Forget The Hindenburg Omen and The Hilsenrath Omen, today we have the real deal as The Baltic Dry Index hits the ominous 666 level – the lowest print for this time of year on record. Of course, just like with oil – this is brushed off as over-supply (not under-demand) and we are sure someone will opine how positive this drastic deflation of shipping rates is for global business… but still – this is the lowest print since September 2012 (and practically the lowest since the recession).
At 666, The Baltic Dry is practically at post-recession lows…
In the two days after Syriza’s dramatic victory in the local Greek election, global investors assumed this loud cry against European policies would mean… more of the same, and as a result not much changed in the risk assessment of Greek assets. Then, overnight, following the previous report that not only does Syriza mean business but it is actively pivoting away from Europe (and toward Russia?), and everyone started paying attention, with a waterfall of selling engulfing not only the Greek stock market but also its bonds, which are crashing in the process sending the 3 Year yield to 16.4%, the highest since the restructuring, and the 10 Year either below or above 10%, depending on which data source is used (Bloomberg has them slightly below, others reporting 10-year bond yields up 50 basis points at 10.30%).
While nations around the world continue to de-dollarize, Russia signed into law its anti-crisis plan today (though details will not be released until tomorrow). Prime Minister Dmitry Medvedev, however, was quite vociferous in some of his threats, warning The West that the “Russian response – economically and otherwise – will know no limits” if Russia is cut off from the SWIFT payments system. Additionally, as Royce, the chairman of the House foreign affairs committee, explains Iran nuclear talks “appear to be stalemated,” just days after Iran completes its de-dollarization and news today, that Russia and Iran plan to create a mutual account for bilateral payments in national currencies. Continue reading »
“There is no alternative…” “Cleanest dirty shirt…” “Fed has to raise rates…” “Decoupled…” – Umm no! 2015 has started with the worst disappointment and weakness in US Macro data in at least a decade… but apart from that, BTFD!
Infographics on the distribution of wealth in America, highlighting both the inequality and the difference between our perception of inequality and the actual numbers. The reality is often not what we think it is.
As reported yesterday, in a surprise announcement late in the day, and shortly before the S&P downgraded Russia to junk (perhaps as part of the fine-print of its $1.5 settlement with the DOJ for daring to downgrade the US in 2011), the US Department of Justice announced it had busted a Russian spy ring in New York City, where at least one of the three people was said to be involved with finance and potentially, capital markets.
Specifically, the DOJ announced “charges against Evgeny Buryakov, aka “Zhenya,” Igor Sporyshev and Victor Podobnyy in connection with Buryakov’s service as a covert intelligence agent on behalf of the Russian Federation (Russia) in New York City, without notifying the U.S. Attorney General of Buryakov’s status as an agent of Russia, as required by federal law. Buryakov was placed under arrest earlier today in Bronx, New York, and is scheduled to appear before U.S. Magistrate Judge Sarah Netburn in federal court in Manhattan later today. Sporyshev and Podobnyy no longer reside in the United States and have not been arrested. By virtue of their prior positions in the United States on behalf of Russia, both of them were protected by diplomatic immunity from arrest and prosecution while in the United States.” Continue reading »
“This is not blackmail,” explains new Greek Finance Minister Yanis Varoufakis, “we simply want to end this seemingly never-ending Greek Crisis.” In what must be worryingly calm and simple to comprehend words for Brussels, Varoufakis tells CNBC’s Michelle Caruso-Cabrera, “this is what happens when you humilate a nation and don’t give it any hope.” Carefully noting that membership in the Euro is not imperative, Varoufakis concludes “bankruptcy cannot be dealt with by borrowing more,” asking rhetorically, “how can I look the German and Finnish taxpayer in the eye and tell them you know I can’t really pay you the money I have already borrowed from you…” but lend me more so I can pay back the ECB?
As Varoufakis explains, he believes Europe is willing to negotiate haircuts – anything else appears a waste of time.
“That’ll teach them Russians” – oh wait… The kneejerk selling of Russian Rubles and stocks post-downgrade has almost entirely been erased and dip-buyers appear to be greatly rotating from US to Russian stocks today…
In the early 1970s, there were about 200,000 new US businesses created each year (net of closures). Now, the number is negative. Why are Americans getting poorer?Look no further. No new businesses (net). No new jobs (again net). No new wealth. Under Obama and Draghi, crony capitalism flourishes. Real capitalism dies.
Despite stagnant wages, surging jobless claims, and global geopolitical anxiety, US consumers have not been this exuberant since August 2007… a month before the great quant fund blow-up and the top of US equities… But it’s different this time, we’re got money-printing and low oil prices… right? Texas confidence plunged from 119.4 to 111.9 (led by a huige crash in expectations from 95.8 to 83.5). Finally, expectations for higher incomes in the next 6 months surged higher – almost at record levels of hope – despite the slump in hourly average earnings.Continue reading »
Overnight, there was much commotion in the precious metal space when, out of the blue, the IMF reported that months after announcing it had unexpectedly repatriated over 120 tons of gold from the NY Fed, the Netherlands had also purchased some 10 tons of gold in the open market, taking its total to 622 metric tons, the highest since 2007, a period in which it had been unchanged for 8 years.
This was promptly reported by both Reuters:
Netherlands added to its gold reserves for the first time in 16 years. It bought nearly 10 tonnes in Dec to bring total to 622 tonnes
The Netherlands added to its gold reserves for the first time since 1998 as the ninth-biggest holder boosted assets to the highest in seven years, while Russia bought for a ninth month, International Monetary Fund data show.
Bullion reserves in the Netherlands climbed to 20 million ounces or 622 metric tons in December, the highest since 2007, after being unchanged at 19.7 million ounces from December 2008 through November, the IMF’s website showed. Russia, with the fifth-biggest hoard, held 38.8 million ounces last month, the most in at least two decades, the data show. Continue reading »
Following November’s across the board ugliness in Durable Goods data, the hockey-stick extrapolators all positioned for the bounce back… Only 1 of 57 economists expected a negative print! But the actual data was a total disaster. Against expectations of a 0.3% rise (following last month’s 0.7% drop), December printed down 3.4% and November was revised drasticaly lower to down 2.1%. This is the lowest durable goods ex-transports since March.
#2) Markets reacted positively to last Thursday’s announcement because Draghi doubled the amount of QE that he leaked to the press on Wednesday. Financial media pegged QE at 600 billion euros on Wednesday and 1.2 trillion euros on Thursday. Once again, Draghi played the Narrative game like a maestro. Continue reading »
Over two years ago, we first highlighted Yanis Varoufakis’ perspectives on the destruction of Greece and Europe’s bogus growth pacts. Since then he has grown in both reason and popularity as his no-nonsense discussons of the mis-design of the euro (and potential solutions) have made him the front-runner to be Syriza’s new finance minister. Never one to mince words or play politics, Varoufakis tells Channel 4’s Paul Mason in this brief (but chilling for Brussels) interview, what his party would do if it gets into government in Greece, and admits the prospect of power in Europe is “scary”. As he sums up, “we are going to destroy the Greek oligarchy system,” and with it, we suspect, much of the narrative that holds the fragile European Union together…
As Varoufakis previously explained,
The Troika is trying to suffocate us and to put pressure on the democratic choice by telling us: either you follow our requirements, or you will be cast into hell. Continue reading »
Over the weekend, in a repeat of rumors that were widespread last year, Forbes ‘reported’ about Project Chrome, a massive corporate reorganization for IBM that would see Big Blue cull over a quarter of its staff – in real terms that means over 110,000 employees, as early as next week. IBM stocks surged higher on this ‘great’ news… and then, disappointment started as “the largest corporate restructuring in history” was denied by the company…
Well that didn’t take long. Russian Finance Minister Siluanov has responded to S&P’s “junk” downgrade of The Russian Federation:
*SILUANOV: S&P DOWNGRADE OF RUSSIA SHOWS ‘EXCESSIVE PESSIMISM’
*SILUANOV: NO REASON TO EXPECT `MASS’ DEBT REDEMPTION REQUESTS
Adding in his statement that he “sees no reason to dramatize” the situation, Siluanov adds that the cut should not have any serious effect on Russia’s capital markets. We assume by “dramatize,” he means – they wil not be ‘visiting’ the local ratings agencies offices for a chat anytime soon.