- China’s Holdings of Treasuries Dropped in ’11 (BusinessWeek)
- Bundesbank at Odds With ECB Over Loans (FT)
- Euro zone puts Greece's efforts under microscope (Reuters)
- Bank of America Considers a Revamp That Would Affect Millions of Customers (WSJ)
- In Days Leading Up to MF Global's Collapse, $165 Million Transfer OK'd in a Flash (WSJ)
- Greece Approves Welfare Cuts for 2nd Bailout (Bloomberg)
- Irish Minister Pushes to Cut Bail-Out Cost (FT)
- China to Support Tech Sectors (China Daily)
- Spanish Bond Yields Fall in Debt Auction After ECB (Reuters)
- China to Expand Cross-Border RMB Businesses (China Daily)
Every year in February, the Treasury department releases its adjustment to foreign purchases of Treasury bond holdings as of the previous June (with revised and overriding estimates for all the intervening months in the interim, as well as previous monthly forecasts). It did that earlier today. And while many may have been expecting the revision to show that contrary to Zero Hedge claims China has in fact been building up its Treasury stake (following the now traditional transfer of UK purchases to China), the reality is that not only has China indeed been dumping US exposure (first reported by us previously when we observed the plunge in holdings in the Fed's custodial account), selling over $100 billion in Treasurys in December alone (bringing its total to $1152 billion, and down 12% from its June total of $1307 billion) but that probably far more curiously, the UK is no longer a shadow buyer of Chinese bond accumulation and instead has become a secret accumulator of Russian holdings.
Earlier today, when forecasting the Chicago PMI, we warned to "expect another massive beat courtesy of consumers confident that they can have Apple apps, if not so much food, since they still don't pay their mortgages." Sure enough, the economic data is now straight out of China, with the Chicago PMI not only trouncing expectations, printing at 64, on consensus of 61 (the highest since last April when the peak of the liquidity bubble popped and the stock market rolled over), but, wait for it, the Employment index came at 64.2, up from 54.7, which was the highest employment print since April 1984! At this point it is no longer worth commenting on economic data, as between this, the NAR, the consumer confidence, it was all become farce of a blur. we now expect February unemployment to print negative as the labor participation rate slides to 50%, and seasonal adjustments and birth/date fixtures account for 5 million "additions" to jobs. One thing that is sure. There will be no more easing for a looooooooong time. Kiss any hope of more trillions in central bank liquidity goodbye.
- Euro-Area Banks Tap ECB for Record Amount of Three-Year Cash (Bloomberg)
- Papademos Gets Backing for $4.3B of Cuts (Bloomberg)
- China February Bank Lending Remains Weak (Reuters)
- Romney Regains Momentum (WSJ)
- Shanghai Raises Minimum Wage 13% as China Seeks to Boost Demand (Bloomberg)
- Fiscal Stability Key To Economic Competitiveness - SNB's Jordan (WSJ)
- Bank's Tucker Says Cannot Relax Bank Requirements (Reuters)
- Life as a Landlord (NYT)
...European banks are three times larger than the European sovereigns, the ECB is not the Federal Reserve Bank of the United States, the leading economy in Europe, Germany, is 22% of the economy of America, that there are ever and always consequences for providing free money, that Europe is in a recession and it will be much deeper than thought by many in my view, that the demanded austerity measures are unquestionably worsening the recession and increasing unemployment, that nations become much more self-centered when their economies are contracting and that the more protracted all of this is; the more pronounced Newton’s reaction will be when the pendulum reverses course.
Last week we joked that for every downtick in the Obama popularity rating (due to record February gas prices) we would see at least 1 million barrels released from the Strategic Petroleum Reserve. Sure enough, humor promptly becomes reality in United Banana States of Amerika:
- CHU SAYS U.S. WEIGHS USING STRATEGIC PETROLEUM RESERVE
- CHU SAYS U.S. IS `VERY CONCERNED' ABOUT EVENTS IN IRAN
So following the Transcanada fiasco, China is now doubly delighted that it will be able to buy even more cheap crude at America's expense. And yet one wonders why the SPR release: after all didn't we learn just today that Americans have not been more confident in years?
Much has been spun in recent weeks to indicate that as a result of collapsing trade, Iran's economy is in shambles and that the financial embargo hoisted upon the country by the insolvent, pardon, developed world is working. We had a totally different perspective on things "A Very Different Take On The "Iran Barters Gold For Food" Story" in which we essentially said that Iran, with the complicity of major trading partners like China, India and Russia is preparing to phase out the petrodollar: a move which would be impossible if key bilateral trade partners would not agree to it. Gradually it appears this is increasingly the case following a just released Reuters report that "Iran will take payment from its trading partners in gold instead of dollars, the Iranian state news agency IRNA quoted the central bank governor as saying on Tuesday."
It had been a quiet week in terms of geopolitical developments out of Middle East. Too quiet, well aside for that whole US escalating once again bit, and forcing Iran to eventually go over the edge. And while the role of the US and Iran has been extensively digested in the past few weeks, it is Iran that has remained in the shadows recently. No longer: as Al Arabiya reports, "Israeli officials say they won’t warn the U.S. if they decide to launch a pre-emptive strike against Iranian nuclear facilities, according to one U.S. intelligence official familiar with the discussions. The pronouncement, delivered in a series of private, top-level conversations, sets a tense tone ahead of meetings in the coming days at the White House and Capitol Hill. Israeli Prime Minister Benjamin Netanyahu and Defense Minister Ehud Barak delivered the message to a series of top-level U.S. visitors to the country, including the chairman of the Joint Chiefs of Staff, the White House national security adviser and the director of national intelligence, and top U.S. lawmakers, all trying to close the trust gap between Israel and the U.S. over how to deal with Iran's nuclear ambitions, according to The Associated Press." Needless to say, the thoroughly effete and comical US foreign policy has no response to follow up queries: "The White House did not respond to requests for comment, and the Pentagon and Office of Director of National Intelligence declined to comment, as did the Israeli Embassy." And while there may be no comments here, look for more warnings about Israeli citizens being targetted by deranged Iranian around the world. Because when all else fails, fearmonger. Next up: the Status Quo will be telling the world how not attacking Iran would be tantamount to global destruction. The only trade off - will the spike in crude to $150 outdo the surge in Obama's popularity rating as the Nobel Peace Prize winner puts his name in the hat for a nomination in the Nobel War Prize category as well.
Could Sweden or Finland be the scene of the next European financial crisis? It is actually far likelier than most people realize. While the world has been laser-focused on the woes of the heavily-indebted PIIGS nations for the last couple of years, property markets in Northern and Western European countries have been bubbling up to dizzying new heights in a repeat performance of the very property bubbles that caused the global financial crisis in the first place. Nordic and Western European countries such as Norway and Switzerland have attracted strong investment inflows due to their perceived economic safe-haven statuses, serving to further inflate these countries’ preexisting property bubbles that had expanded from the mid-1990s until 2008. With their overheated economies and ballooning property bubbles, today’s safe-haven European countries may very well be tomorrow’s Greeces and Italys.
With an economy of just $3.2Tn versus the United States $14.3Tn Germany is trying to prop up a Eurozone that is more than one trillion dollars bigger than America. They just do not have the resources for the task they are undertaking and I predict serious consequences, eventually, from their efforts. Germany is “best of class” and will be the last to go but they cannot evade the European recession in the end and I think it is only a matter of time and unfortunate decisions before the austerity demands made on so many will wind their way back home to those who made the demands. They used a timeline that was much too short for the job at hand and payment will eventually be forced upon them. They obviously get the joke where Eurobonds and other ploys of this nature average the economies of Europe and the standards of living over some period of time so that Germany, in the end, will suffer most as they have the furthest to fall. They have approached the G-20, China, the emerging market countries and all polite responses to the side; the results have been about zip. The Germans are running out of both time and money and Franz is squirming in the beer hall.
The IMF data on central bank demand in January showed that Sweden raised its gold reserves by 18.3 metric tons to 144 tons in January. The data on the International Monetary Fund’s website was gold bullish showing continued demand for gold by central banks internationally. Belarus added 5 tons to reserves, Kazakhstan raised reserves by 7.6 tons and Turkey increased gold reserves by 4.1 tons. They were two quite odd minor reductions in gold reserves. Mexico reduced bullion reserves by 0.1 ton and Tajikistan cut them by 0.3 ton, according to the IMF. However soon after the increase in Sweden’s gold reserves was reported by Bloomberg, Sweden’s central bank gold reserves contradicted the IMF data and denied that they had increased their reserves. Joanna Gerwin, acting head of communication for the Riksbank, told Bloomberg that Swedish gold reserves were unchanged at 125.7 metric tons in January. Officials at the IMF’s office in Paris said nobody in Europe was able to comment. Alistair Thomson, a spokesman for the IMF in Washington, didn’t immediately reply to a voicemail and e-mail from Bloomberg outside normal business hours. Interestingly, the Riksbank sold 36.6 tons under the Central Bank Gold Agreement (CBGA) from 2007-2009. An increase in reserves of 18.3 tonnes is exactly half of the amount sold and would mean that the Riksbank had bought back half of the gold sold from 2007 to 2009.
- Germany Crisis Role in Focus After G-20 Rebuff (Bloomberg)
- G20 to Europe: Show us the money (Reuters)
- Draghi’s Unlimited Loans Are No Panacea (Bloomberg)
- Geithner says Europe has lowered risks of "catastrophe" (Reuters)
- Gone in 22 Seconds (WSJ)
- Gillard beats Rudd to stay Australian PM (FT)
- Brazil Will Continue Reducing Interest Rates, Tombini Says (Bloomberg)
- China to Have ‘Soft Landing’ Soon: Zoellick (Bloomberg)
- China To Be Largest Economy Before 2030: World Bank (Reuters)
- Obama pressed to open emergency oil stocks (FT)
Paging Paul Krugman ... Paging Professor Krugman to the White Courtesy Telephone ...
Earlier today, Wikileaks made its latest startling release on Twitter, telling the media world to standby for a 'major announcement'. Alas, in keeping with the recent tradition from Wikileaks, the "release" was a dud and is merely the collected dump of all the emails previously hacked from Stratfor by Anonymous, as was noted here previously. Alas a quick perusal through the emails so far reveals absolutely nothing exciting, except for the communiques of a paid intelligence provider, which may at times have had a few delusions of grandure and a mistaken and rather overblown sense of self-importance (hardly unique). Yet one exchange that is rather interesting is the following email thread from 2009 which goes from discussing how the billionaires behind ACORN have lost all respect for Obama and Biden ("The billionaire (who also funds ACORN) is greatly disappointed over Obama's "weakness and wimpyness" towards China... She believes Biden is weasel and Obama is a pussy... The liberal factions in DC think Obama is being a pussy."), views on Rahm Emanuel ("I don't disagree that Biden is a weasel. I think Emanuel is emasculating Obama by selling him on clever Clintonesque tactics"), views on how Obama may get back into the thick of things: ("Obama needs to get in a fight and do something really mean and unfair to the right."), on Obama and the banks: ("he could also tell the banks to go screw themselves.") and from there going to analyzing the GOP field: ("The GOP folks I talk to are pushing Jeb Bush. I think that is a mistake. Who else is out there?") and culminating with the GOP frontrunning Mitt Romney - "Romney can't make it. Mormons are viewed as Voo Doo." Much more in the full email thread inside.