U.S. CAPITOL POLICE HAVE REPORTS OF SHOTS FIRED AT 2ND ST AND CONSTITUTION AVENUE N.E., SEVERAL INJURED
FEMALE SUSPECT REPORTED DEAD ON SCENE AT US CAPITAL: SOURCE
CAPITOL SHOOTING STARTED WHEN WOMAN TRIED TO RAM GATE AT WHITE HOUSE, THEN FLED. WAS SHOT WHILE TRYING TO HIT OFFICER. CBS.
CHILD FOUND UNHURT IN CAR OF SUSPECT, ABC TWEETS
It would appear that the almost $1bn capital raise secondary that JCPenney successfully completed last week - inspite of the lies - has done absolutely nothing to resolve market fears as JCP 5Y CDS surges 80bps to 1280bps (equivalent), a record high (and 1Y protection at 1210bps) and the stock price falls another 3.6% to $8.40 - the lowest since 1982. Just as Goldman had warned, liquidity remains a major concern and anyone who had bought the protection made up their losses on the stock they bought from Goldman on the secondary. The credit markets imply around a 25% chance of default within the year and 70% within 5 years.
Meet The Monster Of The Housing Market: Presenting "Vampire REOs" Where Half Of Americans Live Mortgage-FreeSubmitted by Tyler Durden on 10/03/2013 09:44 -0400
Over a year ago, in addition to the money-laundering aspect (confirmed previously) and the REO-To-Rent scramble by PE firms and hedge funds (which is now over as PE become active sellers of apartment rental properties), we highlighted the third implicit subsidy to the housing non-recovery: Foreclosure stuffing. We explained this scheme by banks to limit the amount of available for sale inventory as follows: "since the properties not entering the foreclosure pipeline are effectively kept out of inventory, even shadow inventory, and thus the distressed end market, the monthly drop in foreclosures has acted as a form of subsidy to the housing market, as month after month less inventory than otherwise should, enters the market.... What this has resulted in is a logical increase in prices of the properties that are on the market." Today, the mainstream has finally caught on, and courtesy of RealtyTrac has come up with its own name for this subsidy: Vampire REOs.
When it comes to Central Banks, there are doves and hawks - though in recent times, the two have become confused as to just what they think. However, it is becoming clear that in spite of their incessant need to print money (liquidity) into existence to maintain the status quo, some (but not all) are realizing there are very real costs to this insanity. Compare:
- ECB - *COEURE: LIQUIDITY INTERVENTION CAN INTERFERE WITH PRICE STABILITY
- ECB - *COEURE SAYS CRISIS SUPPORT CAN LATER HAVE "PERVERSE EFFECTS", GENERATE MORAL HAZARD
- FED - *WILLIAMS SEES UNCONVENTIONAL STIMULUS FOR NEXT FEW YEARS
- FED - *FED ZERO-RATE MOVE DIDN'T COMPROMISE POLICY
It seems central bankers believe what they want to believe.
Presented with a stunned level of WTFness... the Obamacare Help-Line - available 24/7 is 1-800-318-2596 as we have been told a number of times by the President... it seems someone did not do their due diligence on what that telephone number's mnemomic is...
Indeed, Mr. President, 1-800-318-2596 to you too.
The US government is shut down, which means only essential spending is permitted. So what does the US government, or rather its Central Intelligence Agency decide to spend precious, mission-critical taxpayer money on? Why arming the Qatari-supported Al-Qaeda "rebels" in Syria of course. WaPo reports that the CIA is expanding a clandestine effort to train opposition fighters in Syria amid concern that moderate, U.S.-backed militias are rapidly losing ground in the country’s civil war, U.S. officials said.... “It’s basic infantry training,” the former U.S. intelligence official said. “How to have some discipline hitting a target, how to reload a magazine, how to clear a room. They’re not marching. They’re learning basic infantry procedures." So let's get this straight: 800,000 non-essential workers are furloughed, but the CIA, in its infinite wisdom, is now, when the government is shut down, doubling down on spending to make sure Al-Qaeda insurgents have even more lethal training (for that inevitable moment when they turn on their sponsor as they tend to do), and even better weapons?
If 4% of voters broke away from dysfunction and voted for independents, that "vital few" would influence 64% of all voters. Next election, join the 4% who will eventually influence the 64%. Voting for incumbents is like not voting at all: either way, you're throwing away your vote.
Update: Boehner spox says Boehner "has always said the US will not default on its debt but cuts and reforms" also needed. In other words, nothing new in what appears to be a planted NYT piece designed to reduce Boehner's leverage.
Take the following report from the New York Times with an epic grain of salt, although for the time being, the following unsourced post in the NYT has pushed stocks off their lows. "With a budget deal still elusive and a deadline approaching on raising the debt ceiling, Speaker John A. Boehner has told colleagues that he is determined to prevent a federal default and is willing to pass a measure through a combination of Republican and Democratic votes, according to one House Republican"... Would the anonymous lawmaker happen to be Peter King, one wonders?
What would the world be without Tom Stolper FX recos? Very confusing, with no sure money to be made, and without anyone to fade, that's what. Which is why we are happy to bring the Goldman muppet slayer's latest FX "recommendation" In short: "We recommend going short $/JPY at current levels of about 97.30 for a tactical target of 94.00, with a stop on a close above 98.80." In even shorter: Goldman is now buying USDJPY from its clients. The only question we have: will the length of time before Stolper is once again Stolpered out be measured in days, or hours?
Remember all those headlines about the "milions" of people swamping the new Obamacare exchange sites and how that explained why the "glitches" appeared and how this proves the American people are so desparate for the insurance... well, the truth appears to be leaking out. As Politico reports, California’s health insurance exchange reported - wrongly - that it had received 5 million hits on its website the first day of Obamacare. State officials said the real number was only about a tenth of that, or 645,000. Is it any wonder that fewer Americans trust other Americans than ever before?
It would appear that Warren Buffett's reassurance this morning that crossing the debt ceiling won't be so bad (trumpeted by any and all equity pitch men since) is being entirely ignored by the bond market. 1-month Treasury bill yields are soaring this morning - up 5bps at 12.5bps now (having touched 16bps - the highest yield in almost 3 years and notably higher than during the 2011 debt ceiling debacle). 1Y USA CDS are also up 3bps at 38.5bps this morning - notably inverted still. Of course, equity markets are surging back to open green for retail investors ignoring Obama's warning last night and Lew's "default has potential to be catastrophic" note this morning. In the meantime, the 1M1Y flattener trade we suggested goes from strength to strength as an indicator of market stress.
Obama said "It's Different This Time," so will the BTFD'ers come back or not?
Something very curious caught our eye in today's Non-manufacturing ISM. It wasn't the "unexpected" drop in the data, which we reported on previously, but what one of the respondents said far in the back of the report. It was the following:
- "The federal government's spending is increasing greatly as agencies execute their final budgets and utilize fiscal year 2013 appropriated funds prior to their expiration on September 30th. This has caused a major increase in procurement activity for goods and services. Budgets are uncertain for fiscal year 2014, so some items requiring funding in future years are not being purchased." (Public Administration)
This begs the question: is the only reason why the economy tends to pick up momentum dramatically as the summer ends just a function of a surge in government spending permeating the broader economy as agencies scramble to spend all the money they have before the end of the September 30 Fiscal Year End (just so they get allocated the same or greater budget in the coming fiscal year), which subsequently plunges or is outright halted as the case may be right now?
While the recent Federal Reserve inaction is bullish for stocks in the short term there are plenty of reasons to remain somewhat cautious. Stocks are overvalued, rates are rising, earnings are deteriorating and despite signs of short term economic improvements the data trends remain within negative downtrends. Investors, however, have disregarded fundamentals as irrelevant as long as the Federal Reserve remains committed to its accommodative policies. The problem is that no one really knows how this will turn out and the current assumptions are based upon past performance. Complacency is not an option; it is critically important to understand that market reversions do not occur without a catalyst. Whether it is the onset of an economic recession, a natural disaster or a financial crisis - there is always something that sparks the initial selloff that leads to a full blown market panic. With this idea in mind here are 3 rising risks that investors should be paying attention to.
The Dow is down for the 9th day of the last 11 since the exuberant Un-Taper spike in stocks. Crucially though, it appears the government's efforts to fear-monger equity markets into forcing action by the House Republicans is working. The all-important Dow 15,000 level has been breached to the downside and represents a much more important "economic" breach than the debt ceiling to any and every talking head it would seem...