Turkey is rapidly descending into chaos on all fronts. With the lira in free fall and the politically-motivated violence escalating, one prominent lawmaker is calling for martial law ahead of new elections which could plunge the country further into civil war.
The Next Leg Of The Commodity Carnage: Attention Shifts To Traders - Glencore Crashes, Noble Default Risk SoarsSubmitted by Tyler Durden on 08/19/2015 16:54 -0500
One month ago we asked: "Which will be first: Trafigura, Mercuria or Glencore." Today we got our answer.
After trading at what we postulated was the rough floor for the CDS at 150 bps for over a year, in the past month Glencore CDS have exploded higher, and at last check was trading 315 bps wide, about 150 wider from the March 2014 levels with the likelihood of a major gap wider when the rating agencies downgrade the company from investment grade to junk, which in turn would trigger an unknown amount of cascading collateral calls and an accelerated liquidity depletion, which would then further hammer Glencore's bonds, and as a result, send its default risk, and CDS, surging.
Noble Group is Asia’s largest commodities trader. According to GMT research, Noble Group took what they have estimated as between $4 to $6 billions worth of fair value gains on asset valuation over the last 5 years. Since we are exactly one week after their Q2 results, in theory Standard and Poor’s had time to do their homework. We expect a big announcement of S&P on Noble Group later this week. UK insurers (who have also a foot in the cargo insurance market) have dumped Noble Group bonds overnight.
How did Tepper do in Q2? In a word: lousy. In another word: the man who recently was on CNBC pitching a 20x P/E multiple as the new normal, may have just called the market top.
"It’s not how I want my epitaph to read, but it’s not a shameful thing helping people finance themselves. It’s not a bad thing."
Goldman Is Officially A Bank: Bailed Out Hedge Fund Will Allow Muppets To Give Their Savings To Lloyd BlankfeinSubmitted by Tyler Durden on 08/13/2015 15:34 -0500
The last time former Goldman employee and then Treasury Secretary Hank Paulson bailed out the hedge fund known as Goldman Sachs, and its closest peers (but not its biggest fixed income competitor Lehman Brothers of course), even the traditionally confused American public pushed back on the structure of the bailout which converted the Goldman holding company into an FDIC-insured company, which led many to ask: just where are Goldman's deposits? The answer, of course, was nowhere, so perhaps in anticipation of the logical pushback against its second, upcoming bailout which would see the taxpayer-backed depositor insurance company once again provide trillions in cash to banks as well as the glorified hedge funds such as Goldman, the firm moments ago decided to do something it has never done before: become an actual bank with checking accounts and such.
Despite claiming yesterday's devaluation was a "one-off", The PBOC has devalued the Yuan Fix dramatically for the 2nd day in a row - now 22 handles weaker than Monday's Fix. Offshore Yuan is trading at 4 year lows against the USD. The carnage from this dramatic shift is just beginning as global equity markets (US futures to China cash) are tumbling, US Treasury bond yields are crashing, gold is up, China credit risk is at 2 year highs, and China implied vol has exploded to 4 year highs. Ironically, China's government mouthpeiece Xinhua explains "China is not waging a currency war; merely fixing a discrepancy."
Printing-press money is fertile ground for expanding world crisis. Crisis is excellent cover for national and international chicanery. How can anyone who is paying attention not recognize these tremors for what they are?
With the economy imploding, currency collapsing, and credit risk soaring, it is perhaps no surprise that just under a year since she was re-elected, Brazil's President Dilma Rousseff is now Brazil's most unpopular democratically elected president since a military dictatorship ended in 1985, with an approval rating of just 8%. In a recent poll, 71% said they disapprove of the way Rousseff is doing her job... and two-thirds would like to see her impeached.
"There's a saying, 'if there's peace, it will start from Cizre, and if there's war, it will start from here as well.' And we can say we have a civil war in Turkey."
Things are getting downright scary in emerging markets as a "triple unwind" in credit, Chinese leverage, and loose US monetary policy wreaks havoc across the space. Between a prolonged slump in commodity prices and a structural shift towards weaker global trade, the situation could worsen materially going forward.
Aside from the socialist utopias of Greece and Venezuela, who else is on the default chopping block? The CDS heatmap below lays out all the countries which according to the market, are most likely to tell their creditors the money is gone... it's all gone.
Today, following another spike in negative news, it appears that the credit markets have finally woken up, and a quick look at Brazil's CDS shows that following today's spike to 314bps, the country's implied default risk is back to levels last seen in April of 2009! We expect more credit market participants to notice the depressionary developments in brazil, and as the country's CDS continue to blow out, many will start asking themselves: is Brazil the next Argentina?