Archive - Sep 2013

After strong performance for the last 3 months as investors around the world turn their eye towards Europe as the hot-money inflow area for clean dirty shirt macro tourists, the core of Europe's hope, Germany, has seen its equity market stumble a little recently. Since Monday alone, the DAX is down 2%, underperforming such stalwart economies as Spain and Greece. The reason, aside from international money flows and "war-" and "Taper"-premia, appears to be worries that Merkel may be losing popularity. After 17 million watched the German debates on Sunday night, opinion polls show Merkel's opposition, Peer Steinbruck, surged in popularity...

Yesterday, it was the Senate committee on foreign relations, today it is the House committee on foreign affairs' turn. Hagel, Kerry, and a seemingly begrudging General Dempsey trudge across the street to re-pitch the 'surgical, 90-day minimum, no-well-maybe-some-boots-on-the-ground' "use of force in Syria," and "weighing the Obama Administration's Response."

It is likely that he does, as he is Chinese and was a Chinese refugee who fled to Hong Kong with his family to avoid the perils of war. Refugees who flee from their homeland to start new lives in other countries tend to have a deeper appreciation of and understand the importance of owning physical gold.

European sovereign bond spreads are notably wider on the day as anxiety over Berlusconi buggering-up Italian politics' status quo once again sent investors scurrying from risk-assets early on in the European day. Italian stocks were down 2% (and the rest of themarket down around 1%) before McCain's confirmation of a 'no-vote on narrow scope' seemed to trigger bigger-deficit-spending exuberance in stocks in the US and Europe. The USD was sold (Taper-off) and Treasuries bid which sent EUR higher and AUD surging (AUD's best 3-day run in 21 months!!). European stocks turned back higher in a ridiclously correlated manner to US equities leavingh only Italy red by the end of the day.

We have yet to see a western newswire confirmation of this breaking news from the Russian news site RIA, but if true, it likely means that contrary to some speculation that Putin is leaning toward an diplomatic agreement over Syrian strikes, the reality is just the opposite. From RIA, Google translated:

• U.S. SECRETARY OF STATE JOHN KERRY IS NOT TO ARRIVE IN PETERSBURG SUMMIT G20 - diplomatic sources

Take it with a grain of salt until there is secondary verification.

President Obama's speech last during the 50th anniversary of MLK may seem sadly ironic now. As he noted, "Dr. King explained that the goals of African-Americans were identical to working people of all races: decent wages, fair working conditions, livable housing..." but the facts are that, as Bloomberg reports, while, for most Americans, the real estate crash is finally behind them and personal wealth is back where it was in the boom. For blacks in the U.S., 18 years of economic progress has vanished, with a rebound in housing slipping further out of reach and the unemployment rate almost twice that of whites. The homeownership rate for blacks fell from 50% during the housing bubble to 43% in the second quarter, the lowest since 1995. The rate for whites stopped falling two years ago, settling at about 73%, only 3 percentage points below the 2004 peak. As Rev. Alvin Love, who knew Obama in the 80s notes, "it's going to take a generation to get back to the point where homeownership can build wealth in this community."

Apocalypse WTF!

Late last night news broke that the Senate Foreign Relations Committee had proposed a resolution for US involvement in Syria which among other things, would limit Obama's Syrian military strike - whose "clinical" purpose and intentions are still very much unclear - to 90 days. As reported earlier, Republican war hawk John McCain said he would not support the resolution, arguably because he hopes to see a wider, more spread out campaign, one which would certainly infuriate Russia and China. Or a simpler reason: the usual bipartisan breakdown in Congress strikes again. Moments ago, yet another republican who previously said he was for Obama's campaign following Boehner's support, the committee's top republican Bob Corker got cold feet, and as Politico reports, may delay if not scuttle the Senatorial vote altogether.

The following chart from Bank of America shows that while as a result of record low interest rates housing affordability until very recently was at record highs (if mostly for those with access to subsidized REO-to-Rent loans or the 60% "all cash" flippers/buyers), this index has plunged in recent months, is back to 2008 levels, and has effectively trimmed its spread to the long-term historical average by half.

It seems the exuberance of a recovering housing market has spread not just to Ford, Toyota, and GM this morning but to the luxury-end of the 'renaissance'-ing auto industry... Because nothing says 'recovery' like a $4.4 million, 750 horsepower, 6.6 liter V12 'Batmobile'-style Lambo...

UPDATE: The entire Boehner-based drop has been retraced. It would appears that one should sell on war but buy on even moar war... which makes some idiotic sense since a longer-protected episode will indeed provide the deficit surging room for moar QE.

It seems perhaps Senator McCain missed the most salient (surgical strike, non-regime-change) points of John Kerry's compelling case yesterday and has decided that:

US REPUBLICAN SENATOR JOHN MCCAIN SAYS DOES NOT BACK SENATE PANEL DRAFT RESOLUTION AUTHORIZING USE OF FORCE IN SYRIA

Maybe in order to deter McCain's strategy of going in blind "all in", raising all the way to nothing short of WWIII, someone should advise the confused presidential candidate he is no longer playing poker on his iPhone

Because latetly there has been some confusion that the US is "energy independent"...

Ahead of tomorrow's ever-so-friendly G-20 meeting in St. Petersburg - where the US Secretary of State hopes that "the Kremlin has a change of heart," - Russia's President Putin just raised the rhetoric. As Reuters reports:

• PUTIN ACCUSES U.S. SECRETARY OF STATE KERRY OF LYING TO CONGRESS ABOUT AL QAEDA'S ROLE IN SYRIA CONFLICT
• RUSSIAN PRESIDENT PUTIN SAYS U.S. CONGRESS HAS NO RIGHT TO "LEGITIMISE AGGRESSION" AGAINST SYRIA

With the Moskva sailing into the Med along with many many others, it seems as Obama just admitted during his Sweden press conference, [on Putin:] "We've kinda hit a wall on additional progress"

With Syrian strikes looking to be a 90-day minimum 'surgical strike' and being supported by the US Congress, it is hardly surprising in this bad-is-good-news 'opposite' world, that both precious metals and crude oil prices are getting slammed lower this morning...