Business

The last 12 months have not been kind to WalMart. 

When the world's largest retailer bowed to pressure to raise wages for its lowest-paid employees, the living wage crowd cheered. In short order, it became apparent that the reverberations from the $1.5 billion endeavor would spell trouble for the company.

When a series of ill-fated efforts to squeeze the supply chain failed to plug the gap, the company resorted to store closures (or "plumbing" as WalMart calls it), job cuts in Bentonville, and reduced hours. 

As we wrote earlier this week, bursting of the bond bubble has begun.

The decision by Central Banks to “inflate” the system’s debts away post-2008 has resulted in the misallocation of trillions of Dollars of capital.

The worst offenders were Chinese corporates. China has created the single largest mountain of bad debt in the world. Indeed, things are so out of control in China that 45% of all proceeds from new bond issuance are being used just to pay off interest on old loans.

Several days ago, Bank Of America was "confused" why retail spending refuses to pick up, although it hoped that this would be a one time aberation and that the official government data would disprove what it was seeing in its card data. Well, that did not happen after the headline retail sales printed moments ago at -0.1% in December, falling from an upward revised 0.4%.

As Bloomberg summarizes, sales at U.S. retailers declined in December to wrap the weakest year since 2009, raising concern about the momentum in consumer spending heading into 2016.

Since The Fed unleashed its liquidity-withdrawing, confidence-inspiring, inflation-creating, growth-related rate-hike, things have gone a little bit pear-shaped for the policy-makers-in-chief. Gold has soared, stocks have plunged, but perhaps most ominously, bond yields have collapsed as policy-error (or naked bathers) are exposed. 10Y yields are down a stunning 33bps from The Fed decision, breaking back near the crucial 2.00% for the first time since October. The odds of a March rate hike are now under 25%!!

Error?

In the latest Chinese domestic financing report released by the PBOC last night, there were two divergent themes: on one hand bank loans grew far less than the expected 700Bn yuan, and at 598Bn this was the second lowest monthly increase in the past year, only higher than October's 514bn; on the other hand total social financing soared to 1.82 trillion yuan, smashing forecasts of a 1.15 trillion increase, and the highest since June.