- Asian stocks rose on Friday, lifting the MSCI Asia Pacific Index to its first weekly gain in four.
- China inflation 'blip' masks price pressures from property, credit surge.
- China orders banks to set aside more deposits to cool the fastest-growing major economy.
- Euro declines for third day on concern Greece measures may not be enough.
- Eurozone economy grows by only 0.1 percent in 4Q 2009.
- Germany, others pledged “determined and coordinated action” to help Greece.
- Asian shares were higher Thursday, with China's more benign than feared inflation data.
- Australia job growth surges, unemployment rate falls; Aussie dollar strengthens.
- Bernanke says Federal Reserve may opt to raise discount rate 'before long'.
- China's January loans rises to $203B, property prices surge as banks extend more credit.
- EU to lay groundwork for Greek aid summit package in push to shield Euro.
- Health groups urge U.S. states to increase cigarette taxes by $1 a pack
- U.S. foreclosure filings rose 15% in January from a year earlier
In a CNBC interview on Feb. 10, Marc Faber went out on a limb saying ALL governments will eventually default, including the United States. From all indications, this is a fairly plausible scenario.
- China's exports jump 21% as imports gain 86% in January, Government says.
- Fed to reveal its strategy for raising interest rates.
- Germany along with EU plans to offer Greece, other members loan guarantees.
- Japanese core machinery orders increased 20.1% in Dec, much better than expected.
- Oil drops to near $73 in Asia after report shows US crude supplies jumped last week.
- Stocks, commodities, Korean Won rise on speculation of Greek aid, China's growth.
Standard and Poor's whacks Citi and Bank of America, revising its outlook on both firms from Stable to Negative, cites "increased uncertainty about the U.S. government's willingness to provide additional extraordinary support to highly systemically important financial institutions in a way that will benefit debt holders."
- Abu Dhabi is set to award almost $2B in onshore oil service contracts.
- Most Asian stocks decline as European deficit concerns increase.
- China's January surge in lending probably exceeded fourth quarter's total.
- Copper imports by China may halve from last year’s record.
- Dow closes below 10,000 for first time in 3 months.
- ECB may be forced to delay exit of emergency lending measures amid Greece concern.
The levered assets of the banks in many Euro-sovereign nations easily outstrip those nations' GDP's. So when the nations' banks get in trouble from bad banking practices (and a very large swath have), the nations themselves are helpless in attempting to truly save the banks (and instead only institute a bait and switch wherein private default risk/insolvency potential is swapped for public manifestations of the same).
As we look forward, we ask, who now determines the variation margin on Greek CDS (and Portugal, and Dubai, and Spain, and, pretty soon, Japan and the US), the associated recovery rate, and how much collateral should be posted by sellers of Greek protection? If Greek banks, as the rumors goes, indeed sold Greek protection, and, as the rumor also goes, Goldman was the bulk buyer, either in prop or flow capacity, it is precisely Goldman, just like in the AIG case, that can now dictate what the collateral margin that Greek counterparties, and by extension the very nation of Greece, have to post on billions of dollars of Greek insurance. Let's say Goldman thinks Greece's debt recovery is 75 cents and the CDS should be trading at 700 bps, instead of the "prevailing" consensus of a 90 recovery and 450 spread, then it will very likely get its way when demanding extra capital to cover potential shortfalls, since Goldman itself has been instrumental in covering up Greece's catastrophic financial state and continues to be a critical factor in any future refinancing efforts on behalf of Greece. Obviously this incremental margin, which only Goldman will ever see, even if the CDS was purchased on a flow basis, will never be downstreamed on behalf of its clients, and instead will be used to [buy futures|buy steepeners|prepay 2011 bonuses|buy more treasuries for the BONY $60 billion Treasury rainy day fund].
In essence, through its conflict of interest, its unshakable negotiating position, and its facility to determine collateral requirements and variation margin, Goldman can expand its previous position of strength from dictating merely AIG and Federal Reserve decision making, to one which determines sovereign policy! This is unmitigated lunacy and a recipe for financial collapse at the global level.
Remarks By Bill Dudley At Australia Dodecatuple Secret Banker Meeting: Where We Have Been, Where We Are And Where We Need To GoSubmitted by Tyler Durden on 02/08/2010 20:51 -0400
"With respect to financial market infrastructures, the Federal Reserve is working with a broad range of private-sector participants, including dealers, clearing banks and tri-party repo investors to dramatically reduce the structural instability of the tri-party repo system." - Oh, so it is structurally unstable. All this, and many more remarks of the "I say X, but really mean Y" variety in the attached speech.
- Australia removes large-deposit guarantee amid signs of economic recovery.
- Brazil poised for Latin America's first rate increase as growth picks up.
- Corporate bond yield spreads widen the most since November: Credit Markets.
- Euro, Asian stocks fall as G-7 fails to end concern over Greece, fiscal budgets.
- G-7 governments risk 'muddled middle' with plan to spend now, save later.
- Greenspan sees 'slow' recovery, would be 'very concerned' if stocks drop.
The LBO Refi Wave Approaches: $800 Billion In Junk Debt Maturing By 2014, Adds To Multi Trillion Fixed Income Refi CliffSubmitted by Tyler Durden on 02/07/2010 14:32 -0400
After a mere $100 billion in projected debt maturities in the 2010-2011 period, the LBO wave of 2005-2007, largely financed with 5-7 year tenor bonds and loans, will set the refi scene on fire in the 2012-2014 period, when $700 billion of debt is set to mature. Should Fed Fund rates, and the yield curve begin to shift higher, the incremental cost of debt capital will destroy tens if not hundreds of billions of equity value over the next 5 years. After peaking at 19.4% in Q4, 2008, and subsequently dropping to 9.5%, Moody's expects HY bond yields to begin increasing in 2011. And while HY companies are rushing to access the current favorable HY refi window, when refi capital is still broadly available, growth capital has been extremely scarce with just 4% of last year's total HY issuance used for M&A activity (78% was for refinancing maturity extension). It would appear High Yield companies have entered "run-off" mode for credit investors, with no consideration for any residual equity value.
Revolutions happen when broken parts of existing structures reassemble themselves in novel ways. Today’s Japanese carry trade will become something completely new: currency jettison. This coming Yen carry trade is going to fundamentally change Japan. Next time, Miho Maejima won’t be hungry for yield. She has no yen for it: the carry trade will be driven by exchange rate volatility hedging. She’ll handcuff the government to the bedpost and go for full-on dollarization. When she does, shorting yen is the best trick on the planet. Dollarization to control currency volatility happens a lot. It is not even a radically new event in Japan, but it will go viral and mutate into a radically new species of carry trade. The utter abandonment of the yen to de-risk will end any return crash. And the Japanese semi-democracy (that designation applies to all nations, not just Japan) must allow it to happen. Aging pensioners are both creditors and voters: the only possible adjustment they can make to the coming sovereign crisis is by getting entirely out of yen.
- Asian stocks fall most in 10 weeks on US jobless claims.
- Australian central bank raises outlook, sees 3.25%-3.5% growth ahead.
- Bank of England voted against extending its bond buying program.
- China announces anti-dumping steps on US chicken amid trade disputes.
- China's stocks drop for 3rd week on global recovery concern.
- Gold saw its biggest slide in 16 months, joining other metals in a broad sell-off.
- Hong Kong stocks fall, headed for longest run of weekly losses since 2008.
The first covered bond deal of 2010 is very simple in its terms and still, alas, a 144A deal. Notice four ratings firms were retained to provide ratings.
JPMorgan, as lead underwriter, just priced the $8 billion Berkshire 4-part bond offering, which ended up being a 6-part deal. Terms were as follows.