Last year we predicted that the world had reached peak centralization and that going forward things would begin to fracture.
What is centralization?
Centralization is the process by which the world grows increasingly centralized, relying on Centralized organizations (Central Banks, sovereign governments, etc.) to determine the direction of capital and focus.
Great news for American Consumers - the price of the stuff you buy with stagnant incomes dropped in December by 0.1% (missing expectations of a 0.0% move). But what's good for Americans is bad news for The Fed as this is a resumption of deflation from mid-2015, and the biggest miss since January 2015. And then there is the ugly news that behind ths headline is a 3.7% surge in shelter costs YoY.
The breakdown is weak - with energy- and food-related deflation offset by shelter
Today's batch of housing data, namely the December update of housing starts and permits, which as a reminder has a quite substantial "confidence interval" was relatively uneventful. Total housing starts of 1,149K was a drop from last month's upward revised 1,179K, and a miss to the 1,200K expected. This was due to a drop in both 1-unit structures, which declined from 794K to 768K in all regions by the Northeast, as well as a decline in multi-family, or rental, units which declined from 378K to 365K, which however declined across all four regions.
Real average weekly earnings rose a de minimus 0.1% MoM in December leaving 2015's YoY growth in earnings at just 1.6% - the weakest since Nov 2014. This Fed-narrative-destroying growth is less than half the rate in January 2015 when it peaked.
So, Janet, now what?
Since looking at Goldman's Q4 EPS was going to be a meaningless attempt at comparing apples to oranges due to the bank's recently announced $3 billion after-tax RMBS settlement, which reduced diluted earnings per common share by $6.53, we decided to instead do what we normally do with Goldman's earnings report and focus on its top line, where we found that in the fourth quarter the bank had generated only $7.3 billion in revenue, a 5.4% drop from a year ago, and underscoring just how difficult the environment is even for the bank that does god's work, this was the weakest Q4 revenue from Go