GM's Latest Flop: Dealers "Stuffed" With 725-Day Supply Of "Tesla Competitor" Cadillac ELR

Here is a verbal account of precisely what happens when domestic car-makers overestimate the purchasing power of the US, and clog channels to an epic extent. In this case, we refer to the recently launched GM Cadillac ELR, launched to much aplomb just five months ago as a competitor to the Tesla Model S for a $76,000 price point (above Tesla's $70,000), has been a complete disaster. And how is GM dealing with this latest sales disappointment (which struck even before all the recent recall scandals had hit)? Why by jamming dealers with an unprecedented 725-day supply, or exactly two years worth of cars!

Where America's Immigrants Come From

There are over 40.7 million foreign-born residents living in America. Iceland, Bermuda, and Samoa have the lowest level of foreign-born population in the United States but it is Mexico that is head, shoulders, and torso above the rest with 28.2% of the foreign-born population from just aross the border. Russia, interestingly, is 20th (just ahead of Iran in 21st place). We can only hope not all Russian immigrants are currently HFT "traders."

Signs Of An Aging Bull Market

When investors hear "bull markets are bull markets until they aren't," their initial response is "no, duh!." However, if that statement is so obvious, why do we spend so much time in trying to predict the future? It is interesting that we are extremely skeptical of fortune tellers, palm readers and psychics but flock to Wall Street analysts and economists that are nothing more than "fortune tellers" in suits.  The reality is that no one is actually prescient. It is all a "best guess" with nothing assured except what "is." Currently, the bull market cycle that began in 2009 remains intact.  It is, what "is." The hypnotic chant of the "bullish mantra" will lull individuals from a momentary state of consciousness back into the dream world of complacency. It is from that place that investors have typically harbored the worst outcomes.

Keynes Would Be Proud: 'Blight Removal Task Force' Calls For 10% Of Detroit Homes Be Torn Down

20% of Detroit homes are in some state of disrepair and as Bloomberg reports, a much-anticipated report from the city’s Blight Removal Task Force says that about half of these should be torn down immediately. Despite Detroit home prices still rising exuberantly in March, over 40,000 structures in the bankrupt city need to be immediately destroyed and a further 44,000 demand attention. The cost of this demolition - about $800 million - which the task force hopes will come from the government. The Keynesian circle is complete - government subsidized mortgages enabled everyone to own a home no matter how unaffordable and now taxpayer funds will subsidize the demolition of that American Dream. Money well spent...

Bonds Up & VIX Up But S&P Hits New Record High (Coz It's Tuesday, Durr)

For the 9th Tuesday of the last 11, stocks closed green with the S&P at new record highs. "Most shorted" stocks were under heavy testicular pressure but seemed the only driver supporting stocks as JPY decoupled, bonds decoupled, the USD decoupled, VIX decoupled, and credit spreads decoupled. But hey, it's Tuesday so that doesn't matter. Copper and oil were flat on the day but gold and silver (battered at the open) lost 1.5 to 2% on the day (gold's worst day in 6 months). Treasuries are 1-3bps lower in yield at the long-end with modest flattening. Volume remains abysmal. The last few minutes saw a mad buying panic come over Russell 2000 bulls which had its best day in almost 3 weeks and is up 6 of the last 7 days.

 

Exxon, BP Defy White House; Extend Partnership With Russia

Several of the largest oil companies in the world are doubling down in Russia despite moves by the West to isolate Russia and its economy. To be clear, the oil companies are not legally running afoul of international sanctions. But their collective shrug in the face of European and American pressure to boycott Russia – along with the $400 billion natural gas deal Russia signed with China last week – illustrates the difficulty with which the West will have at undermining Russia’s energy sector, if it chose to do so. Russia is too big of a prize for the likes of ExxonMobil, BP, and Shell. Or viewed another way, the moves to deepen business in Russia suggest that the world’s biggest oil companies are confident that the U.S. and Europe won’t be so bold as to truly attack Russia’s energy machine.

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.

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...

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.

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...

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.

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

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.

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."

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?

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.

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...