Archive - Feb 2014 - Story

More humor from Mt.Gox, which has once again "temporarily" suspended all transactions. Can it just make it permanent already, and get it over with?

This morning's US equity "market" behavior is 'volatile' to say the least and of course all human-driven??! A JPY-pump-driven surge into day-session open suckered just enough in to leave vaccuum and when someone pulled the rug from under the JPY shorts right at the open (bashing USDJPY back down to the all critical 102.00 level) stocks tanked... AUDJPy stabilized and stocks surged back to it and are now treading water around VWAP. While all this was occurring bond yields went only one way - down; and the USD Index jumped notably. Given the all-time-highs, conviction in stocks seems anything but strong.

Russian bonds had rallied for 2 days on the heels of the ouster of Yanukovych and a hope-fueled strategy (supported by Goldman's buy-buy-buy recommendation) that Europe or the IMF would save the day and fund them back to solvency. However, Russian deputy finance minister Storchak has a different perspective...

*UKRAINE FACES HIGH PROBABILITY OF DEFAULT: RUSSIA'S STORCHAK

And that has sent 3-month Ukraine bond prices tumbling once again...

Despite fresh record highs for stocks, previously exuberant Conference Board consumer confidence was unable to make new highs and instead tumbled by the most in 4 months, missing expectations by the most since October. This catches down to Bloomberg's less confident consumer and suggests the hopes and dreams of a nation looking for moar multiple expansion may be drifting away...

There was a time when Vietnam was America's staunchest proxy war foe. This is not those times which explains why yesterday the president signed a landmark, controversial and not to mention hypocritical deal with Vietnam in which allows the U.S. to sell nuclear fuel and technology to its former foe, which will then be allowed to further enrich it. Why (because there is always a reason when the US does something so unexpected, and especially when nuclear power is involved)? Simple: as the Hill explains, the US "aims to help guarantee Vietnams' energy independence as China asserts a more prominent role in the region." Of course, the last time the US sought to prevent Vietnam's affiliation with a foreign superpower, the results were quite disastrous. One can only hope this time it's different.

Tesla is set to announce a plan this week to build the world’s largest battery factory. The plan will include the involvement of Panasonic and other partners, and it will be so big that Tesla’s CEO Elon Musk is calling it a “gigafactory.” The motivation for building the factory is multiple... and the implications could go beyind the EV market.

While the sell-side community urgently continues to pimp Seasonally Adjusted Case Shiller data, despite the Case-Shiller index creators' own wishes that NSA data be used, it is becoming increasingly difficult to mask the fact that home price momentum is fading. This is precisely what one sees when looking at the change in unadjusted prices, which in December posted the second sequential decline in a row, dropping by -0.08%, following a -0.05% drop in November for the 20-City Composite index, and the biggest sequential decline since November 2012. The annual increase of 13.42% was in line with the expected 13.4%, and was the third month in a row of declines in annual house prices, something we have known for a while, and which the 2 month delayed Case Shiler index finally confirmed. Finally, we are grateful to Case Shiller for being the first to admit that it was not all the weather: "Some of the weakness reflects the cold weather in much of the country. However, higher home prices and mortgage rates are taking a toll on affordability." Let's hope there is no rain in the Spring and sun in the summer then as everything else is already bad and getting worse.

The last 7 days have seen the unstoppable 'sure-thing' one-way bet of the decade appreciation trend of the Chinese Yuan reverse. In fact, the 0.95% sell-off is the largest since 1994 (bigger than the post-Lehman move) suggesting there is clear evidence that the PBOC is intervening. The fact that this is occurring with relatively stable liquidity rates (short-term repo remains low) further strengthens the case that China just entered the currency wars per se as SocGen notes, intending to discourage arbitrage inflows. For the Chinese authorities, who do not care about the level of their stock market (since ownership is so low), and specifically want to tame a real-estate bubble, this intentional weakening is clearly aimed at trade - exports (and maintaining growth) as they transition through their reforms. The question is, what happens when the sure-thing carry-trade goes away?

The last time JPMorga had an investor day, Jamie Dimon explained to Mike Mayo why he is richer than him (and pretty much anyone else). This year, Jamie will be more focused on explaining to 8,000 JPM workers why after firing 16,500 people in consumer and mortgage banking, the bank will now let go another 2K and 6K in those same two groups (which will bring total mortgage and consumer banking headcount reductions between 2013 and 2014 to at least 17K and 7.5K, respectively). This may be tricky especially in the context of, you know, the housing and economic recovery, and stuff.

In 1999, 86% of all vehicles made in the US were produced by a United Auto Workers (UAW) worker. Today that share stands at a dismal 54% as Bloomberg reports UAW workers assembled 5.91 million of the 10.9 million cars and trucks made in the US last year. The UAW's recent failure to organize employees at an assembly plant in Tennessee (operated by VW) underscores how more and more cars from overseas automakers are built here. Membership of the UAW has fallen a stunning 75% since 1979.

• Turkish PM says tapes of talk with son a fabrication (Reuters) but opposition confirms authenticity, and national TV carriers cut parliament when played live
• Inside the Showdown Atop Pimco, the World's Biggest Bond Firm (WSJ)
• Ex-Jefferies Trader’s Customers Say Lies Common Tactic (BBG)
• Bitcoin exchange Mt. Gox disappears in blow to virtual currency (Reuters)
• The messenger mania is spreading: SoftBank Said to Seek Stake in Naver’s Line Messaging Unit (BBG)
• Ukraine Replaces Central Bank Head (BBG)
• Yup, an actual headline: Harsh weather tests optimism over U.S. economy (Reuters)
• Hiring of Law Grads Improves for Some (BBG)
• Easy Currency Bet Gets Harder as the Chinese Yuan Tumbles (WSJ)
• In Ukraine turbulence, a lad from Lviv becomes the toast of Kiev (Reuters)

#Wow! CHP leader Kilicdaroglu: there will be other evidences come forward..so my advice to Erdogan, take a helicopter & flee the country!!

— ilhan tanir (@WashingtonPoint) February 25, 2014

All eyes were on China overnight, where first the PBOC drained a quite substantial CNY 100 billion in liquidity via 14 day repos in the month following the biggest credit injection on record, pushing those worried about China's credit schizophrenia to the edge, and then things got even more bizarre when in an act of clear PBOC intervention, the CNY dropped to the lowest since August 2013 as concerns about the global carry trade's impact on China (as noted here previously) start to reverberate. We will have more to say about China's Yuan intervention, but what should be noted is that the Shanghai Composite has tumbled nearly 10% in the past week, and was down another 2% overnight and is once again just barely above 2000, a level it can't seem to get away from for years (which is fine: recall that the real bubble in China is not the stock but the housing market). Chinese property stocks dropped to 8-month lows as concern continues about bank's withdrawing some liquidity for the asset class.The USDJPY drifted along and after rising to a resistance level of about 102.600 has since slide just shy of its 102.20 support area which means US equity futures are now in the red, and concerns that the S&P 500 may not close at a new record high are start to worry the technicians.

In the annals of internet conspiracy theories, none is more pervasive than the one speculating paid government plants infiltrate websites, social network sites, and comment sections with an intent to sow discord, troll, and generally manipulate, deceive and destroy reputations. Guess what: it was all true.

UPDATE: Mt. Gox website and feed is now offline

Much as we are not surprised, given our previous discussion of the end of major Bitcoin exchange Mt. Gox, this evening's release by Coinbase must be the final nail in the final coffin of the Tokyo-based firm...

"The purpose of this document is to summarize a joint statement to the Bitcoin community regarding Mt.Gox. ... As with any new industry, there are certain bad actors that need to be weeded out, and that is what we are seeing today. "

And scene...