Archive - May 2014

If Vito showed up on your doorstep you were in a heap of trouble and things were about to get decidedly worse.

With another day left until the 48-hour "leave or face war" deadline imposed by the newly-independent regions of Ukraine, Interfax is reporting:

• *SIX UKRAINE SOLDIERS KILLED, 8 INJURED AFTER CONVOY ATTACK: IFX
• *ATTACK ON UKRAINIAN ARMY CONVOY NEAR SEPARATIST-HELD SLOVYANSK

This follows earlier concerns from Germany's Schaeuble who said he "can imagine" a worsening of the Ukraine crisis.

Just 2 days after the people of the Luhansk region voted for secession to Russia - despite protestation from the West and calls for delays from Putin - the self-proclaimed "people's governor" of the region has been injured in an apparent assassination attempt this morning. A car carrying Valery Bolotov was shot at and the press office reports that "he is injured and is currently in a private hospital." Of course, it is unclear who opened fire upon the governor but it certainly won't please Putin who has vowed to protect the rights of his people in that region...

Just as Russia had promised, sanctions were not effective and so they went straight to targeted bans. On the heels of The Pentagon admitting that they had "no solution" to replacing Russian rocket engines in the launch systems for US military satellites (as we have covered extensively), Deputy Prime Minister Dmitry Rogozin this morning announced:

*ROGOZIN: RUSSIA TO HALT U.S. GPS BASES IN RUSSIA ON JUNE 1:IFX
*RUSSIAN BAN ON ROCKET USE FOR US MILITARY SATELLITE LAUNCHES: IFX

He further added that Russia will not extend its partnership in the International Space Station beyond 2020 (which suggests Russia does not expect a quick resolution to the current tensions).

From January 3rd...

Goldman: "We forecast the S&P 500 will end 2014 at 1900 (+3%)"

— zerohedge (@zerohedge) January 3, 2014

Mission Accomplished (8 months early)

When it comes to the Goldman team of crack freaconopenguins the fun never ends.

 Presented with no comment: "Burisma Holdings, Ukraine’s largest private gas producer, has expanded its Board of Directors by bringing on Mr. R Hunter Biden as a new director."

Mixed data from around the world's economies - irrelevant. More promises from Europe - unimportant. Earnings misses and weather forecasts - useless. Knowing it's a Tuesday - Priceless.

Here is the spin: tapped out US consumers simply did not have money to go out and splurge after the March spending bonanza, which sadly fell in a quarter which as we already know, will have a negative GDP print and thus is a wash (due to weather, remember). However, as a result of the blamy (sic) spring weather, US consumers didn't spend online either, as they were forced to go outside and enjoy the lovely weather... where as already noted they didn't spend any money either.

Having been revised up to a 1.5% growth for March (the most since March 2010), retail sales crumbled across the board in April as the promise of un-harsh weather rebounds evaporated into the reality of a one-off pent-up demand pop. All sub-series of retail sales missed expectations with Ex-Auto/Gas actually dropping 0.1%. The broad weakness was led by furniture (-0.6%) and electronics stores (-2.3%).

While Asia in general may be slowing now that China's epic debt creation machine is starting to break down, when it comes to trends within Asia not everyone is equal. And nowhere is this more visible than when comparing Japan, that dynamo of Asia in the 1980s and 1990s, and China, that other "New Normal" dynamo which carried the world across the Great Depression chasm. For the best representation of Japan's epic fall from economic relevance and, inversely, China's superpower ascendancy, here is one chart showing how vastly more relevant to Asia China now is compared to Japan just under 20 years ago.

• EU Court: Google Must Remove Certain Links on Request (WSJ), people have right to be forgotten on Internet (Reuters)
• Harsh weather: German Investor Confidence Drops for Fifth Straight Month (BBG)
• More harsh weather: China Slowdown Deepens (BBG)
• Harsh weather as far as the eye can see: China’s New Credit Declines (BBG)
• "Alien" artist, surrealist H.R. Giger dies aged 74 (Reuters)
• Pfizer urges AstraZeneca to talk as UK lawmakers slam offer (Reuters)
• Property sector slowdown adds to China fears (FT)
• Russia says EU sanctions will hurt Ukraine peace efforts (Reuters)
• U.S. Considers Relaxing Crude Oil Export Restrictions (WSJ)

By "Turbo Tim" Geithner...

Just in case the EURUSD didn't price in enough of the possibility of a June ECB rate cut (because with even Goldman saying no, there is zero chance Draghi will engage in QE) disclosed last week when Mario Draghi broke the ECB's cardinal rule and gave a hint at what is coming next month, an hour ago the WSJ, citing a "person familiar" and we would add likely person who also happens to be short the EURUSD, helped double down on the end of forward guidance (since going forward market will expect action from the ECB instead of mere talk) by saying that the Bundesbank "is willing to back an array of stimulus measures from the European Central Bank next month, including a negative rate on bank deposits and purchases of packaged bank loans if needed to keep inflation from staying too low, a person familiar with the matter said."