While the Valeant soap opera has had constant, heart-pounding drama for weeks and following yesterday's report that it allegedly fabricated prescriptions, even an element of career-ending (and prison-time launching) criminality, so far one thing had been missing: an antagonist tied to Goldman Sachs. We are delighted to reveal the "missing link", one which ties everything together. Its name is Howard Schiller.
"I Would Say Don't Worry" Says Chinese Central Banker As Indian Central Banker Says "World Economy Is Looking Grim"Submitted by Tyler Durden on 10/07/2015 19:17 -0500
"I would say, don't worry" said Yi Gang, deputy governor of the People's Bank of China, after the International Monetary Fund warned of risks in China's economic challenges.
"The world economy is looking grim" - said Raghuram Rajan, Indian central bank governor and former chief economist of the International Monetary Fund.
It just keeps getting worse, and worse, and worse...
Update: CHINA TO CONTINUE STABILIZING MARKET, SENTIMENT, PREVENT RISKS, CSRC SAYS
As Beijing pledges to remain supportive amid a harrowing decline in Chinese stocks, China may find itself with no exit strategy for its plunge protection program. As BofAML notes, "An 'indefinite' holding period is certainly possible – it’s how the government had dealt with the last round of bad debts in the banking system, i.e., by shifting them to bad banks and never crystalizing the losses. But even under such a scenario, there may be unintended consequences."
The forward curve currently points towards a recovery in prices that is far worse than in 1986. As there was no sharp downturn in the ~15 years before that, the current downturn could be the worst of the last 45+ years. If this were to be the case, there would be nothing in our experience that would be a guide to the next phases of this cycle, especially over the relatively near term. In fact, there may be nothing in analysable history.
This seemingly inexhaustible credit line is now drying up, with severely negative consequences for oil producers with debt that's coming due. The row of dominoes swaying unsteadily in these stiff winds won't take much to topple.
"Lenders in general are increasing pressure on oil companies either to raise more equity or do some sort of transaction to pay down their credit lines and free up extra cash."
"There’s another redetermination cycle in the fall, And I’m not going to say likely but it’s possible we’ll be selectively downgrading some clients."
"Now that the spell is broken, we expect that many holders may want to sell to the forced buyers in the market. In addition, although difficult to assess accurately, due to a lack of data, we estimate that around 1/5 of the free float is still carried on margin. The high margin cost means that selling pressure is high as long as investors do not expect the market to go up significantly.we expect the market to experience another leg down, possibly within months."
Countries like Spain and Portugal may by now scratch their heads about taking a hard line on the Greek issue. They may not have fully realized to what extent the eurozone is indeed a shared commitment. All eurozone nations now have at least another 30 days to think that over. The main risk in that period is that Greece may decide to leave on its own.
One year ago, we explained "How The Market Is Like CYNK." Earlier this week, China's richest man found out how right we were, in the hardest way possible
They’ve become sitting ducks, in a market that is "in extreme overvaluation."
Back in early 2007, just as the first cracks of the bursting housing and credit bubble were becoming visible, one of the primary harbingers of impending doom was banks slowly but surely yanking availability (aka dry powder) under secured revolving credit facilities to companies across America. This, in effect, was the first snowflake in what would ultimately become the lack of liquidity avalanche that swept away AIG and unleashed the biggest bailout of capitalism in history. Back then, analysts had a pet name for banks calling CFOs and telling them "so sorry, but your secured credit availability has been cut by 50%, 75% or worse" - revolver raids. Well, the infamous revolver raids are back.
It appears clear that the war reparations 'issue' will not go away anymore. Either Berlin pays what legal experts determine should be paid, or it risks becoming a pariah in its own neighborhood. That the Germans in the 1950s and 1960s, at home and in schools, chose not to tell their children anything about their crimes cannot serve as an excuse to silence the children of its victims. It seems the only way to save the European Union, that Germany has made its economy so dependent on, is for Germany to pay up.
When it comes to trading the possibility of a Grexit, Bloomberg strategist Vassilis Karamanis writes,that there are three possible outcomes.
Scenario 1: Greece exits the euro
Scenario 2: Capital controls are imposed on Greek banks
Scenario 3: Agreement is reached within the next days
As noted earlier, the key macro event on today's calendar, and one which will likely be the origin of significant volatility, is the Eurogroup meeting to decide Greece's fate starting in a few hours where Yanis Varoufakis and his European Finance Minister peers will attempt to resolve two diametrically opposite and seemingly uncompromisable positions. Here is what to expect.