A sneaky overnight levitation pushed the Spoos above 1800 thanks to a modest USDJPY run (as we had forecast) despite, or maybe due to, the lack of any newsflow, although today's first official Humphrey Hawkins conference by the new Fed chairman, Janet Yellen, before the House and followed by the first post-mortem to her testimony where several prominent hawks will speak and comprising of John B. Taylor, Mark A. Calabria, Abby M. McCloskey, and Donald Kohn, could promptly put an end to this modest euphoria. Also, keep in mind both today, and Thursday, when Yellens' testimoeny before the Senate takes place, are POMO-free days. So things may get exciting quick, especially since as Goldman's Jan Hatzius opined overnight, the third tapering - down to $55 billion per month - is on deck.
Two weeks ago we learned what many had already known just by extrapolating simple trends: in 2013 Chinese net imports of gold from Hong Kong alone rose to over 1000 tons of gold, or 1158 to be precise - 100 tons more than China's official gold holdings of 1054 tons which have not "budged" in the past four years - following another significant net monthly import of 94.8 tons of the precious metal in December (and 126.6 gross). This means total gold imports in 2013 was more than double the 557 tons imported in 2012, and as a result China has now officially surpassed India as the world's biggest buyer of gold (although the title may swing back to India once gold price controls are relaxed, or if the government were to count all the gold smuggled into the country via illegal channels).
- Yellen's first test (Reuters)
- Let weak banks die, says eurozone super-regulator (FT)
- Yellen, Carney Face Explaining Policy as Benchmarks Near (BBG)
- Commerzbank Said Seeking Debt Buyers in $6.8 Billion Spain Exit (BBG)
- Junk Yield Premiums Soar on China’s Looming First Default (BBG)
- Millions Trapped in Health-Law Coverage Gap (WSJ)
- Mandel Tops Best-Earning Hedge Funds for Clients in 2013 (BBG)
- Swiss Brace for Sour EU Relations After Immigration Vote (BBG)
- Detroit Bankruptcy Talks to Resume (WSJ)
Iranian warships dispatched to the Atlantic Ocean will travel close to U.S. maritime borders for the first time, a senior Iranian naval commander said Saturday. The fleet, consisting of a destroyer and a helicopter-carrying supply ship, began its voyage last month from the southern Iranian port city of Bandar Abbas. The ships, carrying some 30 navy academy cadets for training along with their regular crews, are on a three-month mission. Reuters reports, citing Admiral Haddad, that "Iran's military fleet is approaching the United States' maritime borders, and this move has a message."
A few short months after Putin cornered the US state department into a disastrous foreign relations dead end with the false flag Syrian escalation which achieved none of the predetermined nat-gas-to-Europe pipeline ambitions, instead alieanting the US from both staunch allies Saudi Arabia and Israel, the Russian president has just managed to inflict yet more pain on US foreign policy this time by infuriating (even more) a core US ally in Europe - Angela Merkel. Just two days after the phone recording of Victoria Nuland emerged in which she not only made it explicitly clear it was the US who was the puppetmaster behind the Ukranian opposition with the traditional CIA tractics as was expected all along, but also explained just how the US freels toward the EU with the now infamous "Fuck the EU" comment, Angela Merkel called the obscene remark "absolutely unacceptable."
As natural gas prices climb, reaching over $5/mcf again on 4 February, and with an unseasonably cold winter, local utilities say that natural gas customers’ bills are 30-40% higher now than last winter.
Turkey scrambled an F-16 fighter jet following a bomb-threat aboard a Ukraine-outbound plane. A passenger, among 110 on the plane, made a bomb threat and demanded the plane be diverted to Sochi. The plane eventually landed in Istanbul - after crew calmed down the man who had reportedly been drinking. This threat follows the US' warning of "toothpaste" bombs.
Raise your hands if you are surprised that, as has emerged, virtually every major bank was manipulating currencies (and everything else) whether as part of the "Bandits' Club", the "Cartel" or some other - until recently- secret message room. That's what we thought. Now raise your hand if you thought the manipulation could be so pervasive, so glaring and so in your face, that even the oldest central bank - the Bank of England - and who knows how many other monetary authorities, were openly encouraging traders from these private banks to do more of the illegal activity they had been engaging in - namely manipulating currencies - with their explicit blessing knowing very well such behavior is undisputedly illegal. We hope at least one or two hands went up, because which it is one thing to be cynical about what is going on behind the scenes, it is something else to see the edifice of global corruption and criminality, whose only purpose was to preserve the status quo, unwinding before your very eyes substantiated by actual facts.
- Here is why AAPL bounced off $500: Apple Repurchases $14 Billion of Own Shares in Two Weeks (WSJ)
- German Court Refers OMT Decision to Europe's Top Court (WSJ)
- Inflation Fuels Crises in Two Latin Nations (WSJ)
- U.S. job growth seen snapping back from winter chill (Reuters)
- Google to own $750 million Lenovo stake after Motorola deal closes: HK exchange (Reuters)
- Frigid Winter Spells Trouble for U.S. Economy (BBG)
- Winter Games to open, Putin keen to prove doubters wrong (Reuters)
- Regulators Ready to Proceed on Bank Leverage Limit (WSJ)
- Abe Eyes Window for Biggest Military-Rule Change Since WWII (BBG)
The taper program distances the bankers from responsibility for crisis in our financial framework, at least in the eyes of the general public. If a market calamity takes place while stimulus measures are still at full speed, this makes the banks look rather guilty, or at least incompetent. People would begin to question the validity of central bank methods, and they might even question the validity of the central bank’s existence. The Fed is creating space between itself and the economy because they know that a trigger event is coming. They want to ensure that they are not blamed and that stimulus itself is not seen as ineffective, or seen as the cause. We all know that the claims of recovery are utter nonsense. The taper is not in response to an improving economic environment. Rather, the taper is a signal for the next stage of collapse. The real reason stocks and other indicators are stumbling is because the effectiveness of stimulus manipulation has a shelf life, and that shelf life is over for the Federal Reserve.
- Draghi as ECB Master of Suspense Keeps Investors on Edge (BBG)
- Abe lays out detailed plan for expanding defense powers (Nikkei)
- Inflation Fuels Crises in Two Latin Nations (WSJ)
- Obama walks into crossfire of Asian tensions (FT)
- Harvard Makes Professor Disclose More After Blinkx Slides (BBG)
- Hedge Funds Rework Currency Positions in Market Drop (BBG)
- Canada, U.S. Strike Tax-Information Sharing Deal (WSJ)
- Indonesia calls for greater clarity from Fed on tapering (FT)
- Sony to cut 5,000 jobs, split off PC, TV operations (Reuters)
When Reuters reported earlier today that Anil Prasad, the global head of foreign exchange at Citigroup, the world's second largest currency trader, is leaving the bank, our ears perked up. The reason is the news overnight that according to the British financial watchdog, Martin Wheatley, the allegations for FX manipulation, "are every bit as bad as they have been with Libor" which supposedly means they are taking them seriously. Could this departure have anything to do with a probe that has already snared head FX trades at JPM, Deutsche and countless other banks? Well, Reuters promptly clarified that Prasad's departure is not related to the global investigation into allegations of currency market manipulation, a source familiar with the matter said. "Anil's decision is his own and entirely unrelated to the on-going FX investigations," the source said. So we had little reason to believe that Prasad's departure is tied to the probe... Until we read this: GOLDMAN SACHS HEAD OF FX TRADING STEVEN CHO TO LEAVE, DJ SAYS
- Goldman to Fidelity Call for Calm After Global Stock Wipeout (BBG)
- Turnabout on Global Outlook Darkens Investor Mood (Hilsenrath)
- EU Said to Weigh Extending Greek Loans to 50 Years (BBG)
- Second Storm Hitting Northeast Halts Planes, Schools (BBG)
- Small Banks Face TARP Hit (WSJ)
- As Sony prepares PCs exit, pressure mounts for reboot on TVs (Reuters)
- IBM Uses Dutch Tax Haven to Boost Profits as Sales Slide (BBG)
- ECB faces dilemma with inflation drop (FT)
- London Subway Strike Snarls Traffic as Union Opposes Cuts (BBG)
People Powered Privacy Savior ... Or Honey Trap Pushed By the Central Banks and TBTF?
The biggest fear the market currently has is not the ongoing crisis in the Emerging Markets, not the suddenly slowing economy, not even China's credit bubble popping: it is that Bernanke's successor may have suddenly reverted to the "Old Normal" - a regime in which the Fed is not there to provide the training wheels should the S&P suffer a 5%, 10% or 20% (or more) drop. Whether such fears are warranted will be tested as soon as there is indeed a bear market plunge in stocks - the first in nearly three years (incidentally the topic of the Fed's lack of vacalty was covered in a recent Reuters article). So, assuming that indeed the most dramatic change in market dynamics in the past five years has taken place, how does one trade this new world which is so unfamiliar to so many of today's "younger" (and forgotten by many of the older) traders? And, more importantly, how does one look for the signs of a bottom: an Old Normal bottom that is. Courtesy of Convergex' Nicholas Colas, here is a reminder of what to look forward to, for those who are so inclined, to time the next market inflection point.