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Goldman Finds The Treasury Market No Longer Reacts To Economic Data

According to a just released Goldman analysis, the sensitivity of US Treasury yields to economic data surprises has declined to near record-lows over the last two years. In other words, the market no longer responds to data. What does it respond to? "Treasury yields have reacted more strongly to Fed communication." But where it gets truly perverse, is that the market, by ignoring the economy, is responding to a Fed which in turn is merely responding to the market.

D-Day For Australia's Real Estate Bubble?

This rotting shack in Sydney and its tiny plot of land sold for nearly $1 million in May of 2014 – more than two years ago. Since then, house prices in Australia have increased even further. Yes, it is an insane bubble, no doubt about it... and now, it appears, the banks are finally realizing, and are pulling back.

Global Shares Slide As Japan Stimulus Disappoints, RBA Underwhelems, Italy Bank Fears Return

European stocks slid to a two-week low amid mixed earnings, as bank stocks extended yesterday’s decline as fears that Italy is not "fixed" have reemerged, not helped by an adverse market reaction to a disappointing Japanese fiscal stimulus announcement, while the AUD first dropped but then jumped after the RBA's priced in rate cut was announced, seen as underwhelming.

Ben Inker: This Is The "Shocking Hole" That Will Be Blown In Equities If Rates Spike By 1.5%

"The most shocking hole that will be blown through people’s portfolios is if discount rates rise again fairly quickly. Even if the circumstance is one in which the global economy is doing well, the impact of a 1.5% increase in the discount rate on equities from here is a fall of over 30%, which would almost certainly be enough to swamp the earnings impact of the decent growth."

Euro Stocks Reverse Early Gains Dragged Lower By Slumping Banks; US Futures Flat; Crude Slides

Following last Friday's shocking weak US GDP print, Asian stocks jumped to an 11 month high on reduced prospects of a near-term rate hike, while the region also digested mostly encouraging in conflicting Chinese PMI data. European bank stocks initially rose following the release of the 2016 stress test then declined, tempering gains in global equity indexes, amid investor skepticism over the usefulness of stress-test results and weaker oil prices.

The Full Details Behind Monte Paschi's €5 Billion Bail Out

  1. Increase the coverage ratio for Bad debt
  2. Transfer all the existing stock of Bad debt into a securitization vehicle. The senior tranche will be covered by government guarantees, Mezzanine will be bought by Atlante fund and the equity tranche will be transferred to existing shareholders and deconsolidated.
  3. A €5bn capital increase to remove the negative capital impact from the operation and maintain capital level at the current level of 11.8%.

Is War Inevitable In The South China Sea?

The indispensable nation’s military hegemony over the whole South China Sea must always be undisputed. Always. But already it is not. China is positioning itself as a cunning, asymmetrical aspirant to “peer competitor”. For the moment Beijing ranks second in the Pentagon’s list of “existential threats” to the US. Were not for Russia’s formidable nuclear power, China would already be number one. At the same time China does not need to launch any military offensive against an ASEAN member; it’s bad for business. But make no mistake; at some point in the future, there will be a serious confrontation between the US and China over “access" to the South China Sea.

The Good, The Bad, & The Great Of Donald Trump's Candidacy

"Donald Trump’s overwhelming virtue is that he is not Hillary Clinton and does not carry a bulging 30-year old bag of bad ideas. Hillary’s ideas—–and those of the establishment for which she shills——about how to fix the coming economic and foreign policy crises, in fact, are so unequivocally and irremediably bad that it is not possible that there is anything worse."

What Alan Greenspan Is Most Worried About

"... it's very difficult to see where the next step is except what I'm concerned about mostly, is stag-flation, meaning I think we're seeing the very early signs of inflation beginning finally to pick up as the issue of deflation fades.... we're in a situation now where looking at the interest rate levels that we're looking at and the inflation rates we're looking at, it's very clear that we're going to be moving reasonably shortly into a wholly different phase."

European Bank Stress Test Preview: What To Expect And How To Trade It

While the main event in today's European bank stress test was leaked moments ago, when Monte Paschi board member Turicchi said that the bank has finalized a bank consortium for a critical capital hike, suggesting that contrary to last minute jitters the bank has found the needed number of willing banks to provide €5 billion in fresh capital it needs resulting in the bank's 3rd bailout in the past 2 years - this one courtesy of the private sector - there may still be some surprises.

Peter Schiff Slams The Fed's 'Loud Talk, No Stick' Policy

Theodore Roosevelt’s famous mantra “speak softly and carry a big stick” suggested that the United States should seek to avoid creating controversies and expectations through loose or rash pronouncements, but be prepared to act decisively, with the most powerful weaponry, when the time came. More than a century later, the Federal Reserve has stood Teddy’s maxim on its head. As far as Janet Yellen and her colleagues at the Fed are concerned, the Fed should speak as loudly, frequently, and as circularly as possible to conceal that they are holding no stick whatsoever.