In this brave New Normal world, a Chinese contraction is somehow expected to be offset by a rebound in Europe's worst economies, because following China's latest PMI miss, overnight we were told of beats in the Service PMI in Spain (56.5, vs Exp. 54.0, a 7 year high sending the Spanish 10 Year to fresh sub 3% lows), Italy at 51.1, vs Exp. 50.5, also pushing Italian yields to record lows, and France 50.4 (Exp. 50.3). We would speculate that macro events such as these, as fabricated as they may be, are relevant or even market-moving, but they aren't - all that matters is what the JPY and VIX traders at the NY Fed do in a low volume tape, usually in the last 30 minutes of the trading day. And since the trading day today happens to be a Tuesday, and nothing ever goes down on a Tuesday, the outcome is pretty much clear, and not even the absolutely abysmal Barclays earnings report has any chance of denting the latest rigged and manufactured low-volume levitation.
The following story by David Sirota at PandoDaily is simply excellent. It zeros in on the secretive and rapidly expanding relationship between private equity firms and the public pensions that invest in them. It shows a crony capitalist love affair greased by lobbyist influence peddlers known as “placement agents”, as well as non-public agreements between PE firms and public pensions chock full of conflicts of interest, extremely high fees and underperformance. Unbelievably, in many instances the trustees of the public pensions are not allowed to know what funds the “fund of funds” invest in. This makes due diligence impossible, and in one particularly egregious example it led the Kentucky Retirement Systems to unknowingly invest in SAC Capital despite the fact it was under SEC investigation at the time.The chief villain in this article will be no stranger to readers of this site. It is Blackstone...
Economist John Maynard Keynes described the effects of inflation citing Vladimir Ilyich Lenin this way: “Lenin is said to have declared that the best way to destroy the capitalist system was to debauch the currency. By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. As the inflation proceeds and the real value of the currency fluctuates wildly from month to month, all permanent relations between debtors and creditors, which form the ultimate foundation of capitalism, become so utterly disordered as to be almost meaningless; and the process of wealth-getting degenerates into a gamble and a lottery. Lenin was certainly right. There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose.” This is why governments love inflation so much and hate gold.
One of the more peculiar news from last week was the grounding of all flights for several hours at several airports in the Southwestern United States and the grounding of planes bound for the region from other parts of the country. As so often happens when there is no specific reason at the time, the error was blamed on a computer "glitch" - the computer problem at a Federal Aviation Administration center slowed the journeys of tens of thousands of arriving and departing passengers at LAX. And that would have been all we heard of it had it not been for some additional digging by NBC which on Saturday, citing unnamed sources, reported a U-2, a Cold War-era spy plane still in use by the U.S. military, "passed through air space monitored by the Los Angeles Air Route Traffic Control Center and appears to have overloaded a computer system at the center."
- Fed’s Fisher Says Economy Strengthening as Payrolls Rise (BBG)
- Russia Knows Europe Sanctions Ineffective With Tax Havens (BBG)
- EU Cuts Euro-Area Growth Outlook as Inflation Seen Slower (BBG)
- U.S. Firms With Irish Addresses Get Tax Breaks Derided as ‘Blarney’ (BBG)
- Portugal exits bailout without safety net of credit line (Euronews)
- Puzzled Malaysian Air Searchers Ponder What to Try Now (BBG)
- Barclays, Credit Suisse Battle Banker Exodus, Legal Woes (BBG)
- Germany says euro level not an issue for politicians (Reuters)
- Alibaba-Sized Hole Blown in Nasdaq 100 Amid New Stock (BBG)
- Obamacare to save large corporations hundreds of billions (The Hill)
For 364 days of the year, the theater that the press and the administration are on the opposite sides of the table, continues without a glitch. However, one day a year, during the annual White House Correspondents' Association dinner, the facade falls and Obama, together with his fawning press corps, have a night of laughs in an Oscar-inspired night of self-congratularoty excess. Which, just like every other night in Washington, is at the taxpayers' expense. Here are the highlights from last night's festivities.
While there may be some confusion about why massive bond buying greeted yesterday's "better than expected" loss of 209 jobs in the 25-54 age group, dragging stocks down, the answer is actually very simple: there is a war in the Ukraine.
- Ukraine attacks rebel city, helicopter shot down (Reuters)
- Euro Unemployment Holds Near Record Amid Factory Gains (BBG)
- Yellen’s Fed Resigned to Diminished Growth Expectations (BBG)
- Junket Figure's Disappearance Shakes Macau's Gambling Industry (WSJ)
- China tried to undermine economic report showing its ascendancy (WSJ)
- Liquidity Trap Hitting AAA Bonds Has ATP CEO Sounding Alarm (BBG)
- AstraZeneca Snubs Pfizer Approach That U.K. Won’t Block (BBG)
- Missing Jet Recordings May Have Been 'Edited' (NBC)
- RBS turns corner as first-quarter profit trebles (Reuters)
- Japan household spending hits four-decade high, wages key to outlook (RTRS) while Real Incomes Drop 3.3% in March, 6th straight decline
Another day where the taken for granted overnight futures levitation is missing (despite a rather rampy USDJPY), indicates that algos are likely waiting for guidance from today's NFP data (buy if beat, buy more if miss) before committing monopoly money. The consensus for today's NFP is 218K, (up from 192K), although as Goldman notes the whisper number is as high as 240K. As DB says, the honest truth is that markets are in one giant holding pattern at the moment with volatility and conviction low. One evidence of this is the AAII weekly sentiment indicator which shows the % bullish, bearish or neutral on the US stock market for the next six months. This week the neutral indicator (40.78) is at its highest level for 9 years. No wonder volumes and volatility are low if investors are lacking a directional bias. Yesterday’s reaction to the ISM manufacturing was interesting. Though the headline number came in firmer than expected (54.9 vs 54.3 expected) and more than 1pt higher than last month’s reading of 53.7, the UST and equity reaction suggested that the data had actually surprised to the downside.
After a few days of extended verbal foreplay, it was only a matter of time before Ukraine finally snapped and resumed a military operation to regain the lost cities in the east, especially once the warmongering IMF made it explicitly clear that should Ukraine lose control of pro-Russian controlled cities the $17 billion bailout package would be lost too. Sure enough, early this morning Kiev launched a military operation to regain control of the pro-Russian separatist stronghold of Slovyansk, overrunning numerous roadblocks and surrounding the city, officials said, but meeting stiff resistance from militants who managed to shoot down at least one helicopter.
Everyone has seen them: those "inexplicable" bouts of furious selling in gold and silver, coming out of nowhere with no news or catalyst. In fact, look no further than what happened first thing this morning, when an unknown seller, smashed all stops in one big sale, and took silver to its lowest price for 2014. This was a premeditated and deliberate selling of silver with one simple purpose: push and reprice silver lower. But this is nothing new: precious metal traders, especially those who are on the other side of the table of the BIS' Mikael Charoze or Benoit Gilson, and countless other commercial banks, are all too aware of this behavior and they take it for granted. No, the real surprise is that suddenly none other than the CME is getting worred that manipulation this blatant is finally chasing regular retail traders away who are tired of being fleeced on a daily basis, leaving central banks and a few "fixing" banks to trade only with each other, which is not acceptable - after all it is the muppets' money that is fair game, not that of other cartel members.
- Two-Thirds of Insurance Exchange Enrollees Paid Premiums (WSJ)
- Panic: Criminal Charges Against Banks Risk Sparking Crisis (BBG)
- Did the junk bubble pop: Junk Loans Pulled as Investors Say No After Fed Raises Concerns (BBG)
- CME mulls price fluctuation limits for gold, silver futures (Reuters)
- AT&T Has Approached DirecTV About Possible Acquisition (WSJ)
- NBA sets wheels turning for Clippers sale; Oprah in wings (Reuters)
- One way to fix prison overcrowding: Florida Jail Hit by Deadly Blast (WSJ)
- New Boeing jets hold key to more than half of future sales (Reuters)
- Sony slashes profit estimate by 70% (Guardian)
Vladimir Putin 'confirmed' yesterday that there were no Russian forces 'boots on the ground' in Ukraine and so it seems the daily growing list of cities that are falling to pro-Russian separatist forces throughout Eastern Ukraine - as the following chart shows - suggests an ever more divided nation is verging on civil war, despite the best efforts of the West to sanction their way to a fix. As Turchinov warned this morning, there is "real danger of the Russian Federation beginning a land war against Ukraine... our armed forces are on full military readiness."
Bomb Blast Rocks Train Station Hours After China's "Fists & Daggers... Strike-First" Warning To TerroristsSubmitted by Tyler Durden on 04/30/2014 09:01 -0500
Police are the "fists and daggers" in the fight against terrorism and will "strike first", China's President Xi Jinping said on a trip to the western Xinjiang region where authorities say members of a Muslim minority are waging a violent separatist campaign. As Reuters reports, this is the same region that sufferred the knife-wielding terrorist attack in the city of Kunming that killed 29 people and injured 140. However, his warning seems to have sparked further action - though not confirmed as a terrorist attack - as a blast occurred at a railway station in Urumqi, capital of northwest China’s Xinjiang region. Details about the blast and casualties are sketchy but local reports suggest up to 50 injured.
- Headline of the day goes to... Cold weather seen temporarily slowing U.S. economy (Reuters)
- Americans Want to Pull Back From World Stage, Poll Finds (WSJ)
- U.S. Plans to Charge BNP Over Sanctions (WSJ)
- What about Jay Carney: Putin Threat to Retaliate for Sanctions Carries Risks (BBG)
- Fed expected to take further step toward ending bond buying (Reuters)
- A Fed-Watcher’s Guide to FOMC Day: Steady Taper, Green Shoots (BBG)
- Alstom accepts 10 billion euro GE bid for its energy unit (Reuters)
- BOJ projects inflation exceeding 2 percent, keeps bullish view intact (Reuters)