teddy Roosevelt enjoyed some fame so they say from such.

Now who gets to define the term is another matter. But we will get to that later. When it comes to Western media in the U.S. it turns out there are fewer than six big owners. Western media is a surrogate for globalization. They like it, they hawk it, they want it. And they most likely will stop at little to get it.

We've been saying for a while now Trump will win. That there are hordes of people out there feeling deeply disenfranchised who are too smart to reveal to pollsters or risk blurting it out at some spring soirée whom they're going to vote for. They will express their choice in the privacy of the voting booths. All pollsters, exit or otherwise, be damned.

We also believe the heavy baggage Hilary is increasingly carrying goes far beyond that around her eyes. Her recent ploy to appoint Bill in charge of revamping the economy is a case in point. Billy boy has some big baggage of his own. This is status quo at its worst.

You can try to claim you're not an insider on the one hand and tout as one of your strengths your experience there on the other. That might have worked in the past, but most likely not this time around. But there is more, much more.

Hilary might not even be the Democrat candidate. We are not alone in sensing the apparently growing concern among leftists about her weaknesses, i.e, her elect-ability. Here is a recent piece from The Daily Bell. Draw your own conclusions. Bill personally flaunted campaign laws by showing up at polls. And we personally know of a case where someone was seriously prosecuted for it, for doing much less than he did.
                                                                                                 
Despite what MSM portrays, in today's scene these incidents are not lost on voters who are fed up with the status quo and the Goldman Sachs of the globe.

http://thedailybell.com/news-analysis/dump-hillary-clinton-slammed-again-by-mainstream-media/

OVERNIGHT

Some call it a rift, others are taking a wait and see approach to an upcoming G7 financial meeting this weekend. Two of the participants--the U.S.and Japan--apparently have a difference about which way the yen should be going, up or down.

This is more of beggar-thy-neighbor tactics many in MSM want to deny because it reflects in one way just how bad the global economy is these days. Meanwhile, the Nikkei was up 0.9% to 16,607 in late morning trading, apparently gaining a boost from Wall Street's performance Monday led by billionaire Warren Buffett's note of taking a large stake in Apple by his Bershire Hathaway fund.

It might have had added significance owing to Buffett's long-claimed disdain for technology stocks or for buying only stocks he could understand. Yet Buffett has proved to be a hypocrit on many issues recently as it was revealed he uses arcane derivatives after firing heavy salvoes of criticism their way over the years. He and his octogenarian comrade Charlie Munger add to the public's growing distrust about Wall Street people saying one thing and doing another. The Omaha Hypocrit is hardly angelic.

Oil shares rallied on Wall Street Monday and the mood apparently carried over to Asian shares Tuesday with crude oil futures nearing a six-month high as attention began to shift to supply problems and the long term-bearish firm Goldman Sachs seems to be changing its tune, at least in the short term, issuing a bullish report. The U.S. dollar also rose to 109.70 against the yen.

In other markets, the Australia’s S&P/ASX 200 gained 0.5%, and Korea’s Kospi slipped 0.2%., the Shanghai Composite Index was off 0.6%, while Hong Kong’s Hang Seng Index was flat. Shippers were strong after the Baltic Dry Index, or freight charges, gained 2.2 percent overnight. 

 Reuters reported:

Japanese Finance Minister Taro Aso said on Tuesday that finance leaders from the Group of Seven rich nations will likely discuss currencies and that Japan will stress the need for stability in global foreign exchange market.G7 finance ministers and central bank heads will meet on May 20-21 in the northeastern Japanese city of Sendai.

Japan, which will host the G7 meeting, has signaled its readiness to intervene in the market to weaken its currency despite a recent U.S. Treasury report on currencies that appeared to warn against unilateral intervention.The yen hit an 18-month high against the dollar JPY= this month. "Currencies will be discussed as needed as part of fbroad debate on global 
economy," Aso told reporters after a cabinet meeting. "We think stability in currencies is the most important."

However, Aso noted it would be hard to persuade Germany and Britain to deploy fiscal spending as part of wider G7 efforts to rev up global growth through coordinated fiscal stimulus.

OTHER VOICES

We used to do a feature every so often called "Other Voices," not so much because we agreed with what was being said, but to permit a variety of viewpoints. We think it's healthy. Here's one we think is worth a read.

Closely-followed former global macro fund manager Raoul Pal gave a dark warning for the US stock market and the global economy.

Pal said that the structure of the market right now reminds him a lot of 2000. He pointed out that it’s been a complicated market that’s up sharply and down sharply in these short-term swings, but over longer periods of time it’s really done nothing. He added that this volatility has been scaring both the bulls and the bears. In other words, everyone is losing money.  

“And in the meantime, the economy, which at first wasn’t clear that it was weakening, now appears to be weakening," he said. "And that was a similar set up in 2000 where everyone started getting chopped around. Nobody knew what was happening. The leadership was getting lost— Apple and other firms have lost their leadership. Back in 2000 it was Microsoft—same kind of thing. It just feels like everyone is willing the market to go up, but something is going wrong in the overall underlying dynamics of the market.”

Pal has been expecting this recent stock market rally to peak out. He’s also looking out for a topping out of the economy. For this, Pal has been looking at the Institute of Supply Management's (ISM) manufacturing index as an indicator.

finance.yahoo.com/news/raoul-pal-warns-of-another-recession-

“I look at the business cycle and I look at the business cycle by the ISM survey,” Pal said, pointing that the ISM survey peaked in 2011 and has been gradually declining ever since.

“What you know is that cycle is pretty predictable. And so you know in due course, the economic cycle will weaken and we’ll get a recession. And if we look at the length, it looks like it’s coming, normally it would come either now or in the next twelve months. The probability is that a recession is coming. Then we look at what happens to stock markets in a recession, they tend to fall. I’m worried that the US economy is weak, the global economy is already weak, and that’s going to bring some stress on the stock market.”

As for investment ideas, Pal thinks there’s a big opportunity to be long bonds, specifically long the ten-year bond. He thinks that the yield will go down to 0.5%. He thinks there’s the probability of a rare situation where the US Dollar goes up and gold goes up. He also thinks the stock market is “potentially in for a rock road.”

In the late fall of 2014, Pal nailed the trade of 2015 when he predicted that oil would fall to $40 a barrel.

On Monday, WTI oil rose about $46 per barrel, a 6-month high. Pal expects oil prices to fall again.

“People spend a lot of time looking at oil prices and analyzing supply and demand and who said what in Iran. But really when you map it, it’s exactly the same as the dollar index. So really it’s the dollar because oil is priced in dollars. The dollar has fallen recently, it means the price of oil goes up, and vice-versa. I think the dollar potentially goes higher in due course, in which case the oil price will probably peter out somewhere around here.”

TPal, a Goldman Sachs alum, previously co-managed GLG's global macro fund, one of the largest in the world. He retired in 2004 at age 36.

He now authors a research letter, The Global Macro Investor, which is read by some of the most prolific hedge fund managers. Pal is also the co-founder of Real Vision Television, an online subscription financial-news service.

LEVEL PLAYING FIELDS

You've no doubt heard of alternative medicine. Well, the hot Wall Street topic today is alternative investments. Not that they're all that new. Like most things in life their they have their seasons and this is one of them.

With the stock and real estate markets, thanks to ZIRP  and NIRP, bubbling along, yields are getting harder to find than a California virgin.

If there's a more politically correct state than California it's probably Massachusetts or some place like that. Well, the California State Retirement fund, like many of it's brethren, is looking for yield. Liabilities keep rising while returns keep shrinking. So the fund recently announced it was considering investing in tobacco companies owing to their decent dividends.

Now this is the equivalent of all the WSJ editorial staff suddenly declaring they love Donald Trump and sang the praises of his qualifications to be president from the beginning. No state was and still is more PC when it comes to smoking than California and their band of Brownistas in Sacramento. Tobacco stocks are not illiquid, but they're about as alternative for the PC crowd as alternative gets.

And like we noted, those liabilities keep growing while yields keep shrinking. If that reminds any of you of something called the Social Security system you're cooking with that non-polluting, PC stuff, natural gas. To use a time-worn description, you're right on.

There is the old saw politicians, socialists and bureaucrats hate: the greater the risk the greater the possible return. With riskless returns now zero or even negative in places like the EU and Japan, you can see the problem pension funds and big insurance companies face, but it applies to nearly everyone. With wages flatter than a new airport runway for decades and the phony central bank memes about inflation's nowhere to be found, liabilities continue to climb while yield shrinks when it comes to purchasing power notwithstanding all the deflationary nonsense central bankers spew forth.

For pension funds and those big insurers that's a form of inflation, not enough yield to cover future costs. A funding crisis is just another name for a shortage of cash flow. And that brings us to those alternative investments. But alternative investments are not without risks. Illiquidity, for example, as in trapped. Not easy to exit. Having to sell at below market value or for less than you paid for them.

Now you can bet politicians, bureaucrats and those of the fix-it-at-all-costs crowd don't care about these things. At least not now. So one might ask oneself what's one of the downers of these brilliant central bankers with their zero or negative interest rates offering little or no yield? It forces those who have a need to look around. Needs usually begets a sense of urgency as in haste can leave its wake.

It also should focus your attention with what's going on in the EU, in this case the mortgage market where at least one member, Denmark, has for four years seen lenders pay interest to borrowers owing to negative interest rates. Why is this important? Easy, a similar movement is threatening to spread throughout the EU led by consumer groups in Spain and Portugal.

The gist of the issue is when is a contract not a contract? The answer if bankers there prevail is equally simple. A contract is a contract only when the banking crowd says it is. Maybe not in your vernacular or mine, but in the system as it is, that's called a level playing field.

OVERNIGHT

The week ahead should prove an interesting one as the Fed minutes become public possibly shedding some light on inflation and what's the Fed's next move. Here a brief breakdown from the WSJ.

TUESDAY: Reports on price inflation in the U.S. and the health of American industries should show whether a first-quarter slump was an aberration. Industrial production—a broad gauge across U.S. factories, mines and power plants—fell in March by 0.6%, but economists surveyed by The Wall Street Journal forecast an increase of 0.3% in April. The Consumer Price Index will show whether inflation is picking up after months of subdued data. Surveyed economists predict a 0.3% rise in the index.

WEDNESDAY: Minutes from the Fed’s monetary policy committeemeeting in April could provide fresh hints to confirm—or counter—market expectations for the Fed to keep rates steady at its June meeting. Investors will be eager to see how much the Fed worries ill winds from overseas could blow the U.S. economy off course, including the risk of a U.K. exit from the European Union.

Japan risks recording its sixth contraction in three years if first-quarter gross domestic product doesn’t print a positive number. The median forecast of 20 economists surveyed by The Wall Street Journal is for inflation-adjusted growth of 0.3%, though a handful say the third-largest economy likely shrank in the first three months of the year.

FRIDAY: U.S. Treasury Secretary Jacob Lew will tell Japanese officials at a two-day G-7 finance ministers’ meeting in Japan to stop threatening to depreciate the yen amid growing currency strains between the two allies. It will be Mr. Lew’s first face-to-face meeting with his G-7 counterparts since the U.S. Treasury named Japan andGermany to a name-and-shame list in its semiannual currency report in late April. The U.S. hopes to convince Tokyo to temper its yen-intervention threats; failure to do so could signal renewed turmoil in exchange rates ahead.

Meanwhile, the Nikkei led what Monday morning was a mixed market starting with China's less encouraging data releases over the weekend. The Nikkei was up slightly less than 1.0%; the Kospi remained nearly flat and the Hang Send edged higher 0.20%. The Shanghai Composite was down slightly, 0.7% and Australia's ASX 200 was slightly up O.42%.

A RIGGED SYSTEM

For four years it continued. From 2006 to 2010.

The presiding magistrate in the case called it "persistent, prolonged and deliberately dishonest behavior." The trial lasted four months. It revolved around the charge of insider trading. A short time back current presidential front runner, Donald Trump, caught some holy hell from MSM for calling  the system "rigged." Trump, contrary to belief, wasn't just talking about the electoral process.

The bottom line, as the judge pointed out: "It was a gross breach of trust." Such gross breaches of trust are hardly limited to the financial world. Politics and MSM should come to mind immediately.

The following is from dailyspeculations.com/wordpress/?p=11047. The poll cited was done by Pat Caddel, a Democrat pollster with a reputation of being, unlike many of his peers, fair minded.

A pollster for four decades and once a pollster for former President Jimmy Carter, he has his detractors. Who doesn't? What's important is that way back in January even before the Iowa primary began he noted this election is about "insurgency," a push back against the status quo. Few especially among the elites believed it then.

72% of adult Americans believed that the country was "in decline" 60% of adult Americans thought that their children would NOT be "better off" than than they were; the same percentage thought that their parents had left them better off than their parents had been 86% of adult Americans do NOT think that they can succeed by working hard and playing by the rules; they think the rules are rigged 89% of adult Americans think both political parties are fundamentally corrupt

There have been other polls out that show similar results particularly when it comes to MSM and the two-party system.  The distrust of the status quo runs wide and much deeper than either Democrat or Republican pundits think. Their peach tree is being shaken to it roots. And the message is clear: a good number of Americans, a large number who for obvious reasons have remained silent so far, don't like and are no longer buying their peaches.

Here's an excerpt from the story as the trial ended.
 blacklistednews.com/Deustche_Bank_Brokers_Jailed_In_Biggest_Insider_Trading_Bust_

Martyn Dodgson, who was a managing director in Deutsche Bank’s corporate broking team leaves Westminster Magistrates Court in London after appearing on a charge of conspiracy.

Two former Deutsche Bank corporate brokers have been sentenced to one of the longest prison terms possible for the crime of insider trading in the UK. As US financial market participants walk free in the streets managing their own “home office” money, Martyn Dodgson and Andrew Hind will be rotting in a Wandsworth prison cell (among the worst reputed of England’s prisons) for up to four and half years for what the judge called “persistent, prolonged and deliberately dishonest behavior.” As Bloomberg reports, the group, including three other defendants, formed part of the FCA’s biggest insider-trading investigation dubbed Operation Tabernula.

The FCA accused Dodgson and Harrison of passing inside information on possible deals from their jobs between 2006 and 2010 to Hind who the agency claimed gave them to Parvizi and Anderson to trade on. All of the men denied the charge. But as Bloomberg reports, the sentences are among the longest handed down in an FCA insider-dealing case…

Martyn Dodgson, 44, was sentenced Thursday in London (to 4 1/2 years in jail)  alongside friend and accountant Andrew Hind, who was given a 3 1/2 year prison term for the same offense. The men were found guilty of insider dealing on Monday after a four-month trial.

“This was persistent, prolonged and deliberately dishonest behavior,” Judge Jeffrey Pegden said when handing down the sentence. Dodgson showed a “gross breach of trust.”

The sentences were another victory for the Financial Conduct Authority, which has won 30 convictions for insider trading since it started prosecuting the crime less than a decade ago.The success comes as U.S. prosecutors are struggling with a court ruling that limits their ability to tackle the offense.

Thirty convictions for insider trading in less than a decade sounds like more than just isolated incidents. The complaint about U.S. prosecutors not being able to tackle the problem because of a court ruling is pure smoke screen. It's a call for more centralized bullying. We will get those bad guys just give us the authority. Wall Street knows who is insider trading. They originated the game.

OVERNIGHT

 Yesterday it was Macy's. Today it was Nordstrom that reported disappointing quarterly earnings and announced it expected slower sales, causing the stock to decline 17% joining two other retailers, Macy's and Kohl's, feeling the pangs of consumers holding on to their hard won money.

A couple of stories today--one about retailers becoming like newspapers and another one about retailers hitting the recession alarm--pretty much tell the retail tale. Much of the money expected from lower energy prices didn't find it way into shopping as consumers upped their savings rates, something the pundits neither expected nor wanted ti consider.

Meanwhile, overnight Reuters reported that the Bank Of Japan issued a statement saying they
"will act decisively using its "ample" policy options if needed to achieve its 2 percent inflation target." Quoting Bank Governor Hauhiko Kuroda, they said Kuroda noted the bank would not stand still until the effects of previous easing measures prove effective.

"We will take monetary policy measures in a timely, forward-looking manner," Kuroda said,
"Risks to the economy are tilted to the downside," he said, pointing to uncertainty over the global economy, volatile financial markets and their effect on business sentiment.

The above sounded to investors like another warning sign causing the yen to soften after rallying when the BOJ decided not to sit tight. The point here is consumer spending or the lack thereof is not  just isolated to the U.S. Some have accused consumers of being the cause for a lack of a sustainable recovery and that magical 2% inflation global central bankers crave so hardily. 

Japanese stock were lower after the yen eased up after being up against the dollar falling 0.2%. Part of the problem has been the U.S. The Fed has eased off talk about interest rates of late and the outlook for the economy given the above-mentioned retail sector is hardly buoying investor spirits.


Elsewhere, the Hang Seng Index was recently off  0.9%, Australia’s S&P ASX 200 was down 0.7% and the Shanghai Composite Index was flat, according to the WSJ.

OVERNIGHT

Some might disagree but Macy's which just reported it worse earnings since the recession began could easily be a surrogate for consumers.

As the WSJ reported, Macy’s Inc. set off fresh fears about the health of the U.S. retail sector, after the country’s largest department-store chain reported its worst quarterly sales since the recession.

The company’s poor results and downbeat comments Wednesday triggered a selloff across apparel makers, mall owners, luxury brands and rival chains. Macy’s shares had their biggest drop since 2008.

“We are not counting on the consumer to spend more,” Chief Executive Terry Lundgren said Wednesday. With saving rates high, wages growing and employment data steady, Macy’s executives were at a loss to explain why consumers weren’t spending in its stores. “We’re, frankly, scratching our heads,” said Chief Financial OfficerKaren Hoguet.

Investor are concerned about the outlook for U.S. retailers, i.e., consumers and more weak earnings reports in Japan and that apparently led to Asian shares defined Thursday in early trading. The Nikkei fell 0.4%, the Korean Kospi was off 0.1% and the Australian S&P/ASX 200 dropped 0.5%.

Meanwhile, the Shanghai Composite Index slipped 0.6% while the Hang Send Index eased 0.4%. According to the Journal, The common theme in the pullback all across the Asia-Pacific region was weaker-than-expected earnings by major U.S. companies. Analysts had been hoping for a revival in consumer spending that could lift the broader U.S. economy.

Macy's was not alone. Disney also reported weak earnings as did several Japanese companies including Toyota and Bridgestone the big tire company. In the futures market gold was off $3.30 at $1,272.20 and oil down a fraction at $46.19.

MAKE BELIEVE

It's only a fiat-paper moon floating over a fiat-paper sea; if you think this isn't make believe, shame on you and me.

This is and has been an analysis-paralysis based Fed from the beginning. And all the King's horses and all the King's men and women in MSM are not going to change it.

The constant puttering with what are only disappointing job numbers recently tells you that. There is more media fudging going on about these numbers than in a fudge factory which, come to think of it, is a good description for this leaderless Fed.

This is a Fed desperately looking for some figure that will give then a clear enough--whatever that translate into--sign that will allow them to hike rates and get much of their self-inflicted heat focused elsewhere.

The Fed's delay has for the most part pulled the green curtain back and revealed a bunch of bureaucrats for what they are, indecisive economic data wonks without a clue. If these data slaves don't know by now, you can bet when they claim they do know, it should more than worry you. Think hard hats here.

The artificially kept low interest rates are a form of rent control. Once they come off you can expect to see some unexpected damage to your buying power. That's just one of the reasons you're seeing some billionaires who lived and prospered mightily most of their careers in the equity trenches come out with statements about gold. Gold is the fiat-paper-pushers worst enemy.

It's only a fiat-paper moon floating over a fiat-paper sea; if you think this isn't make believe, shame on you and me.