Archive - Apr 2014

Rickards does not expressly say one should put 33% of one’s wealth in gold but suggests that an allocation of between 10% and 33% would be prudent. In this regard, he echos Dr Marc Faber who suggested a 25% allocation to precious metals last week.

Another day ending in "y" means another day in which Putin plays the G(roup of most insolvent countries)-7 like a fiddle.

University of Michgan Consumer Confidence soared to 8 month highs, beating expectations by the most since November led by a surge in "outlook" hope. Current conditions are back at December 2013 highs but it is the outlook that is providing the juice for this exuberant headline print. Bear in mind this is the preliminary print of this data and is due for revision in the next 2 weeks or so... which as 'consumers' see the red flashing tickers on their iPhones will be slightly less exuberant.

Talking heads were positively orgasmic at the fact that Greece managed to get a five-year bond deal off in the public markets... at a 4.75% coupon and was 8-times oversubscribed. That must be great news, right? So, kindly explain to us where all that exuberant "Greece is the best thing since sliced bread" demand is today as the bond price has collapsed 1.5 points and yields smashed higher by over 30bps...?

For the first time in over two months, all the major US equity indices are negative year-to-date (as Trannies finally succumb to the selling pressure). Russell and Nasdaq are down 4% YTD.

"We can't help thinking that as it becomes ever clearer that the Fed is pretty much fixed in its determination to stop QE late this year, the oxygen that has fuelled the 5 year bull market is slowly draining out of the market. Clearly the Fed is still buying a significant amount of bonds and thus providing a lot of liquidity but clearly only for a few more months."

- Deutsche Bank

Ahhh, the smell of "fake" headlines in the morning. It smells like victory, especially as there goes another conspiracy "theory"

Producer Price Inflation data soared higher than expectations across the board this morning with Final Demand up 1.4% YoY (against 1.1% expectation) to its highest since Aug 2013. The main driver was food and apparel prices (rather unexpectedly) but we also note that ex-Food-and-Energy was a 0.6% rise (vs 0.2% exp.) which is the biggest month over month jump since March 2011.

Overnight weakness in Asia spilled into Europe and the bloodbath is continuing - especially in the peripheral markets which have until now been invincible in the face of deteriorating fundamentals. Just like US hyper-growth hope, Portugal, Spain, and Italy stock markets have soared this year - among the world's best performers - but are getting monkey-hammered in the last 2 days (down over 5%). Despite more chatter of ECB QE, peripheral bond spreads are also jumping higher (+7bps) as German Bund yields are slumping back below 1.5% - the lowest in 10 months. US futures are ugly too.

So much for the infallible Mr. Dimon.

Moments ago, JPM reported Q1 earnings which missed across the board, driven by the now traditional double whammy of collapsing mortgage revenues - the lifeblood of any old normal bank - and fixed income trading revenues  - the lifeblood of new normal banks. Specifically, JPM reported revenues of $23.9 billion, well below the expected $24.5 billion, matched by a reported earnings miss of $1.28, down from $1.59 a quarter ago (and down $0.02 from Q4, 2014), also missing consensus estimates of $1.38. The breakdown was as follows.

• Sensitive Market Data Leaked After Government Phone Call (WSJ)
• This is a actual Bloomberg headline: China Fake Data to Skew More Export Numbers (BBG)
• This is another actual BBG headline: U.S. as Global Growth Engine Putt-Putts Instead of Purring (BBG)
• Ukraine wants to buy European gas to boost energy security (Reuters)
• JPMorgan Profit Falls 19% on Trading, Mortgage Declines (BBG)
• Record Europe Dividends Keep $2.8 Trillion From Factories (BBG)
• Why is Goldman shutting down Sigma X: SEC eyes test that may lead to shift away from 'dark pools' (Reuters)
• Ebola Outbreak Empties Hotels as West Africa Borders Closed (BBG)
• Australian PM says searchers confident of position of MH370's black boxes (Reuters)
• Gross Says El-Erian Should Explain Reason for Exit (BBG)

After a selloff as violent as that of last night, usually the overnight liftathon crew does a great job of recovering a substantial portion of the losses. Not this time, which coupled with the sudden and quite furious breakdown on market structure, leads us to believe that something has changed rather dramatically if preserving investor confidence is not the paramount issue on the mind of the NY Fed trading desk. Nikkei 225 (-2.38%) suffered its worst week since March'11 amid broad based risk off sentiment following on from a lower close on Wall St. where the Nasdaq Biotech index suffered its largest intra-day decline since August 2011. Negative sentiment carried over into European session, with stocks lower across the board (Eurostoxx50 -1.17%) and tech under performing in a continuation of the recent sector weakness seen in the US. JP Morgan (JPM) due to report earnings at 7:00AM EDT and Wells Fargo (WFC) at 8:00Am EDT.

There is much new info in the just released Bloomberg profile on the infamous ex-JPMorganite Blythe Masters, among which the disclosure that she had made it clear that she had wanted to go along with the disposable JPM physical commodities unit (which as was reported recently, was sold to Swiss commodities giant Mercuria) and "and continue as the group's chief", a plan which did not work out as she had planned since she has no plans to "join the unit’s purchaser" (although joining Glencore is another matter entirely, and one which looks increasingly plausible) but what we find most striking is the following revelation: "Masters is under investigation by federal prosecutors in Manhattan, according to two people with knowledge of the matter. That probe was opened following a settlement with regulators that alleged JPMorgan manipulated power markets in the Midwest and California."

We suspect this will come in handy tonight...

Is the US or the World Coming to an End? It will be one or the other

2014 is shaping up as a year of reckoning for the United States. One of two things is likely: Either the US dollar will be abandoned and collapse in value, thus ending Washington’s superpower status and Washington’s threat to world peace, or Washington will lead its puppets into military conflict with Russia and China. The outcome of such a war would be far more devastating than the collapse of the US dollar.