Archive - Apr 2, 2013

When Mary Schapiro quit the laughing stock US stock market regulator, the only question was which Wall Street firm the latest SEC "revolving door" migrant would end up with, with most bets being on, naturally, Goldman and JPM. Today, to some surprise, the news hit that the former head of the internet porn-addicted regulator (which like clockwork always complains about its low budget: maybe get a refund for that bangbus.com subscription?) has decided to join none other than the revolving door extraordinaire consulting firm Promontory Financial. Per the WSJ: "Ms. Schapiro will work full-time in Promontory's office in Washington as a managing director leading the consulting firm's governance and markets practice and advising clients on risk management and compliance. Ms. Schapiro and a Promontory spokesman declined to say how much she will be paid in the new job." So who is Promontory? Nothing short of an "expert network" of all former government workers who having moved on, are willing to spill the beans about all the secrets of government operations... for a fee of between $1000 and $10,000 per hour. The chart below shows a sampling of all current and former employees of Promontory, explaining why it is a perfect fit for anyone intent on justifying the allegations of those who claim all the SEC does is provide a revolving door opportunity for ex-government workers.

The old 'new normal' precious metals smackdown has made a few appearances since the Cyprus debacle started but this morning's drop is impressive (given the lack of movement elsewhere) as gold drops back below pre-Cyprus levels. There is one 'currency' that is surgung in value though - Bitcoin is now trading at $107.36, up from $46 pre-Cyprus...

While immigration was pretty far down on the priority list at this time last year, recently the topic has taken a front seat in lawmakers’ chambers down in Washington. ConvergEs's Nick Colas notes that policymakers on both sides of ideological spectrum are establishing positions and recommendations for reform, and are familiarizing themselves with some of the lesser-known facts about immigration. In a nutshell, he explains: immigration is not all about border crossings from Mexico and undocumented workers. There are many more figures – and costs – associated with immigration, most of which have palpable and measurable impacts on the US economy. From GDP growth to the health of the housing market, immigration’s influences may not be widely known, but should be in order for policymakers and investors to make informed decisions.

As per rumors first reported in the overnight summary article, the Cypriot finance minister has joined the other rats dumping the sinking island:

CYPRUS FINANCE MINISTER SARRIS SAYS HE RESIGNS
SARRIS SAYS RESIGNS DUE TO ONGOING INVESTIGATION IN CYPRUS
SARRIS SAYS CYPRUS PRESIDENT ACCEPTED RESIGNATION

Investigation? Did he also funnel cash into London ahead of Confiscation Day?

Economists have adjusted their forecasts and it will be difficult for the US data to continue to surprise on the upside. Moreover, there are signs that the economy lost some momentum into the end of Q1 that will likely spill over in Q2. We look at the relatively subdued reaction to the losses that will be incurred by uninsured depositors in Cyprus and recognize that it is far from unprecedented. In the US, the last time uninsured depositors took a hit (50%) was in the IndyMac failure. We show a deterioration of the financial situation in Italy, on top of the political and economic challenges. Lastly, we bring to your attention the deteriorating technical tone for the dollar against the yen and Japanese shares.

It appears like the New Normal is merely a phrase used to describe daily records in virtually everything: the Dow Jones, the S&P, US foodstamps, sovereign bailouts, US total debt, and, today, Euro Area unemployment, which just rose to a fresh all time high 12%. From Bloomberg brief: "Euro-area unemployment rose to a record 12 percent in February and January’s figure was revised up to the same level from 11.9 percent estimated earlier, the European Union’s statistics office said. Jobless rates in January ranged between 4.9 percent in Austria and 27 percent in Greece. While rates in the euro area have risen by 1.1 percent point in the past year, unemployment has fallen by 0.6 percentage point to 7.7 percent during the same period in the U.S." Or said otherwise, European unemployment has now been rising constantly for 22 consecutive months - the longest period for deteriorating unemployment since the early 1990s, which, however, is to be expected for a continent which as we showed yesterday, has now reverted to 19th century growth rates.

• The revolving door continues: Mary Schapiro joins Promontory Financial (WSJ)
• First Peek at Health-Law Cost (WSJ)
• Abe warns over Japan inflation target: warns 2% inflation target may not be reached within two years (FT)
• BoJ's Kuroda tested by divided board (Reuters)
• Nanjing poultry butcher fourth person infected with H7N9 bird flu (SCMP)
• What time do top CEOs wake up? (Guardian)
• Cyprus Seeks More Time to Meet Targets in Talks With Troika (BBG)
• Investors Ignore Negativity at Their Peril (WSJ)
• Apple bows to Chinese pressure (FT)
• One can only laugh: North Korea to restart nuclear reactor in weapons bid (Reuters)
• Visa Demand Jumps (WSJ)
• Bloomberg's refutation of Stockman: yes, yes but... look over there, stocks are up! (BBG)

It is a rhetorical question but what was Goldman doing as AAPL was tumbling from $700 to $428 yesterday? Well, it was telling its clients to buy. And not just buy, but buy with conviction, which of course means Goldman's internal prop flow desk was selling with the same feeling. Today, after AAPL's long suffering momentum chasers have been impaled on a nearly 52 week low, the firm finally cuts AAPL "Conviction Buy" target, dropping it to just Buy, and reducing its price target from $660 to $575. If anyone needed an upside stock catalyst, however brief, Goldman finally ending its conviction selling to the muppets may just be it.

The driver of today's episode of "make the futures levitate" is not so much a rise in the EURUSD as Europe reopens - a very unhappy Europe where Italy's Monte Paschi was already halted down once on news from this weekend it was the first peripheral bank to suffer a depositor "run" - but curiously the USDJPY which after tumbling to under 93 and pushing the Nikkei 225 down by another 1% to just over 12,000 has been ramping gradually all morning to end well above the start of Japanese trading and was back to 93.25 at last check. It certainly is not the European economic news which continue to be about depressionary and getting worse: fresh unemployment record at 12%, final manufacturing PMIs well into contraction and getting worse especially for the doomed PIIGS: Italian PMI dumping even more to 44.5 vs Flash 45.4 and down from 45.8 last, Spain PMI crashing to 44.2, vs flash 46.2 and 46.8 last, UK 48.3 vs Flash 48.7, Germany 49.0 vs Flash 48.9 down from 50.3; France 44.0 vs Flash 43.9 and so on, rumors that the Cypriot Finance Minister is about to be sacked, and most disturbingly, the Slovenia central bank vice-governor Fabijan said that "Slovenia must start credible measures to avoid aid." Where was the last place we heard this.... Oh, yes, Cyprus. The same Cyprus, which paradoxically, is presented by some as the reason for the overnight "rally", with pundits attributing the Troika's "easing" of MOU terms by pushing back the fiscal target from 2016 to 2017 as reported yesterday. How that is even remotely news is shocking since none of the actual austerity measures themselves have been eased. But any goal seeked narrative is fair in the central banks' intervention in the farce formerly known as the "market."