Nomura

China-Led Bank Will "Keep America Honest," Provide Alternative To IMF, Nomura Says

"The AIIB may come to play an important role in keeping America honest. It is difficult to say at this point whether the AIIB will have a negative or a positive impact on the global economy. At the very least, however, the emergence of an international institution with a viewpoint different from that of western creditors will help enhance the quality of debate over emerging economies’ debt problems."

Greece May Sue Goldman Over Bank's Role In Greek Collapse

Former Goldmanite George Jabbour thinks Greece should take legal action against Goldman for the bank's role in helping the country hide its debt. We can only hope that if Greece does indeed decide to take Mr. Jabbour up on his offer to help clawback some of the half billion euros the bank reportedly pocketed from the deal, that the discovery process will help shed some light on whether the man now in charge of the ECB personally oversaw and endorsed the perpetuation of the Greek lie.  

Economic Sanctions Cause War, Not Peace: Some Lessons From FDR's Embargo Against Japan

Ask a typical American how the United States got into World War II, and he will almost certainly tell you that the Japanese attacked Pearl Harbor and the Americans fought back. Ask him why the Japanese attacked Pearl Harbor, and he will probably need some time to gather his thoughts. Ask him what the United States did to provoke the Japanese, and he will probably say that the Americans did nothing: we were just minding our own business when the crazy Japanese, completely without justification, mounted a sneak attack on us, catching us totally by surprise in Hawaii on December 7, 1941. Unfortunately, this orthodox view is a tissue of misconceptions.

Chinese Stocks Plummet Despite Government Threats To Shorts, Europe Lower, US Closed

The Greece impasse set to culminate on Sunday continues to have a massive impact on at least one stock market, unfortunately it is the wrong one, located on a continent which is mostly irrelevant to the future of the Greek people (unless that whole AIIB bailout does take place of course). We are, of course, talking about China which as noted earlier, started off horribly, plunging over 7% with over 1000 stocks hitting 10% limit down, then in the afternoon session mysteriously recovering all losses and even trading slightly higher on the day, before the late selling returned once more, and the Shanghai Composite plunged to close down 5.8%: an unimaginable 20% total roundtrip move!

This Insane Debt Chart Explains Why Chinese QE Is Inevitable

Because the central government is ultimately responsible for guaranteeing local government debt, and because yields on the new muni bonds are so close to those on treasurys, the newly issued local government bonds are really just treasury bonds, meaning that, in essence, the supply of Chinese government bonds is set to jump by CNY2 trillion in the coming months. If all of the local government debt ends up being refinanced, the end result will be the equivalent on CNY20 trillion in additional treasury supply.

Frontrunning: May 12

  • Bonds Extend Global Rout as Europe Stocks Slide, Dollar Weakens (BBG)
  • Verizon Communications to Buy AOL for $4.4 Billion (BBG)
  • Fresh Nepal earthquake kills dozens, triggers panic (Reuters)
  • Sen. Shelby to Unveil Legislation Heightening Fed Scrutiny (WSJ)
  • Bill Gross: The Amount of Money I'll Give Away 'Is Staggering, Even to Me' (BBG)
  • U.S. rejects notion that Gulf rulers snubbing Obama summit (Reuters)... what about AIIB?
  • In Asia, Debt Market Gets Tougher (WSJ)
  • Iran’s Mahan airline defies sanctions in shadowy aircraft deal (FT)

China's True Gold Holdings To Remain A Secret After All

QUESTIONER: Just a few questions about other countries. A quick clarification on SDR, in January the managing director mentioned there would be an informal board briefing in May. Is that still happening, or has it been pushed back?

MR. RICE: .... the board meeting has been deferred because the work is underway and we'll let you know as soon as that board meeting is scheduled again....

Failed Chinese Local Bond Offering Leads To PBOC Easing Confusion

An inauspicious start to China's local government debt swap initiative has the PBoC scrambling to determine the best way to facilitate the successful issuance of new municipal securities as several provinces have reportedly canceled or delayed offerings. Now, the question is whether Chinese LTROs will be enough, or whether outright QE will ultimately be the only option.

The Mystery Of China's Gold Holdings Is Coming To An End

While the reality is that nobody has a clue what China's actual gold holdings are, the good news is that the answer is coming. As noted above, Chinese Premier Li Keqiang has asked the head of the International Monetary Fund to include China's yuan currency in its special drawing rights (SDR) basket.  If indeed China is serious about CNY inclusion in the SDR, it will finally have to reveal its cards, which would mean it finally will provide an update, with a 6 year delay, of just what its latest gold holdings are. As such, don't be surprised to wake up one morning to headlines blasting that Chinese gold holdings have gone up by 2x, 3x, 5x or (more x) since 2009, a long-overdue update which will catalyze the next major leg higher in the precious metal. 

Frontrunning: April 13

  • As reported here first a month ago: The $9 Trillion Short That May Send the Dollar Even Higher (BBG)
  • As an instant target for foes, Clinton may struggle to get message heard (Reuters)
  • Emerging Stocks Rally 11th Day as Aussie Weakens on China (BBG)
  • Puerto Rico, Investors Enlist Ex-IMF Officials (WSJ)
  • Dollar’s Rise Reshuffles Global Economy (BBG)
  • Indonesia eyes regular navy exercises with U.S. in South China Sea (Reuters)
  • Banca Monte dei Paschi Breaches Exposure Limits to Nomura (WSJ)
  • European Bond Buyers Find Negative Doesn’t Necessarily Mean Bad (BBG)

Frontrunning: April 10

  • Nikkei tops 20,000, Europe hits 15-year high (Reuters)
  • GE to sell real estate holdings, sets $50 billion share buyback (Reuters)
  • Iran’s Middle Class Plans for Life After a Deal (BBG)
  • Walgreens to Close 200 Stores as It Expands Cost Cuts (WSJ)
  • Hillary Clinton expected to announce presidential run as soon as this weekend (Reuters)
  • It will cost $1.5 billion to keep Deutsche Bank Libor Manipulators out of prison  (USA Today)
  • Police Cameras Bring Problems of Their Own (WSJ)
  • Obama says concerned China bullying others in South China Sea (Reuters)
  • Investors Revive Appetite for Asian Junk Bonds (WSJ)

Frontrunning: April 1

  • Oil holds around $55 as Iran nuclear talks drag on (Reuters)
  • Bob Diamond’s African Banking Venture Runs Into Problems (WSJ)
  • Iran Nuclear Talks Resume With Lavrov Saying Deal at Hand (BBG)
  • Wal-Mart Ratchets Up Pressure on Suppliers to Cut Prices (WSJ)
  • Renegades of Junk: The Rise and Fall of the Drexel Empire (BBG)
  • Explosion at Yemen factory kills at least 25: residents, medics (Reuters)
  • Macerich Rejects Simon Property’s $16.8 Billion Takeover Bid (WSJ)
  • Reckoning Arrives for Cash-Strapped Oil Firms Amid Bank Squeeze (BBG)