It's Friday afternoon, do you know where your fortress-balance-sheet bank's massive settlement deal with the government is...
- *JPMORGAN TO PAY $5.1 BILLION OVER FHFA MORTGAGE CLAIMS
- *FHFA SAYS JPM TO PAY ABOUT $2.74B TO FREDDIE, $1.26B TO FANNIE
- *JPMORGAN PAYS $1.1B TO RESOLVE REPRESENTATION, WARRANTY CLAIMS
- *FHFA SAYS IT'S SETTLED FOUR OF THE 18 PLS SUITS IT FILED IN '11
$4 billion of this appears to be part of the $13 billion settlement 'agreed' last week; but still leaves the criminal cases from what we can tell... Full statement below...
With US Macro slumping to 3-month lows, is it any surprise that markets everywhere traded with a decidedly Taper-off confidence this week. USD was sold (-0.6% on the week) though commodity currencies (CAD/AUD) were sold also. Stock 'traders' bought every dip, lifting the Russell 2000 for the 8th straight week (first time since 2003). Gold completed its best 2-weeks (+6.4%) in 23 months. Treasuries have been very quiet since Tuesday, ending the week 5-8bps lower in yield. Growth hope faded as Copper (-1%) and Oil (-3%) fell on the week and earnings overall tumbled. Of course, it wouldn't be Friday if we didn't melt-up into the close (helped by a VIX slammer) and sure enough the S&P tagged its all-time highs as panic buying ensued with just minutes left in the week. Headlines will crow of new all-time-highs for the S&P (but credit remains a non-believer, not buying the rip).
As we head into the vinegar strokes of 2013 with the world awash with liquidity and ever ready to BTFATH, we note that the last time the S&P 500 saw two consecutive years when the index did not go negative year-to-date was 1975-1976. As Bloomberg notes, just as in 2012 and 2013, we have not seen one day close below the previous year's closing level but as Marketfield's Michael Shaoul comments "eventually circumstances will change sufficiently to make the equity market a treacherous place," and if history is any guide, just as 1977 saw stocks drop 15%, then 2014 may reacquant investorsd with what "risk" and "volatility" means in US equities.
It's happening again. The US lack of intervention in Syria (and implicit and explicit support for the rebels) has apparently emboldened none other than Al-Qaeda. As the WSJ reports, a flurry of recent attacks by al Qaeda-linked militants in Iraq - strengthened by their alliance with jihadist fighters in Syria - is threatening to undo years of U.S. efforts to crush the group, widening sectarian conflict in the Middle East. Iraqi security officials say al Qaeda-linked fighters from the militant group Islamic State of Iraq and al-Sham, or ISIS, are moving aggressively to re-establish a base of operations in Anbar province, the stronghold of the Sunni insurgency during the U.S.-led war in Iraq.
UPDATE: Tepco Orders Evacuation of Fukushima Power Plant Workers
A 7.3 (according to USGS) magnitude earthquake just struck 311 miles ENE of Tokyo at a depth of 10km. The Pacific Tsunami Center has issued a warning and VOA reports a 1-meter high tsunami could hit Fukushima coast at 02:40 local - 1340ET)....
— Steve Herman (@W7VOA) October 25, 2013
Its not fun being in the government’s crosshairs. But there is comfort in knowing that the then Head of Enforcement at the SEC , Linda Thomsen (now of Davis & Polk law firm. I’m guessing her clients are proud!) went to the Nth degree to make sure she knew the smallest details of apparent arch-nemesis #1 Mark Cuban's case before moving forward!
How anyone thought this made any sense in the first place was a little beyond us, but the Labor Department has ruled that the Federal employees who were furloughed while the government was shutdown were not eligible for unemployment benefits (as well as back-pay)...
- *FEDERAL WORKERS DURING SHUTDOWN NOT ELIGIBLE FOR UNEMPLOYMENT BENEFITS: CNBC
So no double-dip... we await the union-based class action suit...
Rather than go to exhaustive lengths identifying the "terrorists," we identify (based on every piece of data you have ever touched in your life) the 'patriots' and thus, by process of elimination find the real terrorists...
In the long term, it will ultimately be the fundamentals that drive the markets. Currently, the deterioration in the growth rate of earnings and economic strength are not supportive of the speculative rise in asset prices or leverage. The idea of whether, or not, the Federal Reserve, along with virtually every other central bank in the world, are inflating the next asset bubble is of significant importance to investors who can ill afford to lose a large chunk of their net worth. It is all reminiscent of the market peak of 1929 when Dr. Irving Fisher uttered his now famous words: "Stocks have now reached a permanently high plateau." Does an asset bubble currently exist? Ask anyone and they will adamantly say 'NO.' However, maybe it is precisely that tacit denial which might be an indication of its existence
The Obamacare tech team should add another pressing cyber issue to its to-do list. As Mother Jones reports, web secuirty experts warn that that Healthcare.gov (and various state exchanges), the Obamacare websites, has a security flaw that could make sensitive user information, including Social Security numbers, vulnerable to hackers. The website, reportedly, has a coding problem that could allow hackers to deploy a technique called "clickjacking," where invisible links are planted on a legitimate web page. Using this scheme, hackers could trick users into giving up personal data as they enter it into the web site, potentially placing Americans at risk of identity theft or allowing fraudsters to file bogus health care claims.
As Alan Greenspan described this week, in an interview with John Stewart on “The Daily Show,”
“We really can't forecast all that well. We pretend that we can but we can't. And markets do really weird things sometimes because they react to the way people behave, and sometimes people are a little screwy.”
Which means they don’t necessarily go along with your central planning, no matter how good you think it is. But still economists insist that, if they are allowed to monkey around with it, they can make an economy better. And therefore, the Fed, which has lived by the sword of QE, will probably die by it too.
First: we are not suggesting Japan's army is comprised of radioactive mutants - perhaps just those stationed within 10 kilometers of the Fukushima gift that keeps on giving alpha through gamma rays. We are merely saying that if one takes Abe's latest deluded ramblings that Japan is "ready to counter China's power" literally instead of merely more nationalistic bluster by a prime minister whose first term ended in the runs (literally), then the demographically crippled island nation that has a soaring food and energy inflation problem, sliding wages and radiation that comes in 100,000+ RDA dosage increments, would be well advised to have a few invincible X-Men in its army's ranks if indeed it has any intention of taking on China. Because as Walter Sobchak would say, "this is not Man(churia)."
A key challenge for most investors is meeting return bogies, but as Citi notes in the following 6 slides, generating a 10% return in this low-yield environment is still possible (aside from riding short-squeezes in #N/A P/E stocks) as long as you have the intestinal fortitude for the kind of leverage required...
As the status quo crumbles, the state responds in the only way it knows: expand control and become increasingly authoritarian.