Stress Test

US Banks Are Crashing

"Fortress balance sheets"?  Brexit contagion is spreading as USD liquidity and counterparty risk in the interconnected global financial system has reached US banks with Goldman at 3 year lows and BofA and Citi plunging over 12%. This happens just two days after the Fed released its latest stress test results finding that none of the 33 banks tested would need additional capital in case of a "severe" financial crisis.

Key Events In The Coming Week: All About Brexit

With global markets gyrating on every piece of news surrounding the Brexit drama, what’s the timetable for UK-related (and all other macro) events this week and beyond?

European Stocks, US Futures Extend Slide On UK Chaos, Pound Carnage

With global asset correlations once again approaching 1, overnight stocks have been trading in broadly "risk off" mode, following every twist of pound sterling and the rapidly deteriorating British financial situation as "chaos infects" virtually all markets, from China, to European banks, to US equity futures.  As a result of ongoing aftershocks from the Brexit vote, coupled with the sudden political chaos in UK politics, where both parties now seem in disarray, with the pound has extended its selloff to a fresh 31-year low dropping below the Friday lows while European equities are dropping to levels last seen in February.

Stress Test 2016: Fed Says All 33 Banks Can Surive 70 VIX Without Needing Outside Capital

While hardly coming as a surprise to anyone, moments ago the Fed announced that all 33 banks have enough capital to withstand a severe economic shock, though Morgan Stanley trailed the rest of Wall Street in a key measure of leverage, Bloomberg reports. The biggest bank cleared the most severe scenario handily, with the exception of Morgan Stanley whose projected 4.9% leverage ratio tied for last place alongside a Canadian bank’s U.S. unit, falling within a percentage point of the 4 percent minimum. As a result of today's "test result" many banks will likely win regulators' approval next week to boost dividends.

This Is What Yellen Told Congress When Asked If The Fed Is Boosting The Stock Market

ROYCE: So Madame Chair, is having a stable and rising stock market a third pillar or the Federal Reserve's monetary policy if I go back to what I originally heard Ben Bernanke articulate?
YELLEN: It is not a third pillar of monetary policy. We do not target the level of stock prices. That is not an appropriate thing for us to do.

The British Referendum And The Long Arm Of The Lawless

The true fear lies with those who stand to lose the most, in this case the countries who hold the Euro currency together with the thinnest of threads. As Britons head to the polling booths, they should hold their heads high, rightly insulted at the feigned notion that the UK cannot stand on its own. After all, much of the civilized world we take for granted today is rooted in the British rule of law.

UK Banks Told To Model Capital Controls, Bank Runs, 20% Devaluation

"With the encouragement of regulators, some lenders, including HSBC, have even run modelling for the imposition of capital controls, according to people briefed on the exercise. Banks said regulators had demanded a stress test that modelled for a 20 per cent fall in sterling."

Why Are So Many Bankers Committing Suicide?

"Yes he killed himself. But there’s a question: could it be suicide by extortion... There’s a couple suspicions I have..." - son of Deutsche Bank exec William Broeksmit

Futures Flat Ahead Of Payrolls As Gold Continues Surge After Entering Bull Market

There is an odd feeling of Deja QEu this morning, when with two hours to go until the February payrolls, global stocks are modestly higher, US equity futures are likewise slightly higher on the back of a weaker dollar (or perhaps stronger Euro following a Market News report according to which the ECB may disappoint, more on that shortly), but it is gold that is breaking out, and after entering a bull market yesterday when it rallied 20% from its December lows gold has continued to surge, rising as high as @1,274 in early trading a price last seen in January 2015.

Now It's China's Turn To Crash: Shanghai Plunges 6.4% Overnight

In recent weeks Chinese stocks remained relatively resilient, levitating quietly day after day. That all changed overnight when the Shanghai Composite plunged by 6.4% with the drop accelerating into the close. This was the biggest drop in over a month and was big enough to almost wipe out the entire 10% rebound from the January lows in one session.

Maybe Albert’s Crazy Forecast Is Not That Crazy After All

"Albert Edwards sees the possibility of a 75% decline from the peak if all his fears were to manifest themselves. Now many view this as an incredible and somewhat outlandish forecast, yet it is not that unreasonable in our view.... These types of declines would leave indices down rough 60-65% from peak, and would send leverage ratios skyrocketing."

Weekend Reading: The Awakening

"More monetary stimulus, wherever it is in the world, isn’t the answer for a global economy still trying to find a new growth path. Pay attention to bonds and ignore the sirens of the stock market."