Category: zerohedge

White House Communications Director Hope Hicks has joined a long and distinguished line of current and former Trump administration officials or informal advisors who’ve refused to discuss their interactions with the president with a Congressional committee or its investigators.

According to CNN and CBS, which “somehow” had the story just hours after Hicks concluded her closed-door meeting, Hicks refused to answer questions about her time in the White House or during the transition. She met with the House Intelligence Committee to deliver private testimony on Tuesday, arriving mid-morning to encounter a swarm of reporters waiting outside.

 

JUST IN: Trump aide Hope Hicks arrives on Capitol Hill for questions in the House Intel Committee’s Russia investigation pic.twitter.com/gfdE80W1FD

— MSNBC (@MSNBC) February 27, 2018

Hours into her testimony, Hicks reportedly started refusing to answer questions when the subject drifted from the campaign – the focus of the investigation – to her time during the transition and at the White House.

“She’s answered every possible question on the campaign,” said Rep. Peter King, R-New York, though he said questions about her time on the transition or in the White House were apparently off the table.

“We got Bannoned,” said Democratic Rep. Denny Heck.

Republican Rep. Tom Rooney told CBS Hicks was forthcoming about her time on the campaign, but said it was a “legitimate concern” whether any witness could invoke privilege with regard to the transition period. “Those questions need to be answered,” he said.

Bannon famously fought with both the House Intel Committee and the Mueller probe, eventually only answering a list of 25 questions issued by the committee that was “literally scripted,” according to Adam Schiff, the top Dem on the Committee.

Former Trump campaign manager Lewandowski refused to answer questions outside of the campaign, CBS noted. It’s unclear if Hicks’ refusal will become an issue, or if lawmakers will more or less let it slide.

Hicks was initially scheduled for the sit down in January, but abruptly postponed it as White House lawyers figured out what the scope of her testimony should be.

Lawmakers particularly want to hear about any contact campaign officials may have had with Russian intermediaries, and were also interested in Hicks’ account of the drafting of the White House’s initial statement, drafted aboard Air Force One, responding to press reports of a June 2016 Trump Tower meeting between Russians and Trump campaign officials, which, of course, took place last spring, not during the campaign.

Hicks has already been questioned by Mueller’s team and the Senate Intelligence Committee.

via Zero Hedge http://ift.tt/2GQqAVY Tyler Durden

ProShares saw a stunning, record-smashing $850 million crash in assets-under-management flood out of their VIX ETF complex in February… and so they needed to do something!!

Almost 50% of their AUM just evaporated…

And so ProShares has decided to slash the leverage of their two levered VIX ETF funds – SVXY (from 2x to 1.5x) and UVXY (from -1x to -0.5x)…

ProShare Capital Management today announced that the investment objective of two of its ETFs will change effective as of close of business on February 27, 2018.

ProShares Ultra VIX Short-Term Futures ETF (NYSE Arca: UVXY) will change its investment objective to seek results (before fees and expenses) that correspond to one and one-half times (1.5x) the performance of the S&P 500 VIX Short-Term Futures Index (“Index”) for a single day.

The Fund’s investment objective currently is to seek results (before fees and expenses) that correspond to two times (2x) the performance of the Index for a single day. If the Fund were successful in meeting its new objective, on a day the Index rose 1%, the Fund should rise approximately 1.5%, before fees and expenses. Similarly, on a day the Index fell 1%, the Fund should fall approximately 1.5%, before fees and expenses.

ProShares Short VIX Short-Term Futures ETF (NYSE Arca: SVXY) will change its investment objective to seek results (before fees and expenses) that correspond to one-half the inverse (-0.5x) of the Index for a single day.

The Fund’s investment objective currently is to seek results (before fees and expenses) that correspond to the inverse (-1x) of the Index for a single day. If the Fund were successful in meeting its new objective, on a day the Index fell 1%, the Fund should rise approximately 0.5%, before fees and expenses. Similarly, on a day the Index rose 1%, the Fund should fall approximately 0.5%, before fees and expenses.

Certain regulatory approvals will be required for the Funds to permanently pursue these new investment objectives. In the event that such approvals are not obtained, the Funds will consider other courses of action.

As Vance Harwood (@6_Figure_Invest) noted earlier, these actions will reduce ‘termination event’ risk and should also help reduce rebalancing stresses around the end of the day.

via Zero Hedge http://ift.tt/2t2FSoD Tyler Durden

Authored by Simon Black via SovereignMan.com,

Earlier this month, the United States government released its annual financial report for the year 2017.

This is something the government does every year, similar to how large companies like Apple, or Warren Buffett’s Berkshire Hathaway, publish their own annual reports.

Unlike Berkshire and Apple, though, whose financial reports typically show strong, positive results, the US government’s financial statements are a complete horror show.

Right at the beginning of the report, the government explains that it’s “net loss” for the year was an unbelievable $1.2 TRILLION.

Read that number again.

$1.2 trillion. That’s simply staggering.

It’s larger than the size of the entire Australian economy… and constitutes a loss of more than $2.2 million per minute.

This is not a conspiracy theory or irrational fantasy.

This is the Treasury Secretary of the United States of America publicly announcing that the federal government lost $1.2 trillion on page ‘i’ of its annual financial report.

What’s even more alarming is that 2017 was a great year.

There was no war. No recession. No epic financial crisis.

In his introductory letter, in fact, the Treasury Secretary proudly stated that “[t]he country enjoyed a pick-up in [economic] growth in 2017. Unemployment is at its lowest level since February 2001, consumer and business confidence are at two-decade highs, and inflation is low and stable.”

In short, everything was awesome in 2017.

Even the government’s overall revenue was a record high $3.3 trillion for the year.

Yet despite all that good news… despite all those positive developments and record revenue… they STILL managed to lose $1.2 trillion.

If the government loses $1.2 trillion in a GOOD year, how much do you think they’ll lose in a BAD year? How much will they lose when they actually do have a recession to fight? Or another war. Or a major banking crisis?

More importantly, how long can something so unsustainable possibly last?

But the fun doesn’t stop here.

Further in the report, the government reviews its own assets and liabilities… effectively calculating its “net worth”.

It’s just like how an individual might calculate his/her own net worth– you add up the value of your assets, like your home, car, and bank account balances. Then subtract liabilities like mortgage and credit card debt.

The end result is your net worth. And hopefully it’s positive.

The government’s is hopelessly negative: MINUS $20.4 trillion. (See page 55 of the report.)

And that’s worse than its result from the previous year’s MINUS $19.3 trillion– meaning that the government’s net worth decreased by about 6% year over year.

To be clear, a net worth of negative $20.4 trillion means that the government added up the values of ALL of its assets. Every tank. Every aircraft carrier. Every acre of land. Every penny in the bank.

And then subtracted its enormous liabilities, like the national debt.

The difference is negative $20.4 trillion, i.e. the government has far MORE liabilities than it has assets.

If the government were a business, it would have gone bankrupt long, long ago.

On top of that, though, the government separately calculated its long-term liabilities from Social Security and Medicare.

As we frequently discuss, both Social Security and Medicare are running out of money.

And according to the government’s own calculations (on page 58), the “total present value of future expenditures in excess of future revenue” for Social Security and Medicare is MINUS $49 TRILLION.

Essentially this means that the two largest and most important pension and healthcare programs in the United States are insolvent by nearly $50 trillion.

Altogether, the government is in the red by almost $70 trillion.

It’s remarkable that this is not front page news.

There has not been a single utterance from mainstream media about the pitiful, dangerously unsustainable finances of the federal government.

I’m certainly not suggesting that the sky is falling, or that there’s some imminent disaster that will strike tomorrow morning.

But any rational person needs only look to the pages of history to find dozens of examples of once dominant powers who were crippled by their excessive debts.

It may take several years to feel the full impact. But it would be utterly foolish to believe that this time is different.

*  *  *

And to continue learning how to ensure you thrive no matter what happens next in the world, I encourage you to download our free Perfect Plan B Guide.

via Zero Hedge http://ift.tt/2HMTvMd Tyler Durden

WTI/RBOB prices sank today (amid OPEC and IEA comments and a dollar spike) ahead of tonight’s inventory data. Following last week’s surprise draw, API reported a crude build this week (though smaller than expected) and along with another gasoline build, sent energy prices lower.

 

API

• Crude +933k (+3mm exp)

• Cushing -1.277mm (-1.2mm exp)

• Gasoline +1.914mm

• Distillates -1.473mm

Following last week’s surprise crude draw, expectations were for a sizable build but API data showed only a modest build (but still a build) and once again Gasoline inventories increased.  If the Cushing data holds for tomorrow’s DOE data, this would be 10th weekly draw in a row…

“The comments from the IEA head about the pace of U.S. shale growth might have taken the wind out of the bull’s sails,” John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund, told Bloomberg. Heftier stockpiles and a slide in refiner demand “should end up being a bearish factor for the market as well.”

Prices had limped lower into the API data (with WTI back below $63), then confused algos briefly popped prices before they sank to the day’s lows…

via Zero Hedge http://ift.tt/2HNsAjg Tyler Durden

Authored by Jim Quinn via The Burning Platform blog,

“Once you strip out the effects of the debt binge, the artificial stimulus via currency depreciation, and the fabled ‘wealth effect’ from the equity market runup, real GDP growth stripped-down to its core was the grand total of 0.7% last year. Potemkin would be proud.” – David Rosenberg

It appears every president finds the religion of false economic narrative once they ascend to power. Trump never stops babbling and tweeting about the fantastic economy and raging jobs market since his election. He has embraced the stock market bubble as proof of his brilliant leadership, rather than the tens of trillions in debt propping up the most overvalued market in world history. Every president takes credit for any good news, spins bad news as good news, or blames the previous president for bad news that can’t be denied. The president has absolutely zero impact on the economy or stock market over the short term. It’s like taking credit for the sun rising in the east each morning.

The Big Lie method works wonders when you have a willfully ignorant, mathematically challenged, easily manipulated populace. I spent the entire Obama presidency obliterating the fake economic data perpetuated by his BLS, BEA and every other government agency trying to paint a rosy economic picture. I voted for Trump because the thought of Crooked Hillary as the president made me ill. Despite disagreeing with many of his economic, budgetary, and military policies during his first year in office, I’d vote for him again over Hillary in an instant. The thought of having that evil shrew running the country gives me chills.

But that doesn’t mean I will stand idly by, cheerlead and ignore the facts to provide cover for Trump. I despise false narratives, whether they are spun by Democrats or Republicans. The Deep State still runs the show on a day to day basis, and it is in their best interest to mislead the public, keep them sedated, unaware of how bad things have become, and oblivious to the coming debt shitstorm destined to destroy this country. Every remedy prescribed by the Deep State players within the government, Federal Reserve, and Wall Street since 2008 not only did not cure the disease infecting this country, but exacerbated the disease and insured the inevitability of our demise.

It is particularly irritating to hear Trump and his minions bloviating about the tremendous job growth since he was elected. U.S. job growth has averaged 176,000 jobs per month over the past year. That’s down from an average of 208,000 in the prior year, and 217,000 over the prior 4 years. But why let facts get in the way of a good story. The number of new jobs being added per month is on a declining slope. We are eight years into a fake recovery built on trillions in debt, with the ensuing bubbles in the stock market, bond market and real estate market. I don’t need politicians pissing down my back and telling me its raining.

The other false narrative flogged relentlessly by politicians, Wall Street shysters, CNBC bimbos, and a myriad of highly paid MSM talking heads is the record stock market highs are a reflection of a strong robust economy. What a load of crap. The stock market went up 360% over the last nine years as real wages stagnated and even the highly manipulated GDP barely grew at a 2% rate. The Dow hit a record 26,616 on January 26, proceeded to collapse by 2,800 points in less than two weeks, and has since soared by 1,700 points in the next two weeks. None of these moves had anything to do with the economy, corporate earnings or cash on the sidelines.

The stock market bubble has been driven solely by the Federal Reserve providing free money to Wall Street, with a guaranteed put by Bernanke and then Yellen. QE, ZIRP, and an unspoken agreement between the central bankers at the Fed, ECB, Bank of Japan and the Swiss National Bank to buy stocks has effectively elevated stocks around the world to absurd valuations. These highly educated intellectual-yet-idiots now cannot unwind their debt house of cards without blowing up the world financial system. With total public and private U.S. debt of $67 trillion and over $200 trillion of unfunded liabilities, this powder keg of debt awaits the inevitable spark.

The Fed announced the unwinding of their $4.4 trillion balance sheet of dodgy mortgages, treasuries, and other Wall Street created dreck, many months ago. They had been all talk until the last week of January when they reduced their balance sheet by a measly .5%. Do you think it was just a coincidence the stock market imploded by 10% in an instant? Shockingly, the Fed increased their balance sheet by $15 billion over the next two weeks and the stock market rebounded dramatically. Weakening the dollar at the same time didn’t hurt either.

The other excuse for the stock market correction was the CPI hysterically coming in too high at 2.1% and resulting in the 10 year Treasury surpassing 2.9%. It is hysterical the government expects the plebs to believe health care costs are only rising by 2%, auto prices are falling, food prices are increasing less than 2%, and shelter expenses are only rising by 3%. Anyone living in the real world knows their living expenses are rising at an above 5% clip, while their wages are barely growing. It is absolutely essential for the Deep State to disguise the true level of inflation or panic and retribution would ensue.  

Proof the fake employment numbers are nothing but a propaganda ruse can be seen in the real average hourly earnings chart. Real earnings have not budged in over two years when the economy was supposedly adding 200,000 jobs per month. And this is using the patently false CPI as the measure of inflation. In reality, real wages have been in steady decline since 1999. If millions of jobs have been added over the last two years, they must be the shittiest paying jobs possible to not budge wages up one iota. Fries with that Coke?

This is exactly what the Deep State controllers want. They don’t want real wages for real people in the real world to go up. The true purpose of the actions taken since 2008 has been to enrich Wall Street while impoverishing Main Street. Mission accomplished. Record corporate profits and stock market gains have not “trickled down” to the plebs. The over-class has reaped all the benefits. If they allowed real wages to increase by more than 2%, their low interest rate scheme would become untenable. Look what has happened when 10 Year Treasuries approached 3% – financial panic.

A critical thinking individual might ponder why a 3% interest rate would be fatal to the US economy if we truly have 4% unemployment, GDP is really growing at 3%, and consumer confidence is at all-time highs. In 2007 the 10 Year Treasury was 5% and savers could get a 5% in a money market account. Today, with the 10 Year around 2.85%, the average money market pays .12%. The Too Big To Trust Wall Street cabal reaped all the ZIRP benefits and continue to screw the little guy. While they borrowed from the Fed for free, they continued to charge 15% or higher on their credit cards to the ignorant indebted masses.

Let’s face the facts. Your overlords have doubled down on debt to keep this crumbling empire alive, so their looting and pillaging operation could continue. The fractional decline in debt during the 2008/2009 Fed created financial crisis virtually destroyed the global financial system. The solution to this debt problem has been to add tens of trillions in debt while artificially suppressing interest rates by rigging markets. The U.S. alone has added $13 trillion of debt since 2009 – a 25% increase in eight years. The corporate media and Wall Street cheer, as consumer debt surpassed its previous high and stands at over $13 trillion, with revolving credit card debt soaring.

With only 4% unemployment and nothing but rosy economic indicators for as far as the eye can see, one might ask why revolving credit card debt is at all-time highs and the personal savings rate is at all-time lows. Are these two indicators a positive economic sign or a sign of desperation for the average working class family? If the bottom 80% have not had any real wage gains in over a decade, are paying through the nose for healthcare, rent, education, energy, and food, maybe their only choice is depleting their savings and surviving on their credit cards. Does that sound like a Goldilocks scenario for Main Street?

Do you remember the strident mainstream media narrative about the best holiday retail season in years? It seems the Big Lie narrative has been revealed to be false by actual data. Retail sales were flat in December and down substantially in January. The trend is down. Retail sales in the discretionary categories are negative. But at least gasoline sales are robust, due to soaring prices. The debt based auto sale (rental) scheme is unraveling as defaults soar among the millions of subprime borrowers comes home to roost. The average family is barely scrapping by and retail sales will continue to stagnate, while thousands more retail stores are shuttered. Ghost Malls R Us.

The precarious fragile nature of our entire debt dependent financial house of cards has been revealed by the reaction of the housing market to the slightest blip up in mortgage rates over the last two months. A lousy 37 basis point increase in mortgage rates resulted in mortgage applications plunging. And we all know what happened next.

Existing and new home sales both collapsed in a heap. We have home prices at all-time highs, exceeding 2005 bubble highs. We have heavily indebted millennials working shit service jobs who will never be able to afford to buy. We have a new tax law that no longer rewards home ownership. And now we have rising mortgage rates. Get ready for housing collapse part deux. Home prices are poised to fall by at least 30%, again. Thank you sir may I have another. I wonder how much of the $8.9 trillion of mortgage debt will be written off this time and passed to the taxpayers.

The Deep State overlords and their lackeys at the Federal Reserve hit the panic button after the 10% correction two weeks ago. The Fed increased their balance sheet, they’ve managed to push rates back below 2.85%, and they have drastically weakened the dollar to support their Wall Street masters. They can’t keep this up for long. The Fed committed to drastically reducing their balance sheet and weakening the dollar has had zero impact on our worsening trade deficit. Bug is approaching windshield.

Those controlling the strings behind the scenes might believe their brilliant maneuvering, devious schemes, and potent propaganda have successfully navigated the rock shoals of looming financial disaster, but their hubris will end up sinking the ship in the end. Any success they attribute to their intellectual capabilities can also be attributed to just plain dumb luck. The lethargic, plodding, boring economic recovery has been just right for Wall Street and the political class. Not too hot and not too cold. Just right to keep interest rates at emergency level lows while not resulting in workers actually getting wage increases which would create inflation.

It’s truly been a Goldilocks recovery for the stock owning .1%. But, as Ludwig von Mises noted many decades ago, the boom cannot continue indefinitely. Valuations are stretched to the breaking point. Those in power are unwilling or unable to voluntarily renounce further credit expansion. They have laced Goldilock’s porridge with arsenic and it is just a matter of time until she’s dead. A depression is in our future, no matter what actions are taken at this point. Keep calm and prepare yourself.

“The boom cannot continue indefinitely. There are two alternatives. Either the banks continue the credit expansion without restriction and thus cause constantly mounting price increases and an ever-growing orgy of speculation – which, as in all other cases of unlimited inflation, ends in a “crack-up boom” and in a collapse of the money and credit system. Or the banks stop before this point is reached, voluntarily renounce further credit expansion, and thus bring about the crisis. The depression follows in both instances.” – Ludwig von Mises

via Zero Hedge http://ift.tt/2EWkIOv Tyler Durden

In a move that represents a serious blow to Trump son-in-law Jared Kushner’s standing in the West Wing, Politico reports that all White House aides working on the highest-level interim security clearance were informed on Friday that they will have their clearance downgraded from “Top Secret/SCI-level” to “secret” – walling them off from the most sensitive information.

Many had expected that Trump would grant Kushner a waiver, even though Trump himself said Friday that he would let Chief of Staff John Kelly decide if such an exception should be granted. Friday’s memo was not signed by Kelly.

The decision is the first major shakeup since the dismissal of former White House staff secretary Rob Porter, who was exposed for abusing both of his ex-wives. The FBI insinuated that it had informed the White House of Porter’s conduct, appearing to contradict a timeline of events initially offered by Kelly.

The White House has been reticent about the downgrade:

White House press secretary Sarah Huckabee Sanders declined to comment on Kushner’s clearance status at a briefing Tuesday.

“We actually haven’t commented on Jared’s issue indicated, but we have commented on his ability to do his job. Which, he’s a valued member of the team and he will continue to do the important work that he’s been doing since he’s started in the administration.”

Kushner’s attorney said the downgrade wouldn’t impact Kushner’s ability to continue to do his job.

Kushner’s attorney Abbe Lowell said in a statement that Kushner “has done more than what is expected of him in this process.”

Lowell added that the changes would “not affect Mr. Kushner’s ability to continue to do the very important work he has been assigned by the president.”

Indeed, media reports indicated that White House staffers were already exploring workarounds to help Kushner continue to handle his sizable West Wing portfolio – which includes several sensitive foreign policy issues – without having a top-level security clearance. Kelly also issued a statement last week saying any changes to security clearance wouldn’t impact Kushner’s ability to do his job.

“As I told Jared days ago, I have full confidence in his ability to continue performing his duties in his foreign policy portfolio including overseeing our Israeli-Palestinian peace effort and serving as an integral part of our relationship with Mexico,” Kelly said in the statement.

The decision to downgrade staff still working on interim clearances indicates that Kelly is prepared to impose the same sort of discipline on the White House clearance process that he has tried to impose on the West Wing staff more broadly, Politico said.

“The American people deserve a White House staff that meets the highest standards and that has been carefully vetted – especially those who work closely with the president or handle sensitive national security information,” Kelly told colleagues in a memo circulated on Feb. 16. “We should – and in the future, must – do better.”

But no matter what workarounds the White House staff come up with, the fact remains that Kushner will no longer be able to sit in on his father-in-law’s daily intelligence briefings, and myriad other meetings to which he previously had unfettered access.

It’s hard to believe this change won’t severely limit the influence he has on the president – even if he retains his senior advisor position.

via Zero Hedge http://ift.tt/2F7s8Oi Tyler Durden

Just when you thought it was all over…

 

Quite a chaotic day across asset-classes today – the most chaotic since the XIV crisis moves…

 

Once Powell had finished his prepared remarks and confidently expressed his expectations for the economy (and rate hikes), stocks tumbled (as rates spiked)…

 

Only The Dow managed to hold on to yesterday’s gains…

 

Nasdaq managed to get back into the green for the month but slipped notably lower all day…

 

DOW stalled at a 75% retracement of its losses…

 

All of which leaves stocks lower for February and unless tomorrow sees a heroic panic-bid in the S&P, will break the unprecedented 15-month win streak… although that hanging-man candle for Feb is stunning…

VIX jumped notably on the day…

 

Having shifted back into contango yesterday for the first time since the crisis, the VIX term structure snapped back into backwardation (inverted) today following Powell’s hawkish comments…

All major US Equity index ‘VIX’ measures are once again higher for the month of Feb…

 

Treasury yields spike today on Powell’s relatively hawkish comments… then rallied back lower in yields as stocks tumbled.

 

Notably 10Y Yields tested the CPI/FOMC highs before fading this afternoon as stocks sank on infrastructure headlines…

 

As Treasury yields spiked during Powell’s testimony, Breakevens slipped lower after recoupling from the early Feb chaos…

 

The entire curve shifted in parallel on Powell but then 2s30s really started to flatten…

 

The Dollar Index spiked during Powell’s testimony, running stops above last week’s FOMC Minutes highs…

 

Commodities all tanked together as the dollar spiked…

 

Nasdaq and Bitcoin recoupled…

 

With Bitcoin stabilizing above $10,000…

 

Finally,  we note that US macro economic surprise data has tumbled to its lowest since October… are stocks about to catch back down?

via Zero Hedge http://ift.tt/2CLHBhJ Tyler Durden

Authored by Lexi Morgan via Intellihub.com,

Why would media companies not want to see footage from inside of the school that would presumably show a heavily-cladded gunman wearing full body dress?

Three media companies filed suit in court on Monday, in an effort to obtain security camera footage captured on cameras mounted outside of the Majority Stoneman Douglas High School.

But for some reason nothing was filed to obtain footage from inside the school?

Footage that would presumably show a heavily-cladded shooter wearing full body dress, as reported by both teachers and students who admit there was a scheduled code Red drill on the day of the shooting.

Moreover, as it turns out, at least four officers were told by Broward County Sheriff Scott Israel to stand down and to not enter the school unless they were wearing their body cameras which none of them were.

The School Board of Broward County, the Broward County Sheriff’s Office, Sheriff Scott Israel, and Majority Stoneman Douglas H.S. Superintendent Robert Runcie are all listed as defendants in the lawsuit.

via Zero Hedge http://ift.tt/2oBCyLU Tyler Durden

There are those who will breathlessly tell you to ignore all marginal changes in the market, such as the “tiny” move in the VIX from 10 to 15, only to suffer a 96% loss on their inverse VIX ETF when the “tiny” move becomes just a “little bigger” after a short squeeze cascade is triggered because small moves are that much more more acute when starting from a small base. They are also those who will tell you to disregard “modest” moves in the FRA-OIS, the conventional metric for “funding pressures” as we said last week  – after all the move is tiny in the context of “normal times”, yet forget to mention that the Fed’s balance sheet is now $4.4 trillion, or 5x higher than normal accentuating even the smallest rate moves. In fact, these are all the same people who will tell you to ignore all changes in the market, no matter how small, until something breaks and then they tell you it was so obvious the crash was coming.

Meanwhile, we’ll just note that the same Libor-OIS (or its intraday updated cousin, the FRA-OIS) we highlighted less than a week ago  when it was “only” 32.7bps, has blown out by 8 bps in just the past week, and is now over 40bps, the widest since October 2016 and blowing out, a huge move when one considers the hundreds of billions in TRS and other layered swaps levering even one basis point.

Then there is Libor: as of today, the benchmark 3M USD Libor has risen above 2% for the first time since December 2008, as financial conditions, if only in the unsecured dollar funding market – which just happens to benchmark trillions in securities – becomes dangerously tight.

Putting the move in context, one week ago, JPMorgan and BofA said they expect 3M Libor to hit 2% by end-1Q; it get there 5 weeks early as the bond vigilantes wake up.

So what is going on? As we explained not once but twice last week, there are fears that repatriation flows will soak up all much of the excess liquidity on the front end as companies rush to delever.

Then there is the recent surge in bill issuance: as Citi wrotes last week, there is evidence that last week’s $200bn surge in T-bill and Treasury issuance “may be contributing to a tightening in $ financial conditions” which represents a negative for credit.

As Citi explained, in addition to the direct effect of the issuance on real yields, when the US Treasury raises money it initially deposits it in the Treasury General Account (TGA) at the Fed. Rather than growing its balance sheet, the Fed effectively sterilizes these deposits with a reduction in private sector banks’ excess reserves. This in turn reduces the capital available to be deployed in markets for cross-currency and other arbitrages, and means there is a direct link between the rise in the TGA and this week’s rise in $ Libor-OIS (chart below, left hand side).

Another adverse effect, one we discussed last week, is that this also feeds through into a more negative €-$ cross-currency basis (shown below), making FX-hedged purchases of US securities more expensive for foreigners. According to Citi estimates, a rise in the TGA to around $350bn ought to add 2-4bp to the basis; however Citi also suspects the effect may prove considerably greater (chart above, right hand side).

As we said last Friday, “the irony is that the tighter the USD-funding conditions get, the wider the FRA/OIS spread will drift, the less global demand for FX-hedged US paper there will be, the higher US Treasury rates rise to prompt demand, until eventually yields push so high that the already stretched correlation between rising yields and stocks finally snaps, leading to an equity correction (or crash), which in turn forces the Fed to ease financial conditions, resetting the cycle all over again.”

Bottom line, in addition to following the 10Y, the USD, and of course the S&P500, add Libor/OIS to your watchlist, especially now that it is on the verge of breaching a 5 years trendling: it may prove the most forward-looking canary in this particular coal mine.

via Zero Hedge http://ift.tt/2owmr2Z Tyler Durden

Authored by Douglas Stewart via Medium.com,

It appears that Google may have silently joined the ranks of one side of the gun control debate.

On February 26, Twitter users LADowd and Xavier Dreyman noticed that results in the most-used search engine in the world were returning nothing in the “Shopping” tab when any query included a gun part, model, or manufacturer.

His first result was for the rather broad term of “rifle scope”. This netted zero results while providing just two sponsored results below the main search. Curiosity must’ve taken over and he continued on looking for “remington razor” which also netted a whopping 0 results. Turns out, the problem was that Remington is most known for firearms.

Twitter users became even more curious. Myself and others decided to test this and any shopping result for anything related to “Remington”, “Glock”, and “Colt” turns up nothing. Twitter user “Stigcicle” found a more concise list that includes censoring “Steyr”, an Australian town has the misfortune of sharing the name with a gun manufacturer. This includes shopping for parts for your Dodge Colt; if you still have one it is likely in need of many parts anyway.

In order to verify, I took a video of the search results to confirm. Sure enough, it returns 0 results.

In the wake of the Marjory Douglas Stoneman shooting that left 17 dead, renewed calls for gun control are center stage. So are the demands for consumers to boycott the NRA; companies that have business relationships are also facing mounting pressure from consumers and activists.

However, Google’s actions in the wake of the this tragedy are not a surprise given the company’s known political stances. What is surprising is the action was taken in silence. In a time when so many are proud to announce their disagreements with the NRA, one cant help but wonder if this is Google’s way of testing the waters. After all, if it backfires, they can easily claim it was the mistake of some unaccountable department with nameless employees. If it wins, they claim victory. It almost looks strategic.

via Zero Hedge http://ift.tt/2oBW8aJ Tyler Durden