"Mr. Jain created an environment by the physical and functional restructuring of the business GFFX division in the year 2005, involving also a change in the seating order of the trading floor in London which he initiated in which conflicts of interest between traders and submitters arose or were strengthened. There is suspicion that Mr. Jain might have knowingly made incorrect statements in his IBOR related Interview with the Deutsche Bundesbank."
You might be tempted to suspect that the inevitable unwind of a completely unsustainable margin mania is to blame for the brutal selling that has cost Chinese shares some $3.5 trillion in market value over the last three weeks. But you’d be wrong, according to several Chinese newspapers.
Germany’s financial regulator says departing Deutsche Bank co-CEO Anshu Jain may have lied to the Bundesbank about LIBOR manipulation when he apparently denied having any knowledge of rumors that the fixes may have been fixed (so to speak) even as his inbox told a different story.
Chaos reigns, with contradictory headlines pushing and pulling futures in any one direction, only for the next headline to undo the previous one. And only headline scanning frontrunning algos have any chance of trading any of this...
With a DoJ probe having predictably gone nowhere, a group of pensioners and retirement funds are suing Wall Street and Markit for colluding to monopolize the CDS market. Amusingly, Citadel has been subpoenaed to discuss how it was shut out of creating a CDS trading platform by the "oligopolistic" activities of TBTF banks, even as the firm looks set to dominate the market for IR swaps.
Greek 10Y yields are breaking back above 13%, bonds ar trading at 50 cents on the dollar, Greek stocks are near multi-decade lows, and Greek bank bonds have collapsed amid the ever-more-likely Grexit (or at least redenomination amid capital controls). But, there are some very smart chaps who must know something Tsipras, Merkel, and the rest of the world does not... because they are spending "Other People's Money" to buy the dip in Greek stocks and bonds. From Allianz and PIMCO (the world's lagest Greek bondholder ex-ECB) to Putnam and Wilbur Ross, it seems more than a few American investors will be impacted should Greece really implode.
Back in October, following the shocking news that after building Pimco from the ground up, Bill Gross would depart the world's then biggest bond fund following internal infighting, there were concerns that as a result of a surge in redemptions and liquidation sales at the Gross-controlled Total Return Fund, the already illiquid bond market would suffer and potentially go bidless across various CUSIPs in order to extract the best price from the forced seller. This did not happen despite an unprecedented surge in redemptions which has seen PIMCO's AUM tumble by 60% from its peak holdings of $293 billion in April 2013. Why not?
It has been a mostly quiet overnight session with Europe solidly green on another bout of Greek hope even as Bundesbank's Weidmann warned that Greek insolvency risks are rising and Greece reporting that its unemployment rose once more from 26.1% to 26.6% in Q1, in which we got two more rate cuts by New Zealand (which sent the Kiwi crashing the most since 2011) and South Korea (the Won initially dipped only to rebound) but China stole the stage with its latest report on retail sales, industrial production, and fixed investment all of which showed a modest bounce from multi-year lows suggesting the PBOC's attempts to shock the economy into growth may be starting to work (which is bad news for the market).
If it is indeed deja vu, all over again, look for bond yields to tumble over the next 6 months.
- Pressing for Greek concessions, Merkel and Hollande keep Tsipras waiting (Reuters)
- Treasuries Extend Slump as Pimco Dumps Two-Thirds of Holdings (BBG)
- U.S. prepares plans for more troops, new base in Iraq: officials (Reuters)
- Texas policeman resigns after video shows him toppling teen (Reuters)
- Kuroda Says Hard to See Yen Dropping More, Spurring Surge (BBG)
- Tech Startups Woo Investors With Unconventional Financial Terms — but Do Numbers Add Up? (WSJ)
- Putin is a 'bully', U.S. needs to respond resolutely: Jeb Bush (Reuters)
After a Chinese session which following the MSCI failure to include Chinese stocks in its EM index, if only for the time being, was largely a dud with Shanghai stocks actually dropping by 0.1% after a late day selloff, eyes turned to Europe, which once again did not disappoint and where the bond rout continued apace, with the 10Y Bund yield spiking just after the European open, and rising above 1.05%, the widest level since September 19, before recouping some losses and trading just around 1.00% at last check.
- Europe shares set for worst week of 2015 (Reuters)
- Jobs Report Not Likely to Trigger June Rate Hike (Hilsenrath)
- U.S. jobs market seen firming despite lackluster growth (Reuters)
- Gross Says Bond Rout Scary as Hell Even Without Bear Market (BBG)
- Apple Is the New Pimco, and Tim Cook Is the New King of Bonds (BBG), which ZH said in 2013
- In 'year of Apple Pay', many top retailers remain skeptical (Reuters)
- OPEC Nations Signal Few Prospects for Oil-Production Change (BBG)
- China regulator says amending rules on margin trading, short selling (Reuters)