Archive - Sep 25, 2013

Unfortunately for almost every politician in the US, the way-back machine is fully functional in our new technologically miraculous normal. These are "strange times," CNBC's Rick Santelli notes, as he begins to systemically destroy the credibility of all the gaping wide mouths of the politicians (on both sides of aisle) that doth protest too much over the debt-ceiling debate. Santelli is breathless in his rage at the hypocritical comments of the Democrats based on their views from 2006 (when "W" was in the White House) as they decried the "rubber-stamping" of fiscal irresponsibility (raising the debt ceiling) of the Republican Congress. His ire raises as he shines a light on Harry Reid (Dem.) and Charles Grassley (Rep.) among others.

Whereas Americans last quarter had net worth of $70.3 trillion, as a result of a small definition revision, the now have $73.5 trillion. Revisionist Definition wealth for everyone!

Earlier in the week, we warned the mortgage settlement that JPMorgan might face could reach $20 billion. Well, 'officials' at the DoJ according to AP have stated that:

• JPMORGAN NATIONAL SETTLEMENT MAY REACH $11B, AP SAYS
• JPMORGAN PACT MAY INCLUDE $7B CASH, $4B CONSUMER RELIEF
  

What is most surprising is that JPM did not arrange the $11 billion "settlement" as $12 billion in consumer relief and a $1 billion cash payment from the government.

UPDATE: CNBC Damage Control - Story was "misunderstood" and "misleading"...but not denied... CNBC is to Wal-mart as Hilsenrath to the Fed

 Welcome to the new normal recovery... if ever there was a headline that summed up the idiocy of the mal-invested distorted new normal, Wal-Mart just managed it:

*WAL-MART CUTTING ORDERS (In Q3 & Q4) AS UNSOLD MERCHANDISE PILES UP IN U.S.

So, it seems the "if we build it (or stock it), they will come (and buy)" mentaility has failed yet again... As we noted before, as goes Wal-Mart, so goes America...

While Cruz's speech was entertaining (and gained media attention), there is one thing they agree on

• *SENATE VOTES 100-0 TO ADVANCE BILL TO KEEP GOVERNMENT OPEN

Which means the Senate invokes cloture on the motion to defund Obamacare - setting up 30 hours of debate before another vote on the motion (Cue Cruz again?)... but

*CARNEY REITERATES OBAMA WILL NOT NEGOTIATE ON DEBT CEILING

Are too many of our most talented people choosing careers in finance - and, more specifically, in trading, speculating, and other allegedly “unproductive” activities?

There appears to be 3 big lies (among many other smaller ones) currently driving the flow of speculative capital around the world. First, Bernanke said the Taper was off due to 'worsening' financial conditions (except financial conditions remain very near all-time highs). Many mean-reverting extrapolators are calling for a renaissance in emerging markets and Asian growth that will lead us out of this 'temporary' slowdown (except consensus growth expectations for Asian economies are tumbling in reality) and most people assume US economic 'escape velocity' growth is around the corner and the Fed will normalize policy 'just right' (but a glance at Eurodollar futures suggests the market is far more dovish than previous tightening cycles would suggest). With normaliation implying 600bps rates rises, we suspect the reality of these 'lies' will come back to bite sooner rather than later.

It is somehow fitting that on the day when even more undisputed evidence is revealed, surrounding the most brazen market manipulation scheme in history - one involving the "unmanipulable" Libor benchmark rate which serves as the foundation for hundreds of trillions in interest rate sensitive instruments - that the CFTC would also come out moments ago, and announce that in its long-running investigation of alleged manipulation in the silver market... there is absolutely nothing wrong.

It's possible that the liberal's ultimate objective of achieving a single payer system, might well prove to be their undoing.

One would think following the ever louder public complaints against the use of drones that the Obama administration would take the hint and perhaps taper their remote controlled less-than-surgical-strike use. One would be wrong because as we have learned, the president has instead opted to double down and expand drone use by branching out into such manned legacy fighter jet territory as remote-controlled F-16s.

It's like Deja Vu all over again...

Having taken the floor at 2:41ET Tuesday afternoon,. Senator Ted Cruz's anti-Obamacare filibuster-lite has now become the 4th longest filibuster in Senate history, as The Washington Times repots, topping the 1908 speech by Sen Robert La Follette Sr.. Overnight, he read excerpts from both Ayn Rand's “Atlas Shrugged” and from Dr. Seuss’ “Green Eggs and Ham” on the floor, cited approvingly the words of wisdom from actor Ashton Kutcher and hit TV show “Duck Dynasty." Mr. Cruz will not be able to reach the third-longest filibuster in history, a 22-hour and 26-minute affair in 1953, because under the rules, the Senate will have to adjourn its session at noon.

When skimming and speculation are more profitable than actually increasing the production of goods and services, the discipline and incentives of a market economy are distorted to the point of no return. The only way to restore natural market discipline is to let the cost of credit rise to a market-discovered price, force all speculators to absorb the losses resulting from their bad bets, and let the risk of losses discipline lenders to adjust loan portfolios and interest rates to reflect the risks of rising rates and defaults. "Growth" that depends on manipulated interest rates and easy credit is a sand castle awaiting the rising tide; its destruction is assured.

• Derivatives Broker 1: Make 6m go lower! They r going up. [Senior yen trader] will buy you a ferrari next yr if you move 3m up and no change 6m (February 29, 2008, via text message to personal mobile phone)
• Yen Desk Head: Lord Baliff, I would suggest a lunch over golden week. Monday or Tuesday if you are around. *** As for kick backs etc we can discuss that at lunch and I will speak to [Senior Yen Trader] about it next time he comes up for a chat.

Why is JCP down nearly 6% 16% this morning? Here's why.