Archive - Apr 2013

April 28th

Tyler Durden's picture

One Month Later: What Cyprus Thinks In The Aftermath Of Its Bank Sector Collapse?





Curious what the Cypriot people think just over a month after the most dramatic European banking sector collapse in years, and subsequent first bank sector bail-in and depositor impairment ever? Courtesy of Bloomberg, which summarizes a poll conducted via Symmetron and posted in Kathimerini Cyprus we now have an idea of what the still stunned Cypriot population thinks.

 

Tyler Durden's picture

Father Of Boston Bombing Suspects Abandons Plans To See Wounded Son, Bury Another





Having lost your older son in an stand off with the police, the younger one gravely wounded and recently moved to maximum security prison, while alleging both have been set up by the FBI in the recent Boston Marathon bombing, what do you do? Abandon all plans to see them, apparently, despite announcing just a few days ago that burying your dead and "finding out the truth" is the main priority. At least that is that case if you are Anzor Tsarnaev, father of the Boston Marathon bombing suspects. From Reuters: "The father of the Boston Marathon bombing suspects has abandoned plans to travel to the United States to bury one son and help in the defense of the other, he told Reuters on Sunday in an interview in southern Russia."

 

Tyler Durden's picture

How The Fed Holds $2 Trillion (And Rising) Of US GDP Hostage





US commercial bank loans and leases flat since Lehman, and yet US GDP higher by $2 trillion since the biggest bankruptcy in history. How does one reconcile this monetary and growth quandary? Simple. Enter the Fed.

 

Tyler Durden's picture

Of Monetary Cranks, Bureaucratic Meddlers, And The Reinhart-Rogoff Faux Pas





In what has been a banner weak for the many serial inflationists and fans of Big Government out there, equity markets have largely reversed the declines of the previous period on the hope for – what else? – yet more pump priming. On the fiscal front, much heart has been taken at EU Commission President Barroso’s assertion that the time has come to move beyond an exclusive reliance on ‘austerity’ and to begin to focus on encouraging growth. Needless to say [Barroso's actual words, were] far less radical than anything whipped up by the journalists. In the circumstances, however, the wilful desire to over interpret (if not actively misinterpret) the message was far too powerful to resist, especially in the wake of the academic catfight going on over the state of Reinhardt and Rogoff’s Excel skills. For those who have real lives to lead, the briefest of synopses of this spat will suffice and, indeed, it is only introduced here to illustrate the heedless Flucht nach Vorne mentality of the Krugmanites, ever eager as they are to peddle the line that the only reason stimulus has ‘failed’ is because there has been nowhere near enough of it. But other than this war of the scholastics, the whole debt issue surely misses the crucial point that debt only swells in a polity where not only is government over large to begin with, but where it is serially profligate – i.e,. where the political class persists in spending more than it dares ask its electors to contribute to their whims.

 

Tyler Durden's picture

Germany's Perspective: "How Europe's Crisis Countries Hide their Wealth"





After reading the Spiegel article below, which reveals so much about German thinking, it becomes very clear that not only is Cyprus the "benchmark", but that the second some other PIIG country runs into trouble again, and its soaring non-performing loans inevitably demand a liability "resolution" a la Cyprus, it will be Germany once again at the helm, demanding more of the same equity, unsecured debt and ultimately depositor impairment. As the following punchline from Spiegel summarizes, "It would be more sensible -- and fairer -- for the crisis-ridden countries to exercise their own power to reduce their debts, namely by reaching for the assets of their citizens more than they have so far. As the most recent ECB study shows, there is certainly enough money available to do this." And that is the crux of the wealth-disparity demand of the European Disunion.

 

April 27th

williambanzai7's picture

A FeW BuNGaS MoRe





The Good, The Bunga and The Ugly...

 

testosteronepit's picture

Luxembourg Is Not The Next Cyprus, Not Yet, But....





The financial sector added 38% to GDP, but the threat of the banking-data sharing agreement will cause clients to pull their money out...

 

Tyler Durden's picture

Front-Line Observations From A Seasoned Gold & Silver Bullion Dealer





Spikes and plunges in the U.S. dollar price of gold; this is not new. It goes back to the early 1970s. We remember that for most of the past 40 years, physical gold and silver investors, particularly in the U.S., tended to chase big rallies and buy late, while too often selling after plunges or after long periods of price erosion. today’s gold community starts to look a bit different as the breakdown below previous gold and silver price support levels began, and especially last week, with gold going below $1400. Physical buyers were outnumbering sellers in our store by at least 5 to 1. 80 – 90% of the people who have bought gold from us in the last two weeks on the drop were already gold owners, already gold savers. Their attitude is, gold is on sale. What we have now is a game of chicken between the physical buyers and the paper shorters. It is like, who will quit first?

 

Tyler Durden's picture

Earnings - Hope Is Fading





We have long commented on the hockey-stick-like expectations of a second-half 2013 resurgence in EPS and revenue growth. This miracle waiting to happen is, sadly, increasingly unlikely. As Goldman notes, the S&P 500 bottom-up consensus EPS estimate for the remainder of 2013 has fallen 1% since the start of earnings season. Revisions have been most negative in the Materials (-4.1%) and Information Technology (-3.7%) sectors. Managements are guiding well below consensus estimates. Of the companies have provided 2Q guidance, 76% guided with a midpoint below the mean consensus estimate (versus an average of 69% over the past 28 quarters). The median firm guided 4% below consensus (versus 3% historically). However, since the start of earnings season, bottom-up consensus full-year 2013 estimates are down only 40bp; suggesting analysts and serial extrapolators alike have considerable more reality to catch up to yet - but for now, hope is fading a little with EPS, Sales, and Margins expectations for the rest of the year all being marked down.

 

Tyler Durden's picture

From Bust To Bubble, With No Recovery In Between?





The gaps between markets (credit, equity, and volatility) and economic (macro- and micro-) reality have seldom been larger. What is just as concerning as this yawning chasm is the similarity of a number of activities to the 'bubble' in credit in 2007 - from record CLO issuance to covenant-lite loans resurgence. As Citi's Matt King notes, the past fortnight’s virtual melt-up in all things high yielding has been accompanied by a growing sense that markets are breaking out of the patterns of the past few years. In the near term, there is no reason in principle why the moves cannot go further; but unless more of the central bank stimulus finds its way through to the economy, this opens up the risk of sudden corrections as markets fall back to earth. How long will it take for that to occur, and for markets to become scared once again? It is hard to tell, and yet, as we have noted numerous times, we have been in this situation before. In 2009, the divergences took 6 months before stocks corrected, in 2011 it took 4 months, and in 2012 it took just 1 month. It's not different this time.

 

Tyler Durden's picture

Europe's Fauxterity In Three Simple Charts





Now that the absolutely irrelevant debate over the applicability of the 90% debt/GDP Reinhart and Rogoff hard cutoff for sovereign growth is supposedly over due to an excel mistake of the type that JPMorgan did at least once to misrepresent its VaR both internally and to public shareholders (which to a large group of supposedly people is equivalent to supporting the notion that a record debt global conflagration can only be resolved with even more debt), perhaps the debate can shift to another question: why despite all the bickering and complaints, Europe never actually engaged in austerity, in spending or debt cuts, and that the primary reason the people's plight in the periphery worsened in the past three years is nothing more or less than gross political and governing incompetence?

 

Tyler Durden's picture

The Highest Concentration Of Bitcoins In The World Is In... Berlin





The Kreuzberg area of Berlin has the highest density of businesses accepting Bitcoin in the world. The clip below is fascinating as it becomes readily apparent how excited both the merchants and the customers are about using this free market currency.  As the owner of a bar called Room 77, Joerg Platzer, quite interestingly commented: “Every day we do not start using a free currency like Bitcoin, we actually actively vote for the current system to continue.”

 

Tyler Durden's picture

Jeremy Grantham On The Fall Of Civilizations (And Our Last Best Hope)





In a slight digression from the usual pure market-based discussions of Jeremy Grantham's perspectives, the fund manager addresses what is potentially and even more critical factor for the markets. As he writes, we are in a race for our lives, as our global economy, reckless in its use of all resources and natural systems, shows many of the indicators of potential failure that brought down so many civilizations before ours. By sheer luck, though, ours has two features that might just save our bacon: declining fertility rates and progress in alternative energy. Our survival might well depend on doing everything we can to encourage their progress. Vested interests, though, defend the status quo effectively and the majority much prefers optimistic propaganda to uncomfortable truth and wishful thinking rather than tough action. It is likely to be a close race.

 

Tyler Durden's picture

Guest Post: Physical Gold Vs Paper Gold: Waiting For The Dam To Break





The recent slide in the gold price has generated substantial demand for bullion that will likely bring forward a financial and systemic disaster for both central and bullion banks that has been brewing for a long time. To understand why, we must examine their role and motivations in precious metals markets and assess current ownership of physical gold, while putting investor emotion into its proper context. The time when central banks will be unable to continue to manage bullion markets by intervention has probably been brought closer. They will face having to rescue the bullion banks from the crisis of rising gold and silver prices by other means, if only to maintain confidence in paper currencies. This will likely develop into another financial crisis at the worst possible moment, when central banks are already being forced to flood markets with paper currency to keep interest rates down, banks solvent, and to finance governments’ day-to-day spending. History might judge April 2013 as the month when through precipitate action in bullion markets Western central banks and the banking community finally began to lose control over all financial markets.

 

Tyler Durden's picture

Italy's Enrico Letta Announces New Government





Moments ago, PD's Enrico Letta announced that after several days of negotiations he has enough support to form a government which will see Letta as Prime Minister, while one of Silvio Berlusconi's closest allies, Angelino Alfano, of Berlusconi's PDL, would become deputy prime minister and interior minister, in effect guaranteeing Bunga immunity from any and all political and criminal prosecutions for as long as the government is in power. Reuters also informs that "Bank of Italy director general Fabrizio Saccomanni will take the powerful economy ministry and former European Commissioner Emma Bonino will be foreign minister, Letta said after meeting President Giorgio Napolitano. The government will be sworn in at 1030 BST on Sunday and Letta is expected to go before parliament to seek a vote of confidence on Monday." In other words, the new Italian government will cover all bases: it will be anti-austerity as per Letta campaign to give the people hope that things may get better as much more debt is issued, Berlusconi will be safe and sound, which was his only real mandate, and the Italian Banks will remain in the good graces of the ECB as the link between the financial sector (which has been buying up record amounts of Italian sovereign debt) and the nation becomes inextricably linked, something Europe once upon a time tried to avoid but no longer pretends to even care.

 
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