Archive - Apr 2015

What do retail investors do on volatile days like Friday’s jolt lower on the S&P 500? Thanks to one very large online broker’s publicly available order flow, we now know...

On one hand, Bill Gross says that "German 10yr Bunds = The short of a lifetime." On the other, the ECB is about to run out of bonds to monetize at current prices as the Bund yield slides every lower to the ECB's hard floor of -0.20%. End result: someone will be very hurt...

Despite our exposure of the contagious risk increases in peripheral bond spreads, "many European officials believe a Greek exit would be manageable, and in contrast to 2010-2011, we wouldn’t see the same cascading effect on countries like Spain or Ireland,” according to the European Centre for International Political Economy in Brussels and EU Chair Jeroen Djisselbloem even noted that "the Greek situation can be isolated." It appears America is getting nervous at Europe's apparent complacency... White House economic adviser Jason Furman says a Greek exit from the euro zone would present "VERY LARGE AND UNNECESSARY RISK FOR GLOBAL ECONOMY."

Official Potus Photograph...

From 8x over-subscribed to 60c on the dollar in one year: (almost) well played "yield chasers" with other people's money!

Deposed former Egyptian President Mohammed Morsi was sentenced to 20 years in prison today in connection with a crackdown on protesters during demonstrations against his rule in late 2012. Morsi assumed the Presidency in 2012 after Hosni Mubarak was toppled a year earlier during the Arab Spring. Morsi's "democracy" lasted all of 4 months before he granted himself special autocratic powers triggering unrest that would eventually lead the military to assume power.

Mario Draghi said this week that the transmission channels for European Q€ were opening up and crowed how well his cunning plan was working (by well we assume he means stocks are up). Today we get the ultimate test of that 'transmission' as 3-Month EURIBOR fell below 0.00% for the first time ever (likely wreaking havoc on European derivative pricing models). In English that means banks are being paid to borrow from one another in the interbank money-markets (which sounds a lot like a 'glut' of excess cash) seemingly confirming ICMA's de Vidts fears: "We are scared about the [repo] market freezing," as the ECB is "driving without headlights in the dark." Of course this is yet another disturbing distortion on the heels of homeowners being paid to take out mortgages...

Being grateful boosts your happiness. Here are ten sickening wonderful things we're grateful for in the new normal...

Things for insolvent, cashless Greece are - not unexpectedly - getting worse by the day.

Russian gold reserves, at nearly 40 million ounces, are now fifth largest in the world. Like China, Russia is likely to underreport its gold reserve accumulation. 

In what may be a harbinger of things to come and in a sign that Beijing will allow the market to play a greater role in determining companies’ financial future, a subsidiary of China South Industries Group has missed a coupon payment, marking the first default by a Chinese state-owned firm.

• The Fed Still Wants Easy Money (BBG) - you don't say
• ECB Is Studying Curbs on Greek Bank Support (BBG)
• Banks Paid to Borrow as Three-Month Euribor Drops Below Zero (BBG)
• Baoding Tianwei is first state-owned Chinese enterprise to default (Reuters)
• Major Chinese Developer Says It Can’t Pay Dollar Debts (BBG)
• Wall Street Has No Idea How Much Money Venezuela Has (BBG)
• Goldman Sachs, Morgan Stanley Find Different Paths to Profits (WSJ)
• Does the Collapse of a Chinese Developer Signal the Start of More Defaults? (BBG)
• Retail Traders Wield Social Media for Investing Fame (WSJ)

Explaining the catalysts that move the "market" overnight has become so farcical it is practically an exercise in futility and absurdism.

Several hours after the Greek government decreed the confiscation of local government reserves, this order has finally percolated among the population, and the response to what even ordinary Greeks realize is now the endgame, is less than exuberant. Bloomberg reports, that "as Greece struggles to find cash to stay afloat, local authorities say they oppose a government decision to use their reserves for short-term financing." “The government’s decision to seize our reserves not only raises legal and constitutional issues, but also a moral one,” said George Papanikolaou, mayor of Glyfada, the third-largest municipality in the metropolitan region of Attica after Athens and Piraeus. “We have a responsibility to serve our citizens."

While some journalists here in the US have started to notice the strange series of opposition killings in Ukraine, the US government has yet to say a word.

Compare this to the US reaction when a single opposition figure was killed in Russia earlier this year.