Copenhagen

Frontrunning: April 8

  • Russia's Gazprom says Ukraine did not pay for gas on time (Reuters)
  • Ukraine Moves to Keep Control in East (BBG)
  • Banks Set to Report Lower Earnings as Debt Trading Slumps (BBG)
  • More DeGeners and Obama selfies needed: Samsung's lower first-quarter estimate highlights smartphone challenges (Reuters)
  • Citi Is Bracing to Miss a Profit Target (WSJ)
  • Another slam from GM? Safety group calls for U.S. probe of Chevy Impala air bags (Reuters)
  • Japan drugmaker Takeda to fight $6 billion damages imposed by U.S. jury (Reuters)
  • EU court rules against requirement to keep data of telecom users (Reuters)
  • White House may ban selfies with president after Ortiz-Obama photo promotes Samsung (Syracuse)
Pivotfarm's picture

Singapore Tops Tokyo

Thank your lucky stars that you don’t live in some places around the world. If you think you are having a rough time getting by, finding enough money to make ends meet and you constantly talk over the increase in prices, then think again. You probably don’t live in one of the most expensive cities in the world.

Is Housing Set To Lift Off? (Spoiler Alert: No!)

While there are many hopes pinned on the housing recovery as a "driver" of economic growth in 2014, the data suggests otherwise. The optimism over the housing recovery has gotten well ahead of the underlying fundamentals.  While the belief is that the current push in housing is a side-effect of a recovering economy, the reality may be a function of the speculative rush into buying rental properties for cash which created a temporary, and artificial, inventory suppression. The real driver of an economic recovery is full time employment that leads to rising wages and savings.  Unfortunately, this is something that eludes the current Administration that is focused on creating new regulations on the average of every 8 minutes, raising the cost of healthcare and increasing taxes. Call us crazy, but maybe its time to try something different.

Socialists Furious As Denmark Lets Goldman Have The Dong

Yesterday we reported that Goldman's attempt to buy an 18% stake in Dong Energy, the world's biggest operator of offshore wind farms, while largely preapproved by Danish politicians, had met with solid resistance by the broader population, which had started a petition to block the sale, signed by nearly 200,000 as of yesterday. Alas, despite the valiant effort by the population to keep the energy company - with 68% of the population polled as being against the deal - the country's politicians, certainly with no palms greased by the world's biggest depositor-insured hedge fund - just let Goldman have the DONG.  As Bloomberg reports, "a majority in Denmark’s parliament will let Goldman Sachs Group Inc. proceed with its purchase of a stake in state-owned utility Dong Energy A/S, according to a senior lawmaker in the ruling Social Democrat Party."

Angry Danes Refuse To Sell 19% Of Their DONG To Goldman Sachs

With the (emerging) world suddenly collapsing, appropriately enough on the Chairsatan's last FOMC conference, here is an amusing update from Denmark where apparently the locals are less than excited about giving away their DONG (that would be Danish Oil & Natural Gas for the perverts) to Goldman Sachs. Specifically, over the past several days, a whopping 186,000 Danes have signed a petition to stop the sale of a 19% stake with extraordinary minority stakeholder rights in DONG to Goldman Sachs. Then again, every DONG has its price...

Hope In The Face Of Disaster – Creating A Sustainable, Viable, Future Path For Civilisation

... We have created an apparently wonderful economic model that seems to provide us with so many benefits. When you consider the incredible feats of technology and the global consumerist lifestyle we enjoy it is easy to marvel at what has been achieved. Of course what may be less obvious is the dark side of the growth economic model which is deeply inequitable, restricting its benefits to the relative elite in the western world and trapping the rest of the world in poverty. Most dangerous of all is the unsustainability of the model and where it is taking us in the future. There is now a perfect storm gathering that includes economic indebtedness, resource shortages, population pressures, and climate change that is guaranteed to derail civilisation. Despite this the political and economic mainstream are largely in denial about what is happening– like the hapless engineer and politician in the story everyone agrees that we must restart the ‘growth economy’ and continue to progress down the business as usual pathway. Very few people are taking the long term view and watching the direction towards doom that this pathway leads us. Too invested in the benefits of our current lifestyle, no one wants to hear the counsel of the philosopher who sees the disaster that looms ahead.

A Cash-Strapped Europe's Latest Craze: Rented Clothes

Renting and leasing of consumer products with the intention of testing them out or keeping them after a specific period is nothing new, and has been the basis for viable business models in the US, and around the world, with companies such as Rent-A-Center and Aaron's for decades. However, renting and leasing clothes is something that only a materially cash strapped people would engage in. Such as those of Europe, where the depression has been going on for five years and has manifsted itself in record unemployment month after month, and youth unemployment that in many cases is well over the 50% mark. In this context one has no choice but to live thrifty, even if that means renting, and leasing, second-hand clothing.

China Buys North Korea's Gold Reserves As South Korea Increased Gold Reserves By 30%

Desperate North Korea has exported more than 2 tons to gold hungry China over the past year to earn US $100 million. Even in tough times during the Kim Il-sung and Kim Jong-il regimes, North Korea refused to let go of its precious gold reserves. Chosun media reports that “a mysterious agency known as Room 39, which manages Kim Jong-un's money, and the People's Armed Forces are spearheading exports of gold, said an informed source in China. "They are selling not only gold that was produced since December last year, when Kim Jong-un came to power, but also gold from the country's reserves and bought from its people." This is a sign of the desperation of the North Korean regime and also signals China’s intent to vastly increase the People’s Bank of China’s gold reserves.

European Banks Preparing To Boycott Big Three Rating Agencies

We were wondering how long Europe's insolvent, and very much scorned, banks would take the constant downgrade abuse (or reacquaintance with reality as we like to call it, but that is irrelevant) by the rating agencies without retorting. After all the same organizations that allowed bank "credit analysts" to pretend they did work for years, when they all merely fell in place in some lemming-like procession, patting each other on the back, pocketing record bonus after record bonus and praising groupthink encapsulated by the made up letters AAA, are now largely non-grata first in Europe, and soon, following the imminent downgrade of American banks, in the US as well. It appears that the response is finally coming. Sky News reports that "some of Europe's largest banks are intensifying discussions about a move to reduce their co-operation with the big three credit ratings agencies amid widespread dissatisfaction with their decision-making." After all, when all they do is downgrade, as opposed to the old standby, upgrade, who needs them. In fact, why not just shut their mouths entirely. Sadly, this is precisely what is on the horizon.

Daily US Opening News And Market Re-Cap: April 2

European cash equities are seen mixed as the market heads into the US session, with the DAX index the only bourse to trade higher at the midpoint of the European session. European markets were seeing some gains following the open after the weekend release of better than expected Chinese manufacturing data, however the main price action of the day occurred after some European press reports that the Bundesbank had stopped accepting sovereign bonds as collateral from Portugal, Ireland and Greece garnered attention, however the Bundesbank were quick to deny reports and state that it continues to accept all Eurozone sovereign bonds. Following the denial, participants witnessed a slight bounceback, but failed to push most markets into the green.  Data releases from Europe so far have been varied, with outperformance seen in the UK Manufacturing PMI, beating expectations and recording its highest reading since May of 2011. However, the French manufacturing PMI came in below expectations, weighing on the CAC index as the session progresses. A further release from the Eurozone has shown February unemployment coming in alongside expectations recording a slight increase from January to 10.8%.

Europe: "€1 Trillion May Not Be Enough"

A core piece of last week's European newsflow was that following much pushback, Angela Merkel, who understands the underlying math all too well, finally dropped her opposition to expanding the European "firewall" in the form of a combined EFSF and ESM rescue mechanisms, to bring the total "firepower" to €800 billion (ignoring for a moment that when the true dry powder of the combined vehicle is just about €500 billion net as explained here, hardly enough to rescue Spain, let alone Italy). Yet as has been explained here repeatedly, and as Merkel has figured out, this is easily the most symbolic expansion of a rescue facility ever. Because while the ECB's agreement to allow Eurobanks to abuse its €1 trillion discount window for three years (which is what the LTRO is), following the replacement of JC Trichet with a Goldman apparatchik, at least infused the system with $1.3 trillion in new fungible liquidity (and resulted in a stock market performance boost for the ages, one which is now unwinding), the 'firewall" does not represent new money, nor is a "firewall" to begin with - it is merely one massive contingent liability which will remain unfunded in perpetuity. Slowly the German media is waking up, and in an article in Der Spiegel, the authors observe that "Even a 1-Trillion Euro Firewall wouldn't be enough." And they are correct, because the size of the firewall is completely irrelevant, as explained later. All the "firewall" does is shift even more backstop responsibility on the only true AAA-country left in the Eurozone, Germany. However, the main cause of problems in Europe - a massive debt overhang which can at best be rolled over but never paid down due to the increasingly lower cash flow generation of Europe's (and America's) assets, still remains, and will do so until the debt is finally written down. However, it can't because one bank's liability is another bank's asset. And so we go back to square one, which is that the system is caught in the biggest Catch 22, as we explained back in 2009. We are glad to see that slowly but surely this damning conclusion is finally being understood by most.

Daily US Opening News And Market Re-Cap: March 30

European markets got off to a bad start following early reports that the Greek PM has not ruled out a further aid package for the country, however European cash equities are now trading higher as US participants come to market. Markets have been reacting to the announcement from EU’s Juncker that the Eurogroup has agreed upon Eurozone bailout funds of EUR 800bln. Elsewhere in the session, FPC member Clark commented that the FPC should not aim to stimulate credit growth in the UK, adding that direct intervention in the mortgage market is too politically volatile, but may be considered in the coming years. Following the reports, GBP/USD spiked lower around 15 pips, however it remains in positive territory, moving above the 1.6000 level in recent trade. In terms of data, the Eurozone CPI estimate for March came in just above expectations at 2.6%, 0.1% above the 2.5% consensus. The market reaction to this data, however, was relatively muted as participants await Eurogroup commentary. Looking ahead in the session, participants await commentary on the Spanish budget, US Personal Spending and Canadian GDP.