Archive - Oct 21, 2014

Ebola Inside...

While President Obama has declared his experts say banning travel from the Ebola-stricken West African nations is not the optimal route to stopping the deadly virus' spread in the US, Homeland Security has a different plan as  Rep. John Conyers comments:

*CONYERS: EBOLA NATION TRAVELERS CAN ONLY GO THROUGH 5 AIRPORTS
*U.S. TRAVEL RULE WOULD AFFECT LIBERIA, SIERRA LEONE, GUINEA

Good thing Ron Klain is involved in the decision-making process... oh wait... But in irony of ironies, Rwanda has started screening US and Spanish arrivals fo Ebola too...

Sweden's military has announced that if it finds a suspect foreign vessel in the Stockholm archipelago, it is prepared to force it to the surface "with weapons if necessary". "Our aim now is to force whatever it is up to the surface... with armed force, if necessary," he added. He added that submarines are "extremely difficult" to find, and that Sweden has never succeeded in the past when it came to tracking them down. "And no one else has either," he added.  If the sub is indeed Russian, it would be quite a hit for Sweden, which in more than a decade of hunting Russian U-boats in the 1980s and early nineties, never succeeded in capturing one, except in 1981 when the U137 ran aground several miles from one of Sweden's largest naval bases, triggering an embarrassing diplomatic stand-off for Russia.

Presented with no comment...

Fast forward to last night, when instead of the much hoped for Chinese GDP drop - because it would certainly unleash the greatly delayed Chinese liquidity firehose so hoped for by all the BTFDers who need at least once central bailout per day to keep up the charade - China reported GDP which beat expectations, leading to many sad faces on Wall Street, and forcing Reuters to leak the infamous ECB buying corporate bonds article, since refuted, which served as the overnight ramping catalyst. So what is the "explanation" for this unpleasant, for once, economic beat? Why, the weather of course!

Existing Home Sales bounced back from the worst miss in 2014 in August to print 5.17mm SAAR - the highest since September 2013. Of course the surge is driven by Condos/Co-Ops (up 5.2%) rather than single-family homes (up 2.0%) and median home prices are the highest ever for a September at $209,700. It was not all ponies and unicorns though as Midwest saw sales plunge 5.6%. NAR's Larry Yun has some crucial insight for why home sales are rising..."Economic instability overseas is leading to volatility in the stock market and is causing investors to seek safer bets [in housing]," so we assume he is disappointe dby the 1000s of Dow points we have surged off last week's lows?

Clearly, Leung Chung-Ying, Hong Kong's embattled leader, did not get the Jean-Claude Juncker memo that "when things are bad, you have to lie." As The NY Times reports, Leung - rather stunningly - said overnight that it was unacceptable to allow his successors to be chosen in open elections, in part because doing so would risk giving poorer residents a dominant voice in politics. Instead, rather unsurprisingly, he backed Beijing's position that all candidates to succeed him as chief executive, the top post in the city, must be screened by a "broadly representative" nominating committee appointed by Beijing, and offered several thinly veiled warnings on Monday that it was risky for the protesters to try the patience of the national authorities.

Moments ago, McDonalds not only released earnings and revenues, both of which missed - something which was largely expected since the backward looking data had been telegraphed by MCD's recent global selling collapse - blanketed by atrocious commentary, but it disclosed its September global retail sales which were for lack of a better word, a disaster, after reporting global sales which dropped 3.8%, below the 3.2% expected, and the worst global month since at least 2003. The pain was everywhere, with Europe plunging 4.2% (est -0.9%), Asia down 7.5%, and the US down a whopping 4.1%, far below the 2.8% expected, and also the worst month in over a decade.

The awful news overnight of Total CEO Christophe de Margarie's death in a freak plane crash caused by the jet hitting a snow-plough on the runway has taken a darker twist. As RT reports, Russian prosecutors claim the driver of the snowplough was drunk, and the air traffic controller for the jet was an intern. However, his lawyer, however, says he was completely sober, due to a heart condition preventing him from drinking claiming "he was so sober at the time of the crash," adding "we don't want the blame for the accident falling on an ordinary man." Investigators added that "bad weather conditions and the possibility of a mistake by the pilot will also be considered." ITAR-TASS reports that Putin has sent his condolences and reached out to Francois Hollande, "Vladimir Putin has long known de Margerie and had a close working relationship with him."

It is unclear what the catalyst is - aside from the bounce back from The FT's rejection of Reuters rumor-spreading about ECB corporate bond buying but instead of the usual morning smackdown, precious metals are spiking higher. Gold hit $1255 - its highest in over 5 weeks). Oil is also spiking higher, WTI just broke above $83 (so much for that consumer tax cut?).
For now its unclear what is driving this BUT we do note that Saudi's Riyal has tumbled notably away from its peg in recent days... weakest sicne Jan 2009

The poll shows that 45% approve the Swiss gold initiative and 39% are against. There are 29% firm yes voters and 28% firm no voters (see graph). The poll shows 16% are leaning towards a yes or are “more yes” and 11% are leaning towards a no or are “more no.”

...And don't do it again! Having confirmed that RBS, UBS, JPMorgan,,and Credit Suisse operated a cartell to manipulate bid-ask spreads of Swiss Franc libor, the European Commission has unleashed unmerciless vengeance on these law-breaking institutions: JPMorgan fined EUR 72.2 Million, UBS fined EUR 12.7 Million, Credit Suisse fined EUR 9.17 Million, & RBS Nothing (for whistle-blowing).  The commission found that these four entities 'influenced' interest rate derivatives prices between March 2008 and July 2009 - probably the most volatile and price-sensitive period of American financial history.. and they get fined "an hour's pay?" Nothing ever changes...

Precisely half an hour ago, we mocked the overnight Reuters trial balloon about ECB corporate bond buying, whose only purpose was to send futures higher, when not only did we question the credibility of the report based on "one person familiar with the work inside the ECB, speaking on condition of anonymity" and said that now "we await Germany to throw up all over what is a clear Reuters trial balloon floated by "one person familiar with the work inside the ECB, speaking on condition of anonymity" to see what the market reaction is to even more stimulus (as if it is unclear)." Well, it wasn't Germany. At least not yet. It was Reuters' competitor in the coverage of ECB rumors and innuendo, the FT, which moments ago blasted this, via Bloomberg:

• ECB SAID NOT TO HAVE PUT CORPORATE BOND BUYING ON AGENDA: FT

So just in case anyone forgot how credible the Reuters rumor mill is when bailing out European risk (think summer of 2011 and 2012), here is a stark reminder.

Yesterday it was IBM, today it is the turn of that other Buffett favorite and consumer-spending bellwether, Coke, to disappoint and push the stock lower, when not only did KO miss on the top line, reporting $11.98 billion in sales, below the Estimate $12.12 billion, but utter some unpleasant words about the future, guiding "below its long-term EPS growth target for 2014." And because nothing says strong consumer like one of the biggest consumer staples blowing, we will merely wait for MCDs to come out next and complete the "recovery" picture.