• Pivotfarm
    04/18/2014 - 12:44
    Peering in from the outside or through the looking glass at what’s going down on the other side is always a distortion of reality. We sit here in the west looking at the development, the changes and...


Tyler Durden's picture

UK Vs France: You Decide Who Is Worse

The latest scandalous childish spat in Europe is not between some hardcore religious fanatics in the former Yugoslavia, but between the two countries that traditionally (at least in post-war Europe) have been at the forefront of sense and stability: France and the UK, where things got out of joint after David Cameron vetoed the recent G-27 attempt to bailout French and German banks on the taxpayer's dime, quickly followed up by a media war, and culminating with the idiotic announcement by Bank of France head Christian Noyer who said it is not France who has to be downgraded, but the UK. For our thoughts on this ridiculous statement, which merely confirms how clueless Europe currently is, see here. We will say no more about who is more hopeless between the two - it is pretty clear that in a global coordinated ponzi, everyone is only as strong as the weakest link, especially among the AAA-club: the fact that a central bank head does not, is grounds for great concern... so instead we will leave it up to our readers. Below, courtesy of Reuters, we present a tableau of the key economic dataseries for the two countries, and benchmarked against Europe's strongest economy: Germany. So is Cameron right in saying he is protecting the UK taxpayers by keeping them isolated from the European maelstrom, or is Noyer correct when he says that the UK is far worse off? Readers decide.


Tyler Durden's picture

Frontrunning: December 15

  • Merkel Mired by Woes That May Deter Crisis Effort (Bloomberg)
  • Trade wars accelerate: China set to tax US-made car imports (FT)
  • Bernanke Tells Senators Federal Reserve Has No Plan to Aid European Banks (Bloomberg)
  • Cameron rules out putting extra €30bn into IMF (FT)
  • Inside Wukan: the Chinese village that fought back (Telegraph)
  • Dems Moving From Insistence on Millionaire Tax (Bloomberg)
  • Republicans face voting shake-up (FT)
  • Nicolas Sarkozy: David Cameron's like a child (Metro)
  • China FDI flows stumble in November as U.S. drags (Reuters)
  • Putin Ally Resigns Russian Parliament Post (WSJ)

Tyler Durden's picture

Spain Issues More Bonds Than Targetted At Deteriorating Internals; Market Responds Favorably

We start off the morning with a key bond auction out of Spain that came rather mixed as only one out of three issues priced better than the previous auction, and two out of three had lower bids to cover; yet somehow it was considered a smashing success because a total of €6.03 billion was sold more than the €3.5 billion targeted. First the details: Spain sold €2.45 Bn of 3.15% Jan'16s, at a worse bid/cover of 2.00 vs. Prev. 2.83, and a better yield of 4.023% vs. 5.276% previously; €2.18 Bn, 4.00% Apr'20, at a worse bid/cover 1.50 vs. Prev. 2.01 a worse yield of 5.239% vs. Prev. 5.006%, and lastly €1.4 Bn, 5.50% Apr'21, at a better bid/cover 2.20 vs. Prev. 1.76, and a worse yield 5.545% that was again higher than the previous 5.433%. However, in this world of living bond auction to bond auction, this is considered a smashing success and the result is 5 point rush higher in S&P. And here is the official party line courtesy of Reuters: "Spanish bond yields fell on Thursday, narrowing the spread over German Bunds after the country surprised markets by selling far more than the amount targeted in its last bond sale of the year, although its cost of borrowing remained close to euro-era highs.Bunds were steady but are firmly supported ahead of year-end by investors seeking safer liquid assets as markets question euro zone leaders' ability to find a lasting solution to the debt crisis now in its third year. Spain sold just over 6 billion euros of five- and 10-year paper, compared with a targeted maximum of 3.5 billion euros, taking issuance this year up to its target of 94 billion euros, according to Reuters data. It paid a yield on the 10-year paper maturing in 2021 of 5.545 percent. Spanish 10-year government bonds trading in the secondary market were 17 basis points lower on the day at 5.57 percent, leaving the spread over Bunds at 363 basis points." And just like High Yield issuers, the fate of Europe now relies on market windows: which means that while bond auctions such as today will "succeed", a bond auction scheduled on a day when the market crashes will fail with almost certainty. And while HY issuers can easily pull a bond issue due to "market conditions", countries do not have that luxury, and what happens next nobody knows.


Tyler Durden's picture

Game Theory Over: Bank Of France's Noyer Says Britain Should Be Downgraded, Not France

To anyone who doubted that the gloves are now fully off between France and Britain, we bring you exhibit A: Speaking in an interview with local newspaper Le Telegramme de Brest to be published later on Thursday, Bank of France head and ECB member Christian Noyer said that a downgrade of France's AAA credit rating would not be justified and ratings agencies are making decisions based more on politics than economics and questioned whether the use of ratings agencies to guide investors was still valid. "In the arguments they (ratings agencies) present, there are more political arguments than economic ones," said Noyer, the head of the Bank of France and a member of the ECB's governing council. "The downgrade does not appear to me to be justified when considering economic fundamentals," Noyer said. "Otherwise, they should start by downgrading Britain which has more deficits, as much debt, more inflation, less growth than us and where credit is slumping." The bolded sentence confirms two things: i) that the Nash equilibrium in Europe is now fatally broken, because when you have the head of one central bank doing all he can to throw another central bank under the bus, that's pretty much game (theory) over; and ii) when he said that "the agencies have become incomprehensible and irrational. They threaten even when states have taken strong and positive decisions. One could think that the use of agencies to guide investors is no longer valid." it proves that this amateur has no more understanding of basic finance than your generic Reuters blogger, both of whom apparently fail to comprehend that there are several hundred thousand bond and loan indentures in the real world, not the world of "S&P has no credibility so ignore it", which are loaded with covenants discussing springing liens, rating indexed interest levels and collateral thresholds, all of which are based on a sovereign and corporate rating, and all come into play in a completely unpredictable way (hint AIG - the reason why AIG imploded was because a rating agency downgrade unleashed a terminal margin call) when there is a rating downgrade. Such as that of France in a few hours to days top.


testosteronepit's picture

The Trade Debacle With China

And now a trade war has broken out. Politicians, have a word with your corporate sponsors.


Tyler Durden's picture

"Guantánamo Forever?" - Congress Passes $662 Billion Defense Bill, Aka The NDAA

Congress just passed the National Defense Authorization Act in a 283-to-136 vote. 190 Republicans and 93 Democrats voted for; 43 Republicans and 93 Democrats voted "against." Prepare to be arrested, without charge, simply because someone "up there" believes you engage in "terroristy" stuff. Good luck proving them wrong.


Tyler Durden's picture

Presenting Steve Cohen's Complete Unsealed Confidential Deposition Transcript

Over the past two days, Reuter's Matt Goldstein and Jennifer Ablan have been poring over a formerly confidential transcript of one Stevie (but don't call him that) Cohen, better known as the man who created "information arbitrage", the investor's "edge" and made expert networks very rich, if only briefly. For their extended series on the topic read here, here and here. And while they have done an admirable job of compiling the tasty morsels so far, there is far more here than meets the eye so we open it up to our extended and very much erudite financial audience to find that one slip which the various AGs and DAs have been unable to isolate in years of alleged 'investigatoring'. As Goldstein says: "there is plenty of great and illuminating stuff in the 242 pages of deposition testimony Reuters obtained through a court motion to unseal documents in the civil lawsuit. As we noted in our story, Cohen is pressed at great length for his views on insider trading—he thinks the laws are “vague”. And as we highlighted in our blog, there’s even an amusing little feud between the lawyers over how the SAC Capital founder should addressed. Still, it makes you wonder what was said by Cohen in the more than 400 pages of deposition transcript that wasn’t unsealed. And we’d love to see Cohen on videotape as sometimes body language can be revealing." Perhaps a key point of focus is whether Stevie has himself received tips from the likes of Hank Paulson in the past about future government policy - something we know has already happened albeit with people closer to his Goldman Diaspora, a ring the former Gruntal trader never felt too comfortable with. Because it appears there certainly are hints in that regard, and if indeed proven that SAC was among the "preferential" funds of the administration in its market moving ways, then there would be no surprise why any attempts to find wrongdoing at SAC have so far been duds.


Tyler Durden's picture

Roubini Asks of ‘Goldbugs’ on Twitter “Where is 2,000?”

How much further might gold fall? Market momentum is a powerful force and therefore further weakness is quite possible.  Support is at the 200 day moving average at $1,619/oz. Below that is the psychological level of $1,600 per ounce and the 250 day moving average of $1,571/oz. Price resistance was seen at the $1,570/oz level between late April and July 2011 (see chart) and this level could become support as is often the case in bull markets. It is important to note that gold’s falls have been primarily dollar related and gold has fallen by a lot less in pound and in euro terms. Most analysts of the gold market remain of the view that this is another correction and that the medium and long term uptrend will continue due to significant investment, store of wealth and central bank demand due to geopolitical, macroeconomic, systemic and monetary risk. One analyst who appears to have a very different view regarding gold is world renowned economist Nouriel Roubini.  The Chairman of Roubini Global Economics has again taken to Twitter to engage in some name calling and to appear to question gold’s recent price action and whether gold may reach $2,000/oz.


Tyler Durden's picture

Frontrunning: December 14

  • Austrian Banks Face Hungary ‘Debt Slave’ Revolt (Bloomberg)
  • Steve Cohen calls insider trading rules "vague" (Reuters)
  • ‘Haircut’ dispute risks delaying Greek rescue (FT)
  • Reid Says He Will Block Republican Tax Cut (Bloomberg)
  • Bernanke Signals Europe Risk Keeps Fed Ready to Ease Further (Bloomberg)
  • Euro Crisis Shows Dutch Converge With Germany (Bloomberg)
  • Obama raises stakes over $200bn stimulus renewal (FT)
  • EU treaty hopes come under strain (FT)
  • Beijing urged to bolster house sales (FT)

Tyler Durden's picture

Euro Drops Under 1.3000 Following Record High Yield On Italian 5 Year Auction

And so the inevitable has happened: the European currency finally fell below that strange attrractor level of 1.3000 following an Italian 5 year auction that despite the "technical" clarification that it would be of Off The Run bonds, still ended up being the highest rate ever paid for a 5 Year piece of Italian paper. As Reuters explains, the euro slipped versus the dollar on Wednesday after Italy paid a euro era record yield of 6.47 percent to sell five-year debt, adding to concerns that an EU summit last week had made little progress in tackling the region's debt crisis. More: "Italy paid a euro era record yield of 6.47 percent to sell five-year paper at its first auction of longer-term debt after the EU moved towards greater fiscal integration at last week's summit, but failed to convince markets it can solve the debt crisis. The average yield at Wednesday's sale compares with an auction rate of 6.29 percent Italy paid a month ago, which was also a euro lifetime record high. Rome sold 3 billion euros of the Sept. 2016 BTP bond, the top of an unusually small range of 2 billion to 3 billion euros for the sale. Italy has trimmed the size of its auctions in reaction to market pressure but it will have to step up issuance in coming months if it is to meet a gross funding goal of around 440 billion euros next year." And result: EURUSD < 1.3000 which means bad things for the record high correlated stock market... and the Christmas Rally.


Tyler Durden's picture

CME Executive Chairman Terry Duffy Throws Jon Corzine Under The Bus, Implies The "Honorable" Governor Lied Under Oath

Following another boring day of hemming and hewing, during which Corzine repeatedly exhibited unbearable amnesia and said he had no knowledge of virtually anything until Sunday night, here comes the CME Executive Chairman Terry Duffy, under oath, with what Roberts said "is a bomb" statement which basically says that Corzine lied under oath. Specifically, according to Duffy's remarks during the Q&A, an MF Global employee, a woman, advised the CME that Corzine had been aware of a $175 million loan made to Euro affiliates just days prior to the bankruptcy: a loan which effectively was that of commingled customer accounts, and more importantly a refutation of previous statement under oath by the man who was "financial advisor" to none other than the vice president of the United States who said he did not know about this until late on Sunday. This was not in his prepared testimony. What was is that "Transfers of customer funds for the benefit of the firm constitute serious violations of our rules and of the Commodity Exchange Act." And now we know that according to the Chairman of the CME, the MF Global head lied about the timing of the disclosure. And where it gets worse, is that MF Global was well aware of this, it told the CME to it knew about the segregated account money, and most importantly, it told the CME to stop looking for the segregated account money! Because being the firm of Obama's handler apparently makes you equivalent with the law.

Continue watching the hearing here as it is i) getting interesting and ii) the first perp walk of an ex-Goldman criminal may finally be approaching - link


Tyler Durden's picture

EUR Tumbles To Lows On Report Merkel Rejects Raising Upper Limit On ESM Bailout Mechanism

Having surged on earlier speculation that the Fed may hint at QE3, and follow up reports from RanSquawk that the Straits of Hormuz are either closed or in process of doing so, it is now time for the roundtrip, after Reuters just reported that hopes of EFSF-like expansion for the ESM have been dashed.


Summary: Risk On -> Risk Off


Tyler Durden's picture

US Drones Dropping Like Flies

Perhaps it is time for the stick-jockeys who are controlling US drones to put down the twinky and focus a little more. Reuters is reporting that yet another US drone has crashed, this time while it was vacationing in the Seychelles. The Seychelles Civil Aviation Authority (SCAA) confirmed the incident and said that the plane was on a "routine patrol" and had crashed because of mechanical failure. On the bright side, this has to be good for GDP as Durable Goods orders (or maybe they should be repositioned as non-durable) will get a bump as General Atomics gets some new Predator orders.


Tyler Durden's picture

Gartman Flip Flops With Gold Support at 200 DMA at $1618/oz, And Massive Chinese Demand

Gartman is a trader and is followed by hedge funds and prop desks of banks and does not appear to understand the proven diversification benefits gold brings to a portfolio. In November 2009, Gartman said that there “is a gold bubble.” Gartman said that to say otherwise was “naïve”. Gold was trading at $1,100/oz at the time. In August 2011, Gartman said that gold was the biggest bubble of our lifetime. Inconsistently, only last week, Gartman said on CNBC that he is “long gold” and has been for “six or seven months”. Gartman’s short term calls on gold and silver have been wrong more often than not in recent years. He tends to turn bearish after gold has already experienced a correction and is close to bottoming. Those wishing to diversify and add gold to their portfolio will use his call as a contrarian signal that we may be getting close to a low in this most recent sell off. Our advice is to ignore gurus, price predictions and noise – up and down – and focus on the real fundamentals driving the gold market.


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