Archive - Apr 2, 2014 - Story

One way to understand why the global financial meltdown occurred in 2008 and not in 2012 is all the oxygen in the room had been consumed. In the U.S. housing market, there was nobody left to buy an overpriced house with a no-document liar loan because everyone who was qualified to buy a McMansion in the middle of nowhere had already bought three and everyone who wasn't qualified had purchased a McMansion to flip with a liar loan. Once the pool of credulous buyers evaporated, the dominoes fell, eventually circling the globe. Right now China is at the top of the S-Curve, and the problems of stagnation are still ahead.

Non-Seasonally adjusted New Orders dropped 0.6% YoY - the biggest drop in 11 months (and Capital Goods New Orders plunged 10.2%) but of course, in the current weather-related slowdown-reality, despite a notable mark-down in last month's seasonal data, the headline "common knowledge"-defining data will be the Factory Orders beat expectations (off a lower base).

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• pre-trade and post-trade analytics, software and other products that generate market research, including research on optimal execution venues and trading strategies;
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It didn't take long for Russia to launch the first retaliatory salvo against the unexpected JPMorgan "act of aggression." Moments ago Bloomberg just reported that Sberbank,  the largest bank in Russia and all of Eastern Europe, just halted the issuance of consumer loans in foreign currency. Bloomberg adds that "Sberbank, Russia’s biggest lender, holds 43.3% of nation’s consumer deposits, 32.7% of consumer loans and 32.1% of corporate loans."

"We're seeing basic Econ 101 coming into play," says one New York realtor, "when you have this much demand and so little inventory, prices will have to rise. And they have." And, as Bloomberg reports, that is definitely the case as Manhattan apartment sales surged 35% in the busiest start to a year since 2007, setting price records with the average price per square foot rose 24% to $1,363, the highest in 25 years of record-keeping. As a large broker noted, "we're finally at a point where you're seeing the chronic lack of supply push prices higher," adding "the market really isn’t fun for the buyer." But that freshly printed money from the world's central banks to the world's oligarchs has to go somewhere...

ADP employment change missed for the 4th month in a row, printing at 191k vs 195k expected. 191k is the average level of the last two years so the trend is not improving and we suggest that this is not enough to move the scale of the taper or un-taper decision for anyone ahead of NFP. On a side note none other than Deutsche's Joe Lavorgna was the highest estimate economist at a remarkable 275k - missing by a confidence-shattering 4 standard deviations.

It's that time of day again... when the precious metal mice will play as the broad market cat is still away but this time it's different. Instead of the smack-down that we have seen around the 8amET time each of the last 10 days, today gold and silver are spiking. It is unclear what the catalyst is - just as it is never clear what the catalyst for the monkey-hammerings are - but the timing with Putin's retaliation threats (specifically against a major bank with a mysteriously active gold vault) suggest some causation.

While everyone was gushing over the spectacle on TV of a pro-HFT guy and anti-HFT guy go at it, yesterday afternoon we reported what was by far the most important news of the day, one which was lost on virtually everyone if only until this morning, when we reported that "Monetary Blockade Of Russia Begins: JPMorgan Blocks Russian Money Transfer "Under Pretext" Of Sanctions." This morning the story has finally blown up to front page status, which it deserves, where it currently graces the FT with "Russian threat to retaliate over JPMorgan block." And unlike previous responses to Russian sanctions by the West, which were largely taken as a joke by the Russian establishment, this time Russia is furious: according to Bloomberg, the Russian foreign ministry described the JPM decision as "illegal and absurd."  And as Ukraine found out last month, you don't want Russia angry.

• Why did Yellen use criminals in her employment case studies? Hilsenrath explainz (Hilsenrath)
• GM avoided defective switch redesign in 2005 to save a dollar each (Reuters)
• Xuzhou Zhongsen Said to Avert Bond Default on Guarantor Aid  (BBG)
• France's New Finance Minister Faces Fiscal Challenge (WSJ)
• The magic is gone: Draghi’s Attempt to Talk Down Euro Lost on Traders (BBG)
• Another John Kerry smashing success: U.S. Gambit on Mideast Peace Talks Falters (WSJ)
• Combat-Ready China Military Seen as Xi’s Goal in Graft Battle (BBG)
• Huge earthquake off Chile's north coast triggers tsunami (Reuters)
• Pressure rises on Gross as investors pull $3.1 billion from Pimco's flagship fund (Reuters)

Nikkei 225 (+1.04%) outperformed overnight, buoyed by S&P 500 posting a new all-time high, a dovish BoJ's Tankan inflation survey and reports that the GPIF is to invest in funds specializing in Japanese stocks with high returns. Overall, another quiet session this morning as market participants continued to position for the upcoming ECB meeting, with Bunds under pressure amid further unwind of expectation of more policy easing by the central bank. According to ECB sources, there is no clear consensus at present on policy action, intense debate seen on Thursday after March HICP data, adding that it fears "over-interpretation" by market of QE possibility.