RBS

Frontrunning: December 17

  • Fed’s $4 Trillion Assets Draw Lawmaker Ire Amid Bubble Concern (BBG)
  • Ex-Goldmanite Fab Tourre fined more than $1 million (WSJ)
  • EU Banks Shrink Assets by $1.1 Trillion as Capital Ratios Rise (BBG)
  • Japan to bolster military, boost Asia ties to counter China (Reuters)
  • China condemns Abe for criticizing air defense zone (Reuters)
  • Insider-Trading Case May Hinge on Phone Call (WSJ)
  • Republicans Gird for Debt-Ceiling Fight (WSJ)
  • Mario Draghi pushes bank union deal (FT)
  • German Coalition Plans More Pension Money (WSJ)
  • Oil Supply Surge Brings Calls to Ease U.S. Export Ban (BBG)

China's Colonization Of London Hits Ludicrous Speed, And Now: It's Detroit's Turn

Chinese investment in London between 2010 and Q3 of this year has risen by a "ludicrous speed" comparable 1,500%, or from a frugal GBP54 million to over GBP 1 billion! And boy do the Chinese love London - according to the same report, over 50% of European property investment by Chinese buyers is now in London.  As a result, China is now the third-largest overseas purchaser in U.K. behind Germany and U.S., which invested GBP 1.2 billion and GBP 1.1 billion respectively. "We expect the pool of investors from China targeting London to grow significantly in the coming years. They will consider everything from urban regeneration sites through to trophy assets." Which brings us to point number two: the latest target of the Chinese hot money colonization is none other than bankrupt Detroit.

RBS: The Dumbest Bank Of 2013?

"IMPORTANT: FOR ALL US DOLLAR PAYMENTS TO A COUNTRY SUBJECT TO US SANCTIONS, A PAYMENT MESSAGE CANNOT CONTAIN ANY OF THE FOLLOWING: 1. The sanctioned country name. 2. Any name designated on the Office of Foreign Asset Control (OFAC) restricted list, which can encompass a bank name, remitter or beneficiary."

Frontrunning: December 12

  • J.P. Morgan to Pay Over $1 Billion to Settle U.S. Criminal Probe Related to Madoff (WSJ)
  • Ford board aims to pin down CEO Mulally's plans (Reuters)
  • Raising Minimum Wage Is a Bad Way to Help People (BBG)
  • Japan Lawmakers Demand Speedy Pension Reform (WSJ)
  • EU reaches landmark deal on failed banks (FT)
  • In which Hilsenrath repeats what we said in August: Fed Moves Toward New Tool for Setting Rates (WSJ)
  • Senators Vow to Add to Iran Economic Sanctions in 2014 (BBG)
  • Centerbridge in $3.3bn LightSquared bid (FT)
  • Banks, Agencies Draw Battle Lines Over 'Volcker Rule' (WSJ)

Frontrunning: December 11

  • Wall Street Exhales as Volcker Rule Seen Sparing Market-Making (Bloomberg)
  • GM to End Manufacturing Down Under, Citing Costs (WSJ)
  • U.S. budget deal could usher in new era of cooperation (Reuters)
  • Ukraine Police Back Off After Failing to Stop Protest (WSJ)
  • First Walmart, now Costco misses (AP)
  • Dan Fuss Joins Bill Gross Shunning Long-Term Debt Before Taper (BBG)
  • China New Yuan Loans Higher Than Expected (WSJ)
  • China bitcoin arbitrage ends as traders work around capital controls (Reuters)
  • Blackstone’s Hilton Joins Ranks of Biggest Deal Paydays (BBG)

6 Things To Ponder: Bulls, Bears, Valuations & Stupidity

With just a tad more than three weeks left in the year it is time to start focusing on what 2014 will likely bring.  Of course, what really happens over the next twelve months is likely to be far different than what is currently expected but issuing prognostications, making conjectures and telling fortunes has always kept business brisk on Wall Street.

Frontrunning: December 6

  • Nelson Mandela: 1918-2013 (Reuters)
  • South Africans Flock to Nelson Mandela’s Home to Mourn His Death (BBG)
  • Hillary Clinton or Joe Biden? Obama says won't choose between them for 2016 (Reuters)
  • Fukushima water tanks: leaky and built with illegal labor (Reuters)
  • Sears Holdings Files to Spin Off Lands' End Business (WSJ)
  • Way cleared for landmark global trade deal (FT)
  • U.S. Oil Prices Fall Sharply as Glut Forms on Gulf Coast (WSJ)
  • German Factory Orders Decline in Sign of Uneven Recovery (BBG)
  • FCC Unlikely to Bless a Comcast-TWC Deal: Regulator (WSJ)

Frontrunning: December 5

  • Apple, China Mobile Sign Deal to Offer iPhone (WSJ)
  • Japan approves $182 billion economic package, doubts remain (Reuters)
  • Volcker Rule Won't Allow Banks to Use 'Portfolio Hedging' (WSJ)
  • He went, he saw, he achieved nothing: Biden's Trip to Beijing Leaves China Air-Zone Rift Open (WSJ)
  • Britain announces sharp upward revision to growth forecasts (Reuters)
  • U.S. Airlines to Mortgage-Backed Debt Top List of Best ’14 Bets (BBG)
  • Thaksin's homecoming hopes dashed as Thai crisis reignites (Reuters)
  • Age of Austerity Nearing End May Boost Global Economy (BBG) - or it may expose that it was just corruption and incompetence at fault all along
  • China aims to establish network of high-level FTAs (China Daily)

Futures Fail To Ramp On Lack Of Yen Carry Excitement

While there was a plethora of macro data (starting with some ugly numbers out of Australia which clobbered AUD pairs overnight), China HSBC Services PMI dipping slighlty from 52.6 to 52.5, Final Eurozone PMI Services (printing at 51.2 up from 50.9 and beating expectations of the same on an increase in German PMI numbers from 54.5 to 55.7 and a decline in French PMI from 48.8 to 48.0), Eurozone retail sales declining by 0.2%, on expectations of an unchanged print, and much more (see  below), perhaps the most important news of the day came from Japan which many expect will be the source of much more easing in the coming months and thus serve as marginal lever to push global fungible markets higher. However, not only did various BOJ officials for the first time in a while talk down expectations of a QE boost, but the head of the Japan GPIF said that it doesn't need to sell JGBs right now as it would "rock markets" and that instead can achieve its targeted 52% weighing as bonds mature, that it may buy foreign bonds instead to raise weighting to core target (as the Fed buys Japan bonds?), and that it will be very difficult for Japan to hit the BOJ's inflation target in 2 years. Is Japan already getting cold feet on rumors of more QE and did it realize there are only so many assets it can monetize. If so, watch out below on the EURJPY which has now priced in about 700 pips of expected BOJ QE boosting in early 2014.

Frontrunning: December 3

  • With website improved, Obama to pitch health plan (Reuters)
  • Joe Biden condemns China over air defence zone (FT)
  • Tally of U.S. Banks Sinks to Record Low (WSJ)
  • Black Friday Weekend Spending Drop Pressures U.S. Stores (BBG)
  • Cyber Monday Sales Hit Record as Amazon to EBay Win Shoppers (BBG)
  • Ukraine's Pivot to Moscow Leaves West Out in the Cold (WSJ)
  • Investment banks set to cut pay again despite rise in profits (FT)
  • Worst Raw-Material Slump Since ’08 Seen Deepening (BBG)
  • Democrats Face Battles in South to Hold the Senate (WSJ)
  • Hong Kong reports 1st case of H7N9 bird flu (AP)
  • In Fracking, Sand Is the New Gold (WSJ)

Frontrunning: November 18

  • What can possibly go wrong: Tepco Successfully Removes First Nuclear Fuel Rods at Fukushima (BBG)
  • Japan's Banks Find It Hard to Lend Easy Money (WSJ)
  • U.S. Military Eyes Cut to Pay, Benefits (WSJ)
  • Airbus to Boeing Cash In on Desert Outpost Made Field of Dreams (BBG); Dubai Air Show: Boeing leads order books race (BBG)
  • Sony sells 1 million PlayStation 4 units in first 24 hours (Reuters)
  • Russian Tycoon Prokhorov to Buy Kerimov's Uralkali Stake (WSJ)
  • Google Opening Showrooms to Show Off Gadgets for Holidays (BBG)
  • Need. Moar. Prop. Trading: Federal Reserve considering a delay to Volcker rule (FT)
  • Raghuram Rajan plans ‘dramatic remaking’ of India’s banking system (FT)
  • SAC Capital's Steinberg faces insider trading trial (Reuters)

The Only Two Charts That Matter For The Fed

1. The Fed now owns 32.47% of all 10 Year equivalents, up 32.22% from the prior week, and rising at a pace of 0.3% per week.

2. The Fed is now monetizing a record 70% of all net US 10 Year equivalent issuance.

RBS: "The Fed Is Now Responsible For Monetizing A Record 70% Of All Net Bond Supply"

The following statement and chart from the RBS' Drew Brick pretty much explains it all: "QE has seen the Fed extend its dominion on the US curve away from the short-end and into longer duration paper is patent, too. On a rolling six-month average, in fact, the Fed is now responsible for monetizing a record 70% of all net supply measured in 10y equivalents. This represents a reliance on the Fed that is greater than ever before in history!"

 

Frontrunning: November 11

  • Philippines Left Reeling in Wake of Storm (WSJ)
  • Khamenei controls massive financial empire built on property seizures (RTRS)
  • Race to Bottom Resumes as Central Bankers Ease Anew (BBG)
  • U.S. Postal Service to deliver Amazon packages on Sundays  (LA Times)
  • Obama Stocks Among Best After Re-Election as Rally Tested (BBG)
  • Health-Law Rollout Weighs on Obama's Ratings, Agenda (WSJ)
  • Twitter in Celebrity Spat With Facebook as Rivalry Builds (BBG)
  • Iran deputy industry minister shot dead (AFP)
  • Financier of Taliban-linked group shot dead in Pakistan (RTRS)
  • Obama: The Lonely Guy (Vanity Fair)