- Ukraine Says Malaysian Airliner Shot Down Near Russian Border (BBG)
- Downing of airliner seen as pivotal moment in Ukraine crisis (Reuters)
- Malaysian Air Flight Took Route Avoided by Qantas, Asiana (BBG)
- Russian-Made Missile Hit Malaysia Jet, U.S. Officials Say (BBG)
- Netanyahu Orders Military to Ready Wider Gaza Incursion (BBG)
- Silvio Berlusconi Underage Sex Conviction Overturned (WSJ)
- But... but... "economic patriotism" - AbbVie to Buy Shire for $54.8 Billion as Drug Deals Surge (BBG)
- SEC targets 10 firms in high frequency trading probe - SEC document (Reuters)
- Art bubble pop: Sotheby's to Lay Off 'Modest' Number of Employees (WSJ)
- Moar Abenomics: Hermes Sales Trail Estimates as Japanese Revenue Declines (BBG)
- BRICS set up bank to counter Western hold on global finances (Reuters)
- Fed's Yellen Hedges Her View on Rates (Hilsenrath)
- China GDP Grows 7.5% in Second Quarter (WSJ)
- Get More Acquainted With Your Knees as Boeing Reworks 737 (BBG)
- Israel Warns Gazans of New Attack After Hamas Rejects Truce (WSJ)
- Israel poised for Gaza incursions after truce collapses (Reuters)
- China Housing Sales Fall in First Half of 2014 (WSJ)
- IBM to offer iPads and iPhones for business users (Reuters)
- Fed's George says strengthening economy warrants quick rate rise (Reuters)
If last week's big "Risk Off" event was the acute spike in heretofore dormant Portugese bank troubles (as a reference Banco Espirito Santo has a market cap at the close last night stood at around €2.1bn ($2.9bn), contrasting to Goldman Sachs ($78.1bn) and JP Morgan ($220.5bn)), then yesterday's acceleration in the Portuguese lender's troubles which as we reported have now spread to its holding company RioForte which is set to default, were completely ignored by the market. Today this has conveniently flipped, following a Diario Economico report that Banco Espirito Santo has the potential to raise capital from private investors. No detail were given but this news alone was enough to send the stock soaring by nearly 20% higher in early trading. Still, despite the "good", if very vague news (and RioForte is still defaulting), Bunds remained bid, supported by a good Bund auction, in part also dragged higher by Gilts, which gained upside traction after the release of the latest UK jobs report reinforced the view that there is plenty of spare capacity for the economy to absorb before the BoE enact on any rate rises. Also of note, touted domestic buying resulted in SP/GE 10y yield spread narrowing, ahead of bond auctions tomorrow.
Now that the World Cup is over, and following last week's global macro reporting slumber (aside for the Portuguese risk flaring episode of course), things pick up quite a bit in the coming week. Here are the key events.
"We’re in a world where there are very few unambiguously cheap assets...If you ask me to give you the one big bargain out there, I’m not sure there is one." But frustrating as the situation can be for investors hoping for better returns, the bigger question for the global economy is what happens next. How long will this low-return environment last? And what risks are being created that might be realized only if and when the Everything Boom ends?
As the world awaits the last day of the week and hopefully some clarity on the fate (or even state) of Portugal's Banco Espirito Santo ("BES"), which ultimately is controlled by the nebulous and unpublished accounts of the topmost HoldCo, Espirito Santo International, which in turn is merely a family investment vehicle of the Espirito Santo family as we showed this morning, moments ago BES issued two press releases whose purposes was to provide an updated org chart of the troubled financial entity, and more importantly, to boast that as of today, the deepest of value investors, Seth Klarman's Baupost was a 2.27% investor in the company.
- Facebook Researchers Manipulated News Feeds in 2012 Study (BBG)
- Argentina at Brink of Default as $539 Million Payment Due (BBG)
- Hedge fund correlation risk alarms investors (FT)
- As China Flexes Muscle, Obama Frets Over Rival’s Weakness (BBG)
- As caliphate declared, Iraqi troops battle for Tikrit (Reuters)
- Dubai Caps Worst Month Since 2008 as Real Estate Stocks Tumble (BBG)
- Russian Advisers Ready Iraq to Use New Combat Aircraft (BBG)
- Blackstone Readies Big-Bet Hedge Fund (WSJ) - so what was GSO?
- Pope says communists are closet Christians (Reuters)
- Thomson Reuters revising FX trading standards (Reuters)
- Currency Probe Widens as U.S. Said to Target Markups (BBG)
- Battle for Iraq refinery as U.S. hesitates to strike (Reuters)
- Ukraine forces battle separatists after truce 'refused' (Reuters)
- Fed Dots Ignored as Investors Focus on Yellen’s Message (BBG)
- Retirees Suffer as $300 Billion 401(k) Rollover Boom Enriches Brokers (BBG)
- American Apparel ousts CEO; source says Dov Charney 'will fight like hell' (LA Times)
- House Panel Is Subpoenaed as Trading Probe Heats Up (WSJ)
- GM Officials Ignored Alert on Car Stalling (WSJ)
- Russia’s $20 Billion Bond Void Filled by China to Mexico (BBG)
In his first press conference since the loss last night, it is widely expected that Eric Cantor will resign as House Majority Leader (on July 31). Of course, we are sure Goldman Sachs and BlackRock are fascinated to hear how they are going to get their money back?
The complete implosion in volume and vol, not to mention bond yields continues, and appears to have spilled over into events newsflow where overnight virtually nothing happened, or at least such is the algos' complete disregard for any real time headlines that as bond yields dropped to fresh record lows in many countries and the US 10Y sliding to a 2.3% handle, confused US equity futures have recouped almost all their losses from yesterday despite a USDJPY carry trade which has once again dropped to the 101.5 level, and are set for new record highs. Perhaps they are just waiting for today's downward revision in Q1 GDP to a negative print before blasting off on their way to Jeremy Grantham's 2,200 bubble peak after which Bernanke's Frankenstein market will finally, mercifully die.
If there was some confusion yesterday why in the first quarter, seemingly having no better capital allocation option S&P500 corporate CEOs spent a record $160 billion on stock buybacks, then the following report should explain it: According to a new study by the AP, the median pay package for a CEO rose above eight figures for the first time last year. The head of a typical large public company earned a record $10.5 million, an increase of 8.8 percent from $9.6 million in 2012, according to an Associated Press/Equilar pay study.
The inevitable shuttering of at least 3 billion square feet of retail space is a certainty. The aging demographics of the U.S. population, dire economic situation of both young and old, and sheer lunacy of the retail expansion since 2000, guarantee a future of ghost malls, decaying weed infested empty parking lots, retailer bankruptcies, real estate developer bankruptcies, massive loan losses for the banking industry, and the loss of millions of retail jobs. Since we always look for a silver lining in a black cloud, we predict a bright future for the SPACE AVAILABLE and GOING OUT OF BUSINESS sign making companies.
- The Fed can't print trade? World Trade Flows Fall in First Quarter (WSJ)
- PBOC’s Zhou Says China May Have Housing Bubble in ‘Some Cities’ (BBG)
- ECB's Weidmann - Reviving ABS market not task for central bank (Reuters)
- LOL: Fitch upgrades Greece by a notch to 'B'; outlook stable (Reuters)
- LOL x2: Spain Sovereign Debt Rating Upgraded by S&P (BBG)
- China Will Vet Tech Firms After Threatening U.S. Retaliation (BBG)
- US to claim victory over China in WTO car dispute (BBG)
- Obama urges Democrats to vote in midterms, attacks Republicans (Reuters)
- U.S. Military Pushes for More Disclosure on Drone Strikes (WSJ)
More than half a decade after the collapse, and with talking heads proclaiming the recovery as strong as ever and the Fed remarking on the housing market's foundational pillar to that recovery, BlackRock's CEO Larry Fink has a few words of warning for the exuberant - the US housing market is "structurally more unsound" today that before the last financial crisis. As the data comes in weaker and weaker, despite hopes for a post-weather bounce, the fact that the US housing market is "more dependent on Fannie and Freddie than we were before the crisis," is a problem for the US taxpayer and - unlike Mel Watt's 'free credit for everyone' approach to expanding the GSE's role, Fink says with strong underwriting standards, ownership of affordable homes can again become a foundation for American families. So Watt's easy 'Subprime 2.0' or Fink's hard 'American Dream'.