Bank of England

In the footsteps of the smashing success that was the #AskJPM and #MyNYPD social outreach by the two beloved institutions, yet another renowned entity has decided to take its comedic genius to the people: none other than the place where it all started - the Bank of England. So if you have a question for Mark Carney's money printing and housing bubble-forming institution, do no hesitate to tweet it: just remember to add the #AskBoE hash tag.

• Ukraine Rebels Outfox Army to Dent Poroshenko Troop Goal (BBG)
• Russia Withdraws Most of Forces From Ukraine Border: U.S. (BBG)
• Super-Size Me! China’s ’Mini’ Stimulus Starts Expanding (BBG)
• Option B: The blueprint for Thailand's coup (Reuters)
• Big investors replace banks in $4.2tn repo market (FT)
• Draghi Shields Catalan Independence Bid From Market (BBG)
• U.S. companies seek cyber experts for top jobs, board seats (Reuters)
• Parsley CEO Emerges as One of Youngest U.S. Billionaires (BBG)

A dispassionate discussion look at the rally in US Treasuries

• Snowden: 'no relationship' with Russian government (Reuters)
• Bond Surge Worldwide Drives Index Yield to One-Year Low (BBG)
• Shares flirt with record highs on ECB easing bets (Reuters)
• Goldman Shuns Bonds Pimco’s Gross Favors in ‘New Neutral’  (BBG)
• Porn may be messing with your head (Reuters)
• Dish to Become Largest Company to Accept Bitcoin (AP)
• To Make a Killing on Wall Street, Start Meditating (BBG)
• Apple to get Beats, music mogul Iovine for $3 billion (Reuters)
• Fink Says Leveraged ETFs May ‘Blow Up’ Industry  (BBG)

"Unbridled faith in financial markets prior to the crisis and the recent demonstrations of corruption ... has eroded social capital. An unstable dynamic of declining trust in the financial system and growing exclusivity of capitalism threatens.... Capitalism must reassess bankers' sense of self."

The melt up is accelerating and with the momentum tailwind back, newsflow is once again irrelevant: any news that are even remotely good are trumpeted, and any bad news - such as Europe's right storm rising in the northern states, and left storm surge in the states that demand more handouts from the northern states or China sinking a Vietnamese boat, the most serious bilateral incident since 2007 - are once again (and as usual) nothing more than a catalyst for even more liquidity injections. End result: the S&P futures this morning are 5 points above Goldman's year end target of 1900 and 45 points away from its June 30, 2015 target. Can this breakneck scramble on zero volume continue until Grantham's bubble peak level of 2,200 is hit? Well of course: after all anything goes in the centrally-planned new normal.  To be sure, this is an equity only phenomenon: moments ago the Bund future hit its highest level since May 19, while the 10 Year remains unchanged at 2.53% as it continues to price in the new "deflationary" (and Japanese) normal. And as has been the case during all such divergences of late, either bonds or equities are making a horrible mistake: the question remains: who? Since all equities are doing is tracking FX pairs to the pip and have completely forgotten all about fundamentals, we have a pretty good idea what the answer is.

First it was Germany, now another AAA-rated European country is starting to get concerned about its hard assets. Overnight Bloomberg reported that following in Bundesbank's footsteps, Austria will audit its gold reserves located in the UK, which represent 80% of its total gold holdings. This gold reserve reviews held at Bank of England in London will be first conducted by external auditors, Christian Gutleder, a spokesman for the Austrian central bank, says via telephone. Gutleder explained that the Central bank has checked its reserves regularly in the past, adding that gold reserves haven’t changed since 2007. Which begs the question: why check them now then? 

While US central bankers shudder at the idea of admitting their could be a bubble in real estate or stocks (unless its obvious in hindsight); and England's Bank of England explains 'if there is a bubble, it's not their fault, but there isn't so there'; it appears the Chinese are more comfortable with the truth. As Bloomberg BusinessWeek reports, China's central bank Governor Zhou Xiaochuan said, China may have a housing bubble only in “some cities,” - an issue that’s difficult to resolve with a single nationwide policy. As concerns mount of dramatic over-supply on the back of extrapolated urbanization dreams, Zhou notes, “The economy has slowed down a bit, but not very much," adding that "we should keep vigilance on whether it continues to slow down." Which is odd because US talking heads have made up their minds that China is fixed...

It was almost inevitable: a week after we wrote "From Rothschild To Koch Industries: Meet The People Who "Fix" The Price Of Gold" and days after "Barclays' Head Of Gold Trading, And Gold "Fixer", Is Leaving The Bank", earlier today the UK Financial Conduct Authority finally formalized what most in the "tin-foil" hat community had known for years, when it announced that it fined Barclays £26 million for manipulating "the setting of the price of gold in order to avoid paying out on a client order." Furthermore, the FCA confirmed that those inexplicable gold raids which come as if out of nowhere, and slam gold with a vicious force so strong sometime they halt the entire market, had a very specific source: Barclays, whose trader Daniel James Plunkett, born 1976, "sent out a burst of orders aimed at moving the price of the yellow metal."

Central banks see their main role now in supporting asset markets, the economy, the banks, and the government. They are positively petrified of potentially derailing anything through tighter policy. They will structurally “under-tighten”. Higher inflation will be the endgame but when that will come is anyone’s guess. Growth will, by itself, not lead to a meaningful response from central bankers. No country has ever become more prosperous by debasing its currency and ripping off its savers. This will end badly...

• McDonald’s Workers Arrested at Protest Near Headquarters (BBG)
• U.S. Sends Troops to Chad to Hunt for Abducted Nigeria Girls (BBG)
• BofA Scrapping Market-Making Unit Amid Trading Scrutiny (BBG)
• Biggest attack in years kills 31 in China's troubled Xinjiang (Reuters)
• Intense Fighting Flares in Eastern Ukraine (WSJ)
• Fed Officials Tussle Over Labor Market Slack (Hilsenrath)
• Ikea Economics Lure Central Bankers Seeking New Tools (BBG)
• When Putin ordered up new hospitals, his associates botched the operation (Reuters)
• Norway’s $33 Billion Man Steps Up Search in Asia Real Estate Bet (BBG)

The days of Bernanke's "non-Giffen good" speech circuit may come to an end far sooner than the ex-Chairsatan wishes: "UBS and Goldman Sachs considered his fees too high." Others were quick to point out the obvious:"You can spend $250,000 for Bernanke’s time at a private dinner, or you could just sit down and read what people like Janet Yellen and Mark Carney have to say," David Rosenberg said"... Indeed, this is one deflation which we are confident the Fed Chairman wishes he was 100% certain he could stop in 15 minutes. Sadly, like in the case of everything else relating to Bernanke, when paying for smoke and mirrors it is only a matter of time before everyone, even the uber-richer poseurs, realize that the product they are buying is nothing but a cheap commodity.

• Eric Holder proves he is no US banker puppet by smashing another foreign bank: BNP Falls as U.S. Probe Said to Cost More Than $5 Billion (BBG)
• Fuld Was Top CEO When Fed Last Raised as New Neutral Era Beckons (BBG)
• Tymoshenko loses her magic in Ukraine presidential race (Reuters)
• GOP Sees Primaries Taming the Tea Party (WSJ)
• Heard that one before: Russian troops preparing to leave Ukraine border area (Reuters)
• Vietnam riots land another blow on the global supply chain (FT)
• Heard that one before too: Bank of England minutes show some members closer to voting for rate rise (Reuters)
• BOJ Refrains From Easing With Signs Japan Weathering Tax Rise (BBG)
• Miner Freeport Pressured by Water Costs as Copper Prices Slide (WSJ)
• Talks to end Thai crisis inconclusive, new round called (Reuters)
• Japan Court Blocks Reactor Restarts (WSJ)

Another right of perfectly round number supports: while the Shanghai Composite once again dipped below 2000 overnight to as low as 1991 only to close modestly higher, and the Nikkei followed suit, also sliding below the psychological support level of 14,000 to an intraday low of 13,964 only to close just above 14,000 if in the red, it was the USDJPY that has suffered the most technical pain when shortly after 2:30 am eastern time, the USDJPY dropped by nearly 40 pips, hours after the BOJ indicated that not only is it happy with where in the QE process it stands, but hinted there may well be no more QE, and certainly nothing imminent . In the process, the USDJPY fully smashed the 200 DMA, with the next key parallel support being the 200DMA in the EURJPY at 138.08 (which was at 138.34 last). When that too gives way, it is a straight line to double digits in the USDJPY, and the countdown to the end of the Abe regime begins in earnest.