Wall Street Journal

Despite testifying that she wasn’t informed of the deadly ignition-switch problem until late December 2013, The Wall Street Journal reports that, according to emails it has obtained, GM ordered a half-million replacement ignition switches almost two months before it alerted federal safety regulators to any problems. Who was in charge of GM purchasing at this time? Mary Barra. As WSJ concludes, the switch order, nearly two months before GM told NHTSA of the need for recall in early February, suggests the company took initial concrete action to address the defect, but outside of scrutiny by regulators and vehicle owners.

“A Luxembourg structure is a way of stripping income from whatever country it comes from,’’ said Stephen E. Shay, a professor of international taxation at Harvard Law School and a former tax official in the U.S. Treasury Department. The Grand Duchy, he said, “combines enormous flexibility to set up tax reduction schemes, along with binding tax rulings that are unique. It’s like a magical fairyland.”

Economic forecasting is a dangerous job. As Mark Twain put it in his novel Pudd’nhead Wilson, “October. This is one of the peculiarly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August, and February.” Every wrong prediction could doom a career, or a bank account. Prudence and humility are the only sound tools for building one’s reputation. The talking heads on CNBC appear to know neither. They pledge allegiance to the flag of the tinkering bureaucracy. It explains the loss of ratings, and loss of confidence in the ability of “experts” to see what’s coming down the tracks. Refusing to learn from mistakes will lead to future blunders. Pundits that don’t heed this message are doomed to fail.

Please don't claim anything changes if one party or the other is in the majority. Anyone clinging to that fantasy is delusional.

The Keynesian notions of “potential GDP” and “aggregate demand” have no basis in the real world. They are revealed doctrine. They are the religion of the state’s economic policy apparatus. Its bad enough that this destructive economic religion leads to the farcical forecasting games evident in the EC’s chronic updates and slow-walks of the GDP numbers down. The evil, however, is that the Keynesian apparatchiks will not desist in their destructive money printing and borrowing until they have suffocated free market capitalism entirely, and have monetized so much public debt that the financial system simply implodes.

Saudi Arabia’s move to cut the cost of its oil to US customers has injected fear into the oil markets, bringing the price of OPEC crude below $80 and suggesting to some observers that the cartel is preparing for a global price war.

It there is a better anecdote for everything the IMF stands for than the hedge fund of its former head, disgraced Dominique Strauss-Khan, going broke days after his partner, Thierry Leyne, 49, commits suicide in Tel Aviv under mysterious circumstances as reported previously, and subsequent revelations exposing at least one instance of fraud at the financial firm, we have yet to hear it.

With last night's latest Japanese flash crash firmly forgotten until the next time the trapdoor trade springs open and swallows a whole lot of momentum chasing Virtu vacuum tubes, it is time to look from east to west, Frankfurt to be precise, where in 45 minutes the ECB may or may not say something of importance. As Deutsche Bank comments, "Today is the most important day since.... well the last important day as the ECB hosts its widely anticipated monthly meeting." Whilst not many expect concrete action, the success will be judged on how much Draghi hints at much more future action whilst actually probably doing nothing.

The most bizarre story of the weekend was that of Bank of America's 29-year-old banker Rurik Jutting, who shortly after allegedly killing two prostitutes (and stuffing one in a suitcase), and called the cops on himself.  The answer, as the WSJ has revealed, is just as unsavory: "he had been part of a Bank of America team that specialized in tax-minimization trades that are under scrutiny from prosecutors, regulators, tax collectors and the bank’s own compliance department, according to people familiar with the matter and documents reviewed by The Wall Street Journal."

In a dramatic example of the unprecedented collusion between predatory (HFT) client and predator-enabling (and HFT-pandering) exchange, in which the prey is any naive, witless order block that makes its way onto the exchange only to be frontrun with impunity and assure Virtu even more flawless trading days, we now see just who calls the shots for America's exchanges. "Virtu Financial LLC executive Chris Concannon will be appointed as president of BATS Global Trading Inc., an upstart Kansas City, Mo., firm that has grown into one of the country’s top stock-exchange operators, BATS said."

• To salvage his presidency, Obama faces pressure to reboot - but will he? (Reuters)
• Pro-Russian separatist Zakharchenko wins Ukraine rebel vote (Reuters)
• Russia's Recognition of Ukrainian Separatist Election Is 'Incomprehensible,' Germany Says (Moscow Times)
• Man Running World’s Biggest Wealth Fund Tackles China Riddle (BBG)
• Russian Supply Underpins Global Oil Glut (WSJ)
• Argentina accuses Procter & Gamble of tax fraud, says suspends operations (Reuters)
• ECB Skips Fireworks for Day One of New Role as Supervisor (BBG)
• HSBC Hit by $1.7 Billion of Provisions (WSJ)

Nikkei 225 futures are up over 1600 points since QE ended and topped 17,000 in a quiet Asian holiday session. USDJPY topped 113, up a stunning 5 big figures since QE ended. But it's not all hyperinflationary ponies and rainbows as The Wall Street Journal stuns its readership by admitting "although economic theory says a falling yen should make Japanese goods more competitive overseas and boost exports, that didn’t happen." Of course, that merely means moar is needed and therein lies the problem as opposition (internal and external) to Kuroda's policies are growing. In other news, EURUSD retraced half its mysterious crash losses and China's Yuan fix weakened the most since March.

While the Fed and the BOJ were by far the biggest news of the past week, explicitly admitting that the world simply can not exist without one central bank passing the monetization torch to someone else, a surprising, and scare for its shareholders, development took place when REIT American Realty Capital Properties, with a then-market cap of over $10 billion, announced, under the cover of the Fed ending QE3, that it had overstated its adjusted funds from operation, a cash flow key metric used by REITs, from the first- and second-quarters of 2014.As the WSJ reminds us, while the amount of money involved, some $23 million, was "relatively small", the irregularities resulted in the resignation of the company’s chief financial officer, Brian Block, and chief accounting officer, Lisa McAlister.The result: a crash in the stock that wiped out nearly 30% or nearly $4 billion in market cap.

...people love to hear about how technology always saves the day... "Among the thousands of shale producers, you can guarantee there are pioneers just like those who started the shale revolution. As profit margins erode due to low or even lower future prices, the pioneers will try out the revolutionary new shale techniques that have yet to be deployed." It sounds good in the same way that Twinkies taste good. We would remind people here that back in the 1700's the South Sea company, the stock shares of which bubbled up enormously - even causing Isaac Newton himself to lose the then-staggering sum of 20,000 pounds - was billed as “a company for carrying out an undertaking of great advantage, but nobody to know what it is". Would it be unreasonable to restate the author's claim as "shale operators to deploy new technology of great advantage, but nobody to know what it is?".  Ungrounded hype is the same thing no matter when or where it happens.

If you require more evidence that the United States is a dysfunctional society, observe American elections. Election season is slander season. Each party’s attack teams focus on misrepresenting, defaming, and ridiculing the opposing party’s candidates. Attack ads have replaced debates and any discussion of what the issues are, or should be, and how candidates perceive the public’s interest. Each attack team tells lies designed to enrage various voters about the other team’s candidate. Whoever is elected is indebted not to voters but to the special interests that provided the campaign money.