Nearly a decade since the housing bubble burst the dirty skeletons still emerge from the closet, and still nobody goes to jail. In the latest example of how criminal Wall Street behavior leads to zero prison time and just more slaps on the wrist, overnight Warren Buffett's favorite bank, Wells Fargo, admitted to "deceiving" the U.S. government into insuring thousands of risky mortgages. Its "punishment" - a $1.2 billion settlement of a U.S. Department of Justice lawsuit, the highest ever levied in a housing-related matter.
The market bond market, which is now frontrunning not just what the ECB has announced it will buy but what it may buy, just led to a record European junk bond issuance, when French cable and telecom operator Numericable "stunned the market" (as Reuters put it), when it upsized what was originally supposed to be a $2.25 deal by more than 100% to a whopping $5.2 billion bond deal on Wednesday. This was the largest single high-yield bond tranche ever issued.
- Stocks up as investors look to end bruising week on a high (Reuters)
- Treasuries Set for Two-Week Gain; Greenspan Warns of Global Risk (BBG)
- Yellen, alongside Fed alum, says rate hikes on track (Reuters)
- Oil Prices Lifted by Fed Comments on U.S. Economy (WSJ)
- China says G20 summit should be about economics, not politics (Reuters)
- Cameron Accused of Hypocrisy for Stake in Father's Offshore Fund (BBG)
Despite the supposedly ineluctable logic of Sanders’ unelectability, many pundits now believe there has been a seismic shift in the 2016 presidential race. It is becoming increasingly obvious that Americans are sick to death of the two corporatist political establishments and will do anything to send them a message. Then there’s the matter of the Panama Papers, which once again illustrate the stark contrast in judgement between Bernie Sanders and Hillary Clinton.
Try to imagine Goldman Sachs or JP Morgan being a single-digit stock these days, and you get the picture.
As of this moment, various European banks but most prominently Deutsche Bank as well as Credit Suisse and RBS, have been crashing back to lows hit in early February and then all the way back to the March 2009 "the world is ending" lows. The problem is that now that global central banks are more focused on appeasing China and keeping the USD weaker (by way of a dovish, non-data dependent Fed), the pain for Europe (and Japan), and their currencies, and their banking sector, will likely only get worse. This is precisely the case proposed by Francesco Filia of Fasanara Capital, who explains below his "Short European Bank Thesis."
Here’s my metaphor for investors and central bankers today — the brilliant Cars.com commercial where a woman is stuck on a date with an incredibly creepy guy who declares that “my passion is puppetry” and proceeds to make out with a replica of the woman.
Hillary Clinton’s paid speeches are not relevant because of anything that they said, but because the organizations that paid typically $225,000 to her, for each of them, were paying a servant, for extremely valuable services that that servant is being expected to provide to the owners and top executives of that organization if that servant becomes the U.S. President (or, in the case of her husband Bill) for valuable services that already were provided by that servant when he was a President. They’re pay-offs, for services that are anticipated, or else that have already been provided. They are not (such as the author was assuming) for “the speech.”
About 25% of S&P 500 EPS growth comes from buybacks on average since 2012. The S&P 500 companies on aggregate pay out 2/3 of their earnings through dividends & buybacks.
We're gonna need a bigger bailout...
Thanks to the just released February diary of Fed chief Yellen, we now know exactly when she called Bank of England Governor (and former Goldman Sachs employee) Marc Carney and ECB President (and former Goldman Sachs employee) Mario Draghi. Can you guess when?
"I think stagflation is starting to show - that idea of stronger nominal growth but weaker real growth is starting to show up across the economy. It certainly is showing up with real personal consumption slowing; it's showing with slower job creation growth as the wage rate rises, and it's showing up in weaker profits as the share of labor income rises reducing profit margins for corporations."
When last we checked in on the 1MDB saga, Goldman was busy tying up a few loose ends. Tim Leissner, the banker who built the firm’s Southeast Asia operation from the ground up and the man behind a series of questionable deals that funded what would eventually become Malaysian PM Najib Razak’s personal slush fund, was essentially forced out in January, after bank investigators uncovered what they said was an unauthorized reference letter. Now, the global effort to find out how nearly three quarters of a billion dollars ended up in Najib's checking account looks set to ensnare all of the usual suspects.
For Japan, the post "Shanghai Summit" world is turning ugly, fast, because as a result of the sliding dollar, a key demand of China which has been delighted by the recent dovish words and actions of Janet Yellen, both Japan's and Europe's stock markets have been sacrificed at the whims of their suddenly soaring currencies. Which is why when Japanese stocks tumbled the most in 7 weeks, sinking 3.5%, to a one month low of 16,164 (after the Yen continued strengthening and the Tankan confidence index plunged to a 3 year low) it was anything but an April fool's joke to both local traders.