Tyler Durden's picture

Art Cashin On The Oldest Sovereign Bankruptcy And The UK's Bitter Experience With Perpetual Bonds

Greece just defaulted. Again. No surprise - the country has been in default half the time since 1820. Curiously, Greece is also the first recorded sovereign defaulted as Art Cashin notes in his piece today. He also reminds us that the UK's plans to return the 100 Year bond are nothing new. In fact, the Consol, or the UK perpetual, was around in the 1700's. Things did not work out very well back then...

EconMatters's picture

America's Student Loan To Reach $1.4 Trillion by 2020

The added weight on the gross national debt as well as the dis-incentive for people to seek better education would prove to be one of the greatest risk for America as a whole.

Tyler Durden's picture

Troika Finds Greece Already Likely To Miss Bailout Budget Targets

The money for Greece has not yet been wired, and already a deeper dive into the previously released Troika report shows  what is glaringly obvious to anyone who follows the actual collapse of the Greek economy: that the country is already on course to miss its budget targets for the immediate future (for insane EU assumptions on what the Greek economy should look like through the lens of a Eurocrat, see our chart of the day). The Telegraph reports: "Athens has probably cut spending enough to bring its primary deficit down to 1.5pc this year as agreed. But "current projections reveal large fiscal gaps in 2013-14" according to a leaked draft report by the European Union (EU), the European Central Bank (ECB) and the International Monetary Fund (IMF). In its report, the troika said Athens will have to impose further fiscal cuts of as much as 5.5pc of GDP to meet next year's targets." And while Europe may be terminally fixed, translated this means that the aborigines of the southern colony of Bavaria Sachs will see their wages cut even more, and even more people will be unemployed soon just to appears the first lien debt holders. This in a country of 10.8 million where just 36% of the population works. So Greece, which today received a rare bit of highly irrelevant but good news, when Fitch became the first rating agency to upgrade the country's credit rating from Default to B- (even as its new bonds saw their yield surge to 19% on the second day of trading), will in a few short months be forced to once again deal with even more consequences of being the proud recipient of the inverted European bailout, whereby the country's gold is used to fund Eurobank capital shortfalls.

Tyler Durden's picture

Goldman's Take On The FOMC Statement

Goldman, whose Bill Dudley runs the New York Fed, and the Fed in general, gives the official party line on how to interpret the Fed's statement. Summary: all is well.

Tyler Durden's picture

How Many Days Will It Take To Sell $10 Million Of...

It will come as no surprise to any reader that volumes in general are dismal. This leads inevitably to the question of just how liquid markets are in general. This may not be a critical question for mom-and-pop buying some IBM or CAT at the margin but for institutional investors it is critical to the decision to enter a position. Pairing off reward expectations with risk concerns tends to focus too much on volatility and too little on liquidity and by looking at daily market turnover and the bid-offer spread of each asset class, UBS finds taking liquidity into account can make a huge difference to performance (and risk-appetite). Unsurprisingly, the most liquid assets are large cap equities and US Treasuries. The least liquid assets include various fixed income securities, and in particular high yield credit. Perhaps this goes a long way to explaining why US Treasuries have maintained their strength and why large cap equities have been so strong relative to credit markets (a topic we have discussed at length) as money finds its 'easiest' hole to fill and thanks to liquidity concerns, high yield credit investors remain more pragmatic entrants to an ever-inflating bubble of liquidity (as exits will be small and crowded at the first sign of tightening). We suspect the increasing dispersion between the most and least liquid securities in each asset class will likely feed on itself as fewer funds are willing to 'earn' an 'illiquidity' premium given the bigger binary risks facing all markets.

Tyler Durden's picture

Daily FX Trading Activity: $4.7 Trillion

Over the weekend, the BIS released its latest quarterly review of financial organizations, which despite being chock full of assorted data, merely summarizes what banks already report. As such, it completely avoids the potentially black swan areas, such as derivative, off-balance sheet and shadow banking exposure. In other words, it is largely a waste of time. One section, however, that is useful,is the analysis by Morten Bech on "FX volume during the financial crisis and now" which has created a constant time series to evaluate FX trading volumes all the way through October 2011, as opposed to the traditional BIS Triennial survey, the next of which is due in April 2013. Morten's finding: "I estimate that in October 2011 daily average turnover was roughly $4.7 trillion based on the latest round of FX committee surveys."

Tyler Durden's picture

The Fed's Manipulation Of The Market Is Driving TrimTabs' Charles Biderman "Even More Nuts Than He Already Is"

Back in 2009 and 2010, TrimTabs Charles Biderman made waves for being the first person on prime time financial TV to tell it how it is, namely that the Fed is indirectly and directly affecting asset prices. Then he was ostracized. Now, it is not only a given that the Fed does everything in its power to hike stock prices, but is in fact welcome. Indeed, none other than Bob Pisani made point of highlighting that between central bank intervention and kicking the can down the road, the status quo has managed to restore credibility in the system. Of course, nothing could be further from the truth, as we have demonstrated with the now terminal evacuation of faith by the retail investor in the gross manipulated stock "market" which is nothing but a nominal policy vehicle for politicians and bankers. Unfortunately, the endless lies and propaganda are starting to push rational people who refuse to take the blue pill, and who are fully aware there is no wizard, over the edge. In his latest videoblog, Biderman is back, taking his Lewis Black impersonation to the next level, with the following rant: "Individuals are net sellers of US equities and have been for years, probably because they need to pay bills and stuff. So how are they able to do that and get decent prices without the stock market cracking. Well simple the Federal Reserve has been printing huge amounts of money and that ultimately has been boosting the value of US equities, and therefore the sellers can sell. All of this is driving me even more nuts than I already am."

Reggie Middleton's picture

Greece Is Trying To Convince Portugal To Make F.I.R.E. Hot!!!

As Portugal gets jealous of Greece's ability to just not pay bills, insurance portfolios will suffer greatly as the FIRE sector burns! The first domino has fallen, yet the MSM is taking this as a non-event!

Tyler Durden's picture

The Stranger Beside You - Spouses And ETFs

ETF fund flows have been a uniformly positive source of capital into U.S. risk markets in 2012. Looking a little deeper at the decidedly 'risk-on' flows, Nic Colas (of Convergex Group) notes perhaps their most provocative feature has been their high degree of net concentration.  When you look at the entire “ETF Ecosystem” of listed funds, just 6 funds represent all the net gains in assets over the past month ($5.4 billion in net inflows) – LQD, HYG and JNK in fixed income, VWO in emerging markets, VXX in risk, and GLD in commodities. With 1,433 different ETFs listed on U.S. markets now, Colas likens the comprehension of the $1.2 trillion in AUM across these ETFs to how well you know your spouse as we know ETF flows are important (just like a wedding anniversary date or what day the trash is picked up at home) but with their still-evolving proliferation it seems a daunting task to keep tabs on them. All in all, this brief analysis points to more of a pause in investor sentiment rather than the opening for a more full-blown correction in the coming weeks.

Tyler Durden's picture

Overnight Sentiment: Risk On

Following a busy overnight session, which saw a surprise announcement out of the Brazilian Central Bank cutting rates more than expected, and confirmation of the deterioration in the Japanese economy where January saw a record current account deficit, today we have already seen the Bank of England proceed as expected keeping its key interest rate unchanged (at 0.50%) and QE fixed at GBP325 billion. The ECB is next with its rate announcement, expected to keep things on hold. Yet the mood of the morning is set by speculation that the Greek debt swap may see a sufficient participation rate for the PSI to go through, even if that means CAC activation, as somehow a Greek default is good, and only an "out of control" bankruptcy would be bad. That coupled with renewed expectations of more QE, sterilized or not, and hopes that tomorrow's NFP will be better than expected, as somehow the Fed will pump money even if the economy is "improving", is all that is needed to send the post-roll ES contract to session highs nearly 1% higher than yesterday's close.

Tyler Durden's picture

LTRO - Scratching The Surface

Now that the hype of LTRO is over (for now) people are starting to focus on the details and some of the potential consequences.  This is a first cut based on bits and pieces from various LTRO documents released by the ECB.  We haven’t seen anything that resembles a document fully describing the current LTROs, but are trying to find it, and will refine this analysis as more details come to light. Between early maturity possibilities, the floating rate nature of the loan, and now the variation margin we discussed last night, it seems LTRO may rightfully be the driver of the 'stigma' extensively noted here previously.

Reggie Middleton's picture

The Goldman Grift Shows How Greece Got Got

Not many websites, analysts or authors have both the balls/temerity & the analytical honesty to take Goldman on. Well, I say.... Let's dance! This isn't a collection of soundbites from the MSM. This is truly meaty, hard hitting analysis for the big boys and girls. If you're easily offended or need the 6 second preview I suggest you move on.

Tyler Durden's picture

De-Investifying China

The overnight news that China's economic growth forecast was cut is notable in that it brings to mind the complexities (and realities) of the shift from an investment-led economy to consumption-led sustainability. As Bloomberg BRIEF's Economics note pointed out this morning, China is ranked fourth highest out of 170 countries for its reliance on investment (investment-to-GDP of 49%). The fix requires increasing incomes, internationalization of the yuan, and liberalization of interest rates. The latter is perhaps most troublesome (though all are hard to centrally plan together) as the mis-allocation of capital to large cash-rich SOEs relative to the broader (and potentially more growth-tastic) individual borrower or SME leaves what George Magnus of UBS calls a 'sequencing' problem for the powers that be. His concern is that China gets the downside risks of an investment decline before the upside potential from restructuring the economy towards household spending occurs. Critically, the investment-centric economy is not one of industrial capex or export-oriented expansion but inward-facing construction and infrastructure meaning a slowing of investment-led strength is implicitly ending the property boom. In China it’s very simple: you want to keep both eyes on the state of property markets.

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