- Here comes JPM's next multibillion legal reserve: Federal Probe Targets Banks Over Bonds (WSJ)
- Mulally Bows Out of Microsoft CEO Race, Staying at Ford (BBG)
- United States sending more troops and tanks to South Korea (Reuters)
- Eurozone unemployment sticks at record high (FT)
- China-Japan 'Voldemort' attacks up ante in propaganda war (Reuters)
- Alternative Lenders Peddle Pricey Commercial Loans (WSJ)
- John McAfee: glad Intel dropping name from security software (Reuters)
- Jobless Benefits Bill Stays Alive Amid Talks on Offsets (BBG)
- Chicago Colder Than South Pole as Frigid Air Clamps Down (BBG)
- Former Miss Venezuela shot dead in attempted robbery (Reuters)
- Yellen’s Record-Low Senate Support Reflects Fed’s Politicization (BBG)
- Euro-Zone Inflation Rate Falls in December, even further below ECB's target (WSJ)
- Zambia politician charged for calling president a potato (AFP)
- Blame gold: India Savings Deposit Scam Collapse Leaves Thousands Penniless (BBG)
- Hedge Funds Raise Gold Wagers as Yamada Sees $1,000 (BBG)
- George Osborne limits cuts options with pensions promise (FT)
- Vietnam Raises Foreign Bank Ownership Caps to Aid System (BBG)
- But they said buy a year ago... Goldman to JPMorgan Say Sell Emerging Markets After Slide (BBG)
- SAC Trial Seen by Probe Convict as Latest Abusive Tactic (BBG)
Heading into the North American open, stocks in Europe are seen broadly higher, with peripheral EU stock indices outperforming after Ireland successfully returned to capital markets with its 10y syndication that attracted over EUR 10bln. Financials benefited the most from the consequent credit and bond yield spreads tightening, with smaller Italian and Spanish banks gaining around 4%. Following the successful placement, IR/GE 10y bond yield spread was seen at its tightest level since April 2010, while PO/GE 10y spread also tightened in reaction to premarket reports by Diario Economico citing sources that Portuguese govt and debt agency IGCP consider that the current level of yields already allows Portugal to go ahead with a bond sale. Looking elsewhere, the release of better than expected macroeconomic data from Germany, together with an in line Eurozone CPI, supported EUR which gradually moved into positive territory. In addition to that, smaller MRO allotment by the ECB resulted in bear steepening of the Euribor curve and also buoyed EONIA 1y1y rates. The Spanish and Italian markets are the best-performing larger bourses, Swedish the worst. The euro is stronger against the dollar. Japanese 10yr bond yields fall; Spanish yields decline. Commodities gain, with wheat, silver underperforming and Brent crude outperforming. U.S. trade balance data released later.
- 'Life-threatening' cold bites Midwest, heads east (Reuters)
- Gold Analysts Get Most Bullish in a Year After Rout (BBG)
- Asian Stocks Fall Most in Three Weeks on China Services (BBG)
- Angela Merkel in skiing accident, cancels visits (Reuters)
- High-Speed Traders Form Trade Group to Press Case (WSJ)
- Toyota and Honda post record China sales (FT)
- China Shadow Banking Risks Exposed by Local Debt Audit (BBG)
- J.P. Morgan to Pay Over $2 Billion to U.S. in Penalties in Madoff Case (WSJ)
- Corruption trial of Trenton, N.J., mayor starts Monday (Reuters)
- Car Makers at Consumer Electronics Show Tout Ways to Plug Autos Into the Web (WSJ)
2013 Was A Year Of Calm In The World Of Finance ... 2014 May Not Be So Calm ... Highlights Of Year - German Gold Repatriation, Record Highs In Yen, Huge Chinese Demand - Lowlights Of Year - Massive Paper Sell Offs in April/June and First Deposit Confiscation and Capital Controls ...
"Rich Will Keep Getting Richer In 2014" - In 2013, Top 300 Billionaires Added Half A Trillion In Net WorthSubmitted by Tyler Durden on 01/02/2014 13:22 -0400
All the pundits who preach an economic recovery in the US always fall strangely silent when asked to share their thoughts on the following chart (taken from the St. Louis Fed), showing the annual change in real disposable income per capita in the US. What seems to stump them most is that aside from the 2012 year end aberration (due to accelerated distribution of dividends ahead of the 2013 tax hikes) is that in November the series finally posted its first Y/Y decline (-0.1%) since the Lehman collapse. But as the chart notes, the data is "per capita" and as everyone knows, under the New Normal, some "per capitas" are more equal than other "per capitas." Enter the billionaires. As Bloomberg summarizes, "The richest people on the planet got even richer in 2013, adding $524 billion to their collective net worth, according to the Bloomberg Billionaires Index, a daily ranking of the world’s 300 wealthiest individuals. The aggregate net worth of the world’s top billionaires stood at $3.7 trillion at the market close on Dec. 31, according to the ranking. "The rich will keep getting richer in 2014," John Catsimatidis, the billionaire founder of real estate and energy conglomerate Red Apple Group Inc., said in a telephone interview from his New York office.
- Edward Snowden, after months of NSA revelations, says his mission’s accomplished (WaPo)
- Japan’s Nikkei 225 Extends Six-Year High on U.S. Data (BBG)
- Retailers blend stores, e-commerce to snag holiday stragglers (Reuters)
- Storm wreaks havoc in Britain, France ahead of Christmas (Reuters)
- Big Rally to Pump Up Wall Street Bonuses (WSJ)
- Obamacare Sign-Up Extended as Record 1 Million Use Site (BBG)
- Merkel Hits Wall With Europe Fix (WSJ)
- Boaz Weinstein Loses for Second Year as European Bet Sours (BBG)
- UniCredit has reached an agreement to sell almost €1 billion in nonperforming loans to Cerberus (WSJ)
- U.S. mortgage applications fall as refinance hits five-year low (Reuters)
- Cohen Said to Have Warned Friend About Possible Federal Investigation (NYT)
- ‘Duck Dynasty’ Dad Risks $500 Million With Gay-Sin Remark (BBG)
December 23rd, 1913 is a date which will live in infamy. That was the day when the Federal Reserve Act was pushed through Congress. Many members of Congress were absent that day, and the general public was distracted with holiday preparations. Now we have reached the 100th anniversary of the Federal Reserve, and most Americans still don't know what it actually is or how it functions. But understanding the Federal Reserve is absolutely critical, because the Fed is at the very heart of our economic problems. Since the Federal Reserve was created, there have been 18 recessions or depressions, the value of the U.S. dollar has declined by 98 percent, and the U.S. national debt has gotten more than 5000 times larger. This insidious debt-based financial system has literally made debt slaves out of all of us, and it is systematically destroying the bright future that our children and our grandchildren were supposed to have. The truth is that we do not have to have a Federal Reserve. The greatest period of economic growth in U.S. history was when we did not have a central bank. If we are ever going to turn this nation around economically, we are going to have to get rid of this debt-based financial system that is centered around the Federal Reserve. On the path that we are on now, there is no hope.
In a world in which the Chief Risk Officer of the formerly free capital markets, Ben Bernanke, has made any downside hedges obsolete (and as a result hedge funds have posted 5 years of returns without outperforming the S&P500), the first casualty has emerged: fund of funds. These parasitic, fee-soaking institutions, which merely collect a fee on top of the fees already charged by hedge funds, are rapidly on their way to extinction as the following charts from Eurekahedge prove conclusively. Naturally, the FOF industry which generates massive fees for its "value adding" managers, will not go down without a fight. And as Pensions and Investment reports, the FOFs have found a way to strike back: convert hedge funds into long only, idiot money, and we do enjoy the irony that in this centrally-planned market the idiot money is outperforming the smart, nimble asset managers by orders of magnitude.
- China cash injection fails to calm lenders (AFP)
- European Union Stripped of AAA Credit Rating at S&P (BBG)
- Last-Minute Health-Site Enrollment Proves a Hard Sell (WSJ)
- Bernanke’s Recession-Fighting Weapon Developed by 1900s Banker (BBG)
- Asia Stocks Are Little Changed Amid China Funding Concern (BBG)
- Regulators' Guidance on Volcker Rule Gives Banks Little Relief on Debt Sales (WSJ)
- On one hand: Man Who Said No to Soros Builds BlueCrest Into Empire (BBG); on the other: Michael Platt's BlueCrest Capital Poised for Rough Close to 2013 (WSJ)
- BOJ Keeps Record Easing as Fed Taper Helps Weaken Yen (BBG)
- Bank of England becomes more cautious on economic predictions (FT)
- Gold Climbs From Lowest Close Since 2010 as Goldman Sees Losses (BBG)
Overnight one of the main stories is that the European Union has been downgraded to AA+ from AAA by S&P. While the market digests the impact of the downgrade, all eyes remain on the US treasury market. As Deutsche Bank notes, treasuries are increasingly being viewed as a potential sign of the success or not of the Fed taper in early 2014. From the lows in the immediate aftermath of Wednesday’s FOMC, 10yr UST yields have added more than 10bp. Yields continue to leak this morning (-2bp to 2.95%) though we’re still hovering at levels last seen in early September just before the Fed surprised markets with its non-taper. Despite this, US equities and credit were both reasonably well supported yesterday. However the combination of higher UST yields and a stronger dollar resulted in a fairly difficult day for EM. In EMFX, the Brazilian Real fell 1.1% against the USD, underperforming most other EM currencies. The move was exacerbated by the announcement from the BCB that it would wind back its intervention in the currency market, following the initial positive reaction to tapering on Wednesday. Other EM currencies also struggled including the TRY (-0.7%), MXN (-0.7%) and IDR (-0.3%). A number of EM equity markets struggled including in Poland (-0.7%) and Turkey (-3.5%).
There is a saying: "don't buy the hand that feeds you" but there is nothing in popular aphorism literature about suing the hand that bails you out. Which is precisely what JPM did overnight when it sued the Federal Deposit Insurance Company, claiming the agency was responsible for over $1 billion in liabilities assumed by the bank as part of its takeover of Washington Mutual in 2008. Of course, having been the subject of a relentless battery of lawsuits by every US agency imaginable, many were wondering when JPM would strike back, or rather if it would have the temerity to sue the same government that bailed it out with billions of direct injections and even more billions in FDIC-subsidized bond issuance. The answer is yes, and as JPMorgan alleged in the complaint, the FDIC agreed to shield it from liability from lawsuits claiming failures by Washington Mutual. JPMorgan said it took on only limited liabilities in its purchase of the Seattle-based bank’s assets. What next: Jamie Dimon sues the Fed for forcing it to acquire Bear Stearns' assets at the firesale price of $2 $10 per share, in which the bank assumed Bear's assets if not so much its liabilities - after all there was a government to bail it out for that.
There seem to be two camps at Deutsche Bank these days: one, lead by the observant and somewhat contrarian Jim Reid, who recently asked the all important question about 2014 ("what if there is a recession?"), who accurately observed that something "structurally changed" since the great financial crisis (pretty clear what), and who even dared to suggest that the Fed will never taper, especially with the economy so late in the cycle already. And then there is Joe LaVorgna, best known for having a losing track record to Groundhog Phil. It appears that this morning Joey emerged from his lair deep inside 60 Wall, sniffed the cold air, and saw the shadow of a $10 billion taper, which is what he predicts the Fed will do tomorrow.
If policymakers were gunfighters, they’d be out of bullets: They have run out of effective policy tools to improve the economy.
So the question is simple: If there is a recession in 2014, and policymakers are out of bullets, how will it play out across the American economy?
- Fed’s $4 Trillion Assets Draw Lawmaker Ire Amid Bubble Concern (BBG)
- Ex-Goldmanite Fab Tourre fined more than $1 million (WSJ)
- EU Banks Shrink Assets by $1.1 Trillion as Capital Ratios Rise (BBG)
- Japan to bolster military, boost Asia ties to counter China (Reuters)
- China condemns Abe for criticizing air defense zone (Reuters)
- Insider-Trading Case May Hinge on Phone Call (WSJ)
- Republicans Gird for Debt-Ceiling Fight (WSJ)
- Mario Draghi pushes bank union deal (FT)
- German Coalition Plans More Pension Money (WSJ)
- Oil Supply Surge Brings Calls to Ease U.S. Export Ban (BBG)