We don't get it, and we definitely don’t get why nobody is asking any questions. The IMF and EU make a lot of noise – through the Eurogroup – about all the conditions Greece has to address to get even a mild extension of support, while the same IMF and EU keep on handing out cash to Ukraine without as much as a whisper – at least publicly...
It is time for another song and dance to appease the angry mob, if only for the next week or so until the popular attention span shifts over to the next scandal du jour. Which for today means that two top HSBC execs will appear briefly in UK parliament to testify before the Treasury committee, in a televized webcast set to start momentarily.
After Cutting US Growth Due To Snow, Goldman Now Warns West Coast Port Congestion Will "Drag On GDP"Submitted by Tyler Durden on 02/25/2015 - 09:09
Last week, when with much amusement we observed that the first of many Q1 GDP cuts due to snow... in the winter... had taken place, we warned that next up on the GDP-trimming agenda would be "the West Coast port strike to take place in 2-4 weeks." We were wrong: it wasn't 2-4 weeks. It was 4 days, because overnight first Goldman (and soon all the other penguins) released a report titled "The Fallout from West Coast Port Disruptions" and sure enough, Goldman's conclusion is that "On balance, we think the net impact on Q1 GDP is probably a modest drag, although the estimated effect is highly uncertain at this point in the quarter."
Janet Yellen once again repeats that the economy is “looking stronger” although still it has yet to manifest into actual strength. In fact, it is still so weak that the Fed cannot even suggest that rates will raise anytime over the next several FOMC meetings. In short, the economy is still very sick. The Pundits (Liesman) are suggesting Janet feels the economy is strong but that the “data just isn’t cooperating”. What does that even mean?? The market is a red herring of sorts keeping our attention away from the reality of the economy. And so, to give up the market strength would be synonymous to removing the one remaining support holding up that 100 storey building that is otherwise completely rotted. Only when the economy is able to withstand a market repricing will the Fed allow the market to reprice.
- Invade Syria already, we know you will: Islamic State in Syria abducts at least 150 Christians (Reuters)
- Greece Struggles to Get Citizens to Pay Their Taxes (WSJ)
- Doubts Shadow Deal to Extend Greek Bailout (WSJ)
- In surprise result, Chicago's Mayor Emanuel faces election run-off (Reuters)
- Obama vetoes Keystone pipeline bill (Reuters)
- Another sign of the top: Cushman & Wakefield Going Up for Sale (WSJ)
- Lure of Wall Street Cash Said to Skew Credit Ratings (BBG) ... and threat of DOJ lawsuits also
- Oil rises to $59 as Saudis say demand growing (Reuters)
Reuters quotes Schauble who said that: "It wasn't easy an easy decision for us but neither was it easy for the Greek government because (they) had told the people something completely different in the campaign and afterwards." "The question now is whether one can believe the Greek government's assurances or not. There's a lot of doubt in Germany, that has to be understood," said Schaeuble who despite his misgivings, he has urged German lawmakers to approve the Greek extension in a vote in parliament expected on Friday. The finance minister made one thing very clear: No payments will be made to Athens unless Greek govt meets its commitments in full.
Stocks In Holding Pattern Following Blow-Off Top, Oblivious Of Fed's Warning Of "Stretched" ValuationsSubmitted by Tyler Durden on 02/25/2015 - 07:00
Following the first of two Janet Yellen testimonies to Congress, the market read between the lines of what the Fed Chairman said when she hinted that "the Fed needs confidence on recovery and inflation before beginning to raise rates" and realized that the case of a June rate hike is suddenly far less realistic than previously expected, as a result not only did we see another blowoff top in stocks to fresh all time highs, a move which sent the USD lower, has pushed the median EV/EBITDA multiple to the mid 11x (!) range and the forward PE to just shy of 18x ironically coming on a day when the Fed itself warned about "stretched" equity valuations, and led to brisk buying of global Treasurys across the board, pushing the 10 Year in the US back under 2%, and due to the global convergence trade (because if the Fed returns to QE, it will be forced to buy up Treasuries not just in the US but around the globe, since net issuance including CBs globally is now negative) and leading to today's German 5 Year bond auction pricing at a negative yield for the first time ever.
Located in a nondescript warehouse on Chicago’s west side is where, according to the Guardian, one can find the domestic equivalent of a CIA "black site" - an illegal, off-the-books interrogation compound used by Chicago special police units, one which renders "Americans unable to be found by family or attorneys while locked inside"; a place whose former occupants say is where you end up when you are "disappeared"; a place which confirms that when it comes to the eternal "who is better - us or them" debate, there really is no difference: "It brings to mind the interrogation facilities they use in the Middle East. The CIA calls them black sites. It’s a domestic black site. When you go in, no one knows what’s happened to you.” It's a Guantánamo and Abu Ghraib rolled into one. In short: it is a place where the US constitution and basic human rights have absolutely no access.
Edward Snowden's Libertarian Moment: We "Will Remove From Governments The Ability To Interfere With [Our] Rights"Submitted by Tyler Durden on 02/24/2015 - 22:45
"If people lose their willingness to recognize that there are times in our history when legality becomes distinct from morality, we aren't just ceding control of our rights to government, but our agency in determing our futures... I suspect that governments today are more concerned with the loss of their ability to control and regulate the behavior of their citizens than they are with their citizens' discontent."
With China's return from the Lunar New Year celebrations, it appears precious metals are benefitting from some pent-up demand. Gold, and its high-beta cousin Silver have jumped in the Asia session and are now the best performing asset post-Yellen testimony. US equity futures have drifted lower from the cash close and copper has given back most of its gains...
"...when he gets thanked it can feel self-serving for the thankers, suggesting that he did it for them, and that they somehow understand the sacrifice, night terrors, feelings of loss and bewilderment. Or don’t think about it at all." Rather than saying “thank your for your service,” it appears increasingly clear the appropriate sentiment should be something like, “I’m really sorry American leadership carelessly sacrificed your life for no good reason.”
As the dash-for-trash continues in US equities, Neuberger Berman sums up the state of investing currently, "there has certainly been little reward for owning high-return, superior business models that are conservatively financed," as Bloomberg notes, Fed policy has had the “unintended consequence” of boosting the stocks of companies with heavy debt and little or no earnings. Typically after a recession, such companies lose out to firms that generate more cash and have better balance sheets; this time, no “Darwinian” shakeout happened and low-quality stocks ruled. Managers say they haven’t changed, the market has.
The post-1945 European settlement had many successes. But it is now crumbling. It needs drastic modification. That requires statesmen of the calibre of the men of 1945. It is time for politicians who wish to earn a place in history and upgrade themselves to statesmanhood to step up to the challenge.
Modestly higher than the 'contractionary' 49.7 print in Janauary, February's Markit (flash) China Manufacturing PMI printed at 50.1 (beating expectations of a drop to 49.5). However, before global investors pop the proverbial champagne corks of global recovery, we note that employment's drop accelerated, New Export Orders contracted the most since June 2013, and prices continued to fall. Of course, HSBC is careful to note that "more policy easing is still warranted" because they believe, "domestic economic activity is likely to remain sluggish and external demand looks uncertain." For now Chinese stocks are holding losses after the lunar new year and the Yuan has weakened further near 30 month lows - once again testing the upper 2% fix band.