Archive - Jun 2015 - Story

• White House denies Obama said strong dollar a problem (Reuters)
• Lira Falls to Record Amid Stock Rout as AK Party Loses Majority (BBG)
• Bond-Market Game of Chicken With Fed Is Riskier Than Ever (BBG)
• Xetra Dax enters correction territory (FT)
• China trade shrinks amid slowing demand (FT)
• Greek government eyes compromise with lenders, rules out snap polls (Reuters)
• If You Think Greece’s Crisis Will End Soon, Think Again (BBG)
• China growth data ‘overstated’ due to data error (FT)
• Calpers to Cut External Money Managers by Half (WSJ)

While there were key macroeconomic data out of Asia earlier in the session, with Japan revising its Q1 GDP up from 2.4% to 3.9% (due to an upward revision to capex) making some wonder if it simply didn't snow in Japan this winter, as well as Chinese trade data that was once again disappointing with the third consecutive drop in exports coupled with an 18.1% collapse in imports hinting that nothing is going well in China's economy (which once again sent stocks soaring this time up another 2.2% on certainty another PBOC rate cut is imminent, pushing the PBOC to a fresh 7-year high of 5,132), it was actually a leaked Obama comment on the strong USD that moved markets.

Today, the last missing piece finally fell into place, after Domenico Scala, the independent chairman of FIFA's audit and compliance committee, told a Swiss newspaper that Russia and Qatar could be stripped of their World Cup hosting rights if evidence emerges of bribery in the bidding process. "If evidence should emerge that the awards to Qatar and Russia only came about thanks to bought votes, then the awards could be invalidated," Scala told SonntagsZeitung in an interview published on Sunday. "This evidence has not yet been brought forth."  It shortly will be.

The infestation of cowardice, anti-intellectualism and fear has permeated almost every nook and crany of American life, including academics. So much so, that a college professor has just penned an article titled: I’m a Liberal Professor, and My Liberal Students Terrify Me. Even more worrisome, he felt the need to write it under a pseudonym due to the fear of backlash... This is more or less how politics functions in the U.S. today. Fake and superficial narratives take position at center stage, while the really big existential issues are never addressed, or merely brushed under the rug.

Every great con game eventually comes to an end. 

"Chinese tech firms have fallen out of love with America, and it shows - a growing number of them are looking to drop their listings in New York and head back home," Reuters reports. With 133X valuations singing a siren song, and with Beijing looking to remove restrictions that discouraged some companies from listing in China, dozens of Chinese companies are looking to repatriate.

John Kerry now faces the decision as to whether to quit — which would force the EU’s hand regarding whether to continue with U.S. policy there — or else for Kerry to stay in office and be disrespected in all capitals for his staying on after having been so blatantly contradicted by his subordinate on a key issue of U.S. foreign policy.

Our current money system began in 1971. It survived consumer price inflation of almost 14% a year in 1980. But Paul Volcker was already on the job, raising interest rates to bring inflation under control. And it survived the “credit crunch” of 2008-09. Ben Bernanke dropped the price of credit to almost zero, by slashing short-term interest rates and buying trillions of dollars of government bonds. But the next crisis could be very different…

Back in early/mid 2007, just as the subprime bubble was bursting but Wall Street was desperate for the party to go on, when VIX was flirting with single digits (crushing the swaption market due to lack of vol), when record, multi-billion LBOs were a daily thing, and when corporate bond spreads barely registered any risk on the horizon, there was one dominant trade for those credit traders who saw the writing on the wall (as they usually do 3-6 months ahead of their equity trading peers): going long cheap index puts while funding the cost of carry by selling a steep long end and pocketing the roll down. That trade is back.

In an election that was, essentially, a litmus test for Recep Tayyip Erdogan's plans to expand his powers, voters dealt the Turkish President and his Justice and Development Party (A.K.P.) a stinging blow at the ballot box on Sunday.

New rules at Fannie Mae and Freddie Mac in conjunction with lower FHA premiums helped to drive down payments on single family homes to their lowest level since Q1 2012 in the first quarter.

There are some valid points raised in Lee Siegel's 1100 word rant against college loans (if not so much against college education). There are some bad ones. But two things are is clear: the words "personal" and/or "responsibility" were used precisely zero times, and the op-ed writer, who described himself as "the author of five books who is writing a memoir about money", is hardly a glowing advertisement for an education attained (funded with either debt or equity) at one of the Ivy League's "best", Columbia University... that, or the return on money after wasting nearly a decade in university and taking out tens of thousands in loans to achieve a Master of Philosophy degree.

"Do investors want to own bonds at 1% or 1-2bp yield per bp of realized vol, if risk is exploding? The EGB market is at historical highs in terms of total market risk!"

This breakdown marks the first day that Exxon Mobil has ever closed below this trendline. Now, assuming the stock’s behavior around the trendline is not completely random, and considering its capacity as the 2nd biggest stock in the equity market, the effect of this breakdown may be profound. Absent an immediate reversal back above the trendline, this loss of 28-year support would appear to open the door to more downside in the stock.