• Pivotfarm
    04/18/2014 - 12:44
    Peering in from the outside or through the looking glass at what’s going down on the other side is always a distortion of reality. We sit here in the west looking at the development, the changes and...

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Guest Post: Why The West's Financial Warfare Against Russia May Lead To The Real Thing

A mix of military reluctance and willingness to use financial weapons was evident before the First World War, as it is now in Ukraine. Countries' efforts to protect their financial systems often centred on increased banking supervision and, in many cases, enlarging the central bank's authority to include the provision of emergency liquidity to domestic institutions. But this belief fuelled excessive confidence among those responsible for the reforms, preventing them from anticipating that military measures would soon be needed to protect the economy. Instead of being an alternative to war, the financial arms race made war more likely – as it may well be doing with Russia today.



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"Holy Grail" HFT Firm Virtu Questioned By NY AG

Having the trade record of Bernie Madoff and the braggadocio of a WWF wrestler was just too much for New York Attorney General Eric Schneiderman to ignore. Rigged Market HFT Poster-child, and recent-delayed IPO, Virtu Financial has received a letter of inquiry from the AG's office requesting information about its business. As Bloomberg reports, a person with knowledge of the matter said this week that six high-frequency trading firms have received subpoenas as part of Schneiderman’s investigation and Virtu was asked for similar information in a letter of inquiry which could be escalated to a subpoena if the company doesn’t comply voluntarily.



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Ukraine Tanks Stopped By Unarmed Woman

There days ago it was the male "separatists" that stopped Ukraine tanks armed with just their bodies. Yesterday, in the seceding Ukraine town of Kramatorsk, it is a woman's turn.



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Obama Administration Encouraged Insider Trading

Over the past week the Obama administration leaked material information, in effect allowing and encouraging frontrunning of public data, when it told "asset managers last week that it was planning additional sanctions against Russia over the conflict in Ukraine."Bloomberg reports that the meeting, convened a week before talks with Russia in Geneva that ended yesterday, left managers grappling with the question of whether the government intended to follow through, or was trying to trigger asset sales through the threat of sanctions, said the person. Former administration officials have said forcing Russia out of global financial markets is the strongest tool President Barack Obama has at his disposal in trying to defuse the ongoing crisis between Russia and Ukraine.



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Ukraine "De-escalation" Voided As Pro-Russia Militia Refuse To Vacate Occupied Buildings

If yesterday we had questions about the half life of the effectiveness of the latest diplomatic de-escalation of Ukraine tensions 'achieved' in Geneva, following news that both Ukraine would continue its anti-terrorist operation and that fighting had broken out in various east Ukraine locations after the agreement, today any questions have been swept aside following news that the Ukraine "separatist" milita, who after all is the primary object of Ukraine "anti-terrorist activities", has announced that they will only leave the occupied east Ukraine buildings if the interim government in Kiev resigns. Denis Pushilin, a spokesman of the self-appointed Donetsk People's Republic, told reporters that the insurgents do not recognize the Ukrainian government as legitimate.



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"Hillary For President" Fundraiser Busted For Illegal Campaign Contributions

If you listen carefully, you can hear the stampede of politicians distancing themselves from their once best-friend - Hotel magnate Sant Singh Chatwal - as AP reports, he plead guilty Thursday to charges he secretly funneled more than $180,000 in illegal campaign contributions to three unnamed candidates and coached someone to lie about it. Without the contributions "nobody will even talk to you," Chatwal said. "That's the only way to buy them, get into the system." Welcome to the ugly truth of American politik.



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Putin's Top 10 Q&A Quotes: "The US Will Cut Off Their Nose To Spite Their Face"

Ukraine’s crisis was, predictably, at the center of Vladimir Putin’s annual televised interview... but here are the Russian President's Top 10 Q&A quotes... “The US is certainly one of the world’s leaders. At some point it seemed that it was the only leader and a uni-polar system was in place. Today it appears that is not the case. Everything in the world is interdependent and once you try to punish someone, in the end you will cut off your nose to spite your face,”



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What Oil War Premium?

Central bank's ongoing and so-far-successful efforts to crush short-term volatility and encourage hapless individuals into the world's nominally rising stock markets has had consequences. Inequalities abound (rich vs poor, corporate profits vs capex/jobs, bond yields vs growth hopes) but nowhere else is this more evident - given the ever-increasing crescendo of the drum-beat of war around the world - than in oil price volatility. As the chart below shows... oil price volatility is at its lowest in 21 years. We can't help but be reminded of Taleb's priceless phrase that "there is no freedom without noise - and no stability without volatility."



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Princeton Study Confirms 'US Is An Oligarchy'

"...policymaking is dominated by powerful business organizations and a small number of affluent Americans, then America’s claims to being a democratic society are seriously threatened...

...even when 80% of the population favored a particular public policy change, it was only instituted 43% of the time."



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Wave To The Webcam Caption Contest

For an administration run by a "straight to TV" teleprompter, it is only fitting that the inspiration for reaching out to the unemployed masses should come straight from the Oscars. No Samsung's media stunt this time, just America's figurehead leaders kindly requesting everyone to please wave to the NSA-controlled webcam: after all they are on the other end, and smiling.



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If The Smart Money Is Selling, Who's Buying?

Based on Bloomberg's Smart Money Flow indicator, there is a very significant amount of distribution going on... the question is just who is soaking up the smart money selling? Company buybacks, Johnny 5, or a greater-fool retail investor?



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It's Time To Ditch The Consumer Price Index (CPI)

That the official rate of inflation doesn't reflect reality is obvious to anyone paying college tuition and healthcare out of pocket. The debate over the accuracy of the official consumer price index (CPI) and personal consumption expenditures (PCE--the so-called core rate of inflation) has raged for years, with no resolution in sight. So why does the government maintain such a transparently inaccurate and misleading metric? For three reasons.



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The Great Stock Buyback Craze Is Finally Ending

As we reported last night, whether as a result of Snowden revelations and NSA blowback by BRIC nations, or simply because the global economy is contracting far faster than rigged and manipulated markets worldwide will admit, IBM's Q1 revenues not only missed consensus earnings, but dropped to their lowest level since 2009. And yet, IBM stock is just shy off its all time highs and earnings per share have been flat if not rising during this period, leading even such acclaimed investors who never invest in tech companies as Warren Buffett to give IBM the seal of approval. How is that possible? Simple: all that investment grade companies like IBM have done in the New Normal in order to preserve the illusion of growth, is to use cash from operations, or incremental zero-cost leverage, to fund stock buybacks. In essence a balance sheet for income statement tradeoff. However, that "great stock buyback gimmick" as we call it, is finally coming to an end.



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BTFDe-Escalation

VIX-slamming, USDJPY-ramping, BTFDe-escalating muppetry and we end the week near the highs with the S&P and Trannies comfortably green YTD (though notably underperforming gold still). Treasuries were sold hard today (7Y +10bps) as the D word was bandied about by the politicians (while in reality de-escalation was anything but what was happening), but the 5s30s still flattened modestly further. 10Y saw one of its worst days of the year and yields pressed up to their 200DMA. Gold and silver were flat to modestly lower as copper and oil limped higher. FX markets were relatively calm as the USD pushed higher on the week (+0.5%). Stocks closed weak into the close but after 3 days of ramp, it's hardly surprising.



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President Obama Discusses Obamacare And The (De)Escalation - Live Feed

An impromptu press conference... on Obamacare but we are sure there'll be time to poke the bear...



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