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On The 3-Week Anniversary Of The Precious Metals Bear Raid

While the memories of the gold and silver price collapse of April 12/15 are still strong in the cognitively biased members of the business media, few have managed to notice that the last 3 weeks have seen the best run in 21 months for Gold and a complete retracement of the Monday drop (and Fib 61.8% retracement of the entire Fri/Mon drop). It appears the paper-to-physical 'great rotation' continues to gain momentum...



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Of Spain's "Bad Bank" Foreclosed Properties, Only 6,000 Of 83,000 Units Have Tenants

Most of the SAREB's loans are linked to finished properties, for which it might be easier to find a buyer, but 4.3 percent are for unfinished developments and nearly 10 percent are for empty lots, for which there is little or no demand. Nearly all of the foreclosed properties in its portfolio are empty, including apartment blocks far outside big cities. Only 6,000 of nearly 83,000 housing units have tenants.



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MBI Saga Over: Bank Of America To Settle Long-Running Litigation, Take 5% Stake; MBIA Stock Soars 50%

The seemingly endless MBIA saga, in which the mortgage insurer sued Bank of America and where a settlement has been overdue for some two years (see here), is finally coming to an end. Moments ago Dow Jones reported what the final settlement may look like: $1.6 billion in cash as well as a $500 million line of credit. Just as notable, BAC will buy a 5% equity stake in the name. MBIA was briefly halted as a circuit breaker was triggered, and has continued to surge following the unhalt. As a reminder, a settlement in this case may push the company into the $20 handle realm. Finally, our report from September 2011 on MBIA's potential to be the next Volkswagen courtesy of its massive short interest as a percent of float can be found here.



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Meet "The Liberator": The World’s First Fully 3D-Printed Firearm

3D-printing, like decentralized crypto currencies, have the potential to change the world in which we live in extraordinary ways. Ways that are almost inconceivable at this point given we are so early in the game.  More than anything else, these technologies can empower the individual like never before, and we think that is generally a very good thing. We first covered the impact of 3D-printing on the firearms industry in January, where we discussed Defense Distributed’s success in printing magazines for semi-automatic weapons.  At the time, their next major goal was to print a fully functioning firearm. They have now done just that.



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With Japan On Holiday, European Bonds Have Worst Day In Six Weeks

With Japan in the middle of Golden Week (and the UK on holiday), it is perhaps no surprise that European sovereign bonds sold off today. After an epic month, which saw Italian bond spreads collapse around 100bps, today's 10bps widening in spread is the worst in six weeks (and Spain was of similar magnitudes). Equity indices were mostly in the red today (though not dismally) with Italy and Spain down 0.3% and 0.6% resepectively. The Swiss OMX was the only index in the green today. Draghi's comments that "he stands ready to act again" sent EURUSD gapping down 50 pips hovering arund 1.3070 by the close; but it was EURJPY and AUDJPY that were diverging bearishly from risk assets in general.



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Apollo's Leon Black: The Smart Money Is "Selling Everything That Is Not Nailed Down"

When a sell-side strategist says 'buying opportunity of a lifetime', we know there will be another right around the corner even if we rally 10%; when one of the largest buy-side firms believes "this is an almost biblical opportunity to reap gains and sell," we tend to listen. In this brief clip from last week's Milken Institute, Apollo Group's Leon Black says his firm has been a net seller for the last 15 months, and that they "are selling everything that is not nailed down." Critically lost in the mainstream media's diatribe is his point that as the markets push higher, juiced by the Fed's policies, his firm will be selling more and more into that and harvesting gains (realizing profits) as opposed to watching unrealized gains (and the mirage of a wealth effect). Apollo has had $13bn of 'realizations' in the last 15 months - the most ever - as he sees "the market is pricey... in our view, priced for perfection." We suspect perfection is far from what we achieve.



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Flat In May, No Dismay

The last few years have seen very similar trajectories in the first (and second) quarters of the year. Typically Q1 has been extremely bullish but has had a moment (or two) of doubt that caused weakness that inevitably bought. In fact, while many look on at 2013 as an outlier year (which it is over the entire quarter), since it's early March lows 2013 is lagging the performance of markets on average the last few years, even as Treasuries follow very similar seasonal paths. Over time, the sell-in-May-and-go-away' truism has become more pronounced (as we explained recently from a causation perspective) but the following chart shows that no matter how excited we were in each year in the first four months of the year, May (alone) has not been a good month...



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ECB Tumbles On More Draghi Verbal Intervention

Moments ago, Draghi made sure all the downside stops in the EURUSD were taken out when out of the blue, during a discussion following prepared remarks at LUISS, he confirmed what the ECB said last week: namely that the 25 bps cut is just the beginning.

  • DRAGHI SAYS ECB ARE TO EXAMINE EU DATA IN THE NEXT WEEKS AND IS READY TO ACT AGAIN
  • ECB READY TO ACT AGAIN IF NEEDED, DRAGHI SAYS
  • ECB MONETARY POLICY IS TO REMAIN ACCOMMODATIVE

This follows his earlier comments that the ECB can't subsidize government through buying bonds (only through trillions repo equivalents apparently), which means more whispers of a negative deposit rate are coming to a rumormonger near you.



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The Most Crowded Trades

Herd-mentality, group-think, safety-in-numbers, or lemmings. When a trade becomes one-sided, we are often taught that contrarianism is the smarter position. When a trade becomes extremely one-sided, the market is at its most fragile. There are currently three trades that have become not just consensus, but are near record levels of extreme positioning - and with the help of leverage (and record margin levels) this all adds up to a risk-on market (since all the three trades are on the same side of the long central bank largesse, short safety view) that is over-prone to more significant corrections. Join the crowd or join the 'smarter' money?



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How Al Gore's Net Worth Caught Up With Mitt Romney's

Mitt Romney's net worth of $250 million is well-known by virtually everyone in America: after all, it was the primary campaign offensive used by the Obama team against his presidential challenger in an election run largely down wealth, and social class lines, and whom "Democrats targeted in ads and speeches as being out of touch with most Americans." What many may not know is that staunch democrat Al Gore's own personal wealth, has soared from virtually nothing in 1999 to a staggering $200 million according to an analysis conducted by Bloomberg.



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Charles Gave: "Get Out Of Banks, Get Out Of France - Get Out Of The Euro"

Last month we laid out the reasons why France was On The Brink Of A Secondary Depression - in short, due to a deadly collision of French politics with Frankensteinian monetary union. Unfortunately, subsequent data confirms the bleak trajectory. Even Francois Hollande is beginning to wake up to just how destructive and anti-business the French agenda is. France will enter a recession at a time when spending and debt levels are quite high and Hollande’s recent attempts to assist entrepreneurs are too little, too late. France has been slower to cut taxes than other EU members and a secondary depression will push the French budget deficit to new dangerous heights as the government's 'forecast' of the primary balance is farcical. Even if borrowing costs remain low, debt ratios will still explode. Knowing this, why then are French rates so low? The usual explanations (purchases by the Swiss National Bank and Mrs. Watanabe buying) have some merit, but other factors may also be at play. In any case, in a bond market, one should look at two things: the return ON capital and the return OF capital. The return ON capital is pitiful and the return OF capital is far from certain. Sell the financials in Europe - and in France especially. Really, the euro is on its last legs. France is in play.



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Russia, China Urge Respect Of Syrian Sovereignty As UN Finds Only Syrian Rebels Used Chemical Weapons

Carla Del Ponte, a member of the UN independent commission of inquiry on Syria, said that testimony gathered from casualties and medical staff indicated that the nerve agent sarin gas was used by rebel fighters. "Our investigators have been in neighbouring countries interviewing victims, doctors and field hospitals and, according to their report of last week which I have seen, there are strong, concrete suspicions but not yet incontrovertible proof of the use of sarin gas, from the way the victims were treated," Ms Del Ponte said in an interview with Swiss-Italian television, broadcast on Sunday. "This was used on the part of the opposition, the rebels, not by the government authorities," she added, speaking in Italian. Ms Del Ponte added that the inquiry has yet to see any direct evidence suggesting that government forces have used chemical weapons, but said further investigation was required before this possibility could be ruled out. The new claims come one week after the United States said it had "varying degrees of confidence" that sarin had been used by Syria's government on its people.



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Italy's Seven-Time Ex-Premier Giulio Andreotti Has Passed Away

A few weeks after Italy reelected its 87-year old president for a second term, we get news that its former 7-term Prime Minister, 94 year old, Giulio Andreotti, has passed away.



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Key (Lack Of) Events And Market Issues In The Coming Week

Following last week's macro fireworks, the coming week will be an absolute snoozer with virtually nothing on the calendar until Thursday's Initial claims, which is the key event of the week, as well as much Fed president jawboning again, including both good and bad cops talking QE4EVA either up or down. And with earnings season basically over, at least coffee consumption will be higher than average.



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Frontrunning: May 6

  • Lesson From Buffett: Doubt Yourself (WSJ)
  • Gold Bulls Split With Buffett as Traders Say Sell (BBG)
  • Apple Misses IPhone Customers as Global Carriers Balk (BBG)
  • Russia extends Cypriot loan by 2 years, cuts interest: troika document (Reuters)
  • Tax Rewrite in Play in Capitol (WSJ)
  • No early warning for U.S. on Israeli strikes in Syria (Reuters)
  • Germany riveted at start of neo-Nazi murder trial (Reuters)
  • JPMorgan Investors Urged to Split Chairman Role, Oust Directors (BBG)
  • Leniency for Offshore Cheats (WSJ)
  • Brussels steps up efforts over tax avoidance (FT)
  • Ambulance chasing: Mesothelioma Doctors, Lawyers Join Hunt for Valuable Asbestos Cases (WSJ)
  • Web Sales-Tax Bill Set to Face Bumps (WSJ)
  • Colleges Cut Prices by Providing More Financial Aid (WSJ)


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