Archive - Apr 15, 2015 - Story

Because when the macroeconomic backdrop is as bad as it's ever been... there's only one thing for it - panic-buy equities...

It was bound to happen sooner or later: moments ago Mario Draghi was attacked by what appears to be a female (non-Greek) protester screaming "End ECB Dick-tatorship" while delivering his prepared remarks.

Yesterday we were told about Hillary's "Everyday Americans" and exposed the ugly reality of just who stands behind her. Today she meets with some "Everyday Iowans" but as you will read... the attendees were carefully selected and students were locked inside classrooms to avoid any embarrassing questions being asked... We wonder if Wall Street employees are locked in their offices when she visits the executives suites. Somehow, I doubt it.

Just days after Russia lifted sanctions on providing anti-aircraft missiles to Iran, Reuters reports that The Greeks are in talks with Russia to purchase missiles for the S-300 defense system. Greece, a NATO member, has been in possession of the advanced Russian-made systems since the late 1990s and in a defiant show of independence towards Troika, is now negotiating with Russia for the purchase of additional missiles and for their maintenance.

The Asian Infrastructure Investment Bank will establish an AIIB currency basket with China set to push for the yuan to take a prominent role and for “special currency funds” to be established in order to issue yuan-denominated loans through the fund. "The AIIB's grand vision for infrastructure investment [comes] with challenges but China should do its best to establish the yuan as a currency for settlement and denomination," one analyst says.

The Amazon model of burning countless amounts of cash in hopes of one day reaching profitability has fully arrived at Netflix.

Presented with no comment...

Three former Freddie Mac executives who understated the amount of subprime exposure on the GSE's book by a factor of 28 came to terms with the SEC today on a settlement which imposes fees no one has to pay and "limitations on future behavior" that "will not limit [anyone] in any practical way."

"We could now be at a crossroads," warns Deutsche Bank in its annual default study report. As the 'artificial bond market' is exposed and yield curves flatten on Fed rate hikes so carry risk-reward is reduced and default cycles have often been linked to the ebbing and flowing of the YC through time with a fairly long lead/lag. With HY defaults having spent 12 of the last 13 years below their long-term average (with the last 5 years the lowest in modern history), "a perfect default storm could be created for 2018 if the Fed raises rates in 2015."

This will make every American feel much better about handing over that check today... as Simon Black notes today "I believe we have an obligation to starve the beast..."

There were the usual trite, forgettable highlights in the just released beige snow book, which as summarized by Bloomberg, had the following highlights:

FED: ECONOMY EXPANDED IN MOST REGIONS MID-FEB. TO END-MARCH;  HIGHER RETAIL SALES REPORTED BY MAJORITY OF REGIONAL FED BANKS; BEIGE BOOK: LABOR MARKETS STABLE OR SHOWED MODEST IMPROVEMENT; REGIONAL FEDS NOTED MODEST UPWARD WAGE AND PRICE PRESSURE;

One can ignore all of the above, because the only word that matters in the latest beige book was one: "Weather"

Update: *LOCKDOWN LIFTED AT U.S. CAPITOL AFTER GYRO COPTER ARREST

US Capitol Police have locked-down buildings after a man landed a gyrocopter on the lawn. As The Tampa Bay Times reports, the man is a mailman from Ruskin named Doug Hughes who was attempting to deliver campaign reform messages to Congress.

The slowly accelerating melt-up in stocks (amid earnings meeting massively lowered expectations, China's economy slumping, and US macro data hitting new multi-year lows) is aided and abetted by a collapse in VIX. Dow is above 18,000; S&P above 2,100, and Nasdaq above 5,000 - so everything is awesome. Trading volume remains well below a trending-lower average...

Confidence in the system likely hangs by a much thinner thread than is currently widely perceived. Since “risk asset” prices are soaring in much of Europe, the underlying currents of suspicion are well masked, but that certainly doesn’t mean they don’t exist. While we believe that central bank and regulatory interventions in the market are a major reason why so many bond yields have dropped into negative territory, the role played by distrust in the banking system is probably quite large as well – a suspicion that seems to be confirmed by the strength of the euro-denominated gold price.