Archive - Jun 18, 2014 - Story

Now where have we seen this before? Who could have guessed that the weather-induced rebound exuberance would be slowly but surely reduced? US Economic Forecasting - where New Year's hopes go to die...

The tragic reality is the Bush II/Obama administrations have made the world a far more dangerous place.

What Obama wants, he appears to get. As AP reports, the U.S. Patent Office has ruled the Washington Redskins nickname is "disparaging of Native Americans" and that the team's federal trademarks for the name must be canceled. We note that this decision is based on the fact that 30% of Native Americans believed the term 'Redskins' to be disparaging (not a majority). Which leaves us questioning when the Federal Government will see the New York Giants as disparaging of tall people and The Oakland Raiders as disaparaging of pirates... welcome to the new normal. We wonder (rhetorically of course) if this latest Redskins escalation is supposed to distract from Ukraine, Iraq, Bergdahl, IRS, Benghazi, or approval ratings?

The battle between Islam's two major branches began over 1400 years ago when the Islamic prophet Mohammad died and the two sides clashed over who should succeed him. This centuries old 'war' is once again threatening Iraq's (and indeed the Middle East - and thus the world's) stability. The Washington Post's senior national security correspondent Karen DeYoung explains in 100 seconds just how we got here...

Following the release of the  "deeply troubling" 315-page "Valukas Report" and the firing of 'all' those responsible for multiple deaths from GM's 'Kevorkianesque' cars, CEO Mary Barra is back on the Hill to face the music once more from The Subcommittee on Oversight and Investigations. Having explained in her previous testimony that she could answer their questions as she did not have the information, Subcommittee Chairman Tim Murphy (R-PA) noted, now "we will have the chance to get those answers and compare the company's findings to our own." Of course, one wonders if the politicians will ask about how GM silenced a whistleblower.

"Simple Jack" is back. Yesterday it was the 4x oversubscription for Kenyan debt at 7% yield; today we see bailed-out Cyprus (yes that Cyprus - in "emergency situation" and still with capital controls) managed to sell EUR 750 million of 5 year maturity debt at a 4.85% yield. As Reuters reports, this is the fastest comeback to the public markets of any bailed-out European country. "People are searching for yield," said of Martin Wilhelm, founder of IfK, a German Kiel-based bond boutique, which runs a bond fund with Acatis; and that is clear as Cyprus just issed at a cheaper cost of funding than Greece (4.95% 2 months ago). In the understatement of the day, Michael Leister, senior strategist at Commerzbank.  said "the risk is that valuations and primary market dynamics aren't related to fundamentals anymore." Cyprus economy is expected to contract 4.2% this year. Like Greece's deal in April, the buyers are expected to largely British- and U.S.-based hedge funds.

In order to avoid even further questions about the true role of the NSA and thus risk even more embarrassment of the broken US government apparatus (because the IRS scandal is really symptomatic of a greater issue: the deteriorating of checks and balances in the US legislative branch), the man who has been most steadfast in his pursuit of Lois Lerner's, and the IRS', pursuit of conservative groups, House Oversight and Government Reform Committee Chairman Darrell Issa on Tuesday issued a subpoena to the Internal Revenue Service, ordering the agency to turn over the hard drive they claim is responsible for wiping out two years of critical email communications. According to the Washington Examiner, Issa is not only seeking emails, but wants equipment, “communication devices,” printed documents and just about anything else related to former IRS official Lois Lerner, who has refused to testify before Congress and who the GOP believes is a central player in the targeting scheme.

Moments ago Saudi Arabia fired back at Iraq's "harsh words" and warned that Iraq faced the threat of full-scale civil war with grave consequences for the wider region and, in a message to arch rival Iran, warned against outside powers intervening in the conflict. "This grave situation that is storming Iraq carries with it the signs of civil war whose implications for the region we cannot fathom," Foreign Minister Prince Saud al-Faisal told a gathering of Arab and Muslim leaders in Jeddah. He urged nations racked by violence to meet the "legitimate demands of the people and to achieve national reconciliation (without) foreign interference or outside agendas". It was unclear if "foreign interference" includes the US as well, or just limited to Iran.

The US Current Account deficit was larger than any of the 40 'qualified' economists expected and missed expectations by the most since Q4 2008 (Lehman). Of course, this will be shrugged off as 'weather-related' but if weather can do as much damage as Lehman (sending the deficit back to the biggest levels since Q1 2012) then one has to wonder just how 'stable' this recovery is.

Well that didn't take long. Home prices are not the only thing surging in Britain as Reuters reports British spot wholesale gas prices climbed over 7% after Ukraine and Russia failed to agree on the price of future gas deliveries. Britain gets around 5% of its gas from Russian sources and a mild winter and spring have prompted utilities to inject more gas into storage than usual. One analyst notes "as yet flows through Ukraine to Europe have not been disrupted but the market has become increasingly concerned that they will," and now, following the explosion in the largest gas transit pipeline in Europe, disruptions have begun.

When it comes to the Benghazi embassy killings, the administration will kindly request that Americans focus all their negative energy on this (very bearded) face: the one belonging to the repetedly interviewed by US press alleged "masterming" of the deadly Benghazi attack, Ahmed Abu Khatallah (profiled previously) who for nearly two years was hiding in plain sight in Libya, and who has finally, after extensive Google searches on his current whereabouts by the CIA, been found and captured (a process CNN described as "a large group of trappers quietly snaring rare and dangerous prey") and is being brought back to the US to be waterboarded until Hillary Clinton's book sales finally pick up.

• Levin Hearing Ups Volume in High-Frequency Call to Action (BBG)
• Ukrainian President Fires Central Bank Chief (BBG)
• Argentina Plans Debt Swap (WSJ)
• Fed Decision Day Guide From Dot Plots To Exit Strategy (BBG)
• World Bank Economist: China May Face US-Style Financial Crisis (WSJ)
• Premier Li says no hard landing for China, expects medium to high growth (Reuters)
• Putin Talks Peace With Ukraine Leader After Gas Pipe Fire (BBG)
• Poll Shows Erosion in President's Support (WSJ)
• U.S. mortgage applications plunge in latest week (Reuters)
• Ex-Goldman director goes to prison, still owes $13.9 million fine (Reuters)

it is suddenly not fun being a Fed president (or Chairmanwoman) these days: with yesterday's 2.1% CPI print, the YoY rate has now increased for four consecutive months and is above the Fed's target. Concurrently, the unemployment rate has also dipped well below the Fed’s previous 6.5% threshold guidance, in other words the Fed has now met both its mandates as set down previously. There have also been fairly unambiguous comments from the Fed’s Bullard suggesting that this is the closest the Fed has been to fulfilling its mandates in many years. Finally, adding to the "concerns" that the Fed may surprise everyone were BOE Carney’s comments last week that a hike “could happen sooner than the market currently expect." In short: continued QE here, without a taper acceleration, merely affirms that all the Fed is after is reflating the stock market, and such trivial considerations as employment and inflation are merely secondary to the Fed. Which, of course, we know - all is secondary to the wealth effect, i.e., making the rich, richer. But it is one thing for tinfoil hat sites to expose the truth, it is something else entirely when it is revealed to the entire world.