In real democracies, governments would do what the citizens who put them in office want them to do. The United States and other Western democracies make a mockery of that ideal. But, even so, there are limits; governments cannot defy public opinion on matters of great moment indefinitely. Enabling the Saudi ruling class, and the rulers of the other Gulf states, to direct American foreign policy to the extent that they do, and to get away with whatever they please, is hardly the least of it; but neither is it the only cause for concern.
- Once-Unthinkable Criminal Pleas by U.S. Banks Get Investor ‘Meh’ (BBG)
- The E-Mail That Helped Catch Barclays: ‘ISDAfix Is Manipulated’ (BBG)
- CFTC Said Preparing ISDAfix Probe Talks in Weeks: Credit Markets (BBG)
- Islamic State takes control of Syria's Palmyra in westward advance (Reuters)
- Tensions High as Greece Gets Smallest Aid Rise Yet (BBG)
- The Rise of the $50,000 Rental (BBG)
- U.S. says South China Sea reclamations stoke instability (Reuters)
- First Hanergy Now Goldin: Hong Kong Stocks Drop Like Stones (BBG)
Puerto Rico is racing the clock ahead of a July 1 deadline to pass a fiscal budget for 2016 and scrape together $360 million due to creditors. Without a budget, the commonwealth will face a partial government shutdown and may be unable to issue $2.9 billion in oil-tax bonds needed to pay The Government Development Bank.
- Tsipras Endgame Nears as Greek Bank Collateral Evaporates (BBG)
- Shi'ite forces ordered to deploy after fall of Iraqi city (Reuters)
- Ratings agency Fitch to downgrade many European banks (Reuters)
- Bubble Blowing to Continue So Long as Yellen Isn’t Raising Rates (BBG)
- Greece's Debt Battle Exposes Deeper Eurozone Flaws (WSJ)
- Obama to set new limits on police use of military equipment (Reuters)
- China April home prices fuel hopes of bottoming out, but long road to recovery (Reuters)
- Hedge Funds Close Doors, Facing Low Returns and Investor Scrutiny (NYT)
- ASIC's Greg Medcraft 'quite worried' about Sydney, Melbourne house prices (Fin Review)
- The fake: Avon-Offer Hoax Shows It’s Easy to Put One Over on SEC’s Edgar (BBG)
- And the real: US buyout group TPG snaps up UK discounter Poundworld (FT)
- El Niño near-certain to last through summer: U.S. climate center (Reuters)
- Oil Sands Land Becomes Alberta’s Hot Real Estate as Oil Rebounds (BBG)
- SEC a stumbling block in banks' forex guilty pleas: sources (Reuters)
- Pimco’s Stocks Chief Maisonneuve to Leave as Funds Closed (BBG)
- Bank of America’s Woes Test ‘Fixer’ CEO (WSJ)
- Puerto Rico Governor, Lawmakers Agree on Revenue Proposal (BBG)
If yesterday's laughable lack of volume (helped by the closure of Japan and the UK) coupled with hopes that the end of the buyback blackout period was enough to send stocks surging if only to end with a whimper below all time highs despite what is now looking like three consecutive quarters of Y/Y EPS declines according to Factset, today's ramp will be more difficult for the NY Fed and Citadel to engineer, not least of all due to the headwind of the overnight "incident" by China's stock bubble which saw the Shanghai Composite tumble by 4%, the most since January.
"A government shutdown is very probable in the next three months due to the absence of liquidity to operate," Puerto Rico's finance officials warn, in an effort to shock lawmakers into action and avoid a potential "PRimbo".
This will make every American feel much better about handing over that check today... as Simon Black notes today "I believe we have an obligation to starve the beast..."
At the New York Fed’s evocatively named workshop, “Chapter 9 and Alternatives for Distressed Municipalities and States.”
- 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)
Based on Bloomberg data, Doral Bank is the 3rd largest (by assets) bank in Puerto Rico...or rather was. After a 58% collapse in the share price today, news broke after the close:
*PUERTO RICO'S DORAL BANK PLACED UNDER FDIC RECEIVERSHIP, BANCO POPULAR AGREES TO BUY DORAL BANK OPERATIONS
It appears Non-Performing Loans were over 40%. Popular will take the deposits (and 8 of Doral's 26 branches) and the FDIC eats the bad debt (estimates to cost the Deposit Insurance Fund (DIF) will be $748.9 million).
While PRexit is yet to hit the headlines, Puerto Rico bonds joined an illustrious club of ne'er-do-wells today with its 10Y yield spiking above 10%...
So far it has been largely a repeat of the previous overnight session, where absent significant macro drivers, the attention again remains focused both on China, which reported some truly ugly inflation (with 0.8% Y/Y CPI the lowest since Lehman, just call it deflation net of the "goalseeking") data (which as usually is "good for stocks" pushing the SHCOMP 1.5% higher as it means even more easing), and on Greece, which has not made any major headlines in the past 24 hours as patience on both sides is growing thin ahead of the final "bluff" showdown between Greece and the Eurozone is imminent. The question as usual is who will have just a fraction more leverage in the final assessment - Greece has made its ask known, and it comes in the form of 10 billion euros in short-term "bridge" financing consisting of €8 billion increase in Bills issuance and €1.9 billion in ECB profits, as it tries to stave off a funding crunch, a proposal which will be presented on the Wednesday meeting of euro area finance ministers in Brussels. The question remains what Europe's countrbid, if any, will be. For the answer: stay tuned in 24 hours.
- Greek Risk Draws Global Concern on Lehman Echo Warnings (BBG)
- Merkel to urge caution in U.S. as pressure builds to arm Ukraine forces (Reuters)
- West Races to Defuse Ukraine Crisis (WSJ)
- German-French Push Yields Ukraine Summit Plan With Putin (BBG)
- Swiss Leaks lifts the veil on a secretive banking system (ICIJ)
- Italy Lenders Seen Cleansing Books Amid Bad-Bank Plans (BBG)
- G-20 Finance Chiefs Face Tough Test in Istanbul (WSJ)
- Demand for OPEC Crude Will Rise This Year, Says Group (WSJ)... or rather prays
- U.S. Banks Say Soaring Dollar Puts Them at Disadvantage (WSJ)
- Oil Drops Below $45; U.S. Stockpiles May Speed Collapse (BBG)
- Pound Drops as Traders Write Off Higher Rates on Inflation Slump (BBG)
- Oil prices down again as UAE defends holding production (Reuters)
- The Politics Behind the ECB's Threat to Cut Greece Funding (BBG)
- France dispatched thousands of police and military personnel to protect synagogues and Jewish schools, as the government warned of continued terror threats after three days of deadly violence (WSJ)
- Chinese Car Dealers Find Days of ‘Printing Money’ Ending (BBG)
- Gold Rises to Highest Since October as U.S. Rate Outlook Weighed (BBG)
- Divers retrieve crashed AirAsia jet's cockpit voice recorder (Reuters)