Creditors

Futures Fade As Chinese "Good News Is Bad News" For Fed, Oil Drops As Doha Concerns Emerge

Good news is still bad news after all. After last night's China 6.7% GDP print which while the lowest since Q1 2009, was in line with expectations, coupled with beats in IP, Fixed Asset Investment and Retail Sales (on the back of $1 trillion in total financing in Q1)  the sentiment this morning is that China has turned the corner (if only for the time being). And that's the problem, because while China was a good excuse for the Fed to interrupt its rate hike cycle as the biggest "global" threat, that is no longer the case if China has indeed resumed growing. As such Yellen no longer has a ready excuse to delay. This is precisely why futures are lower as of this moment, because suddenly the "scapegoat" narrative has evaporated.

Do Ongoing Global Events Prove The World Is Ready For Revolution?

Gazing into the abyss of worsening future authoritarian control, will we turn and walk away, ignoring our differences for the sake of our mutual betterment around the planet — or will we scoff, succumb, and tumble over the edge in our complacency? The choice is ours...

Valeant Crashes Below $30 As Large Bondholder Calls "Default" Event

One week ago, we warned that "Valeant Lenders Demand Two Pounds Of Flesh For Covenant Waivers", a function of Valeant having virtually no leverage. Well, while Valeant proudly announced it had obtained a covenant waiver from its lenders late last week, it appears not everyone was onboard with the plan, and as a result moments ago Valeant stock crashed (below $30) after hours as major bond investor Centerbridge has notified the company that it intends to call a default event, presumably on annual report delays breaking covenants.

A "Massive" New Headache For Banks Has Emerged

It's not just the shale drillers who are in danger as they see their liquidity evaporate. As the WSJ writes today, and as covered here since January, it is the lenders themselves whose unfunded revolver exposure may suddenly become funded and expose them to even greater risks from the energy sector should oil not rebound far more forcefully and put US oil and gas companies back in the black. How big is the exposure? Very big: $147 billion.

Size Matters: Analysts Mock Italy's Tiny "Atlas" Bailout Fund Meant To Support €360BN In Bad Debt

Yesterday Italy announced that it had taken the long-anticipated first step to alleviate investor concerns surrounding the stability of the banking system. Local banks, insurers, and asset managers have agreed to fund a €5 billion backstop for these troubled loans. Speculation of the imminent deal had sent Italian (and European) bank stocks soaring yesterday. The deal is named Atlante, or Atlas, after the mythological god who held up the sky. This is appropriate, as it truly is a myth to believe that setting aside 1.5% to resolve a €360 billion bad debt problem will solve anything.

Frontrunning: April 13

  • Gloomy start to results season hits shares (Reuters)
  • Stocks Rise Around World as Commodities Advance; Bonds, Yen Drop (BBG)
  • Oil hits 2016 high above $43 on producer meeting hopes (Reuters)
  • Rosneft chief Igor Sechin says low oil prices will not last (FT)
  • Banks Face Massive New Headache on Oil Loans (WSJ)
  • Wells Fargo Misjudged the Risks of Energy Financing (BBG)

U.S. Futures Jump In Tandem With Soaring Italian Banks On Hopes Of Government Bailout

it has been a rather quiet session, which saw Japan modestly lower dragged again by a lower USDJPY which hit fresh 17 month lows around 170.6 before staging another modest rebound and halting a six-day run of gains; China bounced after a slightly disappointing CPI print gave hope there is more space for the PBOC to ease; European equities rose, led by Italian banks which surged ahead of a meeting to discuss the rescue of various insolvent Italian banks, while mining stocks jumped buoyed by rising metal prices with signs of a pick-up in Chinese industrial demand.

Austria Just Announced A 54% Haircut Of Senior Creditors In First "Bail In" Under New European Rules

Following a decision by the Austrian Banking Regulator, the Finanzmarktaufsicht or Financial Market Authority, Austria officially became the first European country to use a new law under the framework imposed by Bank the European Recovery and Resolution Directive to share losses of a failed bank with senior creditors as it slashed the value of debt owed by Heta Asset Resolution AG.

Italy Seeks "Last Resort" Bailout Fund To "Ringfence" Troubled Banks, Meeting Monday

Italy is the “too big to fail”, “elephant in the room”. Should Italy try Austria’s solution, it presumably would cause a “chain reaction with ripple effects that would be felt across the European banking system.” Instead, officials will attempt to “ringfence” the problem, hoping to “sweep it under the rug” where presumably a “€360bn pile of non-performing loans” will cure itself, eliminating the need for additional bail-ins

Saudi Authorities Halt Soccer Game To Cut Off Player's "Anti-Islamic" Hair

The ultra-conservative, Wahhabism-practicing kingdom of Saudia Arabia had their sports authorities stop a match on Friday to cut a player's hair because they deemed it "anti-Islamic." A video posted online on Friday showed one player being given a last-minute haircut before a fixture to comply with Saudi Football Federation guidelines.

"The People Aren't Stupid" - Germany Takes Aim At The ECB, May Sue Draghi: Spiegel

The alienation between Germany and the ECB has reached a new level. Back in deutsche mark times, Europeans often joked that the Germans "may not believe in God, but they believe in the Bundesbank," as Germany's central bank is called. Today, though, when it comes to relations between the ECB and the German population, people are more likely to speak of "parallel universes."... Should it come to helicopter money, Berlin would have to consider taking the ECB to court to clarify the limits of its mandate. In other words: the German government and Draghi's ECB would be adversaries in a public court case.

"Rotten To The Core"

You have $100,000 in your account, right? Does it mean that there is a little cubbyhole somewhere, with your name on it, in which you will find a stack of 1,000 Ben Franklins? Nope. Not even close. No cubbyhole. No stack of money. No nothing.