en The "European Close" Trade Goes For 5 In A Row <p>Yesterday's warning worked out as the moment Europe closed, US equities reversed trend... Today we are rallying once again into the European close - <strong>will we get 5 reversals in a row?</strong></p> <p>&nbsp;</p> <p><a href=""><img src="" width="600" height="1580" /></a></p> <p>&nbsp;</p> <p>... Or like the TUESDAY Effect... will it be broken by widespread knowledge...</p> <p><em>Charts: Bloomberg</em></p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="261" height="263" alt="" src="" /> </div> </div> </div> Thu, 28 Aug 2014 15:23:02 +0000 Tyler Durden 493633 at Russian Ruble Tumbles To Record Low Against Dollar <p><strong>The Russian Ruble has collapsed this morning to its weakest against the USDollar on record</strong>. The drop - similar in size to the drop when US and Europe unleashed Sanctions 3.0 - has sent USDRUB to 36.89. Russian stocks are down 2.2% this morning - biggest drop in 3 weeks - and Russian bonds are weaker (10Y +20bps back above 5%). We can't help but think somewhere Shinzo Abe is getting ideas about how to really devalue his nation's currency to competitiveness...</p> <p>Ruble at record lows against Dollar...</p> <p><a href=""><img src="" width="600" height="302" /></a></p> <p>&nbsp;</p> <p><em>Charts: Bloomberg</em></p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="962" height="484" alt="" src="" /> </div> </div> </div> Thu, 28 Aug 2014 15:10:56 +0000 Tyler Durden 493632 at Ukraine Again Says It Has Destroyed Russian Military Vehicles, Market No Longer Cares <p>The last time the Ukraine who cried Russian wolf invasion swore it had blown up Russian military vehicles, as part of the humanitarian convoy, it turned out rather quickly it had lied after it couldn't provide any evidence of this. So, in keeping with crying wolves, now is the time for try #2. From BBG:</p> <ul> <li><strong>UKRAINE SAYS TWO COLUMNS OF RUSSIAN MILITARY VEHICLES DESTROYED</strong></li> <li>UKRAINE SAYS RUSSIAN MILITARY VEHICLES DESTROYED NEAR ILOVAYSK</li> </ul> <p>Judging by the market reaction, which actually <em>rose </em>on the headlines, it is becoming clear that Ukraine propaganda has lost all market moving abilities, as not even the algos buy the fabricated attempts at escalation. </p> <p>And in other news, after not even NATO, which has been in full warmonger mode today, dared to use the word "invasion" opting instead for the much more politically correct "incursion", here is the UK using the same phrasing:</p> <ul> <li><strong>CAMERON: CONCERNED BY EVIDENCE OF RUSSIA INCURSION INTO UKRAINE</strong></li> </ul> <p>Finally, and as always, we look for Putin's take on today's events. </p> <p>However, one thing is clear: since only Citadel's execution algos of NY Fed trading orders matters, expect today's "drop" to be quickly erased and the manipulated rally in the last minutes of trading to take the S&amp;P to fresher, recorder highs as the world supposedly teeters on the edge of World War III.</p> headlines Ukraine Thu, 28 Aug 2014 14:57:33 +0000 Tyler Durden 493631 at German Security Expert Warns "War Between Russia And The West Is A Real Possibility" <p>"The de-escalation strategy with Moscow has failed," warns Joachim Krause, Director of the Institute for Security Studies, concluding ominously that "<strong>A war between Russia and the West... is a real possibility</strong>." <a href="">As Handelsblatt reports, </a>Krause states "<strong>we should not deny this reality any longer</strong>."</p> <p><a href=""><em>From Handelsblatt (via Google Translate),</em></a></p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>The Director of the Institute for Security Studies at the University of Kiel, Joachim Krause, holding a war between Russia and the West for possible, the West should now not clearly show the flag in view of the escalating situation in Ukraine. <strong>"A war between Russia and the West, I do not wind up currently, but if the West will not respond with the necessary determination and effectiveness, a war in a few years could be a real possibility,"</strong> Krause told Handelsblatt Online.</p> <p>&nbsp;</p> <p>The fact that Russia's invasion takes place in the Ukraine a week before the NATO summit, show that Kremlin chief Vladimir Putin challenged the West generally. <strong>"We should set out and deny this reality any longer."</strong></p> <p>&nbsp;</p> <p><strong>"What we are experiencing these days, is an armed aggression of Russia against Ukraine</strong>," Krause said. He referred to the aggression defined by the United Nations of 1974 Then was also to be considered "sending by or on behalf of a State of armed bands, groups, irregulars or mercenaries" as interstate aggression, "if this is of <strong>such gravity as to in its consequences a regular invasion equals</strong> ".</p> <p>&nbsp;</p> <p>Thus, <strong>the policy of the federal government had failed to hold a de-escalation strategy which Moscow to intervene militarily in the Ukraine.</strong></p> </blockquote> <p>*&nbsp; *&nbsp; *</p> <p>But, with with US equities a fraction away from all time highs, and just barely below 2000, shouldn't there be no risk of any conflict according to the all-knowing market, which is never wrong?</p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="570" height="476" alt="" src="" /> </div> </div> </div> Google Reality Ukraine Vladimir Putin Thu, 28 Aug 2014 14:21:57 +0000 Tyler Durden 493630 at Pending Home Sales Drop YoY For 10th Month In A Row <p><strong>Pending Home Sales fell 2.7% year-over-year making this the 10th month of falling YoY sales.</strong> This print beat expectations of a 3.5% decline but last month's data was revised lower to a 4.7% decline. MoM sales jumped 3.3% but the series has been extremely noisy in the last 6 months as the <strong>Northeast saw a seasonally-adjusted gain of 6.2% MoM</strong> (and Midwest fell 0.4%).</p> <p>&nbsp;</p> <p>Pending Home Sales down YoY 10th Month in a row...</p> <p><a href=""><img src="" width="600" height="312" /></a></p> <p>&nbsp;</p> <p>Midwest fell as Northeast surged...</p> <p> <blockquote class="twitter-tweet" lang="en"> <p>Regional Pending Home Sales vs. Existing Home Sales: {ECWB P 53FF369C01F00019&lt;Go&gt;} <a href=""></a></p> <p>&mdash; Michael McDonough (@M_McDonough) <a href="">August 28, 2014</a></p></blockquote> <script async src="//" charset="utf-8"></script></p> <p>&nbsp;</p> <p><em>Chart: Bloomberg</em></p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="962" height="501" alt="" src="" /> </div> </div> </div> Twitter Twitter Thu, 28 Aug 2014 14:09:17 +0000 Tyler Durden 493629 at Argentina Proclaims Peso Devaluation "Obviously Won't Happen" - Just Like It "Vowed" In 2013 <p><a href="">May 2013, President Kirchner</a>: "As long as I'm president, <strong>those who want to make money through devaluations, which other people have to pay for, will have to keep waiting for another government</strong>,"</p> <p><a href="">Jan 2014:</a> <strong>Argentina Devaluation Sends Currency Tumbling Most in 12 Years</strong></p> <p>Aug 2014: Argentina’s Cabinet Chief Jorge Capitanich said today a <strong>devaluation of the peso, "obviously won't happen."<br /></strong></p> <p><strong><span style="text-decoration: underline;">So what's next?</span></strong></p> <p>&nbsp;</p> <p><a href=""><img src="" width="600" height="314" /></a></p> <p><a href="">From May 2013:</a> Argentine President <strong>Cristina Kirchner vowed not to devalue the country's currency</strong> for the remainder of her term because she said doing so would hurt most Argentines.</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>In a nationally televised speech, Mrs. Kirchner addressed widespread criticism of her economic policies and said that anyone who wants to see the currency devalued will have to wait until someone else becomes president.</p> <p>&nbsp;</p> <p><strong>"As long as I'm president, those who want to make money through devaluations, which other people have to pay for, will have to keep waiting for another government," she said.</strong></p> <p>&nbsp;</p> <p>The comments came amid intense speculation that the government planned to announce some kind of new policy aimed at restoring confidence in the peso.</p> <p>&nbsp;</p> <p><strong>Economists say the growing gap between the black-market exchange rate and the official rate is spooking investors</strong> and leading people and companies to delay investment plans. But government officials such as Vice President Amado Boudou have downplayed such comments.</p> <p>&nbsp;</p> <p><strong>"People really exaggerate the informal dollar,"</strong> said a comment posted on Mr. Boudou Twitter account. "This is a very speculative, marginal issue that involves very few Argentines."</p> </blockquote> <p><a href="">Jan 2014:</a> <strong>Argentina Devaluation Sends Currency Tumbling Most in 12 Years</strong></p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>Argentina devalued the peso the most in 12 years after the central bank scaled back its intervention in a bid to preserve international reserves that have fallen to a seven-year low.</p> <p>&nbsp;</p> <p><strong>The peso has plunged 12.7 percent over the last two days to 7.8825 per dollar</strong> at 3:45 p.m. in Buenos Aires, after falling to as low as 8.2435, according to data compiled by Bloomberg. The decline in the peso marks a policy turn for Argentina, which had been selling dollars in the market to manage the foreign-exchange rate since abandoning a one-to-one peg with the U.S. dollar in 2002.</p> </blockquote> <p>*&nbsp; *&nbsp; *</p> <p>And now... (via Bloomberg)</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>Argentina’s Cabinet Chief Jorge Capitanich said today opposition groups are promoting a <strong>devaluation of the peso, “which obviously won’t happen.”</strong></p> <p>&nbsp;</p> <p>So-called vulture funds, or holders of defaulted bonds suing for repayment, and traders in the illegal currency market are causing the peso to weaken by supporting economic and media groups: Capitanich</p> <p>&nbsp;</p> <p><strong>“They generate speculative attacks to promote devaluation of the peso,” Capitanich said</strong></p> <p>&nbsp;</p> <p>“It’s a permanent strategy of the vulture funds, for which they have the participation of the local vultures”</p> </blockquote> <p>*&nbsp; *&nbsp; *</p> <p>It appears the market disagrees...</p> <p><a href=""><img src="" width="600" height="411" /></a></p> <p>&nbsp;</p> <p>*&nbsp; *&nbsp; *</p> <p><a href="">Here is what Former minister and ex-presidential hopeful Roberto Lavagna said in 2013 after Kircher's statement...</a></p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p><strong>“We are in the worst of worlds. Devaluation is a fact of market and evidence of President Cristina Fernandez administration’s failure</strong>, which insists in not accepting it”, said Lavagna who was the architect for the taking off of the Argentine economy in 2003 following the collapse and major default of 2001/02.</p> <p>&nbsp;</p> <p><strong>“The market has already adopted and adapted to the devaluation of the Peso, so it seems out of touch with reality to keep the artificial official rate, which is well below the level of daily operations by the different economic actors”</strong>, added Lavagna. </p> <p>&nbsp;</p> <p><strong>“The Argentine economy is in the process of rapid deterioration;</strong> inflation was <strong>born out of the printing of money with no reserves</strong>; investment is scarce and so is the creation of jobs, plus the energy situation has become most complicated”, warned the former minister who was the brain behind the Argentine sovereign debt restructuring.</p> <p>&nbsp;</p> <p>He added that the government of <strong>President Cristina Fernandez “locks itself in its small wonderland out of touch with the real world, and thus can’t find the way out according to their mental scheme”. </strong>The majority of Argentines will end paying the tough adjustment plan, so “we need to build an integral plan to create a sustained growth system”.</p> </blockquote> <p>*&nbsp; *&nbsp; *</p> <p>Seems like nothing has changed...</p> default Reality Sovereign Debt Twitter Twitter Thu, 28 Aug 2014 13:49:15 +0000 Tyler Durden 493628 at THe PeTRo DoLLaR... <p style="text-align: center;"><iframe src="" width="1024" height="441" frameborder="0"></iframe></p> Thu, 28 Aug 2014 13:35:47 +0000 williambanzai7 493627 at The Housing Echo-Bubble Is Popping <p><em>Submitted by <a href="">Charles Hugh-Smith of OfTwoMinds blog</a>,</em></p> <p><span><i>There is nothing remotely &quot;normal&quot; about the echo-bubble&#39;s rise, and we can anticipate that its deflation will be equally abnormal.</i></span><br />&nbsp;</p> <div><b><span>Conventional wisdom on the resurgence of the housing markets takes one of two paths:</span></b><br />&nbsp;</div> <div><span>1. Housing is not in a bubble, it is merely returning to &quot;normal&quot;</span><br />&nbsp;</div> <p><span>2. Housing is bubbly in some markets, but prices will continue to rise</span></p> <p>&nbsp;</p> <div><span><b>Here&#39;s an alternative view: housing is in an echo-bubble that&#39;s popping.&nbsp;</b>Courtesy of the excellent&nbsp;<a href="" target="resource">Market Daily Briefing</a>, here are some charts that make the case that the housing echo-bubble was just another Federal Reserve-induced speculative asset bubble that&#39;s popping, like every other speculative bubble in recorded history.</span><br />&nbsp;</div> <div><span><b>First up: home prices, as measured by the Case-Shiller Price Index.</b>&nbsp;Note the near-perfect symmetry of the echo-bubble: it has taken roughly the same time-span to inflate and reach a top as the first housing bubble from January 2004 to its peak 2+ years later.</span><br />&nbsp;</div> <div><span>The echo-bubble has topped out at about 50% of the decline from the primary bubble top to the trough in 2012.</span></div> <div><span><img border="0" src="" /></span></div> <div>&nbsp;</div> <div><span><b>The distorted fundamentals of the echo-bubble are revealed in this chart of mortgage debt to wages.</b>&nbsp;Current levels of mortgage debt are double historic levels, and 35% above the level of 2001, when the primary housing bubble lifted off.</span></div> <div><span><img border="0" src="" /></span></div> <div>&nbsp;</div> <div><span><b>The third charts tells us the echo-bubble is popping.</b>&nbsp;Note that housing sales lead price by about six months: sales started falling in late 2005, and prices rolled over in mid-2006.</span><br />&nbsp;</div> <div><span>Housing sales rolled over in December 2013, and sure enough, prices are starting to weaken in many markets.</span></div> <div><span><img border="0" src="" /></span></div> <div><span><b>The echo-bubble doesn&#39;t pass the sniff test as a &quot;normal&quot; housing recovery.</b>&nbsp;Exhibit #1: who&#39;s buying and who&#39;s not buying:</span><br />&nbsp;</div> <div><span>1. Marginal buyers using 3% down-payment FHA/VA loans who wouldn&#39;t qualify for conventional mortgages. The risk of marginal borrowers defaulting is high, a reality reflected in&nbsp;<a href="" target="resource">FHA&#39;s default rate:</a></span><br />&nbsp;</div> <div><i><span>When lending sources dried up during the financial crisis, the FHA propped up the housing market by insuring the lenders it works with against losses and enticing them back into the market. But the FHA&rsquo;s default rate shot up as its loan volume expanded, depleting its cash reserves to levels below what is required by law. In September 2013, the FHA tapped taxpayer money to cover its losses for the first time in the agency&rsquo;s 80-year history.</span></i><br />&nbsp;</div> <div><span>2. Who&#39;s not buying:&nbsp;<a href="" target="resource">Upper-Income, Educated, Married with Children, and Still Not Buying:</a><i>Declining Homeownership among &quot;Prime&quot; First-Time Home Buying Candidates (Fannie Mae Housing Insights, Volume 4, Issue 4)</i></span><br />&nbsp;</div> <div><span>3. The dominance of all-cash buyers--generally investors (those close to the money spigots of the Fed&#39;s&nbsp;<i>free money for financiers</i>) and foreign buyers.</span><br />&nbsp;</div> <div><span><b>Note the difference between mortgage credit expansion, which has lagged price gains.</b>&nbsp;This suggests many of the sales (about 35% in many hot markets) were all-cash purchases that did not require a mortgage</span></div> <div><span><img border="0" src="" /></span></div> <div><span><b>Take away the Fed&#39;s zero-interest rate policy (ZIRP), its&nbsp;<i>free money for financiers</i>and foreign buyers seeking a safe haven for their&nbsp;<i>hot money</i>, and what&#39;s left of the supposedly &quot;normal&quot; housing recovery?</b>&nbsp;Not much.</span></div> <div><span>There is nothing remotely &quot;normal&quot; about the echo-bubble&#39;s rise, and we can anticipate that its deflation will be equally abnormal.</span><br />&nbsp;</div> <p><span>How do we know when an asset class is in a bubble? When everyone who stands to benefit from the continuation of the expansion declares it can&#39;t be a bubble.</span></p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="468" height="337" alt="" src="" /> </div> </div> </div> Case-Shiller default Default Rate Fannie Mae Free Money Housing Bubble Housing Market Reality recovery Thu, 28 Aug 2014 13:26:44 +0000 Tyler Durden 493626 at GDP 'Good News' Sparks Bond Buying & Stock Selling, Treasury Curve Crumbles Further <p>US GDP beat expectations 'proving' that government data shows the recovery meme is on track (as long as it doesn't snow ever again). The market's reaction... intriguing - stocks shrugged even as a USDJPY pump tried to get things going; gold and silver moved modestly higher; and <strong>Treasury yields... fell notably at the long end</strong>. 30Y is now trading with a 3.06% handle and 5s30s is back below 145bps...!</p> <p>Bonds are rallying on the GDP beat...</p> <p><a href=""><img src="" width="600" height="314" /></a></p> <p>&nbsp;</p> <p>The yield curve continues to collapse...</p> <p><a href=""><img src="" width="600" height="300" /></a></p> <p>&nbsp;</p> <p>And stocks are shrugging..</p> <p><a href=""><img src="" width="600" height="445" /></a></p> <p>&nbsp;</p> <p>Chjarts: Bloomberg</p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="862" height="640" alt="" src="" /> </div> </div> </div> Bond recovery Yield Curve Thu, 28 Aug 2014 13:00:28 +0000 Tyler Durden 493625 at Q2 GDP Revision Unexpected Rises On Alleged Jump In Capex To Highest Since 2011 <p>Following the unexpected surge in Q2 GDP, which beat most analyst estimates, there was widespread expectation that based on real-time data, the revised Q2 print would be worse. So perhaps it is appropriate that the Bureau of Economic Analysis punked everyone once again, when moments ago it released the first revision to the Q2 GDP print, which instead of dropping to the consensus expected 3.9%, it instead rose to 4.2%, up from the 4.0% initial report. </p> <p>This was driven not by a change in actual spending, the most important driver of the US economy, which was unchanged from the first estimate at 1.69%, but, amusingly enough, by a jump in fixed investment, i.e., CapEx, which rose from 0.3% in Q1 to 0.91% in the first Q2 GDP estimate to 1.25% currently: this is the highest CapEx print since Q4 2011. How is this possible (especially when one excludes Boeing orders)? Nobody knows, unless the BEA now adds stock buybacks to its definition of fixed investment, which as everyone now knows, is where the bulk of corporate free cash flow has been going.</p> <p>As for inventory, it rose at a slightly lower pace, up 1.39% vs the 1.66% annualized pace reported previously, although on an absolute basis the number was again higher,&nbsp; and as JPM reports, inventories rose by 84 billion versus the $67 billion JPM had expected, "<em>potentially dragging on Q3.</em>"</p> <p>Finally, the other two components, Net Trade, were largely unchanged at -0.45%, and 0.27% respectively. </p> <p>All in all this simply means that either the final Q2 GDP revision will be where all the dirt is stuffed in one month, or Q3 GDP will be a reversion to a much lower mean.</p> <p><a href=""><img src="" width="600" height="356" /></a></p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="1174" height="696" alt="" src="" /> </div> </div> </div> Boeing fixed Thu, 28 Aug 2014 12:44:00 +0000 Tyler Durden 493624 at