New Normal

• 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)

If there isone thing that is virtually certain about today's trading (aside from the post Rig Count surge in oil because if there is one thing algos are, it is predictable) is that despite S&P futures being a touch red right now, everything will be forgotten in a few minutes and yet another uSDJPY momentum ignition ramp will proceed, which will push the S&P forward multiple to 18.0x on two things i) it's Friday, and an implicit rule of thumb of central planning is the market can't close in confidenece-sapping red territory ahead of spending heavy weekends and ii) the Nasdaq will finally recapture 5000 following a final push from Apple's bondholders whose recent use of stock buyback proceeds will be converted into recorder highs for the stock, and thus the Nasdaq's crossing into 5,000 territory because in the New Normal, the more expensive something is, the more people, or rather algos, want to buy it.

It is time for another song and dance to appease the angry mob, if only for the next week or so until the popular attention span shifts over to the next scandal du jour. Which for today means that two top HSBC execs will appear briefly in UK parliament to testify before the Treasury committee, in a televized webcast set to start momentarily.

Before the world morphed into what it has become, the relationship between stock prices and intraday ranges was somewhat positively correlated (as one would imagine) - higher prices and a steady vol means absolute ranges will trend higher. However, the last few years - and most especially the last few months - as equity index prices soared, so intraday ranges collapsed. In fact, the last 3 times a new low range was made, that marked a local high in stock prices. Along with the fact that the VIX term structure is the steepest since the pre-Bullard collapse,  hedging - as opposed to BTFTAH - seems more appropriate in the short-term at least.

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."

"The chart below illustrates our daily Adjusted Net Trading Income from January 1, 2009 through December 31, 2014. The overall breadth and diversity of our market making activities, together with our real-time risk management strategy and technology, have enabled us to have only one overall losing trading day during the period depicted, a total of 1,485 trading days..."

** Greek Bank Runs Accelerate as Possible ‘Grexit’ Looms
** Fatigue with Greek Crisis Breeding Massive Complacency
** Ukraine a Significant Setback for NATO
** India Demand To Rise To 35 - 40 Tonnes This Month
** Gold Oversold - Fundamental and Technical Position Good 

According to IMF researcher Brad Jones, who wrote "Asset Bubbles: Re-thinking Policy for the Age of Asset Management", the "business risk of asset managers acts as strong motivation for institutional herding and "rational bubble-riding." This is a critical observation, and one which suggests that the mere groupthink of massive asset managers is what leads to not only herding, lack of originality and the "hedge fund hotel" phenomenon, but also to recurring and ever greater asset bubbles. As Jones further writes, "subdued leverage is not a sufficient condition for financial stability—if systemic risk, and activity in the wider economy, is shaped importantly by large shifts in risk premia owing to the "rational herding" motivations of asset managers."

Two months ago we showed, and explained in great detail, how in the new normal the role of gold is nothing more than a funding "currency" to allow the BOJ to sell Yen against it (on a borrowed basis, which is also why the LBMA halted reporting its GOFO data as of the end of February, as it would not be pleasant for the central bank cartel to demonstrate just how much institutional gold shortfall there developed following major BOJ interventions). So for all those who are curious what it looks like when the BOJ "enters the house", here it is...

Because "bad is good" in the new normal central-planner-created fiction in which we live...

In today's new normal, all that matters is pretense and for the most pretentious items we need to dig deep down in the Oligarch ornaments folder. The latest must-have item among those that really understand the world (and manage it) - The $3.5 million "Diamond Ecstasy" iPhone 6 from Goldgenie.

“We like the money,” said Raymond Baker, the president of Global Financial Integrity, a Washington nonprofit that tracks the illicit flow of money. “It’s that simple. We like the money that comes into our accounts, and we are not nearly as judgmental about it as we should be”... Mayor Michael R. Bloomberg said on his weekly radio program in 2013, shortly before leaving office: “If we could get every billionaire around the world to move here, it would be a godsend.”

"Most Shorted" stocks are now comfortably green on the year after the last 4 days have seen the biggest short squeeze in 15 months. Today alone, "most shorted" stocks are up 1.8%. Welcome to the new normal dash for trash on hopes that Greece is "fixed", Q€ "works", and despite dismal US macro data, it will be the economic engine of the world...

It is no secret that January was a bad month for bulls: it was in fact the worst start to the year in years, especially following that surprising last day selloff, which took the YTD drop as of January 30 to an unheard of, at least under global central-planning, -3.1%. It wasn't just the broader market: some of the more marquee hedge funds names also found it a tough time to navigate the transition of global easing away from the Fed to the ECB even as other central banks like the SNB lost all credibility, such as Fortress, Third Point, Perry, Maverick, Brevan Howard and various others, all of which had negative returns for the majority of the month based on HSBC data. But it wasn't all bad news: in fact, as the table below shows, the January outperformers generated higher relative returns than the worst funds of the month,

As the new Greek government begins 'reforming' the previous administration's austerity reforms and travels the length and breadth of Europe pitching its "we don't want more loans, we want debt reduction" ultimatum, Greek judges back at home have had their own moment of clarity in the new normal. The Greek Court of Auditors ruled on Monday that a decision by the previous government to cut the pensions of judges retroactively from August 2012 was unconstitutional and in violation of the European Convention of Human Rights... Well played judges.