Archive - Jun 2015

"It’s about time we start getting worried about possibly the next [financial crisis]," warns BlueMountain's James Staley explaining that, "the lack of liquidity that currently exists today, is something that people on the buy side, sell side and regulatory side need to be focused on." In an effort to quantify just how big that 'issue' is, Bloomberg reports that the U.S. corporate-bond market has ballooned by $3.7 trillion during the past decade, yet, as Citi's Stephen Antczak warns, almost all of that growth is concentrated in the hands of three types of buyers, "we used to have 23 types of investors in the market. Now we have three. In my mind, that’s the key driver."

During an interview with Bloomberg TV, Bill Clinton uttered the following:

*CLINTON SAYS FOUNDATION HAS "STRICT NO-CORRUPTION POLICY"

Which made us wonder, does the Clinton Foundation also have a strict "no murder policy", or a strict "no punching small babies policy"? It seems a 'given' that any trusthworthy organization would implicitly have a "no corruption policy."

The United States Department of Justice is using federal grand jury subpoenas to identify anonymous commenters engaged in typical internet bluster and hyperbole in connection with the Silk Road prosecution. DOJ is targeting Reason.com...

From Greek lobbyists to Silicon Valley VCs and from Goldman BSDs to FT reporters, The Bilderberg Group will meet later this week in Tirol to discuss what happens next to the rest of the world... here are the participants...

“I was spooked. It looked at first like a real default so I rushed to the bank."

“I used to take out half and leave the rest for an emergency. Now I feel relieved it’s there and make sure I take out every last lepto [cent].”

OPEC's next task is to convince those making new investments in oil that rather than catching a bottom in oil prices, they have caught a falling knife. The cartel must dampen enthusiasm for investment for the long term if the organization's members are going to benefit. A crippled U.S. oil industry without friends in the investment world is the only way to assure that rising prices won't simply lead to a stampede back into U.S. shale deposits.

Greed is good... especially for FIFA officials. While Wall Streeters make bank and Hedgies pile up coin, Emolument.com reports that it is the soccer godfathers that make the real money...

Just like yesterday, when the 3Y auction issued $24 billion in paper on substantially better terms than many feared, so today's 10 year auction was even stronger, pricing at 2.461%, 1.3 bps through the When Issued of 2.474%, at a 2.461 Bid to Cover, far better than last month's 2.2370 and the highest since December 2014. Why the strong auction? Same reason why yesterday's 3Y was also strong. Same reason why every other auction coming on days when there is a substantial short overhang into the auction is strong: shorts were squeezed.

Surprise! Germany has begun to talk back their exuberant headlines over a Greek compromise. As Reuters reports, Germany will only accept a cash-for-reform deal between Greece and its international creditors that has the approval of all three lending instutions, a government spokesman said in response to reports that Berlin was considering easier terms, "all else is pure invention."   EURUSD has faded back all of the headline gains... but for now US equity futures remain convinced.

"These record profits that companies are reporting are not all they're cracked up to be."

Mark Carney: "Real markets are essential to guarantee prosperity. Not markets that collapse when there is a shock from abroad. Not markets where transactions occur in chat rooms. Not markets where no one appears accountable for anything."  So... not markets which are artificially rigged by $22 trillion in central bank liquidity and which collapse every time the "threat" that any of this preciously liquidity may be taken away?

Bank of Japan Governor Kuroda has managed to do it again. In his now daily missives on "deflation mindset being over", "economy is on the right track", "QQE is working", and his best yet "BoJ has no plan to finance government debt", Kuroda unleashed the ultimate idiocy last night when he proclaimed "it is desirable for FX to move in a stable manner." USDJPY has fallen over 2 handles for the biggest surge in JPY strength in 6 months... to which Amari noted "Kuroda didn't intend to move market with his remarks." Irony indeed.

What's the Worst-Case Scenario?

While we await for Germany to deny the latest "Greece is fixed" report, below is a quick update of what is going on with Greek bank liquidity. It is not good.

“We have a significant population gap among African American males because so many of them have spent time in jail and, as such, we can’t hire them."