Hong Kong

London’s property market is still hell bent on going crazy as if it has overeaten and become over inflated yet again.

New research shows that European banks are as likely to fail today as they were preceding the global economic crash 7 years ago. Bail-ins are now the rule.

As the economic calendar slowly picks up following the NFP lull, we are looking at a busy week both globally and in the US, where an army of Fed speakers culminates with a Yellen speech on Friday at 1pm in Rhode Island.

Central bank liquidity lines like those the Fed used to bailout the world seven years ago have become a fixture of the post crisis financial system. Since 2009, China has essentially blanketed the globe with yuan liquidity lines, inking swap agreements with nearly three dozen countries with the primary goal of increasing the degree to which the renminbi is used in international trade.

Was that it for the "reflation" aka Bund-rout trade? One look at German bonds this morning and the sharp, panic selloffs seen in recent days are completely gone making one wonder if the ECB is done selling Bunds the CTAs who were riding the momentum train have all been squeezed out of their long positions and now the trend back to -0.20% can resume only to be followed by another abrupt 6-sigma move as the ECB once again sells inventory to buy itself more monetization runway. As a reminder, the ECB has to buy debt until September 2016 and it won't be able to if the 30-Year Bund is at -0.20% in a few months (or weeks).

It has gotten to where just the lack of a rout in Bunds or any other government issue is enough to activate the "bullish" outside stop hunting algo, which is probably why ES has jumped overnight in another illiquid, newsless session. Curiously, Bunds shave not sold off even though the EUR has jumped sharply by almost 100 pips overnight to a 3 month high also on no news (with some amusing acrobatics by the USDJPY alongside) traditionally a bearish indicator for the Dax and thus the S&P. Perhaps the algos are just late, or maybe the "weak dollar is good for stocks" thesis has been activated, but in any event this morning's ramp higher in the ES will continue until all upside stops are hunted down by Virtu and crushed mercilessly.

"Mark Dearlove, a Barclays Plc executive who was involved in the manipulation of the London interbank offered rate, was named as the U.K. lender’s head of markets for Asia-Pacific," Bloomberg reported earlier today, proving once again that not only do those involved in rigging, fixing, and otherwise manipulating every benchmark rate and market on the planet not go to prison, they in fact get promoted.

• Obama, McConnell missteps undercut trade pact in U.S. Senate (Reuters)
• Bears Beware: Rout Puts Investors on Wrong Side of Central Banks (BBG)
• U.S. Set to Rip Up UBS Libor Accord, Seek Conviction (BBG)
• Greece’s Creditors Said to Seek EU3 Billion in Budget Cuts (BBG)
• Amtrak train derails in Philadelphia, killing at least five (Reuters)
• Oil glut worsens as OPEC market-share battle just beginning (Reuters)
• China Stimulus Aims at Restructuring Trillions in Local-Government Debt (WSJ)

Following yesterday's turbulent bond trading session, where the volatility after the worst Bid to Cover in a Japanese bond auction since 2009 spread to Europe and sent Bund yields soaring again, in the process "turmoiling" equities, today's session has been a peaceful slumber barely interrupted by "better than expected" Italian and a German Bund auction, both of which concluded without a hitch, and without the now traditional "technical" failure when selling German paper. Perhaps that was to be expected considering the surge in the closing yield from 0.13% to 0.65%. Not hurting the bid for 10Y US Treasury was yesterday's report that Japan had bought a whopping $23 billion in US Treasurys in March, the most in 4 years so to all those shorting Tsys - you are now once again fighting the Bank of Japan.

The Iranian Navy is escorting Yemen-bound ships which Tehran says are carrying humanitarian aid for those caught in the crossfire between the Houthis and the Saudis. Given 'coalition' suspicions surrounding the possibility that Iran is arming militiamen, expect the US to be very interested in inspecting the aid vessels, setting the stage for a possible "accident" off the war-torn country's coast.

It all started again in Asia, although not in China where the berserker mania bid for stocks has returned and the SHCOMP is now up nearly 5% in the past two days following the PBOC's latest easing, but in Japan where once again the massively illiquid JGB market, of which the BOJ owns roughly a third as of this moment, is going through yet another shock period (if not quite VaR yet) with last night's 10 Year JGB auction seeing the lowest Bid to Cover since 2009. This was the beginning, and promptly thereafter bond yields around the globe spiked once more, with 10-year Treasury yields climbing to a five-month high, as the global rout in debt markets deepened. The biggest casualty so far is the Bund, which having retraced some of the flash crash losses from two weeks ago is once again in panic selling mode, and while not having taken out the recent 0.8% flash crash wides, traded just shy of 0.75% this morning.

In 2003, Kevin Flanagan was an information technology employee at Bank of America. They told him he was being replaced with foreign labor, and he was ordered to train his replacement. After he completed his assignment, he was laid off. Then he went to the parking lot and shot himself.  That's "free trade."

• Fed’s Yellen: Stock Valuations ‘Generally Are Quite High’ (WSJ)
• Britain's dead-heat election 'down to the wire' on polling day (Reuters)
• European Markets Roiled by U.S. Fed Chief Janet Yellen’s Comments (WSJ)
• Stocks Drop With German Bonds to Extend $2 Trillion Global Loss (BBG)
• Oil heads toward 2015 highs despite ample supply (Reuters)
• Wary of bond 'cliff,' Fed plans cautious cuts to portfolio (Reuters)
• Saudi Arabia mulling land operations on Yemen border (Reuters)

By going after Ripple (a major player in the industry), FinCEN is trying to scare all the smaller players into ratting out their customers. You don’t see rich, stable countries doing this sort of thing. In fact, the exact opposite. An official from HK Treasury recently stated that: “the Government does not consider it necessary to introduce at the moment new legislation to regulate trading in such virtual commodities or prohibit people from participating in such activities.”

"If you were to ask me, since we’re making forward-looking statements, what will the second quarter look like in Las Vegas? Weak. Do you hear me? Weak. So I’m trying to lower expectations here. This notion of a big recovery is a complete dream," Steve Wynn says, underscoring not only the weakness in gaming revenue from the Vegas strip to Macau, but also the fact that there simply is no economic recovery in the US.