Archive - Mar 12, 2015 - Story

With Greece on the edge of being kicked out of the Eurozone , either voluntarily or otherwise, with an anti-austerity party on the verge of taking over the reins of power in Spain, with Beppe Grillo waiting in the corridors for his chance to pounce in Italy and with Marine le Pen and her nationalist party on the verge of becoming the biggest shocker of Europe over the coming years, here, according to Daniel Hannan, is what killed democracy in Europe. Europe itself.

With all deference to Dr. Richard Fisher, the surging dollar is not good for either the economy or ultimately a stronger labor market. This is particularly the case when the dollar is only stronger because the rest of the world is on the brink of recession and or deflation. The negative impact of a surging dollar in a weak economic environment will more than likely outweigh any positive inputs for the U.S. consumer. Time will tell, but the evidence is mounting that the we are likely closer to the end of the current economic cycle than the beginning.

Hint: It's not the economy and it's not unemployment.

Here's how Blomberg says one 27-year old has made millions from loaning money to failing companies and trading in their penny stocks. 

Having thought long and hard (since 2009) about the benefits of becoming a member of the European Union, Iceland has decided to withdraw its application...

*ICELAND SAYS WON'T RESTART ACCESSION TALKS WITH EU

The 2013-elected (euroskeptic) coalition government had scrapped talks, so this is not entirely surprising, as it sought more trade accords.

In Q4 US household net worth jumped by $1.5 trillion to $82.9 trillion, driven by a rise in total assets to $97.1 trillion, even as the long awaited increase in "good debt", that of mortgage debt, remains elusive and Mortgage debt hasn't budged from $9.4 trillion in 8 quarters! This, even as the total US housing market is said to have kept rising. The biggest jump in Q4 assets was once again in financial assets, driven by a $492 billion increase in Corporate Equities as well as $323 billion added from Pension Funds. And as usual, financial assets remained at precisely 70% of total assets. Who benefits? Why America's richest of course.

Despite the continuing commentary that all is well in America, economic growth expectations for Q1 just collapsed to a new cycle low. From just 4 months ago, growth expectations have been cut 20% to 2.4%... but that is still double The Atlanta Fed's dismal 0.6% forecast...

Front-month crude oil futures just plunged to new 6-week lows and a $46 handle. The April-May (J-K) spread has soared... no immediate catalyst for this move so we suspect it is Oil ETF and futures-roll-driven flow.

“In the past, if one of our brokers wanted to exploit a questionably legal regulatory loophole or breach the covenant of good faith with an investment client, that would require hours of manually contravening the basic principles of professional integrity. But this innovative system will allow millions of such transgressions to go through every single day. Going forward, I expect this revolutionary program to be the cornerstone of our business.”

Having previously hinted that they might 'dip' into public pensions funds for some short-term cash to payback The IMF, and then confirming that the plan is to repo that cash from pension cash reserves (raising concerns about how they will unwind the repo - i.e. pay it back); the Greek government finally signed the bill today that enables them to plunder the Greek people's pension funds (for their own good).The massive irony of this bill is the bill enables greek deposits to be fully invested in Greek sovereign bonds... which Tsipras and Varoufakis both admitted today is "unsustainable" and "will never be repaid."

"Mario Draghi and the ECB’s manipulation of asset prices makes Greenspan’s Fed look like a rank amateur. More shocking though than the plunge in the euro, and more shocking even that 25% of sovereign eurozone bonds now trade in negative territory, is what has happened to eurozone equity valuations. For, as we approach the sixth anniversary of the US cyclical bull market, the PE expansion of eurozone equities is simply off the scale!" - Albert Edwards

Yesterday's 10 Year auction played a trick on the repo market, which was so short the underlying the repo was trading very special at -1.8%. Today, as we noted earlier, the shortness persisted, and not only in the 10Y but the 30Y as well, whose repo was negative for the second day in a row. Well, while the bet yesterday was wrong, today it was spot on, with the 30 Year reopening of 29-Year-11-month CUSIP RK6 pricing surprisingly weak, stunning the bond market when a whopping 2.1 bps tail was announced moments ago, following a High Yield announcement of 2.681%, well above the 2.66% When Issue.

"For the time being, the problem is one of a scarcity of bonds – where it is difficult to find all the bonds across the curve that need to be bought – but, if yields keep falling further; eventually it will become a problem of shortage of bonds due to the 25% threshold in terms of ECB ownership – where there is not enough bonds for the ECB to buy the required amounts," BNP warns. At that point, there will be an effective Q€ taper — and the tantrum that comes with it.

There was a point in 2010 when American capitalism might have had an opportunity to heal itself and commence on a long march toward sustainable growth and real wealth gains. But the monetary politburo would have none of it - keeping the pedal to the metal until this very moment... and the rest is history. The Fed and the other central banks around the world have fomented a new and even more virulent and dangerous financial bubble.

It appears Washington is losing some control among its allies. Amid a flurry of high-level visits to Vietnam last year, the US has been pouring in aid and assistance in health, education, landmines clearance, scholarships and nuclear energy. The reason is now becoming clear. As Reuters reports, Vietnam has been allowing Russia to use a former US military base to refuel nuclear-capable bombers as it rattles its sabre over the Asia-Pac region.. and America would like that to stop: "we have urged Vietnamese officials to ensure that Russia is not able to use its access to Cam Ranh Bay to conduct activities that could raise tensions in the region." All that was missing was the "or else."