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Gold Spikes, Bonds & Stocks Surge Despite Fed Warning Over Complacency

As usual the initial knee-jerk reaction (in this case lower in stock prices and higher in bond yields) has been faded rapidly and despite Fed warnings over investor complacency (and real economic uncertainty not being priced in), investors are buying bonds and stocks with both hands and feet (for now)... Gold is spiking higher as the USD drops.



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Jon Hilsenrath's 555 Word FOMC "QE Is Dead, Long Live The Easy Policy" Summary

1 minutes, 555 words, and Fed-whisperer Jon Hilsenrath declares that based on the FOMC minutes, QE is dead and now the uncertainty is all about rate-hike timing. Crucially, given the Fed's concerns over complacency, Hilsenrath explains, "while they don't expect rates to get very high because of lingering headwinds to the economy, they also don't want to give the public too much comfort that they'll remain near historically low levels far into the future."



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FOMC Minutes Show Fed Fears Investors Are Too Complacent; QE To End In October

Having continued to taper, expressed no fear of inflation, and been nothing but confident that Q1 was nothing-but-weather at the press conference, the FOMC Minutes shows:

*SOME FED OFFICIALS SAW INVESTORS AS TOO COMPLACENT ON RISKS
*FED SAW INSUFFICIENT INVESTOR UNCERTAINTY ON ECONOMY, RATES
*FOMC SEES QE ENDING WITH $15 BLN CUT IN OCT. IF OUTLOOK HOLDS

Strange not a mention of the surge in Treasury fails but this appears as close to a "sell" as the Fed will give...

Pre-FOMC Minutes: S&P Futs 1964, Gold $1323.50, 10Y 2.59%, Oil $102.22, JPY 101.75



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Muni Fund Collapses To Record Lows As Puerto Rico Risk Rises

It appears "reach for yield" has consequences after all - and remember how exuberant the market (stocks) were after PR managed to get that bond off earlier in the year? Quietly behind the scenes and away from the exuberant stock market trading headlines of the mainstream media, Muni bond markets are in turmoil. Thanks to the 'shenanigans' in Puerto Rico - after lawmakers last month approved a bill allowing some public corporations to restructure debt - PR bonds have collapsed to record lows (and dragged a number of large Muni funds with them)



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Destroying The "Recessions Can't Happen Without A Yield Curve Inversion" Myth

A repeated theme on financial-TV in recent weeks is that there cannot be a recession without a yield-curve inversion first because in each of the last 6 recessions stretching back 50+ years, short-term rates rose above long-term rates before the recession. However, if you study the period after The Great Depression and even in Japan's last 25 years (that are the best examples of balance sheet recessions), it is very common to have a recession without a yield curve inversion first. In-fact, there were 6 of them following The Great Depression into the 1950's.



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10 Year Auction Spooked By Looming Minutes, Tails 1.1 Bps, Still Prices At Lowest Yield Since June 2013

Ahead of the FOMC Minutes, many seem to have taken a cue from DB's bond trading recos, and taken a flier on today's just concluded reopening of $21 billion in 10 Year paper (technically 9 year 10 month), which probably explains why the 10 year paper just priced at 2.597%, a rather gappy 1.1bps tail to the 2.586% When Issued. Still, pricing at just under 2.60%, this was the lowest 10 Year high yield in over a year, since the 2.21% in June 2013. Considering the recent surge in negative repo rates, expect any freely floating paper to be promptly mopped up despite the apparently weak auction.



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President Obama To Explain Why Wal-Mart's CEO Is Wrong; Economy Is Doing Great - Live Feed

Stocks at record highs... Unemployment rates at multi-year lows... magical job creation 'impressive'... President Obama has a lot to proclaim "mission accomplished" over - except its all fallacious (as Wal-Mart's CEO recently explained). Of course, this will all be solved if everyone was paid 'fairly' at least $15/hour despite the greatest irony of Obama's inequality fight is that "his policies are squeezing the middle class and causing the Fed – with the President’s encouragement – to engage in the radical monetary policy, which is exacerbating inequality. This simple truth cannot be repeated often enough."



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Former New Orleans Mayor Ray Nagin Sentenced To Decade In Prison For Bribery

Former New Orleans Mayor Ray Nagin was sentenced to 10 years in prison for bribery, money laundering and other corruption that spanned his two terms as mayor--including the chaotic years after Hurricane Katrina hit in 2005. Mr. Nagin was convicted Feb. 12 of accepting hundreds of thousands of dollars from businessmen who wanted work from the city or Mr. Nagin's support for various projects. The bribes came in the form of money, free vacations and truckloads of free granite for his family business. The 58-year-old Democrat had defiantly denied any wrongdoing after his 2013 indictment and during his February trial.



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Why Tuition Keeps Rising (Spoiler Alert: Government Intervention)

As long as the majority of the cost of college education is not born directly by students but rather by Government loans and grants, our institutions of higher learning will not be forced to adapt and find innovative ways of delivering quality education to more students at a decent price. They will go on keeping supply low, tuition higher and expenses growing. The kindest thing our government might do for our kids is to stop throwing money at inefficient Universities in their name, or at least demanding more from those institution in return for that money - in such a world the school’s focus would then shift to keeping prices down while offering good value.



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China President Warns Conflict With America Would Be "Global Disaster"

While recent US relations with Russia plumbed lows unseen since the Cold War, at the same time "succeeding" in cementing relations between Russia and China, the so-called Eurasian, anti-Petrodollar axis, and leading to an accelerated groundbreaking natgas deal between Kremlin and Beijing, at least the department of state had managed to not completely alienate China. Which maybe why China just issued a rather out of place tongue-in-cheek warning overnight, when China’s President Xi Jinping called for greater military communication with the U.S., saying as he opened high-level talks between the two countries that any conflict would be a global disaster.



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One Company Finally Admits: It Wasn't The "Harsh Weather" After All

Yesterday we heard from the CEO of the world's biggest company that the exuberant jobs data did not reflect any economic reality Wal-Mart was seeing. Overnight, William Arthur Tindell, CEO of The Container Store, further destroyed the myth of a 'recovery' stalled by 'weather' and threw the rest of his 'retailer' brethren under the bus: "We thought our sluggish sales were all because of weather and calendar shift...but now we've come to realize it's more than that, consistent with so many of our fellow retailers, we're experiencing a retail funk."



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Treasury Curve Collapses To Flattest Since Feb 2009

Steep curve, lots of Net Interest Margin, buy banks, inflation's coming, rates have to rise... no! The US Treasury curve (specifically the spread between the 5Y yield and 30Y yield) has tumbled to its lowest since February 2009 as the long-end dramatically outperforms the Fed-pressured front-end amid concerns that the next cycle will be anything but exuberant and the new normal rates will be notably lower than consensus believes. On a side note, 5 years ago, US bond markets implied a 10Y yield now of 4.6% - almost double what it is; it seems the future (now) is not as rosy as everyone expected then...



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Why Housing Will Crash Again - But For Different Reasons Than Last Time

Institutionalizing the speculative excesses that inflated the previous housing bubble has fed magical thinking and fostered illusions of phantom wealth and security.



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Everything's Down

Oil, yes; Stocks, yes; USD, yes; Gold, yes; Silver, yes; Copper, yes; and bond yields, yes. Seems like it's time for some USDJPY or VIX rampage...



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