Archive - Jan 2014

While the talking heads are gloating over green arrows in stock-market-land this morning, the turmoiling is far from over. This morning's dismal Durable Goods data sent asset classes scrambling as gold dropped, oil popped, Bonds ripped and dipped, and stocks dipped and ripped... for now... AAPL remains -6.9% but VIX continues to see hedges unwound (-1.2 vols at 16.2%) We presume this is some hope that Taper will be tapered.

Confidence is soaring (or sliding) depending on what survey you choose to believe. The UMich confidence's collapse (the biggest miss in 8 years) has been matched by more 'baffle 'em with bullshit' as the Conference Board beats expectations by the most in 5 months and pushes back towards 2013 highs (near the highest in over 5 years). Both the Present situation and Expectations rose notably - despite 1.4 million people losing their benefits, a lackluster holiday season for retailers, and stagnant incomes - but the Present Situation index rose to the highest since April 2008.

It would appear the fears of a global bank run are spreading. From HSBC's limiting large cash withdrawals (for your own good) to Lloyds ATMs going down, Bloomberg reports that 'My Bank' - one of Russia's top 200 lenders by assets - has introduced a complete ban on cash withdrawals until next week. While the Ruble has been losing ground rapidly recently, we suspect few have been expecting bank runs in Russia. Russia sovereign CDS had recently weakned to 4-month wides at 192bps.

A story that won't go away: The German central bank 'proposing' an emergency "capital levy" in "conditions of extraordinary national crisis." 

Mykola Azurov, the prime minister of Ukraine, (and his cabinet) has resigned. The move comes as the government faced losing a no confidence vote and being stripped off their power. It seems the opposition (pro-Europe) are gaining momentum once again as the Ukraine also repealed the controversial anti-protest laws that created more tension last week. The Russians are not amused and have warned that they may reconsider the $15 billion bailout offer if the current government is removed. The Ukrainian Hryvnia is continuing its collapse on this news and has dropped back towards record lows (though bonds are rallying).

And the hits just keep on coming: after the atrocious Durable Goods number, it was the turn of the Case Shiller housing data, which reported what many already knew - in November the 20 City Composite index (the Non-seasonally adjusted version which as the report's authors acknowledge is the accurate one) posted its first monthly decline, dropping modestly from 165.9 to 165.8, or down 0.06%, since November of 2012. And while on an annual basis, the increase was still a solid 13.71%, up from October's 13.61%, these backward looking numbers will quite soon turn sharply negative once the sharp bounce in 2013 - driven not by a housing recovery but by institutional all cash buyers and foreign money launderers seeking to park their cash in the US - get anniversaried.

We can waste many words to explain today's absolutely atrocious and recovery killing durable goods report (wait for it... wait for it... it's the weather's fault), or we can just show this once chart explaining all that has happened so far in the "recovery."

It seems the "dollar is a reserve currency for ever and ever" propaganda has not reached Africa, also known as Southern China as explained here two years ago, where moments ago the Central Bank of Nigeria issued the following surprise announcement:

• NIGERIA CENTRAL BANK TO RAISE SHARE OF YUAN TO 7% FROM 2%
• NIGERIA CENTRAL BANK TO DIVERSIFY RESERVES INTO YUAN

But why would anyone buy Yuan when there are so many ever-more diluted dollars available?

The Federal Reserve is the primary engine of income/wealth inequality in the U.S. Eliminate "free money for cronies," bailouts of the "too big to fail" banks that own the Fed, manipulation of markets, the purchase of impaired private assets at high prices, and all the other tools of financialization the Fed wields to enforce its grip on the nation's throat--in other words, abolish the Fed--and the neofeudal structure that feeds inequality will vanish along with the feudal lords that enforced it. We don't need to "fix" things as much as remove the obstacles that are blocking the way forward. The Federal Reserve is the primary obstacle to reducing income/wealth inequality.

Early this morning, at JPM's 33 story high London Headquarters located at 25 Bank Street in Canary Wharf, a 39 year-old man jumped to his death after falling onto a 9th floor roof. The police, who were called to the scene at 8:02 this morning, said they are not treating the death as suspicious and no arrests have been made, suggesting the death was indeed a suicide.  London Ambulance Service and London Air Ambulance attended but they could not save the man. 

• Emerging markets pray for Wall Street tumble (Reuters)
• Yellen Faces Test Bernanke Failed: Ease Bubbles (BBG)
• Samsung sets new smartphone sales record in fourth quarter, widens lead over Apple (Reuters)
• China’s Foreign-Reserves Investment Chief Said to Depart Agency (BBG)
• China’s Rescue of Troubled Trust May Stoke Risk-Taking (BBG)
• Ukraine PM Azarov offers to resign 'to help end conflict' (Reuters) ... And Russia says may reconsider aid if this happens
• But... but... it was all gold's fault: India Unexpectedly Raises Rate as Rupee Risks Inflation Goal (BBG)
• Former Belgian king 'boycotting' public events after complaining £760,000 is not enough to live on (Telegraph)
• Greek disposable income tumbles 8% in Q3 (Kathimerini)

Tonight, when O does call for higher taxes on the rich, half of the congressmen will stand and applaud.

The depressed tone overnight following AAPL's disappointing earnings mysteriously evaporated just ahead of the European open, when around 2 am Eastern the all important USDJPY began an dramatic ramp, (with ES following just behind) which saw it rise from the Monday closing level of 102.600 all the way to 103.250, in what appears to have been a new frame-setting stop hunt ahead of a variety of news including the start of the January - Bernanke's last - FOMC meeting. One of the potential triggers for the move may have been the RBI's unexpected hike in the repurchase rate  to 8.00% with an unchanged  7.75% consensus, which was its second consecutive INR-boosting "surprise." Among the amusing comments by RBI's Rajan, justifying the ongoing (loising) fight with inflation, was that India's consumer numbers are weak because of inflation. But... isn't that the Keynesian cargo cult's wet dream?

The linear Quantity Theory of Money holds that if more units of a currency are issued, then the value of each unit should fall. Bitcoin was designed with this idea in mind. It's a fatal flaw.

With food-stamp recipients dominated by 'working age Americans' for the first time in history; and 1.4 million having recently dropped off the benefits rolls, we suspect, extremely sadly, that the following breakdown of homelessness in America is about to get worse. Los Angeles has by far the greatest number of unsheltered homeless in America and New York City the largest population - at around 65,000 - of homeless people in the US. One wonders at the State of the Union tomorrow...