Archive - Jun 13, 2013

Bloodied, but here to help...

Emerging from a hearing with NSA Director Keith Alexander, Reps. Mike Rogers (R-Mich.), chairman of the Intelligence Committee, and Dutch Ruppersberger (D-Md.), the senior Democrat on the panel, said Snowden simply wasn't in the position to access the content of the communications gathered under National Security Agency programs, as he's claimed. "He was lying," Rogers said. "He clearly has over-inflated his position, he has over-inflated his access and he's even over-inflated what the actually technology of the programs would allow one to do. It's impossible for him to do what he was saying he could do... I hope that we don't decide that our national security interests are going to be determined by a high-school dropout who had a whole series of both academic troubles and employment troubles," Rogers said.

Feel like you've seen this all before... you have...

We now know that the US is not the cleanest dirty 'economic' shirt but it seems that the "well, where else are you going to put your money?" argument remains in full 'myopic' swing. The problem - we've seen this suspension of belief before...

Being poor is like a game of poker where if you lose, the other players get to screw you. And if you win, the dealer screws you. A bunch of you reading this are among the 45 million “working poor” in America, and if you’re not, you know somebody who is. People are quick to tell you to pick yourself up by your bootstraps and just stop being poor. What they don’t understand is the series of intricate financial traps that makes that incredibly difficult...

What you hear is a giant hissing sound. And what you get is capital destruction and wealth transfer.

... Is that it is for temporary workers.

NSA Leaks Help – Rather than Hurt – the United States

Following the 3 and 10 year auctions in the last two days, today's 30 Year $13 billion reopening completed the trifecta of ugliness, pricing at a surprisingly wide 3.355%, or three whole basis points above the When Issued, which traded at 3.324% at 1pm - the biggest tail in a long time. It was also the highest yield for a 30 Year since March 2012. The internals were not pretty either - the Bid To Cover coming at 2.47, well below the TTM average of 2.59 but hardly the massive BTC collapse that we saw in yesterday's 10 Year. And just like yesterday, the Directs ran for the hills taking down just 8.5%, compared to 15.2% in the past year average, Indirects taking 40.2% and 51.3% or so left for the Dealers who will be happy to stock up on some more collateral.

There's no way to sugarcoat the dismal performance of the precious metals in recent months. But a revisitation of the reasons for owning them reveals no cracks in the underlying thesis for doing so. In fact, there are a number of new compelling developments arguing that the long heartbreak for gold and silver holders will soon be over.

$1.4 trillion in QE bought a bear market for Japan. Good luck to the rest of the QE crowd.

By 2025 the drone industry will employ 100,000 people and be worth $82 billion globally, as it is not just about spying anymore...

When it comes to the validity, accuracy and honesty of government-sourced data, sadly there is much to be desired in the time of the New Normal, when governments have made it very clear they will resort to any measure to boost confidence - from the wealth effect to flagrantly doctoring economic (dis)information. Luckly for now at least, the private sector provides a somewhat credible alternative, although even that is rapidly being subsumed by the government apparatus (see ADP morphing into BLS-lite). Still, it is a useful data point for those who still care about the anachronism known as "fundamentals." So in order to supplement the retail data disclosed earlier which according to some was the "most important retail spending" report in years, one useful counterpoint is sales data as disclosed by credit card processors such as MasterCard (sadly often hiding behind subscription paywalls). Here are some highlights of what a parsing such a recent report reveals, courtesy of Bloomberg.

What do NYU Stern School of Business, world renknown professors of risk and analytics, and BoomBustBlog have in common? Wild horses couldn't drag a penny of our money through the French banking system!

World trade volume growth is languishing at a mere 1.3% YoY - a level only seen worse during the 2000/1 and 2008/9 global crises. Central banks have shot their wads to the point of no return. Governments have hit a peak-debt wall of fiscal irresponsibility. So what's left in the great depression playbook... why protectionism of course. As Bloomberg's Niraj Shah notes, global trade protectionism has surged to its highest since the financal crisis according to Global Trade Alert. As Simon Evenett notes, the past 12 months have seen a quiet, wide-ranging assault on the commercial level playing field. When protectionist dynamics were viewed as a compelling threat to the world economy in early 2009, defenders of an open trading system took up arms. They would be wise to do so again before international commerce fragments further along national lines.