Just over a year ago, we warned that while the world of speculative capital is focused intently on the Twitter and Facebook #Ref/0 fundamental valuations in the publicly-traded equity markets, the real dot-com 2.0 bubble is occurring in the private markets. Few paid attention, prefering the head in the sand "well the music is still playing" meme; but one (or two) billionaires noticed, and with all eyes intently focused on Nasdaq 5,000 (as some indicator that we made it back to Nirvana), Mark Cuban unleashes uncontestible exposition why is this bubble far worse than the tech bubble of 2000.
It is becoming clear that a pretty wide divide seems to appear between what many people think the Syriza government in Athens should do, and what they actually can do at this point in time. It should be useful to clarify what this divide consists of, and how it can be breached, if that is at all possible.
By far the most important geopolitical event of the day, as straight-to-C Span-poluist-pandering as it may have been, was Israel Prime Minister's address to congress, in which for nearly one hour the Israeli leader bashed Iran, stopping just shy of fabricating even more evidence about how close Iran is to developing a nuclear weapon. Yet one person missed everything including the standing ovation at the end: president Barack Obama. As it turns out he had more important things to do...
Tens of thousands marched Sunday through Central Moscow to honor Boris Nemtsov, outspoken opposition critic of Vladimir Putin who was murdered Friday night and thousands more mourned today at his funeral (though notably not Putin himself) and more pointedly, The BBC reports, several EU politicians and Russian opposition leader Alexei Navalny were barred from attending the funeral. Hours later, Mr Navalny accused the Russian authorities of responsibility for the murder, adding to slew of competing theories involving everything from the CIA to Islamic militants and Ukrainian nationalists.
Financial collapse is already baked in, and it's only a matter of time before it happens, and precipitates commercial collapse when global supply chains stop functioning. Political collapse will be resisted, and the way it will be resisted is by starting as many wars as possible, to produce a vast backdrop of failure to serve as a rationale for all sorts of “emergency measures,” all of which will have just one aim: to suppress rebellion and to keep the oligarchy in power.
A century of government meddling has turned the issue of water rights on its head, and further centralized control of waterways in local, state, and federal governments. Just as the residents of Los Angeles fought over water with local farmers, the residents of Las Vegas will soon find themselves fighting with surrounding states over what’s left of Lake Mead. None of the power players seem to care that the current population settlements of the southwestern United States cannot last. One day the water will run out. The sooner this reality is confronted, the better.
While every other word from talking-heads and policy-makers relates various anecdotes (or simple lies) about US economic growth, The Atlanta Fed appears to have taken a 'data-dependent' perspective on the real economy (as opposed to smoke and mirrors). Based on their GDPNow "nowcasting" model, The Atlanta Fed projects Q1 2015 GDP growth os just 1.2% (less than half current sell-side economist consensus) and getting weaker...
One of Chancellor George Osborne’s senior advisers on economic policy has been captured on video smoking crack cocaine in a drugs den. Prof Douglas McWilliams, who last year estimated we would all be £165 a year better off by the election, is seen inhaling it through a glass tube at a flat in North London. Red-faced and slurring his speech, he later told the dealer he had “too much” and that he had spent the day on a binge. Two rocks of the deadly drug can clearly been seen on a table beside the dazed professor. The grainy footage, seen by the Sunday Mirror, will heap embarrassment on the Chancellor and raise serious questions about his choice of adviser.
Greek short-term default risk jumped over 300bps today putting the odds of a restructuring at 50-50 within the next year as the warnings we issued last week with regard Greece's imminent default on its IMF loan loom. Seeking to reassure its lenders (and avoid yet more capital flight), Reuters reports the Greek government said it was "exploring solutions," including delaying payments to suppliers or try to raise up to 3 billion euros by borrowing from state entities such as pension funds. We are sure the Greek people will be enthused when they find out what the 'radical left' has in store for their funds...
"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
"None dare call it a “currency war” because that would be counter to G-10/G-20 policy statements that stress cooperation as opposed to “every country for itself”, but an undeclared currency war is what the world is experiencing. Close to the same thing happened in the 1930’s, a period remarkably similar to what many countries’ policies resemble today.... Negative/zero bound interest rates may exacerbate, instead of stimulate low growth rates in all of these instances, by raising savings and deferring consumption... Asset prices for stocks, high yield bonds and other supposed 5-10% returning investments, become stretched and bubble sensitive; Debt accumulates instead of being paid off because rates are too low to pass up – corporate bond sales leading to stock buybacks being the best example. The financial system has become increasingly vulnerable only six years after its last collapse in 2009.... Central banks have gone and continue to go too far in their misguided efforts to support future economic growth."
Not "contained." Just six short months ago, the 2Y bonds of Austria's bank bank - HETA Asset Resolution AG - were trading well above par as the world and his mom reached for yield (~6%) in all the wrong places. Today, following the "spectacular development" over the weekend that the bank will be wound down due to the discovery of an $8.5bn "hole" in its balance sheet, the 2Y HETA bonds are trading below 50c on the dollar (at a yield of 54%). This is indeed Austria's "Lehman" moment as for the first time in the new European 'bail-in' era, senior debt is getting a massive haircut.
Clearly if Western governments were ‘merely’ drowning in debt-to-GDP ratios of roughly 100%, then theycould still argue that attempting to manage these debt-loads was legitimate rather than treasonous. However, Germany’s government (debt-to-GDP of 188%) can no longer make that claim. Nor can: