Capital Markets

With Washington throwing its full faith and credit behind a new Ukrainian bond issue, it appears it’s time for Moscow to play spoiler to current debt restructuring talks between Kiev and its creditors. Russia holds some $3 billion of Ukraine's debt and doesn't think it should have to incur losses as part of any deal because Vladimir Putin is no average joe private creditor.

The political pressure on Germany is rising in Europe. The country faces a choice: Continue business as usual or change the strategy? Only the latter option may give it real influence on shaping the future course of economic and political affairs in Europe. Playing defense is the comfortable choice, but it may be the wrong strategy. What needs to be done? Below is a proposal for saving the Eurozone in a way that would safeguard Germany’s interests, too

With The ECB banning Greek banks from continuing the GGB-buying ponzi scheme, the banking system in deposit outflow panic, cash running extremely dry, food shortages building, and bond/loan payments looming, Greek celebrations of Independence Day today are likely tempered by European officials coin-tossing over the nation's future (in or out of the EU). 196 years after winning their sovereignty from The Ottoman Empire, one wonders if The Greeks have the ability to fight their sovereignty back from "The Institutions." Perhaps, in the future, The Greeks will mourn "In Dependence" Day as opposed to celebrating "Independence" Day...

Banks have reclassified a quarter trillion in assets in order to avoid the negative effects of an impending rate hike cycle. In the end, investors would be wise to remember that something is only worth what someone is willing to pay you for it. 

• Germanwings Airbus crashes in France, 148 feared dead (Reuters)
• Greece promises list of reforms by Monday to unlock cash (Reuters)
• Merkel Points Tsipras Toward Deal With Greece’s Creditors (BBG)
• Banks Shift Bond Portfolios -Move to ‘held to maturity’ category aims to guard against rising rates, shield capital  (WSJ)
• Beijing to Shut All Major Coal Power Plants to Cut Pollution (BBG)
• As Silence Falls on Chicago Trading Pits, a Working-Class Portal Also Closes (NYT)
• Oil below $56 as Saudi output near record, China activity slows (Reuters)

"Leverage is risky. Purchasing assets with borrowed money can amplify small movements in prices into extraordinary gains or crippling losses, even default."

- San Fran Fed

Greece – faced with illiquidity, insolvency and a potential banking collapse – is running out of time and appears to be on the back foot as its international creditors refuse to countenance any debt restructuring, rescheduling or forgiveness.

QE makes sense only from a Keynesian/socialist perspective and ignores the long-term cost of low interest rate policies to individual investors and financial institutions.

A look ahead at next week.

The correlation between wage growth and consumer spending is now 0.93 according to RBC meaning that the 80% of the labor force who aren't seeing their pay increase will not be driving the US economic engine going forward.

Dear Chairman,
 
I would like one member of the FOMC to take the time to tell the American public the truth about the last seven years and monetary policy...

Fraud grows in good times because rescission is rarely sought (or granted) when asset values rise. Fraud is not a problem, till it is.

Back in 2009, when aside from a few insiders, nobody had heard of HFT, Zero Hedge launched its crusade to expose the algorithmic scourge that has since then caused an equity, treasury and now US Dollar flash crash, and has been the subject of a Michael Lewis bestseller and resulted in countless market halts and failures. More importantly, there is now roughly 50 pages of just bibliography citing the evidence-based, academic research that has shown just how pervsavibely, maliciously and premeditatedly HFTs manipulate, destabilize, impair and otherwise destroy every single market in which they participate.

U.S. oil producers are issuing new shares of stock at the fastest pace in more than a decade, looking to investors for a cash lifeline to pay down debt and keep drilling as crude prices continue to sink, Bloomberg notes, a move which paradoxically will only serve to depress prices further. 

Investors are wary of debt from fourth largest iron ore miner as slumping demand and a supply glut crush prices.