• Sprott Money
    05/05/2016 - 06:02
    Why is a Deutsche Bank mouthpiece suggesting “negative retail deposit rates or perhaps wealth taxes”? The answer is to (supposedly) stimulate our economies.

Baseline Scenario

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The Enabler & The Lifeline: Diamond Resorts & Quorum FCU





Diamond has a good thing going with Quorum: they get access to ample credit, especially for those applicants with weaker credit profiles. From a Diamond investor's perspective, it would be a shame if anything changed. The post credit-crisis strategy of focusing on esoteric lending opportunities like VOI (as well as taxi medallions, hearing aids and fertility treatments) to generate revenues and membership has run into both a broader slowdown in the consumer credit cycle as well as more specific problems, like an increasingly worried regulator.

 
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S&P Enters The Latest European Scandal: Downgrades Poland From A- To BBB+





As so often happens, whenever there is a political spat in Europe, the rating agencies are quickly involved (thing S&P and Moody's downgrades and upgrades of Greece depending on how well the vassal nation is "behaving"), and moments ago S&P downgraded Poland from A- to BBB+ outlook negative, precisely due to Poland's new media law which has been the topic of so much consternation over the past week. In other words, S&P is now nothing more than a lackey for Brussels, threatening to send Polish yields higher if Poland does not fall in line.

 
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Denmark Hikes Rates As Draghi's "Hawkish" Ease Relieves Peg Pressure





When Mario Draghi “disappointed” markets in December by “only” cutting the depo rate by 10 bps and “merely” extending PSPP by six months while electing not to expand monthly asset purchases, the Riksbank, the Nationalbank, the Norges Bank, and the SNB all breathed heavy sighs of relief. And while we doubt the ECB is done when it comes to going "full-Krugman" (as it were), Mario Draghi’s “hawkish” ease did buy his counterparts some breathing room. Case in point: Denmark just hiked.

 
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Banco De Portugal Indicates The ECB Stress Test Was A Complete 'Sham'





The Central Bank of Portugal conveniently released their results between Christmas and New Year, when the trading desks in Europe are virtually empty...

 
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Has The Fed Ever (Accurately) Predicted A Recession?





In a recent survey not a single major central bank could provide an example of an accurate “a priori” recession forecast. The silence from the Federal Reserve, European Central Bank, BOE, BOJ and the Bank of Canada is deafening.

 
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Presenting SocGen's 5 Black Swans For 2016





November has been a banner month for black swans. From Leftist political coups in Portugal to terror attacks in Paris to downed Russian fighter jets in Syria, the market is gradually learning to expect the unexpected. In its latest Quarterly Economic Outlook, SocGen outlines five political and economic black swans that could land in 2016.

 
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Brazil's Disastrous Debt Dynamics Could "Create Contagion" For Emerging Markets, Barclays Warns





“Brazil is confronting a toxic combination of a primary budget deficit, high public debt (relative to EM countries), very high real interest rates (the Selic stands at 14.25%), sluggish trend growth, a negative commodity price shock and potential contingent liabilities for the sovereign, which together spell trouble for public debt dynamics.”

 
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Confused About What Mario Draghi Will Do Next? Here's The Official Decision Tree From His Former Employer





Now that there are "no taboos," and assuming the ECB doesn't take our advice on the '52 Mantles or the lumber, the only question is whether the central bank will pair a depo rate cut with the PSPP expansion (in whatever form it takes)....

 
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Greek Bad Debt Rises Above 50% For The First Time, ECB Admits





Today we got yet another tortured admission of just how ugly Greek balance sheets are, the ECB has admitted what we knew months ago, namely that more than  half of all Greek loans are now nonperforming, and that as much as 57% of the loans made by Piraeus Bank the bank which fared worst, are at risk with the other Greek banks not much better off.

 
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S&P Downgrades Saudi Arabia On Slumping Crude, Ballooning Fiscal Deficit





"We expect the Kingdom of Saudi Arabia's general government fiscal deficit will increase to 16% of GDP in 2015, from 1.5% in 2014, primarily reflecting the sharp drop in oil prices. Hydrocarbons account for about 80% of Saudi Arabia's fiscal revenues."

 
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What Will Mario Draghi Announce Tomorrow: Here Is What Wall Street Thinks





Tomorrow morning Mario Draghi is widely expected to if not announce an extension, or expansion, of the ECB's QE program, than to at least jawbone sufficiently, and push the EURUSD lower from its recently anchored level in the 1.10-1.20 range. But what are the specifics of Draghi's announcement: will he merely expand the monetization limit per security, as he did in early September, will he increase the universe of eligibile securities, or will he simply extend the maturity of the non-open ended QE from September 2016 to some indefinite date? The following list, courtesy of Bloomberg, summarizes what the sellside universe believes Draghi will unveil in just under 12 hours.

 
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Greece Votes: Syriza Wins But Neo-Nazis Top Among The Unemployed





Greece went to the polls on Sunday with a choice that really wasn't a choice and even as Alexis Tsipras looks set to prevail the most shocking electoral outcome is this: neo-Nazi Golden Dawn is set to come in third and garnered the most support of any party among Greece's unemployed.

 
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Greece Heads Back To The Polls: Full Sunday Election Preview





Don't look now but Greece (remember them?) is headed back to the polls on Sunday in an election that pits a watered down version of Alex Tsipras and Syriza against the conservative New Democracy. With Syriza's original vision relegated to the realm of "wishful thinking", Greeks face a choice that really is no choice at all.

 
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