Archive - Mar 11, 2014

Just before the European close, copper prices on the LME (and US futures) began to crack on rumors that another China corporate had defaulted. This plunge was accompanied by a collapsed in AUD and rumors across desks were a levered fund unwind (which appears some China-commodity play) was responsible. While many would like to believe that fundamentals matter, today made it clear they don't as AUDJPY weakness dragged stocks lower tick-for-tick. A brief moment of hope in the early-afternoon - where VIX was slammed lower as momentum away from carry was sparked  failed and stocks continued to slide, retracing a considerable amount of post-Putin gains. Bonds and gold were bid (after the latter suffered early) as WTI crude slipped back under $100 and copper was crushed.

An ECONOMIC Expert – Rather than a NUCLEAR Expert – Briefed Japanese Prime Minister on Condition of Fukushima Reactors as the Disaster Unfolded ... Nuclear Regulatory Commission BLATANTLY Covered Up Significance of Fukushima

The Constitution and the "separation of dingbats"...

The Libyan defense minister took over duties as prime minister this morning as the Libyan parliament voted "no confidence" in the current prime minister after a North-Korea-flagged tanker broke the "blockade" from a rebel-held port. The ouster of the PM appears to have bolstered confidence in the anti-rebel oil-stealing that we discussed yesterday, and resulted in

*LIBYA NAVY FIRE HIT TANKER AS IT FLED TO INTL WATERS: SKYNEWS

The oil tanker - The Morning Glory - had at least 234,000 barrels of oil aboard but is now "under complete control" of Libyan government authorities. However, as Bloomberg reports, the North Korean tanker is said to be on fire after being hit by a missile.

Russia's military action in Crimea was out of weakness.  He was afraid having a potentially hostile power on his border and losing his naval base in Crimea.  He is at risk of repeating mistakes of the Soviet Union in not taking market forces seriously enough.  

David Stockman blasted the GSE-profiteers just last week but the manic run-up in the stocks of Fannie Mae and Freddie Mac has abruptly come to an end as the FT reports, the US Senate banking committee on Tuesday released a highly anticipated plan that would maintain government backing of mortgages but wind down the GSEs. Not a great day for Mr. Ackman - who owned 10% at last filing.

The US equity market summarized in one chart...

While we noted the top-down dismal demise of the American Dream of upward mobility over the weekend, Bloomberg has crunched the numbers and ranks the 50 most populous cities in the US on the difficulty of obtaining upward mobility in a low-wage job. The American dream is hardest to achieve in... Miami.

Let's be clear about one thing (to quote the president): the Fed's policies have been an unqualified success for financiers and an abject failure for everyone who has to work for a living. The Fed has not just failed to rectify the nation's obscene inequality in wealth and income; it has actively widened it by handing guaranteed returns to the banks and financiers while strip-mining what's left of the middle and working classes' non-labor income, i.e. interest on savings.

The tit-for-tat sabre-rattling and rhetoric continues to build ahead of this weekend's planned referendum in Ukraine's Crimea region. This morning has seen 3 new threads beginning with Ukraine's "live-fire" exercises involving T-64B tanks. This was then followed by warnings from Russia of "consequences" of "unconditionally indulging radical elements" in Ukraine calling US financial aid "illegal" which was swiftly responded to by the State Department exclaiming it "unacceptable" that Russian forces take matters into their own hands and "do not create the right environment for diplomacy." Not positive...

"The more information we get, the more we're inclined to conclude that it was not a terrorist incident," says the Interpol Secretary General Ronald Noble according to CNN, as details of the 2 Iranians at the center of the "stolen passport" uncertainty are identified. As CNN reports, Noble gave their names and ages as Pouri Nourmohammadi, 18, and Delavar Syed Mohammad Reza, 29 and added "they are not likely to be members of a terrorist group." Of course, the more dismal unknown is that of the entire plane and its passengers and crew which remain missing without a trace.

While the world is terrified about what China - where corporate bond defaults are now permitted - may be about to unleash on the world, most are all too happy to remain in a state of delightful ignorance. We decided to take a peek behind the scenes.

"We can't come out of this with a shadow of doubt about the integrity of the Bank of England," Governor Mark Carney told MPs this morning on the heels of the report, as we noted here, that found no collusion by the bank to manipulate FX rates. A senior BoE employee was told of "attempts to move the market" but "did not convey to [Monetary Policy Committee member Paul Fisher] that markets were being rigged," and therefore was suspended. While many have called this "as bad as Libor" the BoE remains adamant of its lack of involvement but is still restructuring itself - adding that "it isn't our job to go out hunting for rigging of markets." Nope, just to ignore it, we presume. MPs were not impressed.

Mt. Gox’s lawyers confirmed 750,000 Bitcoins belonging to the firm’s customers had gone “missing”, along with around 100,000 units that the company owned. Alleged that it came under some 150,000 DDoS attacks per second for several days ahead of its spectacular failure.

It's all about the fun-durr-mentals... but, just in case you don't believe that, this morning's angst over copper financing and China credit concerns has sparked notable carry unwinds (USDJPY below 103 and AUDJPY 93) and therefore US equities are tumbling (tick for tick). This morning's volatility in stocks was considerable around the open suggesting a lot of uncertainty and nervousness.