Archive - Jun 2015 - Story

After disappearing from the public scene last November when his term in EC expired, Herman has re-emerged, or rather, reincarnated into his new role. And while it is not hardly as dramatic as the emergence of a Hermina van Rompuy, his new role will surely raise several (knowing) eyebrows. Meet: Japan's new Haiku Ambassador. 

• China stocks fall, led by ChiNext, on margin tightening; Hong Kong down too (Reuters)
• Bond market sell-off rumbles on, stocks feel the pinch (Reuters)
• Bond Rout Wipes Out 2015 Gains as Traders Stay Glued to Screens (BBG)
• Greek Groundhog Day Continues With Talks Failing to Break Impasse (BBG)
• Greece and Its Creditors Agree on Some Measures in Bailout Talks (WSJ)
• 'Bellingcat Report Doesn't Prove Anything': Expert Criticizes Allegations of Russian MH17 Manipulation (Spiegel)
• GE Said to Hire Banks to Start Sale on $20 Billion Assets (BBG)
• Alibaba Pictures plans $1.6bn share sale (FT)
• How Companies Justify Big Pay Raises for CEOs (BBG)

For once Mario Draghi was right. A day after the European central bank head warned of a spike in volatility, volatility did just that, with markets everywhere from China to Europe seeing volatility explode.

Most commentary still appears predicated on the idea that there will be some last-minute deal - either because the creditors will back down and give Greece some more money without requiring it to be paid back or because the Greek government will back down if it understands that not doing so would ultimately mean leaving the euro. On the other hand, some believe neither side is particularly interested in achieving a deal.

It appears - as opposed to what the world's asset-gathering commission-takers would have one believe - that huge illiquid spikes in bond markets are not good for stocks. As the bond carnage continues to careen throughout Asia, Chinese stock investors appear to have decided enough is enough at doubling their money in a mere few months. After early weakness out of the gate, the ubiquitous dip-buyer-of-last-resort failed to appear as the afternoon session arrived and Chinese stock indices are down between 5% (Shanghai Comp - which never took out its previous highs) and 7% (CHINEXT which was up over 16% in the last 3 days) overnight. Everybody better be hoping for a disastrous jobs number on Friday or this drop may suddenly become the long lost 'healthy' correction in global stocks so many have called for.

“A person under surveillance is no longer free; a society under surveillance is no longer a democracy.”

Dear Mr Hilsenrath and your Central Bank Team,

This is Joe from the disappearing Middle Class in America.  You asked me the other day to drop you a note if I felt that something was wrong.  What I’m having trouble with is “why” you’re asking me if anything is wrong!?

So let me explain.

Recently, we outlined Hillary Clinton’s keynote speech requirements which include the customary $225,000 plus a “chartered roundtrip private jet”, $1,000 for a stenographer, and a host of other “incidentals.” But the Clintons actually come cheap compared to a certain former Fed chair. Here’s a look at speaking engagement rates for some well-known former and current US officials.

Our general rule of thumb when it comes to legislation is that the more high-sounding the name, the more insidious the law.

Exhibit A: the just-passed USA FREEDOM Act.

Given the rather depressing plight of the average US laborer, it’s little wonder that some workers are inclined to “alter their mood” a bit before punching the clock. Indeed, over the past 24 months, a decades-old trend towards falling workplace drug usage has reversed itself, with 4% of workers now testing positive for either legal or illegal drug use.

The carnage in Europe and US bonds is echoing on around the world as Aussie 10Y yields jump 15bps at the open (to 3.04% - the highest in 6 months) and the biggest 2-day spike in 2 years.  JGBs are also jumping, breaking to new 6-month highs above 50bps once again raising the spectre of VAR-Shock-driven vicious cycles...

"Only if the economy is powered by the marginal borrower who will no longer borrow after a 0.25% hike, does it make sense to believe a hike will derail the economy.  Comparisons to 1937, where a hike pushed the US into recession, are incomparable and groundless.  On the other hand, maybe the FOMC is worried that the ‘no free lunch’ concept makes them suspicious of the possibility of a meaningfully deleterious market reaction which could have a negative impact on the broader economy.  However, under this logic, delaying a hike would only exacerbate such a response."

The next several weeks are likely to be relatively eventful in Washington...

In the ironically titled "Paying For The Past" presentation, none other than Dick Fisher, Al Greenspan, and Larry Lindsey appear to have crossed the Rubicon of denial, lies, and deception to the dark-side of accepting reality. As Bill Holter asks, why exactly would these former Federal Reservists hint that, mathematically, logically, intuitively and in real life, IT'S OVER! Do they now realize what the crazy gold bugs have been saying all along is true and the day of reckoning is very close at hand.  They must be trying to get "out in front" of what is coming so they're on the record for historical and "legacy" purposes.  Nothing else makes any sense.