Petrobras Pays Up: The High Price Of Issuing A 100 Year Bond

The scandal-surrounded, junk-rated, state-managed Brazilian oil producer Petrobras managed to successfully issue a $2.5 billion notional 100-year bond yesterday. Mainstream media is cock-a-hoop over the fact that the 'market' seemed to soak this bond up so easily and at a yield of 8.45% (which was 20-30bps below guidance) amid an order book apparently up to asround $10 billion. However, for those with some math skills, the truth is that it cost Petrobras around $380 million more than market-implied levels to successfully launch the bond (and so it should).

A 10% Correction Now Or A 20% (Or More) Bear Market Later On

If U.S. equities feel brittle, they should. Yes, central bank liquidity from Japan and Europe may well push global equity markets higher.  But what we really need is a pullback – that classic 10% correction that flushes out weak hands, reestablishes the discipline of “Risk” in the “Risk-Return” equation, and shows capital markets how to do more than just follow central bank liquidity.  So watch June’s price action in U.S. stocks very carefully, because this process needs to start now.  The bull market that began in March 2009 is now an ancient bovine indeed.  After all, better 10% now than 20% or more later in the year.  The first is inconvenient.  The second is unwelcomed.

Bernanke On China Power Grab: "All That's Happening Is Congress' Fault"

“The US Congress is largely at fault for all that’s happening,” the former chairman of the Federal Reserve said in Hong Kong on Tuesday. What’s interesting here is the tendency for Americans to view the AIIB as something that was ultimately created by the US — even if only inadvertently.

Who's On The Other Side Of The Trade?

The system is corrupt… and dangerously dysfunctional. But why does no one say so? Opinion makers such as Paul Krugman and Larry Summers misunderstand intentionally. But who speaks for the next three decades?  Everyone wants more credit, more inflation, more bubbles, more subsidies, and more special privileges. Who’s on the other side of the trade?

FIFA President Sepp Blatter Resigns, Calls For New Elections: Live Feed

Following overnight news that yet another former FIFX executive, this time Jerome Valcker, former top deputy to FIFA president Sepp Blatter, may be involved in the latest money laundering and corruption scandal, one involving a $10 million transfer of funds, which has been presented as an alleged payment of bribes over South Africa's bid to host the 2010 World Cup, moments ago the FIFA president announced he would hold an imprompty press conference. Will Blatter finally announced his resignation? Find out now.

German Bund Carnage Ends With Worst Day In 3 Years

10Y Bund yields exploded over 17bps today to top 71bps for the biggest absolute yield increase since August 2012. Initially triggered off hotter-than-expected EU inflation, one can't help but wonder if the magnitude and linearity of the move had an invisible hand helping it out "to make room for more ECB buying."

It's Official: The "Helicopter Money" Calls Have Begun

In April we said that "sooner or later, in order to avoid liquidation and stave off severe disinflationary pressures, someone will have to call in "Helicopter Janet" and once the cash paradropping begins well, we'll see you in the Weimar Republic." Sure enough, the semi-official calls for helicopter drone cash drops have arrived.

China Goes Full BTFD-tard: Record New Trading Account Openings Send Stocks Up 16% In 2 Days

After scaring millions of freshly created stock market speculators with a 10% 'correction' last week, it appears the PBOC's wealth-effect-creating, fix-the-leverage-overhang-with-temporary-stock-exuberance strategy was put into action with a record-smashing 4.4mm new accounts opened. Since Friday's lows, CHINEXT - China's tech-focused index - is up an astounding 16% (the largest ever 2-day swing). The Shenzhen Composite has also soared over 12% to fresh highs but we note the broadest-based Shanghai Composite has yet to make it back to last week's highs (even though it is up 9% from last week's lows).

Expect The Recent Oil Rally To End Badly If OPEC Doesn’t Cut

There have been a steady stream of articles championing the ingenuity of U.S. tight oil producers for figuring out how to maintain production with fewer rigs. It doesn’t strike me as ingenious to produce more oil at low prices that ensure losing money. OPEC will meet on Friday (June 5, 2015) and most doubt that a production cut will result. If that is the outcome, expect the recent rally in oil prices to end badly.

Hacked Emails Expose George Soros As Ukraine Puppet-Master

Just days after George Soros warned that World War 3 was imminent unless Washington backed down to China on IMF currency basket inclusion, the hacker collective CyberBerkut has exposed the billionaire as the real puppet-master behind the scenes in Ukraine. In 3 stunning documents, allegedly hacked from email correspondence between the hedge fund manager and Ukraine President Poroshenko, Soros lays out "A short and medium term comprehensive strategy for the new Ukraine," expresses his confidence that the US should provide Ukraine with lethal military assistance, “with same level of sophistication in defense weapons to match the level of opposing force," and finally explained Poroshenko's "first priority must be to regain control of financial markets," which he assures the President could be helped by The Fed adding "I am ready to call Jack Lew of the US Treasury to sound him out about the swap agreement."

Albert Edwards: Yen Collapse Will Lead To "New Round Of Currency Turmoil", Deflation In US And Eurozone

One look at FX trading this morning and all one can see is surging volatility and, for lack of a better word, turmoil. Which is precisely what Albert Edwards said would happen in his latest note overnight (released just as the USDJPY briefly breached 125) in which he observes that the Yen has now fully broken its 30-year support and predicts that "a new round of currency turmoil" is beginning.

A Bubble On Thin Ice

The current asset bubble depends on a number of perceptions that could easily be put to the test by unexpected developments. There is a widespread consensus on a number of issues. This includes the belief that the economy will strengthen, that the emergence of “price inflation” is practically impossible, that “QE” will always guarantee rising asset prices, and that central banks have everything under control. Now we learn that in addition to this, a surprisingly large number of traders has no experience beyond the ZIRP & QE era of recent years. Meanwhile, the market’s underpinnings in terms of liquidity exhibit numerous weaknesses.

Factory Orders Scream Recession, Drop 6% From Year Ago In Sixth Consecutive Drop

Following this morning's disappointing tumble in ISM New York (with 5 of the 6 components plunging), Factory Orders tumbled 0.4% MoM in April (against expectations of a modest 0.1% decline). This comes after March's exuberance-inspiring upwardly revised 2.2% MoM surge (which ended a 7 month streak of MoM drops). Down 6.4% against 2014, this is the 6th month in a row of YoY declines in Factory Orders - something not seen previously outside of a recession.

US Equities Test Key Support

The S&P 500 dropped briefly below 2,100 testing its 50-day moving-average and the Russell 2000 and S&P MidCap 400 both broke below their 50-day moving-averages. But remember, Greece is irrelevant and any correction is a healthy buying opportunity...

All United Airlines Flights Are "Grounded" Due To "Automation Issues" - Update: Ungrounded


Just minutes are bomb threats have been evaluated as a hoax, we get news of a much more widespread issue:


All United Airlines flights have been grounded as of Tuesday morning at 9:35 a.m ET, according to the Federal Aviation Administration.

Recovery 2015: Use Of Non-Bank Credit (e.g. Payday Loans) Continues To Soar

It’s not the case that every one of these middle- and upper-class households turned to pawnshops and payday lenders because they got whomped by an unexpected bill from a mechanic or a dentist. “People who are in these [non-bank] situations are not using these forms of credit to simply overcome an emergency, but are using them for basic living experiences,”