Archive - May 19, 2014

So… the Fed may not be able to raise interest rates because Wall Street has $12 trillion in derivatives that could be affected?

Funny how, in the current national rapture of techno-narcissism, it is harder than ever to do something that for generations used to be as simple as pie: to get somebody on the telephone. To some degree, this situation represents the sheer diminishing returns and unintended consequences of technology. In a nation infatuated with technology, these entropic effects are always ignored. We just don’t want to hear about it, and our related infatuation with feel-good public relations bullshit spews a fog of concealment over it. It ought to be self-evident that this could only happen in a profoundly corrupt, dishonest, and degenerate society, because it took the form of a social compact that accepted this sort of behavior as okay.

Confirming yet again that the global "recovery" benefits some (very few) more than others (the non-very few), is the latest news out of the UK where the Sunday Times reports that the 1000 richest Britons now hold a cumulative £519 billion in wealth: a number which increased by 15% in the past year as the real disposable incomes of the non-richest declined. Putting this number in context, the "most well-off Britons now own the equivalent of a third of the country's gross domestic product (GDP)." Another way of looking at it: the wealth of 1000 Britons is 3.5x greater than the GDP of Greece.

In the first case of its kind, US Attorney General Eric Holder has broght charges against five Chinese military officals on charges of economic espionage and other offenses related to computer hacking of US nuclear power, metals, and power industries:

• *FIVE CHINESE MILITARY OFFICERS CHARGED BY U.S. WITH ESPIONAGE
• *JUSTICE DEPARTMENT SAYS CHINA HACKERS PENETRATE U.S. COMPANIES
• *DOJ SAYS ESPIONAGE TARGETED WESTINGHOUSE ELECTRIC, U.S. STEEL, ALCOA, SOLARWORLD

Holder added that the "range of trade secrets and other senstivive business information stolen in this case is significant and demands an aggressive response."

TedBits - Newsletter

What are they so excited about? Bonds ain't buying it? JPY ain't buying it? It's not Tuesday... or maybe the machines smelled some stops that needed bleeding avove overnight highs...

The New York Times' ousted top editor Jill Abramson will have a chance on Monday to address the unusually scathing criticisms of her management style leveled by publisher Arthur Sulzberger Jr. when she makes her first public remarks since she was fired. But, as Reuters notes, it is unclear whether Abramson, who was the first woman to lead the Times newsroom, will mention the controversy over her firing when she delivers a commencement speech to students graduating from Wake Forest University in North Carolina.

The ECB, the Swiss National Bank (SNB) and the Riksbank of Sweden announced a new gold agreement this morning. They announced they have no plans to sell significant quantities of gold and reaffirmed the importance of gold bullion as a monetary reserve asset.

It was only in March when the Fed revealed its latest downward revision to 2014 GDP growth, when it announced (in the same report as the infamous "dots") that its GDP forecast "central tendency" was reduced from 2.8-3.2% to 2.8-3.0%. This was when the world was still expecting a Q1 GDP somewhere around 1.5%-2.0% (when the full severity of snow in the winter wasn't yet apparent), instead of the current consensus forecast around -0.6%. Which, when combined with the current Q2 GDP tracking forecast somewhere around 3.5%, means that for the Fed's projection to be accurate, second half growth will have to average between 4.2% and 4.6%! Said otherwise, at its June 18 meeting expect the Fed - whose forecasting record is absolutely abysmal - to "significantly" lower its GDP forecast. Because what bonds really needed was another buying catalyst...

"They" said it could not happen... the bond market's "most hated" bull move has now accelerated 10Y yields back below 2.5% once again... gold and silver are also bid this morning.

It seems David Tepper's "frigging" "dangerous" market is hitting home as asset managers have greatly rotated their portfolios to hold the most cash in 2 years. Of course, as BAML is quick to point out - this is great "wall of worry" climbing news, "it’s people taking money off the table and playing defensive. There is some inherent buying power." We have now seen almost 6 months of institutional selling and retail investor buying and Bloomberg does a great job rounding up the best market mantras for why it's different this time, and everything is fine... remember "Today’s bearish investors are tomorrow’s bulls."

The core dynamic in our state-corporate system is a status Quo that suppresses competition (few other stores are allowed in town), usually by indirect means: high land leases, high fees for doing business in town, mountains of absurd regulations no small businesses can afford to meet, etc. In state-corporate capitalism, small business thus poses a threat to the monopolistic partnership of the government and dominant corporations. Small businesses that try to meet all the regulations and pay all the fees and taxes are either marginalized or driven out of business by the high overhead. Truth is the first victim of the Company Store's dominance.

• Qatar Bank: Deutsche Bank to raise $11 bln with help from Qatar (Reuters)
• AstraZeneca rejects Pfizer's take-it-or-leave-it offer (Reuters)
• China Home-Price Growth Slowdown Spreads as Sellers Discount (BBG)
• The new face of NSA: Mike Rogers (Reuters)
• Putin orders troops near Ukraine to return home (AP)
• Wall of Worry Rebuilt as Nasdaq Rout Sends Cash to High (Nasdaq)
• Bank of England's Mark Carney highlights housing market's risk to UK economy (Guardian)
• Greek Selloff Shows Rush for Exit Recalling Crisis (BBG)
• Anti-austerity Greek radicals ahead in Athens local election (AFP)