Archive - Jun 17, 2014

As if the market needed any further proof it is not only manipulated and rigged (at least under a legal system that classifies trading on insider information as illegal), but is constantly abused by those with material, non-public information - i.e., insiders - here comes a study conducted by professors at McGill and New York Universities, which, as the NYT summarizes, finds that "A quarter of all public company deals may involve some kind of insider trading."

"While some may cheer an earlier Fed rate hike, its hard to see the recent growth-inflation mix as anything other than discouraging." - JPMorgan

Do you remember the serfs and servants and villeins and peasants in the good old times of feudalism and the Middle Ages? If you don’t, I have good news for you! The custom of working in return of goods instead of salary revives in Greece of modern European Union and of exquisite Euro area. The results of a survey conducted by the Labor Institute of the Confederation of Labor Union (GSEE) are shocking but not unexpected...

Just minutes after claiming the 'explosion' at "The Brotherhood" pipeline in Ukraine was not an explosion but a 'fire', Ukraine's interior minister Arsen Avakov has stated that:

*UKRAINE SAYS GAS PIPELINE EXPLOSION PROBABLY TERROR ATTACK

Of course, the question is which 'terrorists'? The Right Sector or the Russian separatists. According to reports from UKRTransGas, the fire has now been extinguished but it is the rhetoric of Ukraine's Yatsenyuk "Russia's gas halt aims to destroy Ukraine" that is most troubling as, like Russia's Pushkov warned, Ukraine-Russia tensions have reached a new stage.

A month ago, using the latest UK housing data from Rightmove, we asked a simple question: whose housing bubble is bigger: China's, or the place where increasingly more of China's $25 trillion in bank assets are being parked: the UK (specifically London). Using then available data, the answer was still a toss-up, even if the divergence in directions was quite clear. Earlier today, we finally got the official data from the UK's Office for National Statistics, and we politely retract our question, as rhetorical as it may have been. The reason: there is no contest - the UK's housing bubble has officially slammed China's, and the result is nothing short of a knock out.

Presented once again (6mths and 180 golf rounds forward)...

In 2006, I invited the late General Bill Odom to address my Thursday Congressional luncheon group. Gen. Odom, a former NSA director, called the Iraq war “the greatest strategic disaster in American history," and told the surprised audience that he could not understand why Congress had not impeached the president for pushing this disaster on the United States. History continues to prove the General’s assessment absolutely correct.

Disappasionate overview of what to expect from the 2-day FOMC meeting that begins today

As reported moments ago by the BLS, real average hourly earnings just posted their third sequential decline in a row, dropping from $10.33 in February, to $10.32 in March, to $10.30 in April, to $10.28 in May.  Furthermore, this was the first year over year decline since October 2012. And to put today's $10.28 real average hourly earnings number in context, this is the same real wage seen last in July 2013, July 2012, March 2011 and then, if one goes further back... the month after Lehman failed!

In what we are sure will be a reassuring hearing full of confirmation that markets are unrigged, safe for investors, and why retail has never had it better, the Permanent Subcommitte on Investigations will start by hearing from IEX's Brad Katusyama who will, as he did before, put them straight on the real actions of the high frequency trading community... Remember the last time HFTs tried to defend themselves... they lied.

Blame it on the... spring?

The Fed is losing its reasons for printing, leaving it desperate to revive the meme that the US economy is in self-sustaining recovery mode. At 2.0% Core CPI has caught up with the hot-flation of PPI removing the crutch of low-flation easement the Fed has been relying on. While Ex-Food-and-Energy is surging (well above expectations), the food index rose 0.5% in May after increasing 0.4% in each of the three previous months; and the index for food at home increased 0.7%, its largest increase since July 2011. This is all happening against a backdrop of real hourly wages dropping 0.1% YoY.

An indication of just how off the charts the 2014 edition of the full retard bond bubble is comes from Kenya which priced a debut $2bn eurobond yesterday and in the process managed to break the record for the largest debut for an African country in the sovereign bond market. One tranche of the offering was a $1.5bn 10 year note that priced at a yield of 6.875%. Kenya is rated B+ and the deal came several days after a large-scale terrorist attack in Kenya. The punchline: according to the FT, the orderbook was more than four times oversubscribed which is roughly equivalent to around 20% of the country’s GDP according to Bloomberg data.

Events in Iraq are changing by the hour, now that US combat boots are "on the ground", expect them to change even faster. For those looking to catch up on the most recent overnight news out of this latest civil war torn country, here is the full update.

• Obama to tout manufacturing gains, highlight economic progress (Reuters)
• Iraq Gunmen Attack North of Baghdad as Obama Weighs Plan (BBG)
• Chinese Regulators Block Shipping Alliance Abandoned Deal (WSJ)
• Russian $8.2 Trillion Oil Trove Locked Without U.S. Tech (BBG)
• Ukrainian forces, rebels clash near Russian border (Reuters)
• M&A talk lifts stocks, Iraq tensions ease slightly (Reuters)
• Wealthy Clintons Use Trusts to Limit Estate Tax They Back (BBG)
• Argentina vows to service debt despite new legal blow (Reuters)
• Allergan's Bitter Pill for Morgan Stanley (WSJ)
• Islamists kill 50 in Kenya, some during World Cup screening (Reuters)
• American Express Revs Up Pursuit of the Masses (WSJ)