With the rest of the developed world's central banks waiting for the Fed to admit defeat for one more year and delay its proposed rate hike (or launch NIRP/QE4 outright) it was all about China (the same China which a month ago we said would launch QE sooner or later) and hope that its central bank would boost asset prices, when over the weekend the PBoC governor hinted that more easing is imminent to offset the accelerating drag after he admitted that the nation’s growth rate has tumbled "a bit" too much and that policy makers have scope to respond. How much scope it really has now that its bad debt is rising exponentially is a different question. It got so bad, Shanghai Securities News leaked a false rumor earlier forcing many to believe China would announce an unexpected rate cut as soon as today, in the process sending the Shanghai Composite soaring by 2.6%.

The Financial Crisis of 2007 was the nearest thing to a “Near Death Experience” that the Federal Reserve could have had. One ordinarily expects someone who has such an experience- exuberance behind the wheel that causes an almost fatal crash, a binge drinking escapade that ends up in the intensive care ward - to learn from it, and change their behavior in some profound way that makes a repeat event impossible. Not so the Federal Reserve.

A look ahead at the major drivers in the days ahead.  

"An electric car does not make you green... You’re better off filling up at the pump," if you live in Canada. According to a new study by professor Chris Kennedy, even if every driver in Canada made the switch - from gas to electric - the total emissions might not actually go down... since in Alberta, Saskatchewan and Nova Scotia, electric cars generate more carbon pollution over their lifetimes than gas-powered cars. Paging Al Gore...

Biotech has outperformed the broad market by a count of 3.5:1 over the past four years, is up four fold over a decade that included the worst financial crisis since the Depression, is riding a 5-year reign as the top performing sector, and the number of public companies in the sector with $2B market caps has tripled in four years. But we'll let the charts do the talking.

While the euro itself has recovered a bit from its worst levels in recent sessions, euro basis swaps have fallen deeper into negative territory on par with the epic nosedive of 2011. We are not quite sure what the move means this time around, since there is no obvious crisis situation – not yet, anyway. A negative FX basis usually indicates some sort of concern over the banking system’s creditworthiness and has historically been associated with euro area banks experiencing problems in obtaining dollar funding. This time, the move in basis swaps is happening “quietly”, as there are no reports in the media indicating that anything might be amiss. Still, something is apparently amiss...

Ukraine’s American Finance Minister has announced a broad restructuring plan with a wide range of severe haircuts for creditors, and she – well, obviously – wishes to include Russia in the group of creditors who are about to get their heads shaved. Russia sees the world as one in which multiple major powers can govern together. The US sees Russia as a power that must be defeated by any means necessary, and subdued. One of these worldviews must prevail in the end. Perhaps we won’t know which one that will be until the third power, China, raises its voice. What we do know is that Russia will back down only so far, and then it will no more.

• Google's new CFO to make $70 million (WSJ)
• Senate passes Republican budget with deep safety net cuts (Reuters)
• With Yemen strikes, Saudis show growing independence from U.S. (Reuters)
• Banks Slash Dividends as Loans Sour From Beijing To Pearl River (BBG)
• North American Railroads Caught by Speed of Crude-Oil Collapse (BBG)
• Japan’s Zero Inflation a Setback for Abenomics (WSJ)
• Cooperman Says U.S. Seeks Information About Omega Trades (BBG)

We're just a little over two weeks into PSPP and signs are already beginning to show that the ECB is effectively breaking the market. "The soaring cost of borrowing government bonds in secured lending markets highlights the distortions caused by the ECB's asset-purchase scheme, which analysts say could clog up Europe's financial system," Reuters notes.

While it is unclear at this moment if this is merely the latest casualty of below normal Capex (or was the result of a gas leak), or if there was foul play involved, moments ago the NYC scanner was lit up with reports that a building had collapsed, following an explosion, on 7th street and 2nd avenue, in the East Village in Manhattan.

What would happen, for example, if a large number of holders decided to sell a high yield bond ETF all at once? In theory, the ETF can always be sold. Buyers may be scarce, but there should be some price at which one will materialize.  But we can’t get away from depending on the liquidity of the underlying high yield bonds. The ETF can’t be more liquid than the underlying, and we know the underlying can become highly illiquid.... no investment vehicle should promise more liquidity than is afforded by its underlying assets. Do these recent promises represent real improvements, or merely the seeds for subsequent disappointment?

• Saudi Arabia, allies launch air strikes in Yemen against Houthi fighters (Reuters)
• Pilot on Crashed Jet Was Locked Out of Cockpit, NY Times Says (BBG)
• Why Bombing This Tiny Oil Producer Is Roiling the Energy Market (BBG)
• U.S.-led coalition, Iraqis pound Islamic State in Tikrit (Reuters)
• Munger Says Prepare for Harder World as Buying Power Slides (BBG),Mocks Greek ‘Idiotic Idea’ You Can Vote Yourself Rich (BBG)
• The Central Banker Who Saved the Russian Economy From the Abyss (BBG)
• Bank of Canada says foreign buyers complicate housing market (Reuters)
• Investors Scoop Up Companies’ Bonds (WSJ)
• Espirito Santo Probe Turns Mariana Mortagua Into Portuguese Star (BBG)

his commentary will undoubtedly antagonize the entire mainstream media, many/most traders in the rigged casinos we call markets, and even many members of the Alternative Media. As the saying goes; “the truth hurts.”

 

The purpose of this analysis is not to accumulate (more) enemies, however. Rather, there is simply no way to properly explain why all of this pseudo-analysis is fatally flawed without explicitly making clear one, central point: all price-analysis is meaningless. Since “price analysis” accounts for roughly 95% of all the drivel which the mainstream media calls “analysis”; this one point alone invalidates virtually all of the Corporate media’s trash.

Crude prices rallied this morning - on the back of absolutely nothing - ahead of this morning's DOE inventory/production data. Following last night's bigger than expected 4.8 mm barrel API inventory build, DOE reports a huge 8.17mm barrel build (against expectations of a 4.91mm build) - the 11th consecutive week and longest streak on record. Cushing inventories rose for the 16th consecutive week, up 1.91mm barrels (against a 2.1mm barrel build expectation). Crude production hit a new record high. Oil prices are giving back this morning's gains...

Ignoring the considerable risks in the mid 2000s led to the global financial crisis. Irish politicians, bankers and financial experts, like their international counterparts, are slow learners ...