The Greco-Germanic war of words continues... Having pissed off The Greeks with his "Troika" remarks, Germany's Schaeuble went on today to more ad hominum attacks by reportedly calling the Greek FinMin "foolishly naive." The Greek ambassador has 'officially' complained to "friend and ally" Germany about the personal insult. But The Greeks had the last laugh, as first Varoufakis and then Tsipras explained respectively that "Greece would never pay back its debts," and "Greece cannot pretend its debt burden is sustainable." The German response, via tabloid Bild, "there must be an end to this madness. Europe must not be made to look stupid."
"Mario Draghi and the ECB’s manipulation of asset prices makes Greenspan’s Fed look like a rank amateur. More shocking though than the plunge in the euro, and more shocking even that 25% of sovereign eurozone bonds now trade in negative territory, is what has happened to eurozone equity valuations. For, as we approach the sixth anniversary of the US cyclical bull market, the PE expansion of eurozone equities is simply off the scale!" - Albert Edwards
It appears Washington is losing some control among its allies. Amid a flurry of high-level visits to Vietnam last year, the US has been pouring in aid and assistance in health, education, landmines clearance, scholarships and nuclear energy. The reason is now becoming clear. As Reuters reports, Vietnam has been allowing Russia to use a former US military base to refuel nuclear-capable bombers as it rattles its sabre over the Asia-Pac region.. and America would like that to stop: "we have urged Vietnamese officials to ensure that Russia is not able to use its access to Cam Ranh Bay to conduct activities that could raise tensions in the region." All that was missing was the "or else."
Warren Buffett's “financial weapons of mass destruction” - how are you?
Just hours after Ferguson, MO police chief Thomas Jackson submitted his resignation - the latest in a string of Ferguson officials to resign in the week since a scathing Justice Department report found widespread racially biased abuses in the city's policing and municipal court, and also found that the city used police as a collection agency, citing traffic citations to black residents to boost city coffers through fines, creating a "toxic environment" - two police Ferguson officers were shot during a protest outside Ferguson, Missouri police headquarters early on Thursday.
- As reported here first: The U.S. Has Too Much Oil and Nowhere to Put It (BBG)
- Dollar Drops From 12-Year High as S&P Futures, Bonds Gain (BBG); Dollar Bulls Retreat From 12-Year High to Euro With Fed in View (BBG)
- Clinton Private Email Plan Drew Concerns Early On (WSJ)
- ECB Bond Buying Not Needed With Economy Improving, Weidmann Says (BBG)
- China Feb new yuan loans well above forecast (Reuters)
- U.S. probing report Secret Service agents drove car into White House barrier (Reuters)
- Kerry tells Republicans: you cannot modify Iran-U.S. nuclear deal (Reuters)
- PBOC Pledges to Press on With Rate Liberalization Amid Slowdown (BBG)
- China Prepares Mergers for Big State-Owned Enterprises (WSJ)
Bank Of Korea Unexpectedly Cuts Interest Rate To Record Low 1.75%, 24th Central Bank To Ease In 2015Submitted by Tyler Durden on 03/11/2015 21:19 -0400
The currency war salvos just keep on coming. Moments ago the BOK unexpectedly (the move was predicted by just 2 of 17 economists polled by Bloomberg) cut its policy rate from 2.00% to a record low 1.75%, in what is clearly a full-blown retaliation against the collapse currency of its biggest export competitor, Japan, whose currency has cratered to a level that many in South Korea believe has become a direct subsidy for its competing exports. As such the only question is why the BOK didn't cut earlier. And following the surprise rate cut by Thailand earlier today, the "surprise" South Korean rate cut means there are now 24 easing policy actions by central banks in 2015 alone.
China remains an export economy no matter how hard they try to convince the world they are moving otherwise. The idea of creating internal “demand” as a means to extricate marginal changes from everybody else is undoubtedly a good idea, even a noble one, but the reality of China as it exists top-down isn’t conducive for such a transformation. Further, that just isn’t realistic under the global conditions that have persisted since the Great Recession was declared over. In that respect, there isn’t much to separate what is occurring now from the Great Recession itself.
US To Send Drones, Humvees To Ukraine, Boost Russia Sanctions As Moscow May "Deploy Nuclear Weapons In Crimea"Submitted by Tyler Durden on 03/11/2015 19:24 -0400
So much for the second Minsk ceasefire. A few hours ago, the US returned to its strategy of escalating Russian "costs" when it placed sanctions on eight Ukrainian separatists and a Russian bank, warning that recent attacks by rebels armed by Russia violated a European-brokered ceasefire in the war-torn country. The Russian response to the latest sanction pending, but the response may have been hinted at earlier today when an official from Russia's Foreign Ministery said the nation has the right to deploy nuclear arms in the Black Sea peninsula of Crimea. And finally, indicating that the semi-hot escalation between the US and Russia is close to getting out of control, Vice President Biden told Ukraine's president Wednesday the U.S. will send more aid to the country, which U.S. officials said will include small drones and armored Humvees.
Fed's Fisher: "[the stronger the dollar]... the better it is for our companies big and small to go out and hire American workers."
Goldman's Cohn: "the effects of the soaring dollar are just starting to be felt; for US exports, manufacturing, and jobs - it is not going to be positive."
"Much of the money for buybacks and higher dividends is coming from the banks issuing preferred shares. To investors they look a lot like bonds that pay interest. But for regulators, preferred shares serve as a cushion against any future losses, in part because they never have to be repaid," Reuters notes, suggesting TBTFs are effectively robbing Peter to pay Paul.
Whether the world's central banks are 'co-operating' or competing is up for question but the tsunami of policy easings so far this year is making the 'surprise' rate cut, unsurprising. As Bloomberg reports, Thailand today became the latest to execute an unexpected interest-rate cut, bringing the total to 23 in 2015. While only 6 of 22 economists expected it, the Southeast Asian country -- a onetime export powerhouse that’s seen its manufacturing mojo dim somewhat in recent years amid historic flooding and political infighting -- lowered its main rate to 1.75%. "The surprise move suggests the economy is much weaker than expected," noted one analyst, adding that "it is negative for the baht and there’s concern that lower rates may lead to more outflows as the U.S. is expected to raise rates."
In an attempt to secure some stability, i.e., funds, now that Venezuela is no longer able to tap Chinese bailout loans as last-recourse funding, Reuters reported that Venezuela's central bank is in talks with Wall Street banks to create a gold swap that would allow it to monetize some $1.5 billion of the metal held as international reserves, according to government sources familiar with the operation. Under the swap, the central bank would provide 1.4 million troy ounces in exchange for cash.
"Neither Central Bankers Nor Market Participants Can Extract Any Information From Current Bond Valuations"Submitted by Tyler Durden on 03/11/2015 09:46 -0400
All is not what it seems. Markets are upside down. Some ‘risk?free’ assets can be purchased for a guaranteed loss. EU asset markets (ex?Greece) are soaring at the same time that EU disunity is rising. An interest rate hike by the Fed is likely to cause a rally in Treasury bonds and a steep correction in US equities.