• 09/21/2014 - 14:52
    Dear Janet; If I may be so forward, as a concerned citizen of the Constitutional Republic of the United States, it is with great consternation that I feel compelled to write you this distressing...

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One Of These Things Is Not Like The Other

As US equity markets explode higher at the open this morning (Dow over 17,300 and S&P testing 2,020) extending the week's gains to 2%, we thought it intriguing that Treasury yields are now lower on the week... long live the Queen (Janet not Elizabeth), long live Jack Ma, and long live quad-witching.



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Meanwhile, In Front Of Apple Stores In New York And Around The World...

While none of these people, many of whom are unemployed and paid by others to stay in line for days, will spend the $3,600 someone in China just paid for a "gold" iPhone, they will gladly pay hundreds of dollars out of pocket, or in many cases simply lease with zero money down, the latest and greatest aspirational gadget to show they are cooler than they actually are.



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Goldman Warns Tesla Will Need To Raise At Least Another $6 Billion

Following a plant tour to TSLA, Goldman is confident that the company will meet its 2014 production objectives. However, what keeps them more guarded is the aggressive timetable of the gigafactory as well as a potential escalation of capital needs given the planned capacity ramp, model and derivative expansion, service expansion as well as other undisclosed projects. Simply put, Goldman warns, at the low end of our three disruptive scenarios for TSLA, they see the need for an additional $6bn in capital - and 18% dilution to the current market cap around $33bn. With 3Q likely to be a noisy quarter and shares seemingly baking in flawless execution at present, Goldman remains sidelined for now with a $210 target.



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UK Scrambles Fighter Jets To Intercept Two Russian Strategic "Bear" Bombers

While Scotland was busy concluding the count of its votes for or against independence, Royal Air Force fighter jets based out of the northern Scottish base in Lossiemouth in Moray, were scrambled to identify and intercept two airplanes which subsequently were revealed to be Russian Tu-95 Russian "Bear H" strategic bombers, that were spotted in international airspace although the exact location of the encounter has not been disclosed. As the RAF later clarified in a statement, the aircraft did not enter UK airspace. 



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Spanish Bond Risk Rises As Catalan Referendum "Dialog" Heats Up

Early kneejerk exuberance in Cable and European bond risk is rapidly unwinding as the reality of a revolting youth raise concerns over social stability. Nowhere is that more evident than in Spain this morning as pro-Catalan independence supporters push the government for a referendum on their secession in November:

  • *CATALANS SAYING LOUDLY BUT GENTLY THEY WANT TO DECIDE: MAS
  • *SPAIN GOVT OPEN TO DIALOG, HAS TO COMPLY WITH LAW: SAENZ
  • *REFERENDUMS ARE NOT POSSIBLE IN SPANISH LAW, DEPUTY PM SAYS

Catalan President Artur Mas says it is a mistake to think the Scottish "No" votes casts a shadow over Catalonia and is threatening Rajoy if he blocks the vote. Spanish bond risk is up 12bps off the lows of the day.



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Frontrunning: September 19

  • Scots spurn independence in historic vote but demand new powers (Reuters)
  • Salmond’s Journey as Scotland’s Leader Ends Short of Destination (BBG)
  • European Stocks Rally to 6 1/2-Year High on Scottish Vote (BBG)
  • Jack Ma Planning Personal Roadshow With Clinton to Immelt (BBG)
  • Some consumers say Apple is losing its 'cool' factor (Reuters)
  • Gold IPhones at $3,600 as China Delay Fuels Black Market (BBG)
  • This Man's Job: Make Bill Gates Richer (WSJ)
  • Mom-and-Dad Banks Step Up Aid to First-Time Home Buyers (BBG)
  • France says it launches first air strikes in Iraq (Reuters)


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The Scotland Referendum: Who Voted How And Why?

The following post-referendum poll from Lord Ashcroft does a good summary of who voted how and why. However, the most telling distinction is the following:

  • Voters aged 16-17: YES: 71%; NO: 29%
  • Voters aged 65+: YES: 27%; NO: 73%

How will last night's vote look like in 5, 10 or 15 years when today's 17 year olds are Scotland's prime demographic?



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Scottish "No" Vote Pushes S&P To New Record High; Cable, Yen Roundtrip On Quad-Witching Alibaba Day

So much for any Scottish referendum vote "surprise": the people came, they voted, and they decided to stay in the 307-year-old union by a far wider margin, some 55% to 45%, than most polls had forecast, even as 3.6 million votes, a record 85% turnout, expressed their opinion. The gloating began shortly thereafter, first and foremost by David Cameron who said "There can be no disputes, no re-runs, we have heard the settled will of the Scottish people." Queen Elizabeth II, who is at her Scottish castle in Balmoral, is expected to make a rare comment on Friday. But while a No vote was where the smart betting money was ahead of the vote anyway, and is thus hardly a surprise, the most curious thing overnight was the complete roundtrip of cable, which was bought on the rumor and then sold off on the news, roundtripping by nearly 200 pips.



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When War Erupts Patriots Will Be Accused Of Aiding "The Enemy"

In modern times, war is never what it seems. Mainstream historians preach endlessly about grand conflicts over territory, resources, political impasse, and revenge, but the cold hard reality is that all of these “motivations” are actually secondary, if they are relevant at all. If you really want to understand the past, or the intricacies of war, you will be lost unless you accept that most conflicts are designed; they are not random or natural. They are not the product of too much national sovereignty or individual liberty. No; traditional war is a tool for the organized ruling class. It always has been and always will be.



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What Happens When Scottish Voters Give It Their 110%, According To CNN

What is most disturbing is that this photo is just as likely to be real as fake.



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On The Ambiguity Of The Fed's Dot Plot

The Fed’s Dot Plot may look like a precise set of forecasts, with a series of purposeful markings meant to portray certainty and conviction. The math, however, as ConvergEx's Nick Colas notes, says something else entirely. Based on actual math, it isn’t until 2016 that an increase to Fed Funds becomes a statistical certainty, with a 2.7% mean estimate and a range of 0.75 – 4.7% Fed Funds at a 0.98 standard deviation.



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FX Markets In Turmoil On Scottish Vote & Japan Economic Downgrade

Cable (GBPUSD) is surging as the first results from the Scottish Referendum hit and a resounding "No" to independence appears confirmed. Almost back to pre-Scottish-Vote-fears level (1.66), cable is up 250 pips in the last 24 hours (its biggest move in over a year). GBP is also strengthening notably against EUR (2-year highs), CHF (2 year highs) and of course the JPY (6 year highs) as the Japanese government admits defeat and downgrades its economic assessment for the first time in 5 months (hence sell JPY as they 'must' do more money printing (despite Japanese businesses all pushing for a stronger JPY). FX markets are extremely volatile this evening and implicitly, equity futures are clanging around cluelessly. The USD Index is flat (gaving retraced all FOMC gains). Gold is down on the Japan news (below $1220).



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