It would appear Gazprom has once again come knocking for payment - or else. As Bloomberg reports, Ukraine is pressing the Obama administration to provide political support, as much as $3b in financial aid and “non-lethal weapons,” with the goal of some progress by the end of February, Ukrainian Deputy Foreign Minister Vadym Prystaiko says. Of course, given Europe's agreement to further sanction Russia (asEU agrees more "punitive" steps are now possible) President Obama will be happy to lend Ukraine more American taxpayer money (despite the market's perception that Ukraine's default probability is over 80% - six year highs).
After the delayed 5 Year auction took place 90 minutes ago, and priced strongly well through the When Issued, it was the turn of the last for this week auction of $29 billion in 7 Year paper, which just concluded and, somewhat surprisingly, was the worst of all auctions this week: not only did it tail modestly, pricing at 1.59%, a 0.4 bps tail wider than the 1.586% WI, but the Bid To Cover also was just modestly anove last month's 2.388, at 2.499, below the TTM average of 2.56. To be sure, a key factor for this superficial weakness was that the high yield of 1.59% was the lowest since May of 2013, as a result all those who have booked major profits in last month's auction pricing at 2.13 likely had far less of an incentive to get involved here.
USA USA USA!!!
It appears markets are on the verge of learning just how damaging the unintended consequences will be from multiple years of extreme central bank promises now that the Fed has run out of the ammunition to keep the utopian market façade alive. The structure of the ECB QE and the Greek situation make the backdrop considerably more troubling and difficult.
Because nothing says dump gold and silver like an aggressively escalating currency war...
Earlier, we laid out a very reasonable explanation by none other than Europe's largest insurer AXA why the ECB's QE will fail. The ECB did not like ththis, so it decided to reply. This is how the ECB just "crushed" AXA's logic.
COEURE SAYS QE WILL WORK BECAUSE IT IS BIG
As we previously noted, yesterday's 2 Year auction was an absolute blockbuster and accurately guessed the general direction of the bond market following yesterday's FOMC announcement. Moments ago, the US Treasury sold $35 billion in 5 Year paper, the first of two Note auctions, with the 7 Year due at 1pm today, and like yesterday it too was a very strong auction, with the High Yield tumbling from 1.739% last month, when most were assuming a rate hike is imminent to just 1.288%, stopping through the 1.295% When Issued, and suggesting that the relentless collateral shortage of the past 2 years simply refuses to go away. This was also the lowest closing yield of a 5 Year auction since May 2013.
Threaten to go all Icelandic on the Troika's Medieval ass, or go home, and certainly don't bring a knife to a gunfight!
Yahoo! shares are down meaningfully during the last two trading days due to the decline in BABA shares, even though Yahoo! announced this week the best-case scenario for its shareholders in the form of a tax-free spin-off of its entire equity position in BABA (see our note here). The trading has created an unusual dislocation, in our opinion. Assuming 1) that the BABA stake trades at a 10% discount to BABA as a SpinCo (and, therefore, is worth $33/YHOO share at current BABA levels), and 2) that its 35% equity stake in Yahoo! Japan is valued using a 44% discount to the current market value (i.e., a 38% tax rate plus a 10% liquidity value), then the core Yahoo! business is currently valued at nearly a negative enterprise value of $1bn.
Europe's Largest Insurance Company Explains Why The ECB's QE Has Already Failed Using "Widget Makers"Submitted by Tyler Durden on 01/29/2015 10:54 -0500
"People say, 'Sell government bonds and lend money to widget manufacturers.’ It doesn’t really work like that." Hayes says, adding that "Low yields don’t necessarily mean more lending to the real economy; time and confidence are key elements and last 6 years have shown QE can’t control those." In short: it hasn't even started and QE is already a complete failure. Good job central-planners.
Yet again this morning's "bounce" to $45 was heralded as maybe possibly could be the stability that markets are looking for. And once again it was not as WTI makes fresh cycle lows to a $43 handle.. and once again, energy stocks plunged back to energy credit's reality...
Despite the evident failure of the ‘extend and pretend’ logic, it is still being implemented to this day. Most of you, dear German readers, will have formed a preconception of what this article is about before you actually read it. I am imploring you not to succumb to such preconceptions. Prejudice was never a good guide, especially during periods when an economic crisis reinforces stereotypes and breeds biggotry, nationalism, even violence...
It Will Now Cost You 0.5% To Save Money In Denmark: Danish Central Bank Cuts Rates For Third Time In Two WeeksSubmitted by Tyler Durden on 01/29/2015 10:13 -0500
When the Danish Central Bank cut rates precisely a week ago, going from NIRP to NIRPer, and pushing the deposit rate from -0.2% to -0.35%, the sense of desperation was already in the air: after all this was already the second rate cut by the Denmark's monetary authority in one week, all in the hope of preserving the peg to the DEK to the EUR. That sense of desperation just hit a fever pitch moments ago, when the Dutch central bank just went NIRPest, and cut rates across the board yet again, and made it even more costly to save money in the north European country, where the Deposit rate has just been cut from -0.35% to -0.5%!
The 3.7% plunge MoM in December's pending home sales is the 2nd largest since May 2010, drastically missing expectations of a 0.5% rise in sales (buoyed by exuberance from homebuilders). All regions saw weakness but the Northeast was worst with a 7.5% MoM plunge (so weather will be blamed we are sure - though it appears analysts never thought of that). Inventories fell for the first time in 16 months but NAR's chief economist proclaims it is time for "current homeowners to realize their equity gains and trade-up." Yep - more leverage...