en What Draghi Hath Wrought - German Yields Negative To 7 Years, Swiss To 14 Years <p>Well if that doesn't stimulate aggregate demand... </p> <p>&nbsp;</p> <p><a href=""><img src="" width="600" height="297" /></a></p> <p>&nbsp;</p> <p>We assume they'll just do more of it...</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="949" height="469" alt="" src="" /> </div> </div> </div> Wed, 25 Nov 2015 13:19:04 +0000 Tyler Durden 517031 at Ex-Goldman Compliance Worker Sued By SEC For Insider Trading <p>We already know that when it comes to obtaining "asymmetric info", no bar is too low for Goldman, the company, which stooped so low as to use current and former NY Fed employees who leaked regulator data, a transgression which would normally lead to years behind bars for most mortals but for Goldman merely resulted in another slap-on-the-wrist fine. Now we also find that the same is true for Goldman's employees.</p> <p>Bloomberg <a href="">reports </a>that a former Goldman Sachs Group Inc. employee "hired to help it monitor computer systems for illicit activity" <strong>used the company’s own inside information to invest in mergers and acquisitions involving the bank’s clients, the Securities and Exchange Commission said</strong>.</p> <p>In a lawsuit filed this week in Manhattan federal court, the SEC accused Yue Han of exploiting his access to Goldman Sachs’s information systems to make $468,000 by trading through his personal account and that of a relative.</p> <p>Not surprisingly, said former employee decided his best odds of liquidating his illicit proceeds are on home soils and quickly left the US to go back to China.&nbsp; Regulators are now asking a federal judge to freeze all assets still in the U.S.</p> <p>We expect Yue's 500+ LinedIn connections to promptly dwindle to zero in the coming days.</p> <p><a href=""><img src="" width="600" height="223" /></a></p> <p>Spokesmen for New York-based Goldman Sachs didn’t immediately respond to a request for comment after regular business hours. It was unclear if they could also blame this latest glaring oversight in internal controls on perpetual fall guy Fabrice Tourre.</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="291" height="298" alt="" src="" /> </div> </div> </div> China goldman sachs Goldman Sachs Insider Trading Securities and Exchange Commission Wed, 25 Nov 2015 13:04:54 +0000 Tyler Durden 517030 at Did Mario Draghi Just Leak The Bazooka? Two-Tiered NIRP System May Presage Big Rate Cut <p>Back in September (and on several subsequent occasions), we <a href="">discussed the implications</a> of a further cut to the ECB’s depo rate. A plunge further into NIRP-dom would have serious consequences for the Riksbank, the SNB, the Nationalbank, and the Norges Bank.&nbsp;</p> <p>In world dominated by beggar-thy-neighbor monetary policy, one cut begets another in race to the bottom as everyone scrambles to, i) keep their currency from soaring and ii) keep the inflationary impulse alive.</p> <p>As Barclays explained in great detail several months ago, another ECB depo rate cut would have an outsized effect of the franc:&nbsp;</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p><em>A cut in the ECB’s deposit rate further into negative territory likely would have a significant impact on the EURCHF exchange rate and provoke a more immediate response from the SNB. Indeed, we expect that a cut in the ECB’s deposit rate may have a greater effect on EURCHF than on other EUR crosses. <strong>Switzerland applies its negative deposit rate to only a fraction of reserves, currently about 1/3rd of sight deposits by our calculation.</strong> In contrast, negative deposit rates apply to all reserves held at the ECB, Riksbank and Denmark’s Nationalbank. <strong>Consequently, a cut to the ECB’s deposit rate likely has a larger impact both on the economy and on the exchange rate than a proportionate cut by the SNB.&nbsp;</strong></em></p> <p>&nbsp;</p> <p><a href="" style="font-family: 'Lucida Grande', Verdana, sans-serif; font-size: 13.3333px; line-height: 17.3333px;"><img src="" width="600" height="278" style="max-width: 100%; height: auto;" /></a></p> <p>&nbsp;</p> </blockquote> <p><span style="font-size: 1em; line-height: 1.3em;">Now, it appears </span><strong style="font-size: 1em; line-height: 1.3em;">Mario Draghi may be about to go the Swiss route by introducing a tiered system for the application of negative rates.</strong><span style="font-size: 1em; line-height: 1.3em;"> As </span><a href="" style="font-size: 1em; line-height: 1.3em;">Reuters reports</a><span style="font-size: 1em; line-height: 1.3em;">, “Euro zone central bank officials are considering options such as whether to stagger charges on banks hoarding cash ahead of the next European Central Bank meeting, according to officials.”&nbsp;</span></p> <p>“Officials are discussing a split-level rate,” Reuters goes on to note, adding that the <strong>“contested step would impose a higher charge on banks depending on the amount of cash they deposit with the ECB.”</strong></p> <p>"It could be combined with a ceiling, so that from a certain point onwards liquidity can only be parked overnight at a stronger rate," an unnamed official said. "Whether and how to shape a deposit rate cut in December is in discussion."</p> <p>The idea would be to mitigate the effect of a more negative rate on the institutions (German and French banks for instance) that park the most cash with the ECB. &nbsp;</p> <p>One problem with driving rates further into negative territory is that at a certain point, banks will be forced to pass along the cost to retail deposits. So far, banks have been able to avoid charging depositors by making up the cost through fees and, in what amounts to a perversion of ZIRP/NIRP, higher mortgage rates. </p> <p><img src="" width="600" height="249" style="max-width: 100%; height: auto; font-family: 'Lucida Grande', Verdana, sans-serif; font-size: 13.3333px; font-style: italic; line-height: 17.3333px;" /></p> <p>But, as we <a href="">saw earlier this week</a> with The Alternative Bank Schweiz, there's only so long lenders can hold out under the NIRP regime and <strong>sooner or later, negative rates will make their way to depositors,</strong> and that, in turn, has the potential to cause a revolt (i.e. a bank run).&nbsp;</p> <p>Creating a system of exemptions forestalls the application of negative rates to individual accounts and indeed, it may be the only thing keeping Swiss banks from applying NIRP across the board. As Barclays put it, "a removal of domestic banks’ exemption from negative deposit rates likely would force Swiss banks to pass on negative deposit rates as it would increase the proportion of assets charged negative rates to over 20%."</p> <p>The ECB's plan "sounds like the introduction of allowances similar to that of SNB or in Denmark," Commerzbank’s Head of Fixed Rate Strategy Christoph Rieger told Bloomberg in e-mailed comments. "If allowances are set properly, the measure should fully impact rates, while still helping banks," he added.&nbsp;</p> <p><strong>The interesting thing about the suggestion that the ECB will adopted a tiered system is that Draghi could be telegraphing a larger (i.e. more than 10bps) depo cut.</strong> That is, if you figure out a way to mitigate the effect on banks while preserving the "boom" factor vis-a-vis rates, you'll have hit the sweet spot wherein markets will be pleasantly surprised, and banks will be able to tolerate the push further into NIRP.&nbsp;</p> <p>"[It] allows scope for a deposit rate to be cut even more aggressively in coming months,"&nbsp;Mizuho’s Head of Rates Strategy Peter Chatwell told Bloomberg.&nbsp;</p> <p><em style="font-family: 'Lucida Grande', Verdana, sans-serif; font-size: 13.3333px; line-height: 17.3333px;"><img src="" width="500" height="366" style="max-width: 100%; height: auto;" /></em></p> <p>"I think this could be similar to a proposal from the IMF when they were discussing negative rates for Switzerland. In essence, the ECB will have to distinguish between retail banks and the rest. They could penalize the retail banks that fund themselves via deposits a bit less so that this does not trigger a deposit flight. They could be penalizing wholesale banks a bit more given that the threat of deposit flight is less there," Credit Agricole adds.</p> <p>Here's Citi's Josh O'Byrne:</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p><em>Sourced indications the ECB is considering a two-tiered approach to further depo cuts <strong>suggests to us bigger cuts are being considered</strong> than Citi Economists’ 10bp base case. As we find, <strong>changing in rates are having a bigger impact on FX than they did when rates were positive. The coefficients we back out suggest a 20bp cut to a -40bp depo could take EURUSD closer to 1.04.</strong></em></p> <p>&nbsp;</p> <p><em>Worth keeping in mind here, through asset purchases there’s still about 500bn EUR of liquidity to come before now and September 2016. Increasing the term to mid-2017 would make this 1tn and increasing the pace at the same time to 80bn would put it closer to 1.5tn. <strong>Even at a -20bp depo that represents 3bn EUR of losses to the extent negative rates are not passed on to depositors and banks reduce margins.</strong></em></p> <p>&nbsp;</p> <p><em>A system which exempts a degree of deposits isn’t necessarily new and we have seen in Switzerland almost 65% of deposits exempt from negative rates using a multiple of minimum reserves. Still, CHF LIBOR has been fixing close to the -75bp, move to -80bp since expectations of ECB ease picked up. <strong>Following the very dovish speech from President Draghi last week, targeting higher inflation as quickly as possible, an ECB overwhelm looks on the cards.</strong></em></p> </blockquote> <p><img src="" width="425" height="429" /></p> <p>Yes, an ECB "overwhelm" looks likely and that's not good news for the SNB. In a <a href="">separate piece</a> out Wednesday, Reuters notes that the Swiss are backed up against the wall. "More ECB easing would be the latest challenge in the SNB's four-year battle to shield the export-reliant economy from the strong franc," Reuters says.&nbsp;<strong>"I think the SNB would act if the ECB cuts rates but the room for maneuver is limited,"</strong> Zuercher Kantonalbank's foreign exchange head Bernd Roth warns. The SNB's options:&nbsp;</p> <ul> <li><span style="font-size: 1em; line-height: 1.3em;">It could push three-month interbank offered rates CHLBOR=ECI, where the target range is between -1.25 and -0.25 percent,</span><span style="font-size: 1em; line-height: 1.3em;">further into negative territory to maintain a spread to euro interest rates,</span></li> <li><span style="font-size: 1em; line-height: 1.3em;">it could charge more than 0.75 percent on some sight deposits at the SNB.</span></li> </ul> <p>But Reuters leaves out the "nuclear option": <strong>removing all exemptions from the negative deposit rate. </strong>That would mean individual accounts are in danger of NIRP and it would set the stage for the proliferation of negative rates to individual depositors, a dangerous precedent to be sure.&nbsp;</p> <p>Meanwhile, analysts are already looking at the domino effect that we've been keen on outlining since the ECB's September meeting. Nordea's Niels Christensen says "Denmark will be forced to cut below -0.75 percent if the SNB moves after Draghi while Nomura's&nbsp;Yujiro Goto, Jordan Rochester contend that the Riksbank is more likely that the SNB to cut. "The Riksbank will likely to be proactive after expected ECB decision to cut deposit rate further [and there's a] high possibility of 10-15bps Riksbank rate cut," Goto said in a note on Wedensday. And let's not forget about the Norges Bank who, at +0.75 still has some room to go before NIRP if&nbsp;Oeystein Olsen wants to use monetary policy to combat an economy struggling with "lower for longer" crude.&nbsp;</p> <p>So as you can see, the currency wars are alive and well and the race to the bottom (or, more appropriately, "below" the bottom) is on with the ECB set to kick off a new phase in competitive European devaluations. </p> <p>It's worth noting that if the SNB's exemptions mean an ECB depo cut under the current regime would have an outsized effect of the EURCHF cross versus other euro pairs, then by definition that should mean that if Draghi introduces a tiered system, the decreased divergence between how the ECB and the SNB apply NIRP should mean less upward pressure on the franc than would have been the case with no tiered system. So consider that as well.</p> <p>Finally, because all of the above was a bit technical in nature, we'll close with a bit of comic relief courtesy of sheer central bank lunacy (via Reuters):&nbsp;</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p><strong><em>Another possibility raised among officials was the idea of buying bank loans at risk of non-payment.&nbsp;</em></strong><em style="font-size: 1em; line-height: 1.3em;">One person familiar with the matter said these could be packaged with more creditworthy loans before being put up for sale. <strong>"You could buy rebundled non-performing loans,</strong> combined with good loans," said the person. "If we get to that, then things are very bad."</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="425" height="429" alt="" src="" /> </div> </div> </div> Bank Run Barclays Crude European Central Bank fixed LIBOR Monetary Policy non-performing loans Norges Bank Reuters Swiss Banks Switzerland Wed, 25 Nov 2015 12:44:52 +0000 Tyler Durden 517029 at Frontrunning: November 25 <ul> <li>European stocks up, oil slides as concerns ease over Russia-Turkey tension (<a href="">Reuters</a>)</li> <li>ECB discusses two-tiered bank charges, broader bond buys (<a href="">Reuters</a>)</li> <li>Skies Darken for Accord on Syria With Turkish Downing of Russian Fighter (<a href="">WSJ</a>)</li> <li>New agonies, alliances as Fed debates post-liftoff plan (<a href="">Reuters</a>)</li> <li>Introducing the New OPEC Member That Likes Lower Oil Prices (<a href="">BBG</a>)</li> <li>A New Military Power Rises in the Mideast, Courtesy of One Man (<a href="">BBG</a>)</li> <li>Russia's Gazprom says halts gas supplies to Ukraine over payment (<a href="">Reuters</a>)</li> <li>Ex-Goldman Compliance Worker Sued by SEC for Insider Trading (<a href="">BBG</a>)</li> <li>Other central banks set to act, but Swiss policy cupboard bare (<a href="">Reuters</a>)</li> <li>The Many Steps in a Syrian Refugee’s Journey to the U.S. (<a href="">WSJ</a>)</li> <li>BTG Pactual CEO Esteves Arrested In Brazil's Graft Probe, Police Say (<a href="">BBG</a>)</li> <li>If China Killed Commodity Super Cycle, Fed Is About to Bury It (<a href="">BBG</a>)</li> <li>HP Inc. Gives Weak Earnings Forecasts (<a href="">WSJ</a>)</li> <li>Swedish central bank calls for action as Nordic property market fears grow (<a href="">Reuters</a>)</li> <li>For Poor Countries, Well-Worn Path to Development Turns Rocky (<a href="">WSJ</a>)</li> <li>Canada refugee plan revives concerns over porous U.S. border (<a href="">Reuters</a>)</li> <li>Elite funds prepare for reflation and a bloodbath for bonds (<a href="">Telegraph</a>)</li> <li>Three Goldman bankers leave for Uber as tech world raids Wall Street talent (<a href="">Reuters</a>)</li> </ul> <p>&nbsp;</p> <p><strong>Overnight Media Wrap</strong></p> <p><em><span style="text-decoration: underline;">WSJ</span></em></p> <p>- For a decade, Takata Corp employees in the U.S. raised concerns internally about misleading testing reports on air bags that later became prone to explosions, according to documents reviewed by Wall Street Journal. (<a href="" title=""></a>)</p> <p>- When federal regulators launched a crackdown on alleged discrimination in auto lending two years ago, they calculated they could secure a market-shaping settlement by going after a company unlikely to fight the charges because it needed to avoid a complaint to clinch government approval for a broader restructuring, according to a report, based on internal documents and emails written by the staff of Consumer Financial Protection Bureau. (<a href="" title=""></a>)</p> <p>- A U.S. investigation into potential foreign bribery by Wal-Mart Stores Inc has unearthed evidence of possible misconduct by the retailer in Brazil, after investigators found little to support the sweeping allegations involving Mexico that initially prompted the probe, according to documents and people familiar with the matter. (<a href="" title=""></a>)</p> <p>- The U.S. Justice Department is investigating whether Comcast Corp's business practices in the $5 billion cable advertising-sales market violate federal antitrust law, according to a document reviewed by Wall Street Journal. (<a href="" title=""></a>)</p> <p>- The California Public Employees' Retirement System, known as Calpers, said it has paid $3.4 billion in performance fees to private-equity managers since 1990, providing the most significant disclosure yet in a debate at retirement plans over whether Wall Street is worth the price of admission. (<a href="" title=""></a>)</p> <p>&nbsp;</p> <p><em><span style="text-decoration: underline;">FT</span></em></p> <p>German prosecutors have launched an investigation into suspected tax evasion in connection with cheating on emissions tests by Volkswagen, adding to the intense scrutiny of Europe's biggest carmaker.</p> <p>The European Commission proposed on Tuesday, a 45 billion stg eurozone-wide deposit guarantee scheme, that would guarantee all bank accounts up to 100,000 euros within the decade.</p> <p>Former chief executive of BP Plc and ex-chairman of Royal Dutch Shell Plc said in a report that oil and gas companies need to adopt strategies such as shifting to renewable energy technologies and cutting further investment in fossil fuels to survive the global pressure to cut the use of fossil fuels. </p> <p>&nbsp;</p> <p><em><span style="text-decoration: underline;">NYT</span></em></p> <p>- The American economy turned in a better performance last quarter than first thought, expanding at a 2.1 percent rate, the government said on Tuesday. The improvement in inventory levels was offset by a slight downward revision in consumer spending last quarter. (<a href="" title=""></a>)</p> <p>- Turing Pharmaceuticals, which sparked a fury two months ago by sharply increasing the price of a 62-year-old drug, said on Tuesday it would not reduce the list price of that drug after all. However, it said it would offer discounts of up to 50 percent to hospitals and would take other measures to help patients afford the medicine. (<a href="" title=""></a>)</p> <p>- The Food and Drug Administration said it had approved Portrazza from Eli Lilly, in combination with two forms of chemotherapy, to treat patients with advanced squamous nonsmall cell lung cancer, the most common type of lung cancer. (<a href="" title=""></a>)</p> <p>- On Tuesday, California Public Employees' Retirement System disclosed for the first time that it paid $3.4 billion since 1990 to the biggest private equity managers on Wall Street, including firms such as Carlyle, Blackstone and Apollo. (<a href="" title=""></a>)</p> <p>- As early as 2000, the Japanese auto supplier Takata manipulated test results on airbag inflaters, according to a person with direct knowledge of internal company documents. The data manipulation, whose details were first reported by The Wall Street Journal, involved tests intended to demonstrate compliance with automakers' design specifications, said the person, who was not authorized to speak. (<a href="" title=""></a>)</p> <p>- Governor of New York Andrew Cuomo said on Tuesday that the state had come to an agreement to keep open an Alcoa plant on St. Lawrence River after promising the company nearly $70 million in state subsidies. The governor's announcement came after several weeks of negotiations between New York officials and Alcoa.(<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>** Quebec's pension fund manager Caisse de depot et placement du Quebec's bold foray into the world of infrastructure development is hitting snags, with concerns being raised over the tendering process for transit projects. (<a href="" title=""></a>)</p> <p>** Mortgage rates are on the rise in Canada, a trend that could cool the housing market even as the economy struggles to recover from the effects of low oil prices. Five-year, fixed-rate mortgages, which represent the largest share of Canadian mortgages, have risen by as much as 20 basis points in the past two months as Canadian government bond yields have moved higher. (<a href="" title=""></a>)</p> <p>** Justin Trudeau's government will miss its self-imposed deadline to fulfill a signature campaign promise on Syrian refugees, as the Liberals announced a slower approach on Tuesday to bringing 25,000 government-assisted refugees to Canada. (<a href="" title=""></a>)</p> <p>NATIONAL POST</p> <p>** This Black Friday, the Outlet Collection at Niagara on the Ontario side of the border will be packed with more than a few U.S. license plates. Americans looking to take advantage of the favorable exchange rate have been heading north, and the expectation is that it will continue as long as the loonie is low, says Carley Rupcic, the tourism manager for the 720,000 square foot mall owned by Ivanhoe Cambridge, a real estate company. (<a href="" title=""></a>)</p> <p>** Bombardier Inc asked investors for a little more patience on Tuesday, acknowledging that 2016 will be another "difficult year" while outlining plans for a significant turnaround by 2020. (<a href="" title=""></a>) </p> <p>&nbsp;</p> <p><em><span style="text-decoration: underline;">Hong Kong</span></em></p> <p>SOUTH CHINA MORNING POST</p> <p>- Some Hong Kong businesses are still not ready for a competition law which will come into force on December 14, an antitrust lawyer said. John Hickin, a partner of Mayer Brown JSM, said some businesses engaged in clearly cartel-type activities that have done nothing. The new Competition Ordinance will prohibit unfair business practices such as price fixing. (<a href="" title=""></a>)</p> <p>- Hong Kong's new young band of democratically elected politicians has been invited by Chief Executive Leung Chun-ying to join the advisory bodies, which help shape government policies. The move follows Sunday's district council elections that saw dozens of young candidates unseat veterans of the pan-democratic and pro-establishment camps. (<a href="" title=""></a>)</p> <p>- Alibaba Health Information Technology, which recorded a wider interim net loss for six months to September-end, plans to expand its fledgling internet-based medical services network to meet growing demand for private healthcare operations in mainland China. Chief executive Wang Lei said pilot testing of its medical services network started in the interim period. (<a href="" title=""></a>)</p> <p>THE STANDARD</p> <p>- The International Federation of Association Football has started probe into an incident where Hong Kong fans booed the national anthem at the home World Cup qualifying match against China. The Hong Kong Football Association received an official letter from Fifa about disciplinary investigation, and is asked to provide a report for the match at Mong Kok Stadium on November 17. (<a href="" title=""></a>)</p> <p>- Eight of 60 batches of clothing tested by Shanghai authorities have contained quality issues. The Shanghai municipal bureau of quality and technical supervision identified problems with eight batches of garments, some from popular brands. These included women's jeans from Gap, jeans from Japanese brand Uniqlo and H&amp;M jackets. (<a href="" title=""></a>)</p> <p>- Mainland developers may see their share prices outperform the Hang Seng Index in the first half of next year, with total home sales hitting a historic high during 2016, Citibank said in a report. A quick rebound in home prices in second-tier cities and more government stimulus such as tax cuts are the two driving forces for the industry, Citibank added. (<a href="" title=""></a>)</p> <p>HONG KONG ECONOMIC JOURNAL</p> <p>- Asset Management Association of China said it lost contact with 12 private equity funds in the mainland, including 9 in Beijing. The association said it could not get hold of the funds through their provided telephone numbers, e-mails and short messages.</p> <p>- Luxury goods retailer Joyce Boutique Holdings posted HK$34.9 million ($4.5 million) loss for six months ended September, against a profit a year ago, amid fall-off in customer spending in Hong Kong and China, driving down sales performance of luxury retail market. Depreciation of the euro and yen against yuan led to an increase in overseas shopping and online shopping.</p> <p>&nbsp;</p> <p><em><span style="text-decoration: underline;">Britain</span></em></p> <p>The Times</p> <p>One of the biggest shareholders in Royal Dutch Shell Plc has thrown its weight behind the oil group's 43 billion stg takeover of BG Group Plc, despite mounting concerns about the impact of plunging oil prices on the commercial logic that underpins the deal. (<a href="" title=""></a>)</p> <p>The Guardian</p> <p>The new chief executive of Rolls-Royce Holdings Plc has warned that senior job losses will form part of 200 million stg in annual cost cuts. (<a href="" title=""></a>)</p> <p>John McDonnell, the shadow chancellor, has accused George Osborne of putting Britain's health and security at risk with politically motivated deficit reduction plans that have left the economy in chaos. (<a href="" title=""></a>)</p> <p>The Telegraph</p> <p>The chairman of the Energy and Climate Change select committee said it would write to regulator Ofgem asking it to examine "potential abuses of the system" after concerns were raised about the high prices National Grid had to pay one generator, Calon Energy, to help keep the lights on across the UK at the start of November. (<a href="" title=""></a>)</p> <p>The Treasury has agreed to meet with Britain's challenger banks at least four times a year, as George Osborne attempts to defuse a row over financial taxes ahead of his Autumn Statement on Wednesday. (<a href="" title=""></a>)</p> <p>Sky News</p> <p>Whitehall is making plans for a Commons vote on George Osborne's welfare cap within a month, in the clearest sign that the Chancellor has missed his self-imposed welfare cap. (<a href="" title=""></a>)</p> <p>The rollercoaster crash at Alton Towers that seriously injured five people was caused by human error, the theme park has said. (<a href="" title=""></a>)</p> <p>The Independent</p> <p>The maker of Whirlpool, Indesit and Hotpoint tumble dryers has warned that a "significant" number of millions of dryers in households around the UK could pose a fire risk. (<a href="" title=""></a>)</p> Andrew Cuomo Black Friday Bond Brazil California Public Employees' Retirement System Carlyle Central Banks China Citibank Comcast Government Stimulus Hong Kong Housing Market Insider Trading Mexico OPEC Private Equity Real estate Reuters Shadow Chancellor Ukraine Volkswagen Wall Street Journal Yen Yuan Wed, 25 Nov 2015 12:34:39 +0000 Tyler Durden 517028 at Why Even A Modest Disruption Will Shatter The Status Quo <p><a href=""><em>Submitted by Charles Hugh-Smith of OfTwoMinds blog,</em></a></p> <p><em>Any modest reduction in debt, tax revenues, consumption or new borrowing will bring the entire Status Quo crashing down.</em></p> <p><strong>Consider this clipping from the August 1932 San Francisco Chronicle newspaper:</strong></p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><em>&quot;Reduction of salaries of municipal employees and limitation of city positions to only one member of a household will be sought by (Supervisor) Adolph Uhl in two amendments to the San Francisco charter. The salary reductions would run from 2.5% for the lowest bracket to 25% on salaries of $500 a month or more.&quot;</em></p> </blockquote> <p>Thanks to the handy <a href="" target="resource">BLS Inflation Calculator</a> we know that $500 a month in 1932 is the equivalent of $8,680 per month (about $104,000) a year.</p> <p><strong>Imagine the tempest of fury and outrage that would arise should this be proposed the next time local governments run short of funding.</strong> Nowadays, the calls would not be for sacrifices from the highly paid public servants but for tax increases of 25% to maintain public-servant wages and benefits while the private sector economy implodes.</p> <p><strong>This unwillingness to sacrifice for the greater good is now endemic.</strong> This is the result of two powerful social forces:</p> <p>1. The loss of any shared sense of purpose or social good worthy of sacrifice.</p> <p>2. The ascendancy of <em>maximizing private gain by whatever means are available</em> as the primary purpose and goal of the Status Quo.</p> <p><strong>The dominance of <em>maximizing private gain by whatever means are available</em> leaves the Status Quo brittle and fragile.</strong> Since everyone reckons any sacrifice should fall on someone else, the only possible result is disunity and bitter conflict over modest sacrifices that are too inconsequential to save the system from collapse.</p> <p><strong>Wishful thinking, mindless optimism and blind adherence to failed ideas also make the Status Quo brittle and fragile.</strong> As Michael Grant noted in his book <a href=";tag=charleshughsm-20&amp;linkCode=as2&amp;camp=1789&amp;creative=9325&amp;creativeASIN=0760769990" target="resource">The Fall of the Roman Empire</a>:</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><em>There was no room at all, in these ways of thinking, for the novel, apocalyptic situation which had now arisen, a situation which needed solutions as radical as itself. (The Status Quo) attitude is a complacent acceptance of things as they are, without a single new idea.</em></p> <p>&nbsp;</p> <p><em><strong>This acceptance was accompanied by greatly excessive optimism about the present and future.</strong> Even when the end was only sixty years away, and the Empire was already crumbling fast, Rutilius continued to address the spirit of Rome with the same supreme assurance.</em></p> <p>&nbsp;</p> <p><em><strong>This blind adherence to the ideas of the past ranks high among the principal causes of the downfall of Rome.</strong> If you were sufficiently lulled by these traditional fictions, there was no call to take any practical first-aid measures at all.</em></p> </blockquote> <p><strong>A dependence on debt, low interest rates and financial legerdemain also render the Status Quo extremely fragile when the debt become unpayable</strong> and low interest rates no longer boost additional borrowing.</p> <p><strong>The wishful thinking is that we can borrow limitless sums ad leave the debt burden on our children and grandchildren with no consequences.</strong> But once the system is dependent on massive borrowing, it becomes acutely sensitive to default, as consumption collapses once consumers can no longer borrow to consume, and asset bubbles engorged by debt-assets (bonds, student loans, mortgages, subprime auto loans, etc.) burst.</p> <p>Lest you think this implosion from a modest decline in debt and new borrowing is preposterous, please examine this chart of total credit: that tiny wobble in 2008 very nearly collapsed the entire global financial system.</p> <p><img align="middle" border="0" src="" /></p> <p><strong>Any modest reduction in debt, tax revenues, consumption or new borrowing will bring the entire Status Quo crashing down.</strong> This is the bitter fruit of rampant financialization and the ascendancy of <em>maximizing private gain by whatever means are available</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="525" height="389" alt="" src="" /> </div> </div> </div> BLS default ETC Newspaper Roman Empire Student Loans Wed, 25 Nov 2015 12:14:16 +0000 Tyler Durden 517027 at Global Stocks Rebound As Geopolitical Tensions Subside; Europe Surges On Report Of More ECB Easing <p>Following yesterday's dramatic geopolitical shock, U.S. equity index futures rise as Russia has not escalated the confrontation with Turkey as some had feared, while Asian shares fall, reversing earlier gains. European stocks are rallying and the euro is falling on the back of a Reuters report that the ECB is mulling new measures to prop up lending, although it’s not clear at this point what the real impact from these measures would be.</p> <p>As a result, global stocks are little changed for a second day as investors assess the geopolitical fallout from the downing of a Russian warplane by Turkey. U.S. President Barack Obama and French President Francois Hollande called for Russia and Turkey to avoid escalating the confrontation. Hollande meets German Chancellor Angela Merkel in Paris today before heading to Moscow tomorrow to meet President Vladimir Putin.</p> <p>As Bloomberg reports, Tuesday's worst performing global equity benchmarks are experiencing differing fortunes today. On Tuesday Turkey's Borsa Istanbul Index sank 4.4 percent, the most in four months. </p> <p><img src="" width="575" height="319" style="max-width: 1200px;" /></p> <p>Russia's RTS Index dropped 3.3 percent, the most since Sept.1. Today Russian stocks rose as much as 1.6 percent, while Turkish equities fluctuated between gains and losses. Russia was the biggest source of Turkey's imports in 2014, while some 12 percent of all tourists to Turkey were from Russia last year, according to Renaissance Capital. Turkey is Russia's second-biggest market for gas exports, and relies on Gazprom to meet half of its gas needs. Turkey's lira fell for a third day against the dollar. </p> <p>Elsewhere the commodity rout continues, and the rout in iron ore continues. Today it slumped to the lowest since 2008 as output cuts at Chinese steel mills hurt demand. China accounts for half of global steel output. At the same time, mining companies like BHP Billiton and Rio Tinto are continuing to expand low-cost iron ore supplies. Ore with 62 percent content delivered to Qingdao, a global benchmark, has sunk 38 percent in 2015 to just above $43 a dry metric ton and is on track for a third consecutive annual decline.</p> <p><img src="" width="580" height="283" style="max-width: 1200px;" /></p> <p>Oil, gold, copper decline while food commods gain. Dollar also advances. The top overnight news stories include the aftermath of Turkey’s shooting of Russian bomber, SEC suit of former Goldman compliance worker, UnionPay/Apple agreement, U.S. Senate Cmte’s pending review of inversions, and China data offering early glimpse of 4Q. </p> <p>Moving the FX market was news from Reuters that the ECB is discussing 2-tiered bank charges, and bond buys, namely that the ECB mulls<br /> staggering charges for banks that park money with central bank or<br /> buying more debt.</p> <p><strong>Market Wrap</strong></p> <ul> <li>S&amp;P 500 futures up 0.2% to 2090</li> <li>Stoxx 600 up 1.3% to 379</li> <li>MSCI Asia Pacific down 0.4% to 134</li> <li>US 10-yr yield down 1bp to 2.23%</li> <li>Dollar Index up 0.36% to 99.89</li> <li>WTI Crude futures down 1.4% to $42.27</li> <li>Brent Futures down 1.6% to $45.39</li> <li>Gold spot down 0.1% to $1,074</li> <li>Silver spot down 0.1% to $14.18</li> </ul> <p>Looking at regional markets, Asian equity markets traded mostly lower despite the flat close on Wall St., as geopolitical uncertainty dampened risk sentiment. The ASX 200 (-0.3%) was pulled lower by consumer staples amid profit taking in retail giant Woolworths. Financials underperformed in the Nikkei 225 (-0.4%) as several large banks including Nomura are told to increase their capital ratio. Shanghai Comp. (+0.9%) swung between gains and losses as broad sector strength was offset by losses in brokerages amid speculation that the recent rally had been overdone. 10yr JGBs traded higher as the risk off tone drove inflows into the paper, while a better 20yr JGB auction where b/c was at its highest YTD also stoked demand into the 10yr.</p> <p><strong>Key Asian Data:</strong></p> <ul> <li>China’s Earliest Monthly Economic Indicators Flash a Warning: Baidu index drops, MNI sentiment weakens as challenges mount.</li> <li>Singapore’s Economy Expands More Than Estimated on Services: 3Q GDP +1.9% q/q vs est. no change.</li> <li>Stevens Says ‘Chill Out’ on Rates as Australia Bows to Slowdown: RBA governor notes currency depreciation effect slow to emerge.</li> <li>Li Ka-Shing’s Power Assets, CKI Drop as Investors Spurn Merger: Deal rejection comes as billionaire reorganizes his empire.</li> <li>Hedge Fund Calls for $4b Payout From Japan’s Kyocera: Co. should sell giant KDDI stake, Oasis Management says.</li> <li>Citic Securities Blames Flawed Swaps Data on ‘System Upgrade’: Securities Association of China said it overstated some swaps data by 1t yuan Apr.-Sept.</li> <li>China Energy Engineering Draws Silk Road, GE to $2b IPO: 20 cornerstone investors, incl. China’s Silk Road Fund, also GE, agreed to buy combined $1.27b of stock, terms show.</li> </ul> <p>The biggest overnight news came out of Europe, where Reuters reports regarding the ECB have dictated price action this morning after a relatively subdued start to the session. Monetary officials suggest staggering charges on banks hoarding cash is among the potential options being considered for the ECB meeting next week, with other options including purchasing further debt.</p> <p>In terms of the consequences of the news , equity markets saw a bid to trade firmly in positive territory (Euro Stoxx: +1.3%) after trading sideways early on with UK housebuilding names among the best performers ahead of the UK Autumn Statement amid speculation of a GBP 6.9bIn project to build 400k new homes. Of note, IBEX (-0.16%) underperforms after Santander have been weighed upon by reports Abengoa are seeking protection from their creditors.</p> <p>Bunds also benefitted from the ECB news , moving out of negative territory in the wake of the news to trade at their highest level of the day. Momentum to the upside has also been supported with supply from the Eurozone out of the way (despite Germany holding a technically uncovered Bund Auction), with month-end flows also proving to be supportive.</p> <p>Analysts at Citi note that month end asset rebalancing suggests a weak signal of a move from equities and into bonds, with the anticipated outflows from US and Japanese stocks the main driver behind the move. Citi's model suggests that fixed income may see global inflows with the exception of Latin America and EM Asia.</p> <p><strong>Key European Data:</strong></p> <ul> <li>Osborne to Spur U.K. Housebuilding With Developer Incentives: A doubling of housing budget will see 400k new homes built across England under George Osborne’s proposals later today.</li> <li>Abengoa Seeks Creditor Protection After Gonvarri Pulls Accord: Gonvarri Corporacion Financiera pulled out of plan to invest in embattled renewables co.</li> <li>Spanish Bank Mergers May Come of ‘Tremendous Pressure’: Ultra-low interest rates, weak home loan demand, growing competition for business credit are eroding returns.</li> <li>Merkel Vows to Help France in Fighting Islamic State Terrorism: Germany could strengthen its presence in Mali, prolong its mission in Afghanistan, will step up its own security, intelligence gathering at home, Merkel said in Berlin. Germany’s $7b Refugee Boost to Outweigh VW Crisis Fallout</li> <li>Norway Imposes Border Checks as Refugee Flow Splits Scandinavia: Norway said late Tues. it will impose border controls from Thurs. this week.</li> <li>ECB Says QE Program to Be Suspended Over Dec. Holiday Period: ECB to step up its asset purchases in December to compensate for nearly 2-week pause over holiday period.</li> </ul> <p>In FX, the EUR/USD fell in the wake of the ECB reports to see the pair slip below the 1.0600 level and the earlier weekly low at 1.0591 with the pair now eyeing notable levels to the downside which include the April low at 1.0521 and March low at 1.0458. Subsequently the USD-index has now broken above 100.00 to take out April highs and eye the best levels seen since 2003 at 101.80. Analysts at Citi note that month end asset rebalancing will have a relatively muted FX impact, with GBP the notable beneficiary from USD positive hedge rebalancing and USD negative asset rebalancing.</p> <p>In Commodities, the ECB source reports that strengthened USD have led to recent softness in oil and gold, after both traded firmly in early European trade, with WTI coming off yesterday's highs reached in spite of the large build observed in API crude oil inventories. Of note today sees the release of EIA NatGas storage change and Baker Hughes rig count.</p> <p>On the calendar today we have US Personal Income, PCE Deflator,<br /> Composite&nbsp; and Services PMI's, U. of Mich. Sentiment, UK Chancellor's<br /> Budget Statement</p> <p><strong>Top Global News</strong></p> <ul> <li>U.S. Urges Russia, Turkey to Cool Standoff Over Downed Plane: President Obama said Tues. he’ll make it a “top priority” to prevent Turkey-Russia standoff from worsening.</li> <li>ECB Said to Discuss 2-Tiered Bank Charges, Bond Buys: Reuters: ECB mulls staggering charges for banks that park money with central bank or buying more debt.</li> <li>Ex-Goldman Compliance Worker Sued by SEC for Insider Trading: Yue Han allegedly exploited access to firm’s IT systems to make &gt;$468,000 using his personal trading account, that of a relative.</li> <li>UnionPay, Apple Said to Reach Apple Pay Agreement for China: Cos. have preliminary deal using UnionPay’s point-of-sales network, according to people familiar.</li> <li>Amazon Challenger Announces $350m Investment: Cash infusion led by Fidelity, providing money to help co. attract customers during its first holiday shopping season.</li> <li>Senate Panel to Take On Inversions in Review of Global Taxation: Finance Cmte. to take on corporate inversions as part of a broader review of challenges posed by international tax rules</li> </ul> <p><strong>Bulletin Headline Summary from Bloomberg and RanSquawk</strong></p> <ul> <li>Price action has largely been dictated by ECB source reports suggesting staggering charges on banks hoarding cash is among the potential options being considered <p>This has led to upside in equities and fixed income with EUR softness seeing EUR/USD break below 1.0600 and the USD-index break above 100.00 </p> <p>Looking ahead, highlights include US Personal Income, PCE Deflator, Composite&nbsp; and Services PMI's, U. of Mich. Sentiment, UK Chancellor's Budget Statement</p></li> </ul> <p><strong>DB's Jim Reid concludes the overnight wrap</strong></p> <p> Geopolitical tensions dominated market sentiment for much of<br /> yesterday following the news that a Russian fighter jet had been shot down by<br /> Turkey near the Syrian border, prompting the US and NATO to try and deescalate<br /> the situation after Russian President Putin warned of ‘serious<br /> consequences’. Much like the aftermath of the terror events in Paris, price<br /> action was relatively well contained with markets showing a degree of<br /> resilience, evident in particular with a decent bounce off the intraday lows for<br /> US equities to finish more or less flat (S&amp;P 500 +0.12%, Dow +0.11%). In<br /> Europe the Stoxx 600 had finished -1.24%, while losses were unsurprisingly<br /> led by the Russian equity markets where the MICEX had closed -3.11%. The<br /> tension did provide some short-term respite for Oil markets where WTI<br /> bounced +2.68% to close just shy of $43 and helping much of the rebound in<br /> the US equity market. Gold finished up +0.61% from its recent 5-year low and<br /> there was positive price action for much of the base metals space also with<br /> Copper (+2.63%), Zinc (+2.23%) and Nickel (+5.66%) all sharply highly. </p> <p>With Thanksgiving in the US tomorrow market liquidity will be pretty thin on<br /> the ground through the rest of the week, with no real economic data or<br /> Fedspeak due on Thursday or Friday. As a result and as you’ll see at the end of<br /> the report, it’s a packed data calendar this afternoon with a number of market<br /> sensitive releases due including the latest PCE data and also durable and<br /> capital goods orders. Yesterday, US Q3 GDP offered few surprises after being<br /> revised up as expected to +2.1% saar from the initial +1.5% reading on the<br /> back of the massive surge in inventories. Concerning however was the<br /> downward revision in both consumption (3.0% vs. 3.2%) and final sales (2.7%<br /> vs. 3.0%), while our US economists expect inventories to unwind this quarter<br /> which will likely depress economic output, and so now expect Q4 real GDP<br /> growth to be 1.5% saar from 2.3% previously. </p> <p>Yesterday’s corporate profits data for Q3 showed a -1.1% fall in the quarter<br /> which marks the third drop in the last four quarters. In fact, profits are now<br /> down -4.7% versus a year earlier which is the lowest reading since Q2 2009, or<br /> the recession. Given that profits tend to be a leading indicator of the labour<br /> market, this is another trend worth keeping an eye on. Meanwhile, the other<br /> notable data report yesterday was the latest November consumer confidence<br /> index reading which was down a steep 8.7pts at the headline to 90.4 (vs. 99.5<br /> expected). The expectations component was down a material 10.1pts to 78.6,<br /> while much of the commentary reflected consumers having a less favourable<br /> view of the job market, with jobs ‘plentiful’ falling in particular to the lowest<br /> level since April, although jobs ‘not so plentiful’ were up slightly. That brought<br /> the labour differential index down to -6.3 (from -1.9 last month). The end result<br /> of yesterday’s data was not a huge change to December liftoff expectations<br /> however, with the probability of a December hike sitting at 74% (unchanged<br /> versus this time yesterday) while US 2y yields continue to hover around<br /> 0.930%.</p> <p>Taking a look at how markets in Asia this morning are trading, it’s been a fairly<br /> cautious start to proceedings with the bulk of bourses generally trading with<br /> losses. Markets in Japan have seen the heaviest falls with the Nikkei and Topix<br /> down<br /> -0.31% and<br /> -0.57% respectively. The Hang Seng (<br /> -0.13%), Kospi (<br /> -0.26%)<br /> and ASX (<br /> -0.63%) are in the red also while Chinese bourses (Shanghai Comp<br /> +0.58%) have rebounded after the midday break, supported by a 3.4pt rise in<br /> the November consumer sentiment reading to 113.1. There was less good<br /> news from the latest MNI business sentiment index reading for China however,<br /> which was down 5.7pts to 49.9 and a five month low. Also of note in China is<br /> the news that the country’s security regulator has removed the rule requiring<br /> brokerages to hold net long positions for any proprietary trading in a sign of a<br /> gradual reduction in support measures for equities there. </p> <p>In terms of the rest of the dataflow yesterday. The October advance goods trade balance revealed a slight narrowing of the deficit to $58.4bn (from<br /> $59.1bn) after expectations had been for a modest widening. The September<br /> S&amp;P/Case<br /> -Shiller house price index reading rose a slightly better than expected<br /> +0.61% mom (vs. +0.30% expected) and is now up nearly +5.5% yoy. The<br /> November Richmond Fed manufacturing activity index edged down a couple<br /> of points this month to<br /> -3 (vs. +1 expected). Meanwhile, over in Europe the<br /> main release of note was the Q3 GDP reading for Germany where there was no<br /> change to the final revision at +0.3% qoq, driven by private and government<br /> consumption with net exports a major drag. Germany’s IFO survey for<br /> November revealed a slight 0.8pt uplift in the business climate reading to<br /> 109.0 (vs. 108.2 expected), while both the current assessment (113.4 vs. 112.4<br /> expected) and expectations (104.7 vs. 104.0 expected) surveys were above<br /> market. Our German economists noted that yesterday’s data has not moved<br /> their expectations in a meaningful way. They expect Germany to remain in a<br /> domestically driven robust business cycle with cyclical positives like continued<br /> health of the labour market, strong labour immigration, low interest rates and<br /> public infrastructure somewhat offset by moderate global growth limiting<br /> world trade and equipment investment, along with inflation recovery weighing<br /> on real incomes. On top this, there are further risks present including an<br /> escalation of the refugee crisis and geopolitical risks. </p> <p>Before we take a look at today’s calendar, there was some dovish BoE chatter<br /> to take note of yesterday, with Chief Economist Andy Haldane saying that ‘I<br /> see the balance of risks around UK GDP growth and inflation skewed<br /> materially to the downside, more so than embodied in the November 2015<br /> inflation report’. Haldane noted that the risks to the upside are more modest in<br /> scale and that given the balance, has a neutral stance on the future direction of<br /> monetary policy. </p> <p>In terms of the day ahead, this morning in Europe it’s set to be a relatively<br /> quiet session with just French consumer confidence and Italian industrial<br /> orders data due. It’s a packed day for economic releases in the US however<br /> ahead of Thanksgiving Day tomorrow. The personal income and spending data<br /> for October (which is expected to be solid in light of October’s employment<br /> report) will be closely watched, in particular the PCE core and deflator readings.<br /> Following this we get more important data with the preliminary October<br /> durable and capital goods orders numbers. Our US economists expect the<br /> headline to bounce strongly based on higher aircraft orders, but core orders to<br /> trend lower again. At the same time we’ll get last week’s initial jobless claims<br /> print shortly followed by the September FHFA house price index reading. Later<br /> in the afternoon we’ll get the flash November services and composite PMI<br /> numbers, before we round off the session with October new home sales and<br /> finally the last read of the University of Michigan consumer sentiment print for<br /> November. In the UK it’ll be worth keeping a close eye on Chancellor of the<br /> Exchequer George Osbourne’s Autumn Statement.</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="1200" height="666" alt="" src="" /> </div> </div> </div> Afghanistan Apple Australia B+ Baidu Barack Obama BOE Bond China Consumer Confidence Consumer Sentiment Copper Creditors Crude Crude Oil Equity Markets Eurozone fixed France Germany Initial Jobless Claims Insider Trading Japan Jim Reid Market Sentiment Michigan Monetary Policy New Home Sales Nikkei Nomura Norway Personal Income President Obama Price Action Recession recovery Renaissance Reuters Richmond Fed Trade Balance Turkey University Of Michigan Vladimir Putin World Trade Yuan Wed, 25 Nov 2015 12:01:27 +0000 Tyler Durden 517026 at Ask The Expert - Steve St. Angelo! <p>&nbsp;</p> <p>&nbsp;</p> <h1 style="margin-top: 0px; margin-bottom: 0.25em; padding: 0px; font-size: 24px; font-weight: normal; line-height: 1.15; font-family: Roboto, sans-serif; max-width: 90%;"><span style="text-decoration: underline;"><em><strong><a href="">Ask The Expert - Steve St. Angelo</a></strong></em></span></h1> <p><span style="text-decoration: underline;"><em><strong><a href="">(Click for Original Post)</a></strong></em></span></p> <p>&nbsp;</p> <p><span style="font-family: Roboto, sans-serif; font-size: 15px; line-height: 21px;">Steve St. Angelo is an Independent researcher who started to invest in precious metals in 2002. Later on in 2008, he began researching areas of the gold and silver market that, curiously, the majority of the precious metal analyst community have left unexplored. These areas include how energy and the falling EROI – Energy Returned On Invested – stand to impact the mining industry, precious metals, paper assets, and the overall economy. His work can be seen on numerous online publications, but his website, SRSrocco Report, is highly regarded as one of the most invaluable publications of its kind in the sphere of precious metals and the economy.</span></p> <p>&nbsp;</p> <p>&nbsp;</p> <p><iframe src="" width="710" height="399" frameborder="0"></iframe></p> <p>&nbsp;</p> <p>&nbsp;</p> <h1 style="padding: 0px; margin-top: 0px; margin-bottom: 0.25em; line-height: 1.15; font-size: 24px; font-weight: normal; font-family: Roboto, sans-serif; max-width: 90%;"><em style="margin: 0px; padding: 0px;"><span style="font-family: 'Lucida Grande', Verdana, sans-serif; font-size: 20.3333px; line-height: 17.3333px;">Please email with any questions about this interview, precious metals, or to receive these in your inbox&nbsp;</span><strong style="font-family: 'Lucida Grande', Verdana, sans-serif; font-size: 20.3333px; line-height: 17.3333px;"><span style="text-decoration: underline;"><a href=" Zero Hedge SRS Article">HERE</a>.</span></strong></em></h1> <p>&nbsp;</p> <p>&nbsp;</p> <p>&nbsp;</p> <p><em style="margin: 0px; padding: 0px;"><strong style="font-family: 'Lucida Grande', Verdana, sans-serif; font-size: 20.3333px; line-height: 17.3333px;"><span style="text-decoration: underline;"><br /></span></strong></em></p> Precious Metals Wed, 25 Nov 2015 10:57:59 +0000 Sprott Money 517014 at M&A Spikes to Craziest Frenzy Ever, even as Bottom Falls out of Riskiest End <p>Pfizer’s revenues have been declining for what will be four years in a row by the end of 2015. Its liabilities have ballooned to $104 billion. Its “goodwill” and “intangible assets” – future expenses temporarily parked on the balance sheet – have swollen to $95 billion. It has so much debt in relationship to its real assets that its tangible stockholder equity is a <em>negative</em> $24 billion. It’s facing a “patent cliff,” as new generic drugs are eating into sales and profits of its old drugs. It’s in worse shape than even IBM.</p> <p>And it no longer wants to pay taxes in the US. So it announced a miracle cure, a marvelous piece of financial and tax engineering: the $160-billion acquisition of Allergan.</p> <p>It’s the second largest deal ever and has become target of political scorn from all sides for one of its primary purposes: transferring Pfizer’s legal headquarters on paper to Ireland in order to escape US taxes. But beyond the sound-bites, the deal propels global M&amp;A so far this year to a record $4.2 trillion. </p> <p>With over a month to go before the year is up, it blows away the all-time <em>annual</em> record of $4.1 trillion set in 2007, according to <a href=";A%202015%20Surpasses%20All-Time%20Annual%20Record.pdf"><span style="text-decoration: underline;">Thomson Reuters</span></a>. US-targeted M&amp;A activity, which accounts for nearly half of global M&amp;A, has soared 55% from 2014 and exceeds $2 trillion for the first time ever.</p> <p>Pfizer’s deal pushes global healthcare M&amp;A to $649 billion, more than 2013 and 2014 combined! No other industry comes even close. Tech M&amp;A, though it has more than doubled from 2014, is in distant second place. And Pfizer’s deal pushed pharma M&amp;A to $416 billion, more than 2014, 2013, and 2012 <em>combined</em>.</p> <p>Big Pharma is getting bigger. And Pfizer is the M&amp;A queen among them: it engineered the largest two pharma deals ever, the Allergan deal and the $89-billion acquisition of Warner-Lambert in 1999. According to Thomson Reuters, six of the largest 20 pharma deals ever involve Pfizer.</p> <p>Pfizer is expected to issue a ton of its overvalued shares, of which it can print an unlimited number, to buy Allergan. So in theory, the deal won’t necessitate additional debt. But there will be “large-scale share buybacks, to combat post-merger dilution,” <a href=";aid=12393539"><span style="text-decoration: underline;">S&amp;P Capital IQ LCD</span></a> reported, on top of the $5-billion pre-merger buybacks to be implemented over the first half of next year. Pfizer is expected to fund most of these buybacks by issuing a ton of new debt. And that “contributed to S&amp;P’s decision today to place the AA rating on Pfizer under review for possible downgrade.”</p> <p>The deal shows just how feverish M&amp;A has become before the window closes –&nbsp;when the stock and bond markets deteriorate. That’s already happening at the lower end of the credit-ratings spectrum. Deals by junk-rated companies are getting in trouble as their stocks, bonds, and loans have gotten hammered. </p> <p>Banks lend money to make these deals happen. Since these “leveraged loans” are too risky for banks to keep on their books, they offload them to institutional investors, such as loan funds. But now, banks are increasingly finding themselves stuck with these loans, such as those for the leveraged buyouts of software company Idera, apparel maker Fullbeauty, and generic drug maker Lannett.</p> <p>Leveraged buyouts by PE firms are in particular trouble. Now banks have to offer big discounts, possibly at a loss, to bamboozle portfolio managers into taking these loans. The <a href=""><span style="text-decoration: underline;">Financial Times</span></a>:</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>But even discounting has not been enough – underlined last week by banks being forced to postpone the $5.5-billion sale of debt to finance this year’s largest leveraged buyout; Carlyle’s carveout of Veritas from Symantec.</p> </blockquote> <p>The problem? The credit cycle is ending. Finally seeing some of the risks, investors are transitioning from loosy-goosy, everything-goes – a formula the Fed has espoused since 2008 through its destruction of yield – to a sense of caution or even foreboding. And they’re beginning to pull back.</p> <p>Initially, junk rated energy, mining, and metals companies caught the brunt of it. But over the past two months, it spread to retail, pharma, and media companies. And this, according to the <em>Financial Times</em>, “has unnerved portfolio managers.”</p> <p>So the flight to quality, as it’s called, has begun. The <em>least risky</em> junk bonds (rated BB) have merely edged down as their average effective yield has edged up from&nbsp;around 4.3% in mid-2014 to 5.85% now, according to the BofA Merrill Lynch US High Yield index. But the bottom has fallen out of the riskiest end: junk bonds rated CCC or below have swooned, and their yields have soared from around 8% on average in mid-2014 to over 15% now:</p> <p><a href="" target="_blank" class="image-anchor"><img src="" alt="US-CCC-or-below-rated-yields-2011_2015-11" width="504" height="354" class="alignnone wp-image-19661 size-full" /></a></p> <p>And the Fed hasn’t even begun to raise rates yet.</p> <p>Corporate deal makers and Wall Street aren’t blind. They see that the credit cycle is ending, that lower-rated companies are having trouble issuing bonds at survivable rates. They see rising defaults. They see a few mega-caps propping up the S&amp;P 500 index, while numerous former darlings have been abandoned. And so they’re furiously making hay as the storm is moving in. </p> <p>But M&amp;A booms have consequences for the real economy. They tie up corporate resources, stifle innovation, and create bloated, unmanageable, over-indebted empires. They concentrate pricing power. They entail “efficiencies” and “synergies,” so shutdowns and mass layoffs. They’re the last leg in a bull market. And they’re always followed by deep trouble.</p> <p>Moody’s has already warned about the coming credit crunch and has drawn unnerving parallels to 2008 and 1999. Read… <a href=""><span style="text-decoration: underline;">Last Two Times this Happened, it was Mayhem</span></a>.</p> Bond High Yield Institutional Investors Ireland Merrill Merrill Lynch Reuters Wed, 25 Nov 2015 07:48:30 +0000 testosteronepit 517025 at Russia Deploys Warship Off Syrian Coast To "Destroy Any Threats To Russian Planes" <p>Despite demands from France&#39;s Hollande, America&#39;s Obama, and NATO&#39;s Stoltenberg that this situation not esclate, it appears Putin is not taking the shooting down of a fighter jet lying down. The seemingly cagey confirmation by NATO and Obama of Turkey&#39;s claims that Russia invaded its airspace has been rebuked by <strong>Russia which claims the Hmeimim airbase radar shows the attacking Turkish plane violating Syrian airspace</strong>. In response, Russia is moving a Cruiser &#39;Moskva&#39; off the coast to strengthen air-defenses - just as French and US carriers are on their way.</p> <p><strong>Here is The Turkish version mapping of the flight paths.</strong></p> <p><a href=""><strong><img height="384" src="" width="500" /></strong></a></p> <p>&nbsp;</p> <p>Russia claims otherwise:</p> <ul> <li><strong>HMEIMIM AIRBASE&#39;S RADAR SYSTEM RECORDS VIOLATION OF SYRIAN AIRSPACE BY ATTACKING TURKISH WARPLANE - RUSSIAN DEFENSE MINISTRY</strong></li> </ul> <p>And is escalating:</p> <ul> <li><strong>RUSSIAN &#39;MOSKVA&quot; CRUISER TO GO TO AREA IN COASTAL LATAKIA TO STRENGTHEN AIR DEFENSE IN SYRIA - RUSSIAN DEFENSE MINISTRY</strong></li> </ul> <p>The Missile cruiser in question:</p> <p><a href=""><img alt="" src="" style="width: 600px; height: 386px;" /></a></p> <p>The reason for the deployment:</p> <ul> <li><strong>RUSSIAN ARMED FORCES GENERAL STAFF: NONE OF OUR PARTNERS, COUNTRIES FIGHTING ISIL HAVE EVER TOLD US THAT SO-CALLED MODERATE OPPOSITION UNITS WERE IN AREA WHERE SU-24 DOWNED</strong></li> <li><strong>NO ATTEMPTS REGISTERED ON PART OF TURKISH PLANE TO GET IN TOUCH OR ESTABLISH VISUAL CONTACT WITH OUR CREW VIA OBJECTVE CONTROL DEVICES - RUSSIAN DEFENSE MINSTRY</strong></li> <li><span style="text-decoration: underline;"><strong>WARSHIP TO DESTROY ANY THREATS SEEN TO RUSSIAN PLANES: IFX</strong></span></li> </ul> <p>Specifically, as <a href="">RT reports</a>, the steps announced by Russian top brass as the following:Three steps as announced by top brass:</p> <ol> <li>Each and every strike groups&rsquo; operation is to be carried out under the guise of fighter jets</li> <li>Air defense to be boosted with the deployment of Moskva guided missile cruiser off Latakia coast with an aim to destroy any target that may pose danger</li> <li>Military contacts with Turkey to be suspended</li> </ol> <p>Just like the downing of flight MH17 over Ukraine, it has quickly become a case of &quot;he said, she said&quot;:</p> <p>Rudskoy said the Russian warplane did not violate Turkish airspace. Additionally, according to the Hmeymim airfield radar, it was the Turkish fighter jet that actually entered Syrian airspace as it attacked the Russian bomber. <strong>The Turkish fighter jet made no attempts to contact Russian pilots before attacking the bomber, Rudskoy added.</strong></p> <p>&ldquo;We assume the strike was carried out with a close range missile with an infra-red seeker,&rdquo; Rudskoy said. &ldquo;The Turkish jet made no attempts to communicate or establish visual contact with our crew that our equipment would have registered. The Su-24 was hit by a missile over Syria&rsquo;s territory.&quot;</p> <p>Sergey Rudskoy, a top official with the Russian General Staff, condemned the attack on the Russian bomber in Syrian airspace by a Turkish fighter jet as &ldquo;a severe violation of international law&rdquo;. He stressed that the Su-24 was downed over the Syrian territory. The crash site was four kilometers away from the Turkish border, he said.</p> <p>As a result, Russia now plans to implement new measures aimed at strengthening the security of the country&rsquo;s air base in Syria and in particular to bolster air defense. <strong>Russian guided missile cruiser Moskva, equipped with the &lsquo;Fort&rsquo; air defense system, similar to the S-300, will be deployed off Latakia province&#39;s coast</strong>.</p> <p><strong>&quot;We warn that every target posing a potential threat will be destroyed,&rdquo;</strong> lieutenant general Sergey Rudskoy said during the briefing.</p> <p>&ldquo;All military contacts with Turkey will be suspended,&rdquo; he added.</p> <p>Furthermore, as the Russian Ministry of Defense explained, going forward, any Turkish plane that enters Syrian airspace will be fair game.</p> <blockquote class="twitter-tweet" data-partner="tweetdeck"><p dir="ltr" lang="en"><a href="">#SYRIA</a> <a href="">#Rudskoy</a> Russian Defence Ministry warns that all the potentially dangerous targets will be destroyed</p> <p>&mdash; ?????????? ?????? (@mod_russia) <a href="">November 24, 2015</a></p></blockquote> <script async src="//" charset="utf-8"></script><p>And again, all this is happening as both the French <a href="">carrier de Gaulle and the US carrier CVN-75 USS Harry S. Truman are on their way </a>to a very dangerous rendezvous off the Syrian coast.</p> <p><a href=""><img height="602" src="" width="500" /></a></p> <p>So just as we warned in September, the situation has become a complete rerun of the 2013 Syria &quot;Mediterranean&quot; showdown, with full naval engagement by all parties, except this time the tensions are significantly escalated, a Russian fighter jet has just been taken down, US and French aircraft carriers are arriving in weeks, and Putin will not hestitate to go as far as he has to in order to save face.</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="2000" height="1286" alt="" src="" /> </div> </div> </div> France None Turkey Ukraine Wed, 25 Nov 2015 04:40:00 +0000 Tyler Durden 516995 at Turkish Shootdown of Russian Jet: What You Need to Know <p>A U.S. official <a href="">told</a> Reuters that the Russian jet was <em>inside</em> <em>of Syria</em> when it was shot down:</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p id="yui_3_18_1_1_1448421504002_1263">The United States believes that the Russian jet shot down by Turkey on Tuesday was hit inside Syrian airspace after a brief incursion into Turkish airspace, a U.S. official told Reuters, speaking on condition of anonymity.</p> </blockquote> <p>Russia <a href="">denies</a> that the Russian fighter jet &ndash; which was bombing ISIS &ndash; ever entered Turkish air space, and has put out its <a href="">own map</a> purporting to prove that claim.</p> <p>The Russian jet pilots who parachutted free of their burning plane were then purportedly <a href="">killed by Turkish rebels</a> inside Syria.&nbsp; If true, this is a war crime.</p> <p>Then &ndash; when a Russian helicopter tried to save the pilots &ndash; <em>it</em> was shot down by <a href="">American-backed Syrian rebels</a> &ndash; using weapons provided to them <a href="">by the United States&nbsp;</a> &ndash; and a Russian marine <a href="">was killed</a>.</p> <p>Russia is <a href="">deploying a warship off the Syrian coast to &ldquo;destroy any threats</a> to Russian planes&rdquo;.&nbsp;&nbsp; <a href="">Many believe</a> this is the <a href="">start of World War III.</a></p> <p>While the U.S. and NATO tried to blame Russia, German Vice-Chancellor Sigmar Gabriel <a href="">slammed</a> Turkey:</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>&ldquo;This incident shows for the first time that we are to dealing with an actor who is unpredictable according to statements from various parts of the region &ndash; that is not Russia, that is Turkey,&rdquo; Gabriel said, as cited by DPA news agency. He added that Turkey was playing &ldquo;a complicated role&rdquo; in the Syrian conflict.</p> </blockquote> <p>Indeed, NATO-member Turkey is <a href="">MASSIVELY supporting ISIS</a>, <a href="">provided chemical weapons</a> used in the jihadi&rsquo;s massacre of civilians, and has been bombing&nbsp;<a href="" title="busted">ISIS&rsquo; main on-the-ground enemy &ndash; Kurdish soldiers &ndash; using its air force</a>.&nbsp; And some of the Turkish people are also <a href="">unsympathetic to the victims</a> of ISIS terrorism.</p> <p>Turkey was also instrumental in the creation of ISIS.&nbsp; An internal Defense Intelligence Agency (DIA) document produced recently shows, the U.S. knew that the actions of &ldquo;the West, Gulf countries and <strong>Turkey</strong>&rdquo; in Syria <a href="" title="might create a terrorist group like ISIS and an Islamic caliphate">might create a terrorist group like ISIS and an Islamic CALIPHATE</a>.</p> <p>As the former DIA head <a href="">explained</a>:</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>It was a <strong>willful decision</strong> [by Turkey, the West and the Gulf states] to &hellip; support an insurgency that had salafists, Al Qaeda and the Muslim Brotherhood &hellip;.</p> </blockquote> Reuters Turkey Wed, 25 Nov 2015 04:12:44 +0000 George Washington 517024 at