Archive - Feb 2015

There goes GDP... Inventory growth stalled notably to just 0.1% MoM in December (missing the 0.2% rise expectations) from 0.8% growth in November to its lowest since May 2013. The other side of the spectrum was even worse with Wholesale Sales sliding a worse-than-expected 0.4% leaving the December inventories/sales ratio at 1.22 (up from 1.16 in December) to the worst level since Lehman. If we build it... based on artificial price signals and mal-investment - they didn't come...

Update: EUROPEAN COMMISSION SAYS THERE IS NO FORMAL PROPOSAL FOR GREECE BUT TALKS ARE INTENSIVE

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Did Europe just fold? Moments ago Bloomberg blasted a headline which has to be validated (and may well be refuted considering this is Europe), which said that:

COMMISSION TO PROPOSE 6 MONTH EXTENSION FOR GREECE - SOURCES.

So did Greece just win the first round of its stand off with Brussels, and why? What emerged as the biggest point of leverage overnight was the following threat reported hours ago by Reuters, citing the Greek defense minister Kammenos, who essentially threatened to go to Russia and/or China if Europe decline to cooperate.

Since central banks are there 24/7 and on site to intervene and "eliminate" Greek leverage at any flashing red headline, it is up to Greece to create a narrative that the European leverage in turn is also weaker, which means to project, whether based on truth or otherwise, that Greek bank deposit outflows are slowing. That is precisely what Reuters reported moments ago when it reported, citing Greek bankers, that deposit outflows have slowed so far in February after a sharp increase estimated for a month earlier, but savers are still uneasy over the new leftist government's standoff with its official lenders.

0945ET - BATS OPTIONS HAS REVOKED SELF-HELP VS NASDAQ OPTIONS MARKET

Having achieved only modest gains in risk assets from the 'rumored' six-month-extension trial balloon for Greece, it appears European leaders are standing in line to refute the fact that they "folded" and talk back the non-bailout bailout. First, Italy's FinMin Padoan denying he has seen any plan; then the European Commission stating unequivocally that "there is no formal proposal," and finally none other than Jeroen Dijsselbloem bleets that "discussions with Greece have yet to start." But apart from that, everything is fixed...

But the shadow of crisis has passed... it appears the engine of job growth in America is sputtering as NFIB Small Business optimism dropped from 100.4 to 97.9 (against an extrapolated 101.0 expectation - the biggest miss since Nov 2012). Across the board the data was disappointing with the percentage of firms expecting a better economy falling to 0%, and the number of employers anticipating job creation drops to just 14%.

While "sources" have yet to confirm anything about an extension for Greece (and some have actually denied it - Italy's Padoan "hasn't seen any plan yet"), US Treasury yields are rising (10Y back above 2.00%), and risk assets rallying in Europe and US. Greek stocks are up over 7% today (taking them up 2% on the week) but Greek bank bonds remain lower on the week (despite today's rally). US equities are sceptically rallying on the back of USDJPY momo ignition, auctioned up to pre-payrolls stops.

It appears, while Washington continues to proclaim they have single-handedly 'isolated' Russia and crushed its economy, nations around the world continue to want to do business with Putin and his nation...

*SISI: RUSSIA, EGYPT AGREE ON FREE TRADE ZONE W/ EURASIAN UNION
*SISI STRESSES IMPORTANCE OF MILITARY COOPERATION W/ RUSSIA

Judging by the images of welcome on the streets of Cairo, the people of Egypt are anything but looking to 'isolate' Russia... even after the US "bailed them out" and they still have US-taxpayer-backed guaranteed bonds.

A week after the release of a clip with sported professionally produced, near Hollywood-level editing and effects, showing the brutal burning of a Jordanian pilot hostage, Jordan announced it has deployed "thousands" of ground troops to its border with Iraq as it ramps up a campaign against ISIS militants, two Jordanian government officials told NBC News on Tuesday.  As NBC reports, the troops were sent to prevent the infiltration of ISIS fighters into Jordan and as a show of force, according to the sources who spoke on condition of anonymity. In other words, what would formerly have been seen as an overt act of territorial incursion, or as it is also known, a sovereign invasion, is now interpreted as a defensive act, one seeking to "prevent" infiltration by the same ISIS, that only exists due to US intervention in Syria in 2013.

While PRexit is yet to hit the headlines, Puerto Rico bonds joined an illustrious club of ne'er-do-wells today with its 10Y yield spiking above 10%...

• Greek defense minister says Greece has Plan B if EU rigid on deal (Reuters)
• Germany rejects Greek claim for World War Two reparations (Reuters)
• Greece to Seek $11.3 Billion in Financing to Avoid Funding Crunch (BBG)
• Lazard Sees $113 Billion Greek Debt Cut as ‘Reasonable’ (BBG)
• U.S. Navy Considers Setting Up Ship Base in Australia (BBG)
• Dalio’s Bridgewater Fund Said to Rise 8.3% in January (BBG)
• As U.S. Exits, China Takes On Afghanistan Role (WSJ)
• EU money funds cut exposure to bank debt (FT)
• China Inflation Drops to Five-Year Low in January (WSJ)
• Oil-Price Rebound Predicted (WSJ)

So far it has been largely a repeat of the previous overnight session, where absent significant macro drivers, the attention again remains focused both on China, which reported some truly ugly inflation (with 0.8% Y/Y CPI the lowest since Lehman, just call it deflation net of the "goalseeking") data (which as usually is "good for stocks" pushing the SHCOMP 1.5% higher as it means even more easing), and on Greece, which has not made any major headlines in the past 24 hours as patience on both sides is growing thin ahead of the final "bluff" showdown between Greece and the Eurozone is imminent. The question as usual is who will have just a fraction more leverage in the final assessment - Greece has made its ask known, and it comes in the form of 10 billion euros in short-term "bridge" financing consisting of €8 billion increase in Bills issuance and €1.9 billion in ECB profits, as it tries to stave off a funding crunch, a proposal which will be presented on the Wednesday meeting of euro area finance ministers in Brussels. The question remains what Europe's countrbid, if any, will be. For the answer: stay tuned in 24 hours.

"Enjoy the party, but dance near the door."

A measles outbreak in the U.S. has prompted a national debate over vaccinations, a debate that quickly turned ugly baby vaccinebecause both sides think they are protecting their children from harm. Some parents say that they should have the right to refuse vaccines if they think it is in their children’s best interest, while others argue that ill-informed parental views can be overridden by the State if the public health is at stake. When argued on the traditional battleground, the problem has no solution. As with school prayer, immigration policies, parade permits for controversial groups, or allowing the homeless in “public” libraries, here too there is no way to solve the problem except by letting private property owners set the rules on their land.

In some countries, the 'solution' the state chooses for its ignominous billionaire class of inequality-garnering, economy-wrecking individuals is to either a) turn one's back for a brief enough moment as to allow the tyrant to leave the country in search of a golden beach upon which to lament how great a trade being long European bonds would have been' or b) enhance their wealth further on a quid pro quo basis. In China, the 'treatment' for corrupt billionaires who love casinos, cigars, and luxury cars is much simpler... execution.