With Apple Watches still on back-order (due to defective supply, not abundant demand) and the sell-side confused as to whether it will be a great success (Morgan Stanley's exuberant extrapolation of Google searches) or a damp squib (KGI cut estimates on demand slowing), the latest projections from Slice Intelligence suggest things are definitely going so well for the world's largest gadget-maker.

After the first minute of the first day's initial (and oh so American short-attention-span-confirming) burst of buying...


Things have tailed off dramatically... averaging under 30k per day being ordered (according to Slice Intelligence projections)

Slice Intelligence's projections are based on data that it tracks from US consumer spending through e-commerce email receipts.

As QZ reports,

Apple has taken orders for almost 2.5 million watches in the US through Monday, May 18, according to Slice’s projections, which are based on more than 14,000 online shoppers.


More than half of those orders were placed on April 10, the first day Apple accepted watch pre-orders in the US and eight other countries, according to Slice.

*  *  *

Perhaps, The Daily Mash's satirically-conjured man's perspective of his first day wearing the device is closer to home after all...

Sales manager Tom Logan’s new Apple Watch has been unexpectedly ridiculed by his work colleagues.


32-year-old Logan felt confident that his futuristic timepiece would attract admiring glances rather than unflattering Knight Rider comparisons.



He said: “I had it all planned out – not saying anything about it, but then somebody just notices and goes ‘is that the new Apple Watch?’. I would respond simply with a wry Clooney-esque smile and they would mouth the word ‘awesome’.


“What actually happened is somebody said ‘what the fuck’s that weird-looking thing?’


“I explained that it was the brand new Apple Watch and they went ‘HAHAHA’ in a really deliberately hurtful way. The accounts assistant said it was the opposite of a fanny magnet and everyone cracked up.


“Then everyone started pretending to talk into their watches, saying things like ‘come in KITT, I am a massive tosser, please help’.”


By 10am Logan had removed the watch. He explained: “It wasn’t because people were being sarcastic, I just had a hot wrist, everyone gets a hot wrist sometimes.


“People get jealous of early adopters.”


The madness of the Fed’s pending 81 month run of zero interest rates comes down to an inflation subterfuge that has no logical or empirical grounding in real world economics. Essentially, the Keynesians who currently inhabit the Eccles Building have turned all of central banking’s anti-inflation history on its head, saying, instead, that there is not enough of it to create optimum economic growth and wealth; and,…

Submitted by Lance Roberts via STA Wealth Management,

Over the last couple of months, I have regularly updated the ongoing consolidation process in the S&P 500. As I noted earlier this week, that consolidation was completed confirming the current bull trend in the market. To wit:

 "I stated previously that I expected the consolidation to resolve itself to the upside due to the underlying momentum in the markets. As I discussed in this past weekends newsletter (subscribe for free e-delivery), the resolution of that consolidation has now been achieved."


"This [breakout] suggests that portfolios should remain FULLY ALLOCATED to equities for the time being as the tendency for the markets remains upwardly biased.


WARNING: This does NOT mean that this will be the case for the next three (3) months or the next year. It just means that the markets are still moving higher at the current time. However, investors should continue to monitor portfolios and manage risk going forward as things will change. As I have discussed previously, this does NOT mean that all market risk is now resolved,  or that investors should return to their complacent slumber. See "Bull Market Most Overbought/Leveraged In History."


I want to be quite clear about my comments. My job is to manage portfolios in a manner to participate in markets when they are rising and protect capital when they are not. Therefore, focusing on WHY markets are rising is of little importance because portfolios are already invested. My attention needs to be directed toward WHAT may cause markets to buckle unexpectedly. It is because of that analysis that I am often viewed as a "bear." In reality, I am agnostic, and because I am discussing the markets bullish breakout it does NOT mean that I have somehow changed my views.


IT IS WHAT IT IS. Denying the fact markets are rising, and failing to participate in the short term, is just as damaging as participating in a sharp market decline. In BOTH events, I am destroying client capital."

This weekend's reading list is a compilation of opinions on the current state of the makrkets and investing. And as the old saying goes - "opinions are like ***holes, everybody's got one."

1) Investors Need To Face The Possibility Of A "Great Reset" by Mark Hulbert via MarketWatch

"Watch out if corporate-profit margins narrow to their long-term average share of gross domestic product. If so, the S&P 500 Index would trade at less than 1,700 in five years, a decline of more than 20%.

I'm not necessarily forecasting such a dismal eventuality, though it's in the realm of possibility. I merely point it out to illustrate how dependent the stock market is on wide profit margins.


Few seem to be focusing on this vulnerability."

Read Also: A Stock Market Top Is Likely Near by Mark Hulbert via MarketWatch


2) Monetary Movements & Economic Mirage by Gavekal via Gavekal Capital Blog

"If the Fed has quietly decided to not only abandon any prospect of rate increases, but begin expanding its balance sheet again (in some stealth QE), stocks probably do propel out the year long relative strength consolidation with bonds. But, if not, then stock managers should be particularly attuned to monetary movements and the economic mirage in the US. Our simple model of the change in Fed asset compared to the total return of stocks vs. bonds, suggests the potential for significant bond outperformance if the Fed sticks to its plan of a 2015 lift-off."


Read Also: Lower Earnings, Higher Stock Prices by Charlie Bilello via Pension Partners


3) Valuation & The Fed Model by Dr. Yardeni via Dr. Ed's Blog

"Valuation like beauty is in the eye of the beholder. With bond yields at historical lows, why shouldn't valuation multiples be at historical highs? At 2%, the 10-year Treasury bond yield has an effective forward P/E of 50, implying that stocks trading at a forward earnings yield of 5.9% and a multiple of 17 are grossly undervalued by as much as 62%. Of course, this "Fed Model," as I first named it back in July 1997, has been showing that stocks are undervalued since the Tech bubble burst. Furthermore, historically low interest rates may be a sign of secular stagnation, which isn't particularly bullish."


Read Also: Market Is Becalmed, No Reason To Rally Or Sell by AP via NYT

Read Also: The Fallacy Of The Fed Model by Lance Roberts via


4) Liquidity Starved Markets Fear The Worst by Simon Nixon via WSJ

"The optimistic view is that over time the market will innovate its way around the liquidity squeeze. Perhaps trading will migrate to the futures market and new fixed- income indices, allowing investors to gain exposure to price moves without having to own the underlying asset. Or perhaps new private pools of capital such as hedge funds will take the place of bank-based market makers in providing daily liquidity, although currently they show little appetite to do so. Or maybe longer-term investors such as insurers and pension funds will simply step in and hold less liquid assets to maturity, although this may require a change in the way these businesses are regulated.


An alternative view is that the liquidity squeeze is symptomatic of less benign changes in the financial landscape. In the 30 years since the Big Bang reforms in the City of London and the repeal of the Glass-Steagall Act in the U.S., capital markets have provided the motor for globalization, underpinned by the liquidity provided by banks. If banks stop making markets, the risk is that this process goes into reverse: As investors discover they can't sell their assets, they may stop buying too, pushing up the cost and reducing the supply of capital to the primary market."

Read Also:  This Chart Gets Us To 2425 On The S&P by Sam Ro via Business Insider



5) The Debate Of Tobin's Q Ratio

"If you sold every share of every company in the U.S. and used the money to buy up all the factories, machines and inventory, you'd have some cash left over. That, in a nutshell, is the math behind a bear case on equities that says prices have outrun reality."


Read: Nobel Winner's Math Is Showing Market Unhinged From Reality via Bloomberg


""But how useful is this ratio in reality? In my view, not very. And the problem, as I've explained before, is that it tries to apply a historical concept of mean reverting "value" in a world where the concept of value could be (and likely is) totally dynamic."


Read: Thoughts On Tobin's Q by Cullen Roche via Pragmatic Capitalism


""I'm usually very skeptical of these market models. For one reason, just because the market is over-valued doesn't mean that it won't become even more richly valued."


Read: Don't Fret About Tobin's Q by Eddy Elfenbein via Crossing Wall Street


Meb Faber's April Tweets via Meb Faber Research

A veritable smorgasbord of great data points worth your time to review. Great stuff Meb.

4 Factors Signaling Volatility Will Return With A Vengence by Nomi Prins via ZeroHedge

"No one could have predicted the sheer scope of global monetary policy bolstering the private banking and trading system. Yet, here we were - ensconced in the seventh year of capital markets being buoyed by coordinated government and central bank strategies. It's Keynesianism for Wall Street."

Is This The Top? by Ben Carlson via Wealth Of Common Sense

"Here are some better questions to be asking yourself."

These Are The 10 Things That You Will Do That Will Kill Your Returns by The Irrelevant Investor

No matter what investors SAY they will do, they will almost always succumb to the emotional investment mistakes caused by being human. Might as well understand them up front.


Have a great weekend.

The 2008 Crisis was caused by too much debt/ leverage, particularly in the form of illiquid derivatives (mortgage backed securities get the most attention, but the derivatives market was well over $800 trillion at the time of the crisis).


To combat the financial crisis, the Fed did three things:


1)   Cut rates to zero.

2)   Abandon accounting standards.

3)   Engage in Quantitative Easing/ QE.


None of these policies represented “solutions” to the crisis. In fact, you couldn’t even accurately argue that they represented “containment.” What the Fed did was permit the very cancerous securities that nearly imploded the Wall Street banks to spread beyond from the private sector onto the public’s balance sheet.


You cannot cure cancer by letting it spread from one area of the body to the next. You cannot solve a termite problem by letting the termites move somewhere else in a house. So how could one argue that you could solve a financial crisis by letting the problems spread elsewhere in the financial system?


Consider mere leverage levels. Going into the 2008 crisis, the investment banks sported leverage levels in the 30-40s. Lehman was leveraged at 31 to 1. Morgan Stanley was leveraged at 30 to 1. Merrill Lynch peaked out in the low 40s.


Today, the Fed’s has $57.6 billion in capital and $4. 4 TRILLION in assets. That represents a leverage level of 75 to 1.


The Fed will argue that this leverage does not matter because it can print money to increase its leverage levels. This is technically true, but doesn’t alter the fact that the Fed has backed itself into a corner by buying up over $3.5 trillion worth of stuff... which the Fed has no idea how to exit.


Indeed, we know that Janet Yellen was “somewhat concerned about exit strategies” back in 2009 when the Fed’s balance sheet was $2 trillion or so. Today it’s more than TWICE that. One wonders just how “concerned” she is today, with the Fed’s balance sheet larger in size than the GDP for most developed countries.


Even more absurd is the Fed’s ongoing issue with interest rates. Never before in history has the Fed kept rates at zero for 5+ years. But then again, never before has the Fed’s real taskmasters, the TBTFs, been sitting on over $180 trillion in interest rate based derivatives.


Those who shrug off these issues are overlooking the fact that the treasury dept. has ordered survival kits for employees at the TBTFs… while the New York Fed, has been boosting its satellite office in Chicago in preparation for potential market dislocations when the inevitable interest rate hike hits.


Indeed, nothing exposes the fallacies of the Fed’s policies of the last five years like its horror at the prospect of raising rates even a little bit. Rates have been effectively zero for five years. Today, the Fed is so concerned about what even ONE rate hike would do that it is actively preparing for potential systemic risk.


A second round of the great crisis is coming. The Fed didn’t fix 2008.; it simply set the stage for something even worse.


If you’ve yet to take action to prepare for the second round of the financial crisis, we offer a FREE investment report Financial Crisis "Round Two" Survival Guide that outlines easy, simple to follow strategies you can use to not only protect your portfolio from a market downturn, but actually produce profits.


You can pick up a FREE copy at:


Best Regards

Phoenix Capital Research



VIX Smashed, Euro Trashed, Bonds Cashed, Stocks Dashed... and Markets BREAK!!! 1517ET BATS BYX HAS DECLARED SELF-HELP AGAINST NASDAQ


In case it was unclear from all the positive spin post-Yellen speech... (h/t @jonvthvn)


On the day - it was very quiet with some excitement around a hot CPI and not-hot Janet Yellen


Everything might have been awesome for The Nasdaq and Small Caps high-beta buffonery, but Trannies werer trounced on the week...


Sectors were very mixed on the week...


While cash looks relatively stable... the serious swings in the equity markets are much clearer when looking at futures...

NOTE - just look again at the week in cash and the week in futures... now look at VIX!


VIX was smashed to an 11 handle - lowest since early December...


Before it started to rip back higher and so th emarket broke...


Treasury yields ended the week higher - jumping notably after today's CPI data...(but note the flattening of the curve - 5Y notably underperforming 30Y)


The USDollar rose well over 3% this week - its best week since Lehman...


Led by a 4%-plus collapse in the Euro - its worst since Lehman...


The USD strength kept commodities under pressure (with copper worst)... higher than expected inflation - sell Gold!


Crude had another magical v-shaped recovery week...


Charts: Bloomberg

Bonus Chart: Did the Microsoft curse strike again?

"I got no strings on me..."



Source: Townhall

The first rule of “Project Bookend” is that you don’t talk about “Project Bookend.”

In retrospect, maybe the first rule should have been “you don’t accidentally e-mail ‘Project Bookend’ to a news agency”, because as the Guardian reports, one of its editors opened his inbox and was surprised to find a message from the BOE’s Head of Press Jeremy Harrison outlining the UK financial market equivalent of the Manhattan project. 

Project Bookend is a secret (or ‘was’ a secret) initiative undertaken by the BOE to study what the fallout might be from a potential ‘Brexit’, but if anyone asked what Sir Jon Cunliffe and a few senior staffers were up to, they were instructed to say that they were busy investigating “a broad range of European economic issues.”

Here’s more from The Guardian:

Bank of England officials are secretly researching the financial shocks that could hit Britain if there is a vote to leave the European Union in the forthcoming referendum.


The Bank blew its cover on Friday when it accidentally emailed details of the project – including how the bank intended to fend off any inquiries about its work – direct to the Guardian.


According to the confidential email, the press and most staff in Threadneedle Street must be kept in the dark about the work underway, which has been dubbed Project Bookend…


MPs are now likely to ask whether the Bank intended to inform parliament that a major review of Britain’s prospects outside the EU was being undertaken by the institution that acts as the UK’s main financial regulator. Carney is also likely to come under pressure within the Bank to reveal whether there are other undercover projects underway.


Officials are likely to have kept the project under wraps to avoid entering the highly charged debate around the EU referendum, which has jumped to the top of the political agenda since the Conservatives secured an overall majority. Many business leaders and pro-EU campaigners have warned that “Brexit” would hit British exports and damage the standing of the City of London.


The email indicates that a small group of senior staff are to examine the effect of a Brexit under the authority of Sir Jon Cunliffe, who as deputy director for financial stability has responsibility for monitoring the risk of another market crash. 


Cunliffe also sits on the board of the City regulator, the Prudential Regulatory Authority.


The email from Cunliffe’s private secretary to four senior executives, was written on 21 May and forwarded by mistake to a Guardian editor by the Bank’s head of press, Jeremy Harrison.

It says: “Jon’s proposal, which he has asked me to highlight to you, is that no email is sent to James’s team or more broadly around the Bank about the project.”


It continues: “James can tell his team that he is working on a short-term project on European economics in International [division] which will last a couple of months. This will be in-depth work on a broad range of European economic issues. Ideally he would then say no more.”

*  *  *

In sum: Mark Carney accidentally pulled a Coeure who intentionally pulled a Yellen

On the bright side for Carney, it looks like he’s making big strides when it comes to his goal of providing “greater transparency over [the BOE’s] decision-making.”


VIX hit 2015 lows and started to rip higher...


So something had to be done...




When Nasdaq goes dark, #HFT machines freak out ("Mommy!") and the % of non-NBBO quotes goes wild

— Eric Scott Hunsader (@nanexllc) May 22, 2015

Just two short weeks ago we explained what happened to Tinder's predecessor, Adult FriendFinder, which was a website whose sole purposes was finding, to put it bluntly, a fuck buddy. Just like Tinder currently under IAC's wing, we explained, back in 2011 when the early stages of the current
gargantuan tech bubble were only taking shape, nobody could hide their
enthusiasm about the stock.

So imagine our shock when we see today that Adult FriendFinder has been hacked and, as CNN reports, more than 3.5 million people’s sexual preferences, fetishes and secrets have been exposed...

But it gets better, as Liberty Blitzkrieg's Mike Krieger explains, accusations are emerging that Federal employees used it from government emails.

Before I get into the meat of this story, let’s briefly cover the background of the Adult FriendFinder hack. From CNN:

More than 3.5 million people’s sexual preferences, fetishes and secrets have been exposed after dating site Adult FriendFinder was hacked.


Already, some of the adult website’s customers are being identified by name.


Adult FriendFinder asks customers to detail their interests and, based on those criteria, matches people for sexual encounters. The site, which boasts 64 million members, claims to have “helped millions of people find traditional partners, swinger groups, threesomes, and a variety of other alternative partners.”


The information Adult FriendFinder collects is extremely personal in nature. When signing up for an account, customers must enter their gender, which gender they’re interested in hooking up with and what kind of sexual situations they desire. Suggestions AdultFriendfinder provides for the “tell others about yourself” field include, “I like my partners to tell me what to do in the bedroom,” “I tend to be kinky” and “I’m willing to try some light bondage or blindfolds.”

I don’t relish in the fact that people’s private information is being exposed in this manner; however, if federal employees are using the site via government email addresses, that is newsworthy.

Andrew Auernheimer, a controversial computer hacker who looked through the files, used Twitter to publicly identify Adult FriendFinder customers, including a Washington police academy commander, an FAA employee, a California state tax worker and a naval intelligence officer who supposedly tried to cheat on his wife.


Asked why he was doing this, Auernheimer said: “I went straight for government employees because they seem the easiest to shame.”


Millions of others remain unnamed for now, but anyone can open the files — which remain freely available online. That could allow anyone to extort Adult FriendFinder customers.

Again, I don’t get any pleasure in the public shaming of people for these sorts of things, but RT adds the following to the story:

The men behind the screen names “Eaglesfan_6969” and “Verywilling2011” are looking for sex, and they’re doing it from government-provided email accounts, according to data pilfered from a hacked dating website.


A trove of personal information pertaining to paid account holders of AdultFriendFinder, a website that touts itself as letting users “Find a fuck buddy for online sex,” has surfaced, and its contents suggest employees of local and federal agencies, including law enforcement, the Navy and the Federal Aviation Administration have used their government-provided email addresses to search for partners.


Among account holders identified through the leaked details include individuals with emails linked to the United States Department of Homeland Security, the FAA, the government of Augusta, Georgia; the state of Virginia and the Metropolitan Police Department of Washington, DC.


DHS guidelines prohibit employees from using their government email for “Engaging in any activity that would discredit DHS, including seeking, transmitting, collecting or storing defamatory, discriminatory, obscene, harassing or intimidating messages or material.” The Pentagon says in a 2013 report that “Federal Government communication systems and equipment (including Government-owned telephones, facsimile machines, electronic mail, Internet systems and commercial systems when the federal Government pays for use) shall be for official use and authorized purposes only.” There is an exemption in place for “morale and welfare” communications by employees on extended deployments.

If true, I’m sure nothing will happen to them, as federal employees, like bankers, are essentially above the law.

*  *  *

Given this, however, one wonders just how exuberant IAC is over its valuation of Tinder now? ...and how fast people will be logging off...


Still, all that really matters for the current generation of sophisticated
investors is eyeballs (or in this case some other anatomical organ).


It's official: after seeing it work so well for years in China, the US Department of Commerce's Bureau of Economic Statistics has officially replaced all of its excel models with just one function. The following:

As Steve Liemsan hinted a few days ago, in what we thought was a very belated April fools joke, th eBEA has finally thrown in the towel on weak seasonally-adjusted US GDP data, and as a result has decided to officially proceed with a second seasonal adjustment: one which will take all the bad data, and replaced it with nice and sparkly, if totally fake and goalseeked, GDP numbers.

As Bloomberg reports, "the way some parts of U.S. gross domestic product are calculated are about to change in the wake of the debate over persistently depressed first-quarter growth. In a blog post published Friday, the Bureau of Economic Analysis listed a series of alterations it will make in seasonally adjusting data used to calculate economic growth. The changes will be implemented with the release of the initial second-quarter GDP estimate on July 30, the BEA said."

In other words, as of July 30, the Q1 GDP which will have seen its final print at -1% or worse, will be revised to roughly +1.8%, just to give the Fed the "credibility" to proceed with a September rate hike which means we can now safely assume not even the Fed will launch a "hiking cycle" at a time when the first half GDP will print negative (assuming the Atlanta Fed's 0.7% Q2 GDP estimate is even modestly accurate).

Will abnormally "good" data be revised lower, or whether labor market data, which is already manipulated beyond comparison by the BLS will also be adjusted due to "residual seasonality"? Don't hold your breath.

And since economists pride themselves in giving complex names to what even 5 years olds now grasp is open data manipulation, the technical term the BEA will use to goalseek historical data is now also clear: "residual seasonality"

Although the agency adjusts its figures for seasonal variations, growth in any given first quarter still tends to be weaker than in the remaining three, economists have found, a sign there may be some bias in the data. It’s a phenomenon economists call “residual seasonality.”

More details on how economics has just devolved into a complete farce on a scale that even the Chinese Department of Truth will find laughable:

“BEA is aware of the potential for residual seasonality in GDP and its components, and the agency is looking for ways to minimize this phenomenon,” the division said in the post. More information will be available in a BEA Survey of Current Business report scheduled for mid-June publication.


The agency is exploring ways to address possible issues in measures of federal government defense spending, where research has shown that first- and fourth-quarter growth rates are lower on average, the BEA said, reiterating a statement given to Bloomberg published May 18.


It will also start seasonally adjusting some inventory components that currently aren’t, and also some data from the U.S. Census Bureau’s quarterly services survey, it said. The latter should boost the accuracy of consumer spending estimates, it said. The changes to the calculations will cover the period from 2012 to the present.


Additionally, the BEA is reviewing all series that figure into the GDP calculations to find and fix any leftover biases that exist within its current methodology.

And to complete the total collapse of US reporting integrity, here is the full BEA blog post on the topic of goalseeked data, aka "residual seasonality."

* * *

BEA Works to Mitigate Potential Sources of Residual Seasonality in GDP

The Bureau of Economic Analysis (BEA) is working on a multi-pronged action plan to improve its estimates of gross domestic product (GDP) by identifying and mitigating potential sources of “residual” seasonality. That’s when seasonal patterns remain in data even after they are adjusted for seasonal variations.

Each spring, BEA conducts an extensive review–receiving updated seasonally adjusted data from the agencies that supply us with data used in our calculation of GDP. Most of the data the feeds into GDP is seasonally adjusted by the source agency, not BEA. At the same time, BEA examines its own seasonal factors for those series that BEA seasonally adjusts itself. All that work takes place in preparation for BEA’s annual revision to GDP and its major components, which will be released on July 30.

As a result of this ongoing work, BEA is aware of the potential for residual seasonality in GDP and its components, and the agency is looking for ways to minimize this phenomenon.

• One of the areas we’re currently reviewing is possible residual seasonality in measures of federal government defense services spending. Initial research suggests that the first and fourth quarter growth rates are lower on average than those of the third and second quarters. BEA is developing methods for addressing what it has found.

• Time frame to implement: Improvement will take place with the release of second quarter GDP on July 30. Period covered: 2012, 2013, 2014, and forward.

• BEA also will begin adjusting certain inventory investment series that currently aren’t seasonally adjusted.

• Time frame to implement: Improvement will take place with the release of second-quarter GDP on July 30. Period covered: 2012, 2013, 2014, and forward.

• Also as part of this year’s seasonal adjustment review, BEA is planning to seasonally adjust a number of series from the Census Bureau’s quarterly services survey that now have sufficient time spans to which seasonal adjustment techniques can be applied. Currently, these series are smoothed using a four-quarter moving average to attempt to smooth out seasonal trends in the data. While BEA’s review had not identified residual seasonality in the PCE services estimates, applying statistical seasonal adjustment techniques to these indicators will improve the accuracy of the underlying trends in PCE estimates.

• Time frame to implement:  Improvement will take place with the release of second quarter GDP on July 30.  Period covered 2012, 2013, 2014, and forward.

• BEA will review all series entering the GDP calculations to identify, and where feasible, mitigate any residual seasonality within its existing seasonal adjustment methodologies.

• Time frame to implement: Review will take place with the release of second-quarter GDP on July 30. Period covered: 2012, 2013, 2014, and forward.

• Longer term–beyond July 30–BEA will continue looking at components of GDP to determine if there are opportunities to improve seasonal adjustment methodologies.  Should BEA identify other areas of potential residual seasonality, BEA will develop methods to address these findings. If research suggests that residual seasonality originates with already seasonally adjusted source data, BEA will work alongside its source data agencies to determine the appropriate course of action.

* * *

Some further thoughts: when, not if, the Fed's rate hike leads to a recession, that too will be seasonally adjusted away. And QE4 will be called tightening in the name of "residual seasonality."

And, of course, once the Fed's credibility finally crashes, its seasonally adjusted credibility will be at an all time high.

The State Department has released 850 pages of e-mails from Hillary Clinton’s private e-mail address. Clinton has been under fire for using a private e-mail server (as opposed to an official government account) to discuss potentially sensitive matters of national security and foreign policy during her tenure as the nation’s top diplomat. Specifically, there are big questions about who knew what and when about an attack on US outposts in Benghazi that killed US ambassador J. Christopher Stevens. 

Clinton has said she wants the e-mails to be released and The State Department is using this as a “we told you so” moment as you can see from the following statement:

“The emails we release today do not change the essential facts or our understanding of the events before, during, or after the attacks, which have been known since the independent Accountability Review Board report on the Benghazi attacks was released almost 2½ years ago.”

Nevertheless, the release isn’t likely to impress Clinton’s critics who note that the now-public documents represent but a small fraction of the 55,000 pages turned over to Congress and even though the rest of e-mails are set to be released on a “rolling basis”, what the public sees is ultimately filtered through Clinton’s attorneys so you can be absolutely certain that there will be no Seymour Hersh moments to be had by sifting through the pile. Here’s Rep. Trey Gowdy who heads the House Select Committee on Benghazi:

“State Department transferred 300 messages exclusively reviewed and released by her own lawyers. These lawyers, it must be noted, owed and continue to owe a fiduciary responsibility to Secretary Clinton to protect her interests. To assume a self-selected public record is complete, when no one with a duty or responsibility to the public had the ability to take part in the selection, requires a leap in logic no impartial reviewer should be required to make and strains credibility.”

It sure does, but be that as it may, there were a few interesting things to be gleaned from perusing the documents. The first batch of e-mails released to the NY Times on Thursday do not seem to suggest that Clinton received or transmitted any classified information on her personal e-mail server, but that isn’t the interesting part because after all, if there’s evidence she did transmit such information, the lawyers would make sure those e-mails didn’t see the light of day. What is interesting though is that there’s a whole lot of SBU flying around. SBU stands for “sensitive but unclassified”, and as you’ll see from the below, some of the information probably shouldn’t have been sent from a private account:

Via NY Times:

The day after the Sept. 11, 2012, attacks on American outposts in Benghazi that killed Mr. Stevens and three other Americans, Mr. Blumenthal sent Mrs. Clinton a memo with his intelligence about what had occurred. The memo said the attacks were by “demonstrators” who “were inspired by what many devout Libyan viewed as a sacrilegious internet video on the prophet Mohammed originating in America.” Mrs. Clinton forwarded the memo to Mr. Sullivan, saying “More info.” (Pages 193-195)..


The next day, Mr. Blumenthal sent Mrs. Clinton a more thorough account of what had occurred. Citing “sensitive sources” in Libya, the memo provided extensive detail about the episode, saying that the siege had been set off by members of Ansar al-Shariah, the Libyan terrorist group. Those militants had ties to Al Qaeda, had planned the attacks for a month and had used a nearby protest as cover for the siege, the memo said. “We should get this around asap” Mrs. Clinton said in an email to Mr. Sullivan. “Will do,” he responded. That information contradicted the Obama administration’s narrative at the time about what had spawned the attacks. Republicans have said the administration misled the country about the attacks because it did not want to undermine the notion that President Obama, who was up for re-election, was winning the war on terrorism. (Pages 200-203)..


Mrs. Clinton’s emails show that she had a special type of government information known as “sensitive but unclassified,” or “SBU,” in her account. That information included the whereabouts and travel plans of American officials in Libya as security there deteriorated during the uprising against the leadership of Col. Muammar el-Qaddafi in 2011. Nearly a year and a half before the attacks in Benghazi, Mr. Stevens, then an American envoy to the rebels, considered leaving Benghazi citing deteriorating security, according to an email to Mrs. Clinton marked “SBU.”

So nothing “classified” there which should perhaps raise questions in and of itself because if top level discussions about what might have caused the death of a US diplomat in a country that was (and still is) engulfed in a civil war, doesn’t constitute “classified” information, then one shudders to think what does. 

Further, the fact that Clinton was exchanging mails on her private server that revealed the whereabouts and travel plans of the very same ambassador who was later killed is a bit disconcerting, as is the fact that apparently, the travel itinerary of diplomats in conflict zones is apparently not top secret enough to be deemed classified. Of course we guess the latter point there makes sense, considering that government officials probably only have so much mental bandwidth when it comes to “classified” things before it becomes impossible to keep up with all the lies and when you’re busy doing things like crafting complex narratives to justify overthrowing a dictator so you can help your Middle Eastern friends help you by piping natural gas to Europe in an effort to cripple Russia, small-ish things like telegraphing the whereabouts of ambassadors might have a tendency to fall through the classified cracks by being judged to be merely “sensitive.” 

Finally, it does look like there may have been an effort (although it's not clear, and probably never will be, how concerted the effort was), to delay going public with the whole "it was actually terrorists who killed him" bit, but then again who knows because when it comes to the government's relationship with militants fighting to usurp regimes in strategic and/or oil-rich Middle Eastern countries, all bets are off and the public will likely never read an e-mail that contains anything that even approximates the real story. 

Read and draw your own conclusions...


By Kyoungwha Kim at Bloomberg In Shenzhen, home of China’s hottest stock market, rallies of more than 500 percent aren’t unusual. What’s become rare are the type of corrections that rocked Hong Kong this week. Hanergy Thin Film Power Group Ltd. and Goldin Financial Holdings Ltd. plunged more than 45 percent in Hong Kong after surging more…

Forget Shanghai and its roaring stock market, there's a new centre for speculative excess in China. Nothing says sustainable capital formation like a stock index that trades at a valuation of 67.2 times earnings, is up 166% in the last year and whose components regularly see 500% rallies (and recently epic collapses). Welcome to Shenzhen.



With margin debt hitting new records and with over 20 million new retail trading accounts opened in the last 9 weeks alone, China has - without any doubt - gone full tulip-tard...



But, as Bloomberg reports, the greatest fools can be found not in Shanghai, but in Shenzhen, home of China’s hottest stock market, rallies of more than 500% aren’t unusual.

In Shenzhen, there are 103 stocks that rallied that much this year, compared with only four in the former British colony.


Among the 1,721 stocks on the Shenzhen Composite Index, four have declined this year.

The Shenzhen benchmark jumped 12 percent this week, the most since 2008, as turnover topped trading in both Shanghai and Hong Kong. Investors have piled into the non-state companies that dominate the Shenzhen bourse after the government pledged to support developing industries, including technology and health care, to shift the economy away from manufacturing and property development.




The 103 stocks in the Shenzhen 500 percent club trade at an average 375 times reported earnings, while their average market capitalization has risen to $3.5 billion, according to data compiled by Bloomberg. Many of them recently sold shares for the first time.

But it gets better... as the IPO bandwagon has created a monster bubble...

As we previously discussed, the best performer is Beijing Baofeng Technology Co., a developer of online movie players, which has jumped 3,822 percent since its initial public offering two months ago and made its chairman Feng Xin a billionaire.



Zhejiang Longsheng Auto Parts Co., which makes car-seat parts, has climbed about 1,600 percent in the past year to trade at almost 600 times profits.


Wanda Cinema Line Co.’s 1,047 percent rally since its January IPO turned it into a $22.1 billion company.


While moves in Hong Kong stocks aren’t limited by trading caps, companies on mainland bourses are only allowed to gain or fall by a maximum of 10 percent on a daily basis -- except on the first day of trading, when the shares can rise as much as 44 percent.

But - as many have discovered in recent days - it's not all ponies and unicorns,

What goes up... crashes to floor in a wealth-destroying frenzy...



It was all going so well, and then...


“Hanergy and Goldin are a good reminder for investors in China,” Ronald
Wan, chief executive at Partners Capital International Ltd. said in Hong


“They have a close similarity with many stocks in Shenzhen which have rallied based on speculation rather than fundamentals.”

*  *  *

In conclusion:

“Valuations are ridiculously high,” Castor Pang, the head of research at Core Pacific-Yamaichi in Hong Kong, said by phone.


“The stocks surged too much and no one knows why.”

*  *  *

But - who could have seen this coming - especially with these avid traders watching over these markets...

By Someone sent me an email this evening with some details on the Paul Krugman response to James Montier which I discussed here. I had previously stated that the Krugman response was lacking meat. But it’s actually worse than that. It’s actually highly misleading and appears intentionally so. In the post Dr. Krugman tries…
By ZeroHedge It appears the frauds, falsehoods, and f##king fallacies are all being exposed at the same time. While we have noted three companies that have collapsed in the last week – destroying their billionaire owners’ wealth in the process – it appears the Chinese capital destruction virus has spread to Germany. Joyou AG –…

The total rig count dropped by just 3 last week - the smallest decline since December - to 885, tracking perfectly with the 4-month lagged oil price we have been showing for 4 months.


Oil rigs dropped just 1 on the week to just 659 - the lowest since August 2010. Oil prices are unch.




Charts: Bloomberg

Presented with little comment, aside to ask - how many 'people' went to jail for this?

Via JPMorgan,

The purpose of this notice is to disclose certain practices of JPMorgan Chase & Co. and its affiliates (together, “JPMorgan Chase” or the “Firm”) when it acted as a dealer, on a principal basis, in the spot foreign exchange (“FX”) markets. We want to ensure that there are no ambiguities or misunderstandings regarding those practices.

To begin, conduct by certain individuals has fallen short of the Firm’s expectations. The conduct underlying the criminal antitrust charge by the Department of Justice is unacceptable. Moreover, as described in our November 2014 settlement with the U.K. Financial Conduct Authority relating to our spot FX business, in certain instances during the period 2008 to 2013, certain employees intentionally disclosed information relating to the identity of clients or the nature of clients’ activities to third parties in order to generate revenue for the Firm. This also was contrary to the Firm’s policies, unacceptable, and wrong. The Firm does not tolerate such conduct and already has committed significant resources in strengthening its controls surrounding our FX business.

The Firm has engaged in other practices on occasion, including:

  • We added markup to price quotes using hand signals and/or other internal arrangements or communications. Specifically, when obtaining price quotes for bids or offers from the Firm, certain clients requested to be placed on open telephone lines, meaning the client could hear pricing not only from a salesperson, but also from the trader who would be executing the client’s order. In certain instances, certain of our salespeople used hand signals to indicate to the trader to add markup to the price being quoted to the client on the open telephone line, so as to avoid informing the client listening on the phone of the markup and/or the amount of the markup. For example, prior to agreement between the client and the Firm to transact for the purchase of €100, a salesperson would, in certain instances, indicate with hand signals that the trader should add two pips of markup in providing a specific price to the client (e.g., a EURUSD rate of 1.1202, rather than 1.1200) in order to earn the Firm markup in connection with the prospective transaction.
  • We have, without informing clients, worked limit orders at levels (i.e., prices) better than the limit order price so that we would earn a spread or markup in connection with our execution of such orders. This practice could have impacted clients in the following ways: (1) clients’ limit orders would be filled at a time later than when the Firm could have obtained currency in the market at the limit orders’ prices, and (2) clients’ limit orders would not be filled at all, even though the Firm had or could have obtained currency in the market at the limit orders’ prices. For example, if we accepted an order to purchase €100 at a limit of 1.1200 EURUSD, we might choose to try to purchase the currency at a EURUSD rate of 1.1199 or better so that, when we sought in turn to fill the client’s order at the order price (i.e., 1.1200), we would make a spread or markup of 1 pip or better on the transaction. If the Firm were unable to obtain the currency at the 1.1199 price, the clients’ order may not be filled as a result of our choice to make this spread or markup.
  • We made decisions not to fill clients’ limit orders at all, or to fill them only in part, in order to profit from a spread or markup in connection with our execution of such orders. For example, if we accepted a limit order to purchase €100 at a EURUSD rate of 1.1200, we would in certain instances only partially fill the order (e.g., €70) even when we had obtained (or might have been able to obtain) the full €100 at a EURUSD rate of 1.1200 or better in the marketplace. We did so because of other anticipated client demand, liquidity, a decision by the Firm to keep inventory at a more advantageous price to the Firm, or for other reasons. In doing so, we did not inform our clients as to our reasons for not filling the entirety of their orders.

*  *  *

We have helped a little here...


*  *  *

Mea FX Culpa...

Having shown his true colors in recent months by embarking not just on an anti-gold crusade, but more recently on an anti-cash mission, Citi's Willem Buiter has once again exposed his newly minted CFR status-quo-embracing status this morning. During an appearance on CNBC, Buiter notes that there would be "havoc" if Greece left the euro zone and adopted an alternative currency; but then he went on the pre-prescription blasting that any kind of alternative currency tied to the euro "would be rubbish." These comments come just hours after German FinMin Schaeuble raised the possibility that Greece may need a parallel currency alongside the euro if the country’s talks with creditors fail.


German Finance Minister Wolfgang Schaeuble raised the possibility that Greece may need a parallel currency alongside the euro if the country’s talks with creditors fail, people familiar with his views told Bloomberg...

Schaeuble mentioned the idea of parallel currencies at a recent meeting without endorsing it, according to two people who attended and asked not to be identified because the gathering was private. He also cited the example of Montenegro, which uses the euro but isn’t a member of the currency union, one person said.


The comments suggest that some in Germany are preparing for the worst amid a standoff with Greece that has dragged on since February.


While Chancellor Angela Merkel and her finance minister say the goal is to keep Greece in the euro, Schaeuble has also said he wouldn’t rule out a Greek exit from the 19-nation currency.


Germany is “ready to take this brinkmanship very far,” with Schaeuble in the role of “attack dog,” Jacob Funk Kirkegaard, senior fellow at the Peterson Institute for International Economics in Washington, said by phone.

But Citi's Willem Buiter is less than exuberant about the success of that plan...

There would be "havoc" if Greece left the euro zone and adopted an alternative currency, Willem Buiter, global chief economist at Citi, told CNBC.



"I really think the notion that Greece exits with or without a shadow currency or a proper currency (is ridiculous). Greece has not, historically, been good at managing an independent currency. This time, if they were to move towards that from a situation of extreme weakness it would be havoc for Greece so I wouldn't recommend that."


Asked whether Greece could exit the 19-country single currency group with some kind of alternative currency tied to the euro, Buiter rebuffed the notion, saying "that would be rubbish."

*  *  *

Once again we leave it to Jacob Funk Kirkegaard, senior fellow at the Peterson Institute for International Economics in Washington to conclude...

“We’re in this game of chicken... the problem is that Alexis Tsipras is riding a scooter and Wolfgang Schaeuble is driving an armored BMW.”

by Helen Lamanna,

Here are this week’s reading diversions for your personal enlightenment. Have an excellent weekend!

7 Reasons it’s Time to Move On and Embrace Change

Change isn’t part of the process; it is the process. The bad news: nothing is permanent. The good news: nothing is permanent.

Top 10 Health Benefits of Black Pepper | Top 10 Home Remedies

Black pepper can be used to clear up a stuffy nose and congestion as it helps loosen phlegm. It also has antimicrobial properties, which is why black pepper is included in various cough and cold remedies.

Note: There is a print link embedded within this post, please visit this post to print it. Note: There is an email link embedded within this post, please visit this post to email it.

sas_pageid='32268/222034'; // Page : sas_formatid=13730; // Format : rect_story 300x250 sas_target=''; // Targeting SmartAdServer(sas_pageid,sas_formatid,sas_target);
Home Remedies for Stress | Top 10 Home Remedies

Common physical effects of stress are headaches, muscle tension or pain, chest pain, fatigue, frequent urination, upset stomach and difficulty sleeping.

5 ways the words you use every day could be making you sad – Healthista

Just avoiding negative words could make the difference between and good day and a bad one.

Surprising Things Screwing up Your Sleep | Men’s Health

Kick these shut-eye killers to the curb, and make your whole life better—overnight

What Type Of Perfectionist Are You | Real Simple

And could it mean you have a dark side?

Depression linked with Parkinson’s disease risk | Fox News

People who have been diagnosed with depression may have an increased risk of developing Parkinson’s disease later on, a new study suggests.

Top 10 Health Benefits of Drinking Water | Top 10 Home Remedies

The amount of water you consume everyday plays an important role in maintaining a healthy body. Experts recommend drinking eight to 10 glasses of water each day to maintain good health.

How to Stop Drinking Diet Soda – Shape Magazine

5 easy ways to banish your bad habit – and improve your health in the process.

Narcissism | So what I really meant…

Narcissists display extreme selfishness, a lack of empathy, and a craving for admiration. Freud aptly named the disorder after the mythological figure of Narcissus, who fell in love with his own reflection in a pool of water, and was doomed to never receive any love back from his reflection.

From peppermint to oolong: the health benefits of different teas – Telegraph

A study suggests that camomile tea can help prolong life. But what can other types of tea do for the body?

Traders looking to get an early start on the holiday weekend will have to wait a bit longer today, as Janet Yellen is set to speak to a sold-out audience at the Providence, Rhode Island Chamber of Commerce’s Economic Outlook Luncheon today.

Yellen will discuss the prospects for the economy and will likely parrot the usual talking points about consistent employment gains and a generally positive environment for growth — “transitory” Q1 weakness notwithstanding.

The Fed chief will also likely reiterate that ‘lift-off’ will probably come later this year, because as we learned earlier this week, the BEA and Yellen’s friends at the San Francisco Fed have now given the FOMC the all-clear to ignore Q1 GDP because once the data undergoes a second seasonal adjustment, the economy will be shown to have performed fine after all meaning the rate hike can proceed as planned.

As a reminder, earlier in the session we got a core CPI print that ostensibly indicates that inflation is moving in the desired direction providing further breathing room for the Fed to tighten (although our take on the data was a bit different). 


Live Feed

Alternate Live Feed (click image for link to Bloomberg Live Feed)

*  *  *

Key excerpt:

Given this economic outlook and the attendant uncertainty, how is monetary policy likely to evolve over the next few years? Because of the substantial lags in the effects of monetary policy on the economy, we must make policy in a forward-looking manner. Delaying action to tighten monetary policy until employment and inflation are already back to our objectives would risk overheating the economy. For this reason, if the economy continues to improve as I expect, I think it will be appropriate at some point this year to take the initial step to raise the federal funds rate target and begin the process of normalizing monetary policy.

And here is Yellen blaming the "snowy winter"

The Commerce Department's initial estimate was that real gross domestic
product was nearly flat in the first quarter of 2015. If confirmed by
further estimates, my guess is that this apparent slowdown was largely
the result of a variety of transitory factors that occurred at the same
time, including the unusually cold and snowy winter and the labor disputes at ports on the West Coast, both of which likely disrupted some economic activity. And some of this apparent weakness may just be statistical noise.

Finally, why Yellen is bullish...

I therefore expect the economic data to strengthen. 

... and yet she still refuses to hike rates.

Further headlines:


Full speech below...


Zircon - This is a contributing Drupal Theme
Design by WeebPal.