Archive - Oct 2014 - Story

Following the sad death of Thomas Duncan this morning, CBS is now reporting that a possible second case of Ebola has been discovered in a suburb of Dallas:

*DALLAS AREA PATIENT SHOWS EBOLA SYMPTOMS: CBS

The patient claims to have had contact with Thomas Eric Duncan, referred to as Dallas ‘patient zero', and also confirmed travel to West Africa.

"Don’t let the occasional 50-60% crashes disturb your peace of mind! You will always win in the long run! Long term bear markets don’t exist... well, maybe except in Japan. And much of the 18th century. But other than that, nothing can go wrong..."

If you liked King Dollar, you'll love Dumping Dollar... Gold, Treasuries, and Stocks are surging after the release of the FOMC minutes suggested The Fed will keep rates lower longer. The USDollar is dumping - just as The Fed suggested it was worried about a strong dollar. Stocks remain negative on the week and below the levels of the last FOMC...

Federal Reserve officials have become more concerned about weak growth overseas and the impact of a strengthening U.S. dollar on the domestic economy, warns WSJ Fed-whisperer Jon Hilsenrath, adding that, the stronger currency, by reducing the cost of imported goods and services, could hold U.S. inflation below the Fed’s 2% objective. Fed staff also reduced its projection for medium-run growth in part because of these concerns. The minutes showed more clearly than before that concerns about global growth and the disinflationary impact of a strong currency are giving officials additional pause about moving quickly on rates.

With the S&P down over 3% from September's FOMC statement, the market needed some 'good' news from the Fed minutes to save the 'wealth' that has been created...

• *FED OFFICIALS SAW GLOBAL SLOWDOWN AMONG RISKS TO U.S. OUTLOOK (growth)
  
• *FOMC SAID SOME DEVELOPMENTS COULD UNDERMINE FINANCIAL STABILITY (bubbles)
  
• *FED SAW RISING DOLLAR AS RISK TO EXPORTS, GROWTH, MINUTES SHOW (jawbone USD)
  

So The Fed fears bubbles, fears growth slowing down, and appears to be talking down the dollar. In other word, dovish minutes confirming the dovish statement was indeed dovish.

If you like your 'disappointing' government-sponsored wage growth data, you can keep it... but if you are an ambitious talking-head economist looking to boost confidence in the economy in the hopes of a career in the administration, then ADP has just the 'tool' for you. Behold, the "ADP Workforce Vitality Index" - which measures the total real wages paid to the US private sector workforce, implying that the BLS is not measuring wage growth correctly as it is actually notably higher. In Q3, the ADP data grew 0.77% which they argue "is a good sign that may lead to increased consumer spending and a boost for the economy," and implicitly means The Fed should be hiking rates sooner as ADP warns "real wages are accelerating." Zandi the optimistic hawk?

The most surprising data point in today's 10 Year auction was the plunge in Directs, which tumbled from 13.5% to only 6.6%, which was the lowest since August of 2012 when they ended up with 5.2%. Just how much of this lack of Direct interest is due to Bill Gross no longer being on the bid? And what happens to future auctions in a world without the Old "New Normal" Pimco?

The “Doomsday Book” is essentially a private compilation of emergency measures that the Federal Reserve could take in the event of a financial crisis or other market-destabilizing event. The book has never been made public. But Fed officials have refused to release it, and Justice Department officials at a court hearing on Tuesday said the Federal Reserve Bank of New York wanted to keep the book under seal.

Two bond "markets", one yield...

If the top 1/100th of 1% crowding airports with their private jets isn't afraid of impoverished, disenchanted debt-serfs with pitchforks, they should be.

The first US Ebola patient, Thomas Eric Duncan, who was treated in Texas, has just died:

TEXAS HEALTH REPORTS DEATH OF EBOLA PATIENT THOMAS ERIC DUNCAN

And while we await the inevitable CDC press conference to follow, the stock of CMRX, whose medicine was being used to treat him, is plunging.

BTFD'ers are absent as markets everywhere are in turmoil. Commodities are sliding with WTI plunging (almost a bear market from June highs) and copper crumbling. The USD is slightly lower (3rd day in a row). Treasury yields are slightly lower. But it is stocks that are turmoiling most as the Dow nears unchanged year-to-date. After the dramatic ramp off the lows last week, stocks have entirely roundtripped and then some to fresh cycle lows, led by Trannies and Small caps. VIX is back over 18. In Europe, stocks tanked once again with DAX closing below 9,000 for the first time this year.

UPDATE: *ENHANCED EBOLA SCREENINGS TO START AT JFK FIRST: CNN

Following CDC Director Frieden's warning yesterday, the AP reports, US Homeland Security has unveiled additional more stringent monitoring of all travelers to the US for the Ebola virus:

*U.S. AIRPORTS TO TAKE TEMPS OF TRAVELERS FROM W. AFRICA: WPOST
*FIVE OF BUSIEST U.S. AIRPORTS TO TAKE TEMPERATURES, POST SAYS

While geopolitics has largely dropped of the front news page, replaced by updates on the global Ebola epidemic (which until recently was considered nothing but fearmongering by those who prefer to avoid reality ews until it is far too late), things in the Middle East are getting worse, and while the US attack against ISIS has achieved absolutely nothing (in fact, the revelation of US strategies may have facilitated the incursion of ISIS into the town of Kobani, a mostly Kurdish city in north Syria), the latest geopolitical hotspot over the past few days has become NATO member Turkey (we provided a big picture summary in "Turkey, The Kurds And Iraq - The Prize & Peril Of Kirkuk"). It is here that violent clashes broke out across the southeast of the nation with several people reported dead and curfews imposed, as the region’s Kurdish people protested the advance of Islamic State just across the border with Syria.

Modern central banks enjoy extraordinary independence, typically operating free from political interference. Central bank actions that alter the allocation of credit blur those boundaries and endanger the stability the Fed was designed to ensure. Such interference in the allocation of credit is an inappropriate use of the central bank’s asset portfolio. It is not necessary for conducting monetary policy, and it involves distributional choices that should be made through the democratic process and carried out by fiscal authorities, not at the discretion of an independent central bank.