- European Bond Yields Go Negative (WSJ)
- Traveler from Liberia is first Ebola patient diagnosed in U.S. (Reuters)
- Hong Kong Protesters Step up Pressure on Leung to Quit (BBG)
- JPMorgan to face U.S. class action in $10 billion MBS case (Reuters)
- Turkey mulls military action against Islamic State (Reuters)
- Singapore Home Prices Fall for Fourth Straight Quarter on Curbs (BBG)
- Italy's Economic Woes Highlight Dilemma for European Central Bank (WSJ)
- Advanced iOS virus targeting Hong Kong protestors (Reuters)
- Fed Scrutiny of Leveraged Loans Grows Along With Bubble Concern (BBG)
- Mosquito Virus That Walloped Caribbean Spreads in U.S. (BBG)
In a striking admission that Mario Draghi's "strategy" about the ECB's Private QE future, aka ABS monetization plan, is nothing short of converting Europe's central bank into a "bad bank" repository for trillions in bad and non-performing debt, the FT yesterday reported that "Mario Draghi is to push the European Central Bank to buy bundles of Greek and Cypriot bank loans with “junk” ratings, in a move that is set to exacerbate tensions between Germany and the bank." It is expected that the former Goldmanite will unveil details of a plan to buy hundreds of billions of euros’ worth of private-sector assets at tomorrow's ECB meeting.
A quick anecdote that should quickly confirm just how broken everything is: earlier today MarkIt reported European manufacturing data that was atrocious, with both German and European PMIs tumbling to levels not seen since mid-2013, and with Europe's growth dynamo now in a contraction phase clearly signalling what has been long overdue: a European triple dip recession. So what happens? Moments later Germany sells €4.1 billion in 10 Year paper at a record low yield below 1%.... even as the Bundesbank had to retain a whopping 17.84% of the auction, the highest since June, with only €4.663 Bn in bids for the €5 Bn target, the first miss since May 21. So hurray for the central banks, boo for the economy, and as for that mythical creature, once known as bond vigilantes, our condolences: good luck figuring out what the hell just happened, and good luck recalling what a free market is.
If the European triple-dip alert was barely glowing a muted red until this morning, then following the latest German PMI data, which tumbled to 49.9 from 50.3, below the 50.3 consensus, and is the first contractionary print in 15 months, then they are now screaming a bright burgundy. And while the European recession has now clearly made its way to the core, it wasn't just Germany: French PMI continued to be solidly in a contracting phase, at 48.8, unchanged from the previous month, the overall European Manufacturing PMI also missed and declined, dropping from a flash reading 50.5 to only 50.3, which was a 14 month low, with the average PMI reading for Q3 the lowest since a year ago, and as MarkIt summarized, "Eurozone manufacturing edges closer to stagnation." Have no fear, though, Mario Draghi and his monetization of Greek Junk Bonds will fix everything!
*CDC CONFIRMS FIRST EBOLA CASE DIAGNOSED IN THE UNITED STATES, PATIENT IS IN DALLAS HOSPITAL, NEWS 8 REPORTS
*CDC DIRECTOR SAYS: `THERE IS NO DOUBT WE WILL STOP IT HERE'
The patient recently returned (via plane) from traveling from Liberia, West Africa. This perhaps explains why CDC was "taking precautions in the US" as we noted previously. And don't forget the administration's interference in Ebola treatments.
Something quite "crazy" indeed (not our words).
Here come the revisionists with new malarkey about the 2008 financial crisis. No less august a forum than the New York Times today carries a front page piece by journeyman financial reporter James Stewart suggesting that Lehman Brothers was solvent; could and should have been bailed out; and that the entire trauma of the financial crisis and Great Recession might have been avoided or substantially mitigated. That is not just meretricious nonsense; its a measure of how thoroughly corrupted public discourse about the fundamental financial and economic realities of the present era has become owing to the cult of central banking. The great error of September 2008 was not in failing to bailout Lehman. It was in providing a $100 billion liquidity hose to Morgan Stanley and an even larger one to Goldman. They too were insolvent. That was the essence of their business model. Fed policies inherently generate runs, and then it stands ready with limitless free money to rescue the gamblers. You can call that pragmatism, if you like. But don’t call it capitalism.
While Greek government yields (and political leaders) proclaim the troubled peripheral European nation is 'recovering', the risk of major political upheaval in Greece has not gone away ahead of next year's presidential vote next year. As Reuters notes, under growing pressure from anti-bailout leftists, Greek Prime Minister Antonis Samaras desperately needs a new narrative to get the backing of lawmakers and rally Greeks fed up with four years of austerity. We wish him luck as Keep Talking Greece notes, it is high time that the real data of the economic situation of the Greek society come to the surface and so it did this week. A report from Greece's State Budget Office found that three in every five Greeks, or some 6.3 million people, were living in poverty or under the threat of poverty in 2013 due to material deprivation and unemployment.
Two classes of warships kicked off the U.S.-led attacks on Islamic State and the al Qaeda-linked Khorasan group. WSJ's Jason Bellini explains what are these ships' capabilities?
The U.S. government is borrowing about 8 trillion dollars a year... The only way that this game can continue is if the U.S. government can continue to borrow gigantic piles of money at ridiculously low interest rates. And our current standard of living greatly depends on the continuation of this game. If something comes along and rattles this Ponzi scheme, life in America could change radically almost overnight.
Reports of individuals snapping up near-record numbers of gold and silver coins are coming in from around the world. While individual buyers aren't the dominant players in precious metals, they do make a difference; and their renewed enthusiasm is matched by some recent national trends. There's no guarantee that this buying, encouraging as it seems, is anything more than a blip; but in the aggregate it does seem like a lot of buyers, old and new, are finding current prices to be attractive. That's how bottoms form and new bull markets begin.
More Lies: Watchdog Finds Government "Greatly Exaggerated" Success In Funding Small Businesses Last YearSubmitted by Tyler Durden on 09/30/2014 - 19:46
New investigations by the Small Business Administration (SBA) Office of Inspector General have found SBA Administrator Maria Contreras-Sweet's announcement that small businesses received 23.39% of all federal contracts was greatly exaggerated. As WaPo reports, Federal agencies overstated their success last year in contracting with small businesses that face socio-economic disadvantages finding $400 million worth of contracts that agencies gave to ineligible firms but still counted toward their targets. Rather stunningly, the report found of the top 100 recipients of the highest dollar amount of federal small business contracts, over 75% were actually current large businesses. Trust...
It is very common to find examples of stock quotes changing rapidly - hundreds and sometimes thousands of times per second in a single stock. At the extreme, we've seen in excess of 25,000 quote changes in a single stock in one second of time or less. Sometimes a simple pattern evolves from the quote price changes, such as in the case of a certain High Frequency Trading (HFT) algorithm that we've recently seen run every day in Google stock. The algo starts with an order to buy 100 shares, then replaces a millisecond (ms) later with an order to buy a penny higher.. and repeats hundreds of times. "So what? HFT needs to be able to cancel quotes fast so they can tighten spreads, add liquidity and lower costs." The problem is that when HFT cancels a quote after just 1 ms, then anyone located more than 93 miles (150 km) away will see a stale quote. Worse, they won't know it's stale unless and until they try to act on it and wait for a response.
For a long time, Fed printing via balance sheet expansion has been the key to understanding markets and the predominant driver that has trumped all other matters. Investors have been able to ignore significant global events, tensions, and economic conditions in faraway places, because a lower real and perceived risk premium from implicit Fed promises was the single most important aspect driving asset prices higher. This game is quickly coming to an end. As the Fed’s asset purchase program ends next month, global events and global economic fundamentals will have to be taken into account and priced accordingly.