Archive - Nov 2015

It is not just shorts buying and insiders selling. One other, quite persistent force has reemerged and contrary to the speculation that corporations are currently in an stock repurchase blackout period, the reality is anything but.

Strange Bedfellows ...

"As more information has come to light, we have become concerned that the plane may well have been brought down by an explosive device."

When Saudi Arabia moved to Plaxico themselves last November by killing the petrodollar in an effort to bankrupt the US shale space and tighten the screws on Moscow, Riyadh set in motion a series of events that culminted in a 20% fiscal deficit and, most recently, an S&P downgrade. Now, the kingdom is not only running out of money, but water and food as well.

The Illinois cop, whose death sparked a massive manhunt in September, fatally shot himself in a "carefully staged suicide" after committing "extensive criminal acts," police said Wednesday according to NBC News. Initially hailed as a hero after his death, Fox Lake, Illinois, police Lt. Joe Gliniewicz is now likely to be remembered by another label: a betrayer. As the local police commander told CNN, the officer placed his equipment at the scene in an "attempt to mislead first responders and investigators to believe this was a homicide," and far from being a hero, Gliniewicz "committed the ultimate betrayal" with his actions over the past several years which included stealing and laundering money from a program that mentored young people.

Make no mistake, the War on Cash is very real. And it’s unfolding before our very eyes.

Following today's mauiling of the short end, few were expecting a strong 2 Year auction. They did not get it. As widely expected, the yield of 0.824% jumped from 0.699% a month ago to a level seen in April of 2010. The good news: it wasn't as bad as it could have been: the When Issued was trading at 0.825% at 1pm. The Bid to Cover was ugly too, because at 3.013 this was the lowest implied demand for 2Y paper since May of 2010.

"Absent the central banks, we would be in the later stages of a credit cycle," warns Principal Global Investors's David Blake as 2015 has now seen the most corporate debt downgrades since 2009 and the upgrade-downgrade ratio crashes to financial crisis lows. A lot of people are recognising we are closer to the end of the credit cycle than the beginning, and while stocks have bounced back dramatically as Dana Lyons' details, junk bonds have not; a combination normally associated with more extensive bear markets and recessions. As BofAML analysts warned "the slow moving train wreck seems to be accelerating."

Welcome to the most bifurcated US jobs market ever... According to ISM, employment is best since 2005 for the Services 'economy' and the worst since 2009 for the Manufacturing 'economy'. The last two times the labor market was so divergent... did not end well.

Yesterday, we learned that Fannie Mae recently rolled out a new program known as “Home Ready,” which would allow borrowers to obtain a 3% downpayment mortgage with no minimum cash contribution. Now we learn this...

"God's plan is not for things to rise in the autumn, that is why it is called fall... If you want to be good with The Almighty, you might want to delay until May."

the case really boiled down to just one thing: not whether it is legal to spoof, which it is and yet massive, well-connected HFT firms get away with it every single day, but whether it is legal to take advantage of HFT algos programmed to do just one thing - frontrun orders, and activity which leads to massive losses for the algos and the Citadels behind them, when the spoofer realizes just how dumb his counterparty truly is. The verdict was clear: nobody is allowed to outspoof the spoofers.

Never mind that one of the "smartest people in the room" just dumped 15% of his stake, Facebook fanboys are buying the stock's dip with both hands and feet... you can't keep a good momo stock down.