Archive - Oct 14, 2014 - Story

In the pantheon of utter political stupidity in our time, the competition is pretty fierce to see who ranks #1. But I have to imagine that, even with so many rivals, Argentina’s Cristina Fernandez de Kirchner makes a pretty compelling argument to be the champion. Exhibit A: Argentina’s new ‘supply law’, or Ley de Abastecimiento, (as we warned here) due to take effect in December next year.

There is just one chart that anyone should care about in the aftermath of INTC's just announced Q3 earnings. This one.

Doctors at the University of Kansas Hospital are expecting results of blood tests Tuesday that could determine if a patient has contracted the Ebola virus. Initial Results - Negative - waiting on CDC results.

Yet again, early exuberance in stocks - which was entirely unsupported by credit and bonds - plunged back to reality late in the day. Intraday volatility in Russell and Trannies was unbelievable with 3-4% swings (Trannies best day in 14 months before the tumble - but managed to close back above its 200DMA). Since Friday, Treasury yields are 6-9bps lower and the dollar rallied back to unchanged today. The big story was the total collapse in oil prices into their close (accompanied by weakness in CAD and EUR, stocks, and bond strength) as it appears someone large got a serious tap on the shoulder to liquidate (WTI under $82 -4.4%, biggest drop in 2 years). Copper gained as gold and silver slipped modestly on the day. HY credit pushed back above 400bps (widest in 13 months) as VIX broke above 24.5 briefly in the last hour (from below 21.5 at its lows) highest since June 2012.

Who could have seen this coming? (aside from this of course)

As cases continue to surface across America, the CDC is shifting its strategy to battle Ebola infections...

*CDC SAYS ESTABLISHING EBOLA RESPONSE TEAM
*CDC: RESPONSE TEAM CAN BE AT ANY HOSPITAL W/EBOLA CASE IN HOURS

This Ebola outbreak is being called the “most severe, acute health emergency seen in modern times“, and the U.S. health care system is completely and totally unprepared for it.  The truth is that most U.S. hospitals are simply not equipped to safely handle Ebola patients, and most hospital staff members have received little or no training on Ebola.  And the fact that Barack Obama and our top public health officials are running around proclaiming that Ebola is “difficult to catch” is giving doctors and nurses a false sense of security.

Having noted last week of the rising tensions between the French (pushing forward with plans for a budget deficit that far exceeds EU Treaty rules) and Germany (letting a Frenchman run EU's finances is "an unwise personnel decision") and Brussels (planning to reject the French budget); it seems the French are unimpressed. As les Echos reports, French finance minister Michel Sapin has proclaimed he won't change the budget, arguing that the EU commission has no power to reject a budget as sovereignty belongs to France's parliament... fighting words for a 'union'! In addition, the EU is now planning to reject Italy's budget, due to its "serious violation" of EU rules.

The head of the San Francisco Federal Reserve Bank on Tuesday said he would be open to another of round asset purchases if inflation trends were to fall significantly short of the U.S. central bank's target. Although he said it would take a big shift in the U.S. economic outlook for the Fed to restart its bond buying, John Williams said the possibility of a new downturn in Europe and other global economic woes pose a risk to the United States. "If we really get a sustained, disinflationary forecast ... then I think moving back to additional asset purchases in a situation like that should be something we should seriously consider," Williams said in an interview with Reuters.

Equity markets live and die on several well-established conventions, according to ConvergEx's Nick Colas, noting that these are the rules that investors use as the bedrock of their fundamental analysis. The volatility of the last few weeks shows that some of these paradigms are now under attack. Chief among the question marks: “Do central banks always have the power to tip the balance between growth and recession?” Another rising concern: “Can stocks constantly shrug off recessionary signals from commodity and fixed income markets?” Lastly, “How many exogenous, if largely unpredictable, global events can equities ignore before their collective weight halts a bull market?” Bottom line: the debate on these topics isn’t over for October or the balance of the year.

A few minutes ago, all hell broke loose in Intel stock when a Reuters fat finger did a JPM deja vu (as a reminder, JPM earnings were released just after 4 am, some three hours before their scheduled release due to a Nasdaq news release error) and released what the robots thought was INTC's Q3 earnings. Moments later, it was uncovered that while it was a fat finger, the finger hit the wrong button and had erroneously leaked Q2 earnings once again. Nonetheless, what happened in the interim was your typical algo idiocy, which as Nanex' Eric Hunsader summarized best, as follows: "This is crazy - note the wide swings in $INTC - some lasting less than 1 second. #HFT madness"

With more than 4,400 people dead from Ebola - mainly in West Africa - senior WHO official Bruce Aylward told reporters on Monday that the outbreak was continuing to spread geographically to new districts in the capitals of Sierra Leone, Liberia and Guinea. As The BBC reports, the WHO says it is alarmed by the number of health workers exposed to the disease and warned the epidemic threatens the "very survival" of societies and could lead to failed states. "Any sense that the great effort that's been kicked off over the last couple of months is already starting to see an impact, that would be really, really premature," Aylward said, as WHO further warned the number of new Ebola cases may jump to 10,000 a week by Dec. 1 as the deadly viral infection spreads - "the virus is still moving geographically and still escalating in capitals, and that’s what concerns me."

Moments ago, the Fed concluded its latest $931MM POMO, with just 6 more POMOs left ever (at least until another QE program is unveiled), and judging by the last week's performance, the market has finally figured this out. And Goldman, which has been pounding the table on shorting the 10 Year for about a year now, and in the process crucifying even more muppets, has some bad news for TSY shorts: global growth is crashing.