Archive - Apr 2014 - Story

Presenting: the proverbial elephant in the room.

What you have to realize is that this trend is inevitable... we are hopelessly lost in a declining spiral vortex of debt and corruption that will only change with war and civil unrest.

The last time Goldman Sachs urged clients to "sell", it was gold - and in the next quarter, they were the largest acquirer of the precious metal via ETFs. So when the muppet-murdering bank suggests this morning that, while "we have been caught in choppy action" there is a slow awakening of Treasury bears and recommends shifting from a neutral to short-duration position in bonds... one can't help but wonder just what the bank will do with all the bonds clients sell to them...

The real problem with Piketty's taxation/social welfare solution to wealth inequality is that it does nothing to change the source of systemic inequality, debt-based neofeudalism and neocolonialism.

Momentum, or high-growth hope, stocks are making fresh lows of the February Tarullo Top as this morning's mysterious buying panic sparked by housing data has relapsed into aggressive selling pressure. The Russell 2000 has broken below its 200DMA once again - a critical support level - and Nasdaq and Trannies ar emaking new lows from Friday. Momentum, or high-growth hope, stocks are making fresh lows of the February Tarullo Top as this morning's mysterious buying panic sparked by housing data has relapsed into aggressive selling pressure. The Pharma frenzy is fading fast also. The Russell 2000 has broken below its 200DMA once again - a critical support level - and Nasdaq and Trannies are making new lows from Friday. All US equity indices are now in the red for April.

NY Republican Congressman, and former FBI agent (ironically), Michael Grimm - who became infamous for threatening an NY1 reporter "I'll throw you off the fucking balcony... I'll break you in half" - has been indicted on campaign finance charges as well as mail, wire, and healthcare fraud. Oh and since he seemed such a trustworthy and honest chap after his apology for the prevous threats, he is also being charged with perjury after lying about all the other shit he did... Welcome to American politics... As AP reports, he has pleaded not guilty to the 20-count federal indictment.

Last week, Chinese police, after 60 years of operating unarmed, got their first guns. But nowehere is it clearer just how nervous the Chinese authorities are getting about the restless natives than in the following series of photos posted moments ago on Sina, showing security forces in China's Urumqi province learning how to use... bayonets?

It seems the US and EU sanctions escalation has done nothing to calm the tensions between Ukrainians and pro-Russian forces in Donetsk, where according to report ultranationalists from Kiev are involved in a skirmish with local riot police. As the following clip suggests... "rocks and missiles are being thrown from both sides - there are injuries and scenes of absolute brutality as both sides clash."

Spot the nation that just had "major sanctions" handed down to it...

Just a few brief days ago, Weibo IPO'd "successfully" at the bottom-end of its range ($17) and exploded higher - "proving" that Candy Crush (or take your pick of recent IPO failures) were all one-offs and that 'quality' companies were still in demand. Fast forward 6 days and Weibo just entered a bear-market - down dramatically from its highs over $24 and is nearing its IPO price. There's no data, no news - just selling, in size. Investors stashing cash away for another pop in Alibaba's forthcoming IPO perhaps? Not if market conditions continue to look like this...

While Apple's earnings report last week left little to be desired, one of the more notable observations was that the company's cash hoard, relentlessly rising until now, had seen its first quarterly dip since Lehman, declining by $8 billion from $158.8 billion to $150.6 billion. Which was to be expected: since the technological company has not had much success with "growthy" innovation since the arrival of Tim Cook, it has been forced to become an activist investor's favorite piggybank, buying back and dividending record amounts of cash. In fact, perhaps the most notable feature of its earnings release was that AAPL would boost its buyback plan by 50% to $90 billion. One small problem: as everyone knows, when it comes to shareholder friendly actions, Apple can only rely on its domestic cash hoard. What this simply means is that after making the history books with the biggest ever, $17 billion bond offering 12 months ago, Apple is about to issue a whole lot more of debt.

A few weeks ago, after Gartman got "scared" of the market and "got out of stocks" only to see a sharp reversal, Gartman turned "pleasantly bullish"... only to see stocks close the week red. Overnight, Gartman may have set the market direction once again with the following update: "We turned “pleasantly” bullish of shares several weeks ago when the S&P tested 1805-1810 and it has rushed higher since, although global shares have not followed the US higher with the same sense of urgency. Now, however, 1875-1885 has proven to be formidable resistance and our bullish enthusiasm has to be reduced once again." And sure enough, stocks surge. In HFT momentum chasing algo terms.

The Dallas Fed manufacturing survey beat expectations by the most since September 2013 and rose to near its highest since Feb 2012. Most of the 'current' sub-indices rose thogh prices paid tumbled (oddly to its lowest since August) and wages stagnated (as new orders surged to their 2nd highest since 2006 - entirely sustainable!!) What is probably more worrisome is the plunge in the employment expectations index - which dropped to its lowest since Dec 2013 (but but but the weather).

The almost ubiquitous overnight levitation (thanks to JPY - bouncing off 102.00 overnight; and more Pharma M&A exuberance) gave way very quickly to more of the same from Friday as the high-growth, high-hope, high-hype, high-beta stocks get slammed. The dump of US equity indices at the open was then met with a "well, it's Tuesday tomorrow... oh and FOMC" mad panic buying scramble... Then the 'great' news that pendong home sales dropped YoY for the 6th month in a row confirmed the momo spike and sent bond yields spiking and gold prices tumbling because one data point MoM is all that we need to spark the algos into action... If you want to know why this idiocy is happening - look no further than USDJPY...

Pending Home Sales provided some hope for the serial extrapolators this morning as month over month saw a 3.4% gain (against expectations of a 1% pop) for the first sequential rise in 7 months (led by the South and West - which were largelty unaffected by the weather). NAR appears happy to state that there are no more weather factors and it's business as usual. This is the 6th month in a row of negative year over year comps for pending home sales.