Archive - Jun 2014 - Story

Saddam Hussein had Muhammad Saeed al-Shaaf, nicknamed "Baghdad Bob" or "Chemical Ali", to explain just how great things were in Iraq (as bombs were raining down around him). With the US 'demanding' the removal of Maliki, we present the Iraq's new military spokesperson, whose name we are sure will raise a few eyebrows - Saad Maan.

Moments ago Kevin McCarthy of California was elected majority leader by House Republicans, according to Riva Litman, spokeswoman for Republican Conference Chairman Cathy McMorris Rodgers. He fills the spot lost by Eric Cantor following his shocking loss to a tea-party activist two weeks ago. McCarthy win is not surprising: it was largely expected. What however, is notable is that with a self-declared net worth of between only $76K and $266K, albeit is substantial jump from the he $16K he revealed in 2008, he is by far the poorest member of the GOP leadership group.

Over 7 years ago, John Kerry had his last public encounter with the military forces in Iraq; and it didn't go down so well...

Larry Fink told the world this morning that central banks are holding a floor under stock prices (but wouldn't expect to see large price increases) - and judging by the gamma imbalances in volatility-land, they are using options markets to unriggedly manage that implicit put. However, given the utter dominance of the machines in the market and any reaction when real volume hits stocks (always down), we thought, courtesy of Nanex, a gentle reminder of just how quickly the Fed put disappears would be useful in this new "we can never get hurt, valuations are within norms, there is no complacency" normal.

what will make the Ukraine restructuring fascinating is if the "activist" bondholder investors, aka vultures, aka holdouts, are not your usual hedge funds, but none other than the Kremlin, which after accumulating a sufficient stake to scuttle any prenegotiated, voluntary transaction can demand virtually anything from Kiev in order to allow the country to make the required adjustments on its bonds to avoid an outright sovereign default. Because who else can't wait for Putin Capital Management LP?

UPDATE: Delayed Until 1315ET

"Boots on the ground" or no boots-on-the-ground? Airstrikes or no airstrikes? Maliki "in" or "out"? ISIS Sanctions? Red lines? YouTube clips? President Obama has his hands full dealing with this self-created SNAFU... but we are sure this press conference will clear it all up (likely as Yellen noted yesterday, it's just "noise")...

Gold has been flashing red this morning that something is happening. Bonds started to crack and then the 30Y TIPS auction tailed... and bond yields are smashing higher. And now stocks are being sold on heavy volume as VIX rolls over... what did Janet say to do now? We need another press conference...

What’s a crony status quo to do when it is ultimately confronted with an unruly mob of plebs frustrated with the fact median wages haven’t increased in forty five years, while the 0.01% has stolen everything in sight with the help of the Federal Reserve and corrupt Washington D.C. politicians? Well, naturally you’d launch the South African made Skunk Riot Control Copter, fully equipped with a suite of high-definition and thermal imagine cameras, strobe lights, speakers and a pepper spray firing paint ball gun which can fire 80 shots per second!

The damage done by Central Planning has yet to come home to roost. Six years into the Grand Experiment--that Central Planners can pick winners who just happen to be their cronies--the chickens of consequence are still making their way home. And when they finally come home to roost, we will all discover that the economy is much more fragile than advertised by the Central Planners and their media toadies.

UPDATE: Sure enough, this was serious! *FBI, N.Y. POLICE ANNOUNCE FINANCIAL CYBER CRIMES TASK FORCE

Hacking Target... or The Pentagon... or Alcoa... or some Chinese military installation is all well and good; but mess with the US equity markets' mainstay market structure and it's getting serious. As BAE Systems reports, hackers slowed down high-speed trading at a large hedge fund last year and rerouted information about the company’s trades to offsite computers. The cyber-attack targeted the hedge fund’s trade order entry system and added gaps to the company’s trading algorithm - delaying orders by milliseconds. The hack went undetected for 8 weeks.  Though the hedge fund was not named, it is believed that 'organized crime' is behind the hack - ironic really...

While both the EAME and Latin America region posted their third consecutive month of 20%+ declines (-22% for EAME, -23% for Latin America), it was Asia (read China) where CAT sales have createred, and the -30% plunge in annual retail sales means Chinese demand for industrial equipment is the weakest it has been since the Lehman collapse.

The headlines are all about Philly Fed's rise to 9-month highs - just shy of the cycle's highs last September. Employment is up, and orders are improving... all good (buy, buy, buy)... But... the 'outlook' or hope index has exploded in the last 2 months by the most since 2009 rebounding from the winter doldrums. Perhaps most worrisome - though we are sure Yellen will dismiss it as "noise", Prices Paid are surging - up most in the last 2 months since June 2009. This is the biggest surge since the Fed started printing money... furthermore, prices received are down notably (ending the margin expansions dream).

It appears Russia 'retaliation' continues for the 'costs' imposed by the West on Putin and his people (Russia +28%, S&P +6% since sanctions). Putin looks set to take on both EU and US as RT reports that Russian MPs are preparing a bill to ban the use of US consulting companies in Russia; and then Ukraine's Naftogaz says Russia's Gazprom seeks to end its accord on daily gas transit - a move which could threaten EU gas supplies. The US put its best man forward to respond and Treasury Secretary Jack Lew thretatened "US is ready to act" on Russia if Ukraine escalates...

Argentina's attempt to work around SCOTUS decision in favor of the 'holdouts' was rejected (under anti-evasion orders) last night leaving Argentina no alternative but to threaten to default on its debt. The government called it "impossible" to pay bond service due on June 30, because payment to holders of restructured bonds could not be made unless the 'holdouts' were paid $1.33 billion at the same time (and Argentina's economy minister argues could be up to $15 bn) which the distressed country clearly does not have. For the first time in 12 years, Argentina has agreed to negotiate with the 'holdouts' (has renegged on that negotiation) who refused to participate in two restructurings that followed Argentina's 2002 default but it seems increasingly likely that an even of default looms for Argentina.  One good thing may come from the victory of the 'hold-outs': the government will find it difficult to rack up more debt.

It took all of "several seconds", in the NYT's own words, for the latest proposal for a ceasefire, issued by Ukraine's new president Petro Poroshenko, to be "rejected."