Archive - Nov 2014

*MCCONNELL SAYS ONLY ONE DEMOCRAT COUNTS: OBAMA

Front-running President Obama's press conference by an hour, new Senate Majority leader Mitch McConnell (having received a congratulatory phone message from the President on his party's victory) will, we are sure, encourage bipartisanship and utter conciliatory tones as he holds his first press conference post-election. However, judging from some comments, the gloves are off. "We want to get things in front of the president that define him and his party," one Republican Senate aide said, "Harry Reid has protected him. We want to force him to make a choice."

As the 'new' alternative political party - "We Can" - surges to the lead in polls in Spain, it appears extreme parties from around Europe are taking note. As KeepTalkingGreece reports, the Spanish branch of the neo-fascist Golden Dawn party has been officially registered as a political party in Spain. Between Catalan secession, record youth unemployment, and government corruption, throwing some right-wing extremists into the mix should 'help'.

what...

George Carlin explains why he doesn't complain about politicians... "this is all we have to offer, garbage in, garbage out" Maybe, he chides, it's not the politicians, "the public sucks, f#$k hope!"

Republicans have won majorities in the House and Senate. Results in some states have not yet been finalized, but Republican gains appear to be somewhat larger than most observers expected. On the bright side, Goldman expects a more active legislative agenda (gettng things done) but on the more worrying side, they warn of risk of renewed uncertainty ahead of fiscal deadlines.

The legendary Hungarian-American investor, George Soros, told Handelsblatt that the European Union and euro currency zone could unravel if member countries can't agree on a unified response to Russia's aggression in Ukraine. "Wake up Europe," he chides, adding that Western economic sanctions against Russia, which are limiting the ability of Russian businesses to obtain financing on the global market, are a necessary evil, concluding "Freedom sounds like a free good, but you have to be ready to defend it."

UPDATE: ARABIAN SECURITY SOURCE SAYS FIRE OCCURRED IN AN OIL PIPELINE, NOT TERRORIST ATTACK

It appears Saudi markets are back in play. As Bloomberg's Richard Breslow noted this morning, Riyal forwards have jerked notably higher (implying weakness expected) and the Tadawul All Share Index has dropped 7% in the last 2 days after the killing of Shi'ites by unknown parties and now news that a pipeline has exploded. As Breslow warns, "if that indeed signifies the spread of Islamic State into Saudi Arabia, it would be the first time they crossed Saudi borders. That would be a big deal and a major escalation of problems over in that part of the world, far beyond what it would do to capital markets."

We applaud PIMCO's attempt to stem the bleeding, however by publicly confronting such a critical, for any asset manager, topic as fund outflows and even providing a handy daily chart of outflows, we fear it will only push the situation from bad to worse, as increasingly more investors ask themselves: "what are we missing." Especially since the appropriate chart to focus on is not the one showing the outflows from the TRF since September, but the one below, showing the epic devastation that the flagship fund, the Total Return Fund, of the world's largest bond manager, has suffered since April 2013, when its AUM peaked at just inder $300 billion, and fast foward to October 2014, when it is now a whopping 42% lower and declining fast.

The absurdity of taxing us to health is obvious - as is the unlimited greed and avarice of local government for more tax revenues, by any means available. Eat sugar, go to jail. The local Gulag would love it.

What happened in October is that an unadjusted response which indicated the weakest labor market in half a year, was magically transformed into almost the best print in the history of the Employment series.

How?

Seasonal Adjustments.

Oil prices are spiking (WTI crude is up $3 off this morning's lows) following the pipeline explosion in Saudi Arabia. Of course, energy stocks are surging on the news too and we are just waiting for some clever talking head to proclaim this surge as demand-driven showing how strong the economy is...

The US Dollar is moving up RAPIDLY. Will this blow up the financial system as it did in 2008? We’ll soon find out.

The Ruble collapsed another 2% today breaking above 45 for the first time ever as Bank of Russia's Deputy Governor Ksenia Yudaeva suggested their policy was "quite close" to free floating the currency and desperately tried to jawbone the currency. She suggested that further rate increases were possible, that interventions were part of the "policy package" when repo tool ramps up and, most notably, Moscow could use some of its national foreign currency or even gold bullion reserves – now the world's fifth largest hoard – to pay for buying imports if Western sanctions over Ukraine continue.

Based on the ridiculous, seasonally-adjusted data released day after day by the various US "Departments of Truth", also known as the BLS, the Census, the Dept of Commerce, UMichigan, ADP, the Conference Board and so on, the US economy is so strong and consumer confidence is so resurgent, America is on the verge of a second golden age. Sadly, for Obama, and last night's epic rout for Democrats, it was all a lie - a lie perpetuated by a manipulated S&P500 which hit daily record highs on unprecedented central bank liquidity injections which have now terminally disconnected the "markets" from the economy, and the welfare of the vast majority of the common "folk" - and said "folk" saw right through it.