The Mother Of All Chart Porn - Presenting Goldman's Top 100 Favorite Charts

Christmas comes early for chart porn addicts this year, courtesy of Goldman Sachs which has compiled its top 100 favorite charts together in one place.

 

 

 

Charting China's Take Over Of The Banking World... And A Stark Warning

In what may come as a surprise to some, the top 3 banks in the world by market cap, are not based in the US, nor the UK, nor, obviously, Europe. All three are Chinese, namely ICBC, CCB and the Agricultural Bank of China. The top two US banks by market cap, Wells and JPM, are 4th and 6th respectively. And what is probably scarier, and what is not shown on the chart, is the amount of "assets" that these banks need to hold on their balance sheets to generate the returns needed to maintain this market cap: off the top of our head we would imagine that the US banks, when adding derivative exposure, have balance sheet risk that is orders of magnitude higher than that of China. Yet the most fascinating aspect is the amazing speed with which China took over the banking world (and with which market caps have increased), in the past 20 years. Without a single bank in the top 10 as recently as 2005, China now has 4 banks among the ten biggest in the world. Yet should China be worried and is history poised to repeat? Back in 1991, 6 of the top 10 largest banks in the world... were Japanese. Now not one of the 6 is to be found anywhere.

 

 

Hungarian Rescue Talks Fail

Something is decidedly strange in Europe today: while there has been a favorable shift in bond spreads with the 10 year BTP dropping to 6.4% (although still waiting for LCH to react to its margin cut even as spreads are 100 bps wider) it is the 3M EUR/USD cross currency basis swap that has us confused as it has mysteriously moved violently tighter, from -140 bps to -121 bps overnight, indicating someone may know something in advance of yet another central bank liquidity infusion. As for the catalyst why one may be needed, we go to Hungary where we learn that "rescue" talks with the IMF and EU "on securing some form of backing to reassure investors" have broken down. As a reminder, should Hungary go, Austria and its billions in CHF-denominated mortgages will almost certainly be next, and with it a test of the SNB's EURCHF floor.

 

 

IMF Chief Christine Lagarde Warns That Global Economic Outlook Is ‘Gloomy’

IMF boss says no country in the world is immune from the crisis and all must take steps to boost growth, with risks of inaction including ‘isolation and other elements reminiscent of the 1930s depression’.
from Telegraph.co.uk:

As Gold Rebounds Over $1600, Some Thoughts On Why The Liquidation Snapback Is Here

Yesterday when gold was trading in the $1570 we suggested that based on the very volatile shifts in the funding environment for gold, whereby the gold lease rate had moved from record negative to borderline flat, the plunge in the yellow metal is likely coming to an end. Less than 24 hours later, gold has just passed $1600 yet again. And as the following note from Sandeep Jaitly of First International Group (whose interview with Max Keiser exposing economics for fraud back in June was quite the hit) observes, by analyzing the continued funding unwind pressure, the recent liquidation move in gold is one that has to be taken advantage of. To wit: "The movements in the bases confirm that the recent downward move in gold against Dollars was as a result of Dollar funding pressures. Gold was lent on the swap against United States Dollars. This swap must be unwound and where a bid for gold was sought to raise Dollar liquidity, an offer of gold will be sought to unwind the swaps. The co-bases for Feb-12 and Apr-12 gold contracts are starting to advance – an exceptionally bullish signal following the selloff and a sign that physical buying is being prompted by these lower prices. It would be very prudent to accumulate gold against United States Dollars aggressively over the next fortnight."

ECB Liquidity: Back-Door Bazooka Or Suspension Of Democracy, BARCAP Opines

 The market's reaction to Draghi's comments over the last week have been visceral in its schizophrenia. While his 'temporary' provisions, three-year LTROs specifically, provide a life-line of liquidity (a la TLGP - and how is that working out for the US banks having to roll now?), they hardly address the real underlying problem of the vicious circle between sovereign debt's now-risky nature and financial balance sheets bloated with zero-risk-weighted re-hypothecated peripheral bonds. The last week has seen a roller-coaster of Senior-Sub debt decompression and compression, liquidation-like drops in commodities, lower correlation across European sovereign debt, and significant dispersion in high- and low-beta equity and credit markets (notably as we have previously discussed, some of which will have been driven by index roll technicals). The issue comes down to whether this is the Bazooka (buy-buy-buy) or not enough (fade-the-rallies) and BARCAP's macro sales and European Banks' research team have, like the rest of the market, been exchanging views on this perspective. While their take on the liquidity explosion is that it doesn't solve the almost unsolvable solvency problem but it the deeper insight that perhaps it is not the actual mechanics of this liquidity bazooka but the perception that democracy itself has been suspended in favor of bank and sovereign survival that interests us more. Furthermore, they do an excellent job on breaking down the mythical carry trade potential of these LTROs and mutual sovereign financing benefits since near-term (carry-trade) profit potential would be offset by additional sovereign risk - meaning that funding markets could stay closed for longer. Once again the issue of collateralization, risk-weightings, and deleveraging are front-and-center as bank 'managers' and politicians may be at loggerheads on the carry-trade-savior potential and the ECB's status on the balance sheet only serves to further subordinate existing bondholders.

Daily US Opening News And Market Re-Cap: December 16

• Fitch downgraded the long-term IDR ratings of seven major banks, including, Bank of America, Goldman Sachs, Citigroup, Barclays, BNP Paribas, Credit Suisse and Deutsche Bank
• Market talk that S&P may downgrade sovereign ratings of Spain and Italy today, however the talk remains unconfirmed
• Eurozone 10-year government bond yield spreads tightened across the board, with particular narrowing observed in the Spanish/German and Italian/German spreads
• According to a senior Troika official, the aim of Greek talks is a voluntary debt swap, however there are no guarantees of success, adding that the Greek 2011 deficit is likely to be higher than the 9% of GDP target
• German FDP party approved the set-up of ESM

Russia Intercepts Radioactive Shipment To Iran

The Iranian geopolitical tension is about to get more complicated, after it was uncovered that Russian authorities had intercepted a passenger carrying radioactive material to Iran. According to AFP, the Russian customs service seized a consignment of radioactive isotope Sodium-22 at a Moscow airport from a passenger who was to travel on a flight to Tehran, the customs service said in a statement. "Tests showed that the Sodium-22 could only have been obtained as the result of the work of a nuclear reactor," the customs service said, saying it was alerted by signals that background radiation in the area was 20 times the norm. We expect to hear some loud noises coming from the now hopelessly irrelevant US State Department within minutes. As for the "Russian connection", we doubt anyone will be surprised by the gamma decaying love between the two countries.

Market Snapshot: European Dispersion And The CDS Roll

Next week, credit derivatives will roll from December to March maturities. The last couple of days have seen increasing dispersion across sovereign, and corporate equity and credit markets in Europe. The modestly bullish bias to credit index moves, while not totally dismissible as optimism, is likely to have a number of technical drivers implying that investors should not read too much into the compression. Liquidity has dropped notably in both single-name and index products recently and credit derivative dealers have increased the spread between the bid and the offer accordingly - this means the roll adjustment may be even more expensive this time around and for traders with a book full of single-name CDS, positioned more short, the bias will be to sell index protection to 'hedge' some of that roll-adjustment. The other technical is the indices swung once again from rich to cheap into the middle of this week (meaning the indices trade on a cheap basis to the cost of the underlying components) and so heading into a roll, arbitrageurs will want to rapidly take advantage of this - especially in the high-beta XOver and Subordinated financials space. So, all-in-all there has been some optimism in credit markets the last two days but as-ever we pour some sold water on the excitement as all-too-likely this is driven by roll and arb technicals, as opposed to a wall of risk-hungry buyers.

RANsquawk European Morning Briefing - Stocks, Bonds, FX etc. – 16/12/11

Submitted by RANSquawk Video on 12/16/2011 - 06:07 ETC Morning Briefing RANSquawk





Social Security in violent transition? 

Posted by : Bruce Krasting

Post date: 12/16/2011 - 07:22

The gloves are coming off.

Ron Paul Tea Party Money Bomb starts tonight at midnight, and runs all day Friday, December 16th, 2011.
Support the one candidate who supports the Constitution and your right to life, liberty and the pursuit of happiness.
Support the Ron Paul Money Bomb @ DailyPaul.com & RonPaul2012.com

Central Banks Are Steadily Losing Their Cover In The Gold Market

by Chris Powell, GATA:
Dear Friend of GATA and Gold:
Thanks to the latest commentaries by Brady Willett of Fall Street, Tom Szabo of Metal Augmentor, and Jim Willie of the Golden Jackass, more people are realizing the potential for market manipulation through central bank gold leasing, of which there lately have been strong indications.
In “Did Ron Paul Slay the Gold Bull?” Willett remarks that favorable lease rates “allow powerful interests to more readily manipulate gold”:
http://www.fallstreet.com/dec1511.html
In “Charlatan Exposed: Negative Gold Lease Rates,” Szabo writes: “The gold forward rate has increased during both the late September and current selloffs in gold, which probably means that gold is being leased by central banks in order to provide liquidity for the banking system. … The gold bugs are essentially right that the gold price is falling this time because paper gold is flooding the market.”
Read More @ GATA.org

Ron Paul Up, Jon Corzine Testified, Europe Debt Crisis, Strait of Hormuz & More: Weekly News Wrap Up

[Ed. Note: Related.]
from USAWatchDog:

USAWatchdog.com – Jon Corzine, former head of now bankrupt MF Global, testified in front of multiple congressional committees this week along with other top executives of the firm. It was almost like an episode of the Three Stooges in the way these folks portrayed what they knew and when they knew it. The main problem is the question of what happened to $1.2 billion in customer cash. The executives claim they didn’t know anything, but some in Congress aren’t buying it. The IMF chief, Christine Lagarde, said the crisis in Europe is not only “unfolding but escalating.” Iranians now say they brought down that American spy drone (SQ 170 Sentinel) by hacking into the electronics of the aircraft. The U.S. denies it’s even the real thing. Meanwhile, it is reported the Iranians are practicing shutting down the Strait of Hormuz. The Strait is a shipping passage for 40% of the world’s crude oil annually. If that is closed down due to hostilities, it would surely sink the fragile world economy. Congressman Ron Paul keeps fighting his way up the national Presidential polls. He is near the top and only out of first place now by a few percentage points despite the MSM largely ignoring his campaign. Finally, the indefinite detention bill or the National Defense Authorization Act (NDAA) is on its way to President Obama’s desk to sign into law. Many say it largely strips U.S. citizens of their constitutional rights. Greg Hunter of USAWatchdog.com has all these stories and more in this edition of the Weekly News Wrap-Up.

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