European Unemployment Declines From All Time High, Youth Unemployment Hits Fresh Record - Full BreakdownSubmitted by Tyler Durden on 11/29/2013 09:03 -0400
A hungover America slowly wakes up from a day of society-mandated consumption and purchasing excess to engage in even more Fed-mandated excess in the equity markets. The only difference is that while the "90%" was engaged in the former and depleting their equity, and savings, accounts in the process, far less than 10% will be doing the latter. Overnight attention was drawn to the rapidly escalating territorial dispute between China and Japan, now in the air, Bitcoin's brief surge above the price of an ounce of gold, and the ejection of the Holland from the AAA Eurozone club (where only Germany and Finland remain), following an S&P downgrade of the Netherlands from AAA to AA+, which however had been largely priced in long ago (and was coupled with an upgrade of Spain from negative to stable outlook, as well as an upgrade of Spain from CCC+ to B-). Europe surprised pleasantly on both the inflation (better than expected) and unemployment rate (dropped from an all time high of 12.2% to 12.1%), even if youth unemployment rose to fresh record highs.
In fitting with the pre-holiday theme, and the moribund liquidity theme of the past few months and years, there was little of note in the overnight session with few event catalysts to guide futures beside the topping out EURJPY. Chinese stocks closed a shade of red following news local banks might be coming under further scrutiny on their lending/accounting practices - the Chinese banking regulator has drafted rules restricting banks from using resale or repurchase agreements to move assets off their balance sheets as a way to sidestep loan-to-deposit ratios that constrain loan growth. The return of the nightly Japanese jawboning of the Yen did little to boost sentiment, as the Nikkei closed down 104 points to 15515. Japan has gotten to the point where merely talking a weaker Yen will no longer work, and the BOJ will actually have to do something - something which the ECB, whose currency is at a 4 year high against Japan, may not like.
- JPMorgan $13 Billion Mortgage Deal Seen as Lawsuit Shield (BBG)
- J.P. Morgan Is Haunted by a 2006 Decision on Mortgages (WSJ)
- World powers, Iran in new attempt to reach nuclear deal (Reuters)
- Keystone Foes Seek to Thwart Oil Sands Exports by Rail (BBG) - mostly Warren Buffet?
- How Would Fed Deal With Debt Ceiling Crisis? Look to Minutes for Clues (Hilsenrath)
- Anything to prevent the loss of prop trading: 'Volcker Rule' Faces New Hurdles (WSJ)
- BOE Sees Case for Keeping Record-Low Rate Beyond 7% Jobless (BBG)
- Obama Backs Piecemeal Immigration Overhaul (WSJ)
- Abenomics Seen Cutting Japan Bad-Loan Costs to 2006 Low (BBG)
"I have been cursed at a Chinese border. In Dubai, my passport was studied by three veiled women for over an hour and my suitcase completely dismembered. In the Philippines I had to bribe someone in order to get my visa extended for a few days. Borders, they can be tough, especially in countries known for corruption.
But never, ever, will I return to the United States of America."
- Excerpt from a must read article by Niels Gerson Lohman
Time runs out on Italian and Spanish banks. But the truth is fatal.
Argues that despite the growth the of the state in response to the crisis, what characterizes the current investment climate is the weakness of the state. This asssessment is not limited to the US, where the federal government remains partially closed.
From Cascading Complexity To Systemic Collapse: A Walk Thru "Society's Equivalent Of A Heart Attack"Submitted by Tyler Durden on 10/05/2013 23:59 -0400
"The commonalities of global integration mean that diverse hazards may lead to common shock consequences. The systems that transmit shocks are also the systems we depend upon for our welfare and the operation of businesses, institutions and society... One of the primary consequences of a generic shock is an interruption in the flow of goods and services in the economy. This has diverse and profound implications - including food security crises’, business shut-downs, critical infrastructure risks and social crises... More generally it can entail multi-network and delocalised cascading failure leading to a collapse in societal complexity.... This is a complex society’s equivalent of a heart attack. When a person has a heart attack, there is a brief period during which CPR can revive the person. But beyond a certain point when there has been cascading failure in co-dependent life support systems, the person cannot be revived. The extent of our contemporary complex global system dependencies, and our habituation to a long period of broadly stable economic and complexity growth means a systemic collapse would present profound and existential challenges."
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Do you wonder what to make of America’s soaring government debt and what it means for the future? Or, if you already have it figured out, are you interested in research that might challenge your position? Either way, you might like to see the results of this exercise:
1... Take each historic instance of government borrowing rising above America’s current debt of 105% of GDP.
2... Eliminate those instances in which creditors received a lower return than originally promised, due to defaults, bond conversions, service moratoriums and/or debt cancellations.
3... Of the remaining instances, consider whether and how the debt-to-GDP ratio was reduced.
In other words, let’s see what history tells us about today’s debt levels and what comes next. You may find the answer surprising.
There are dates that go down in history and some will be remembered as landmark signals of changing times. Russia has the upper hand in Syria.
- Summers Quit Fed Quest After Democrats Spurned Obama Favorite (BBG)
- Geithner Still Not Interested in Fed Chair Slot (WSJ)
- Gross’s Trade Sours as Bonds Lose Faith in Fed Guidance (BBG)
- Bob Diamond calls for bank rules shake-up (FT)
- Russia says may be time to force Assad's foes to talk peace (Reuters)
- Iran Dials Up Syria Presence (WSJ)
- Kerry Seeks to Sell Syria Deal (WSJ)
- Shutdown of Japan’s Last Nuclear Reactor Raises Power Concerns (BBG)
- Emerging Stocks Rise to 3-Month High as Bonds Gain on Fed (BBG)
- Bernanke’s Maradona swerve hits bonds (FT)
An increasing cacophony of prognosticators are of the status-quo sustaining belief that stock and bond prices will rally next week when the Fed announces the taper. As Scotiabank's Guy Haselmann notes, the thinking goes that alleviation of the uncertainty will cause a "relief rally." However, as Haselmann notes, since the Fed has provided 5 years’ worth of massive stimulus that has launched asset prices to record highs, the commencement of the withdrawal process is significant... and any relief rally that ensues next Wednesday should be sold. His thoughts extend from Indonesian central bank's dilemma to European political instability, and the next stage of the Syrian crisis...
If there’s one country in the world that you might not think would be at the top of the outsourcing list and the place to send orders to be fulfilled from the West, it would probably have to be North Korea. The world’s most closed economy, that Communist dictatorship.
Emerging markets’ currencies are crashing, and their central banks are busy tightening policy, trying to stabilize their countries’ financial markets. Who is to blame for this state of affairs? The cause of this state of affairs, in one word, is austerity. Weak demand in Europe is the real reason why emerging markets’ current accounts deteriorated (and, with the exception of China, swung into deficit). Thus, if anything, emerging-market leaders should have complained about European austerity, not about US quantitative easing. Fed Chairman Ben Bernanke’s talk of “tapering” quantitative easing might have triggered the current bout of instability; but emerging markets’ underlying vulnerability was made in Europe.