Citigroup

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Frontrunning: January 6





  • Average 10-year yield of U.S., Japan and Germany dropped below 1% for the first time ever: Free Money in Bond Markets Shows Global Economy Still Struggling (BBG)
  • Brent falls below $52 as oil hits new five and a half year lows (Reuters)
  • China Fast-Tracks $1 Trillion in Projects to Spur Growth (BBG)
  • Saudi Arabia Raises Price of Main Oil Grade for Asian Buyers (BBG)
  • Oilfield Writedowns Loom as Crude Slump Guts Drilling Values (BBG)
  • Biggest Oil-Rig Drop Since 2009 Spells Tough Year Ahead (BBG)
  • CIA says its inspector general is resigning at end of month (Reuters)
  • Pipeline IPOs Climb on Demand for Returns Immune to Oil (BBG)
  • Natural Gas No Savior for Investors Seeking Oil Refuge (BBG)
  • Euro zone economy ended 2014 in poor shape (Reuters)
 
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Is Citi The Next AIG?





Something stunning and unexpected took place in the third quarter: Citigroup, or rather its FDIC-insured Citibank National Association entity, just surpassed JPM and is now the biggest single holder of total derivatives in the US. Furthermore, as the charts below show, while every other bank was derisking its balance sheet, Citi not only increased its total derivative holdings by $1 trillion in Q2, but by a whopping, and perhaps even record, $9 trillion in the just concluded third quarter to $70.2 trillion!

 
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Frontrunning: January 5





  • Economists sceptical ECB bond-buying would revive eurozone (FT)
  • Indonesia naval captain says may have located missing plane's tail section (Reuters)
  • Oil hits five and a half year low under $55 (Reuters)
  • Samaras Warns of Euro Exit Risk as Greek Campaign Starts (BBG)
  • The death of active investing: Vanguard Sets Record Funds Inflow (WSJ) - thank you Fed
  • Oil Downturn Has Many Wondering How Lone Star State Will Weather a Bust (WSJ)
  • Hollande Says France Must Exceed 1% Economic Growth to Spur Jobs (BBG)
 
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Knowing It Will End Badly And Turning A Blind Eye





The problem is inherent in the knowing “that it will end badly” and yet turning a blind eye and making money anyway. For that’s what a good Wall Street aficionado does after all, right? I mean, who cares about arguing about real economics or fundamentals. Who cares – I’m up 8%!! As if that’s all that now matters. For if that’s all that matters why don’t we embrace crony capitalism, embrace stagnant wages, embrace the 99% vs the 1% as that’s the best it’ll ever be. Who cares, as long as we’re getting ours. This disgusting bloated behemoth of an adulterated Central Bank infused market is now getting downright scarier.

 
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Frontrunning: December 26





  • Japan inflation slows to 14 month low, output slips (Reuters)
  • Russia says ruble crisis over as reserves dive, inflation climbs (Reuters)
  • Ruble rebounds sharply from lows as exporters sell dollars (Reuters)
  • Xbox, PlayStation Networks Attacked, Hackers Claim Credit (BBG)
  • Sony’s ‘The Interview’ Packs Theaters Without Violence (BBG)
  • Oil edges above $60 as Libyan output slumps (Reuters)
  • Shoppers’ Late Rush Gives Hope to Retailers (WSJ)
  • Japan says close to deal with South Korea and U.S. on North Korea defense (Reuters)
  • NYPD Arrests Seven for Threats After Slayings of Officers (BBG)
 
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Frontrunning: December 24





  • Russia says NATO turning Ukraine into 'frontline of confrontation' (Reuters)
  • Oil Drillers Under Pressure to Scrap Rigs to Cope With Downturn (BBG)
  • Demonstrators Defy NYC Mayor's Call to Suspend Police Protests (BBG)
  • U.S. to send more private contractors to Iraq (Reuters)
  • ISIS Shoots Down Jet From U.S.-Led Coalition, Syrian Monitors Say (NYT)
  • Russians Race to Secure Mortgages Before Costs Spiral (BBG)
  • Abe Brings in Former Soldier Nakatani as Defense Minister (BBG)
  • At Coke, Newest Flavor Is Austerity (WSJ)
  • Fear and retribution in Xi's corruption purge (Reuters)
  • UBS Raises Flag on China’s $1 Trillion Overseas Debt Pile (BBG)
 
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The Greater Abomination: Washington's Lies About TARP's "Success" Are Worse Than The Original Bailouts, Part I





The mainstream economics narrative is so far down the monetary rabbit hole that the blinding clarity of the chart below has no chance whatsoever of seeing the light of day. That’s because it dramatizes the real truth regarding all the Fed gibberish about “accommodation” and “stimulus”. Namely, that what lies beneath its “extraordinary measures”, such as ZIRP, QE, wealth effects and the rest of the litany, is a central banking regime that systematically destroy savers. Period. TARP wasn’t “repaid” with a profit. It was simply perpetuated and  morphed into a new form of destructive state subvention and malinvestment.

 
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Bank Revenues Plummet 17% In October And November According To Citi





It appears that the Q4 earnings season "bloodbath" predicted by harbinger Jefferies is right on track. According to Citigroup, Q4 is shaping up to be nothing short of a disaster for bank earnings. To wit: "Primary revenues decreased 17% yoy over Oct-Nov, notably impacted by weaker lending trends, per Dealogic industry data. Issuance revenues also declined while advisory revenues increased slightly. Loans revenues fell 61% yoy over Oct-Nov with leveraged finance particularly lower, given weaker market conditions [ZH: uhm, market hit all time highs in both October and Novemer?!]. By contrast, DCM revenues increased 11% over the same period, primarily driven by higher IG issuance (+27% yoy), partially offset by lower HY, down 12%." Which is odd: remember how everyone said banks are being punished for low volatility? Apparently the only thing worse for banks than zero/low vol was... high vol.

 
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Frontrunning: December 22





  • Police officers' slaying raises pressure on New York mayor (Reuters)
  • People Call for Cooling of Racial Tensions After Murder of NYPD Officers (BBG)
  • The $6.3 Trillion Frenzy That Vanquished Treasury Bears (BBG)
  • China Investigates Possible Stock-Price Manipulation (WSJ)
  • Citigroup Was Wary of Metals-Backed Loans (WSJ)
  • UPS Turns Parking Lots Into Sorting Centers to Add Speed (BBG)
  • U.S. Move to Normalize Cuba Ties Boosts Firms’ Asset Claims (WSJ)
  • Meredith Whitney’s Fund Said to Drop 11% as Office Put on Market (BBG)
  • Railcar Bottleneck Looms for Oil (WSJ)
 
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2014 Year In Review (Part 2): Will 2015 Be The Year It All Comes Tumbling Down?





Despite the authorities' best efforts to keep everything orderly, we know how this global Game of Geopolitical Tetris ends: "Players lose a typical game of Tetris when they can no longer keep up with the increasing speed, and the Tetriminos stack up to the top of the playing field. This is commonly referred to as topping out."

"I’m tired of being outraged!"

 
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2014 Year In Review (Part 1): The Final Throes Of A Geopolitical Game Of Tetris





Every year, David Collum writes a detailed "Year in Review" synopsis full of keen perspective and plenty of wit. This year's is no exception. "I have not seen a year in which so many risks - some truly existential - piled up so quickly. Each risk has its own, often unknown, probability of morphing into a destructive force. It feels like we’re in the final throes of a geopolitical Game of Tetris as financial and political authorities race to place the pieces correctly. But the acceleration is palpable. The proximate trigger for pain and ultimately a collapse can be small, as anyone who’s ever stepped barefoot on a Lego knows..."

 
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Frontrunning: December 19





  • Icahn, Paulson Suffer Large Losses as Energy-Related Bets Sour (WSJ)
  • Oil Investors Keep Betting Wrong on When Market Will Bottom (BBG)
  • U.S. to sell final $1.25 billion shares of Ally Financial from bailout (Reuters)
  • Ally Financial Gets Subpoena Related to Subprime Automotive Finance (WSJ)
  • Russia's parliament rushes through bill boosting banking capital (Reuters)
  • How a Memo Cost Big Banks $37 Billion (WSJ)
  • ECB considers making weaker euro zone states bear more quantitative easing risk (Reuters)
  • How the U.S. Could Retaliate Against North Korea (BBG)
 
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Frenzied Chinese Stock Buyers Soak Up So Much Liquidity, Central Bank Forced To Intervene, Prevent Seizure





China's seven-day repurchase rate, a gauge of interbank funding availability in the banking system, surged 139 basis points, to a 10-month high of 5.28% in Shanghai, the biggest since Jan. 20. The reason for the sudden cash crunch, according to Bloomberg, is that subscriptions for the biggest new share sales of the year lock up funds. Twelve initial public offerings from today through Dec. 25 will draw orders of as much as 3 trillion yuan ($483 billion), Shenyin & Wanguo Securities Co. estimated. In other words, the scramble to allocate capital into China's surest way of making money, IPOs, has led to a drying out of general liquidity in the entire market. This in turn forced the PBOC to intervene and inject short-term money loans to commercial lenders in order to prevent the kind of interbank liquidity lock up that emerged in China in June 2013 in the aftermath of the first Taper Tantrum (and which before all is said and done, will likely take place again) and which sent global capital markets around the globe reeling before China resumed its massive liquidity injections which are at the heart of China's debt-fuelled bubble in the first place.

 
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