As if the fact that the Privacy and Civil Liberties Oversight Board found the NSA's bulk telephone collection "has shown minimal value in safeguarding the nation from terrorism," the 238-page report concluded it was illegal in several ways and violates privacy. Coincidentally, on the day of the release of the 9/11 Commission-prompted report, Edward Snowden (in an online chat - below) stated, "It's not good for our country, it's not good for the world, and I wasn't going to stand by and watch it happen, no matter how much it cost me." Indeed, one wonders if this would have ever come to light; but now following these findings that the program is not authorized by the Patriot Act the panel may give ammunition to critics in Congress and fuel legal challenges presenting a problem for President Obama who said last week (instead of waiting for the report) that he would allow the program to continue.
Markets have started the week on the back foot, despite a brief rally following a better-than-expected Q4 GDP print in China. Indeed, Asian equities recorded a small pop following the GDP report, but the gains were shortlived as the general negativity on China’s growth trajectory continues to weigh on Asian markets. In terms of the data itself, China’s Q4 GDP (7.7% YoY) was slightly ahead of expectations of 7.6% but it was slower than Q3’s 7.8%. DB’s China economist Jun Ma maintains his view that economic growth will likely accelerate in 2014 on stronger external demand and the benefits from deregulation. The slight slowdown was also evident in China’s December industrial production (9.7% YoY vs 10% previous), fixed asset investment (19.6% YoY vs 19.9% previous) and retail sales (13.6% vs 13.7% previous) data which were all released overnight. Gains in Chinese growth assets were quickly pared and as we type the Shanghai Composite (-0.8%), HSCEI (-1.1%) and AUDUSD (-0.1%) are all trading weaker on the day. On a more positive note, the stocks of mining companies BHP (+0.29%) and Rio Tinto (+0.26%) are trading flat to slightly firmer and LME copper is up 0.1%. Across the region, equities are generally trading lower paced by the Nikkei (-0.5%) and the Hang Seng (-0.7%). Staying in China, the 7 day repo rate is another 50bp higher to a three month high of 9.0% with many investors continuing to focus on the Chinese shadow banking system following the looming restructuring of a $500m trust product that was sold to ICBC’s customers.
For the past 5-6 years the United States has experienced something that no one ever thought could happen.
President Obama has recently promoted inequality as a fundamental threat to our way of life, saying, “The combined trends of increased inequality and decreasing mobility pose a fundamental threat to the American Dream, our way of life, and what we stand for around the globe.” You can read the rhetoric here. Let’s look at the reality.
The Teleprompter-In-Chief Fails to Impress ...
The question of just who, what, where, and when the US government spied on and stored metadata about is moot now... thanks to Edward Snowden; but President Obama will be firing on all his teleprompter-based cylinders today as he explains the "changes" to NSA data collection and the likely "punt" deferrals to Congress:
HAYDEN SAYS OBAMA MAY 'PUNT' SOME QUESTIONS TO CONGRESS ON NSA
OBAMA SAID TO ORDER END OF SECTION 215 METADATA PROGRAM (as it currently exists)
NSA SAID TO NO LONGER KEEP BULK PHONE RECORDS UNDER OBAMA PLAN
Calling for an 'overhaul' of the NSA (seeking input from Congress and intelligence officials) will, we are sure, appease those who cannot believe the 'hope-and-change'-monger could have sanctioned such things; but we suspect little will change in reality.
Weak results from Intel, American Express and Capital One, not to mention Goldman and Citi? No problem: there's is overnight USDJPY levitation for that, which has pushed S&P futures firmly into the green after early overnight weakness: because while the components of the market may have such trivial indicators as multiples and earnings, the USDJPY to which the Emini is tethered has unlimited upside. And now that the market is back into "good news is good, bad news is better" mode, today's avalanche of macro data which includes December housing starts and building permits, industrial production, UofMichigan consumer confidence and JOLTs job openings, not to mention the up to $3 billion POMO, should make sure the week closes off in style: after all can't have the tapped out consumer enter the weekend looking at a red number on their E-trade account: they might just not spend as much (money they don't have).
Moments ago The Hill reported that what many thought was absolutely impossible, may in fact become a reality: President Obama is considering issuing an executive order (#394,039,993,837?) to raise the minimum wage for Federal Workers... and in the process - with the help of that other central planner par excellence Bern-ellen - lap all those other Banana republics that everyone so enjoys making fun of.
Earlier today, following significant delays, the Senate released its bipartisan report on the deadly Benghazi US embassy attack from September 11, 2012, which faulted both the State Department and the intelligence community for not preventing attacks on two outposts in Benghazi, Libya, that killed four Americans, including a U.S. ambassador. For those who are short on time and would rather get the cliff notes on the 85 page report (link here), the following summary from AP should suffice.
As long as we ignore that data last week, the jobless recovery is mediocre at best... let's see how great it really is as President Obama explains how exceptional America still is...
Big Banks Launder Hundreds of Billions of Illegal Drug Cartel Money … But Refuse to Provide Services for Legal MarijuanaSubmitted by George Washington on 01/14/2014 21:08 -0400
Following yesterday's major market drubbing, in which the sliding market was propped up by the skin of Nomura's (and BOJ, and Fed's) teeth at 103.00 on the USDJPY, it was inevitable that with Japan returning from holiday there would be a dead cat bounce in the Yen carry pair, and sure enough there was, as the USDJPY rose all the way back up to 103.70, and nearly closed the Friday gap, before starting to let off some air. However, now that US traders are coming back online, Japan's attempts to keep markets in the green may falter, especially since it only has a couple of ES ticks to show for its efforts, as for the Nikkei which dropped 3% overnight, it has now lost all US "Taper" gains.
It would appear that there is even a limit for the Supreme Court as to what they will allow President Obama to get away with:
*OBAMA'S RECESS APPOINTMENTS QUESTIONED BY U.S. SUPREME COURT
As Bloomberg reports, justices across the ideological spectrum questioned whether President Barack Obama complied with the Constitution when he appointed three members of the National Labor Relations Board during a Senate break.
With no major macro news on today's docket, it is a day of continuing reflection of Friday's abysmal jobs report, which for now has hammered the USDJPY carry first and foremost, a pair which is now down 170 pips from the 105 level seen on Friday, which in turn is putting pressure on global equities. As DB summarizes, everyone "knows" that Friday's US December employment report had a sizeable weather impact but no-one can quite grasp how much or why it didn't show up in other reports. Given that parts of the US were colder than Mars last week one would have to think a few people might have struggled to get to work this month too. So we could be in for another difficult to decipher report at the start of February. Will the Fed look through the distortions? It’s fair to say that equities just about saw the report as good news (S&P 500 +0.23%) probably due to it increasing the possibility in a pause in tapering at the end of the month. However if the equity market was content the bond market was ecstatic with 10 year USTs rallying 11bps. The price action suggests the market was looking for a pretty strong print.
Thought the incredibly unpopular Obamacare health plan (the most epic disaster story was the woman who was touted as a success and then later kicked off her plan) had put most of its problems behind it? Think again. Yesterday, after the stock market close, health insurer Humana warned that the “risk mix” of those who have signed up for the program will be “more adverse than previously expected.” In plain english what this means is that only old and sick people are signing up, while younger generations with piles of student debt, a couch in their parents’ basements and no jobs decide to ride things out uninsured.