It took only a 60 USDJPY pip overnight ramp to send US equity futures 20 points off the overnight lows in the immediate aftermath of the Crimean referendum, which from a massive risk off event has somehow metamorphosed into a "priced in", even welcome catalyst to buy stocks. The supposed reasoning, and in a world in which Virtu algos determine the price action of the USDJPY from which all else flows based solely on momentum we use the word reasoning "loosely", is that there was little to indicate that the escalation between Russia and Ukraine was set to accelerate further. As we said: an annexation is now seen as risk off, something even Goldman appears unable to comprehend (more on that shortly). In macroeconomic news, European inflation - at least for the Keynesians - turned from bad to worse after the final February inflation print dropped from the flash, and expected, reading of 0.8% to just 0.7% Y/Y, a sequential increase of 0.3% and below the 0.4% expected, confirming that deflationary forces continue to ravage the continent. The only question is how soon until Europe comes up with some brilliant scheme that will help it join Japan in exporting its deflation.
- Ukraine anxiety triggers flight to safety, stocks tumble (Reuters)
- Woodrow Wilson’s Ukraine Failure Foreshadows West’s Dilemmas (BBG)
- Fortress Executives Join Peers Selling Stock After Rally (BBG)
- 303 Deaths Seen in G.M. Cars With Failed Air Bags (NYT)
- Putin Deports Executives for Speeding as Sanctions Loom (BBG)
- Russia blocks internet sites of Putin critics (Reuters)
- China Bond Risk Exceeds Ireland as Defaults Unavoidable (BBG)
- China H-Shares Post Biggest Weekly Drop Since October (BBG)
- Surge in Rail Shipments of Oil Sidetracks Other Industries (WSJ)
- Blackstone’s Home Buying Binge Ends as Prices Surge (BBG)
China is the reason so many companies tell you how great their prospects are.
- China premier warns on economic slowdown as data fans stimulus talk (Reuters)
- Li says China defaults ‘unavoidable’ (FT)
- Russia Said to Ready for Iran-Style Sanctions in Worst Case (BBG)
- Rescue the tapes from the Bank of England’s dustbins (FT)
- Obama Warns Putin of Cost to Russia for Annexing Ukraine (BBG)
- The TVIX is back: Credit Suisse VIX Note That Ran Amok in 2012 Back on Top (BBG)
- U.S. Risks National Blackout From Small-Scale Attack (WSJ)
- U.S. Investigators Suspect Missing Airplane Flew On for Hours (WSJ)
- Malaysia says no evidence missing plane flew hours after losing contact (Reuters)
- Missed Alarms and 40 Million Stolen Credit Card Numbers: How Target Blew It (BBG)
- Death Toll in NYC Building Blast Rises to Six; Search Continues (BBG)
- China worries chill markets, copper slumps (Reuters)
- Peak dot com dot two idiocy: Candy Crush Saga maker King seeks $7.56 bln valuation from IPO (BBG)
- Obama Meeting With Yatsenyuk Raises Stakes in Ukraine (BBG)
- Federal prosecutors open criminal probe of GM recall (Reuters)
- Pimco Cuts Government Debt on Outlook for Fed Buying (BBG)
- Missing Malaysian Jetliner Confuses World That’s Online 24/7 (BBG)
- Mortgage Giants Face Endgame (WSJ)
- Russia Calls U.S. Aid to Ukraine Illegal Amid Standoff (BBG)
- U.S. judge freezes assets of Mt. Gox bitcoin exchange boss (Reuters)
- Ousted Libyan PM flees country after tanker escapes rebel-held port (Reuters)
- Senate-CIA Dispute Erupts Into a Public Brawl (WSJ)
Is America the greatest nation on the planet? The reality is that the United States is in a deep state of decline, and it is getting harder to deny that fact with each passing day.
How much faith can we put in our ability to decipher all the numbers out there telling us the US is closing in on its cornering of the global oil market? There’s another side to the story of the relentless US shale boom, one that says that some of the numbers are misunderstood, while others are simply preposterous. The truth of the matter is that the industry has to make such a big deal out of shale because it’s all that’s left. There are some good things happening behind the fairy tale numbers, though—it’s just a matter of deciphering them from a sober perspective.
This week brings a slew of central bank meetings: At the forefront will be the BOJ meeting on Tuesday where no changes to monetary policy are expected. However, we will be watching the commentary closely for hints to further monetary easing in the coming months. Goldman, and others, still expect the BOJ to provide additional stimulus in the second quarter of this year as the impact of the consumption tax hike on the economy becomes visible - it is that expectation that sent the USDJPY above 100 in late 2013 and any disappointment by the BOJ will certainly have an adverse impact on the all important Yen carry pair. In terms of the key data to watch this week, the themes of recent weeks remain the same: US activity data, with retail sales and the U. Michigan Consumer sentiment survey the main releases, European inflation trends (French and German HCPI data on Thursday and Friday, respectively), and finally external balances in EM. Within that group, the latest data points for trade and current account balances in India, Turkey and South Africa will receive the most attention.
- Index of largest Chinese stocks drops to lowest since February 2009 (BBG)
- Plane-Debris Hunters Seek Suspected Aircraft Window Part (BBG)
- New-Home Building Is Shifting to Apartments (WSJ)
- Forward Guidance Risks Stoking Instability, BIS Says (BBG)
- Alleged Bitcoin Millionaire Nakamoto Gets $28,000 Donations (BBG)
- Mexico kills drug kingpin reported dead years ago (Reuters)
- Tencent to Buy 15% Stake in JD.com to Boost E-Commerce (BBG)
- Bitcoin exchange MtGox 'faced 150,000 hack attacks every second’ (Telegraph)
- Noyer Says Stronger Euro Creates Unwarranted Pressure on Economy (BBG)
- Russian Forces Gain in Ukraine as Separatist Vote Looms (BBG)
While Big Oil, consumer groups, lobbyists, lawmakers... are mudwrestling over the export ban, exports of “petroleum products” are soaring.
- Putin rebuffs Obama as Ukraine crisis escalates (Reuters)
- Behind the $100 Billion Commodity Empire That Few Know (BBG)
- Initial Public Offerings Hit Pace Not Seen in Years (WSJ)
- Russian Parliament Will Back Crimea Split From Ukraine (WSJ)
- Nakamoto Named as Bitcoin Father Denies Involvement, Flees Press (BBG)
- Chaori Can’t Make Payment in China’s First Onshore Default (BBG)
- Zombies Spreading Shows Chaori Default Just Start (BBG)
- Pimco's Gross declares El-Erian is 'trying to undermine me' (Reuters)
- U.S. Fighters Circle Baltics as Putin Fans Fear of Russia (BBG)
Today's nonfarm payroll number is set to be a virtual non-event: with consensus expecting an abysmal print, it is almost assured that the real seasonally adjusted number (and keep in mind that the average February seasonal adjustment to the actual number is 1.5 million "jobs" higher) will be a major beat to expectations, which will crash the "harsh weather" narrative but who cares. Alternatively, if the number is truly horrendous, no problem there either: just blame it on the cold February... because after all what are seasonal adjustments for? Either way, whatever the number, the algos will send stocks higher - that much is given in a blow off top bubble market in which any news is an excuse to buy more. So while everyone is focused on the NFP placeholder, the real key event that nobody is paying attention to took place in China, where overnight China’s Shanghai Chaori Solar defaulted on bond interest payments, failing to repay CNY 89.9mln (USD 14.7mln), as had been reported here extensively previously. This marked the first domestic corporate bond default in the country's history - indicating a further shift toward responsibility and focus on moral hazard in China.
The first is the Chinese word for filthy, stinking rich, the uncouth bling-blingy rich of the People’s Republic. The second is the name given to middle-aged women dripping in gold. I imagine that two middle-aged women with the yellow bars would lead to a much deserved ‘dispute’ (yes repeating the ideogram for ‘woman’ actually means there’s ‘trouble’, telling you a whole lot about what the Chinese actually think about women insociety).
While Janet Yellen fell back on the ubiquitous central banker statement that she "would do all that [she] can" it was Dallas Fed's Richard Fisher who raised the most eyebrows yesterday. In a speech in Mexico City, the central banker said he was concerned about "eye-popping levels" of some stock market metrics warning that the Fed must monitor the signs carefully to ensure bubbles were not forming. While other Fed members have paid lip-service to bubbles, Fisher explicitly discussed stocks in the context of the dot-com boom of the late '90s warning of "the ghost of 'irrational exuberance'" and worried about corporate bonds too.
With the world still on edge over developments in the Ukraine, overnight newsflow was far less dramatic than yesterday, with no "bombshell" uttered at today's Putin press conferences in which he said nothing new and simply reiterated the party line and yet the market saw it as a full abdication, he did have some soundbites saying Russia should keep economic issues separate from politics, and that Russia should cooperate with all partners on Ukraine. Elsewhere Gazprom kept the heat on, or rather off, saying Ukraine recently paid $10 million of its nat gas debt, but that for February alone Ukraine owes $440 million for gas, which Ukraine has informed Gazprom it can't pay in full. Adding the overdue amounts for prior months, means Ukraine's current payable on gas is nearly $2 billion. Which is why almost concurrently Barosso announced that Europe would offer €1.6 billion in loans as part of EU package, which however is condition on striking a deal with the IMF (thank you US taxpayers), and that total aid could be as large as $15 billion, once again offloading the bulk of the obligations to the IMF. And so one more country joins the Troika bailout routine, and this one isn't even in the Eurozone, or the EU.