Archive - Jan 27, 2015

"This is not blackmail," explains new Greek Finance Minister Yanis Varoufakis, "we simply want to end this seemingly never-ending Greek Crisis." In what must be worryingly calm and simple to comprehend words for Brussels, Varoufakis tells CNBC's Michelle Caruso-Cabrera, "this is what happens when you humilate a nation and don't give it any hope." Carefully noting that membership in the Euro is not imperative, Varoufakis concludes "bankruptcy cannot be dealt with by borrowing more," asking rhetorically, "how can I look the German and Finnish taxpayer in the eye and tell them you know I can't really pay you the money I have already borrowed from you..." but lend me more so I can pay back the ECB?

We are happy to report that the P&L drought may have finally ended, and we have none other than the man many have suggested could be next in line for the title of honorary "Tom Stolper" of the FX realm: BofA's technical strategist MacNeill Curry. Moments ago, Curry came out with a trade reco which is, not surprisingly, just in line with what the vast consensus, and not to mention the Bank of Japan, thinks: long USDJPY.

According to the doctrine of central planners, the idea of Q€ is to lower rates to encourage borrowing (and credit creation) to spark growth and kickstart a virtuous recovery. As the following chart shows, that is total and utter crap... French jobseekers just hit a fresh record high and French rates just hit a record low - and that has been the story for 6 years. So  - just as The Fed was finally forced to admit, Q€ is nothing more than wealth redistribution from all taxpayers to the ultra-rich asset owners who - it is hoped- will bless the plebeians with some trickle-down-ness... with every asset under the moon already at record highs, once again we ask - just what do you think this will achieve Draghi.

Greece will be first, followed by the rest of the PIIGS in Europe. Japan is also on the block as will be the UK and ultimately the US.

Just because we do not acknowledge the binds that tie us to our servitude does not invalidate their existence, but rather significantly strengthens them.

In the early 1970s, there were about 200,000 new US businesses created each year (net of closures). Now, the number is negative. Why are Americans getting poorer? Look no further. No new businesses (net). No new jobs (again net). No new wealth. Under Obama and Draghi, crony capitalism flourishes. Real capitalism dies.

The Swiss-Franc-inspired spike in crude oil (crazy but true) as Europe opened has seen its highs broken as WTI Crude tests $46 once again following reports of Saudi Oil Minister Ali Al-Naimi meeting with Rolf Willy Hansen - ambassador of Norway, Oleg Ozerov - ambassador of Russia, and Pekka Voutilainen, ambassador of Finland; to discuss "market stability." Why would that spike oil prices? Because the three are plotting the final destruction of US shale... just as Obama makes an appearance at Abdullah's funeral?

If you are wondering about the morality of a nation or the lack thereof...

Last year Austria's largest bank, Erste Bank, sent shudders of Credit Anstalt through the European Banking System. This year it is Austria's 3rd largest bank that is scaring investors senseless. On the heels of the Swiss National Bank's decision to un-peg from the Euro, Raiffeisen Bank's Swiss-Franc-Denominated mortgage worries have resurfaced (along with Russian/Ukraine writedowns) and nowhere is that more evident than the total collapse of the bank's bonds (from over 95c to 65c today). Even after the ECB Q€ (and some apparent intervention to weaken the Swissy) bonds kept free-falling. Perhaps, The Freedom Party's demands for a bailout will grow louder as the contagion concerns across Europe's banking system explode...

Kyle Bass would hold an economic summit every year at his ranch in East Texas. He would kick off the festivities by introducing his sniper friends.

"That'll teach them Russians" - oh wait... The kneejerk selling of Russian Rubles and stocks post-downgrade has almost entirely been erased and dip-buyers appear to be greatly rotating from US to Russian stocks today...

Draghi, we have a problem. EURUSD is back above 1.14 - having retraced over half the post-Q€ collapse. More troubling though - and the entire raison d'etre of Q€ (according to officials) - forward inflation expectations are now dramatically lower than pre Q€ levels...

Given that Russia perceives itself to be under financial and economic attack from the West, there is the possibility that they are accumulating more gold than they are declaring officially to the IMF.

De Nederlandsche Bank, the Dutch central bank has denied reports in Reuters, Bloomberg and picked up by GoldCore, that the bank had increased its gold holdings for the first time in sixteen years. IMF data had shown that the Dutch had increased their holdings to 622.08 tonnes.

The Dow is now down 360 points on the day - its biggest point drop in 19 months. Perhaps more notable is that since the End of QE3, The Dow is now down 0.4% - but the fundamentals we hear you cry...

You will pardon us if we don't "buy" the latest attempt by the Census Department to telegraph housing euphoria with the just reported number of 481K new December home sales, a surge of 11.6% compared to November, an increase which was expected by the consensus to be only  2.7%. In fact, the 481K print is now the "highest" since June of 2008. The reason for our disbelief? Because as we have been tracking for the past 6, and now 7 months, every single such euphoric print since May of 2014 has been revised substantially lower after the fact (and after the headline-scanning algos promptly gobbled up stocks on the initial "beat"), and sure enough, the November print of 438K, was also just "revised" downward to 431K.