en Peak Q€xuberance? German Investor Confidence Stumbles As DAX Hits Record Highs <p>Despite US business media's propagandic imploring that Europe is recovering, is in a Goldilocks scenario, and is the best place to invest - all thanks to the magic of Q€ - it appears they forgot to tell the Germans. The <strong>ZEW Investor Expectations index fell for the first time in 6 months</strong>, without making a higher high, as Germany's DAX index rose to record-er higher highs. <strong><em>We've seen this pattern of momentum exuberance before...</em></strong></p> <p>&nbsp;</p> <p><a href=""><img src="" width="600" height="660" /></a></p> <p>&nbsp;</p> <p>Did we just pass Peak Q€ Exuberance?</p> <p>&nbsp;</p> <p><em>Charts: 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="1114" height="1225" alt="" src="" /> </div> </div> </div> Goldilocks Tue, 21 Apr 2015 15:34:38 +0000 Tyler Durden 505094 at There Still Are Some Retail Investors Left: This Is What They Are Buying <p><em>Via ConvergEx&#39;s Nicholas Colas,</em></p> <p><strong>What do retail investors do on volatile days like Friday&rsquo;s 1.1% move lower on the S&amp;P 500?&nbsp;</strong> Today we look at information from one very large online broker&rsquo;s publicly available order flow to explore that topic.</p> <p><strong>The simple answer: they buy, and the predominant security type is single stocks rather than exchange traded funds.</strong></p> <p>The top three names from Friday&rsquo;s action: <strong>Apple </strong>(2.6x better to buy, based on the number of orders), <strong>Netflix </strong>(1.1x), and <strong>Facebook</strong> (2.4x). The SPDR S&amp;P 500 ETF is just off the podium in 4th place, with a 1.5x buy/sell ratio.</p> <p>In the top 30 names traded, <strong>only Microsoft and Schlumberger saw net single-stock sell imbalances</strong>. <span style="text-decoration: underline;"><em>Will retail always be there to catch the falling knife, or at least soften its fall?&nbsp; Hard to say, but for now this segment of investors seems to keeping the faith. </em></span><br />&nbsp;<br /><strong>For many individual investors in the U.S., the Financial Crisis still casts its long shadow over their confidence in equity markets.</strong> Even though the S&amp;P 500 has recovered all its losses from the 2007-2009 drop, barely half of Gallup respondents in their regular surveys on the topic report that they have &ldquo;Any money invested in the stock market right now &ndash; either in an individual stock, a stock mutual fund, or in a self-directed 401(k) or IRA&rdquo;.&nbsp; The exact numbers: 54% reported such ownership in April 2014 (last results) versus 65% in 2007 and 67% in 2002 (all time high).<br />&nbsp;<br /><strong>While it&rsquo;s tempting to chalk this shift up to the aging demographics of the baby boomer generation, that&rsquo;s not a very satisfying explanation.</strong> Four quick points here:</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><strong>First, any long term look at the return data for different asset classes shows equities have some role in a portfolio for anyone under the age of 68 (positive 10 year returns and an average life expectancy of 78 in the U.S.).</strong></p> <p>&nbsp;</p> <p><strong>Second, the stair-step declines in Gallup&rsquo;s self-reported ownership numbers correlate to post-bubble periods, with drops after the 2000 dot com bust and the 2007-2009 Financial Crisis.</strong></p> <p>&nbsp;</p> <p><strong>Lastly, the response to Gallup&rsquo;s regular &ldquo;Do you think investing in the stock market would be a good idea or bad idea?&rdquo; query shows a real lack of faith in equities. </strong>Since 2000, there have only been 2 times when the &ldquo;Good idea&rdquo; response registered over 50%: 2004 and 2006.</p> <p>&nbsp;</p> <p><strong>The bottom line is that most Americans are still quite cautious about investing in equities, and its not just their age giving them pause. </strong>They seem to see the volatility of the last 15 years as a fundamental impediment to lasting confidence in U.S. stock markets. For an asset class that requires patience to reap any substantial rewards, that&rsquo;s a tough hurdle. Too tough for many, it would seem.</p> </blockquote> <p><strong>But what about those investors who are still invested in U.S. stocks &ndash; that slim 54% majority with money still in the market?</strong> For them, the story seems quite different than for those who&rsquo;ve turned their backs on stocks. Either they have a different psychological makeup from their peers, or perhaps their experience with stocks is more rooted in the gains of the past five years than the churn of the last fifteen.<br />&nbsp;<br /><strong>Take as a mini case study the action from Friday&rsquo;s sell off.</strong>&nbsp; I regularly look at the daily trading trends available on one large online broker&rsquo;s website &ndash; Fidelity&rsquo;s retail portal. The data posts every day in real time, so by the end of trading hours you have a snapshot of what this particular brokerage has seen in terms of order flow through the day. The top 10 names traded are visible to anyone with or without a brokerage account at the company &ndash; the remaining 20 names require an account ($2,500 minimum).<br />&nbsp;<br /><strong>A few key takeaways from the data:</strong></p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><strong>Retail investors still trade a lot of single stocks, rather than exchange traded funds. </strong>Of the top 30 names in terms of the number of orders, only 5 are ETFs.&nbsp; The rest are all individual company equities.</p> <p>&nbsp;</p> <p><strong>The top three names in terms of order flow on Friday were Apple, Netflix and Facebook.</strong> To give a sense of scale, Apple had 72% buy orders and 28% sell orders on Friday. Netflix was paired more closely, at 53% buy orders and 47% sells. Facebook orders skewed more to the buyside as well: 71% to 29% sells.</p> <p>&nbsp;</p> <p><strong>The ETF with the most retail interest based on this data was SPY, with 61% buy versus 39% sell orders.</strong> The only other ETF name in the top 10 is UVXY &ndash; the ProShares Ultra VIX Short Term Futures &ndash; with 30% of the order flow as buys and the rest as sells.</p> <p>&nbsp;</p> <p><strong>Taken as a whole, retail investors were net buyers of the top 30 names on this list during Friday&rsquo;s volatile session.</strong> In terms of single stocks, retail was a small net seller of just two names &ndash; Microsoft and Schlumberger &ndash; and hardly in enough size to be meaningful.</p> <p>&nbsp;</p> <p><strong>Rounding out the Top 10 list (those available on public access to the Fidelity website): GE, Alibaba, American Express, AT&amp;T, and Bank of America. </strong></p> </blockquote> <p><strong>I know we can&rsquo;t take one day &ndash; even a volatile one &ndash; and put too much weight on the data to extrapolate larger trends. </strong>At the same time, the long term is just a bunch of short terms strung together. Friday&rsquo;s volatile action should have been exactly the kind of churn that spooks retail investors. There were, for example, very few satisfying explanations for the +1.5% drop in the S&amp;P 500 through 2pm, or the 50 basis point snapback into the close. And yet, the data is clear: retail bought this dip.<br />&nbsp;<br /><strong>It could well be that the last 15 years of U.S. equity market volatility has left only the &ldquo;True believers&rdquo; to buy and own stocks.</strong> They are fewer in number (or at least percentages) than during much of the last 2 decades, but they are still there. And they still believe in buying individual stocks.<strong><em><u> Now, we really haven&rsquo;t had a large bout of market volatility in several years, so we don&rsquo;t know if they will step in when the CBOE VIX Index reaches 20, or 30, or higher. But for now, they still believe.</u></em></strong></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="173" height="201" alt="" src="" /> </div> </div> </div> American Express Apple Bank of America Bank of America CBOE Demographics Equity Markets Gallup SPY Volatility Tue, 21 Apr 2015 15:11:06 +0000 Tyler Durden 505093 at Bill Gross Says Bunds "Short Of A Lifetime", As Mario Draghi Is About To Run Out Of Bunds To Buy <p>By now everyone has seen the infamous chart showing how much of Europe's government bond market is trading in negative territory.</p> <p><a href=""><img src="" width="502" height="463" /></a></p> <p>&nbsp;</p> <p>This is simply a visual representation of <a href="">three stunning facts</a>:</p> <ul> <li><strong>As of this moment 53% of all global government bonds yielding 1% or less.</strong></li> <li><strong>$5.3 trillion of all global government bonds currently have negative yields, of which 60% are European.</strong></li> <li><strong>and Central bank assets now exceed $22 trillion, a figure equivalent to the combined GDP of US &amp; Japan.</strong></li> </ul> <p>Considering that central banks aren't going anywhere in their frenzied scramble to re-export deflation to their peers, which means trillions more in debt monetizations (until they all lose patience, or credibility, whichever comes first and start paradropping money from Bernanke's chopper) the statistics above are only going to get worse.</p> <p>It is in this context that moments ago, Bill Gross said that "<strong>German 10 year Bunds are the short of a lifetime...</strong></p> <blockquote class="twitter-tweet" lang="en"><p>Gross: German 10yr Bunds = The short of a lifetime. Better than the pound in 1993. Only question is Timing / ECB QE</p> <p>— Janus Capital (@JanusCapital) <a href="">April 21, 2015</a></p></blockquote> <script src="//"></script><p>... however with the provision that there is one open question: timing and ECB QE (also, we can only guess that Gross means 1992 not 1993 for the pound move). </p> <p>Of course, <em>that is the $5.3 trillion question. </em></p> <p>In the meantime, here are some observations on timing and ECB QE. </p> <p>As we <a href="">noted over a month ago</a> on March 6, what will first happen before Bunds are indeed "a short of a lifetime" is that they will first all hit -0.20%. They are already well on their way.</p> <p><a href=""><img src="" width="500" height="264" /></a></p> <p>The reason? The same one we have been pounding the table on for <a href="">over three years</a> - <strong>Europe simply does not have enough unencumbered collateral for the ECB monetize, </strong>and certainly not enough to allow the ECB to continue its QE until late 2016. </p> <p>And little by little everyone is figuring this out. </p> <p>Today, it's Reuters' turn which write that "<strong><span style="text-decoration: underline;">Debt redemptions and coupon repayments are expected to be about 30 billion euros more than the value of debt sales</span>.</strong>"</p> <p>Reuters continues:</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>This means the ECB and national central banks (NCBs) <strong>may struggle to buy some of the bonds needed to keep the maturity of the banks' purchases in line with the average maturity of each country's eligible debt. </strong>The markets with the biggest net inflows this month are Spain, Germany and the Netherlands. </p> <p>&nbsp;</p> <p>"This month's low net supply figure is not helpful to the ECB/NCB aim to minimise market distortions when carrying out QE, as there could be competing flows with investors wanting to reinvest in European government bonds," said Orlando Green, rate strategist at Credit Agricole.</p> </blockquote> <p>What this means is that far from being the short of a lifetime right now, Bunds are in fact quite the opposite, and their progression to the hard -0.20% floor across the curve is just a matter of time before everyone decides to frontrun the ECB's purchases over the next year. Because if the ECB will have no choice but to buy even more Bunds from the private market, <strong>then the sellers can demand any prices for these Bunds, up to and including the ECB's hard (for now) floor of -0.20%!</strong></p> <p>Indeed, confirming that the ECB has a scarcity problem is the ECB's stern denial of just that: "ECB President Mario Draghi said last week he saw no "scarcity" problem in bond markets."</p> <p>Let's revisit when the 10Yr Bund is trading at -0.20%, shall we?</p> <p>Meanwhile, the only question is when the benchmark Bund finally crosses the historic 0.00% threshold. There is a brief reprieve in the coming two months...</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>The redemption flow in euro zone bond markets may exacerbate some of these problems in April but these difficulties may ease in the next two months. Debt sales in Italy and France in particular will outweigh debt repayments in May, Credit Agricole data shows. </p> </blockquote> <p>... After which things get very ugly, fast:</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>It will be a bumpy road though -- a net 69 billion comes back to the market in July. So far under its programme, which began on March 9, the ECB has bought 73.3 billion euros of public sector bonds. </p> <p>&nbsp;</p> <p><strong>If ECB purchases are not market-neutral, investors may take the opportunity to speculate on what the central bank will buy in any given month, on the view that it will have to revert to neutrality by the end of the programme in September 2016</strong>.</p> </blockquote> <p>Visually, the above looks as follows:</p> <p><a href=""><img src="" width="502" height="1119" /></a></p> <p>Of course, if Greece has anything to do with it, this ECB's "market neutrality" will be compromised much faster: should the Greek capital controls and bank run be exacerbated in the coming days, primarily as a result of the ECB's own ongoing attempt to spark a banking sector panic in Greece, then the 10 Year Bund may slide under 0.00% in the coming days, on its way to -0.20%. </p> <p>And yes, once the entire German curve is trading at -0.20% then Bill Gross will be spot on, and Bunds will indeed be the short of a lifetime. </p> <p>Just don't expect to pocket the proceeds any time soon because, paradoxically, for that to happen, central banks have to finally lose all credibility. And the fiat in which one will enjoy the profits from the Bund short may suddenly not be worth all that much in a post central-bank world.</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="1211" height="1119" alt="" src="" /> </div> </div> </div> Across the Curve Bank Run Bill Gross Bond Central Banks France Germany Greece Italy Janus Capital Japan Netherlands Reuters Tue, 21 Apr 2015 14:45:36 +0000 Tyler Durden 505092 at White House Refutes European Complacency: Warns Grexit Threatens Global Economic Recovery <p><a href="">Despite our exposure of the contagious risk increases in peripheral bond spreads,</a> <em><strong>&quot;many European officials believe a Greek exit would be manageable</strong>, and in contrast to 2010-2011, we wouldn&rsquo;t see the same cascading effect on countries like Spain or Ireland,&rdquo;</em> according to the European Centre for International Political Economy in Brussels and EU Chair Jeroen Djisselbloem even noted that <em>&quot;<strong>the Greek situation can be isolated</strong>.&quot;</em></p> <p>Germany also confident...</p> <ul> <li><strong>*SCHAEUBLE: EUROPE WON&#39;T TAKE RISK TO ENDANGER GLOBAL ECONOMY</strong></li> <li><strong>*SCHAEUBLE: EURO ZONE HAS OVERCOME CRISIS, THERE&rsquo;S NO CONTAGION</strong></li> </ul> <p>However, it appears America is getting nervous at Europe&#39;s apparent complacency... White House economic adviser Jason Furman says <strong><em>a Greek exit from the euro zone would present &quot;VERY LARGE AND UNNECESSARY RISK FOR GLOBAL ECONOMY.&quot;</em></strong></p> <ul> <li><strong>WHITE HOUSE ADVISER FURMAN SAYS &quot;GREXIT&quot; INVOLVES LARGE TAIL RISK, COULD IMPEDE INVESTMENT, CREATE UNCERTAINTY IN MARKETS AND THREATEN ECONOMIC RECOVERY</strong></li> </ul> <p>And UK Chancellor George Osborne is not so complacent:</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>&ldquo;The situation in Greece is the one at the moment that&rsquo;s the <strong>most worrying for the world economy,</strong>&rdquo; Osborne told reporters.</p> <p>&nbsp;</p> <p><u><strong>&ldquo;A misstep could easily return the world economy to the situation we were in 3 or 4 years ago&rdquo;</strong></u></p> </blockquote> <p>* * *</p> <p>Still we are sure everything will be fine...</p> <p><img height="317" src="" width="600" /></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="214" height="186" alt="" src="" /> </div> </div> </div> Bond Germany Global Economy Greece Ireland recovery White House Tue, 21 Apr 2015 14:19:44 +0000 Tyler Durden 505081 at PoRTRaiT OF A LeaDeR... <p style="text-align: center;"><iframe src="" width="820" height="1024" frameborder="0"></iframe></p> Tue, 21 Apr 2015 14:00:10 +0000 williambanzai7 505080 at One Year Ago, These Bonds Were Eight Times Oversubscribed <p><a href="">Almost exactly one year ago, </a>Greece returned "triumphally" to the bond markets when it issued its first 5 Year bond post-bailout at the lowest yield since 2009. This was trumpeted by business media...&nbsp;</p> <blockquote class="twitter-tweet" data-partner="tweetdeck"><p>Congrats to Greece on its triumphant return.</p> <p>&mdash; Joseph Weisenthal (@TheStalwart) <a href="">April 10, 2014</a></p></blockquote> <script async src="//" charset="utf-8"></script><p>... who especially clung of the fact it was <strong>eight times oversubscribed</strong>, more than the demand for Facebook IPO shares, as 'proof' that Greece was fixed, the crisis was behind Europe, and everything should be bought.</p> <p>There were countless comedic punchlines, such as the <a href="">following</a>:</p> <blockquote><p>Greek bondholder Hans Humes, chief investment officer at Greylock Capital,<strong> said costs should be as low as 25 bps above Portugal's, or about 3.25 percent. </strong></p> <p>&nbsp;</p> <p>"Sure, the costs are a bit higher when coming to the market but the sooner they do it the better," said Humes, who believes Greece's debts to the private sector are so small compared to those owed to the EU and IMF that another haircut imposed on private investors makes little sense. <strong>"Selling to a voluntary market on a new issue basis is a game changer," </strong>he said.</p> </blockquote> <p><a href="">We were far less sanguine and at the time we noted</a>, <em>"claims that is the best example of positive sentiment and of a new normal are foolish - if nothing else, this is a sign of utter complacency and exuberance."</em></p> <p>We were right.</p> <p>From 8x over-subscribed to 60c on the dollar in a year.</p> <p>Which however is great news for Mr. Humes: because if he liked the bonds at a yield of 4.95% he should be all-in this morning when they are yielding a record high 20.2%, right!?</p> <p><a href=""><img src="" width="600" height="314" /></a></p> <p><a href="">You were warned:</a></p> <blockquote><p><strong>"<a href="">Fear Of Missing Out</a>" - that is the only way one can explain the irrational idiocy with which asset "managers" are scrambling to allocate other people's money into today's "historic" Greek (where unemployment just printed at 26.7%) return to the bond market, </strong>and which according to Greek PM Venizelos was eight times oversubscribed, or far more demand than for the Facebook IPO. </p></blockquote> <p>It seems, once again, that Greek yields are catching up to the state of collapse in the country, and the only thing that is preventing the rest of Europe from following Greece into an ecnomic singularity is hope and faith that Mario Draghi will continue to monetize everyone else's bonds, ironically the same "catalyst" behind the 8x oversubscription.</p> <p><a href=""><img src="" style="width: 600px; height: 313px;" /></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="964" height="504" alt="" src="" /> </div> </div> </div> Bond fixed Greece New Normal Unemployment Tue, 21 Apr 2015 13:56:51 +0000 Tyler Durden 505079 at A New Dark Age: When College Doesn't Pay <p><a href=""><em>Submitted by Daniel Drew via</em></a>,</p> <p>If you&#39;re so smart, why aren&#39;t you rich? One day, as ignorance becomes an ideal to strive for, that question might be replaced with, &quot;<b>If you&#39;re so <i>dumb</i>, why aren&#39;t you rich?</b>&quot;</p> <p>The possibility that evolution might take a wrong turn and transform us into a society of imbeciles was dramatized in the movie <a href="" target="_blank">Idiocracy</a>. That process is beginning today as education is no longer rewarded. <b>A look at the <a href="" target="_blank">labor force</a> participation rate for college graduates shows a steady decline since the data was first tracked</b>.</p> <p><a href="" target="_blank"><img alt="Bachelor Degree Labor Force Participation" border="1" src="" style="width: 600px; height: 397px;" title="Bachelor Degree Labor Force Participation" /></a></p> <p>&nbsp;</p> <p>Getting a college degree used to mean a ticket on the upward trajectory of this thing they once called a &quot;career.&quot; Now, your college degree guarantees you a place behind the bar counter in the <a href="" target="_blank">McJob recovery</a>.</p> <p><img alt="Student Loans" border="1" src="" style="width: 560px; height: 296px;" title="Student Loans" /></p> <p>As more college graduates become unemployed, the more the federal government picks up the <a href="" target="_blank">tab</a>.</p> <p><img alt="No Degree Lambo" border="1" src="" style="width: 498px; height: 381px;" title="No Degree Lambo" /></p> <p><b>Idiocracy is upon us</b>.</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="452" height="355" alt="" src="" /> </div> </div> </div> recovery Tue, 21 Apr 2015 13:30:18 +0000 Tyler Durden 505078 at Egypt's Clinton-Backed Former President Jailed For 20 years <p>Deposed former Egyptian President Mohammed Morsi was sentenced to 20 years in prison today in connection with a crackdown on protesters during demonstrations against his rule in late 2012. Morsi, whose Muslim Brotherhood has been branded as a terrorist organization by now-President Abdel Fattah al-Sisi, assumed the Presidency in 2012 after Hosni Mubarak was toppled a year earlier during the Arab Spring. Morsi would himself become the target of mass protests after issuing a decree granting himself special powers — the unrest would ultimately end in the military assuming power in July of 2013 in an infamous <a href="">(maybe)-coup</a>. </p> <p>Here's <a href="">Al Jazeera</a>:</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p><strong><em>A Cairo court has sentenced former Egyptian President Mohamed Morsi and 12 other defendants to 20 years in prison.</em></strong></p> <p>&nbsp;</p> <p><em><strong>Morsi was convicted on Tuesday of ordering the arrest and torture of protesters in clashes outside the presidential palace in December 2012. </strong>The court acquitted the former president of murder charges that could have seen him face the death penalty.&nbsp;</em></p> <p>&nbsp;</p> <p><em>Morsi also faces serious charges in three other cases, including an accusation that he passed intelligence to Qatar.</em></p> <p>&nbsp;</p> <p><em>Mohammed Soudan, a senior member of the Muslim Brotherhood, and an official within its affiliated Freedom and Justice Party, told Al Jazeera that the trial was a "political farce".</em></p> </blockquote> <p>And a bit more from <a href="">BBC</a>:</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p><em>It is the first verdict he has received since his ousting and is one of several trials he faces.&nbsp;</em><em style="font-size: 1em; line-height: 1.3em;">Morsi was deposed by the army in July 2013 following mass street protests against his rule.</em></p> <p>&nbsp;</p> <p><strong><em>Since then, the authorities have banned his Muslim Brotherhood movement and arrested thousands of his supporters.</em></strong></p> <p>&nbsp;</p> <p><strong><em>Morsi and 14 other Brotherhood figures escaped a more serious charge of inciting the killing of protesters, which could have carried the death sentence.</em></strong></p> <p>&nbsp;</p> <p><em>Most of the other defendants were also given 20-year prison sentences. Morsi's legal team have said they will appeal.</em></p> <p>&nbsp;</p> <p><strong><em>Morsi's trials</em></strong></p> <p>&nbsp;</p> <p><em>This verdict is just one of several Mr Morsi faces. They include:</em></p> <ul> <li><em style="font-size: 1em; line-height: 1.3em;">Colluding with foreign militants in a plot to free Islamists in mass prison breaks during the 2011 uprising against Hosni Mubarak</em></li> <li><em style="font-size: 1em; line-height: 1.3em;">Espionage and conspiring to commit terrorist acts in Egypt with the Palestinian movement Hamas, Lebanon's Hezbollah and Iran's Revolutionary Guards</em></li> <li><em style="font-size: 1em; line-height: 1.3em;">Endangering national security by leaking state secrets and sensitive documents to Qatar via the Doha-based Al Jazeera network</em></li> </ul> </blockquote> <p>Perhaps the best way to sum up how “<a href="">successful</a>” the US was in terms of foreign policy over the course of the political turmoil is to quote former Obama adviser Vali Nasr, who described the situation as follows in a 2013 interview with the <a href="">Wall Street Journal</a>:&nbsp;</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p><strong><em>"The Mubarak people are unhappy with the way he was shoved off without a thank you. The military thinks we coddled the Brotherhood and didn't intervene to control them. And the Brotherhood thinks that we never supported them when they needed support, and then gave the green light to the military."</em></strong></p> </blockquote> <p>Sounds like par for the US foreign policy course. </p> <p>Now, with Morsi sentenced to nearly a quarter century behind bars, we thought it as good a time as any to resurrect the following Morsi-era quotes from Hillary Clinton who, like Egypt’s democratically elected former President, just wants what’s best for “everyday” people:</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p><em>“The United States [strongly supports] the Egyptian people and their democratic transition".</em></p> <p>&nbsp;</p> <p><strong><em>"We want to be a good partner and we want to support the democracy that has been achieved by the courage and sacrifice of the Egyptian people.”</em></strong></p> </blockquote> <p><span style="font-size: 1em; line-height: 1.3em;">A “democracy” that lasted all of four months before Morsi, in an irony of ironies, granted himself sweeping autocratic powers in the interest of safeguarding the transition to democratic institutions.&nbsp;</span></p> <p><img src="" width="450" height="207" /></p> <p><img src="" width="450" height="250" /></p> <p><img src="" width="450" height="237" /></p> <p>And of course there was <a href="">this</a>:</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p><em>The wife of former Egyptian president Muhammad Morsi is the latest Muslim Brotherhood “insider” to threaten to expose the special relationship between Morsi and the Obama administration—a relationship the latter insists never existed.</em></p> <p><em>Nagla Mahmoud, Morsi’s wife, is reportedly angry at some statements recently made by Hillary Clinton, including that Morsi was “naïve” and “unfit for Egypt’s presidency,” as reported by Arabic media.</em></p> <p>&nbsp;</p> <p><strong><em>In the words of El-Mogaz News, Morsi’s wife “is threatening to expose the special relationship between her husband and Hillary Clinton, after the latter attacked the ousted [president], calling him a simpleton who was unfit for the presidency. </em></strong></p> <p>&nbsp;</p> <p><strong><em>Sources close to Nagla confirmed that she has threatened to publish the letters exchanged between Morsi and Hillary.”</em></strong></p> <p>&nbsp;</p> <p><em>The report continues by saying that Nagla accuses Hillary of denouncing her former close ally, the Brotherhood’s Morsi, in an effort to foster better relations with his successor, Egypt’s current president, Sisi—even though, as Nagla laments, “he [Morsi] was faithful to the American administration.”</em></p> </blockquote> <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="582" height="269" alt="" src="" /> </div> </div> </div> national security Wall Street Journal Tue, 21 Apr 2015 13:15:09 +0000 Tyler Durden 505077 at European Banks Are Paid To Borrow For First Time Ever As Euribor Goes Negative <p>Mario Draghi said this week that the transmission channels for European Q&euro; were opening up and crowed how well his cunning plan was working (by well we assume he means stocks are up). Today we get the ultimate test of that &#39;transmission&#39; as <strong>3-Month EURIBOR fell below 0.00% for the first time ever</strong> <em>(likely wreaking havoc on European derivative pricing models)</em>. In English that means banks are being paid to borrow from one another in the interbank money-markets (which sounds a lot like a &#39;glut&#39; of excess cash) seemingly confirming ICMA&#39;s de Vidts fears: <strong><em>&quot;We are scared about the [repo] market freezing,&quot; as the ECB is &quot;driving without headlights in the dark.&quot;</em></strong> <a href="">Of course this is yet another disturbing distortion on the heels of homeowners being paid to take out mortgages...</a></p> <p>Banks now paid to borrow from one another...</p> <p><a href=""><img height="312" src="" width="600" /></a></p> <p>&nbsp;</p> <p>&nbsp;</p> <p>As fears of the repo market in Europe freezing appear to be confirmed... <a href=""><em>(via Reuters),</em></a></p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><strong>The European Central Bank (ECB) risks secured-lending or repo markets grinding to a halt unless it works more closely with national central banks (NCBs) to improve liquidity</strong>, a senior trade association official told Reuters.</p> <p>&nbsp;</p> <p>The 5.5 trillion euro ($6 trillion) repo market is vital for banks and companies to manage their cash balances, offering short-term loans in exchange for government debt as collateral.</p> <p>&nbsp;</p> <p>Godfried de Vidts, the chair of the International Capital Market Association&#39;s European Repo Committee, said unless the ECB took action within the next few months, investors might start avoiding euro zone bonds.</p> <p>&nbsp;</p> <p>That might push borrowing costs up in the longer term.</p> <p>&nbsp;</p> <p><strong>&quot;Investors could become reluctant to invest in euro zone debt,&quot;</strong> he said, noting that his committee had voiced its concerns to officials at the ECB.</p> <p>&nbsp;</p> <p>The <strong>ECB has allowed bonds bought under its trillion-euro purchase scheme (QE) to be used as security for loans, a precaution against any surge in repo prices that might occur as QE sucks securities out of the market</strong>.</p> <p>&nbsp;</p> <p>But <span style="text-decoration: underline;"><strong>traders say that the system does not allow bonds to be leased for long enough</strong></span>, is too restrictive on the amount parties can borrow and is very expensive.</p> <p>&nbsp;</p> <p><strong>&quot;We are scared about the market freezing,&quot; </strong>de Vidts said.</p> <p>&nbsp;</p> <p>In recent weeks, one 10-year Bund became so scarce that <strong>market players paid up to 2.5 percent to lend cash in exchange for the German bond</strong>, dealers said.</p> <p>&nbsp;</p> <p>De Vidts said the ECB&#39;s &quot;securities lending&quot; framework also relies too heavily on NCBs offering their own lending programs, and many of them have not yet put systems in place.</p> <p>&nbsp;</p> <p>NCBs are responsible for 80 percent of purchases under QE, with the ECB directly buying the remaining 20 percent in the roughly 7-trillion-euro euro zone government bond market.</p> <p>&nbsp;</p> <p><strong>&quot;We are driving without headlights in the dark,&quot;</strong> said de Vidts, proposing that the ECB centralizes the scheme in Frankfurt.</p> <p>&nbsp;</p> <p><span style="text-decoration: underline;"><strong>&quot;You are getting this scenario - which is a nightmare for the repo market &ndash; of a re-nationalization of a market that had developed to become European.&quot;</strong></span></p> <p>&nbsp;</p> <p>Last week, ECB President Mario <strong>Draghi said the bank saw no evidence QE was creating a shortage of bonds</strong>, or that this might happen in the future.</p> </blockquote> <p>*&nbsp; *&nbsp; *</p> <p>This won&#39;t end well.</p> <p><a href=""><img alt="" src="" style="width: 500px; height: 313px;" /></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="500" height="313" alt="" src="" /> </div> </div> </div> Bond Bond Dealers Borrowing Costs Central Banks European Central Bank Repo Market Reuters Tue, 21 Apr 2015 13:08:01 +0000 Tyler Durden 505076 at Ten Things We're Grateful For (Irony Alert) <p><a href=""><em>Submitted by Charles Hugh-Smith of OfTwoMinds blog</em></a>,</p> <p><span><i>Being grateful boosts your happiness. Ten wonderful things I&#39;m grateful for.</i></span></p> <p><span><b>Since every volume on the nearly endless shelf of pop psychology self-help books recommends working up some gratitude as the key to happiness, I&#39;ve conjured up a list of what I&#39;m grateful for.</b><em>&nbsp;(Please turn your irony setting on.)</em></span></p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><span><b>1. I&#39;m grateful that our choice of president has been reduced to two equally detestable dynasties or their proxies.</b>&nbsp;This greatly simplifies the process of selecting a warmongering figurehead for the Empire and its bankers.</span></p> <p>&nbsp;</p> <p><span><b>2. I&#39;m grateful that I can watch a full spectrum of entertainment, ranging from depraved to dreadfully unfunny&nbsp;</b>on any device at anytime. This&nbsp;<i>white noise</i>&nbsp;helps block out any troubling clarity of thought or urge to ask what I might feel if I wasn&#39;t constantly distracted.</span></p> <p>&nbsp;</p> <p><span><b>3. I&#39;m grateful that there are so many opportunities to borrow money</b>, because if I couldn&#39;t borrow more, I might miss an astounding opportunity to consume more of something I don&#39;t really need.</span></p> <p>&nbsp;</p> <p><span><b>4. I&#39;m grateful that every food item in the store now contains sugar in one form or another</b>, or a sugar substitute. This simplifies the process of maintaining my addiction to sugar, as all I need to do is eat anything produced by Corporate America&#39;s food sector.</span></p> <p>&nbsp;</p> <p><span><b>5. I&#39;m grateful I live in a country where the government can trample on the rights of its citizens behind a thin veil of legitimacy.</b>&nbsp;After all, what terrible thing might happen if the government couldn&#39;t arrest those horrible people tearing up their front yard lawn to plant a vegetable garden?</span></p> <p>&nbsp;</p> <p><span><b>6. I&#39;m grateful for our national obsession with fostering phony self-esteem that has no basis in accomplishment, dedication or sacrifice for others</b>, as the self-absorbed, entitled populace will still feel good about themselves as the bloated, dysfunctional status quo implodes.</span></p> <p>&nbsp;</p> <p><span><b>7. I&#39;m grateful that we have institutionalized moral hazard as the unspoken law of the land</b>, so financiers can gamble billions of dollars without worrying about the potential losses, as they know the taxpayers will foot the bill while they get to keep any gains.</span></p> <p>&nbsp;</p> <p><span><b>8. I&#39;m grateful our financial markets are now dominated by Federal Reserve manipulation, high frequency trading and dark pool shadow banking.</b>&nbsp;This guarantees that all we commoners need to do to make a lot of money playing the stock market is to&nbsp;<i>buy the dips</i>.</span></p> <p>&nbsp;</p> <p><span><b>9. I&#39;m grateful that money can buy political influence so transparently</b>, as this informal auction is open to anyone with tens of millions of dollars who wants to protect and expand their wealth and power.</span></p> <p>&nbsp;</p> <p><span><b>10. I&#39;m grateful that our mainstream media is owned by a handful of corporations</b>, as the homogenized message they broadcast is reassuringly uniform. If every outlet is repeating that unemployment and inflation are low and the rising stock market is making us all wealthier, it must be true.</span></p> </blockquote> <div><span>*&nbsp; *&nbsp; *</span></div> <div><span>Now do feel better?</span></div> <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="172" height="150" alt="" src="" /> </div> </div> </div> Corporate America Federal Reserve High Frequency Trading High Frequency Trading Moral Hazard Shadow Banking Unemployment Tue, 21 Apr 2015 12:54:03 +0000 Tyler Durden 505073 at