Archive - Nov 11, 2014

Just 24 hours before "the most important watch in the world" goes up for auction in Geneva today, the owner - 48-year-old Sheikh Saud bin Mohammed Al-Thani of Qatar has died suddenly; somewhat ironically confirming that "you never actually own a Patek Philippe, you merely look after it for the next generation." Though, it appears, in this case, as Hodinkee reports, the sale of Henry Graves Jr. Patek Philippe Supercomplication - which is expected to sell for in excess of $15 million today - was due to the Sheikh running into financial difficulties. So is this Peak Patek, when even the oil-money is forced to sell assets?

Europe is closing... the American stock trader is on his own now with no bond market police to manage the mania...

As everyone knows in today's new normal world of investing, "good news is bad news" and indeed it seems a record "Singles' Day" sales record of around $9.3 billion (up 59% YoY) was enough of 'good news' trigger to spark the worst day in BABA since the IPO. Today's 4% drop of course is nothing compared to the 45%-plus gains off the Bullard lows, and we suspect the BoJ or GPIF will be back in action soon to BTFD. Profit-taking? Sell the news? Or perhaps it was Jack Ma's Elon-Musk-esque comments on how his high stock price is based on very high expectations and he is feeling the pressure.

The responsibility for starting and ending wars, the way wars are fought and the losses we suffer all rest with our elected civilian leadership.

It appears the terrorist organization known as Islamic State has been watching the fiasco of fiat money and reading Alan Greenspan and Ron Paul. As The Daily Mail reports, ISIS wants to introduce its own currency and plans to bring back solid gold and silver dinar coins in an attempt to solidify its makeshift caliphate. Around 1500 years after the Dinar was first introduced - made from pure gold and silver - ISIS plans to implement the change within a few weeks, changing changing from regular dinars and Lira to golden dinars and silver dirhams.

Things just got much worse for Ukraine, which has been on life support by its "western allies" ever since the US State Department-coup early in the year. Because those same allies look like they may have had enough.  According to Reuters, some in Brussels are disillusioned by the experience of helping Ukraine. EU generosity in waiving import duties and funding gas supplies from Russia may be being abused, they say. "Some in Ukraine's elite may be colluding with Russia, even as fighting in the east has begun to escalate again. "The Ukrainians are manipulating the EU," a senior EU official involved in negotiations told Reuters, saying the bloc was "waking up" to a need to better defend its own interests."

Moments ago, according to local press, the simmering east Ukraine conflict just escalated substantially following what are reports of a massive explosion off the Ukraine coast near heavily contested Mariupol - the key city which stands in Russia's way to make a land bridge from Russian territory to the recently "Russianized" Crimea. As Interpretermag reports, citing Mariupol news site 0629.com.ua, there has been a powerful explosion in the Azov sea, south of the city.

Recession is a useless discussion by now. The US is a painted pig, the EU needs to let countries go or they’ll go to war, Japan hung its head in a noose for Halloween and China has its 32nd consecutive month of falling factory-gate prices. Lower oil prices may for now hide some of the pain, but even that is too much for Japan, because of the deflationary effect of even less consumer spending. And it’s that lack of spending that’s everyone’s worst enemy. But you can’t solve that with central bank stimulus. The formerly rich world is loaded with burger flippers, food stamps and underwater homes, and that means less, not more, spending. All ‘formerly rich’ governments have historically unequaled spin doctors on their payroll, so the real numbers across the board are much much worse even then what we are ‘allowed’ to know. And what we do know is already awful once you sweep away the propaganda. You’re only going to be OK as an investor if the Fed continues to hold your hand and lead you softly through the ups and downs. You really think they will? Recession? In your dreams.

Because when Elmo sees the economic fundamentals taking the Dow to at least 36,000, how can you possibly stay out of the market?

With this year's APEC meeting in China having just barely concluded, where the biggest news was not the inability of the US to make any material headway in trans-Pacific trade (who needs trade when you have a printer?) or that China is "willing" to import even more NSA bugs courtesy of Cisco and Qualcomm, but Russia's second "western" mega gas deal with China, as well as the following photo-op of course and with the WSJ reporting that in the now year-old "nuclear"negotiations between the west and Iran, there has been no progress, it was once again Putin's turn to turn the screws on the lame duck president following a report moments ago that Russia inked a deal to build eight nuclear power units in Iran, as a new partnership agreement, guaranteed by the IAEA.

• No Sign of Thaw in Obama’s Brief Encounters With Putin (BBG)
• Japan Lawmakers Prepare for Snap Elections as Abe Mulls Tax (BBG)
• Global stocks rise, Brent crude hits four-year low (Reuters)
• U.S., China to Drop Tariffs on Range of Tech Products (WSJ)
• ‘Too-Big-to-Fail’ Rule Would Raise Bar for Bank Capital (WSJ) ... and mean even bigger taxpayer bailouts
• Pot in New York: $100 Ticket. No Charges. No Record. No Nothing (BBG)
• Microsoft unveils first Lumia smartphone without Nokia name (Reuters)
• Davos-Man Ackermann Lured to Cyprus Bank by Billionaires (BBG)
• Alibaba, Apple Talks on Payments Tie-Up Focused on China (WSJ)

With the bond market closed today due to Veteran's Day and the correlation and momentum ignition algos about to go berserk without any parental supervision, it was only a matter of time before some "stray" headline sent first the carry pair of choice, i.e., the USDJPY, and subsequently its derivative, the Emini, into the stratosphere. And sure enough, just before 3am Eastern, it was once again Reuters' turn to leak, only this time not about the ECB but Japan, as usual citing an unnamed "government official close to Abe's office", that Prime Minister Shinzo Abe was likely to delay a planned sales tax increase.

• JAPAN MORE LIKELY TO DELAY SALES TAX INCREASE, REUTERS REPORTS

Which of course is a repeat of what Reuters said 2 days ago but since it came on the weekend, the momentum ignition algos didn't notice. The result was an instant surge in the USDJPY, which shortly thereafter touched on 116.00 the highest level in 7 years, and is up now 200 pips since yesterday as the obliteration of Japan's economy proceeds, in turn pushing European stocks, and shortly, the S&P, higher