en The Federal Reserve Has Declared The Winner In The Generational Financial War <p><a href=""><em>Submitted by Charles Hugh-Smith of OfTwoMinds blog</em></a>,</p> <p><i>The policy of safeguarding Boomer benefits with asset bubbles will lead to the destruction of the unprepared, the unwary and those who foolishly trusted our &quot;leadership&quot; and central bank to tell them the truth.</i></p> <p><b>Though it is exceedingly politically incorrect to mention it publicly, a financial war between the generations is being fought in the U.S.</b> and every other developed nation that has promised social welfare benefits to its burgeoning class of retirees.</p> <p>The war is being fought on multiple fronts: political promises, interest rates, housing, central bank policies and official rates of inflation, to name a few of the top battlefields.</p> <p><b>Though no one in power will state this publicly, the Federal Reserve has already declared the winner of the generational war: the Baby Boomers won and Gen-X and Gen-Y lost.</b> Fed policies insure the Boomers will benefit from financial bubbles inflated by the Fed, and the following generations will lose--not just this year or next year, but for decades to come.</p> <p><b>Any nation that offers its retirees social welfare benefits (pensions and healthcare) faces a no-win demographic crunch:</b> the number of retiring people entering the class of beneficiaries far exceeds the number of additional full-time jobs being created. In other words, it&#39;s not just a matter of having enough young people to support the rapidly expanding cohort of retirees--there must be enough good-paying full-time jobs for the young people so they can pay high taxes to fund the retirees&#39; benefits and support their own consumption/saving.</p> <p><b>Let&#39;s cover the fundamentals of the mismatch between what was promised to retiring Baby Boomers and the generations that must support their retirement.</b></p> <p><b>The fact is that the number of full-time jobs paying more than minimum wage has stagnated while the number of retirees qualifying for pensions and healthcare benefits has soared.</b> In the good old days of expansion, there were roughly 10 full-time workers for each retiree drawing social benefits (Social Security and Medicare).</p> <p>The ratio fell to 5-to-1, then to 3-to-1, and is now 2-to-1: <b>that is not a ratio that is sustainable without crushing tax burdens on the young.</b></p> <p><img align="middle" border="0" src="" /></p> <p>Estimates are even worse in other developed nations. In Europe, the ratio of retirees over 65 to those between 20 and 64 will soon reach 50%--and that&#39;s of the population, not of people with full-time jobs paying taxes to fund social welfare programs. (<i>source: Foreign Affairs, July/August 2014, page 130</i>)</p> <p><b>All government social welfare programs are pay-as-you-go.</b> The Trust Funds touted in propaganda are illusions, backed by nothing but the promise to sell more Treasury debt.</p> <p><a href="" target="resource"> The Problem with Pay-As-You-Go Social Programs: They&#39;re Ponzi Schemes</a> (November 5, 2013)</p> <p><b>While the costs of defined-benefit programs such as Social Security can be extrapolated relatively accurately, the program&#39;s revenues cannot be predicted because they come from wages.</b> If recession slashes millions of jobs, or earned income declines as wage increases slip below the rate of inflation (which is precisely what&#39;s been happening for the past 6 years), revenues won&#39;t meet wildly optimistic forecasts that presume high, sustained wage and employment growth forever.</p> <p><b>No official forecast of tax revenues supporting Social Security and Medicare ever factor in a recession, much less a decade or two of declining wages.</b> If the forecasts were more realistic, the programs would be revealed as insolvent.</p> <p>That is of course a political impossibility, so delusional forecasts are issued and accepted as &quot;real&quot; lest the unpalatable reality be recognized.</p> <p><b>Defined-benefit programs such as Social Security have costs that can be estimated with some accuracy, but programs such as Medicare are open-ended: their costs cannot be predicted.</b> Every attempt to control the ballooning costs of healthcare benefits for the retired lowers the rate of growth for a year or two, and then the costs soar once again as the number of beneficiaries and costs of delivering ever-expanding services both explode higher.</p> <p><b>As a result of these fundamentals, the Powers That Be face a dilemma:</b> they cannot reveal the insolvency of these huge social welfare programs, even though the insolvency is guaranteed by demographic and global-economic dynamics.</p> <p><b>There are a very limited number of financial solutions to this dilemma.</b></p> <p>1. Taxes can be raised. This is problematic for several reasons. One is that taxes on the self-employed and upper-middle class are already 40%-50%, as I have outlined many times. Two, the number of &quot;wealthy&quot; people (households earning $250,000 or more) is tiny compared to the 100+ million army of social welfare program beneficiaries.</p> <p>Higher taxes and junk fees are already suppressing consumption. Every dollar of additional tax paid is a dollar that won&#39;t be spent by the household that earned the dollar.</p> <p><i>Tax the rich</i> is politically popular but in practical terms, it doesn&#39;t generate the revenues that are expected, for the simple reasons that A) the number of wealthy is relatively tiny and B) the super-wealthy either move their capital elsewhere or they buy political favor-tax breaks.</p> <p>2. Slash benefits and limit the total Medicare costs per beneficiary. Since young people tend not to vote and older people tend to vote, this is a political non-starter, at least until 90+% of young people start voting.</p> <p>3. Raise interest rates to 10+% to encourage saving and to generate a healthy return on pension funds and retirement accounts. The net result of 10% yields is the immediate collapse of the Fed-fueled asset bubbles in housing, bonds and stocks. All these currently bubblicious assets would implode.</p> <p>This is also a non-starter, because the financial/political Aristocracy and owners of these assets would be devastated by the implosion of the bubbles.</p> <p>4. Inflate bubbles in housing, stocks and bonds to boost the value of pension funds, retirement accounts, and government tax revenues from capital gains by pushing interest rates to zero and extending credit to speculators, financiers and marginally qualified borrowers.</p> <p><b>The Federal Reserve has clearly chosen #4 as the only politically palatable solution.</b> While asset bubbles create the politically positive illusion that pension funds can pay the benefits promised, retirement accounts are swelling in value and tax revenues are rising thanks to higher property taxes and capital gains taxes, this legerdemain comes with a heavy price:</p> <p><b>Younger generations are either priced out of assets such as housing or they are forced to buy assets at inflated prices--</b> prices that will inevitably implode as these stupendous speculative bubbles pop. When the bubbles pop, the young people who bought into the illusion that asset bubbles can expand forever will be underwater, and not for a year or two but for a generation.</p> <p><b>The system rewards silence and complicity.</b> Everyone bellying up to the social welfare trough is implicitly encouraged to support the Status Quo, lest their share of the swag be diminished. That the trough will collapse is not important to each beneficiary; what&#39;s important is that their share of the swag is not diminished, even if cuts are the only sustainable way to save the programs from collapse.</p> <p>I am a Baby Boomer, and in 4 short years I will be entitled to belly up to the trough and extract hundreds of thousands of dollars in open-ended benefits (at least for Medicare). <b>I have long proposed that the Boomers collectively fall on our swords and accept the draconian cuts necessary to align our benefits with the cold reality of declining wages and employment.</b></p> <p>The equally cold reality is that the current &quot;solution&quot; impoverishes the younger generations and generates a tsunami of risk that will wash away the Status Quo--including the benefits of the Boomers.</p> <p>Right now, we as a nation are greedily collecting the financial fish flopping around as the coming tsunami pulls the water out of the bay and briefly exposes the sea floor. The Federal Reserve and our self-serving political &quot;leadership&quot; is reassuring us the water has left for good and we are free to collect the free fish forever.</p> <p><b>This is a blatant lie.</b> The demographic and economic tsunami is gathering force over the horizon, and the policy of safeguarding Boomer benefits with asset bubbles will lead to the destruction of the unprepared, the unwary and those who foolishly trusted our &quot;leadership&quot; and central bank to tell them the truth.</p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="521" height="294" alt="" src="" /> </div> </div> </div> B+ Federal Reserve Medicare Reality Recession Swag Mon, 26 Jan 2015 13:46:19 +0000 Tyler Durden 500971 at 2015: The Year of Default <p>&nbsp;</p> <p><a href=""><span style="text-decoration: underline;"><em><strong>Jeff Nielson for Sprott Money</strong></em></span></a></p> <p>&nbsp;</p> <p>Making New Year “predictions” used to be an automatic, beginning-of-the-year exercise, to the point where readers generally expected such pieces from the pundits they follow. However, it is an activity which has died-out somewhat, a casualty of our propaganda-saturated Wonderland Matrix.</p> <p>&nbsp;</p> <p>When all that we can see around us is nothing but fiction and illusion, all events appear to be arbitrary – since we are unable to observe cause-and-effect. By definition; arbitrary events cannot be predicted. Thus these New Year’s “predictions” have become a Fool’s Game, and having been burned once (several times?), most commentators have reached the similar conclusion that this is an exercise in futility.</p> <p><a href=""><img src="" alt="zxcv5" width="543" height="343" class="aligncenter size-full wp-image-10576" /></a></p> <p>&nbsp;</p> <p>Even from a Big Picture standpoint; attempting to estimate when the bubbles will burst, and the Ponzi-schemes will come crashing down is problematic. There is abundant, human history showing that at times of market (or economic) extremes, a collective cultural insanity sets in, allowing such extreme conditions to persist much longer than any rational estimation would predict.</p> <p>&nbsp;</p> <p>&nbsp;</p> <p>In our current Ponzi-scheme economic system, operated by the most ruthless, rapacious crime syndicate in the history of humanity; this cultural insanity has been deliberately induced, through 24/7 brainwashing. The Zombies are never allowed to see/hear opinions or evaluations which run contrary to the brainwashing, thus they never even consider alternative possibilities.</p> <p>&nbsp;</p> <p>&nbsp;</p> <p>“Everyone” (all the drones of the propaganda machine) says that the U.S. “economic recovery” has now turned into an economic boom. “Everyone” says there is no end in sight to this pseudo-expansion, so the Zombies are incapable of even conceiving of a reality different from the “don’t worry/be happy” pablum of the Corporate media. The reality that the U.S. economy is in a Greater Depression which is rapidly worsening is completely invisible to the Zombies – despite the evidence of the economic carnage all around.</p> <p>&nbsp;</p> <p>&nbsp;</p> <p>Yet in spite of all the reasons for not making beginning-of-the-year predictions; there will be a prediction made here this year. Why? Because (imprudently?) a “prediction” was made at the beginning of 2014, in a piece titled Silver Bells. It concludes with the following paragraph:</p> <p>&nbsp;</p> <p>The year 2014 should be the “year of silver”, in terms of fundamentals dictating a correction in prices which dwarfs the modest tripling which took place in 2009. However, if 2014 is not the year of silver; we should feel quite confident in predicting that 2015 will be the Year of Silver Default.</p> <p>&nbsp;</p> <p>While an obvious effort was made to present this as a shared prediction; “we” did not predict that 2015 will be the Year of Silver Default. This was my prediction, and it’s time to either stand by it, or run from it. In this respect; there will be a little bit of both.</p> <p>&nbsp;</p> <p>It would seem (in retrospect) more advisable to label this, more generally, as “the Year of Default” rather than (specifically) the Year of Silver Default. The reason for adding this degree of ambivalence is that in terms of what can visibly be seen in this totally opaque marketplace; all indications have been that the One Bank’s primary, recent concern has been its collapsing gold inventories rather than its collapsing silver inventories.</p> <p>&nbsp;</p> <p>We need merely review recent history to substantiate this conclusion. First the One Bank triggered the greatest “gold rush” in global history in 2013, as (for a variety of reasons) perpetrating the Cyprus Steal induced the most-frenetic wave of gold-buying ever.</p> <p>&nbsp;</p> <p>We know this was of great concern to the banking crime syndicate, since the One Bank immediately intervened. It blackmailed India’s government (through yet more of its rapacious currency-manipulation) into placing almost a complete embargo on gold imports. But the embargo failed.</p> <p>&nbsp;</p> <p>It then ordered its puppets in the U.S. government to engineer a coup in Ukraine, where (among the banksters’ objectives) they promptly looted all of that nation’s gold, as soon as they had placed their own Thugs in power. But clearly that hasn’t even begun to satisfy the One Bank’s sudden lust for gold-stealing.</p> <p>&nbsp;</p> <p>As readers know; it is presently engaged in its most ambitious “operation” (i.e. economic terrorism) to date. This time; its target is nothing less than Russia. While the One Bank has various reasons for presently directing its animosity at Russia, we know one of its primary motivations, because it has been broadcast by the drones of the Corporate media again and again.</p> <p>&nbsp;</p> <p><strong>Traders Betting Russia’s Next Move Will Be To Sell Gold</strong></p> <p>&nbsp;</p> <p>This sudden obsession of Western media drones with Russia’s gold is transparent. As noted in a recent commentary; extortion is one of the One Bank’s favorite enterprises, and one cannot conduct extortion unless one makes their demands known. As also noted; this simply replicates the pattern we saw with India. First the One Bank induced a “currency crisis” in that nation’s economy, and then the Corporate media drones “predicted” that the (so-called) currency-crisis would evaporate as soon as India’s government blocked-off gold imports.</p> <p>&nbsp;</p> <p>With the banksters clearly demonstrating a current obsession with gold (and their own lack of it); what then could have compelled the original prediction that 2015 would be the Year of Silver Default? There were two reasons why, despite the events of 2013, it was “silver default” and not gold default which was predicted at the beginning of 2014.</p> <p>&nbsp;</p> <p>To begin with, we have two fundamental differences between the gold market and the silver market:</p> <p><a href=""><img src="" alt="zxcv7" width="517" height="389" class="aligncenter size-full wp-image-10582" /></a></p> <p>1)&nbsp;&nbsp; Silver has enormous “industrial demand” to go along with massive, global demand for silver as money/jewelry.</p> <p>2)&nbsp;&nbsp; Because of (1), and because many of silver’s industrial applications require only tiny amounts of silver; most of the world’s silver has literally been “consumed” by these applications, with global stockpiles of silver now spread throughout the world’s endless stockpiles of garbage.</p> <p>&nbsp;</p> <p>It is because of these two fundamental differences between gold and silver usage that we see a further differentiation between the two markets. Most of the world’s “gold demand” can (and has been) satisfiedwith paper. Going back to Jeffrey Christian’s infamous gaffe in 2010 at a CFTC hearing; we know that the “gold market” is composed of 1% actual gold, and 99% paper-called-gold.</p> <p>&nbsp;</p> <p>While much of the “investment” demand for silver can (and has been) diluted with identical fraud selling paper-called-silver (and perhaps to even a greater degree than the gold market), the banksters can’t use their fraudulent paper to meet the industrial demand for silver.</p> <p>&nbsp;</p> <p><a href=""><img src="" alt="zxcv6" width="558" height="917" class="aligncenter size-full wp-image-10580" /></a></p> <p>Nor can they use paper to satisfy the demand for real metal originating in Eastern nations, where the One Bank’s various paper-for-metal frauds are entirely ineffectual. Why? Because a vast amount of Eastern demand for gold/silver originates among the peasant populations of these nations.</p> <p>&nbsp;</p> <p>Lacking even access to banking services, the bankers cannot employ any of their paper-for-metal frauds on these peasant populations. Only real, physical bullion can satisfy this demand. Furthermore, when the One Bank launched its ill-conceived (but desperate?) attack on India’s gold market, the temporary disruption in India’s gold supply caused a massive stampede into silver.</p> <p>&nbsp;</p> <p>India’s silver imports in 2013 broke its previous record for silver imports in 2008, triggered by the plunge in the price of silver which accompanied the Crash of ’08. And its silver imports in 2014 may have exceeded last year’s record. Thus while we see the banksters visibly obsessing over gold, this unprecedented drain on global silver stockpiles (after 50 years of steady erosion) must also be a grave concern for this crime syndicate.</p> <p>&nbsp;</p> <p>For all these reasons; it now seems much more constructive to simply discuss “bullion default”, rather than attempting to specifically identify whether such a default event would first occur in the silver market, or the gold market. Clearly, persuasive reasons can be presented for either metal. Furthermore, as we saw/see in India; in attempting to avoid bullion-default with one metal, the banksters could easily (inadvertently) trigger some investment stampede which then causes a bullion default with the other metal.</p> <p>&nbsp;</p> <p>Will 2015 be the Year of (bullion) Default? That question will be answered in roughly 360 days (or less). For 4 ½ years; we’ve known that the gold market (and silver market) is leveraged by at least 100:1, because 4 ½ years ago; the banksters’ “bullion crisis” had already reached that degree of severity.</p> <p>&nbsp;</p> <p>Paradoxically, as the years have rolled by, and no default-event has occurred, the psychological illusion begins to grow that default will never occur – the frauds will simply go on forever. But physical supply-deficits cannot continue forever. While demand is inexhaustible, stockpiles are finite.</p> <p>&nbsp;</p> <p>We are 4 ½ years closer to gold-default or silver-default than when Jeffrey Christian first told us these Ponzi-schemes were already leveraged to the point of insanity. Recent events disclose even more-extreme drains on the banksters’ bullion stockpiles – and more-extreme gambits by the One Bank to endeavour to steal more bullion (i.e. gold).</p> <p>&nbsp;</p> <p>Lastly, we’re even beginning to see some signs of “restlessness” in the bankers’ paper-fraud markets, where bullion prices are currently showing more volatility than at any other time in recent years. Previous price-action over (in particular) the last three years has been month-after-month of flat prices, punctuated by intervals where bullion prices were marched steadily lower – in an orderly manner.</p> <p>&nbsp;</p> <p>Two-way volatility in prices is something which has not been seen in these markets since (early) 2011. Nothing lasts forever, particularly with respect to relentless supply-deficits for physical commodities. Bullion-default will take place soon, and (for many reasons) it appears that “soon” may finally arrive, in 2015.</p> <p>&nbsp;</p> <p><a href=""><span style="text-decoration: underline;"><em><strong>Jeff Nielson for Sprott Money</strong></em></span></a> </p> default India Reality Ukraine Volatility Mon, 26 Jan 2015 13:30:00 +0000 Sprott Money 500826 at Greek Bonds Battered As Dip-Buyers Rescue Greek Stocks <p>The post-QECB euphoria in Greek asset markets was prognosticated by those who prefer to do such things as indicative that "the markets know something," positive about Sunday's (yesterday's) election... because markets are efficient and always 'price in' events (just like 1987, 2000, 2008 etc...). However, this morning <strong>ugliness in both Greek stock (especially banks) and bond markets</strong> suggests it was nothing more than algo-driven carry-inspired short-squeezes as both stocks and bonds plunged at the open. Stocks received the ubiquitous - well it's down so we better buy 'em treatment - but even that is fading as<strong> stocks catch back down to bonds' weakness, having unwound most of QECB's goodness</strong>...</p> <p>&nbsp;</p> <p><a href=""><img src="" width="600" height="631" /></a></p> <p>&nbsp;</p> <p><em>Chart: Bloomberg</em></p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="957" height="1006" alt="" src="" /> </div> </div> </div> Bond ETC Mon, 26 Jan 2015 13:22:56 +0000 Tyler Durden 500970 at Oil Jumps On OPEC's El-Badri's "$200 A Barrel Sometime" Comments <p>The headline-reading algos were at the top of their game this morning when milliseconds after <strong>OPEC's general secretary Abdalla El-Badri said oil prices could reach $200 a barrel if there's a lack of investment following this price slump</strong>... though failed to provide any timeline for his forecast. WTI prices jumped $1 from $45 to $46 even as El-Badri noted the<strong> market was still over-supplied by 1.5 million barrels per da</strong>y.</p> <p>&nbsp;</p> <ul> <li><strong>*OPEC'S EL-BADRI HOPES OIL MKT WILL RECOVER IN `REASONABLE TIME'</strong></li> <li><strong>*OPEC OPEN TO DISCUSSIONS WITH NON-OPEC TO BALANCE MKT: EL-BADRI</strong></li> <li><strong>*OPEC TO RESUME SWING-PRODUCER ROLE EVENTUALLY: EL-BADRI</strong></li> <li><strong>*EL-BADRI SEES SOME OPEC UPSTREAM PROJECTS CANCELED</strong></li> </ul> <p>&nbsp;</p> <p><a href=""><img src="" width="600" height="357" /></a></p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="1745" height="1037" alt="" src="" /> </div> </div> </div> OPEC Mon, 26 Jan 2015 13:10:21 +0000 Tyler Durden 500969 at Goldman: It's The Central Banks' Fault We Can't Be More Bearish On Gold <p>We've heard it all: snow, cold weather, hot weather, non one-time recurring, "one-time, non-recurring" charges, and even Bush. But when it comes to "excuses" for why one is wrong, this morning Goldman's note <strong>"Central banks stall a more bearish gold outlook" </strong>absolutely takes the cake. </p> <p>That's right: Goldman just blamed central banks for being unable to be "more bearish" on gold. </p> <p>While readers let that sink in for a bit, here is the jist of Damien Courvalin's note.</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p><strong>Even more monetary stimulus has helped support gold prices…&nbsp; </strong></p> <p>&nbsp;</p> <p>While gold prices have trended lower since mid-2013, the decline has been short of our expectations. Recently, the combined support of: (1) weaker-than-expected US economic data; (2) the run-up to the announcement of QE in Europe; and (3) the surprise SNB decision to remove the CHF/EUR cap, have seen prices rise to near $1,300/toz. While we believe that these catalysts are now mostly priced in, and that gold prices will decline in 2015-16, we are nonetheless raising our near-term forecast to current prices. </p> </blockquote> <p>Wait, so infinitely diluting fiat money and paper claims on wealth, a process which inevitaly ends up with the paradropping of bales of cash, is favorable for hard, "traditional" stores of value? Do go on...</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p><strong>…but the start of the US hiking cycle is drawing near </strong></p> <p>&nbsp;</p> <p>We expect the decline in gold prices to resume from 3Q15, with the start of the US rate hiking cycle. Accordingly, we revised our 3, 6- and 12-month gold price forecasts higher to $1,290/toz, $1,270/toz and $1,175/toz but our year-end 2016 forecast lower to $1,000/toz. While our near-term conviction in lower gold prices has declined, our confidence in lower gold prices in the long-run has increased on the back of lower expected inflation in coming years and a declining marginal cost of gold production. </p> </blockquote> <p>Actually Damien, <em>your own team </em>at Goldman wrote on Friday that " We continue to expect a later-than-consensus first hike, with September remaining our baseline but the risks looking increasingly tilted to the later side" so it may be time to re-evaluate that whole "drawing near" assessment considering it is in fact being <em><strong>pushed further back</strong></em>!</p> <p>Continuing:</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p><strong>Lower oil prices and USD strength to relieve mining cost pressures </strong> </p> <p>&nbsp;</p> <p>Based on our cost curve modelling, we estimate that lower energy prices and USD strength have brought the “all-in” marginal production cost down $150/toz to $1,050/toz and that this move will be persistent. We also recognize that as we move further into the Exploitation phase of the commodity cycle, additional cost deflation forces are likely to emerge, such as wage deflation, increasing labor and capital productivity and a faster pace of technological (TFP) growth, leaving risk to our new long term gold price forecast of $1,050/toz skewed to the downside. </p> </blockquote> <p>Oh, so lower crude prices are a disaster for crude producers but a gift for gold miners: gold miners the bulk of which are located in various third-world nations, where crude "trickle-down" economics works every time, all the time, and where striking miners are never on edge about the possibiliy of extracting even the smallest of wage concessions in a world in which some fixed cost is unexpectedly reduced. Got it. </p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p><strong>Cost deflation, rising supply and higher real rates all intertwined </strong> </p> <p>&nbsp;</p> <p>Importantly, while our cost-deflation work focuses on gold as a mined commodity, <strong>the drivers of this cost deflation are directly tied to the anchors of our cyclically bearish gold view. </strong>It is not a coincidence that the outperformance of US growth – enabled by the Shale revolution and driving gold prices lower – is occurring with a strengthening of the US dollar and amidst lower energy prices as the dynamics are very much self-reinforcing. We would further expect that the <span style="text-decoration: underline;"><strong>higher rate environment</strong></span> that will drive gold prices lower will ultimately drive gold production higher. </p> </blockquote> <p>Ok, that really went over our heads, but with $1.4 trillion in European government debt <a href="">having gone to <em><strong>negative interest rates </strong></em>since the ECB's announcement of NIRP</a> in June...</p> <p><a href=""><img src="" width="396" height="412" /></a></p> <p>... just which "<strong>higher rate environment</strong>" are we talking about here?</p> <p><img src="" width="400" height="533" /></p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="600" height="800" alt="" src="" /> </div> </div> </div> Central Banks Crude fixed Mon, 26 Jan 2015 13:01:06 +0000 Tyler Durden 500968 at Frontrunning: January 26 <ul> <li>Alexis Tsipras: the Syriza leader about to take charge in Greece (<a href="">Guardian</a>)</li> <li>Tsipras to form anti-bailout Greek government after big victory (<a href="">Reuters</a>)</li> <li>Tsipras Forges Anti-Austerity Coalition in EU Challenge (<a href="">BBG</a>)</li> <li>East Coast braces, flights canceled as 'historic' blizzard bears down (<a href="">Reuters</a>)</li> <li>Rebels press Ukraine offensive, Obama promises steps against Russian-backed 'aggression (<a href="">Reuters</a>)</li> <li>Syriza Victory Brings Hope for Immigrants of EU Access (<a href="">BBG</a>)</li> <li>For Saudis, Falling Demand for Oil Is the Biggest Concern (<a href="">BBG</a>)</li> <li>Oil prices fall on market relief over Saudi policy (<a href="">Reuters</a>)</li> <li>Chris Christie Joins Crowded GOP Fight for Donors (<a href="">WSJ</a>)</li> <li>NY insider trading ruling tests prosecutors beyond Wall Street (<a href="">Reuters</a>)</li> <li>Samaras’s Undoing Came Fast After Praise From Merkel (<a href="">BBG</a>)</li> <li>Pimco-Led Rescue of Batista Startup Seen Faltering on Oil (<a href="">BBG</a>)</li> <li>Packaging companies Rock-Tenn, MeadWestvaco to merge (<a href="">Reuters</a>)</li> </ul> <p>&nbsp;</p> <p><strong>Overnight Media Digest</strong></p> <p><em><span style="text-decoration: underline;">WSJ</span></em></p> <p>* Coinbase Inc, a startup backed by $106 million from the New York Stock Exchange, banks and venture-capital firms, said its exchange will offer greater security for individuals and institutions to trade bitcoin and monitor real-time pricing of the cryptocurrency. (<a href="" title=""></a>)</p> <p>* Google Inc's upcoming wireless service would aim to end subscribers' reliance on a single carrier, instead giving them the ability to pick the best signal from a variety of sources, people familiar with the plan said. (<a href="" title=""></a>)</p> <p>* Siemens Chief Executive Joe Kaeser is expected to face tough questions from investors on Tuesday over the high price he agreed in September to pay for U.S. oil equipment maker Dresser-Rand Group Inc. (<a href="" title=""></a>)</p> <p>* Axis Capital Holdings Ltd and PartnerRe Ltd said they have agreed to merge and form one of the world's biggest reinsurance and specialist insurance companies, a firm with a combined market value of $11 billion. (<a href="" title=""></a>)</p> <p>* New Jersey Gov. Chris Christie and his supporters have formed a political-action committee ahead of a likely bid for president, adding a third well-known Republican figure to the fight for campaign funds among the party's core donor class. (<a href="" title=""></a>)</p> <p>* Cablevision Systems Corp said it will offer a Wi-Fi mobile-phone service starting next month, making it the first U.S. cable operator to take such a product to market. (<a href="" title=""></a>)</p> <p>&nbsp;</p> <p><em><span style="text-decoration: underline;">FT</span></em></p> <p>* U.S. venture capital group Andreessen Horowitz has won a bidding process to invest in money transfer group TransferWise. The group will invest $58 million in the London-based company.</p> <p>* Standard Chartered is looking to replace its Chief Executive Peter Sands and has appointed Egon Zehnder to conduct the search. The move follows calls from some of the bank's largest shareholders to accelerate the plan of succession.</p> <p>* A committee of MP's have called for a suspension on fracking, dealing a fresh blow to Britain's shale gas industry. They have warned that the government was using "undemocratic" laws to help the industry.</p> <p>* Danish company Novo Nordisk is setting a $1 billion a year revenue target for its Saxenda medicine as it anticipates that pharmaceuticals will come to have an increasing role in helping people lose weight. </p> <p>&nbsp;</p> <p><em><span style="text-decoration: underline;">NYT</span></em></p> <p>* After his term as mayor ended, Michael Bloomberg has moved quickly to reassert control at the company that he founded and that bears his name, especially in its media operation. (<a href="" title=""></a>)</p> <p>* With the Federal Reserve expected to send a stronger signal on when it will raise its benchmark interest rate, three people who lost jobs in the downturn are working but not making as much as before. (<a href="" title=""></a>)</p> <p>* Greece rejected the harsh economics of austerity on Sunday and sent a warning to the rest of Europe as the left-wing Syriza party won a decisive victory in national elections, positioning its tough-talking leader, Alexis Tsipras, to become the next prime minister. (<a href="" title=""></a>)</p> <p>* Advertisers, and possibly other third parties, are finding ways to exploit a hidden tracking mechanism that Verizon Wireless users cannot delete. (<a href="" title=""></a>)</p> <p>* In this digital age when filling a shopping cart requires little more than clicking on a screen, the printed retail catalog keeps vying for a place on the coffee table. (<a href="" title=""></a>)</p> <p>* Sheldon Silver, the longtime speaker of the New York State Assembly, agreed on Sunday to relinquish his duties on a temporary basis as he fights federal corruption charges, according to people briefed on the matter. (<a href="" title=""></a>)</p> <p>* London-based TransferWise has announced that it has raised $58 million in a new round of fund-raising by a consortium of investors led by the Silicon Valley firm Andreessen Horowitz. (<a href="" title=""></a>)</p> <p>* The Raine Group plans to announce on Monday that it has hired Tom Freston, the former chief executive of Viacom , as a senior adviser. (<a href="" title=""></a>)</p> <p>* Two big insurance companies, PartnerRe Ltd and Axis Capital Holdings, have agreed to merge, creating a new $11 billion player in the specialized field of reinsurance. (<a href="" title=""></a>)</p> <p>&nbsp;</p> <p><em><span style="text-decoration: underline;">Canada</span></em></p> <p>THE GLOBE AND MAIL</p> <p>** Canada's oil producers are being told to brace for more bad news, even as they struggle to cope with a collapse that has driven prices down by nearly 60 percent from their peak last June. Toronto-Dominion Bank economist Dina Ignjatovic said she expects WTI prices to sink below $40 as bulging inventories weigh on the market in the next few months. (</p> <p>** Goldcorp Inc's quest for new mines is a matter of survival, according to the company's chairman. "The only way mining companies can grow is through acquisitions and the only way they can survive is through acquisitions. Sometimes, I'm not sure people outside the mining business appreciate that," Ian Telfer said in a recent interview. (</p> <p>** The federal government will not meet the Monday deadline set by the Thalidomide Victims Association of Canada to announce a financial aid package for Canadians harmed by the drug, an emotional setback for victims anticipating help to cope with their failing health. (</p> <p>NATIONAL POST</p> <p>** A bitter dispute over a $112 million investment in Caribbean casinos has placed Michael DeGroote, one of Canada's wealthiest businessmen, at the center of bizarre accusations of mafia exploitation, death threats and fraud. (</p> <p>** Owning BlackBerry Ltd shares requires a strong stomach and over the last few months many investors have decided to say goodbye to the stock's dips and peaks. (</p> <p>** While President Barack Obama's new tax proposals may never see the light of day, given the Republican majorities in both the House and Senate, they have generated discussion among cross-border tax practitioners. Dual citizens living in Canada or Canadians who own U.S. properties may wonder whether they need to reopen their estate plans in case the proposals, referred to by the White House as an attempt to close the "trust-fund loophole," ever come into law. ( </p> <p>&nbsp;</p> <p><em><span style="text-decoration: underline;">China</span></em></p> <p>CHINA SECURITIES JOURNAL</p> <p>- The impact of cutting the interest rate and reserve requirement ratio (RRR) was limited for the real economy and funds might flow into the stock market, said Liu Shijin, vice-director of Development Research Center of the State Council.</p> <p>- The China Insurance Regulatory Commission and four other government regulators jointly released a guidance, saying they would support and encourage insurance companies to accelerate the development of credit warranty insurance.</p> <p>SECURITIES TIMES</p> <p>- Anbang Insurance Group has increased its stake in China Minsheng Banking eight times in two months, and is the largest shareholder with a holding of 18.35 percent.</p> <p>CHINA DAILY</p> <p>- China will increase visa privileges for foreign experts, the paper said. Foreign experts recruited through 55 talent programmes will be able to apply for visas, resident permits and permanent residency, a privilege previously only given to those on the 1,000 Talent Plan.</p> <p>- Shanghai's decision to scrap the GDP target this year signals a shift in attention from quantity to quality of economic growth, said an editorial in the official paper. But underdeveloped regions cannot follow this example, it said.</p> <p>&nbsp;</p> <p><em><span style="text-decoration: underline;">Britain</span></em></p> <p>The Times</p> <p>Bentley Motors is helping to create a university technical college in Crewe as part of efforts to meet a skills shortage and to produce the home-grown talent it believes is vital to preserve its quintessential Britishness. (<a href="" title=""></a>)</p> <p>Greece sent shockwaves across Europe last night as a radical left-wing party that has promised to end austerity and refuse to take orders from Berlin and Brussels triumphed in the country's election. (<a href="" title=""></a>)</p> <p>The Guardian</p> <p>Security procedures are being reviewed at Downing Street after a hoax caller pretending to be the head of Government Communications Headquarters (GCHQ) managed to get through to David Cameron. Cameron spoke to the imposter, who was claiming to be the GCHQ director Robert Hannigan, but ended the call quite quickly after he released he was being tricked. (<a href="" title=""></a>)</p> <p>Philip Green has put BHS up for sale after receiving a number of approaches for the department store chain. The move comes after years of speculation that the retail tycoon was willing to part with BHS if a buyer could be found for the loss-making business. (<a href="" title=""></a>)</p> <p>The Telegraph</p> <p>Card Factory Plc is in the early stages of considering a bid for upmarket rival Paperchase. The retailer, which has 130 UK stores and 30 outlets overseas including the United Arab Emirates, France and Germany, has been put up for sale by its private equity owners with a price tag of around 150 million pounds. (<a href="" title=""></a>)</p> <p>British companies paid out a record 97.4 billion pounds in dividends to investors last year after the bumper one-off payment from Vodafone Group Plc outweighed the drag caused by a strong pound. (<a href="" title=""></a>)</p> <p>Sky News</p> <p>The Post Office will this week publicly target becoming one of Britain's leading financial services providers by the end of the decade, amid ministerial support for its vast network to play a greater role in banking provision. (<a href="" title=""></a>)</p> <p>The parent company of British Airways has approached Aer Lingus about a fresh takeover bid for the Irish carrier. Sky News can exclusively reveal that International Consolidated Airlines Group submitted a revised proposal to the board of Aer Lingus within the last couple of days. (<a href="" title=""></a>)</p> <p>&nbsp;</p> <p><strong>Fly On The Wall Pre-Market Buzz</strong></p> <p>ECONOMIC REPORTS</p> <p>Domestic economic reports scheduled for today include:<br />Dallas Fed manufacturing activity index for January at 10:30--consensus 4.0</p> <p>ANALYST RESEARCH</p> <p>Upgrades</p> <p>American Axle (AXL) upgraded to Overweight from Neutral at JPMorgan<br />Bed Bath &amp; Beyond (BBBY) upgraded to Outperform from Perform at Oppenheimer<br />DRDGOLD (DRD) upgraded to Neutral from Underweight at JPMorgan<br />DealerTrack (TRAK) upgraded to Buy from Hold at Stifel<br />DreamWorks Animation (DWA) upgraded to Buy from Neutral at B. Riley<br />First Niagara (FNFG) upgraded to Buy from Hold at Jefferies<br />Fortinet (FTNT) upgraded to Buy from Neutral at Citigroup<br />Garmin (GRMN) upgraded to Outperform from Sector Perform at RBC Capital<br />Harmony Gold (HMY) upgraded to Overweight from Neutral at JPMorgan<br />McDonald's (MCD) upgraded to Overweight from Equal Weight at Stephens<br />Monro Muffler (MNRO) upgraded to Neutral from Reduce at SunTrust<br />Pier 1 Imports (PIR) upgraded to Outperform from Perform at Oppenheimer<br />Randgold (GOLD) upgraded to Overweight from Neutral at JPMorgan<br />Triumph Group (TGI) upgraded to Sector Perform from Underperform at RBC Capital</p> <p>Downgrades</p> <p>Aluminum Corp. of China (ACH) downgraded to Underweight from Neutral at JPMorgan<br />AmeriGas (APU) downgraded to Hold from Buy at Jefferies<br />B2Gold (BTG) downgraded to Neutral from Buy at Goldman<br />CenterPoint Energy (CNP) downgraded to Neutral from Buy at Citigroup<br />CommScope (COMM) downgraded to Sector Perform from Outperform at RBC Capital<br />Derma Sciences (DSCI) downgraded to Neutral from Overweight at Piper Jaffray<br />Fortress (FIG) downgraded to Market Perform from Outperform at Keefe Bruyette<br />Gold Fields (GFI) downgraded to Neutral from Overweight at JPMorgan<br />Graco (GGG) downgraded to Perform from Outperform at Oppenheimer<br />Gran Tierra (GTE) downgraded to Neutral from Outperform at Credit Suisse<br />HCP (HCP) downgraded to Neutral from Buy at Mizuho<br />IGM Financial (IGIFF) downgraded to Underweight from Equal Weight at Barclays<br />Insulet (PODD) downgraded to Market Perform from Outperform at William Blair<br />KCG Holdings (KCG) downgraded to Sell from Neutral at Goldman<br />Knight Transportation (KNX) downgraded to Hold from Buy at KeyBanc<br />Maxim Integrated (MXIM) downgraded to Neutral from Positive at Susquehanna<br />Praxair (PX) downgraded to Neutral from Outperform at RW Baird<br />Qualys (QLYS) downgraded to Market Perform from Outperform at JMP Securities<br />State Street (STT) downgraded to Underperform from Market Perform at Bernstein<br />Tandem Diabetes (TNDM) downgraded to Market Perform from Outperform at William Blair<br />Trinseo (TSE) downgraded to Neutral from Buy at Citigroup<br />UPS (UPS) downgraded to Equal Weight from Overweight at Barclays<br />UPS (UPS) downgraded to Neutral from Outperform at Credit Suisse<br />VeriSign (VRSN) downgraded to Underperform from Neutral at Credit Suisse</p> <p>Initiations</p> <p>Aruba Networks (ARUN) initiated with a Neutral at Citigroup<br />KapStone (KS) initiated with an Outperform at RBC Capital<br />Lear (LEA) resumed with a Neutral at JPMorgan<br />Paramount Group (PGRE) initiated with a Neutral at UBS<br />QAD Inc (QADB) initiated with a Buy at Canaccord<br />Ruckus Wireless (RKUS) initiated with a Buy at Citigroup<br />Ubiquiti Networks (UBNT) initiated with a Neutral at Citigroup</p> <p>COMPANY NEWS</p> <p>AT&amp;T (T) to acquire Nextel Mexico for $1.88B, less outstanding net debt<br />Post Holdings (POST) to acquire MOM brands for $1.15B<br />RockTenn (RKT) and MeadWestvaco (MWV) entered into a definitive combination agreement to create a global provider of consumer and corrugated packaging in a transaction with a combined equity value of $16B<br />Endo (ENDP) to replace Covidien (COV) in S&amp;P 500 as of 1/26 close, HCA Holdings (HCA) to replace Safeway (SWY) in S&amp;P 500 as of 1/26 close<br />Gilead Sciences (GILD) expanded its hepatitis C generic licensing agreements to include the investigational NS5A inhibitor GS-5816. The expanded agreements will allow Gilead’s India-based partners to manufacture GS-5816 and the single tablet regimen of sofosbuvir/GS-5816, once approved, for distribution in 91 developing countries<br />AXIS Capital (AXS), PartnerRe (PRE) to combine in $11B merger</p> <p>EARNINGS</p> <p>Companies that beat consensus earnings expectations last night and today include:<br />Provident Financial (PROV), RockTenn (RKT)</p> <p>Post Holdings (POST) reports preliminary Q1 sales $1.07B, consensus $1.07B<br />PartnerRe (PRE) sees Q4 EPS $4.20-$4.60, may not compare to consensus $3.04<br />AXIS Capital (AXS) sees Q4 EPS $1.15-$1.21, consensus $1.21</p> <p>NEWSPAPERS/WEBSITES</p> <p>Apple (AAPL) to report China iPhone sales topped U.S. iPhone sales, Financial Times reports<br />Teva (TEVA) rebuffed Pfizer (PFE) approach late last year, Bloomberg reports<br />Yahoo (YHOO) may absorb Tumblr sales force, Re/code reports<br />FXCM (FXCM) to consider selling assets to repay rescue loan, WSJ reports<br />Private equity firm 'seriously' considered buying Herbalife (HLF), NY Post reports (NUS, AVP)<br />PepsiCo's (PEP) new director nominee could ease tensions with Trian, Barron's says<br />Twitter (TWTR) still has problems, Barron's says<br />Urban Outfitters (URBN) could be more attractive, Barron's says<br />Oracle (ORCL) shares could climb over 20%, Barron's says</p> American Axle Apple B+ Barclays Bitcoin China Citigroup Corruption Credit Suisse Dallas Fed Federal Reserve France Germany Google Greece Insider Trading Insurance Companies Keefe Mexico New York State New York Stock Exchange Post Office Private Equity Reuters Standard Chartered State Street Trian Twitter Twitter Ukraine Verizon Viacom White House Mon, 26 Jan 2015 12:46:27 +0000 Tyler Durden 500967 at Market Wrap: Global Risk Rattled By Syriza Surge To Power <p>This morning both the SNB stunner from two weeks ago, and the less than stunning ECB QE announcement from last Thursday are long forgotten, and the only topic on markets' minds is the startling surge of Syriza and its formation of a coalition government with another anti-bailout party - a development that many in Europe never expected could happen, and which has pushed Europe to the bring of the unexpected yet again. And while there is much speculation that this time Europe is much better positioned to "handle a Grexit", the reality is that European bank balance sheets are as bad if not worse than in 2014, 2013, 2012 or any other year for that matter, because none of ther €1+ trillion in NPLs have been addressed and the only thing that has happened is funding bank capital deficiencies with newly printed money. You know what they say about solvency and liquidity. </p> <p>In any event, Syriza's dramatic ascent to power now places Greece on collision course with the Troika, and certainly Germany, a collision that everyone will be watching closely, and none other more than various other regional breakaway powers such as Spain's Podemos which is already riding on the coattails of Syriza's victory. </p> <p>All of this is also being manifest in sentiment toward risk this morning, which has seen a bit of a bounceback following a sharp selloff in the overnight futures, one which wiped out all the market gains since the announcement of Draghi's Q€. </p> <p>Asian markets kicked off the week on a cautious note with focus on SYRIZA’s victory in Greece. US equity futures fell with the Nikkei 225 (-0.3%) following suit amid a strong JPY, underpinned by flight to safety flows. Shanghai Comp (+0.94) and Hang Seng (+0.24%) rallied late in the session after lacking direction for most of the day, continuing on from last week’s sharp post-Chinese GDP gains.</p> <p>European equities are marginally in the green after a choppy morning session following the Greek elections, with the only tier 1 data this morning, German IFO Business Climate (106.7 vs Exp. 106.5, Prev. 105.5), coming in slightly above-expected but having no sustained reaction. The FTSE is the underperformer as mining names weigh on the index as a result of falling commodity prices as well as the Athens Stock Exchange, which opened 3% lower, with banks weighing in the sector, opening 7% lower, however these losses have been mostly pared throughout the morning. </p> <p>In terms of stock specific stories, news over the weekend suggested that IBM (IBM) are to lay off 26% of their global workforce this week and Pfizer (PFE) are said to have been rebuffed by Teva (TEVA) in their search for an M&amp;A deal. This news has seen Shire (SHP LN) trade higher this morning, along with news that the US FDA have said it would license their Natpara drug. </p> <p>Elsewhere, Bunds are lower on the day after failing to sustain a break above 159.00 shortly after the open and settled below the handle with little price action for the rest of the European morning, while Greek bond yields are wider to the German benchmark by 40 bps this morning. Short sterling has been weighed upon by more hawkish than usual comments from BoE’ Carney (Neutral), who warned that low interest rates may not last as long as investors expect, which echoed similar comments from Forbes (Soft Hawk) over the weekend. </p> <p>Volumes may be lighter than usual heading into the US session as the North-east of the US faces a 'potentially historic blizzard' which would lead to 3ft of snow, with heavy snowfall forecast from Philadelphia to Maine and blizzard warnings issued in both New York and Boston.</p> <p>In FX, the European session has seen a retracement of heavy selling pressure in EUR/USD following on from the pair falling below the 1.1100 handle for the first time since 2003 during Asian hours. However, this morning sees the greenback coming off its eleven year highs to see EUR/USD rise around 50 pips back above 1.1200, with European participants considering the reaction to SYRIZA’s victory over-exaggerated, as the victory has been widely anticipated in Europe. Meanwhile, the pullback in USD has not seen USD/JPY able to fall back below the 118.00 handle, which was broken overnight.</p> <p>RUB currently trades around session lows as the conflict with Ukraine continued to escalate over the weekend, with Ukrainian President saying that the Russian threat to Ukraine has increased and US President Obama hinting at new Russian sanctions.</p> <p>The other noteworthy currency is CHF, with volatility continuing after the SNB announced the removal of the currency floor, where EUR/CHF currently resides below parity but has seen buying pressure throughout the European morning.</p> <p>The commodity complex has seen gold pull back from its post ECB-QE announcement highs to trade below USD 1,185/oz, with the yellow metal failing to break above USD 1,300/oz overnight and falling throughout the morning. The energy sector sees Brent and WTI futures both in negative territory with the latter breaking below the USD 45.00 handle and continuing to trade around the handle throughout the European morning, partially as a consequence of the strong USD.</p> <p><em><strong>In summary: </strong></em>European shares stay mixed with the travel &amp; leisure and autos sectors outperforming and oil &amp; gas, basic resources underperforming. Syriza to form coalition with Independent Greeks party after Greek election. Euro reverses losses, Greek stocks pare Friday’s gain, Greek bond yields rise. Ruble weakens. German IFO above estimates. The Swiss and German markets are the best-performing larger bourses, U.K. the worst. Portuguese yields decline. Commodities fall, with natural gas, silver underperforming and nickel outperforming. U.S. Dallas Fed index due later.</p> <p><strong>Market Wrap:</strong></p> <ul> <li>S&amp;P 500 futures down 0.3% to 2038</li> <li>Stoxx 600 up 0.1% to 370.8</li> <li>US 10Yr yield down 1bps to 1.79%</li> <li>German 10Yr yield up 0bps to 0.36%</li> <li>MSCI Asia Pacific down 0.2% to 140.8</li> <li>Gold spot down 0.8% to $1283.2/oz</li> <li>Euro up 0.29% to $1.1237</li> <li>Dollar Index up 0.17% to 94.93</li> <li>Italian 10Yr yield down 2bps to 1.51%</li> <li>Spanish 10Yr yield down 0bps to 1.38%</li> <li>French 10Yr yield up 1bps to 0.55%</li> <li>S&amp;P GSCI Index down 0.8% to 376.8</li> <li>Brent Futures down 1.3% to $48.1/bbl, WTI Futures down 1.3% to $45/bbl</li> <li>LME 3m Copper down 1.3% to $5447.5/MT</li> <li>LME 3m Nickel up 0.3% to $14400/MT</li> <li>Wheat futures up 0.1% to 530.5 USd/bu</li> </ul> <p><strong>Bulletin Headline Summary </strong></p> <ul> <li>Prime Minister-elect Alexis Tsipras forged an anti-austerity alliance within hours of his election victory, challenging European peers with a declaration that the era of bowing to international demands for budget cuts is over</li> <li>The challenge for Tsipras now is to come good on his election pledges, including a writedown of Greek debt, while persuading creditors from ECB, IMF and European Commission to keep aid flowing</li> <li>"The Greeks have the right to vote for whom they want,” Hans-Peter Friedrich, a deputy caucus leader for Merkel’s faction in parliament, told Bild newspaper. “We have the right to no longer finance Greek debt”</li> <li>Finland remains open to discussions on extending maturities, lowering rates on Greek loans, Prime Minister Alexander Stubb says; however, “it’s unfathomable to make Finnish taxpayers pay for Greek stimulus policies”</li> <li>Governor Haruhiko Kuroda says the Bank of Japan may need to get creative in any further monetary stimulus. Among options analysts highlight: regional-government bonds, a type of security that could aid public support</li> <li>German business confidence rose in Jan. with Ifo institute’s business climate index advancing to 106.7, higher than forecast, from 105.5 in Dec.</li> <li>A blizzard forecasters call “life-threatening” that may drop three feet of snow from New York to Boston has caused more than 1,800 flight cancellations and will likely block road and rail traffic, close schools and knock out power across the U.S. Northeast</li> <li>Sovereign yields mostly lower; Greek 10Y yields surge 50bps. Asian, European stocks mostly higher, U.S. equity-index futures fall. Brent and WTI, gold and copper fall</li> </ul> <p><strong>US Event Calendar</strong></p> <ul> <li>10:30am: Dallas Fed Mfg Activity, Jan, est. 4 (prior 4.1)</li> </ul> <p>* * * </p> <p><strong>DB's Jim Reid Concludes the overnight recap</strong></p> <p>After the polls closed last night it soon became clear from the exit polls that Syriza had claimed a stunning victory although 12 hours later and with 95% of the results counted Syriza look to have fallen just short of an outright majority. Syriza have won 36.4% of the vote compared to 27.8% for the governing New Democracy party and are projected to win 149 seats vs the 151 needed for a majority on the 300 seat parliament. Even so, DB’s George Saravelos wrote last night that, “the election outcome in Greece this evening is at the very top-end of an “anti-austerity” mandate that the electorate could deliver.” So what next? First Syriza’s leader Alexis Tsipras now has a three day long “exploratory mandate” in which his party will negotiate with other parties to secure a majority. Alternatively Syriza could form a minority government where it will need to secure a tolerance vote from parliament – this requires only a majority of those MP’s present to secure the confidence vote and so Syriza could manage this if it agrees with smaller parties for them to stay away from the vote. Early reports suggest that Syriza will look to make a deal with the right-wing anti-bailout Independent Greeks party, with a Syriza official stating that, "There was an agreement with Mr Kammenos (leader of the Independent Greeks Party) to meet on Monday at 10:30 local time to confirm the support and possible participation of the Independent Greeks in the new government." In terms of what happens next, this same official suggested that, “most likely is that the prime minister will be sworn in on Monday and the new government will be sworn in on Tuesday evening or at the latest on Wednesday morning." Tsipras is also expected to meet with leaders of the centrist To Potomi and the Communist party KKE before taking up government (Reuters).</p> <p>In terms of the formation of this government, George thinks that, “the positions of finance minister, PM chief of staff, and chair of the council of economic advisors are likely to form the core of a new government's negotiating team with the Troika and these appointments will therefore be closely watched.” </p> <p>Looking ahead Parliament is scheduled to open on February 5th where its first job will be to elect a new President, which should take place by February 13th. Following this the new government will request a vote of confidence from parliament to allow it to begin negotiations with the Troika. After this the next big deadline for Greece is February 28th when the country’s current program expires and a major question for the new government is if they will request and whether they will be granted an extension on this. George Saravelos expects that, “it is in both sides' interest to secure an extension of the program to July to allow negotiations to proceed, but it is important that this materializes. ” From the European side we will probably get an early flavour for how Greek-Eurogroup negotiations will pan out later today as the Eurozone finance ministers meet later and are expected to give some sign over whether they would accept an extension. If this extension can be agreed then the Troika will likely send a mission to Athens in mid-February to start negotiations although Tsipras has indicated it is an open question whether or not they will be invited. </p> <p>The situation in Greece is undoubtedly delicate with the nation’s banks having already requested liquidity assistance from the ECB due to deposit outflows and the Greek government's continuing need to issue debt. Ultimately the outcome here is going to depend on how negotiations between Syriza and the Troika go, with Syriza’s desire to achieve meaningful debt relief for Greece along with a reduction in austerity and changes to the country’s structural reforms all on Syriza’s policy platform. It is likely that the twists and turns of these negotiations will form the main narrative for Greek risk in the coming weeks. George sees a consensual outcome between the Greek government and its creditors as achievable but requiring very meaningful concessions from both sides and the chance of Greek government instability and fresh elections a possibility. </p> <p>Looking slightly more widely, last night’s result marks a major political event for Europe and possibly a new era for European politics. It marks the first time that a non-mainstream party has won the reins of government in the aftermath of the crisis and may be a harbringer for more political turmoil to come for the region as non-mainstream parties grow ever closer to power. Syriza are the first to form a government. They may not be the last. How Greece under Syriza performs from here on will be an important test case for the region. Note that this still could be a slow burning issue. Our plate spinning analogy for 2015 suggested that the central banks would keep the plates spinning aggressively until a cure for gravity (sustainable growth) or a policy error or a political accident. With the ECB now being aggressive, the fall-out from yesterday's vote is likely to be limited unless no compromise can be made. However political risk is going to be the biggest challenge to the Euro over the years ahead. It might only take one rogue election result to seriously damage the whole project.</p> <p>Overnight in Asia markets have been reacting to the news. EURUSD was as much as -1% lower in overnight trading but has recovered to be sat currently -0.23% lower. Risk has so far struggled with a number of Asian equity markets currently trading down – the Nikkei is -0.3% whilst the Hang Seng is -0.12% The US 10Y has been well bid with the rate falling another 4bps.</p> <p>In other news over the weekend the conflict in eastern Ukraine seemed to heat up further after a rocket attack on the port city of Mariupol on Saturday. The US, NATA and OSCE said that the launch took place in rebel-held territory. At an emergency meeting on Sunday the Ukrainian President stated that separatists are attacking along the entire front line (Bloomberg news). The growing battles in the area are a sign of the escalation in the conflict and over the weekend the US and its allies have been putting pressure on the Russian government to use its influence on the rebels to curtail the violence and adhere to the September ceasefire, with Angela Merkel speaking with Vladimir Putin on the phone yesterday to this end (Reuters). </p> <p>Looking back to last Friday, markets were broadly strong as they traded with greater conviction on Thursday’s ECB move although they pared back some of their gains later in the day as Greek concerns began to rise not helped by Syriza’s Tsipras comments that Syriza doesn’t recognize commitments made by previous governments. Nevertheless the ECB impulse won out with the Stoxx600 closing the day up +1.5% and iTraxx Main and Crossover closing -1.4bps and -4.7bps respectively. Government bonds also rallied (10Y US and German yields closed the day -5bps and -9bps) and the EUR continued to fall as EURUSD lost another -1%. Even Greek 10Y bond yields managed to fall 40bps. The clearest disappointment was US equities as the S&amp;P500 closed the day down -0.6%, partly on the back of the weaker US manufacturing PMI which fell to 53.7 its lowest read in a year vs. expectations it would rise to 54. </p> <p>There are few major data points today with the December Spanish PPI data (expected to rise to -0.9% from -1.1% MoM) and the January German IFO surveys due out (all components are expected to improve) as well as the already discussed Eurogroup finance ministers meeting in Brussels. We will also get earnings reports from Microsoft. Overnight we will have Chinese industrial profits for December. </p> <p>Looking ahead to the rest of the week, tomorrow the German and Italian finance ministers will speak at an EU committee and the EU finance ministers will meet. In the UK we will get Q4 GDP (expected to slip slightly to +0.6% QoQ) and France will release its latest jobseekers data. We will also get US durable goods orders, Case-Shiller house prices, composite and services PMI’s, new home sales and consumer confidence. On Wednesday we have one of the highlights of the week with the FOMC’s latest meeting – whilst there isn’t scheduled to be a press conference or the release of the Fed’s Summary of Economic Projections there will nevertheless be a statement. On Thursday we will have the latest Italian confidence and wage data, euro area confidence, German January inflation (expected in at -0.2% YoY), US initial jobless claims and Japanese inflation (expected to slip to +2.3% YoY). Finally to close the week we will have German December retail sales, Spanish Q4 GDP (expected in steady at +0.5% QoQ), euro area inflation and unemployment, and Q4 US GDP (expected to slip to +3.1% QoQ annualised) and core PCE inflation.</p> <p>Whilst the current earnings season is taking a back seat given all the macro developments, we could have some interesting highlights this week as we see results from some of the major oil and gas companies. Indeed we have 9 of them reporting including names such as ConocoPhillips and Chevron. Earnings will likely be impacted from the downturn in oil but perhaps more importantly we will hear their thoughts around what lies ahead for the sector. Interestingly the four US energy companies that have reported so far aren't doing that badly relative to the market's earnings expectations but we suspect that's also because most of them are oil drillers where earnings haven't been much impacted by the downturn yet. There's perhaps also a stronger focus on cost and balance sheet discipline in Q4 but overall the outlook still remains challenging as evinced by some of the job cuts announced by the likes of Schulumberger and Halliburton so far. We've updated our usual earnings tracker table in the PDF today. Whilst only 74 S&amp;P 500 companies have reported so far, the earnings and revenue performance is largely similar to those we've seen in previous years. The EPS beats (73% of total) are a lot stronger than sales beats (49% of total) so far. A similar trend is also emerging on the other side of the Atlantic where EPS beats (80% of total) are much stronger than revenue beats (36% of total) although it is still very early days for the European reporting calendar.</p> Bank of Japan Bloomberg News Bond Case-Shiller Central Banks Consumer Confidence Copper Council Of Economic Advisors Creditors Dallas Fed Equity Markets Eurozone Flight to Safety France Germany Greece Initial Jobless Claims Japan Jim Reid Natural Gas New Home Sales Newspaper Nikkei None President Obama Price Action Reality Reuters Ukraine Unemployment Vladimir Putin Volatility Mon, 26 Jan 2015 12:19:41 +0000 Tyler Durden 500966 at Syriza Forms Coalition Government With Anti-Bailout Independent Greeks: What Happens Next <p>There was some excitement in the capital markets overnight, when what was initially seen as an outright victory for Syriza, giving it an absolute, 151-seat majority in parliament - a fear that briefly pushed the EURUSD under 1.11 when the Euro PPT stepped in - ended up being a placing just shy of a majority with 149 seats. However, that same excitement fizzled several hours ago when the "radical left" party agreed to form a government with the "rightwing" group of the Independent Greeks in the aftermath of Syriza's historic win which harnessed the public backlash against years of belt-tightening, job losses and hardship.</p> <p>As the <a href="">FT reports</a>, Panos Kammenos, leader of the fiercely anti-bailout Independent Greeks, said as he left Syriza’s headquarters after a meeting with Alexis Tsipras, the prime minister-elect: <strong>“The country has a government. Independent Greeks will give a vote of confidence to Alexis Tsipras.</strong>” The deal would give Syriza a comfortable working majority in parliament but Mr Tsipras has yet to confirm anything as he continued coalition negotiations with other parties.</p> <p>So in a parliament in which the nationalist Golden Dawn placed third, the new leadership will be comprised of a far left and a far right group, both united by the hatred of European bailouts and the stifling Greek economy, both of which they are eager to blame on Germany and the Troika.&nbsp; </p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>Despite their ideological differences, the two leaders established regular contacts while the previous centre-right New Democracy government was in office, based on their shared stance that Greece should abandon austerity and seek a debt write-off, while remaining a member of the eurozone. </p> <p>&nbsp;</p> <p>Mr Kammenos, a former deputy merchant marine minister in a New Democracy government, left the party in 2012 to set up his own party, taking a handful of lawmakers with him. </p> </blockquote> <p>This means that any potential agreement with the next party Tsipras is looking to work alongside, the new To Potami party, becomes of secondary importance:</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>Mr Tsipras was meeting Stavros Theodorakis, leader of the centre-left To Potami (The River) party later in the day to discuss possible co-operation. Mr Theodorakis has refused to participate in a Syriza-led government but could offer support even if his party is not part of a formal coalition. To Potami finished fourth in the election with 6.4 per cent of the vote and 17 seats.</p> </blockquote> <p>And while bankers across Europe were fast to talk down the possibility of a hardline Syriza, having failed to get those two elusive seats, the fact that it has aligned itself with a just as rabid anti-Europe party will actually end up forcing Tsipras hand to deliver on at least some of his anti-bailout, anti-Troika, promises, all of which Germany has shot down apriori.</p> <p>So what happens next? </p> <p>Well, on one hand, as RBS' Greg Gibbs points out, the ECB's just announced QE "substantially" increases the incentive for Greece to stay in an acceptable EU/IMF austerity program as a decline in EUR and regional bond yields provide a draw for the country. He adds to expect a lot of “bluff and bluster” from both sides of the Greek debate in 1H2015 especially since EU members will concede little ground to Syriza-led Greek government. The problem is that Syriza can hardly agree to no concessions as it has built reputation on easing austerity.</p> <p>This leads Gibbs to conclude that the most likely outcome is just enough ground conceded on both sides to save face. </p> <p>Immediate focus likely to be troika review expected end-March; most important deadlines expected when Greece faces repayment pressure on large amount of bonds in July/Aug.</p> <p>The take of Morgan Stanley's Hans Redeker is less optimistic: he, alongside other fx strategists, thinks that the Greek election outcome don’t bode well for the Euro, adding overnight that investors will watch which party Syriza reaches out to. We now know that said party is the a rightwing anti-bailout organization, which weaknes the compromise angle. </p> <p>MS says to expect a modest core European opposition against Greek debt restructuring as no doubt current debt levels are unsustainable. </p> <p>Friction with EU partners will probably be on reforms as Syriza has not only called for the end to austerity, but wants to roll back some structural reforms and re-hire in public sector. </p> <p>The conclusion: it will be up to the German government to "make a difficult decision."</p> <p>So what was Germany's kneejerk take?&nbsp; Well as Michael Grosse-Broemer, chief whip of German Chancellor Angela Merkel’s party, said in a N-TV television interview, Alexis Tsipras will have to face reality “once the smoke of the election campaign lifts" adding that "you have to abide by agreements that were made in the past. <strong>Tsipras has promised a lot, but he will have to deliver if Greece wants aid disbursements to continue.</strong>" It is not quite <em>bailoutmail </em>but if the word fits.</p> <p>Merkel's lawmaker concludes that the Greek left is “a bit blinded by their ideology,” and that the German-led approach has worked in other euro-area countries that received bailouts. </p> <p>It almost makes one wonder if it wasn't "austerity" as much as corruption and incompetence that is behind the endless Greek drama...</p> <p>In any event, both sides are now on collision course, with Tsipras knowing full well that if he dilutes his promises sufficiently his political career will also be measured in months. Speaking of Tsipras, here are some amusing snippets about his ideological position <a href="">from the Guardian</a>:</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>As Greece descended into economic crisis, there were almost no signs that the young ideologue, an ardent admirer of Ernesto “Che” Guevara – he named the youngest of his two sons after the Argentinian Marxist revolutionary – would emerge as the wild card to challenge Europe or Athens’ own dynastic politics and vested interests.</p> <p>&nbsp;</p> <p>...</p> <p>&nbsp;</p> <p>Tsipras, perhaps more than any other Greek politician, has flourished on the back of crisis, his anti-austerity rhetoric and dexterity as a political operator becoming sharper by the day. His determination to learn English – swotting from textbooks in his spare time – helped turn him into a polished performer and earned grudging respect from his greatest opponents. </p> <p>&nbsp;</p> <p><strong>“Although trapped in his own rhetoric, he is very good at deflecting criticism and often using it to his advantage,”</strong> says Dr Eleni Panagiotarea, a research fellow at Greece’s leading thinktank, Eliamep. “His electoral campaign has been slick and very media-savvy.”</p> <p>&nbsp;</p> <p>...</p> <p>&nbsp;</p> <p>At 40, the former communist party youth activist, student leader, self-avowed atheist and firebrand appears determined to jolt not only his own country but also Europe. Nonconformity is part of the package. Others, say aides, will have to wake up to the reality that the radicals – for they wish to be called nothing else – will be doing things differently. </p> <p>&nbsp;</p> <p>Under Syriza, Athens will challenge fundamentals: the politics of austerity, fiscal policies, how business is done. With the eyes of the world media on him, Tsipras rammed home that message himself on Sunday after casting his vote in Athens. </p> <p>&nbsp;</p> <p>"Our common future in Europe is not austerity, it is the future of democracy, solidarity and cooperation," he announced.</p> <p>&nbsp;</p> <p>...</p> <p>&nbsp;</p> <p>Greek politicians are unaccustomed to taking Europe by storm. And they are certainly not used to being seen as trailblazers capable of galvanising public opinion in the 28-nation bloc. </p> <p>&nbsp;</p> <p>But, mixing chutzpah and charisma, Tsipras has managed to do both. From political unknown he has become the gadfly tormenting the big players in the EU. </p> <p>&nbsp;</p> <p><strong>"Merkelism,” he says, is in his sights. </strong>It is hard to overestimate the significance of this outcome for the left. Or Tsipras’s role in uniting groups that, famously, have remained fractured on the edge of political spectrum. </p> <p>&nbsp;</p> <p>Deploying unrivalled communication skills, the telegenic Tsipras has allowed Syriza to speak for a whole sector of society that for decades was hounded and harassed by authoritarian rightwing rule. </p> <p>&nbsp;</p> <p>In a nation still polarised by the fault lines of a bloody left-right civil war, both he and his alliance of Euro-communists, socialists, Maoists, Trotskyists and greens – since united into a single force – were only three years ago firmly relegated to the sidelines of Greek politics. </p> <p>&nbsp;</p> <p>Outside the eclectic world of Syriza committee meetings, congresses and conventions, they were not a force to be reckoned with. </p> </blockquote> <p>Maybe they are, but Europe is well-aware that any Greek renegotiation means one thing: an impairment of the ECB balance sheet, something which is also a non-starter for the central bank which is already toying dangerously close with losing all credibility as well as big losses for German taxpayers now that the bulk of Greek debt exposure has been mutualized outside of the banking sector,&nbsp; </p> <p>Whatever happens, expect a substantial increase in volatility in coming weeks as Greek pre-election promises and the harsh European reality finally collide, and lots and lots of red flashing headlines and FX kneejerk responses.</p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="567" height="378" alt="" src="" /> </div> </div> </div> Bond Capital Markets Corruption Eurozone Germany Greece headlines Reality Volatility Mon, 26 Jan 2015 11:49:28 +0000 Tyler Durden 500964 at "Out Of My Face Please" - Why Are US Soldiers In Mariupol? <p>Amid the devastation of yesterday's Mariupol artillery strikes which killed or wounded dozens, which was promptly blamed by both sides on the "adversary" - and has been proclaimed by both 'sides' <em>(more on that later)</em> as more violent than before the truce - an 'odd' clip has emerged that appears to provide all the 'proof' a US intelligence officer would need to surmise that US military boots are on the ground in Ukraine. As the following clip shows, a Ukrainian journalist approaches what she thinks is a Ukrainian soldier <em>(since he is wearing a Ukrainian military uniform and is carrying an AK)</em> and asked him as they run through the battlezone, "<strong>tell me, what happened here</strong>?" His response, which requires no translation, speaks for itself.</p> <p>Forward to 2:36 for the 'Ukrainian' soldier's response:</p> <p> <iframe src="//" width="560" height="420" frameborder="0"></iframe></p> <p>Here is a clip which focuses just on the exchange in question:</p> <p> <iframe src="//" width="560" height="420" frameborder="0"></iframe></p> <p>With daily reportage of the 'invasion' of Russian military forces into Ukraine territory (admittedly unconfirmed by NATO), this clip raises many questions about American involvement in the ongoing conflict - most of all, was the US involved in the "staging" the Mariupol massacre, and if so it is clear who should be blamed (and isolated).</p> <p>Of course, US troops, or at least mercs, on the ground, should not be a total surprise, <a href=""><strong>since just 2 months ago, we discussed the hacked US documents that revealed the extent of undisclosed US "lethal aid" being given to the Ukraine army</strong></a>. What was apparently left unleaked was the part of the US aid also includes US-speaking soldiers. The only question is whether US taxpayers are paying their wages.</p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="590" height="444" alt="" src="" /> </div> </div> </div> Ukraine Mon, 26 Jan 2015 03:44:02 +0000 Tyler Durden 500937 at Israel's President Refuses To Meet With Obama <p>While Obama is doing everything in his power to show that when it comes to commiserating with the Saudis, he is first in line, the US relationship with that "other" US ally in the region, Israel, is in a fast and furious state of "crash and burn." </p> <p>Recall, that it was yesterday <a href="">when it was revealed </a>that President Obama will forgo a visit to the Taj Mahal during his visit to India in order to pay respects in Saudi Arabia after the death of King Abdullah, the White House announced early Saturday morning. Vice President Biden was initially scheduled to lead the U.S. delegation, but he will instead now remain in Washington and Obama will add the stop onto his return from India, where Obama is concluding his trip to "foster economic ties with the nation."</p> <p>This, in turn, takes place a day after <a href="\">Obama announced </a>he would not meet Israel's prime minister when he visits Washington in March, the White House said on Thursday, after being blindsided by the Republicans' invitation to Benjamin Netanyahu to address the U.S. Congress on Iran. </p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>Bernadette Meehan, spokeswoman for the White House National Security Council, said Obama was withholding an invitation for Oval Office talks with Netanyahu because of Israel's March 17 elections. </p> <p>&nbsp;</p> <p>“As a matter of long-standing practice and principle, we do not see heads of state or candidates in close proximity to their elections, so as to avoid the appearance of influencing a democratic election in a foreign country," Meehan said in statement. </p> <p>&nbsp;</p> <p>"Accordingly, the president will not be meeting with Prime Minister Netanyahu because of the proximity to the Israeli election, which is just two weeks after his planned address to the U.S. Congress."</p> </blockquote> <p>This in turn led to a stunning retaliation, when Israel indicated earlier today that it has finally had it with Obama, with the above sequence of events <a href="">culminated in what Haaretz described </a>was a reciprocal snub of the "leader of the free world" by Israel's president Reuven Rivlin, who declined a White House invitation to meet with Obama during his upcoming US trip. </p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>The White House approached senior U.S. officials and advisers of President Reuven Rivlin on Saturday, to examine the possibility of a meeting between Rivlin and President Barack Obama during the former’s upcoming visit to the United States. <strong>Rivlin finally declined the American offer.</strong> </p> <p>&nbsp;</p> <p>Rivlin will be in New York this week to speak at UN Headquarters, for an International Holocaust Remembrance Day event. The President’s Residence had informed U.S. Ambassador Dan Shapiro in early December of Rivlin’s planned visit, and the information was conveyed to the White House. </p> <p>&nbsp;</p> <p>A senior Israeli official said that at first Rivlin did not want to impose himself on Obama, and that he would be happy to go to Washington if invited by the White House. The deputy spokesman for the White House National Security Council, Alistair Baskey, said that Rivlin had asked in December about the possibility of a meeting as part of his visit to New York, and that there had been contacts between the two presidential bureaus over the matter in recent weeks.</p> <p>...</p> <p><strong>After consultations, Rivlin finally declined the American suggestion. His advisers explained to the Americans that the two leaders’ schedules do not overlap, because Rivlin is expected to return to Israel before Obama gets back to Washington.</strong> </p> <p>&nbsp;</p> <p>The President’s Residence and the White House released coordinated statements last night identical in their wording, that there had been contact between the relevant parties in Israel regarding a meeting while Rivlin was in New York. </p> <p>&nbsp;</p> <p>“At this stage, it has been agreed not to hold a meeting during his visit, due to the schedule constraints of both leaders, and that a meeting would be scheduled at a later date,” the statement said.</p> </blockquote> <p>"Scheduling conflicts" indeed.</p> <p>At this point it is clear that Obama's foreign policy is beyond salvage. What is less clear is why he has chosen to snub Israel at the expense of Saudi Arabia, especially at a time when it is the Saudis' relentless extermination of every last US shale driller that will soon send America's economy reeling, and push Texas (at first, then many other states) in outright recession. </p> <p>One suggestion is that Obama decided to cut his India trip short so he could diligence in person whether, as the following chart shows, when it comes to corporal punishment, the world's most evil (du jour) terrorist organization is getting all of its pointers from America's biggest "ally" in the Middle East.</p> <p><a href=""><img src="" width="600" height="1224" /></a></p> <p>&nbsp;</p> <p>Actually scratch that: these days the last thing Obama cares about are facts. So if one had to use a graphic to show what is going on, the following one is far more appropriate.</p> <p><a href=""><img src="" width="597" height="435" /></a></p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="597" height="435" alt="" src="" /> </div> </div> </div> Barack Obama India Iran Israel Middle East national security President Obama Recession Saudi Arabia White House Mon, 26 Jan 2015 03:29:01 +0000 Tyler Durden 500963 at