“Things always become obvious after the fact” – Nassim Nicholas Taleb
“Facts do not cease to exist because they are ignored.” – Aldous Huxley
Meet Martin "The Hammer" Mallett, chief currencies dealer at the Bank of England in 2007, and, as WSJ reports, recipient of emails that were part of an alleged campaign to rig benchmark interest rates, according to evidence presented in a London trial Wednesday. Remarkably, as we have detailed extensively, the emails were sent out with daily suggestions for where a variety of banks should set Libor. Mallett was later fired for what the central bank described as "serious misconduct," although the bank said his departure wasn’t directly related to the currencies-rigging investigation.
Bill Gross just revealed another aspect of trading in the new (or any) normal: one may get the direction and the timing with laser-like precision (as Gross did on his Bund trade), but if said trade is excecuted in a way where the inherent "coiled spring" volatility of the Gross-defined "new normal" blows up the trade structure, the losses will make one wish never to have had the correct idea in the first place.
It's worthwhile recalling that mainstream economists, the Federal Reserve, government agencies and the mainstream financial media all deny the economy is in recession until it falls off a cliff.
You know it's a bubble when... A listing has appeared online advertising a single bed in a house in London where the mattress is located in the kitchen.
In 2011, McDonald's announced it would hire 50,000 new employees on April 19 for its National Hiring Day. They eventually hired 62,000 people. Over 1 million people applied. With 62,000 hired out of more than 1 million, that leaves the McDonald's acceptance rate at 6.20%. Let's see how that compares with the Ivy League acceptance rate in 2011...
Thursday, in a long-awaited opinion, the Second Circuit Court of Appeals in New York' three-judge panel ruled that the NSA program that secretly intercepts the telephone metadata of every American was illegal. It’s now up to Congress to vote on whether or not to modify the law and continue the program, or let it die once and for all. Lawmakers must vote on this matter by June 1, when they need to reauthorize the Patriot Act. A key factor in that decision is the American public’s attitude toward surveillance. Given the vast amount of revelations about NSA abuses, it is somewhat surprising that just slightly more than a majority of Americans seem concerned about government surveillance. Which leads to the question of why?
- ‘Flash Crash’ Overhaul Is Snarled in Red Tape (WSJ)
- ECB Considers Tighter Noose on Greek Banks (BBG)
- Dollar Falls as U.S. Data Cast Doubt on Fed Policy Tightening (BBG)
- Market U-Turn Rams Hedge Funds (WSJ)
- Greece makes 200 million euro IMF payment due Wednesday (Reuters)
- Greek unemployment was 25.4 percent in February (Reuters)
- J.P. Morgan’s Barista-Turned-Banker Sees Good Things Brewing (WSJ)
It's not easy being a millionaire in the New Normal.
“When does our credit based financial system sputter / break down? When investable assets pose too much risk for too little return. Not immediately, but at the margin, credit and stocks begin to be exchanged for figurative and sometimes literal money in a mattress.” We are approaching that point now as bond yields, credit spreads and stock prices have brought financial wealth forward to the point of exhaustion. A rational investor must indeed have a sense of an ending, not another Lehman crash, but a crush of perpetual bull market enthusiasm.
Nowhere is the new normal more evident than the frenzied hording of so-called "trophy homes" by the world's 1800 billionaires. As Bloomberg reports, the ultra-luxury housing market is scaling new heights as a record number of properties around the world command prices topping $100 million. Demand is growing among affluent Americans and Europeans; billionaires from unstable economies, such as Russia and Middle Eastern countries; and buyers from mainland China, who were barred from investing overseas before 2012. Why - simple (to them?)... "They’re a scarce commodity. And they’re better than gold because you can boast about it."
The week that passed has been nothing short of a roller coaster ride for many nervous investors. And for some: a realization that the once hyped, hawked, and levered Billion dollar babies can indeed “come off the rails.” Turning the once joyride into something more in common with a free fall into the abyss. However, you’re told not too worry: For if you loved the ride when the prices were higher, then surely you should be ecstatic to “ride again” since the new ticket prices are clearly “on sale!”
Something serious is brewing under the hood...