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Barclays' FICC Slaughtered: Revenue Plummets 41% In Q1

So much for the Lehman effect: five years after Barclays acquired Lehman's only valuable asset - its North American brokerage personnel - in a liquidation firesale, the benefits have all but disappeared (confirmed further by the most recent departure of such prominent ex-Lehmanites as Paul Parker, Larry Wiesenck and of course, Skip McGee). Case in point: today's announced earnings, in which we found that Lehman's pre-tax profits slid 5% to £1.69 billion. However, looking at the bottom line, which reflected benefits from cost cuts and loan loss reserve releases, not to mention an "accounting gain on Barclays debt" would surely miss the big picture, which was that the bank's Investment Banking revenue was down 28% £2.49 billion. However the punchline was that core driver of New Normal bank revenues: FICC, which was slaughtered by an unprecedented 41% to to £1.23 billion, coming far worse than even the most dire analyst estimates.

The Complete Ira Sohn Conference Post-Mortem

From 110 slides of Ackman-inspired Fannie Mae bullishness to Tudor-Jones "Central Bank Viagra", and from Jim Grant's "Buy Gazprom because it's the worst-managed company in the world" to Jeff Gundlach's housing recovery bearishness and "never seeing 1.5 million home starts ever again"... there was a little here for every bull, dick, and harry at the Ira Sohn conference. Perhaps noted behavioral psychologist said its best though: "be careful about the quality of advice you get."

Stocks Avoid Sinko De Mayo With Ye Olde JPY Dump-And-Pump

Thanks to the miracle of VIX slamming, USDJPY-stop-running, CBOE breaking, US equity market opening, "we're not worried about no stinking Ukraine civil war or Chinese economic collapse", low volume levitation, stocks knee-jerked off early dumping lows to recover comfortably into the green today. Not everything was exuberant though (as Trannies and the Russell 2000 ended red - bouncing once again off its 200DMA). Gold gained almost 1% today (back over $1310) for its best 2-days since January. The USD closed unch (with notable weakness in SEK). USDJPY ranged down below 102 and rammed stops to lead the charge higher in stocks (even with Japan closed for 2 days). Stocks tracked JPY but benefitted from a dead-cat-bounce in Treasury yields. VIX closed higher on the day (unable to regain the late-slam from Friday). AAPL regains $600 and Biotechs bounced 4.5% - so everything's fixed.

Is This The Reason For The Relentless Treasury Bid?

Over the weekend, Bloomberg had an interesting piece about two of the main reasons why while stocks continue to rise to new all time highs, the expected selling in bonds - because in a normal world, what is good for stocks should be bad for bonds - isn't materializing, and instead earlier this morning the 10 Year tumbled to the lowest since February, while last week the 30 Year retraced 50% of its post-Taper Tantrum slide, or in short a complete disconnect between stocks and bonds.

Key Events In The Coming Week

This week, markets are likely to focus on US ISM Nonmanufacturing, services and composite PMIs in the Euro area (expect increases), ECB’s Monetary Policy Decision (expect no change in policy until further ahead), and Congressional testimony by Fed’s Yellen.

17 Facts To Show To Anyone That Still Believes That The U.S. Economy Is Just Fine

No, the economy is most definitely not "recovering".  Despite what you may hear from the politicians and from the mainstream media (shrugging off today's terrible GDP print), the truth is that the U.S. economy is in far worse shape than it was prior to the last recession.  In fact, we are still pretty much where we were at when the last recession finally ended.  When the financial crisis of 2008 struck, it took us down to a much lower level economically.  Thankfully, things have at least stabilized at this much lower level.  For example, the percentage of working age Americans that are employed has stayed remarkably flat for the past four years.  We should be grateful that things have not continued to get even worse.  It is almost as if someone has hit the "pause button" on the U.S. economy.  But things are definitely not getting better, and there are a whole host of signs that this bubble of false stability will soon come to an end and that our economic decline will accelerate once again.  The following are 17 facts to show to anyone that believes that the U.S. economy is just fine...

FAA Grounds All Flights From West Coast Due To Computer "Glitch"

Update: ye olde CTRL+ALT+DEL trick seems to have done it and the computer "glitch" has been fixed.

The FAA has declared a "ground halt" on all flights at the following airports: BOS, BWI, DCA, EWR, FLL, JFK, LAS, LAX, LGA, MCO, MIA, PHL, TEB

*COMPUTER PROVIDING AIR-TRAFFIC RADAR DISPLAY MALFUNCTIONING

LAX is citing "computer issues" as the reason (and a radar system crash across at least 3 Western states) which could mean delays up to 90 minutes.

No Bubble At All: IPO For Company That "Doesn't Have Current Operations" 36 Times Oversubscribed

Over 300 years ago, the South Sea company was created (and successfully IPO'd) "for the purpose of rivaling the East India Company." It had no actual operations as of yet but the buying panic for shares was driven by greedy investors seeing the government's elite doing so well and wanting a part of the prospects of a company with no operations becoming a world leader (or just finding a greater fool). Today, the first IPO of shares on Dubai's main stock market for 5 years was 36 times over-subscribed for a company called Marka (which is a "cash shell" which does not have any current operations). Nope, no bubble here.

 

Hilsencliff Notes: Q1 Worse Than Expected But Taper Stays

In one of his most voracious tomes, The Wall Street Journal's Fed-see-er Jon Hilsenrath prepared 726 words and published them in 5 minutes to explain that the Fed's forecasts for Q1 were dismally wrong, that the future will all be rosy, and their forecasts spot on, and that the Taper is steady..."Fed officials acknowledged the first-quarter slowdown was worse than expected by saying activity "slowed sharply." Previously, they had just said activity merely slowed...Still, officials nodded to signs of a pickup in economic activity in March and April, suggesting they aren't too worried about the winter slowdown."

Deja Vu All Over Again: Fannie, Freddie Would Need Another $190 Billion Bailout When Things Go South

While it will come as a surprise to exactly nobody, certainly nobody who understand that the US financial system is no better financial shape than just before the Lehman crash as nothing has been fixed and everything that is broken has been merely swept under the rug (for details see Paul Singer's explanation posted last night) of epic-er leverage, the news that when (not if) the US economy succumbs to a severe economic downturn Fannie and Freddie would require another taxpayer funded bailout, one of $190 billion or even more than the first $187.5 billion-funded nationalization of the GSEs, can only bring a smile to one's face.

In Repeat Of Its Q1 GDP Forecast Farce, Goldman Launches Its Q2 GDP Prediction At 3.0%

It was back on January 30 that the Goldman economist team made its first downward revision to what then was a 3.0% forecast to Q1 GDP. Exactly three months later we find that Goldman was off by only 97% when Q1 GDP printed at 0.1%. That's ok - they are economists, and thus are expected to be massively, epically wrong. So here is Goldman with its first "tracking forecast" for Q2 GDP. It is.... drumroll.... 3.0%. How long until this number too is lowered to 0.1% (to be sure, all that rain in New York City has to detract at least 1%-1.5% from Q2 GDP right?).

About That CapEx Spending Renaissance...

For all the talk that imminent, inevitable, "any second now" CapEx spending renaissance is getting, we can only assume we are looking at a wrong chart of the change in quarterly fixed income spending that plugs straight into the US GDP calculation. There is no other possible explanation.