Archive - Dec 12, 2013 - Story

Syria may be old news as any escalation has been put on hold at least until next summer, but the hilarity resulting from the bungled US foreign policy intervention in the country lingers. The latest chapter in John Kerry's book of "Diplomacy for Idiots" is the case of General Salim Adris, a so-called moderate the top Western-backed commander of the Free Syrian Army, who was literally run out of the country by the more extremist, Al Qaeda based factions among the Syrian CIA armed and Qatar funded "rebel" forces. As the WSJ eloquently puts it, "Islamist fighters ran the top Western-backed rebel commander in Syria out of his headquarters, and he fled the country, U.S. officials said Wednesday." Any references to brave Sir Robin are purely accidental. It got better when the same Al Qaeda fighters "took over key warehouses holding U.S. military gear for moderate fighters in northern Syria over the weekend." In other words, as we repeatedly forecast over the summer, the US is now once again arming Al Qaeda fighters with weapons that sooner or later will be used against the US, at a time of the CIA's choosing.

Haters gonna hate, but the “Bitcoin bubble” meme has become the financial equivalent of a viral online cat video – wildly popular but pretty vacuous. In an effort to separate fact from fiction, ConvergEx's Nick Colas reviews 11 bitcoin myths (and dispels them). Still, there’s no doubt that the public is entranced: there are now 3x more Google searches for “bitcoin” than “Western Union”, and 33x more than for “Gold coins”.  We started writing about bitcoin back in February because it was – and still is – a fascinating invention (for better or worse). How it plays out, we will just have to wait and see.

With even Bank of England head Mark Carney admitting UK housing prices may be a little bubbley (and affordability plumbing new depths), RT reports that a hostel in east London has come up with the ingenious idea, to try and solve homelessness amid soaring rents in the British capital, of converting a shipping container from China into a tiny low cost home for hard up and desperate Londoners. The boxes, called mYpads, cost GBP75 per week - around one-quarter of the rent of most distant yet commutable borough in London - and are affordable for even those on minimum wage.

There was much concern that heading into the holiday season the US consumer would hunker down, which is why the just released retail sales came as a bit of good news: the headline and core (ex-autos) numbers both beat expectations of 0.6% and 0.2%, printing at 0.7% and 0.4% respectively, and refuting rumors of a big consumer slowdown into the holiday season. On the other hand, core retail sales, ex-autos, showed a declining growth rate, following the 0.5% increase in October, declining to 0.4% in the past month, while the ex-autos and gas number remained flat from October to November, or 0.6%. It is unclear if this number is good enough to send futures sliding on the back of the horrible claims report which has so far managed to push futures into green territory, but with the bulk of the monthly change contained in the seasonal adjustment, any 0.1% increments of change or beats of expectations are very much noise.

While the Labor Department admits "difficulties in seasonally adjusting" the data, this is the biggest spike ex-Sandy in the all-important initial claims data since 2005. At 368k (versus 320k expectations), this is the worst miss sicne Sandy also (absent the government shutdown debacles) and the Labor department says no states were estimated. This is the worst initial claims print since March... just enough bad news to provide the Fed some leeway? Of course, with enough statistical noise to sink an economy, it would appear another government-inspired data series has become next-to-useless ammo for the baffle 'em with bullshit brigade.

No new news as a catalyst this morning but it appears someone decided it was highly inappropriate for the precious metals to be holding their gains as stocks and bonds revert back to pre-payrolls 'taper' levels. Gold and Silver have been monkey-hammered lower this morning as heavy volume hit futures markets about 419ET and 645ET. Futures were not halted. Some speculation that gold's drop followed positive comments from Ukraine's foreign minister but that seems a stretch...

The more the cops, the safer: that's what conventional wisdom says. The contrarian view, of course, is that when police per capita are far above average, there is usually a reason. Or, it the distribution could be just pure noise, depending on how much money can be allocated to police budgets or how prone to cop extortion a given country is. The chart below doesn't provide a definitive answer, with Russia leading the world in most police per 100,000 persons according to the UN and ONS, while Greece and Serbia mark the trailing end. Still, those who would rather avoid police brutality and paying a bribe to corrupt law enforcers, may be urged to avoid the left end of the chart below...

• J.P. Morgan to Pay Over $1 Billion to Settle U.S. Criminal Probe Related to Madoff (WSJ)
• Ford board aims to pin down CEO Mulally's plans (Reuters)
• Raising Minimum Wage Is a Bad Way to Help People (BBG)
• Japan Lawmakers Demand Speedy Pension Reform (WSJ)
• EU reaches landmark deal on failed banks (FT)
• In which Hilsenrath repeats what we said in August: Fed Moves Toward New Tool for Setting Rates (WSJ)
• Senators Vow to Add to Iran Economic Sanctions in 2014 (BBG)
• Centerbridge in $3.3bn LightSquared bid (FT)
• Banks, Agencies Draw Battle Lines Over 'Volcker Rule' (WSJ)

It has been another session of overnight weakness, in which, to quote Deutsche Bank, "something has changed" as ES algos no longer track every tick of the EURJPY (or other JPY pair variants). Usually in such transition periods where the robots are not sure how to trade risk based on highly leveraged inputs, things go bump in the night, and they did just that with the E-Mini trading just off its overnight lows, despite a notable rise in the EURJPY from yesterday's close. Keep a close eye on the now traditional pre-market ramp in the EURJPY - if unaccompanied by an increase in the E-mini, it may be time to quietly exit stage left.

Since the bank that decides what happens at the NY Fed, and by implication, at the broader Federal Reserve system, is none other than Goldman Sachs, it would be informative to read what none other than Goldman thinks of Ben Bernanke's thesis advisor Stanley Fischer, formerly head of the Bank of Israel, as the next vice chairman - as he is now actively rumored to become shortly. Conveniently, here is just such a Q&A from Goldman's Jan Hatzius - the man who feeds Bill Dudley all his economic and monetary insights over lobster sandwiches at the Pound and Pence.