Archive - May 2013

May 29th

Tyler Durden's picture

Meanwhile, In Crude Oil...





Just as gas prices at the pump are about to rise to their highest ever for this time of the year - and further crush an already hurting consumer's disposable income - someone has decided that enough is enough and $95/bbl WTI is just too much. Crude prices just plunged on very heavy volume - just think of the implicit tax cut we will hear of course. We note three small things: 1) how does this fit the growth story that is supposedly driving bond yields higher? and 2) there is a 4-6 week lag between WTI and retail prices so do not expect this drop to ease any pressure in the short-term), and 3) we wonder if this shift is a 'tap on the shoulder' for yet another correlation-driven trade gone wrong.

 

williambanzai7's picture

EURO GHouLS: THeY SuCKeD THe YouTH oF EuRoPe DRy To SaVe THeiR ZoMBiE BaNKS...





Now they are here to help: Prepare for intensive Mandarin lessons for retail, hotel and hospitality trainees and fast track privatization interns.

 

Tyler Durden's picture

What Goes Up, Sometimes Comes Down





For no good reason, equity markets woke up this morning with a "Tuesday" hangover. Perhaps it is the realization that there is no great rotation and bond weakness is a sign of global capital market queasiness (not growth expectations). Perhaps it is a drying up of collateral to cover the over-levered, over-crowded, reach-for-yield trades. Perhaps the whisper of a well-known large hedge fund manager forced to liquidate his $18.7bn portfolio, into a stock market with no capacity to cope with 'negative' liquidity at the margin, are actually true. Or just perhaps it is time for a snap back to reality (the reality of VIX, credit, macro, micro, lumber, and copper perhaps?)

 

Tyler Durden's picture

Cyprus Bank Deposits Plunge By Most Ever During "Capital Controls" Month





Following the improvised and very confused bail-in of the Cypriot banking system in mid/late March, one of the key requirements was to contain the liquidity within territorial Cyprus, and prevent the outflows of critical bank funding liabilities - i.e., deposits - abroad thus causing a waterfall cascade of ever increasing capital needs and bigger and better bailouts. Thus capital controls, which two months after the bailout, are still in place. Judging by just released Cyprus Central Bank data they failed. Because even though the deposit outflow in March, when the fiasco happened, was a moderate €3.8 billion, which the European politicians promptly pointed to as confirmation of a job well done, it was the April outflow that was the jawdropping number. In a month in which deposit flight should have been largely contained, Cyprus banks saw a record outflow of 6.4 billion, or 10% of its entire deposit base, in one month!

 

Phoenix Capital Research's picture

Did Stocks Just Pose a False Breakout?





A false breakout occurs when the market breaks out of a technical formation in one direction then fails to follow through on the move. Looking at the rising wedge pattern in the S&P 500 this appears to be happening now.

 

Tyler Durden's picture

The Casino At The End Of The Universe





Between the actions of the world's central banks and the use of leverage we have built the biggest casino ever built in the history of the world. It is no longer possible to invest. A casino does not have an investment window or an investment game and there is nothing around us but a giant building holding Games of Chance now. You have money and there is now nothing than can be done except to gamble and that is exactly what we are all doing. It will take just one or two rolls on Red when money is lost, more credit demanded and then denied by the House, to cause a seizure in this giant casino. In the end it is almost always leverage that touches off the rush to the exit door and the financial markets are now levered past what we have ever known before.

 

Tyler Durden's picture

Art Cashin Asks (And Answers) If The Fed Has Been Engaging In Stealth Tapering





Those following day to day flow (buys and sells) data of Treasurys and MBS by the Fed, are aware that in the past few months Ben Bernanke's net purchases of MBS have declined modestly. Naturally this is not due to a stated policy of tapering one or more purchasing programs (at least not yet), but due to what appears to have been a drop off in origination, as confirmed by recent plunging mortgage applications data (and which today literally crashed out of bed). So is this net change in Fed flow, in a world in which Fed flow is all that matters (sorry "Stock" purists: 2009 called, they want their discredited ideas back) an indication of stealth Fed tapering? Read on for Cashin's explanation.

 

Tyler Durden's picture

Cash And Tarry: Mortgage Applications Plunge At Fastest Rate Since 2009





In the 'old normal' a spike in interest rates would have sparked an avalanche of 'rational' home-buyers and refinancers to apply for mortgages for 'fear' of the 'never-to-be-seen-again' rates disappearing. It seems, however, courtesy of a Bernanke-trained market, that this surge in rates has pushed many to the sidelines (mortgage applications slipped 8.8% WoW and -23% in the last 3 weeks), we presume waiting for the omnipotent-one to save the day yet again. The year-to-date shift in mortgage applications is now the worst since 2009 and the divergence between home sales and application for a mortgage is growing wider every week (reminding us of another euphoria and exuberance-driven unreality divergence).

 

Reggie Middleton's picture

Blackberries, Apples & Fruit Borne Successitis - The Problem With Excess Profits Is Hubristic Management Tends To Take Eyes Off





Tim Cook was in the media yesterday saying that market share doesn't matter, profits do. Ahem, maybe you should listen more closely to your ex-boss, Steve Jobs!

 

Tyler Durden's picture

The Green(back) Revolution: Why Tesla Is Just A Distraction





Tesla has been outselling specific Mercedes, BMW and Audi models at similar price/quality points, and Consumer Reports has given the car glowing reviews. Is there a broader meaning in this, other than the introduction of a very well-designed luxury automobile? JPMorgan's Michael Cembalest's suggests that the Tesla’s price and its fossil fuel footprint suggest that it’s a distraction regarding the issue of transportation and related environmental efficiencies.

 

Tyler Durden's picture

European Credit Contraction Accelerates, Spanish Loan Creation Craters





There is a simple mnemonic for the Keynesian world: credit creation = growth. More importantly, no credit creation = no growth. And that, in a nutshell is the entire problem with Europe.

 

Tyler Durden's picture

Death By Carry





These are not easy times for the global bond market. We’re looking at US Treasuries market (more below), and reckon this morning’s 10-yr spike to 2.23 is only the start. We could see more aggressive price declines as the curve steepens further. It’s only partly based on the better economic outlook and fears of the QE Taper. Japan banks will be among the biggest sellers due to the volatility and “death by carry”. Forget the stories Japan banks were buyers at the wides.. that’s wishful thinking from Treasury holders long and wrong on the US bond market. Unfortunately, each passing day sees the BoJ's credibility chipped away.

 

Tyler Durden's picture

EU Extends Deficit Deadlines For Most European Countries, Admits Structural Adjustment Failure, Kills Austerity





Moments ago, the following European Commission website hit the interwebs, which can be summarized as follows:

  • EU EXTENDS DEFICIT DEADLINE FOR PORTUGAL TO 2015
  • EU EXTENDS DEFICIT DEADLINE FOR NETHERLANDS TO 2014
  • EU EXTENDS DEFICIT DEADLINE FOR SPAIN UNTIL 2016
  • EU RECOMMENDS LIFTING EXCESSIVE-DEFICIT REGIME FOR ITALY
  • EU SAYS 20 STATES CURRENTLY UNDER EXCESSIVE-DEFICIT PROCEDURES

Translation: the theatrical spectacle of Europe's austerity, which never really took place, is finally over. Going forward political incompetence will henceforth be known as just that: incompetence, and elected rulers will not be able to pass the buck to evil, evil, "austerity." More importantly, Europe has also proven without a doubt, that any "structural adjustments" on the continent are impossible, and that governments are locked in a spend till you drop mode.

 

Tyler Durden's picture

Sallie Mae Splits In Two, Will "Firewall" Student Loan Portfolio In Standalone Company





How do you "extract" shareholder value when everyone and their grandmother knows you are one of the sole public proxies of an epic student loan bubble? You firewall its nearly $160 billion student loan portfolio (including Federal and Private) portfolio and associated origination and servicing exposure in its own public company and spin off the remainder as a separate "consumer banking" company. That is what Sallie Mae has just done.

 

Tyler Durden's picture

Frontrunning: May 29





  • South China Sea tension mounts near Filipino shipwreck (Reuters)
  • OECD cuts economic forecasts as eurozone drags on growth (FT)
  • Switzerland frees banks to settle U.S. tax evasion cases (Reuters)
  • U.S. Says Firm Laundered Billions (WSJ)... no, it's not HSBC, also: Free Corzine!
  • Ardent conservative Bachmann to not seek re-election to Congress (Reuters)
  • Russia faults U.S. over 'odious' Syria rights resolution (Reuters)
 
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