Archive - Jun 12, 2015

You know it's bad when on an illiquid Friday, a Greek Deal Rumor headline only manages a measly 5pt ramp in the S&P 500... Wolf cried just one too many times? Wednesday saw 25 point vertical ramp on the same headline...

Another day, another flash crash in the USD Index. As the Sept 2015 USD Index Futures contract suddenly crashed instantly, so EURUSD surged (and TSY yields tumbled)... something broke...

The temptation is great to hedge or seek large returns through the use of these volatility products.  ?Many will make a run for it anyway, but few still will really be able to be successful at it (again ~5% are profitable with skill).  Instead, the gravitational burden of a continuously decaying product assaults both your performance and intelligence (someone's going to earn a lot of money from you taking on these new-aged products but it's not you!) Simply out, It's been a baleful speculative vehicle, across any horizon.

While talking heads have proclaimed any Grexit contagion will be contained... it appears they are wrong (surprise!). The last 2 days have seen sovereign bond spreads soar 25-35bps for Spain, Portugal and Italy. On the yield side, Spain 10Y spread to Bunds is at its highest since August 2014 and Portugal at its highest since Feb 2015.

Perhaps, just perhaps, it was not Dick Costolo's incompetence after all? How long before Dorsey is "resigned" in order to create some more short-term wealth for shareholders?

Preliminary June UMich consumer sentiment data rose from 90.7 to 94.6 as respondents appear very excited about soaring gas prices and far more excited abiout stocks than every other confidence survey recently. Current conditions soared from 100.8 to 106.8 as expectations only rose from 84.2 to 86.8. Where does the hope come from? Simple... income expectations are the highest since 2008 and the most divergent from reality ever.

As the reality of moar record production in a slowing demand world filter through the narrartive of a dropping inventory being dragged away into tanker storage arb, so WTI has dropped back below $60 and Energy stocks have tumbled - giving up all the week's gains. Just when the mainstream media was reconvinced that oil is fixed...

"Senior EU officials have formally discussed for the first time a possible Greek debt default as negotiations between Athens and its creditors have stalled ahead of an end-month repayment deadline," Reuters reports. Or, translated from political correctness into the truth: "EU officials have stopped pretending that no one has discussed a Greek default." 

According to the BLS, after a torrid 2014, in which there was a 24% surge in beef prices which central planners blamed on everything except their policies, in May the Beef and Veal price index just rose to a new all time high of 260.8, up 12.3% from a year ago, and up 30% in the past two years.

The bank runs (and capital controls) begin. Macedonia Central Bank Governor Bogov states:

*GREEK BANKS IN MACEDONIA CAN’T WITHDRAW CASH, MACEDONIAN BANKS PROTECTED IN CASE OF GREXIT: BOGOV

How long before the rest of Europe follows suit and a bank holiday is declared Monday to "Cyprus" depositors?

The question is whether this is due to quite poor sentiment in the gold market or are banks that have been found rigging most markets, manipulating the gold market?   

Producer Prices Final Demand rose 0.5% MoM - the biggest monthly rise since September 2012. With the gasoline index up a stunning 17% (but but but) 80% of the broad-based advance is attributable to prices for final demand energy - which increased 5.9%. In contrast, Final Demand PPI YoY Ex Food & Energy dropped to +0.6% - the lowest on record in the short time series.

Headline hockey remains all that matters if one is "trading" European stocks, bonds, or FX. Today, so far,  no deal... and so Athens Stock Exchange and Greek bank bonds are plunging (for now)...

Once you funnel everyone into risk assets and then mask the risk to generate complacency, you guarantee a bidless market when risk reappears.