Archive - Apr 2014

Having hit their most hopeful levels in seven years in January, small business hiring plans have collapsed at the fastest rate since Lehman in the ensuring 2 months. Despite the headlines proclaiming the modest rise and beat in the headline NFIB data, capex spending plans dropped and hiring expectations dropped to lows seen 11 months ago. We can only assume the small businesses are expecting more winter storms through the spring...

Are you saying it took the highbrow economist cadre five years to figure out and agree with what we first said in 2009, and for which we received endless ridicule, abuse and accusations of fringe insanity? Yes. We are saying that.

Update: As CNBC just reported moments ago, tech fund Coatue is returning $2 billion of $7 billion to investors, citing "difficult market conditions." Just wait until the "difficult market" drops more than just 3% from all time highs...

As a reminder, for those with Bloomberg (and the proper permissions) the easiest way to track the performance of the most popular hedge fund names is using the BBG ticker GSTHHVIP, and especially its performance against the S&P. But for those who don't have access, or are too lazy or depressed to type anything into their terminal today, here it is, straight from Goldman's sales and trading mouth, summarizing yesterday's market poundage:

Our HF VIP basket underperforms the SPX by over 100bps, 3 standard dev move and the worst since June 2012.

Oops.

• Russia's Gazprom says Ukraine did not pay for gas on time (Reuters)
• Ukraine Moves to Keep Control in East (BBG)
• Banks Set to Report Lower Earnings as Debt Trading Slumps (BBG)
• More DeGeners and Obama selfies needed: Samsung's lower first-quarter estimate highlights smartphone challenges (Reuters)
• Citi Is Bracing to Miss a Profit Target (WSJ)
• Another slam from GM? Safety group calls for U.S. probe of Chevy Impala air bags (Reuters)
• Japan drugmaker Takeda to fight $6 billion damages imposed by U.S. jury (Reuters)
• EU court rules against requirement to keep data of telecom users (Reuters)
• White House may ban selfies with president after Ortiz-Obama photo promotes Samsung (Syracuse)

Market tops usually feature something called rotation. This occurs when investors move out of former top performing companies or market leaders, into safer investments.

It took Virtu's idiot algos some time to process that the lack of BOJ stimulus is not bullish for more BOJ stimulus - something that has been priced in since October and which sent the USDJPY up from 97.000 to 105.000 in a few months, but it finally sank in when BOJ head Kuroda explicitly stated overnight that there is "no need to add stimulus now." That, and the disappointing news from China that the middle kingdom too has no plans for a major stimulus, as we reported last night, were the final straws that forced the USDJPY to lose the tractor-beamed 103.000 "fundamental level", tripping the countless sell stops just below it,  and slid 50 pips lower as of this moment to overnight lows at the 102.500 level, in turn dragging US but mostly European equity futures with it, and the Dax was last seen tripping stops below 9400.

The real truth the bankers wish to conceal from the public is that they use HFT programs to suppress gold and silver prices.

The last time global equity markets were falling at this pace (on a growth scare) was the fall of 2011. That time, after a big push lower, November saw a mass co-ordinated easing by central banks to save the world... stock jumped, the global economy spurted into action briefly, and all was well. This time, it's different. The Fed is tapering (and the hurdle to change course is high), the ECB balance sheet is shrinking (and there's nothing but promises), the PBOC tonight said "anyone anticipating additional stimulus would be disappointed," and then the BoJ failed to increase their already-ridiculous QE (ETF purchase) programs. The JPY is strengthening, Asian and US stocks are dropping, CNY is weakening, and gold rising.

In response to claims by the Ukraine government (and the west) that Russia provoking trouble in Eastern Europe - with The White House's Jary Carney even suggesting that pro-Russia demonstrators were paid - Russia's foreign ministry has responded. Posting via their Facebook page, Russia urged Ukraine to halt any interior military preparations which could instigate a civil war. But the kicker, for which we anxiously await a rebuttal, is Russia's comment that they "are particularly concerned that the operation involves some 150 American mercenaries."

Increasing domestic conflicts are an unintended consequence of the rapid globalization behind China’s rise. China’s embrace of globalization has aligned once fractious elites behind a banner of shared economic interest. Neither China nor the rest of the world can ignore this dilemma and paradox; with every “made in China” product we buy we are contributing to this rise in wealth, and the rise in frustration, social tension and air pollution. They are unfortunately coupled together.

Sadly, as suspected - and in line with his CFO in 2009 - the reported death of Jan Peter Schmittmann was indeed suicide. The ex-CEO of ABN Amro hanged himself, but only after murdering his wife, Nally, and 22 year-ol daughter Babette. As Bloomberg reports, a farewell letter was found in the house, but authorities declined further comment on its contents. Schmittmann’s family was cited as saying in the statement that “we knew Jan Peter struggled with severe depression," and added that their "first concern now is supporting the remaining daughter in coping with this indescribable grief." Aweful...

Last week we saw yet another tragedy at Ft. Hood, Texas, as a distraught Iraq war veteran killed three of his fellow soldiers before killing himself. It is nearly five years after the last Ft. Hood shooting, where 13 people were killed. These tragedies are heartbreaking and we certainly feel much sympathy for the families of the victims. While there is much focus on the mental illness that appears to have driven many of these men to murder, what is left unsaid is the cause of the tragedy. Government officials and the media only talk about the symptoms that lead to these tragic events. They will tell us that there are people who get post-traumatic stress disorder (PTSD) and kill themselves and others. They will all call for more government intervention into the lives of those in the military to root out and “treat” mental illness. But they will never question the two causes of these tragedies: the disastrous decade-long US wars in Iraq and Afghanistan that have destroyed the minds of so many service members, and the government psychiatrists who prescribe extremely dangerous psychotropic drugs to treat these damaged soldiers.

Remember CDOs? Murky, illiquid investments, backed by bulge-bracket firms that offered lots of yield over similar-rated corporates - just don't ask questions. As SCMP's Shirley Yam reports, China's so-called "trust" products, promise high returns with big-name backing, but a scheme touted at Ping An Bank highlights just how murky the world of mainland investment offerings is. After reading this, we suspect, that last trace of faith that the PBOC has the Chinese shadow banking system under control (and a growth renaissance is due any moment) will be eviscerated.

Dondero had quite a "track record" of illegal trading activity before he was finally busted for one last time engaging in HFT spoofing. However, it is not his FINRA brokercheck record that is of interest, but the fact that back in 2007, in the first ever CNBC Million-Dollar challenge, it was none other than Dondero who almost won. And yes, he nearly manipulated his way to the $1 million prize money then too. Only, the way he did fudged his winning percentage was not as most other competition participants had, by abusing the widely known system glitch that allowed contestants to see which stocks were rising in after-hours trading and then to buy those stocks at the lower, 4 p.m. EST closing price, but using a far more devious scheme. One which is reminiscent of the crime that last week just ended his trading career in the real world as well.

The level of employment in the United States has been declining since the year 2000.  There have been moments when things have appeared to have been getting better for a short period of time, and then the decline has resumed.  Thanks to the offshoring of millions of jobs, the replacement of millions of workers with technology and the overall weakness of the U.S. economy, the percentage of Americans that are actually working is significantly lower than it was when this century began.  And even though things have stabilized at a reduced level over the past few years, it is only a matter of time until the next major wave of the economic collapse strikes and the employment level goes even lower.  And the truth is that more good jobs are being lost every single day in America.