Archive - Jun 9, 2015 - Story

While API and DOE data has not exactly been consistent recently, the fact that API reported a huge 6.7 million barrel inventory draw for the last week is significant. Of course, all eyes will be focused on production data tomorrow but for now, WTI prices are up at the highs of the day.

Chinese stocks are around 4 times more volatile than the current MSCI World index... in other words, if asset allocators maintain current equity weightings then portfolio risks will soar (if China is added). But given that most risk budgets are fixed, rising volatility in the equity portion of portfolios (from adding China) will require rotation out of equities and into bonds (or lower vol assets) in order to maintain VaR limits. Be careful what you wish for...

What’s really at issue here is a transfer from national democratic sovereignty to, instead, international-corporate sovereignty, in which international coporations will have locked-in an international dictatorial control over a large portion of what it is that national governments do, and necessarily must do, in order to serve the public good. The whole thing is a corrupt con-job.

"costs" or Plan A all along?

David Nicholls: “Banks do not collude to try to set a Libor rating. “I think I am just hearing a lot of hysteria about Libor that is just misinformed."
John Ewan: “A cabal of them could.”
Nicholls: “What’s a cabal?”
Ewan: “A group together could."
Nicholls: “That’s an interesting conspiracy theory."

A Russian Tu-95 has overshot the runway after taking off in Russia’s Far East, resulting in injuries to several crewmembers. The four-engine Tu-95 (NATO codename Bear) is a long-range strategic bomber capable of carrying nuclear warheads. As RT reports, the accident has prompted the Russian Defense Ministry to temporarily freeze all flights carried out by the aircraft.

*WHITE HOUSE BRIEFING ROOM WAS EVACUATED ON BOMB THREAT: EARNEST
*WHITE HOUSE GIVES ALL CLEAR ON BRIEFING ROOM
*SECRET SERVICE QUICKLY MADE SURE ROOM WAS SAFE, EARNEST SAYS
*BOMB THREAT WAS PHONED IN, EARNEST SAYS

We should not even want to rebuild the world as it was in the decade of the 2000’s because it was so unbelievably unstable, a fact revealed persistently in the nearly eight years since that peak. Economists and central bankers treated the Panic of 2008 and the Great Recession as if it were a temporary interruption in an otherwise healthy system, a cyclical problem that over time heals on its own. Most of them still, to this day, hold the same view and the world’s economy and financial system is paying the costs of doing so. The eurodollar economy is falling apart and no amount of orthodoxy can reverse it because the eurodollar economy is orthodoxy.

After a very modest drop last week, outstanding margin trading balances in China have resurged to record highs this week as 'correction' dip buyers rampage back into the markets, hopeful of China's inclusion in (and devastation of) the MSCI indices. With China's market cap now nearing $10 trillion (40% of USA's, up from just 14% last year), we thought a profile of just who is buying Chinese stocks - from plastic umbrella makers up 3000% this year to ponzi schemes like Hanergy. As one middle-aged rural Chinese chap exclaimed jubilantly, "it's easier to make money from stocks than farmwork."

"U.S. President Barack Obama is weighing steps to bolster Iraq's battle against Islamic State," Reuters says, as senior military officials indicate an increase in the number of US "support personnel" may be necessary. Meanwhile, Congressional war hawks are beating the drum.

After today's latest selloff in the Treasury complex which has again sent yields to the widest levels since October, many were watching today's first of the week bond auction with trepidation to see if the rout in the secondary market would spill over into the primary. It did not. In fact, pricing at 1.125%, this was precisely on the screws of the When Issued at 1pm, suggesting there was no notable weakness in demand for today's $24 billion in 3 Year paper.

After Bridgewater, and Goldman Sachs, today it is SocGen's turn, which overnight advised clients that with "US set to unwind QE", now is the time to "increase cash" and "reduce risk." This is how SocGen advises its clients to be positioned ahead of the end of QE...

Day in, and day out, American investors are bombarded with bloviation on how the American economy is leading the world (and that's why you need to buy moar stocks). The only problem is... it's a lie, as the following chart clarifies.

While Obama is currently under fire for stating at the recently concluded G-7 summit in Germany that the US "does not yet have a complete strategy" how to deal with ISIS, the reality as relates to the true US strategy, namely the ouster of Syria's president al Assad, could not be more different. Because while ISIS continues to deflect attention from what is really happening in the middle east, the noose around Syria's Assad is tightening one day at a time, with the latest blow coming overnight after Syrian "rebels", also supported by the US (and allowed to call in B-1B strikes), scored a major military victory capturing the second biggest Syrian army base in the south of the country, located in the city of Deraa near the border with Jordan, and just 100 km south of Damascus.