Archive - Sep 22, 2015

Allegedly spotted on Sand Hill Road and the West Side Highway...

"The dissenters were the ministers representing the Czech Republic, Hungary, Romania and Slovakia. Under European law, three of the countries — the Czech Republic, Romania and Slovakia — would be required to accept migrants against their will, said one European Union diplomat, who spoke on condition of anonymity shortly after the vote."

In short, the next round of the great crisis is beginning.  It will take time to unfold, but we have reached Peak Central Bank Intervention. When Central Banks loosen policy and the markets fail to respond, you're in the End Game.

That’s what yesterday’s Bullard Rip was all about - it amounted to the bell at the top. In time it will become evident that the market is unable to break-out of the bubble finance channel it has established between 2075 and 2125 over the past year. When December comes around and the Fed has to explain the growing signs of global and domestic recession, the robo-machines will have grown themselves an altogether new set of programs. Namely, an algorithm that says any day the Eccles Building is open for business is a good day to sell.

The Nasdaq was the last great hope holding on to positive returns in 2015... until this morning.. and as Nasday went red YTD, panic-buying ensued slamming TRIN near record highs...

"There is a chance that the Fed, like a number of central banks in recent years, may find it impossible to escape the effective lower bound to which policy rates were cut during the dark days of the crisis some seven years ago."

In the last non-Bill auction conducted by the US Treasury two weeks ago, many were surprised to see a surge of interest for 30 Year paper. Then after the Fed refused to hike rates sending the long yield plunging, it suddenly all became very clear. Fast forward two weeks to today's just concluded auction on the other end of coupon paying US paper, namely the issuance of $26 billion in 2 Year paper. And while a month ago, the 2 Year left a lot to be desired, today's issue was positive euphoric, pricing at 0.699% 0.3 bps through the When Issued, with a Bid to Cover of 3.269, solidly above last month's 3.164 which was the lowest since October.

Most Fed officials still expect a first rate increase this year, Yellen says, noting that "13 out of the 17 are looking for a move in 2015." The market disagrees...

One of the more remarkable characteristics of American life is our passive acceptance of systems that are so obviously completely insane. Yes, I refer to our healthcare system, a.k.a. sickcare because in America sickness is profitable and health is not, and healthcare profiteering that would be the envy of pirates and warlords everywhere is the norm.

"We are heading towards disaster" exclaims UKIP's Nigel Farage in this brief clip. Having warned for months about both the consequences of actions and the EU's disastrous policies, the flood of immigrants, Farage warns "we face a direct threat to our civilization if we allow large numbers of people from that war-torn region into Europe." Simply put, he fears within EU policy "there is no way to filter out extremists in favor of people fleeing in genuine fear of their lives," and suggest following the Australian policy.

Today's Glencore implosion is a far greater risk to the capital markets and the global economy than Volkswagen: a few executive resignations, a few bribes to US Congress, and the scandal will be promptly snuffed. For Glencore, however, which suddenly the entire world realizes is - as we said in March 2014 - the way to trade China, it may now be too late.

“We assume [the Russian buildup in Syria is] being coordinated with the Iranians. What we are seeing now is that there is some sort of Iran nexus."

Re-unleash The Bullard...

Following August's collapse (from 13 to 0), September's Richmond Fed followed on the heels of Philly, Empire, and Dallas Fed surveys and collapsed to -5 - its lowest since January 2013. Under the covers it is a total disaster, the average workweek crashed from 3 to -12 - the lowest level since April 2009 (as did the order backlog). New Orders and Capacity Utilization also plunged to its lowest since Jan 2013 as clearly the inventory accumulation is starting to feedback into prodiction cuts. Combined, the regional surveys suggest a notable plunge in overall ISM in September... flashing bright red recession warnings.

If anyone is still confused by the trigger that caused the biggest selloff in biotech stocks in 2015, here are the Taiwanese animators with "all you need to know."