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Checkpoint Charlie Is Back: Ukraine Starts Building A New Berlin Wall





The ongoing conflict in Ukraine has fueled a resurgence in totalitarianism. Capital controls. Exchange controls. Wage and price controls... and now Border controls and people controls. As of this morning, the government of Ukraine started... “reinforcing”... the defenses of Kiev with eight barricaded checkpoints. Walls are never, ever erected to keep people out. They’re built to trap people inside.

 
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Stocks, Crude, & AAPL Bonds Tumble After Big Bond Auction





While stocks dipped a little into the 10Y Treasury auction, it appears the blistering demand was enough to shatter the illusion of awesomeness and spark a plunge in stocks and crude oil. One thing of note, AAPL bonds have been whacked today (newly issued 2025s down 2 points today to $97.50) and as the auction closed, AAPL also rolled over - which appears the catalyst for the broad weakness.

 
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Caption Contest: The Moment Janet Yellen Figured it All Out…





As the WSJ noted, the "world’s top finance leaders on Tuesday in effect backed currency depreciation as a tool for promoting growth by signaling strong support for aggressive easy-money policies aimed at boosting the fragile global economy." Spot the person who just realized it's not going to work.

 
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Blistering Foreign Demand For 10 Year Treasurys, Highest Since 2011





As expected following yesterday's scorching 3 Year bond auction in which Indirect, aka official foreign, demand soared to the highest in 5 years, today the trend of relentless demand from abroad for US yields continued, when the Treasury sold $21 billion in 10 Year paper, which not only priced 1.4 bps though the When Issued 2.014%, hitting the high yield precisely at 2.000%, but saw the highest Indirect Bid, of 59.5%, since December of 2011.

 
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Obama May Attack ISIS In Any Country He Chooses, Deploy Ground Troops On A Whim, Delay Afghanistan Pull Out





The Nobel peace prize-winning president has been busy today: not only did he already petition Congress earlier to declare war on the Islamic State, a non-country which technically doesn't exist, but now he plans to expands his "war powers" to any other place in the world. From Reuters:

  • MILITARY AUTHORIZATION BILL WOULD PRESERVE PRESIDENT'S ABILITY TO ORDER OPERATIONS AGAINST ISLAMIC STATE IN COUNTRIES OTHER THAN IRAQ, SYRIA - WHITE HOUSE SPOKESMAN
  • WHITE HOUSE SAYS COMBAT BOOTS ON THE GROUND MAY BE USED FOR HOSTAGE RESCUE OPERATIONS
  • OBAMA NOT RULING OUT DEPLOYING COMBAT TROOPS ON GROUND TO ASSIST AIR STRIKES AGAINST ISLAMIC STATE, IF PENTAGON RECOMMENDS IT -WHITE HOUSE

And not only that: also according to Reuters, Obama is considering a request from Afghan President Ashraf Ghani to slow the pace of the withdrawal of U.S. troops in Afghanistan, a senior administration official said on Wednesday.

 
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The Keys To The Gold Vaults At The New York Fed ‘Coin Bars’, ‘Melts’ And The Bundesbank





 

‘Coin bars’ is a bullion industry term referring to bars that were made by melting gold coins in a process that did not refine the gold nor remove the other metals or metal alloys that were in the coins. The molten metal was just recast directly into bar form. Because it’s a concept critical to the FRBNY stored gold, the concept of US Assay Office / Mint gold bar ‘Melts’ is also highlighted below. Melts are batches of gold bars, usually between 18 and 22 bars, that when produced, were stamped with a melt number and a fineness, but were weight-listed as one unit. The US Assay Office produced both 0.995 fine gold bars and coin bars as Melts. The gold bars in a Melt are usually stored together unless that melt has been ‘broken’.

 
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Rising Interest Rates & Long Term Stock Returns





There have been ZERO times that the Federal Reserve has entered into a rate hiking campaign that did not have a negative consequence...

 
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Europe's Greek Contagion Update: Peripheral Bonds Risk Surges





While US equities suggest all is well and Greece is contained, the less mainstream-news indicators of European stress are starting to flash orangey/red as the surge in spreads across European peripheral bonds since the Greek election suggests Q€ is being over-run. Italian, Spanish, and Portuguese bond spreads are all wider on the year now and up 25-30bps from ther Greek Election (fastest rise in months). Greek bank bonds and stocks remain near record lows and even broad European stock indices are struggling to hold gains post-election.

 
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Deutsche Bank Warns, Energy Stock "Valuations Are Unsustainable" Unless Crude Hits $70 By 2H15





We previously noted the extreme spike in S&P Energy sector stock valuations (and the fact that energy sector earnings will have to surge by 70% in order for this exuberant to be 'discounted' correctly). Now Deutsche Bank has run the numbers and warns that in order for S&P Energy to now be trading at what we would consider a fair ~15x normalized EPS, $70/bbl oil must return and be sustained by 2H15.

 
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The Minsk Summit Begins - Live Webcast





The so-called "Normandy Quartet" of Merkel, Hollande, Poroshenko, and Putin are arriving for the latest/final round of Ukraine peace talks... Poroshenko warns "things in east Ukraine will "go haywire" if Minsk talks fall through."

 
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Bank Of America Used Government-Backed Funds For "Reckless, Extremely Levered" Tax Avoiding Trades





A current Bank of America employee has made a number of whistleblower submissions to the U.S. Securities and Exchange Commission about the role played by the U.S. banking subsidiary in financing dividend-arbitrage trades: trades which used taxpayer-backed funds to allow hedge funds to avoid paying taxes. The employee’s submissions allege that Bank of America’s London-based Merrill Lynch International unit has extended “extreme levels of BANA leverage” to fund “increasingly aggressive and reckless” tax-avoidance trades. The submissions said the practices risked causing the bank “serious financial and reputational damage.”

 
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The Eurogroup Meeting Begins - Live Webcast





 
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The Euro’s Exponential Decay





There’s nothing good left from the initial idea that gave birth to the EU. It’s devolved into something utterly ugly, in which fat Germans driving their Mercs and Beamers down the autobahn can yell at their car stereos that those lazy Greeks must pay their due - which stems from Merkel et al. bailing out Deutsche Bank’s insanely outsized derivatives portfolios. The whole thing is so morally bankrupt, it’s really insane that we’re still trying to have a serious discussion about it. The whole thing, the entire global banking system, is as morally bankrupt as it is financially. So far, all the EU has (anyone notice how silent the IMF has been?) is hubris, bluster and chest-thumping. They play politicians, but Syriza plays real life.

 
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WTI Nears $47 Handle After Inventory Build Doubles Expectations & Production Hits Record High





With inventories expected to rise 2.33 million barrels, crude oil inventories surged by 4.87 million barrels for the 5th week in a row (despite some talking heads looking for a draw). There were significant builds across the board in all products. As far as rig counts dropping means production cuts - forget it - crude production rose 0.534% to a new record high and total inventories rose to a new record high. Furthermore, as the following chart shows, the total crude inventory is still massively excessive relative to historical norms for this (or any other) time of year.

 
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Deserted US Embassy In Yemen Immediately Seized By Armed Rebels





Moments after its US inhabitants leave the embassy in Yemen for one final time, it is now officially owned by the new, less than supported by the US, rebel regime.

  • ARMED HOUTHI REBELS SEIZE U.S. EMBASSY VEHICLES AFTER AMBASSADOR, DIPLOMATS LEAVE COUNTRY - LOCAL MEMBERS OF EMBASSY STAFF

We could make a token witty comment about how this entire episode is emblematic and symbolic of all US foreign policy in recent history, but at this point, what difference does it make?

 
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