Archive - May 4, 2015 - Story

"The Japan-led Asian Development Bank unleashed measures that could help it hold its ground as a resource for regional economies, even as China’s Asian Infrastructure Investment Bank gains prominence," Bloomberg says. In the latest sign that the US and Japan are struggling to cope with the rise of China-led multilateral institutions, the ADB is reportedly adopting "groundbreaking" measures to ensure it can remain competitive.

“[W]e have placed the exclusive custody of our entire banking reserve in the hands of a single board of directors not particularly trained for the duty - who might be called 'amateurs'... But still there is a faith in the Bank, contrary to experience, and despising evidence.”

It seems yet another hero of the recent cyclical bull market, resp. echo bubble, may be in danger of falling from grace. This has already happened to his predecessor Alan Greenspan, who has been gradually demoted from “Maestro” to “irresponsible bubble blower”. In this sense the somewhat less praise-laden verdicts that are lately emerging with respect to Ben Bernanke could be seen as an early warning sign.

"Greece is so far off course on its $172bn bailout programme that it faces losing vital International Monetary Fund support unless European lenders write off significant amounts of its sovereign debt, the fund has warned Athens’ eurozone creditors," FT reports, indicating that the organization may force the ECB and implicitly the German taxpayer to take the hit if Greece wants to receive the last tranche of aid under its existing program.

Including the professional class, perhaps only 3% of the workforce is truly independent.

The cumulative three-month net flows into, or rather out of equities, is now the largest on record.  So, again, we ask: just who is "buying" stocks? Because the greatest rotation is here, and as far as non-central bank participants are involved, it is into bonds and out of stocks.

The social media slump continues...

"From the BIS to BlackRock, and Jamie Dimon to Jose Vinals, everyone seems to be talking about market liquidity," Citi's Matt King writes, before taking an in-depth look at just how broken the 'markets' truly are. To summarize: no depth in the Treasury market, a duration mismatched powder keg in "long-term" mutual funds thanks to the fact that ZIRP has destroyed money market yields causing investors to find a new 'cash substitute,' and a magically shrinking repo market in the wake of new regulations ironically meant to promote stability.

Greenlight's David Einhorn has come out swinging at the Fed-fueled fracking frenzy and, after pointing out facts that are extremely widely known, and have been explained innumerable times here, sent Shale stocks tumbling... led by the so-called "MotherFracker" - Pioneer Natural Resources... Einhorn concludes, "Either way the frackers are fracked."

The new age of Economic Totalitarianism is upon us all. As we warned previously, Australia will be the first to introduce a compulsory tax on savings. This is the ultimate Marxist state for now anyone with spare cash is the enemy of the Conservative Tony Abbott government. The introduction of this tax on money in Australia led by Tony Abbott is the trial balloon for the global economy.

“When does our credit based financial system sputter / break down? When investable assets pose too much risk for too little return. Not immediately, but at the margin, credit and stocks begin to be exchanged for figurative and sometimes literal money in a mattress.” We are approaching that point now as bond yields, credit spreads and stock prices have brought financial wealth forward to the point of exhaustion. A rational investor must indeed have a sense of an ending, not another Lehman crash, but a crush of perpetual bull market enthusiasm.

While the ECB is representing that it has no limitations on total monthly volume purchases, it is suddenly finding itself forced to buy increasingly more bonds on the short end. Which brings up the question: is this due to the specific shift in the purchasing strategy of the ECB, or has the ECB simply run out of bond sellers on the long end and as a result is forced to buy ever shorter-maturity paper?

Yesterday, around 7 pm, dozens of people were at a contest hosted by New York-based American freedom Defense Initiative at the Curtis Culwell Center in Garland, Texas when police said two men pulled up in a vehicle and shot a Garland Independent School District Security guard in the ankle at about 7 p.m. The men were then shot and killed by Garland police. While the FBI did not have any immediate comments or speculation on the reason behind the attac, according to the Site intel group, overnight it was Islamic State supporters who took "credit" for the bungled shooting attack.

Nowhere is the new normal more evident than the frenzied hording of so-called "trophy homes" by the world's 1800 billionaires. As Bloomberg reports, the ultra-luxury housing market is scaling new heights as a record number of properties around the world command prices topping $100 million. Demand is growing among affluent Americans and Europeans; billionaires from unstable economies, such as Russia and Middle Eastern countries; and buyers from mainland China, who were barred from investing overseas before 2012. Why - simple (to them?)... "They’re a scarce commodity. And they’re better than gold because you can boast about it."