ECB head Mario Draghi pulled out all the stops today but macro markets weren't buying it. "The Central Planning Belief System is breaking down," Hedgeye CEO Keith McCullough wrote. "This is the beginning of the end."
Takeaway: Join us next Monday, March 14 at 11:00 a.m. ET, for a call with former Fed Vice Chairman Don Kohn to preview the March 15-16 FOMC meeting.
Don Kohn Previews the FOMC Meeting
The Potomac Research Group - A Hedgeye company - will be hosting a call with former Fed Vice Chairman Don Kohn Monday, March 14 at 11:00 a.m. ET to preview the March 15-16 FOMC meeting. Don will offer his outlook on the labor market, inflation, consumer spending, manufacturing data, and other factors that will factor into the Fed's rate hike calculus.
Participating Dialing Instructions
Confirmation Number: 13630084
Don Kohn's Bio:
Don is an expert on monetary policy, financial regulation and macroeconomics and serves as the Senior Economic Strategist for the Potomac Research Group. He brings 40 years of experience working for the Federal Reserve, where he was a key adviser to the last three Federal Reserve chairmen and served as a member and then Vice Chairman of the Board of Governors from 2002 to 2010.
Don has written and published extensively on monetary policy and its implementation and on a variety of other subjects related to central banking. He chaired an important international committee of central bankers through the period of the recent financial crisis. He received a B.A. in economics from the College of Wooster and a Ph.D. in economics from the University of Michigan.
Takeaway: What to watch on the election 2016 campaign trail.
Below is a brief excerpt from Potomac Research Group Chief Political Strategist JT Taylor's Morning Bullets sent to institutional clients each morning.
Last night's Democratic debate was supposed to be last one on the official schedule (two more have been added), and would have been the final punctuation mark in Hillary Clinton's clinching of the nomination had she not been upset in MI. Bernie Sanders, reanimated by his Tuesday win, largely fought her to a draw.
We continue to get the sense that Team Clinton is discounting Sanders' tenacity, even after all that's happened. She had a lot of good moments last night, but she still lacks coherence on her Wall Street speeches, and she doubled down on iffy attack lines about the auto bailouts, immigration, and health care that are unlikely to stick. She's not any less likely to be the nominee after this week, but her inability to put Sanders away has her supporters rightly concerned anyway.
Sanders' surprise win in MI will not win him the nomination, but it has certainly added another dimension to the race as the primary trudges onward. Wins like MI will allow Sanders to continue to land jabs on Clinton's more centrist stances, and the longer he contests the primary the more she'll be dragged to the left.
Call it a broken record or call it message discipline, but Bernie's core themes are as clear as ever, while Clinton's remain a mosaic of policy proposals that she hasn't been able to bring into focus. Her inevitable drift leftward may not hurt her much if Trump is her opponent in the general election, but it has a big impact on how she'd have to govern as president.
FL's primary next week is the first major, and possibly last, test of the anti-Trump movement. In FL, outside groups have purchased over $12 million in attack ads aimed at Trump -- a princely sum compared to the less than $10,000 spent on anti-Trump buys in both MI and MS. Efforts to oppose Trump have been disorganized and ineffective, and we'll see if the bruised establishment's efforts pay off at all in Florida -- though we expect it'll do little to move the needle.
Relied upon by big institutional and individual investors across the world, this granular morning newsletter distills the latest and most vital market developments and insures that you are always in the know.
Takeaway: We may be mere months away from U.S. recession according to jobless claims.
Editor's Note: See today's 259k jobless claims print? That's not the bullish harbinger many investors make it out to be. In fact, it might just be the last shoe to drop before a recession sinks in. That's one of the key takeaways from a recent institutional research report written by our Financials analysts Josh Steiner and Jonathan Casteleyn. Below is a brief excerpt. To get full research access email email@example.com.
"... While we may sound a bit like a broken record on this point, we still think it bears repeating that the cycle is late stage. The chart below shows that there has historically been a time limit on how long the labor market can run this hot.
The chart shows that in the last three cycles, claims have run below 330k for 24, 45, and 31 months before recession set in. The current sub-330k run just entered month 25. That puts us one month past the minimum, 8 months from the 33-month average, and 20 months from the 1990s record-setting expansion."
In this brief excerpt from The Macro Show this morning, Hedgeye CEO Keith McCullough discusses the latest “Viagra” monetary policy moment and why central planners’ days are numbered.
Subscribe to The Macro Show today for access to this and all other episodes.
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Takeaway: The Central Market Planning #BeliefSystem is breaking down.
The ECB popped its latest Viagra pill this morning in a desperate attempt to stimulate Europe's flacid economy. Markets didn't buy it and did the exact opposite of what central planners intended.
In other words...
A brief recap of the ECB announcement:
What happened in macro markets following the policy announcement is even more important. European equities rallied, at first, with Italy up as much as 2%, following ECB head Draghi's press conference.
Then, it all came apart and equities fell.
Meanwhile, as Draghi was laying out the ECB stimulus measures, the Euro tumbled 1.4% versus the U.S. dollar (i.e. Draghi's intent) but then completely reversed. As of now, the Euro/USD is up 1.3%.
Here's what that looked like this morning:
Macro markets are wising up and clearly questioning the potency of central-planning policy tools. Note: The ECB cut its outlook for growth and inflation:
"Why not ask yourself if this is the beginning of the end – of the grand central-market-plan," Hedgeye CEO Keith McCullough wrote on 2/23 in a recent Early Look entitled "Big Bank Theory." McCullough continues:
"My Big Bang Theory for the #CurrencyWar (one of the Top 3 Themes in our Macro deck right now) is as follows:
I know, I know. It’s just a theory. But it’s what I would call one that has a probability that is rising, not falling, in rate-of-change terms."