Back in 2011 Goldman, when the FDIC-insured bank holding company with no deposits, was slapped with the biggest at the time SEC penalty for shorting CDOs it had sold to clients, it started a trend of scapegoating all its evils on a lone, then 20-something individual, Fabrice Tourre, who seemingly had "worked alone" and whose actions were not supervised by anyone: the chain of responsibility started and ended with him. Naturally, nobody went to jail. A few years later, stuck in the biggest scandal of its post-bankruppcy existence involving over 20 million recalls in just the first 6 months of 2014 alone, GM has decided that what worked for Goldman should work for it too, and as the WSJ reports, is "pinning of a decadelong failure to recall defective cars on a lone engineer." Meet Raymond DeGiorgio, said lone engineer.
As of this moment, US equity futures are perfectly unchanged despite what has been an almost comical reactivation of the 102.000 USDJPY tractor beam. Considering the pair has been trading within a 75 pips of the 102.000 level for the past month, one has to wonder when and what the next BOJ Yen equilibrium level will be reset to. Oddly enough, even as the USDJPY is very much unchanged, the Nikkei continues to rise suggesting that, as Nikkei reported, the GPIF is already investing Japanese pension funds in stocks. Which is great for the Nikkei catching up with the global bond bubble, what is not so great is what happens when the market realizes that the largest holder (excluding the BOJ) of JGBs is dumping, and the world's most illiquid major sovereign bond market rushes for the exits. Just recall the daily halts of Japanese bond trading from the summer of 2013 - we give it 3-6 months before it returns with a vengeance.
The damage done by Central Planning has yet to come home to roost. Six years into the Grand Experiment--that Central Planners can pick winners who just happen to be their cronies--the chickens of consequence are still making their way home. And when they finally come home to roost, we will all discover that the economy is much more fragile than advertised by the Central Planners and their media toadies.
She came, she spoke, and she sent stocks to a new all time high. That is perhaps the simplest summary of what Janet Yellen did yesterday when, as a result of her droning monotone, she managed to put the VIX literally to sleep, which closed at the lowest since 2007 and the resulting surge in the S&P was a fresh record high, because despite the "concerns" Fed member have about record high complacency, all they are doing is adding to it. And now that apparently the Fed has a market "valuation" department, and Yellen can issue fairness opinions on whether the S&P is overvalued, the only question is whether today, as a follow through to yesterday's "buy everything, preferably on leverage, sincerely - the Fed" ramp, the VIX will drop to single digits today.
A year ago we wished TEPCO the best of luck with the construction of the "Game of Thrones"-esque 1.4km giant wall of ice that was designed to surround the exploded Fukushima power plant and slow the movement of irradiated water below the damaged reactors, preventing it from flowing over into the ocean and surrounding land. A plan so idiotic we were at a loss for words trying to list the ways it could go wrong. And, as it turns out, making a project overly complicated and ridiculous doesn't assure it will be a success. Quite the contrary. As Japan JIJI reports, Tepco said the project, which remains in its early stages, is experiencing a problem with an inner ice wall designed to contain highly radioactive water that is draining from the basements of the wrecked reactors. A Tepco spokesman added that "We have yet to form an ice plug because we can’t get the temperature low enough to freeze the water."
Bank of America believes the increasing geopolitical tensions in Iraq risk regional contagion, with the potential for negative spillover to global markets. If Iraq were to see further turmoil, in addition to the civil war in neighbouring Syria, we believe it could destabilize the region further, disrupt oil production and exports, and provide fertile ground for terrorist activity to extend its reach. They review the background of Iraqi turmoil, and discuss the political, economic and market implications in 10 questions; noting that the root of the problem is the central government’s non-inclusive and sectarian policies.
The clock is ticking on the "Europe is fixed" narrative. It's only a matter of time before the banking crisis resurfaces.
Following the release of the "deeply troubling" 315-page "Valukas Report" and the firing of 'all' those responsible for multiple deaths from GM's 'Kevorkianesque' cars, CEO Mary Barra is back on the Hill to face the music once more from The Subcommittee on Oversight and Investigations. Having explained in her previous testimony that she could answer their questions as she did not have the information, Subcommittee Chairman Tim Murphy (R-PA) noted, now "we will have the chance to get those answers and compare the company's findings to our own." Of course, one wonders if the politicians will ask about how GM silenced a whistleblower.
it is suddenly not fun being a Fed president (or Chairmanwoman) these days: with yesterday's 2.1% CPI print, the YoY rate has now increased for four consecutive months and is above the Fed's target. Concurrently, the unemployment rate has also dipped well below the Fed’s previous 6.5% threshold guidance, in other words the Fed has now met both its mandates as set down previously. There have also been fairly unambiguous comments from the Fed’s Bullard suggesting that this is the closest the Fed has been to fulfilling its mandates in many years. Finally, adding to the "concerns" that the Fed may surprise everyone were BOE Carney’s comments last week that a hike “could happen sooner than the market currently expect." In short: continued QE here, without a taper acceleration, merely affirms that all the Fed is after is reflating the stock market, and such trivial considerations as employment and inflation are merely secondary to the Fed. Which, of course, we know - all is secondary to the wealth effect, i.e., making the rich, richer. But it is one thing for tinfoil hat sites to expose the truth, it is something else entirely when it is revealed to the entire world.
With stocks up and oil down, Iraq must be fixed? However, as The Institute for the Study of War notes, the clashes continue from north to south in Iraq.
With newsflow out of Iraq having slowed down as has the ISIS offensive, which appears to have been halted north of Baghdad, the market now shifts its attention to the Fed's two-day meeting which begins today and continues through tomorrow afternoon, when it will be leaked by media outlets to ultra-wealthy speculators and robots, breaching the embargo (in exchange for a hefty payoff) some 10 minutes before 2 pm.
It's one of those days: despite the Iraq conflict spilling out of control and about to involve US drones and warplanes, despite China's naval conflict with Vietnam over an oil rig in disputed territory set to go "kinetic" at any moment, despite the Ukraine civil war having its deadliest day yet this weekend and adding insult to injury Russia halting gas supplies to Ukraine (letting Kiev and Berlin fight for the scraps), despite crude prices rising ever higher and about to unleash a "discretionary income" shockwave on America's summertime motorists, despite yet another massive tax inversion M&A deal in which the buyer has made abundantly clear its stock is overvalued and will be used as the purchasing currency, stocks are inexplicably not at all time highs this morning.
It's possible to describe Rep.Eric Cantor as a serial sell-out. But that would be giving an unprincipled politician driven by an unalloyed ambition to climb the greasy pole of Washington power too much credit. In truth, Cantor never campaigned for any recognizable principle; he merely maneuvered his way to the top of the House GOP hierarchy by following in the tawdry footsteps of modern GOP bagmen like Tom DeLay and Roy Blunt. Eric Cantor made a career of milking the Warfare State and pandering to Wall Street. This brought him nearly to the top of the Washington heap. But in the end, it did not fool his constituents. And most certainly it set back the conservative cause immeasurably.
Believe it or not, the main driver of risk overnight had nothing to do with Iraq, with the global economy or even with hopes for more liquidity, and everything to do with a largely meaningless component of Japan's future tax policy, namely whether or not Abe (who at this pace of soaring imported inflation and plunging wages won't have to worry much about 2015 as he won't be PM then) should cut the corporate tax rate in 2015. As Bloomberg reported, Abe, speaking to reporters in Tokyo today after a meeting with Finance Minister Taro Aso and Economy Minister Akira Amari, said the plan would bring the rate under 30 percent in a few years. He said alternative revenue will be secured for the move, which requires approval from the Diet.
The numbers that you are about to see are likely to shock you. They prove that the global financial Ponzi scheme is far more extensive than most people would ever dare to imagine. The truth is that our financial system is little more than a giant pyramid scheme that is based on debt and paper promises. It is literally a miracle that it has survived for so long without collapsing already. But at some point a day of reckoning is coming, and when it arrives it is going to be the most painful financial crisis the world has ever seen.