Bank of America

• Ed Miliband, Nick Clegg and Nigel Farage resign as Tories sweep to victory (Telegraph)
• Bonds and stocks rebound, sterling soars after UK election (Reuters)
• Cameron Set to Return With U.K. Majority as SNP Sweeps Scotland (BBG)
• Tory win brings marked EU exit risk (Reuters)
• Why did Labour lose this election? It never tried to win it (Telegraph)
• Stock Buybacks Hit New Records (WSJ)
• Hard Money Comes Easy as Wall Street Funds Home Flippers (BBG)
• Justice Department to Investigate Baltimore Police (WSJ)
• Saudi Arabia mulling land operations on Yemen border (Reuters)

Systematic Corruption Has Metastasized throughout the U.S.  ... Making Our Once-Great Nation Deathly Ill

• ‘Flash Crash’ Overhaul Is Snarled in Red Tape (WSJ)
• ECB Considers Tighter Noose on Greek Banks (BBG)
• Dollar Falls as U.S. Data Cast Doubt on Fed Policy Tightening (BBG)
• Market U-Turn Rams Hedge Funds (WSJ)
• Greece makes 200 million euro IMF payment due Wednesday (Reuters)
• Greek unemployment was 25.4 percent in February (Reuters)
• J.P. Morgan’s Barista-Turned-Banker Sees Good Things Brewing (WSJ)

On a day full of exultation for The Oracle of Omaha, we could not help but see the irony of Warren Buffett losing yet another bet and not paying up...

The "new" Bond King joins his predecessor on the bond throne in calling German Bunds a compelling short opportunity. Just as we said last week, "when you short negative yielding bonds you have a positive carry," so why not leverage your bet 100X and get paid to wait on rising yields? 

When we first exposed in February how yet another bank - Bank of America - has been quietly preserving the post Glass-Steagall world in which cash depositing taxpayers are on the hook for a bank's stupidity, some shrugged it off and looked to stress test to solve all the problems. However, it appears - for once - the SEC is not willing to just ignore the bank's actions. Just as JPMorgan's CIO Office, aka the London Whale, took advantage of fungible, taxpayer-insured funding in the form of excess US deposits over loans, to corner the US credit market (in what was clearly a directional prop trade); so, as WSJ reports, The SEC is investigating whether BofA broke rules designed to safeguard client accounts, potentially putting retail-brokerage funds at risk in order to generate more profits using large complex trades.

If the DOJ and CFTC is going to be consistent, then they have to indict the entire financial community from the CME, Exchanges, Brokers, Institutions, Investment Banks, Hedge Funds, Management Funds and High Frequency Trading Firms.

• Clinton charities will refile tax returns, audit for other errors (Reuters)
• China Warns North Korean Nuclear Threat Is Rising (WSJ), or another country realizes war is the only "exit"
• Shares, euro sag after euro zone PMIs disappoint (Reuters)
• China Manufacturing Gauge Drops to Lowest Level in 12 Months (BBG)
• Deutsche Bank Said to Pay $2.14 Billion in Libor Case (BBG), or roughly a €20,000 per banker "get out of jail" fee
• Brazil’s Petrobras Reports Nearly $17 Billion in Asset and Corruption Charges (WSJ)
• Can This Oil Baron’s Company Withstand Another Quake? (BBG)
• Bad for Q1 GDP: Raytheon sales fall amid weak U.S. defense spending (Reuters)

• Because it just gets funnier: UK speed trader arrested over role in 2010 'flash crash' (Reuters)
• ... and funnier: Mystery Trader Armed With Algorithms Rewrites Flash Crash Story (BBG)
• Presidential hopeful Rubio reaches out to gay Republicans (Reuters)
• Varoufakis Sees Differences Narrowing in Creditor Talks (BBG)
• China Debt Mess Brings Out the Yin and Yang in Policy Makers (BBG)
• Hedge Fund That Made 18% on Dollar Strength Now Bets on Drop (BBG)
• Whistleblower Jim Marchese Scores Millions in Payout—Again (WSJ)
• Release of Benghazi Report on Hillary Clinton Likely Pushed to Election Season (BBG)

• FUTURES TRADER ARRESTED FOR ALLEGED ROLE IN 2010 FLASH CRASH
• FUTURES TRADER CHARGED WITH ILLEGALLY MANIPULATING STOCK MKT
• SARAO HAS BEEN CHARGED WITH COMMODITIES, WIRE FRAUD: GOELMAN
• SARAO WAS ARRESTED AT HIS HOME IN LONDON TODAY, GOELMAN SAYS
• CFTC FILES CIVIL CASE AGAINST NAVINDER SINGH SARAO

Over the past couple of years, there has been a growing chorus of individuals claiming that the financial markets have finally shaken the shackles of the secular bear market that began at the turn of the century. Bank of America is the latest to jump onto the "new secular bull market" bandwagon; but what they miss is that secular bull markets are not born of price, but rather of a set of fundamental metrics that foster sustained economic growth over long periods of time.

What do retail investors do on volatile days like Friday’s jolt lower on the S&P 500? Thanks to one very large online broker’s publicly available order flow, we now know...

Just two facts to best describe the New Paranormal:

1. Central bank assets now exceed $22 trillion, a figure equivalent to the combined GDP of US & Japan
2. 53% of all global government bonds are yielding 1% or less

Good luck with that "renormalization."

• 2010: The first full year of the recovery was a growth recession with a collapse in inventories (after the restocking was complete), and continued private sector deleveraging.
• 2011: There were a series of events, including the Japanese tsunami, spike in oil prices and US debt downgrade by S&P.
• 2012: The crisis in the Eurozone intensified with concerns over a Greek exit and a breakup of the Eurozone. The policy response abroad was lackluster and there were concerns of another financial crisis.
• 2013: The combination of the sequester, debt ceiling fight and government shutdown created an environment of heightened uncertainty and fiscal restraint.
• 2014: The polar vortex delayed economic activity and led to a permanent loss of growth.
• 2015: Rapid appreciation of the dollar and heightened uncertainty about the winners and losers from plunging oil prices has hurt growth. A small part of the weakness may be related to the weather and the dock strike.

It is almost too coincidental to be a coincidence: on the day Ben Bernanke, who until a year ago was the biggest fixed income portfolio manager in the world courtesy of the Fed's $4.5 trillion in assets, joins Citadel as an advisor, the massively levered "market-neutral" hedge fund which as we showed earlier has $176 billion in regulatory assets, "loses" its global head of fixed income, senior managing director Derek Kaufman. Well not exactly loses. The reason for his "voluntary" departure: according to Bloomberg Kaufman is leaving Citadel not because he is about to be replaced by the former Fed chairman but because last year he lost $1 billion "in a variety of trades."