Archive - May 2015

With French ministers crowing about their better-than-expected GDP data (+0.7%) as some trend reversal that heralds a revolution, it appears Vladimir Putin is about to put a dent in their hopes and dreams. As Sputnik News reports, Moscow has finally given up on the $1.3 billion deal for two Mistral-class helicopter carriers and plans to build its own. Even worse for France, now Russia will discuss only the sum that Paris should pay Russia for the failed contract. However, as with everything in the world, there may be aulterior motive, as China comes sniffing as a white knight for the amphibious vessels (at a reduced price) and then sells to its 'ally' Russia (who has already pocketed the contract cancellation fees).

We're still open...

...or just see the mirrors...

... at least according to the Atlanta Fed. Based on the one GDP model which hasn't lost all credibility and which for the past 3 months has captured the attention to wannabe weathermen and other Wall Street strategists, today's bevy of stronger than expected data, everything from Durable Goods, to core CapEx, to New Home Sales, to Case Shiller, to Consumer Confidence, and even the Richmond Fed was sufficient to push Q2 GDP... by 0.1% to 0.8%.

As we documented previously, one of the best ways to determine if a given Treasury auction will be strong is to look at the implied short overhang heading into the auction courtesy of Repo rates. Earlier today, ahead of today's $26 billion auction, the 2Y was trading -0.27% in repo: not too shorted, but judging by the results of the just concluded auction, shorted enough.

The nation is wallowing self-piteously in a fetid trough of denial and adolescent rage/magical thinking now that the nation's bogus, debt-based "prosperity" has crashed and cannot be restored.

WTI is having its worst day in over 2 months as the front-mointh tumbles back below $57.50 to one-month lows... Perhaps fundamentals do matter after all - or is this pre-OPEC dump to force non-Saudi cartel members to revolt?

Seems like now would be a good time to reinstate the NSA's bulk data collection (for our own security) to find out who is at the center of this...

*CAPITOL VISITORS CENTER HAS BEEN EVACUATED;CAPITOL NOT AFFECTED
*CAPITOL POLICE DON'T IMMEDIATELY HAVE STATEMENT ON EVACUATION

“Evacuate, evacuate, evacuate the U.S. Capitol building,” a loudspeaker blared.

As noted Tuesday morning, China’s margin-fueled equity mania reached new heights overnight with the Shanghai Composite wrapping up its best six-day run in seven and a half years, but the real story was the tech-heavy Shenzhen Comp which, after a brief hiccup precipitated by the Hanergy ponzi debacle, has now firmly regained its momentum jumping nearly 4% with at least 250 listed companies trading limit up on the session.

American consumers may have pocketed most of their gas savings thus far, but there are two discretionary items where they aren’t holding back spending: bourbon and Tennessee whiskey.

"...it is imperative that the data does turnaround during 2015h2 for the recent rise in yields to be sustained. It is quite surprising to us that there is so much focus on US employment data and Fed Funds normalization to the exclusion of global trade data or US demand let alone productivity. A case perhaps of the lunatics trying to run the asylum."

A rooftop solar system may make overall sense if the cost of grid electricity is high enough, but batteries and backup generators still aren’t remotely competitive with grid electricity when it comes to load-following.

"We shall do our best then to remain as we have been: pleasantly long of equities on balance. There really is no other course of actions we can take.... Long of One Unit of Ten Year Notes/short of One Unit of the Long bond future: Friday, May 22nd we wished to sell into the strength of the bond market"

Bond yields are collapsing and US equity markets are not happy this morning. The Dow Industrials are now up only 1.2% year-to-date, and over 350 points from last week's record highs (as Trannies are down over 8% YTD).

If there were any remaining questions about China’s maritime resolve, they were answered unequivocally on Tuesday with the release of the country’s 2015 defense white paper which indicates that Beijing is set to increase its “open seas protection” after countries with “ulterior motives” have busied themselves “meddling in South China Sea affairs.” Adding insult to injury for the US, China went on to broadcast a groundbreaking ceremony for two lighthouses Beijing is building on its new islands