Archive - Jun 2014

Hillary Clinton may have left the White House "dead broke" in her own words over a decade ago, but the same can hardly be said about her daughter, Chelsea, who as Politico revealed today, was being paid an annual salary of $600,000 at NBC News before switching to a month-to-month contract earlier this year.

Anxiety over the Qingdao port and warehouse probe is slowly but surely creeping through all the commodities that were used in China's commoditty-financing-deals (as we noted here). With Copper hurting (and gold picking up), Iron Ore prices have tumbled to 21-month lows (near the lowest since 2009) as 'real' demand slows as the economy slows and 'financial' demand is crushed as "banks are more vigilant about iron ore financing." As Bloomberg reports, investigators are trying to determine if individual batches of commodities were used multiple times to secure loans. This is making banks nervous (shadow and non-shadow) and while iron ore inventory is falling, prices are adjusting lower rapidly as traders anticipate "financing problems forcing traders to dump ore."

First it was JPM and Bank of America, now it is Citigroup's turn to confirm that in the New Normal, and especially with no volume to speak of, banks are nothing but piggybank utilities for the government to extract cash from whenever it so desires. From Bloomberg:

• U.S. SAID TO SEEK MORE THAN $10 BLN IN CITIGROUP MORTGAGE PROBE
• U.S. PROBE RELATES TO CITIGROUP'S MORTGAGE-BOND SALES

However, Citi appears less than excited at the prospect of paying $10 billion to buy itself out of trouble. In fact, as the price of justice is being negotiated, Citi has offered only 40 cents on the dollar to tip the scales of what is right and wrong under the Eric Holder regime. Sadly for it, the government wants more.

Having set a deadline of June 16 (next Monday) for pre-payment of gas supplies from Russia to Ukraine, it appears Ukraine officials are willing to take the pain of no energy instead of paying what Gazprom is asking:

UKRAINE PM ORDERS GOVERNMENT, REGIONAL AUTHORITIES TO PREPARE ENERGY SECTOR FOR RUSSIAN GAS CUTS FROM MONDAY

The last negotiation had Ukraine willing to pay $326 and Russia asking $385, which Ukraine said "was not a market price." There are more problems for Europe though as Ukraine's PM has ordered the national regulator to revise 'transportation tariffs' for Russian gas via Ukraine (i.e. to Europe).

This week’s news certainly WASN’T BORING.  Big events and small add up to unfolding CHAOS around the WORLD. This week’s subjects: American Empire on FIRE!,  Out on a LIMB: Credit Unions facing INSOLVECY,  Is rising indebtedness a sign of economic strength?,  Bond YIELDS continue to collapse as the race for yield INTENSIFIES,  George Orwell in Action, Showdown looming at the OK corral!,  Simply UNBELIEVABLE SOVEREIGN credit market action, PHANTOM GDP, Rare INDEED, Must watch video interview with Charles Nenner,European BANKING SYSTEM INSOLVECY

It is hard not to gloat when reading the latest embarrassing mea culpa from Bank of America's Ethan Harris, who incidentally came out with an "above consensus" forecast late last year, and has been crushed month after month as the hard data has lobbed off percentage from his irrationally exuberant growth forecast for every quarter, and now, the year. As a result, BofA has finally thrown in the towel, and tongue in cheekly admits it was wrong, as follows: "our tracking model now suggests growth of -1.9% in 1Q and 4.0% in 2Q for a first half average of just 1.0%.... Momentum is weak, but fundamentals are strong. We have lowered second half growth to 3.0% from 3.4%."

Following last month's drop and disappointing miss, University of Michigan Consumer Confidence just got even worse. Despite record high stock prices and near record high car purcahsing exuberance, consumer confidence tumbled for the 2nd month in a row (just when the pent-up demand of Q1 is supposed to kick in). This is the biggest miss of expectations since Dec 2012 and appears to confirm the lack of exuberance seen in the government's survey data. Inflation expectations dropped to the lowest in 2014 as hopes for the economic outlook dropped to 3-month lows. Not the animal-spirity, wealth-creatingy, exuberance the Fed (and every multiple expansion-hoping muppet) was expecting...

With nicknames like "The Money Wizard" and "Gran Hustle," 88 people have been indicted in what the FBI calls "one of the largest federal food program frauds ever." Grocery stores were created for the express purpose of laundering WIC (Women, Infant & Children) and Food Stamp (EBT) funds from willing benefits-receivers who were given discounted cash for the "food" stamps canvassed from "low income neighborhoods" in Georgia. The government seeks the forfeiture of $20 million in bank accounts and assets, including two luxury vehicles, a 2008 Mercedes Benz and a 2008 Land Rover. Exceptional!

Here is what happens to GM when month after month it confirms it has flunked the Derek Zoolander school for bailed out companies who can't build cars good: GM has now recalled 70% more cares than it sold in all of 2013, and has recalled 83% more cars in the first 6 months of 2014 than it did in the entire 2008-2013 period!

In case there was any concerns that the US Secretary of State is unable to handle the rapidly moving events in Iraq due to being stuck on his boat (again), here comes the Ketchup heir-in-law, speaking at the London Global Summit to end sexual violence in conflict (!) to diffuse all fears that "just once" the US may not be on top of its foreign policy game: KERRY SAYS OBAMA MOVING `RAPIDLY' TO DECIDING ON IRAQ RESPONSE; KERRY SAYS "WE ARE LASER-FOCUSED ON DEALING WITH THE CRISIS AT HAND." And just like that, the jihadists who are too extreme even for Al Qaeda, will surely promptly scatter, fearful what drastic sanctions the US will impose on the Al Qaeda central bank and, heaven-forbid, the travel ban that will likely also follow...

After the surge in prices in April, May's Producer Prices fall 0.2% MoM (compoared to a +0.1% expectation). Year-over-year inflation rose 2.0% (down from last month's 2.1% and missing expectations of 2.4% significantly). This is the first MoM drop since Febuary for the headline and core numbers as it appears vehicle rental appeared to see prices implode. PPI Ex Food and Energy (core), saw prices rise at 2.0% - the fastest since May 2012.

Just when you thought it was safe to stay home...

In December 2012, 70% of those polled viewed Hillary Clinton favorably; in March 2014 it was down to 56%; and now, as President Obama's approval rating hits record lows, only 52% view Hillary Clinton favorably. "She is down across the board," notes the poll, "even with groups that have been her most ardent supporters." As Bloomberg reports, among likely 2016 voters, Clinton remains ahead with 47% support compared to 38% for each of her potential opponents.

While the US scrambles to figure out what the least painful way is to admit yet another humiliating foreign policy defeat, things in Iraq continue to deteriorate as the relentless blitzkrieg unleashed by the ISIS/ISIL Al-Qaeda spin off, which has shocked everyone by its speed and scale, takes two more towns, as it rushes for its target: Baghdad itself.

• Tea Party struggles to repeat Cantor-style shock in Tennessee (Reuters)
• Iran Deploys Forces to Fight al Qaeda-Inspired Militants in Iraq (WSJ)
• Oil Rallies as Militant Advance in Iraq Threatens Crude (BBG)
• Gold Set for First Back-to-Back Weekly Gain Since April (BBG)
• Hedge Funds Get Stung by Slow Markets (WSJ)
• Sterling nears 5-year high after Carney speech (FT)
• Britain Warns Boom in Real-Estate Prices Threatens Economy (WSJ)
• East Europe Leaders Urge EU Unity to Counter Russia (BBG)
• Formula One Said to Be Valued at $8 Billion as Malone Seeks Stake (BBG)
• Dumb and dumber: Abe Plans Company Tax Cut in 2015 as Kuroda Warns on Budget (BBG)