Japan is not exporting deflation to the euro area. Here's why. And the dollar's role a the major reserve asset remains quite stable despite the perennial forecasts of its demise.
Overnight, UK property consultancy Knight Frank reported that London property prices rose 7.5% annually, modestly slowing from 8.1% in March 2013, and 11.3% March 2012. Slowing you say? Not really, and certainly not at the high end: "London sales over £1 million accounted for 22% of the £4.7 billion total in the 2012/13 tax year, while sales over £2 million made a 15% contribution. Transaction volumes in both price brackets represent less than 2% and 1% of the total, respectively" Knight Frank reported. But really putting it into perspective is the observation that on the 5 year anniversary of the centrally planned, HFT-rigged market ramp, London real estate prices have risen by a stunning 68% in the 5 years since March 2009.
- US, Russia talks fail to end Ukraine deadlock (AP)
- Russian forces 'gradually withdrawing' from Ukraine border (AFP)
- Turkish PM Erdogan tells enemies they will pay price after poll (Reuters)
- And Goldman arrives: Credit markets open to Argentina for first time in years (Reuters)
- Regulators Twice Failed to Open GM Probes (WSJ)
- Bad loan writedowns soar at China banks (FT)
- Investors Breathe Life Into European Banks' Bad Loans (WSJ)
- Euro zone inflation drops to lowest since 2009 (Reuters)
- Yellowstone National Park rattled by largest earthquake in 34 years (Reuters)
After ramping in overnight trading, following the spike in Japanese stocks following another batch of disappointing economic data out of the land of the rising sun and setting Abenomics which sent the USDJPY, and its derivative Nikkei225 surging, US equity futures have pared some of the gains in what now appears a daily phenomenon. Keep in mind, the pattern over the past 6 consecutive days has been to ramp stocks into the US open, followed by a determined fade all the way into the close, led by "growthy" stocks and what appears to be an ongoing unwind of a hedge fund basket by one or more entities. Could the entire market be pushed lower because one fund is unwinding (or liquidiating)? Normally we would say no, but with liquidity as non-existant as it is right now, nothing would surprise us any more.
The start of Q2 2014. US economy to strength. Japan's to weaken. Euro-area is barly growing, while the UK continues apace.
The rising price of gold is a huge embarrassment to the US government not because it devalues the dollar (it does not do this) but because it provokes a loss of confidence in the dollar. When the dollar is seen as falling in value against gold, its fall causes investors to exchange dollars and other currencies for gold as a means of protecting wealth. The rising price of gold is a blot on the prestige of the US dollar and the prestige of the US itself. The price of gold in dollars is therefore under strict government control. This fact, once derided as ridiculous, is increasingly accepted as truth by those interested in monetary matters around the world. The means for controlling the price of gold lies in the massive sales of “paper gold” which take place to suppress its price, as so many investigators have amply documented. US monetary policy considers that the dollar is here to stay forever, and that gold is no longer – and never again will be – the world’s ultimate money. The governments of several nations around the world do not share the same conviction with regard to the permanence of the dollar.
This week just happens to be the 160th anniversary of Britain and France’s declaration of war on Russia in what would eventually become known as the Crimean War. Part 1. At the time, Russia was a rising power. Other nations in the region– particularly France and the Ottoman Empire, were in obvious decline. All of this should sound familiar. As Mark Twain said, history might not necessarily repeat, but it certainly rhymes. By dropping Russia from the G-8, they’re proving beyond a doubt that the G8 has no power... and practically shoving Russia into bed with China. This is a classic example of how formerly great powers accelerate their own decline. And Mr. Obama and his colleagues seem to be following this playbook to a T.
As if you didn’t already recognize the serious threat to press freedom in the UK following authorities holding Glenn Greenwald’s partner David Miranda for eight hours under “terrorism” laws as he transferred through London’s Heathrow airport. It’s not just the traditional press at risk in the UK either, the government is hard at work censoring the internet itself via ridiculous filters. Now we find out from the Irish Times that..."...Britain’s intelligence agencies visited [The Guardian] and told them they would be closed if they persisted in printing Snowden’s revelations of mass surveillance
- Crimea Resolution Backed by U.S. Barely Gets UN Majority (BBG)
- Russian Buildup Stokes Worries (WSJ)
- As reported here first: China’s Developers Face Shakeout as Easy Money Ends (BBG)
- U.S. House Poised to Clear Sanctions Called Putin Warning (BBG)
- Bitcoin Prices Plunge on Report PBOC Orders Accounts Shut (BBG)
- Search for lost Malaysian jet shifts significantly after new lead (Reuters)
- Russian fund taps China and Middle East (FT)
- Long battle looms between U.S. college, athletes seeking to unionize (Reuters)
- Official warns EU-US trade deal at risk over investor cases (FT)
- New iPhone likely out in September, Nikkei daily says (AFP)
By this point, one has to be impressed at the resilience with which algos repeat the same pattern over and over again, hoping for a different outcome. It is now the 6th day in a row that the JPY-carry trade (be it USDJPY, EURJPY or AUDJPY) driven levitation has pushed equity futures smartly up in overnight trading. And by all accounts - in the absence of ugly macro news which in today's sparse data line up (just Personal Income and Spending and UMich consumer condfidence) - the same post early highs fade we have seen every day in the past week will repeat again. The overnight euphoria was driven primarily by Europe where Bloomberg reported 2 Year Spanish yields have traded below those of the UK for the first time since 2009. And since it is obviously not the strong fundamentals, what is continuing to happen, as has been the case since October 2013, is everyone is pricing in the ECB's QE, which even Weidmann is openly talkin about now, which simply means it will most likely never actually happen, certainly not until it is too late.
Britain's former chairman of the Financial Services Authority (FSA), Lord Adair Turner, warned that the UK could be repeating the 2008 financial crisis by fueling the property market ... When money is debased by monetary authorities on an industrial scale, the results can be catastrophic ...
Shortly after suspending Russia’s membership in the exclusive coalition of industrialized nations, the United States and the six other wealthy nations that compose the newly renamed Group of Seven reportedly found themselves unable to get their deposit back on a set of “2014 G8 Summer Getaway” T-shirts they had ordered for the body’s scheduled summit in June...
- BOE to Sign Agreement With China on Yuan Clearing Next Week (BBG)
- U.S. law firm plans to bring suit against Boeing, Malaysia Airlines (Reuters)
- Citigroup Fraud Stings Mexico Star as Medina-Mora Chased (BBG)
- Fraternity Chief Feared for Son as Hazings Spurred JPMorgan Snub (BBG)
- UBS suspends six more forex traders (FT)
- Goodbye CSCO Q1 EPS: China to strengthen Internet security after U.S. spying report (Reuters)
- Good luck: Spain Banks With $55 Billion of Property Seek Deals (BBG)
- Citic Pacific Said to Plan About $4 Billion Public Offering (BBG)
- Yahoo Japan to buy eAccess from SoftBank for $3.2 billion (Reuters)
- "Whatever it takes" to talk down the Euro: Euro, peripheral bond yields fall on ECB easing debate (Reuters)
Why is Citigroup not like any of the top four banks, including JPM, WFC, USB or BAC?
After tumbling overnight to just around 101.80, the USDJPY managed to stage a remarkable levitating comeback, rising all the way to 102.3, which in turn succeeded in closing the Nikkei 225 at the highs, up 1% after tumbling in early trade. The Shanghai Composite was not quite as lucky and as fear continue to weigh about a collapse in China's credit pipeline, the SHCOMP was down more than 0.8% while the PBOC withdreww even more net liquidity via repos than it did last week, at CNY 98 billion vs CNY 48 billion. That said, this morning will be the fifth consecutive overnight levitation in futures, which likely will once more surge right into the US market open to intraday highs, at which point slowy at first, then rapidly, fade again as the pattern has seemingly been set into algo random access memory. Which in a market devoid of human traders is all that matters.