Archive - Jul 25, 2014

If you shorted CYNK at the all time highs well over $20 several weeks ago, just before the stock was halted after the SEC finally woke up to its duty of protecting investors from pump and dump ponzi schemes (such as the broader market for example) congratulations: you are now up a lot to quite a lot, as the stock has just reopened for trading some 86% lower (on the usual volume of virtually no shares, even though the FT just told us that illiquidity is bullish), a price at which it still has a market cap of over $500 million! The only question: how does this company, which technically doesn't exist, still have any equity value left?

The EU and global drive toward bail-ins continues unabated. Bail-ins are coming to financial institutions and banks in the EU, UK, U.S. and much of the western world - with painful consequences for unprepared investors and savers.

In an effort to make the MH17 crash site safer, Dutch Prime Minister Mark Rutte has announced that he will be sending 40 unarmed military police. As AP reports, the military police will help the investigators (along with forensic experts) "to look for remaining remains and personal belongings" and "to try to piece together exactly what happened." While pro-Russian separatists have ensured the site is a safe place for the Dutch investigators (who have been given the lead role since Holland was so hard hit), Rutte acknowledged that it "remains a risky place to work," and "will constantly reassess the situation."

The S&P500 has now gone nearly 800 days since a correction of more than 10 percent – the “meaningful” level for many analysts. The more extended the market becomes, the larger the eventual decline may be. Over the last 50 years, the longer the time between market corrections, the steeper the drop once the correction does occur.

Q2 manufacturing is now in the books, and despite all those euphoric manufacturing surveys, it was a big dud. And as it goes, so does that CapEx rebound that is always just around the corner, but never actually here. Bring on the latest round of downward Q2 GDP revisions...

According to Reuters, key measures suggested by the Commission include:

• closing EU capital markets to state-owned Russian banks,
• an embargo on arms sales to Moscow,
• restrictions on the supply of energy and dual-use technologies.
• a list of 15 individuals and 18 entities, including companies, subject to asset freezes for their role in supporting Russia's annexation of Crimea and detribalization of eastern Ukraine.

Of course, since France would blow a gasket if its Mistral ship was impacted by the sanctions, and since this really is just another populist measure not intended to really punish Russia (as that would mean a prompt shut off of European gas and an even prompter slide into a triple dip recession if not outright depression), Europe promptly "detoothed" the sanctions by announcing that they would not affect current supplies of oil, gas and other commodities from Russia, diplomats said.

Think only the US can engage in the farce known as "sanctions" (why theater, because until Obama sanctions Gazprom, yeah right... crickets... it is nothing but populist theater)? Think again. Overnight Russia's consumer protection agency, filed a lawsuit in a Moscow court - which clearly has nothing to do with recent geopolitical bickering between the former Cold War enemies - seeking to ban some of McDonald's Corp's burgers along with its milk shakes and ice cream, a court spokeswoman said on Friday. The reason for the ban: as Reuters reports, a regional branch of the consumer protection agency Rospotrebnadzor asked the court to declare production and sales of some products illegal due to "inappropriate physical-chemical parameters."  The lawsuit's list of contested products named the fast-food chain's Royal Cheeseburger, Filet-o-Fish, Cheeseburger and Chicken Burger but not its Big Mac burger.

• Argentine holdout NML says government "choosing" to default (Reuters)
• Crunch time for Gaza truce talks as death toll passes 800 (Reuters)
• Don’t Tell Anybody About This Story on HFT Power Jump Trading (BBG)
• U.S. Accuses Russia of Shelling Eastern Ukraine (BBG)
• France’s Wheat Exports in Question as Rain Spoils Quality (BBG)
• Tapering in action: Lower printer sales hurt Xerox's revenue (Reuters)
• No liquidity? No Problem, there's an ETF for that: Bond ETFs Swelling in Europe as Trading Debt Gets Tougher (BBG)
• Herbalife hires ex-Biden chief to fend off regulators (NYPost)
• GM recalls far from calamity for some dealers who find new customers, business (Reuters)
• Bad weather likely cause of fatal Air Algerie crash: French officials (Reuters)

Following yesterday's disappointing results by Visa, which is the largest DJIA component accounting for 8% of the index and which dropped nearly 3%, while AMZN's 10% tumble has weighed heavily on NASDAQ futures, it has been up to the USDJPY to push US equity futures from dropping further, which it has done admirably so far with the tried and true levitation pump taking place just as Europe opened. One thing to keep in mind: yesterday the CME quietly hiked ES and NQ margins by 6% and 11% respectively. A modest warning shot across the bow of what may be coming down the line?