Archive - Aug 17, 2015

Earlier today an EU official was reported as saying that Greek banks will exclude all depositors from losses until the EU’s Bank Recovery and Resolution Directive rules go into effect on Jan. 1, 2016.  Needless to say this was vastly different to Dijsselbloem's blanket guarantee statement from Friday, and suggests that depositors will indeed be bailed-in, but not right now: only after BRRD rules come in place on the first day of 2016.

As McCain attempted a backdoor exit, the activists chanted in the hallway with their arms linked. Once they noticed McCain’s convoy making an escape, the group began chasing on foot. They were temporarily blocked by law enforcement but eventually made their way out of the building, chasing the cars as they exited the Navajo nation.

"Who" really runs your state?...

Offshore Yuan continues to trade at a discount to onshore against the USD (imply a modest further devaluation is due) but the spread is narrowing and today's practically unch Yuan fix is dragging USDCNH lower (stronger Yuan). Yesterday's afternoon session ramp in stocks managed to extend its gains as margin debt rises for the 7th straight day. The PBOC injects 120 bn Yuan liquidity via 7-day reverse-repo (notably more than the 50bn maturing), as HSBC's Stephen King concludes, the message from last week's surprise devaluation is clear - China no longer wants to play the "global shock absorber" role - instead is more focused on domestic instability... and there is no other nation yet willing (or able) to shoulder the responsibility.

“The Americans allowed ISIS to rise to power because they wanted to get Assad out from Syria. But they didn’t anticipate that the results would be so far beyond their control.” This was not, then, a US intelligence failure as such. Rather, the US failure to to curtail the rise of ISIS and its likely destabilization of both Iraq and Syria, was not due to a lack of accurate intelligence? - ?which was abundant and precise? - ?but due to an ill-conceived political decision to impose ‘regime change’ on Syria at any cost. We can’t come up with any other logical conclusion. Either way, such people have no business running the affairs of these United States, and their actions are merely increasing instability and violence across the planet. The longer they remain in charge with no accountability, the more dangerous this world will become.

Two words - "Nailed it!"

The Fed is too scared to raise interest rates in the middle of an already weak recovery and risk sending the U.S. economy back into recession, or worse... The Fed chief "does not want to be responsible for the depression that I think we’ve been in the midst of all along," Paul added, "everything is vulnerable, so we’re living in very dangerous times."

As the chart below shows, from oil to bunds, to US HG and Convertible debt, to USTs and even to Developed Market stocks, turnovers are virtually non-existant, while the only place where there has been a transitory surge in turnover has something to do with Chinese stocks, where volume however has been quite muted in recent months ever since the bubble died.

It's human nature for us to want to keep our wealth close at hand. Trouble is, you have all your wealth in one jurisdiction, and should that jurisdiction find itself in an economic crisis, all that “diversification” will be seriously at risk. If we’re being really truthful with ourselves, governments pose a greater threat than the average thief, as they can steal legally. Much of the world has gone on a massive spending spree and has, in effect, used a credit card to do so. Soon, that bill will need to be paid and the jurisdictions that are in debt will unquestionably be revealed to be insolvent. The economic crisis, when it hits, will be sudden and will be devastating.

While 75% of 'expert economists' expect The Fed to raise rates in September, Goldman Sachs warns that if investors are worried about a September rate hike then it is not being priced via S&P 500 options...

The dance of the zombies goes on... During the 10 years between 2005 and 2014, these four retailers spent $34 billion on stock buybacks and dividends. But, alas, their cumulative net income during the period was only $13 billion. So they pumped 2.6X more into the casino than they earned! Last week’s tepid retail reports were not only a reminder that QE and ZIRP have by-passed main street entirely. The faltering department store sector is also a reminder that the monumental amount of Fed confected cash pooling-up in the canyons of Wall Street is breeding debt-laden zombies throughout the length and breadth of the land.

It appears some are finally waking up...

"For your information and consideration for action. First rain expected today or tonight. Avoid ALL contact with skin. If on clothing, remove and wash as soon as possible, and also shower yourself. Avoid pets coming into contact with rains, or wet ground, and wash them immediately if they do."

“The way to wealth in a bull market is debt. The way to oblivion in a bear market is also debt, and nobody rings a bell.” – James Grant