Archive - Apr 22, 2015 - Story

Politics in Ukraine continues to be characterized by the East/West divide that was so clearly visible in maps of Ukrainian elections and the distribution of the Ukrainian and Russian language (see “Mapping the Conflict in Ukraine” for details on this). While the new government wants to be seen as embodying Western values in contrast to the kleptocracies that previously governed the country, both its actions and omissions very often seem at odds with this aspiration, to say the least.

Japanese Prime Minister Shinzo Abe awoke on Wednesday to find a half-meter-wide drone, contaminated with trace levels of radioactive cesium, on the roof of his office in Tokyo. Of course this is nothing new for Washington where a drone crash-landed on The White House lawn in January and Chief Cabinet Secretary Yoshihide Suga said that Japan is looking to tighten laws governing drones (ahead of next year's G7-summit and the 2020 Olympics). Of course, the police have explained cesium isn't harmful to humans (though we suspect they aren't stupid enough to drink it).

To put the 28 months of declining retail sales in context, during the Great Financial Crisis, CAT suffered "only" 19 months of consecutive declines. As of March 2015, this number is now 28! Or as a more truthful Tim Geithner would say, "Welcome to the second Great Depression, Caterpillar!"

Coincidence? Maybe. But since Bill Gross called Bunds "the short of a lifetime," the last two days have seen German 10Y Bund yields rise (on a percentage basis) by the most on record. On an absolute basis, this is the biggest yield increase since Oct 2014... Who would dare to sell when Draghi has promised moar...

DOE Inventory data confirmed API data overnight with a 5.3mm bbl build (notably better than expectations of 3.2mm and significantly higher than last week's 1.29mm build). Cushing saw a build that was the 2nd lowest since November 2014 (even though at +738k the build was well above expectations of +550k). Crude prices appear to jumping higher on the fact that production was a 2nd consecutive production cut (albeit very modest) even though we have seen such short-term drops before (and it was only Alaska that saw a drop -3.4% - lower 48 was flat 0.0%).

Great news... housing is back? so sell stocks and bonds...

After failing to comfortably beat expectations for the last 7 months, March Existing Home Sales surged 6.1% to a 5.19mm SAAR - the highest since Sept 2013. Despite collapsing macro data throughout March all blamed on 'the weather' The Midwest saw existing home sales rise the most (by 10.1%). All this 'pent-up demand' has crushed affordability as home prices are up 7.8% YoY - the largest gain since Feb 2014.

The central bank high is euphoric, the crash and burn equally epic. Be careful what monkey you invite to latch onto your back...

With Turkish enforcement now granted a green light to detain anyone, for any reason, the next inevitable crackdown was only a matter of time - that on free speech. Overnight we got a vivid example of just that when a university student in southern Turkey has been handed a one-year suspended sentence for retweeting a satirical article about a governor from Zaytung, a mock news portal in Turkey, daily Cumhuriyet has reported.

Fun-durr-mentals...

Moments ago McDonalds reported its latest sales numbers which were basically atrocious, worse than usual, and missed across the board. At this point the operational challenges facing the company are clearly unfixable in its current iteration which is broken beyond merely a CEO switch, and not even a "buy 1 Big Mac, get 3 Big Macs (and Joseph A Banc suits) free" strategy will fix the ailing fastfood maker, whose secular collapse is best captured by the charts below. So what does the stock do? It jumps.

Following comments from the Swiss National Bank, reducing the group of sight deposit account holders that are exempt from negative interest rates, has sent Swissy tumbling...

With talks between Greece and its creditors expected to go mostly nowhere in Riga later this week, and with speculation about an energy deal between Athens and Moscow (i.e. the precursor to the dreaded "Russian pivot") looking less like speculation and more like reality with each passing day, Europe is going the spite route by filing anti-trust charges against Gazprom.

While we eagerly await for the SEC to retract its official 104 page report summarizing the "Findings regarding the market events  of May 6, 2010" in light of "recent developments", and as we follow the shift in the official narrative to the outright bizarre, in which the entire Flash Crash is now blamed on just one man (as opposed to just Waddell & Reed as per the previous narrative), we learn that the latest scapegoat for a broken, fragmented and manipulated market, Navinder Sarao, is not quite so eager to go to minimum security prison in the US for doing what leads to a slap on the wrist when someone like Citadel or Virtu does it, and will challenge the CFTC's attempt to pin everything on him.

• Because it just gets funnier: UK speed trader arrested over role in 2010 'flash crash' (Reuters)
• ... and funnier: Mystery Trader Armed With Algorithms Rewrites Flash Crash Story (BBG)
• Presidential hopeful Rubio reaches out to gay Republicans (Reuters)
• Varoufakis Sees Differences Narrowing in Creditor Talks (BBG)
• China Debt Mess Brings Out the Yin and Yang in Policy Makers (BBG)
• Hedge Fund That Made 18% on Dollar Strength Now Bets on Drop (BBG)
• Whistleblower Jim Marchese Scores Millions in Payout—Again (WSJ)
• Release of Benghazi Report on Hillary Clinton Likely Pushed to Election Season (BBG)