Q3 earnings for financials show that the interest rate risk created by the Fed after years of zero rates is very real indeed
- Global Currency Tensions Rise (WSJ) - in other words, when everyone eases to infinity, nobody eases
- EU to give Spain, France more time to cut deficit (Reuters) - But not because their economies are not "recovering" fast enough, oh no.
- As we expected, Grupo Bimbo considering a bid for Hostess' snack cakes and bread brands (NY Post)
- Time for bus-control: Eleven children killed in latest Chinese bus crash (Reuters)
- Greece Should Write Off Billions of Overdue Taxes, Report Says (BBG) - not all taxes in perpetuity?
- India clamps down on gang-rape protests, PM appeals for calm (Reuters)
- But Meredith Whitney said... Push for Cheaper Credit Hits Wall (WSJ)
- For Greece, last major austerity package, says eurozone official (Kathimerini)... "unless there is another one"
- Americans Miss $200 Billion Abandoning Stocks (BBG) ... and two flash crashes... and $15 trillion in artificial central bank props
- Goldman Sachs Takes Long View Over Payouts (FT)
- Cliff Would Strike Low Incomes Hard (WSJ)
- Afghan policewoman kills US police adviser (AP)
- For Sale in Japan: Electronics Assets (WSJ)
- Merkel's Dilemma: Risk Euro Zone or Her Government (WSJ)... as first suggest by ZH 2 months ago, with only one resolution: referendum
- Russia warns West over Syria after Obama threats (Reuters)
- Consider keeping Bernanke, Romney adviser Glenn Hubbard says (Reuters)... Glenn Hubbard is the star of the movie Inside Job
- Spain Deficit Goals at Risk as Cuts Consensus Fades (Bloomberg)
- Czech Austerity Revolt Threatens Cabinet as Slump Bites (Bloomberg)
- Greek cuts to be deeper than trailed (FT)
- Akin rebuffs Romney, Republican calls to quit Senate race (Reuters)
- Obama Leads Romney in Poll Showing Disdain for Congress (Bloomberg)
- Greece needs more time to reform, PM Samaras tells paper (Reuters)
- UK banks face scandal over toxic insurance products (Reuters)
- Iceland Shelves Monetary Tightening as Krona Seen Appreciating (Bloomberg)
- India Considers $35 Billion Debt Revamp After Biggest Blackout (Bloomberg)
For every semi-positive data point the bulls have emphasized since the market rally began, there's a counter-point that makes us question what all the fuss is about. The bulls will cite expanding US GDP in late 2011, while the bears can cite US food stamp participation reaching an all-time record of 46,514,238 in December 2011, up 227,922 participantsfrom the month before, and up 6% year-over-year. The bulls can praise February's 15.7% year-over-year increase in US auto sales, while the bears can cite Europe's 9.7% year-over-year decrease in auto sales, led by a 20.2% slump in France. The bulls can exclaim somewhat firmer housing starts in February (as if the US needs more new houses), while the bears can cite the unexpected 100bp drop in the March consumer confidence index five consecutive months of manufacturing contraction in China, and more recently, a 0.9% drop in US February existing home sales. Give us a half-baked bullish indicator and we can provide at least two bearish indicators of equal or greater significance. It has become fairly evident over the past several months that most new jobs created in the US tend to be low-paying, while the jobs lost are generally higher-paying. This seems to be confirmed by the monthly US Treasury Tax Receipts, which are lower so far this year despite the seeming improvement in unemployment. Take February 2012, for example, where the Treasury reported $103.4 billion in tax receipts, versus $110.6 billion in February 2011. BLS had unemployment running at 9% in February 2011, versus 8.3% in February 2012. Barring some major tax break we've missed, the only way these numbers balance out is if the new jobs created produce less income to tax, because they're lower paying, OR, if the unemployment numbers are wrong. The bulls won't dwell on these details, but they cannot be ignored.
Last week we learned two things: that Jamie Dimon specifically telegraphed he is now more powerful than the Fed, and that the US economy is back down to the same March 2009 optical exercises in financial strength gimmickry to stimulate rallies. Recall that on FOMC day, the market barely budged on Bernanke's ambivalent statement and in fact was in danger of backing off as the readthrough was that of no more QE... until JPM announced a major stock buyback and dividend boost. The catalyst: a successful passing of the latest and greatest Stress Test, which according to experts was "much more credible" than all those before it. Wrong. The test was merely yet another complete farce and a total joke. But as expected, the test had its intended effect: financial shares soared across the board, and banks promptly took advantage of investors and robot gullibility to sell equity into transitory strength. Bloomberg's Jonathan Weil explains.
And the real lesson, dear friends, is that the good old USA is a subprime nation
A systematic plan to create the illusion of stability and provide no-risk profits to the mega-Wall Street banks was implemented in early 2009 and continues today. The plan was developed by Ben Bernanke, Hank Paulson, Tim Geithner and the CEOs of the criminal Wall Street banking syndicate. The plan has been enabled by the FASB, SEC, IRS, FDIC and corrupt politicians in Washington D.C. This master plan has funneled hundreds of billions from taxpayers to the banks that created the greatest financial collapse in world history. The authorities had a choice. This country has bankruptcy laws. The criminally negligent Wall Street banks could have been liquidated in an orderly bankruptcy. Their good assets could have been sold off to banks that did not take their extreme greed based risks. Bond holders and stockholders would have been wiped out. Today, we would have a balanced banking system, with no Too Big To Fail institutions. Instead, the years of placing their cronies within governmental agencies and buying off politicians paid big dividends for Wall Street. Their return on investment has been fantastic.
Following the clusterflock of black swans that has hit world markets in the past month, the Fed has realized it needs to act quick to distribute money to undercapitalized bank shareholders ahead of the upcoming bank sector bail out, which will naturally be funded by taxpayers all over again. According to the Fed, the 19 worst banks in America (in other words those that are allowed to issue dividends) are: Ally Financial Inc. (no, really, f/k/a GMAC is healthy), American Express Company, Bank of America Corporation, The Bank of New York Mellon Corporation, BB&T Corporation, Capital One Financial Corporation, Citigroup Inc., Fifth Third Bancorp, The Goldman Sachs Group, Inc., JPMorgan Chase & Co., Keycorp, MetLife, Inc., Morgan Stanley, The PNC Financial Services Group, Inc., Regions Financial Corporation, State Street Corporation, SunTrust Banks, Inc., U.S. Bancorp, and Wells Fargo & Company. The surge in share prices of the mentioned banks confirms that this is nothing but the latest round of Fed-endorsed taxpayer rape, which nobody can do anything against as the Fed is an "unsupervised" entity, DC is owned by Wall Street, and the peasantry is downloading porn on their iPad.
It was only a matter of time: back in March, following revelations of the Lehman Repo 105 scam, we speculated that the days of Ernst & Young are numbered. Back then we said "we are confident that (again, with the assumption that we live in some
semblance of a sane/ration world), E&Y's Financial Services Office
and quite possibly the entire firm. Integrity is the number one
currency for an auditor, and just like Anderson, E&Y's just went out
in a puff of green-colored smoke." Today we learn that Andrew Cuomo is about to make E&Y's life a whole lot more difficult. Per the WSJ "State Attorney General Andrew Cuomo is close to filing the case, which
would mark the first time a major accounting firm was targeted for its
role in the financial crisis." Too bad - E&Y was surely hoping that just like everything else in this corrupt country, out of sight would mean out of mind, and soon everyone would forget about the firm's involvement in the biggest bankruptcy in history. Better luck next time...
- Asian stocks, Copper decline before European debt talks; Treasuries gain.
- EU faces `gridlock' on debt crisis; agrees on a crisis- management mechanism in 2013.
- India’s central bank kept benchmark interest rates unchanged after 6 increases this year.
- Oil falls to near $88 in Asia despite plunge in US crude inventory.
- Qatar makes $65B bet it can remake economy in World Cup preparation.
- US foreclosure filings plunge to two-year low as lenders probe practices.
- AAR Corp beats by $0.07, posts Q2 EPS of $0.42. Revs rose 36.0% to $447M.
The biggest idiots in the world come out swinging:
- U.S. regional bank Regions Financial Corp.'s financial performance in recent quarters has lagged our expectations. Furthermore, we think the company's financial flexibility has been somewhat reduced.
- We lowered our counterparty credit ratings on Regions and its primary bank subsidiary, Regions Bank. The outlooks on their long-term ratings remain negative.
- We expect net losses to persist at Regions in the near term, largely due to unfavorable loan and geographic concentrations. We think net losses could continue to modestly pressure capital ratios in the near term.
- Asian shares traded down amid nervousness China may introduce further tightening.
- Billionaire Carlos Slim acquires stake in New York money Mmanager BlackRock
- BMW &Mercedes cut back on Christmas breaks as demand for new models booms
- China allows yuan to start trading against ruble.
- Eurozone consumer confidence improves to -9.5 in Nov from revised -10.9 in Oct.
- Irish PM said the government will resign after passing the country’s budget.
- SKorea scrambled fighter jets and returned fire after NKorea lobbed shells into its territory.
- Asian stocks advance for second day on US economic data, Ireland hopes.
- Bernanke takes defense of monetary stimulus abroad, turns tables on China.
- South Korea to reimpose tax on bonds; first of a possible raft of capital control measures.
- Spain sells €3.7B of bonds yielding less than secondary market.
- Treasuries hold gains as Bernanke says job losses may curb economic growth.
- Air China to buy $4.49B worth of aircraft from Airbus at a discount.
- Arthur J. Gallagher announced acquisition of Behnke & Co. Terms undisclosed.
- Asian stocks rebound as commodities climb, China government acts on prices.
- BoE plans to adopt a less-intrusive approach to overseeing U.K. banks.
- Euro climbs versus Yen, Dollar on optimism Ireland aid to calm debt market.
- IMF warns of Hong Kong housing-bubble risks.
- Irish talks turn to government bailout as EU officials join IMF in Dublin.
- Moscow approves $32B sale of state assets; disposals to help cover budget deficit.
- API reports surprise decline in crude-oil supplies.
- Asian stocks, commodities drop as China drafts price curbs; Won, Euro fall.
- EU starts work on Irish bank aid package, stops short of immediate bailout.
- FDIC is conducting abt 50 criminal investigations of directors, employees at US banks.
- NAHB index rose to 16 in November from a downwardly revised 15 reading in Oct.
- Amgen Inc. is studying a takeover offer for Actelion Ltd.
- Boeing to buy privately-held CDM Technologies. Terms undisclosed.
- Carlyle's Booz Allen Hamilton raises $238M in IPO.