As of this moment, US equity futures are perfectly unchanged despite what has been an almost comical reactivation of the 102.000 USDJPY tractor beam. Considering the pair has been trading within a 75 pips of the 102.000 level for the past month, one has to wonder when and what the next BOJ Yen equilibrium level will be reset to. Oddly enough, even as the USDJPY is very much unchanged, the Nikkei continues to rise suggesting that, as Nikkei reported, the GPIF is already investing Japanese pension funds in stocks. Which is great for the Nikkei catching up with the global bond bubble, what is not so great is what happens when the market realizes that the largest holder (excluding the BOJ) of JGBs is dumping, and the world's most illiquid major sovereign bond market rushes for the exits. Just recall the daily halts of Japanese bond trading from the summer of 2013 - we give it 3-6 months before it returns with a vengeance.
With 2 Russian TV journalists killed in recent days and on the heels of Russia's cutting off Ukraine's gas supply for non-payment, Interfax is reporting that:
*EXPLOSION ON UKRAINE GAS TRANSIT PIPELINE REPORTED: IFX
*INTERFAX CITES UKRAINE INTERIOR MINISTRY ON GAS PIPELINE BLAST
Witnesses say flames are reaching 200 metres high. Gazprom shares are tumbling on the news (as should European stocks) and Russia's Foreign Affairs Committee Chief Aleksei Pushkov warned relations between Ukraine and Russia have entered a new stage and are "moving closer towards a serious conflict."
This week brings some key events and releases in DMs, including US FOMC (Goldman expects $10bn tapering, in line with consensus), IP, CPI, and Philly Fed (expect 13.5), EA final May CPI (expect 0.50%), and MP decisions in Norway and Switzerland (expect no change in either).
Straightforward dispassionate overview of the investment climate
As human beings, we are remarkably poor at predicting our future selves. We know that our personalities, preferences and values have certainly changed in the past, but, as ConvergEx's Nick Colas explains, we tend to dramatically underestimate what changes might be in store on these fronts in the future. That’s the upshot of a recent bit of research by Harvard psychologist Daniel Gilbert, and it helps explain how we process decisions as varied as whether to get a tattoo or how we invest financial capital. Stasis is our default setting when it comes to considering our futures, and that lack of imagination seems to inform how much we can predict about how other people and systems will change as well. The most important takeaway: no matter how much you think your life will remain the same, you are almost certainly wrong. And the same goes for capital markets.
When one thinks of millionaires and billionaires, the countries USA, China and UK usually come to mind. And while in terms of absolute numbers of millionaires and ultra high net worth individuals (those with more than $100 million in assets) this would be correct (and since these countries also have the greatest number of poor people too, it merely confirms the record gap between the rich and poor), a very different view emerges when observing the world's uber wealthy not on an absolute but relative basis. In that case, when ranked by millionaires as a proportion of the population, the top three nations are Qatar, Switzerland and Singapore where millionaires account for more than 10% of all households, while a ranking of the most UHNW individuals per 100,000 households gives Hong Kong, Switzerland and Austria in the top three spots.
Eurozone recessions, unemployment fiascos, toppling banks, crashing auto sales... didn’t exist, sez the Stoxx 600. But then an ugly thing happened.
- Inside the White House's decision to free Bergdahl (Reuters)
- Dimon’s Raise Haunts BNP Paribas as U.S. Weighs $10 Billion Fine (BBG)
- Jobs Are on the Line as Banks' Revenue Slides (WSJ)
- Wall Street Adjusts to the New Trading Normal (WSJ)
- Nothing like objective, intense probes: GM recall probe to clear senior execs, finds no concerted coverup (Reuters)
- ECB ready to cut rates and push banks into lending to boost euro zone economy (Reuters)
- China Should Resist Further Stimulus, IMF Says (BBG)
- Carney Finds Ally in Draghi as Key Rate Kept at 0.5% (BBG)
- Assad wins Syria election with 88.7 percent of votes (Reuters)
The governments and central banks of the world are engaged in a futile effort to stimulate economic recovery through an expansion of fiat money credit. They will fail due to their ignorance or purposeful blindness to Say’s Law that tells us that money is the agent for exchanging goods that must already exist. New fiat money cannot conjure goods out of thin air, the way central banks conjure money out of thin air. This violation of Say’s Law is reflected in loan losses, which cannot be prevented by any array of regulation or higher capital requirements. In fact rather than stimulate the economy to greater output, bank credit expansion causes capital destruction and a lower standard of living in the future than would have been the case otherwise.
Topics discussed in the interview were - China and Russia’s gold hoarding - - Do not trust government ‘headline inflation’ - Importance of owning physical gold internationally - Likelihood of bank bail-ins in G20 countries - Cyprus bail-in did not hurt Russians; Hurt Cypriot savers - You have to be prepared ... Better to be a year early than a day late
This week's busy calendar starts off with today’s global PMIs and ISMs. On Tuesday, President Obama begins a four day European trip ahead of the G7 meeting which starts on Wednesday. This G7 meeting is replacing the G8 meeting that was originally scheduled in Sochi but was cancelled after Russia’s annexation of Crimea. Tuesday’s data docket is important with Euroarea data releases including inflation and unemployment expected to further cement the ECB’s resolve in easing policy come Thursday. Wednesday features the global services ISMs and PMIs. Other data releases scheduled for that day includes the ADP employment report, which will provide an important preview to Friday’s NFP, and US trade. The Fed releases its Beige Book on Wednesday too and the second estimates of Euroarea GDP will be published on Wednesday as well. Apart from the ECB on Thursday, we also have the BoE policy meeting.
- McDonald’s Workers Arrested at Protest Near Headquarters (BBG)
- U.S. Sends Troops to Chad to Hunt for Abducted Nigeria Girls (BBG)
- BofA Scrapping Market-Making Unit Amid Trading Scrutiny (BBG)
- Biggest attack in years kills 31 in China's troubled Xinjiang (Reuters)
- Intense Fighting Flares in Eastern Ukraine (WSJ)
- Fed Officials Tussle Over Labor Market Slack (Hilsenrath)
- Ikea Economics Lure Central Bankers Seeking New Tools (BBG)
- When Putin ordered up new hospitals, his associates botched the operation (Reuters)
- Norway’s $33 Billion Man Steps Up Search in Asia Real Estate Bet (BBG)
As expected and discussed earlier in the day, Credit Suisse appears has become the first major bank to admit to doing anything wrong (though obviously unrelated directly to the financial crisis):
- U.S. FILES CRIMINAL CASE AGAINST CREDIT SUISSE IN FEDERAL COURT
- CREDIT SUISSE AGREES TO PLEAD GUILTY IN TAX CASE SAYS U.S
- CREDIT SUISSE PLEA WOULD END THREE YEAR U.S. INVESTIGATION
- U.S. ALLEGES CREDIT SUISSE AIDED U.S. CITIZENS IN TAX EVASION
Expectations are for a $2.6 billion settlement ($1.9bn to DoJ & $0.7bn to NY) - notably more than the ~$475 million CS has reserved for the settlement - but Eric Holder's due to speak at a press conference at 6pmET to cover the details (but will anyone go to jail?)