"This Is A Trend": Increasingly More Russian Companies Set To Drop Dollar, Switch To Chinese Yuan

As we have been reporting (and forecasting for the past several years), the Eurasian anti-US Dollar axis is rapidly taking shape, with recent events catalyzed and certainly accelerated by US foreign policy in Ukraine, which has merely succeeded in pushing Russia that much closer, and faster, to China. The latest proof of this came overnight when the FT reported that Russian companies are preparing to switch contracts to renminbi and other Asian currencies amid fears that western sanctions may freeze them out of the US dollar market, according to two top bankers. Andrei Kostin, chief executive of state bank VTB, said that expanding the use of non-dollar currencies was one of the bank’s “main tasks”. “Given the extent of our bilateral trade with China, developing the use of settlements in roubles and yuan [renminbi] is a priority on the agenda, and so we are working on it now," ... "It looks like this is not just a blip, this is a trend,” said Mr Teplukhin of Deutsche Bank.

Frontrunning: June 9

  • Attorneys Known for Large Civil Settlements Line Up to Sue GM Over Company's Handling of Defective Ignition Switches (WSJ)
  • Pakistani Taliban attack airport in Karachi, 27 dead (Reuters)
  • U.S. Official: Sgt. Bowe Bergdahl Has Declined to Speak to His Family (WSJ)
  • Ukraine Gas Talks Resume in Brussels to Avoid Cut-off This Week  (BBG)
  • China's Central Bank Flexes Muscle (WSJ)
  • China says Vietnam, Philippines' mingling on disputed isle a 'farce' (Reuters)
  • World Needs Record Saudi Oil Supply as OPEC Convenes (BBG)
  • Kraft Raises Prices on Maxwell House, Yuban U.S. Coffee Products (BBG)
  • United Continental: One Sick Bird (WSJ)

The Death And Decay Of Detroit, As Seen From The Streets

With the stock market hitting record highs day after day, it is easy to move on and forget that one of American's once premier cities, Detroit, has been bankrupt for nearly a year. But out of mind doesn't mean out of sight, especially now that Google has launched its street view Time Machine, which provides for 7 years worth of street images, showing the time shift of the tumultuous period period starting in 2007. One blogger who decided to take this time lapse data and apply it to the city of Detroit is GooBing Detroit who, as the following time-lapse photos demonstrate, has captured Detoit's unprecedented slow-motion collapse into death and decay in what is the closest we have to "real time."

Single-Digit VIX Imminent As Slow News Week Set To Depress Trading Even More

With the VIX smashing last week to levels not seen since early 2007, the S&P rising to all time highs, and European core and peripheral bond yield this morning touching historic lows, it would appear that the "market" has priced in every possible negative outcome. Which, as Goldman showed over the weekend is clearly not the case at least as investors are concerned who continued to sell stocks across the board in May even as the market broke out to record levels making many wonder who is buying stocks (for more read here)? Expect more of the same, and with some luck we will get a single digit VIX in the coming days as newsflow slows down following payrolls week and ahead of the world cup start in Brazil.

Caught On Tape: Nancy Pelosi Squirms As Teen Questions Her On The NSA

You’ve got to give young Andrew Demeter a lot of credit. Given the chance to meet a powerful Congresswoman, most people would melt into a sad puddle of unjustified reverence and pathetic groveling. Not this young man. When he was given the opportunity to ask Nancy Pelosi a question, he confronted her on the NSA’s unconstitutional spy practices and why she hasn’t done anything to stop it, considering she claims to be so “liberal.”

 

PBOC Hits Panic Button: Strengthens Currency By Most In 20 Months

On the heels of growing contagion concerns regarding shadow banking collateral and the "rehypothecation evaporation" and this weekend's 'odd' Chinese trade data (big drop in imports, no doubt impacted by dramatic commodity invoicing swings), the PBOC has fixed the Chinese currency 0.36% in the last 2 days... the biggest strengthening in the currency since October 2012. It is unclear for now exactly what is going on but we suspect the panic button outflows as banks pull credit and unwind CCFDs are forcing China's hand to offset CNY selling pressure... and of course China does it in grand style.

Where Metal Spikes Meet The Homeless: In London "The Destitute Are Now Considered Vermin"

First, the world's oligarchs slowly but surely took over London real estate, where as we reported last week, home prices in May soared by the most in 12 years, and now, according to the Telegraph, in order to make London into an even more exclusive enclave where only the uber-wealthy can rub shoulders, assorted luxury buildings are installing metal spikes on the ground outside to fully deter homeless people from sleeping (and hence living) there. In other words, in London homeless people have been relegated to pigeon status, as the same technique has been long used to prevent rats with wings from landing, and defecating, at select locations.

The Only Chart You Need To See To Trade Japan's GDP "Beat"

While Japan's Trade balance missed expectations once again (bigger deficit than hoped or expected), the flashing red headlines of the night belong to Japan's 1.6% QoQ GDP print (better than expected)  - the 'best growth' since Q3 2011. The initial reaction was JPY weaker, which meant Nikkei higher (and oddly JGBs rallied too). But... and it's a big but... Japanese consumer spending shot up by 2.2% in Q1 - the biggest on record... matched only by Q1 1997, the quarter before Japan's last tax-hike decision. What happened the quarter after that? Take a look...

Socialism Comes To Seattle

Economic science has long shown that labor is not magically exempted from the laws of supply and demand. Therefore, minimum wage laws hurt rather than help workers, especially those with few skills or those just starting out, who are on the lowest rungs of the ladder. If one wants to raise youth unemployment and price unskilled workers out of the market, there is no surer way than introducing a minimum wage – especially one that is far higher than what the market can bear. Seattle is one of the few municipalities in the US boasting of an openly socialist council member, Ksahma Sawant. One of her central demands was the introduction of a $15/hr minimum wage in Seattle. The city council has now bowed to this demand, a decision that is likely to prove extremely destructive, especially to small businesses. Seattle seems eager to become the next Detroit.

The Mystery Grows: Goldman Finds That Virtually Everyone "Sold In May"

The great mystery of the endlessly levitating market continues to confound everyone, even Goldman Sachs. Because while the market soared in May (and has continue to surge in June) contrary to the sell in May mantra, when peeking beneath the market's covers, Goldman has found that most investor groups did just as they are supposed to do for this time of the year: they sold!

Morgan Stanley's Bear Case For The US Economy

While Morgan Stanley's lower-than-consensus economic expectations for the US economy splits the difference between an economy where people remain hesitant to take on risk, essentially extending the post-crisis pall, and one where they embrace risk in the manner of a more typical post-WWII cyclical expansion; their alternative scenarios (at either corner of the goldilocks world) make one wonder just what the catalyst will be to release the kraken of better-than-subpar growth...

The Carnage Beneath The Bullish Stampede

Risk is no longer priced into anything. Volatility has gone to sleep. Uniformity of thought has taken over the stock market. Complacency has reached a point where even central banks have begun to worry about it: the idea that markets can only go up – once entrenched, which it is – leads to financial instability because no one is prepared when that theory suddenly snaps. But all this bullishness, this complacency is only skin deep. Beneath the layer of the largest stocks, volatility has taken over ruthlessly, the market is in turmoil, people are dumping stocks wholesale, and dreams and hopes are drowning in red ink.

Suspect Yells "Tell The Police, The Revolution Has Started" Before Shooting Spree In Las Vegas WalMart

UPDATE: Las Vegas Review reports 5 dead: 2 cops, 1 civilian, 2 suspects

Multiple shootings and at least one death has been reported after two people (a man and a woman) shot two Law Vegas police officers, stole their gear, and entered a nearby Wal-Mart. As KLAS-TV reports, police say witnesses told them the suspects took the police officers' gear and, as they were walking out of the restaurant after the shooting, they said, "tell the police the revolution has begun." As Las Vegas Review Journal reports, the shooters were still at large as of noon.

 

US Air Force Sends 2 B-2 Stealth Bombers To The UK

With call-signs "Death 11" and "Death 12", we suspect the deployment by the US Air Force of 2 B-2 Stealth Bombers to the UK's RAF base in Fairford is for anything but simple sight-seeing. As The Aviationist notes, B-2s don’t move from Whiteman AFB, in Missouri, too often as they are trained to conduct very long round-trip missions from their homebase; which is why the deployment of two Spirit bombers with the 509th Bomb Wing to the UK is, at least, noteworthy. The question is... what will Putin's retaliatory sabre-rattle be?

Everything Popular Is Wrong: Malinvestment And Consumers

Government intervention in the economy manipulates the buying decisions of the population. The resulting malinvestment quickly turns into malinformation and imbalanced marketing messages. Our minds are dominated by the marketing messages of malinvestment which blankets our economy in a dark fog of partial truths. Partial truths masquerade as the whole story, granting subpar products and services unchallenged attention and popularity. Oscar Wilde was right: “Everything popular is wrong.”

Europe's Good, Bad, & Ugly Reality (In 3 Simple Charts)

Mario Draghi unleashed his ultimate "spend-it-all-now-or-you'll-lose-it" Keynesian demand-pull bazooka this week when he went full negative-rate-tard. While plenty of time has been spent discussing the "low-flation" and the total lack of credit creation (Keynes ultimate kryptonite), we thought the following three charts might bring home just how entirely broken (and dependent) Europe's economy/market has become...

The World’s Five Most Important Oil Fields

Much has been made about the role that hydraulic fracturing – or fracking -- has played in revolutionizing the energy landscape, unlocking vast new reserves of oil trapped in shale rock. This “tight oil” is pouring into the global pool of oil supplies at a crucial time, preventing oil prices from spiking in an age of high demand and geopolitical turmoil. But the world still relies overwhelmingly on conventional oil production from existing fields, many of which are in decline. The Middle East has dominated the world of oil for half a century and as the list below shows, it remains king. Here are the top five most important oil fields in the world.