SPY

• Senate lets NSA spy program lapse, at least for now (Reuters)
• Draghi Deflation Relief Means Little With Greek Threat Unsolved (BBG)
• Tepid factory data add to Asian gloom (FT)
• Citigroup Likely to Close Banamex USA (WSJ)
• Frugality of High Earners in U.S. Shows Long Shadow of Recession (BBG)
• Greece’s Tsipras Warns Bell May Toll for Europe (BBG)
• Carnegie Mellon Reels After Uber Lures Away Researchers (WSJ)
• Romário leads drive for Brazilian probe into Fifa (FT)
• Faster than China? India's road, rail drive could lay doubts to rest (Reuters)

Remember China's 6% crash last week? It is now a distant memory made even more remote thanks to the latest batch of ugly data out of China, coupled with hints of even more liquidity injections, which led to the latest surge in the Shcomp, an index that has put most pennystocks to shame. In Europe, the big story remains Greece, and as everyone expected, the doomed country and its creditors failed to make a deal on Sunday. This is after Greek Officials were said to have prepared a draft agreement, which was expected to be announced on Sunday. Not helping things, Greek PM Tsipras came out in fully defiant mode and accused bailout monitors of making “absurd” demands and seeking to impose “harsh punishment” on Athens. A bunch of final PMI number showed a modest improvement in the periphery at the expense of Germany whose deterioration is starting to be a concern.

It took 31 years, but it appears that the origins of 1984 are finally upon us. It’s happening all across the West at an alarming pace, and people are willing to allow it. That’s the funny thing about freedom. True freedom means that you are free to be an idiot. Unfortunately most people in the West are caged birds. It might be a nice cage with plenty of Starbucks and Bed, Bath, and Beyond megastores. But it’s a cage... filled with clueless birds chirping away about how free they are.

"U.S. surveillance imagery shows China has positioned weaponry on one of the artificial islands it is developing in the South China Sea," WSJ reports. US Defense Secretary says the US will "fly, sail, and operate" wherever it wants.

"While advising Mrs. Clinton on Libya, Mr. Blumenthal, who had been barred from a State Department job by aides to President Obama, was also employed by her family’s philanthropy, the Clinton Foundation, to help with research, “message guidance” and the planning of commemorative events, according to foundation officials... Much of the Libya intelligence that Mr. Blumenthal passed on to Mrs. Clinton appears to have come from a group of business associates he was advising as they sought to win contracts from the Libyan transitional government."

Government Will Use “Secret Interpretations” to Get Around Legal Prohibitions

• FIFA Raided by Swiss Authorities in 2018, 2022 World Cup Probe (BBG)
• Companies Send More Cash Back to Shareholders (WSJ)
• Time Warner Cable Deal Stirs Debt Concerns (WSJ)
• Qatar $200 Billion World Cup Under More Scrutiny Amid FIFA Probe (BBG)
• Philippine, Vietnamese troops play soccer and sing on disputed island (Reuters)
• The G-7's Problem: Can the World Deal With a Greek Default? (BBG)
• SocGen Deal for Bache Illustrates Commodity-Trading Woe (WSJ)
• China’s Naval Abilities Test Asia’s Insecurities (WSJ)

The police state is about to pass the baton to the surveillance state.

“The ultimate goal of the NSA is total population control.” - William Binney, NSA whistleblower

• Developed-Country Growth Slows, OECD Says (WSJ)
• Charter Agrees to Buy Time Warner Cable for About $55 Billion (BBG)
• Dollar hits one-month high as periphery woes weigh on Europe (Reuters)
• IMF Says Yuan No Longer Undervalued Amid Reserve-Status Push (BBG)
• Hanergy secured $200m loan ahead of solar group stock tumble (FT)
• Congressional Inaction Threatens NSA Spy Program (WSJ)
• Germany sees progress on Greece, EU officials to confer on Thursday (Reuters)
• Hayes ‘motivated by greed’, prosecutor says in Libor case (FT)
• Whistleblowers Find SEC Rewards Slow and Scarce (WSJ)

Just to confirm that if the US had hoped it could threaten Beijing into submission and force the Politburo into curbing its expanionist appetit, it was dead wrong, the nationalist Global Times, a paper owned by the ruling Communist Party’s official newspaper, the People’s Daily, said in a Monday editorial that war was “inevitable” between China and the United States unless Washington stopped demanding Beijing halt the building of artificial islands in the disputed waterway.

It’s amazing when you think about it– a combat veteran who lost a leg supposedly fighting for ‘freedom’ can’t have the medical procedure he needs because a destructive government bureaucracy.  That’s what freedom means today in America. And nobody’s fighting for it. Soldiers are off risking life and limb for oil companies, banks, and defense contractors. And citizens are distracted with bread and circuses. All the while, government power continues to expand at the expense of the individual.

And Privacy ...

"FBI agents can’t point to any major terrorism cases they’ve cracked thanks to the key snooping powers in the Patriot Act, the Justice Department’s inspector general said in a report Thursday that could complicate efforts to keep key parts of the law operating... Inspector General Michael E. Horowitz said that between 2004 and 2009, the FBI tripled its use of bulk collection under Section 215 of the Patriot Act, which allows government agents to compel businesses to turn over records and documents, and increasingly scooped up records of Americans who had no ties to official terrorism investigations."

At the end of every quarter there is a scramble by the financial public to peek at what the biggest hedge fund holdings were as of 45 days ago. And yet, one wonders why: as Goldman notes, "the low dispersion market continues to challenge stock-pickers as the average hedge fund lags the S&P 500 for the seventh straight year (2% vs. 4% YTD)." In fact, even the barbarous relic known as gold has outperformed the average hedge fund YTD. Then again, as we have said since 2012, the only informational value comes not from looking at hedge fund longs, but their biggest shorts, since short squeezes remain perhaps the only source of major outperformance. So for all those curious, here are the biggest hedge fund shorts as of March 31, 2015.

As we detailed earlier, in a chaotic scene during the wee hours of Saturday, Senate Republicans blocked a bill known as the USA Freedom Act - backed by President Barack Obama, House Republicans and the nation's top law enforcement and intelligence officials - which would have preserved the government's ability to search phone company records for suspected spies and terrorists. As AP reports, the failure to act means the NSA will immediately begin curtailing its previously-secret bulk data collection progreams with The DoJ noting that while it will take time to taper off the collection process, that process began Friday (according to an administration official). Sen. Rand Paul called the Senate's failure to allow an extension of the surveillance programs a victory for privacy rights, adding "we should never give up our rights for a false sense of security."