FBI Opens Inquiry Into JPM Loss
Earlier we were complaining that the newsflow was on its way to getting full-retard surreal. It just crossed that line. From NBC:NY FBI Opens Inquiry into JPMorgan Chase Loss
Has The Greek Bank Run Started?
Euro-Dumpfest Continues As LTRO Banks Implode
Just
when you thought you'd seen the worst, its gets worsterer. While US
equities are oscillating in a broad range trying to ignore the
Eurocalypse, European asset markets had one of the worst days of the
year today across the board. Spanish and Italian bond spreads
are 40bps wider this week alone (adding 15-20bps today) and Portugal
(sorry Stevie) are 52bps wider this week as our prediction that
a compressed basis would remove any technical support for the bonds
has come true. With sovereigns deteriorating rapidly, and given the
forced contagion of the LTRO program, it is no surprise that financials are imploding.
Senior and Subordinated credit spreads are underperforming
dramatically with Subs +90bps and Seniors +55bps in May, while
high-yield credit is 100bps wider and broad European equities
(Bloomberg's BE500 index) are tracking them lower now practically
unchanged for the year (and back below its 200DMA). Of course,
while Greek bank runs are accelerating (and are likely beginning in
Spain) and ASE is at all-time lows, the hope remains that if things get
ugly enough, the ECB will save the day and Draghi will magically
re-appear. The hope of another LTRO is meaningless, though
likely inevitable, as it will only exacerbate the stigma that we have
been so accurate on. With collateral in short-supply,
especially in Spain, any further encumbrance will crush LTRO-facing
bank debt and equity-holders via subordination and so it may make sense
to be even more long the 'stigma' divergence between LTRO and
non-LTRO.It's Simple - Think Like A Criminal
*When you see that money is flowing to those who deal, not in goods, but in
favors – when you see that men get richer by graft and by pull than by
work, and your laws don't protect you against them, but protect them
against you – when you see corruption being rewarded and honesty becoming a
self-sacrifice – you may know that your society is doomed. *Ayn Rand,
"Atlas Shrugged" (Francisco D'Anconia money speech)
A good friend and colleague asked me my thoughts on the recent blogosphere
posting over the weekend about the disclosure in JPM's 10-Q of pending
litigation related to mort... more »
Emotional Bias Drive Short-Term Market Interpretations
The retest of long-term resistance as support is normal market action.
Connected interests which also shape perceptions understand that emotion
biases drive short-term market interpretations. It uses them to facilitate
a transfer of control during reactions in secular bull or bear market.
There's really nothing more to be said other than this logic will be
support by the market's action...
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content, and more! ]]
Gold: We Can Have Setbacks
Gold may not perform very well in the near future. The gold market has
performed so well, we could have some setback. -* in CBS MarketWatch *
Related: SPDR Gold Trust ETF (GLD)
*Marc Faber is an international investor known for his uncanny predictions
of the stock market and futures markets around the world.*
2013 Is Probably Going To Be A Mess
I don't expect the world economy to be very good in the next couple of
years. In fact, 2013 is probably going to be a huge mess. 2014 will be a
real mess. - *in CNBC *
*
*
Related: SPDR S&P 500 Index ETF (SPY)
*Jim Rogers is an author, financial commentator and successful
international investor. He has been frequently featured in Time, The New
York Times, Barron’s, Forbes, Fortune, The Wall Street Journal, The
Financial Times and is a regular guest on Bloomberg and CNBC.*
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Positive Divergences Suggests Downside Force Weakening In Equities
Positive divergences between price, standard norm(E) and McClellan
Oscillator(E), and statistically oversold readings (Std Norm < -1.96) often
anticipate tradable bottoms (see chart). Statistically oversold readings,
standard norm reading exceeding +/- 1.96, often coincide with the emotional
extremes of trend exhaustion. The market should attempt a rally after the
first technical...
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A Lot Of People Are Having To Liquidate Positions
I know that a lot of people are having to liquidate positions because now
the banks’ examiners are all over these banks especially JPMorgan (JPM) so
they’re trying to take off as many positions as they can so that the
regulators don’t put them out of business. - *in CNBC *
*Jim Rogers is an author, financial commentator and successful
international investor. He has been frequently featured in Time, The New
York Times, Barron’s, Forbes, Fortune, The Wall Street Journal, The
Financial Times and is a regular guest on Bloomberg and CNBC.*
If We Rally Into August, We May Crash In The Fall
“If we have a rally into August it could resemble 1987 with a crash in the
fall.” - *in Bloomberg *
*
*
Related: SPDR S&P 500 Index ETF (SPY), SPDR Dow Jones Industrial Average
ETF (DIA)
*Marc Faber is an international investor known for his uncanny predictions
of the stock market and futures markets around the world.*
There Are Going To Be More Regulations, More Controls
We — the financial types — are getting blamed for all the world’s problems. There are going to be more regulations, more controls, more taxes. - *in CNBC * *Jim Rogers is an author, financial commentator and successful international investor. He has been frequently featured in Time, The New York Times, Barron’s, Forbes, Fortune, The Wall Street Journal, The Financial Times and is a regular guest on Bloomberg and CNBC.*
Doing God's Real Work - Hollande's Plane Returns To France After Being Hit By Lightning On Way To Merkel Visit
No, this is not a joke:- HOLLANDE'S PLANE TURNS BACK TO PARIS AFTER BEING HIT LIGHTNING EN ROUTE TO BERLIN - PRESIDENTIAL SOURCE
Drone Warfare In America
How
would Obama supporters feel if they learned that their beloved
President was running far-to-the-authoritarian-right of arch-hawk
Charles Krauthammer on one particular civil liberties issue? Sadly, the
answer is that the most Obama supporters probably wouldn’t feel very
much at all, because support for Obama has always predominantly been emotion-driven (he promised change “you can believe in”, not “change that I can logically convince you will be beneficial“).Is Spain In Danger Of An Imminent LCH Margin Hike?
The
Greek new-election news this morning pushed sovereign spreads wider
across the board in Europe. Spain and Italy have leaked back off those
high spread levels in the last hour (while Portugal has not) but
critically, Spain is rapidly approaching a very significant Maginot Line,
as noted by Bloomberg's chart-of-the-day today. In the past (in the
case of Portugal and Ireland) when the bond spread on European
sovereigns relative to AAA-rated European debt has reached 450bps, the LCH has slapped on significant margin hikes.
At a time when cash/collateral is in extremely short-supply (as
indicated most obviously by the rapid deterioration in EUR-USD basis
swaps recently), Spanish 10Y spreads are perhaps a day or two of weakness away from the point of no-return. When Portugal broke this level it rapidly accelerated from 450bps to over 800bps in less than three months.It's Official: Greece To Pay May 15 Bond Maturity
Earlier, we reported on media speculation that this was a done deal. We now get confirmation.- GREEK FINANCE MINISTRY TO PAY EU435 MLN BOND
- GREECE SAYS TODAY'S DECISION DOESN'T PREJUDICE FUTURE DECISIONS - no, just those you have to COMPLY with
A Greek Affair To Remember And Mr. Hollande's Opus
We
suspect, when we look back on Europe some months from now, that we will
see; a love affair gone badly due to conditions beyond anyone’s
control and a separation that, while bound in great sadness, is what
the Fates have determined for the actors in this grand drama.
Extending the unreality, foillowing news that Greece will - as expected -
hold new elections, today the new French President and the German
Chancellor will meet for the first time. They will issue a statement
promising cooperation, a brighter Europe, some vision of a grand
alliance and an eternal pledge for the spirit of unity between the
French and the German people. Believe none of it. The Germans are
already targeting Vichy as the new place of government in France and
there is an active search underway to find the decedents of Marshal
Petain. There was an armistice between Germany and France in
1940 and there may be a new one announced today but the new one, like
the old one, will be a short lived affair as the goals of France and the goals of Germany could not be further apart.Homebuilder Confidence Rises To 5 Year High As Actual Sales Remain Near All Time Lows
America
may not sell many new homes (read - sales are near or at all time
lows), but that does not prevent homebuilders from having a dream, or
in this case confidence that soon, soon, SOON,
things will finally improve. Sure enough, in May the NAHB homebuilder
confidence soared to 29, from 24, on expectations of a 26 print. Of
course, these numbers are completely meaningless, and only serve to get
the algos ramping momentum in an upward direction. In the meantime, the
reality of actual sales, can be seen on the chart below.Art Cashin On The Way To The European Egress
If there was one analogy we had not heard so far to the deplorable European situation, it was that to P.T. Barnum's infamous "Egress." Following this morning's Art Cashin note, that is no longer the case. Granted, since it references a museum exhibit, such as what the EUR, not to mention European socialism which recently ran out of other people's money, will soon be, it is about time...The Greek Neo Nazi Manifesto
In
case anyone was wondering why such a fuss was made about a few far
left and far right parties gaining ground in the Greek elections, here
is the leader of the Greek Golden Dawn party - treating us to his world
view. No commentary necessary.Risk Off As Greek Chaos Returns
With
the Greeks unable to hug it out and new elections (as per Venizelos
and Kammenos) all but guaranteed, the probability that Greece will exit
just went to 11 on the dial. Markets hiccupped and plunged, giving up
all the German GDP gains and then some. EURUSD traded back below 1.2800 -
trading 1.2780 as we post, S&P 500 e-mini futures dumped 13 points now below yesterday's lows,
Europe's DAX took a dive, and all European sovereign bond spreads tore
higher dominated by Portugal, Spain, and Italy (+38-48bps on the week
now). Credit spreads are gapping wider in Europe and the US.
Commodities, which had been limping a little higher - on weaker USD and
growth-hopiness we suppose - have reversed those gains with Silver and
Oil underperforming. Treasuries and Bunds in lockstep and notably lower
in yield - to lows of day.Here Come The Greek (Re)Elections
Wonder why the EURUSD is suddenly sliding? Here's why:- GREEK ANTI-BAILOUT CONSERVATIVE KAMMENOS SAYS THERE IS NO DEAL ON GOVERNMENT -BBG
- KAMMENOS SAYS "THEY PREFER CREDITORS TO NATIONAL SOLUTION"
- KAMMENOS SAYS NEW ELECTIONS WILL BE HELD
Economic Data Dump Keeps Everyone Confused, Pessimism About Future Increases
We
bring you "baffle with bullshit" Tuesday edition, where retail Sales
ex-autos miss consensus modestly, but the Empire Manufacturing beats by a
mile.Bundesbank Confirms German Gold Held By FED, BOE and Banque De France
Germany's Bundesbank confirmed yesterday that the German gold reserves are held overseas by the Federal Reserve, the Bank of England and the Banque de France. The German parliament, the Bundestag, has been examining the accounting of German gold reserves at the Bundesbank. The parliament's Budget Committee, one of the most powerful committees in the German parliament, had requested a critical report by the Federal Audit Office. "The decision has been unanimous," the paper quoted the Christian Social Union budget expert Herbert Frankenhauser. The newspaper report alleged "account cheating" regarding the German gold reserves. According to a Bild report, the federal auditing office complained of "inadequate diligence of the accounting of the gold reserves, which are stored in some foreign countries. Repatriation of the gold reserves is encouraged.” The Bundesbank confirmed that it, like many central banks, keeps part of its reserves in vaults at foreign central banks and said some of its gold is held at the Federal Reserve Bank of New York, the Banque de France and the Bank of England. It declined to say how much gold in total is held overseas or how much gold is stored with the Federal Reserve, Bank of England and Banque de France. The Bundesbank statement said it had complete confidence in the integrity of the central banks where the gold is held. "From these central banks, the German Bundesbank annually gets confirmation of the gold holdings in troy ounces as a basis for its accounting," the Bundesbank’s statement said.How To Make A 135% Annualized Return In 4 Months
Update: the expected next step: "GREEK 2023 BOND PRICE FALLS TO 14.51 PERCENT OF FACE VALUE" - but it was a "no brainer" trade... a "trade of the year" trade... Tough break for Greylock. As we said "Um,
distressed bond expert guys - the bonds you should have bought are the
old UK-law bonds which may return par...at least you had some covenant
cover." Oh well - at least it is "other people's money."Back on January 22, (Subordination 101), we advised readers that the one virtually sure way to make a killing in the bond market is to i) buy up a fulcrum Greek piece of debt, i.e., international/UK-law bond with strong covenant protection ahead of the country's restructuring, ii) refuse participation in the cramming down PSI, which was nothing but a GM-type exercise in covenant stripping, and iii) sit back and enjoy the money trickle in. Back than the €450 million bond of May 15, 2012 traded at ~75. Today, that same bond is about to generate a 31.26% cash on cash return, or 135% annualized, as it is Greece that has blinked, and according to the FT, has decided to make a full bond payment on this issue to avoid an out of control sovereign default, even though by doing so, it reduces its cash holdings by a third to just over €1 billion as discussed yesterday, and risks pushing both the PSI participants and its citizens into a murderous rage, as instead of complying with its mouthing off during and after the PSI, that not one bondholder would get a par repayment (nor apparently use the cash for public proceeds such as paying salaries), the one entity who ended up having all the leverage was those bondholders, who went against the grain, and held to their covenant rights. Just as we suggested. End result...
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