Bank of America

Exactly 15 years ago today, who said it?

"You want winners? [This] is what my fund is buying today to try to make money tomorrow and the next day and the next? You want my top 10 stocks for who is going to make it in the New World? You know what? I am going to give them to you. Right here. Right now. OK. Here goes. Write them down..."

Fifteen months later, Money magazine reported that [his] list had cratered 82%... Accountability ruins the game.

"The diversified hedge fund index was up 0.4% for the month of February, while the S&P 500 was up 6.0% on a price returns basis. CTAs unperformed the most in the month, down 1.9%, while Event Driven were up 2.4%."

- Bank of America

• Hilsenrath: Fed Ushering in New Era of Uncertainty on Rates (WSJ)
• Is Supreme Court's chief justice ready to take down ObamaCare? (The Hill)
• Netanyahu arrives in U.S., signs of easing of tensions over Iran speech (Reuters)
• Nemtsov Murder Fuels Suspicion, Fails to Spur Russia Selloff (BBG)
• ECB uncomfortable with leading role in Greek funding drama (Reuters)
• Video shows Los Angeles police shooting homeless man dead (Reuters)
• Iraq Military Begins Campaign to Reclaim Tikrit (WSJ)
• How Billionaires in London Use Secret Luxury Homes to Hide Assets (BBG)

• Central Banks With Negative Rates Spur Question of How Low to Go (BBG)
• DHS to keep running: Congress edges toward domestic security funding patch (Reuters)
• Setbacks for Tsipras Stir Discord in Greek Ruling Party (BBG)
• Greece’s Challenge: Appeasing Its Creditors and Its Population (WSJ)
• Buffett, a cheerleader for America, takes his checkbook abroad (Reuters)
• Oil’s Big Swings Are the New Normal: Market has rarely been more volatile (WSJ)
• Ukraine Left Behind as Russian Stock Gains Are Unmatched (BBG)
• Brent rises to $61, set for first monthly gain since July (Reuters)

What in god’s name does Janet Yellen think she is doing? Just a few weeks ago she established the ridiculous Fedspeak convention that “patient” means money market rates will not rise from the zero bound for at least two meetings. Now she has modified that message into “not exactly”.

Janet Yellen is very alarmed that some members of Congress want to conduct a comprehensive audit of the Federal Reserve for the first time since it was created. During testimony this week, she made “central bank independence” sound like it was the holy grail. Even though every other government function is debated politically in this country, Janet Yellen insists that what the Federal Reserve does is “too important” to be influenced by the American people. Does any other government agency ever dare to make that claim? If the Fed is doing everything correctly, why should Yellen be alarmed? What does she have to hide?

The nebulous threat of NIRP in the US "some time in the future" became tangible after J.P. Morgan Chase, the largest US bank by assets (and second largest in the US by total derivative notional) is preparing to charge large institutional customers for some deposits. WSJ adds that JPM "is aiming to reduce the affected deposits by billions of dollars, with a focus on bringing the number down this year. "The moves have thrown into question a cornerstone of banking, in which deposits have been seen as one of the industry’s most attractive forms of funding."

...

No Longer Focused On Deposits Or Loans?!

With historically low long-term interest rates, the opportunity cost of holding gold and silver are close to zero or even negative, in other words you would “lose” money if you buy bonds (the benchmark) instead of gold and silver. When people realize that their money is not “safe” with the banks they will start withdrawing cash from their accounts and buy physical gold and silver instead. Depending on circumstances this could possibly bring down the (fractional) banking system. Why keep money in an account that gives you a negative return? Swiss banks are already witnessing stronger than normal interest for physical gold.

• Greece to submit loan request to euro zone, Germany resists (Reuters)
• Ukrainian forces start to quit besieged town (Reuters)
• Bank of Japan maintains policy, no surprises (FT)
• China Considering Mergers Among Its Big State Oil Companies (WSJ)
• Soros Shifts to Europe, Asia as Investors Cut U.S. Equities (BBG)
• Putin tells Kiev to let troops surrender as Ukraine ceasefire unravels (Reuters)
• Venezuela Squanders Its Oil Wealth (BBG)
• Swiss prosecutor raids HSBC office, opens criminal inquiry (Reuters)

There was much confusion yesterday when algos went into a buying frenzy on news that Greece would submit a request for a 6 month loan extension, believing this means Greece has caved and will agree to a bailout programme extension as well. Nothing could have been further from the truth as we explained first moments after the headline struck, and also as Reuters validated moments ago when it said that "Greece will submit a request to the euro zone on Wednesday to extend a "loan agreement" for up to six months but EU paymaster Germany says no such deal is on offer and Athens must stick to the terms of its existing international bailout." But since the political nuances of diplomacy are lost on the math Ph.Ds who program the market-moving algos, the S&P did manage to roar above 2100 on what was another headfake and then forgot to sell off on the reality.

When it comes to trading the possibility of a Grexit, Bloomberg strategist Vassilis Karamanis writes,that there are three possible outcomes.

Scenario 1: Greece exits the euro
Scenario 2: Capital controls are imposed on Greek banks
Scenario 3: Agreement is reached within the next days

the latest news out of the West Coast is not good for anyone hoping for a quick resolution to the congestion problem. According to Reuters, after the clogged ports briefly reopened on Friday after a daylong closure, "shippers planned to re-impose a partial shutdown through the holiday weekend barring a settlement in stalled labor talks with the dockworkers union."

Following last month's narrative-crushing drop in retail sales, despite all that low interest rate low gas price stimulus, January was more of the same as hopeful expectations for a modest rebound were denied. Falling 0.8% (against a 0.9% drop in Dec), missing expectations of -0.4%, this is the worst back-to-back drop in retail sales since Oct 2009. Retail sales declined in 6 of the 13 categories.