Michelangelo's iconic image of God giving life to Adam is reimagined for the robotic age. Here, God gives life to a robot, a new kind of futuristic Adam.

This Time Is Different (Duh)

Secular stagnation largely rests on two different stories: First, that we will be making fewer babies forever.  Second, that those babies will be crazy un-productive and never raise a cybernetic finger: “Output per worker grew last year at its slowest rate since the millennium, with a slowdown evident in all regions, underscoring how the problem of lower productivity growth is now taking on global proportions…Globally, the rate of growth decelerated to 2.1 per cent in 2014, compared with an annual average of 2.6 per cent between 1996 and 2006…The fact that companies have become less efficient at converting labour, buildings and machines into goods and services is beginning to trouble policy makers around the world.”  Also, you should know that number 2 on the Financial Times’ list of five drags on productivity is “The big innovations have already happened.”  Which, of course, is always true at all times…the big innovations have already happened.  But this will change — will it?!  We have just summarized the “debate” on secular stagnation.  Meanwhile, George Magnus is connecting the speculative euphoria exhibited by German bunds and Chinese equities: “Rationalised in macroeconomics, this is essentially about ‘secular stagnation’…We should beware this narrative, even if the secular stagnation hypothesis turns out to be right…Any euphoric returns today will be counterbalanced as night follows day…Institutions are still buying European debt on negative yields.  Investors who have missed the doubling of the Chinese stock market since mid-2014 wonder if they can afford to stay out.  Emerging market currencies are down but asset returns have barely moved despite a steady deterioration in currency reserves, capital flows and growth.”  Meanwhile, cheap is like, so 2013: “investors are being dragged kicking and screaming into the stock market because, while valuations are not cheap, there really aren’t any better options,” says money manager.  “Higher P/E stocks don’t frighten me…this tends to be the most exciting and rewarding stage of the market anyway,” says fund manager.  Meanwhile, Bond Traders Uncover Secret To Rates That Fed Doesn’t Get.


Speaking Of Rewarding Stages Of The Market

How Can I Invest In China? is probably the question you’ll be getting this week (if not already).  “A year ago, analysts who cover the 50 largest companies trading in Shanghai and Shenzhen said equities were set to rally 28 percent.  Turns out they weren’t anywhere near optimistic enough, as monetary easing and a buying frenzy among Chinese retail investors sent shares surging 111 percent through last week…While regulators have taken steps to weed out speculators, they’ve also sought to expand the role of equity markets in helping companies raise funds as the government reins in credit expansion.  Beijing has accelerated reviewing companies’ applications for initial public offerings since April.”  Meanwhile, as “the dollar has soared against the currencies of most of its biggest trading partners in the last year, Beijing has largely refused to let the renminbi depreciate against it.  At 6.20 to the dollar, it’s less than 1.5% off the record high it posted at the start of last year.  As you might expect, tying the renminbi to the dollar has led China’s exporters to lose competitiveness on regional and world markets, particularly against local rivals Korea and Japan.”


EU: This Time Greece Is Down To The Wire For Real You Guys


bad apple

Some Banking News

Bank stocks are making a comeback you guys: “with yields expected to keep climbing as the economy improves and as the Fed begins to embark on a multi-year process of policy normalization, the environment for bank stocks is brightening.”  You’re probably sitting there thinking “sure, fine — But what inning?!”  “We’re only in the fourth inning of credit demand,” says banker.  Nice.  Meanwhile, foreign exchange rigging is $5.6 billion under the bridge (alt): “the DoJ said that between December 2007 and January 2013, euro-dollar traders at Citi, JPMorgan, Barclays and RBS — who described themselves as members of ‘The Cartel’ — ‘used an exclusive electronic chat room and coded language to manipulate benchmark exchange rates’…the total penalty being paid over forex now exceeds the approximately $9bn paid to settle the Libor rigging claims.  The banks settling the forex allegations…are hoping that Wednesday’s deal will enable them to finally draw a line under both affairs.”  Meanwhile, “nearly one in five [financial service professionals] feel financial service professionals must sometimes engage in unethical or illegal activity to be successful in the current financial environment.”  Also, “the number of people working in the securities business nationally has returned to 2007 levels, as has the gap between the compensation of Wall Street workers and that of everyone else…Average pay per full-time worker in the securities industry averaged 2.2 times that of the average American worker for the 70 years that ended in 1999 and peaked at 4.2 in 2007.  It has rebounded to 3.6 times as high in 2013, and looks likely to have risen further since then.”  But you guys, “it is unfair to suggest the entire industry is a den of thieves…Structurally, Wall Street firms carry much less risk than they did years ago.  Capital requirements are significantly higher.”  Indeed.  “It might be thought that [diminished liquidity in markets] is an unintended consequence of regulation…But comments from Bank of England Governor Mark Carney last week suggest investors should think again: this may be a feature of the new world, not a glitch…A vital part of this argument is that due to the regulatory overhaul of the financial system, markets have to bear liquidity risk — and should charge to do so…This is difficult for markets to reflect, however…as the assumption of abundant central-bank supplied liquidity has driven down the premium charged for investing in illiquid assets.”  


Dear China: We’ll Be The Judge

Here’s something people are really focused on: “The decline of Hanergy Thin Film Solar Group Ltd. was as spectacular and inexplicable as its ascent.  Just 24 minutes of Hong Kong trading erased $18.6 billion of market value and wiped out almost four months of gains that made it more valuable than Sony Corp. of Japan.”  Apparently the chairman missed the shareholder’s meeting and everything exploded.  Bubbles, amIright?!


EU: What Bound Rout?


JPN: GDP And Stock Market Have Been Beating Expectations Recently


investors Finally Get What They Wished For Are Rubbing Their Lamps Again

Government bonds are continuing to sell off today: “the US 10-year Treasury yield rose to 2.36 per cent in early New York trading, its highest level since November…Euphoria over the [ECB’s] €60bn-a-month monetary stimulus that pulled the German 10-year bond yield down towards zero per cent last month has faded on improving growth prospects and climbing inflation expectations…’[the sell-off] is starting to stretch the boundaries of what you could call a technical correction.  A lot of strategists are getting nervous,’” says a strategist.   John Williams, however, thinks nervous is healthy: “my personal preference is that we don’t have the most telegraphed policy decisions in history, as we did in 2004…In a normal economy there is some volatility in markets, that is just a healthy functioning of markets trying to understand and filter what the data means for policy.”  Meanwhile, German Bund investors may need to up their intake of aspirin: “It took 102 trading days for 10-year Bund yields to rally from 68bp to their all-time low of 7bp on April 20th.  It took just 15 days after that to jump back to 68bp again.”  Furthermore, “in the volatility of the last week, the backdrop of negative yielding assets in Europe has changed significantly.  Higher yields means fewer negative yields…But even €1 trillion down..negative yielding Eurozone government debt remains greater than the size of positive yielding Euro credit.”  Reuters thinks this could be “a shot in the arm” for the ECB:  “this has broadened the pool of bonds the ECB can buy under its quantitative easing (QE) purchase programme, which excludes all paper yielding below the minus 20 basis points that corresponds to the bank’s deposit rate.”  Meanwhile, “if bond yields are going up because investors demand a higher premium for holding risk, then the losses on riskier assets like equities ought to be bigger still.  But that doesn’t appear to be the case.  Government bond yields seem to have ticked higher because inflation expectations have been rising…If bond yields are going up because growth expectations are picking up, this should ultimately be favorable for equity markets, albeit after a round of near-term volatility.”  Also, the main argument for why this is a “technical” correction has been the surprise announcement by Treasury to issue $64 billion in treasuries this week.  However, “demand for the U.S. government securities sold at auction has declined in each of the past three months, after also slumping in the August-through-October 2014 period…the Treasury is also competing with more than $20 billion of debt slated to be sold by companies.”  We should get a preview of the “technical” correction thesis today as $24 billion three-year notes go up for auction.  Stay tuned.


Mo’ Money, Mo’ Problems

“While [Apple] may well become the first $1 trillion market cap company (Carl Icahn’s recently top-ticking tweets notwithstanding), did you know that AAPL is now bigger than the entire market cap of all Spanish stocks combined?  Or that Austria’s $99 billion gross market cap is the size of Mastercard.  Or that Finland’s entire stock market is about the size of Verizon?”  Speaking of which, Finland Verizon has no idea what to do with all their money is buying AOL.  Also, mutual funds have no idea what to do with all their money are hunting unicorns.  Also, sovereign wealth funds have no idea what to do with all their money are “[harnessing] the premium associated with more illiquid assets.


USA: Retail Sales Indicate Divergence Between East And West Coasts


Tech: Google Is Currently Putting 10,000 Miles A Week On Their Self-Driving Cars


USA: Why Do You Think Disney’s Rags-To-Riches Love Stories Are So Popular?


Data Dependency Feels Bad, And Then It Feels Good, And Then It Feels Bad, And…

“This week’s sell off might have been because too many investors believed bond yields would only go down; crowded positioning left the market vulnerable to small shifts in sentiment.”  Interesting to consider that “when fears about a eurozone break-up rise, German yields generally fall;” therefore, higher yields = less worry about Greece?  Maybe not: “right now (read: Thursday) the market is in a state of shock…A lot of people are staying clear, and that makes the market less liquid, which is helping to exaggerate market moves…the moves have reversed so sharply that [European yields] are back where they were before the stimulus was announced…’In one week we had a total unwinding of all QE-related trades.’”  Speaking of liquidity, Mohamed El-Erian says “tighter regulations and less patient shareholders have restricted the ability of broker-dealers to deploy their balance sheets counter-cyclically.  As such, they have limited appetite when it comes to accumulating inventory in the event that a large chunk of the investor base decides to go the other way.  The result has been a series of sudden out-sized price moves in quite a range of markets, from sovereign bonds to foreign exchange, emerging markets, and high-yield corporates.”  So as you can probably tell, things got a bit panicky this week; we even had a moment with Janet Yellen calling stocks overvalued and prices stretched and all that (very déjà vu).  To be fair, the panic was coming from bond markets, which have this strange ability to convince people of more things than the stock market.  But all of that is going away fast: the April jobs report came out this morning and investors are all like, “oohh…reassuring.”  🙂  “Payrolls rose 223,000 in April, following a 85,000 gain in March…The unemployment rate slid further to 5.4 per cent…more Americans entered the labour force, pushing up the participation rate to 62.8 per cent from 62.7 per cent the previous month.”  “The standard story that economists have been telling is that this is just another messy winter with worse-than-usual weather…But there’s a ‘show me’ dimension to that conclusion…So what the new jobs numbers offer is relief that the crummy first-quarter data was indeed an aberration, not a new trend.  At the same time, they are soft enough that they include no real evidence of an acceleration into a new, stepped-up rate of growth” (read: acceleration into Fed tightening).  Here are the charts.  Also, German bund yields have dropped back down to 0.53bps, and you shouldn’t feel bad if you missed out on the Gross Short of a Lifetime because apparently Bill Gross missed it as well.


China: Pinky Swears No QE


WM: Risk ≠ Volatility, Maybe


WM: Case For Indexing In Bonds Is Far Less Clear Than It Is For Stocks


What: The “Cylon Detection” System Finds 10 To 20 Spoofers A Day, On Average


WaitWhat: You Know That All Startup Founders Dropped Out Of College And Hate English, Right?

Interstellar BuzzFeed

Those Aren’t Mountains…

The “esoteric concern on almost everybody’s lips” these days is bond market liquidity: “while banks have cut their inventories of bonds, asset managers have recently been gobbling them up…But the catch is that many asset managers rely on potentially flighty forms of funding (ETFs anyone?)…If US rates suddenly rise, retail investors might flood out of bond funds…If that happens, those funds might discover the bonds are completely illiquid, or untradeable except at rock bottom prices…Thankfully, nobody expects the test to come quite yet.”  Whew!  Nice.  So, what might be driving that expectation?  “The sole bright spot is the eurozone”–this is where your lower jaw falls slightly and you start questioning the decision to keep reading this “connect the dots” nonsense — “The gap between US and eurozone growth has, for now, disappeared completely.  Overall, the growth rate of the global economy has therefore slowed further…Activity growth needs to recover markedly in the next few weeks if a generalised downgrade to global growth forecasts for the 2015 calendar year is to be avoided.”  “Like a pilot spotting a smoking engine at take-off, the US Federal Reserve is having second thoughts about when to raise interest rates…[A delay] may change the shape of the global recovery, crushing hopes for a sharp rebound in the eurozone (On the back of Wednesday’s Fed statement, the euro soared to $1.125), while removing some of the gloom from the outlook for emerging markets…The longer [the Fed] waits before cutting interest rates, the further they can go with loosening monetary policy.”  Furthermore, “emerging markets may find a surprise ally in Europe.  A stronger euro would make it harder for the ECB to meet its inflation target, [leaving them with] little option but to continue with their QE programme…But they should not take too much comfort.  Fed increases are powerful tsunamis — within hours, their effects are felt even on the furthest shores.”  Meanwhile, Vanguard says that “while you might expect the prospect of the Federal Reserve raising interest rates to put the brakes on capital inflows into emerging markets, thereby worsening their financing problems, our research suggests that doesn’t have to be the case…While financial crises have coincided with a drying up of capital inflows to emerging markets, that’s been less true of monetary tightening by the Fed.”  Getting back to the US for a minute, Gavyn Davies says the “persistent tendency for US growth to disappoint” is due to one or both of the following: “weak aggregate demand, owing to a demand-side form of ‘secular stagnation’; or a permanent slowdown in productivity growth…Ultimately, the behaviour of US inflation will distinguish between the two competing hypotheses, and the Federal Reserve will have to set policy accordingly.”  Meanwhile, “if these interest rates were to continue for 10 years, stocks would be extremely cheap now,” says Warren Buffett.  Meanwhile, John Hussman understands that using the Greek alphabet is a quick way to a financier’s heart.


The Latest Buzz

“The word ‘wrong’ is really good,” says a senior BuzzFeed video producer.  “Started in 2006 as a lab for experimental web content, BuzzFeed has attracted an audience of 200 million monthly unique visitors, making it the sixth-largest site in the U.S. — bigger than eBay, Yahoo, and Wikipedia…It’s known for its viral hits — jokey lists about cute animals — and increasingly, its investments into journalism.  But now, like its digital pers, BuzzFeed has aggressively expanded into video…Ideas for new ‘wrong’ videos get thrown around: Snacks you’re eating wrong.  Maybe you’re running wrong, or putting your pants on wrong…When Frank asks his team what they’re working on, they rarely tell him the individual piece they’re shooting, but rather the problem they’re trying to solve.”  Meanwhile, Twitter’s live-streaming app Periscope has taken pay-per-view piracy to a whole nother level: “Soon, viewers started to notice a trend.  If a Periscope session [got] too many ‘hearts (Periscope lingo for favorites), a stream would get shut down…This wasn’t really a problem, however, because like a hydra, we could just go to another Periscope stream somewhere else in the world to watch the fight on someone else’s TV.”


Global: Moody’s Has Become So Senile


USA: “No One Is Spared Their Side-Eyed Looks”


USA: The Bernanke Cat Fights Of 2015: John Taylor’s Contribution


What: Turns Out Goldman’s Coal Mines Weren’t A Passion Project

zeppelin logo

Confusion Trending

The Wall Street Journal proclaims that “the trades that had proven winners in recent months backfired [in April] (alt)…The euro strengthened 4.5% against the dollar in April after tumbling 11% in the first quarter.  The U.S. benchmark crude-oil price soared 25% after declining 11% in the first three months of the year.  The Nasdaq Biotechnology Index fell 2.8% in April after jumping 13% in the first quarter.  Yields on German government bonds bounced higher after nearing zero last week.”  Furthermore, “the turnaround month ended with an exclamation point,” read: selloff in “suddenly vulnerable technology stocks.”  Twitter, Yelp and LinkedIn are the culprits.  “It is spring cleaning,” says one.  “It’s a short-term unwind,” says another.  “I’m convinced medium-term trends will re-establish themselves.”  Nice.  As you can probably tell, everyone is a bit “um, what?” about recent economic data.  ICYMI, 1Q GDP came in at 0.2%, and people were all like “probably not a true reflection of the economy’s health, given the role of temporary factors such as the weather and the ports dispute.”  Then, the impossible happened:  “private sector pay rose 2.8 per cent in the first quarter (alt)…the quickest upward pace since 2008;” “personal spending rose 0.4% in March from February (alt)…the biggest gain since August;” “new claims for jobless benefits tumbled to a 15-year low” etc.  “This is precisely why we told you to ignore the weak first-quarter GDP data produced yesterday.  It’s old news.  And the economy is showing”–cue Institute for Supply Management: “the pace of U.S. manufacturing growth held at its slowest in almost two years in April, as a rebound in new orders was offset by employment shrinking to its lowest level in more than five years.”  Also, “U.S. construction spending fell in March to a six-month low…Economists polled by Reuters had expected construction spending to rise 0.5 percent.”  Of course, the best head-scratcher of all is still with us: “consumer confidence increased in April to the second-highest level in more than eight years as Americans grew more upbeat about their financial prospects.”  Meanwhile, 10 year Treasury prices have fallen nearly 8% since Wednesday.


China: Chinese Equities Are A Stairway To Heaven (Alt)

Orientalism aside, this is pretty suspect: “After jumping by the maximum-allowed 44 per cent from the offer price when it floated in Shenzhen just a month ago, the stock has risen by the daily maximum of 10 per cent every day since…Every one of the 29 IPOs in Shanghai and Shenzhen this month have risen by the daily limit each day since.  The worst performing IPO from earlier in the year has doubled in price.”


USA: P2P Derivatives

“LendingClub chief executive officer Renaud Laplanche said he’s aware of the interest to bet against the market.  Derivatives that give investors the ability to protect against losses on the loans the company arranges is just smart risk-management, he said.”


Musk: “The Goal Is Complete Transformation Of The Entire Energy Infrastructure Of The World”


What: Eyeglass Retailer Gets $1.2 Billion Valuation With No Profits


WaitWhat: Guy Thinks VCs Are Gonna Need A Dark Pool

oliver twistEat Up

“The performance of the US stock market is quite impressive considering that there isn’t much of a spring in the latest batch of economic indicators.  The winter’s ice patch is looking more and more like the spring’s soft patch.”  “It is one of the market’s paradoxes that soft economic growth can be a fine climate for stocks.  As long as the economy is advancing, corporations can increase sales and profits.  But in a soft advance, interest rates stay low, keeping costs down.  The uncertain economy keeps Federal Reserve monetary policy easy, one of the main bulwarks of a bull market…Severe bear markets usually occur when the Fed is raising interest rates sharply to cool off inflation…low inflation and low rates increase the present value of future corporate earnings.”  Meanwhile, the Wall Street Journal says “core inflation readings would be even weaker but for the pace of gains in the BEA’s measure of housing costs, which counts toward about one-fifth of its core price index.  This was up 2.9% from a year earlier in February.  Absent that, core inflation would have been running at just 1%.  Housing counts for an even bigger chunk of the Labor Department’s consumer-price index, which is a big reason why its core measure has been running ahead of the BEA’s…The rental vacancy rate fell to 7% in the fourth quarter from 8.2% a year earlier…the lowest level since 1993.”  Meanwhile, “Japanese life insurers — some of the world’s largest institutional investors — plan to keep pouring money into U.S. debt this year as the list of countries able to meet their thirst for yield shrinks…Even though the roughly 2% current yield on 10-year U.S. Treasurys is a far cry from yields of 5% or better before the global financial crisis, it is still light-years better than the current 0.16% yield for German bunds with the same maturity or the 0.29% yield for 10-year Japanese government bonds…’Considering current yield levels, liquidity, hedging of currency exposure, the U.S. is likely the primary destination.’”  So inflation and rates are low, which means there’s a lot of “stocks are expensive, BUT” going on at the moment: “stocks are expensive but while rates stay low, and earnings avoid a serious collapse, money flows into them.  A strong catalyst — really bad earnings, a bad geopolitical event, or a surprise from the Fed — is needed before the market can jolt out of its steady ascent.”  Speaking of surprises, the “Make my day, Janet Yellen” crowd is eating their last free lunch: “what the market never worried about was whether the statement would include the most dreaded news: a rate hike, and because of that, every meeting was something of a free lunch for the market.  That is the case this week, too.  The Fed’s signals have been very clear: there won’t be a rate hike at the April meeting.  However, this is the last meeting at which that certainly presides.  After this, higher rates are firmly on the table.”



“There are two main routes through which the slowdown could develop into something much worse…investment could slow sharply…[and] there could be a rise in household savings in response to concerns about falling household wealth, which is what happened during the US housing crash.  Given the bubble-like surge in equity prices, this may seem improbable, but it would become more likely if the equity surge ends in a crash.  The second route, also reminiscent of events in the US in the last decade, would be a financial crash led by stressed loans to the real estate or manufacturing sectors.”  Meanwhile, “Chinese companies are increasingly tapping the equity market for funds to pay down liabilities and invest in growth.  They’ve announced $82 billion of secondary stock offerings in 2015, a figure UBS Group AG predicts will increase to a record $161 billion by December.”  Also, “authorities have pledged to move toward a so-called ‘registration system’ where markets, rather than regulators, determine most aspects of an offering, including pricing and timing.”


WM: Consensus Expectations

Also, Why International Diversification Matters.


Greece: He Who Shall Not Be Named Shall Not Be In Negotiations


What: Socialist Muslim Slash Deflationary Force

porky pig

A Th-Th-Th-That’s All, Folks!

Mohamed El-Erian’s portfolio is mostly concentrated in cash right now: “Central banks look at growth, employment, at wages.  They are too low.  They don’t have the instruments they need, but they feel obliged to do something…They hope that they will trigger what’s called the wealth effect…There is a massive gap right now between asset prices and fundamentals.”  “Why is this the most mistrusted bull market in recorded history?  Because no one thinks it’s real.  Everyone believes that it’s a by-product of outrageously extraordinary monetary policy actions rather than the result of fundamental economic growth and productivity — and what the Fed giveth, the Fed can taketh away.”  Meanwhile, “there are two common delusions about the Fed: [1] They know something we don’t [2] They are stupid.” Meanwhile, “there seems to be a conflict between low liquidity in markets requiring more and more predictability and the Fed wanting to have more flexibility…If economic conditions demand that [the Fed] raise rates this year it will simply have to contend with the existing, broken model.”  Meanwhile, “the easy part of the dollar rally is definitely behind us” (alt) …”On Friday, the dollar took its biggest tumble in almost two weeks following slower-than-expected U.S. job growth for March.  The Labor Department reported nonfarm payrolls grew by 126,000.  Economists…had forecast an increase of 248,000…the expected likelihood of a Fed rate increase in September dropped to 28% from 33%, according to the fed-funds futures market.”  Meanwhile, Josh Brown says “the preconditions for active management outperformance are present!”  He argues that the current outperformance of small caps over large, as well as international stocks over domestic, provide plenty of “alpha” potential.  Furthermore, “dispersion has shot up — dispersion representing the degree of standard deviation between stocks from one another.”  Also, “cash is also not as big of a drag this year as it was last year.”  “The question is, will these conditions remain present long enough for the active funds to post a (sorely needed) banner year for the industry?  It would make things a lot more interesting and could cause quite a stir here in the Index Utopia.”  Meanwhile, The Tide In Europe Is Turning Towards Active Management.  Also, Would Benjamin Graham Have Hated Index Funds?


USA: What Happens If My Algorithm Is Wrong?”


USA: [Insert Noun Here] Asian Infrastructure Bank Has Convinced Larry Summers Of One Thing!

Rouhani tweet Iran nuclear deal

Negative Yields And The Current Strength In The U.S. Labor Market

“If financial theory is grounded in one principal, it’s the ‘time value of money,’ or the idea that individuals prefer consumption today over consumption in the more uncertain future…Currently 25% of the European sovereign bond market is trading with a negative nominal yield…Why would anyone pay to lend money?  There are several reasons.”  1) “you expect a significant decline in prices,” and 2) buy low, sell to the ECB.  “What does a persistent regime of negative yield mean for investors?”  1) “income-producing stocks in Europe have a natural edge,” 2) strong dollar, and 3) “they are suppressing U.S. rates.  It’s hard to reconcile a sub-2% U.S. 10-year yield with the current strength in the U.S. labor market.”  …


Black Swans Shocking Headlines And The Current Weakness In The U.S. Labor Market

“US companies scaled back hiring sharply last month, adding to evidence that the economy has lost momentum since the start of the year….Payrolls increased by 126,000 in March (alt), well below Wall Street expectations (244,000) and snapping a 12-month spell of gains above 200,000…The previous two months’ readings were also revised down by a net 69,000, while the unemployment rate was unchanged at 5.5 per cent…The data pushed the dollar down to the $1.10 mark against the euro, while the yield on the 10-year note fell 8 basis points to 1.84 per cent…None of the 98 economists polled by Bloomberg had forecast such a low figure.”  “Now you’ll see economists ratcheting down their job creation expectations for next month, next quarter, the full year etc.  They’ll also be pushing back their expectations for when the Fed will first raise interest rates from June to September or even sometime in 2016.  The one thing they won’t be doing is ending the forecasting nonsense.”  Meanwhile: Are The Best Days Of The Recovery Behind Us?  Why Are Wages Growing Slowly Despite McDonald’s, Wal-Mart Raises?  Bottom Line: Ouch.


Teraflops Of Tweets And Jay-Z

“Scientists at the firm, Two Sigma Investments LLC, program itcs machines to cull torrents of information from sources like newswires, earnings reports, weather bulletins and Twitter…the firm has more than 100 teraflops of power — more than 100 trillion calculations a second — and more than 11 petabytes of storage, the equivalent of five times the data stored in all U.S. academic libraries.” Meanwhile, “people lost maybe as much as a few hundred thousand dollars because, for a brief stupid minute, they thought Tesla was introducing…a watch?  No, of course they didn’t.  They thought Tesla was introducing a thing called the Model W, and they didn’t read any further than the headline, and they bought Tesla stock hoping the Model W, whatever it was, would be a huge success…And when I say ‘people’ I mean mostly ‘algorithms,’ which are faster and more literal than humans.”  Meanwhile, “shares in music streamer Aspiro, a majority of which was bought earlier this month by hip-hop star Jay-Z, soared on Tuesday to as much as 11 times the price at which remaining shares will be acquired in a compulsory squeeze-out only days away…buyers [look] set to face losses of some 90 percent…’There are reasons to suppose that some have not noticed the communication around the bid.’


Global: Krugman On Summers And Bernanke


Oil: Iran Nuclear Talks End With “Framework” (Alt)

Oil dipped 5% on the news.

Also, here’s a neat gif of Warren Buffett making a lot of money.


WM: Bond Traders Switching To Currencies?

“While the amount of marketable Treasuries outstanding has almost tripled since 2007 to $12.5 trillion at the end of last year, trading has fallen 11 percent.”


WM: ETFs Are All About Active Sector Selection

Airbnb Bets On Boom In Cuba Tourism

US vs Europe allocations Mar 2015

Chasing European Equities Foreign Currency Returns

“The EMU MSCI (in euros) is up 19.0% ytd, well ahead of the 1.5% gain in the US MSCI.  Of course, this divergence has been fueled by the 12.6% ytd plunge in the euro.  The currency is down 24% from last year’s high of $1.39 to $1.06.  In US dollars, the EMU MSCI is up only 4.1% ytd, and is actually down 6.8% y/y.  As a result, there has been a rush to Eurozone ETFs that are hedged to the euro.”  “Bullishness towards European stocks has reached uncharted territory,” says a quant at Merrill Lynch.  “19% of global asset allocators are now underweight U.S. equities — the largest share since January 2008.  Allocations to equities in Japan and particularly the eurozone, by contrast, have risen sharply and many respondents say that this might just be the start of an enduring trend as major central banks around the world continue along sharply different paths.”  Meanwhile, economists at Goldman and Wells are expecting “a cut to the Fed’s growth and inflation forecasts, which could result in the first rate increase coming after the June meeting…[they] still believe a September liftoff in rates is more likely that one in June.”  Meanwhile, Rick Rieder thinks “the application of technology as a deflationary force is nowhere more apparent than in the energy industry…production has continued to grow despite the rig count having peaked more than two years ago…limited incremental investment or working capital is required, but the yield continues to drive forward.  That’s called productive disinflation, and it’s happening in many different sectors of the economy.”


WM: Market Efficiency And The Infinite Regress Of “Dumb”

Meanwhile, S&P 500 funds will be forced to buy American Airlines and sell Allergan on Monday.


WM: Relax, DIY Robo-Tax Preparation Didn’t Kill The Tax Advice Industry Either


Global: “There Are No Shadow Banks, Just A Shadow Banking System”


WM: “Bond-Market Crashes Have Actually Been Relatively Rare And Mild” Says Shiller


What: 27% Of Respondents Think You Can Get Paid To Receive Insurance From Default