July 25th, 2014
As we have been highlighting for a few weeks, something is rotten in high-yield credit markets. This week, the mainstream media is starting to catch on as major divergences in performance (high-yield bond spreads are 30-40bps off their cycle tights from just prior to MH17 even as stocks rally to new record highs) and technicals weaken. However, as BofA warns, flows follow returns and this week saw the biggest outflows from high-yield funds in more than a year. Investment grade bonds saw notable inflows as investors chose up-in-quality, rather than reach-for-yield, for the first time in years... equity investors, pay attention.
Over the past few days, John Kerry flew to Egypt, where among other things, he proposed a weekling Gaza Truce. Alas, that was one taxpayer funded trip for the Secretary of State flushed down the drain:
- ISRAEL CABINET UNANIMOUSLY OPPOSED KERRY PLAN: CHANNEL 1
- ISRAEL'S SECURITY CABINET HAS REJECTED GAZA CEASEFIRE PROPOSAL, SEEKS MODIFICATIONS -GOVT SOURCE
Or, largely just as was expected (because even Bloomberg is now reporting how the entire middle east is mocking John Kerry).
It's gone from bad (Mapping Africa's "Totally Out Of Control" Ebola Epidemic) to worse, (Head Doctor Fighting Africa's "Out Of Control" Ebola Epidemic Contracts The Virus), to much worse (Liberian Man Tested For Ebola In World's Fourth Most Populous City), to having run out of comparaitves - although we are leery of using a superlative just yet as we have a feeling Africa's Ebola's epidemic will deteriorate before it gets better. But the latest news is bad enough: as Reuters reported moments ago, Sierra Leone officials appealed for help on Friday to trace the first known resident in the capital with Ebola whose family forcibly removed her from a Freetown hospital after testing positive for the deadly disease.
No red lines, no YouTube clips, no WMD this time: just more "straight to propaganda" speculation by the Pentagon. "Russia is preparing the transfer of more powerful weaponry into Ukraine and it could happen at any time, the Pentagon spokesman said Friday, citing the latest U.S. intelligence. The transfer could be "imminent," Pentagon spokesman Col. Steve Warren told reporters. It's believed the weaponry will be driven into Ukraine "potentially today," Warren said, but it is not clear if Russian troops will be involved."
"there are a number of tech stocks that are caught up in a smaller version of the 1999-2000 internet bubble, and as we mentioned, we created a bubble basket to short them. At this year’s Sohn Investment Conference in May, David presented athenahealth (ATHN), a healthcare IT company, as an example of a bubble basket stock. In response to our assertion that the shares are absurdly overvalued, CEO Jonathan Bush summed things up perfectly a few days after the conference when he told Bloomberg TV, “And those who buy our stock should not be sort of bottom [line] watching value investors. They should be people who dream of a health care cloud.” At Greenlight, dreams do not form the basis of investment theses."
Update: It has been confirmed that the Liberian man who died in quarantine, did in fact have Ebola. Cue panic mitigation.
While the state of Sierra Leone is scrambling to locate the missing woman who is "on the loose" in the capital Freetown with a documented case of Ebola, we can at least close the book on the other developing story we reported yesterday involving a person who collapse in the international airport of Nigeria's megacity, Lagos, and who was being tested for Ebola. The man has died.
Like all addicts, Central Planners are confident they can manage the monkey on their back. But this is a self-serving illusion; it's the monkey who controls the addict, not the other way round. If we're not addicted to failure, why do we tolerate a central bank that creates one rush-high-overdose-crash after another? Perhaps it's time to confess that we're addicted to failure because we're too afraid to face life without this financial addiction. Pretty sad, huh? Like all observers, those of us without monetary heroin in our veins wonder when the poor addict will finally wake up and choose a path that isn't self-destructive. But as many of us know from personal experience, it often takes a near-death experience to awaken the instinct for survival in the addict. Sadly, sometimes not even that is enough, and a once-great nation spirals down to ruin.
With "recoveries" like these who needs staged, false flag conflicts and wars covering over 10% of the globe? Well, socialist France for one which moments ago announced that total jobless rose from 3.389 million to 3.398 million, a new record high. Surprisingly, while the year-over-year unemployment change for people under 25 declined by 3.1%, it was workers 25-49 which saw a material 3.3% increase in joblessness, but it was workers aged 50 and older that saw a veritable surge in unemployment, rising by 11.5% from a year ago. Surely, just like in the US, this is due to young people retiring in droves.
It was a little over a year ago when the "Mystery Sponsor Of Weapons And Money To Syrian Mercenary "Rebels" Was Revealed" as none other than the uber-wealthy Qatar (also known as the tiny but filthy rich state in the Persian Gulf that hosts the US Fifth fleet, better known as infinite leverage vis-a-vis the United States), which effectively had been pulling the US interventionist strings in hopes of taking out the Assad government and installing a puppet regime, one which would be helpful in facilitating the passage of a natgas pipeline beneath the country, which would then proceed into Turkey and all the way into Europe, as a means of bypassing Europe's reliance on Russia (which as recent events have shown has all the leverage when it comes to Europe). It failed. As a result it had to redirect its puppetmastery skills elsewhere. That "elsewhere" appears to be none other than Hamas,
Curious why Brent just spiked by over 1% (and the S&P500 took a leg lower)? The reason is headlines from Reuters citing Europe's unellected dictator, Van Rompuy who has said that sanctions should include Oil technology. However, in a hilarious twist, the unellected muppet of Europe's insolvent banks, hopes to get his sanctions cake and snort Russia's gas too, adding that Europe's sanctions should exclude the gas sector.
- LETTER FROM EU COUNCIL HEAD VAN ROMPUY TO MEMBER STATES SAYS RESTRICTIONS ON SUPPLYING TECHNOLOGY TO RUSSIA SHOULD INCLUDE OIL, BUT EXCLUDE GAS SECTOR-EU SOURCES
Here it appears that Europe's unelected leaders are somehow deluding themselves that if faced with escalating sanctions, Russia will not unilaterally cut off the gas to Europe.
Miss Chernobyl 2014...
If NYS Superintendent of Financial Services Lawsky's proposed BitLicense was applied to the Internet in 1994, Goldman Sachs & JP Morgan would be controlling your ability to read this post right now and Google, Facebook and Twitter would not exist
You can be forgiven for thinking that the world is a pretty terrible place right now, exclaims JPMorgan's Michael Cembalest. With 11.7% of the world's population currently at war (and a considerably larger percentage seemingly on the verge), it seemed an appropriate time to summarize the main geopolitical risk points in the world.
Bloomberg carried out a study and it has just been published. It covers conference calls from 2004 to 2014 and it analyzes how American CEOs speak and what words they use.