Archive - Aug 9, 2013

The Greeks have been in recession now for six long years. While economies around in neighboring EU countries seem as if they are shining with just a glimmer of hope that the recession is over, the Greeks are not partaking in any of that.

President Obama is due to answer some supposedly unprepared questions from a press-corps not 'specifically' benefiting from his questions at 1500ET. From 'pissed-off about Putin' to flogging the American Dream once again and the wide-spread closure of US embassies... we are sure there'll be some interesting off-teleprompter comments for all...

Do you see what happens Larry when you float a strategic trial balloon or two? Your odds literally surge, at least according to Irish bookmaker Paddy Power, which in the absence of InTrade has become the only market polling venue where pundits put money where their mouth is (as opposed to countless clueless Op-Eds written by every self-proclaimed Fed expert in existence). Where two weeks ago, on July 24, Larry "the hawk" Summers was a long 20% odds challenger to Janet Yellen, who was a solid 75% favorite to become the next Fed chair, since then Yellen's odds have crumbled to just 33% currently, while Summers has exploded higher and after peaking at 60% two days ago has climbed even higher, and is a 66.6% (appropriately enough) favorite currently. Time for the perma-Doves to panic yet?

"The rich are feeling better about their prospects and starting to rediscover real estate as a place to park money," notes one analyst who was seemingly not alive 7 years ago, adding, "the stock market has created a tremendous amount of wealth, and that's being put into homes." It seems we are destined to 'never' learn that too much of a good thing might just not be... a good thing. Following President Obama's homeownership is patriotic roadshow this week and his almost too ironic to be real comments that the U.S. has "got to turn the page on this kind of bubble-and-bust mentality that helped to create this mess in the first place," it appears we have gone perfectly 360 as once again home prices for the wealthiest are soaring. Homes priced at more than $1 million lost about 46% of their value during the housing crash; since then, based on Bloomberg's survey of Zillow data, their value has more than doubled.

 Could it be coincidence that the worst Crisis in years suddenly went away right as the women with her finger on the “bailout” button needed to convince German voters that she’s doing a great job?

There are real-world consequences to over-issuing credit and currency. Eventually this leads to a bidding war for trust: Whose credit/cash will be trusted to retain its purchasing power? There is a grand irony here, of course; as issuers of credit/cash attempt to debase their currency to boost their exports, their debased currency buys fewer real-world resources.

When it comes to the programmed, centrally-planned Chinese economy, the academics who pre-determine the daily lives of over one billion citizens and report randomly generated gibberish when they have to validate to the world the success of their macro experiment, go straight and by the textbook. The same theoretical textbook taught in every Keynesian class which says "if you build it, they will come." Alas, as even the WSJ has discovered, when it comes to China, if you build it, they are no longer coming... and are in fact leaving.

The constitutional legacy of Barrack Moebama (Der FUBAR).

Since mid-July, the S&P 500 is practically unchanged having ebbed and flowed on lower and lower volumes. But one thing that is very clear in the last few weeks, investors seem to have been conditioned to sell early and BTFD late... The question we have is (given the S&P is approaching its worst week of the year), when everyone 'knows' this is the strategy, when does it become self-defeating?

It hasn’t been a great year for Chesapeake Energy, just coming down from a management meltdown and now giving up on its leases in New York over the state’s ban on high-volume fracking. It’s a battle that’s been on for two years over thousands of acres of natural gas leases in New York, where fracking has been banned for five years. The problem was that the landowners leased the acreage to Chesapeake before the advent of hydraulic fracturing, and now they don’t want these leases extended under the original terms, according to a report by Reuters. The report says that Chesapeake has now notified the landowners that it is giving up the fight, and that the decision should be finalized next week. But there’s more to this than a simple court case...

A shroud of mystery has surrounded American whistleblower Edward Snowden's whereabouts since he received temporary asylum in Russia last week, but migration authorities have let slip that he is not in Moscow... "We don't have these records. I don't have any such information. He's not in Moscow."

Those seeking the definitive, one-stop fund flow heatmap covering the key paper asset classes over the past 10 years, are advised to bookmark this page.

... what has been different about the current negative GOFO episode is that while in the past GOFO spiked negative and promptly reverted to normal, short-end GOFO rates (1-3 Month) have been negative now for the longest period on record: 25 consecutive work days. And it's only getting worse: after the 6 Month GOFO rate also slid below 0% in mid-July, only to recover positive for the next two weeks, as of today it has again turned negative for the second day in a row while the short-end procurement situation has gone from bad to worse.

While outlining the ridiculous spectacle of the last 24 hours news flow on JCPenney is useful for some, a step back to view this charade for what it is - a hedge fund manager massivley under-water, a company careening into bankruptcy, a board desperate to show it has any relevance, and a most senior creditor (Goldman Sachs) chomping at the bit to securitize the firm's T-Shirts and small appliances... the entire 'bounce' from yesterday has been retraced as Ackman and JCP's board fling insults at each other... JCPanic has been downgraded to JCPandemonium... on its way to JCPoof...

Gross: Strategists/writers I follow? Dalio, Durden, Bianco, Arnott, Aitken, Santelli, Grant, Grantham, Inker, Marks, Quaintenance & Brodsky

— PIMCO (@PIMCO) August 9, 2013