Archive - Jun 17, 2013 - Story

Over the weekend, Dick Cheney emerged from his lair, and staunchly defended the NSA surveillance programs that started under his tenure as Vice President, telling Chris Wallace on Fox News Sunday that the programs could have stopped 9/11 had they been in effect. More to the point, Cheney shared his view of Edward Snowden, whom he accused of being a traitor and went so far as hinting that he could be a spy for China. "I'm suspicious because he went to China. That's not a place where you would ordinarily want to go if you are interested in freedom, liberty and so forth," Cheney said, adding: "It raises questions whether or not he had that kind of connection before he did this." The last statement finally generated an official response from China whose Foreign Ministry on Monday, which had been silent for the past week over all issues surrounding the whistleblower, denying Edward Snowden was a Chinese spy and said the United States should give the world an explanation regarding its international internet surveillance programme.

In the week ahead, we get the usual middle-of-the-month batch of early business surveys, including the New York Empire, Philly Fed and Eurozone Flash PMIs. The second key focus will be a number of important monetary policy meetings, including the FOMC, as well as the Swiss, Norwegian Turkish and Indian policy decisions. The latter two are particularly interesting in the light of the recent EM weakness. The main event this weak will be the FOMC meeting after the recent market focus on the timing of tapering of the QE3 program. Swings in bond markets related to the FOMC meeting could be the primary source of FX volatility this week.

• Obama prepares for chilly talks with Putin over Syria (Reuters)
• G8 opens amid dispute on Syria arms (FT)
• Economists Blame Fed for Higher Bond Yields (WSJ) - wait... what? Isn't the "stronger economy" to blame?
• What a novel concept - In the Czech Republic, a spying scandal has forced the PM to resign (BBG)
• Rigged-Benchmark Probes Proliferate From Singapore to UK (BBG)
• Economists Wary as Fed's Next Forecast Looms  (Hilsenleak)
• Banks Balk at New Rules for Small Loans (WSJ)
• Sporadic clashes in Turkey as Erdogan asserts authority (Reuters)

First it was the "most important" payroll print in years, then the "most important" retail sales number, and now we are just days ahead of the "most important" FOMC statement in years as well, as the fate of the centrally-planned markets lies in the hands of Bernanke's decision to taper, or not to taper. The main catalyst for now still appears to be an ongoing wrong interpretation of Hilsenrath's Thursday blog post in which some still see reaffirmation by the Fed that it won't taper, when all the Fed's mouthpiece said is that the short-end would be anchored even as the long-end is allowed to rise. Looking at the well-known no volume levitation futures action, which in the overnight session has wiped out all of Friday's losses and then some simply due to a 2.73% rise in the Nikkei overnight back above 13,000 driven by the USDJPY briefly regaining 95.00, the market has made up its mind (if only for the time being) that whatever decision the Fed takes regarding the monthly level of liquidity injection is a bullish one. At least until it changes its mind next.