Archive - Jun 25, 2015

In today's consequence-less world - where only the poor are punished - news that a top official at a controversial U.S. export finance agency deleted text messages sent within days of the 2014 midterm elections after a watchdog group filed an open records request for the messages, will come as no surprise whatsoever. The 'excuse' given by Ex-Im Bank's chief of staff Scott Schloegel  - because as we saw yesterday, there is no accountability - he "deleted, by mistake, the messages on my phone for the period in question." Most transparent administration ever...

Moments ago we learned that none other than that ultimate "arbiter" on all things moral and ethical, Apple itself, entered the fray with a decision to remove all Civil War games from its App Store! According to MacRumors, "Apple has removed seemingly all Civil War games from the App Store for displaying the Confederate Flag in "offensive and mean-spirited ways," our sister website TouchArcade has learned. Apple has sent a removal letter to affected developers to inform them that their app does not comply with Section 19.1 of the App Store Review Guidelines."

The Supreme Court has ruled that people who bought healthcare coverage through federal exchanges as part of Obamacare can keep subsidies that effectively limit the amount low- and middle-income Americans pay for health insurance to 9.5% of their income or less.

Let us remind ourselves that the individual in question has a disturbingly large portion of society captivated day after day, year after year.

Capital should always be allocated to the “marginal cost of capital”. The stock market in its most simple form is really an input–output black box: In goes the “cost of capital” – out comes “profit”. No one can disagree that, over the long- and medium-term, it’s the profit which both explains and drives stocks best. The most profitable companies get the best stock returns... which brings us to the “dilemma” of today’s market: The marginal cost of capital is significantly higher.

"House of Cards" indeed...

While everyone now knows that the 2amET European-open hour is the most profitable to be long the US equity market, there is an even easier way to make money in stocks (without the need to wake up early). As Nanex shows, "Buy Tuesday" is the best-performing strategy - outperforming such foolish trades as "Buy Wednesday" or "Sell On Friday and Go Away" by a considerable amount. One thing though, just like The Boomtown Rats, stocks don't like Mondays (or haven't done for a decade).

President Obama is due to take the lectern to gloat address the decision of "the most liberal Supreme Court since the 60s" upholding his healthcare tax...saying that subsidies do not violate state law. Drink every time he smiles, says "right decision", "bipartisan", and neck the whole bottle of tequila if mentions that "justice was done," or uses the term "SCOTUSCare."

There has been some confusion why Germany and the Eurozone are so strict in negotiating with France and unwilling to concede even to the smallest of what they deem as outlandish Greek demands. The reason is not so much whether Spain or even Italy, both countries with soaring unemployment, a lost generation and a sweeping movement against "austerity", follow with comparable demands should Europe concede to Tsipras, but France, where the frontrunner for the next president, the National Front's Marine Le Pen, has just warned that not only is a Grexit inevitable, but that France would follow shortly.

Following meetings with EU officials and then with IMF chief Christine Lagarde and ECB chief Mario Draghi on Wednesday evening, Greek PM Alexis Tsipras is back at it on Thursday, in a frantic attempt to salvage a deal with creditors. He'll need to win over EU finance chiefs (who are collectively losing their will to keep Greece in the currency bloc) and the IMF as the EU summit kicks off in Brussels.

Missing by the most on record (as serial extrapolators expected a rise to 56.5), Markit US Services PMI (following weakness in the Manufacturing PMI) printed 54.8 - the lowest since the middle of weather carnage in January. As Markit notes, with the exceptions of the weather-related slowdown at the turn of the year and the 2013 government shutdown, June saw the weakest pace of economic growth since May 2013 as the Composite PMI slipped to 54.6 - its lowest since January 2015 (as employment tumbled and cost burdens surged the most since Oct 2013). As Markit conludes, hopes for a 3.00% growth are receding as "there has clearly been a loss of momentum in recent months."

High school students, even those who are borderline-failing their SATs, have a better understanding of economics and job growth than Washington bureaucrats.

Just when you think we have finally hit "peak farce" this happens:

NO EUROGROUP AGREEMENT IN SIGHT ON GREECE: EU OFFICIAL
EUROGROUP HAS BEEN 'INDEFINITELY SUSPENDED:' EU OFFICIAL
EUROGROUP MAY RECONVENE ONCE GREECE PROPOSAL RECEIVED: OFFICIAL

“Any of these events would likely trigger asset price volatility [and] attempts by institutional investors to redeem illiquid corporate bonds in crisis circumstances would amplify volatility.”

Flagging the Grexit...