en ISIS Leader Al-Baghdadi Dead, Radio Iran Claims <p>Following The Guardian's report that ISIS leadder Abu Bakr Al-Baghdadi had <strong>received serious "life-threatening" injuries during a US-led airstrike in March</strong>; in what could deal a severe jolt to the extremist organization, Radio Iran has claimed that <strong>the ISIS caliph has died</strong>.</p> <p>According to a tweet by the All India Radio (AIR), Baghdadi's death claim has been made by Radio Iran.</p> <blockquote class="twitter-tweet" lang="en"><p>Leader of the <a href="">#ISIS</a> terrorist group Abu Bakr al-Baghdadi has died: Radio Iran</p> <p>— All India Radio News (@airnewsalerts) <a href="">April 27, 2015</a></p></blockquote> <script src="//"></script><p><a href=""><em>As ZeeNews adds,</em></a> a Guardian report last week claimed that Baghdadi had received serious 'life-threatening' injuries during a US-led airstrike in March and that the strike had left him seriously wounded.</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>The report added that <strong>Baghdadi was no more in control of daily operations of ISIS as he had not been able to recover.</strong></p> <p>&nbsp;</p> <p>However, <strong>there were similar reports of Baghdadi being "seriously injured" in US-led air strikes last year</strong>, but they were not confirmed.</p> <p>&nbsp;</p> <p><strong>The Pentagon had refuted the latest report of Baghdadi being injured, saying there was no evidence to prove that the ISIS chief had suffered injuries </strong>when the US-led coalition planes bombarded the al-Baaj a district of Nineveh, near Syrian border on March 18.</p> </blockquote> <p>*&nbsp; *&nbsp; *</p> <p>&nbsp;</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="469" height="340" alt="" src="" /> </div> </div> </div> India Iran Mon, 27 Apr 2015 12:23:39 +0000 Tyler Durden 505557 at Key Events In The Coming Week: April FOMC And Q1 GDP <p>There are two main events in the coming week: the (second in a row disastrous) Q1 US GDP and the April FOMC.</p> <p>As DB reminds us, Q1 GDP consensus has plunged to 1% YoY (with even LaVorgna lowering his forecast to 0.7% from 1.7% following the weaker-than-expected core durable goods shipments and inventory figures). As <a href="">Zero Hedge first pointed out nearly two months ago</a>, the 'Atlanta Fed GDPNow is currently at 0.1% and has been below 1% since early March, well ahead of the street. </p> <p>Assuming a weak reading, the bulls will point to the weather impact, the West Coast port disruptions and the recent strange pattern of weak Q1s relative to the rest of the year. The bears will suggest the dollar and a sluggish global economy is having an impact and that the secular stagnation theory is still alive.</p> <p>As DB's Jim Reid notes, "how the Fed interprets this will be far more important though and this week's low key FOMC meeting (Wednesday conclusion) will be interesting in so far as how much they acknowledge weak Q1 growth and inflation and how confident they are that its temporary. There is no press conference or economic update, just a statement."</p> <p>Aside from these two events, today we also have the April composite and services PMI and the Dallas Fed manufacturing reports. </p> <ul> <li>Tomorrow we have Q1 UK GDP which will be interesting a week before the election. </li> <li>On Wednesday in Europe we have April eurozone confidence and German April CPI whilst over in the US it’s a busy day with US Q1 GDP and the April FOMC decision. </li> <li>Thursday looks set to be another busy day as we begin with the latest BoJ statement before heading to Europe for German March retail sales, Spanish Q1 GDP and April CPI and Eurozone April CPI and unemployment. </li> <li>In terms of macro data we close the week with Japanese March CPI, US April ISM and with Greece' payment to the IMF due.</li> </ul> <p>BofA's chart summarizes the above:</p> <p><a href=""><img src="" width="600" height="425" /></a></p> <p><em>Source: BofA and Deutsche</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="784" height="555" alt="" src="" /> </div> </div> </div> CPI Dallas Fed Eurozone Global Economy Jim Reid Unemployment Mon, 27 Apr 2015 12:14:08 +0000 Tyler Durden 505556 at Under Pressure From Europe, Tsipras Prepares To Show Varoufakis The Door <p>On Friday, Greece’s embattled FinMin Yanis Varoufakis added to his highlight reel of “<a href="">kerfuffles</a>” when he put on a performance at the negotiating table in Riga that prompted his peers to <a href="">describe him</a> as an amateurish time-wasting, gambler. As talks with creditors drag on under the constant threat of a Greek default and a disorderly euro exit, it appears Varoufakis’ antics may have finally gone too far, for as <a href="">Reuters reports</a>, PM Tsipras looks to have effectively replaced the FinMin as lead negotiator. Here’s more:</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p><em>Greek Prime Minister Alexis Tsipras on Monday reshuffled his team handling talks with European and IMF lenders, after his finance minister was sharply criticized for his performance at a euro zone meeting last week…</em></p> <p>&nbsp;</p> <p><em>Tsipras and senior aides expressed support for Yanis Varoufakis and agreed the finance minister would supervise a new team negotiating a reforms deal with lenders, <strong>but appointed deputy Foreign Minister Euclid Tsakalotos as coordinator of the group, a government official said.</strong></em></p> <p>&nbsp;</p> <p><strong><em>The appointment suggested Tsakalatos, an Oxford-educated economist and professor who is soft-spoken and well-liked by officials representing creditors, would have a more active role in face-to-face talks from now on.</em></strong></p> </blockquote> <p>And here are more details via Bloomberg:</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p><em>Greek representative at Euro Working Group George Chouliarakis will be responsible for Greek delegation in Brussels Group meetings.</em></p> <p>&nbsp;</p> <p><em>General secretary of Greek govt Spyros Sagias will assume coordination of technical work in Athens.</em></p> <p>&nbsp;</p> <p><em>General secretary of finance ministry Nikos Theoharakis will focus on drafting a growth plan for Greek economy, which will be basis for June agreement with creditors.</em></p> </blockquote> <blockquote class="twitter-tweet" lang="en"><p>Despite govt officials backing <a href="">@yanisvaroufakis</a>, others are being introduced/upgraded in talks process <a href="">#Greece</a></p> <p>— Stelios Bouras (@SteliosBouras1) <a href="">April 27, 2015</a></p></blockquote> <script src="//"></script><p>The move comes on the heels of reports that eurozone negotiators had finally become so exhausted with Varoufakis that they had sought to bypass him altogether after the Greek FinMin apparently adopted a stance so contentious on Friday that talks never even progressed to the point where divisions over reforms could be discussed. Meanwhile, Varoufakis was busy playing the martyr, tweeting out FDR quotes and having dinner by himself. Here’s <a href="">FT</a>:</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p><em>Greece’s dire financial position is forcing eurozone authorities to look beyond</em></p> <p><em>Mr Varoufakis to Alexis Tsipras, prime minister, much like in February when Jeroen Dijsselbloem, the Dutch finance minister who chairs the eurogroup, brokered an extension of the current bailout programme.</em></p> <p>&nbsp;</p> <p><em>According to two eurozone officials, Mr Dijsselbloem phoned Mr Tsipras from Riga in an effort to mend fences after Friday’s feisty eurogroup meeting, where Mr Varoufakis was rounded on by his eurozone colleagues.</em></p> <p>&nbsp;</p> <p><strong><em>In a sign that Mr Varoufakis’s combative approach is prompting concern in Greece as well, a senior Athens official said the Riga meeting was likely to lead to him being sidelined as Mr Tsipras and his deputy Yannis Dragasakis take a more hands-on role…</em></strong></p> <p>&nbsp;</p> <p><em>Mr Varoufakis shrugged off criticism from his eurozone colleagues, comparing his situation to that of US President Franklin D. Roosevelt as he pushed through the New Deal. <strong>“They are unanimous in their hatred for me and I welcome their hatred,” he tweeted.</strong></em></p> <p>&nbsp;</p> <p><em>Some eurozone and Greek officials believe divisions between Mr Varoufakis and Mr Tsipras are deepening and that a concerted appeal to the prime minister could still produce a deal by late May, the time many feel an agreement has to be reached if any aid disbursement can be made before the current bailout expires at the end of June.</em></p> <p>&nbsp;</p> <p><em>“There is an element of cognitive dissonance here,” said one official involved in the talks. “Varoufakis does not comprehend that at the political level one just does not negotiate every item. Other people do that.”</em></p> </blockquote> <p>* &nbsp;* &nbsp;*</p> <p>And when it comes to&nbsp;<a href="">dinner plans</a>, Varoufakis was not interested in joining his fellow European officials at the gala...</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p><em>As the buses carrying European finance ministers left for a gala dinner in the Latvian capital on Friday night, <strong>one of the party hung back at the hotel and then wandered off alone into the dusk.</strong></em></p> </blockquote> <p>...because he does not like "<a href=",Varoufakis-cant-stand-boring-dinners.html">boring dinners</a>."</p> <p>We suppose that's a good thing, because it now appears he'll be invited to a lot less of them.</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="235" height="141" alt="" src="" /> </div> </div> </div> Cognitive Dissonance Creditors default Eurozone Greece Reuters Mon, 27 Apr 2015 11:50:18 +0000 Tyler Durden 505555 at Frontrunning: April 27 <ul> <li>Nepal earthquake toll crosses 3700 (<a href="">Reuters</a>)</li> <li>Greeks Add Pressure on Tsipras to Compromise as Talks Resume (<a href="">BBG</a>)</li> <li>With No Deal on Greek Bailout Aid in Sight, Some in Europe Suggest ‘Plan B’ (<a href="">WSJ</a>)</li> <li>BOJ Shouldn’t Ease Further; Yen Fell Enough: Business Lobby Head (<a href="">BBG</a>)</li> <li>Clinton Foundation admits making mistakes on taxes (<a href="">Reuters</a>)</li> <li>Here’s the Old Nemesis Starting to Spook Bond Traders Again (<a href="">BBG</a>)</li> <li>Deutsche Bank to Trim Investment Banking (<a href="">WSJ</a>)</li> <li>China’s Stocks Rise to Seven-Year High on SOE Merger Speculation (<a href="">BBG</a>)</li> <li>Set to begin, U.S. plan for Syrian rebels already mired in doubt (<a href="">Reuters</a>)</li> <li>ECB Seen Going All the Way on QE as Economists Doubt Taper (<a href="">BBG</a>)</li> <li>War Haunts Russia’s Southern Fringe, Threatening Pipelines (<a href="">BBG</a>)</li> <li>Scottish nationalists eye 'enormous clout' in next UK government (<a href="">Reuters</a>)</li> <li>China Inc. Finds Cure to Debt Hangover in Stock-Market Boom (<a href="">BBG</a>)</li> <li>Israel Says It Carried Out Airstrike on Syrian Border (<a href="">WSJ</a>)</li> </ul> <p>&nbsp;</p> <p><strong>Overnight Media Digest</strong></p> <p><em><span style="text-decoration: underline;">WSJ</span></em></p> <p>* Rescuers in Nepal struggled to reach remote areas hit by Nepal's most devastating earthquake in roughly 80 years. (<a href="" title=""></a>)</p> <p>* President Barack Obama tightened rules for the U.S. drone program in 2013, but secretly approved a waiver giving the Central Intelligence Agency more flexibility in Pakistan than anywhere else to strike suspected militants, according to current and former U.S. officials. (<a href="" title=""></a>)</p> <p>* With Ferdinand Piech's departure Saturday, Volkswagen AG faces two weeks of uncertainty before its annual meeting on May 5, as the automotive giant faces big challenges getting back in gear amid slumping sales in the U.S. and China and high costs in Europe. (<a href="" title=""></a>)</p> <p>* Investigators overlooked evidence given to them just hours after the 2010 "flash crash" that could have enabled them to uncover the strategies of Navinder Sarao, the trader now accused of helping cause the violent selloff in stocks that day, according to members of a committee that oversaw the investigation. (<a href="" title=""></a>)</p> <p>* Pharmaceutical companies such as Valeant are buying drugs that they see as undervalued, then raising their prices.(<a href="" title=""></a>)</p> <p>* The world's largest advertiser, Procter &amp; Gamble Co , plans deep cuts in the number of ad agencies it works with in hopes of big savings on fees.(<a href="" title=""></a>)</p> <p>&nbsp;</p> <p><em><span style="text-decoration: underline;">FT</span></em></p> <p>EU diplomats and politicians fear that the UK's neck-and-neck general elections will result in a fragile government and even set a course for a British exit from the bloc just as Europe faces a renewed Russian threat and a lingering economic crisis.</p> <p>Nepal has turned to its two Asian neighbours, India and China, and the rest of the international community to assist with the aftermath of a devastating weekend earthquake, as the death toll from the disaster rose to 2,800.</p> <p>The British government has told BP Plc it would oppose any potential takeover of the company. The vulnerability of BP to a takeover has been discussed at a senior level in Whitehall since the Deepwater Horizon disaster, when an explosion on a rig working under contract for the company killed 11 men and triggered the worst offshore oil spill in U.S. history.</p> <p>The resignation of Ferdinand Piëch, the dominant force at Volkswagen for more than two decades, leaves a void at the top of the German carmaker.</p> <p>Ebay Inc' chief executive, John Donahoe, said in an interview with the Financial Times that barriers were breaking down between different areas of online commerce. The auction website chief's comments support arguments already made by Google Inc in its first response to the European Commission's landmark competition case.</p> <p>&nbsp;</p> <p><em><span style="text-decoration: underline;">NYT</span></em></p> <p>* Regulators are considering whether to reopen an investigation into Jeeps with rear gas tanks, despite Fiat Chrysler's agreement two years ago to recall some of the affected models. (<a href="" title=""></a>)</p> <p>* As soon as Comcast Corp withdrew, Charter Communications Inc was reported to be exploring a new bid for Time Warner Cable Inc, but some predict consumers will lose no matter who buys whom. (<a href="" title=""></a>)</p> <p>* Computer industry mainstays are rolling out technology to block surveillance, including by the National Security Agency, which fears "going dark" on terror threats. (<a href="" title=""></a>)</p> <p>* Jay Z took to Twitter on Sunday to defend his new streaming music service Tidal, after news reports suggested that the app was slipping into early oblivion. (<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>** Prime Minister Stephen Harper signalled last week that Canada will set a less ambitious emissions-reduction goal for 2025 than the one announced by President Barack Obama, which aims to reduce greenhouse gases by 26 percent from 2005 levels. (</p> <p>** Canada's energy industry is bracing for more budget cuts and possibly another wave of layoffs even as crude prices edge up from multiyear lows. (</p> <p>** The federal government and Canadian aid groups are marshalling resources to help in the aftermath of the Nepal earthquake, dispatching doctors, medical supplies and a military response team to the country. (</p> <p>NATIONAL POST</p> <p>** Toronto's outgoing police chief, Bill Blair, has confirmed he will be running for the federal Liberals in the fall election. Blair tweeted Sunday morning that he is "excited to continue my public service by working to earn the support of people in Scarborough Southwest." (</p> <p>** Pittsburgh Penguins superstar Sidney Crosby has been added to Canada's roster for the upcoming world hockey championship, giving the Canadian team a huge boost as it seeks to win its first gold medal since 2007. ( </p> <p>&nbsp;</p> <p><em><span style="text-decoration: underline;">Hong Kong<br /></span></em></p> <p>SOUTH CHINA MORNING POST</p> <p>-- Hong Kong is set to play a more active role in Southeast Asia with the likely conclusion next year of an ASEAN-Hong Kong free-trade pact, Chief Executive Leung Chun-ying told the ASEAN Leadership Forum in Kuala Lumpur. (</p> <p>-- Cathay Pacific Airways chief executive Ivan Chu Kwok-leung told the South China Morning Post that he thinks his airline may have returned to a period of long-term steady profit delivery for shareholders, four years after the last decade-long run ended. (</p> <p>-- Moving HSBC's headquarters to Hong Kong from Britain could unlock at least $14 billion in value for the banking giant's shareholders, analysts say. HSBC said at its annual general meeting with investors last Friday that it would review the future of its British headquarters. (</p> <p>THE STANDARD</p> <p>-- Pan-democratic lawmakers kicked off their publicity against the government's political reform package in Wan Chai, vowing to talk to residents up close. The launch of the two-month "anti-pocketing" campaign, comprising seminars, bicycle parades, distributing leaflets and postcards, was attended by 17 out of 23 pan-democratic lawmakers. (</p> <p>-- Hong Kong's stock market is neither irrational nor becoming another A-share market, Secretary for Financial Services and the Treasury Ceajer Chan Ka-keung says, after money from the mainland has boosted local stocks for a month. Participation of mainland investors makes local share prices more indicative of their real value, he said. (</p> <p>HONG KONG ECONOMIC JOURNAL</p> <p>-- The Hong Kong Travel Agent Owners Association forecast that travel agents would serve 40-50 percent fewer mainland tourists during the upcoming Labour Day golden week holiday beginning May 1, compared with the same period last year. Some hotels are cutting room rates by 40 percent to lure travellers, according to Simon Yuen, the association's vice chairman.</p> <p>-- Maoye International Holdings Ltd said its wholly-owned unit, Shenzhen Maoye Trade Building Co Ltd, would buy 3.48 million of Ping An Insurance's Shanghai-listed A shares at 87.6 yuan apiece for 304.4 million yuan.</p> <p>&nbsp;</p> <p><em><span style="text-decoration: underline;">Britain</span></em></p> <p>The Times</p> <p>* HSBC mulls splitting off Midland if it moves to Asia</p> <p>HSBC Plc Holdings may spin off its UK division into a separate business, reviving the old Midland Bank. The move could be considered as part of the far-reaching review by Britain's largest bank, announced on Friday, into whether to move its headquarters to Asia amid rising costs and increasingly onerous regulations in the UK. (<a href="" title=""></a>)</p> <p>* Record fine halves Deutsche profits</p> <p>First-quarter profits at Deutsche Bank AG have halved after the bank was hit by a record fine, and comes in advance of a long-awaited restructuring that could lead to job losses among City traders in London. (<a href="" title=""></a>)</p> <p>The Guardian</p> <p>* Slow GDP growth in first quarter puts pressure on Osborne</p> <p>George Osborne's stewardship of the economy is expected to take a dent on Tuesday when the latest official figures show last year's healthy growth has lost momentum. With just over a week until the election, the chancellor will come under pressure from critics following a run of poor figures from the manufacturing and construction sectors that City economists predict have slowed growth in the first quarter. (<a href="" title=""></a>)</p> <p>* BP and Shell to report 60 pct collapse in first-quarter profits</p> <p>BP Plc and Royal Shell Plc will this week report a collapse in first-quarter profits of around 60 percent on the same period of 2014, underlining the financial damage being inflicted by low oil and gas prices. Analysts predict BP will be hit the hardest, putting further pressure on chief executive, Bob Dudley, as he tries to steer the company back to full health amid continuing fallout from the Deepwater Horizon accident. (<a href="" title=""></a>)</p> <p>The Telegraph</p> <p>* Number 10 warns of opposition to potential BP bid</p> <p>The Government has met with BP Plc in recent days to express its opposition to any potential takeover of the oil major. The move by Downing Street comes on the back of speculation that BP could be the next company to be caught up in the wave of consolidation in the energy sector. (<a href="" title=""></a>)</p> <p>* Lloyds takes 640 mln pounds hit from TSB's Spanish sale</p> <p>Lloyds Banking Group Plc will this week take a 640 million pounds ($972 million) hit to profits from the sale of TSB Banking Group Plc to Spain's Banco Sabadell . The taxpayer-backed bank is due to recognise the loss at its first-quarter results, sending profits falling despite an improvement in underlying performance. (<a href="" title=""></a>)</p> <p>Sky News</p> <p>* Car-leasing giant revs up 100 mln pounds windfall</p> <p>Investors in the UK's biggest independent car-leasing group are toasting a 100 million pounds windfall just a year after the merger of two smaller rivals created an industry powerhouse. (<a href="" title=""></a>)</p> <p>* Labour to cap rents to help 'generation rent'</p> <p>Labour plans to bar private landlords from raising rents faster than inflation over a three-year period if it wins power after the General Election. Party leader Ed Miliband described Labour's blueprint as "a plan for a stable, decent, prosperous private rental market where landlords and tenants can succeed together". (<a href="" title=""></a>) </p> Barack Obama Bond China Comcast Crude Deutsche Bank Google Hong Kong India Israel Lloyds national security Reuters Shenzhen Time Warner Twitter Twitter Volkswagen Yen Yuan Mon, 27 Apr 2015 11:34:04 +0000 Tyler Durden 505554 at China Considers Launching QE; Shanghai Stocks Soar <p>Nearly two months ago we explained "<a href="">How Beijing Is Responding To A Soaring Dollar, And Why QE In China Is Now Inevitable</a>" in which we cited Cornerstone who reminded us "that from 2007 to late 2008, U.S. fed funds dropped 500 bp, and then the Fed still needed to do QE? The backdrop for China looks a bit similar. We had a credit bubble, they have a credit bubble. We had a housing bubble, they have a housing/investment bubble. Will China eventually have to go down the same path as the U.S., and the Eurozone? ... The PBoC will first cut rates to 0%, before contemplating QE." </p> <p>To this we added that "once China, that final quasi-Western nation, proceeds to engage in outright monetization of its debt, then and only then will the terminal phase of the global currency wars start: a phase which will, because global economic growth and that all important lifeblood of a globalized economy - trade - at that point will be zero if not negatve, <strong>will see an unprecedented crescendo of money printing by absolutely everyone, before coordinated devaluations mutate into uncoordinated, and when central bank actions morph from "all for one" to "each man for himself.</strong>" </p> <p>We may not have long to wait because just hours ago, MarketNews first among the wire services hinted at what we suggested was the endgame.</p> <ul> <li>*PBOC DISCUSSING DIRECT PURCHASES OF LOCAL GOVT BONDS: MNI</li> <li>*PBOC IS DISCUSSING UNCONVENTIONAL POLICIES: MNI</li> </ul> <p>Bloomberg adds more, citing MNI as saying that the Chinese central bank discussing "adopting unconventional policies to rebuild its balance sheet and reinvigorate economy, including making direct purchases of local government bonds from market."</p> <p>Of just as we predicted.</p> <p>MNI continues that "although wide range of possibilities tabled about how PBOC operations could change, <strong>common thread of discussion involves need to expand balance sheet to ensure supply of liquidity meets economy’s demands, </strong>report says."</p> <p>In other words, China is about to engage in the biggest QE of them all, and drown the world with exported deflation as the global supply glut which we explained yesterday, hits unprecedented levels and ultimately leads to the biggest inventory dumping phase in global history which central bankers will have no choice but to offset with Friedman's infamous "helicopter drop" of money, finally leading to the terminal phase for fiat currencies. </p> <p>MNI continues:</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p><strong>PBOC discussed quantitative easing, which would tie in with aim of having local governments sell CNY1t in bonds this year to lower interest costs, mitigating systemic risk and boosting economies at local level. </strong></p> <p>&nbsp;</p> <p>PBOC could buy assets directly from the banks, freeing them up to purchase local government bonds, or buy local government bonds directly from the market, according to sources who have been briefed on discussions. </p> <p>&nbsp;</p> <p>Unlike reserve-requirement cuts, which involve funding already in PBOC accounts, <strong>these operations would expand bank’s balance sheet, helping it to counter impact of sustained capital outflows.</strong></p> </blockquote> <p>Because apparently $22 trillion in global central bank assets is not enough to show the world's Keynesians, who are now eager to push the world to war just to avoid being proven wrong, that QE does not work. </p> <p>To be sure others promptly jumped on the report: according to Shanghai Pudong Development Bank, the "possibility exists for PBOC to adopt unconventional policy such as bond purchases as onshore commercial banks may have limited appetite for such notes."</p> <p>Move will help fund infrastructure projects more smoothly at a time when growth is slowing, Shanghai-based senior analyst Cao Yang says, adding that the Yuan will continue to be stabilized as authorities keen to promote currency internationalization</p> <p>And while no decision has been made and China is clearly unsure if this is the correct policy...</p> <ul> <li><strong>PBOC ECONOMIST SAYS NO NEED FOR STRONG STIMULUS: PEOPLE'S DAILY</strong></li> </ul> <p>... the market has already made up its mind, with the Yuan falling 0.14%, set for biggest drop since March 23, to 6.2036 per dollar, while the Shanghai Composite was up 3% in overnight trading, rising above 4,500 for the first time since the last financial crisis, and up 40% <a href="">since we first predicted in the beginning </a>of March precisely what the Chinese endgame is.</p> <p><img src="" width="500" height="293" /></p> <blockquote class="twitter-tweet" lang="en"><p>In today's A-share stock of the day: Baofeng Tech, limit-up 10% for 24 successive days. (h/t <a href="">@timdayipper</a> <a href="">@io8_8ov</a> ) <a href=""></a></p> <p>— Vikram (@vikramreuters) <a href="">April 27, 2015</a></p></blockquote> <script src="//"></script><p><img src="" width="499" height="421" /></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="400" height="226" alt="" src="" /> </div> </div> </div> Bond China Eurozone Housing Bubble Monetization Quantitative Easing Twitter Twitter Yuan Mon, 27 Apr 2015 11:21:59 +0000 Tyler Durden 505550 at Gold Flows East – China, India Import Massive Quantities of Gold from Switzerland <p><strong><a href="">Gold Flows East – China, India Import Massive Quantities of Gold from Switzerland</a></strong></p> <p><strong>- Singapore, India and China continue to import staggering volumes of gold from the West</strong><br /><strong>- U.K. exports of bullion to Switzerland increase 6 fold to a very large 97 tonnes</strong><br /><strong>- Gold exports from Switzerland to both China and India doubled in March</strong><br /><strong>- Shanghai Gold Exchange (SGE) becoming most important centre for physical gold trade</strong><br /><strong>- LBMA says London gold trade will not move to exchange</strong><br /><strong>- Gold price languishes at all time inflation adjusted lows despite robust demand …</strong><br /><strong>- Gold will protect Asian peasants and western middle classes …</strong></p> <p><a href=""><img src="" alt="goldcore_chart1_27-04-15" width="595" height="455" /></a></p> <p>In what future generations will likely see as a major, potentially catastrophic blunder of monetary policy, the West and particularly the City of London continues to hemorrhage huge volumes of gold which is flowing Eastwards to&nbsp;<a href="">Singapore</a>, India and China from London via Switzerland.</p> <p>“Gold exports to China from the refining hub of Switzerland almost doubled to 46.4 metric tons in March”, up from 23.6 tonnes in February” according to&nbsp;<a href="">Bloomberg</a>. India’s gold imports from Switzerland doubled to 72.5 tonnes in the same period.</p> <p>The increasingly affluent masses in China and India continue to have a voracious appetite for gold as a store of value.&nbsp;Policy makers in China and Russia have also made gold a cornerstone of their monetary policy.</p> <p>Bloomberg reported the following:</p> <p>“Flows to India rose before this month’s Akshaya Tritiya festival, which is considered a traditional day to buy precious metals.”</p> <p><a href=""><img src="" alt="goldcore_chart2_27-04-15" width="604" height="462" /></a></p> <p>The Asian demand for Swiss refined gold was met in part by very large gold imports from the U.K. Bloomberg states that Swiss imports from the U.K. &nbsp;rose sixfold in the same period to 97.2 tonnes.</p> <p>This figure dwarfs Swiss imports from other nations. The U.S. and Turkey exported just over 18 tonnes and 15 tonnes respectively and these figures greatly exceed the amounts coming from all the other countries from whom Switzerland imports gold.</p> <p>It is likely that London good delivery bars (400 troy ounces) favoured by western institutions including bullion banks and central banks are being imported into Switzerland. They go to the Swiss refineries to be smelted and refined into kilobar format which is increasingly popular in Asia and traded on the Shanghai Gold Exchange (SGE).</p> <p>Bloomberg also reports that “Global sales from gold-backed funds totaled 55.7 tons in March.” This would indicate that the gold making its way to Asia is coming from official holdings and or liquidation of&nbsp;<a href="">gold ETFs</a>. Some of those selling the ETFs are opting to acquire physical, allocated bullion and storing in vaults in Zurich, Hong Kong and of course Singapore.</p> <p>Singapore is fast becoming an important gold hub and a favourite location for&nbsp;<a href="">allocated bullion storage</a>&nbsp;among risk conscious bullion buyers. Hong Kong saw a decline in its share of the market as Chinese investors increasingly opt to use the Shanghai Gold Exchange (SGE) for buying and trading in general.</p> <p>Bloomberg reports that “Shipments to Hong Kong fell 26 percent to 30 tons”, whereas “Trading volume for bullion … jumped about 60 percent from the previous month to a record in March, Shanghai Gold Exchange data show.”</p> <p>The SGE deals solely in physical gold bars and not paper contracts or unallocated bullion bank accounts which can be used to divert and reduce actual demand for physical gold and cap gold prices.</p> <p>Between them China and India and Singapore - who imported almost 29 tonnes from Switzerland - imported almost 150 tonnes of the 223.3 tonne total of gold exported from Switzerland in March which Bloomberg said are “the highest since at least 2013”.</p> <p>While sentiment towards gold in the West is abysmal - even as gold languishes at record lows when adjusted for inflation - Asian demand remains insatiable.</p> <p><a href=""><img src="" alt="goldcore_chart3_27-04-15" width="604" height="533" /></a></p> <p>It would be wise for investors to inform themselves as to why this should be so. Demand for gold in Asia is often written off by Westerners as an irrational impulse of uneducated Asian peasant farmers and workers.</p> <p>This is unfair to gold buyers in Asia - many of whom have experience of currency devaluation and therefore opt to own gold as a savings mechanism and a superior store of value.</p> <p>However irrational holding gold may appear, the alternative - holding paper currencies which are continually being devalued through QE and inflation in various sectors of the economy - is even more irrational.</p> <p>The fact that it is a matter of Chinese state policy to continuously accumulate vast volumes of gold and that the Chinese government has encouraged its citizens to own gold shows that bullion is not the fringe asset of irrational ‘gold bugs’ as it is often suggested in some western media.</p> <p>The fact that Western central banks continue to hold, consolidate and repatriate gold shows the strategic importance placed on gold by the very entities who issue the currencies we use.</p> <p>People need to protect themselves from potential economic and monetary crises where existing currencies may be devalued. In the event of serious problems or even the collapse of the unsustainable debt-based international &nbsp;monetary system, an allocation to gold will protect wealth. Both the savings of peasants in India and those of the middle classes and high net worths in the western world.</p> <p>Separately, this morning the LBMA have said that gold bullion trading in London isn’t likely to move to an exchange because it would increase costs and reduce liquidity, the LBMA told Bloomberg.</p> <p>The London Bullion Market Association on Monday said it has commissioned Ernst &amp; Young LLP to conduct a study and prepare recommendations on how to develop the market. In the future, there may be more regular transaction reporting and a return of publishing gold forward offered rates and the forward curve, said Ruth Crowell, the association’s chief executive.</p> <p>The World Gold Council began gathering views from banks and traders, including potentially moving over-the-counter trading to an exchange, three people with knowledge of the matter said in February. Contracts change hands through an exchange in New York, Singapore and Shanghai, while London relies on banks and other companies to manage counterparty risks.</p> <p>“It is unlikely that the Ernst &amp; Young review will recommend moving the existing business from OTC to an exchange, given a move would increase costs for OTC clients and diminish liquidity,” Crowell said by phone on Monday. “We have also had a lot of changes happening in the market. Recently, the market has needed a lot more from the LBMA …”.</p> <p><strong>Important guides to storage in Singapore and Switzerland:</strong><br /><strong><a href="">Essential Guide to Storing Gold In Singapore<br /></a><a href="">Essential Guide to Storing Gold In Switzerland</a></strong></p> <p>&nbsp;</p> <p><strong>MARKET UPDATE</strong></p> <p>Today’s AM LBMA&nbsp;<a href="">Gold</a>&nbsp;Price was USD 1,182.75, EUR 1,090.52 and GBP 780.85 per ounce.<br />Friday’s AM LBMA Gold Price was USD 1,192.15, EUR 1,097.49 and GBP 788.04 per ounce.</p> <p>Gold fell 1.35 percent or $16.10 and closed at $1,178.60 an ounce Friday, while silver slipped 1.07 percent or $0.17 closing at $15.72 an ounce. Gold and silver both fell for the week - down 2.15 percent and 3.32 percent respectively.</p> <p>Spot&nbsp;<a href="">gold in Singapore</a>&nbsp;&nbsp;was up 0.1 percent to $1,180 an ounce by end of day trading and gold continued to eke ouit meager gains in dollars in London trading - and had better gains in euros and particularly sterling due to UK election jitters.</p> <div class="mceTemp"> <dl id="attachment_2514"> <dt><a href=""><img src="" alt="Gold in GBP - 24 Hours" width="606" height="368" /></a></dt> <dd><em>Gold in GBP - 24 Hours</em></dd> </dl> </div> <p>Investors will be cautious due to the Greek default risk and the U.S. FOMC meeting that begins tomorrow. This has impacted European stock markets this morning which are seeing losses.</p> <p>Greek bond yields edged higher today as investors reacted to fruitless debt relief talks between eurozone finance ministers on Friday which only served to highlight the gulf between Greece and its creditors.</p> <p>No deal was reached between the Eurozone finance ministers and Greece after meetings on Friday. On Saturday, Wolfgang Schaeuble hinted that Berlin was preparing for a possible Greek default.</p> <p>This week local Greek governments are scouring for cash in order to help pay out its pensioners and employees, while &nbsp;households and businesses withdrew 1.3 billion in another run on Greek banks last week.</p> <p><a href=""><img src="" alt="goldcore_chart5_27-04-15" width="600" height="346" /></a></p> <p>Germany’s Bild newspaper reported today that Tsipras asked Merkel to convene an emergency European Union leaders’ summit. Yesterday, Bloomberg reported that Greek Prime Minister Alexis Tsipras held a call with German Chancellor Angela Merkel and Eurogroup President Jeroen Dijsselbloem to discuss progress in negotiations, said a government source from Athens.</p> <p>Greece is still hanging onto its membership in the Eurozone by its fingertips but we are nearing the end of the saga.</p> <p>Gold in late morning European trading is up 0.30% or $1,183.78 an ounce. Silver is up 0.69 percent at $15.83 an ounce and platinum is also up 0.02 percent at $1,120.00 an ounce.</p> <p><strong>Breaking Gold News and Research&nbsp;<a href="">Here</a></strong></p> Bond Central Banks China Creditors default European Union Eurozone Greece Hong Kong India Monetary Policy Newspaper OTC Precious Metals Switzerland Turkey World Gold Council Zurich Mon, 27 Apr 2015 11:14:38 +0000 GoldCore 505553 at Equity Futures At Session Highs Following Chinese QE Hints; Europe Lags On Greek Jitters <p>It has been a story of two markets so far, with China's Shanghai Composite up another 3% in today's continuation of the most ridiculous, <a href="">banana-stand driven </a>move of the New Normal (and there have been many ridiculous moves in the past 6 years) on the previously reported hints that the <a href="">PBOC is gearing up to start its own QE</a>, while Europe and the Eurostoxx are lagging, if only for the time being until Citadel and Virtu engage in today's preapproved risk-on momentum ignition, on Greek jitters, the same jitters that last week were "fixed"and sent Greek stocks and bonds soaring. Needless to say, neither Greek bonds nor stocks aren't soaring following what has been the <a href="">worst week for Greece in months</a>.</p> <p>As for US futures, just keep a track of the increase in the USDJPY once the math PhDs wake up and activate their Yen correlation algos: that's all you need to know if the S&amp;P will hit another all time high, with GAAP EPS now solidly above 21x. At last check, futs were up 0.2%, at the highs of the overnight session.&nbsp; Expect the now standard zero volume levitation ramp as the Fed now seems to have moved to 2200 on the S&amp;P as its next "fair value" target.</p> <p>A more detailed look at Asia shows equities mostly rose led by Chinese bourses with both Shanghai Comp (+3%) and Hang Seng (+1.4%) extending last week’s gains to touch fresh 7yr highs. The latter was lifted by financials after HSBC (+5%) surged on news of a planned GBP 20bln spin-off. Talk also did the rounds overnight that the PBoC could consider a QE programme, although a PBoC economist has stated that China does not need strong stimulus. ASX 200 (+0.7%) neared 6,000 amid strength in miners with iron ore technically in a bull market, after gaining over 20% since April 2nd. Nikkei 225 (-0.2%) bucked the overall trend after falling below 20,000 amid profit taking, ahead of Thursday’s BoJ meeting.</p> <p>Japan cut to `A` from `A+` by Fitch, Outlook stable with Fitch citing insufficient fiscal measures in the FY budget in replacement of a deferred rise in consumption tax.</p> <p>Despite European equities opening higher, markets reside in negative territory with participants now focusing on Greece, due in part to the today’s light economic calendar. In stock specific news, Deutsche Bank is the worst performing stock in Europe after reporting earnings and adding that profits were negatively impacted by litigation fees of USD 1.5bln with its CFO warning over heavy litigation before the end of 2015. Elsewhere, Volkswagen are among the leading gainers in Europe after Chairman Piech was dismissed consequently ending the boardroom rift in the DAX heavyweight which has taken focus in recent weeks. </p> <p>Bunds have edged higher alongside UST’s with dampened sentiment emanating throughout the Eurozone on Greek worries after Friday’s disappointing meeting in Riga, while this week provides substantial increase in redemptions at around EUR 65bln. This week also sees supply in the Eurozone move back to a more typical figure of EUR 13bln from the modest EUR 2.8bln last week as Italy kicked off proceedings today when they came to market with a CTZ and two inflation-linked offerings.</p> <p>The USD index sits comfortably above 97.00 with mild weakness observed in EUR and GBP with political uncertainty continuing to take hold. Separately, rumours surrounding that the PBoC could conduct a QE programme has resulted in CNY set for its largest fall since late February against the USD with short covering in USD/CNY citing Asian trading sources as the economy attempts to combat stifling growth. Volatility was observed in USD/JPY after Fitch downgraded Japan which saw the pair spike higher by 27 pips above 119.40, only to pare those all of those gains. Of note, the BoJ rate decision is scheduled on Thursday.</p> <p>WTI and Brent crude futures erased its earlier gains with the USD exhibiting strength heading into the North American crossover as Brent falls below its 65.00 handle. Spot gold retraced some of Friday’s losses after US stocks reached fresh record highs with concern over Greece aiding the yellow metal. Furthermore, precious metals remain tentative ahead of Wednesday’s FOMC meeting.</p> <p><strong>Bulletin headline summary from RanSquawk and Bloomberg</strong></p> <ul> <li>Market focus turns to Greek uncertainty, due in part to today’s light economic calendar thus weighing on European equities</li> <li>Looking ahead sees the release of US Services PMI and large cap earnings after-market including the world’s largest company Apple</li> </ul> <ul> <li>Treasuries steady before week’s auctions begin with $26b 2Y notes, WI yield 0.54% vs 0.598% in March; 10Y yields have spent nearly a month spent between 1.800% and 2.01% as weaker-than-forecast eco reports call timing of Fed liftoff into question; FOMC statement due Wednesday.</li> <li>Greece is counting on deposits of local governments, cities and other funds to meet end-of month payments of over EU1.5b ($1.6b) after euro area finance ministers on Friday said they won’t disburse more aid until bailout terms are met</li> <li>The PBOC is discussing adopting unconventional policies to rebuild its balance sheet and reinvigorate economy, including making direct purchases of local government bonds from market, MNI reports, citing unidentified people</li> <li>China may cut the number of centrally administered SOEs to 40 from the current 112 through mergers and restructuring, the Economic Information Daily reported</li> <li>As authorities show a newfound tolerance for defaults and debt levels at Shanghai Composite Index members climb to all-time highs, Chinese companies are increasingly tapping the equity market for funds to pay down liabilities and invest in growth</li> <li>Fitch lowered Japan’s sovereign-credit rating to A from A+, citing a lack of steps by the government to offset effects from a delayed sales-tax increase</li> <li>Japan’s central bank appears to be wavering in its commitment to QE, said Kozo Yamamoto, an adviser to Prime Minister Shinzo Abe and advocate of reflationary policies</li> <li>The Bank of Japan shouldn’t expand monetary stimulus, as such a move would fail to spur growth and make prospects for an eventual exit from the policy harder, the new head of a business lobby said</li> <li>India’s smallest capital infusion for state banks since 2009 should boost corporate bond sales as lenders have less room to fund businesses, ratings companies say</li> <li>Hopes for finding survivors trapped under rubble began to fade 48 hours after Nepal’s worst earthquake in decades even as rescuers ferried scores of climbers trapped on Mount Everest to safety</li> <li>Sovereign bond yields mostly lower. Asian stocks decline, European stocks fall, U.S. equity-index futures rise. Crude oil lower, gold and copper gain</li> </ul> <p><strong>US Event Calendar</strong></p> <ul> <li>9:45am: Markit US Composite PMI, April preliminary (prior 59.2)</li> <li>Markit U.S. Services PMI, April preliminary, est. 58.8 (prior 59.2)</li> <li>Markit U.S. Services PMI, April preliminary, est. 58.8 (prior 59.2)&lt;/li&gt;&lt;/ul&gt;</li> <li>10:30am: Dallas Fed Mfg Activity, April, est. -12 (prior -17.4)</li> </ul> <p><strong>DB's Jim Reid concludes the overnight recap</strong></p> <p>Q1 US GDP and the April FOMC are two of the key events this week. With regards to GDP (Wednesday), consensus is at 1% YoY with DB lowering its forecast to 0.7% from 1.7% following the weaker-than-expected core durable goods shipments and inventory figures. The 'trendy' Atlanta Fed GDPNow is currently at 0.1% and has been below 1% since early March, well ahead of the street. Assuming a weak reading, the bulls will point to the weather impact, the West Coast port disruptions and the recent strange pattern of weak Q1s relative to the rest of the year. The bears will suggest the dollar and a sluggish global economy is having an impact and that the secular stagnation theory is still alive. We continue to have sympathy for the latter arguments but it wouldn't be a surprise to see some bounce in the data as Q2 progresses which may be as confusing to the market as weak data has been in Q1. Trying to assess the trend will be tough for several weeks if not months. This could cause volatility as the market over-interprets the real-time data.</p> <p>How the Fed interprets this will be far more important though and this week's low key FOMC meeting (Wednesday conclusion) will be interesting in so far as how much they acknowledge weak Q1 growth and inflation and how confident they are that its temporary. There is no press conference or economic update, just a statement.</p> <p>Moving on to markets, the Asian session is faring pretty well overnight with key equity benchmarks higher across the board. Greater China markets are leading the gains as we type with Hong Kong and Shanghai up +1.3% and +1.8%, respectively. Asia credit spreads are holding firm overnight and are not really being affected by developments around the first SOE default in China. There are some new developments on the story though as Caixin reported that Baoding Tianwei will get loans from China Construction Bank to repay the CNY85.5m missed coupon after co-ordination by the PBOC. CCB is said to be the underwriter and creditor of the bonds. Staying in China, the MNI overnight reported that the PBOC is discussing adopting unconventional policies to rebuild balance sheet and reinvigorate the economy, including market direct purchases of local government bonds from the market. Sounds a bit like QE to us! Finally in overnight terms, the EUR is fairly stable at around 1.085 against the Dollar despite stalled Greek negotiations over the weekend. </p> <p>In terms of the latest on Greece key EU stakeholders are still in a deadlock after the meeting at Riga last Friday. Indeed there are also signs that Greek finance minister Yanis Varoufakis is increasingly being isolated both in Brussels and in Athens which has prompted officials to bypass the finance minister in upcoming debt talks. Merkel and Tsipras agreed on a phone call on Sunday to maintain contact during talks in order to reach a debt deal and the tone of the call was apparently positive. Negotiations are said to resume today over a call and the leaders will also meet in person on Wednesday. Separately the Bild has reported that Tsipras tried to convince Merkel and Dijsselbloem to hold an EU emergency summit this week so still plenty of Greek headlines to come. </p> <p>With month-end approaching Greece is faced with payments of over EUR1.5bn in pensions and salaries. Bloomberg has said that Greece will use the deposits of local governments, cities and other funds to meet them. Greek deputy Finance Minister last week said that the country is about EUR400m short of the amount needed for meeting salaries and pension obligations. Beyond that there is also EUR201m of interest payment due on its IMF loan on 6th May and a principal repayment of EUR766m due on the 12th May (ekathimerini). Recent local polls are showing that a majority of Greeks are concerned about a sovereign default and if talks over a new deal fail the government would consider the options of snap elections or a referendum according to the deputy Prime Minister (Bloomberg). Greek 10yr bond yields were up 40bps on Friday to around 12.7%. </p> <p>Taking a quick look at Friday’s trading session we saw the S&amp;P 500 (+0.23%) and NASDAQ (+0.71%) close at record highs. For the S&amp;P 500, Friday’s strength was led by Consumer Discretionary (+1.3%), IT (+1.0%), Utilities (+1.0%) and Materials (+0.8%). Good corporate earnings were said to be a key driver behind the rally. Interestingly the risk-on tone failed to deter buyers of Treasuries with the 10yr yield closing 5bps lower at 1.909% on weak data. The headline durable goods orders for March rose 4.0% but the core report was weak once we adjusted for the stronger aircraft orders. The February numbers were also marked down materially. Nondefense capital goods orders were down -0.5% mom after a downward revision to February from -1.4% to -2.2%. The Dollar fell again on Friday to round off its second consecutive weekly decline. </p> <p>Speaking of corporate earnings, we do have a very busy week of company results ahead in the US with over 160 firms (or 31% of the S&amp;P 500’s market cap) lined up for Q1 announcements. We'll highlight some of the key earnings to watch later, but first let's take a quick look at the performance so far. About two weeks into the earnings season, we’ve seen over 180 companies release their Q1 results. So far the beat/miss ratio has been fairly strong for earnings but fairly disappointing for sales. Indeed just over three quarters of US firms have exceeded consensus EPS estimates but just less than half of those have beaten sales forecasts. Lower sales beats (relative to EPS) have been a familiar sight in a post crisis world but the current run rate is still lower than the average beat of 59% since 2010. Things are quite different on the other side of the pond with more sales revenue beats than EPS beats. It is still early days for European earnings but two thirds of firms have come ahead of analysts’ sales target whereas only around 56% have managed to do the same for earnings.</p> Bank of Japan Bond China Citadel Copper Crude Crude Oil Dallas Fed default Deutsche Bank Economic Calendar Eurozone Fail Fitch fixed GAAP Global Economy Greece headlines Hong Kong Italy Japan Jim Reid Markit NASDAQ New Normal Nikkei Precious Metals RANSquawk ratings Sovereign Default Volatility Volkswagen Yen Mon, 27 Apr 2015 10:49:21 +0000 Tyler Durden 505552 at Fitch Downgrades Japan To A From A+ <p>With the USDJPY's ascent to 125, 150 and higher having seemingly stalled just under 120, with concerns that the BOJ may not monetize more than 100% of its net debt issuance suddenly surfacing, the BOJ and the Nikkei would take any help they could get. They got just that an hour ago when Fitch downgraded Japan's credit rating from A+ to A, citing lack of sufficient structural fiscal measures in FY15 budget to replace deferred consumption tax increase.&nbsp; </p> <p>But don't panic, Fitch says: it expects Japan’s gross debt to GDP ratio to "stabilize around 250% of GDP in 2020." Perhaps the fact that Fitch did not predict the complete collapse of the Japanese economy is why the USDJPY spiked then promptly reversed and is trading almost unchanged, the same as Nikkei futures. </p> <p><img src="" width="442" height="313" /></p> <p>&nbsp;</p> <p>See, if Fitch had predicted a stabilization level of 2,500%, then Japanese stocks would be limit up today. Because remember: in the New Normal, only a completely socio-economic collapse and terminal currency devaluation leads to limit up in regional stock markets.</p> <p>As to what really prompted the downgrade, which the BOJ was hoping would lead to a far more negative reaction for the JPY, here it is:</p> <blockquote class="twitter-tweet"><p><a href="">#FITCH</a>, <a href="">#S</a>&amp;P, <a href="">#MOODY</a>'S JOINTLY ANNOUNCE CHANGES TO RATINGS SYSTEM, RANGING FROM "AAA" ("RED HOT PRINTING MACHINE) TO "D" (OUT OF INK)</p> <p>— MacroTourist (@Gloeschi) <a href="">April 27, 2015</a></p></blockquote> <script src="//"></script><p><em>Full Fitch note:</em></p> <p><strong>Fitch Ratings-Hong Kong-27 April 2015: Fitch Ratings has downgraded Japan's Long-Term Foreign and Local Currency Issuer Default Ratings (IDRs) to 'A' from 'A+'. </strong></p> <ul> <li><strong>&nbsp;</strong>The issue ratings on Japan's senior unsecured foreign and local currency bonds are also downgraded to 'A' from 'A+'. </li> <li>The Outlooks on the Long-Term IDRs are Stable. </li> <li>The Country Ceiling is downgraded to 'AA' from 'AA+' and the Short-Term Foreign Currency IDR is downgraded to 'F1' from 'F1+'.</li> </ul> <p style="text-align: justify;">KEY RATING DRIVERS</p> <p>The downgrade of Japan's IDRs reflects the following key rating drivers:-</p> <ul> <li style="text-align: left;">Fitch's downgrade reflects the fact that the Japanese government did not include sufficient structural fiscal measures in its budget for the fiscal year April 2015-March 2016 (FY15) to replace a deferred consumption tax increase. The agency had placed Japan's IDRs on Rating Watch Negative on 9 December 2014 following the government's decision to delay the scheduled consumption tax increase that was the centrepiece of its medium-term fiscal consolidation effort. At that time, Fitch said the ratings would be downgraded in the absence of broadly equivalent fiscal measures to replace the deferred consumption tax increase in the FY15 budget.</li> <li style="text-align: left;">The FY15 budget cut corporate tax rates, although the base was broadened, making the measure's impact broadly neutral overall. However, the government has said it wants to cut corporate tax rates again in FY16. The government also introduced a supplementary budget for FY14 in January 2015 that essentially spent an unexpected increase in revenue. These developments increase Fitch's uncertainty over the degree of political commitment to fiscal consolidation. The government is set to unveil a new fiscal strategy in the summer of 2015. The details of the strategy will be important, but the strength of the government's commitment to implement it will be even more important and will only become clearer over time.</li> <li style="text-align: left;">The government may still achieve its interim fiscal target of a 3.3% of GDP primary budget deficit (excluding earthquake reconstruction spending) in FY15. Corporate tax receipts are rising strongly, despite the rate cut, driven by buoyant corporate profits. High dividend payments are also boosting personal income tax receipts. The government expects these items, together with the lagged effect of the 2014 consumption tax hike, to generate about 0.6% of GDP in additional revenue in FY15. However, corporate profits are being boosted partly by the 8% trade-weighted depreciation of the Japanese yen in the twelve months to end-March 2015. This is unlikely to be sustainable. Pressure on the budget could rise in FY16 if corporate profits fell back.</li> <li style="text-align: left;">Japan's main sovereign credit and rating weakness is the high and rising level of government debt. Fitch projects the gross general government (GG) debt to GDP ratio to rise to 244% of GDP by end-2015, by far the highest ratio of any rated sovereign. The Japanese sovereign also has a large stock of assets. The GG held financial assets worth 113% of GDP at end-2014, including foreign reserves worth about 27% of GDP. However, the agency focuses on gross indebtedness in assessing sovereign solvency, as described in our sovereign rating criteria. Japan's net GG financial liabilities are still the highest in the OECD (143% of GDP at end-2014). The rise in Japan's net GG financial liability ratio (62pp) over the period 2007-2014 was the second-highest in the OECD behind Ireland (83pp), suggesting the net position is also deteriorating relatively rapidly.</li> <li style="text-align: left;"><strong>Japan's gross GG debt to GDP ratio is projected to stabilise around 250% of GDP in 2020 under Fitch's baseline fiscal projection. </strong>However, Fitch's analysis indicates that the debt dynamics are highly vulnerable to variations in parameters such as economic growth, the budget deficit, or yields. This vulnerability is a negative factor for the ratings.</li> <li style="text-align: left;">The Japanese sovereign's exceptionally strong financing flexibility supports the ratings, despite weaknesses and vulnerabilities elsewhere in the public finances. The ten-year Japanese government bond (JGB) yield has averaged 0.34% year-to-date (as of 23 April 2015), down from 0.55% in 2014. The average maturity of the JGB stock has gradually lengthened to 7 years and 10 months by December 2014, from 5 years and 1 month in March 2005.</li> <li style="text-align: left;">Sovereign funding flexibility rests mainly on the massive stock of savings of the Japanese private sector and the strong "home bias" with which these savings are invested. The Japanese domestic non-financial sector had 689% of GDP in assets at end-2014, up from 564% at end-2008. The Japanese household sector ran a financial surplus of 4.2% of GDP in 2014, above the five-year average of 3.8%. About half of the JGB stock is held in the broader public sector, which reduces the possibility of a self-fulfilling loss of confidence in the JGB market.</li> <li style="text-align: left;">High private-sector savings also support the external finances, which are a credit strength. The sovereign had USD1.26trn in foreign reserves at end-2014, underpinning a net sovereign foreign-currency creditor position worth 29% of GDP at end-2014, stronger than the 'A' or 'AA' medians. Fitch projects the Japanese economy as a whole to hold a net creditor position in debt-like assets worth about 76% of GDP by end-2015. The overall international investment position recorded net assets worth about 66% of GDP by end-September 2014 (latest available), up from 33% at end-2005.</li> <li style="text-align: left;">Sovereign financing flexibility is currently being supported by the Bank of Japan's (BoJ's) quantitative and qualitative easing policies. The BoJ's holdings of government securities rose to 27.3% of the stock at end-March 2015, from 12.1% at end-2012 (according to BoJ data). The role of the BoJ as supplier of a global reserve currency endows Japan with exceptional policy flexibility and supports the sovereign's funding position. These factors are strengths in the credit profile. However, the BoJ will face a challenge in eventually unwinding the expansion of its balance sheet without triggering a sharp rise in financial-market volatility.</li> <li style="text-align: left;">Japan's macroeconomic performance is a rating weakness. Fitch cut its forecast for 2015 growth to 1.3% in March 2015 from 1.5% in December 2014, driven by the weaker-than-expected recovery in domestic demand following the April 2014 consumption tax hike. The five-year-average growth rate (2011-2015) of 0.8% is well below the medians for the 'A' range (3.1%) or for the Organisation for Economic Co-operation and Development group of richer countries (1.6%). Inflation excluding the effects of the April 2014 consumption tax hike was around zero in February. Prospects for success in permanently lifting the economy's real and nominal GDP growth rates remain in doubt, two years after the launch of "Abenomics". Progress on growth-enhancing structural reform remains limited.</li> <li style="text-align: left;">Japan's ratings are supported by strong credit fundamentals including a high-income, wealthy economy; high governance standards; strong core public institutions; and deeply-entrenched social and political stability.</li> </ul> <p style="text-align: justify;">RATING SENSITIVITIES</p> <p>The Stable Outlooks reflect Fitch's assessment that upside and downside risks to the ratings are currently broadly balanced.</p> <ul> <li>The main factors that could, individually or collectively, lead to a negative rating action are:</li> <li>Evidence that the authorities' commitment to fiscal consolidation was weakening, such as failure to articulate a clear and credible strategy for stabilising public debt ratios, or slippage relative to targets</li> <li>Weaker macroeconomic performance than Fitch expects for a sustained period, intensifying the challenge in stabilising the public finances</li> <li>A sharp and sustained rise in real interest rates demanded by investors to hold government debt</li> </ul> <p style="text-align: justify;">The main factors that could, individually or collectively, lead to a positive rating action, are:</p> <ul> <li>Stabilisation of public debt ratios; growing confidence that public indebtedness could achieve a sustainable downwards path that was reasonably robust to cyclical economic volatility</li> <li>Sustained and broad-based economic recovery, including acceleration in nominal GDP growth</li> </ul> <p style="text-align: justify;">KEY ASSUMPTIONS</p> <p>Fitch assumes that the confidence of the Japanese public in the country's basic economic and financial stability is maintained, such that the Japanese sovereign's exceptional funding flexibility remains intact</p> <p>Fitch further assumes that there is no significant escalation of global or regional geopolitical risks, for example Japan's maritime territorial disputes with China, to a level that could disrupt economic activity</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="442" height="313" alt="" src="" /> </div> </div> </div> Abenomics Bond Budget Deficit China default Don't Panic Fitch Ireland Japan New Normal Nikkei Nominal GDP Personal Income ratings Real Interest Rates recovery Reserve Currency Volatility Yen Mon, 27 Apr 2015 10:00:47 +0000 Tyler Durden 505551 at Caught On Tape: Dramatic Video & Images From The Mount Everest Avalanche <p>In the immediate aftermath of yesterday&#39;s destructive Nepal earthquake, which has led to hundreds of aftershocks and a constantly rising death toll, <a href="">currently exceeding 2000</a>, the most visually stunning, if quite deadly, phenomenon was a massive avalanche on Mt. Everest and leading to at least 17 casualties, including a Google executive, and 61 injured.</p> <p>According to <a href="">Xinhua</a>, the avalanche began Saturday on Mount Kumori, a 7,000-meter-high mountain just a few miles from Mount Qomolangma, also known as Mount Everest, gathering strength as it headed toward the base camp where climbing expeditions have been preparing to make their summit attempts in the coming weeks, he said. Numerous climbers may now be cut off on routes leading to the top of the world&#39;s highest peak.</p> <p>The avalanche plowed into a part of base camp, a sprawling seasonal village of climbers, guides and porters, flattening at least 30 tents, Tshering said. All of the dead and injured were at base camp.</p> <p><u><strong>Terrifiyingvideo from a skier at base-camp</strong></u> -<em> warning - expletive-strewn...</em></p> <p><iframe allowfullscreen="" frameborder="0" height="315" src="" width="560"></iframe></p> <p>&nbsp;</p> <p>For a sense of the base camp&#39;s location relative to the rest of the world&#39;s tallest mountain refer to the image below, taken from a <a href="">May 2014 WSJ story discussing the &quot;dangerous business&quot; of Everest,</a> when 16 sherpas died in what was previously the deadliest disaster in the mountain&#39;s history.</p> <p><a href=""><img height="407" src="" width="500" /></a></p> <p>Survivors reached over Internet messaging services described a scene of terror as the snow and ice roared through the nearby Khumbu Icefall and into the camp.</p> <p>The nationalities of base camp victims were unclear as climbers described chaotic attempts to treat the injured amid fears of more landslides and aftershocks that continue to rattle the region. Chinese media &quot;West China City Daily&quot; reported that a Chinese climber and two Sherpa guides were among the dead.</p> <p>Dan Fredinburg, a Google executive who described himself as an adventurer, was among the dead, Google confirmed. Lawrence You, the company&#39;s director of privacy, posted online that Fredinburg was with three other Google employees hiking Mount Qomolangma. Fredinburg served as product manager and the head of privacy at Google X.</p> <p><a href=""> </a>has further details:</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>The avalanche &mdash; or perhaps a series of avalanches hidden in a massive white cloud &mdash; plowed into a part of base camp, a sprawling seasonal village of climbers, guides and porters, flattening at least 30 tents, Tshering said. All of the dead and injured were at base camp.</p> <p>&nbsp;</p> <p>Survivors reached over Internet messaging services described a scene of terror as the snow and ice roared through the nearby Khumbu Icefall and into the camp.</p> <p>&nbsp;</p> <p>Azim Afif, the 27-year-old leader of a climbing team from University of Technology Malaysia, said in an interview on the service WhatsApp that his group was in a meal tent waiting for lunch when suddenly the table and everything around them began shaking.</p> <p>&nbsp;</p> <p>When they ran outside, they saw <strong>&quot;a wall of ice coming towards us,&quot; and heard the cries of Sherpa guides shouting for people to run for their lives, he wrote. &quot;We just think to find a place to hide and save our life.&quot; </strong></p> <p>&nbsp;</p> <p>The small team planned to sleep together Saturday night in one large tent &quot;to make sure if anything happen, we are together,&quot; Afif said. Quickly, though, climbing teams scattered across the camp and began to work together to search for survivors.</p> <p>&nbsp;</p> <p>Gordon Janow, the director of programs for the Washington-based guiding outfit Alpine Ascents International, said from Seattle that his team had come through the avalanche unscathed. Their first goal was to deal with the devastation at base camp, he said, and they would then try to create new routes to help climbers stuck above the treacherous Khumbu Icefall. The icefall, which is just above base camp, is a key route up the lower part of Everest.</p> <p>&nbsp;</p> <p>&quot;Everybody&#39;s pretty much in rescue mode, but this is different from some independent climbing accident where people can be rescued and taken somewhere else,&quot; Janow said. &quot;I don&#39;t know where somewhere else is.&quot;</p> </blockquote> <p>Follow some truly epic photos as the avalanche was headed toward base camp...</p> <p><a href=""><img height="315" src="" width="500" /></a></p> <p><a href=""><img height="289" src="" width="500" /></a></p> <p><img height="502" src="" width="500" /></p> <p>&nbsp;</p> <p>... as well as a whole series of photos taken by AFP&#39;s Roberto Schmidt who was at base camp on Everest when the avalanche hit, <a href="">courtesy of Telegraph</a>:</p> <p>&nbsp;</p> <p><em><a href=""><img height="312" src="" width="500" /></a></em></p> <p><em>Pictures taken by AFP&#39;s South Asia photo chief Roberto Schmidt show an enormous cloud of snow and debris cascading down the mountain as survivors recalled the horrifying moment that disaster struck on Saturday.</em></p> <p>&nbsp;</p> <p><em><img height="312" src="" width="500" /></em></p> <p><em>&quot;I ran and it just flattened me. I tried to get up and it flattened me again,&quot; Singapore-based marine biologist George Foulsham told AFP at base camp. &quot;I couldn&#39;t breathe, I thought I was dead. When I finally stood up, I couldn&#39;t believe it passed me over and I was almost untouched.&quot;</em></p> <p>&nbsp;</p> <p><em><a href=""><img height="313" src="" width="500" /></a></em></p> <p><em>A spokesman for Nepal&#39;s tourism department, which issues the permits to climb the world&#39;s tallest mountain, said the death toll had risen to 17 and could increase further. &quot;Seventeen have been reported dead so far and 61 are injured,&quot; said Tulsi Gautam. &quot;Those who are able are walking down. Others are being airlifted to Pheriche.&quot; Here, rescuers use a makeshift stretcher to carry an injured person after an avalanche triggered by an earthquake flattened parts of Everest Base Camp.</em></p> <p>&nbsp;</p> <p><em><a href=""><img height="313" src="" width="500" /></a></em></p> <p><em>Expedition guide Pasang Sherpa searches through flattened tents in search of survivors</em></p> <p>&nbsp;</p> <p><em><a href=""><img height="313" src="" width="500" /></a></em></p> <p><em>An injured porter is transfered onto a makeshift stretcher</em></p> <p>&nbsp;</p> <p><em><a href=""><img height="313" src="" width="500" /></a></em></p> <p><em>Rescuers tend to a sherpa injured in the avalanche</em></p> <p>&nbsp;</p> <p><em><a href=""><img height="313" src="" width="500" /></a></em></p> <p><em>Many had traveled to Nepal for the start of the annual climbing season, which was cancelled last year after 16 sherpa guides were killed in what was previously the deadliest disaster in the mountain&#39;s history</em></p> <p>&nbsp;</p> <p><em><a href=""><img height="309" src="" width="500" /></a></em></p> <p><em>People look on at the devastation </em></p> <p>&nbsp;</p> <p><em><a href=""><img height="313" src="" width="500" /></a></em></p> <p><em>Another makeshift stretcher for another casualty</em></p> <p>&nbsp;</p> <p><em><a href=""><img height="313" src="" width="500" /></a></em></p> <p><em>Nepalese Sherpas look up towards an area from where an avalanche descended</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="900" height="521" alt="" src="" /> </div> </div> </div> China Google Mon, 27 Apr 2015 03:15:45 +0000 Tyler Durden 505526 at Capital Controls Arrive: Greece Begins Confiscating Deposits Of "Small Debtors" <p>Last week, the Greek government <a href="">issued a decree</a> which called for local governments to transfer excess cash to the central bank so that Athens would be able to pay pensions, salaries, and the IMF. The move is expected to raise as much as €2 billion to help keep the country afloat while the country’s “<a href="">amateurish, time-wasting gambler</a>” of a FinMin feebly attempts to find some kind of middle ground with his EU counterparts and as PM Tsipras pulls out all the stops including the old EU Summit sideline end-around with Merkel and the wild card <a href="">energy gas pipeline advance&nbsp;from Gazprom </a>(which may portend the dreaded “Russian pivot"). &nbsp;</p> <p><strong>If the “temporary” local government reserve sweep constitutes what we have branded<a href=""> “</a></strong><strong><a href="">soft</a>” capital controls, we now have the first evidence that the “hard” variety may have arrived</strong> because as Kathimerini reports, Greek debtors are having their deposits seized in lieu of payment. Here’s <a href="">more</a>:</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p><em><strong>As the country’s finances reach a critical point, tax authorities have started seizing the deposits of small debtors,</strong> Kathimerini understands.</em></p> <p>&nbsp;</p> <p><em><strong>No figures were available regarding the new crackdown but cases of debtors targeted included a citizen with a debt of just 200 euros.</strong></em></p> <p>&nbsp;</p> <p><em>The bank account of the man in question was frozen and then reopened once it was established that he had paid his dues. In several cases, including that of a citizen with a debt of 24,000 euros, bailiffs are said to have used threats to secure the cash. The initiative comes as efforts to crack down on rich Greeks with tax debts make slow progress.</em></p> </blockquote> <p><span style="font-size: 1em; line-height: 1.3em;">So there it is: the first indication that Greeks may soon be Cyprus’d. As a reminder, Citi now says capital controls will likely play a part in whatever the “resolution” (if you want to call it that) to the Greek situation turns out to be, barring a best case scenario outcome which seems exceedingly unlikely. As a reminder, here's what happens under "</span><a href="" style="font-size: 1em; line-height: 1.3em;">Grimbo</a><span style="font-size: 1em; line-height: 1.3em;">":</span></p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p><strong><em>In theory a run on banks could trigger capital controls tomorrow.&nbsp;</em></strong></p> <p>&nbsp;</p> <p><em><strong>The lack of an agreement would also at some point be associated with capital controls </strong>and binding limits on ELA access (<strong>ZH</strong>: the writing is already on the wall for ELA restrictions as well). Compared to the previous scenario, the capital controls (a mix of bank holidays, deposit withdrawal restrictions, restrictions on external transactions) are likely to be more extensive and longer-lived...</em></p> </blockquote> <p>Meanwhile, not every local governor is particularly enthusiastic about turning over reserves to the state. Here's&nbsp;<span style="line-height: 20.7999992370605px; font-size: 1em;"><a href="">Kathimerini</a> again:</span></p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p><em>But many local authority leaders stood their ground. </em></p> <p>&nbsp;</p> <p><strong><em>The mayor of Aristoteli in Halkidiki, northern Greece, resigned late on Friday, citing personal reasons.</em></strong></p> <p></p> <p>&nbsp;</p> <p><em>According to the controversial decree, local authority reserves will be used to “cover<br /> the state’s urgent needs, amounting to 3 billion euros over the next 15 days.”&nbsp;</em><em style="font-size: 1em; line-height: 1.3em;">The motion passed with 156 votes from coalition MPs following a furious session in Parliament on Friday night.<br /> </em></p> <p>&nbsp;</p> <p><em style="font-size: 1em; line-height: 1.3em;">Tsipras is to meet on Tuesday with Attica Governor Rena Dourou, who was on a visit to the US last week.</em></p> <p>&nbsp;</p> <p><em>Last month the Attica Regional Authority donated 80 million euros to the state.</em></p> <p></p> <p>&nbsp;</p> <p><em><strong>Universities also object to the decree and rectors met on the weekend to discuss their response. </strong>Technical college directors are to meet Monday.</em></p> </blockquote> <p>If the students become restless, it's truly all over.</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="273" height="188" alt="" src="" /> </div> </div> </div> Attica Greece Mon, 27 Apr 2015 02:17:41 +0000 Tyler Durden 505541 at