Bank of England

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Asian Euphoria Sends Nikkei Above 20,000, Fizzles In Europe On More Greek Fears; US Futures Down





Whether it is in sympathy with the now relentless surge in the Shanghai Composite which tacked on another 2.44% overnight to close at a fresh multi-year high just shy of 4400, well more than double from a year ago, or because Mrs Watanabe was unable to read the latest Japan trade data whose first trade surplus in 3 years hinted that there will be no new easing by the BOJ any time soon, but overnight the Nikkei closed above 20,000 for the first time in 15 years, with "makers of chocolate, mayonnaise, potato chips and household appliances" helping lift the Tokyo market according to the WSJ. The now daily Asian euphoria however did not last long in the European session, and after opening higher, the Stoxx Europe 600 slipped into negative territory just an hour into trading, and was down 0.4% by midmorning, lead by a near 1% decline on Athens' mains stock index, which has since recouped losses stemming from the overnight report that the ECB is considering an up to 50% haircut on Greek bank collateral, a move that would wipe out the Greek financial sector with ease.

 
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Frontrunning: April 21





  • The Fed Still Wants Easy Money (BBG) - you don't say
  • ECB Is Studying Curbs on Greek Bank Support (BBG)
  • Banks Paid to Borrow as Three-Month Euribor Drops Below Zero (BBG)
  • Baoding Tianwei is first state-owned Chinese enterprise to default (Reuters)
  • Major Chinese Developer Says It Can’t Pay Dollar Debts (BBG)
  • Wall Street Has No Idea How Much Money Venezuela Has (BBG)
  • Goldman Sachs, Morgan Stanley Find Different Paths to Profits (WSJ)
  • Does the Collapse of a Chinese Developer Signal the Start of More Defaults? (BBG)
  • Retail Traders Wield Social Media for Investing Fame (WSJ)
 
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Bank Of England Exposes US Cronyism: Questions Why Buffett's Berkshire Hathaway Is Not Too Big To Fail





If you thought currency-wars were a problem, just wait until crony-wars begin. In a stunning show of disagreement among the omnipotent, The FT reports that a Freedom of Information Act request has confirmed The Bank of England wrote to US authorities seeking clarity about Berkshire’s absence from a provisional list of "systemically import" (Too Big To Fail) financial institutions (SIFIs). The US Treasury declined to comment...

 
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CLO Volume Hits Record As PE, Wall Street Look To Stay Ahead Of New Rule





March was a record month for CLO issuance with $15.2 billion in deals coming to market, bringing the YTD total to $29 billion and making Q1 2015 the best first quarter in history for CLO new issue volume. And while a JPM analyst who spoke to Bloomberg says managers “want to get deals done early before risk retention kicks in,” we're confident that it’s all about keeping credit flowing to deserving borrowers and not at all about a desire to keep exposure to 5% of a collateral pool littered with loans to “companies that are of lower credit quality or that do not have a third-party evaluation of the likelihood of timely payment of interest and repayment of principal” off of the books.

 
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Futures Jump Following Worst Chinese Eco Data In 6 Years





If yesterday stocks surged on the worst 4-month stretch of missing retail sales since Lehman, one which BofA with all seriousness spun by saying "it seems not unreasonable to suspect that the March 2015 reading on retail sales gets revised up next month", then the reason why futures are now solidly in the green across the board even as German Bunds have just 14 bps to go until they hit negative yields and before the ECB is fresh out of luck on future debt monetization, is that overnight China reported its worst GDP since 2009 together with economic data misses across the board confirming China's economy continues its hard landing approach despite a stock market that has doubled in the past year.

 
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Frontrunning: April 13





  • As reported here first a month ago: The $9 Trillion Short That May Send the Dollar Even Higher (BBG)
  • As an instant target for foes, Clinton may struggle to get message heard (Reuters)
  • Emerging Stocks Rally 11th Day as Aussie Weakens on China (BBG)
  • Puerto Rico, Investors Enlist Ex-IMF Officials (WSJ)
  • Dollar’s Rise Reshuffles Global Economy (BBG)
  • Indonesia eyes regular navy exercises with U.S. in South China Sea (Reuters)
  • Banca Monte dei Paschi Breaches Exposure Limits to Nomura (WSJ)
  • European Bond Buyers Find Negative Doesn’t Necessarily Mean Bad (BBG)
 
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Frontrunning: April 9





  • Greece pleads cash running out, told to hasten reforms (Reuters)
  • ECB Cash Said Likely to Fall Short of Greek Request This Week (BBG)
  • Chinese Stock Buying Frenzy Sweeps Into Hong  (WSJ)
  • Shell’s $70 Billion BG Deal Meets Shareholder Skepticism (BBG)
  • Yemen's Houthis seize provincial capital despite Saudi-led raids (Reuters)
  • Iran Nuclear Deal Gives Syria’s Bashar al-Assad Reason to Worry (WSJ)
  • Slow apps, low battery life limit appeal of Apple Watch (Reuters)
  • Gilead’s $1,000 Pill Is Hard for States to Swallow (WSJ)
  • The Oil Industry's $26 Billion Life Raft (BBG)
 
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Guest Post: Russia's Central Bank Governor Is Way Smarter Than Ours





It wouldn’t be a first, but it would certainly be a – bigger – shock. That is to say, the Bank of England hijacked the head of Canada’s central bank some time ago, but, while unexpected enough, that would pale in comparison to the US hiring the present razor sharp and fiercely independent Governor of the Russian central bank, Elvira Sakhipzadovna Nabiullina. It would still seem to be a mighty fine idea, though. Not that we think it will happen. Yellen is obviously neither; she’s a cog in a machine that huffs and puffs and pumps and dumps to make sure her overlords in the blissful world of US finance make ever more profit no matter how bad things get in American society.

 
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How America Became An Oligarchy





"The politicians are put there to give you the idea that you have freedom of choice. You don’t. . . . You have owners." - George Carlin, The American Dream

According to a new study from Princeton University, American democracy no longer exists. Using data from over 1,800 policy initiatives from 1981 to 2002, researchers Martin Gilens and Benjamin Page concluded that rich, well-connected individuals on the political scene now steer the direction of the country, regardless of – or even against – the will of the majority of voters. America’s political system has transformed from a democracy into an oligarchy, where power is wielded by wealthy elites.

 
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Back From Holiday, European Stocks Celebrate Atrocious US Jobs Data, Jump Over 1%





Yesterday it was only the US that got the full benefit of the market-wide stop hunt that sent the US market soaring on its biggest opening ramp in 2015 following the worst payroll data since 2013, because Europe was closed for Easter Monday. Which means today it was Europe's turn to celebrate atrocious US data (yes, yes, snow - because somehow tremendous January and February jobs data was not impacted by snow), and in the first European trading session of the week, equities have started off on the front-foot.

 
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Stock-Market Crashes Through the Ages – Part II – 19th Century





Stock-market crashes saw the light of day more and more as the world became industrialized. The 19th century saw a rapid increase in their numbers.

 
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Frontrunning: April 6





  • Political Battle Ramps Up Over Iran Nuclear Deal (WSJ)
  • Greece moves to quell default fears, pledges to meet 'all obligations' (Reuters)
  • Isolated Greece pivots east to Russia, China and Iran. But will it work? (Telegraph)
  • Frustrated officials want Greek premier to ditch Syriza far left (FT)
  • Greek political unrest and deepening debt crisis fuel talk of snap election (Guardian)
  • Rand Paul’s Challenge: Charting His Own Course (WSJ)
  • In Greenspan Conundrum Redux, Odds Are on Bond Traders’ Side (BBG)
  • Yemen's Aden suffers amid clashes, aid deliveries delayed (Reuters)
  • Record Gasoline Output to Curb Biggest U.S. Oil Glut in 85 Years (BBG)
 
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The Bank-State Bargain - Breaking The Basic Rules Of Capitalism





There’s no getting away from it. Banks create money out of nothing when they extend loans and then charge borrowers interest on this newly created capital. The result is an ongoing multi-billion pound/ dollar subsidy breaking the basic rules of capitalism. Galbraith was right. Governments should be more pragmatic. Politicians should stop hiding behind the skirts of ‘the market’ and make some judgement calls. As many have said, we need banking but we don’t need banks, at least not banks like this.

 
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QE For The People - What Could Go Wrong?





A number of economists have proposed the implementation of what has been dubbed "QE for the people." They seem to prefer to apply the principle "When in trouble, double." Given the massive mistakes which were made by central banks from Weimar to Bernanke and the relentless attempts to use the printing press to finance governments, it probably shouldn't take much to convince people of alternatives, and not more of the same, right?

 
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