Traders and market participants are pretty bad at decision making as it is, the last thing they need is inaccurate information via sensationalized and overhyped TMZ Style News reports to base their decision making process on.
This weekend’s “Things To Ponder” is comprised of a variety of readings that cover a fairly broad spectrum from educational to informative and even a little bit sarcastic.
"You give me this office, and in turn, my fears, doubts, insecurities, foibles, need for sleep, family life, vacations, leisure is gone. I am giving myself to you. The American people should have no patience for whatever is going through your head because you have a job to do. You don't make that decision unless you are prepared to make that sacrifice, that tradeoff. Those who make mistakes in the president's office make them because they haven't fully thought through the dimensions of that choice."
- Barack Hussein Obama
While Hillary explains that Obama is “thoughtful” and “incredibly smart,” the unannounced 2016 Presidential candidate had a few less than supportive words for the current Iraq-bomber-in-chief. In an interview in The Atlantic magazine, Bloomberg reports Clinton warns Obama lacks a specific doctrine, adding "great nations need organizing principles, and "don't do stupid stuff" is not an organizing principle."
Any Bond Idiot Can Buy into Fear, but they are Forced to Sell into ‘Good Times’!
What will it be this time? Grab your popcorn and tune in.. and don't forget, he "will not rest" until whatever 'it' is, is fixed...
Japan’s QE was large enough that no one, not even the most stark raving mad Keynesian on the planet, could argue that it wasn’t big enough. Which is why the results are extremely disconcerting for Central Bankers at large.
Alarm bells in the European banking system have been ringing for quite a while but nobody seems to be listening. The roaring capital markets are just too loud. But we have been keeping track of a few things.
As every 'real' corporate bond manager knows (as opposed to playing one on television), forecasting from historical defaults is a fool's errand as the process is entirely cyclical and non-stationary. The fact that default rates have been low for 4 years (thanks to an overwhelming flood of liquidity-driven demand for yield) is of absolutely no use when pricing discounted cashflows into the future. However, as Fitch warns, a jump in US high-yield default rates looms. There have been 10 LBO related bond defaults thus far in 2014, compared with nine for all of 2013. While most sectors remain relatively clam, the utilities and chemicals sectors are seeing huge spikes in defaults... which explains why the market is starting to price that in.
After an exuberant day in Argentine bond and stock markets, we are nearing a decision. With a handful of hours left until it's all over, various 'deal's have been proposed today from Argentine bankers as a last-minute rescue package. S&P has already decided that it's a done deal:
- *ARGENTINA CUT TO SD FROM CCC- BY S&P
- *ARGENTINA DEFAULTED ON $13B IN FOREIGN DEBT, S&P SAYS
- *ARGENTINA MISSED $539M BOND PAYMENT, S&P SAYS
And now, Argentine Economy Minister Axel Kicillof will speak in a press conference at country’s consulate in Manhattan (ironically a block from the holdouts' office).
Find the silver lining in this utter disaster... and remember, it's not moar of the same QQE as the BoJ is starting to hit its inflation mandate, misery indices are soaring, and approval ratings tumbling. Japanese Industrial Production in June fell 3.3% (almost triple the expected 1.2% drop) and the biggest plunge since March 2011 (the tsunami). This is the 10th miss in the last 12 months. Simply put, while the progressives would dearly love it not to be true, Abenomics is an epic fail leaving Japan readying itself for yet another lost decade (if it makes it that far without Abe going full militarist).
- The market in one sentence: Buying on Dips Pays Most in Five Years as Stocks Rebound (BBG)
- Europe subdued, Russia shares tumble on new sanctions (Reuters)
- Chinese Data Don’t Add Up (WSJ)
- Argentine Default Drama Nears Critical Stage (WSJ)
- Global Pressure Mounts on Israel to End Gaza Fighting (BBG)
- Ukraine troops advance as experts renew attempt to reach crash site (Reuters)
- Prospects Brighten for Republicans to Reclaim a Senate Majority (WSJ)
- Europe’s banking union faces legal challenge in Germany (FT)
- Investors Bet on China's Large Property Developers (WSJ)
- Hague court orders Russia to pay over $50 billion in Yukos case (Reuters)
Barclays Wants Dark Pool Complaint Against It Dismissed, Says "Nobody Was Harmed"; NY Attorney General DisagreesSubmitted by Tyler Durden on 07/24/2014 11:18 -0500
File this one for the bizarro files. After Barclays was caught lying to its "sophisticated" clients about how it handles their order following the lawsuit by NY AG Schneiderman, the bank, having suffered an epic 75% collapse of trading volume in its dark pool, has decided to fight back and earlier today filed a motion to dismiss the dark pool complaint against it. Its main argument, as reported by the WSJ, is that the attorney general's complaint "fails to identify any fraud, establishing no material misstatements, no identified victims and no actual harm." In other words, Barclays alleges the dark pool participants were smart enough to figure out Barclays was lying to them when it promised their order flow wouldn't be offered up to predatory algos.
- EU to weigh extensive sanctions on Russia (FT)
- U.S. lifts flight ban to Israel (Reuters)
- Russia says will cooperate with MH17 probe led by Netherlands (Reuters)
- Norway faces ‘concrete and credible’ terrorist threat (FT)
- Don’t Tell Anybody About This Story on HFT Power Jump Trading (BBG)
- But... but... PMI: Unilever Sales Growth Misses Estimates on Asian Slowdown (BBG)
- World’s Biggest Wealth Fund Reviews $8 Billion Russian Stake (BBG)
- Qualcomm latest US tech company to reverse in China (FT)
- Hamptons Home Sales Rise as Buyers Find More Inventory (BBG)
Those keeping track and hoping the second default would finally hit have to hold their breath again after yet another last minute bailout has now made a complete mockery of China's "deliberate" intentions to clear up the rot plaguing its bond market. As Reuters reports, Huatong avoided a "landmark bond default at the last minute on Wednesday, raising enough funds to pay off both principal and interest on a 400 million yuan ($64.51 million) bond." Who bailed it out? Why the same government which continues to say one thing and do something totally different.