Archive - Jun 16, 2014 - Story

Investigators have opened a probe into the bizarre death of the former deputy head of the Interior Ministry's anti-corruption department, who reportedly jumped out of a window during questioning on Monday. "During the interrogation, the investigator and lawyer left the room, and at that moment my client dove out the window. He is dead," said Georgy Antonov, the lawyer of Boris Kolesnikov, Interfax reported.  Lyudmila Alexeyeva, head of the Moscow Helsinki Group and a veteran human rights campaigner, cast doubt on the official version of events, calling the situation "very strange." "When he ran, knocked over the guards, he just knew that a window was open somewhere? It's very strange somehow. It's unclear whether he jumped himself or was thrown out," Alexeyev said in comments carried by Interfax.

After 5 months of missed expectations and tumbling to one-year lows, the NAHB sentiment index jumped 4 points to 49 (still below the 'positive' 50 level). The Northeast - most troubled supposedly by the weather - saw prosepctive buyer traffic drop, but the otheer 3 regions rose with the West spiking. Just as we have seen in the last 2 cycles, NAHB survey data remains far adrift of the reality of sales, but that won't stop the algos extrapolating this jump to new highs and a recovery in housing that is back on...as HANB Chair confirms "is a welcome sign and shows renewed confidence in the industry."

Who could have seen that coming? The IMF has slashed US growth expectations for 2014 from 2.8% to 2.0% (with 2015 hockey-sticking back to 3.0%) due to weather. The IMF also warned the Fed should be "mindful of financial stability," but that is not the most surprising aspect of the IMF's mea culpa as they plunge head first into policy decisions...

*IMF RECOMMENDS RAISING U.S. MINIMUM WAGE, ADDITIONAL U.S. INVESTMENT IN INFRASTRUCTURE, & LIMITING OR ENDING ITEMIZED TAX DEDUCTIONS

One wonders, rhetorically of course, if the IMF also pulled a "Polish Central Bank" and suggested that the US fire all Republicans in return for this suggestion; and we wonder how El-Nino is "priced-in" to this forecast.

Last month's collapse in Industrial Production was handily revised up to a less taper-terrifying 0.3% drop (from 0.6%) and May saw the production gauge rise 0.6% vs 0.5% expectation for a notably unimpressive 'surge' post weather problems. Utilities fell modestly (as one would expect) but mining and manufacturing picked up slightly. Perhaps most notably, while total vehicle production rose, Auto production dropped for the 3rd month in a row as the Feb/March surge slows.

With everyone expecting "Belgian" US Treasury holdings to surge by another inexplicable double-digit billion amount, and surpass $400 billion in what has been the most aggressive, and secretive, accumulation of TSYs by an unknown third-party using the Belgian jurisdiction as venue via Euroclear, the April holdings of the small European country posted their first drop since August. According to the TIC data released moments ago, total "Belgium" holdings - the third largest after China and Japan - declined by $15 billion in April, to a new grand total of $366 billion.

Following the arrival of the US aircraft carrier CVN-77, the ironically named George H.W. Bush, in the Persian Gulf, another US warship, LPD-19, the USS Mesa Verde also entered the Persian Gulf moments ago. Its cargo: some 550 US marines.

This week brings some key events and releases in DMs, including US FOMC (Goldman expects $10bn tapering, in line with consensus), IP, CPI, and Philly Fed (expect 13.5), EA final May CPI (expect 0.50%), and MP decisions in Norway and Switzerland (expect no change in either).

It was the best of times, it was the worst of times. Empire Fed jumped to 19.28, notably better than the 15.00 expectation and reached highs not seen since June 2010, and up from the 19.01 last month. It doesn't get much better than that - even in the V-shaped recovery off the recession lows: if only sentiment surveys were the same as hard data - the US recovery would never be stronger. Alas, despite all this exuberant cycle high-ness - if only in the eyes of beholders, and certainly not in Q1 US GDP of -2.0%, the number of employees index tumbles from 20.88 to 10.75 and worse still the forward-looking index dropped after 3 months of gains.  However, the worst news, comes for those who continue to, incorrectly, predict a CapEx renaissance: The capital expenditures index fell for a second consecutive month, dropping to 11.8, and the lowest since February.

"Today, from 10:00 a.m. Moscow time, Gazprom, according to the existing contract, moved Naftogaz to prepayment for gas supplies ... Starting today, the Ukrainian company will only get the Russian gas it has paid for."

Another conspiracy "theory" becomes conspiracy "fact" as The FT reports "a cluster of central banking investors has become major players on world equity markets." The report, to be published this week by the Official Monetary and Financial Institutions Forum (OMFIF), confirms $29.1tn in market investments, held by 400 public sector institutions in 162 countries, which "could potentially contribute to overheated asset prices." China’s State Administration of Foreign Exchange has become “the world’s largest public sector holder of equities”, according to officials, and we suspect the Fed is close behind (courtesy of more levered positions at Citadel), as the world's banks try to diversify themselves and "counters the monopoly power of the dollar." Which leaves us wondering where are the central bank 13Fs?

• Iraq Army Tries to Roll Back Sunni Militants’ Advance (BBG)
• Starbucks to Subsidize Workers' Online Degrees (WSJ)
• ‘Bitcoin Jesus’ Calls Rich to Tax-Free Tropical Paradise (BBG)
• Medtronic Is Biggest Firm Yet to Renounce U.S. Tax Status (BBG), Medtronic to buy Covidien for $42.9 billion, rebase in Ireland (Reuters)
• Oil Topping $116 Seen Possible as Iraq Conflict Widens (BBG)
• Putin Seeks Paris Landmark as Hollande’s Russia Ties Defy Obama (BBG)
• GM Says It Has a Shield From Some Liability (WSJ)
• BOJ’s Bond Paralysis Seen Spreading Across Markets (BBG)

It's one of those days: despite the Iraq conflict spilling out of control and about to involve US drones and warplanes, despite China's naval conflict with Vietnam over an oil rig in disputed territory set to go "kinetic" at any moment, despite the Ukraine civil war having its deadliest day yet this weekend and adding insult to injury Russia halting gas supplies to Ukraine (letting Kiev and Berlin fight for the scraps), despite crude prices rising ever higher and about to unleash a "discretionary income" shockwave on America's summertime motorists, despite yet another massive tax inversion M&A deal in which the buyer has made abundantly clear its stock is overvalued and will be used as the purchasing currency, stocks are inexplicably not at all time highs this morning.