Business

Authored by David Stockman via Daily Reckoning,

On July 10, 2007 former Citigroup CEO Chuck Prince famously said what might be termed the “speculator’s creed” for the current era of Bubble Finance. Prince was then canned within four months but as of that day his minions were still slamming the”buy” key good and hard:

“When the music stops, in terms of liquidity, things will be complicated. But as long as the music is playing, you’ve got to get up and dance. We’re still dancing,” he said in an interview with the FT in Japan.

Since the election of Donald Trump as President, 'hope' has triumphed over reality...

As this Trumptopia has evolved (and as yet achieved very little in reality), hard data - real actual economic output - has collapsed to two year lows, as surveys of economic activity reached record levels of delusion... and over the last couple of months fell back somewhat to reality.

Consider it a kiss to the bond investors who are expected to oversubscribe the upcoming latest "triumphal" Greek return to the bond markets, as soon as next week. Moments ago, rather unexpectedly, S&P raised its outlook on Greece from Stable to Positive, but reaffirmed the Greek rating at B-. The rating agency, said it believes that "recovering economic growth, alongside legislated fiscal reforms and further debt relief, should enable Greece to reduce its general government debt-to-GDP ratio and debt servicing costs through 2020."

For only the second time in the last 27 weeks (and 4th in the last 56 weeks), the number of US oil rigs fell last week (down 1 to 764 rigs). There is a growing concern that the rising rig count has now outpaced the lagged response to pricing and is due to rollover further...

Notably the Canadian oil rig count rose by 12 last week.

WTI tumbled to a $45 handle heading into the data after tanker-tracker data suggested OPEC supply was the highest in 2017...

Authored by Mohamed El-Erian via Bloomberg.com,

Over the past few months, government bond yields have fallen, the dollar has weakened and financials have underperformed, yet the major stock indexes are at or very near record highs, as persistently supportive liquidity conditions have more than compensated for policy and growth disappointments.

By boosting returns and repressing volatility, ample liquidity is a gift for investors. It makes the investment journey pleasing, comfortable and lengthy. But it is not a destination.