Archive - Apr 2015

And it’s dragging down the economy.

Is the BoJ's back against the wall? We certainly think so as the evidence increasingly supports the notion that the central bank is bumping up against the limits of accommodative monetary policy and may soon be headed — as we've variously predicted —for "failed nation" status.

With Jean-Claude Juncker demanding a Unified European Army, it appears Germany is wasting no time in simultaneously boosting its own economy with warfare spending and comforting a 'fearful populace' with more military might. As Reuters reports, Germany plans to procure more than 100 additional Leopard 2 tanks, increasing its total Leopard 2 tank inventory by a whopping 45% a government spokesman said on Friday, as it seeks to ensure its "troops are ready for action in response to concerns over recent Russian assertiveness."

"The April 7th, 2015 power outage in Washington DC is curious to say the least. Virtually instantaneously, the government declare it was not a terrorist attack. After all, how could that possibly be when the NSA guards the country. If there was an attack on the power-grid, then the NSA would have to answer for their failure. So clearly, if it was an attack, they would never admit it."

The White House is concerned that China may be using its size and power to "force other countries" into subordinate positions". This accusation seems particularly amusing given that it seems to describe US foreign policy perfectly. 

Amid a historic margin-fueled equity buying frenzy in mainland China that has tech stocks trading at 200X and drove more than 4 million new "investors" into the market in March alone, HSBC's Head Of China Equity Strategy sits down with FT to explain, on video, why it's different this time and why there may be more upside to come for Hong Kong's day-trading housewives.

At 12.58, VIX closed today at its lowest level since December 4th 2014 (which makes perfect sense, given the forward-looking volatility implied by each and every macro data item and earnings release in the next month). However, as BofA notes, the VIX term structure (VXV / VIX) suggests "significant concern" about this advance in stocks being sustained.

From no 'boots on the ground' in Iraq to 3500 US troops supporting "Operation Inherent Resolve" in 9 months... promises promises Mr. Obama.

"In my view, every asset allocation team in the world should have this chart hanging on their wall," - Deutsche Bank Chief Economist Torsten Sløk

Randolph Duke: Money isn't everything, Mortimer.
Mortimer Duke: Oh, grow up.
Randolph Duke: Mother always said you were greedy.
Mortimer Duke: She meant it as a compliment.

Attorney General Eric Holder felt the need, following recent allegations that DEA agents had "sex parties" with prostitutes hired by local drug cartels in Colombia, to send a memo to all his staff..."I want to reiterate to all Department personnel, including attorneys and law enforcement officers, that they are prohibited from soliciting, procuring, or accepting commercial sex."

Zero rates are simply no longer needed. The Fed doesn’t need to stay ‘lower for longer’, because it has already done that.  Waiting until September would mean a much greater possibility of missing their window of opportunity.   Market conditions might deteriorate or geo-political tensions rise in a way that more deeply affects the US.  Alternatively, market froth might grow even frothier, causing a larger market reaction than otherwise would have been the case.  Lastly, it would also be prudent to hike well in advance of the $215 billion of Treasuries on the Fed’s balance sheet that matures in early 2016; which, if left un-reinvested, is a de facto-tightening.