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...?
With minutes to go until England begins its World Cup Friendly warm-up against Peru, it appears the supporters will be sporting a somewhat unusual attire. While we have grown used to outrageous costumes in the past, as RT reports, the similarity between "England's Wearable Flag" and a "Ku Klux Klan Outfit" are a little too close for comfort...
It is very apparent the Fed literally are making policy up as they go along and Wall Street doesn`t realize that the Fed has no exit strategy. The learning curve is going to be painful as always for Bond Holders.
- Ukraine Rebels Outfox Army to Dent Poroshenko Troop Goal (BBG)
- Russia Withdraws Most of Forces From Ukraine Border: U.S. (BBG)
- Super-Size Me! China’s ’Mini’ Stimulus Starts Expanding (BBG)
- Option B: The blueprint for Thailand's coup (Reuters)
- Big investors replace banks in $4.2tn repo market (FT)
- Draghi Shields Catalan Independence Bid From Market (BBG)
- U.S. companies seek cyber experts for top jobs, board seats (Reuters)
- Parsley CEO Emerges as One of Youngest U.S. Billionaires (BBG)
Despite all the doom and gloom in the market, we would have loved to have these employment numbers three years ago.
One supremely smart CNBC talking head summed it all up, "today's negative GDP number was excellent news," and sure enough, thanks to someone's multi-billion-dollar bid at the all-time-highs mid-afternoon, we went to the moon, Alice. Trannies are on target for their best month since October (+5.7%). The dash-for-trash has a new life as "most shorted" have now risen 6 days in a row - the biggest squeeze in over 3 months. This all happened as bonds rallied (though yields rose modestly on the day), VIX rose, USDJPY would not play along and aside from the spike in volume, on a total lack of liquidity. Gold and silver were monkey-hammered early on but limped back off their lows as WTI crude rallied from the GDP print on. The S&P 500 is now only 30 points short of Goldman Sachs June 2015 target.
Since so many people are still slightly confused about how all the pieces come together in this move lower in yields, we feel the need to add some follow-up commentary.
- Snowden: 'no relationship' with Russian government (Reuters)
- Bond Surge Worldwide Drives Index Yield to One-Year Low (BBG)
- Shares flirt with record highs on ECB easing bets (Reuters)
- Goldman Shuns Bonds Pimco’s Gross Favors in ‘New Neutral’ (BBG)
- Porn may be messing with your head (Reuters)
- Dish to Become Largest Company to Accept Bitcoin (AP)
- To Make a Killing on Wall Street, Start Meditating (BBG)
- Apple to get Beats, music mogul Iovine for $3 billion (Reuters)
- Fink Says Leveraged ETFs May ‘Blow Up’ Industry (BBG)
Wednesday is not Tuesday (except for Trannies). Some early weakness in stocks was bid mindlessly back to its highs even as 10Y bond yields kept tumbling to 11-month lows and oil and copper rolled over. VIX ended the day higher (again) ignoring the exuberance in the light volume equity market. 10Y yields dropped to 2.43% - its best day in 5 months (breaking last October's key support). The yield curve flattened dramatically with 2s30s at its tightest in a year. The USD was bid (led by GBP weakness) buy JPY's volatility is what ran the stock show today. Gold and silver fell further as did WTI crude (back under $103). The S&P 500 is now around 60 points rich to 10Y bond yields (and the world is still short bonds); credit spreads are well off their tights and VIX isn't falling; breadth is weakening and so is volume... but apart from that... BTFATH. A late-day selling frenzy took the shine off the CNBC headlines with stocks closing red.
Western strategists and talking heads, we are sure, will know better and continue to pitch China as the renewed engine of growth in the world and that everything will be fine... but when the country's largest property developer says, the "golden era" for China’s property market has passed, adding that "The period in which everybody makes money out of property is gone," perhaps it is time to listen? Of course, we are sure there will be an orderly exit (just as there was in CNY last night which crumbled to 19-month lows) but as China Vanke Co's Yu Liang warns, "the phase where 'whoever buys makes money' is gone." Property sepculators are frustrated that the government won't bail them out "are they tryng to kill us?" as one analyst notes "this downturn is more serious than 2008."
Our response to a question asked by CNBC-- “Why if everybody is talking about inflation is the bond market not moving?
- Yellen Concerned by Housing Slowdown She Has Scant Power to Cure (BBG)
- Because snow in Q1? Citigroup’s CFO Says Trading Revenue Could Slide 25% (BBG)
- Banks Raise Caution Flag on Trading (WSJ)
- The answer is yes: Hilsenrath asks if BOJ’s Kuroda Awakening to His Limits? (WSJ)
- Google Develops Prototype Cars for Fully Autonomous Driving (WSJ)
- Amazon Expects Lengthy Hachette Dispute (WSJ)
- Tencent $1 Billion Game Shows Global Hunt for Mobile Hits (BBG)
"Unbridled faith in financial markets prior to the crisis and the recent demonstrations of corruption ... has eroded social capital. An unstable dynamic of declining trust in the financial system and growing exclusivity of capitalism threatens.... Capitalism must reassess bankers' sense of self."
With much hotter CPI & PPI reports the last two months, we anticipate the May reports before Fed's June meeting to be on the high side, and that the Fed will probably have to address these new inflation pressures....