The Mess That Greenspan Made - Part 32

Confidence Begins to Fade

Confirming what was seen in this item earlier in the week via the latest weekly economic confidence survey from Gallup, the mood of the American consumer appears to be fading as a harsh winter gives way to spring, at least according to the latest reading on consumer sentiment from Reuters and the University of Michigan.

In the first of two readings for March, the index fell from 81.6 in February to 79.9 this month, its lowest level in almost a year, save for the most recent episode of the government shooting itself in the foot again last fall via a partial shutdown.

As was the case for the Gallup survey, the overall decline was driven by reduced expectations about the future as this component dropped from 72.7 to 69.4, its lowest level since November. The current conditions component actually rose, from 95.4 to 96.1, as Americans were more confident about their personal finances.

In a testament to the Federal Reserve’s ongoing effort to inflate asset prices, the fewest share of homeowners since 2007 said their homes had lost value over the last year, though respondents said home price gains would slow in the year ahead.

Fear of inflation is still nowhere to be seen as the one-year outlook puts prices 3.2 percent higher while inflation five years from now is seen coming in at a rate of just 2.9 percent.

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In these appearances at CNBC, Marc Faber and Art Cashin share some thoughts about how geopolitical events involving Russia and an economic slowdown/banking crisis involving China are dramatically changing the risk/reward setup for an aging stock bull market.

Faber notes, “”Just in the last six months, there has been a euphoria for U.S. equities. My view is that it’s not a good time to buy … I think going forward or for at least the next 12 to 24 months, investors should consider where will I lose the least money?” He also thinks the Chinese economy is growing at only only 4 percent, rather than the reported 7-8 percent.

Cashin talks about yesterday’s sell-off that is about to resume in trading today, stating the obvious in noting, “The next few days are critical“. One thing is certain, there’s a very strong safe have bid at the moment with Treasuries and gold soaring at the expense of equities.

Friday Morning Links

Russian Troops Mass at Border With Ukraine – NY Times
Russia Must Stop U.S. Expansion in Ukraine – Moscow Times
Putin’s Ukraine Ambition Unimpeded by West – Bloomberg
China warns of dangerous Russia sanctions ’spiral’ – Reuters
January, February figures show chill in economy – China Daily
China’s Li Keqiang warns investors of wave of bankruptcies – Guardian
Is Chinese Debt the Great Financial Crisis – Part Two? – HuffPost
Fresh worries over China prompt slew of downgrades – CNBC
Number of millionaires in U.S. reaches a new high – LA Times
The myths and realities of America’s debt – Fortune
Why the underworld loves bitcoin – Reuters
Singapore’s Bitcoin Crackdown – Bloomberg

To find out what Tim thinks of today’s news, subscribe to Iacono Research

China economy fears continue to drive markets – AP
Signs Of Market Top Appear – Stock Traders Almanac
Is market’s risk-off mentality back in play? – USA Today
Faber: Better to Get Out of Stocks Than Into Stocks – Money News
Rosenberg: Greatest Investor Risk Is Now Inflation – Financial Sense
Treasury Demand Most Since December on Crimea, China – Bloomberg
Gold touches six-month highs on Ukraine worries – Reuters
Gold Physical Demand Stays Subdued As Prices Rally – Kitco
If Russia Central Bank Sold Gold, Gold Market Could Shiver – IBT
Silver’s three main drivers for 2014 – HSBC – Mineweb
Dollar Weakness Continuing – Trader Dan

Fear of Wages – Krugman, NY Times
“It’s (Still) the Inflation, Stupid.” – CFR
Senators strike bipartisan jobless benefits deal – AP
Is the Middle Class Better Off Than We Think? – Fiscal Times
China Can Drag Down The Global Economy – Comstock Funds
Paralysed ECB leaves Europe at the mercy of China deflation shock – Telegraph
Saving Lenin: Soviet-Era Statue a Symbol of Divided Ukraine – Spiegel
Property sales value ebbs amid negative outlook – China Daily
Blackstone’s Home Buying Binge Ends as Prices Surge – Bloomberg
Home prices jump again in Bay Area housing market – LA Times
CFPB targets “zombie” foreclosures after Reuters report – Reuters
Inflation Signs Lurk in Broader Labor Data Yellen Seeks at Fed – Bloomberg


Bill Black Explains How Best to Rob a Bank

William Black, associate professor of economics and law at the University of Missouri, Kansas City, explains how best to rob a bank in this TED presentation.

It starts out poorly by blaming the too-big-to-fail banks for $11 trillion in lost wealth due to the financial crisis – that wealth would never have been created without the TBTF banks, so, blame them for the boom and bust, but not just for the bust – but it gets better.

I’ve not read Black’s book – The Best Way to Rob a Bank Is to Own One – and probably never will, due largely to that Serenity prayer thing. These things are best left to people like Black.

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