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Ever since Cyprus hit the headlines, Slovenia has been close behind. Another small European nation with a banking system that dwarfs its GDP (though not on the scale of Cyprus). However, as we noted previously, it is not the size that matters, it is the precedent. The European leadership are desperate for the 'template' used in Cyprus - of haircutting all the way through the capital structure - not be used in Slovenia for fear the real world will see through their jawboning facade. Chatter continues that Slovenia can get out of this on their own - in some magical government-guaranteed reacharound - but, just as in Cyprus (where Non-Performing MLoans reaching 30-40% was the trigger for their avalanche), so Slovenia is there now. While the 'average' is around 14% NPLs, the large state-controlled banks had over 30% NPLs at the end of 2012. The need for in excess of EUR1bn in recapitalization alone - though stress test results have been kept secret - and as the FT's op-ed notes, in order to appease global investors' fear that lessons have not been learned, government money (read taxpayer) should not be the first option, creditors should be bailed-in. With Slovenia CDS stuck at six-month wides, it appears the market remains far more nervous either way.

Now that the 3:30 pm pump has been exposed to the world, and having been priced in and frontran (such as yesterday) it changed to the 3:30 dump, algos are desperately searching for another daily calendar trading opportunity. It appears the opening of Europe and Japan for trading are just these two much needed "fundamental" catalysts. As the charts below show, it appears there is nothing more bullish for the two key carry pairs, the USDJPY and the EURUSD, than Japan opening at 8pm Eastern, and then Europe opening next, at 3:30 am Eastern.

The boy who cried wolf is now openly screaming "global thermonuclear war." No, really. AFP reports that North Korea said Tuesday the Korean peninsula was headed for "thermo-nuclear" war and advised foreigners to consider leaving South Korea, as the UN chief warned of a potentially "uncontrollable" situation. "Tuesday's advisory -- greeted largely with indifference -- followed a similar one last week to foreign embassies in Pyongyang, to consider evacuating by April 10 on the grounds war may break out. "The situation on the Korean Peninsula is inching close to a thermo-nuclear war," the Asia-Pacific Peace Committee said in a statement carried by the North's official Korean Central News Agency." The result - a big yawn, which sadly for Kim Junior is the worst reaction. After all what is a dictator with an inferiority complex and a laughable military to do to get some respect around here and score some "nuisance value" cash from the superpowers (which has been his entire plan all along).

We started off the overnight session with various pseudo-pundits doing the count-up to a 100 in the USDJPY. It was only logical then that moments before the 4 year old threshold was breached, the Yen resumed strengthening following comments from various Japanese politicians who made it appear that the recent weakening in the currency may suffice for now. This culminated moments ago when Koichi Hamada, a former Yale professor and adviser to Japanese Prime Minister Shinzo Abe, told Reuters that level of 100 yen to dollar is suitable level from the perspective of competitiveness. The result has been a nearly 100 pip move lower in the USDJPY which puts into question the sustainability of the recent equity rally now that the primary carry funding pair has resumed its downward trajectory. Another result is that the rally in the Nikkei225 was finally halted, closing trading unchanged, and bringing cumulative gains since the morning before the BoJ’s announcement last Thursday to 8.9%. Over that the same time period, the TOPIX Real Estate Index is up an incredible 24%, no doubt reflecting the prospect of renewed buying of REIT stocks from the BoJ’s asset purchasing program.

Perhaps the best measure to gauge the European recovery is by the soaring number of companies going bust, because only from this perspective is Europe finally "fixed." As Reuters reports citing a report by Axesor, a record 2,564 companies filed for "insolvency proceedings", a more palatable version of the word bankruptcy, in the first quarter - an increase of 10% from Q4 and up a whopping 45% from Q1 2012. The reasons given: "tight credit conditions and meager demand." Or in other words: no actual cash flow to fund demand for products and services. Obviously it will take some truly phenomenal massaging and manipulation to represent GDP as rising in this environment, but we are confident the Spanish authorities are already on it, and somehow the Spanish pension fund, already 97% filled with Spanish government bonds, will somehow have a finger in yet another completely unbelievable economic print which will fool most of the algos most of the time on flashing red Bloomberg headlines.

Q. What is your view on gold?

Soros: That’s a complicated question. It has disappointed the public, because it is meant to be the ultimate safe haven. But when the euro was close to collapsing in the last year, actually gold went down, because if people needed to sell something, they could sell gold. Therefore they sold gold. So gold went down together with everything else. Gold was destroyed as a safe haven, proved to be unsafe. Because of the disappointment, most people are reducing their holdings of gold. But the central banks will continue to buy them, so I don’t expect gold to go down. If you have the prospect of a crisis, you will have occasional flurries or jumps. So gold is very volatile on a day-to-day basis, no trend on a longer-term basis.

Slew of headlines out of the UK reporting that after suffering a stroke, the Iron Lady and former Prime Minister of the UK, Margaret Thatcher, has died. Rest in Peace.

With every modestly positive datapoint being desperately clung to, now that even Goldman's Hatzius has once more thrown in the economic towel after proclaiming an economic renaissance in late 2012 just like he did in late 2010 only to issue a mea culpa a few months later (and just as we predicted - post coming up shortly), the key prerogative is to ignore the elephant in the room. That, of course, is that the JPY 1 quadrillion bond market had to be halted for the second day in a row as the Japanese capital markets are fast becoming a very big and sad joke. The resulting flight to safety from Japanese investors, who sense that their own bond market is on the verge of breaking down completely, has managed to send French and Belgian bonds to record lows, the Spanish 2 Year to sub 2%, the German 6 month bill negative in the primary market, the US 10/30 year constantly bid and so on. The immediate result is that the bond-equity disconnect continues to diverge until one day we may get negative 10 Year rates coupled with an all time high stock market. Gotta love the fake New Normal market, in which the Japanese penny stock market was up another 2.8% to well over 13,000 even as the Shanghai Composite plumbs ever redder territory for 2013 on fears the birdflu contagion will hurt the already struggling economy even more.

The general mantra from mainstream analysts and economists since the first of the year is that the "economy is set to finally turn the corner."  The premise of the assumption is that the Fed's continued monetary actions, and now specific targeted goals of suppressed inflation and targeted employment, is going to push the economy into "escape velocity." Today, we leave the analysis up to you. The following series of charts displays several important economic variables ranging from incomes and production to economic growth.  The question for you to answer: "Is the economy about to boom OR has it peaked for the current economic cycle?" As you look at each chart below compare what you are visualizing versus what you are being told.

With all three major non-Fed central banks on the tape today, all economic data will be merely "noise" as the market digests what the central-planners' intentions are. The BOJ came and went, and following its substantial balance sheet expansion announcement, which many called "shocking and awing" the USDJPY has pushed higher by 2.5 big figures, although not reaching the 96 levels seen prior to Kuroda's actual announcement. In fact, from this point on there is likely downside as Japan's biggest export competitor, South Korea, has no choice but to join the race to debase which in turn will be JPY-positive. The Bank of England is next, which as expected did nothing moments ago, and will keep doing nothing until Carney joins officially this summer. In some 45 minutes, the ECB headlines will hit the tape where Draghi may bur more likely may not lower deposit rates, and instead will focus on recent deterioration in the economy. None of this will be surprising, and the EUR continues to trade sufficiently weak in line with sub-200DMA levels seen in the past few weeks. What we look forward to the most will be Draghi once again discussing the legal term-sheet details of the ECB's OMT program. His answer will be amusing as there still is no answer, and the OMT is for all intents and purposes the biggest straw man ever conceived by a central bank.

The driftless overnight sessions are back. After the Nikkei soared by 3% following several days of declines, and the Shanghai Composite continued its downward ways despite Non-Manufacturing PMI prints for March which rose both per official and HSBC MarkIt data, Europe was unsure which way to go, especially with the EURUSD once more probing the 1.28 support level. The USDJPY was no help, and even with the BOJ meeting at which new governor Kuroda is finally expected to do something instead of only talking about it, imminent, has hardly seen the Yen budge and provide the expected carry-funding boost to global risk. In terms of newsflow there was little of it: European CPI in March printed at 1.7%, above expectations of 1.6%, but below February's 1.8% rise in inflation. UK continued telegraphing the inevitability of Mark Carney's imminent QE, with construction PMI the latest indicator missing, at 47.2, below expectations of 48.0 (above 46.8 last).  Elsewhere, Spanish Prime Minister Mariano Rajoy on Wednesday called for Europe to implement growth policies to balance its austerity drive and for countries with room for fiscal manoeuvre to increase public spending. "Europe is the only region in the world in recession. To overcome this situation we need three things: every country needs to do its homework, we need more (European) integration and we need growth policies," Rajoy said in a televised speech to leaders of his People's Party. "That's why countries which can afford it should spend more." Surely Europe will get right on it: after all, it's only "fair."

The Russians are taking a page from the Europeans book (and not a positive one for libertarians). Given the substantial criminal activity and illegal entrepreneurship in Russia - the grey and black economies account for 50–65 percent of GDP and estimates that about $50 billion was taken out of Russia illegally in 2012 alone - the great and glorious leaders have decided to impose restrictions on cash transactions. As Russia Beyond The Headlines reports, Russia may ban cash payments for purchases of more than 300,000 rubles (around $10,000) starting in 2015 - starting with a higher ($19,500) restriction in 2014. They will also enforce mandatory cash-free salary payments (cash compensation accounts for 15% of GDP currently) in an effort to both bring some of the population's 'grey' income out of the shadow; and increase the volume of cash reserves in the banks. It would appear that wherever we look now, leadership are realizing that the limits of fiscal and monetary policy have been reached and now changing rules, limiting freedom, and outright confiscation are the only way to maintain a status quo. Ironic really, when the enforcement of said rules may just be the catalyst for the end of the status quo as the middle class suffers.

The housing recovery was described by one muppet on CNBC yesterday as 'parabolic' so we decided to go in search of this mystical anecdotal surge that is so often heard on the airwaves of the preachers. It turns out, the recovery (if that's what you want to call it) is not so much. Just as in Europe, it seems if we repeat the same lie (or hope) often enough, it may just come true. So it is in the US. Headlines crow of YoY gains and ad hoc surges (Vegas and Silicon Valley) but if you dig down just an inch or two into the real data, the housing 'recovery' is the little train that isn't. As Bloomberg notes, regional home prices have recovered to only 2004 levels and while the REO-to-Rent model remains for the late-to-the-gamers, it is inevitably a self-destroying bubble if there is no organic growth and one glance at the rate of mortgage applications ('real' buyers) says all we need to know about the housing 'recovery'.

Since the Cyprus headlines hit, the markets have been 'confused'. Bonds have been bid, protection has been aggressively chased in credit (CDX) and equity markets (VIX), and FX carry markets have completely decoupled from a quarter-end heat-seeking missile of an equity market. Can it last? Who knows, but one way or another these short-term divergences suggest there are better ways than stocks to play a long bet or, alternatively, the marginal buyer of equities here is disconnected from every other asset classes' reality.

It will come as no surprise that the US equity market this week has been bought on every dip but a glance at the following chart must leave one asking the question - who (or what) is buying? The huge volumes that the market has seen when selling occurs dwarves the miniscule (mostly after-hours) volume that occurs during the ramps. Of course, the slow drift higher is evident also - as $85bn a month spills out day after day. Meanwhile Treasury bonds have handily outperformed since the 3/15 Cyprus headlines hit - 10Y up 1.25% against unchanged for the S&P 500.