"In the movie he was portrayed as the moral compass. After hearing his praise for the awesome job Paulson did by saving the criminal Wall Street banks with taxpayer money, I think the justice and righteousness stuff is overdone. Earlier in his talk he said banks existed to “fuck you” – his exact words. Then later he says we had to save them or the world would have ended."
"New Jersey would fund only 50% of the ADC in fiscal 2018, after funding 40% in fiscal 2017. Underfunding in any year ratchets up future state liabilities, in effect pushing back the tide, as New Jersey comes closer to the day when it will be left with no choice but to confront its very significant retirement obligations."
"Vast liabilities are being switched quietly from private banks and investment funds onto the shoulders of taxpayers across southern Europe. It is a variant of the tragic episode in Greece, but this time on a far larger scale, and with systemic global implications."
Another day, another headache for owners of French bonds. In the latest French presidential poll, conducted by Elabe for TV broadcaster BFMTV, Marine Le Pen extended her lead by another 2-3 points, while support for her primary centrist challenger Emmanuel Macron, tumbled by 5 points in the last week.
Spain’s three biggest banks, Banco Santander, BBVA and Caixa Bank, have got off to a flying start this year having issued €8.6 billion in new debt, seven times the amount they sold during the same period of last year. The last time they rolled out so much debt so quickly was in 2007, the year that Spain’s spectacular real estate bubble reached its climactic peak.
According to BofA, the best ways to hedge increased risks of a potential Eurosceptic win in the upcoming French election is favouring 10y peripheral spread wideners in Spain vs France, longs in 5y5y Germany and 5y Dutch sovereign CDS. In the options space, the banks recommends going long vol with a hybrid 6m10y strangle. In inflation, it likes 5y5y French CPI v HICP widener and a long 30y OATei breakeven vs inflation swap.
Marine Le Pen's threat to redenominate €1.7 billion in French debt infor francs has sparked panic among the establishment, with rating agencies, economist and central bankers all warning that this would amount to the largest sovereign default on record, threatening chaos to the world financial system on top of the collapse of the single currency.
US equity futures are unchanged, trading near record highs after digesting a spate of earnings results on Thursday. The dollar pared its weekly loss as the yen and pound slid, while gold headed for its longest slump in three months. European equities fell and markets in Asia were mixed at the start of Lunar New Year holidays.
Sterling fell, equities slid, Chinese markets got a helping government intervention hand again, and gold climbed over concerns U.K. Prime Minister Theresa May is prepared to lead Britain out of the European Union’s single market and as the U.S. President-elect suggested other countries could break from the bloc.
Dallas CFO: "The more the rating agencies learn about the crisis facing Dallas as a result of the police and fire pension, the more they understand what the City has been saying for some time – the pension is a significant risk to the fiscal health of the City."
"This is another firm that, while I wouldn’t say they were fine a week ago, they didn’t look like they were headed to collapse, and a week later they’re dead. It was messier than optimal. Is it systemic or not? Fingers crossed, we hope not."
In what may be one of the most dramatic retaliations to a downgrade report, Indonesia’s government said it has terminated all business partnerships with JPMorgan Chase after the U.S. bank downgraded its outlook on stocks in Southeast Asia’s largest economy.