In what may be a resounding echo of March 2006, moments ago the New York Superintendent of Financial Services said that Ocwen had engaged in abuses that could potentially harm hundreds of thousands of borrowers. As AP reports, the state regulator issued a letter Tuesday to Ocwen Financial Corp., documenting the same kinds of suspicious actions that worsened the housing crisis and the Great Recession.
The Magic Number Is Revealed: It Costs Central Banks $200 Billion Per Quarter To Avoid A Market CrashSubmitted by Tyler Durden on 10/21/2014 12:58 -0400
"For over a year now, central banks have quietly being reducing their support. As Figure 7 shows, much of this is down to the Fed, but the contraction in the ECB’s balance sheet has also been significant. Seen from this perspective, a negative reaction in markets was long overdue: very roughly, the charts suggest that zero stimulus would be consistent with 50bp widening in investment grade, or a little over a ten percent quarterly drop in equities. Put differently, it takes around $200bn per quarter just to keep markets from selling off."
Fast forward to last night, when instead of the much hoped for Chinese GDP drop - because it would certainly unleash the greatly delayed Chinese liquidity firehose so hoped for by all the BTFDers who need at least once central bailout per day to keep up the charade - China reported GDP which beat expectations, leading to many sad faces on Wall Street, and forcing Reuters to leak the infamous ECB buying corporate bonds article, since refuted, which served as the overnight ramping catalyst. So what is the "explanation" for this unpleasant, for once, economic beat? Why, the weather of course!
As commented previously, the reason for today's 30 point rip in emini futures from the lows hit just 4 hours ago, was a test of the ECB emergency BTFD service, today provided courtesy of Reuters which, just after the European close, gave what is ever more incorrectly called the "market" its dose of upward momentum ignition, when it reported that, in addition to the previously announced "private QE" which includes ABS and covered bond purchases, that Goldman's head of the European central bank would also go ahead and monetize corporate bonds, taking a step even further than the Fed, which at least is confined to public securities, and directly influencing private asset prices.
To get a sense of just how chaotic, unprepared, confused and in a word, clueless the ECB is about just its "private QE", aka purchases of ABS, which should begin in the "next few days" (but certainly don't hold your breath) - let alone the monetization of public sovereign debt - here is Exhibit A. Because if you were confused about what is about to happen, don't worry: it appears the ECB hardly has any idea either, because it was just on October 7 when 40 ABS bonds were dropped from the ECB's "eligible for purchasing" list. And then, just a week later, the ECB changed its mind about changing it mind, and reinstated 19 of the ineligible bonds right back!
"I see deflation flirting with America." Retail sales equals consumer spending equals velocity of money. And unless the money supply is rising, hardly likely in the taper, less spending is deflation by definition. Forget about PMI and all that kind of data, it’s much simpler than that. Central banks can do all kinds of stuff, but they can’t make us spend our money on things we don’t want or need. Let alone make us borrow to do so. And if we don’t, deflation is an inevitable fact. That doesn’t mean prices for some items won’t go up, but that’s not what counts. It’s about how fast we either spend the money we have – if we have any left – or how much we borrow. And if time is money, then borrowed money is borrowed time. So we really shouldn’t.
We suspect the market will be disappointed by this morning's headlines from China. Chinese rate markets are implying a RRR cut is coming soon (as swap rates drop below deposit rates - previously signaled 2 RRR cuts) but the PBOC announced this morning a muich more focused injection of cash to 20 of the nations' largest banks. RRR cuts, are (theoretically) considerably more broadly stimulative to lending than a $32.8 billion cash injection to banks - which are struggling to lend as demand for loans (given high costs of debt for the firms that need the money the most) is weak. One can only imagine the holes in bank balance sheets that exist if the PBOC is forced to do this. Simply put, no matter how much hope there is, as we noted previously, the PBOC will not be providing broad stimulus.
If the last three days all started with a rout in futures before the US market open only to ramp higher all day, today it may well be the opposite, when shortly after Europe opened it was the ECB's turn to talk stocks higher, when literally within minutes of the European market's open, ECB's Coeure said that:
- COEURE SAYS ECB WILL START WITHIN DAYS TO BUY ASSETS
Which was today's code word for all is clear, and within minutes US futures, which until that moment had languished unchanged, soared by 25 points. So will today be more of the same and whatever early action was directed by the central bankers will be faded into a weekend in which only more bad news can come out of Ebola-land?
A rising stock market, like a rising tide, can cover a multitude of interesting and/or scary things. If the finance guys who really know what’s going on are buying, then the disturbing stories that lead each evening’s news must be manageable. And we, in general, must be okay. But let the market fall a bit and those headlines suddenly begin to seem both oppressive and really, really numerous. And maybe we’re not okay after all.
Despite Bank of England's Mark Carney confident overtones that policy-makers must focus on economic developments rather than worry about potential market volatility as they consider exiting stimulus, it appears the esteemed central bank is communicating 'forward guidance' on its money-printing expectations over the next decade... BANK OF ENGLAND SIGNS 10-YEAR BANKNOTE PRINTING CONTRACT WITH DE LA RUE... starting in April 2015 (when US rate hikes might start?)
As President Obama's attention has now drifted from the 'humanitarian' mission in Iraq (which initially saw major initial inflows of Jihadists from around the world) to his real goal, we thought the following, somewhat disturbing, map of foreign fighter inflows to Syria would serve to provide context for just what local 'moderate' terrorists will be fighting (for the US) against. Welcome to The New Normal Crusades...
We warned a week ago of the various possibilities surrounding an Ebola outbreak in America, and today we get some degree of confirmation of a medical-based martial-law coming to the US. Governor Dan Malloy has declared a Public Health Emergency in Connecticut, authorizing the "isolation of any individual reasonably believed to have been exposed to the Ebola virus." Simply put, as we noted previously, the State of Public Health Emergency allows bureaucrats to detain and force-vaccinate people without due process - despite not one single case being found in CT. If there is a major Ebola pandemic in America, all of the liberties and the freedoms that you currently enjoy would be gone. The state of public health emergency will remain in effect indefinitely until lifted by the governor.
There is something seriously wrong if the Federal Reserve cannot raise the Fed Fund`s Rate a measly 100 basis points after 7 longs years of ZIRP. Seven years is an entire business and economic cycle!
The most surprising data point in today's 10 Year auction was the plunge in Directs, which tumbled from 13.5% to only 6.6%, which was the lowest since August of 2012 when they ended up with 5.2%. Just how much of this lack of Direct interest is due to Bill Gross no longer being on the bid? And what happens to future auctions in a world without the Old "New Normal" Pimco?