Archive - Jan 2014
January 30th
Markets Flailing As Bipolar EM Sentiment Lurches From One Extreme To Another
Submitted by Tyler Durden on 01/30/2014 07:10 -0500- B+
- Bank Lending Survey
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And so following yet another Fed taper, coupled with another disappointing manufacturing data point out of China, emerging markets did their thing first thing this morning and all the most unstable EM currency pairs - the TRY, the RUB, the ZAR and the HUF - all plunged promptly in the process pushing down the USDJPY which as become a natural carry offset to EM troubles, only to rebound promptly. Specifically, USDTRY blew out 400 pips to 2.3010 highs after which it bounced, and has now stabilized around 2.27, well above the Turkish central bank intervention level, USDZAR is back down to 11.2120 after hitting five-year highs of 11.3850, the Ruble also plunged after which it jumped on speculation of Russian central bank intervention, while futures are tracking even the tiniest moves by USDJPY and pushing the Emini which is trading in a liquidity vaccum by a quarter point for ever 2 or pips. And with all news overnight shifting from bad to worse (keep an eye on declining German inflation now) it goes without saying, that EM central banks around the world now are desperately trying to keep their currencies under control: which is why the market's jitteryness is only set to increase from here on out.
January 29th
GoD Bail THe QUeeN...
Submitted by williambanzai7 on 01/29/2014 22:41 -0500Can you spare a tuppence your Fraudship?
Is The US-China Rivalry More Dangerous Than The Cold War?
Submitted by Tyler Durden on 01/29/2014 22:32 -0500
The prominent realist international relations scholar John Mearsheimer says there is a greater possibility of the U.S. and China going to war in the future than there was of a Soviet-NATO general war during the Cold War. In contrast to the Middle East, which he characterizes as posing little threat to the United States, Mearsheimer said that the U.S. will face a tremendous challenge in Asia should China continue to rise economically.
JPMorgan Warns "Avoiding China Defaults Now Will Amplify The Future Problem"
Submitted by Tyler Durden on 01/29/2014 22:04 -0500
Investors in China have been running scared of a default on a high risk trust product; but, as Bloomberg's Tom Orlik notes, they should embrace it. The implicit guarantee that no investments will go sour is one of the key problems with China’s financial system as Orlik adds it encourages reckless lending often to borrowers whose only merit lies in backing from a deep-pocketed government. Crucially, as JPMorgan warns in a recent note, "avoiding defaults is not the right answer, as it will only delay or even amplify the problem in the future." A default that encourages lenders to price in risk would be a positive development and the CEG#1 was an ideal product to 'fail' with its 11% yield and clear idiosyncratic company problems. However, regulators won't have to wait long for a second chance as JPM warns "There will be a default in China’s shadow banking industry this year as economic growth momentum slows."
A Mission to Mars Illustrates the Insanity of the Federal Reserve
Submitted by smartknowledgeu on 01/29/2014 21:53 -0500Below, we use a mission to Mars to clearly illustrate the insanity of Central Bank-speak.
Wednesday Humor: F##k The Fed
Submitted by Tyler Durden on 01/29/2014 21:22 -0500
An oldie but a goodie... On the final FOMC meeting of Ben Bernanke's illustrious career as Fed Chair, we thought it appropriate to dust off the following musical reminder of just who the Fed are...
"... you see the Federal reserve is not a government thang; it's a bunch of private bankers we obey...and they don't answer to the people coz they pull the strings; and that's precisely why we have to say... hey hey, hey hey... F##k The Fed.."
The Carnage Continues In Asia As China PMI Confirms Contraction Deepening
Submitted by Tyler Durden on 01/29/2014 20:50 -0500
Following last week's Flash PMI print of 49.6, the Final print for January China Manufacturing dropped further to 49.5 confirming the contraction is deepening. Japanese stocks were down the most since August in the early going as Nikkei futures extended the losses from the US day-session (and rather notably decoupled from USDJPY and breaking below 15,000). The Nikkei is heading for the worst month since May 2012 (-8.66% so far). S&P futures tracked USDJPY as 102.00 was defended aggressively. Chinese stocks are also tumbling (though not as hard as Japan and US) and the PBOC will not be adding liquidity today. Furthermore the blame is being shifted as Deputy FinMin Zhu warns that the "Chinese economy faces risks from overseas uncertainty." EM FX is drifting lower still.
"The (Other) Shoe" - IceCap Monthly Commentary
Submitted by Tyler Durden on 01/29/2014 20:39 -0500
If one were only to look at the stock market and the buzz within New York, London, San Francisco, Sydney or Toronto; they would conclude that the world is indeed booming. After all, people say the stock market is a leading indicator and that is telling us that the world is bursting at the seams with accelerating growth. And of course, the leading financial news stations are tripping over themselves with gushes of great news. Now, we don’t mean to be the party pooper; however one must understand what is really happening to truly appreciate the still, slow moving and delicate economic pickle the world has been stuck with. For starters, these major cities are always booming. Instead, for a better picture of economic life, feel free to visit St. Louis, Winnipeg, or Marseilles and we’re sure you’ll have no problems at all securing that dinner reservation. Peeling away the top layer of fabulous news resulting from the stock market, we cannot help but see that the deep structural issues associated with the 2008-09 crisis remain. The mountains of bad debt have simply shifted away from specific investors, to governments and their tax payers. From a global perspective, this transfer of bad debt from specific investors to tax payers is THE most important issue to understand. In simpler terms, and unknown to many, the bad debt has been spread around the world for everyone to share. Yes, socialism has arrived and few in our capitalistic world have noticed.
Poland Ex-FinMin: "The Global Economy's Glory Days Are Over"
Submitted by Tyler Durden on 01/29/2014 19:58 -0500
The global economy’s glory days are surely over. Yet policymakers continue to focus on short-term demand management in the hope of resurrecting the heady growth rates enjoyed before the 2008-09 financial crisis. This is a mistake. When one analyzes the neo-classical growth factors – labor, capital, and total factor productivity – it is doubtful whether stimulating demand can be sustainable over the longer term, or even serve as an effective short-term policy. Instead, policymakers should focus on removing their economies’ structural and institutional bottlenecks. In advanced markets, these stem largely from a declining and aging population, labor-market rigidities, an unaffordable welfare state, high and distorting taxes, and government indebtedness.
60% of Americans Value Privacy Over Anti-Terror Protections
Submitted by George Washington on 01/29/2014 19:30 -0500Americans Are Starting to Wake Up from their Fear-Induced Haze
Things That Make You Go Hmmm... Like Europe's Propitiating Politicians
Submitted by Tyler Durden on 01/29/2014 19:22 -0500
Sometimes, in cables amongst themselves, politicians tend to forget that "real people" will eventually get to read their words (either that or they realize but just don't give a damn), and they drop the facade and talk in real terms. As Grant Williams explores in the following excellent discussion, the phrase "propitiate public opinion" among Spanish and UK minsters arguing over Gibraltar sums up perfectly the world in which we live. Propitiate - to make (someone) pleased or less angry by giving or saying something desired. Behold, politics.
The Emerging Market Collapse Through The Eyes Of Don Corleone
Submitted by Tyler Durden on 01/29/2014 18:43 -0500
The problem, though, is that once you embrace the Narrative of Central Bank Omnipotence to "explain" recent events, you can't compartmentalize it there. If the pattern of post-crisis Emerging Market growth rates is largely explained by US monetary accommodation or lack thereof ... well, the same must be true for pre-crisis Emerging Market growth rates. The inexorable conclusion is that Emerging Market growth rates are a function of Developed Market central bank liquidity measures and monetary policy, and that all Emerging Markets are, to one degree or another, Greece-like in their creation of unsustainable growth rates on the back of 20 years of The Great Moderation (as Bernanke referred to the decline in macroeconomic volatility from accommodative monetary policy) and the last 4 years of ZIRP. It was Barzini all along!
Edward Snowden Nominated For Nobel Peace Prize
Submitted by Tyler Durden on 01/29/2014 18:11 -0500
Just five years after President Obama was awarded the Nobel Peace prize (to much global amazement), Norwegian politicians have nominated none other than Edward Snowden for this year's award for contributing to transparency and global stability by exposing a U.S. surveillance program. As Reuters reports, Snowden’s "actions have in effect led to the reintroduction of trust and transparency as a leading principle in global security policies." Is this the Nobel's last best effort to regain some credibility?
Nothing Lasts Forever; World Bank Ex-Chief Economist Calls For End To Dollar As Reserve Currency
Submitted by Tyler Durden on 01/29/2014 17:32 -0500
In the past we have discussed at length the inevitable demise of the USD as the world's reserve currency noting that nothing lasts forever. However, when former World Bank chief economist Justin Yifu Lin warns that "the dominance of the greenback is the root cause of global financial and economic crises," we suspect the world will begin to listen (especially the Chinese. Lin, now - notably - an adviser to the Chinese government, concludes that internationalizing the Chinese currency is not the answer (preferring a basket approach) but ominously concludes, "the solution to this is to replace the national currency with a global currency," as it will create more stable global financial system.
RBS £8 Billion Loss Shows Risk In UK Banking System
Submitted by GoldCore on 01/29/2014 17:11 -0500Nearly six years after the financial crisis and its massive bailout, it looks like business as usual by the bankers in RBS and in the City of London and Wall Street ... The smart money is either continuing to accumulate physical or transporting already purchased bullion from storage in the U.S., Canada, Europe and other western countries to storage in Asia.






