Archive - Feb 19, 2014

Despite our insistence that their was nothing new in the BoJ's loan ceiling hike and lack of QE extension (and Goldman's 'this is already priced in' perspective), it still took the machines that are running USDJPY almost 36 hours to figure it out. USDJPY has retraced the entire 100 pip swing and has broken back below the crucial 102.00 level this morning. Time for some more jawboning about the potential for more QE - even as Kuroda insisted last night to the Diet that the government's tax hikes occur (if for no other reason to ensure this does not escalate into the 'monetization miasma' that they fear the market would believe). Of course, as we approach the US open, we would expect the usual ramp-job to lift stocks.

It seems once again that 'economists' and 'analysts' misunderstood the weather in winter is cold. Housing Starts dropped a stunning 16% MoM (from an upwardly revised December data) for the biggest miss since June 2013 (and 8 of last 10 months missed expectations). This is the biggest MoM drop in 3 years. Building Permits - more problematic for the weather blamers - also plunged (by 5.4%) missing expectations by the most since June. However, what is the biggest slap in the face for the 'weather-blamers' is the collapse in Permits for the West (-26%) while most other regions improved.

For years, the Netflix streaming business has been growing like a parasite, happy to piggyback on established broadband infrastructures, where the broadband companies themselves have becomes competitors to Netflix for both distribution and content. Until now. Emboldened by the recent Net Neutrality ruling, which has put bandwidth hogs like Netflix which at last check was responsible for over 30% of all downstream US internet traffic broadband providers are finally making their move, and in a preliminary salvo whose ultimate compromise will be NFLX paying lots of money, have started to throttle Netflix traffic. The WSJ reports that the war between the broadband-ers and the video streaming company has finally emerged from the "cold" phase and is fully hot.

The past 5 weeks have seen mortgage applications crumble a further 16% - their biggest such drop in 14 months as the index for home purchase applications hovers close to its lowest level since 1995. Non-seasonally-adjusted, this is the worst start to a year in over a decade. Must be the weather?

The events in the Ukraine continue to deteriorate. Moments ago Lawmakers in Ukraine’s Lviv region, declared independence after backers evicted appointed governor overnight. Lviv’s parliament formed executive committee with department heads in Governor Oleh Salo’s administration that will take over functions of regional government, Oksana Dmetryv, a spokeswoman for Speaker Petro Kolodiy, said today by phone from Lviv. Protesters also seized headquarters of security services in Lviv, a region of 2.5 million people bordering Poland. Elsewhere, there were reports of more military vehicles crossing through Kiev: if there are any more Molotov Cocktail video follow ups we will be sure to capture them.

• Ukraine leader denounces coup bid, West weighs sanctions (Reuters)
• Time to buy Imodium calls: Kuroda Easing Doomed as Yen Seen Missing 120 Level (BBG)
• Teens Disappear From U.S. Workforce (BBG)
• Fed Sets Rules for Foreign Banks (WSJ)
• Quant Funds Feel Investor Bite After Underperforming (BBG)
• China Probes Qualcomm, InterDigital Over Monopoly Concerns (WSJ)
• Capital One says it can show up at cardholders' homes, workplaces  (LATimes)
• SEC Gains Power to Take Profit Made From Insider Trading (BBG)

After surging yesterday for no reason whatsoever because as we explained on several occasions, there were no surprises in the Tuesday BOJ statement, and the doubling and extension of its loan facilities was implicit and factored into the doubling of its monetary policy (as goldman explained quite well), both the Nikkei and the USDJPY has been forced to revert, with the latter all important carry funding pair back to 102 and in danger of sliding lower, as a result ES is now below yesterday's lows. Which is why the 102 USDJPY "invisible hand" tractor beam will be all important today especially if the market finally starts paying attention to the proxy civil war that has gripped the Ukraine. Stocks traded lower, albeit in a relatively range-bound range this morning, with the Spanish IBEX-35 underperforming. Banking names remained under pressure, with focus still on yesterday’s reports that Spanish banks' bad loans marked a fresh record, together with comments by ECB's Weidmann, who said that sovereign debt purchases would constrain the central bank via political pressure. Similar view was also echoed by ECB’s Nowotny, who said that government bond buying US Fed-style would be difficult to do under ECB's mandate.