Bank of America
- Moscow fights back after sanctions; battle rages near Ukraine crash site (Reuters)
- On Hold: Merkel Gives Putin a Blunt Message (WSJ)
- Argentina’s Default Clock Runs Out as Debt Talks Collapse (BBG)
- Argentina braces for market reaction to second default in 12 years (Reuters)
- Banco Espirito Santo Plunges After Posting 3.6 Billion-Euro Loss (BBG)
- Adidas Plunges After Cutting Forecast on Russia, Golf (BBG)
- GOP Says Lerner Emails Show Bias Against Conservatives (WSJ)
- Londoners Cashing in Flee to Suburbs as Home Rally Wanes (BBG)
- BNP Paribas Reports Record $5.79 Billion Quarterly Loss (WSJ)
- Swiss Banks Send U.S. Client Data Before Cascade of Settlements (BBG)
- Putin Sows Doubt Among Stock Bears Burned by 29% Rebound (BBG)
It's all over but the crying: having explained Argentina's position (i.e. not giving to so-called vulture funds), Economy Minister Kicilloff explains:
- *KICILLOF SAYS HEDGE FUNDS NOT WILLING TO GIVE DELAY ON RULING
- *KICILLOF SAYS HARD TO BELIEVE ARGENTINA IN DEFAULT IF HAS FUNDS
- *KICILLOF SAYS ARGENTINA CAN'T COMPLY WITH COURT RULING
- *HOLDOUTS DIDN'T ACCEPT ARGENTINE OFFER: KICILLOF
As Bloomberg notes, by defaulting today, Argentina may trigger bondholder claims of as much as $29 billion -- equal to all its foreign-currency reserves. Just remember that the last 2 days have seen 'smart money' buy Argentine bonds and stocks to all-time record highs.
With hours to go until Argentina's grace period runs out and default occurs, investors are less than frantically selling Argentine bonds and pesos. They are lower but do not appear in full panic mode as we presume investors cling to hope that Argentina folds and pays off the holdouts (though there has been no sign of that so far). ARG 2033 bonds are down 3 points to 81 and the black-market peso is modestly weaker at 13.0 (near its record lows). Argentine CDS tightened modestly (as BofA warns the facts surrounding Argentina’s bond payments continue to be unique and deciding if CDS are triggered could take longer than expected) but 1Y CDS are holding at 4600bps (equivalent) - a 52% probability of default. Paul singer continues to defend himself (and the holdouts) from claims they are "dangerous fundamentalists" hell-bent on making it impossible for foreign sovereigns to restructure their debts.
- EU finalises Russian sanctions as BP warns of impact on business (FT)
- Geopolitical Risk Rises for Global Investors (BBG)
- Jaded Argentines brace for looming debt default (Reuters)
- In Argentina, Mix of Money and Politics Stirs Intrigue Around Kirchner (WSJ)
- Mom ‘Trusting God’ for Ebola-Infected U.S. Doctor’s Life (BBG)
- Thanks NSA: Tech Companies Reel as NSA's Spying Tarnishes Reputations (BBG)
- Goldman unit eyes foray into China amid metals financing scandal (Reuters)
- Cash out time: London’s Gherkin Tower Offered for Sale by Its Lenders (BBG)
- Apenomics strikes again: McDonald’s Japan axes profit guidance amid food safety scandal (FT)
- Do you see what happens Larry when you are the only USDJPY bid? Nomura Profit Falls More Than Estimated on Broking Slump (BBG)
Clear examples of how the wrong regulation HURTS the US consumer, and how to do something about it.
Let's take a look at the amount of settlements/fines from various banks and financial institutions around the world since the crisis.
- Argentine holdout NML says government "choosing" to default (Reuters)
- Crunch time for Gaza truce talks as death toll passes 800 (Reuters)
- Don’t Tell Anybody About This Story on HFT Power Jump Trading (BBG)
- U.S. Accuses Russia of Shelling Eastern Ukraine (BBG)
- France’s Wheat Exports in Question as Rain Spoils Quality (BBG)
- Tapering in action: Lower printer sales hurt Xerox's revenue (Reuters)
- No liquidity? No Problem, there's an ETF for that: Bond ETFs Swelling in Europe as Trading Debt Gets Tougher (BBG)
- Herbalife hires ex-Biden chief to fend off regulators (NYPost)
- GM recalls far from calamity for some dealers who find new customers, business (Reuters)
- Bad weather likely cause of fatal Air Algerie crash: French officials (Reuters)
Despite a full court press of PR to confirm HFT firms are friends of retail investors and do no wrong; the SEC, it appears, sees it differently. While Mary White has confidently explained the market is not rigged, her agency is now actively seeking tips, complaints, or referrals that show, as The Chicago Tribune reports, evidence of abuse of order types, as well as traditional forms of abusive trading like "layering" or "spoofing" and other issues relating to high-frequency trading that might be violations of the law. Here are the 10 firms (including poster child holy-grail trader Virtu Financial) that the SEC is probing... can you spot the oddly missing one...
- Bubble Paranoia Setting in as S&P 500 Surge Stirs Angst (BBG)
- But how will math PhDs determine "fair value" - Wall Street Techs Take Secrets to Next Job at Their Peril (BBG)
- U.S., EU Escalate Russia Sanctions as Putin Holds Firm (Bloomberg)
- Australia Becomes First Developed Nation to Repeal Carbon Tax (WSJ)
- Gaza humanitarian truce goes into force, hours after tunnel clash (Reuters)
- Barclays, Deutsche Bank Said to Face U.S. Senate Hearing (BBG)
- ECB Asset Buying Far Off and May Not Come, Hansson Says (BBG)
- Time Warner win would make Murdoch U.S. media king (Reuters)
- Costly Vertex Drug Is Denied, and Medicaid Patients Sue (WSJ)
- China Rallying for All Wrong Reasons to Top-Rated Analyst (BBG)
- GM recalls some cars with problematic switches; judges others safe (Reuters)
Slowly but surely, all those cans that many hoped were kicked indefinitely into the future, are coming back home to roost. The biggest impact on global risk overnight have been undoubtedly the expanded Russian sanctions announced by Obama yesterday, which have sent the Russian Micex index reeling to six week lows (as it does initially after every sanction announcement, only for the BTFDers to appear promptly thereafter), with the biggest hits saved for the named companies such as Rosneft -5.6%, Novatek -5.1%, and others Alrosa -5.7%, VTB Bank -4.3%, Sberbank -3.4% and so on. Then promptly risk off mood spilled over into broader Europe and at last check the Stoxx600 was down 0.8%, with Bund futures soaring to record highs especially following news (from the Ukraine side) that a Russian warplane attacked a Ukrainian fighter jet. Not helping matters is the end of the dead cat bounce in Portugal where after soaring by 20% yesterday on hopes of a fresh capital infusion, Espirito Santo has once again crashed, dropping as much as 11%, driven lower following downgrades by both S&P and Moodys, as well as the realization that someone was pulling everyone's legs with the rumor of an equity stake sale.
One can't help but wonder just how concerned the powers that be are becoming when such an esteemed mainstream media outlet as Bloomberg News would deem fit to defend the almighty US Dollar. "There are always people who say the dollar is going to be replaced, but it hasn't happened," chides one strategist (clearly forgetting that nothing lasts forever). As growing concerns of "exorbitant privilege" spread from the usual anti-imperialist foes (Russia and China's de-dollarization) to close allies like France and now to the world's growth engine - BRICS, it seems defending what was previously unquestionable itself should be grounds for alarm...
The reason why "one-time, non-recurring" charges are traditionally excluded from a company's adjusted bottom line calculation is because they are, at least in theory, one-time and non-recurring. So, after looking at the chart below which breaks out Bank of America's quarterly litigation charges alongside its net income, can someone please explain to us why anyone is still showing the bank's pro forma EPS excluding litigation charges?
- BRICS set up bank to counter Western hold on global finances (Reuters)
- Fed's Yellen Hedges Her View on Rates (Hilsenrath)
- China GDP Grows 7.5% in Second Quarter (WSJ)
- Get More Acquainted With Your Knees as Boeing Reworks 737 (BBG)
- Israel Warns Gazans of New Attack After Hamas Rejects Truce (WSJ)
- Israel poised for Gaza incursions after truce collapses (Reuters)
- China Housing Sales Fall in First Half of 2014 (WSJ)
- IBM to offer iPads and iPhones for business users (Reuters)
- Fed's George says strengthening economy warrants quick rate rise (Reuters)
Bank of America's $10 Billion In 2014 Legal Charges Mask Ugly Trends, Net Interest Margin Drops To Lowest On RecordSubmitted by Tyler Durden on 07/16/2014 08:00 -0400
Another quarter down, another desperate attempt by Bank of America to mask a serious underlying business deterioration using bells, whistles, and gimmicks.
If last week's big "Risk Off" event was the acute spike in heretofore dormant Portugese bank troubles (as a reference Banco Espirito Santo has a market cap at the close last night stood at around €2.1bn ($2.9bn), contrasting to Goldman Sachs ($78.1bn) and JP Morgan ($220.5bn)), then yesterday's acceleration in the Portuguese lender's troubles which as we reported have now spread to its holding company RioForte which is set to default, were completely ignored by the market. Today this has conveniently flipped, following a Diario Economico report that Banco Espirito Santo has the potential to raise capital from private investors. No detail were given but this news alone was enough to send the stock soaring by nearly 20% higher in early trading. Still, despite the "good", if very vague news (and RioForte is still defaulting), Bunds remained bid, supported by a good Bund auction, in part also dragged higher by Gilts, which gained upside traction after the release of the latest UK jobs report reinforced the view that there is plenty of spare capacity for the economy to absorb before the BoE enact on any rate rises. Also of note, touted domestic buying resulted in SP/GE 10y yield spread narrowing, ahead of bond auctions tomorrow.