Archive - Jan 2014

While the world may be reeling in the aftermath of a horrible week for markets, which following today's largely expected $10 billion additional taper announcement, is only set to get worse (because, oops, the global economy turned out to not be in escape velocity mode as everyone simply confused the artificial level of the S&P 500 with economic output, as usual), one entity is delighted by the recent surge in volatility and market uncertainty: CNBC.

"On the one hand and in a stable state, tapering should lead to a gradual ‘normalization’ of yield levels – which mean that the 10 year should (assuming no crisis) ‘gradually’ trades toward nominal GDP minus some liquidity premium. However, ... should concerns build that global growth and inflationary expectations begin to drop too much (either due to Fed Taper or Geo-events), then Treasury values will recalibrate and yields could drop precipitously to 2.5%. If things got really bad, yields could fall quite a bit further."

There are some significant set ups in several key charts. 

First there was TWTRQ - the ticker for Tweeter Home Entertainement (which exploded 650% higher when the TWTR IPO was announced); then came NEST - the ticker for Nestor Inc. (which exploded 4900% higher when Google announced its acquisition of the thermostat maker Nest); and , drum roll please... today (just as we warned last night) the market's sheer idiocy is exposed once again in the form a 900% gain in the ticker symbol MYRA - the ticker for Myriad Emtertainments (following the President's unveiling of his MyRA savings plan last night)... we have no comment...

If the Fed doesn't "save us" this afternoon - I don't know what will.  

• March 1997: In a seemingly “innocuous” move the Fed “tinkers” by raising rates 25 basis points.
• April 1997: Japan raises its consumption tax as USDJPY has rallied from a post Kobe Earthquake low of 79.7 to 127.50 . USDJPY collapse to 111 by June
• June 1997-Jan 1998: Severe reaction in Asian currencies as “hot money flees”
• August-October 1998: Russia defaults, Long term capital folds and the Fed eases aggressively as the Equity market drops 22% (S&P)

UPDATE: Grimm issues statement "I was wrong"

Michael Grimm, New York Congressional Representative has just apologized to reporter Mike Scotto for the following mind-blowing outburst following the SOTU last night (when the reporter pressed him on his capmaign finance issues)... Let me be clear to you: You ever do that to me again, I’ll throw you off this f##king balcony... No, no, you’re not man enough, you’re not man enough. I’ll break you in half. Like a boy.”

With all eyes on Russia over the next month as the Sochi Winter Olympics ramps up, we are sure having the market's attention on a collapsing currency is not what Putin had in mind before he dropped $50 billion to make it snow. While the Ruble remains just above record lows against the USD, Bloomberg reports that it has dropped to a record low against the central bank's dollar-euro basket. Russia's finance minister proclaimed today (Erdogan style?) that Bank Rossii should not raise rates (which has been unchanged at 5.5% for the last 15 months). Russian CDS is widening (193bps at 4 month highs) but not cratering like other EM currencies but MICEX (stocks) have had their longest losing streak since April.

Moments ago, the US Treasury sold its first $15 billion in 2 Year Floating Rate Notes, providing investors with yet another product that "protects" against inflation, following the 1997 introduction of TIPS, which courtesy of their linkage to the official BLS hedonically and seasonally-adjusted definition of "inflation" have mostly protected investors from any real gains. Here are the results.

With the (emerging) world suddenly collapsing, appropriately enough on the Chairsatan's last FOMC conference, here is an amusing update from Denmark where apparently the locals are less than excited about giving away their DONG (that would be Danish Oil & Natural Gas for the perverts) to Goldman Sachs. Specifically, over the past several days, a whopping 186,000 Danes have signed a petition to stop the sale of a 19% stake with extraordinary minority stakeholder rights in DONG to Goldman Sachs. Then again, every DONG has its price...

"We take profit on our TRY/ZAR trade recommendation which we entered last night at a level of 4.92. At the time of writing, the level is 4.968 resulting in a gain of 1.0% before carry. The short-lived relief rally in the TRY was swiftly interrupted by a shift in market sentiment, with the updated policy implementation failing to deliver the intended improvements in clarity. On the other hand, an unimpressive 50bp hike from SARB on the heels of CBRT’s punchier response fell short of expectations. Overall, the market continues to trade in a panic mode, notwithstanding the monetary policy responses spreading fast across EM, as real policy rates come increasingly under scrutiny." - SocGen

The Central State and its core directives, central planning and ever-widening control of every aspect of life, is eroding the human essential: community. Rather than the rah-rah phoniness of the President's State of the Union speech, which was predictably filled with Soaring Rhetoric (tm) and promises of more central planning and state expansion, let's consider the real state of the union.

For the first time since mid-October, "no brainer" investment AAPL has dropped below the maginot line of $500. We are sure Carl Icahn will be buying another $500 million worth of shares today... AAPL is now down over 13% from its December highs.

First MyRA, now this:

• OBAMA SAYS HE'S PREPARED TO ACT WITHOUT CONGRESS ON ECONOMY
• OBAMA SAYS WASHINGTON CAN EITHER HELP OR HINDER ECONOMIC GROWTH

So how long until the Economist-In-Chief extends presidential term limits with executive order.

On January 2, the Institute for Supply Management announced the December Manufacturing ISM print: at 57.0, it was a beat of expectations of 56.8, and resulted in an expected boost to markets. Moments ago, the 57.0 print was quietly revised to 56.5. Which means the beat of consensus expectations quietly became a miss. But please don't say anything, because all that pro-cyclical, bullish media spin that was fabulated on the basis of a data point which subsequently was revised to a disappointment, would have to be revised...