• ilene
    01/28/2015 - 19:33
    Suppose you could print up counterfeit dollars, euros or yen that were identical to the real things. Fun, you think? Here's how it plays out. 

Reuters

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Russia Slams US/NATO Attempts To Draw It Into Military Conflict With Ukraine





NATO's Jens Stoltenberg unleashed the latest tirade against Russia this morning proclaiming - though offering no proof - that there are Russian forces and heavy equipment in Ukraine and a high number of Russian forces on the border which "doesn't contribute to a peaceful solution." Apparently pre-empting this outburst, Pravda reports Anatoly Tsyganok, director of the Military Forecasting Centre, exclaims, "Ukraine reiterates that Russia is in the war, but it's not true," adding that in fact "the USA and the NATO have artificial satellites continuously circulating above this territory and control the situation," concluding with a jab at The US & NATO that "Russia has never participated in the military conflict. And no attempt to involve Russia in the conflict will be crowned with success." The propaganda battle continues...

 
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Draghi's Trillion Euro 'Bazooka' and SNB Shock Is ‘Icing On Cake’ For Gold





Who will ultimately benefit from the action? Will it be the people of Europe or only the mega-rich? For whom, we have continuously pointed out QE has greatly benefitted and as Alan Greenspan recently pointed out – QE has been a “terrific success.” The intensification of currency debasement and currency wars shows the increasing importance of owning physical gold coins and bars.

 
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S&P Surges As ECB's QE Leaked: Board Proposes €50 Billion In Bond Monetization Per Month





And so with less than 24 hours to go, the ECB has decided to leak its deliberations not only to Merkel and Hollande, but Dow Jones. To wit:

DJ: ECB EXEC BOARD'S QE PROPOSAL CALLS FOR ROUGHLY EUR50B IN BOND BUYS A MONTH -  SOURCES
ECB SAID TO PROPOSE QE OF 50 BILLION EUROS A MONTH THROUGH 2016

More as we see it, but if indeed this will be a program without risk-mutualization and conditional and limited burden-sharing, where the hope was that Draghi would "shock and awe" the world with the size of the bond purchasing program instead, €600 billion per year looks decidedly on the low side of any "surprise" announcement where the whisper number was for €1 trillion per year, and if indeed this is the final formulation may result in a substantial disappointment for stocks after the initial kneejerk reaction.

 
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Yemen's Rebels Hold US-Backed President "Captive" In His House. Seize Country's Largest Ballistic Missile Base





As reported yesterday, Yemen became the latest foreign policy "success" story of the US after the local minority of Iran-friendly Shi'ite Houthi militiamen stormed, and captured, the presidential palane. At the same the whereabouts of Yemen's US-backed president Abed Rabbo Mansour Hadi were unknown. Moments ago we learned about his current location: according to AP, "two Yemeni presidential advisers say the Shiite rebels who are on a power grab campaign in the capital, Sanaa, are holding the president "captive" at his home, a day after seizing the presidential palace.

 
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Frontrunning: January 21





  • Obama Targets Income Gap in Address That Shapes 2016 Election (BBG)
  • Republicans Reject Obama’s Main Economic Proposals (WSJ)
  • Senate’s Shelby Says White House Bank Tax Is Dead on Arrival (BBG)
  • Is Dollar Next? Investors Reassess After Swiss Shock: Currencies (BBG)
  • Bank of Japan Cuts Price Forecast, Maintains Record Stimulus (BBG)
  • Pound Weakens After BOE Policy Makers Drop Call to Raise Rates (BBG)
  • Putin not flinching on Ukraine despite economic crisis (Reuters)
  • Indonesia will not make public full preliminary AirAsia crash report (Reuters)
  • Party Hasn't Stopped for Russians at Davos Even With Ukraine Sanctions (BBG)
 
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Market Wrap: Futures Lower After BOJ Disappoints, ECB's Nowotny Warns "Not To Get Overexcited"; China Soars





Three days after Chinese stocks suffered their biggest plunge in 7 years, the bubble euphoria is back and laying ruin to the banks' best laid plans that this selloff will finally be the start of an RRR-cut, after China's habitual gamblers promptly forget the market crash that happened just 48 hours ago and once again went all-in, sending the Shanghai Composite soaring most since October 9, 2009.  It wasn't just China that appears confused: so is the BOJ whose minutes disappointed markets which had been expecting at least a little additional monetary goosing from the Japanese central bank involving at least a cut of the rate on overnight excess reserves, sending both the USDJPY and US equity futures lower. Finally, in the easter egg department, with the much-anticipated ECB announcement just 24 hours away, none other than the ECB's Ewald Nowotny threw a glass of cold water in the faces of algos everywhere when he said that tomorrow's meeting will be interesting but one "shouldn’t get overexcited about it."

 
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Downgrading The US Will Cost S&P $1.5 Billion





Remember when S&P forgot for a second that it lives in a world of pretend free speech, and where telling the truth would promptly result in a lawsuit by the US government after it downgraded the US from AAA to AA+ in the summer of 2011? A downgrade which as Bloomberg previously reported led to this exchange with then Treasury Secretary Tim Geithner: "S&P’s conduct would be looked at very carefully," Geithner told McGraw according to the filing. "Such behavior would not occur, he said, without a response from the government." Well, S&P will never make the same mistake again, because according to Reuters, it will cost it $1.5 billion to settle with the government and put the whole "downgrade" episode in the past.

 
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Ukraine Claims Russian Forces At Border, Attack Conflict Zone; Russia Replies "Complete Rubbish"





After reportedly rejecting Vladimir Putin's peace proposal and continuing heavy shelling in the pro-Russian-held regions of Donetsk, Ukraine's military spokesman Lysenko is reporting the Russian army is directly attacking Ukraine forces in the north conflict zone. The fight over what is now a destroyed Donetsk airport continues with Lysenko claiming to have stalled Russian forces adding that three Russian battallions are approaching the Ukraine border. CNN reports that the Russian Defense Ministry says, "Ukraine's allegations that Russian troops are in Ukraine are complete rubbish."

 

 
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Obama's "Partners" In Yemen Overthrown As Presidential Palace Falls To Local Militiamen





It seems like an eternity ago when Obama delivered the following extensively choreographed "Statement by the President on ISIL", in which he praised US anti-terrorist tactics, giving Yemen and its "partners" as an example of "successful" US foreign intervention.  To wit: "This counterterrorism campaign will be waged through a steady, relentless effort to take out ISIL wherever they exist, using our air power and our support for partner forces on the ground.  This strategy of taking out terrorists who threaten us, while supporting partners on the front lines, is one that we have successfully pursued in Yemen and Somalia for years." He may want to scrub that statement because just 4 months after reading that from the Teleprompter, America's "partners on the Yemen front lines" have officially fled quietly into that good night, abandoning the control of the nation to local Shiite militiamen.

 
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Frontrunning: January 20





  • Obama to focus on middle class in State of Union address (Reuters) - all 4 of them?
  • European Stocks Buoyed by ECB Hopes (WSJ)
  • China's 2014 economic growth misses target, hits 24-year low (Reuters)
  • Federer on Swiss Franc Shock: "Does It Mean I've Got to Win Now?" (BBG)
  • First-time buyers help Christie’s reach record sales (FT)
  • So it was the NSA? U.S. Spies Tapped North Korean Computers Prior to Sony Hack (BBG)
  • Why Chinese Developer Kaisa's Default Risk Has Money Managers Spooked (BBG)
  • Morgan Stanley Misses Estimates on Drop in Bond-Trading Revenue (BBG)
 
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Market Wrap: Global Markets Rebound On ECB QE Hopes After IMF Cuts Global Growth Forecast Again





Hours after the IMF cut its global economic growth forecast yet again (which for the permabullish IMF is now a quarterly tradition as we will shortly show), now expecting 3.5% and 3.7% growth in 2015 and 2016, both 0.3% lower than the previous estimate (but... but... low oil is unambiguously good for the economy) and both of which will be revised lower in coming quarters, and hours after China announced that its entirely made up 2014 GDP number (which was available not 3 weeks after the end of the quarter and year) dropped below the mandatory target of 7.5% to the lowest in 24 years, it only makes sense that stock markets around the globe are solidly green if not on expectations of another year of slowing global economies, which stopped mattering some time in 2009, but on ever rising expectations that the ECB's QE will be the one that will save everyone. Well, maybe not everyone: really only the 1% which as we reported yesterday will soon own more wealth than everyone else combined and who are about to get even richer than to Draghi.

 
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Tempers Fray As Argentine Tampon Squeeze Extends To 20 Days





While Venzuelans line up for hours every day to garner staples such as soap and toilet paper, the Argentinians have a potentially more explosive problem. As Reuters reports, the country's 20.6 million women couldn't find their favorite tampons earlier this month - during the height of summer - "for 20 days, we simply couldn't source any tampons from wholesalers." The government vowed to keep the supply chain filled with tampons as media talk of a "run on tampons" stoked peoples' fears that Argentina is rapildy heading down the same socialist utopia track as its neighbor.

 
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Hilsenrath Speaks: Fed Will Proceed With Rate Hikes "Later In The Year"





The Fed's own favorite mouthpiece Jon Hilsenrath (for more see "On The New York Fed's Editorial Influence Over The WSJ"), just released a piece in which he claims, or rather his sources tell him, that the Fed is "on track to start raising short-term interest rates later this year, even though long-term rates are going in the other direction amid new investor worries about weak global growth, falling oil prices and slowing consumer price inflation." In other words, just like the ECB in 2011, the Fed which has hinted previously that it will hike rates just so it has "dry powder" to ease once the US economy falls into recession, will accelerate a full-blown recession in the US when it does - if indeed Hilsenrath's source is correct and not merely trying to push the USDJPY higher (for reference, see Reuters "exclusive" report on the Samsung takeover of Blackberry, denied by both parties within hours - hike some time this summer.

 
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Bundesbank Announces Repatriation of 120 Tonnes of Gold from Paris and New York Federal Reserve





The Bundesbank, Germany’s powerful central bank, announced very publicly this morning the further repatriation of some of it’s gold being held in foreign locations – namely in Paris and New York with the Bank of France and the Federal Reserve.

 
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Iran OK With $25 Oil As Iraq Pumps Crude At Record Pace





The precarious "game theory" equilibrium that worked for decades while OPEC was still a functioning cartel is unwinding before everyone's eyes. Just as Saudi Arabia accurately anticipated, the lower the price of crude goes, the more both OPEC members and their non-OPEC peers (especially shale companies funded by hundreds of billion in junk bonds) will have to produce in order to keep their budgeted revenues roughly in line (and keep creditors happy for the time being) in the process setting off an unprecedented wave of bankruptcies and production capacity declines, which take about 6-12 months after the price plunge to materialize. Case in point: the country formerly known as Iraq (and now better known as that region around the Tigris and the Euphrates that does not belong to ISIS) is pumping crude at a record pace and will continue to boost exports this year, its Oil Minister Adel Abdul Mahdi said.

 
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