Archive - Jun 17, 2014

You can ignore and even downplay for a while, but eventually and as sure as the fundamental law of nature that everything has a cost....

Another Tuesday, another sell-off in bonds and rally in stocks. The hawkish inflation data this morning sparked stock weakness and bond weakness but while the latter saw yields keep pushing higher, the former rallied back extravagantly ignoring the dismal housing data - well why not, its Tuesday today and FOMC tomorrow. The Russell 2000 was the winner once again as traders embrace high beta as alpha (and financials outperformed (2s30s steepened for once). 10Y Treasuries saw yields jump the 2nd most in 2 months (with 7Y the worst performer +6.5bps). Gold, silver, and copper all rose notably after the inflation data but oil prices decided to waterfall lower having briefly reached unch for the week (as soon as POMO ended). "Most shorted" stocks were smashed higher today (+2%) enabling the early ramp and while a late-day selling scramble nearly rescued failure from success, VIX pressure was enough to save stocks' green track record.

With stocks up and oil down, Iraq must be fixed? However, as The Institute for the Study of War notes, the clashes continue from north to south in Iraq.

As reported yesterday, The SCOTUS dealt a major blow to Argentina hopes it would avoid making payments on its "holdout" bonds when it enforced a lower-court ruling that said Argentina can't make payments on its restructured debt unless it also pays holdout hedge funds headed by Elliott Management, best known for briefly seizing an Argentina ship in late 2012. The immediate result was a major rout in the country's sovereign bonds, which also sent Argentina CDS soaring. Sadly for Argentina, this would hardly be the end of it, and about an hour ago, Standard & Poor added insult to injury and lowered its long-term foreign currency rating on Argentina to CCC- from CCC+ citing a "higher risk of default on the country's foreign currency debt." As a result, yesterday's drop in bonds has continued, if at a more moderate pace, and the country's USD bond due 2024 hav continued to sink in intraday trading.  So what is next for the cash-strapped Latin American country for which the road ahead is suddenly quite "challenging" and default appears increasing like the only way out? For the answer we go to Citi's Jeffrey Williams who has laid out the five most likely developments.

Tittytainment 101...

With an hour left in the trading day and stocks surging impressively on absolutely no positive catalyst whatsoever (hawkish inflation, dismal housing data, Baghdad under attack, Ukraine terrorism) apart from higher bond yields, we thought a gentle reminder of what day of the week it is would help those looking for some sanity in the entirely rational "markets" that are not only unrigged by HFT but are also unrigged by massive insider trading...

In light of the stunning upset Dave Brat just pulled off against House Majority Leader Eric Cantor earlier this week, many are asking the question as to whether or not we are seeing a genuine political shift against the incredibly corrupt status quo. One thing that is abundantly clear is that any candidate with strong ties to Wall Street will be attacked like a piñata. While the mainstream media likes to talk nonsense about how Brat won because of his opposition to immigration reform, it appears the opposite is true. His winning issue was actually crony capitalism and Wall Street theft. Charlie Rangel has been a U.S. Representative. since 1971 and is currently the third longest serving Congressperson in America. He turned 84 years old this past Wednesday, and was at the center of a tax avoidance scandal several years ago. Of course, if a mere pleb like us were caught avoiding taxes we’d likely face harsh consequences. However, for a crony politician like Charlie Rangel all is forgiven and is allowed to continue to “represent” his constituents... his primary is June 24th.

With Hillary Clinton still plagued by relentless confrontations about her role in the Benghazi fiasco, which apparently are "making a difference", and certainly distracting from Obama's otherwise impeccable domestic (and foreign) reign, it was about time the US finally exposed a much more "appropriate" scapegoat for the public anger surrounding the events in Libya on September 11, 2011. Which is precisely what it did earlier today, when it was revealed not only who it believes the "mastermind" of the Benghazi attack is, but that the person in question, Ahmed Khatallah, had been captured.

Quite frankly where do you start? We are sure there will be congratulations for the capture of the Benghazi ringleader (an interestingly timed distraction) but what the President will be asked (if we have a press corps) are: why Iraq wasn't his fault, how 275 boots on the ground are not really boots on the ground, will the US partner with Iran to 'fix' Iraq, and what about new reports of Syria using chlorine gas? Not to mention lost IRS emails, the VA debacle, government-sponsored civilian deaths in GM cars, and of course, how Seattle raising minimum wages will increase jobs?

"Do as we say, not as we do" continues to be the policy of the ruling elites in America (and around the world). Having claimed in her book that the Clintons were 'dead broke' after leaving The White House and that she understood the financial struggles of Americans, Bloomberg reports that the Clintons are using financial planning strategies befitting the top 1% of U.S. households in wealth, creating residence trusts and shifting ownership. Crucially, this is all designed to shield their assets from the estate tax (that now tops out at 40% of assets upon death) - a tax that Bill and Hillary Clinton have long supported. “The estate tax has been historically part of our very fundamental belief that we should have a meritocracy,” Hillary Clinton said at a December 2007 appearance, as long as she doesn't have to pay it, it seems.

Inflation is once again soaring in the US. Oil is back above $100 per barrel. Stocks have more than tripled from their 2008 lows, and housing is now more expensive relative to incomes than it was in 2007 for some markets.

Here we go again:

• CHEMICAL WEAPONS WATCHDOG SAYS EVIDENCE SUGGESTS CHLORINE GAS-LIKE CHEMICALS HAVE BEEN USED IN SYRIA

Because apparently in the eyes of the administration, ordinary Americans are not only

The American Dream appears to be less and less appealing. Following the release of the names of individuals who renounced their US citizenship (or terminated their long-term US residency) in Q1 2014, the rate of expatriation from the USA is continuing its exponential rise...