Reuters

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JPM Refuses To Comply With Broad PFG Subpoena





Last week we wrote that we were not surprised to learn that the first party of interest in the PFG bankruptcy was "none other than JPMorgan, which together with various other banks, will be the target of a subpoena by the PFG trustee." We added "How shocking will it be to find that Dimon's company is once again implicated in this particular episode of monetary vaporization." It appears that we were not the only ones shocked to learn that Jamie Dimon's firm could make a repeat appearance again when it comes to missing client money: JPM itself seems to not have expected this development. The result, as just reported by Reuters: "JPMorgan Chase & Co on Monday sought to limit the power the bankruptcy trustee for Peregrine Financial Group has to subpoena information from financial institutions that did business with the failed brokerage." Why, whatever may JPMorgan be hiding, and whyever is it taking preemptive steps from preventing such information from leaking into the public domain: because it is too "burdensome" - it is only logical that Jamie can not dedicate one person of his 261,453 employees to this modest matter. No fear though: even if it is found that just like in the MF Global bankruptcy JPM may have overreached just a tad when it comes to money that doesn't belong to it, the CFTC can just say that as a result of an extensive 4 year investigation, JPM was found to have done nothing wrong, and if the public can please already disperse.

 
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Fake Tweets About Syrian President Assad's Death Cause All Too Real Spike In Crude And S&P





And the update comes as expected: RUSSIAN INTERIOR MINISTRY DENIES ISSUING ANY STATEMENT ON ASSAD'S HEALTH VIA TWITTER: REUTERS

Moments ago, the apparently fake twitter account of the Russian minister of the interior Vladimir Kolokoltsev (which was created days ago) sent out the three completely unconfirmed and uncorroborated tweets stating that Syria's president Assad "has been killed or injured" which the market, in all its ultra-high speed trading wisdom, took and ran with, not waiting for any actual confirmed news to be released (because obviously Russian official channels have never heard of news wires such as Interfax).End result: WTI soaring by over $1 to just shy of $92, on what very well may be completely fake news, dragging the entire market higher with it.

 
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Frontrunning: August 6





  • Monti Warns of Euro Breakup as Tussle Over Spain Aid Hardens (Businessweek)
  • Italy doesn't need German cash, Monti tells Germans (Reuters) - at least we know who needs whose cash...
  • Spain has time to Wait for Clarity on EU Aid -Econ Min (Reuters) - which came first: the Spanish bailout request or the denial to need a Bailout request? Ask the Spanish 2 year...
  • Bundesbank Weidmann’s opposition to a proposed new wave of ECB bond purchases has support of Merkel’s CDU - Volker Kauder
  • China media tell U.S. to "shut up" over South China Sea tensions (Reuters)
  • Top Chinese Leaders Gather in Annual Summer Conclave (WSJ)
  • Greece Agrees With Troika on Need to Strengthen Policy (Bloomberg)
  • Coeure Says ECB Should Look at Getting Loans Into Real Economy (Bloomberg)
  • Italy Central Banker Sees Potential Rate Cut as Euro Economy Slows (WSJ)
  • A Dose of Dr. Draghi's 'Whatever It Takes' (WSJ)
  • Greek bank head sent savings abroad (FT)
 
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Shell Pulling Cash Out Of Europe Due To "Shift In Willingness To Take Risk"





Even as the ECB is desperately doing its best to stick a finger in every hole in the leaking European dam, in which just like in the US failed monetary policy is a substitute for sound fiscal one, and in which the pattern of interventions and cause and effect will now follow that of Japan until the bitter end, others are not waiting around to see the results. Reuters reports that Royal Dutch Shell is pulling some of its funds out of European banks "over fears stirred by the euro zone's mounting debt crisis, The Times reported on Monday." And shell is not the only one: more and more institutional are actively preparing to lock up their cash on a moment's notice, an eventuality which can be seen best at the ECB itself, where deposits with the ECB (collecting 0.00%), dropped to just €300 billion the lowest since 2011, while the ready for withdrawal current account saw holdings rise to a record €550 billion overnight, a €20 billion increase overnight. And so the cycle repeats anew, and Gresham's law rises to the surface, as bad money pushes out good money, and in return the situation deteriorates once more, until the next time much more than just harsh language out of the ECB will be needed just to preserve the status quo.

 
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ECB Saves Greece From Certain Bankruptcy. Again





A few days ago we wrote that "Greece Runs Out Of Money. Again" because it did. The country, which is permanently locked out of the bond markets, would be down to a negative cash balance as soon as its August bond payment to the ECB was made. The reason is that the Troika continues to delay its decision. whether or not to hand over Greece its next monthly allowance. So with the country threatening to once again be on the front page as math rears its ugly head, the ECB has decided to take the bold step and admit that in lieu of even remotely credible collateral pledged and repledged in the ponzi repo system, the ECB has no choice but to expand the universe of eligible "collateral" against which it will provide cash. From Reuters: "The ECB's Governing Council agreed at its meeting on Thursday to increase the upper limit for the amount of Greek short-term loans the Bank of Greece can accept in exchange for emergency loans, the newspaper said in an advance copy of the article due to appear in its Saturday edition."

 
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Europe's Largest Insurer Allianz Not Amused That Central Banks Are Involved In Liborgate





What a difference a revisionist market rally makes. Remember when everyone was involved in Libor manipulation? No? Curious what a few hundred DJIA points will do especially when the corporate revenues and supporting them simply are not there, and one goes all in on multiple expansion. One entity which, however, has not forgotten about Lieborgate is Pimco parent and Europe's largest insurance firm, Allianz. And they are not happy: "Europe's biggest insurer, Allianz, is worried about the role central banks may have played in an interest rate rigging scandal that has enveloped some leading international lenders, the insurer's chief financial officer said on Friday. "We do not find it funny, what has happened, in particular the arising implication that it is not just the banks but central banks being involved in this," Oliver Baete told a conference call with analysts. "That really gives us cause for concern," Baete added." Of course, neither the ECB nor the FED could care much, considering that Allianz would be immediately insolvent if the same central banks who manipulated Libor stopped manipulating interest rates... which is implicitly what Allianz is unhappy about.

 
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Frontrunning: August 3





  • U.S. nuclear bomb facility shut after security breach (Reuters)
  • EU Commission Welcomes Greek Reform Pledge, Wants Implementation (Reuters) -> less talkee, more tickee
  • China Cuts Stock Trading Costs to Lift Confidence (China Daily) as France hikes transactions costs
  • Holding Fire—for Now—but Laying Plans (WSJ)
  • ECB-Politicians’ Anti-Crisis Bargain Starts to Emerge (Bloomberg)
  • Dollar falls back as non-farm payrolls loom (FT)
  • Ethics Plan to Raise Consumer Confidence (China Daily)
  • Brazil backslides on protecting the Amazon (Reuters) - fair weather progressive idealism?
  • Japan Foreign-Bond Debate May Boost BOJ Stimulus Odds (Bloomberg)
  • Japan’s Lower House Passes Bill to Let Workers Stay on to 65 (Bloomberg)
 
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Scary, Scary Knight: Prime Brokers Start Pulling Cash





Update 2: and spreads some more: Sterne Agee Not Routing Trades to Knight Capital

Update: it spreads: Fidelity Investments Not Routing Orders Through Knight: Reuters

Earlier, when interviewed by Bloomberg TV, Knight Capital CEO refused to say, prudently under advice of counsel, if any counterparties have cut off their lines to the fallen Knight. Well now we can confirm with 100% certainty that at least one Prime Broker has terminated all funding to and fro the firm which may not have much time left. We are certain it is not the only one. And now the scramble for a deal is on. If Lehman and MF Global are any indication, the odds are good to quite good. Inversely of course, just like Knight's berserk algo yesterday.

 
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Live Webcast Of Draghi Press Conference - Draghi Punts, ECB "MAY" Act In Coming Weeks





Summary of what has been said so far: Nothing, just as we said last week. Draghi basically repeated the June 29 summit bottom line that the EFSF should buy PIIGS bonds, the ECB "May" act, which means Germany is still not on board, and that after talking markets up by 5%, he has delivered nothing but a delay. This is a huge blow to his and the ECB's credibility.

* * *

With speculation ripe out of everyone from Reuters to the FT about what Draghi may or may not say, with or without Germany's blessing, the best at this point is just to hand over the microphone to the former Goldmanite. Here is the live webcast of Draghi's press conference. Pay attention as a word out of place will send the EURUSD plunging by 200 pips. Or soaring.

 
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Draghi vs. Weidmann Round 1





Investors now look to the European Central Bank’s rate decision at 1145 GMT.  If “Super” Mario Draghi doesn’t come out with a loaded arsenal (bold intervention), then the markets will be disappointed.  Mario Draghi will be confronting his colleague and nemesis in the ECB Jens Weidmann. Weidmann is the Head of THE Bundesbank, a former Merkel economics advisor, and an ECB governing council member who has just 1 vote out of the 23 today at the ECB MEETING in Frankfurt. However Weidmann sees his role differently.  "I certainly would not say that we are just one of 17 central banks [in the Eurozone]," he said in an interview published on Wednesday. "We are the largest and most important central bank and we have a greater say than many other central banks in the Eurosystem. This means we have a different role." The disagreement here lies with the fact that the Germans are against the ECB becoming like a US Federal Reserve in Europe. Weidmann feels it would be wrong to give the ESM a banking license allowing it to tap large quantities of funds from the ECB. Can “Super” Mario make the jump happen? Time will tell.

 
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Frontrunning: August 2





  • What's wrong with this headline: Obama authorizes secret support for Syrian rebels (Reuters)
  • Hilsenrath promptly dusts off ashes of sheer propaganda failure, tries again: Fed Gives Stronger Signals of Action (WSJ)
  • Fed Hints at Fresh Action on Economy (FT)
  • Fed Poised to Step Up Stimulus Unless Economy Strengthens (Bloomberg)
  • IMF Chief Lagarde Praises Greece, Spain for Efforts (Bloomberg) - efforts to beg as loud as possible?
  • US sanctions against bank 'target' China (China Daily)
  • Trimming China's Financial Hedges (WSJ)
  • ganda central bank cuts key lending rate to 17 pct (Reuters)
  • Greece Agrees €11.5bn Spending Cuts (FT) - Agrees? Or does what a good debt slave is told to do
  • Germany Retains Stable AAA Outlook at S&P After Moody’s Cut (Bloomberg)
  • Spain’s Bond Auction Beats Target as Borrowing Costs Rise (Bloomberg)
 
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Deutsche On Draghi: "In Short It Doesn’t Look Like We Will Get Any Explicit Action Today"





With everyone confused over why Draghi has put himself in a position from which he can't deliver and satisfy the market one hour ahead of the ECB announcement, and everyone placing their last bets on the EUR and the SPGBs before the ECB press release hits without really having any clue what the Italian has in store that will make both the EuroStoxx and the Bundesbank happy, here are some additional last minute "insights"  from Deutsche Bank that promise not to clarify the situation all that much. Because while "We'll be honest and say we've been totally confused about what to expect from the ECB ever since Draghi's speech last Thursday" DB does say: "In short it doesn’t look like we will get any explicit action today." Clear as mud.

 
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Hyper Mario And Germany On Verge Of All Out Warfare





Back in March we wrote "Mario Draghi Is Becoming Germany's Most Hated Man" for one reason: a few months after the former Goldman appartchik was sworn in to replace Trichet with promises he would not "print" Draghi did just that in a covert way via $1.3 trillion in LTROs, that immediately hit the economy and sent inflation across Europe soaring. It now appears that the simmering hatred between the two is about to upshift to a whole new level, with the threat of open escalation finally arriving. Because if Sueddeutsche Zeitung is correct, via Reuters, in precisely 12 hours, Draghi will proceed with a plan that has neither Germany's nor Buba's blessing, in the process effectively isolating the only remaining solvent country in Europe, and its de facto paymaster, and forcing Germany to take a long, hard look at the exit sign (which, however, as reported earlier, with each passing day that drags Germany's economy is becoming less of an unthinkable outcome). To wit: "Draghi is planning concerted action using both the ECB and the future euro European Stability Mechanism (ESM) to purchase sovereign debt from Spain or Italy in order to help push down borrowing rates for those two countries." There is one problem: "highly doubtful that the German government would agree to Draghi's approach. The Bundesbank also is likely to reject the idea, the paper added."

 
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