Las Vegas

Did you hear the one about the Vegas gambler, the Pro golfer, and the Wall Street insider? Straight off the pages of some Hollywood script, the Wall Street Journal reports that Federal investigators are pursuing a major insider-trading probe involving finance, gambling and sports, examining the trading of investor Carl Icahn, golfer Phil Mickelson and Las Vegas bettor William "Billy" Walters. All three men have denied any investigations or "no comment"-ed about "well timed" stock trades in Clorox in 2011 - around the time Icahn made a $10.2bn bid for the company. Mr. Walters and Mr. Mickelson, 43, play golf together; and rather comedically, Mr. Icahn said he didn't know who Mr. Mickelson was...?

If you said San Francisco, you are very wrong (as recently shown in "Bizarro Housing Bubble Spills Over Into "Overbid Madness"). No, according to the latest Case Shiller data, the one city (out of 20) where home prices dropped in March, somewhat inexplicably considering the ridiculous flipping of houses taking place in the ultra-luxury segment, was New York.

Following the fourth consecutive decline in home prices as reported by Case Shiller (remember, it was the weather), it was inevitable that in the last month of Q1, when the weather warmed up and when Americans went on a spending spree that took their savings rate to the lowest since 2009, home prices, those tracked by the Case Shiller index, would post a rebound. Which they did: According to the just released Top 20 City Composite Index, home prices bounced by 0.88%, higher than expected, with the composite printing at 166.80, more than the 166.23 forecast, following fourth consecutive sequential declines. This represented a better than expected 12.37% annual price increase, even if the pace of annual price increases appears to be slowing: this was the lowest annual price increase since August.

There’s a long and comprehensive To-Do list that has been waiting for us since at least 2008, when the nation received one forceful blow upside its thick head. We refuse to pay attention.

The days of Bernanke's "non-Giffen good" speech circuit may come to an end far sooner than the ex-Chairsatan wishes: "UBS and Goldman Sachs considered his fees too high." Others were quick to point out the obvious:"You can spend $250,000 for Bernanke’s time at a private dinner, or you could just sit down and read what people like Janet Yellen and Mark Carney have to say," David Rosenberg said"... Indeed, this is one deflation which we are confident the Fed Chairman wishes he was 100% certain he could stop in 15 minutes. Sadly, like in the case of everything else relating to Bernanke, when paying for smoke and mirrors it is only a matter of time before everyone, even the uber-richer poseurs, realize that the product they are buying is nothing but a cheap commodity.

Just out from Bloomberg:

• Deutsche Bank preparing a capital increase, aims to raise EU8 billion through new shares by end of June, Handelsblatt says, citing unidentified people in the finance industry.
• Deutsche Bank likely to get new single investor
• Deutsche Bank new investor may hold 5%-8% of shares
• Deutsche Bank declined to comment: Handelsblatt

And the punchline: Bank’s new shares may be sold with 25%-30% discount. In other words, it is liquidity scramble time, and the bank is willing to give anyone with deep enough pockets a 30% discount to market price just to get some additional short-term funding.

After losing $4 billion as both a lender and equity-holder, Deutsche Bank has decided now is the time to sell The Cosmopolitan of Las Vegas. The lucky buyer of the 3000-room hotel and casino... none other than America's largest landlord - Blackstone Group. The formerly biggest "buy-to-rent" private equity firm is paying $1.7 billion for the Vegas hotspot after having piled $3.5 billion into property across the city and other parts of Nevada. It is ironic that it was Steve Wynn, another Vegas magnate, who recently noted just how great times were for the 'big guy' seeking cheap financing (and, unfortunately, just how bad it was for the average joe).

• Bank of England sees 'no housing bubble' (Independent)
• ‘If the euro falls, Europe falls’ (FT)
• India's pro-business Modi storms to historic election win (Reuters)
• Global Growth Worries Climb (WSJ)
• Bitcoin Foundation hit by resignations over new director (Reuters)
• Blackstone Goes All In After the Flop (WSJ)
• SAC's Steinberg loses bid for insider trading acquittal (Reuters)
• Beats Satan: Republicans Paint Reid as Bogeyman in 2014 Senate Races (BBG)
• Tech Firms, Small Startups Object to Paying for Internet 'Fast Lanes' (WSJ) - but they just provide liquidity
• U.S. Warns Russia of Sanctions as Ukraine Troops Advance (BBG)
• Major U.S. hedge funds sold 'momentum' Internet names in first-quarter (Reuters)

Almost exactly a year ago Bernanke unleashed what Zero Hedge first dubbed the Taper Tantrum. Moments ago, the head of Appaloosa revealed what may be the catchphrase of mid-2014 with the "Tepper Tantrum", when during his presentation at the annual SALT conference in Las Vegas, the usually bubbly and cheerful billionaire (who last year made $400,000 per hour or a total of $3.5 billion) spooked everyone and in what for someone who has traditionally been long everything on leverage can pass as sheer doom and gloom basically told his wide audience that he is "nervous, it's nervous time" and in this "dangerous market", it is "time to preserve money"; his advice to anyone listening: "don't be too freakin' long".

There's not much good news for housing these days. For a little while, the Fed's suppression of interest rates juiced housing enough to distract Americans from weak job creation and stagnant real wages. Don't have a job? No problem! Just borrow against the appreciation of your house to feed your family. But Yellen's interest rate wand looks to be out of magic. The government had a pipe dream of white picket fences for everyone. But Americans can't refinance their way to wealth. Especially in the Greater Depression.

The debate over just how rigged algos have made the market may be raging, but when it comes to riggedness, there is no debate that nothing beats Las Vegas where in the long (and not so long) run the house always wins. But how much does it win, and what games provide the house with the biggest profit? The following two charts answer these pertinent questions for anyone who may be planning a trip to the city of Lost Wages.

Confirming and continuing a trend we first described a year ago, overnight RealtyTrac reported, as part of its Q1 institutional investor and cash sales report, that the percentage of all-cash buyers has soared in the past year with "42.7% of all U.S. residential property sales in the first quarter were all-cash purchases, up from 37.8% in the previous quarter and up from 19.1% in the first quarter of 2013 to the highest level since RealtyTrac began tracking all-cash purchases in the first quarter of 2011."

One of the more peculiar news from last week was the grounding of all flights for several hours at several airports in the Southwestern United States and the grounding of planes bound for the region from other parts of the country. As so often happens when there is no specific reason at the time, the error was blamed on a computer "glitch" - the computer problem at a Federal Aviation Administration center slowed the journeys of tens of thousands of arriving and departing passengers at LAX. And that would have been all we heard of it had it not been for some additional digging by NBC which on Saturday, citing unnamed sources, reported a U-2, a Cold War-era spy plane still in use by the U.S. military, "passed through air space monitored by the Los Angeles Air Route Traffic Control Center and appears to have overloaded a computer system at the center."

Everyone has seen them: those "inexplicable" bouts of furious selling in gold and silver, coming out of nowhere with no news or catalyst. In fact, look no further than what happened first thing this morning, when an unknown seller, smashed all stops in one big sale, and took silver to its lowest price for 2014.  This was a premeditated and deliberate selling of silver with one simple purpose: push and reprice silver lower. But this is nothing new: precious metal traders, especially those who are on the other side of the table of the BIS' Mikael Charoze or Benoit Gilson, and countless other commercial banks, are all too aware of this behavior and they take it for granted.  No, the real surprise is that suddenly none other than the CME is getting worred that manipulation this blatant is finally chasing regular retail traders away who are tired of being fleeced on a daily basis, leaving central banks and a few "fixing" banks to trade only with each other, which is not acceptable - after all it is the muppets' money that is fair game, not that of other cartel members. 

Overnight, RealtyTrac released its latest home-flipping report. What it found is that while the latest housing bubble may have indeed popped, manifesting itself not only in a decline in flipping prices but also a tumble in flipping activity across the US as a percentage of all sales from 6.5% a year ago to just 3.7% in Q1, and down from 4.1% last quarter, flipping, where a home is purchased and subsequently sold again within six months, can still be massively profitable, leading to returns that would make the pimpliest 25-year-old, math PhD HFT-firm owner green with envy.  Among the core findings was that the average sales price of single family homes flipped in the first quarter was $55,574 higher than the average original purchase price. That gross profit provided flippers with an unadjusted ROI (return on investment) of 30 percent of the average original purchase price averaged out across the US. The average gross profit per flip a year ago was $51,805 for an unadjusted ROI of 28 percent. However, it is the range that is notable: the flip ROI ranged from -8%, or a loss of $10k on the property, to a gain of 80%, a whopping $144K!