Archive - Oct 12, 2014

It appears the weakness in US equity markets (the last of the hot money flow darlings to be hit) is now rippling back down the bubble-complex of world equity markets. Dubai, infamous for its huge surge in the last 2 years and 36x over-subscribed IPO of a company with no actual operations - which marked the top before a 30% collapse - was open for business today and crashed 6.5%. This the Dubai Financial Markets General Index biggest daily drop in 14 months... the ripple effect is beginning.

By now it is clear to everyone that the force-feeding of free-money into financial markets by The Fed et al. has led to a scale of financial repression never before witnessed as bond yields for even the riskiest of risky names collapse to record lows and cheap-financed share buybacks raise leverage to record highs and support an ever more fragile equity wealth creation machine. As Blackrock (and many others) have recently proclaimed, the corporate bond market is "broken" and the risk posed by investors trying to dump bonds is"percolating right under" the noses of regulators; so it is with grave concern we suggest the following two charts - showing the massive out-sized holdings of PIMCO's funds in the high-yield and emerging market debt markets leave a bond marketplace in fear that forced sales via redemptions are the straw that breaks the 'central bank omnipotence' narrative's back...

Qatar may be tiny, but it is having a major impact across the Arab world. By propping up violent jihadists in the Middle East, North Africa, and beyond, while supporting the United States in its fight against them, this gas-rich speck of a country – the world’s wealthiest in per capita terms – has transformed itself from a regional gadfly into an international rogue elephant. Using its vast resources, and driven by unbridled ambition, Qatar has emerged as a hub for radical Islamist movements. In doing so, Qatar is destabilizing several countries and threatening the security of secular democracies far beyond the region. For the sake of regional and international security, this elephant must be tamed.

It's so good to be the cleanest dirty shirt, right? Wrong...

The war of words between Europe's unelected monetary-policy dictator Mario Draghi and Germany's "but it's us that pays for all this" Bundesbank has been gaining momentum since Jens Weidmann penned his Op-Ed slamming Draghi's OMT 'whatever it takes' as "too close to state financing" in 2012. A week ago, Weidmann stepped up the rhetoric by claiming ECB policy is "hostage to politics" and has lost its indepdendence - warning Draghi's dictatorial policies were leading Europe down a "dangerous path." But now, as pressure grows from the Spanish (record unemployment, record bad debt, record low yields), Italian (record unemployment, record debt-to-GDP, record low yields) and French (record unemployment, treaty-busting-deficits, record low yields) for Draghi to monetize more assets, he has struck back in Focus magazine, blasting Weidmann is "impossible" to work with because the Germans "say no to everything." Dis-union...

Hearing of IMF interventions generally conjures up images of developing nations (and the occasional Eurozone peripheral economy of late) facing some kind of financial difficulty. But it was actually Great Britain, the cradle of the industrialized world, which in 1976 became one of the first countries ever to be "bailed out" by the IMF in the modern sense of the term.

What if there was some degrees of freedom in the centrally planned capital markets that rational, non-emotional and non-ideologically-laden thinking could shed light on ? Here is such an attempt

Centers for Disease Control and Prevention Director Dr. Tom Frieden will provide an update at 11 a.m. ET Sunday on the response to the second case of Ebola in Dallas, the first person-to-persion transmission on US soil. As reported earlier, a health care worker, who cared for Liberian Ebola patient Thomas Eric Duncan at Texas Health Presbyterian Hospital, tested positive for the disease, hospital officials announced Sunday. Duncan died on Wednesday. The CDC will conduct confirmatory tests on Sunday and share the results after the patient, who has not been identified, is notified, according to a CDC statement.

And then there was #2. A few hours ago, Texas Health Presbyterian Hospital, announced that a health care worker who cared for dying Ebola patient Thomas Eric Duncan, has tested positive for the virus after a preliminary test, officials said early Sunday. If confirmed, it would be the first known person-to-person transmission of the disease in the United States. The name of the patients is currently unknown, what is known however, is that the worker was wearing full protective gear when treating Duncan, suggesting - yet again - that there is a transmission mechanism which is not accounted for under conventional protocol.

Coincidence … Or Something More?