Archive - Apr 2014 - Story

A picture paints a thousand words - though perhaps only one is necessary to describe NATO...(for now)...

Presented with no comment... "Today, Bundy revealed himself to be a hateful racist... Bundy has endangered the lives of innocent women and children... it is unacceptable for individuals to use violence or the threat of violence to advance their radical views."

Who can forget the amazing story of Alex Hope which was all the rage two years ago? Probably everyone. So here is a timely reminder because as it turns out young master Hope, who struck the proverbial gold at the tender age of 23, was nothing more than the latest Ponzi schemer whose only success in life was finding the absolute, and quite rich, idiots who believed his lies. Well, that, and being able to transform himself from a catering manager working at Wembley Stadium into an FX trader.... even if a fake, criminal and absolutely terrible FX trader.

This should be good... how will Kerry explain the 2nd warship in the Black Sea and Poland troops as non-escalation but Russia military exercises as escalation when Ukraine has now re-launched its anti-terrorist operations...

Andrew Haldane, who is well known among readers as being one of the most outspoken and truthy central bankers in the world, will become Bank of England's Chief Economist in June. That fact is what makes his comments - however factually honest - extremely uncomfortable for the Keynesian status quo DSGE modelers alive and well in every central bank in the world. To summarize his thoughts in the following letter - the models are useless and it's time to rethink everything...

You just can’t make this stuff up. A few days ago the President of the United States signed into public law bill S. 2195, now known as Pub.L. 113-100. The law aims to “deny admission to the United States to any representative to the United Nations who has been found to have been engaged in espionage activities or a terrorist activity against the United States and poses a threat to United States national security interests.” In other words, if the US government thinks that if you have been spying on the United States, then they won’t let you in the country. Gee, let’s think for a moment - who has been engaging in espionage against the United States? Anyone? Ah, right. The US government. Mr. Obama himself.

Six charts or six thousand words? We know which we'd pick.

Euphoria over Apple channel-stuffing and non-GAAP magic for Facebook quickly turned into the HFT-liqudity-providers nightmare as rumors of an emergency Putin press conference sent USDJPY tumbling lower (and therefore US equities). Once the rumor passed - and despite all the facts on the escalation - stocks bounced (especially Nasdaq) to close mixed. S&P and Dow unchish, Nasdaq +0.5%, Russell -0.5%. VIX was in charge in general once the ramp was under-way but even that went into crazy mode as algos lost the plot. Credit markets are "deniers" of the exuberance as are long-end Treasuries which rallied another 2bps and near 10-month lows. Gold was monkey-0hammered early but rallied on Putin's comments and closed unchanged for the week above $1290. Copper rallied notbaly eback above its 50DMA and Oil limped higher as the USD flatlined.

In the last few months, the yield curve spread between 5Y Treasuries and 30Y has collapsed almost 80bps - this is the fastest relative drop since February 2007. The yield curve is down further today - at its flattest since September 2009. As BofAML's Macneil Curry warns, the flattenin trend is ongoing and sees medium-term targets down to 143bps (over 30bps below current levels) which would raise a number of eyebrows among the excuberant equity crowd (and the Spanish bond-buyers).

In an SEC filing today, GM, it appears, has been forced to admit that:

• *GM SAYS FACING RECALL INQUIRES FROM MULTIPLE GOV'T AGENCIES

As WSJ reports,  government filing that it is under investigation by federal prosecutors, the Securities and Exchange Commission, a state attorney general, Congress and the National Highway Traffic Safety Administration for its handling of a recent rash of recalls. And furthermore,

• *60 PUTATIVE CLASS ACTIONS SUITS FILED OVER SWITCH RECALL

The company says in the filing it isn't currently able to estimate the potential costs of lawsuits or investigations tied to the ignition recall, but adds resolving the probes could have a "material adverse impact" on the company's finances.

With the "truce deal" laying torn asunder by un-de-escalation by each and every side in this dangerous game of chicken, it now seems even diplomacy is off the table. The Russian foreign ministry reports that the planned on April 23 and 24 telephone conversations between, Minister of Foreign Affairs of the Russian Federation Sergey Lavrov and U.S. Secretary of State John Kerry , unfortunately did not take place for reasons beyond Moscow's control, adding that

• *UKRAINE GETTING DEEPER AND DEEPER INTO CRISIS: RUSSIA
• *U.S. MUST FORCE UKRAINE TO STOP MILITARY PUSH IN EAST: RUSSIA

Ukraine's 48-hour red-line is getting closer and with the UN warning that "the situation could quickly spin out of control with unpredictable consequences," it is perhaps time to derisk a little.

Since 2012, almost every economist has predicted that the housing recovery would continue into each coming year and would be a key driver of economic growth. That was again the plan for 2014, but with the housing recovery now on the ropes those same economists are perplexed as to why. Yet, "hope" remains that the recent slowdown is just a "weather related" casualty. The slowdown in housing is not due to the "weather." It began prior to the onset of the recent winter blasts. Nor will reduced distressed sales, delinquencies, negative equity or rising inventories salvage the predictions. These are all indicators "OF" the housing market, but not what "DRIVES" the housing market. The real answer to the slowdown in housing is not so difficult to comprehend...

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The similarities between 2007 and 2014 continue to pile up. And you know what they say - if we do not learn from history we are doomed to repeat it.  Just like seven years ago, the stock market has soared to all-time high after all-time high.  Just like seven years ago, the authorities are telling us that there is nothing to worry about.  Unfortunately, just like seven years ago, a housing bubble is imploding and another great economic crisis is rapidly approaching.

The "v"-shaped recovery in US equity indices is largely being ignored by bonds, JPY, and credit for now as VIX is in charge of the ramping efforts for now... until the last few minutes when it all went a bit pear-shaped...