Archive - Sep 10, 2014

While the just concluded 10 Year auction was hardly exciting, pricing at 2.535%, which was slighly higher than last month's 2.44% if still the second lowest yield for a 10Year auction in 2014, and a 0.2 bps tail to the When Issued of 2.533%. The Bid to Cover of 2.71 was slightly below last month's 2.83, and right on top of the TMM average. But it was the internals where there was some fireworks, with the Indirects taking down well over half of the auction, or 53%, the first time that Indirects have received a majority of the auction since June 2013 and the highest Indirect bid since December 2011. The flipside was that Dealers were left with just 33.6% of the auction, the lowest since May, and Directs left holding 13.5% of the final allotment, below the 18.5% TTM average. All in all, a snoozer of an auction.

"We are “uncomfortable” about the prospects for the broad market here in the US and abroad and we’ve bought derivatives sufficient in size to bring our net exposure to the equity market back to neutral once again. With 9/11 upon us, and with the very real possibility of al-Qaeda or the ISIL or some other “radical” fundamentalist, Muslim terrorist group… or some fanatic lone wolf… to wreak havoc upon the West seems uncommonly high. It is better to err upon the side of neutrality than to make large, or even modest, bullish bets at this point." - Said otherwise, Dennis Gartman does it again.

Current finance minister Sapin, perhaps unsurprisingly, has admitted that France will miss EU deficit targets and needs more time to rein in public finances - proclaiming, as Reuters reports, that it may take until 2017 to bring it in line. Germany's response "nein, nein, nein" with Merkel demanding EU nations stick to commitments (rejecting any plans to 'bend rules') and Schaeuble blasting that Germany is "certain France is aware of its responsibilities." But the real stunner is that as France shows its utter ineptitude in managing an economy, EU President Juncker has placed former French finance minister Moscovici in charge of Europe's taxes and finances. German lawmakers exclaimed this is "not a wise personnel decision." The core splinters...

There are some people, who if they don't already know, you can't tell em' --Yogi Berra

I would like to open a pass book savings account......................

For the terrorist group known as the Islamic State, Syria and Iraq were a good place to start their campaign, but in order to survive and prosper it knew from the outset that it had no choice but to set its sights on the ultimate prize: the oil fields of Saudi Arabia.

Well, I am profitable on this latest move up in 10-year yields, and I expect yields to continue rising through the 10 and 30 year bond auctions later this week ...

The penny stock mafia are at it again...

Yesterday, former Fed Chairman Alan Greenspan was the keynote speaker at KPMG’s 2014 Insurance Industry Conference Tuesday, where he answered questions such as 1) where the economy is going, 2) why, and 3) when (if ever) is it likely to improve. The answers, as reported by Property Casualty 360, are: 1) nowhere fast, 2) because nobody is willing to invest, and 3) eventually, but nobody can tell when. He listed 9 specific reasons why the "economy stinks", although surprisingly, nowhere did he mention the fact that the current and future economic disaster is all a direct result of his ruinous reign at helm of the Fed where as a result of his "great moderation" and the Fed's catastrophic monetary policies conceived mostly under Greenspan himself, the economy is now perpetually stuck in a boom-bust cycle, and where every time a bubble bursts another has to replace it or else the entire western way of life will be gone in a heartbeat.

Day after day we are told, just wait for rates to rise ("which they 'have' to because economic growth is so strong") and stocks will take off into the next leg of exuberance... why else would the Fed end QE and start more hawkish discussions? (aside from the fact they truly fear broken repo, exuberant markets, and lethargic politicians). Be careful what you wish for... Mortgage rates rose last week, back to the same level they have been at for 3-months, and refinancing activity (adjusted for holidays) collapsed to its lowest since 2008... and home purchase activity tumble back towards 20-year lows.

First fines have been imposed for manipulation of the gold fixing, the silver fixing is even discontinued entirely. But is everything in order with the platinum fixing? Have there been manipulations – and are they part of a larger manipulation campaign?

As reported ealier this morning, here, courtesy of Bloomberg, are the nominees for the next European Commission under the presidency of Jean-Claude "If Serioues Then lie" Juncker, with one from each of the European Union’s 28 countries. Job assignments were announced today by the incoming president, Jean-Claude Juncker of Luxembourg. What do these appointments mean for the European Union? The attached flash analysis from Open Europe should answer most initial questions.

With GDP now basically an exercise in inventory expansion and contraction (Q2 inventory estimate amounted to 40% of GDP), this 'miss' in July Wholesale Inventories provides a worrying glimpse into Q3 GDP.  Against expectations on a 0.5% rise MoM, inventories rose only 0.1% (and June was revised lower) to the weakest inventory build since May 2013. This is the 3rd miss in a row.

We have recently noted the increasing pressure on the Swiss National Bank (SNB) over its peg to the EUR in the midst of a capital flood from Europe. The slow bleed strengthening of CHF against EUR had many concerned the SNB would be forced (by exogenous factors) to adjust the peg. But, this morning, it appears they tried to draw a red line... CHF has plunged after SNB's Mosler said negative interest rates remain an option should its minimum exchange rate (peg) come under threat. So, first NIRP in Europe, then in Japan (as per our overnight discussion), and now the Swiss warning NIRP is coming there next...

But... but... but... it's the best ever, the most innovative, "never been seen before" - apart from none of that is true (as we noted yesterday). It appears investors feel the same way as AAPL's stock price tumbles from pre-celebrity-naked-selfies to the critical 50-day moving-average...