Archive - Jun 11, 2015

It's all relative...

What’s a company with no revenue, seven employees, and a $5 million throwaway drug worth in Janet Yellen’s “substantially stretched” biotech market? Billions, apparently.

"But aren't stocks "cheap relative to bonds"? Unfortunately, the evidence suggests exactly the opposite. Indeed, despite a yield to maturity of hardly more than 2% annually, Treasury bonds are still likely to outperform the total return of the S&P 500 over the coming decade... Frankly, history suggests that a rather ordinary completion to the present market cycle would involve the S&P 500 losing more than half of its value."

"He was incredibly strong because of the methamphetamine"...

Gold is now officially a 'basket case'...

While Pope Francis has called for an end of "the cult of money and the dictatorship of an economy," The Vatican City has been forced into sharing information with the US. Despite the oft-quoted Book of Proverbs prose that "[T]he borrower becomes the lender's slave," in the case of the world's largest borrower - the US government - it still acts like everyone’s master, including dictating the most ridiculous terms on financial agreements like this.

Moments ago, what many thought was inevitable with the stock trading just $1 above its 52-week low and just over 50% below its all time high, finally happened when Twitter issued a press release stating that CEO Dick Costello has decided to step down, leading to an immediate surge in the stock, and the obligatory tweet:

Are we QE'd out??? It was supposed to be about the quality of growth,not helping the oligarchy protect their collective arses

As we noted in Part 1, this central bank fueled boom will ultimately be paid for in the form of a prolonged deflationary contraction. On the morning after, of course, it will be asked why the central banks were permitted to engineer this fantastic financial and economic bubble. The short answer is that it was done so that monetary central planners could smooth and optimize the business cycle and save world capitalism from its purported tendency toward instability, underperformance and depressionary collapse. In Part 2, the whole case for this sweeping and unprecedented Keynesian demand management by the monetary authorities was a crock. Accordingly, the days of the Warren Buffet economy are indeed numbered.

Moscow-based cybersecurity firm Kaspersky Lab has released a detailed report that outlines how spyware (which some suggest originated in Israel) was used to infiltrate the hotels that hosted the Iran nuclear negotiations. From the report: "Earlier this year, during a security sweep, Kaspersky Lab detected a cyber intrusion affecting several of its internal systems. Following this finding, we launched a large-scale investigation, which led to the discovery of a new malware platform. Notably, some of the new 2014-2015 infections are linked to the P5+1 events and venues related to the negotiations with Iran about a nuclear deal."

Gazprom has vowed to entirely cut out Ukraine as a transit hub for natural gas exports to Europe. “We will not export gas via Ukraine after 2019. The customers will get gas at (newly) agreed delivery points,” Gazprom’s Deputy CEO Alexander Medvedev said on June 9.

Back in October, following the shocking news that after building Pimco from the ground up, Bill Gross would depart the world's then biggest bond fund following internal infighting, there were concerns that as a result of a surge in redemptions and liquidation sales at the Gross-controlled Total Return Fund, the already illiquid bond market would suffer and potentially go bidless across various CUSIPs in order to extract the best price from the forced seller. This did not happen despite an unprecedented surge in redemptions which has seen PIMCO's AUM tumble by 60% from its peak holdings of $293 billion in April 2013. Why not?

In the last 3 days, Ukraine's short-term bond prices have crashed 9%. Specifically the 2017s are down 3.5 points today alone following Ukraine's (American) finance minister threats yesterday in Washington that it will default on its debt unless creditors (which include both Russia and the US taxpayer) acquiesce to their demands for more aid (more debt). As Bloomberg reports, the country will stop making payments on its debt if talks don’t make progress, Finance Minister Natalie Jaresko told reporters in Washington Wednesday. Bondholders are “deeply concerned” about Jaresko’s stance, a creditor group led by Franklin Templeton said in a statement today.