Citigroup

Something serious is brewing under the hood...

Deutsche Bank's LIBOR settlement likely should have landed the bank on the SEC's "bad actor" list, but thankfully, the CFTC was willing to write language into its settlement with the bank which effectively allows the German lender to skirt Dodd-Frank, proving yet again that it's good to be TBTF.

As Bloomberg summarizes the various opinions suggested by Wall Street analysts, the rout in German debt and other European sovereign bonds was caused by market-technical factors such as investor positioning and supply glut rather than shift in views on economic outlook, analysts say, with profit-taking on successful QE trades, thin market liquidity and position-squaring before month-end are cited among main bearish catalysts.

It feels like not a single soul is worried about the increasing amount of negative interest rates around the world. Ignorance or indifference?

Having previously explained the 175,846,629,768 reasons why former Fed Chair Ben Bernanke would join Citadel - the most-levered hedge fund in the world and alleged conduit of fed put protection; we thought it intriguing to note what billionaire Citadel Ken Griffin had to say about Bernanke and his policies just 2 years ago...

Should Gary Gensler truly be Clinton's chief financial officer, and should Hillary become America's next president, then ladies and gentlemen, in the fine tradition started by Hank Paulson who nearly brought the entire wastern world to ruin, the next US Treasury Secretary will be the following fine former Goldman Sachs employee and "champion for everyday Americans."

Late last year, Grexit "expert" Willem Buiter decided that he was a greater expert on the topic of monetary metals than on geopolitics by stating that "Gold Is A 6,000 Year Old Bubble." Now, he has decided that after gold, it is best to just do away with any physical currency altogether and the time to ban cash has arrived.

Just as the S&P appeared set to blast off to a forward GAAP PE > 21.0x, here comes Greece and drags it back down to a far more somber 20.0x. The catalyst this time is an FT article according to which officials of now openly insolvent Greece have made an informal approach to the International Monetary Fund to delay repayments of loans to the international lender, but were told that no rescheduling was possible.  The result if a drop in not only US equity futures which are down 8 points at last check, but also yields across the board with the German 10Y Bund now just single basis points above 0.00% (the German 9Y is now < 0), on its way to -0.20% at which point it will lead to a very awkward "crossing the streams" moment for the ECB.

Update: *LOCKDOWN LIFTED AT U.S. CAPITOL AFTER GYRO COPTER ARREST

US Capitol Police have locked-down buildings after a man landed a gyrocopter on the lawn. As The Tampa Bay Times reports, the man is a mailman from Ruskin named Doug Hughes who was attempting to deliver campaign reform messages to Congress.

Without the support of the ECB, the country’s banking system would be shut off from international markets and likely collapse.

• Shale Oil Boom Could End in May After Price Collapse (BBG)
• Oil above $58 on U.S. shale output report, Mideast (Reuters)
• Ackman Says Student Loans Are the Biggest Risk in the Credit Market (BBG)
• Alibaba Disputes U.S. Group’s Claim it Tolerates Fake Goods on Taobao (WSJ)
• Petrobras takes steps to avert a technical default (FT)
• Yen’s Drop Is Approaching Its Limit, Says Abe Adviser Hamada (BBG)
• 'Slicing and dicing': How some U.S. firms could win big in 2016 elections (Reuters)
• Fed official warns ‘flash crash’ could be repeatedv (FT)

While today's macro calendar is empty with no central bank speakers or economic news (just the monthly budget (deficit) statement this afternoon), it’s a fairly busy calendar for us to look forward to this week as earnings season kicks up a gear in the US as mentioned while Greece headlines and the G20 finance ministers meeting on Thursday mark the non-data related highlights.

Everyone was shocked by yesterday's Chinese March trade update which showed that while imports slid largely as expected, it was the 15% drop in exports, the largest in over a year, that prompted many to wonder just how big the global trade slump really is, masked by what has now become pervasive, global QE. This was the worst performance, exports and imports combined, since late 2009.  Below is a selection of responses by Wall Street analysts trying to justify how - with global equities, if only in local currency terms, at all time highs - China can be doing so badly.

If there was any doubt that global trade is stalling, it was promptly wiped out following the latest abysmal Chinese trade data which saw exports tumble by 15% - the most in over a year - on expectations of a 8% rebound, with the trade surplus coming in at CNY18.2 billion, far below the lowest estimate. While unnecessary, with the Chinese GDP growth rate this Wednesday already expect to print at a record low, this was further evidence of weak demand both at home and abroad. Weakness was seen in most key markets, and the strength of China's currency was partly to blame, which again brings up China's CNY devaluation and ultimately QE, which as we wrote some time ago, is the ultimate endgame in the global reflation trade which, at least for now until the CBs begin active money paradropping to everyone not just the 0.01%, is only leading to inflation in stocks and deflation in everything else.v

“In my 30-year career, it’s one of the most unattractive risk-return propositions that I’ve seen,” DoubleLine's Bonnie Baha says. Between abysmally low yields, heightened rate sensitivity heading into a rate hike cycle, and balance sheet re-leveraging on the part of US corporations, it’s a bad time to be betting on corporate credit.