Archive - Jan 16, 2015 - Story

Marilyn Tavenner, head of the U.S. Centers for Medicare and Medicaid Services, plans to step down at the end of February, she told her staff in an e-mail. As Bloomberg reports, Tavenner didn’t say why she was leaving. In November, she acknowledged that her agency had made a mistake in its calculation of the number of people enrolled under Obamacare.

UMich Consumer Sentiment surged to 98.2 - smashing expectations of 94.1 by the most in almost 2 years. This is the highest sentiment since February 2004...!!This all seems very odd... especially in light of the dismal retail sales data and weak wage growth (and we note this is the preliminary print). Inflation expectations plunged to 2.4% (from 2.8%) - the lowest since 2010. American optimism remains unphased as a majority (55.2%) now expect higher wages in the next year (despite earninsg actually dropping!!) 54% of Americans think it is a good time to SELL a house. 

Spoiler alert: nothing good, because what until yesterday was, indicatively, a 1 million mortgage (in HUF or PLN terms) is suddenly a 1.2 million mortgage. But what about the details? Here they are, courtesy of Goldman Sachs.

Spot the difference...

Industrial Production dropped 0.1% in December (slightly worse than expected) after November's 1.3% surge - the biggest sicne may 2010. Not since Jan 2014's Polar Vortex has Industrial Production dropped more than this. The 5.5% surge in vehicle production - as suspected - was entirely unsustainable and dropped 0.9% in December and Utilities collapsed 7.3% on the month - the worst dropo since Jan 2006.

Gold and the USD are the most correlated since July 2010. Despite the surging USDollar - which any mainstream media pundit will tell you should crush the hopes and dreams of the barbarous relic - gold prices are surging since the start of 2015. The latest $50 jerk higher came after the SNB decision asthe safety of non-fiat currencies was sought aggressively. At $1270, gold is at its highest since Sept 2014.

• DEUTSCHE BANK LOST ABOUT $150M THURS DUE TO SWISS FRANC VOLATILITY: SOURCE
• BARCLAYS LOST TENS OF MILLIONS OF DOLLARS THURS: SOURCE
• INTERACTIVE BROKERS GROUP SAYS "SEVERAL" CUSTOMERS SUFFERED LOSSES IN EXCESS OF THEIR DEPOSIT AMOUNTING TO APPROXIMATELY $120 MILLION, LESS THAN 2.5% OF CO'S NET WORTH

Great news! The cost of 'stuff' that Americans buy dropped 0.4% last month, or rahter great news for anyone but economists for whom this is the worst possible outcome imaginable - after all what will spur insolvent Americans, where the middle class no longer exists, to spend their money today if they don't think prices will rise tomorrow?

UPDATE: Knight Trading 2.0? Jefferies executive are reportedly on-site at FXCM discussing a $200 million bailout

As we first reported last night, FXCM was among the first of many retail FX brokers (and the largest) to see its clients suffer massive losses from yesterday's Swiss Franc surge following the SNB decision to unleash market forces. There are now at least 4 retail FX brokers (FXCM, Excel Markets, OANDA, and Alpari) who have announced "issues" but FXCM, being among the largest and publicly traded is the most transparent example of wjust what can go wrong when average joes are allowed 100:1 leverage. FXCM is now stuck chasing clients for money they do not (and will never) have.. and its stock is down 90%, trading a $2 this morning (down from $17 on Wednesday). As Credit Suisse notes, time is running out as regulators "tend to be impatient once capital requirements are breached."

What we see now is the recovery of price discovery, and therefore the functioning economy, and it shouldn’t be a big surprise that it doesn’t come in a smooth transition. Six years is a long time. Moreover, it was never just QE that distorted the markets, there was – and is – the ultra-low interest rate policy developed nations’ central banks adhere to like it was the gospel, and there’s always been the narrative of economic recovery just around the corner that the politico/media system incessantly drowned the world in. That the QE madness ended with the decapitation of the price of oil seems only fitting.

The FDIC-backed hedge fund may have beaten on the EPS and top line, the reason why investors are less than excited, is because as the chart below shows, the trend is most certainly not the friend of either Lloyd Blankfein or Goldman's shareholders. The culprit: the one most important category, FICC revenue, was nothing short of the Jefferies-hinted disaster, and at $1.218 billion, it was not only a huge miss to expectations of $1.6 billion, but was 30% lower compared to a year ago, and is the lowest FICC revenue since Lehman.

The bad news is that as we also speculated, and as Greek officials tried to cover up as usual, the Greeks have resumed doing what they do best any time their country is facing a grand crisis: walking to the bank and withdrawing what little deposits they have left. Or rather running to the bank. Which brings us back to the topic of the Emergency Liquidity Assistnace, which as Kathimerini reported moments ago, at least two Greek systemic banks have reportedly resorted to, indicating that the liquidity situation in Greece is once again as dire as it was in the depth of the European collapse.

Just a flashing headline for now from Bloomberg citing AFP:

HOSTAGES TAKEN IN POST OFFICE IN PARIS SUBURB, POLICE SAY: AFP

Three people have been taken hostage by an unknown gunman at a post office in Colombes, a northwest suburb of Paris, French media reported. The gunman is armed with a Kalashnikov rifle, French RTL radio reports. He is holding from two to five people hostage, Le Figaro reports, citing police sources.

One day after the SNB stunner roiled markets, overnight global markets have seen - as expected - substanial downward pressure, with the Swiss market slide resuming post open, while European stocks have seen some pressure despite what is now an assured ECB QE announcement next week. However, the one trade that can not be mistaken is the global rush into the safety of government paper, with every single treasury yielding less today than yesterday (the Swiss 10Y was trading below 0% at last check), except for Greek 10Y which are wider on deposit run fears. That said, with capital market liquidity absolutely non-existent even the smallest trade has a disproportionate effect on futures, and expect to see much more rangebound trading until the damage report from the SNB action is fully digested, something which will take place over the weekend.