Just days after the NY Fed ousted an employee for providing confidential information to a Goldman Sachs banker (who formerly worked at the NY Fed - and has since been fired by Goldman), Bill Dudley - the president of the NY Fed - will face a very skeptical Senate Banking Committee this morning investigating so-called "regulatory capture." Of course, their eyes were finally opened after Carmen Segarra, a former employee, leaked 47.5 hours of taped conversation (as we discussed in detail here), exposing the dismal reality of the relationship between the 'regulator' and the 'regulated' as New York regulators were deferential to Goldman bankers for a supposedly "shady" deal. Dudley's defense (not denial) so far: "We understand the risks of doing our job poorly and of becoming too close to the firms we supervise. Of course, we are not perfect. We sometimes make mistakes."
Goldman may have been right that there will be no more multiple expansion in 2015, but there sure was quite a bit overnight thanks to the latest verbal and actual central bank interventions by the ECB and the PBOC. And as a result, the biggest beneficiary is the S&P500, which is set to open just around 2070, or about 30 points shy of Goldman's 2015 S&P500 year-end target. And for those who still care about such things, the chart below shows that fundamentally, the S&P is now trading at 17.5x non-GAAP LTM EPS, and, drumroll, 19.2X GAAP PE!
Speaker Boehner is out with his response to Obama's executive diktum:
*BOEHNER: OBAMA IMMIGRATION ORDERS WILL ENCOURAGE BORDER CRISIS
*OBAMA `DAMAGING PRESIDENCY ITSELF' BY EXECUTIVE ORDER: BOEHNER
As Obama himself noted, these actions are those of a teenager...
The effects of the cut in the benchmark lending rate are likely to be small, Goldman warns, pouringh cold water on the exuberant - "unlikely to have a big direct impact on the economy", since lending rates are not currently subject to either upper or lower limits. Goldman adds that the rate cut may however be slightly useful to borrowers in negotiations with lenders, in our view. This is nevertheless a positive step in interest rate liberalization, in their view.
Gold Repatriation Stunner: Dutch Central Bank Secretly Withdrew 122 Tons Of Gold From The New York FedSubmitted by Tyler Durden on 11/21/2014 - 08:25
A week ago, we penned "The Real Reason Why Germany Halted Its Gold Repatriation From The NY Fed", in which we got, for the first time ever, an admission by an official source, namely the bank that knows everything that takes place in Germany - Deutsche Bank - what the real reason was for Germany's gold repatriation halt after procuring a meager 5 tons from the NY Fed. Some took offense with this pointing out, correctly, that the gold held at the NY Fed in deposit form for foreign institutions had continued to decline into 2014 even despite the alleged German halt. Well, today we finally know the answer: it wasn't Germany who was secretly withdrawing gold from the NYFed, contrary to what it had publicly disclosed. It was the Netherlands. Why did the DNB decided it was time to cut its gold held at the NY Fed by 122 tons? "It is no longer wise to keep half of our gold in one part of the world," a DNB spokesman said.
First Mario Draghi made some strong statements speaking in Asia that "It is essential to bring back inflation to target and without delay," which sent EURUSD tumbling BUT did not spark moves in the S&P 500 (though Gold slipped). It was not until the PBOC cut rates (and sent AUD surging) that the US equity market perked up and started ripping... along with gold and as the morning progressed, gold has kept going as it is clear the Central Banks of the world have only one policy left... (no wonder the Dutch want their gold back)
Recent polls show pro-default parties growing popular in peripheral euro-area countries such as Greece, Italy and Spain. As Bloomberg Brief's Maxime Sbaihi notes, in a depressed economic environment, their promises to restructure public debt might soon bring them to power and tempt traditional parties to adopt their ideas. This return of political risk in the euro area doesn’t appear to be priced in by market participants. As Italy's Beppe Grillo recently exclaimed, "we will leave the Euro and bring down this system of bankers, of scum."
- They go all in: China’s PBOC Cuts Interest Rates for First Time Since 2012 (BBG)
- And all in-er: ECB's Draghi throws door to quantitative easing wide open as recovery wanes (Reuters)
- Global Markets Rally: ECB Head Says Central Bank Is Ready to Expand Stimulus Program After China Cuts Rates (WSJ)
- Obama unveils U.S. immigration reform, setting up fight with Republicans (Reuters)
- U.S. increasing non-lethal military aid to Ukraine (Reuters)
- Russia warns U.S. against arms to Ukraine as Biden due in Kiev (Reuters)
- Ukraine slashed gold holdings in October, Russia added more - IMF (Reuters)
- Abe Dissolves Japan’s Lower House of Parliament (WSJ)
While the biggest news of the day will certainly be China's rate cut (and the Dutch secret gold repatriation but more on the shortly), here is a list of all the other central-banking/planning events which have moved markets overnight, because in the new normal it no longer is about any news or fundamentals, it is all about the destruction of the value of money and the matched increase in nominal asset values.
"The People's Bank of China decided to cut financial institutions RMB benchmark interest rate loans and deposits with effect from November 22, 2014. The one-year benchmark lending rate down 0.4 percentage points to 5.6%; one-year benchmark deposit rate down 0.25 percentage point to 2.75%, while the combination of market-oriented reforms to promote the interest rate, the upper limit of the floating range of interest rates on deposits of financial institutions by the benchmark deposit 1.1 times the adjusted interest rate is 1.2 times; other grades adjusted accordingly benchmark interest rate loans and deposits, and to make appropriate benchmark interest rate maturities degenerate."
The bad news: every central-planner is now all in. The good news for the liquidity addicts, is that the S&P futures are now 12 points higher on what is clearly the only growth strategy left in a centrally-planned world, and are approaching 2070 and just 30 points away from Goldman's 2015 year end target.!
A sinkhole 20 by 30 meters (65 by 98 feet) in size has been found near a Uralkali mine in Russia's Perm region. As Mining.com reports, while stunningly no casualties have been reported so far, the situation is expected to worsen as locals fear that the hole could get bigger and swallow their houses.
"Give me your corrupt, your crony, your oligarch masses yearning to launder money free,
The criminal masterminds of your destroyed environment and police state.
Send these, the pampered, the private jet setter to me, I open my hands to your golden yuan."
"this sentence is a big surprise to me as I did nothing wrong..."
Are you waiting for the next major wave of the global economic collapse to strike? Well, you might want to start paying attention again. Three of the ten largest economies on the planet have already fallen into recession, and there are very serious warning signs coming from several other global economic powerhouses.