- The ice breaks; fiscal talks set (The Hill); Ryan steps up to shape a deal (The Hill), as predicted here yesterday
- Republicans consider short-term U.S. debt ceiling increase (Reuters)
- Shutdown Standoff Shows Signs of a Thaw (WSJ)
- JPMorgan Clients in Cash as Schwab’s Options Hedge Default (BBG)
- Mitch McConnell, Senate GOP search for way out (Politico)
- Meredith Whitney Winds Down Brokerage Unit After Setting Up Fund (BBG)
- Washington Budget Chaos Keeps Fed Rates Low for Longer (BBG)
- Chinese Premier Outlines US Debt Concerns (FT)
- Saudis brace for 'nightmare' of U.S.-Iran rapprochement (Reuters)
- Obama Urges Action on Yellen’s Fed Nomination (Reuters)
- Libyan Prime Minister Ali Zidan Freed After Kidnap (WSJ)
- Troops Forage for Food While Golfers Play On in Shutdown (BBG)
- Police suspect dental hygienist Miriam Carey was behind the wheel of Capitol chase (WaPo)
- Italian Senate committee starts Berlusconi expulsion process (Reuters)
- Swiss Regulator Probing Banks Over Foreign-Exchange Manipulation (WSJ)
- GOP Begins Search for Broad Deal on Budget (WSJ)
- No Jobs Report Means Economists Chew on Football Instead of Data (BBG)
- U.S. default seems unthinkable but investors have options (Reuters)
- Citigroup fined $30 million after analyst sent report to SAC, others (Reuters)
- FBI Snags Silk Road Boss With Own Methods (BBG)
- Recession Warnings Found in Asset Price Falls (BBG)
- Bank of Japan warns of severe global impact from U.S. fiscal standoff (Reuters)
One thing is now abundantly clear: 2013 is now one big scratch for bankers who were expecting that this year bonuses would finally pick up from the prior several years mediocre performance and catch up to the record days of 2009 (just after the biggest wholesale bank bailout in history). The WSJ summarizes the situation best: "I haven't seen morale this bad since the Titanic," said Richard Stein, a senior recruiter at Caldwell Partners CWL.T -3.41% who specializes in financial services. And if bankers are not happy, nobody else will be (here's looking at you dear perpetual banker bailout ATM known as US taxpayers).
Despite the president's tongue-in-cheek warning to Wall Street that this time it's different, and it that "it should be concerned", that same Wall Street continues to roundly mock his attempts to talk it lower on the third day of America's "shutdown", knowing very well that if things ever turn bad, Mr. Chairman, aka the S&P chief risk officer, will get to work, and rescue everyone from that pesky thing known as losses. Whether the offsetting optimism was driven by made up China non-manufacturing PMI rising from 53.9 to 55.4, the highest in six months, or just as made up non-core European PMI data which also beat expectations despite Germany Services PMI continuing to telegraph a weakness, dropping from 54.4 to 53.7, is unknown and once again not important. So while futures are modestly lower if only until such time as the daily 3:58pm VIX slam takes place just before market close, do not expect any major moves in stocks until either the GOP finally folds and lets Obama have his way, or bundles all shutdown legislation into the debt ceiling negotiation, and careens the US right into the debt ceiling deadline on October 17 without any legislation in place.
If yesterday was the paradoxical government shutdown "relief rally" pushed higher by a last minute VIX smashing ramp, today reality is starting to set in and global stocks and US futures are set to open lower. The FTSE MIB remains the only European bourse to trade in positive territory in today’s session, having touched upon 2 year highs as it is expected the political tumult that threatened to cause a collapse of the Italian government will be resolved today even as the latest news indicate Berlusconi's PDL will support the Bunga godfather after all. Other European equities have failed to benefit from this as market participants remain cautious ahead of the ECB rate decision today when Draghi may or may not (most likely) announce a new LTRO.
Breaking Bad With Big Bank CEOs: How Bad Bank CEOs Use the Bystander Effect to Dupe Good People Into Working For ThemSubmitted by smartknowledgeu on 09/30/2013 05:09 -0500
This may become the most important article I’ve ever written. But whether it becomes that article or dwells in anonymity is up to you, the reader.
Frequent readers will recall that in the past, on several occasions, we expected that MBIA would rise due to two key catalysts: a massive short interest and the expectation that a BAC settlement would provide the company with much needed liquidity. That thesis played out earlier this year resulting in a stock price surge that also happened to be the company's 52 week high. However, now that we have moved away from the technicals and litigation catalysts, and looking purely at the fundamentals, it appears that MBIA has a new problem. One involving Zombies. These freshly-surfacing problems stem from a particular pair of Zombie CLO’s – Zombie-I and Zombie-II (along with Zombie-III, illiquid/black box middle-market CLO’s). While information is difficult to gather, we have heard that MBIA would be lucky to recover much more than $400 million from the underlying insured Zombie assets over the next three years, which would leave them with a nearly $600 million loss on their $1 billion of exposure which would materially and adversely impact the company's liquidity. And as it may take them a while to liquidate assets in a sure-to-be contentious intercreditor fight – their very own World War Z – MBIA may well have to part with the vast majority of the $1 billion in cash, before gathering some of the potential recovery.
- The new normal name of a broken market: glitches - NYSE, Nasdaq Consider Cooperating to Address Glitches (WSJ)
- Early Thursday Humor: Abe Tells Wall Street Japan’s Economy Is Exceptionally Good (BBG)
- Rising Rates Seen Squeezing Swaps Income at Biggest Banks (BBG)
- JPMorgan Mortgage Talks Said to Discuss $11 Billion Deal (BBG)
- Can't make this up: HFT firm "finds" Fed did not leak data early to benefit HFT firms (FT)
- Hertz Cuts Full-Year Forecast on Weak U.S. Airport Rentals (BBG)
- Greece does not need third bailout, seeks debt 'reprofiling' - deputy PM (Reuters) - right, it needs a fourth and fifth
- Hezbollah gambles all in Syria (Reuters)
- Twitter Adds J.P. Morgan and Morgan Stanley as Bankers on IPO (WSJ)
- Messi in Court Shows Tax Collectors Set to Pursue Star Athletes (BBG)
China Beige Book Exposes Government Lies: "Conventional Wisdom Of Economic Expansion In China Seriously Flawed"Submitted by Tyler Durden on 09/25/2013 06:58 -0500
There are facts; then there are completely fabricated, made up numbers. And then there is Chinese "data." After having been exposed in the past several years countless times on these pages alone as being absolute manipulated propaganda hogwash, it is amazing that anyone, anywhere still believes anything to come out of the official Beijing mouthpiece, which merely adjusts a few variable cells in the big central planning goalseeking excel spreadsheet and reports the answer. Yet the recent myth of a China "rebound" is one of the factors why stocks recently hit fresh all time highs: forget all that stuff about a CNY1 trillion deleveraging (yes, China's credit bubble is still the biggest in the world) - all that matters is made up garbage. Well, it may be more difficult this time. As Bloomberg reports, a "Beige Book" survey of the Chinese economy conducted in late August showed that "China’s economy slowed this quarter as growth in manufacturing and transportation weakened in contrast with official signs of an expansion pickup, a private survey showed." Surprise: China was lying again.
- Iran Icebreaker Set at U.N. (WSJ)
- Chrysler Feud Triggers IPO Filing (WSJ)
- JPMorgan Chase, 12 More Banks Said to Be Sued Over Libor (BBG)
- Regulator sues Morgan Stanley, eight others over faulty securities (Reuters)
- Monte Paschi Seen Boosting Cost Goals to Meet EU Demands (BBG)
- Here we go again - "not enough funds": CFTC chair Gary Gensler warns on fund cuts to police derivatives (FT)
- Congress Fuels Private Jails Detaining 34,000 Immigrants (BBG)
- KKR, Sycamore looking to buy Jones Group this week (NYPost) - take with lots of salt
- Fiat rethinks alliance with Chrysler after IPO filing (Reuters)
- Young Invincibles Caught in Crossfire Over Obamacare Cost (BBG)
- Mayfair Office Squeeze Spawns New London Real Estate Hubs (BBG)
Everything was proceeding according to central-plan with a gradual rise in risk and a decline in the USD until 4 am Eastern, when the German IFO Business Climate data was released and missed across the board (107.7 vs Exp. 108.0; Current assessment 111.4 vs Exp. 112.5; Expectations 104.2 Exp.104.0), reminding everyone now that Merkel is cemented for the near future, the immediate prerogative for Europe is to get the EUR lower, one way or another. A returning bid to the dollar also has pushed 10 Year yields under 2.70%, while once again sending various EM currencies sliding, and bringing back cross asset volatility to a world whose Sharpe ratio over the past several months has plummeted into negative territory. Increasing concerns about a government shutdown (misplaced) will likely prevent a solid bid from developing under markets.
- Triumph Confirms 'Era of Merkelism' (Spiegel)
- Merkel must reach out to leftist rivals after poll triumph (Reuters)
- Norwegian Air says both its Dreamliners hit by technical issues (Reuters)
- Chinese court gives Bo Xilai life sentence (CBS)
- Social Dems Deflect Talk of Merkel Alliance (Spiegel)
- Blasts shake Nairobi mall, smoke pours from building (Reuters)
- Open-Government Laws Fuel Hedge-Fund Profits (WSJ)
- Forbes Calls Goldman CEO Holier Than Mother Teresa (Matt Taibbi)
- BlackBerry move away from consumers unlikely to stem decline (Reuters)
- And another Greek strike: Greek teachers, civil servants to strike against layoffs (Reuters)
Whether we want to admit it or not, we find ourselves in pre-revolutionary times at the moment. This doesn’t mean we predict violent upheavals everywhere followed by chaos and bloodshed, it means that the current paradigm is no longer sustainable because it is not longer working. More and more people now recognize this. In case you needed anymore insight into the complete and total insanity of the “elite” Central Planners driving the U.S. economy off a cliff, we have decided to highlight a couple of articles explaining the rapid reflation of two important subprime markets: Homes and Autos. Clearly the only lesson learned from the 2008 crisis was that connected oligarchs can steal all they want with total impunity. There’s only one way this ends. With a complete and total collapse and then a massive paradigm shift. We're quite hopeful our next system can be far better than this one.
- JPMorgan Guilty Admission a Win for SEC’s Policy Shift (BBG)
- Pricing Glitch Afflicts Rollout of Online Health Exchanges (WSJ)
- This will end well: Japan LDP Considers Draft Bill to Put Government in Control of Fukushima Cleanup (WSJ)
- How a German tech giant trims its U.S. tax bill (Reuters)
- Despite Merkel's Popularity, Angst Creeps In (WSJ)
- Hank Paulson warns of regulatory conflict (FT)
- Rajan Surprises With India Rate Rise to Quell Inflation (BBG)
- Apple Begins Selling New iPhones (WSJ)
- Pope Says Church Should Stop Obsessing Over Gays, Abortion (BBG)
A week ago when we presented the missing link in the "all cash" housing recovery, namely laundered, embezzled or simply stolen off-shore sourced cash parked in the US real estate market which takes advantage of the NAR's generous anti-money laundering provision exemption, we asked what we thought would be a rhetorical question: "just how far will Preet Bharara take this, and comparable such future actions?" Turns out the answer is quite a bit farther, and higher. And not only that, but instead of just targeting residential real estate, the US attorney in Manhattan, is now focusing on commercial real estate as well. As CNN reported moments ago, the US government has seized an iconic midtown Manhattan skyscraper, one where none other than Ivan Boesky plotted his insider trading schemes in the 1980s, that prosecutors claim is secretly owned and controlled by the Iranian government. The skyscraper in question is 650 Fifth Avenue, also known as the Piaget building.