Archive - Apr 7, 2015

For a second time within a couple of weeks, Greek Defense Minister and leader of coalition government junior partner Independent Greeks, Panos Kammenos warned that if the European Union keeps undermining the coalition government and the country exit or is forced to exit the Euro “waves of migrants: will stream from Turkey to Europe and among them there would be ISIS “radicals.” Speaking to THE TIMES, Kammenos said: “The gross meddling into [Greek] domestic affairs isn’t just unheard for European standards, it’s unethical and it’s dangerous. If Greece goes, then a lot more than financial stability and the euro is at stake.” “If Greece is expelled or forced out of the eurozone, waves of immigrants without papers, including radical elements, will stream from Turkey and head towards the heart of the West."

Too soon?

There was only bad news in the just released Fed consumer credit report for the month of February. First, the "good credit", the one that consumer should load up on when they feel comfortable about the future, i.e., credit card, or revolving debt, continued its recent plunge, and in February crashed by $3.7 billion, following January's $1 billion plunge. This was the worst month for revolving credit since December 2010 and explains perfectly why the consumer has literally gone into hibernation - it has nothing to do with the weather, and everything to do with the unwillingness to "charge" purchases, which in turn is a clear glimpse into how the US consumer sees their financial and economic future.

Despite being an otherwise staid, traditional news service, the professional banking division of the Financial Times recently released an utterly scathing assessment of the British economy. It was entitled, “The UK economy is a ticking time bomb,” and the editor didn’t pull any punches in completely shattering the conventional fantasy that ‘all is well’, and that advanced economies can simply print and in debt their way to prosperity.

A constant stream of hyprocrisy from Fed officials (will print moar money if stuff happens), The EIA (storage is getting fuller and fuller, but production will be lower than expected), and Saudi Oil Minister Naimi's idiocy (increased production, demanding non-OPEC cooperation, but optimistic on prices recovering in the short-term) has sent crude asymmetrically rocketing higher... which is now apparently a good thing for US equities.

NO INITIAL INDICATIONS OF TERRORISM IN WASHINGTON, D.C., POWER OUTAGES - U.S. GOVERNMENT OFFICIALS

*STATE DEPT SAYS PEPCO EXPECTS TO RESTORE POWER IN 1-2 HOURS

The utility firm Pepco is currently investigating a Washington-wide black-out that has plunged The White House, State Department, The US Capitol, D.C. Metro, and even Oprah's TV Stage into darkness...Ironically, the outage occurred minutes after Rand Paul commented that "the time has come to take away the power from Washington D.C..."  Has anyone seen Kim Jong-Un today?

A funny thing happened in Britain... as calorie intake has fallen by 8% in the last decade and 4.4% since 2010, driven both by eating out less and eating healthier at home, so obesity levels are stabilising versus recent years with the number of patients diagnosed as obese also declined by 15% yoy in 2013/14, following a 7% decline in 2012/13. In the US, however, the latest data shows that obesity is still rising...

"The Fed is 'ever-interested' in doing something later," Jim Grant notes, explaining why he believes the timetable for rate hikes will be pushed back further as fear of allowing a free market in the "most critical" of prices - that of interest rates - would lead to the "unmasking of the misallocations of capital that will have come about through the levitation of asset prices." Grant further unleashes his verbal attack of truthiness when he points out that the central bank's persistent easy money policies is on display currently in the form of stifling American enterprise and sending millions of people from the workforce "more or less permanently."

Anyone wondering what the bond market thinks about the prospects of an imminent rate hike need but look at the high yield of the just concluded 3 Year auction, which saw a yield of only 0.865%, pricing through the 0.87% when issued, and the lowest since March of 2014. While one can barely see it on the chart below, the Bid to Cover was a fraction lower compared to March, at 3.252 down from the 3.330 TTM average. Completing the internal picture was an Indirect take down of 49.4% which was in line with recent auctions and solidly above the 12 month moving average of 37.6, while Dealers took 1% less than in March, at 39.5% of the final allotment, leaving Directs with 11.1% of the auction.

It wasn't a pleasant sight for hundreds of onlookers at the Zvezdochka shipyard in Russia's Archangelsk region overnight when an Oscar II-class nuclear sub undergoing repair work suddenly caught on fire.

The move by California to require mandatory cuts in water use for the first time in its history has highlighted the world’s looming water crisis and increased the focus on the links between sustainable water and sustainable energy. “We need a new paradigm,” says Steven Solomon, author of Water: The Epic Struggle for Wealth, Power and Civilization. “The days when we could just go further into the mountains and find new sources of water are past. We need to make better use of the water we have.”

"While on the navy ship, the soldiers ate pickles, but we had an eight course meal, and beer as well,"

"The Fed has been pushing everybody into the public markets... it makes sense to reduce your exposure to the most trafficked assets."