Archive - Jan 7, 2015

This should be good... On the same day as the administration pushes through 3% down FHA loans for some insane reason, President Obama is in Michigan to discuss the renaissance of the US Autoo industry (or more correctly described- the rebirth of the subprime lending bubble)...

A tragedy is unfolding in Paris at the moment where armed men stormed the Paris offices of French satirical magazine Charlie Hebdo on Wednesday morning, killing “at least 12 people” and injuring more, said a police officer. As a reminder, it was in November 2011 when the Charlie Hebdo’s headquarters were gutted by fire, hours before a special issue of the weekly featuring the Prophet Muhammad appeared on newsstands. Since then, the weekly moved to a new location, which was guarded by police, who were also shot at Wednesday morning. The shooters opened fire inside the magazine’s offices using automatic AK-47 rifles before fleeing, said the officer, cited by the WSJ. The attackers, described as "a commando with Kalasnikov and pump action... they went in there to kill" are believed to still be at large as France is "in shock" according to its president.

Update: Liberation now backtracking on the arrest report, saying this instead: The Interior Ministry denied the arrest of the suspects, but police sources, it was confirmed their location and identification.

Having managed to escape after their murderous rampage at the Charlie Hebdo offices, some were skeptical if the police would be able to catch the shooting suspects, who were identified minutes ago, alive. Moments ago French newspaper Liberation reported that the three suspects have indeed been arrested: google translated

The three suspects have been identified. This is Said K., born in 1980 in Paris, Sherif K., born in 1982 in Paris and Hamyd M., born in 1996. All three are from Gennevilliers (Hauts-de-Seine). They were reportedly arrested but no official confirmation comes in time for the Interior Ministry.

Note there is no official confirmation from French authorities yet so it is not exactly clear where Liberation is getting its information.

Calls for a decoupling between the Fed's balance sheet and the "market" may have been premature: following the latest selloff, the S&P's "strange attractor" is once again a very old and familiar one: the size of the Fed's assets, which - if only for the time being - have stopped growing. Ironically, those calling for a selloff after the end of QE3 were right, if wrong on the asset class: crude is down 40% since the end of QE3!

"In their discussion of financial market developments, participants observed that movements in asset prices over the intermeeting period appeared to have been importantly influenced by concerns about prospects for foreign economic growth and by associated expectations of monetary policy actions in Europe and Japan."

Moments ago, French Le Point revealed the nationality of the three Paris terrorists: via Bloomberg: PARIS ATTACKERS ARE FRENCH-ALGERIAN, LE POINT SAYS

Le Metro added that two of the three men, aged 18, 32 and 34  were actually born in France. And finally, according to French sources, their names: Said Kouachi, Cherif Kouachi and Hamyd Mourad

While the vast majority of mainstream economists and analysts currently expect 2015 to be another robust year for the economy and the markets, there is a rising risk to that forecast. If oil prices, a reflection of global economic demand, remains depressed for a considerable period of time, the negative impacts of loss of employment, reductions in capital expenditures and declines in corporate profitability could outstrip any small economic benefit gained from lower oil prices. As we stated previously, for those who have lived in Texas long enough to remember the oil rout in the early 80's, the greatest fear in 2015 is that oil prices remain low.

Whether this is a double-bluff is unknown, but for now, the North Koreans and ISIS are off-the-hook for the terrorist murders in Paris this morning. As The Telegraph reports, a 33-year-old witness to the attacks has said that two terrorists shouted "tell the media that this is al-Qaeda in the Yemen," before the brutal killings.

Amid all of the confusion stemming from the December dissents and disinformation, the hope was that the Minutes might add some color on global risks, inflation, and lift-off timing.

• *FED OFFICIALS SAW RATE RISE UNLIKELY BEFORE APRIL, MINUTES SHOW (Patient)
• *MANY ON FOMC SAW DOWNSIDE RISKS TO U.S. FROM GLOBAL WEAKNESS (Fear)
• *FOMC SAW OIL, DOLLAR MOVES TEMPORARILY PUSHING INFLATION LOWER (Transitory)

So The Fed is positive (jobs, US Econ), negative (global risk contagion), and neither (everything's transitory). Pre-FOMC Minutes: S&P Futs 2018.5, 10Y 1.97%, Gold $1210, WTI $48.16

The December FOMC statement revealed a lack of agreement among Fed officials over communication, BofAML explains, as evidenced by the complicated extension of the forward guidance language and the dissents from both sides of the hawk-dove spectrum. While Standard Chartered expects the Minutes to show The Fed in no rush to raise rates, UBS warns the Minutes “could upset market perceptions of what is important to the Fed’s decision-making process."

No reason to sell.  No reason to buy.  That about sums it up.  Unfortunately, that is about as optimistic a scenario as we can come up with, supported by equally optimistic growth expectations. In reality, the market has no support.  We can only hope that it will not crash at the first sign of trouble. There are always good reasons to own a home, a place to raise a family. However, home ownership via extremely leveraged financing carries enormous and unprecedented risk. We think many potential buyers recognize the risk and are correctly staying out of the market. The new normal in real estate terms is unlikely to be what the market is hoping for.

The Queen has sent "sincere condolences" to French President Hollande over the Paris attack (as have Obama, Merkel, and Cameron) as he puts Paris on high terrorist alert as the manhunt for the reported 3 killers continues. Front National's Marine Le Pen has been more vociferous in her remarks, wanting to "defend against war waged on France," and calling for "rejection of fundamental islam." The remarks and actions of the day are even more chilling in light of Chrlie Hebdo's editor's comments in 2012 that "our job is not to defend freedom of speech but without it we're dead. We can't live in a country without freedom of speech. I prefer to die than to live like a rat."

Clash of civilizations? Basically, 12 people have been murdered today for drawing stupid cartoons...