US 10Y Yield Hits 3.019% - Highest Since July 2011

While a few media outlets had premature releases yesterday, Bloomberg data just confirmed that for the second time this year, 10Y US Treasury yields have crossed 3% (it was 3.005% in Sept 2013) breaking to the highest since July 2011 (right before the yield collapse after the US debt-ceiling downgrade debacle). We are sure the media will proclaim this as 'proof' that the recovery is different this time, except the term structure continues to flatten (suggesting less faith in the future) and to spice things up 30Y mortgage rates have surged to 4.63% - almost the highest since May 2011 - but again, apparently, this won't affect the housing recovery either (even though mortgage apps are down two-thirds from their highs).

Chinese Media Compares Japan PM To "Terrorists And Fascists"; Blasts Abe's Homage To "Devils", Urges Boycott

On Thursday, Japan prime minister Shinzo Abe stunned the world by defying everyone - including the EU and the US whose embassy sent a tersely worded letter in which is said that it is "disappointed that Japan's leadership has taken an action that will exacerbate tensions with Japan's neighbors" - when he visited the Yasukuni Shrine where Japanese leaders convicted as war criminals by an Allied tribunal after World War Two are honored along with those who died in battle, for the first time in 7 years. The response was fast and furious. Below, courtesy of Reuters, is a snapshot of the morning after in the Chinese media. The reviews of Abe's action were not glowing.

Frontrunning: December 27

  • Millions of Tons of Metals Stashed in Shadow Warehouses (WSJ)
  • Moguls Rent South Dakota Addresses to Dodge Taxes Forever  (BBG)
  • Fastest Japan Inflation Since ’08 Stokes Wage Pressure (BBG)
  • Thai crisis deepens as army chief hints at intervention (Reuters)
  • Anti-Assad Lebanese ex-minister killed in Beirut bomb (Reuters)
  • Foreigners Unload Turkey Bonds as Probe Tarnishes Erdogan Growth  (BBG)
  • Small ISS Change Shakes Up Boards: Tweak to Influential Shareholder Adviser's Recommendations Has Directors Rethinking Proposals (WSJ)
  • Japan’s Nishimura Calls for Quick Corporate Tax Cut to Under 30% (BBG)
  • Japan's Abe bets U.S. alliance, ratings can weather shrine visit (Reuters)

Euro Surges In A 1.3900 "Digital One Touch" Stop Hunt

After last night's clear pursuit of the 105 one touch digital option concluded with success, this morning, the stop hunts continue, only this time in the EURUSD, which has been on a steady upward trajectory and starting below 1.37 has crossed nearly 200 pips in the matter of 12 hours, and moments ago stopped just shy of 1.3900 where it seems another one touch digital threshold can be found.Depending on how much money the seller stands to lose should 1.39 be taken out, expect a fierce (or not so fierce) defense of the barrier.

Guest Post: Hope And Hurdles In 2014

The world economy has experienced another year of subdued growth, having failed to meet even the most modest projections for 2013. Most developed economies continued trudging along toward recovery, struggling to identify and implement the right policies. Meanwhile, many emerging economies encountered new internal and external headwinds, impeding their ability to sustain previous years’ economic performance. Nonetheless, some positive developments in the latter part of the year are expected to gain momentum through the coming year. But the global economy is still subject to significant downside risks. In short, while the global economic outlook for 2014 has improved, policymakers worldwide must remain vigilant about downside risks and strengthen international cooperation. Developments in 2013 provide strong incentive for policymakers to do so.

What Chinese Consumers Are Rushing To Buy This Christmas

While the US consumer is rushing to spend what little savings they have left and grab that last for 2013 "X% off" deal from the local inventory-clearance bin on plastic Made in China trinkets or marked-down clothing, Chinese consumers are likewise scrambling to buy products. Only, unlike in the US, the object of China's affection is not some gizmo that will end up in the local landfill within 3-6 months. China News Network shows what it is.

 

What The 1% Wear To Court

With an ever-rising number of 1%-ers in the public eye for less-than-god's-work-like behavior, Town and Country magazine knows it can be tough dressing for court when nothing in your closet is off the rack! Here are some fashion strategies for the wealthy and notorious as they approach the bar... the dock is the new red carpet and one must, must find the balance between Brioni and bankruptcy... or Couture over Kevlar...

Some Themes To Watch In 2014

Propaganda, phony fixes and more debt can only cover the widening gap between fiscal reality and official fantasy for so long. So what else besides the potential for another global financial meltdown bears watching in 2014? Here are a few worthy prospects... as we doubt the same illusions and tricks will get the global economy through 2014-2015 unscathed.

Guest Post: Obamacare’s Many Negative Side-Effects Should Surprise No One

Government intervention, no matter what its form or intention, causes iatrogenics — unintended negative consequences that hurt the very people they’re intended to help. Nowhere is this better exemplified than with Obamacare, a policy intended to bring insurance to all that has in effect taken it away from many. Perhaps the growing coalition of people recognizing this paradox will take this revelation and apply it to other policy arenas as well. For the affected classes, we can only hope.

Peak Trash

The end of the year is peak trash season across America as the Environmental Protection Agency estimates Americans produce around 25% more waste around the holidays than other periods. As the WSJ notes, Christmas isn't so pretty on the back end. The additional garbage—which adds up to over one million tons of waste—includes food scraps, cutlery, wine bottles, wrapping paper and Christmas trees; but Online sales add a thickening layer of refuse. In recent years, as more consumers have taken to buying online, the volume of corrugated cardboard boxes, air-filled plastic pockets and Styrofoam pellets in trash has grown. The rise is unprecedented as corrugated cardboard boxes account for as much as 50% of the paper product waste from some nearby towns, versus less than 20% a decade ago.

100 Years Of Success? - Fed 'Inflation' Style

Money is only as useful as to what it can purchase. The Fed has created a system where debt is now equal to money.  This is why big purchases like cars, housing, and even going to college are only feasible by mortgaging your future for many decades. Since the payments are broken down into tiny monthly installments many people pay little attention to the true cost of things over their lifetime. Yet, as MyBudget360 shows, over time, the U.S. dollar has lost a tremendous amount of purchasing power due to inflation. Inflation slowly eats away at your purchasing power yet having access to debt has given the middle class the false impression that they are still protected from the unraveling impacts of inflation. They are not...

 

The Job Market Is Officially Fixed

We are happy to announce that the job market is officially improving. It was almost exactly a year ago when we reported that Delta Airlines received 22,000 applications for about 300 flight attendant jobs in the first week after posting the positions outside the company. The applications arrived at a rate of two per minute. Said otherwise, the precious few lucky hires had overcome an acceptance ratio of 1.3%. Putting this into perspective, the acceptance ratio at Harvard, the lowest of any university, is 5.9%. Fast forward to today and once can clearly see an improvement: over the weekend, Southwest Airlines Co. which last hired flight attendants from outside the company in 2011, received applications at a rate of only 80 a minute, getting a paltry 10,000 resumes for 750 openings.

 

Stocks Surge For Sixth Straight Session

Despite the mainstream media's premature exuberance over the 10Y yield breaking above 3.00%, it didn't (according to Bloomberg) but that didn't stop it from closing as close as it can get to the high yields of the year (and back to July 2011 levels) at 2.9905%. The USD drifted getly lower with GBP and EUR strength the biggest drivers. Commodities saw Gold and even more Silver jump at the open then drift while copper and oil limped higher. Volume in stocks was 20% below last Boxing Day which provided the perfect recipe for a VIX smack-down, slow meltup rally to new record-er highs.

The Straight And Narrow

It seems not only is the "market" adhering to the lower-left-to-upper-right mentality of newsletter-writers a little too literally but it it would appear we have found the limit of Birinyi's ruler... Behold the Dow Jones Industrial Average on the straight-and-narrow. Because, when there's no dip to buy, you BTFATH...

U.N. Asks U.S. To Justify Latest "Cruel, Inhuman" Drone Attack That Killed 15 Yemen Civilians In A Wedding

Imagine, if you will, that you and your 15 closest unarmed, civilian friends are celebrating a young couple who has just started their lives together, and are on your way to their wedding party, when all of a sudden a remote-controlled US killing machine drops several air-to-surface tactical missiles on your group and kills you before you have a chance to blink. Macabre as it sounds, this is precisely what happened in the conflict-torn (courtesy of the CIA) republic of Yemen last month when a US drone mistakenly killed 15 people.

How Debtors' Prisons Are Making A Comeback In America

Apparently having 5% of the world’s population, but 25% of its prisoners simply isn’t good enough for neo-feudal America. No, we need to find more creative and archaic ways to wastefully, immorally and seemingly unconstitutionally incarcerate poor people. Welcome to the latest trend in the penal colony formerly known as America. Debtors’ prisons. A practice we thought had long since been deemed outdated (indeed it has been largely eradicated in the Western world with the exception of about 1/3 of U.S. states as well as Greece).

S&P 500 Should Hit Goldman's June 2014 Target Some Time Tomorrow

To think it was just two weeks ago, on December 13, when the S&P was being supported by the "Independence Day" barrier of 1776. It was also on that day that Goldman's strategist David Kostin updated his most recent forward S&P500 price targets for both 6 months ahead (i.e. June), and December 31, 2014. The numbers were 1850 and 1900 respectively.  What is just a little bit concerning, is that the S&P, following yet another 10+ point move today on what can only be characterized as "hilarious" volume, will hit Goldman's S&P500 June price target some time tomorrow (or maybe today if the NY Fed trading desk sends the VIX to a 10 handle).