If China just suffered its biggest market selloff in years, when the plug was pulled on just $200 billion in "shadow banking" assets, let's all hope that Bank of New York and State Street, who among just the two of them control some $55 trillion in custodial, repoable assets, never get any ideas from Beijing...
Earlier today, just after the market open, the one company that everyone had once again piled into, and which as of September 30 was the most held company by the hedge fund community with at least 175 "smart money" institutional fans based on expectations that with every other stock and asset becoming increasingly illiquid, at least this one would preserve its liquidity come hell or high water, flash crashed. The company is Apple, So what happend? Between 9:49:54 and 9:50:43 Eastern, AAPL plunged from nearly 6%, from $117.69 to $111.27, a moved which wiped out one Transcanada (or one Travelers, or one Lukoil, or one Carnival, or one Christian Dior, or one Hyundai Motor Company, or one Takeda, or one State Street) in market cap.
- Moar central banks! Asian Stocks Rise Amid Stimulus Speculation; Topix Jumps (BBG)
- Syria rebels in south emerge as West's last hope as moderates crushed elsewhere (Reuters)
- Bufett's Berkshire to Buy Duracell Business From Procter & Gamble in $3B Deal (AP)
- Weak Demand, Real-Estate Slump Signal Headwinds for China (WSJ)
- China Slowdown Deepens as Leaders Said to Mull Cutting Target (BBG)
- Saudis Reject Talk of OPEC Market Share War as Oil Slides (BBG)
- Oil Tankers Stream Toward China as Price Drop Sparks Boom (BBG)
Our political-financial system has gone from the dysfunctional to the failed to the surreal. Speculation, once left to individuals and investors, is now federally sponsored, subsidized and institutionalized. When this sham finally buckles and the next shoe falls and rates do eventually rise, the stock market will tank, liquidity will die, and the broader economy will plunge into a worse Depression than before. We are not there yet because of these coordinated moves and the political force behind them. But we are on a precarious path to that inevitability.
- Futures rally after BOJ ramps up stimulus (Reuters), Japan's central bank shocks markets with more easing as inflation slows (Reuters)
- Kuroda Jolts Markets With Assault on Deflation Mindset (BBG)
- Japan Mega-Pension Shifts to Stocks (WSJ)
- Russia Raises Interest Rates (WSJ)
- Oil-Price Drop Has Saudi Officials Divided (WSJ)
- Not anymore, the BOJ is here: Fed Exit Could Spark Slump in All Markets, ATP CEO Says (BBG)
- Wal-Mart Weighs Matching Online Prices from Amazon (WSJ)
- Euro-Area Inflation Picks Up From Five-Year Low on Stimulus (BBG)
- Big Banks Brace for Penalties in Probes (WSJ)
- Ex-UBS Trader Defense Could Be Threat to U.S. Forex Cases (BBG)
To summarize (even though with liquidity as non-existant as it is, this may be completely stale by the time we go to print in a minute or so), European shares erase gains, fall close to intraday lows following the Fed’s decision to end QE. Banks, basic resources sectors underperform, while health care, tech outperform. Companies including Shell, Barclays, Aviva, Volkswagen, Alcatel-Lucent, ASMI, Bayer released earnings. German unemployment unexpectedly declines. The Italian and U.K. markets are the worst-performing larger bourses, the Swiss the best. The euro is weaker against the dollar. Greek 10yr bond yields rise; German yields decline. Commodities decline, with nickel, silver underperforming and wheat outperforming. U.S. jobless claims, GDP, personal consumption, core PCE due later.
Russia’s weighing of capital controls if net outflows intensify.
- A Month of Bombs Dropped in One Night of Strikes on Syria (BBG)
- Air strikes in Syria hit Islamic State-held areas near Turkey (Reuters)
- Pimco ETF Draws Probe by SEC (WSJ)
- Shadowy al Qaeda cell, hit by U.S. in Syria, seen as 'imminent' threat (Reuters)
- Yellen Warns on Market Calm Before ‘Considerable Time’ Up (BBG)
- Dudley Says Fed Needs U.S. Economy to Run ‘A Little Hot' (BBG)
- Websites Are Wary of Facebook Tracking Software (WSJ)
- Just a joke now: Barclays Fined Twice in One Day for Compliance Failures (BBG)
- Fired UPS worker kills two supervisors, self, in Alabama shooting (Reuters)
The man who assisted and "consulted" Gordon Brown (a man so clueless about finance he didn't and still doesn't have any idea what a carry trade is, let alone one in gold) the man who was Chief Manager of the Bank of England's reserves (all reserves) when Britain commenced its gold dumping campaign intended to, as usual, bail the big banks whose gold shorting trades had gone horribly wrong, the man - John Nugee - is the same man tasked with making the London gold fix fair, efficient, transparent and unrigged. One can't make this up.
- World Bank Cuts Global Growth Forecast After ‘Bumpy’ 2014 Start (BBG)
- Al-Qaeda Offshoot Threatens Iraq Oil Site After Taking Mosul (BBG)
- Fed Prepares to Keep Record Balance Sheet for Years to Come (BBG)
- EU investigates tax rulings on Apple, Starbucks, Fiat unit (Reuters)
- Cantor Loss Shocks Republicans, Dims Immigration Changes (BBG)
- More surveillance: Google to Buy Satellite-Imaging Startup for $500 Million (WSJ)
- Tea Party activist who defeated Cantor focused on budget, immigration (Reuters)
- Airbus Suffers Worst Order Loss as Emirates Deal Scrapped (BBG)
- Amazon.com plans local services marketplace this year (Reuters)
- Amazon Stops Taking Advance Orders for ‘Lego’ and Other Warner Videos (NYT)
- 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)
An explanation of how fractional reserve banking infringes on everyone’s freedom.
A week ago we wrote: 'While it has been public for a long time that i) JPM is eager to sell its physical commodities business and ii) the most likely buyer was little known Swiss-based Mercuria, there was nothing definitive released by JPM. Until moments ago, when Jamie Dimon formally announced that JPM is officially parting ways with the physical commodities business. But while contrary to previous expectations, following the sale JPM will still provide commercial gold vaulting operations around the world, it almost certainly means farewell to Blythe Masters." Sure enough:
JP MORGAN COMMODITY CHIEF BLYTHE MASTERS LEAVING, WSJ SAYS
Farewell Blythe: we hope your replacement will be just as skilled in keeping the price of physical gold affordable for those of us who keep BTFD every single day.
It's mid-March, which means it is time for the annual confidence boosting theatrical spectacle known as the Fed's stress test (for those who may have forgotten last year's farce when Jamie Dimon preempted the Fed by announcing a dividend in advance of the results, can read here). And like in the past, there were absolutely no surprises with 29 of 30 banks passing with flying colors. Of course, since it is a "test", and someone has the be sacrificial calf, this year that honor falls to Zions Bankshares. Last year its was Citi, SunTrust and MetLife. In both years the results are completely meaningless, as the Fed neither then, nor now, has any methodology for how to calculate capital in case of the same kind of counterparty failure chain as happened during Lehman, and when no amount of capital would have been sufficient to preserve the financial sector. Like we said: theatrical spectacle. But at least everyone's confidence has been boosted. So Buy stawks, and build your paper wealth! And here is the truly funny part: in the baseline stress test scenario, the Dow Jones "plunges" to 11.4K in Q3 2014, and then somehow surges back to all time highs by Q4 2016! Does the Fed understand the word Stress?
- Malaysia Says Stolen Passport User Had No Links to Terror Groups (BBG)
- Malaysia military tracked missing plane to west coast (Reuters)
- Freescale loss in Malaysia tragedy leads to travel policy questions (Reuters)
- Top German body calls for QE blitz to avert deflation trap in Europe (Telegraph)
- Firms Suffer 23% Drop in Asia Fees Amid Search for Cash (BBG)
- Putin Dismisses U.S. Proposal on Ukraine (WSJ)
- Lenovo says China strike an IBM matter, but it won't cut wages (Reuters)
- Congress to Investigate GM Recall (WSJ)
- New hedge funds face life or death battle for funding (FT)
- Muni Bond Costs Hit Investors in Wallet (WSJ)
- BOJ keeps stimulus in place, cuts view on exports in warning sign (Reuters)
- ECB Homes In on Risky Assets as Inspectors Fan Out Across Europe (BBG)
- Snowden: "The Constitution was violated" (Reuters)