Wells Fargo

Frontrunning: December 17

  • Fed’s $4 Trillion Assets Draw Lawmaker Ire Amid Bubble Concern (BBG)
  • Ex-Goldmanite Fab Tourre fined more than $1 million (WSJ)
  • EU Banks Shrink Assets by $1.1 Trillion as Capital Ratios Rise (BBG)
  • Japan to bolster military, boost Asia ties to counter China (Reuters)
  • China condemns Abe for criticizing air defense zone (Reuters)
  • Insider-Trading Case May Hinge on Phone Call (WSJ)
  • Republicans Gird for Debt-Ceiling Fight (WSJ)
  • Mario Draghi pushes bank union deal (FT)
  • German Coalition Plans More Pension Money (WSJ)
  • Oil Supply Surge Brings Calls to Ease U.S. Export Ban (BBG)

Why Obama's Home Affordable Modification Program Failed (Spoiler Alert: Thank Bank Of America et al)

Back when the Executive and Congress at least pretended not to abdicate all power to the Fed, one of the centerpiece programs designed to boost the housing market for the benefit of the poor (as opposed to letting Ben Bernanke make marginal US housing a rental industry owned by a handful of private equity firms and hedge funds), was Barack Obama's Home Affordable Modification Program or HAMP, which attempted to prevent foreclosures by lowering distressed borrowers’ mortgage payments. Under the program, homeowners would be given trial modifications to prove they can make reduced payments before the changes become permanent. The program was a disaster as of the 3 million foreclosures that were targeted for modification in 2009, only 905,663 mods have been successful nearly five years later - a tiny 13% of the 6.9 million who applied (still, numbers which Obamacare would be delighted to achieve). Part of the reason: the program's reliance on the same industry that sold shoddy mortgages during the housing bubble and improperly sped foreclosures afterward. But there was much more. For the definitive explanation of everything else that went wrong, we go to Bloomberg's Hugh Son whose masterpiece released today explains how and why once again the banks - and especially one of them - won, and everyone else lost.

Frontrunning: Friday 13

  • Presidential Task Force Recommends Overhaul of NSA Surveillance Tactics (WSJ)
  • Monte Paschi's Largest Shareholder Says It Will Vote Against $4.1 Billion Capital Increase (WSJ)
  • SAC Reconsiders Industry Relationships—and Its Name (WSJ)
  • Icahn’s Apple Push Criticized by Calpers as ‘Johnny Come Lately’  (BBG)
  • In Yemen, al Qaeda gains sympathy amid U.S. drone strikes (Reuters)
  • Missing American in Iran was on unapproved mission (AP)
  • In China, Western Companies Cut Jobs as Growth Ebbs (WSJ)
  • U.S. lays out steps to smooth Obamacare coverage for January (Reuters)
  • Las Vegas Sands Said to Drop $35 Billion Spanish Casino Proposal (BBG)
  • Twitter Reverts Changes To Blocking Functionality After Strong Negative User Feedback (TechCrunch)

This Is How Much The Banks Paid To Get The "Volcker Rule" Outcome They Desired

Curious how much the various banks who stood to be impacted by or, otherwise, benefit from either a concentration or dilution of the Volcker rule? According to OpenSecrets, which crunched the numbers, here is how much being able to continue prop trading meant to some of the largest US banks and lobby groups:

Not bad considering the loophole-ridden Volcker Rule will effectively permit "hedge" books (where an army of lawyers paid $1000/hour defines just what a hedge is) to continue piling on billions of dollars in wildly profitable, Fed reserve funded trades.

Frontrunning: December 11

  • Wall Street Exhales as Volcker Rule Seen Sparing Market-Making (Bloomberg)
  • GM to End Manufacturing Down Under, Citing Costs (WSJ)
  • U.S. budget deal could usher in new era of cooperation (Reuters)
  • Ukraine Police Back Off After Failing to Stop Protest (WSJ)
  • First Walmart, now Costco misses (AP)
  • Dan Fuss Joins Bill Gross Shunning Long-Term Debt Before Taper (BBG)
  • China New Yuan Loans Higher Than Expected (WSJ)
  • China bitcoin arbitrage ends as traders work around capital controls (Reuters)
  • Blackstone’s Hilton Joins Ranks of Biggest Deal Paydays (BBG)

Frontrunning: December 10

  • U.S. set to adopt Volcker rule to curb bank trading gambles (Reuters) After vote, lawsuits likely next hurdle for Volcker rule (Reuters)
  • U.S. Congress budget talks could produce Tuesday deal, aides say (Reuters)
  • Wealthy Go Frugal This Holiday Amid Uneven U.S. Recovery (BBG)
  • Tearful Thai PM urges protesters to take part in election (Reuters)
  • Fed’s Bullard Sees Higher QE Taper Odds as Labor Market Improves (BBG)
  • Coeure Says ECB Would Offer More LTROs Only When Banks Can Lend (BBG)
  • Inside China's Super-Sterile Chicken Farms (WSJ)
  • Mandela Service Rivals JFK’s as Leaders Meet in South Africa (BBG)
  • China data defy slowdown forecasts (FT), and of course the word is "data"
  • Cold, ice grip U.S. as more snow to blanket East (Reuters)

Frontrunning: December 9

  • Glass-Steagall Fans Plan New Assault If Volcker Rule Deemed Weak (BBG) ... "if"? The banks control the legislators and regulators...
  • Cellphone data spying: It's not just the NSA (USA Today)
  • Major tech companies push for limits on government surveillance (Reuters)
  • Shanghai Warns Kids to Stay Indoors for Seventh Day on Smog (BBG)
  • Protesters fell Lenin statue, tell Ukraine's president 'you're next' (Reuters)
  • Everyone must be flying private these days: EADS to cut 5000-6000 jobs, close Paris HQ in restructuring (FT)
  • Big Players Trade 'Upstairs' (WSJ)
  • There’s no way to tell how many people who think they’ve signed up for health insurance through the U.S. exchange actually have (BBG)
  • Slower China inflation reduces worries of tighter policy (Reuters)

Frontrunning: December 6

  • Nelson Mandela: 1918-2013 (Reuters)
  • South Africans Flock to Nelson Mandela’s Home to Mourn His Death (BBG)
  • Hillary Clinton or Joe Biden? Obama says won't choose between them for 2016 (Reuters)
  • Fukushima water tanks: leaky and built with illegal labor (Reuters)
  • Sears Holdings Files to Spin Off Lands' End Business (WSJ)
  • Way cleared for landmark global trade deal (FT)
  • U.S. Oil Prices Fall Sharply as Glut Forms on Gulf Coast (WSJ)
  • German Factory Orders Decline in Sign of Uneven Recovery (BBG)
  • FCC Unlikely to Bless a Comcast-TWC Deal: Regulator (WSJ)

Frontrunning: December 5

  • Apple, China Mobile Sign Deal to Offer iPhone (WSJ)
  • Japan approves $182 billion economic package, doubts remain (Reuters)
  • Volcker Rule Won't Allow Banks to Use 'Portfolio Hedging' (WSJ)
  • He went, he saw, he achieved nothing: Biden's Trip to Beijing Leaves China Air-Zone Rift Open (WSJ)
  • Britain announces sharp upward revision to growth forecasts (Reuters)
  • U.S. Airlines to Mortgage-Backed Debt Top List of Best ’14 Bets (BBG)
  • Thaksin's homecoming hopes dashed as Thai crisis reignites (Reuters)
  • Age of Austerity Nearing End May Boost Global Economy (BBG) - or it may expose that it was just corruption and incompetence at fault all along
  • China aims to establish network of high-level FTAs (China Daily)

Too Big To Fail Banks Are Taking Over As Number Of U.S. Banks Falls To Record Low

The too big to fail banks have a larger share of the U.S. banking industry than they have ever had before.  So if having banks that were too big to fail was a "problem" back in 2008, what is it today? The total number of banks in the United States has fallen to a brand new all-time record low and that means that the health of the too big to fail banks is now more critical to our economy than ever.  In 1985, there were more than 18,000 banks in the United States.  Today, there are only 6,891 left, and that number continues to drop every single year.  That means that more than 10,000 U.S. banks have gone out of existence since 1985.  Meanwhile, the too big to fail banks just keep on getting even bigger.

Frontrunning: December 4

  • EU Fines Financial Institutions Over Fixing Key Benchmarks (Reuters)
  • Euro-Area Economic Growth Slows as Exports, Consumption Cool (BBG) - someone has a very loose definition of growth
  • Ukraine Officials Scour Globe for Cash as Protests Build (BBG)
  • Oops: Franklin Boosted Ukraine Bet to $6 Billion as Selloff Began (BBG)
  • Japan Plans 18.6 Trillion Yen Economic Package to Support Growth (BBG) - or about 2 months of POMO
  • How Peugeot and France ran out of gas (Reuters)
  • Iran threatens to trigger oil price war (FT)
  • Abe Vows to Pass Secrecy Law That Hurts Cabinet’s Popularity (BBG)
  • Brazil economy turns in worst quarter for 5 years (FT)
  • Australia’s Slowdown Suggests RBA May Need to Do More (BBG)
  • Biden calls for trust with China amid airspace dispute (Reuters)

Frontrunning: December 3

  • With website improved, Obama to pitch health plan (Reuters)
  • Joe Biden condemns China over air defence zone (FT)
  • Tally of U.S. Banks Sinks to Record Low (WSJ)
  • Black Friday Weekend Spending Drop Pressures U.S. Stores (BBG)
  • Cyber Monday Sales Hit Record as Amazon to EBay Win Shoppers (BBG)
  • Ukraine's Pivot to Moscow Leaves West Out in the Cold (WSJ)
  • Investment banks set to cut pay again despite rise in profits (FT)
  • Worst Raw-Material Slump Since ’08 Seen Deepening (BBG)
  • Democrats Face Battles in South to Hold the Senate (WSJ)
  • Hong Kong reports 1st case of H7N9 bird flu (AP)
  • In Fracking, Sand Is the New Gold (WSJ)

Frontrunning: December 2

  • America’s Role as Consumer of Last Resort Goes Missing (BBG)
  • Holiday sales sag despite blitz of deals (WSJ)
  • Abe Support Falls Below 50% for First Time Amid Secrecy Drive (BBG)
  • U.S. airlines give China flight plans for defense zone (Reuters), while Japan: no change to airlines' notification policy when flying in East China Sea zone (Reuters)
  • Thai protesters seek to topple PM after clashes (Reuters)
  • Hilton Seeks as Much as $2.4 Billion in Biggest Hotel IPO (BBG)
  • Biden on delicate mission to defuse tensions in East Asia (Reuters)
  • Fed eyes financial system weak link (WSJ)
  • Pentagon in line of fire in US budget war (FT)
  • China’s monetary squeeze collides with housing bubble (FT)

Overnight Carry Currency Weakness Has Yet To Translate Into Futures Ramp

Asian equities have gotten off to a rocky start to the week despite some initial optimism around the twin-Chinese PMI beats at the start of the session. That optimism has been replaced by selling in Chinese equities, particularly small-cap Chinese stocks and A-shares after the Chinese security regulator issued a reform plan for domestic IPOs over the weekend. The market is expecting the reforms to lead to a higher number of IPOs in the coming quarters, and the fear is that this will bring a wave of new supply of stock to an already-underperforming market. Indeed, the Chinese securities regulator expects about 50 firms to complete IPOs by January 2014 – and another 763 firms have already submitted their IPO applications and are currently awaiting approval. A large number of small cap stocks listed on Hong Kong’s Growth Enterprise Market were down by more than 5% this morning, while the Shanghai Composite is down by 0.9%. The Hang Seng (+0.4%), Hang Seng China Enterprises Index (+0.8%) are performing better on a relative basis, and other China-growth assets including the AUDUSD is up 0.5%. The Nikkei (-0.1%) is also a touch weaker after Japan’s Q3 capital expenditure numbers came in well below estimates (1.5% YoY vs 3.6% forecast). Elsewhere Sterling continues to forge new multi-year highs against the USD (+0.3% overnight).

GoldCore's picture

It would likely also deal another blow to the U.S property market and the fragile U.S economy. JP Morgan, Bank of America and Wells Fargo appear to be most exposed - meaning that either taxpayers will again be asked to bail out banks or more likely the coming bail-in regime will confiscate cash from depositors.