2 eras of fiscal policy
Charts
Scary Chart Of The Day: Average Foreign Purchases Of US Securities Take Out Lehman Low
As we reported earlier today [10], for whatever reason China sold the second biggest amount of US Treasurys in December. However, that was only part of the story. In fact, as we also noted, while the two largest US foreign creditors were net sellers, total foreign bond holdings actually rose in the last month of 2013 and as the chart below confirms, when it comes to Long-Term Treasury paper, foreigners were actually buyers of some $18 billion in Treasurys. It is everything else that they sold in the month when the S&P hit its all time high: specifically, foreigners were net sellers of Agency securities ($15.4 billion), Corporate Bonds ($7.5 billion) and Corporate Equities ($13.7 billion) something which hardly fits with the narrative of the record stock market high generating confidence in even more buying down the line.
[11]
In the chart above it is the black line - gross purchases of US long-term securities - that is the most troubling, as its trend is hardly anyone's friend.
So what happens when one smooths out the line to normalize for monthly fluctuations? This:
[12]
The chart is very disturbing: it shows that as the S&P rises higher and higher (on ever declining volumes), foreigners are buying fewer and fewer US securities. In fact, on a 12 Month Moving Average basis, foreigners bought less long-term US securities than they did when Lehman crashed!
Luckily we live in a New Normal when price is no longer determined by simple supply and demand (and certainly not from retail investors who have long since given up on the fraudulent, broken US capital "markets") but Fed jawboning of a record $2.5 trillion in bank excess reserves, corporate buybacks and HFT algos spurring momentum ignition and buying because others are buying.
And so we have come full circle, because while, understandably, nobody had any appetite for US securities around the Lehman crash when until the Fed stepped in and singlehandedly took over the US capital markets it was unclear if there even would be a US capital markets, now that five years later the S&P has risen to a level nearly three times the March 2009 lows thanks entirely to the Fed's $4.1 trillion balance sheet backstop, the interest in US securities is... lower than it was in the days just after Lehman!
Source: TIC [13] [13]
Latin American Currencies Plunge To 2003 Lows, Argentine BONARs Shrink
GIH: Latin America should not be disregarded, it was an Asian crisis in 1998 that shook worldwide markets. Brazil is a growing player in the global economy, and the Venezuelan stock market has been on a bull run. What happens in Latin America deeply affects the world. Take a look at these disturbing Forex charts:
With today's plunge, Latin American currencies have collapsed by over 5% in th elast 2 weeks - the fastest drop in almost two years. Year-over-year this is a 15.75% drop, the largest such drop since Lehman. This drop breaks the 2009 lows and presses the currencies to their weakest since 2003... Bond markets are being crushed as short-dated Argentine BONARs have collapsed to 14 month lows.
LatAm FX at 11 year lows...
[5]
Argentina BONAR have seen firmer days.
[6]
Chart: Computers and Electronic Products Orders
Chart: Insider Transactions Ratio
Chart: Million lines of code
The below chart compares number of lines of code of various projects, from Unix, to the iPhone, and finally, healthcare.gov. With an enormous amount of code, and likely little or no documentation, it would be impossible to 'fix' the site, or even make a blueprint of how it is supposed to work. In any event, the below data visualization presents the facts based on number of lines of code, as it may be difficult for the average person to imagine.
Click to enlarge
For more data visualization see:
Chart: You have the right to remain out of prison
Click to enlarge
It’s Getting Congested: The World’s “Three Handle” Ten Year Bonds
A convergence of US/EU bond spreads sends an ominous message about the comparison between the false US recovery/QE program and the EU crisis.
Forget "the 1%-ers", meet the 3%-ers. As US Treasuries sell-off and European bonds continues to surge, the 3% handle on government debt is becoming a crowded trade with the following six nations now yielding between 3 and 4%... US, UK, Ireland, Israel, and drum roll please... Italy and Spain!
- US 3.008%
- UK 3.044%
- Ireland 3.389%
- Israel 3.70%
- Italy 3.98%
- Spain 3.99%
Bear in mind that a year ago the spread between Spain and US was 350bps and is now less than 100bps...in some wierd world that all makes sense, we are sure.
Note today saw European stocks selling off (apart from Greece which roared 4% higher) but European bonds screamed lower in yield with Portuguese spreads 30bps tighter today alone and Spain and Italy 18bps tighter!! This is a perfect echo of 2013's first day ramp (and the biggest spread compression since 1/2/13!!)
Everyone front-running ECB QE?
Chart: Bloomberg
Chart: Twitter Now Has A Larger Market Capitalization Than 80% Of All S&P 500 Companies
As everyone is well aware by now, Twitter investors and speculators have been on a sharp, sudden and very relentless buying spree, sending the company nearly 50% higher since the first week of December, and nearly doubling it since late November.
Why the stock has exploded the way it has, nobody knows, and frankly nobody cares: it has entered that mythical zone of raging momentum where things work, until they don't for whatever reason. But in order to present readers with a sense of where TWTR's $40 billion market cap, which is greater than 403, or 80%, of all S&P 500 companies, puts in in the context of several companies all of which have a market cap that is lower than Twitter's, we have shown on the chart below Twitter's 2014 projected Revenue compared to this same universe of immediately smaller S&P500 companies. Again, just for the sake of perspective.
Certainly, we have no doubt that Twitter's growth curve, based on the realistic assumption of infinite and growing advertising budgets, will promptly eclipse not only the revenues but certainly the earnings and cash flows of all the below-listed companies, and why not all other companies, both in the US and the world, too. Surely, more idiotic things have happened under Bernanke's centrally planned regime.
The Illustrated Guide To 4 Years Of Currency Wars
(click image for larger view)