Archive - Mar 2015

We begin to understand why the death of Ferguson, Mo, teen Michael Brown sent such shock waves through America last year. He truly symbolized our country: an overgrown, oafish, wannabe thug making one bad choice after another until his final, suicidal lurch against authority — followed by all the exculpatory lying on his behalf: the “gentle giant,” hands up, don’t shoot! This is exactly how America acts on the world stage these days. We are the Michael Brown among nations, high on exceptionalism, stoned on entitlement, swaggering moronically from one place to another grabbing what we feel like, smashing things up as we go.

With "The objective of the Hellenic Financial Stability Fund is to contribute to the maintenance of the stability of the Greek banking system, for the sake of public interest," it appears the Fund's Chairman has decided to add some instability and leave the sinking ship:

• *GREEK BANK RECAPITALIZATION FUND CHAIRMAN RESIGNS: STATEMENT

Ironic (or coincidental) timing as Draghi proclaims he is not blackmailing Greece and Merkel says "Nein" to more liquidity.

The future of Europe being decided?

*'WE WANT GREECE TO BE ECONOMICALLY STRONG,' MERKEL SAYS SHE IS SEEKING TRUSTFUL COOPERATION WITH TSIPRAS
*TSIPRAS: GREEK BAILOUT INCREASED SOCIAL INEQUALITY
*TSIPRAS: GREEK ECONOMY NEEDS BAILOUT DISBURSEMENT (please?)
*MERKEL SAYS SHE CAN'T 'OFFER ANY LIQUIDITY' ON HER OWN (nein!)

Spot the odd one out...

As the chart below shows, there very dramatic, and very glaring discrepancy between what BofA started experiencing one year ago (when we first noted it) when it comes to loan creation, and what the Fed represents every Friday in its weekly H.8 statement, has never been greater!

Careful to follow the status quo's meme, Fed vice-Chair Stanley Fischer just uttered the following...

FISCHER SAYS DOLLAR'S RISE ALSO REFLECTS RELATIVE U.S. STRENGTH

Which is odd because a) Jim Bullard said this morning that it was ECB QE that was responsible for the strong dollar; and b) US growth expectations have collapsed as the USD soared. Don't show him this chart...

*FISCHER SAYS RATE LIFTOFF LIKELY WARRANTED BEFORE END-2015

With the world now convinmced that Janet Yellen is as dovish as she has ever been on rate hikes, today comes the first post-FOMC speech. None other than Vice-chair Stanley Fischer is due to address The Economic Club of New York on the topic of "Monetary-policy lessons and the way ahead." As Art Cashin warned this morning, Fischer "seems to feel that the Fed must raise rates this year. He is also the only Fed official to concede that any rate hike will be different than any seen before."

The US Dollar took down Oil, commodities, even emerging market currencies. Stocks will be next. The first REAL sign that the 2008 Crash was coming occurred when the US Dollar began to skyrocket in the summer of 2008.

A shift in the mutual fund industry's stance towards grossly overvalued private tech startups may be embedding risk into the retirement accounts of unsuspecting Americans, suggesting that the rather creative valuations VCs and founders place on the latest app may be imperiling your 401k. It's called "chasing unicorns."

It has not been a good week for Spain's embattled Prime Minister Mariano Rajoy. Following what Bloomberg calls "its worst election result in 25 years," in Andalusia (the nation's most populous region); the corruption scandals re-rear their ugly head:

*SPAIN RULING PEOPLE'S PARTY MAY HAVE HAD SECRET ACCOUNTS; COURT SEES POSSIBLE TAX FRAUD BY COUNTRY'S RULING PARTY

Spanish bond risk widened 4-5bps on the day as both events confirm the rise of anti-EU parties Podemos and Ciudadanos.

Can stocks keep hitting new highs even as sales and profits fall?

Greece – faced with illiquidity, insolvency and a potential banking collapse – is running out of time and appears to be on the back foot as its international creditors refuse to countenance any debt restructuring, rescheduling or forgiveness.

We often hear various Fed officials described as hawks or doves but Janet Yellen’s Fed brings to mind another avian metaphor. They are afraid to raise rates for fear that doing so would upset the asset market inflation process and derail what is left of their theory. In her press conference last week Yellen said that stock market valuations were on the high side of historical norms, an appellation that only works if one includes the stock bubble of the late 90s. It seems that she and the other members of the FOMC have decided that another epic stock market bubble is better than admitting they were wrong. This FOMC doesn’t have any hawks or doves, only chickens.