Bank of America
Is capital adequacy really the answer to the question?
A dispassionate look at the main considerations for investors in the week ahead.
The situation with Russia should give investors and traders a reason to brush up on their history, as current events take root in things that happened 50, 100, and 200 years ago. To understand this, can provide perspective, during an information war, where it's not easy for some to separate facts from beliefs and propoganda (on both sides). The relationship between US and Russia has always been interesting, as we shall explore.
The cultural divide
It's mid-March, which means it is time for the annual confidence boosting theatrical spectacle known as the Fed's stress test (for those who may have forgotten last year's farce when Jamie Dimon preempted the Fed by announcing a dividend in advance of the results, can read here). And like in the past, there were absolutely no surprises with 29 of 30 banks passing with flying colors. Of course, since it is a "test", and someone has the be sacrificial calf, this year that honor falls to Zions Bankshares. Last year its was Citi, SunTrust and MetLife. In both years the results are completely meaningless, as the Fed neither then, nor now, has any methodology for how to calculate capital in case of the same kind of counterparty failure chain as happened during Lehman, and when no amount of capital would have been sufficient to preserve the financial sector. Like we said: theatrical spectacle. But at least everyone's confidence has been boosted. So Buy stawks, and build your paper wealth! And here is the truly funny part: in the baseline stress test scenario, the Dow Jones "plunges" to 11.4K in Q3 2014, and then somehow surges back to all time highs by Q4 2016! Does the Fed understand the word Stress?
The chart below from Bank of America - showing the progression of first-time US homebuyers in recent months - should scare everyone who still believes that there is some sort of "housing recovery" in the US.
Why Mainstream Economists Like Krugman Are So WRONG and So DANGEROUS
Rather than deal forthrightly with the reality that unrealistic promises made to their employees cannot be honored, local government has pursued a strategy of legalizing looting. The gradual erosion of civil liberties, legal rights and government ethics are connected: our rights don't just vanish into thin air, they are expropriated by government: Federal, state and local. Though much is written about the loss of civil liberties at the Federal level, many of the most blatantly illegal power grabs are occurring in local government. When local government looting is legalized, the entire system is illegal. Here are three recent examples of blatantly illegal looting by local governments.
Computer programs are obsolete before they even get put on the market and it’s been that way for years now. There’s also the added bonus of actually making sure that the buyers keep buying and always want the latest.
In the aftermath in the recent surge in China's renminbi volatility which saw it plunge at the fastest pace in years, many, us included, suggested that the immediate next step in China's "fight with speculators" (not to mention the second biggest trade deficit in history), was for the PBOC to promptly widen the Yuan trading band, something it hasn't done since April 2012, with the stated objective of further liberalizing its monetary system and bringing the currency that much closer to being freely traded and market-set. Overnight it did just that, when it announced it would widen the Yuan's trading band against the dollar from 1% to 2%.
It has been a relatively quiet overnight session, aside from the already noted news surrounding China's halt on virtual credit card payments sending Chinese online commerce stocks sliding, where despite an ongoing decline in the USDJPY which has sent the Nikkei plunging by 3.3% (and which is starting to impact Abe whose approval rating dropped in March by a whopping 5.6 points to 48.1% according to a Jiji poll), US equity futures have managed to stay surprisingly strong following yesterday's market tumble. We can only assume this has to do with short covering of positions, because we fail to see how anyone can be so foolhardy to enter risk on ahead of a weekend where the worst case scenario can be an overture to World War III following a Crimean referendum which is assured to result in the formal annexation of the peninsula by Russia.
No one in Germany is allowed to get in the way of the sacrosanct exporters.
We would suffer too many subdural hematomas if we were to comment on this most recent outbreak of the "idiot meteorologist" syndrome by Bank of America below.
- China premier warns on economic slowdown as data fans stimulus talk (Reuters)
- Li says China defaults ‘unavoidable’ (FT)
- Russia Said to Ready for Iran-Style Sanctions in Worst Case (BBG)
- Rescue the tapes from the Bank of England’s dustbins (FT)
- Obama Warns Putin of Cost to Russia for Annexing Ukraine (BBG)
- The TVIX is back: Credit Suisse VIX Note That Ran Amok in 2012 Back on Top (BBG)
- U.S. Risks National Blackout From Small-Scale Attack (WSJ)
- U.S. Investigators Suspect Missing Airplane Flew On for Hours (WSJ)
- Malaysia says no evidence missing plane flew hours after losing contact (Reuters)
- Missed Alarms and 40 Million Stolen Credit Card Numbers: How Target Blew It (BBG)
- Death Toll in NYC Building Blast Rises to Six; Search Continues (BBG)
Bond Trading Grinds To A Halt: Goldman Set To Report Weakest Q1 Since 2005; Revenues Down As Much As 25% ElsewhereSubmitted by Tyler Durden on 03/12/2014 11:47 -0400
Since Wall Street has been explicitly fighting the Fed (remember: the main reason there is no volume is because nobody is selling) Wall Street has once again lost, and despite its appeals, the time to pay the piper has come. Said payment will be taken out of bank Q1 earnings which as everyone knows, will continue the declining trend seen in recent years (so much for that whole Net Interest Margin fable), but to learn just how bad, we go to the FT which reports that fixed income groups across Wall Street "are set for their worst start to the year since before the financial crisis, with revenue declines of up to 25%." The punchline: "Analysts now expect Goldman Sachs to record its weakest first quarter since 2005 and JPMorgan Chase and Bank of America are forecast to see their lowest revenues since they bought Bear Stearns and Merrill Lynch, respectively, in 2008."
While the world is terrified about what China - where corporate bond defaults are now permitted - may be about to unleash on the world, most are all too happy to remain in a state of delightful ignorance. We decided to take a peek behind the scenes.