Putin 1 - Dimon 0: JPMorgan Unhalts Russian Money Transfer

after shocking the world with its unilateral decision to halt Russian money transfers without a direct order from the administration, Reuters reports that JPM has folded and will process said payment from Russia's embassy in Kazakhstan to insurance agency Sogaz, easing tension after Moscow accused the U.S. bank of illegally blocking the transaction under the pretext of sanctions.

His Name Was Jeremy Stein: Fed's Lone Bubble-Spotter Resigns

The last year or two has seen a deluge of Fed speakers pay lip-service to watching/monitoring/keeping-an-eye-on potential bubbles... but as yet having found none... That is all except one - Jeremy Stein - who explicitly called out high yield bonds as in a 'frothy' bubble last year... it appears he has grown weary of smashing his head against that wall...

  • *FED SAYS STEIN SUBMITTED RESIGNATION LETTER TO OBAMA
  • *YELLEN SAYS STEIN WAS 'AN INTELLECTUAL LEADER' ON FED BOARD

Stein plans to return to teaching at Harvard but in his resignation letter noted that more work is needed on the job market and that the financial market needs strengthening.

@LaVorgnanosense

Mission Accomplished: Spanish Bond Yields Converge To Treasuries

Thanks to more jawboning promises of QE from Draghi this morning, peripheral bond yields in Europe have collapsed once again. Any minute now, Spain will be a lower-yielding bond than the US... and at this pace, you will have to pay Spain to lend it money within a few months... we are sure someone has figured out how entirely useless asset-purchases would be at these levels.. but for now, fight the fed in the US (they remind us that tapering is not tightening remember) but don't fight the promise of the ECB...

Services Data Misses As Pent-Up "Weather" Demand Fails To Show

Markit's Services PMI missed expectations (55.3 vs 55.5 flash) and dropped from last month - as it seems an easing of the 'weather disruption' did nothing for pent-up services demand. Services employment growth slowed (suggesting a weak NFP) as did new business (very significantly) but optimism rose (so that's good). On the heels of that the ISM Services print missed expectations for the 4th month of the last 5 (53.1 vs 53.6) but rose modestly MoM.

"HFT Is A Growing Cancer" Says Mom And Pop's Favorite Retail Broker Charles Schwab

"High-frequency traders are gaming the system, reaping billions in the process and undermining investor confidence in the fairness of the markets. It’s a growing cancer and needs to be addressed.  If confidence erodes further, the fuel of our free-enterprise system, capital formation, is at risk. We can’t allow that to happen. For sure, we still believe investing in equities is a primary path to long-term wealth creation, and we believe in the long-term structural integrity of the markets to deliver that over time for individual investors, which is all the more reason to be vigilant in removing anything that creates unfair advantage or undermines investor confidence... High-frequency trading isn’t providing more efficient, liquid markets; it is a technological arms race designed to pick the pockets of legitimate market participants. That flies in the face of our markets’ founding principles.

Goldman Expects 3% S&P 500 Upside In Coming Year

From Goldman's David Kostin, who first looks back: "S&P 500 began 2014 with a pullback of 6%, repeating its 2013 trend, but then rallied 8% to reach a new high of 1885. The market has not had a drawdown of 10% since the summer of 2012, rallying nearly 50% during that time. Gold and bonds have outperformed stocks YTD" and then forward: "S&P 500 rises 2% in 1Q to hit new high; we expect 3% appreciation during next 12 months" In other words, by the end of this week the Market should hit Goldman's 12 month forward price target.

Draghi QE "Reflection" Drops Euro, Pops Bonds/Stocks

Despite Draghi's explanation that a QE program in Europe (due to the greater extent of bank lending vs capital market financing) would not be "as efficient" as the Fed's program, his comment that:

*DRAGHI SAYS COUNCIL WILL REFLECT HARD ON DESIGN OF QE

Has provided just enough "hope" juice to drive the EUR lower and ramp bond and stock prices across Europe (for now). We will have to see what the half-life of this jawboning is. Of course, the EUR selling is USD buying and that is pumping USDJPY higher - and therefore a pre-open pump in US equities.

Q1 GDP To Tumble As Trade Deficit Surges Most Since September

So much for those already abysmally low Q1 GDP forecasts. Moments ago, the Census Bureau released trade data for February which crushed expectations of an improvement from $39.1 billion (revised to $39.3 billion) to $38.5 billion, and instead rose 7.7% to $42.3 billion, the highest monthly trade deficit since September. This was driven by a 0.4% increase in imports to to $231.7 billion offset by a drop in exports of 1.1%  to $192.5 billion. The goods deficit increased $2.2 billion from January to $61.7 billion in February; the services surplus decreased $0.8 billion from January to $19.4 billion in February. Most notably however, is that as a result of this "unexpected" surge in the deficit, the Q1 GDP forecast cuts, anywhere between 0.2% and 0.4% are set to begin.

Initial Claims Miss By Most In 5 Weeks; Rise Most In 10 Weeks

Despite hope that this time is different, and after a few weeks of improvement that was extrapolated as back-to-the-status-quo for us all, initial jobless claims rose by their most week-over-week in 10 weeks, missed expectations, and hover just below the average of the last year. Not exactly the positive trend that so many would like to use to build their "so buy stocks" thesis. This follows ADP's miss and the ISM reports' internal jobs indices misses. Of course, a 'bad' claims data is great news for more un-tapering.. the bulls, let down by Draghi, now need Friday's payroll data to be truly dismal.

Mario Draghi's "All Talk And No Action" ECB Press Conference - Live Feed

As we noted previously, there was a low expectation that Mario Draghi would unleash a much-hoped-for QE but we suspect the devil of the dovish details will come in the press conference when the bespectacled banker will prove that open-mouth operations and the promise of "whatever it takes" at some point in the future are just as powerful (for now) as any actual monetary policy. Rates lower for much much longer... studying negative rates... contemplating asset purchases... preparing to fire OMT... Euro is too strong comments... expect a wild ride... EURUSD is at 1.3760 as he starts.

Frontrunning: April 3

  • Russia says expects answers on NATO troops in eastern Europe (Reuters)
  • Dealers say GM customer anxiety rising, sales may take hit (Reuters)
  • China Unveils Mini-Stimulus Measure (WSJ)
  • Londoners Priced Out of Housing Blame Foreigners (BBG)
  • New earthquake in Chile prompts tsunami alerts (Reuters)
  • Ukrainian Billionaire Charged by U.S. With Bribe Scheme (BBG)
  • Chinese Investments in U.S. Commercial Real Estate Surges (BBG)
  • Old Math Casts Doubt on Accuracy of Oil Reserve Estimates (BBG)
  • US secretly created 'Cuban Twitter' to stir unrest (AP)

Futures Surprise Nobody With Now Mundane Overnight Levitation

Being that markets are unrigged and all, at least according to every single proponent of HFT that is, futures have done their overnight levitation as they have every day for the past month driven by the one staple - the Yen carry trade - even if in recent days the broader market slump during the actual daytrading session mostly impacted biotechs yesterday. And since any news is good news, we don't expect today's main event, the ECB's rate announcement and Draghi press conference, both of which are expected to announce nothing new despite Europe's outright inflationary collapse which most recently dropped to 0.5%, the lowest since 2009.

Reverse Mortgages Spike 20% In 2013 As Baby Boomers Scramble For Cash

While we have covered the various ways in which Americans are scraping by in the current feudal economy, from food stamps and disability fraud, to student loans and living in mom and pop’s basement, this reverse mortgage thing is a piece of the puzzle we have been missing. These mortgages are not insignificant either. According to Inside Mortgage Finance, originations were up 20% in 2013, hitting $15.3 billion. So when you see that older guy working the cashier at Wal-Mart and wonder to yourself how he is surviving, the answer may increasingly be a reverse mortgage. Oh, and since the FHA is originating many of these loans, you the taxpayer will be on the hook!

HSBC China Composite PMI Tumbles To 28-Month Lows As Services Fell (& Rose)

For the 4th month in a row, China's composite PMI fell (with new orders tumbling) - this time to the lowest levels since Nov 2011 and firmly in contractionary territory. However, in the exact antithesis of the manufacturing PMI data, tonight's non-manufacturing data saw the official government data miss expectations and drop (manufacturing rose) while HSBC's services PMI rose (HSBC's manufacturing dropped). This was enough (along with an Aussie retail data miss) to send AUDJPY into conniptions jerking lower then higher then lower as the algos just could not comprehend the levels of absurdity that was flooding their valves. Japanese PMI strolled along in its neither here nor there zone and Aussie PMI tumbled back into contraction after one month of exuberance. In the famous words of Frank Valli, oh what a night.

ECB Preview: Expect More Talk And No Action

New cycle lows in Eurozone inflation along with disappointing ISMs across various nations raise the probability of a dovish ECB meeting tomorrow, in Citi's view. However, as Deutsche expands upon, they do not see an obvious trigger for "actual" policy easing in the data and events since the last ECB Council meeting and any "action" will take the form of words, not deeds. Despite all the hope in the world, Deutsche warns there would have to be a substantive deterioration relative to current forecasts to elicit an asset purchasing/QE response from the ECB. Instead, more comments on Euro strength, stronger forward guidance, confirmation of the magic of OMT are more likely but so far the market is absolutely calling Draghi's bluff and saying 'put-up-or-shut-up' especialy in terms of EUR strength.

Why Turkey Was Planning A False Flag Operation In Syria

You’ve probably heard about the recent leaked conversations involving Turkey. It was stunning to hear the highest-ranking Turks casually discussing how to provoke a false flag incident that would justify a large military intervention in Syria. This is a big deal because Turkish troops in Syria opens the door to NATO troops in Syria, which drastically expands the conflict. In case you didn’t know, a false flag is an incident that is designed to deceive people into thinking it was actually carried out by someone else. The same tactic is used by the world’s militaries and intelligence services to nefarious effect. Many believe the Reichstag fire incident that allowed Hitler to drastically expand his power was a false flag operation. So, why would the Turks propose doing such a thing in Syria?

In A NYT Op-Ed, Venezuela's Maduro Explains Why It's The Rich That Are Revolting

After the success of Putin's op-ed, Venezuela's President Nicolas Maduro has put pen to paper in a NY Times op-ed. Calling for "peace and dialogue," Maduro blames the US government for supporting the 2002 coup and funding the opposition support movements currently. Slamming the US media's biased perspective on his nation's "best [electoral] process in the world," the outspoken leader explains, "the claims that Venezuela has a deficient democracy and that current protests represent mainstream sentiment are belied by the facts. The antigovernment protests are being carried out by people in the wealthier segments of society who seek to reverse the gains of the democratic process that have benefited the vast majority of the people."