Archive - Jul 2013 - Story

State Department spokesperson Jen Psaki is doing her best not to appear like she is speaking for a dictatorship, and won't take sides, here are some headlines:

*PSAKI: MURSI SPEECH LACKED SPECIFIC STEPS, ACTIONS SPEAK LOUDER THAN WORDS, MURSI MUST RESPOND TO POPULAR CONCERNS
*PSAKI WON'T SPEAK TO UNCOMFIRMED REPORTS OF COUP, NO STEPS TAKEN ON RESCINDING U.S. MILTIARY AID TO EGYPT
*PSAKI: US EMBASSY IN CAIRO, CONSULATE IN ALEXANDRIA CLOSED

Live now.

Uncertainty over global oil supply chain amid a 'tanks on the street' and a coup in Egypt, no worries. Portugal increasingly prone to testing Draghi's OMT 'promise' as Cabinet collapses, don't sweat it. US growth implications terrible given trade balance and ISM services, all good. It appears to us like US equity market algos were not told that today is a half-day as they progressed with the BTFD ramp in the first half after some serious declines early on.

A tweet from Gehad El-haddad, the media spokesman for the Muslim Brotherhood & Senior Adviser to Freedom & Justice Party, indicates that the NSA (or Snowden) may be busy.

All my accounts on the internet (Facebook, Twitter, Linkedin, Gmail) r being hacked at the same time !!

— Gehad El-Haddad (@gelhaddad) July 3, 2013

Courtesy of the BBC's Jeremy Bowen, we can see that the tanks in Cairo are now deployed. Surely this will add at least another 10 points to the Stalingrad and Propaganda 500 on anywhere between 2 and 3 contracts in today's hilarious zero volume revolutionary melt up.

Update: The melt up on no volume insanity continues

One has to laugh. Following overnight news of an ongoing collapse in the Portuguese government and an epic surge in Portuguese bond yields, not to mention the ongoing military coup in Egypt, the S&P just hit highs as trading volume disappears and the BTFD algos take over.

The Egypt drama is reaching its inevitable, and largely expected, conclusion. From Reuters:

• EGYPT PRESIDENT'S NATIONAL SECURITY ADVISER SAYS MILITARY COUP UNDER WAY
• NO MILITARY COUP CAN SUCCEED AGAINST POPULAR RESISTANCE WITHOUT CONSIDERABLE BLOODSHED -MURSI AIDE
• MURSI ADVISER SAYS EXPECTS ARMY, POLICE VIOLENCE TO REMOVE PRO-MURSI DEMONSTRATORS
• EGYPT BROTHERHOOD SPOKESMAN SAYS TANKS ON STREETS, VIA TWITTER
• SEVERAL HUNDRED EGYPTIAN SOLDIERS, TOGETHER WITH ARMOURED VEHICLES, PERFORM MILITARY PARADE ON MAIN ROAD NEAR PRESIDENTIAL PALACE - REUTERS WITNESS

In other words, if Morsi leaves, you get a Civil War.

#Breaking: Egyptian TV reports #Morsi under house arrest http://t.co/XXtyYIxUnw #Egypt

— ABC News (@ABC) July 3, 2013

We were promised by the cognoscenti of PhD economists that higher mortgage rates would not affect the so-called housing recovery. They devoutly prayed to the god of momentum that "rates were still low historically" and "housing is on a self-sustaining path" and numerous other truisms that always fail at the turning points. Well, it appears from mortgage application data that things are not looking so hot. Whocouldanode that smashing interest rates higher at the margin (remember its the marginal impact - not absolute since the majority who can have refi'd or purchased down to new low rates with their fixed cash flow and this bid up house prices via their new found affordability) would crush the dreams of an organic (not 'hedgie-driven flip-dat-house REO-to-Rent'-based) recovery. And don't forget the drag from these higher rates to come, and what happened the last two times mortgage rates spiked at this pace. This collapse year-over-year in mortgage apps is as bad as that in 2006 when the last bubble burst...

Hardly surprising, but those starved for headlines out of Egypt, this is the best we have:

• Egypt's Morsi refuses to step down, tells military not to 'take sides' as deadline nears - AP (or rather tells military not to take opposite side)
• Egypt's Morsi offers consensus government as a way out crisis - AFP

More as we see it, although without vocal support out of the US for Morsi to date, his fate is largely sealed.

Confused by last night's bombshell white flag of defeat by the Obama administration which delayed the implementation of the employer mandate, aka the "shared-responsibility rules" by one year until 2015 derailing the public education campaign that the rollout of Obamacare was set to take place in October? Then the following list of 6 questions and answers from Politico analyzing the ins and out of the decision is for you.

Presented with little comment aside to note that Egypt's 2020 bond yields are up 42bps today to a record 10.65%, the 5Y CDS has surged to 925bps and yet the last few days have seen egyptian equity markets jump almost 10%. Is the thinly-traded local market being driven by US ETF-driven news-algo flows or is it all going to be ok after all?

Baffle with BS continues: just as the June Mfg. ISM predictably beat two days ago, so today's Non-mfg ISM missed, printing at 52.2 below expectations of a 54.0 and down from 53.7. This was the lowest print since February 2010, and the biggest miss to expectations since April 2010. The New Order components was absolutely destroyed printing at 50.8, down from 56.0, and the lowest since July 2009. Furthermore, Business Activity tumbled from 56.5 to 51.7, far below consensus of 56.8, and the lowest since November 2009. The only good indicator on the face of this absolute devastation was the Employment index which mysteriously rose by 4.6 to 54.7, the highest since February: those part-time jobs must sure be accretive to businesses.

And now for something completely different. Citi's Willem Buiter is best known for his exhaustive, often times fatalistic outlook on Europe (he will ultimately be right about the Grexit, and Spexit, and ultimately Dexit, the only problem is so will Meredith Whitney about the state of the US municipals - eventually). It appears there may have been a reason for his dour outlook on life: a sexy stalker as it turns out. A sexy, but very demented stalker.

With just a few short hours to go until the military-coup-deadline, the situation is rapidly moving from bad to worse in Egypt. Following Reuters reporting that the Muslim Brotherhood's refusal to meet with army officials - "We do not go to invitations (meetings) with anyone. We have a president and that is it," Sky News Arabiya reports that the Egyptian army now completely controls the State TV building. The miltary will make a statement at 5pm local (10amET).