What Have We Got To Look Forward To?

As another woeful week wends to a weary close... what we got to look forward to? Although markets appeared to be shooting off in every direction, we do expect we'll see clearer direction soon. Despite the noisy criticism earlier this week of Yen "competitive" devaluation, the G20 meeting said nothing. We suspect certain individuals were quietly sat in the comfy chair, had global reality gently explained to them with the aid of some rusty dental equipment, were slapped around a bit and told to shut it. As long as Japan can sign the pledge on “no competitive depreciation” without giggling we’ll be ok. We do suspect the warmest circle of financial hell is being reserved for those populist European politicians who've tried to appeal to voters with efforts to stem the financial tides, and punished markets for being markets.

Chechen President Statement On Boston Bombers: "Seek The Roots Of Their Evil Inside America"

Chechen president Ramzan Kadyrov: "Tragic events took place in Boston. As a result of the blast people were killed. Previously, we expressed out condolences to the people of the city, and the people of America. Today, as reported by the media, during his arrest attempt, a Tsarnaev was killed. It would be logical, for him to be detained and investigated, and all the circumstances and degrees of his guilt uncovered. Apparently, the special services needed a result at any cost to calm down society. Any attempts to make a connection between Chechnya and Tsarnaevs, even if they are guilty, are in vain. They grew up in the United States, their attitudes and beliefs were formed there. It is necessary to seek the roots of evil in America. The whole world should fight terrorism. We know thisd better than anyone else. We wish a recovery to all the victims and share the Americans' sense of sorrow."

Guest Post: A Radically Simple Life

Simplicity requires eliminating virtually everything we are "processed" to want and need for personhood, and accepting the intrinsic complexity of meaningful projects. There are two basic ways to reduce the stress described in yesterday's entry, The Silent Epidemic in a Broken, Deranged System: Stress: simplify one's life and take control of one's life. The two are not mutually exclusive, of course, but one does not necessarily lead to the other.

What Is Going On In US Equity Markets Today?

US equity indices are in their own little world of glee today. Treasuries, credit, FX markets, swaps, commodities are not playing along. So what is going on? These two charts may help to explain...

According To 'French' Fitch, France Is Now Rated Higher Than The UK

Fitch has just downgraded the UK from AAA to AA+ - now lower than France's.


Fitch doesn't see the UK economy reaching 2007 highs until 2014 - so there's hope?

Tamerlan Tsarnaev's Gym Partner Profiles Dead Bomber

Earlier, we presented a captioned photo profile of one of the two alleged terrorists, the 26 year-old Tamerlan Tsarnaev who died last night in a shoot-out with the Boston Police. As a follow up, Bloomberg has conducted an interview with one of his gym sparring partners, "Jon K" who trained with Tamerlan in the same Boston gym, and who told BBG TV that "he seemed like a really nice guy, to himself and a little bit arrogant and cocky, but he helped people at the gym all the time with their boxing and was friendly with everyone. It's a complete shock." Jon, who asked that his last name not be used, said: "All week, I have been wondering who the psycho was and it turns out that it was somebody I interacted with. It is shocking, especially as an athlete, he was an athlete, that he would do this to other athletes and just anyone in general."

German Stocks Have Worst Week In 10 Months

EURUSD ended the week pretty much where it started - around 1.3100 - having tested from 1.30 to 1.32 during the week. Italian stocks also end the week practically unchanged - despite no government. But... German stocks (DAX) have slumped over 5% in the last six days for the biggest such drop since early June last year. Most other European equity indices end the week down 1.5 to 2.2% but - for some high-beta, JPY-expatriating reason, Italian stocks ripped higher today and saved the week. Swiss rates end the week near their lows. European sovereign bonds in general ended the week flat to slightly tighter. Europe's VIX closes modestly higher (but well off its mid-week highs). So while on the face of it, all is well, the smackdown in core European stocks to 5 month lows suggests things are not going well on the continent.


IBM Crashes Most In 8 Years, Now Down For 2013

Following last night's abysmal earnings and outlook shift, it appears the hopers are leaving IBM in their hordes. The biggest single-day drop in 8 years has smashed IBM down over 7% and plunged it into the red for 2013. This drop represents a 120 point drop in the Dow Jones Industrial Average - but have no fear, thanks to EURJPY and the rest of the Dow components magically levtating, the Dow is green...

Sister Of Bombing Suspects Emerges In West New York

As the authorities focus on the geographic distribution of what may (or may not) be a delocalized cell, a curious developed has emerged courtesy of NJ.com, which reports that a woman has been found living in West New York who has identified the bombing suspects as her brothers. She adds, logically enough, that she can't believe any of this has happened. She is probably not the only one.

Guest Post: Important Lessons In Domestic Terrorism

Benjamin Franklin was right. Ultra-committed separatist groups, extremists, and all-around bad guys can always find a soft target. Guard the airport and they’ll blow up the bus station. Guard the bus station and they’ll take out a public park. Constant security, paramilitarism, and steady erosion of freedom constitute an enormous price to pay for a false sense of safety against bad people.

The Chart Making The Fed Nervous

While Cyprus has been brushed away as a "storm in a teacup" and asset-gatherers stare blankly at their screens pointing at record highs to confirm the "market knows best", it appears something rather important 'broke' that day (and hasn't stopped breaking since). While we have discussed the rather glaring divergences between US equities' exuberance and global equity markets and macro- and micro- data; supposedly the Fed's key indicator (the 5Y5Y forward inflation expectation) has reversed rather significantly. The last two times, forward inflation expectations dropped so significantly, the ECB launched LTRO and the Fed launched QE3. It seems the BoJ's QQE is not having the effect perhaps they had hoped on inflation expectations. Will the Fed have to come to the rescue once again? And how will gold react to that?

Italy Will Not Have A President Following PDL Boycott Of Fourth Round Vote

There had been some hope that the political vacuum in Italy would normalize after the fourth balloting round of presidential voting, in which the candidate agreed upon by both Bersani and Berlusconi, former trade union leader Franco Marini, would be elected with a simple majority, following a failure to elect one in the first three rounds. Marini had been in the lead with 521 votes but short of the two-third majority needed, or 672, to win the vote. Those hopes have now been dashed following news, coming from a tweet by the PDL's Maurizio Gasparri, that Berlusconi's PDL and its ally Northern League will not take part in the vote. This means that Marini will no longer have even the 504 votes needed to get elected with a simple majority and that the entire spectacle was nothing but empty theater. And so the ongoing total political chaos and vacuum in Italy remains.

Letter Bomb Intercepted At German President's Residence

The chaos continues. Die Welt is reporting that a suspected letter bomb was intercepted today in a routine mail control at the residence of the Germany President Joachim Gauck in Berlin.


The suspect mail has been safely neutralized according to police.

Killed Chechen Bomber Brother: "I Don't Have A Single American Friend, I Don't Understand Them."

While the first alleged terrorist bomber, 19 year-old Dhjokar Tsarnaev, born in Kyrgystan, is on the loose currently somewhere in Boston and is the target of a massive manhunt, his brother, 26 year-old, Tamerlan Tsarnaev, born in Russia and legal US resident since 2007, died overnight in a shootout with the local police. It appears he was a boxer, studied at Bunker Hill Community College, was very religious, didn't drink or smoke, wanted to become an engineer, and his favorite movie was Borat. His YouTube page can be found here: on it can be found videos of Islamic preacher Feiz Mohammad. Most informative is a captioned photo narrative by Johannes Hirn showcasing the older brother's boxing pursuits and a glimpse into his history and philosophy.

IBM -4.5% Pre-Market; Dow Futures Sliding

UPDATE: Boeing cuts 747 production 12.5% on lower demand (BA -0.5%, Dow futures slide 25 points)

Thanks in large part to G-20 comments, JPY has resumed its devaluation path and dragged risk-assets higher with it as S&P futures are up 8 points. However, this 'artificial' exuberance appears to hide the simple reality of individual stocks as IBM is trading down 4.5% in the pre-market and for now Dow futures are down around 40 points from the cash close.

Frontrunning: April 19

  • Police Searching for 19-Year-Old Boston Bombing Suspect (BBG)
  • Mayhem Erupts in Boston After MIT Campus Officer Slain (BBG)
  • Elvis Impersonator Accused of Ricin Letters Sowing Fear (BBG)
  • Blackstone Pulls Out of Dell Bid on Rapidly Falling PC Sales (BBG)
  • Before Texas plant exploded: What did regulators know? (Reuters)
  • Aso Says Japan Policy Unopposed at G-20 Meeting as Yen Falls (BBG)
  • Bipartisan pair target $2.5tn US savings (FT)
  • Plan for new Cyprus vote casts uncertainty on bailout (Cyprus Mail)
  • Ireland picks through debtors’ lifestyles (FT)

Surviving Bombing/Shootout Suspect's Social Page

While one of the shootout suspects, who have turned out to be brothers of Chechen origin, has been killed, the other one is still on the loose, is said to have had military and weapons training, and is the reason for the lockdown of Watertown and increasingly bigger parts of Boston. His social webpage on the service VK.com has been revealed, where the last log in attempt was at 5:04 am. Hopefully this is Chechnya Standard Time.

Sneaky FX-Led Overnight Levitation Offsets IBM Earnings Bomb

With the entire world's attention focused on Boston, the FX carry pair traders knew they had a wide berth to push futures, courtesy of some EURUSD and USDJPY levitation overnight, which started following news out of Japan that the G-20 would have no objection to its big monetary stimulus - of course they don't: they encourage it: just look at the levitation in the global wealth effect stock markets since it started. The Friday humor started early: "Japan explained that its monetary policy is aimed at achieving price stability and economic recovery, and therefore is in line with the G20 agreement in February," Aso told reporters. "There was no objection to that at the meeting." "We explained (at the G20 meeting) that we're convinced that the measures we're taking will be good for the global economy as they will help revive Japanese growth," Aso said. And by global economy he of course means stocks. Shortly thereafter, when Europe opened, the real levitation started as someone, somewhere had to offset what would otherwise be a 100 point plunge in the DJIA just on IBM's miserable results alone. Sure enough what better way to do that than with a wholesale market "tide" offsetting one or two founder boats.