• Pivotfarm
    07/27/2014 - 17:57
    There never seems to be a day that goes by without someone predicting that China is going to go down the Yangtze and end up some creek without a paddle.

American International Group

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Frontrunning: August 2





  • What's wrong with this headline: Obama authorizes secret support for Syrian rebels (Reuters)
  • Hilsenrath promptly dusts off ashes of sheer propaganda failure, tries again: Fed Gives Stronger Signals of Action (WSJ)
  • Fed Hints at Fresh Action on Economy (FT)
  • Fed Poised to Step Up Stimulus Unless Economy Strengthens (Bloomberg)
  • IMF Chief Lagarde Praises Greece, Spain for Efforts (Bloomberg) - efforts to beg as loud as possible?
  • US sanctions against bank 'target' China (China Daily)
  • Trimming China's Financial Hedges (WSJ)
  • ganda central bank cuts key lending rate to 17 pct (Reuters)
  • Greece Agrees €11.5bn Spending Cuts (FT) - Agrees? Or does what a good debt slave is told to do
  • Germany Retains Stable AAA Outlook at S&P After Moody’s Cut (Bloomberg)
  • Spain’s Bond Auction Beats Target as Borrowing Costs Rise (Bloomberg)
 
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This Is The Government: Your Legal Right To Redeem Your Money Market Account Has Been Denied - The Sequel





Two years ago, in January 2010, Zero Hedge wrote "This Is The Government: Your Legal Right To Redeem Your Money Market Account Has Been Denied" which became one of our most read stories of the year. The reason? Perhaps something to do with an implicit attempt at capital controls by the government on one of the primary forms of cash aggregation available: $2.7 trillion in US money market funds. The proximal catalyst back then were new proposed regulations seeking to pull one of these three core pillars (these being no volatility, instantaneous liquidity, and redeemability) from the foundation of the entire money market industry, by changing the primary assumptions of the key Money Market Rule 2a-7. A key proposal would give money market fund managers the option to "suspend redemptions to allow for the orderly liquidation of fund assets." In other words: an attempt to prevent money market runs (the same thing that crushed Lehman when the Reserve Fund broke the buck). This idea, which previously had been implicitly backed by the all important Group of 30 which is basically the shadow central planners of the world (don't believe us? check out the roster of current members), did not get too far, and was quickly forgotten. Until today, when the New York Fed decided to bring it back from the dead by publishing "The Minimum Balance At Risk: A Proposal to Mitigate the Systemic Risks Posed by Money Market FUnds". Now it is well known that any attempt to prevent a bank runs achieves nothing but merely accelerating just that (as Europe recently learned). But this coming from central planners - who never can accurately predict a rational response - is not surprising. What is surprising is that this proposal is reincarnated now. The question becomes: why now? What does the Fed know about market liquidity conditions that it does not want to share, and more importantly, is the Fed seeing a rapid deterioration in liquidity conditions in the future, that may and/or will prompt retail investors to pull their money in another Lehman-like bank run repeat?

 
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Frontrunning: April 26





  • Fed Holds Rates Steady, But Outlooks Shift (Hilsenrath)
  • Has Obama Stacked the Fed? Not Really (Hilsenrath)
  • High Court Skeptical of Obama’s Use of Power as Campaign Starts (Bloomberg)
  • Europe Seen Adding Growth Terms to Budget Rules as Focus Shifts (Bloomberg)
  • China Reaches Out to Its Adversaries Over Rare Earths (WSJ)
  • Iran Says It May Halt Nuclear Program Over Sanctions (Bloomberg)
  • Europe Shifts Crisis Focus to Growth as Merkel Backs Draghi Call (Bloomberg)
  • Merkel Wants Rules for Raw Material Derivative Trade (Reuters)
  • Evercore Profit Falls 62% as Investment Banking Expenses Rise (Bloomberg)
 
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Frontrunning: April 25





  • Merkel Pushes Back Against Hollande Call to End Austerity Drive (Bloomberg)
  • ECB's Draghi throws crisis ball back to governments (Reuters)
  • Greek Bank Chief Warns of a Possible Euro Exit (WSJ)
  • China’s Wen Says Economy Will Maintain Robust Expansion (Bloomberg)
  • North Korea's nuclear test ready "soon" (Reuters)
  • Hong Kong Peg Architect Says Convertible Yuan `Long Way Off’ (Bloomberg)
  • Hollande seeks wider EU fiscal pact (FT)
  • Gavyn Davies: Why UK GDP continues to lag the G7 (FT)
  • U.S. Lost AAA on Danger of Liquidity Crisis, S&P’s Kraemer Says (Bloomberg)
 
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No Hints Of QE In Latest Bernanke Word Cloud





Addressing his perception of lessons learned from the financial crisis, Ben Bernanke is speaking this afternoon on poor risk management and shadow banking vulnerabilities - all of which remain obviously as we continue to draw attention to. However, more worrisome for the junkies is the total lack of QE3 chatter in his speech. While he does note the words 'collateral' and 'repo' the proximity of the words 'Shadow, Institutions, & Vulnerabilities' are awkwardly close.

 
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Is IPO for Ally Financial Really Seen as "Unlikely" by Treasury?





Unfortunately, nobody in the Treasury seems to want to deal with the mess at Ally Financial before Election Day.  But the question is whether Ally can wait until then.

 
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Frontrunning: March 8





  • Investors help Athens over bailout hurdle (FT)
  • Greece Moves Closer to Swap (WSJ)
  • U.S. Warns Apple, Publishers (WSJ)
  • China offers other Brics renminbi loans (FT)
  • Court Challenges EU on Bank Downsizings (WSJ)
  • QE blamed for surge in pensions shortfall (FT)
  • Tang: Open to adjusting dollar trading band (WSJ)
  • U.S. Report to Warn on Cyberattack Threat From China (WSJ)
 
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Quotes Of The Week... And Friday Humor





For our quote of the week, we go to the man who almost brutally cut the meal between breakfast and brunch (it was formerly supposed to be German demand #39 for Greece but was mysteriously cut in the final draft) in the name of fiscal austerity and setting a shining example of calorific sacrifice. We repeat almost. Quote Busineweek: "No one pays attention to the activation of the CDS." Venizelos told lawmakers in comments broadcast live on state-run Vouli TV........     :0

 
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Bailed Out AIG Posts Huge "Beat" On Tax Gimmick, Will Avoid Paying Taxes For Years





AIG just conducted a two-fold master class of i) how to confuse Wall Street of having "superb" earnings, and ii) how to avoid paying any corporate taxes for years to come. Because as part of the company's just announced massive $19.8 billion profit, a whopping $17.8 billion was nothing short of the oldest tax accounting gimmick in the book - the release of a valuation allowance (i.e., deferred tax liability vs deferred tax asset conversion). In other words, apples to apples, the real Net Income attributable to shareholders was not $19.8 billion but realistically $2 billion, which would compare to last year's $11.2 billion if only it was not for a $13.5 billion gain on divested business posted in Q4 2011, when the company again was fudging numbers like a drunken sailor. Anyway, we are confident even the algos will figure it out eventually. But the real slap in the face coming from this bailed out company is that as a result of this accounting change, AIG will essentially not pay any taxes for years to come, most likely until its next insolvency.

 
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Frontrunning: February 9





  • New Greek demands threaten debt deal (FT)
  • Greek Finance Minister Heads to Brussels; Loan Talks Stall (WSJ)
  • Talks Stalled on Greek Bailout as Venizelos Heads to Brussels (Bloomberg)
  • US banks near historic deal on foreclosures (FT)
  • Obama: Europe needs "absolute commitment" on debt crisis (Reuters)
  • Fed's Lacker sees no need for more easing for now (Reuters)
  • Europe compromise urged at summit (China Daily)
  • China to Punish Illicit Bank Lending, Shanghai Securities Says (Bloomberg)
  • Monti Meets Obama Amid ’Spectacular Progress’ (Bloomberg)
  • Draghi’s First 100 Days Presage Greek Help (Bloomberg)
 
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America's "Largest Minority-Owned And Operated Investment Bank" Shuts Down





Solyndra, Ener1, and now Kaufman Bros - The current economy may not be very good at creating jobs, even minority-focused ones, but its track record in inverse job creation is rapidly becoming second to none. Bloomberg reports that "Kaufman Bros. LP, the minority-owned investment bank that helped unwind U.S. stakes in bailed-out financial companies, ceased operations as of yesterday, according to a notice posted on its website. Chief Executive Officer Benny Lorenzo told employees that New York-based Kaufman was closing immediately in a meeting yesterday after trading closed, according to two people with knowledge of the matter, who declined to be identified because they weren’t authorized to speak publicly. Neither Lorenzo nor Chief Financial Officer Gerard Durkin returned messages left on their office and mobile phones yesterday and today." More amusing is the following description: "The company, which also has offices in San Francisco, said it was sought out by institutional investors, hedge funds and government agencies to help meet diversity goals." No comment. The closure notice can be found on the company's website. And so another bank bites the dust. Many more coming.

 
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Frontrunning: January 20





  • Fed Holds Off for Now on Bond Buys  (Hilsenrath)
  • Bonds Show Return of Crisis Once ECB Loans Expire (Bloomberg)
  • Greek Debt Talks Enter Third Day After ‘Substantial’ Discussions (Bloomberg)
  • Sharp clashes at Republican debate ahead of vote (Reuters)
  • Lagarde Joins Warning on Fiscal Cuts Before Davos (Bloomberg)
  • Investors exit big-name funds as stars fail to shine (Reuters)
  • Payday lenders plead case to consumer agency (Reuters) - the EFSF included?
  • EU Toughens Fiscal Pact Bowing to ECB Objections, Draft Shows (Bloomberg)
  • Minister Urges Japan to Use Strong Yen (FT)
  • China Eyes Pension Fund Boost for Stock Market (Reuters)
  • China Manufacturing Contraction Boosts Case for Easing: Economy (Bloomberg)
 
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Chris Whalen On The Zombie IPO: Is American International Group the "Blood Doll" of Wall Street?





In this issue of The Institutional Risk Analyst, we return to the zombie dance party to check in on the queen of the prom, American International Group ("AIG"). First a question: Vampires are all the rage now in popular culture, so allow us to offer a macabre metaphor for AIG. Do you know what a "blood doll" is? A girl who craves to be the regular victim of or willing donor to a vampire. But hold that thought.

 
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