• EconMatters
    07/13/2014 - 22:47
    Market participants are far too levered up, all on the same side, and well behind the monetary normalization curve of when the first rate hike is actually going to occur. 


December 12th

Tyler Durden's picture

$32 Billion 3 Year Bond Prices At Second Lowest Yield Ever, Highest Bid To Cover On Record

Following the auction of the latest $32 billion in 3 year bonds, the market is expected to relax as based on the optic the auction was a stunning success, with a High Yield of 0.352%, higher than just the 0.334% hit in September when the market was collapsing. Yet the Bid To Cover of 3.624 was the highest ever in the series of the bond. Now the bad news: Primary Dealers once again accounted for well over 53.9% of the auction: or about $17 billion, which will be promptly repo'ed back to the Fed with the proceeds used for various other purposes. In other words, the clear demand for $15 billion came in the form of Indirects taking down 39.1% and Directs with 7.0%. Nonetheless, with the When Issued trading at 0.36%, there is no doubt that the auction was a smashing success, under the parameters of the US bond issuance regime. In the meantime, we await to see what happens to German Bund auctions in the next few days if the yield once again collapses, and there is just not enough demand at auction.


Tyler Durden's picture

Goldman Punk'd Clients Yet Again

On Friday, following the announcement from Goldman that the firm's had just turned more bullish on European financials raising banks from Underweight to Neutral, we said: "Goldman has just started selling European bank stocks to its clients, whom it is telling to buy European bank stocks. Said otherwise, the Stolpering of clients gullible enough to do what Goldman says and not does, has recommenced. Our advice, as always, do what Goldman's flow desk is doing as it begins to unload inventory of bank stocks. Translation: run from European bank exposure." Sure enough: European banks (as per BEBANKS) are now down 3.84% today alone, or -1.5% from the Thursday close, while the general MSCI Euro Fin sector, EUFN, is down 6% today. While not quite a slam dunk trade as a Stolper FX anti-reco, nobody has ever filed for bankruptcy by making money. Thank you Goldman.


ilene's picture

Mr. Parasite Goes To Washington

In Washington, Mr. Parasite joins his sociopathic family and lives happily ever after. 


George Washington's picture

The Financial Crisis Was Entirely Foreseeable



Tyler Durden's picture

French Downgrade - Even More Likely Than Yesterday

First Moody's and now Fitch are coming out with negative comments about the summit. That provides mores more air cover for S&P to downgrade France 1 notch. The EU and EIB may also get notched in that case, further hurting the reputation of the EU and their plans. Political pressure may stay the hand of S&P but if not, this should spark a steep decline in risk asset prices. It may even make it more difficult for the ECB to print as one of its strongest members stumbles.


Tyler Durden's picture

Guest Post: Headwinds For Housing

It’s no secret that housing and employment are correlated, and the causation is intuitive. If more people have jobs, then more people have incomes that support the purchase of a home. In the other direction, the more houses that are built to meet rising demand, the more jobs will be created in construction and real estate. We can see the correlation in this chart from the St. Louis Federal Reserve displaying one measure of employment for workers age 45-54 and the index of home prices. As employment of those in their peak earning years rose, so did home prices. This is partly a function of basic supply and demand: Rising demand pushes prices higher. As employment fell, demand declined, and so did home prices. The Federal Reserve famously has a dual mandate: to maintain stable inflation and employment. The Fed attempts to pursue these goals with monetary tools such as setting interest rate targets, while the Federal government supports housing by subsidizing mortgage interest via tax policy and guaranteeing mortgages via the housing-lending agencies of Fannie Mae, Freddie Mac, and the Federal Housing Administration (FHA). The Fed’s primary tool for stimulating demand for housing has been to lower mortgage interest rates, by buying the US Treasuries that set the baseline cost of long-term debt and also mortgage securities. Indeed, the Fed’s first quantitative easing (QE) program was to buy about $1 trillion in distressed mortgage debt outright. This removed the impaired debt from banks’ balance sheets and also served to lower mortgage rates.


Tyler Durden's picture

Protesters Arrested At Goldman Sachs HQ?

But fear not: the arrested are not the firm's "god's work-ing" employees; more of the OWS persuasion. From PressTV: "US police have arrested 17 members of the Occupy movement in New York as the nationwide crackdown on the anti-corporatism protesters continues." When we get additional confirmation of this arrest from US sources, and not-Iranian media, we will update. Luckily, since none of the protesters can close a Goldman (which is still a Bank Holding Company) checking account, we are confident the story will end here.


Tyler Durden's picture

Leading French Presidential Candidate Hollande Says Will Renegotiate Brussels Decision If Elected

Just because credit agency downgrade risk uncertainty is not enough, FAZ now advises there is electoral risk to add to the mix. Because if Sarkozy were to lose the presidential election, his competitor, the socialist-backed Francois Hollande has said that he would not accept the decisions of the Euro-summit, and will try to renegotiate the outcome, in effect unwinding any "progress" made so far in stabilizing the European currency. "Should he win the presidential elections, France would not ratify the treaty. "If I am elected President of the Republic, I will negotiating a new agreement," Hollande announced on the radio station RTL." Why is this concerning? Because as a recent poll indicates Hollande has a commanding lead over Sarkozy as of mid-November. "The proportion of French voters who have confidence in Sarkozy to deal effectively with the country’s problems expanded to 40 percent, according to the poll published in the French newspaper today. While Socialist Francois Hollande topped popularity ratings in the poll, he lost 5 points in the period. About 51 percent of voters said they had a “positive image” of Hollande." In other words, it is likely to quite likely that Sarko will not be reelected. Which also means that suddenly all bets are off for Europe.


Tyler Durden's picture

Complete David Cameron Statement On European Veto

"I went to Brussels with one objective: to protect Britain’s national interest. And that is what I did"


Phoenix Capital Research's picture

Want to Know the REAL DEAL in the EU? Talk to a CEO

It’s time we admit the truth, the EU and its banking system are literally on the edge of collapse. Think 2008… for an entire region. And politicians are going to solve this mess with a March 2012 meeting!?!


Tyler Durden's picture

Guest Post: The Last Refuge Of Wall Street: Marketing To Increasingly Insolvent Consumers

Have you noticed that all the "hot" initial public offerings (IPOs) being hyped by Wall Street are all marketing companies? The big IPO that has everyone on the Street salivating is of course Facebook in 2012--the ultimate "social media" marketing machine. What's striking about these heavily hyped Social Media companies is that they make nothing, and their service is either free (Facebook, Twitter, etc.) or a "free" marketing mechanism (Groupon). When was the last time a company went public in the U.S. that actually manufactured a good? When was the last time a "hot" company went public selling a service that had nothing to do with marketing and that actually performed a valuable function? Wall Street has nothing left to sell except marketing schemes aimed at increasingly insolvent consumers. With a hollowed-out manufacturing base and leveraged financialization finally running out of steam as the engine of "growth" (see debt saturation chart below), then chumming the waters thrashing with marketing piranhas is Wall Street's last refuge of staggering profits. In other words, marketing to increasingly insolvent consumers is a Darwinian zero-sum game. Sales can't actually increase as consumer credit and incomes both decline; sales are simply brought forward in time or ripped from the desperate grasp of a competitor. The only "hot industry" left in America that Wall Street can hype is the one promising to get to the consumer before the other marketing piranhas can strip the last shreds of cash and credit from their bones.


Phoenix Capital Research's picture

Graham Summers’ Weekly Market Forecast (La La Land Edition)

EU leaders just decided to impose stricter budgetary requirements from EU members. Only in La La Land could this be viewed as progress. The EU already had budgetary requirements… which the PIIGS countries all ignored. So how will these NEW budgetary requirements change anything? And who or what is going to enforce them?


Tyler Durden's picture

Watch David Cameron Explain To UK Parliament Why He Broke Away From The Eurozone Group Of 27

Last week's biggest political shock was David Cameron telling Europe to shove its authoritarian ambitions and breaking away from the Group of 27, in effect killing any chance of a favorable summit outcome. Watch him live now as he explains why he did what he did.

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