Bank of America

Detroit May File For Bankruptcy Overnight

Presenting default you can believe in, as the largest municipal bankruptcy in US history, involing the one-time iconic "motor city" which now has a population of 700,000 and some $20 billion in liabilities, is about to become reality. But fear not: the Detroit bankruptcy, like rising rates, are entirely due to the economic recovery.

Somnolent Market Summary Ahead Of Bernanke's Repeat Performance

Stocks in Europe recovered from a cautious start to the trading session and gradually edged back into positive territory, though the DAX index in Germany under performed following less than impressive earnings by SAP. Company’s shares fell around 3% after the company trimmed its outlook for 2013 software revenue, blaming slowing economic growth in China. Elsewhere, Akzo Nobel shares fell 5% in early trade after the company said that its Q2 net profit almost doubled from the same period last year thanks to the sale of its North American paints division and a tax gain. Going forward, market participants will get to digest the release of the weekly jobs report, Philadelphia Fed survey for the month of July and earnings report releases from Morgan Stanley, Verizon, BlackRock and Google. Finally, today is the second day of Bernanke's semi-annual testimony.

Bank Of America: From Loss To Profit Thanks To Mark-To-Unicorn

Page 5 of BAC's Financial Supplement lays it out for all to see: the "Net change In available-for-sale debt and marketable equity securities" in Q2 was $4.233 billion. How does this compare to the firm's reported Net Income of $4 billion? It compares as follows: absent Mark-To-Unicorn, Bank of America's "Net Income" of $4 billion would have been a loss of $200 million. Which, incidentally, is what BAC reveals is its Comprehensive Income at ($209)MM. Of course, since every other firm is in the same boat of hiding epic losses the second the market stop acting according to every whim of the central planners, nobody cares and certainly nobody wants to bring attention to this little fact.

Bank Of America Beats Helped By $0.9 Billion Loan Loss Reserve Release

Moments ago Bank of America was the last TBTF bank to report earnings, which came in at $4 billion or $0.32 per diluted share compared to expectations of a $0.26 print. Revenue was $22.9 billion net of interest expense which was just a fraction above the $22.7 billion expected. The immediate reason for the beat: the usual accounting fudge to net interest losses which came in at $1.2 thanks to yet another $900 Million (well above the $804MM in Q1 and the same as Q4 2012) loan loss reserve reduction to the total net charge off number of $2.1 billion. And with $21.2 billion in credit loss "buffer" allowance still left on the books from those torrid days of 2008, expect the accounting fudges to continue for a long time.

Where Markets Stand Ahead Of Bernanke

Bernanke today testifies on monetary policy before the House Financial Services Committee (formerly the Humphrey-Hawkins). The testimony will be released at 8:30 am NY with Q&A after his testimony. Tomorrow he testifies before the Senate Banking Committee but the prepared remarks are the same for both days. Indeed it’s likely that the Q&A will be where all the fun starts. As DB says, he will likely try to pull off the trick of continuing to prepare the groundwork for tapering but try to give bond markets something to help them fight off the pressure of higher yields. With no post-meeting press conference planned for the July 30th/31st FOMC, and Bernanke not scheduled to speak publicly until he appears at the Global Education Forum event on August 7th, this week’s testimony may well be the only remarks we hear directly from the chairman for some weeks.

Pivotfarm's picture

Call it what you will, a handshake or a parachute; the result is all the same. The rest of us just get elbow out of the way as we get pushed through the back door. The top executives leave by the front door and to boot they hop into a chauffeur-driven car (paid by the company, of course) as they drive off into the sunset. To parachute someone: send them elsewhere, relocate them, bundle them off, pack them off or dispatch.

10 Reasons Why Sharknado Is Coming To The Global Economy

Have you ever seen a disaster movie that is so bad that it is actually good? Unfortunately, we are witnessing something just as ridiculous in the real world right now.  In the United States, the mainstream media is breathlessly proclaiming that the U.S. economy is in great shape because job growth is "accelerating" (even though we actually lost 240,000 full-time jobs last month) and because the U.S. stock market set new all-time highs this week.  The mainstream media seems to be absolutely oblivious to all of the financial storm clouds that are gathering on the horizon.  The conditions for a "perfect storm" are rapidly developing, and by the time this is all over we may be wishing that flying sharks were all that we had to deal with.

Pivotfarm's picture

Why The EU Has Failed

It has all gone belly up if we look at the EU and we are honest. Yes, they might be trying to paper of the cracks and yes they might be shoving some super strong glue in their to stop everyone pulling in different directions, but if they are really truthful about it, the EU28 (now that Croatia has become a member since July 1st 2013)

Frontrunning: June 28

  • Fashionable 'Risk Parity' Funds Hit Hard (WSJ)
  • No 1997 Asian Crisis Return as China Trembles (BBG)
  • Greece Faces Collapse of Second Key Privatization (FT)
  • China Bad-Loan Alarm Sounded by Record Bank Spread Jump (BBG)
  • Iranian official signals no scaling back in nuclear activity (Reuters)
  • Asmussen Says Any QE Discussions at ECB Not Policy Relevant (BBG)
  • Flat Japanese consumer prices aid Kuroda (FT)
  • Vietnam Devalues Dong for First Time Since ’11 to Boost Reserves (BBG)
  • World Bank Sees ‘Vulnerable’ Food System on Climate Change (BBG)
  • Fed big-hitters seek to quash QE fears (FT)
  • EU Leaders Set to Slow Support for Ailing Banks (BBG)

Fact Or Fiction: Financial Sector Thinks It’s About Ready To Ruin World Again

Claiming that enough time had surely passed since they last caused a global economic meltdown, top executives from the U.S. financial sector told reporters Monday that they are just about ready to completely destroy the world again. Representatives from all major banking and investment institutions cited recent increases in consumer spending, rebounding home prices, and a stabilizing unemployment rate as confirmation that the time had once again come to inflict another round of catastrophic financial losses on individuals and businesses worldwide.  “It’s been about five or six years since we last crippled every major market on the planet, so it seems like the time is right for us to get back out there and start ruining the lives of billions of people again,” said Goldman Sachs CEO Lloyd Blankfein. “We gave it some time and let everyone get a little comfortable, and now we’re looking to get back on the old horse, shatter some consumer confidence, and flat-out kill any optimism for a stable global economy for years to come.”

Frontrunning: June 21

  • Turmoil Exposes Global Risks (WSJ)
  • China Money Rates Retreat After PBOC Said to Inject Cash (BBG)
  • Fed Seen by Economists Trimming QE in September, 2014 End (BBG)
  • Booz Allen, the World's Most Profitable Spy Organization (BBG)
  • Abe’s Arrows of Growth Dulled by Japan’s Three Principles (BBG)
  • China steps back from severe cash crunch (FT)
  • Smog at Hazardous as Singapore, Jakarta Spar Over Fires (BBG)
  • U.S. Weighs Doubling Leverage Standard for Biggest Banks (BBG)

Frontrunning: June 20

  • Bonds Tumble With Stocks as Gold Drops in Rout on Fed (BBG)
  • Bernanke Sees Beginning of End for Fed’s Record Easing (BBG)
  • Gold Tumbles to 2 1/2 Year-Low After Fed as Silver Plummets (BBG)
  • PBoC dashes hopes of China liquidity boost (FT)
  • U.S. Icons Now Made of Chinese Steel (WSJ)
  • Emerging Markets Crack as $3.9 Trillion Funds Unwind (BBG)
  • Everyone joins the fun: India sets up elaborate system to tap phone calls, e-mail (Reuters)
  • China Manufacturing Shrinks Faster in Threat to Europe (BBG)
  • More on how Syria's Al-qaeda, and now US, supported "rebels", aka Qatar mercenaries, operate (Reuters)
  • Echoes of Mao in China cash crunch (FT) - how dare a central bank not pander to every bank demand?
  • French watchdog tells Google to change privacy policy (Reuters)

Guest Post: Who Are The Real Traitors?

Over the course of decades we have allowed ourselves to be corrupted by the love of material possessions, the lure of a debt based faux wealth, the money for nothing entitlement promises of dishonorable politicians, the evil of currency debasement, the effectiveness of mass media propaganda, and the belief that we could sacrifice freedom and liberty for promises of safety and security made by a cabal of powerful rich men. Power has been concentrated into the hands of the few, who operate in secrecy and despise the people. They don’t want transparency or open debate. Freedom of speech is nothing but a thorn in their side. They believe they are smarter than the serfs and have no morality when it comes to committing illegal acts and disregarding the Constitution. They are not acting in the public interest. Their abuse of power and looting of the national wealth have put us on a path towards a bloody revolution. This is not a time for conformity, obedience or submission. It’s time to stand up and expose the evil doers. It’s time to rally around those who care about this country. Who are the real traitors? You know the answer.