Archive - Apr 2013 - Story

In all the jubilation last night following the capture of the 19 year terrorism suspect, virtually everyone missed news that a massive 7.0 magnitude quake according to the China Earthquake Administration (and 6.6 according to the USGS including countless aftershocks) hit China's Sichuan province, leaving at least 156 dead and over 2200 injured according to the latest estimate from Xinhua. The epicenter was not too far from the infamous earthquake five years ago when 70,000 people died, and millions were left homeless as a result. The earthquake occurred at 8.02 a.m. (0002 GMT) in Lushan county near Ya'an city and the epicentre had a depth of 12 km (7.5 miles), the U.S. Geological Survey said. The quake was felt by residents in neighbouring provinces and in the provincial capital of Chengdu, causing many people to rush out of buildings, according to accounts on China's Twitter-like Sina Weibo microblogging service.

The 19-year old Dzhokhar has seen better days...

The nightly developments continue as we learn next that Tsarnaev is in serious (or critical according to Bloomberg) condition in the hospital, with a gunshot wound to the neck and leg, and that perhaps just as importantly, he will not get his Miranda warning, instead the FBI is overruling due process and using the "public safety" exception instead.

Hear is straight from the horse's mouth

Suspect in custody. Officers sweeping the area. Stand by for further info.

— Boston Police Dept. (@Boston_Police) April 20, 2013

BREAKING: Source says bomb suspect pinned down in Watertown

— The Boston Globe (@BostonGlobe) April 19, 2013

Cyberspace matters. We know this because governments and militaries around the world are scrambling to control the digital space even as they slash defense spending in other areas, rapidly building up cyber forces with which to defend their own virtual territories and attack those of their rivals. But we do not yet know how much cyberspace matters, at least in security terms. Is it merely warfare’s new periphery, the theatre for a 21st century Cold War that will be waged unseen, and with practically no real-world consequences? Or is it emerging as the most important battle-space of the information age, the critical domain in which future wars will be won and lost? China and the U.S. have both said that they would like to see a rules-based cyberspace, but they do not see eye to eye on how those rules should be established. A costly and potentially dangerous Cyber Cold War awaits if they cannot do better, and agree on some rules of engagement for their rapidly expanding online forces.

It was reported previously that police were on the hunt for a Honda CRV, allegedly a car belonging to a potential Boston suspect. Shortly thereafter the car was found, but not the suspect. However, we wonder if the Boston police and the Feds, still looking for Dzhokhar Tsarnaev, who by now has likely left the immediate crime scene, are aware that the suspect had what appears to be another car, a new, black Chevrolet Camaro, Mass license plate 649VC8, one which we have found on the suspect's twitter stream about he was boasting as recently as March 15th, and which we have not seen mentioned in either the mainstream or fringe press yet.

Our financial markets actually have a natural equilibrium state that is far removed from where they are today. But interfering monetary policy (e.g. QE) and delusional fiscal policy have pulled the system away from its authentic state, to the point now where the forces to correct are placing growing strain on the status quo. As the system seeks to return to where it should naturally be, the yields that the Fed is so desperately trying to engineer are going to become less in size and number. Investors need to realize that much of the "growth" the Fed is trying to return to was manufactured and unnatural. We are returning to a lower-growth environment, whether we want to or not.

@therealabdul_ boston marathon isn't a good place to smoke tho

— Jahar (@J_tsar) August 10, 2012

Succinctly summarizing the positive and negative news, data, and market events of the week...

This week saw the largest plunge in US macro data in 11 weeks pushing us back towards the lowest levels since August. Fundamentals (macro and also micro- earnings) did have some impact - with stocks having their worst week in 5 months (but the S&P managed to bounce off its 50DMA) and despite carnage in its largest components, the Dow gained 10 points (of which -150 points were from IBM, GE, and MCD). Today saw a small recovery bounce amid low volumes driven by JPY weakness (testing back up toward 100 post G-20 silliness) and VIX compression as macro overlays were lifted and positions reduced. Gold gained on the day but silver lagged ending the week -5.5% and -11% respectively, with the USD gaining 0.77% on the week (as JPY weakened almost 400 pips off its Monday night highs). Treasuries traded in a 4-6bps range all week (and flow was quiet) but the long-end ended lower in yield by 2-4bps.

"Perhaps more to the point for TBTF, if a SIFI does fail I have little doubt that private investors will in fact bear the losses--even if this leads to an outcome that is messier and more costly to society than we would ideally like. Dodd-Frank is very clear in saying that the Federal Reserve and other regulators cannot use their emergency authorities to bail out an individual failing institution. And as a member of the Board, I am committed to following both the letter and the spirit of the law."

The last five days in and around Boston have been dismal and chaotic. From the real-time video of the horror to the news media one-upmanship and from bombing to manhunt, this infographic clarifies how far we have come...