Archive - Mar 2015

The percentage of homeowners underwater in the US was flat from Q3 to Q4 which doesn’t sound all that terrible until you consider that this figure had fallen for 10 consecutive quarters. Things look particularly bad in Florida and the midwest where more than 25% of borrowers are sitting in a negative equity position. A new report from Zillow says negative equity will become a permanent fixture in the housing market.

Just as we warned not even two hours ago, things on quad-witching get exciting... and volatile. And sure enough, after starting out the overnight session calmly and without much fanfare, US equity futures have proceeded to surge on absolutely no news, but merely what appears to be the latest market-wide stop hunt, or as the CME's central bank liquidity rebate program is being put to good use.

And then there were none. Like dominoes, US allies have fallen in line on the heels of the UK's decision to join the China-sponsored Asian Infrastructure Investment bank and now, the stanuchest supporter of Washington's position on the venture looks set to defect as well.

Moments ago, the German DAX roared gingerly back over 12,000 dragging US equity futures alongside it, with the catalyst cited as the somewhat optimistic tone following the three hours of talks held late last night to try to break an impasse that risks sending Athens stumbling of the euro zone. As a result, a smiling if only through his teeth, Tsipras said Greece was "moving swiftly to meet creditors' demands for a detailed economic reform plan" and assured euro zone leaders his leftist-led coalition would speed up work to avert bankruptcy. Alas, even a best case scenario which sees some €1.9 billion in payment unlcoked, will not be enough: as Bloomberg calculated, "The country’s cash shortfall is projected to hit 3.5 billion euros ($3.7 billion) in March, according to Bloomberg calculations based on 2015 budget figures."

"An eclipse blocks the sun in just a few minutes, though, leading to a potential sudden drop of up to 35,000 megawatts of generation capacity. That is the equivalent of about 20 large coal-fired power plants coming off the grid at the same time. Conventional electricity suppliers will have to seamlessly substitute power to prevent blackouts, and then they must shut down capacity as solar power rebounds," WSJ notes, as some parts of Europe witness a total solar eclipse.

• Clinton Charity Tapped Foreign Friends (WSJ)
• Dollar Set for Worst Week Since ’13; S&P Futures Rise (BBG)
• Shale Producers Have Found Another Lifeline: Shareholders (BBG)
• BOJ Kuroda says no sign of 'currency war' brewing in world (Reuters)
• Fed Is Pushing and Pulling on Rates Riddle (WSJ
• Brent oil falls towards $54 on OPEC output, Iran (Reuters)
• Iran Talks Stall Over Ending of Sanctions (WSJ)

Quad-witching days are volatile on normal days, so in an environment of virtually zero liquidity, in which the market careens from one extreme to another simply based on whether the Fed utters one single word, in which volatility across asset classes is soaring, and in which it is all about igniting algo momentum, today's quadruple withicng should be memorable, which is good since there is virtually no macro data today to speak of. 

"Due to unforseen events I decided to close down Evolution Marketplace. We want to thank you guys for you effort and help making this the most profitable and popular marketplace. This wasn’t an easy decision but due to other marketplaces getting shut down and the forum going downhill I decided to cut my ties and exit with an eight figure profit. The millions from evo will be divided up amongst the mods a few admin and members. Since this is such an abundance of money I may consider buy ins from former evo members in exchange for 1k bitcoinis. I’ll be around around for a short period of time before permanently moving to the caribbeans, I hope you guys understand."

A judicial advisory panel Monday quietly approved a rule change that will broaden the FBI’s hacking authority despite fears raised by Google that the amended language represents a “monumental” constitutional concern. The Judicial Conference Advisory Committee on Criminal Rules voted 11-1 to modify an arcane federal rule to allow judges more flexibility in how they approve search warrants for electronic data, according to a Justice Department spokesman. The FBI wants the expanded authority, which would allow it to more easily infiltrate computer networks to install malicious tracking software. This way, investigators can better monitor suspected criminals who use technology to conceal their identity....  Google weighed in last month with public comments that warned that the tweak “raises a number of monumental and highly complex constitutional, legal and geopolitical concerns that should be left to Congress to decide.”

FHFA finds that the GSEs might well need billions more in taxpayer dollars in the event of a downturn, suggesting the deck may be stakced against those the companies' common. 

"It would be transformative if everybody voted," Obama said during a town hall event in Cleveland, Ohio. "That would counteract (campaign) money more than anything. If everybody voted, then it would completely change the political map in this country." Obama also added that the people who tend not to vote are "young, they're lower income, they're skewed more heavily toward immigrant groups and minorities ... There's a reason why some folks try to keep them away from the polls."

"The GPIF in October slashed its targeted holdings of low-yielding government bonds and doubled its target for stocks, as part of Prime Minister Shinzo Abe's plan to boost the economy and promote risk-taking," Bloomberg notes, marking a shift into risk assets by the country's pension funds. 

"Under our central case, gold prices are likely to rise gradually, eventually breaking through the USD2,000/oz level within the next decade. This is the most likely outcome, to which we assign a 45% probability," ANZ analysts say, in a note explaining how a number of factors are converging to make the outlook for gold particularly bullish.

In the next FOMC projection slide deck, Janet Yellen should just show the following "dots" chart. It may well be the first time in history that the Fed has actually made an accurate forecast.

US diplomats still haven’t quite figured out how to greet Japanese officials, as was made abundantly clear when the First Lady visited Japan this week.