Prudential

• Full picture of Clinton charities' foreign government funding remains elusive (Reuters)
• Greece Readies for Another Week of Deadlines (BBG)
• Greece says deal will be 'difficult' at Eurogroup meeting (Reuters)
• Saudi Arabia’s Rulers Snub Arab Summit, Clouding U.S. Bid for Iran Deal (WSJ)
• Saudi Aramco Said to Plan Spending $80 Billion Overseas (BBG)
• The $900 Billion Influx That’s Wreaking Havoc in U.S. Bills (BBG)
• Cameron rules out another Scottish independence vote (Reuters)
• Banks Prep Defense for Anti-Wall Street Campaigns (WSJ)

The trio of macro-prudential policy, the onset and evolution of shadow banking, and the nebulous concept of financial stability may have become a toxic cocktail which can be instrumental in moving forward the Federal Reserve’s timeline for lift-off zero bound rates.  The intuition here is stooped in concepts of volatility and how market structure evolution may contribute or detract from asset volatility. Volatility is the square root of time. Financial repression times time equals volatility. Financial repression and/or macro-prudential policy times time equals the inverse of financial stability. Financial stability inverted equals volatility squared.

If you thought currency-wars were a problem, just wait until crony-wars begin. In a stunning show of disagreement among the omnipotent, The FT reports that a Freedom of Information Act request has confirmed The Bank of England wrote to US authorities seeking clarity about Berkshire’s absence from a provisional list of "systemically import" (Too Big To Fail) financial institutions (SIFIs). The US Treasury declined to comment...

The panic buying by China’s newly-minted, day trader hordes took a breather on Tuesday which we think presents as good an opportunity as any to assess what factors might intervene to derail the self-feeding margin madness that has Shanghai and Hong Kong partying like it’s 1999 on the Nasdaq.

“The biggest worry of the buy side around the world is that there has been a dramatic decline in liquidity from the sell side for many fixed income products,” Prudential's David Hunt tells Bloomberg, echoing Jamie Dimon and confirming what we've been shouting about for years.

"In some instances, malfunctioning algorithms have interfered with market functioning, inundating trading venues with message traffic or creating sharp, short-lived spikes in prices as a result of other algorithms responding to the initial erroneous order flow."... "If liquidity is as bad as it is now, what’s going to happen when things really get adverse?” said Richard Schlanger, who co-manages about $30 billion in bonds as vice president at Pioneer Investments in Boston.

When Will Bad News Cease to be Good News for Stocks? It is quite amazing to watch this. Even as one economic datum after another indicates that a major slowdown is underway that could well turn into a recession (keep in mind that this is not a certainty – at similar junctures in recent years, aggregate economic data recovered just in the nick of time), the US stock market continues to take everything in stride. The longevity, intensity and persistence of a bubble is per se not proof that it will inevitably continue – it is only an indication of the likely amount of pain the market will eventually dispense.

• Iranians celebrate, Obama hails 'historic' nuclear framework (Reuters)
• Iran Nuclear Accord Hailed as Landmark After Marathon Talks (BBG)
• Two New York City women accused of planning 'terrorist attack' (Reuters)
• Cyprus Lifts Capital Controls Two Years After Deposits Bail-In (BBG)
• Jury Hits Chrysler With $150 Million Penalty in Boy’s Death (WSJ)
• Greece says ready to make IMF payment on April 9 (Reuters)
• Germanwings Co-Pilot Set Plane to Go Faster Before Crash (BBG)
• IBM hire advisers to deal with restless investors - sources (Reuters)

While we wait to see which “well capitalized” bank will be the next to crumble under the weight of mountainous writedowns occasioned by the sudden souring of “riskless” assets, we get to read the DuesselHyp post-mortem, which shows that the bank was effectively AIG’d by Eurex.

It's a total shock that maniacs who borrow nearly 100% on interest only terms to lose rental money to speculate on housing capital gains would love low interest rates. And with the lowest mortgage rates in Australian history, coinciding with the sloppiest lending standards in Australian history, combining with the highest property prices in Australian history, added to the highest household debt to income ratio in Australian history, what would you expect the biggest idiot of a treasurer in Australian history to do?

There was a point in 2010 when American capitalism might have had an opportunity to heal itself and commence on a long march toward sustainable growth and real wealth gains. But the monetary politburo would have none of it - keeping the pedal to the metal until this very moment... and the rest is history. The Fed and the other central banks around the world have fomented a new and even more virulent and dangerous financial bubble.

• Fed Likely to Remove ‘Patient’ Barrier for Rate Increase as Soon as June (Hilsenrath) - which year?
• Clinton says used personal email account for convenience (Reuters)
• Euro sinks to 12-year lows as yield gap grows (Reuters)
• Get Ready for Oil Deals: Shale Is Going on Sale (BBG)
• EIA raises 2015 US oil production forecast, cuts 2016 outlook (Reuters)
• How Falling Oil Prices Are Hindering Iraq’s Ability to Fight Islamic State (WSJ)
• China economic data weaker than expected, fuels policy easing bets (Reuters)
• ECB ‘Chasing Own Tail’ as Bond Rates Turn Negative, SocGen Says (BBG)
• Swiss makers quietly gear up with smartwatches of their own (Reuters)

It’s one thing to predict one person’s shopping or investment decisions. But can brain scans be used to forecast the entire market? Neuroeconomist Paul Glimcher says, “If we had access to that data, when people pick stocks, can these models predict macro-level changes in stock prices from individual-level models of angels picking stocks? There’s reason to believe it might work.” Already, neuromarketing consultancies advise large companies like Google and PepsiCo on which products will do well, and how to position them in the marketplace. Maybe one day there will be boutique equity research consultancies that scan the brains of focus group participants as they answer questions about individual securities, and investors could incorporate these neural inputs as they mull whether to buy or sell a security. 

• Dollar at 12-year peak versus euro, emerging markets spooked (Reuters)
• CIA sought to hack Apple iPhones from earliest days (Reuters)
• Draghi Urged Greece to Allow Troika Back Before It’s Late (BBG)
• Brent crude dips below $58 on strong dollar and supply (Reuters)
• Credit Suisse replaces CEO Dougan with Prudential's Thiam (Reuters)
• More "distressed" energy M&A: Verisk buys Wood Mackenzie for £1.85bn (FT)
• Prepare for a surge in defaults: Investors Are Buying Stocks and Bonds From Energy Producers Amid Oil Price Drop (WSJ)
• Private equity executive ordered to pay £72m to ex-wife (FT)
• Democratic donors unfazed by Hillary Clinton's use of private email (Reuters)
• Expensive Hepatitis C Medications Drive Prescription-Drug Spending (WSJ)
• 'ISIS Hackers' Almost Certainly Not ISIS Hackers (NBC)

As noted earlier, starting early with the overnight session there was already some serious fireworks in Asia, when first the USDJPY soared then tumbled, pushing the Nikkei lower some 0.7% with it, driven entirely by the surge in Dollar which rose to a fresh 12 year high overnight after gaining as much as 0.59%, in an extension of Friday’s post-NFP gains. Additionally, the EUR/USD slipped below 1.0800 to touch its lowest level since Sept’03 while USD/JPY rose above 122.00 for the first time since Jul’07, after breaching long-term resistance at 121.85. However, in recent trade the pair has seen a straight line sell-off which in turn has sent US equity futures sliding, and the ES down about 14 points as of this moment. Meanwhile, the frontrunning of the ECB continues, with German 10 Year yields sliding -3bps to 0.281%, the lowest in series history. Also touching fresh record lows were Austrian, Belgian, Dutch, Finnish, Irish, Italian, Spanish 10 Year rates.