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America's Job Is Done In Afghanistan

Mission Accomplished... Moments ago Obama proudly announced that America's job in Afghanistan is done. Heroin users and dealers around the world agree.


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Spot The Odd One Out

The USD is getting dumped; bond yields are tumbling; VIX is hgher; credit spreads are pushing wider... and stocks are (drum roll please) pleasantly green...


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Obama Tells Afghanistan "If You Like The US Troops In Your Country, You Can Keep 9800 Of Them" - Live Feed

This should be good - President Barack Obama is expected to announce on Tuesday that the United States plans to keep just under 10,000 troops in Afghanistan after this year, if the Afghan government signs a security agreement.


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Bond Bears Are Scratching Their Heads While Looking At These Charts

Large speculators (read - hedge funds or the supposed "smart money") have shifted their S&P 500 positioning to net short, increased their Russell 2000 short positioning and decreased their NASDAQ longs to one-year lows. Market-neutral funds have dropped exposure notably in the last week and long/short funds are well below market norms for their long positioning. But what has the bond bears really scratching their heads (as they added to their shorts in the last week) is that the last time so many people were convinced that rates can only go higher (based on CFTC data), bad things happened in stocks.


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How The Really "Smart" Money Wins

Presented with little comment aside to note the odd coincidence of a massive 12,500 lot June $40 strike call option buy a week ago in Hillshire Brands (typically very low volume and very illiquid) and today's unsolicited bid for the company and accompanying sale of 12,500 lots of call options for a 1000% gain... nice work if you can get the inside scoop...


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Tailing 2 Year Auction Prices At Lowest Yield, Highest Bid To Cover Since February

Today's 2 Year auction was not expected to be exciting, and it wasn't. Pricing at 0.392%, the auction tailed the 0.39% When Issued by 0.2 bps - the first tail since June - but was well below last month's 0.447%, and the lowest yield since February's 0.34%. The flipside is that the Bid to Cover of 3.519, higher than last month's 3.345 was also the highest since February's 3.605, and well above the TTM average of 3.29. It appears the trend of declining BTCs has finally broken. The internals were perhaps a little more exciting: Directs took down 25.23%, above the 18.96% last month, and the highest in 2014, above the 21.3% TTM average. Alternatively, indirects were left with 18.86%, below the 23.36%, and certainly well below the 40.93% from March, making the number the lowest Indirect takedown since January of 2013. The remaining 55.91% went to the Dealers, which was just a tad below the 57.7% from April, if above the 51.1% TTM average.


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The Housing "Recovery" In Four Charts

The housing "recovery" since 2010 can be summarized in four phrases: diminishing returns, unprecedented central state/bank intervention, unintended consequences, end-game. The unintended consequences of the Fed's unprecedented interventions will rip the heart and lungs out of the housing market


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PIMCO Rehires Paul McCulley As Its "100 Days Per Year" Chief Economist

Four years after he left the firm, PIMCO is hiring back Paul McCulley to save its brand and provide just enough ammo to defend its bullish/bearish positions now that El-Erian's disagreements have left. Unlike some firms who believe that 'chief economists' must be full-time - adding value each and every day with their extrapolations of every macro tick - McCulley will spend up to 100 days per year working in PIMCO offices. Bearing in mind McCulley's previous lazer-like focus on Capex (which is dismally flat still) and his belief in a "W" shaped recovery not a "U" or a "V", we suspect the bearded prognosticator will have a bullish bond bias - especially as the trillions of ticking time bombs in the shadow banking system remain as incendiary as ever.


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JPMorgan's Advice To College Students: "Saving Is Not Enough: You Need To Invest"

Now that the rigged market jig is up, and the aging Baby Boomers - those who had some stocks in their discretionary accounts to begin with - have turned to outright sellers of equities (and in fact are doing so "in droves" as reported last week), primary dealers and hedge funds - tired of tossing overvalued hot potatoes among themselves and with the Fed gradually phasing out its daily market goosing - are in desperate need of a new buyer. They may have just found their mark. According to JPMorgan's sage advise to wannabe students, "it is not enough to save for college anymore, you need to invest."


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Obama To Authorize Weapons Training Of Syrian "Rebels"

This will end well. President Obama is, according to WSJ, close to authorizing the US military to train "moderate" Syrian rebels. The move - clearly expanding Washington's role in the conflict and a subtle side-swipe at Putin - is aimed at providing a seemingly arbitrary group of rebels with weapons training to fight against both Bashar al-Assad's regime's army as well as Al-Qaeda-linked groups. One quick question - how will Obama determine who is 'moderate' and who is full Al-Qaeda-tard?


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The New Normal In One Sentence: "In The US Equity Market, The Worse A Company’s Finances, The Better It’s Doing"

It was just last Friday when we updated our list of the most hated, i.e., most shorted, stocks which are so critical in the New Normal because as we have reported constantly since 2012, going long the most shorted names remains the best alpha-generating strategy, outperforming the broader market by orders of magnitude. Today, it is Bloomberg's turn to recap just how broken the market is with an article that highlights the "balance sheet bombs" rallying by 94%. The lede: "In the U.S. equity market, the worse a company’s finances, the better it’s doing." Because there is nothing like rewarding failure and capital misallocation to promote economic growth and employment recovery.


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Richmond & Dallas Fed Miss; Manufacturing Outlook Plunges

With all eyes firmly focused on housing data that is adjusted beyond belief and a confidence print that merely met expectations, both the Richmond and Dallas Fed just missed expectations with some very concerning data under the hood. In no particular order - Dallas Fed outlook plunged from 14.5 to 11.8; Dallas employees plunged from 13.9 to 2.8 (and the workweek collapsed); New Orders and production also slumped as any post-weather bounce is buggered. For Richmond, new order volume plunged from 10 to 3 and capacity utilization dropped back below 0; and the outlook for shipments also slid to 3 month lows with employees expected to drop. In short - a total disaster...


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"The Market's Not There" - One World Trade Center Lowers Asking Rents By 10%

With the housing purchase market for everyone but the wealthiest stagnating (confirmed by today's sliding "plans to buy a home" indicator), forcing Americans to scramble for rental properties and pushing residential asking rents to fresh record high quarter after quarter, the same can not be said for the commercial sector. In fact quite the opposite: according to the WSJ the owners of the towering 3.1 million square foot One World Trade Center, which at last check was 55% leased, have been forced to cut asking rents by 10% from 75% to $69. Why? "The market's not there," said Mr. Durst, whose Durst Organization bought a stake in the tower from the Port Authority in mid-2011. "When we started in 2011, everybody expected the economy to take off, and obviously that hasn't happened."


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Consumer Confidence Falls Short Of Weather-Peak; Plans To Buy A Home Drop

Following last month's drop and missed expectations - just when a post-weather bounce was hoped for - May's 83.0 print (in line with expectations) is disappointing to those seeing all-time highs in stocks. As  reminder, the US consumer decided they were most confident in March - amid the shitty weather and stumbling stock market - and now with warm weather and record highs, things are less exuberant. Looking forward, plans to buy an appliance dropped as did plans to buy a home (even as rates drop).


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US Service PMI Surges Near Record High As Margin Pressures Appear

Markit's US Services PMI soared to 58.4 in April - blowing away the expectations of 55 - just shy of the record high 58.5 seen in March 2012 and early 2010. All sub-indices rose providing just enough comfirmation that all is well in the world.. but one has to ask whether the fastest rise in new work orders in 3 years is sustainable or simply a post-weather bounce. Input prices are up once again though even as output charges dropped - so much for the dream of ever-expanding margins. Is good news bad?


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