You know Merkel, Draghi, Dijsselbloem et al. have a problem when... More than one in three Greeks (35%) in 2014 approved of Russia's leadership, while fewer than one in four (23%) approved of the EU's leadership.
S&P Settles DOJ Lawsuit For $1.5 Billion; Agrees Not To Accuse Government Of Retaliation For US DowngradeSubmitted by Tyler Durden on 02/03/2015 09:26 -0400
As had been widely rumored in the past two weeks, and as the WSJ reported overnight, moments ago McGraw Hill, parent of disgraced rating agency S&P, entered into a $1.5 billion settlement to fully resolve the DOJ lawsuit regarding S&P ratings on RMBS and CDOs. As the WSJ reported overnight, In the "span of about 30 hours, the Justice Department lowered its asking price and backed off demands that S&P admit to violating laws when it issued rosy grades on risky mortgage deals, the people said." But the bottom line: 'S&P agreed to ... withdraw its assertion that the Justice Department lawsuit was political retaliation for the ratings firm’s 2011 downgrade."
- RBA cuts interest rates to record low of 2.25% (SMH)
- RBI keeps rates on hold (Reuters), India allows banks flexibility on big projects to reboot growth (Reuters)
- BP slashes capital spending by 20% (FT)
- Greek Retreat on Writedown May Move Fight to Spending (BBG)
- Rosneft accounting move helps BP beat profit forecast (Reuters)
- Amazon in Talks to Buy Some of RadioShack's Stores (BBG)
- Behind Obama's budget proposals, a gloomy view of the future (Reuters)
- How the Justice Department, S&P Came to Terms (WSJ)
- Staples, Office Depot in Advanced Talks to Merge (WSJ)
Because admitting that the Venezuelan utopia is failing due to the policies of Hugo Chavez' "socialist revolution" would leave the thread by which Venezuelan socialism hangs ready to snap, President Maduro has shifted the blame for hyperinflating-price-based staples shortages and food lines from a cut in oil revenues to the dastardly capitalists. As The BBC reports, Maduro ordered the arrest of executives of one of the country’s largest pharmacy chains for allegedly creating shortages of everything from diapers to heart medicine. A triumphant information minister proclaimed, "we came, we normalized sales, we summoned the owners, we arrested them and they're prisoners for having provoked the people with economic war."
- Germany Sees No Need to Scrap Troika in Overseeing Greek Turnaround (WSJ)
- European markets subdued as Chinese data weighs (Reuters)
- U.S. Oil Workers Strike Enters Second Day as Crude Prices Slide (BBG)
- Oil prices rally above $55 as investors pile in (Reuters)
- Obama Wants a New Tax on U.S. Companies' Overseas Profits (BBG)
- If Trading Bonds Is Hard, Think About Pain When Rates Rise (BBG)
- Julius Baer Braces for Swiss Franc Impact (WSJ)
- Coke, Budweiser win as Super Bowl ad battle gets serious (Reuters)
The overnight session had been mostly quiet until minutes ago, when unexpectedly WTI, which had traded down as low as the mid $46 range following the weakest Chinese manufacturing data in two years, saw another bout of algo-driven buying momentum which pushed it sharply, if briefly, above $50, and was last trading about 2.6% higher on the day. In today's highly correlated market, this was likely catalyzed by a brief period of dollar weakness as well as the jump of EURCHF above 1.05, within the rumored corridor implemented by the Swiss National Bank, which apparently has not learned its lesson and is a glutton for a second punishment, after its hard Swissy cap was so dramatically breached, it hopes to repeat the experience with a softer one around 1.05. Expect to see even more FX brokers blowing up once the EURCHF 1.05 floor fails to hold next.
What ratings agency Fitch and the Bank of Canada had warned about has come to pass.
Say you are a socialist, and you have intervened heavily in the economy. Suddenly, things don’t work as you thought they would. Somehow, economic laws seem to refuse to bend to your will. However, you cannot really believe that since according to your convictions, wealth is a byproduct of government plans and decrees. So the solution to the unintended consequences of the initial intervention is to intervene further, in an attempt to refine the plan, so to speak. So you try again. And again. And again. Chances are, your name is Nicolas Maduro. In summary, the thread by which Venezuelan socialism hangs may soon snap.
"When it gets serious, you have to lie," were the infamous words of one J-C Juncker and today - following the 40-50% collapse in Greek Bank equity capital this week,ECB's Bank Supervision boss Nouy has come out to calm everything down:
*NOUY SAYS GREEK BANKS ARE 'PRETTY STRONG', HAVE STRENGTHENED THEIR BALANCE SHEETS
*ECB'S NOUY SAYS GREEK BANKS WILL SURVIVE CURRENT CRISIS
Which, translated for the elites means, "sell-sell-sell." And then - just to add even more pressure, S&P puts Greece on Watch Negative.
Today what we’ve come to know as “mainstream financial media” has provided nothing more than a vehicle for the exponential rise of group-think. All at the suffering of critical thought. In what seems like the blink of an eye most anything to do with financial insight whether it be the reporting of, as well as investigative analysis; has morphed into some version of a stylized regurgitation of Central banking dogma. (this also includes many of the so-called “experts” brought on to fortify the sermons).
Well that didn't take long. Russian Finance Minister Siluanov has responded to S&P's "junk" downgrade of The Russian Federation:
- *SILUANOV: S&P DOWNGRADE OF RUSSIA SHOWS 'EXCESSIVE PESSIMISM'
- *SILUANOV: NO REASON TO EXPECT `MASS' DEBT REDEMPTION REQUESTS
Adding in his statement that he "sees no reason to dramatize" the situation, Siluanov adds that the cut should not have any serious effect on Russia's capital markets. We assume by "dramatize," he means - they wil not be 'visiting' the local ratings agencies offices for a chat anytime soon.
With the Ruble having plunged 3 handles today alone, it appears perhaps more than a few could see this coming...
- RUSSIAN FEDERATION RATINGS CUT TO JUNK BY S&P
- RUSSIAN FEDERATION CUT TO BB+ FROM BBB- BY S&P; OUTLOOK NEG
Putting it below investment grade for the first time in a decade. Of course, this happens just 6 days after the news first leaked that S&P would pay a $1.5 billion settlement to the US DoJ over downgrading America: one wonders just what else was in the small print?
State-owned oil companies that don't slash expenses to align with revenues and boost critical investment in the infrastructure needed to maintain production will suffer financial extinction.
Over a month ago we presented a ranking of "America's most levered energy companies." Since then they have all, without exception gotten clobbered, not only in their publicly traded stock but also their debt. Today, long after the liquidation whirlwind has left junk bond owners dazed and confused, Goldman catches up, and lays out a matrix of shale companies sorted not only by leveraged (they see 2.5x as the cutoff; we used 4.0x) but also by shale asset quality. From there, it also lays out the various opportunities, if any, available to the management teams in the resultant 4 quadrants. Readers will be most interested in the "restructuring/bankruptcy" option, most applicable for Group 4, because these are the names which, all else equal, will file for bankruptcy first.
"There will first be a pernicious excitement, and next a fatal collapse." -- Walter Bagehot, Lombard Street (1844)