Picturing Our Dystopian World - Where Less Is More

The economic growth expectations for the world in 2014 just plunged to fresh lows at a mere 2.78% - that is 15% "less" growth than was expected a year ago. The world's equity markets are up 25% "more" than at the start of 2013. Thus, our dysfunctional dystopian world where 'less' economic growth is 'more' wealth-creating. Long live the central bank utopia...

Late-Day VIX-Selling Panic Rescues S&P From Red Close Year-To-Date

The major US equity indices all pushed into negative YTD territory today in yet another pump-dump-and-small-ramp deja vu day. Early strength gave way quicker today as Biotechs bounced off an early dump (but closed back below their 100DMA for 2nd day - first time in 18 months), momo names were crushed (down 10-14% post-FOMC), Citi was banged over 5% (on extremely heavy volume post CCAR), and the NASDAQ tested down (and bounced off) its 100DMA. Treasuries were mixed once again with bear-flattening the dominant theme. The USD ended the day unch on the week with EUR weakness offset by CAD and GBP strength. AUDJPY was in chgarge of stocks most of the day-session. Copper and oil improved as gold and silver slipped more (though bounced at the close). Late-day JPY pump, VIX dump rescued the S&P back to +0.03% return for 2014.

Fact Or Fiction: G-7 Unable To Get Deposit Back On "G-8 Summer Getaway" T-Shirts

Shortly after suspending Russia’s membership in the exclusive coalition of industrialized nations, the United States and the six other wealthy nations that compose the newly renamed Group of Seven reportedly found themselves unable to get their deposit back on a set of “2014 G8 Summer Getaway” T-shirts they had ordered for the body’s scheduled summit in June...

Greek Supreme Court Rules "Bank Deposit Confiscation" Against The Constitution

While we are sure the governments and their IMF handlers will find a way around such annoyances as the rule of law, the Greek Supreme Court just ruled that the seizure of bank deposits due to debts to the state without previous notice was against the Constitution. We humbly suggest the Ukrainian courts be rapidly brought to a decision on the same ruling, before IMF hands start dipping into pockets.

Ukraine's 'Freedom-Seeking' Nationalists Protest Government Building, Ministers Evacuated - Live Feed

Well that didn't take long.. the "nationalists" who freed the country from Yanukovych's apparent corrupt government in favor of a well-chosen US leadership, are now turning on the replacements:

  • *UKRAINE NATIONALIST PRAVYI SEKTOR PROTESTS AT PARLIAMENT: TV5
  • *UKRAINIAN PROTESTERS DEMAND INTERIOR MINISTER'S RESIGNATION
  • *UKRAINE LAWMAKERS EVACUATED FROM PARLIAMENT BUILDING: TV5

Of course, this is a day after the party's leader was allegedly killed by Police, and following lawmakers demands that citizens return any illegally held guns. It seems reveolution is addictive...

FOMC Asset Purchases And The S&P 500

If the current pace of reductions continues it is reasonable to assume that the Fed will terminate the current QE program by the October meeting. If we assume the current correlation remains intact, it projects an advance of the S&P 500 to roughly 2000 by the end of the year. But... the question is, can the US economy can stand on its own when QE completely winds down, not to mention when the Fed actually hikes rates? Amid such weak levels of economic growth does not leave much wiggle room to absorb an exogenous event, or even just a normal downturn, in an economic cycle. If the Fed is indeed caught in a liquidity trap, then the current withdrawal of support will quickly show the cracks in the economy pushing the Fed back into action. It is at the point of "monetary impotence" where the word "risk" takes on a whole new meaning.

"Are The Bubbles Back?" - Live Feed

"Either way you look at it, it's time for the Fed to stop inflating housing assets, and stop buying mortgages" is how Alex Pollock introduces the following live streamed event by AEI. With speakers such as Chris Whalen we suspect, as the moderator explains, they will explain why "financial markets never seem to grow smarter when it comes to real estate."

30Y Treasury Yield Tumbles Under 3.5% - Lowest In 9 Months

The short-end of the Treasury curve continues to reprice higher in yield (3Y +2bps) as the term structure bear-flattens with 30Y yields rallying further after the aggressive 7Y auction. 30Y yields just broke below 3.5% (-4.5bps) - the lowest level intraday since early July 2013. 2s10s are now at 2.21% - near 10-month lows - and 5s30s has plunged to 1.80% - its flattest since September 2009.

2 Bear Markets In 15 Years In Not Enough "Punishment"

Bear markets are punishment for over-exuberance and greed, notes ConvergEx's Nick Colas, teaching investors to be more careful next time around. That’s a pretty popular narrative in capital markets, and with two tough bear markets over the past 15 years, Colas suggests you’d think that there’s no way investors would be guilty of blowing bubbles again.  Right?  Well, as Nick explains, if the evidence from actual crime and punishment is any guide, this moral narrative is actually quite wrong.

Spain Rules Catalonia Independence Referendum "Unconstitutional"

With Scotland moving ever closer, Crimea having chosen their own path, and Venice overwhelmingly voting for secession from Italy, the Spanish government has put its foot down on the Catalonia's planned independence referendum. As Time reports, In a Tuesday ruling, Spanish judges found Catalonia’s planned independence referendum to be unconstitutional. Of course, just as in Crimea, this is being ignored by the Catalan government - a region seen as the powerhouse of the Italian economy - who exclaimed "this will have no effect on the process."

Dear Keynesians: Your Sad Devotion To A Failed Religion Hasn't Conjured Up A Recovery; Here's Why

The central premise of the Keynesian Cargo Cult is that this mechanism of making it cheap and easy to borrow money will work a kind of magic that can only be manifested by dancing around a fire at night waving dead chickens and chanting "humba-humba." The Keynesian cargo Cult calls this magic "animal spirits." Unfortunately, waving dead chickens while dancing around a fire doesn't do anything in the real world, and neither does making it cheap and easy to borrow more money. You poor, dumb, deluded fools. You've destroyed our economy, our values and our ability to deal with reality. Your faith is as boundless and disconnected from the real world as your policies.

Ukraine Parliament Rejects IMF's Bailout Terms (As US Passes Ukraine Aid Bill)

The US Senate is more than happy to hand over a few billion and confirm sanctions:

  • *SENATE PASSES UKRAINIAN AID BILL WITH RUSSIAN SANCTIONS
  • *HOUSE PASSES VERSION OF UKRAINIAN AID, RUSSIAN SANCTIONS BILL

But, it seems the IMF's requirements for Ukraine's bailout are too much for the locals to bear:

  • UKRAINE PARLIAMENT FAILS TO SUPPORT FIRST BID TO PASS ANTI-CRISIS LAW REQUIRED FOR IMF DEAL

Lawmakers will continue to work on the bill as it seems they approve the top-line budget but not the taxes required to get there... beggars can be choosers again maybe?

Bring Out Your "Toxic Sludge" - European Loan Creation Remains At Record Low Levels

Yesterday we reported that in an attempt to unclog Europe's broken credit and monetary piping, European regulators are preparing to get their hands dirty by easing rules on, and unleashing, an asset class once labelled toxic sludge, i.e., all the worst of the worst debt that was the reason why Europe is in a 6 year-old depression, and hope and pray it somehow fixes itself. Today, the ECB reported the latest data on European credit creation in the private sector. Or rather lack thereof. Because at -2.2%, this was essentially an all time low private sector loan "growth" (rather, credit destruction). Which means Europe will have to throw all the toxic sludge it can find in its desperation to reignite yet another credit bubble, something Bernanke's cronies appear to have done far more admirably.

President Obama's European "Ally" Tour Continues - Live Feed

Making friends and mending fences and reinforcing his 'promise' noto to spy on friends and to have NATO's back... in Rome with Italy's newest Prime Minister Renzi...

  • *RENZI SAYS OBAMA'S MESSAGE TO EUROPE SOUND, CLEAR
  • *RENZI SAYS EU, U.S. SHARE VIEW ON UKRAINE
  • *RENZI SAYS OBAMA'S CHALLENGE TO EU IS 'FASCINATING'

Fascinating indeed?

Russia To Create Own National Payment System In "Bid To Reduce Dependence On The West"

The more the West attempts to "isolate" Russia and pushes it away from its "core values" and of course the US Dollar, the more Russia will seek the safety of a non-dollar based system. We have previously described how Putin has been scrambling to enmesh Russia in tight bilateral commodity-based trade with both China and India, and now it is Russia's turn to announce it would seek its own "national payment settlement system" following last week's surprising and unmandated service halts by both Visa and MasterCard, which as Vladimir Putin said earlier today, will be a "bid to reduce economic dependence on the West."

Gun-Banning CA Senator Busted For Weapons Trafficking

Filed under 'most ironic story of the day', California Senator Leland Yee, who authored gun control legislation, has been busted by the FBI for conspiracy to deal firearms without a license and to illegally import firearms. As AP reports, Yee is also accused of accepting tens of thousands of dollars in campaign contributions and cash payments to provide introductions, help a client get a contract and influence legislation. House of Cards much?

 

Spot The Crushing Impact Of The Tropical Vortex On February Pending Home Sales

Moments ago, the always laughable realtor advertising agency known as the NAR, reported that its agents were not making as much money as they had hoped, when pending home sales in February tumbled by 10.2%, well below expectations of a -9.0% drop, and below the January decline of -9.3%. Why? Here is what the cuddly Larry Yun, NAR chief economist, said was the culprit: "Contract signings for the past three months have been little changed, implying the market appears to be stabilizing. Moreover, buyer traffic information from our monthly Realtor survey shows a modest turnaround, and some weather delayed transactions should close in the spring." In other words, the February collapse was further aggravated by ongoing harsh weather in February. That's fine - we even went so far as showing where the regional sales moves were in February. What is quite visible on the chart below is that the largest collapse in February activity was in Southern states, which is clearly due to the Tropical Vortex.

 

Home Sales Plunge Most In 3 Years, Drop 8th Months In A Row

Must be the weather... (though if you want to believe that, do not look at the regional breakdowns)... Pending home sales fell 10.2% YoY - the worst in 3 years (notably worse than the 9% drop expected by the meteorologists in the economics departments of the big banks). This is the 8th month in a row of home sales drops (pre-weather).