Archive - Jun 26, 2014

All sorts of promises, explicit and implicit, were issued to win votes. All the promises are now empty, and we might as deal with this reality head-on... if we can muster up the almost-lost ability to deal with reality rather than rely on fantasy/wishful thinking.

More Hollande 'broken promises' as French joblessness reaches a new record high. Aside from the idiotic month when officials forgot to send text messages, this is the 36th month in a row of worsening employment in France. That must explain why, along with a collapsing PMI, French bond risk remains near record lows...

It wasn’t an edgy blogger but the Office of the Comptroller of the Currency that issued the warning.

It was about two months ago when in a shocking development in the otherwise sleepy tax-evasion haven of Lichtenstein, the CEO of local Bank Frick, was murdered in the underground garage of the bank by a disgruntled former client. As readers may recall, the tragic event happened at a time when there was a spike in banker suicides, prompting us to wonder if "with the first open bank CEO murder, one wonders if there will be a change in the pattern." Two months later it appears as if the vector of death is indeed changing when, as Reuters reported, overnight the head of the fourth largest bank in Albania, Credins, was murdered, shot at least five times, as he entered his office in the capital Tirana.

First, it was gold manipulation and now alleged equity market rigging; it seems investors (and customers) have finally had enough. Barclays stock price is down over 8% today and trading back at 18 month lows. Of course, we will hear that this is the kitchen sink quarter etc... "remember the London Whale" but the trail of alleged fraud (and the damning emails) suggests catching this falling knife is anything but a "no brainer"...

With all eyes firmly focused on the dismal Q1 GDP print and summarily dismissing it as 'noise', backward-looking, 'weather', and 'exogenous'; today's worrying spending data has sent the serial extrapolators among the sell-side economist herd scrambling to downgrade over-exuberant Q2 GDP expectations (five so far). One glance at this chart is all one needs to know about the "bounce back" in pent-up demand spending (that is not there). As Bank of Tokyo-Mitsubishi's Chris Rupkey told Bloomberg, "Don’t start betting on those 3% GDP numbers yet." This only trumped Goldman Sachs 'oh-so-embarrassed-again' Jan Hatzius who slashed his exuberant 4% Q2 GDP growth estimate to 3.5% (for now).

Following yesterday's revelations that Barclays was raping its clients, maliciously misrepresenting and lying to them on a daily basis, who could have possibly foreseen the following development:

• BARCLAYS SAID TO LOSE DARK POOL TRADING CUSTOMERS AFTER SUIT
• BARCLAYS SAID TO BE SHUNNED BY BERNSTEIN, VOYA AFTER SUIT

Furthermore, traders are getting notifications that routing to LX is now down, meaning the dark pool is now merely... dark.

It appears Germany has come out swinging ahead of today's FIFA World Cup match:

*GERMANY ENDING VERIZON CONTRACT, CITING NSA: AP

Is this the "boomerang" that Putin warned Obama about?

I was reminded of this by this story from Salt Lake City, which tells of an officer that was looking for a lost child. For reasons wholly unclear to me, in conducting a house-to-house search, this "peace" officer shot and killed a dog.

UPDATE: FIFA bites back and bans Uruguay's Luis Suarez for 4 months

As 12ET rolls around and USA's soccer team prepares to engage zee Germans with the goal of advancing to the FIFA World Cup's knockout stage, Bloomberg undertook an 'economic' face off to see just how the two powerhouse nations stack up. The result - a 4-0 win for Germany does not bode well for the soccer...

"Markets don't appreciate how close the Fed is to its goals," and thus tightening, is the warning from the usually quite dovish Jim Bullard.

BULLARD SAYS MARKETS DON'T APPRECIATE HOW CLOSE FED IS TO GOALS; MARKETS SHOULD BE PRICING IN RATE INCREASES BASED ON WHAT THE FED SAYS

Remember, don't fight the fed - unless they say sell?

Presented with no comment...

Can someone please help us find just where is this much-hyped consumer spending spreed is please?

When "justifying" the abysmal Q1 GDP print, one after another economist has scrambled to explain that this number is irrelevant, due to a spending halt during the "harsh winter", following which the US consumer has been spending like mad in Q2, and the PCE, which in Q1 was an abysmal 1.0%, and the worst since 2009, is set for a major rebound. Well, guess what: after last month's huge miss (originally -0.1% now revised to 0.0%, on expectations of a 0.2% rise), the month of May - the second month of Q2 - just showed that US consumer still refuses to spend. In fact, while personal income came in line with expectations in the month of May, rising 0.4%, same as expected, and disposable income in current dollars rising by $56 billion to $12,877 billion, it was spending which missed for the second month in a row and the 4th miss in the past 6 months rising only 0.2%, half the expected 0.4%! This was the fourth spending miss in the past six months.

Forget PPI (it's "cyclical"); ignore CPI (it's "noisy"); dismiss all the recent PMIs showing input prices surging and output prices dropping - that is the message the Fed is feeding the world over its 'inflation' concerns. However, the one indicator that the Fed really focuses on (or has said it does until now) - the PCE Deflator - just surged to 1.8% - its highest since October 2012 and nearing the Fed's 2% mandate-stumping level. Ignore that Janet!