Stress Test

How To Make The Financial System Radically Safer

The best way to regulate banks is to turn over regulatory control to the very exacting, and unsympathetic, order of the market. That is to have little to no regulations and one very specific and uncompromising provision: "There will be absolutely, unconditionally, categorically, no government funded bailouts."

Fannie, Freddie Would Need $100BN Bailout In New Financial Crisis

Fannie Mae and Freddie Mac would need as much as $100 billion in bailout funding in the form of a potential incremental Treasury draw, in the event of a new economic crisis which sends the S&P some 50% lower and results in a failoure of their largest counterparty.

40% Of The Fed's Interest On Excess Reserves Is Paid To Foreign Banks

Now that Congress is finally scrutinizing the $4.5 trillion elephant in the room, it may be interested to know that approximately 40%, or $838 billion in reserves parked at the Fed belong to foreign banks. This means that the Fed is giving a $10 billion (and rising) annualized subsidy to non-US banks every year.

Banks Are Saving Stocks As FANG Flops Again, DAX Hits 2-Month Lows

Yesterday's 'dead cat bounce' in FANG stocks has been erased as broad-based weakness stemming from increasing recognition of hawkish central bank chatter is hitting stocks and bonds. Bank stocks bounce after stress test 'success' are saving some indices from bigger losses.

Frontrunning: June 29

  • Global Bonds Gyrate as Investors Try to Parse Central Banks’ Next Stimulus Moves (WSJ)
  • Republicans struggle to salvage healthcare effort (Reuters)
  • States' Medicaid spending to increase (Reuters)
  • Apple's iPhone turns 10, bumpy start forgotten (Reuters)
  • Fed’s Stress Tests: All Banks Cleared on Payouts to Shareholders (WSJ)

Euro Surges, Yields And Stocks Rise As Central Banks Deliver Coordinated Message

The euro soared to the highest level in over a year while bond yields and global shares also climbed, as an ongoing barrage of coordinated hawkish comments from central banks signaled the era of easy money might be coming to an end for more than just the United States. S&P futures were fractionally in the green following the best day for US equities in two months.