Archive - Mar 27, 2014 - Story

Filed under 'most ironic story of the day', California Senator Leland Yee, who authored gun control legislation, has been busted by the FBI for conspiracy to deal firearms without a license and to illegally import firearms. As AP reports, Yee is also accused of accepting tens of thousands of dollars in campaign contributions and cash payments to provide introductions, help a client get a contract and influence legislation. House of Cards much?

Moments ago, the always laughable realtor advertising agency known as the NAR, reported that its agents were not making as much money as they had hoped, when pending home sales in February tumbled by 10.2%, well below expectations of a -9.0% drop, and below the January decline of -9.3%. Why? Here is what the cuddly Larry Yun, NAR chief economist, said was the culprit: "Contract signings for the past three months have been little changed, implying the market appears to be stabilizing. Moreover, buyer traffic information from our monthly Realtor survey shows a modest turnaround, and some weather delayed transactions should close in the spring." In other words, the February collapse was further aggravated by ongoing harsh weather in February. That's fine - we even went so far as showing where the regional sales moves were in February. What is quite visible on the chart below is that the largest collapse in February activity was in Southern states, which is clearly due to the Tropical Vortex.

Must be the weather... (though if you want to believe that, do not look at the regional breakdowns)... Pending home sales fell 10.2% YoY - the worst in 3 years (notably worse than the 9% drop expected by the meteorologists in the economics departments of the big banks). This is the 8th month in a row of home sales drops (pre-weather).

For the first time in over 6 weeks, all major US equity indices are in the red for 2014. Early-year leaders Nasdaq and Russell are being crushed by the battering of Biotechs and monkey-hammering of Momo names. Since FOMC, Momos are down 14% and Biotech down 12%. The high-growth hope is fading and nowhere is that more evident than the tumble in 30Y yields - now at 10 month lows. The hopes that financials would lead have nw left as they are also in the red post-FOMC (post-CCAR hope).

With the hours counting down to the latest deadline for open enrollment for Obamacare coverage, it appears the administration needs more keg-standing bro's, easy women, and twerking Richard Simmons to get the message out. A new survey by Kaiser finds 6 out of 10 unaware of the deadline. When reminded of the mandate and the deadline, half of those without coverage as of mid-March say they think they will remain uninsured.

For the 5th day in a row, US equities have levitated in the pre-open and faded away quickly soon after. Today is different though in 2 ways: the pump was de minimus and the dump is early. It seems the initial claims good news is indeed bad news for stock investors. Treasuries continue to bear flatten once again as 30Y is rallying and 5Y selling off further; gold is steady at around $1300 and the USD is rallying modestly. Copper and oil prices are rising. European stocks are also faltering with DAX giving up all its early gains.

And so the various estimates of Q4 GDP have made an almost full circle: starting at 3.22% in the first forecast, plunging to 2.38% in the second, and finally settling at 2.63%, a miss from the expected 2.7%. This is down from 4.1% recorded in Q3 which however as everyone knows by now was purely due to a unprecedented, record inventory build up.

Initial jobless claims dropped 10k this week to 311k - the lowest in 4 months - offering little bad-news-is-good-news hope for renewed un-tapering to pump stocks back up. Illinois, New York, and Pennsylvania (all weather-related) saw the biggest drops in claims in the prior week. Continuing claims also fell 53k to 2.82 million, its lowest in 3 months.

Gazprom must really be demanding payment on overdue Ukraine invoices which is the only way we can explain the unprecedented speed with which the IMF has managed to cobble together a makeshift bailout package of up to $27 billion - the bulk of which will naturally go to Russia - which has just made Ukraine its latest vassal state. There are of course, conditions: "Approval is “expected in April, following the authorities’ adoption of a strong and comprehensive package of prior actions aiming to stabilize the economy and create conditions for sustained growth,” IMF mission chief Nikolay Gueorguiev said in the statement. Disbursement may start next month, he said at a news conference in Kiev." And then comes the hyperinflation: "Monetary policy will target domestic price stability while maintaining a flexible exchange rate. This will help eliminate external imbalances, improve competitiveness, support exports and growth, and facilitate the gradual rebuilding of international reserves. The NBU plans to introduce an inflation targeting framework over the next twelve months to firmly anchor inflation expectations"...  Very high inflation targeting.

• BOE to Sign Agreement With China on Yuan Clearing Next Week (BBG)
• U.S. law firm plans to bring suit against Boeing, Malaysia Airlines (Reuters)
• Citigroup Fraud Stings Mexico Star as Medina-Mora Chased (BBG)
• Fraternity Chief Feared for Son as Hazings Spurred JPMorgan Snub (BBG)
• UBS suspends six more forex traders (FT)
• Goodbye CSCO Q1 EPS: China to strengthen Internet security after U.S. spying report (Reuters)
• Good luck: Spain Banks With $55 Billion of Property Seek Deals (BBG)
• Citic Pacific Said to Plan About $4 Billion Public Offering (BBG)
• Yahoo Japan to buy eAccess from SoftBank for $3.2 billion (Reuters)
• "Whatever it takes" to talk down the Euro: Euro, peripheral bond yields fall on ECB easing debate (Reuters)

Let the fun begin.

After tumbling overnight to just around 101.80, the USDJPY managed to stage a remarkable levitating comeback, rising all the way to 102.3, which in turn succeeded in closing the Nikkei 225 at the highs, up 1% after tumbling in early trade. The Shanghai Composite was not quite as lucky and as fear continue to weigh about a collapse in China's credit pipeline, the SHCOMP was down more than 0.8% while the PBOC withdreww even more net liquidity via repos than it did last week, at CNY 98 billion vs CNY 48 billion. That said, this morning will be the fifth consecutive overnight levitation in futures, which likely will once more surge right into the US market open to intraday highs, at which point slowy at first, then rapidly, fade again as the pattern has seemingly been set into algo random access memory. Which in a market devoid of human traders is all that matters.