Archive - Oct 9, 2013

When on October 1, fallen billionaire Eike Batista's OGX Petroleo & Gas, missed a $45 million bond coupon payment, some were surprised but most  had seen the writing on the wall. After all, Brazil's second largest oil company after Petrobras, and the crowning jewel of Batista's EBX Group, had been under the microscope of investors and certainly creditors (and if it wasn't it certainly should have been) after oil deposits that Batista had valued at $1 trillion turned out to be commercial failures. And so the countdown to the inevitable bankruptcy filing began. Overnight, Bloomberg reports that the wait should not be long (in fact it may coincide with the default of that other insolvent mega-creditor: the United States), and will mostly certainly take place before the end of the month, following the retention of bankruptcy specialist law firm Quinn Emanuel.

Yellen is in; nothing is resolved in DC; and there's no news on the wires - so it makes perfect sense that once again as the 830ET period ticks by that commodity prices - especially gold, silver, and copper enter what many in the business call "free fall." All sarcasm aside, this is becoming far too ubiquitous - but of course with the CFTC closed for business, while the cat's away the algos will play.

"Over the last 12-24 hours the small cracks that have appeared in financial markets over the last week have started to edge open a little bit wider. On the plus side this may start to help concentrate the minds of the politicians a bit more after another day of stalemate and lack of urgency. Our thoughts are that this will get resolved when either the market forces the issue with a big sell-off or when we get closer to an as yet unspecified hard-date as to when the US runs out of money." - DB's Jim Reid

It would be comical if it wasn't so tragic, and if for some inexplicable reason Japan hadn't been awarded the 2020 Olympics as a desperate measure to boost the economy with zero regard for the human cost. Following news of yet another radioactive spill taking place at Fukushima earlier this week, the latest in what is becoming a countless series if "incidents", overnight we learned that in the latest accident involving the exploded Fukushima nuclear power plant, which is now so very much out of control that even the government is considering removing Tepco from the containment effort, at least six workers were exposed to a leak of highly radioactive water on Wednesday, "the latest in a string of mishaps the country's nuclear watchdog has attributed to carelessness, saying they could have been avoided." They could have indeed, if only Japan were to formally recognize the severity of the catastrophe instead of constantly pushing it under the rug at a time when the only thing that matters for the successful, if ultimately doomed, implementation of Abenomics is the preservation of confidence at all costs.

• Janet Yellen, a Backer of Pushing the Fed's Policy Boundaries (WSJ)
• Jos. A. Bank proposes to buy Men's Wearhouse for $2.3 billion (Reuters)
• J.P. Morgan to Cull Business Clients (WSJ)
• RBS Said to Pass Currency Trader Chats to FCA Amid Probe (BBG)
• Prosecutors give SAC settlement ultimatum (FT)
• U.S. builders hoard mineral rights under new homes (Reuters)
• Bill Comes Due for Brazil's Middle Class (WSJ)
• US expected to slash aid to Egyptian government (AP)
• Samsung launches world's first smartphone with curved screen (Reuters)
• Microsoft’s $7.2 Billion Nokia Bet Not Luring Apps (BBG)
• China raises hurdles for foreign banks (FT)

For all expectations of a big jump in US futures overnight on the largely priced in Janet Yellen nomination announcement which is due at 3 pm today, the move so far has been very much contained, as expected, with a modest 90 minute halflife, as the markets' prevailing concern continues to be whether the debt ceiling negotiation will be concluded by the October 17 deadline or if it would stretch further forcing the government to prioritize payments. There is however some hope with Bloomberg reporting that some possible paths out of the debt impasse are starting to emerge with less than a week before U.S. borrowing authority lapses after Obama said he could accept a short-term debt-limit increase without policy conditions that set the terms for future talks. Whether this materializes or just leads to more empty posturing and televized press conferences is unclear, although as Politico reports, the stakes for republicans are getting increasingly nebulous with some saying they are "losing" the fight, while the core GDP constituency is actually liking the government shutdown.