Archive - Apr 2015 - Story

Just as we predicted five short days ago, US-armed, Iran-backed, Houthi rebels are set to stage a repeat of the ISIS Mosul central bank plunder as local residents report "suspicious" activity outside the Aden branch of Yemen's central bank.

With many of the world's nations drawing closer to the China-led AIIB, and The Greeks in Moscow today, the news that Vietnam has agreed all of the principle aspects in creating a free trade zone between the countries of the Russia-led Eurasian Economic Union, will likely come as yet another blow to Washington.

Earlier today we suggested that while paying 67x for the BG Group is an exercise in sheer desperation and will cost Shell's shareholders dearly, one group stood to profit handsomely: the bankers who were handed the deal on a silver platter, and who stand to make hundreds of millions in M&A fees without even loading up a merger model: the deal was predetermined from the moment the CEO of Shell called his counterpart at BG.  It turns out we were wrong, and there is one person who stand to reap even more massive benefits than the banks who are just there for window dressing.  That person is BG Group's CEO Helge Lund who, according to Bloomberg calculations, stands to pocket as much as $43 million less than two months after joining the company on February 9 from Norway's Statoil.

Smart meters are now being used by authorities to crack down on “water wasters” in the state of California, but this is just the tip of the iceberg as far as what they can be used for.  Ultimately, smart meters are designed to be part of an entire “smart grid” that will enable government bureaucrats “to control everything from your dishwasher to thermostat“.   And in recent years, there has been a massive push to install smart meters in as many homes in the United States and Europe as possible.

Politics in America is controlled by money in America. But of course none of that, however accurate, makes it right.

It had to happen sooner or later... in the new normal of yield-reaching, collateral-shortage-ing, money-printing economalypse, the Swiss government has become the first ever to issue a 10Y sovereign bond at a negative yield. As WSJ notes, while several European countries have sold government debt at negative yields up to five years of maturity - which means investors effectively pay for the privilege of buying it - no other country has previously stretched this out as long as 10 years. Mission Accomplished Central Bankers?

In a new study, the IMF asks whether there's a global slump in real private investment (spoiler alert: yes there is and it's broad-based and endemic in advanced economies) and also suggests that productivity growth across the globe is likely to remain constrained for the foreseeable future.

California is suffering from a shortage because the government foolishly sets limits on the price of water (and imposes all sorts of other restrictions on the distribution infrastructure). In a free market for water, the price would adjust to balance supply and demand, allowing people to ration it according to their own tastes. If someone really loved long showers, he could still take them, he would just pay a lot more and we would be spared the absurdity of Jerry Brown telling people they can’t water their lawns or wash their cars.

Some companies are notorious for buying back billions in stock in order to mask the decline in their earnings by reducing the number of shares outstanding. Alcoa, which still has a major debt overhang from the last financial crisis, is unable to do that as it simply does not have the free cash flow to dedicate to shareholder friendly activities. Instead, Klaus Kleinfeld's company is forced to resort to an even more primitive form of EPS fudging: massive quarterly EPS addbacks.

If there is one word to describe today's market, as well as the market of the past week, past month, and perhaps all of 2015, it is "stop hunts." Well, technically it's two words.

At this point 15 years ought to count for something. After all, we have now used up one-seventh of this century. So you can’t say its too early to tell what’s going on or to identify the underlying trends. So, after another Jobs Friday: here is the tally: The number of breadwinner jobs in the US economy is still 2 million below where it was when Bill Clinton still had his hands on matters in the Oval Office.

"We believe such a scenario would have the potential to 'burst the corporate bond bubble' as bond yields would rise with inflation, corporate confidence would run high and a releveraging/deterioration in credit metrics would materialise resulting in bond fund outflows. The lack of liquidity in corporate bond markets would make the process particularly painful," UBS says, reiterating the perilousness of a secondary market lacking ample liquidity amid voracious investor demand for new issuance.

As was largely expected, after 11 hours of deliberations by the jury, Dzhokhar Tsarnaev was convicted moments ago of killing four people and injuring 264 in the 2013 Boston Marathon bombings. While the guilty counts are still being read (the full list of 30 is presented below), he has already been found guilty of counts 1-10 all of which carry the death penalty. Next up: the jury must decide if he gets the death penalty.

Following the surprise dovish FOMC dot-downgrade to counter hawkish 'patience removal', and this morning's admission by Dudley that The Fed is Dow-Data-Dependent; expectations for the FOMC Minutes offering any insights were low...

• *FED OFFICIALS FAVORING LIFTOFF LATER IN 2015 CITED DOLLAR, OIL, CHINA, GREECE
  
• *FED OFFICIALS WERE SPLIT ON JUNE RATE RISE, FOMC MINUTES SHOW
  
• *MOST OFFICIALS SAW RISKS TO OUTLOOK, JOB MKT NEARLY BALANCED

So "worried" about the world, "downside" risk to growth but reasons to be cheerful, unpatient and data-dependent liftoff... something for everyone.