Nothing to see here, buy stocks, it’s all good. The month-end stock ramp algos are busy this morning and the journalist shills are playing up a extraordinary rise in the Chicago PMI, which apparently justifies ignoring the report that GDP growth collapsed to a meager 0.1% SAAR in Q1. Oh it’s the weather! Excuse me, but that is a seasonally adjusted number and would have been negative except for a huge surge in healthcare (Obamacare) spending which all by itself added 1.1% to GDP.
The GDP price index rose, but only at a 1.3% rate. The Eurozone reported an 0.8% rate this morning. While prices are rising at nearly 2% in Japan, wages and salaries just recorded their 22nd. monthly drop in a row and, BTW, the Japanese manufacturing PMI fell into contraction at 49.4. So much for Abenomics and hopefully another nail in the coffin of QE, that Keynesian insanity that is gutting the world economy. All of which is good for the fundamentals of that most hated asset class, long Treasuries. Which are getting a little bit of love this morning, but not anywhere near what they deserve.
The elephant in the room is real estate. Mortgage originations and refinancings are horrible, with the purchase index down 21% y-o-y and the refi index is down 76% from last May. The cash buyers – hedge funds and other speculators – that have been sustaining prices are pulling back. Look out below.