en Germany Is Officially Back In Deflation: Stocks Slide <p>For the first time since October 2009, Germany saw Consumer Price Inflation fall in January. <strong>Missing expectations for the 2nd month, Germany's deflationary 0.5% drop in CPI is the worst deflation since July 2009</strong> and comes just <a href=";sa=D&amp;sntz=1&amp;usg=AFQjCNG7HYHdqP--o2uA4IGHYYLHpgoAmQ">3 weeks after Europe broadly entered the dreaded deflation spiral of doom</a> so many status quo economists are terrified of.</p> <p>&nbsp;</p> <p>Oops...</p> <p><a href=""><img src="" width="600" height="315" /></a></p> <p>&nbsp;</p> <p>&nbsp;</p> <p> Just a good job Draghi unleashed Q€ ... oh wait inflation expectations have tumbled since then too...</p> <p><img src="" width="600" height="316" /></p> <p>&nbsp;</p> <p>&nbsp;</p> <p><em>Charts: Bloomberg</em></p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="961" height="504" alt="" src="" /> </div> </div> </div> CPI Germany Thu, 29 Jan 2015 13:10:54 +0000 Tyler Durden 501139 at 2015 Currency Wars Year-To-Date Summary: 13 Rate Cuts, 5 Rate Hikes <p>For those keeping track of currency wars around the globe, 2015 - a year in which two central banks, those of Switzerland and Singapore have already admitted defeat, is shaping up as nothing short of historic. As DB's summarizes<strong>: just about 31 countries have, in less than a month, eased in the form of 13 mostly "surprise" rate cuts, while just 5 have tightened monetary policy</strong>.</p> <p><em>From DB:</em></p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>Yesterday we highlighted that 9 Central Bank have eased policy this year. However we've subsequently learnt there are actually 13. Here is the full list: <strong>Singapore, Europe, Switzerland, Denmark, Canada, India, Turkey, Egypt, Romania, Peru, Albania, Uzbekistan and Pakistan</strong>. Given that the ECB covers 19 countries you could actually say its 31 countries. On the other hand we think 5 countries have tightened monetary policy including <strong>Brazil, Armenia, Krygyzstan, Mongolia and Belarus</strong>. Overnight the RBNZ kept rates on hold although attention in the Asia-Pacific region will move to the RBA decision next week.</p> </blockquote> <p>As DB concludes, "who is next is the big question, <strong>and can the Fed continue to try to prime the market for rate hikes when the rest of the world is easing</strong>?" Judging by yesterday's market reaction, the answer for now is year.</p> <p><img src="" width="500" height="416" /></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="750" height="624" alt="" src="" /> </div> </div> </div> Brazil Central Banks India Monetary Policy Romania Switzerland Turkey Uzbekistan Thu, 29 Jan 2015 12:47:31 +0000 Tyler Durden 501138 at Frontrunning: January 29 <ul> <li>Who Doubts Yellen's Policies? Summers for One (<a href="">BBG</a>)</li> <li>Samsung, Apple Back in Dead Heat for Global Smartphone Dominance (<a href="">WSJ</a>)</li> <li>Islamic State purportedly sets new deadline for hostage swap (<a href="">Reuters</a>)</li> <li>Turkey's $7.9 Billion Mystery Money That's Simply Vanished (<a href="">BBG</a>)</li> <li>How a Two-Tier Economy Is Reshaping the U.S. Marketplace (<a href="">WSJ</a>)</li> <li>U.S. Prisons Grapple With Aging Population (<a href="">WSJ</a>)</li> <li>Hasenstab Sees $3 Billion Vanish in Ukraine as One Big Bet Sours (<a href="">BBG</a>) - maybe he should BTFD, pardon, "invest" in Belarus next?</li> <li>Belarus May Seek Debt Restructuring in 2015, President Says (<a href="">BBG</a>)</li> <li>Malaysia says MH370 crash an accident to clear compensation (<a href=";SECTION=HOME&amp;TEMPLATE=DEFAULT&amp;CTIME=2015-01-29-07-11-37">AP</a>)</li> <li>Deutsche Bank Has ‘Stronger’ Start to Year in Trading (<a href="">BBG</a>)</li> <li>Ford Earnings Down on North America Ops, Venezuela Charge (<a href="">WSJ</a>)</li> <li>Alibaba Profit Misses Estimates as Jack Ma Boosts App Spending (<a href="">BBG</a>)</li> <li>Pelosi says Netanyahu speech to Congress could hurt Iran talks (<a href="">Reuters</a>)</li> <li>Hershey dips into meat market with Krave Jerky (<a href=";SECTION=HOME&amp;TEMPLATE=DEFAULT&amp;CTIME=2015-01-29-07-06-58">AP</a>)</li> <li>Air Force picks Boeing 747-8 to replace Air Force One (<a href="">Reuters</a>)</li> </ul> <p>&nbsp;</p> <p>&nbsp;</p> <p><strong>Fly On The Wall Pre-Market Buzz</strong></p> <p><em><span style="text-decoration: underline;">WSJ</span></em></p> <p>* McDonald's Corp said Chief Executive Don Thompson was leaving, less than three years into his tenure, and promoted a company veteran to try to revive the fast-food giant from its worst slump in more than a decade. (<a href="" title=""></a>)</p> <p>* The population of graying U.S. prisoners has exploded in recent years largely because more offenders are entering or re-entering prison in middle age, new research shows. (<a href="" title=""></a>)</p> <p>* The advance of wealthy households, while middle- and lower-income Americans struggle, is reshaping markets for everything from housing to clothing to beer. (<a href="" title=""></a>)</p> <p>* The Federal Reserve signaled it would keep short-term interest rates near zero at least until midyear, while also setting the stage for tough decisions in the coming weeks about whether it should wait even longer. (<a href="" title=""></a>)</p> <p>* Sony Corp said it is shutting down its $10-a-month Music Unlimited at the end of March, four years after launching it in the United States. The streaming service, one of the biggest in Japan, is integrated into Sony's PlayStation consoles and has counted mostly PlayStation users among its subscribers. (<a href="" title=""></a>)</p> <p>* Facebook Inc isn't signing up new users the way it once did, but the social network is generating a lot more revenue from each user. (<a href="" title=""></a>)</p> <p>* U.S. business groups are asking China to postpone a new cyber security review process that they say is too intrusive and involves disclosing sensitive material to the Chinese government. (<a href="" title=""></a>)</p> <p>* A surprise move by Singapore to ease monetary policy is the latest sign of the pressure on policy makers at a time of falling commodity prices, declining inflation and softening growth expectations. (<a href="" title=""></a>)</p> <p>* Reynolds American Inc won shareholder approval for its $25 billion acquisition of Lorillard Inc. Shareholders of Reynolds, Lorillard and Imperial Tobacco Group TLC voted in favor of the deal, which still needs regulatory approval. The Federal Trade Commission is expected to weigh in later this quarter. (<a href="" title=""></a>)</p> <p>* The Chinese government accused e-commerce giant Alibaba of failing to crack down on the sale of fake goods, bribery and other illegal activity on its sites in a rare public dispute with one of the country's most prominent companies. (<a href="" title=""></a>)</p> <p>* Hundreds of Standard Chartered's most senior executives gathered earlier this month on Singapore's Sentosa island to address the global bank's dimming fortunes. From a lectern at a colonial-style resort, Chief Executive Peter Sands warned that management has just a few months to turn around the bank or risk losing the support of the board of directors, according to attendees. (<a href="" title=""></a>)</p> <p>* Big money is beginning to wash over the new media landscape. Both Mashable and Business Insider are expected to announce significant venture capital investments Thursday, building on a recent trend of hefty cash infusions and valuations for the sector's biggest players. (<a href="" title=""></a>) </p> <p>&nbsp;</p> <p><em><span style="text-decoration: underline;">FT</span></em></p> <p>* Societe Generale and Goldman Sachs Group Inc are among several banks that are discussing plans to back Aztec Money, a peer-to-peer financing platform. The sector is also attracting interests from high-profile individuals, with Arianna Huffington, the latest to join a P2P lender.</p> <p>* UK's parliamentary watchdog has abandoned hopes for examining state support to a contract with French company EDF , which is behind a proposed 24 billion pound ($36.3 billion) twin reactor scheme in Somerset, where Hinkley Point is located. This comes after the watchdog predicted that a deal would not be struck before general elections in May.</p> <p>* Songbird Estates Plc, agreed on Wednesday to a 2.6 billion pound offer from Qatar Investment Authority (QIA) and Brookfield for Canary Wharf, one of the world's leading financial districts. The board of Songbird maintained that the 350 pence per share offer undervalued the company but advised the minority investors to accept the deal as it had the support from the largest shareholders and there was no rival bid coming.</p> <p>* BP Plc has handed U.S. oil company Chevron Corp a big stake in development of 1 billion barrels of crude in the Gulf of Mexico in a agreement that is worth hundreds of millions of dollars. </p> <p>&nbsp;</p> <p><em><span style="text-decoration: underline;">NYT</span></em></p> <p>* Switzerland's move to untie its currency from the euro has caused the franc to soar, along with hundreds of thousands of mortgage payments in Poland. (<a href="" title=""></a>)</p> <p>* Investors made clear on Wednesday the depth of their concerns about Greece's new leftist-led government, driving up its borrowing costs, pushing down stock prices and highlighting the risks in the country's banking system. (<a href="" title=""></a>)</p> <p>* Yahoo Inc will be judged by its core Internet businesses after spinning off its $39 billion stake in the Alibaba Group Holdings Ltd, the Chinese e-commerce behemoth - accounting for about 85 percent of the market value of Yahoo. (<a href="" title=""></a>)</p> <p>* The Chinese government has adopted new regulations requiring companies that sell computer equipment to Chinese banks to turn over secret source code, submit to invasive audits and build so-called back doors into hardware and software, according to a copy of the rules obtained by foreign technology companies that do billions of dollars' worth of business in China. (<a href="" title=""></a>)</p> <p>* The Basel Committee for Banking Supervision made public last Friday its list of priorities for the coming year, a document that is essential reading for banks and anyone else trying to determine what direction bank regulation around the world may take. The committee includes representatives of 28 countries, including the United States, who will use the committee's guidelines to write up their own standards. (<a href="" title=""></a>)</p> <p>* A federal bankruptcy judge in Delaware said on Wednesday that Caesars Entertainment Co, the troubled casino operator, could proceed with a Chapter 11 bankruptcy of its largest unit in its preferred jurisdiction of Chicago, handing an incremental but important victory to the company and its private equity backers. (<a href="" title=""></a>)</p> <p>* The Federal Reserve kept its options open on Wednesday, signaling that it would not raise short-term interest rates any earlier than June, while leaving unresolved how much longer it might be willing to wait before lifting its benchmark rate from near zero, where the central bank has held it for more than six years. (<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>** When the Bank of Canada slashed its key interest rate by 0.25 percentage points last week, the big question was whether the Big Six banks would follow suit. But within hours of the surprising rate cut, Toronto-Dominion Bank said it was considering holding its prime rate steady. During this time, three banks privately told The Globe and Mail that they were closely watching each other's actions. If one cut, it was clear they all would. (<a href="" title=""></a>)</p> <p>** Declining enrolment is taking a huge toll on Canada's largest school board, and one in five schools now are targets for possible closing. The Toronto District School Board released a list on Wednesday evening that compares the number of students an institution can accommodate to its enrolment numbers. (<a href="" title=""></a>)</p> <p>** Canada is being dragged into "overzealous" financial regulation by a global campaign to root out risky bank lending practices, former Bank of Canada governor David Dodge argues in a new report. (<a href="" title=""></a>)</p> <p>NATIONAL POST</p> <p>** Canada and the international coalition have relied heavily on air strikes to support Kurdish peshmerga fighters combatting the Islamic State of Iraq and Al-Sham in Iraq, but this hasn't addressed the group's most lethal tactic. (<a href="" title=""></a>)</p> <p>** Six weeks after Cenovus Energy Inc unveiled a pared-back capital budget for 2015, the continued slide in oil prices has forced the oilsands major to announce Wednesday another C$700 million in spending cuts and trim the number of contractors it employs. (<a href="" title=""></a>)</p> <p>** Almost a year after the federal government revamped the way medical marijuana is produced and distributed in Canada - moving from home-based operations to large-scale commercial ones - the fledgling industry continues to encounter growing pains. (<a href="" title=""></a>) </p> <p>&nbsp;</p> <p><em><span style="text-decoration: underline;">Hong Kong<br /></span></em></p> <p>SOUTH CHINA MORNING POST</p> <p>-- The mainland launched two legal experiments in Shenzhen, setting up the country's first circuit court and a court in Qianhai that will feature a jury with members from Hong Kong. The circuit court is aimed at promoting judicial independence and reducing interference by local party officials. The court will start hearings on Monday. (</p> <p>-- The Securities and Futures Commission increased its enforcement activity as a study showed it has issued 56 percent more disciplinary and criminal actions against companies and individuals last year than in 2013. The regulator projected a budget deficit of HK$416.94 million for the coming fiscal year as it hires more staff to handle regulatory work. (</p> <p>-- Mainland movie star and director Zhao Wei and her husband may have breached Hong Kong's disclosure law by delaying the reporting of their HK$3.1 billion purchase of a 9.18 per cent stake in Alibaba Pictures for a month. The couple made the purchase on December 20 but it was only disclosed in a stock exchange filing on January 23. (</p> <p>THE STANDARD</p> <p>-- Link REIT management defended its ground breaking move to splash some HK$10 billion on a commercial project in Kwun Tong, denying it is turning into a property developer. The shopping malls operator reassured unitholders that income distribution per unit will not be affected by the hefty spending. (</p> <p>-- Hong Kong Financial Secretary John Tsang Chun-wah is expected to scrap more sweeteners in next month's budget for a second year in a row. Among those to be dropped is the one-month free rent that public housing tenants enjoyed this fiscal year. (</p> <p>MING PAO DAILY</p> <p>-- More people from Hong Kong and Macau choose to migrate to Taiwan amid affordable property price, with the number of application surging 40 percent year on year to 6,400 last year, while the volume of application is expected to increase to 10,000 this year, according to Centaline's Asia-Pacific chief executive Addy Wong Wai-hung.</p> <p>&nbsp;</p> <p><em><span style="text-decoration: underline;">Britain</span></em></p> <p>The Times</p> <p>Tesco has pinpointed the locations of 43 unprofitable supermarkets and earmarked them for closure under a restructuring by the struggling grocery chain's new chief executive. Up to 2,000 jobs will be affected by the closures. (</p> <p>A report into the collapse of HBOS will be delayed until after the general election amid wrangling about the roles of senior staff in the bank's failure in 2008. (</p> <p>The Guardian</p> <p>Dimitris Avramopoulos, the European commissioner for justice and home affairs, called for the prompt passage of legislation to collect and retain information on anyone flying into or out of the European Union as part of a package of counter-terror policies following the attacks in Paris and the foiling plots in Belgium. (</p> <p>The Scottish government has announced a moratorium on all planning consents for unconventional oil and gas extraction, including fracking. Energy Minister Fergus Ewing told parliament that the moratorium would allow time for the government to launch a full public consultation on the controversial drilling technique. (</p> <p>The Telegraph</p> <p>BP has moved closer to achieving its target of around $10 billion (6.60 billion pounds) of divestments in 2015 after it sold a big share in two of its prospects in the Gulf of Mexico to U.S. oil major Chevron Corp. (</p> <p>The Bank of England may increase interest rates by no more than half a percentage point a year and not return to anything like pre-crisis levels for the foreseeable future, according its chief economist. The central bank is "in no rush to raise" its interest rates, according to Andy Haldane, and the base rate could go no higher than 2.5 percent, even by the end of the decade. (</p> <p>Sky News</p> <p>Tesco has recalled one of its own-brand squash drinks after customers complained of a "disgusting smell" and some children were reportedly left vomiting. A flavour additive was added in error to the squash, but Tesco said it posed no food safety risk. (</p> <p>The bosses of Britain's biggest bookmakers have urged the government to extend advertising curbs across the industry as they seek to avoid "an unlevel playing field" with smaller rivals. Executives from Coral, Ladbrokes, Paddy Power and William Hill met Helen Grant, the Gambling Minister to discuss recent progress on responsible gambling initiatives. (</p> <p>The Independent</p> <p>Canary Wharf's majority owner, Songbird Estates, has accepted a 2.6 billion-pound ($3.94 billion) bid from Qatar and Canada after international attempts to find another buyer failed. (</p> <p>&nbsp;</p> <p>&nbsp;</p> <p><strong>Fly On The Wall Pre-market Buzz</strong></p> <p>ECONOMIC REPORTS</p> <p>Domestic economic reports scheduled for today include:<br />Jobless claims for week of Jan. 24 at 8:30--consensus 300K<br />Pending home sales index for December at 10:00--consensus up 0.5%</p> <p>ANALYST RESEARCH</p> <p>Upgrades</p> <p>AngloGold (AU) upgraded to Outperform from Sector Perform at RBC Capital<br />Arctic Cat (ACAT) upgraded to Outperform from Neutral at RW Baird<br />Qorvo (QRVO) upgraded to Outperform from Market Perform at Northland<br />RockTenn (RKT) upgraded to Buy from Hold at KeyBanc</p> <p>Downgrades</p> <p>Cavium (CAVM) downgraded to Market Perform from Outperform at JMP Securities<br />Fortinet (FTNT) downgraded to Sector Perform from Outperform at Pacific Crest<br />General Mills (GIS) downgraded to Market Perform from Outperform at BMO Capital<br />HSBC (HSBC) downgraded to Underperform from Neutral at Exane BNP Paribas<br />Helmerich &amp; Payne (HP) downgraded to Sell from Neutral at Citigroup<br />Infosys (INFY) downgraded to Underperform from Hold at Jefferies<br />MeadWestvaco (MWV) downgraded to Neutral from Buy at Longbow<br />Petrobras (PBR) downgraded to Underweight from Neutral at HSBC<br />Philips (PHG) downgraded to Hold from Buy at Deutsche Bank<br />Pinnacle West (PNW) downgraded to Neutral from Buy at UBS<br />RE/MAX Holdings (RMAX) downgraded to Neutral from Buy at BofA/Merrill<br />Union Bankshares (UBSH) downgraded to Neutral from Buy at Compass Point<br />United Financial (UBNK) downgraded to Market Perform from Outperform at Keefe Bruyette<br />Vivendi (VIVHY) downgraded to Hold from Buy at Jefferies<br />Westpac Banking (WBK) downgraded to Sell from Neutral at Citigroup<br />Wipro (WIT) downgraded to Underperform from Hold at Jefferies</p> <p>Initiations</p> <p>Alpha Natural (ANR) initiated with an Underperform at Macquarie<br />Arch Coal (ACI) initiated with a Neutral at Macquarie<br />BioMarin (BMRN) initiated with a Buy at Evercore ISI<br />CONSOL (CNX) initiated with a Neutral at Macquarie<br />comScore (SCOR) initiated with an Outperform at Wedbush<br />Clearwater Paper (CLW) initiated with an Outperform at Macquarie<br />Cloud Peak (CLD) initiated with a Neutral at Macquarie<br />L Brands (LB) initiated with a Neutral at Wedbush<br />Mercer (MERC) initiated with a Neutral at Macquarie<br />Metaldyne Performance (MPG) initiated with a Buy at KeyBanc<br />PMC-Sierra (PMCS) initiated with an Outperform at Imperial Capital<br />Peabody (BTU) initiated with a Neutral at Macquarie<br />Rayonier Advanced Materials (RYAM) initiated with a Neutral at Macquarie<br />Vitae Pharmaceuticals (VTAE) initiated with an Overweight at Piper Jaffray<br />Wausau Paper (WPP) initiated with a Neutral at Macquarie<br />Xerium Technologies (XRM) initiated with an Outperform at Macquarie</p> <p>COMPANY NEWS<br />McDonald's (MCD) President and CEO Don Thompson to retire, effective March 1. The board has elected Steve Easterbrook to replace Thompson as president and CEO. Additionally, Pete Bensen, senior executive VP and CFO, is being promoted to the newly-created role of Chief Administrative Officer. Kevin Ozan, who currently serves as SVP and Corporate Controller, will succeed Bensen and as EVP and CFO<br />Citrix (CTXS) announced the implementation of a restructuring program designed to increase strategic focus and operational efficiency. The restructuring will affect approximately 700 full-time and 200 contractor positions, and is expected to result in annualized pre-tax savings in the range of approximately $90M-$100M<br />Qualcomm (QCOM) cut 2H15 outlook for semiconductor business largely driven by the effects of: A shift in share among OEMs at the premium tier, which has reduced its near-term opportunity for sales of its integrated Snapdragon processors and has skewed our product mix towards more modem chipsets in this tier; Expectations that its Snapdragon 810 processor will not be in the upcoming design cycle of a large customer's flagship device; and Heightened competition in China&nbsp;&nbsp; <br />Toshiba (TOSBF) to license North American TV business to Compal Electronics<br />Salix Pharmaceuticals (SLXP) said it will restate results for fiscal 2013 and the first three quarters of fiscal 2014<br />Facebook (FB) reported monthly active users up 13% to 1.39B</p> <p>EARNINGS<br />Companies that beat consensus earnings expectations last night and today include:<br />Qualcomm (QCOM), Facebook (FB), Wi-LAN (WILN), Capital Bank (CBF), Capital Bank (CBF), Alexion (ALXN), Cabot Microelectronics (CCMP), Cascade Bancorp (CACB), Helmerich &amp; Payne (HP), Xcel Energy (XEL), Air Products (APD), Potash (POT), MEDNAX (MD), Thermo Fisher (TMO), CARBO Ceramics (CRR), Check Point (CHKP), IBERIABANK (IBKC), PTC Inc. (PTC), Teradyne (TER), Murphy Oil (MUR), Kirby (KEX), First Connecticut (FBNK), Astoria Financial (AF), DHT Holdings (DHT), Celadon Group (CGI), Tetra Tech (TTEK), MKS Instruments (MKSI), Cabot (CBT), Washington Trust Bancorp (WASH), West Corp. (WSTC), ShoreTel (SHOR), Financial Institutions (FISI), Intersil (ISIL), Ameriprise (AMP), PAREXEL (PRXL), Flextronics (FLEX), Extreme Networks (EXTR), ServiceNow (NOW), Swift Transport (SWFT), Electro Scientific (ESIO), Mellanox (MLNX), Aspen Technology (AZPN), Cardiovascular Systems (CSII), Cavium (CAVM), Tractor Supply (TSCO), Hologic (HOLX), Qorvo (QRVO), Citrix (CTXS), Vertex (VRTX), Las Vegas Sands (LVS), Cirrus Logic (CRUS), Silicon Graphics (SGI)</p> <p>Companies that missed consensus earnings expectations include:<br />World Acceptance (WRLD), Enterprise Products (EPD), Cash America (CSH), Regis (RGS), WESCO (WCC), Time Warner Cable (TWC), BE Aerospace (BEAV), Methanex (MEOH), Jacobs Engineering (JEC), Triumph Group (TGI), Royal Gold (RGLD), IDEX Corp. (IEX), Albemarle (ALB), Kearny Financial (KRNY), Umpqua Holdings (UMPQ), NewBridge Bancorp (NBBC), C1 Financial (BNK), Capstead Mortgage (CMO), TriState Capital (TSC), Fox Chase Bancorp (FXCB), Datawatch (DWCH), Flowserve (FLS), CACI (CACI), QIAGEN (QGEN), Greenhill &amp; Co. (GHL)</p> <p>Companies that matched consensus earnings expectations include:<br />Steel Dynamics (STLD), Northfield Bancorp (NFBK), Brookline Bancorp (BRKL), Core Laboratories (CLB), Fortinet (FTNT), MainSource Financial (MSFG)</p> <p>Facebook (FB) sees FY15 revenue 5% lower than it would be under FY14 exchange rate<br />Qualcomm (QCOM) sees Q2 EPS $1.28-$1.40, consensus $1.28, Q2 revenue $6.5B-$7.1B, consensus $6.74B. The company also lowered FY15 adjusted EPS view to $4.75-$5.05 from $5.05-$5.35, consensus $5.21 and lowered FY15 revenue view to $26B-$28B from $26.8B-$28.8B, consensus $27.81B<br />Silicon Graphics (SGI) sees Q3 EPS (10c)-0c, consensus 8c, sees FY15 revenue $540M-$560M, consensus $551.7M</p> <p>NEWSPAPERS/WEBSITES<br />Alibaba (BABA) taken by surprise of Yahoo's (YHOO) split decision, Financial Times reports<br />Some see Yahoo (YHOO) as takeover target after Alibaba spinoff, NY Times says<br />GM (GM) rejects request to extend deadline for victims fund, Bloomberg reports<br />Federal judge says forex manipulation case to proceed, Reuters reports (BAC, BCS, BNPQY, C, CS, DB, GS, HSBC, JPM, MS, RBS, UBS)<br />Boeing (BA), Lockheed Martin (LMT) get $383M deal from Air Force, Reuters says<br />Samsung (SSNLF) to invest $84.23M in smartphone factory in India, DigiTimes reports</p> <p>SYNDICATE<br />CTPartners (CTP) suspends proposed common stock offering<br />Entellus Medical (ENTL) 4.6M share IPO priced at $17.00<br />FlexPharma (FLKS) 5.4M share IPO priced at $16.00<br />Gevo (GEVO) files to sell common stock and warrants<br />Mirati Therapeutics (MRTX) files to sell common stock, no amount given<br />Omeros (OMER) files to sell common stock and pre-funded warrants<br />Oxford Immunotec (OXFD) files automatic ordinary share shelf<br />Post Holdings (POST) 6.5M share Secondary priced at $47.50<br />Rexford Industrial (REXR) files to sell 10M shares of common stock<br />XenoPort (XNPT) files to sell $100M of convertible senior notes due 2022</p> Apple BAC Bank of England Belgium Boeing Borrowing Costs Budget Deficit China Citigroup Crude Deutsche Bank European Union Evercore Federal Reserve Financial Regulation Fisher Ford Gambling General Mills goldman sachs Goldman Sachs Hershey Hong Kong India Iran Iraq Japan Keefe Las Vegas Merrill Mexico Monetary Policy Poland Private Equity RBS Reuters Shenzhen SWIFT Time Warner Ukraine Thu, 29 Jan 2015 12:26:47 +0000 Tyler Durden 501137 at Markets Drift Without Direction As Zombified BTFDers Unable To Frontrun Hawkish Fed <p>With markets still digesting the surprising FOMC announcement, which was far more hawkish than most expected, and which once again saw right through the crude weakness and interpreted it as "favorable for households" if saying nothing about investment linkages to this most financialized of commodities, this morning has seen more of the same, with the Nikkei sliding on JPY strength despite the BOJ's clear mini-intervention in the market through its favorite commercial banks buying USJDPY early in the session and moments ago as the pre-US open ramp begins, and even as the Shanghai Composite - now detached completely from everything but investor leverage - once again dipped by 1.3% on fears of a more serious crackdown on margin accounts. In Europe all eyes are still on Greece with the curve now massively inverted, as the 10Y continues to drift wider than 10% even as the Athens Stock Exchange has found a bit of a dead cat bounce this morning and is up just over 3%. </p> <p>The bottom line is that unfortunately for the BTFDers, <em>with the Fed no longer giving explicit buy signals with the "considerable time" language struck</em>, and with an implicit economic upgrade suggesting a rate hike is still on the table, it is becoming increasingly more difficult to frontrun the Fed's "wealth creation" intentions.</p> <p><em>More details from RanSquawk:</em></p> <p>Asian equity markets mostly fell after following suit from a second consecutive negative Wall Street close after yesterday’s slightly hawkish FOMC rate meeting. The Nikkei 225 (-1.06%) fluctuated between gains and losses underpinned by weakness in JPY, while Chinese bourses fell for a third day as China’s CRSC launched a new margin trading probe on 46 brokerages. Consequently, the Shanghai Comp (-1.31%) fell to a 1-week low while the 50DMA crossed above the 100DMA in the Hang Seng (-1.07%), for the first time since May’14.</p> <p>Today’s European session has seen equities open in negative territory, but pared some of these moves throughout the session, after some disappointing earnings pre market, specifically from Shell (RDSA LN), which consequently weighed on competitors BP (BP/ LN) and Total (FP FP). However, as has been the case over the last few days, market participants will be keenly watching todays US corporate earnings, with the likes of Alibaba (BABA) and ConocoPhillips (COP) due to report ahead of the opening bell and Google (GOOGL), Amazon (AMZN) and Visa (V) aftermarket.</p> <p>The other factor weighing on European indices today is last night’s FOMC meeting, whereby the Fed removed their `considerable time` phrasing in what was interpreted as a less dovish than expected announcement, with Fed watcher Hilsenrath stating that the Fed keeping their `patience` phrase suggesting that rates will not rise before June at the earliest.</p> <p>Elsewhere, Gilts outperform its German counterpart after BoE’s Carney stated aftermarket that interest rate hikes will be more gradual than the central bank anticipated at this stage last year. Meanwhile, the GR/GE 10y spread remains in focus after yesterday’s moves, wider today by around 50 bps in the wake of S&amp;P changing Greece’s sovereign rating outlook to `watch negative` from `stable`, with the rating maintained at `B`. Note, this move comes ahead of a scheduled meeting between EU’s Dijsselbloem and SYRIZA’s Tsipras in Athens on Friday.</p> <p>In FX, antipodean currencies have been in focus as AUD continues its downtrend from the Asian session where attention was still on the dovish article by RBA watcher McCrann, with market now pricing a high probability of a rate cut at the next scheduled meeting on 3rd February, with AUD/USD breaking below 0.7800 to trade at 5 and a half year lows. While NZD has been weighed on by yesterday’s dovish RBNZ policy meeting, where the central bank abandoned its tightening bias to trade at 4 year lows. </p> <p>Elsewhere, EUR/CHF and USD/CHF have moved to intraday highs with CHF weakness evident across the board; EUR/CHF trades just off highs hit on Tuesday at 1.0383 which was hit in the midst of talk that the SNB were intervening in the market. Looking ahead, later today sees German CPI data, after we have seen all German states report a fall from previous month’s CPI. As well as this, out of the US today we have Weekly Jobs data and Pending Home Sales.</p> <p>Gold has been the underperformer in the precious metals complex today in response to FOMC inspired USD strength seen during Asia-Pac hours. In the energy complex, both WTI and Brent have seen a slight uptick this morning after WTI crude futures closed last night’s session at the lowest level since early 2009 as crude stockpiles rose above 400mln bbls for the first time in over 30 years.</p> <p><em>In summary: </em>European shares are mixed, after paring earlier declines, with the oil &amp; gas and financial services sectors underperforming and food &amp; beverage, personal &amp; household outperforming. Companies including Royal Dutch Shell, Deutsche Bank, Diageo, Infineon, Nokia and Sandvik released earnings/trading statements. Greek stocks rise after 3 sessions of losses, Greek bond yields continue rise. Turkish lira falls to new record against the dollar. The U.K. and Swedish markets are the worst-performing larger bourses, the Swiss the best. The euro is stronger against the dollar. German 10yr bond yields fall; U.K. 10-year gilt yield drops to record low. Commodities decline, with silver, copper underperforming and Brent crude outperforming. U.S. jobless claims, pending home sales due later.</p> <p><strong>Market Wrap: </strong></p> <ul> <li>S&amp;P 500 futures up 0.5% to 2000.75</li> <li>Stoxx 600 up 0.04% to 369.2</li> <li>US 10Yr yield up 1bps to 1.73%</li> <li>German 10Yr yield down 2bps to 0.34%</li> <li>MSCI Asia Pacific down 1.4% to 140.4</li> <li>Gold spot down 0.9% to $1272.4/oz</li> <li>Euro up 0.27% to $1.1318</li> <li>Dollar Index up 0.1% to 94.56</li> <li>Italian 10Yr yield up 3bps to 1.62%</li> <li>Spanish 10Yr yield up 3bps to 1.47%</li> <li>French 10Yr yield up 1bps to 0.58%</li> <li>S&amp;P GSCI Index down 0.4% to 375.2</li> <li>Brent Futures up 0.5% to $48.7/bbl, WTI Futures down 0.3% to $44.3/bbl</li> <li>LME 3m Copper down 2.3% to $5359/MT</li> <li>LME 3m Nickel down 1.7% to $14790/MT</li> <li>Wheat futures down 0.6% to 502 USd/bu</li> </ul> <p><strong>Bulletin Headline Summary From RanSquawk and Bloomberg</strong></p> <ul> <li>Antipodean currencies trade at multi year lows after the dovish article by RBA watcher McCrann and the prospect of a dovish RBA next week continues to be priced into the currency, while the RBNZ abandoned their tightening bias.</li> <li>Today’s European session has seen equities open in negative territory but ebb higher throughout the European morining in the wake of a less dovish than expected announcement from FOMC and some weaker than expected earnings pre market, specifically from Shell (RDSA LN). </li> <li>Looking ahead, later today sees German CPI data, as well as Weekly Jobs data and Pending Home Sales from the US, with Alibaba (BABA) and ConocoPhillips (COP) due to report ahead of the opening bell and Google (GOOGL), Amazon (AMZN) and Visa (V) aftermarket.</li> <li>Treasuries steady, headed for biggest weekly gain in more than three years after Fed added “international developments” to items used to assess progress toward employment and inflation objectives.</li> <li>While Yellen says history and theory suggest wages will pick up as job market tightens, investors have their doubts, expecting inflation will run well below the Fed’s target for the next decade</li> <li>U.K. gilt yields fell to a record as Bank of England’s Carney said inflation is likely to turn negative for a period, adding to speculation rates will stay at a record low for longer </li> <li>Investors gave their verdict on the new Greek government, selling the country’s stocks and bonds in a signal to Prime Minister Alexis Tsipras of the price he will pay for sticking to promises to end austerity</li> <li>ECB Executive Board member Benoit Coeure said it is “not an urgent issue” to discuss how long quantitative easing will last, because “it will be assessed based on a range of indicators, including inflation expectations”</li> <li>Economic sentiment in the euro area rose for the first time in three months after the ECB committed to spend at least EU1.1t on fueling growth and inflation</li> <li>Sovereign yields mostly lower, Greece 10Y surges 44bps to 10.78%&nbsp; Portugal, Spain and Italy also higher. Asian stocks mostly lower; European stocks fall, U.S. equity-index futures gain. Brent, WTI and gold lower; copper gains</li> </ul> <p><strong>US Economic Data</strong></p> <ul> <li>8:30am: Initial Jobless Claims, Jan. 24, est. 300k (prior 307k)</li> <li>Continuing Claims, Jan. 17, est. 2.405m (prior 2.443m)</li> <li>9:45am: Bloomberg Consumer Comfort, Jan. 25 (prior 44.7)</li> <li>10:00am: Pending Home Sales m/m, Dec., est. 0.5% (prior 0.8%)</li> <li>Pending Home Sales y/y, Dec., est. 10.8% (prior 1.7%)</li> <li>10:00am: ISM Seasonal Adjustments </li> </ul> <p><strong>We conclude with DB's Jim Reid summarizing all the major overnight events</strong></p> <p>So today is 1 AD (1 week after Draghi) and its interesting to see which major assets have been impacted most by the move so far. Using the Thursday pre-announcement levels and the closing prices from yesterday the Stoxx 600, DAX and CAC have rallied +2.81%, +3.90% and +2.44% respectively. Despite the weakness yesterday in peripherals, the IBEX (+0.28%) and FTSE MIB (+1.07%) are also in positive territory whilst on the flip side equity markets in the US are lower with the S&amp;P 500 (-1.49%) and Dow (-2.08%) both down – not helped by a weaker session yesterday which we’ll touch upon later. So its been a good week for one of our trades for 2015 - namely European equities over US. This does seem to be creating more attention of late but we don't think its becoming consensus positioning wise yet. In fixed income, 10y yields in Germany (-23bps), France (-17bps), Spain (-12bps) and Italy (-12bps) have rallied hard since the announcement. Treasuries (-22bps) have also performed strongly although softer US data has helped. Crossover to some surprise is largely unchanged although yesterdays moves wiped a lot of the gains. The Euro, meanwhile, is nearly 3% weaker versus the Dollar and Gold -0.2% softer. </p> <p>The clear outlier to all this is Greece and yesterday’s 9.24% decline in the ASE means that Greek equities are now over 15% down from pre-election levels. Yesterday’s sharp leg lower was once again led by steep falls for the banks (-26.2%) after a report on Bloomberg that bank deposit outflows stood at over €14bn in the run-up to the Greek election, €11bn of which came out in January alone. The last reported total Greek bank deposits was said to stand at around €164bn in November according to Moodys. </p> <p>Recent announcements by the new government to block privatizations of assets which had previously been agreed under the bailout package - starting with the Piraeus Port - is only adding tension to the relationship between the Syriza-led coalition and the Eurozone. A Reuters article yesterday also noted that the new government is looking at plans to reinstate public sector employees and announce increased pensions for those on low incomes. Germany’s economy minister Gabriel was quoted in another Reuters article saying that ‘if Greece wants to deviate from some of these measures, it must bear the cost itself rather than exporting this to other European countries via a haircut or other such ideas’. Gabriel was also critical of the announced blocks to privatizations of assets, specifically saying that ‘citizens of other euro states have a right to see that the deals linked to their acts of solidarity are upheld’. Meanwhile PM Tsipras yesterday declared that Greece would look to seek a solution with creditors, but refused to back down from its pre-election pledge. Specially the Prime Minister was quoted on Bloomberg as saying that ‘there will neither be a catastrophic clash, nor will continued kowtowing be accepted’ before going on to say that the new government ‘will not be forgiven’ in reference to going back on its word on renegotiating the bailout terms.</p> <p>Greek 10y yields closed 86bps wider yesterday and 3y yields finished 270bps wider at 16.73% - the highest since 2012. Meanwhile the 5y CDS is now implying a 70% probability of default within 5 years for the sovereign, not helped by S&amp;P yesterday announcing that it was placing Greece’s credit rating on credit watch negative. Clearly the situation is becoming more and more fragile each day with the banking sector in particular being hardest hit at this point. With the ELA facility currently under bi-weekly review and the relationship between Greece, the Euro-area and Troika coming under more pressure as the government goes against earlier bailout terms, all eyes will be on Athens’ meeting with the Eurogroup tomorrow and if we get any clues or progress towards the end of February funding deadline in particular. For this to seriously impact global markets it does have to spread to other peripherals. With the ECB about to be big buyers the news has to be pretty bad for this to occur. Although yesterday saw some weakness, as we showed earlier these countries are still lower in yield over the past week due to the ECB impact outweighing Greek political concerns. </p> <p>Away from Greece yesterday the day’s other focus was the release of the FOMC January statement. In a nutshell the comments painted further improvement in both the economy and labour market however highlighted that inflation had declined further and reiterated patience around raising rates – specifically noting that the move will be data dependent. With regards to the former, the Fed changed language around job gains from ‘solid’ to ‘strong’ and suggested that the economy has expanded at a ‘solid’ pace having previously suggested a ‘moderate’ pace. On the inflation front language changes included inflation ‘declining further’ below target from ‘continued to run’ and the addition of ‘inflation is anticipated to decline further in the near term’. The FOMC also changed the language around market-based inflation measures by moving from declining ‘somewhat further’ to ‘substantially’. Also of some interest was the addition of ‘international developments’ in the text – highlighting no doubt the recent ECB QE move and tensions around Greece. So an upgraded assessment of the economy but perhaps a slightly more dovish inflation picture. The ‘patience’ language means a March/April hike is very unlikely although mid-year is still in the picture, however their acknowledgement of ‘international developments’ is interesting. As regular readers know we still think this gets pushed back further as the Fed struggles to hike in a global easing environment. </p> <p>Indeed yesterday we highlighted that 9 Central Bank have eased policy this year. However we've subsequently learnt there are actually 13. Here is the full list: Singapore, Europe, Switzerland, Denmark, Canada, India, Turkey, Egypt, Romania, Peru, Albania, Uzbekistan and Pakistan. Given that the ECB covers 19 countries you could actually say its 31 countries. On the other hand we think 5 countries have tightened monetary policy including Brazil, Armenia, Krygyzstan, Mongolia and Belarus. Overnight the RBNZ kept rates on hold although attention in the Asia-Pacific region will move to the RBA decision next week. </p> <p>In terms of market reaction to the Fed, equities closed weaker yesterday with the bulk of the losses coming post the statement release. Indeed, the S&amp;P 500 (-1.35%) and Dow (-1.13%) finished in the red for the second successive day. With the softer tone there was a firm bid for Treasuries. Yields on the 10y benchmark ended the day 10.2bps tighter at 1.721%, closing just above the January 15th lows. 30y yields meanwhile dropped 10.9bps to close at a new record low (2.291%). In fact an early gain for equities was also pared back by further weakness for energy stocks (-3.87%). Both WTI (-3.85%) and Brent (-2.28%) took a sharp leg lower to $44.45/bbl and $48.47/bbl respectively after the latest EIA report showed US crude inventories increasing 8.9m barrels last week to the highest on record.</p> <p>Just wrapping up yesterday’s market moves, the Stoxx 600 closed +0.10% supported by a +0.78% strengthening for the Dax. The FTSE MIB (-0.81%) and IBEX (-1.34%) both weakened whilst 10y peripheral yields were anywhere from 5bps to 14bps wider after the negativity in Greece. The Euro weakened post FOMC to pare back the bulk of Tuesday’s gains and finish 0.83% lower versus the Dollar at $1.129. Data took a backseat with just consumer confidence data out of Germany (9.3 vs. 9.1 expected) and France (90 vs. 91 expected). </p> <p>In terms of markets in Asia this morning, bourses are generally following the lead from the US and trading lower as we type. Indeed the Nikkei (-1.20%), Hang Seng (-1.17%), Kospi (-0.54%) and Shanghai composite (-0.86%) are all weaker. Chinese equities in particular have pared some of the earlier weakness after reports on Reuters that the regulator may launch a fresh review into margin lending in the region.</p> <p>In terms of today’s calendar, focus this morning will likely be on the Euro-area with various confidence indicators due for January including consumer, services and economic prints as well as money supply data. German CPI will also be a highlight as well as unemployment data for the nation. Spanish retail sales will also be worth keeping an eye on. It’s fairly quiet in the US this afternoon with just initial jobless claims (market looking for 300k) and pending home sales due out although 50 S&amp;P 500 companies are due to report. Tomorrow we shift our attention to another payroll report.</p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="600" height="400" alt="" src="" /> </div> </div> </div> Bond Brazil CDS Consumer Confidence Continuing Claims Copper CPI Creditors Crude default Deutsche Bank Equity Markets Eurozone fixed France Germany Gilts Google Greece India Initial Jobless Claims Italy Jim Reid Monetary Policy Money Supply Nikkei Portugal Precious Metals Quantitative Easing RANSquawk Reuters Romania Switzerland Turkey Unemployment Uzbekistan Thu, 29 Jan 2015 12:00:03 +0000 Tyler Durden 501136 at The New Greek Government Arrives In Its Residence: Finds No Power, No Wifi Password And No Toilet Soap <p>Things in Greece are bad. So bad, that the outgoing government of Antonis Samaras decided to not only leave the new inhabitants of the official residence of the Greek prime minister, the Maximos Mansion, without power, and without the WiFi password, but they decided to "borrow" all the soap in the toilet as well. </p> <p><em>More from <a href="">Spiegel</a>, google translated:</em></p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p><strong>"We sit in the dark. We have no internet, no email, no way to communicate with each other", </strong>said an employee of the Office, who has worked for various government for years. "That's never happened before." It shows that Samaras' team have "no manners and no decency." </p> <p>&nbsp;</p> <p>Because of blackouts in the Maximos Mansion the official website of the Greek Prime Minister still shows the image and the resume of Samaras - even though since Monday, the left SYRIZA leader Alexis Tsipras is the head of government in Athens. </p> <p>&nbsp;</p> <p>It was the first time that a government handover has been so bitter, said the office staff to SPIEGEL ONLINE. "Everything was seamless and worked under Mr Samaras but he would not let Mr Tsipras benefit." </p> <p>&nbsp;</p> <p>Samaras had already demonstrated in recent days that he is a bad loser. He was absent, as Tsipras arrived after his swearing-in of the Maximos Mansion on Monday. This Samaras broke with tradition: It is common for an outgoing Prime Minister his successor in office sitting welcomes you and wishes him success for the government's work. </p> <p>&nbsp;</p> <p>The environment of the ousted conservative Prime Minister pointed out that Samaras was not required according to Greek constitution to welcome his successor welcome. </p> <p>&nbsp;</p> <p>But the lack of internet access should be the least of the problems for Tsipras and his team. <strong>Greek media report that Samaras' employees have not even left the soap in the staff toilets.</strong></p> </blockquote> <p><strong>?</strong></p> <p><img src="" width="500" height="375" /></p> <p>Maybe we were wrong to mock Greek austerity after all.</p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="500" height="375" alt="" src="" /> </div> </div> </div> Google Greece Thu, 29 Jan 2015 04:29:59 +0000 Tyler Durden 501130 at Ron Paul On Gold & The Fed's Failed 'Utopian Dream' <p><a href=""><em>Submitted by Ron Paul via The Ron Paul Institute for Peace &amp; Prosperity</em></a>,</p> <p><strong>Over the last 100 years the Fed has had many mandates and policy changes in its pursuit of becoming the chief central economic planner for the United States. Not only has it pursued this utopian dream of planning the US economy and financing every boondoggle conceivable in the welfare/warfare state, it has become the manipulator of the premier world reserve currency.</strong></p> <p>As Fed Chairman Ben Bernanke explained to me, the once profoundly successful world currency &ndash; gold &ndash; was no longer money. This meant that he believed, and the world has accepted, the fiat dollar as the most important currency of the world, and the US has the privilege and responsibility for managing it.<strong> He might even believe, along with his Fed colleagues, both past and present, that the fiat dollar will replace gold for millennia to come. I remain unconvinced.</strong></p> <p>At its inception the Fed got its marching orders: to become the ultimate lender of last resort to banks and business interests. And to do that it needed an &ldquo;elastic&rdquo; currency.&nbsp; The supporters of the new central bank in 1913 were well aware that commodity money did not &ldquo;stretch&rdquo; enough to satisfy the politician&rsquo;s appetite for welfare and war spending. A printing press and computer, along with the removal of the gold standard, would eventually provide the tools for a worldwide fiat currency. We&rsquo;ve been there since 1971 and the results are not good.</p> <p>Many modifications of policy mandates occurred between 1913 and 1971, and the Fed continues today in a desperate effort to prevent the total unwinding and collapse of a monetary system built on sand. A storm is brewing and when it hits, it will reveal the fragility of the entire world financial system.</p> <p><strong>The Fed and its friends in the financial industry are frantically hoping their next mandate or strategy for managing the system will continue to bail them out of each new crisis.</strong></p> <p>The seeds were sown with the passage of the Federal Reserve Act in December 1913. The lender of last resort would target special beneficiaries with its ability to create unlimited credit. It was granted power to channel credit in a special way. Average citizens, struggling with a mortgage or a small business about to go under, were not the Fed&rsquo;s concern. Commercial, agricultural, and industrial paper was to be bought when the Fed&#39;s friends were in trouble and the economy needed to be propped up. At its inception the Fed was given no permission to buy speculative financial debt or U.S. Treasury debt.</p> <p><strong>It didn&rsquo;t take long for Congress to amend the Federal Reserve Act to allow the purchase of US debt to finance World War I and subsequently all the many wars to follow.</strong> These changes eventually led to trillions of dollars being used in the current crisis to bail out banks and mortgage companies in over their heads with derivative speculations and worthless mortgage-backed securities.</p> <p><strong>It took a while to go from a gold standard in 1913 to the unbelievable paper bailouts that occurred during the crash of 2008 and 2009.</strong></p> <p>In 1979 the dual mandate was proposed by Congress to solve the problem of high inflation and high unemployment, which defied the conventional wisdom of the Phillips curve that supported the idea that inflation could be a trade-off for decreasing unemployment. The stagflation of the 1970s was an eye-opener for all the establishment and government economists. None of them had anticipated the serious financial and banking problems in the 1970s that concluded with very high interest rates.</p> <p>That&rsquo;s when the Congress instructed the Fed to follow a &ldquo;dual mandate&rdquo; to achieve, through monetary manipulation, a policy of &ldquo;stable prices&rdquo; and &ldquo;maximum employment.&rdquo; The goal was to have Congress wave a wand and presto the problem would be solved, without the Fed giving up power to create money out of thin air that allows it to guarantee a bailout for its Wall Street friends and the financial markets when needed.</p> <p>The dual mandate was really a triple mandate. The Fed was also instructed to maintain &ldquo;moderate long-term interest rates.&rdquo; &ldquo;Moderate&rdquo; was not defined. I now have personally witnessed nominal interest rates as high as 21% and rates below 1%. Real interest rates today are actually below zero.</p> <p><strong>The dual, or the triple mandate, has only compounded the problems we face today</strong>. Temporary relief was achieved in the 1980s and confidence in the dollar was restored after Volcker raised interest rates up to 21%, but structural problems remained.</p> <p>Nevertheless, the stock market crashed in 1987 and the Fed needed more help. President Reagan&rsquo;s Executive Order 12631 created the President&rsquo;s Working Group on Financial Markets, also known as the Plunge Protection Team. This Executive Order gave more power to the Federal Reserve, Treasury, Commodity Futures Trading Commission, and the Securities and Exchange Commission to come to the rescue of Wall Street if market declines got out of hand. Though their friends on Wall Street were bailed out in the 2000 and 2008 panics, this new power obviously did not create a sound economy. Secrecy was of the utmost importance to prevent the public from seeing just how this &ldquo;mandate&rdquo; operated and exactly who was benefiting.</p> <p>Since 2008 real economic growth has not returned. From the viewpoint of the central economic planners, wages aren&rsquo;t going up fast enough, which is like saying the currency is not being debased rapidly enough. That&rsquo;s the same explanation they give for prices not rising fast enough as measured by the government-rigged Consumer Price Index. In essence it seems like they believe that making the cost of living go up for average people is a solution to the economic crisis. Rather bizarre!</p> <p><u><strong>The obsession now is to get price inflation up to at least a 2% level per year. The assumption is that if the Fed can get prices to rise, the economy will rebound. This too is monetary policy nonsense.</strong></u></p> <p>If the result of a congressional mandate placed on the Fed for moderate and stable interest rates results in interest rates ranging from 0% to 21%, then believing the Fed can achieve a healthy economy by getting consumer prices to increase by 2% per year is a pie-in-the-sky dream. Money managers CAN&rsquo;T do it and if they could it would achieve nothing except compounding the errors that have been driving monetary policy for a hundred years.</p> <p>A mandate for 2% price inflation is not only a goal for the central planners in the United States but for most central bankers worldwide.</p> <p>It&rsquo;s interesting to note that the idea of a 2% inflation rate was conceived 25 years ago in New Zealand to curtail double-digit price inflation. The claim was made that since conditions improved in New Zealand after they lowered their inflation rate to 2% that there was something magical about it. And from this they assumed that anything lower than 2% must be a detriment and the inflation rate must be raised. Of course, the only tool central bankers have to achieve this rate is to print money and hope it flows in the direction of raising the particular prices that the Fed wants to raise.</p> <p><strong>One problem is that although newly created money by central banks does inflate prices, the central planners can&rsquo;t control which prices will increase or when it will happen. Instead of consumer prices rising, the price inflation may go into other areas, as determined by millions of individuals making their own choices. Today we can find very high prices for stocks, bonds, educational costs, medical care and food, yet the CPI stays under 2%.</strong></p> <p>The CPI, though the Fed currently wants it to be even higher, is misreported on the low side. The Fed&rsquo;s real goal is to make sure there is no opposition to the money printing press they need to run at full speed to keep the financial markets afloat. This is for the purpose of propping up in particular stock prices, debt derivatives, and bonds in order to take care of their friends on Wall Street.</p> <p>This &ldquo;mandate&rdquo; that the Fed follows, unlike others, is of their own creation.<strong> No questions are asked by the legislators, who are always in need of monetary inflation to paper over the debt run up by welfare/warfare spending.</strong> There will be a day when the obsession with the goal of zero interest rates and 2% price inflation will be laughed at by future economic historians. It will be seen as just as silly as John Law&rsquo;s inflationary scheme in the 18th century for perpetual wealth for France by creating the Mississippi bubble &ndash; which ended in disaster. After a mere two years, 1719 to 1720, of runaway inflation Law was forced to leave France in disgrace. The current scenario will not be precisely the same as with this giant bubble but the consequences will very likely be much greater than that which occurred with the bursting of the Mississippi bubble.</p> <p><strong>The fiat dollar standard is worldwide and nothing similar to this has ever existed before. </strong>The Fed and all the world central banks now endorse the monetary principles that motivated John Law in his goal of a new paradigm for French prosperity. His thesis was simple: first increase paper notes in order to increase the money supply in circulation. This he claimed would revitalize the finances of the French government and the French economy. His theory was no more complicated than that.</p> <p>This is exactly what the Federal Reserve has been attempting to do for the past six years. It has created $4 trillion of new money, and used it to buy government Treasury bills and $1.7 trillion of worthless home mortgages. Real growth and a high standard of living for a large majority of Americans have not occurred, whereas the Wall Street elite have done quite well. This has resulted in aggravating the persistent class warfare that has been going on for quite some time.</p> <p>The Fed has failed at following its many mandates, whether legislatively directed or spontaneously decided upon by the Fed itself &ndash; like the 2% price inflation rate. But in addition, to compound the mischief caused by distorting the much-needed market rate of interest, the Fed is much more involved than just running the printing presses. It regulates and manages the inflation tax. The Fed was the chief architect of the bailouts in 2008. It facilitates the accumulation of government debt, whether it&rsquo;s to finance wars or the welfare transfer programs directed at both rich and poor. The Fed provides a backstop for the speculative derivatives dealings of the banks considered too big to fail. Together with the FDIC&#39;s insurance for bank accounts, these programs generate a huge moral hazard while the Fed obfuscates monetary and economic reality.</p> <p><strong>The Federal Reserve reports that it has over 300 PhD&rsquo;s on its payroll. </strong>There are hundreds more in the Federal Reserve&rsquo;s District Banks and many more associated scholars under contract at many universities. The exact cost to get all this wonderful advice is unknown. The Federal Reserve on its website assures the American public that these economists &ldquo;represent an exceptional diverse range of interest in specific area of expertise.&rdquo; Of course this is with the exception that gold is of no interest to them in their hundreds and thousands of papers written for the Fed.</p> <p><strong>This academic effort by subsidized learned professors ensures that our college graduates are well-indoctrinated in the ways of inflation and economic planning. As a consequence too, essentially all members of Congress have learned these same lessons.</strong></p> <p><u><strong>Fed policy is a hodgepodge of monetary mismanagement and economic interference in the marketplace. </strong></u>Sadly, little effort is being made to seriously consider real monetary reform, which is what we need. That will only come after a major currency crisis.</p> <p>I have quite frequently made the point about the error of central banks assuming that they know exactly what interest rates best serve the economy and at what rate price inflation should be. Currently the obsession with a 2% increase in the CPI per year and a zero rate of interest is rather silly.</p> <p>In spite of all the mandates, flip-flopping on policy, and irrational regulatory exuberance, there&rsquo;s an overwhelming fear that is shared by all central bankers, on which they dwell day and night. <u><strong>That is the dreaded possibility of DEFLATION.</strong></u></p> <p>A major problem is that of defining the terms commonly used. It&rsquo;s hard to explain a policy dealing with deflation when Keynesians claim a falling average price level &ndash; something hard to measure &ndash; is deflation, when the Austrian free-market school describes deflation as a decrease in the money supply.</p> <p>The hysterical fear of deflation is because deflation is equated with the 1930s Great Depression and all central banks now are doing everything conceivable to prevent that from happening again through massive monetary inflation. Though the money supply is rapidly rising and some prices like oil are falling, we are NOT experiencing deflation.</p> <p><strong>Under today&rsquo;s conditions, fighting the deflation phantom only prevents the needed correction and liquidation from decades of an inflationary/mal-investment bubble economy.</strong></p> <p>It is true that even though there is lots of monetary inflation being generated, much of it is not going where the planners would like it to go. Economic growth is stagnant and lots of bubbles are being formed, like in stocks, student debt, oil drilling, and others. Our economic planners don&rsquo;t realize it but they are having trouble with centrally controlling individual &ldquo;human action.&rdquo;</p> <p><strong>Real economic growth is being hindered by a rational and justified loss of confidence in planning business expansions. </strong>This is a consequence of the chaos caused by the Fed&rsquo;s encouragement of over-taxation, excessive regulations, and diverting wealth away from domestic investments and instead using it in wealth-consuming and dangerous unnecessary wars overseas. Without the Fed monetizing debt, these excesses would not occur.</p> <p><u><strong>Lessons yet to be learned:</strong></u></p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>1. Increasing money and credit by the Fed is not the same as increasing wealth. It in fact does the opposite.</p> <p>&nbsp;</p> <p>2. More government spending is not equivalent to increasing wealth.</p> <p>&nbsp;</p> <p>3. Liquidation of debt and correction in wages, salaries, and consumer prices is not the monster that many fear.</p> <p>&nbsp;</p> <p>4. Corrections, allowed to run their course, are beneficial and should not be prolonged by bailouts with massive monetary inflation.</p> <p>&nbsp;</p> <p>5. The people spending their own money is far superior to the government spending it for them.</p> <p>&nbsp;</p> <p>6. Propping up stock and bond prices, the current Fed goal, is not a road to economic recovery.</p> <p>&nbsp;</p> <p>7. Though bailouts help the insiders and the elite 1%, they hinder the economic recovery.</p> <p>&nbsp;</p> <p>8. Production and savings should be the source of capital needed for economic growth.</p> <p>&nbsp;</p> <p>9. Monetary expansion can never substitute for savings but guarantees mal&ndash;investment.</p> <p>&nbsp;</p> <p>10. Market rates of interest are required to provide for the economic calculation necessary for growth and reversing an economic downturn.</p> <p>&nbsp;</p> <p>11. Wars provide no solution to a recession/depression. Wars only make a country poorer while war profiteers benefit.</p> <p>&nbsp;</p> <p>12. Bits of paper with ink on them or computer entries are not money &ndash; gold is.</p> <p>&nbsp;</p> <p>13. Higher consumer prices per se have nothing to do with a healthy economy.</p> <p>&nbsp;</p> <p>14. Lower consumer prices should be expected in a healthy economy as we experienced with computers, TVs, and cell phones.</p> </blockquote> <p><strong>All this effort by thousands of planners in the Federal Reserve, Congress, and the bureaucracy to achieve a stable financial system and healthy economic growth has failed.</strong></p> <p>It must be the case that <strong>it has all been misdirected</strong>. And just maybe a free market and a limited government philosophy are the answers for sorting it all out without the economic planners setting interest and CPI rate increases.</p> <p><u><strong>A simpler solution to achieving a healthy economy would be to concentrate on providing a &ldquo;SOUND DOLLAR&rdquo; as the Founders of the country suggested. </strong></u>A gold dollar will always outperform a paper dollar in duration and economic performance while holding government growth in check. This is the only monetary system that protects liberty while enhancing the opportunity for peace and prosperity.</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="576" height="399" alt="" src="" /> </div> </div> </div> Ben Bernanke Ben Bernanke Bond Central Banks Commodity Futures Trading Commission Consumer Prices CPI Fail Federal Reserve France Great Depression Monetary Policy Money Supply Moral Hazard New Zealand None Real Interest Rates Reality Recession recovery Reserve Currency Ron Paul Securities and Exchange Commission Stagflation Too Big To Fail Unemployment Thu, 29 Jan 2015 04:00:05 +0000 Tyler Durden 501120 at Teachers' Retirement Funds Are Piling Into Manhattan Real Estate At Record High Prices <p><a href=""><em>Submitted by Mike Krieger via Liberty Blitzkrieg blog</em></a>,</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><strong><em>Rather than buying equity interests in buildings, TIAA-CREF and KTCU are seeking to invest in mortgages backed by office towers, retail properties, warehouses and apartments in major U.S. cities. The venture between the two companies, which manage teachers&rsquo; savings in their respective countries, is 51 percent owned by TIAA-CREF and 49 percent held by Seoul-based KTCU.</em></strong></p> <p>&nbsp;</p> <p><strong><em>&ldquo;You invest in a huge office tower in New York because you want a safe place to put your money and a decent return,&rdquo; over the long-term, he said. &ldquo;This is more a capital preservation play than it is a capital appreciation play.&rdquo;</em></strong></p> <p>&nbsp;</p> <p>&ndash; From the Bloomberg article:&nbsp;<a href="">Manhattan Towers Lure Koreans in $1 Billion Joint Venture</a></p> </blockquote> <p>As soon as&nbsp;I woke up this morning, I saw an email from a very smart friend of mine in the finance industry. He forwarded me an article from the<em> New York Post</em>, about how TIAA-CREF had paid $3,158 per square foot for a building in the Meatpacking area of Manhattan (a record for the area), which isn&rsquo;t far from where I lived for several years in the mid-2000s.</p> <p>For those of you who aren&rsquo;t aware, TIAA-CREF stands for <b>Teachers Insurance and Annuity Association&nbsp;&ndash; College Retirement Equities Fund</b>. According to the company&rsquo;s own website, it:</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><strong><em>We specialize in the distinctive needs of those who work in the academic, research, medical and cultural fields. We&rsquo;re here to listen to you, to advise you, and to help you feel confident about making financial decisions.</em></strong></p> </blockquote> <p>So it essentially manages the investments of people who know the least about investing, i.e., muppets. As such, it came as no surprise that TIAA-CREF might serve&nbsp;as an important bag-holding vehicle for bubble assets just before a fall, tempted by juicy 4% yields. As my friend noted:&nbsp;<strong>&ldquo;In other words, teachers and nurses are shattering property records to fund their retirement.&rdquo;</strong></p> <p>Here are some excerpts <a href="">from the article</a>:</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><em>Our first thought on hearing the price for this sale was whether it was even a Samsung &ldquo;remote&rdquo; possibility. But yes, we&rsquo;ve confirmed that TIAA-CREF is in contract to shatter a Meatpacking District sales record by paying $200 million for 837 Washington St.</em></p> <p>&nbsp;</p> <p><em><strong>The price for the newly constructed 63,131-square-foot boutique office and retail building works out to $3,158 per square foot,</strong> largely based on the value of the retail space and future upside in one of the world&rsquo;s hottest neighborhoods.</em></p> <p>&nbsp;</p> <p><em>For now, the buyer will have a &ldquo;coupon to clip&rdquo; as it rakes in just over 4 percent, based on Samsung&rsquo;s rent for the 10-year deal which, similar to others, has two five-year renewals.</em></p> </blockquote> <p>Reading this made me wonder whether it was just a one-off or part of a larger trend. It appears to be a larger trend, particularly between TIAA-CREF and South Korean companies. I came across an interesting <a href=""><em>Bloomberg</em> article</a>&nbsp;from late last year. Here are some excerpts:</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><em>(Bloomberg) &mdash; <strong>The Korean Teachers Credit Union and TIAA-CREF are staking a claim on Manhattan&rsquo;s Socony-Mobil building in the first investment of a $1 billion joint venture.</strong></em></p> <p>&nbsp;</p> <p><em>Rather than buying equity interests in buildings, TIAA-CREF and KTCU are seeking to invest in mortgages backed by office towers, retail properties, warehouses and apartments in major U.S. cities. The venture between the two companies, <strong>which manage teachers&rsquo; savings</strong> in their respective countries, is 51 percent owned by TIAA-CREF and 49 percent held by Seoul-based KTCU.</em></p> <p>&nbsp;</p> <p><em><em>&ldquo;In the Korean investment environment, where interest rates remain low at about 2 percent, we believe this is a good opportunity to diversify the portfolio through investments in prime assets in the United States with strong fundamentals and steady income streams,&rdquo; Sung-Seok Kang, head of global investments at KTCU, said in an e-mail. &ldquo;We plan to expand this relationship further into other investment types.&rdquo;</em></em></p> <p>&nbsp;</p> <p><em>Mezzanine lending is a complex approach to property investment that not all foreign investors are comfortable with, said Ben Thypin, an analyst at New York-based Real Capital.<strong> Koreans typically prefer a direct ownership stake in a property because it gives them more control of the asset, he said.</strong></em></p> </blockquote> <p>Not to worry, TIAA-CREF is apparently doing that too.</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><em><strong>Asian buyers have been a major force behind climbing real estate values in New York City.</strong> Bank of China plans to purchase 7 Bryant Park, a tower under construction by Hines, for about $600 million, a person with knowledge of the matter said this week. China&rsquo;s Anbang Insurance Group in October agreed to buy the Waldorf Astoria, the 83-year-old Art Deco building occupying an entire block in midtown Manhattan. The $1.95 billion transaction is the largest ever for a U.S. hotel, according to research firm Lodging Econometrics.</em></p> <p>&nbsp;</p> <p><em>&ldquo;You invest in a huge office tower in New York because you want a safe place to put your money and a decent return,&rdquo; over the long-term, he said. &ldquo;This is more a capital preservation play than it is a capital appreciation play.&rdquo;</em></p> </blockquote> <p>Think about that&nbsp;logic. Manhattan office towers at record-breaking valuations several years into what is the greatest Central Bank created bubble in world history for oligarch type assets is considered a &ldquo;capital preservation play&rdquo; for teachers&rsquo; retirement money.</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><em>As of October, property sales in Manhattan were on pace to reach $63 billion this year, surpassing the record $62.2 billion from 2007, according to Massey Knakal Realty Services.</em></p> <p><em>Debt investments like KTCU&rsquo;s may be gaining appeal as funds seek alternatives to the meager returns being generated by owning top-tier real estate, according to Thypin. </em></p> <p>&nbsp;</p> <p><em>Capitalization rates, a measure used to calculate yield on real estate investments, have been falling since 2010, according to Real Capital. <strong>The best buildings in Manhattan are yielding less than 4 percent, the lowest since at least 2002.</strong></em></p> <p>&nbsp;</p> <p><em>The venture between TIAA-CREF and KTCU is targeting investments in major metropolitan areas like New York and San Francisco that yield 5 percent to 7.5 percent, according to TIAA-CREF&rsquo;s Amato.</em></p> <p>&nbsp;</p> <p><em>The growth in property values in those areas is outpacing the recovery in the rest of the country. Prices in the biggest cities are about 13 percent above their 2007 peak, while buildings in small cities and towns are 10 percent below the prior highs, according to the Moody&rsquo;s/RCA Commercial Property Price index.</em></p> </blockquote> <p><strong>This is a classic case of groupthink amongst asset managers. Everyone thinks these assets are safe and untouchable, so they are all piling into the same trade.</strong></p> <p><strong>It appears clear that pension funds are being set up as the ultimate bag holders when the latest Central Bank bubble pops, and in the meantime, they are a perfect source of illegal fee gouging. A win-win for financial oligarchs.</strong></p> <p>For more on that topic, see:</p> <p><em><a href="" rel="bookmark" title="Permanent Link to Meet Janet Cowell – The North Carolina Treasurer Desperately Pushing to Keep Criminal Public Pension Fees Secret">Meet Janet Cowell &ndash; The North Carolina Treasurer Desperately Pushing to Keep Criminal Public Pension Fees Secret</a></em></p> <p><em><a href="" rel="bookmark" title="Permanent Link to Leaked Documents Show How Blackstone Fleeces Taxpayers via Public Pension Funds">Leaked Documents Show How Blackstone Fleeces Taxpayers via Public Pension Funds</a></em></p> <p><em><a href="" rel="bookmark" title="Permanent Link to Another Pension Scandal – The Crony Love Affair Between North Carolina, Credit Suisse and Erskine Bowles">Another Pension Scandal &ndash; The Crony Love Affair Between North Carolina, Credit Suisse and Erskine Bowles</a></em></p> <p><em><a href="" rel="bookmark" title="Permanent Link to Consultant the San Francisco Pension Fund Asked Whether it Should invest in Hedge Funds, Runs a Hedge Fund">Consultant the San Francisco Pension Fund Asked Whether it Should invest in Hedge Funds, Runs a Hedge Fund</a></em></p> <p><em><a href="" rel="bookmark" title="Permanent Link to New Jersey’s Debt is Downgraded by Fitch as Chris Christie Funnels Pension Money to Private Equity and Hedge Funds">New Jersey&rsquo;s Debt is Downgraded by Fitch as Chris Christie Funnels Pension Money to Private Equity and Hedge Funds</a></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="292" height="300" alt="" src="" /> </div> </div> </div> China Credit Suisse credit union Finance Industry Fitch New York City New York Post Private Equity Real estate recovery Thu, 29 Jan 2015 03:50:31 +0000 Tyler Durden 501135 at Norway Regulator Fears Housing Bubble "Isn't Sustainable" <p>Amid the collapse in crude oil prices, the Norwegian central bank cut rates in December (after 1000 days on hold) and is likely to cut again as economic growth stalls. However, the country's financial regulator is <strong>warning falling interest rates risk pushing the Norwegian housing market beyond its breaking point into a "self-augmenting spiral."</strong> With prices up 8.1% YoY, and up 85% nationwide in the last decade, even Robert Shiller warned of Norway's housing bubble in 2012 - and since then household debt (and home prices) have surged. As Bloomberg reports, Morten Baltzersen, head of Norway’s Financial Supervisory Authority stressed <strong><em>"continued rapid growth in debt and house prices isn’t sustainable." </em></strong><em>Unintended consequences?</em></p> <p>&nbsp;</p> <p><a href="">As Bloomberg reports,</a> a <strong>combination of plunging oil prices and falling interest rates risks pushing Norway’s housing market beyond its breaking point, the financial regulator said</strong>.</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>Norway’s housing market, which Nobel laureate <strong>Robert Shiller all the way back in 2012 said was in a bubble,</strong> has been inflated amid an oil boom that has driven wealth creation and kept unemployment below 4 percent. </p> <p>&nbsp;</p> <p><a href=""><img src="" width="554" height="441" /></a></p> <p>&nbsp;</p> <p>Norwegians have more debt than ever before, owing their creditors about twice their disposable incomes, a level that Olsen and FSA’s Baltzersen have said is unsustainable.</p> </blockquote> <p>And it's about to get worse...</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>The economy of western Europe’s biggest oil exporter is now struggling to expand amid a slump in crude. The central bank cut rates in December and said there’s a 50-50 chance for another reduction, triggering a mortgage war as banks such as DNB ASA and Nordea Bank AB lowered rates to lure customers.</p> <p>&nbsp;</p> <p><strong>“Lower interest rates and strong competition in the mortgage lending market could contribute to continued rapid growth in debt and house prices,”</strong> Morten Baltzersen, head of Norway’s Financial Supervisory Authority, said in an e-mailed reply to questions this week. That could drive the housing market into a <strong>“self-augmenting spiral,” </strong>he said.</p> <p>&nbsp;</p> <p><strong>“I’m beginning to be a little bit worried,” </strong>Steinar Juel, chief economist at Nordea, said by phone in Oslo. Another rate cut from the bank would be risky and drive house price gains up by 15 percent, he said.<strong> “We could also have a situation where we really are in a bubble.”</strong></p> </blockquote> <p>Regulators have tried to slow the expansion...</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p><strong>In an effort to cool the market, Norway has introduced a number of measures including raising capital requirements</strong>, the risk weights that lenders assign their mortgages and capping loans at 85 percent of a property’s value.</p> </blockquote> <p>But,<span style="text-decoration: underline;"><strong> the government rejected advice from the FSA for tighter regulations to slow debt growth.</strong></span></p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>The Conservative-led government last year allowed more flexibility in loan standards, allowing banks to lend up to 90 percent of a property’s value. </p> </blockquote> <p>Leaving the regulator threatening once again...</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>Baltzersen said he has monitored the rise of house prices last year.... <span style="text-decoration: underline;"><strong>“Continued rapid growth in debt and house prices isn’t sustainable,”</strong></span> he said.</p> </blockquote> <p>*&nbsp; *&nbsp; *</p> <p>Ironic really that American policy makers have never seen a housing bubble they didn't like and yet we see with Norwegian regulators that there are very clear consequences to playing in the currency wars (both at home and abroad)</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="554" height="441" alt="" src="" /> </div> </div> </div> Creditors Crude Crude Oil Housing Bubble Housing Market Nobel Laureate Norway Robert Shiller Unemployment Thu, 29 Jan 2015 03:20:38 +0000 Tyler Durden 501132 at Jeff Gundlach Warns "The Fed Is About To Make A Big Mistake" (& That's Why Bond Yields Are Crashing) <p>Since The FOMC's "hawkish" statement, bond yields have utterly cratered as near-record speculative short positioning in bonds unwind the long-end (and worries about international problems - "<span class="a" style="left: 530px; top: 2700px; word-spacing: 1px;">and readings on financial </span><span style="text-decoration: underline;"><span class="a" style="left: 3652px; top: 2700px; color: #2e97d3;">and </span><span class="a" style="left: 530px; top: 2785px; color: #2e97d3;">international </span></span><span class="a" style="left: 952px; top: 2785px; word-spacing: 2px;">developments")</span>. However, fundamentally speaking, <a href="">DoubleLine's Jeff Gundlach explains</a>, the Federal Reserve is on the brink of making a big mistake simply put, <em><strong>"if Fed Chair Janet Yellen goes ahead with this plan (to raise rates for 'philosophical reasons'), she runs the risk of having to quickly reverse course and cut interest rates."</strong></em></p> <p>&nbsp;</p> <p>Bond yields crash...</p> <p><a href=""><img src="" width="600" height="333" /></a></p> <p>&nbsp;</p> <p><a href=""><em>As Bloomberg reports,</em></a></p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p><strong>Jeffrey Gundlach says the Federal Reserve is on the brink of making a big mistake.</strong></p> <p>&nbsp;</p> <p>U.S. central bankers have been talking about raising benchmark borrowing costs this year even though the outlook for global growth is worsening as oil prices tumble.<strong> If Fed Chair Janet Yellen goes ahead with this plan, she runs the risk of having to quickly reverse course and cut interest rates, according to Gundlach.</strong></p> <p>&nbsp;</p> <p>“There’s no fundamental reason to raise interest rates,” Gundlach, chief executive officer at DoubleLine Capital LP, said at a conference yesterday in Hollywood, Florida. <span style="text-decoration: underline;"><strong>“My idea is the Fed raises rates for philosophical reasons. That may be short-lived.”</strong></span></p> <p>&nbsp;</p> <p>..</p> <p>&nbsp;</p> <p>Despite this backdrop, most analysts expect central bankers to go through with some sort of tightening this year. Money-market derivatives traders are pricing in a rate increase in the fourth quarter, too.</p> <p>&nbsp;</p> <p><strong>“This is the triumph of hope over experience,” </strong>Gundlach said.</p> </blockquote> <p>*&nbsp; *&nbsp; *</p> <p>Still plenty more shorts to squeeze...</p> <p><a href=""><img src="" width="600" height="329" /></a></p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="386" height="329" alt="" src="" /> </div> </div> </div> Bond Borrowing Costs Federal Reserve Florida Gundlach Janet Yellen Jeff Gundlach Thu, 29 Jan 2015 03:06:09 +0000 Tyler Durden 501115 at Lies And Deception In Ukraine’s Energy Sector <p><a href=""><em>Submitted by Robert Bensh via</em></a>,</p> <p><strong>The Ukrainian government has repeatedly claimed it is doing its best to improve the oil and gas investment climate, but official statements are the opposite of the reality, as Prime Minister Arseniy Yatsenyuk is leading the great deception.</strong></p> <p>According to Prime Minister Yatseniuk, Ukraine has taken a number of important steps to reform the energy sector, and has even achieved success in the formidable fight against rampant corruption, as well as signed open and transparent contracts for purchase of the natural gas from EU member states. Now he claims Ukraine is looking forward to Western companies&#39; investment in Ukraine&#39;s gas transportation system.</p> <p>&quot;I would like to point out where we have succeeded: we have succeeded in overcoming corruption in the energy sector. Billions of dollars, which previously used to flow into the pockets of Ukrainian oligarchs, are now being brought out of the shadows. At present, Ukraine purchases gas under transparent and open contracts with European companies,&quot; Yatseniuk recently told a joint press conference with German Chancellor Angela Merkel in Berlin.</p> <p><strong>Even the President has made misguided and naïve statements this past week in Davos, declaring that &ldquo;&hellip;Ukraine will build new ways for receiving Norwegian gas and gas from Europe, and Ukraine will also produce shale gas.&quot;</strong></p> <p>The stark reality is that these official statements are in no way reflected by government action, and the gas market players in Ukraine recognize the deception as does the energy industry as a whole.</p> <p><strong>The real story is that while gas has been received from Norway in reverse flows, Ukraine&rsquo;s current energy strategy, taxation and fiscal regime has forced Ukraine&rsquo;s current producers of oil and gas to stop drilling new wells and curtail production.</strong></p> <p>The development of Ukraine&rsquo;s potential shale gas is even further afield with Chevron announcing its departure from Ukraine and only Cub Energy remaining in the country as an operator with both technical and local expertise in developing the shale. Even if shale can be developed in Ukraine it will be extremely challenging given the highly service-oriented logistical train, which does not presently exist in Ukraine.</p> <p>In the course of the last year the Ukraine&rsquo;s private gas producers were doing their best to overcome, if not merely survive, the consequences of the government&rsquo;s move to significantly increase fiscal and administrative pressure on the industry without any consultations with the latter. The government failed to deliver on its promises, and the only thing it managed to achieve was an undermining of any trust the industry may have had in it.</p> <p>Ukraine&rsquo;s current regulatory and fiscal systems governing the energy sector are overly complicated and non-transparent, even without the major political and military conflict with Russia and annexation of the Crimea. The implications have been significant. Since last year, all major oil and gas projects in Ukraine have significantly slowed down at best, and been suspended entirely at worst.</p> <p><strong>Issue by issue, the lies continue to mount.</strong></p> <p><u><em><strong>Rising Taxation</strong></em></u></p> <p>The government recently raised the tax burden on private natural gas producers twofold (55% of the sales price - for the natural gas extracted from deposits up to 5km, and 20% - for the natural gas extracted from deposits deeper than 5km), instead of implementing long-awaited market reforms. Notwithstanding its own promises for this to be a temporary measure by 1 January 2015, at the initiative of the Ministry of Finance, just a few days before the New Year, Parliament rendered the tax increase permanent--in violation of the Parliament majority&rsquo;s Coalition Agreement.</p> <p>It is interesting to note that the practicability of these high rates was based on the calculations and official data of the Ministry of Finance for the old huge fields that had been explored and developed in Soviet times by state-owned oil and gas companies, while the gas producers were deprived of the opportunity to present their own figures and assessments for the new wells drilled on their smaller fields. The government simply brushed the matter aside, stating that the costs and expenses claimed by the investors were inflated.</p> <p>Most poignantly here, the figures suggested by the Ministry are so wildly out of line with the facts that even state-owned oil and gas companies refuse to acknowledge them. Recently state-owned Naftogaz calculated the economical production cost of natural gas extracted by its subsidiary, Urgazvydobuvannya, up to UAH 5,430 [USD 344] for 1,000 cubic meters (excluding VAT), which is much higher that the data submitted by the Ministry of Finance (according to which the gas production expenses do not exceed UAH 230-240 [USD 14.6-15.2] per 1,000 cubic meters).</p> <div id="bannerzone5"> <div class="banner" id="banner308"> <div id="bannerzone-attention"><span style="color: #000000;">A new type of investment just recently became available to individual oil &amp; gas investors. Because of the recent crash in oil and the timing of a new law, it could be the most lucrative investment in modern history. I want to give you a step-by-step guide (at no cost) on how you can get started and potentially retire from it.</span></div> <div>&nbsp;</div> <div><u><em><strong>Investors Are Ready for Cooperation, Not the Government</strong></em></u></div> </div> </div> <p>Private gas producers have been open about their costs and expenses. Some of them are actually publicly traded companies (JKX Oil &amp; Gas, Serinus Energy, Regal Petroleum and Cub Energy), and their financial data is open, transparent and publicly available. Over and over again investors sent letters to the Ministry of Finance, with a call for cooperation and open dialogue, demonstrating the relevant figures and presenting underlying documents and statistics. For some reasons the Ministry chose to ignore their efforts and declined any suggestions to establish a joint working group on this matter.</p> <p>Instead of working closely with the industry the Government has already pushed independent businesses out of the gas market by introducing Naftogaz&rsquo;s monopoly on gas supplies to large industrial consumers. This is because the government has been trying desperately to ensure financial support for the eternally cash-starved Naftogaz. Forcefully redirecting the financial flows from gas consumers in favor of Naftogaz was a small-minded, short-sighted remedy. Such administrative measures shocked the Energy Community, which demanded explanations from Ukrainian officials as such measures completely contradict European 3rd Energy package.</p> <p><u><em><strong>Corruption in the Energy Sector</strong></em></u></p> <p>No need to say that such a state of affairs only encourages corruption in the country. In spite of the Prime Minister&rsquo;s promises and assurances to the contrary, the energy sector is still the biggest source of corruption in the Ukrainian economy.</p> <p>Repeated reports by the IMF, the World Bank, and the International Energy Agency (IEA) bring up the issue of corruption in the energy sector. They strongly recommend abolishing price subsidies and cross-subsidization, as well as raising gas prices to a level that will at least cover the production costs of the state producers. Ukraine&rsquo;s system of gas subsidies for households has long been abused by the gas distribution companies that are able to buy gas intended for households at subsidized prices and sell it to businesses at much higher market prices, with a 200-400% margin. The estimated budget losses exceed hundreds of millions of dollars per year. No need to say that the existing system only further destabilizes Ukraine&rsquo;s economy and puts enormous pressure on Naftogaz and its subsidiaries, at whose cost these subsidies are cross-directed by the Government.</p> <p><u><em><strong>No Reforms, No Success</strong></em></u></p> <p>It is obvious that the measures and steps taken by the Ukrainian Government have nothing in common with successes and reforms claimed by Arseniy Yatseniuk, as neither doubling tax rates and serving the oligarchs&rsquo; interests nor corruption and monopolization of the gas market correspond to the recommendations given by the Energy Community and IMF to Ukraine. Despite repeated announcements, implementation of the reform has been held back by fear of losing the electorate&rsquo;s support and approval of the oligarchs&rsquo; groups. Under the mask of nominal fight with the oligarchs the Government takes populist decisions and the Parliament adopts killing laws. One must admit that the Government seems to be unwilling to undo the money-making mechanisms in the energy sector.</p> <p>Given the desperate situation in which Ukraine finds itself today, it should have become extremely committed to the proper development of its domestic gas production, as that would introduce some extra volumes of the gas produced, in addition to 20 bcm domestically, into the local market to satisfy Ukraine&rsquo;s ever-hungry annual consumption of around 53 bcm. This would also allow Naftogaz to save some foreign currency reserves on buying imported gas in lesser volumes, including gas coming from Russia. As a result, financial pressure on the state budget and government (which attempts to plug Naftogaz&rsquo; deficit by any means necessary - including loans from state-owned banks, international financial institutions and currency reserves of the National Bank of Ukraine) could have been significantly lowered.</p> <p>Instead, the government has directed its actions against independent gas producers and the continuing crackdown is severely affecting both the country&rsquo;s energy independence and its currency reserves. The massive fiscal and administrative burden and lack of investment in the national gas extraction industry will only result in further decline of gas production, worsening of economic conditions and a higher degree of Ukrainian dependence on Russia. Ukraine&rsquo;s short sighted policy moves ensure that investment in the sector will cease and attracting new capital will become nearly impossible as Ukraine will be viewed as hostile based on it&rsquo;s treatment of businesses currently operating in the country.</p> <p>The revenues that the government hoped to generate from taxation of the oil and gas companies with the concomitant politically popular taxation of the oligarchs is proving to be a failure, as its actions are not only killing the independent gas production industry in the country, but are in fact depriving Ukraine of the opportunity to become a strong, energy independent economy. Without implementation of the necessary reforms, the Ukrainian energy sector will continue to be the nursery of corruption and playground for blackmail, which Russia enjoys greatly.</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="608" height="342" alt="" src="" /> </div> </div> </div> Corruption Davos International Energy Agency Natural Gas Norway Reality Ukraine World Bank Thu, 29 Jan 2015 02:50:22 +0000 Tyler Durden 501128 at