Archive - Feb 12, 2014

UPDATE: Trannies and Industrials are now red...

Gold has pressed up to almost $1,295 this morning - fresh 3-month highs - as silver and WTI crude also rise notably. The S&P 500 continues its inexorable USDJPY-inspired levitation (and is set for 1,900 by Monday morning at this rate) though remains negative year-to-date (for now) and a small roll-over in JPY is dragging stocks off their highs for now. US Treasuries are offered with the belly underperforming as 5Y reached 2-week highs at 1.56%.

As Deutsche Bank revealed in a note overnight, the GCC may have, quite deliberately, opened a Pandora's Box with its decision which according to Europe's largest bank, and the one whose derivatives exposure makes that of JPM pale by comparison, (i) made it clear it regards OMT as exceeding the competences granted to the ECB by the European Treaty and that (ii) would not consider itself bound by a positive ruling of the European Court of Justice. And while in DB's opinion this action does not have any immediate market consequences, the report's authors think that it "alters substantially the level of insurance we could expect from the ECB against any return of sovereign turmoil."

Yesterday's apparent Yellen un-taper-driven strength in gold broke some key technical levels and Goldman Sachs sees upside.

Serf's Up! 

The growing tensions between Italian Prime Minister Enrico Letta (and his fragile coalition) and Matteo Renzi - the head of parliament's largest (center-left Democratic) party are intensifying this morning. Calls for Letta's resignation, sparked by a junior coalition party head "hoping he was ready to step down," have escalated into more open speculation that the Italian government could collapse within days. Following the failure today of a 'strategy meeting' with center-right coalition partners, Renzi's pro-job-creation and electoral law reforms agenda is gaining consensus. While Letta has stated he will move ahead with his government (and address the public later today), Renzi warned, via Twitter, that he will talk tomorrow afternoon on the way forward.

While the Fukushima nuclear disaster and its 'clean-up' remain oddly missing from most mainstream media headlines, the farce continues to unfold. As Reuters reports, Japan's nuclear regulator has criticized TEPCO for incorrectly measuring radiation levels in contaminated groundwater. The NRA blasted, "something like this cannot happen ... This (data) is what becomes the basis of various decisions, so they must do their utmost to avoid mistakes in measuring radiation."

Imagine the scenario. The company accounts are going to get checked out; the accounts department doesn’t have them ready. There’s a gap in the figures and they don’t tally. Never mind, they may just get through at a pinch and nobody will notice. 

Here comes the latest one - Pax. Weather.com's description of what is about to be unleashed on Atlanta and the entire Eastern Seaboard is nothing short of a review of the movie The Day After Tomorrow: "Potentially "catastrophic" Winter Storm Pax began unfolding before dawn Wednesday in the Atlanta area as temperatures dropped below freezing and sleet and freezing rain began to fall." The National Weather Service's warning was not exactly cheery: "Let’s just start by saying this winter storm may be of historic proportions for the area,” the agency said in a forecast analysis. “We’re looking at significant snowfall totals north and significant, crippling ice totals, especially along the Interstate 20 corridor.” Eli Jacks, a meteorologist with National Weather Service, said forecasters use words such as "catastrophic" sparingly. Not in this case. "Sometimes we want to tell them, 'Hey, listen, this warning is different. This is really extremely dangerous, and it doesn't happen very often,'" Jacks said. The service's memo early Wednesday called the storm "an event of historical proportions." It continues: "Catastrophic ... crippling ... paralyzing ... choose your adjective."

• Anti-Euro Party’s Le Pen Gains Supporters, French Poll Shows (BBG)
• Carney Renews BOE Low-Rate Pledge to Fight Slack in Economy (BBG)
• Bank of England hints at 2015 rate rise (Reuters)
• ECB bond-buying intact and ready after court decision-Coeure (Reuters)
• Canada scraps millionaire visa scheme, dumps 46,000 Chinese applications (SCMP)
• Scrap this then? Vancouver facing an influx of 45,000 more rich Chinese (SCMP)
• China's January Exports Power Higher, Up 10.6% (WSJ) ... and nobody believes the number
• Emerging-Market Shakeout Putting Reserves Into Focus (BBG)
• Wall Street's most eligible banker Fleming waits for suitor (Reuters)
• Kazakh Devaluation Shows Currency War Stirring as Ruble Dips (BBG)

After initially sending the all important USDJPY carry pair - and thus all risk assets - into rally mode, the initial euphoria over manipulated Chinese trade data (see China Trade Puzzle Revived as Hong Kong Data Diverge), has all but fizzled and at last check the USDJPY was sliding to its LOD, approaching 102 from the wrong side. That, and a statement by the ECB's Coeure that the ECB is "very seriously" considering a negative deposit rate (and that the OMT is ready to be used even though it obviously isn't following the latest brewhaha from the German top court) have so far defined the overnight session, the latter having sent the EUR sliding across all major pairs.

Today, more than 10,000 Baby Boomers will retire.  This is going to happen day after day, month after month, year after year until 2030.  It is the greatest demographic tsunami in the history of the United States, and we are woefully unprepared for it.  We have made financial promises to the Baby Boomers worth tens of trillions of dollars that we simply are not going to be able to keep.  Even if we didn't have all of the other massive economic problems that we are currently dealing with, this retirement crisis would be enough to destroy our economy all by itself.  During the first half of this century, the number of senior citizens in the United States is being projected to more than double.  As a nation, we are already drowning in debt.  So where in the world are we going to get the money to take care of all of these elderly people?

Wealth Has Gone to the .01% ... MUCH MORE Than the 1%