Bank of America
West Coast Ports Shut Down For Holiday Weekend: Supply Chain Halt Threatens Havoc On Reeling EconomySubmitted by Tyler Durden on 02/14/2015 19:02 -0400
the latest news out of the West Coast is not good for anyone hoping for a quick resolution to the congestion problem. According to Reuters, after the clogged ports briefly reopened on Friday after a daylong closure, "shippers planned to re-impose a partial shutdown through the holiday weekend barring a settlement in stalled labor talks with the dockworkers union."
The "Catastrophic Shutdown Of America's Supply Chain" Begins: Stunning Photos Of West Coast Port CongestionSubmitted by Tyler Durden on 02/13/2015 00:20 -0400
Following last month's narrative-crushing drop in retail sales, despite all that low interest rate low gas price stimulus, January was more of the same as hopeful expectations for a modest rebound were denied. Falling 0.8% (against a 0.9% drop in Dec), missing expectations of -0.4%, this is the worst back-to-back drop in retail sales since Oct 2009. Retail sales declined in 6 of the 13 categories.
- 'Glimmer of hope' for Ukraine after deal at Minsk peace summit (Reuters)
- Ruble Rebounds, Russian Stocks Surge on Ukraine Cease-Fire Deal (BBG)
- Greek PM Tsipras in Brussels as clock ticks on EU bailout (Reuters)
- Emerging-Market Currencies Rout Not Over for Traders (BBG)
- Little noticed, new Saudi king shapes contours of power (Reuters)
- In Wake of Financial Crisis, Goldman Goes It Alone (WSJ)
- AmEx Is Losing Its Millionaires (BBG)
- Thousands to Lose Health Insurance Over Residency Questions (WSJ)
A current Bank of America employee has made a number of whistleblower submissions to the U.S. Securities and Exchange Commission about the role played by the U.S. banking subsidiary in financing dividend-arbitrage trades: trades which used taxpayer-backed funds to allow hedge funds to avoid paying taxes. The employee’s submissions allege that Bank of America’s London-based Merrill Lynch International unit has extended “extreme levels of BANA leverage” to fund “increasingly aggressive and reckless” tax-avoidance trades. The submissions said the practices risked causing the bank “serious financial and reputational damage.”
Are we on the verge of a major worldwide economic downturn? Well, if recent warnings from prominent bankers all over the world are to be believed, that may be precisely what we are facing in the months ahead.
"According to the University of Michigan survey, consumers have not been this upbeat since January 2004, when the economy was booming. The natural outcome should be for consumers to splurge, hitting the malls and going out to restaurants. But much to our surprise, the data suggest otherwise." - BofA
It took a while, but three months after we wrote "How The Petrodollar Quietly Died, And Nobody Noticed", someone finally noticed.
Greece’s problem can only be truly solved if large scale debt restructuring is accepted and executed. But that would initiate a chain of events that would bring down the bloated zombie that is Wall Street. And it just so happens that this zombie rules the planet. We are all addicted to the zombie. It allows us to fool ourselves into thinking we are doing well – well, sort of -, but the longer term implications of that behavior will be devastating. We’re all going to be Greece, that’s inevitable. It’s not some maybe thing. The only thing that keeps us from realizing that is that the big media outlets have become part of the same industry that Wall Street, and the governments it controls, have full control over. And that in turn says something about the importance of what Yanis Varoufakis and Syriza are trying to accomplish. They’re taking the battle to the finance empire. And it should not be a lonely fight. Because if the international Wall Street banks succeed in Greece, some theater eerily uncomfortably near you will be next. That is cast in stone.
Needless to say, Greece is only the poster child. The McKinsey numbers above suggest that “peak debt” is becoming a universal condition, and that today’s Keynesian central bankers and policy apparatchiks are only pushing on a giant and dangerous global string. So now we get to ground zero of the global Ponzi. That is the monumental pile of construction and debt that is otherwise known on Wall Street as the miracle of “red capitalism”. In truth, however, China is not an economic miracle at all; its just a case of the above abandoned Athens stadium writ large.
Remember the "great rotation"? Neither do we, because the bank that year after year coined the term to prepare investors for a renormalization of the economy as bond yields rise alongside stocks (something that happens in any normal, non-centrally planned banana world), that would be Bank of America for anyone confused, just reported that in the latest week, EPFR data showed inflows to all fixed income funds of $16.04 billion – the highest on record going back to at least 2008. On the "other side of the spectrum were stocks that had $5.52bn of outflows, down from a $1.62bn inflow in the prior week." And just like that, it's a bond-pickers' market, even as central banks trade with each other in various dark pools to keep global equities, and thus confidence, stable even as the capital tsuniami screams deflation for years to come.
- RadioShack files for bankruptcy; Sprint to take over some stores (Reuters)
- Kansas To Issue Bonds and Invest Proceeds to Boost Pension Returns (WSJ)
- Merkel to Make Last Push With Putin as Pessimism Prevails (BBG)
- Islamic State in Syria seen under strain but far from collapse (Reuters)
- Texas Swagger Fades Fast as Oil Town Squeezed Hard by OPEC (BBG)
- SEC probes Blackberry options trading ahead of Reuters report about Samsung talks (Reuters)
- Spanish Bonds Underperform Italy’s as Podemos Gains Popularity (BBG)
- Steelworkers Union Rejects Offer From Refiners (WSJ)
- Brazil January Inflation at Fastest Pace in Nearly 12 Years (BBG)
Six years on from the financial crisis and central banks are still hacking away at interest rates. Australia and Romania's did this week and while Poland and India held off, both are expected to prune rates later in 2015.
"It's a man-made tragedy, and the men who made it won’t fix it." So it turns out Lenin wasn’t just right that the best way to destroy the capitalist system is to debauch the currency. It’s also the best way, as Venezuela can tell you, to destroy the socialist one.
What Denmark has just done is "back-door QE", because as some forget, there are two ways to push the price of an asset higher (thus pushing its yield lower in the case of a bond): increase demand, which is what conventional QE does when central banks buy bonds, or reduce supply. Which is what Denmark just did by completely cutting off all Treasury issuance "until further notice". As a result, paradoxically, increasingly more speculators are betting that the "Trade of 2015" could be doing precisely the opposite of what the Danish central bank is hoping will happen: i.e., shorting the EURDKK (or going long the DKKEUR) in hopes that when the Danish peg finally does break, it too will result in long Swiss France-type profits.