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Chart Of The Day: Bullard Bulls#*t

Welcome to the Dow-Data-DependentTM Fed. Because what a difference 1,100 Dow points makes!



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Calling The Fed's Bluff

If U.S. stocks have stabilized – granted, a big 'IF' - you can thank the fact that markets don’t believe the Federal Reserve’s outlook on interest rates. Bad news will keep the doves “Fed” (yes, a pun…  it’s Friday) and the hawks at bay. A spate of good U.S. news while the rest of the developed world slows is the worst potential outcome in this narrative.



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Officials Responding To "Possible Ebola Situation" Near Pentagon

Arlington County Fire Department and Fairfax County HAZMAT Teams are on the scene after a woman - alleged to have recently traveled from West Africa - fell ill and started vomiting in The Pentagon parking lot this morning. Arlington Public Health has activated its Emergency Operations Center to manage the incident.

WOMAN WHO VOMITED IN PENTAGON PARKING LOT VISITED LIBERIA TWO WEEKS AGO -- FOX CITING DEFENSE SOURCE



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FBI To America: "Let Us Spy On You"

"If you like your phone secretly spied on, you can keep it," appears to be the message from the FBI. As Bloomberg reports, FBI Director James Comey said yesterday that companies like Apple and Google should be required to build surveillance capabilities into their products to help law enforcement with their probes, adding "if the challenges of real time data interception threatened to leave us in the dark, encryption threatens to lead us all to a very dark place."



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Why Nations (And Organizations) Fail: Self-Serving Elites

For those who doubt that America is ruled by a narrow elite: three charts.



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And The Market Breaks Again...



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RANsquawk Weekly Wrap - 17th October 2014



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Dow Surges 400 Points After Fed's Bullard Prevents Plunge With QE4 Bluff

It never gets old... if this sell-off was triggered by a realization that the consumer is truly depressed (retail sales) and the Fed is almost done, then the face-ripping rally (notably on weak volume) of the last 24+ hours is the ugly truth that the 'market' is always and everyday a function of central-bank bullshit. Since Bullard's "QE4" comment (strengthened by random headlines on Yellen's "economic confidence" and ECB Coeure's "QE any minute" comment), the Dow is up 400 points, S&P up 70, and Trannies up 3.5%. Small Caps are now up 3.5% on the week and 30Y Treasury yields only -2.5bps on the week.



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Handelsblatt: "Four German Banks On The Brink"

Several days ago we were confused why, out of the blue, a €1 billion loan BWIC appeared that was dumping German non-performing loans. After all, the whole point of the European "recovery" fable to date has been to deflect all the attention from the "pristine" German banks, up to an including world-record derivatives juggernaut Deutsche Bank,  and to focus on Greece and other insolvent peripheral European nation. Earlier today, German Handelsblatt provided an answer, when it reported that "four German banks are on the brink", i.e., four banks of which three are known, HSH Nordbank, IKB and MunchenerHyp, will likely fail the ECB's stress test whose results are due to be announced next Friday.



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Deflation Flirts With America

"I see deflation flirting with America." Retail sales equals consumer spending equals velocity of money. And unless the money supply is rising, hardly likely in the taper, less spending is deflation by definition. Forget about PMI and all that kind of data, it’s much simpler than that. Central banks can do all kinds of stuff, but they can’t make us spend our money on things we don’t want or need. Let alone make us borrow to do so. And if we don’t, deflation is an inevitable fact. That doesn’t mean prices for some items won’t go up, but that’s not what counts. It’s about how fast we either spend the money we have – if we have any left – or how much we borrow. And if time is money, then borrowed money is borrowed time. So we really shouldn’t.



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Meet America's New Ebola Czar

This should fix it and calm the panic:

*OBAMA SAID TO APPOINT RON KLAIN AS EBOLA CZAR, CNN TWEETS

Forget medical experience, what the USA needs to combat the worst Ebola pandemic ever is "an American lawyer and political operative best known for serving as Chief of Staff to two Vice Presidents - Al Gore (1995–1999) and Joseph Biden (2009–2011)" Gotta wonder how Tom Frieden feels about this...



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"Another Reminder How Addicted Markets Still Are To Liquidity"

The recovery from the lows after Bullard spoke yesterday is another reminder how addicted markets still are to liquidity. Indeed in today's pdf we reprint and  update a table from our 2014 Outlook showing the various phases of the Fed's balance sheet expansion and pausing over the last 5-6 years and its impact on equities and credit. We have found that the relationship broadly works best with markets pricing in the Fed balance sheet move just under 3 months in advance. We've also included our oft-used chart of the Fed balance sheet vs the S&P 500 to help demonstrate this. So end July / early August 2014 was always the time that this relationship suggested markets should enter a new more difficult phase.



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UMich Consumer Confidence Surges To 7 Year High Thanks To Ebola Scare, Sliding Market

Following last month's exuberant catch-up to the Conference Board confidence, UMich confidence surged to cycle highs (helped by Ebola panic and the worst stock maket turmoil in years). At 86.4, handily beating the 84.0 expectations - this is the highest confidence since July 2007. This is the biggest beat of expectations since April 2013 as current conditions were flat but the outlook for the future (hope) surged to 78.4 - highest in 2 years.



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Strange Liaisons? Putin Visits Berlusconi's Home At 3am After Warning Merkel Of Gas Squeeze

It appears Bunga-Bunga boy still has something to offer the international elite. After a lengthy meeting with Germany's Angela Merkel (at a hotel in Milan) where Putin warned of "big transit risks" in delivery of Europe's gas as Ukraine is "starting to siphon off our gas from the export pipeline," and threatening to respond by "reducing flows by the amount stolen;" Putin decided the place to be was 78-year-old Berlusconi's house at 3am. Finally, it is worth noting that Ukraine's President Poroshenko was scheduled to meet with Frau Merkel this morning - we assume to plead his case for why gas transit should flow through his nation (and beg for some more support).



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Leaked ECB Minutes Reveal More Internal Posturing Over Cyprus Bail-Out

The ECB may not release its minutes to the public (opting instead to keep these secret for 30 years) at least for now, but earlier today a transcript of its internal deliberations was made public by the NYT, which revealed how the ECB governing council once again snubbed its responsibilities, and in January 2013 bailed out a failing Cyprus bank, Cyprus Popular Bank, just months ahead of the now infamous Cypriot "bail-in" i.e., deposit confiscation. The story in a nutshell: following much internal wrangling and posturing by the "northern" states, notably the usual suspects such as Wiedmann and Knot, the Cypriot bank, which the ECB continued to bail out even though it should not have as the bank had obtained an ECB lifeline based on fake financials and glaringly impossible assumptions, the bank ultimately failed. Who was left holding the bag? Why Cyprus' depositors of course.



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