EURUSD Slides To 2 Year Low As Reality Supercedes Hope
European
credit markets - sovereign, financial, and corporate - have all
slumped dramatically in the last two days - massivley underperforming
the ever-hopeful equity markets. Even though broadly European
stocks (the BE500 or STOXX) are only retraced by around 25% off their
post-summit highs, individual markets (and especially financials) have
retraced almost 100% of the gains with Spain's IBEX seeing its biggest
2-day drop in 7 months and closing unch anged from pre-Summit levels. EURUSD is the story though as it plunges to two-year lows at 1.2266 - over 400pips from its post-summit euphoria highs
as QE3 hopes are dashed by muddling through US data. The disconnect
between US and European equity indices and the rest of the world's more
idiosyncratic risk markets remains unsustainable and as we have said
before again and again "credit anticipates and equity confirms".
FX Market Sees NEW QE Probability At 25%, Down 50% From Week Ago
For a while now we have suggested that, based on the relationship between the Federal Reserve balance sheet and the ECB's, a 'fair' value for EURUSD is around 1.20.
The difference, we felt, was inspired by hope for a sizable (~$700bn
'pure' NEW QE). The last month or so has seen that hope fade (as well as
European stress rising as ECB rates align with the Fed's ZIRP) as EURUSD now implies the probability of NEW QE now at only 25% (and falling).
European
credit markets - sovereign, financial, and corporate - have all
slumped dramatically in the last two days - massivley underperforming
the ever-hopeful equity markets. Even though broadly European
stocks (the BE500 or STOXX) are only retraced by around 25% off their
post-summit highs, individual markets (and especially financials) have
retraced almost 100% of the gains with Spain's IBEX seeing its biggest
2-day drop in 7 months and closing unch anged from pre-Summit levels. EURUSD is the story though as it plunges to two-year lows at 1.2266 - over 400pips from its post-summit euphoria highs
as QE3 hopes are dashed by muddling through US data. The disconnect
between US and European equity indices and the rest of the world's more
idiosyncratic risk markets remains unsustainable and as we have said
before again and again "credit anticipates and equity confirms".Deutsche Bank Shares Slide As Bafin Discloses Liebor Probe Of Biggest German Bank
And
the hits just keep on coming. Just as we said when it first broke, the
Lieborgate scandal has considerably more play here and the latest and
greatest is, via Bloomberg:Germany’s Bafin Holding Libor Inquiry on Deutsche Bank: Reuters
The Deutsche Bank ADR has plunged by around 5% so far. Following 'news' this morning that RBC didn't 'collude' but no denial of the actual submission 'efforts' it would not surprise us to see the entire spectrum of LIBOR submitters 'probed'.
RBS 'Glitch' Goes Airborne As Biggest Russian Bank Halts All Credit, Debit Card Operations
It seems IT professionals around the world are #failing as the 'glitch' that affected millions of account holders in the UK has leaped the channel and spread across Europe to infect Sberbank - which just happens to be the largest Russian bank. Via Bloomberg:- *SBERBANK CARDS NOT WORKING IN RUSSIA, ABROAD, COMPANY SAYS
- *SBERBANK SAYS WORKING TO RESOLVE TECHNICAL MALFUNCTION :SBER RU
How many times did these glitches occur among the world's largest and likely highest paid IT services groups before the European financial crisis pulled back the curtain and showed the proximity of the liquidty cliff for so many of the 'biggest' banks in the world?RUSSIA-SBERBANK-CARDS-MALFUNCTION MOSCOW. July 6. (Interfax) – Sberbank of Russia (RTS: SBER) has suspended credit and debit card operations due to a technical malfunction, the bank told Interfax. “All cards are not being serviced,” it said.
from Matlarson10:
Obama Reacts To Ugly Jobs Report - Live Webcast
Shots
for "fairness", "duty", "fault" and any other crowdsourced
suggestions. No shots for "Solyndra", "Choom gang", "Eric Holder" or
"record part-time jobs." If recent history is any indication, look for
the S&P to slide.Expectations Smashed Again
Eric De Groot at Eric De Groot - 2 hours ago
Expectations for job growth were high, but reality smashed them again.
Fear not feel-good traders and investors, election year politics means
short memories and plenty of positive economic spin intended to
convey hope for a growing number of disenchanted Americans. Employment
report highlights: Job creation is slowing (chart 1 and 2) Trucking and
warehousing, a...
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content, and more! ]]
Borrowed Time Regardless of Rate Cuts
Eric De Groot at Eric De Groot - 3 hours ago
Europe, England, and China cut rates in response to slowing global growth.
Although cutting short-term rates in response to market driven rates
doesn't do a damn thing to encourage lending and/or investment, it's the
appropriate play in the game of appearances designed to bolster confidence
and buy more time. Eventually, the act of maintaining appearances must be
supported by difficult,...
[[ This is a content summary only. Visit my website for full links, other
content, and more! ]]Snapback - Stockton, Calif. And All The Cities To Follow
Every government entity that reckoned it was moated from the market economy will be snapped back to "discover" risk and consequence. Let's lay out the dynamic:1. Every government can only spend what its economy generates in surplus.
2. Every government transfers risk and consequence from itself, its employees and its favored vested interests to the citizenry and taxpayers.
3. Every government collects and distributes the surplus of its private sector to its employees, favored constituencies and vested interests.
4. Since the government (State) promises guaranteed salaries, benefits and entitlements to its employees and favored constituencies, these individuals believe they are living in a risk-free Wonderland that is completely protected from the market economy.
5. Risk cannot be repealed or eliminated, it can only be masked or transferred to others.
... continued
Biderman On The Constitution And 'Special Interest' Democracy
As
politicians have become more and addicted to the campaign
contributions of 'special interest' groups, or as Charles Biderman of
TrimTabs analogizes: "The pusher owns the user", so the
representatives-of-the-people are no longer. The only solution Charles sees is to change our representative form of government
as we "no longer have a government of the people, for the people, by
the people". In a July-4th-week inspired rant, Biderman extends from the
Gettysburg address to constitutional expectations (and representative
law-driven rule as opposed to military force) concluding what many know
and yet are afraid to lean against: our government is "of the special interest groups, for the special interest groups, and by the special interest groups".The Only Thing We Have To Hope Is Hope Itself
With
today's payroll print hardly bad enough to prompt instantaneous QE (as
evidenced by the weakness in gold for now) and increasing truth coming
out of Europe which confirms our non-game-changing EU-Summit calls; it
seems S&P 500 futures remain confident about something since they
have only retraced 38% of the EU-Summit hope rally,
while EURUSD is over 100% retraced, European Sovereign bond yields have
retraced over 100% of the gains, Italian banks stocks have given up
between 75 and 100% of their gains and across all European banks equity
prices have given up 50% of their gains. So what is there left for ES? Earnings? (not so much with the number of negative pre-announcements) Housing? (hhm don't think so) Election cycle?UK Serious Fraud Office To Begin Criminal Probe Into Lieborgate
And in the meantime, not a peep about any bank in the US, which is ironic considering JPM, Citi and BofA are BBA member banks, and had among the lowest fixing rates during the period in question, and as Bob Diamond himself said, "everyone did it." One may almost get the impression that US regulators and politicians, gasp, have a motive to not investigate banks for not only criminal but civil malfeasance. And why should they: after all there is unlimited taxpayer money. And if that ends, the US can just print some more.
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Point Out The "Housing Bottom" On This Chart
The chart below is a representation of the Establishment Survey (B.1)showing
workers in the Construction of Buildings Space, aka those who, as the
name implies, build buildings. At 1,213,500 workers, this was not only
the lowest number of 2012, but the lowest since May 2011, and is just
2100 workers above the last decade lows. Perhaps instead of relying on
the NAR's self-promotional brochures and Housing Starts data which
capture if and when a shovel has met the earth, one should perhaps track
how much actual demand there is for building construction workers and
how many jobs this critical component of the economy creates. Sadly, as
the chart below shows, not much.Gold Surge and Equity Purge Post-Payrolls... Update: Gold Unsurging
UPDATE: Sell-off gathering pace now. WTI lagging a little more now at $84.6 -$1.2 and ES back at this week's lows as Gold has retraced all its knee-jerk gains
The initial knee-jerk reaction is a closing of the hope-gap between stocks and gold as S&P 500 e-mini futures are down 6pts or so from pre-NFP and Gold is up $11. Treasury yields are dropping relatively fast to the lows of their recent range under 1.56%. For now modest reactions in IG and HY credit (but markets are thin there this week). The USD is just a little weaker and WTI crude is limping lower but not spectacularly. European sovereign spreads are back at their highs.
June Non-Farm Payrolls +80,000, Missing Expectations; Unemployment Rate 8.2%
The June Non-farm Payroll number of 80,000 comes below expectations of 100,000. Private payrolls miss even worse, at 84,000 below consensus of 106,000. Unemployment rate prints at 8.2%, inline with expectations. U-6, or broad unemployment rose from 14.8% to 14.9%. According to the household survey, jobs rose by 156,000 S/A and 1,387,000 Not seasonally adjusted. The worst news is that the number is not bad enough for more NEW QE immediately.
As A Reminder, Here Are The Monthly NFP Seasonal Adjustments
With
the revised consensus of the NFP number due out in under 30 minutes at
precisely 100,000 (because 99,963.333 and 101,492.5 are not quite as
round, memorable and thresholdy), we remind readers that in June the
average seasonal adjustment over the past decade comes to just over 1
million. These are 1 million jobs that do not exist but are merely
added, or in June's average case, subtracted from the actual number, to
make them fit a regression pattern. In other words, the marginal number
that will determine whether or not we have a NEW QE will be far less
than 10% of what the statistical adjustment to the actual June number
itself will be.Reporting On The Golden Fleece
We are at that moment in time where Greece has capitulated and it is going to be hanging or life imprisonment and Greece, eyes downward cast, is waiting for the verdict. This situation may have been long in coming but it is going to be a disaster for the IMF and for the European Union however it goes. Greece (3) will be a “moment” of that you may be assured and the announcement will be coming shortly. The forthcoming decision will be a matter of credibility in the end as the next line in the sand will hit the ECB, the EU and the IMF in a place that hurts as the last free barrier, the private investors, has been breached and is it going to be the taxpayers of Europe that bear the brunt or is it to be the nation of Greece and her people. There can be no more excuses and the fantastic charades of the past have evaporated and been found wanting. The shepherd ascended Mount Olympus and finding no temples, no gods now is descending back down the mountain and trying hard to figure out just what to say to the people. We are about to face a “Moses Moment” when the worshipping of the “Golden Bull” will no longer cut it. Stand by!The First Money Market Casualty Of The ECB: JP Morgan
Yesterday, the ECB took the rate on its deposit facility to 0.0%. Today the money market causalities begin.Frontrunning: July 6
- Beggars can't be choosers after all: Greece Drops Demand to Ease Bailout Terms (FT)
- It took journalists 4 years to get that under ZIRP all banks have to be hedge funds: US Banks Taking Risks in Search of Yield (FT)
- Made-In-London Scandals Risk City Reputation As Money Center (Bloomberg)
- Merkel Approval Rises to Highest Since 2009 After EU Summit (Bloomberg)
- Judge orders JPMorgan to explain withholding emails (Reuters)
- U.S. hiring seen stuck in low gear in June (Reuters)
- Germans Urged to Block Merkel on Integration (WSJ)
- Crony Capitalism Rules: Countrywide used VIP program to sway Congress (Reuters)
- Barclays’ US Deal Rewrites Libor Process (FT)
- Cyprus Juggles EU and Russian Support (FT)
- Delay Seen (Again) For New Rules on Accounting (WSJ)
- Lagarde Says IMF to Cut Growth Outlook as Global Economy Weakens (Bloomberg)
Spain Yield Back Above 7%
Summit full life: One week.
Literally. Last Friday morning speculation that Germany had "caved" to
Mario Monti, somehow allowing beggars to be choosers, and would allow
an unconditional and IMF-free rescue of Spain and Italy while the
seniority of the ESM was eliminated, sending the Spanish 10 Year yield
to under 6.2%. The same security is now back over 7%, where it was just
before the summit, as Finland and Holland (or half of Europe's
AAA-rated countries), and even Germany, made it quite clear, as we said
all along, that stripping seniority of a piece of debt is far more
complex than saying one wants to do it in a Memorandum of
Understanding. The other thing pushing Spanish spreads wider was German
FinMin spokesman Kotthaus saying that no decision on Spain can be
taken on Monday as there is no Troika report on Spain bank aid yet, and
that the European bailout activation, which was supposed to begin on
July 9th, may be delayed until July 20. At that point it will likely be
delayed again, only this time GSPGs may be trading wider than their
lifetime highs of 7.285%. Finally, adding insult to Mario Monti
"victory" is that Merkel's popularity rating just hit a multi-year
high. So: who was last week's summit "winner" again?Today’s Items:
France’s new socialist government has hit
its wealthiest with a 7.2 billion euro tax hike to meet this years
budget deficit target. It also includes surcharges on banks and energy
companies. With that in mind, people tend to vote with their feet and
French is spoken in Canada. The problem with killing the rich and
taking all their stuff is that you can only do it once.
Barclays released emails, from 2008, that
implicates the British Government in the LIBOR scandal. The London
Interbank Exchange Rate, is the rate at which banks borrow from each
other. This rigging was done to make banks make themselves look
healthier, but this had the consequence of affecting hundreds of
trillions of dollars’ worth of financial products worldwide. Even with
the newly adopted so-called “Improved” standard, the Bank of England
and the Fed are both implicated, but they will not go down until the
whole house of cards collapses.
At a cost of $3.5 billion, a giant new
Chinese-built city has sprung up on the outskirts of Angolia’s
capital. The apartments, advertised for more than $120 dollars is well
out of reach for two-thirds of Angolan population, who live on less
than $2 a day. China is most likely thinking long term here folks.
The IRS identified roughly two million tax
returns that were potentially fraudulent last year which is a 72%
increase. It appears that many are following the criminal element in
Washington. Can you imagine the nightmare with the implementation of
over 13,000 pages of regulations with the ObamaTax law.
The following states are considered to
have the lowest property tax bills in the country: Arizona, New
Mexico, West Virginia, Alabama, and Louisiana.
Here are a few…
1. The average U.S. family now spends more than $4000 a year at Wal-Mart.
2. Wal-Mart is the largest employer in 25 different U.S. states.
3. 85 percent of all the products sold at Wal-Mart are made outside of the U.S..
1. The average U.S. family now spends more than $4000 a year at Wal-Mart.
2. Wal-Mart is the largest employer in 25 different U.S. states.
3. 85 percent of all the products sold at Wal-Mart are made outside of the U.S..
Next…
Detective Probes Obama Social Security Number Mystery
http://www.youtube.com
http://www.wnd.com
Detective Probes Obama Social Security Number Mystery
http://www.youtube.com
http://www.wnd.com
A suit has been filed, in Ohio, for the
removal of Obama’s name from the Presidential ballot until he can prove
the validity of his Social Security Number. The prefix number of “042″,
used by Obama, are for residents of Connecticut and the 10 sequential
numbers before and after Obama’ number are from 1977 to 1979. Where
there is smoke there is fire.
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