Bullion Banking is fractional reserve gold banking. The proliferation of unallocated gold credits has created a system in which very little physical gold backs up huge amount of claims on that same gold.
Success used to be admired. Now it’s viewed with suspicion and derision. After all, in the words of the President of the United States, "you didn’t build that..." Success also puts a target on your back – lawsuits, taxes, etc. The more successful you become, the more the system tries to take it away from you. These are entirely the wrong incentives if you want a prosperous society.
The reality is that these zombie companies are a true nightmare for the oil markets. Being “dead” already, they have nothing to lose and so there only goal is to keep producing as much as possible as fast as possible.
In a recent interview with Macro Voices, Hugh Hendry is asked about the trade he has on in his fund, to which the Scotsman says that his team recently had a “eureka moment” and figured out how to design a trade, which has a negative carry when viewed in simple terms, such that they preserve the asymmetric of risk/reward while converting it to a positive-carry trade by adding another “European sovereign component to the trade”.
Moody’s Capital Markets Research issued a damning verdict on Deutsche Bank earlier this week. In a research report put together by the credit agency’s ‘Analytics’ research division, Moody’s analysts write that Deutsche Bank expected default frequency remains at one of the highest levels in the banking industry, despite the bank’s efforts to shore up its capital position.
Venezuela just dodged a bullet, pulling off a last minute bond swap with creditors. The deal only buys Venezuela a little bit of breathing room, and a default at some point next year or the year after is not out of the question. Either way, the South American OPEC nation’s oil production is falling and will only continue on a downward trajectory.
World stocks started the week in the red Monday as the dollar touched a 7-month high and U.S. and European government bond yields climbed to their highest since June following the Friday speeches by Eric Rosengren and Janet Yellen which hinted the Fed's next step could be to pursue a steepening of the TSY yield curve the same as the BOJ.
Remember when two weeks ago the China Beige Book warned that "It’s A Lot More Negative Than People Think" in the world's second biggest economy? Well after months of complacency about the Chinese economy and financial risks emanating from its $35 trillion financial sector, overnight the world got a rude awakening when China export figures tumbled, signalling a deeper slowdown than many anticipated just as the Fed prepares to raise interest rates.