Archive - Jun 25, 2013 - Story

Nothing says economic recovery like one of the most profitable and prestigious law firms in the nation announcing mass layoffs for the first time in 82 years.  Yep, four years after the so-called “recovery” began, things are so good that Weil, Gotshal & Manges has decided to cut 7% of its associates and slash annual compensation for 10% of its partners by hundreds of thousands of dollars. Good luck with that taper Bernank.

If Obama thought dealing with Putin was next to impossible when Snowden was merely hiding in the no man's land of the Sheremetyevo transit zone (see "U.S. steps up pressure on Russia as Snowden stays free") he is about to really lose his grip now that the former KGB spy appears set to "debrief" the very much current NSA whistleblower, and in the process learn as much as possible about US secret spy operations on whose receiving end, for countless years, has been none other than Putin's Russia. As Interfax reports: "Russian law enforcement authorities may detain former CIA employee Edward Snowden to establish the circumstances of his arrival in Russia, including passport details." In other words, Russia is now willing and eager to "force" Snowden to make a faux pas just so it has every reason to end up with the 30 year old in a dark, sound proof room. And just like that Obama's headaches are set to become much, much worse.

• Here come the rolling blackouts: Obama takes on power plant emissions as part of climate plan (Reuters)
• Walking Back Bernanke Wished on Too Much Information (BBG)
• As previewed last week: Bridgewater "All Weather" is Mostly Cloudy, down 8% YTD (Reuters)
• U.S. Said to Explore Possible China Role in Snowden Leaks (BBG)
• Coeure Says No Doubt ECB Loose Monetary Policy Exit Distant (Bloomberg)... so a "recovery", but not at all
• U.S. steps up pressure on Russia as Snowden stays free (Reuters)
• Texas' Next Big Oil Rush: New Pipelines Ferrying Landlocked Crude Expected to Boost Gulf Coast Refiners (WSJ)
• Singapore Offsets Bankers as Vacancies Fall (BBG)
• Asian Stocks Fall as China Sinks Deeper Into Bear Market (BBG), European Stocks Rally With Bonds as Metals Advance (BBG)
• Qatar emir hands power to son, no word on prime minister (Reuters)

It was shaping up to be another bloodbathed session, with the futures down 10 points around the time Shanghai started crashing for the second night in a row, and threatening to take out key SPX support levels, when the previously noted rumor of an imminent PBOC liquidity injection appeared ex machina and sent the Shanghai composite soaring by 5% to barely unchanged, but more importantly for the all important US wealth effect, the Emini moved nearly 20 points higher from the overnight lows triggering momentum ignition algos that had no idea why they are buying only knowing others are buying. The rumor was promptly squashed when the PBOC did indeed take the mic, but contrary to expectations, announced that liquidity was quite "ample" and no new measures were forthcoming. However, by then the upward momentum was all that mattered and the fact that the underlying catalyst was a lie, was promptly forgotten. End result: futures now at the highs for absolutely no reason.

Hardly the white flag of surrender before the feral hogs the markets were expecting, especially since the PBOC just blamed liquidity conditions on "seasonal factors."

• PBOC OFFICIAL SAYS FINANCIAL MARKET STABLE THIS YEAR
• PBOC OFFICIAL SAYS MONEY MARKET FLUCTUATIONS TEMPORARY
• PBOC OFFICIAL SAYS SEASONAL FACTORS TO GRADUALLY DISAPPEAR
• PBOC OFFICIAL SAYS TO CLOSELY WATCH LIQUIDITY CONDITIONS
• PBOC OFFICIAL SAYS TO STEP UP COMMUNICATION TO GUIDE RATES

And the most important:

• PBOC OFFICIAL SAYS LIQUIDITY AMPLE

Oh well: back to the rumor drawing board. But for today, the goal was achieved - both Chinese stocks and European and US futures ramped on the usual bullshit, with China erasing a 5.8% drop closing just 0.2% lower and S&P futures now at the session highs on absolutely nothing.

After imploding in its morning session by a whopping 5.8%, which would have brought the two day crash to a stunning 10%, the Shanghai Composite rebounded trimming its losses by more than half due to so far unfounded rumors there will be a PBOC press conference later today in the last hour of trading in which it may provide some impetus for a bounce (which oddly enough is boosting US equity futures far more effectively than those of China). The expectation is that at the Lujiazui Forum (link here), the PBOC will speak alongside the the CSRS, the CBRC, and CIRC at which the PBOC will wave a white flag to the Chinese "feral hogs." Don't hold your breath: considering the China Daily oped released earlier, this seems highly improbable but at this point global markets are clutching at any and all straws. Look for big market disappointment if the PBOC refuses to address any additional liquidity provision in a few minutes or over the next several days especially since unlike the US, the Chinese central bank is not willing to be held hostage by the stock market in its mission to rid the country of shady "shadow bank" lending conduits.