Russia Celebrates Victory Over Nazi Germany, Putin Visits Newly "Acquired" Crimea, Ukraine Cries Foul

A day after Russia shocked the world with an impressive demonstration of military preparation for what it dubbed was a "massive nuclear attack", the country is celebrating its traditional May 9 national holiday which marks the Soviety victory over Nazis in World War II. Among the people watching the traditional and impressive military demonstration on Red Square was Russian president Vladimir Putin. However it is not Putin's presence as the rally that was notably, but what he did after, when hours after the he watched the tanks rumble on Red Square Putin flew to Crimea for the first time to oversee Russia's newest territorial expansion. This happened even as both Ukraine, Germany and the head of NATO all voiced strong objections to such a visit by Putin which not only formalizes the expansion, but spits in the eye of Western attempts to contain the Ukraine conflict and/or de-escalate

Humiliated On Its Q1 GDP Prediction, Goldman Doubles Down, Boosts Q2 Forecast To 3.9%

Goldman, it would appear, are desperate to not be forced to admit they are wrong once again. On the heels of their dramatic and humiliating swing from expectations of a +3.0% Q1 GDP growth rate at the start of the year to a current -0.6% expectation, the hockey-stick-believers are out with their latest piece of guesswork explaining how growth will explode to 3.9% in Q2 (a full percentage point higher than their previous estimate).The platform for this v-shaped recovery - "consumer spending will probably grow strongly, while the housing market should gradually improve." So 'probably' and 'should' it is then.

 

A Complete History Of Apple's Corporate Acquisitions

For those who believe they can predict the Apple's acquisitive future based on the company's historical M&A pattern, here is a summary of the company's acquisition history over the last two decades.

Frontrunning: May 9

  • Omnicom, Publicis call off proposed $35 billion merger (Reuters)
  • Apple in talks for $3.2bn Beats deal (FT)
  • Alibaba IPO Grew Out of ’80s Chaos and Guy From Goldman (BBG)
  • Nigeria's president at WEF pledges to free kidnapped girls (Reuters)
  • JPMorgan Joins Wells Fargo in Rolling Out Jumbo Offerings (BBG)
  • It's 1999 all over again: Young Bankers Fed Up With 90-Hour Weeks Move to Startups (BBG)
  • ECB stimulus talk knocks euro, peripheral yields (Reuters)
  • Deutsche Bank Currency Crown Lost to Citigroup on Volatility (BBG)
  • London Taxis Plan 10,000-Car Protest Against Uber App Use (BBG)
  • Pfizer Holders Could Face Tax Hit in a Deal for AstraZeneca (WSJ)

Futures Fail To Ignite Overnight Ramp In Quiet Session

It has been a very quiet session so far, and despite the slow-mo levitation in the USDJPY, its impact on US equity futures has been minimal if not negative. In fact, following yesterday's latest late day tumble, which Goldman summarized as follows, "Equities tried and failed again to break 1885, it continues to be the level that we can’t escape"... it would appear we are increasingly changing the trading regime, and as Guy Haselmann explained simply, markets are slowly but surely coming to the realization that the Fed's crutches are being taken away (that they may well return following a 20%, 30%, or more drop in the S&P is a different matter entirely) and that the economy will not grow fast enough to make up for this. Perhaps the most notable "event" is the sheer avalanche of banks pushing up their forecasts for an ECB rate cut (and or QE start) to June following Draghi's yesterday comments. And so the 1 month countdown begins until the end of forward guidance, or until the ECB "shatters" its credibility as expained yesteday.

Where Are America's 49 Million Hungry - An Interactive Map

As of 2012, the most recent year for which data are available, there were about 49 million Americans who, sadly, describe themselves as "food insecure," meaning they have limited access to sufficient amounts of food, according to the U.S. Department of Agriculture. Interviews with several food banks around the country suggest things haven't really improved since then. A new report from the hunger relief charity 'Feeding America' throws the nation’s struggle with hunger into an even starker light. The report, titled "Map the Meal Gap 2014," breaks the USDA’s data down county by county, giving a more nuanced picture of food insecurity. As the Interactive report below reveals, HuffPo notes that there are 16 counties in the U.S. with more than 100,000 "food insecure" children -- a number you might expect to see in a developing country rather than the world’s wealthiest nation.

 

 

David Stockman Pulls The Plug On Janet Yellen’s Bathtub Economics

Some people are either born or nurtured into a time warp and never seem to escape. That’s Janet Yellen’s apparent problem with the “bathtub economics” of the 1960s neo-Keynesians. As has now been apparent for decades, the Great Inflation of the 1970s was a live fire drill that proved Keynesian activism doesn’t work. That particular historic trauma showed that “full employment” and “potential GDP” were imaginary figments from scribblers in Ivy League economics departments—not something that is targetable by the fiscal and monetary authorities or even measureable in a free market economy. Even more crucially, the double digit inflation, faltering growth and repetitive boom and bust macro-cycles of the 1970s and early 1980s proved in spades that interventionist manipulations designed to achieve so-called “full-employment” actually did the opposite—that is, they only amplified economic instability and underperformance as the decade wore on.

Visualizing The Broken Window Fallacy

In our busy days, it is all too easy to fall into the trap of hearing (and believing) the latest headline and its associated spin. For some reason, three minute videos can quickly and easily remove these 'spins' without the need for a PhD. And so we decided to dust off today's 3:06 un-spin clip, addressing the broken-window-fallacy  as the seen versus unseen impact of the idiocy of a broken-window's (or war, or destroying homes, or...) positive impact on an economy is explained in cartoon style. The sad fact is that this fallacy remains at the core of mainstream policy-making and as the video notes, the government's 'creation' of jobs via public works programs (or any number of stimulus-driven enterprises) it does so at the expense of the tax-payer via higher taxes or inflation and that 'spending' which would have otherwise gone to new fridges or iPads is removed and this does nothing to significantly improve aggregate demand (should there be such an amorphous thing) and in fact (as we recently noted here and here) leaves us more and more dependent on the state for corporate profit margins leaving any organic growth a dim and distant memory.

Russia And The Ukraine – The Worrisome Connection To World Oil And Gas Problems

The US approach to the Russia/Ukraine situation reflects a serious misunderstanding of the situation. Russia has little choice but to try to raise the price of products it is selling, any way it can. It needs to cut out those who cannot afford its products, including the Ukraine. If Europe increasingly cannot afford its products, Russia needs to find customers who can afford them. There is little chance that the United States is going to be able to help Europe with its natural gas needs in any reasonable timeframe. Our best chance at keeping the global economy “working” for a little longer is to try to keep globalization working as best we can. This will likely require “making nice” to countries we are unhappy with, and putting up with what looks like aggression. Policymakers like to think that the US has more power than it really does, and like to encourage stories suggesting great power in the press. Unfortunately, these stories are not true; we need policymakers who understand our real situation

Art Bubble Also Cracking As 21 Of 71 Works Fail To Sell At Latest Sotheby's Auction

With the Biotech bubble busted and social media stocks slaughtered, it seems disappointment is spreading for the world's wealthy living off the fat of the Fed. As NY Times reports, on Wednesday, many in the art world converged upon Sotheby’s for the sales of Impressionist and modern art... but nearly a third of the art went unsold. The mediocre results followed an unexciting night at Christie’s on Tuesday and suggest that yet another central-bank-fueled excess-money-has-to-spill-out-of-our-silk-lined-pockets-somewhere trickle-down bubble is bursting. With Chinese property prices tumbling and PBOC cracking down on Macau money-laundering, it is perhaps no surprise that what demand Sotheby's saw was Asia buyers.

Guest Post: The Economics Of Marriage

The marriage rate in the United States has fallen to the lowest level ever recorded. So why is this happening? Well, the truth is that there are a lot of reasons why so many young people are choosing not to get married today. One big reason is money. Young adults in the U.S. are really struggling to find good jobs, and many are hesitant to take a big step like marriage without achieving a certain level of financial security first. And as you will see below, many young adults (especially women) do not even want to date someone that is not employed. In this harsh economic environment, money makes a big difference in the world of romance.

Obamanomics (Summarized In 1 Cartoon)

"fragile" comes to mind... but the excuse factory will be working overtime this year: Q1 was cold weather; Q2 will be Ukraine; and Q3 will be El Nino...

 

Beware "The Distortions Of The Ministry Of Truth" Warns A Cash-Heavy Marc Faber

"Stocks in the advanced economies are basically fully priced," Faber pronounces, and adds that, given their low yields, government bonds are also expensive. The true contrarian play is the "most under-appreciated asset - cash." Even though investors won't earn any money and will actually lose money in the long-term because of Federal Reserve-induced dollar depreciation, Faber suggests that "for the next six months, maybe cash is the most attractive," because the US economy is not recovering at all the way stocks are priced and what is more worrisome is the potential for a sudden eruption of inflation. As we have noted numerous times, Faber blasts that despite the prices of everything going up, government statistics "are distorted by the ministry of truth" in order to enable more money printing by the central banks. Crucially, while we may not be seeing wage inflation in the US, that excess liquidity is squirting up everywhere around the world's assets (and wages in China and India for instance), and the 2008 financial crisis could be just a precursor to a more severe economic fallout on the horizon.

IRS Audited Tea Party Donors Ten Times More Often Than Regular Americans

When the IRS was targeting conservative groups seeking tax exempt status for special scrutiny, they demanded the list of donors supporting those groups in 17 cases. Despite assurances from the agency that the lists had been destroyed, a search requested by Congress revealed that at least 3 lists had survived.

And of the donors on those lists, fully 10% of the individuals had been audited (the rate of audits for ordinary Americans is about 1%)

Now, the House Ways and Means Oversight Committee is demanding that the Government Accountability Office investigate the IRS to see why so many Tea Party donors were audited.

Guest Post: The IMF Goes To War In Ukraine

...What’s left for the Empire of Chaos is to pray for chaos to keep spreading across Ukraine, thus sapping Moscow’s energy. And all this because the Washington establishment is absolutely terrified of an emerging power in Eurasia. Not one, but two – Russia and China. Worse: strategically aligned. Worse still: bent on integrating Asia and Europe. So feel free to picture a bunch of Washington angry old men hissing like juvenile delinquents:I don’t like you. I don’t want to talk to you. I want you to die.”

"Capital" As Seen By An Austrian Economist

In recent weeks the concept of capital has been thoroughly, and incorrectly, deconstructed by Marxists and Keynesians alike now that, suddenly, the world caught up with what we said would be the crux issue back in 2011: record wealth inequality (who could have possibly foreseen it following $10 trillion in central bank balance sheet expansion in the last decade), and finding "fair" ways of confiscating the wealth of the rich to - at least on paper - help the poor even if in reality all it would do is simply lead to more government theft, embezzling, corruption, and capital misallocation. It is now time to get an Austrian perspective and courtesy of unrepentant "Austrian" Sean Corrigan we just got one.

Russell 2000 Enters 10% "Correction" Near 6-Month Lows

US equity markets were off to the races when stocks opened and Yellen began to speak but the late-day ugliness was written on the wall by a total lack of support from either volume or any other risk-market. The S&P ramped up to last Friday's spike highs, Zero Hedge reminded traders that Biotech P/Es were double what they expected, and the 30Y auction tailed ugly was enough - with a dearth of news (aside from downplayed escalations in Ukraine) stocks dumped and played catch down with JPY (weakness) and Bond (strength). EUR weakness (from Draghi Jawboning) provided the impetus for USD strength but leaves the USD unch on the week. Considerable divergence in bonds today (30Y +3bps, 5Y -3bps) means the curve is steepening modestly. VIX was running stocks today and we slammed back under 13 briefly and closer higher on the day. Ugly day for high beta stocks with the Russell near 6mo lows (and the Dow is back in the red for 2014)

The Next Shoe Drops Just 2 Days After The Last One

Two days ago, we told you about how the US appears to be destroying its banking system with the FATCA deadline - it’s as if they’re deliberately trying to weaken one of the few things that still gives the US a shred of power in the world anymore. Fast forward to today and the next shoe appears to have dropped... The FT reported yesterday that JP Morgan has started freezing accounts, declining credit card charges, and terminating customer relationships with foreign diplomats and politicians. All of this is under pressure from the US government to scrutinize banking relationships with "politically exposed persons", or PEPs. Apparently once you’re a PEP, you’re always a PEP. So banks are simply shutting these relationships down.