The German election is over and the confrontation over the US debt ceiling has ended, so event risk should be minimal, right? Not so fast, UBS' Mike Schumacher warns - plenty of pitfalls could trip markets. Forward-looking measures of 'risk' are beginning to show some signs of less-than-exuberance reflected in all-time-highs across all US equity indices and if previous episodes of 'low-vol' are any guide, the current complacency is long in the tooth... no matter how 'top-heavy' stocks become; bloated by the flow of heads-bulls-win-tails-bears-lose ambivalence...
If mere hope of an "imminent" deal starting on Thursday and continuing through Monday, with no actual deal but who cares about details, was enough to push the DJIA up by 600 points, then all it would take to set a new record market high today, is for another day to pass - one day before the October 17 X-Date when one Senator can filibuster the US through the deadline on their own, and when the House still has to have a voice on what the Senate has been doing - without an actual debt deal. After all, the market is so "centrally-planned" all that is needed is knowledge that Bernanke will get to work, and is getting to work to the tune of $85 billion a month, mixed in with some hope. And with today's "market for idiots" facilitating POMO of over $5 billion which guarantees a green close, all that is needed is a complete failure in talks for the SPX to go limit up on even more hopes things will be fine any second now... if not right now.
The Chief Economist at Citi Willem Butler has said today on CBC in an interview that the fiasco over the US budget and the lack of money is nothing more than irresponsible on all political wings and that the country is being run by Munchkins in the Land of Oz.
Today we present the Target2-system and the fiscal bail-out facilities in our series on European efforts to bail out itself. For new readers, check out part 1 here http://bawerk.net/?p=123
Broke nations are bailing out other broke nations with borrowed money. Round and round we go - where we stop nobody knows. As of April, 41 different countries had active financial "arrangements" with the IMF. Sometimes they are called "bailouts" and sometimes they are called other things, but in every single case they involve loans. And most of the time, these loans come with very stringent conditions. It is a form of "global governance" that most people don't even know about. For decades, the IMF has been able to use money as a way to force developing nations to do what it wants them to do. But up until fairly recently, this had mostly only been done with poor nations. But now an increasing number of wealthy nations are turning to the IMF for help... so what happens when the nations that primarily fund the IMF start failing themselves?
It was bound to happen some might say. We were warned! Chinese banks have stopped lending due to pressure from liquidity deposits. Some branches of the Bank of China and the Industrial and Commercial Bank of China have issued statements in which they announce that they are halting lending for a temporary period.
If one thought the schizophrenic lies out of Europe between 2010 and 2013 were bad enough (the bulk of which it now appears were orchestrated by Mario Draghi), here comes China, a country which already has a "credibility" issue so to say, which has no choice but to lie as blatantly as possible in order to preserve some semblance of stability. The reason: as first forecast here months ago, and as has subsequently materialized, the credit/liquidity collapse in the country that lives and breathes on credit creation is rippling through the banking sector and causing unprecedented fallout for a financial industry that is already starved for every marginal yuan. Not unexpectedly following news that various retail and online banking services had been impaired in the early part of the week at China's biggest banks, now Caixin reports that banks are simply shutting lending to both businesses and individuals.
As reported earlier, at least one prominent hedge fund manager, Dan Loeb, is very bullish on Sony (or at least has played his cards well enough to buy the stock 50% lower and is using today's ramp to offload to unwitting momentum chasers as he did with Herbalife). Whether he is merely using the opportunity to earn some activism brownie points on the background of the overall levitation of the Japanese stock market, or is genuinely convinced there is upside for Sony remains to be seen. However, anyone who thinks that Japanese corporates have no place to go but up, is kindly urged to take a look at one-time Japanese electronics titan Sharp, which posted a whopping loss of $5.36 billion, the biggest loss in the company's 100 year history.
MBI Saga Over: Bank Of America To Settle Long-Running Litigation, Take 5% Stake; MBIA Stock Soars 50%Submitted by Tyler Durden on 05/06/2013 11:19 -0500
The seemingly endless MBIA saga, in which the mortgage insurer sued Bank of America and where a settlement has been overdue for some two years (see here), is finally coming to an end. Moments ago Dow Jones reported what the final settlement may look like: $1.6 billion in cash as well as a $500 million line of credit. Just as notable, BAC will buy a 5% equity stake in the name. MBIA was briefly halted as a circuit breaker was triggered, and has continued to surge following the unhalt. As a reminder, a settlement in this case may push the company into the $20 handle realm. Finally, our report from September 2011 on MBIA's potential to be the next Volkswagen courtesy of its massive short interest as a percent of float can be found here.
Why the Western Banking Cartel’s Gold and Silver Price Slam Will Backfire - And How You Can Protect Yourself from the BlowbackSubmitted by smartknowledgeu on 04/22/2013 04:27 -0500
Let's get down to the facts of the recent banker gold & silver paper price smash and the lies about the banker gold & silver paper price smash being propagated by the mass media and banking shills like Paul Krugman so everyone can understand why this smash will blow up in the face of the very bankers that executed it at some point down the road. Retail individuals AND global institutions all around the world are finally beginning to understand that physical ownership of gold and silver is how to counter banker fraud & intervention into the gold and silver markets and this realization is going to produce massive blowback.
- Investigators hunt for clues in marathon bombing (Reuters)
- Investigators scour video, photos for Boston Marathon bomb clues (Reuters)
- 'Act of Terror' Kills at Least Three, Injures About 140 as Bombs Wreak Carnage on Marathon Crowd (WSJ)
- Brent Crude Below $100 (WSJ)
- Slower China Growth Signals Days of Miracles Are Waning (WSJ)
- Central Banks at Ease Limit Risk Political Backlash (BBG)
- Merkel plans to quit midterm, says author (FT)
- Monte Paschi Prosecutors Seize $2.3 Billion of Nomura Assets (Businessweek)
- Treasuries back on investors’ buy lists (FT)
- J.C. Penney Said to Seek Ways to Separate Real Estate for Cash (BBG)
- Climate scientists struggle to explain warming slowdown (Reuters)
- Putin Calls for Stimulus Plan After Recession Alarm (BBG)
- TIPS in Longest Selloff Since ’08 as U.S. Bancorp Cuts (BBG)
Timing couldn’t be worse.
My how the 'over-levered and cross-collateralized debt-is-wealth' mighty have fallen. Eike Batista, Brazilian entrepreneur, was the 7th richest man in the world in 2011 but as Forbes recently noted, he is the 'biggest loser' on their list (losing an incredible $2mm per hour), ending 2012 in 100th place after his biggest holding - OGX Petroleo E Gas - slumped 80% in the last year (and a stunning 43% in 2013 alone) which means his net worth has plunged 20% YTD (according to Bloomberg). While he has the yacht, cars, speedboat, and jets to go with someone who apparently has a net worth of $9.9bn, he now has one more thing to worry about...
*BILLIONAIRE BATISTA SAID TO FACE COLLATERAL CALLS FROM BANKS
As Bloomberg notes, the billionaire faces demands from creditors to boost collateral as his other company MPX Energia saw its stock fall to record lows (as cross-collateralization leads towards a vicious circle). "Doubts about the group continue," one analyst notes as net debt at Batista's six publicly traded units more than tripled last year, "he really has to something to prove he isn't having a cash problem." On the bright side, we are sure his girlfriend will stay with him.
- Grillo kills move to break Italy deadlock (FT)
- Abe nominates Kuroda to run BoJ (FT)
- More WMT bad news: Wal-Mart Chief Administrative Officer Mars to Leave: WSJ (BBG)
- Japan's Abe: Islands Are Indisputably Ours (WSJ) - Except for China of course
- Low-key departure as pope steps down, to enter the final phase of his life "hidden from the world" (Reuters)
- Cuts unlikely to deliver promised budget savings (Reuters)
- European Union caps bankers’ bonuses (FT)
- White House, Republicans dig in ahead of budget talks (Reuters)
- Jockeying Stalls Deal on Cuts (WSJ)
- Argentina Says It Won’t Voluntarily Comply With Bond Ruling (BBG)
- Italian president says forming new government cannot be rushed (Reuters) - or happen at all
- Central Banks Spewing Cash Must Plan Exit Timing, Rohde Says (BBG)
- China Regional Targets Cut in Sign Debt Concerns Heeded (BBG)
- RBA Says Up to 34 Central Banks Holding Australian Dollars (BBG)
- Spain’s Deficit Widened to 10.2% on Bank-Rescue Cost (BBG) - or as Rajoy would say, when one excludes all negatives, it was a surplus
- Monti Austerity Pushes Italians Toward Parliament Upheaval (BBG)
- Russia accuses U.S. of double standards over Syria (Reuters)
- Euro Area to Shrink in 2013 as Unemployment Rises (BBG)
- UK, China central banks to discuss currency swap line (Reuters)
- Italy Court Rejects Challenge to Bailout of Monte Paschi (BBG)
- Japan's Abe to showcase alliance, get Obama to back Abenomics (Reuters)
- Russia’s missing billions revealed (FT)
- China Home-Price Gains May Presage Policy Tightening (BBG)
- Fed unlikely to curtail stimulus despite rising doubts (Reuters)
- Banks face fines up to 30 per cent of revenues (FT) - just as soon as Basel III is passed (i.e., never)
- J.C. Penney Can Raise Billions Under Revised Credit Line (BBG)
- Cost of Dropping Citizenship Keeps U.S. Earners From Exit (BBG)