the times they are a changin......

historic times that defy explanation...a world that has lost its rudder....adrift in the sea of the unknown.....with the 'experts' running the asylum.....

Dutch bonds just did something that we haven't seen in 499 years  Dutch 10-year government bond yields dropped below zero for the first time ever on Monday, making them the latest to join the negative yield club. The Netherlands' 10-year dipped by 0.08 percentage points to as low as -0.007%. It has fallen by about 30 basis points since the June Brexit vote. There's roughly $13 trillion of global negative-yielding debt now, according to data from Bank of America Merrill Lynch, cited by the Wall Street Journal on Sunday. By comparison, there was about $11 trillion ahead of the UK's vote on EU referendum. When a bond is negative yielding, it means investors get less back when the debt is due than what they pay for it today. The Dutch bond yields are the lowest the country has ever seen. Amazingly, there's nearly half a millennium of records to compare that against, as record keeping began in 1517. As a historical reference point, that's the same year that Marin Luther published his 95 Theses. You can see the history of the Dutch 10-year going back to 1517 in the chart, which was shared by Deutsche Bank's Jim Reid in his Monday note to clients.

a difficult time for retailers....

Macy’s Slashes Forecasts

Macy’s said its sales slump accelerated in the first quarter, dragging down earnings and prompting the retailer to cut its forecast for the year.
CEO Terry Lundgren said the company was experiencing "continued weakness in consumer spending levels for apparel and related categories," and noted that sales particularly slowed in mid-March
Shares of Macy's were getting hammered today after the company reported its fifth straight quarterly sales decline in its earnings report this morning.

Kohl’s Posts Surprise Sales Decline

Kohl’s posted a 87% drop in profit in the latest quarter and a surprise decline in sales, in the latest sign of distress by a department-store retailer.
Department store operator Kohl's reported a surprise drop in comparable sales and the first drop in net sales in six quarters as unseasonably cool weather hurt sales of spring wear amid a slump in demand for apparel. Sales at Kohl's stores open at least a year fell 3.9 percent in the first quarter. Analysts polled by research firm Consensus Metrix had expected sales to grow 0.4 percent.

Nordstrom Shares Slammed After Earnings

Department store operator Nordstrom Inc reported a drop in first-quarter sales at established stores and slashed profit expectations for the year, adding to the gloom in the department store sector.

J.C. Penney Reports 1Q Loss, Sales Drop

U.S. department store operator J.C. Penney joined rivals including Macy's and Kohl's in reporting a drop in sales in a quarter marked by a slump in apparel demand.
Sales at J.C. Penney stores open at least a year fell 0.4 percent in the first quarter ended April 30, compared with the 3.3 percent rise expected by analysts polled by research firm Consensus Metrix.
J.C. Penney's net loss narrowed to $68 million, or 22 cents per share, in the quarter, from $150 million, or 49 cents per share, a year earlier.
However, net sales fell 1.6 percent to $2.81 billion.

Tiffany Reports Steepest Sales Drop in Six Quarters

Tiffany reported its steepest sales drop in six quarters, missing analysts' estimates, as a strong dollar discouraged tourists from buying its high-end jewelry and ate into revenue from markets outside the United States.

The company also forecast a mid-single digit percentage fall in its full-year profit. Tiffany had earlier said it expected earnings to stay flat or fall by up to mid-single digit in percentage terms.

Sales at the jeweler's stores open for more than a year fell 10 percent in the Americas region in the first quarter ended April 30. Analysts on average had expected a 9.1 percent decline, according to research firm Consensus Metrix.

Sears Reports Bigger Loss, Exploring Options for Two Businesses

Sears Holdings reported a bigger net loss as sales fell and said it was exploring potential partnerships or other deals for its unit that houses the Kenmore, Craftsman and DieHard (KCD) brands and its Sears Home Services business.

Sears, controlled by CEO Eddie Lampert, has lost more than $8 billion over the last five years. The company has managed to post a profit just once in the last four years.

Net loss attributable to Sears' shareholders widened to $471 million, or $4.41 per share, in the first quarter ended April 30 from $303 million, or $2.85 per share, a year earlier.

Revenue fell 8.4 percent to $5.4 billion. Same-store sales fell 6.1 percent, mainly due to fewer Kmart and Sears mall-based stores in operation.

Abercrombie's Sales Fall for 13th Straight Quarter

Teen apparel retailer Abercrombie & Fitch's sales fell for the 13th straight quarter as customer traffic to its stores dropped, mainly in markets outside the United States.

Shares of the company, whose brands include Hollister and abercrombie kids, plunged 13 percent in premarket trading on Thursday.
Comparable sales at international stores open at least a year slumped 7 percent in the first quarter, surprising analysts, who had expected a 0.2 percent rise, according to research firm Consensus Metrix.
Same-stores sales fell 8 percent in the Abercrombie brand, a much bigger decline than the 0.6 percent expected by analysts.
Abercrombie's revenue fell 3.4 percent to $685.5 million in the quarter ended April 30, missing the average analyst estimate of $710.3 million, according to Thomson Reuters I/B/E/S.
The net loss attributable to the company narrowed to $39.6 million, or 59 cents per share, from $63.2 million, or 91 cents per share, a year earlier.

more velocity.....

Captain Kirk: Scotty, we need more velocity.....now!

Scotty: I'm on it captain......but I don't know how much more she can handle!

Growing debt levels, velocity of money plummeting, FOMC continuing accommodation....where are we headed? 

Looks like the final frontier.....

Sounds like an original Star Trek series episode!

Fighting Recessions With Hot Air

More Hot Air

We think both Duncan and Krugman are wrong. An economic boom, based on nothing but hot air (phony credit, with no real resources behind it), is fraudulent. It will never take us to real growth. Just the contrary. The best thing to do is to pop the bubble…and then pick up the pieces. Besides, it will pop whether we want it to or not.

Heck, we believe in magic as much as the next guy. But the magic act is wearing a little thin. The smoke is dispersing. The rabbits have disappeared. All the glam and sparkle, the shock and awe, the claptrap and hokum – they’re all giving way to economic reality.

We are beginning to see more clearly: the Fed’s theory is nothing but hot air. Now, its funny money is doing something even funnier than it imagined: the exact opposite of what the central planners intended. In yesterday’s Market Insight, Chris showed how the “velocity of money” is plummeting.

The “velocity” of M2. Actually, this is mainly telling us that the Fed has printed a huge amount of money and that surprise, surprise, it hasn’t produced much economic growth. When it begins to rise, it will mainly indicate that the demand to hold cash is declining as confidence in the currency is evaporating – when that happens, we will start to see wide-spread “price inflation” and even less real economic growth – click to enlarge.

This is serious. The velocity of money tracks how often each dollar is used to buy something in the economy. Falling velocity shows that consumers and business are pulling back… becoming more reluctant to spend and invest…downsizing… and holding onto dollars rather than spending them.

This has a similar effect as reducing the supply of money bidding for goods and services. Prices drop. Deflation, in other words.The bubble has developed a leak. The hot air is gushing out. Look out below…

http://www.zerohedge.com/news/2016-04-20/fighting-recessions-hot-air

what is the probability??

It is always a question of where the debt (leverage) rubber band is positioned - how much more stretch does it have until it snaps.....

There's a 100% Probability of a U.S. Recession Within a Year

http://www.bloomberg.com/news/articles/2016-03-04/jim-rogers-there-s-a-100-probability-of-a-u-s-recession-within-a-year

Rogers Holdings Chairman Jim Rogers is certain that the U.S. economy will be in recession in the next 12 months.
During an interview on Bloomberg TV with Guy Johnson, the famous investor said that there was a 100 percent probability that the U.S. economy would be in a downturn within one year.
"It's been seven years, eight years since we had the last recession in the U.S., and normally, historically we have them every four to seven years for whatever reason—at least we always have," he said. "It doesn't have to happen in four to seven years, but look at the debt, the debt is staggering."

Most Wall Street economists see a much smaller chance of a U.S. recession within this span, with odds typically below 33 percent.
Rogers was not specific on what could trigger a disorderly deleveraging process and recession but claimed that sluggish or slowing economies in China, Japan, and the euro zone mean that there are many possible channels of contagion.
The former partner of George Soros suggested that if investors focus on the right data, there are signs that the U.S. economy is already faltering.
"If you look at the … payroll tax figures [in the U.S.], you see they're already flat," he concluded. "Don't pay attention to the government numbers, pay attention to the real numbers."

In light of the economic turmoil envisioned by Rogers, he is long the U.S. dollar.
"It might even turn into a bubble," he said of the greenback. "I mean, if markets around the world are crashing, let's just say that scenario happens, everybody's going to put their money in the U.S. dollar—it could turn into a bubble."
Rogers added that a strengthening U.S. dollar has historically been negative for commodities—the asset class that the investor is best-known for.
While the yen is often designated as a risk-off currency, it won't benefit in the event of a flight to safety due to the massive, continued expansion of the Bank of Japan's balance sheet, according to Rogers, who said he exited his position in the yen last Friday.

new home sales trends

Economic trending data continues to reflect the rocky road of volatility that appears to be this extended cycles 'new normal'...

As the chart below shows, new home construction has plateaued and has been in decline ever since February of 2015 when it posted its post-recession peak of 545K. But what is more troubling is that the median price of new homes tumbled from 307,800 in September, or the highest in the series history to just $281,500, the lowest in 13 months!

The US consumer spending story

Continued 'unexpected' volatility appears to be the theme of this ongoing 'new normal' economic cycle......

NOT GOOD: The US consumer spending story everyone's been jazzed about is fizzling out 

American consumers are feeling increasingly pessimistic about their future spending.

One of the questions on the New York Fed's monthly Survey of Consumer Expectations asks respondents how they expect their household spending to change over the next year. This has been a very jumpy indicator in 2015, seesawing back and forth before dropping over the summer and hitting a new low in September.

As of September, the median household sees its spending growing just 3.18%, the lowest level in the survey's two year history. 

Consumers are a huge part of the American economy, with household consumption making up about 68% of GDP. The decisions consumers make about spending have a huge impact on the overall economy.

Many economists have been optimistic that the US consumer would be able to offset weakness overseas. That's what makes this survey particularly discouraging as the global economy slows.  

FNMA outlook

Economic Growth Outlook Less Upbeat for the Second Half of the Year

Katie Penote   August 24, 2015

WASHINGTON, DC – The first print of second quarter economic growth was weaker than expected, and its composition presents a less optimistic outlook for the rest of the year, according to Fannie Mae’s (FNMA/OTC) Economic & Strategic Research (ESR) Group. The federal government’s upward revision to first quarter growth was essentially offset in the second quarter, due in large part to a drop in nonresidential investment in equipment and structures. These factors, coupled with continued headwinds from a strong dollar and renewed declines in crude oil prices, are expected to continue to pose challenges in the current quarter, although consumer and government spending will likely provide support. Housing also is expected to contribute to 2015’s growth, with year-to-date main housing indicators staying well above year-ago levels.
“While consumer spending growth picked up as we expected in the second quarter of this year, other components disappointed,” said Fannie Mae Chief Economist Doug Duncan. “However, incoming data suggest some upward revisions may be in the cards for the second quarter. Furthermore, job creation remains steady, with full-time employment getting closer to pre-recession numbers, and household net worth continues its gradual rise. On balance, our full-year growth outlook remains unchanged from the prior forecast at 2.1 percent."
“We hold by our previous comments that income growth still needs to strengthen, particularly for younger households, in order to drive significant housing growth, but we are nonetheless seeing some positive improvements in the housing sector,” said Duncan. “Home sales have trended up and inventories are lean, supporting strong home price appreciation. That price growth, driven by laggard supply response, helps build equity for existing owners but is a headwind for first-time buyers. Given significant uncertainties from Greece and China, continued global monetary easing, and an expected slow pace of monetary tightening by the Fed, we anticipate mortgage rates to rise only gradually through next year, which should continue to help support mortgage demand.”

Visit the Economic & Strategic Research site at www.fanniemae.com to read the full August 2015 Economic Outlook, including the Economic Developments Commentary, Economic Forecast, Housing Forecast, and Multifamily Market Commentary. To receive e-mail updates with other housing market research from Fannie Mae's Economic & Strategic Research Group, please click here.