Archive - Apr 3, 2013

When it comes to "procuring" alternative currencies, one can plug in their computer and sit there and wait, or one can do this...

Why has the Euro-zone fallen back into recession, and why can't it shake of its seemingly never-ending crisis? Is there light at the end of the tunnel - or is that an approaching train? A walk through the Euro-zone with charts of macro-economic data reveals the crisis is far from over. Instead, most trends are pointing towards further deterioration - facts as opposed to the hope and anecdote that we are bombarded with on a daily basis. While perusing these charts, consider EU President Barroso's comments just today that, "the worst of the crisis is over." You decide.

As we wait with bated breath for the BoJ news this evening, and while the world stares in jealous amazement at the Japanese stock market's gains and infers that things must be economically awesome in the island nation, the sad depressing truth is - things are worse, much worse, as this series of images from Sanya (or Tokyo's skid row) indicates. The Sanya district in the north-east of Tokyo was taken off the map 40 years ago, but if you can find it you'll discover many of the city's 15,000 homeless people.

A lot of things have gone wrong over the past few years, but the seeds were planted many years ago. In the form of pressure for more people having the “right” to own their properties, even if they did not fulfill the traditional mortgage criteria – hence subprime. In the form of enormous “entitlements” to not just poor, but also middle-class people in the welfare states – hence ballooning deficits and debt. In the form of a Euro, a grand, political project with no practical foundation – hence crisis after crisis, with the dominoes stretching far into the distance. For sure, a lot of financial institutions took advantage of the hands they were dealt. They are not without guilt and responsibility for the current mess. But the real problems lie not in people trying to take advantage of whatever conditions they operate under. The real problem lies in the framework that is created by politicians, preventing free markets to deal with excesses in the way capitalism always does. Cyprus is a very good example of this. The problem is not Cyprus. The problem is the Euro.

After months of posturing, promising, prevaricating, and proclaiming; the time is rapidly upon us where the central planner of the world will have to actually make actions rather than words. As SocGen notes, Central Bank decisions at the BoJ, ECB and BoE will take centre stage tonight/tomorrow but it is the BoJ announcement that is most highly anticipated after the epic jawboning. SocGen’s Sebastien Galy: "Only the truly brave can feel confident trading into the BoJ event"; adds, "It is not completely clear what economic consensus is expecting in terms of BoJ decision apart from broad outlines." Given positioning, the risk of disappointment and short JPY covering cannot be underestimated should Kuroda underdeliver.

The breakdown of sound money has now finally generated a cruel endgame. The fiscal and central banking branches of the state have endlessly bludgeoned the free market, eviscerating its capacity to generate wealth and growth. This growing economic failure, in turn, generates political demands for state action to stimulate recovery and jobs. But the machinery of the state has been hijacked by the various Keynesian doctrines of demand stimulus, tax cutting, and money printing. These are all variations of buy now and pay later - a dangerous maneuver when the state has run out of balance sheet runway in both its fiscal and monetary branches. Nevertheless, these futile stimulus actions are demanded and promoted by the crony capitalist lobbies which slipstream on whatever dispensations as can be mustered. At the end of the day, the state labors mightily, yet only produces recovery for the 1 percent.

As previously reported, former Goldman prop trader and MIT-grad Matt Taylor, 34, handed himself over to authorities earlier today and subsequently pled guilty in Federal Court to one charge of wire fraud "saying he exceeded internal risk limits and lied to supervisors to cover up his activities." He subsequently posted bail in the amount of a $750,000 bond with two co-signers. His sentencing hearing is set for July 26, when he faces a prison sentence between 33 months and 41 months and a fine of $7,500 to $75,000. He will likely get the lower end of both wristslaps, and come out from minimum security prison, that is assuming he even spends one day inside, to some cash stashed away in an offshore bank account (not Cyptus) courtesy of his many years manipulating massing the market first at Goldman and then at Morgan Stanley. And manipulating massing he did, because courtesy of Reuters we now know the full details of his transgressions.

Chosun TV is reporting that South Korean military have lost contact with two North Korean submarines that left their naval base in Hwanghae Province a few days ago. There has obviously been a lot of changes between last week and now and South Korean military officials suggested that while maneuvers in February were nothing meaningful, now it is provocation. The two 'torpedo' subs are small 130-ton, 30-meter, 10-man machines that can stay submerged for three-to-four days.

The term “Story stock” used to mean a company with little more than a sheaf of press releases and a glitzy narrative about its future prospects.  Now, ConvergEx's Nick Colas notes that pretty much any stock with a fighting chance of outperforming needs to have a “Story” to cut through the clutter of a noisy macro-driven market.  Story-less equities where the valuation is cheap simply dawdle, while theoretically expensive story stocks sizzle loudly.  So what makes a good story?  The answer is not only “Blowin’ in the wind,” it is as old as the hills.  CEOs matter intensely – they tell the story, and in the best cases they are the “Hero” at the center of it.  Other types of narratives: “New Blood”, “Resurrection”, and “Conan the Barbarian.”  And even with all these categories, Colas reminds us that we can’t forget that the U.S. equity market is essentially one large story stock, driven by a “Hero” figure – even if you don’t consider Chairman Bernanke is the same league as Moses or Ironman. Of course, we don’t know how this particular “Story” will end.  We don’t call someone a “Hero” until they finish the cycle and return with their gifts and teachings. After all, if creating +$2 trillion out of thin air isn’t some powerful magic to fight off the forces of evil, we don’t know what is.

Whenever discussion over North Korea arises in Western circles, it always seems to be accompanied by a strange mixture of sensationalism and indifference. The mainstream media consistently presents the communist nation as an immediate threat to U.S. national security, conjuring an endless number of hypothetical scenarios as to how they could join forces with Al-Qaeda and attack with a terroristic strategy. In the midst of the latest tensions with the North Koreans, I have found that most people are barely tracking developments and that, when confronted by the idea of war, they shrug it off as if it is a laughable concept. “Surely” they claim, “The North is just posturing as they always have," creating a social and political atmosphere surrounding our relations with the Asian nation that places both sides of the Pacific in great danger. The skeptics argue that we will never get to this point, though, because North Korea has brandished and blustered many times before, all resulting in nothing. We see recent events being far different and more urgent than in the past. All that is needed to instigate an event on the Korean Peninsula are tightened sanctions.

It is hardly the world's best kept secret that it will be a rather chilly day in a very exothermic Hades before a member of Zero Hedge is invited to a central bank press conference to ask a legitimate question. Which is why we are delighted that Scott Solano with the German news agency DPA, who will be at the Oracular Draghi's public appearance tomorrow, has been kind enough to solicit Zero Hedge readers' questions for the former Goldmanite tasked with inflating away Europe's ~$10 trillion debt overhang problem, which he would then ask by proxy (assuming he is not bound and gagged once it leaks to the Frankfurt funding fortress that what he asks may be... provocative).

Treasuries closed at their lowest yield of the year - around 1.81% - and the Dow ended down triple-digits as the S&P saw its biggest down day in six weeks. Volume was 25% above average. The rally's leaders were smashed - Homebuilders suffered the most on the day - now down 4% post Cyprus (along with Materials) but it is Financials that have been slayed post CCAR. The big TBTFs (MS and Citi worst) are down 10% from pre-Cyprus levels. The Dow remains magically green post-Cyprus but the rest of the major indices are down (with Trannies leading the drop). VIX popped back above 14% but stocks are catching down to it. JPY strengthened from early in the US day - giving back all the weakness that the BoJ jawboned overnight and commodities were sold across the board (even as the USD did not move greatly) suggesting more liquidation-like moves. A late-day VWAP-reversion attempt (using HYG and EURJPY) failed which suggests there is real selling-pressure (something we have not seen in recent declines).

#BREAKING: N. Korea army says it has final approval for nuclear attack on US

— Agence France-Presse (@AFP) April 3, 2013

As we noted yesterday, an emerging bird flu that is mysterious and deadly is haunting China. "I can tell you this thing is real and definitely has the markings of being a killer," says Jason Tetro, coordinator of the Emerging Pathogens Research Centre in Ottawa. Memories of China’s repression of news during its tumultuous 2002-03 SARS outbreak could fuel panic and unrest at home and suspicion in the West. A Tuesday editorial in China Daily reminded readers that China’s minister of health and the mayor of Beijing were dismissed 10 years ago “for trying to cover up the disease.” This might explain why FluTrackers, a U.S. website that hosts a global volunteer disease-surveillance network, has been suffering renewed denial-of-service attacks that it says are originating in China. The makeup of this virus is similar to one that researchers have suspected could be the next pandemic. However it’s not quite there yet.

Say what you will, it sure is fun to agitate the fiat worms by saying the word: Bitcoin!