Portugal

Paul Craig Roberts: The West Is Being Reduced To Looting Itself

Something dire has happened to the intelligence and awareness of Western peoples who seem no longer capable of comprehending the machinations of “their” governments. Accountable government in the West is history. Nothing but failure and collapse awaits Western civilization.

Italian Banks Sink As "Bad Bank" Plan Underwhelms

Last week, we noted that Italy is rushing to defuse a €200 billion time bomb in the country’s banking sector as investors fret over banks’ exposure to souring loans. On Wednesday we learn that Italy has indeed managed to strike a deal with Brussels to help alleviate banks’ NPL burden but the agreement falls well short of the type of comprehensive "solution" the market was hoping to see.

Chinese Rush To Buy Foreign Assets As Mammoth $1 Trillion In Capital Flees Country

When the RMB deval dust settled, some $1 trillion in capital fled China in 2015 as Chinese rushed to move money out of the country ahead of what many expect will be a much larger yuan depreciation. Estimating capital flight out of China isn't an exact science and different analysts look at different proxies to determine just how leaky the ship is, so to speak. For their part, Goldman has endeavored to break down the numbers on the way to shedding some light on where to look to assess the pace of the flows. 

Spain's Election Quagmire: What Wall Street Thinks

Don't look now, but Brussels’ preferred Spanish PM is about to be ousted by a coalition of leftist parties, and that, in turn, suggests that the idea of fiscal retrenchment will be thrown out, along with anything that even looks like austerity. That could trigger a showdown between Madrid and Brussels over Spain’s intention to adhere to EU deficit targets.

Why This Slump Has Legs

There may be shallow lulls in the asset markets, nothing ever only falls down in a straight line in the real world, but the debt will and must come down and be deleveraged. The process will in all likelihood lead to warfare, and to refugee movements the likes of which the world has never seen just because of the sheer humbers of people added in the past 50 years. When your children reach your age, they will not live in a world that you ever thought was possible. But they will still have to live in it, and deal with it. They will no longer have the facade you’ve been staring at for so long now, to lull them into a complacent sleep. And the Kardashians will no longer be looking so attractive either.

Equities Soar, Oil Back Over $30 On Hopes For More Stimulus Following Disturbing Chinese Data

Last night's Chinese data deluge can only be classified with one word: bad. So if bad news was again bad news as many claim, both commodities (read oil), and US equity futures should be tumbling right now... but just the opposite is happening and in fact both Brent and WTI have already jumped over $30 this morning. This happens even as the IEA said this morning that global oil markets could “drown in oversupply,”  And yet this morning both commodities, global stocks and futures soaring? Simple: the following Bloomberg headline summarizes it: "Brent Rallies More Than $1 as China GDP Spurs Stimulus Bets," and where Brent goes, so goes risk, and the S&P.

Equity Futures Rise After Oil Rebounds From 12 Year Lows; US Markets Closed

With the US closed today for Martin Luther King Holiday, global risk tone has once again been set entirely by oil, which opened sharply lower at fresh 12 year lows on fears of an Iran oil glut, but has steadily rebounded on the latest OPEC comments, and at last check both WTI and Brent were unchanged trading in the low $29's on muted volume. With Asian markets mixed, European shares swung between gains and losses, while the yen weakened as China stepped up efforts to curb foreign speculation against its currency. Crude oil rose from a 12-year low after the Organization of Petroleum Exporting Countries forecast a decline in supplies from rival producers.

Cracks At The Core Of The Core

It is the “Core of the Core” that now concerns us the most. That is where Federal Reserve (and global central bank) policies have left their greatest mark. It is at the “Core of the Core” where momentous misperceptions and market mispricing have become deeply entrenched. It’s the “Core of the Core” that has attracted enormous amounts of “money” over recent years. It’s also here where I believe leverage has quietly been used most aggressively. Over recent years it became one massive Crowded Trade. Now the sophisticated players must contemplate beating the unsuspecting public to the exits.

Frontrunning: January 13

  • China trade surprise brings relief (Reuters)
  • Obama knocks Trump, voices optimism (Reuters)
  • Republican Candidates Criticize Obama’s State of the Union Address (WSJ)
  • Republicans and Democrats Agree: We Hate Wall Street (WSJ)
  • Oil rises for first time in eight sessions on China, U.S. stocks draw (Reuters)
  • U.S. Exports First Freely Traded Oil in 40 Years (WSJ)
  • China Imports Record Crude as Price Crash Accelerates Buying (BBG)

The EU Bail-In Directive: Dark Clouds Are Gathering

In principle, the BRRD, or “bail-in directive” as it is also known, is quite a good idea. The fact that lending money to fractionally reserved banks or even merely depositing it with them, involves risks needed to be firmly reestablished. One simply cannot expect that banks and their creditors will be bailed out by taxpayers at every opportunity. Besides, the admission that there are risks in banking that have hitherto been glossed over or have even been lied about was long overdue. However, Europe’s governments are now likely to find out that the current monetary system with its fractionally reserved banks is actually incompatible with this admission, so to speak.