Thursday, August 25, 2011

The European Dollar Funding Crunch Is Back: Fed Does Another $500 Million In USD Swaps This Time With The ECB

And now for some once again very disturbing news out of the ECB, just in time for tomorrow's sub-1% GDP announcement and Jackson Hole disappointment. Unlike last week, when the Fed conducted a $200 million FX swap with the Swiss National Bank, this week the bank in dire needs of dollar funding is the ECB itself... and for two and a half times than last week. Furthermore, unlike last week, when we knew in advance that at least one European bank was experiencing a dollar liquidity event, this time the update from the ECB indicated no USD-based liquidity constraints: the $500 million in 7 day USD punitive loans quietly expired and everyone once again assumed that Eurozone liquidity is back to normal. It isn't. And there are two options: either the scramble for cash occurred after the announcement early morning yesterday (the Fed tracks operations ending 8/24 so it simply may not have been caught in time), or, more ominously, the ECB itself is finding itself in a dollar squeeze. The question once again now becomes, who finds themselves in a dollar funding crunch?

Greenspan say's Euro "Breaking Down"

Charting The Deterioration Of Bank Self-Assessed Counterparty Risk Through 3 Month USD Libor

When it comes to counterparty risk, one can look at CDS, for an indication of how the market view a given bank's counterparty risk, or, one can observe how the banks themselves evaluate each other, courtesy of daily Libor fixings by bank. When it comes to Europe it is well known that dollar funding pressures are the most representative of overall liquidity stress. As such, we look at the 3 Month USD libor for various BBA-reporting banks. The picture, over the past month, is not pretty, especially if one is Barclays or RBS. The chart says it all.

State Of Emergency Issued For New York

Hopefully, this is as bad as it will get. Per Reuters, New York Governor Andrew Cuomo on Thursday declared a state of emergency to prepare for the potential impact of Hurricane Irene, which could hit the state this weekend. The formal declaration allows the state to aid counties, cities and towns "more effectively and quickly," get help from the national Emergency Management Assistance Compact and get federal help earlier, the Democratic governor said in a statement. "We are communicating with our federal and local partners to track the storm and to plan a coordinated response, and we will deploy resources as needed to the areas expected to be hit the hardest," Cuomo said.

Germany Won’t Go “All In” on the Euro

Posted by: Phoenix Capital...

Post date: 08/25/2011 - 14:09

With the German economy slowing, the underlying tensions between the ECB and Germany are intensifying. And with Germany’s next round of elections due in late September, the chances of Germany moving...

Since ECB won't, maybe Fed will buy European government bonds

Buffett Tells CNBC 'This Isn't 2008' As Bank of America Gets $5B Loan at Just 6%

Eric De Groot at Eric De Groot - 24 minutes ago

Déjà vu anyone? It may feel like 2008, but it's undeniably different. Headline: Buffett Tells CNBC 'This Isn't 2008' As Bank of America Gets $5B Loan at Just 6% Warren Buffett tells CNBC's Becky Quick "this isn't 2008" and that's why Bank of America is getting better terms for its $5 billion loan today from Berkshire Hathaway, compared to what General Electric and Goldman Sachs paid for... [[ This is a content summary only. Visit my website for full links, other content, and more! ]]

Follow the Money, Not Opinions

Eric De Groot at Eric De Groot - 42 minutes ago

Ramon, Emotions prevent much of the world from seeing beyond the daily noise. Eric Maybe it's time for the world to review Jim's formula. Also, the GLD Puke Indicator (buy signal triggers whenever GLD tonnes in trust drop >1% in one day) flashed two consecutive buy signals, the 23rd & 24th. It's been incredibly accurate, and the last time a double signal happened was in... [[ This is a content summary only. Visit my website for full links, other content, and more! ]]

HFT Quote Stuffing Market Manipulation Caught In The Act

Now that we can directly monitor the amount of quote stuffing in the NYSE courtesy of Nanex (an ability that the SEC apparently never will have), we know that every time there is a massive spike in hollow trade (as in without intentions to cross bids or asks, something everyone but the SEC and the HFT lobby believes should be a felony offense), the market is programmed to either rip of plunge. Sure enough, at just after 3:19 pm we saw an epic spike in empty packets on the NYSE, which set off red flags and immediately prompted us to observe the move in ES, which naturally confirmed that an HFT driven coordinated buy order (no block) was going through and pushing the ES well on its way to VWAP. Market manipulation no longer needs anything more than a coordinated packet stuffing dump, as what happened on May 19. Keep in mind: these work on both the upside and the downside- the reason why suddenly everyone hates HFT after loving it for over 2 years, is that while it provides volumeless levitation, it just as easily can serve as quicksand in a downmarket. That, however, does not make it right, and just as two years ago, when we first brought attention to the matter, so today, we claim that HFT should be abolished immediately by the imposition of a minimum active quote latency. That would eliminate all quote stuffing in a millisecond.