If not the economy or fundamentals, and if not the Fed, which as we know is still on sabbatical after its massive QE1-2-Twist-3 $3 trillion liquidity injection, just what has pushed stocks up to jawdropping all time highs? Here, courtesy of Deutsche Bank, is the answer...
Over the past year, there had been a perplexing spike in suicide events involving bankers, especially those of Deutsche Bank and JPMorgan. Overnight, the first prominent public sector suicide shook the state of Missouri when its state auditor Tom Schweich died in St. Louis in what is said to be an apparent suicide, at the age of 54, around 9:48 am on Thursday, when Clayton Police Chief Kevin Murphy said paramedics responded to an emergency call from his home. Schweich was then taken to a hospital, where he was pronounced dead from a single gunshot wound. The Police chief was quoted by Kansascity.com, who said that “What we know at this point suggests an apparent suicide.”
- Central Banks With Negative Rates Spur Question of How Low to Go (BBG)
- DHS to keep running: Congress edges toward domestic security funding patch (Reuters)
- Setbacks for Tsipras Stir Discord in Greek Ruling Party (BBG)
- Greece’s Challenge: Appeasing Its Creditors and Its Population (WSJ)
- Buffett, a cheerleader for America, takes his checkbook abroad (Reuters)
- Oil’s Big Swings Are the New Normal: Market has rarely been more volatile (WSJ)
- Ukraine Left Behind as Russian Stock Gains Are Unmatched (BBG)
- Brent rises to $61, set for first monthly gain since July (Reuters)
If there isone thing that is virtually certain about today's trading (aside from the post Rig Count surge in oil because if there is one thing algos are, it is predictable) is that despite S&P futures being a touch red right now, everything will be forgotten in a few minutes and yet another uSDJPY momentum ignition ramp will proceed, which will push the S&P forward multiple to 18.0x on two things i) it's Friday, and an implicit rule of thumb of central planning is the market can't close in confidenece-sapping red territory ahead of spending heavy weekends and ii) the Nasdaq will finally recapture 5000 following a final push from Apple's bondholders whose recent use of stock buyback proceeds will be converted into recorder highs for the stock, and thus the Nasdaq's crossing into 5,000 territory because in the New Normal, the more expensive something is, the more people, or rather algos, want to buy it.
- Goldman Employees Reaped $2 Billion From 2008 Options Last Year (BBG)
- On Bush turf, Obama blames immigration woes on Republicans (Reuters)
- Tougher Internet rules to hit cable, telecoms companies (Reuters)
- Russia's Gazprom says can exempt rebel-held areas from Ukraine gas contract (Reuters)
- Allianz Says Pimco Seeing ‘Substantially’ Lower Outflows (BBG)
- Merkel Faces Stepped-Up Dissent on Greek Bailout in Party (BBG)
- SEC Probes Companies’ Treatment of Whistleblowers (WSJ)
- 2-Year Trek From Turf to Table Delays Cheaper U.S. Beef (BBG)
- Turkish jets violate Greek air space (Kathimerini)
Janet Yellen is very alarmed that some members of Congress want to conduct a comprehensive audit of the Federal Reserve for the first time since it was created. During testimony this week, she made “central bank independence” sound like it was the holy grail. Even though every other government function is debated politically in this country, Janet Yellen insists that what the Federal Reserve does is “too important” to be influenced by the American people. Does any other government agency ever dare to make that claim? If the Fed is doing everything correctly, why should Yellen be alarmed? What does she have to hide?
While this morning's prepared remarks will be the same hodge podge of three-armed economist-speak, we suspect the Q&A will be a little aggressive as Fed Chair Janet Yellen faces The House Financial Services Committee. Having told the markets that "valuations are somewhat higher than normal," and "heightened leverage and weak underwriting terms are close to levels preceding the financial crisis," we are sure the Congressmen (and women) will focus attention on financial stability concerns - as opposed to back-patting celebrations of how well The Fed has done.
As a frequent contributor to Bloomberg, I would welcome the opportunity to debate this with Barry.
What say you @ritholtz ? : )
Fed Chair Yellen will be presenting her semi-annual monetary policy testimony - sometimes called the "Humphrey-Hawkins" testimony - today (Senate Banking Committee) and tomorrow (House Financial Services Committee). She is not expected to stray too far from the most recent FOMC statement's "On the one hand, there is recent strong labor market data; but on the other hand, the broader set of US activity data has not been as robust recently, and the inflation outlook has dimmed," uncertainty. The Q&A will of course contain the most fireworks (if last year's Yellen vs Warren deathmatch is anything to go by). Notably, The Fed will also release its semi-annual Monetary Policy Report (which last year contained the warning "valuation metrics in some sectors do appear substantially stretched.")
The nebulous threat of NIRP in the US "some time in the future" became tangible after J.P. Morgan Chase, the largest US bank by assets (and second largest in the US by total derivative notional) is preparing to charge large institutional customers for some deposits. WSJ adds that JPM "is aiming to reduce the affected deposits by billions of dollars, with a focus on bringing the number down this year. "The moves have thrown into question a cornerstone of banking, in which deposits have been seen as one of the industry’s most attractive forms of funding."
- Yellen faces Senate grilling on Fed rate policy, transparency (Reuters)
- Big Banks Face Scrutiny Over Pricing of Metals (WSJ)
- Greece makes more concessions to euro zone, Germany sets vote (Reuters)
- Time for another executive order: Longer Lives Hit Companies With Pension Plans Hard (WSJ)
- The Syria invasion "false flag" approaches: Islamic State in Syria abducts at least 90 from Christian villages (Reuters)
- Why Lenders Love the $2.5 Million Home Loan (BBG)
- Reuters journalist Maria Golovnina dies in Pakistan aged 34 (Reuters)
- Qatar’s Ties to Militants Strain Alliance (WSJ)
According to the WSJ, "prosecutors in the Justice Department’s antitrust division are scrutinizing the price-setting process for gold, silver, platinum and palladium in London, while the Commodity Futures Trading Commission has opened a civil investigation, these people said. The agencies have made initial requests for information, including a subpoena from the CFTC to HSBC Holdings PLC related to precious-metals trading, the bank said in its annual report Monday. Who is involved in this latest gold-rigging scandal? Why everyone! ... which makes it immediately obvious why the European regulator had to promptly cover up the whole affair. Under scrutiny are Bank of Nova Scotia , Barclays PLC, Credit Suisse Group AG , Deutsche Bank AG , Goldman Sachs Group Inc., J.P. Morgan Chase & Co., Société Générale SA, Standard Bank Group Ltd. and UBS AG , according to one of the people close to the investigation.
Despite endless proclamations that the world has 'escaped' the financial crisis, the data (and actions) simply do not back that up. The constant propagandizing of either a) US is economically strong and will drive the world's growth engine (factually incorrect), or b) the rest of the world is about to revert to higher growth seems entirely anathema to the fact that in 2015, we have seen a wave of monetary easing - most recently today by Israel. That makes it 20 central banks that have cut rates (or eased policy) in the last few weeks - covering over 50% of the world's population.
When the German/Eurogroup decision came to throw either their own biggest banks, or the grandmas of a co-member nation of the currency union under the bus, they didn't even hesitate since they have control over the perfect vehicle for such tasks: the ECB (an allegedly neutral institution that in reality peddles political influence in a way that guarantees the poorer countries will always wind up footing the bill). For those of you who don’t want to wake up one day to find their own grandmas crushed under the same bus the Greek yiayia’s are under as we speak, it would be beneficial to ponder how perverse this all is, not just the isolated events but the entire underlying system that produces them. Banks are more important than people, certainly grandmas.
The Eurogroup's apparent 'non-negotiation' stance with Greece reflects one main worry we suspect - conceding to Greece would increase rather than reduce political risk, emboldening the resurgent anti-austerity and anti-euor extremist parties across Europe. With Spain and France seeing 'extremist' parties in the lead, the following chart is likely the one that keeps Dijsselbloem up at night...