Archive - Apr 2014

There is a reasonably quiet start to the week before we head into the highlights of the week including the start of US reporting season tomorrow, FOMC minutes on Wednesday and IMF meetings in Washington on Friday. On the schedule for today central bank officials from the ECB including Mersch, Weidmann and Constancio will be speaking. The Fed’s Bullard speaks today, and no doubt there will be interest in his comments from last week suggesting that the Fed will hike rates in early 2015.

• The counter-HFT-attack begins with first target - dark pools: Dark markets may be more harmful than high-frequency trading (Reuters)
• Malaysia Jet Team Hears Pings Consistent With Black Box (BBG)
• At Toyota as Humans Steal Jobs From Robots (BBG)
• ‘Reverse Auctions’ Draw Scrutiny (NYT)
• Death knell sounds for Brazil’s economic strategy (FT)
• Technology Traders Head for the Exit as Put Trades Surge (BBG)
• NSA Uses Corporate News to Spread Propaganda and Silence Dissent (TruthDig)
• Holcim, Lafarge agree to merger to create cement giant (Reuters)
• Any minute now: Investment Jump Seen From Macy’s to Berkshire After 2013 Fizzle (BBG)
• India kicks off world's biggest election in remote northeast (Reuters)

Update with Ukraine's take: SEPARATIST ACTION IN EAST UKRAINE SHOWS "SECOND STAGE OF RUSSIAN SPECIAL OPERATIONS AGAINST UKRAINE" IS UNDERWAY-UKRAINIAN ACTING PRESIDENT - RTRS

Less than a month after the Crimean referendum which pulled the region away from Ukraine and ceded it to Russia, another east Ukraine regional city, Donetsk, has just declared its independence from Kiev following the previously reported mini coup yesterday in which pro-Russia activists seized the government building in the city, as well as the other two regional capitals. Specifically, as RT reports, today at 12:20 local time, a session of the people's Council of Donbass (Donetsk region) took place in the main hall of the Regional Council and without the police (whose allegiance to Kiev also appears to be non-existent) intervening, unanimously voted on a declaration to form a new independent state: the People’s Republic of Donetsk.

The hedge fund slaughter continued for a second week in a row, and now we know at least one of the parties that was liquidating - curious which hedge fund is unwinding (the first of many)? Here is the answer: "On an investor call Thursday, Mr. Citrone said Discovery had reduced the amount of risk it was taking and that he remained confident that U.S. growth was accelerating." More importantly, for those curious where the pain will continue to be focused as the HF unwind accelerates, here are the most held long hedge fund positions which if indeed the unwind has begun, will be slaughtered in the coming days.

No Yen carry levitation overnight and, naturally, no Spoo levitation, with the futures struggling following the Nikkei's -1.7% drubbing (pushing it back to nearly -10% on the year) and down well from Friday's closing print. Risk averse sentiment following on from lower close on Wall Street on Friday, NASDAQ 100 (-2.7%) marked the worst session since 2011 dominated the price action in Asia, with JGBs up 32 ticks and the Nikkei 225 index (-1.7%). The Shanghai Composite was closed for a market holiday. Overall, stocks in Europe have recovered off lows but remain in negative territory (Eurostoxx50 -0.64%), with tech sector under performing in a continuation of sector weakness seen in the US and Asia, however Bunds remained under pressure as speculation of QE by ECB continued to undermine demand for core EU bonds. No major tier 1 releases scheduled for rest of the session, with focus likely turning to any policy related comments from ECB’s Weidmann, Constancio and Fed’s Bullard.

"Why aren't Americans like you saving more for retirement?"

From Presidential edicts of 'MyRA' being for your own good and "will never go down in value" to Poland's 'precedent-setting' confiscation of public pensions funds for the good of the nation's debt load; and from the IMF's "one-off" wealth tax 'idea' to Europe's recent consideration of 'wholesale savings confiscations and enforced redistribution', it appears Marc Faber's warning that "from now onwards, the bailouts will also be at the expense of the asset holders, the well-to-do people. So if you have money I am sure the governments will one day take away 20-30% of my wealth," is becoming more likely every day. As the following mini-documentary explains, confirming Ron Paul's warning that "there is more chaos to come," Jim Rogers' fear that "they won’t take our bank accounts...they will take our retirement accounts," is coming true.

These are indeed scary times for the corrupt kleptocrats of China.

With all eyes focused on Eastern Europe, tensions appear to be quickly mounting between the erstwhile allies North Korea and China.

"Russia was unable to seize Ukraine by means of military aggression," Ukraine's PM Yatsenyuk blasted, "Now they are implementing plans to seize Ukraine through economic aggression." His comments come after Russia's Gazprom raised prices for gas 81% from $268.50 to $485.50 (on the basis that the previous discount was a subsidy for allowing the use of the Black Sea port of Sevastopol, which Russia now has annexed) to which Yatsenyuk chided "political pressure is unacceptable, and we are not accepting the price of $500." Mr. Yatsenyuk, as WSJ reports, said his government will not pay the new price and will raise the issue in the Stockholm Arbitrage court, which was selected by the two countries years ago to settle the gas disputes - but warned his people that the country should prepare for Russia switching off natural-gas supplies.

Earlier this morning we reported that "Pro-Russia Protesters Seize Government Building In East Ukraine, Demand Autonomy." We suggested that this was only the first city in eastern Ukraine that would see this kind of internal revolt. Sure enough, hours later, the largest city in East Ukraine and one located in close proximity to Russia, Kharkiv, also saw its state building fall to what appear to be pro-Russia protesters, making it the third major city after Donetsk and nearby Luhansk. This coordinated and largely unexpected pro-Russian action triggering accusations from the pro-European government in Kiev that President Vladimir Putin was orchestrating "separatist disorder."

We noted on Friday that something happened in the US stock market that day that has not been seen since the Fed unveiled QE4EVA. It went quietly under the radar of the mainstream media; talking-heads did not mention it; and strategists shrugged it off. What happened? BTFD Failed... and, as BofAML's Macneil Curry warns, popular trades are in trouble (bad news for equity bulls and treasury bears).

Dr Faber discussed the importance of not owning gold stored in the U.S., the mystery of the Fed gold, why Singapore is safest for gold storage, the risks of bitcoin and how small countries should revert to national currencies. The must watch interview can be watched here ...

How much has the average cost of attending college at four-year degree-granting institution in the U.S. risen since the 1969-1970 school year?