S&P Downgrades 15 Italian Financial Institutions, Says Country Faces Deeper Recession Than Previously Thought
It is late in the afternoon on a Friday, which means one thing: it is time to dump all left over bad news under the rug. Sure enough, here comes S&P. From Bloomberg:- S&P CUTS RATINGS ON 15 ITALIAN FINL INSTITUTIONS
- S&P TAKES RATING ACTIONS ON 32 ITALIAN FINL INSTITUTIONS
- BANCA MONTE DEI PASCHI DI SIENA SPA CUT TO BBB-/NEGATIVE/A-3
- BANCA POPOLARE DI MILANO SCRL CUT TO BB+/NEGATIVE/B BY S&P
- S&P SAYS ITALY FACES POTENTIAL DEEPER RECESSION THAN IT THOUGHT
Europe's Largest Insurer Allianz Not Amused That Central Banks Are Involved In Liborgate
What a difference a revisionist market rally makes. Remember when everyone was involved in Libor manipulation? No? Curious what a few hundred DJIA points will do especially when the corporate revenues and supporting them simply are not there, and one goes all in on multiple expansion. One entity which, however, has not forgotten about Lieborgate is Pimco parent and Europe's largest insurance firm, Allianz. And they are not happy: "Europe's biggest insurer, Allianz, is worried about the role central banks may have played in an interest rate rigging scandal that has enveloped some leading international lenders, the insurer's chief financial officer said on Friday. "We do not find it funny, what has happened, in particular the arising implication that it is not just the banks but central banks being involved in this," Oliver Baete told a conference call with analysts. "That really gives us cause for concern," Baete added." Of course, neither the ECB nor the FED could care much, considering that Allianz would be immediately insolvent if the same central banks who manipulated Libor stopped manipulating interest rates... which is implicitly what Allianz is unhappy about.TD Ameritrade Resumes Trading With Knight Hours Before Credit Line Expires; $440 MM Cash Outflow Looms
Knight's credit line expires in 90 minutes. All day it has been a dark box, with virtually no trades coming in or leaving. The company is scrambling, so what happens: some much needed good news finally hits the tape following a TD Ameritrade announcement it has resumed trading with KCG. Will others piggyback as the credit lifeline that is keeping Knight alive expires at the end of the day, and the liquidity runs out, or will firms who explicitly are Knight's competitors in a market which has ever less volume leave it out to hang in hopes of picking up its business on the cheap. A 90 minute difference between life and death for a firm in desperate need of many more such press releases.Treasury Selling Another $4.5 Billion In AIG Stock, AIG To Buy $3 Billion Of Offering
Moments ago AIG stock was halted with many scratching their heads as to the the reason why. Here it is, courtesy of Bloomberg:- TREASURY TO OFFER $4.5 BILLION OF AIG COMMON SHARES
- AIG TO BUY BACK UP TO $3 BILLION OF SHARES SOLD BY TREASURY
Friday Chart Porn: Value Play Of The Decade
Before I get to the good stuff, I wanted to comment quickly on today's
employment report released by the Government. As we all know by now, the
NFP (non-farm payroll report) is one of the most highly politicized and
statistically manipulated economic statistics on the planet. It's gotten
to the point at which it's become absurd in extremis the degree to which
so-called experts get in front of the public and discuss this report as if
it has any meaning at all. In fact, the only meaning it represents to me
is the outrageous degree to which the Government is willing to stretch the
t... more »
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Jim Sinclair’s Commentary
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Jim Sinclair’s Commentary
This is akin to having all clearing agents agree while crossing their hearts not to put their mothers in the microwave ever.
CFTC approves new NFA financial requirement to strengthen protection of customer segregated funds at FCMs
The CFTC recently approved NFA Financial Requirements Section 16 and the related interpretive notice entitled "FCM Financial Practices and Excess Segregated Funds/Secured Amount Disbursements". NFA Financial Requirements Section 16 and the notice impose new requirements on futures commission merchants (FCM) with respect to customer segregated funds and secured amount funds accounts, and require reporting of specific information regarding financial and operational information on a monthly or semi-monthly basis. The requirements will become effective September 1.
NFA Financial Requirements Section 16
NFA Financial Requirements Section 16 contains four subsections. Subsection 16(a) requires FCMs to maintain written policies and procedures regarding the maintenance of FCM’s residual interest in customer segregated and customer secured amount funds. These policies and procedures must identify a target amount (either a percentage or dollar amount) that the FCM will seek to maintain as its residual interest. This target residual amount, and any changes to the amount or material changes to the written policies and procedures, must be approved in writing by the FCM’s governing body, CEO or CFO.
The second subsection, 16(b), prohibits an FCM from withdrawing, transferring or otherwise disbursing funds from any customer segregated funds account exceeding 25 percent of the FCM’s residual interest in those accounts unless the FCM’s CEO, CFO or a principal with knowledge of the firm’s financial information pre-approves the disbursement in writing. Subsection (b) also requires any FCM making such a disbursement to file written notice through the WinJammer online filing system of the disbursement and other specified information. The subsection also imposes requirements for disbursements from any customer segregated funds account made subsequent to a disbursement that exceeds the 25 percent threshold and prior to the next day’s required segregated funds calculation.
More…
US economy adds 163K jobs, rate rises to 8.3 pct. CIGA Eric
A positive but decelerating job creation histogram (JCH) suggests tepid annual job growth within a backdrop of civilian labor force contraction. A zero crossover will signal to the Fed that policy inaction is not longer an option. Until then, a combination of following the path of least resistance (up) and well-timed “whatever it takes” jawboning allows the reallocation trade from bonds to stocks to continue.
Chart: Job Creation Histogram (JCH): Net Nonfarm Payrolls Added/(Lost) less Civilian Labor Force Added/(Lost), 12 Month Average
Headline: US economy adds 163K jobs, rate rises to 8.3 pct.
WASHINGTON (AP) — U.S. employers added 163,000 jobs in July, a hopeful sign after three months of sluggish hiring.
The Labor Department said Friday that the unemployment rate rose to 8.3 percent from 8.2 percent in June.
July’s hiring was the best since February. Still, the economy has added an average of 151,000 jobs a month this year, roughly the same as last year’s pace. That’s not enough to satisfy the 12.8 million Americans who are unemployed.
The government uses two surveys to measure employment. A survey of businesses showed job gains. The unemployment rate comes from a survey of households, which showed fewer people had jobs. Economists say the business survey is more reliable.
Investors appeared pleased with the report. Futures tracking the Standard & Poor’s 500 index and the Dow Jones industrial average gained about 1 percent. The stock market is coming off four days of losses. Yields on government bonds also rose after the report came out as investors moved money out of low-risk assets.
Source: finance.yahoo.com
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Dear Jim,
Think back, do you remember Lehman Bros.? How about MF Global and more recently PFG Best? What do they all have in common? Yes, they all went bankrupt you are correct but…what they ALL had in common was "how", or more to the point HOW FAST they went bankrupt. All of these entities literally went belly up within a week’s time.
How does a firm "just go bankrupt" overnight? Easy, other firms begin to pull money out at the same time that no one will lend to them in the overnight markets. With 20 or 30 to 1 leverage, the milk spoils pretty quickly!
Now, we have Knight Capital in the exact same situation and it has been reported that they are looking for a buyer. They lost $440 million (chump change in today’s world) when their "algo" trading system "malfunctioned" 2 days ago. There is speculation as to the how’s and why’s. I don’t really care. There is speculation on the conspiratorial level that this is just another "rehypothecated vacuum cleaner" being used to force people out of their commodity contracts or to steal client money, (I hope not and feel for the customers) but this I believe is losing sight of the much MUCH bigger picture.
If these firms (along with Merrill Lynch, Countrywide Mortgage, AIG and many more back in 2008) can become insolvent within 5 trading days and close their doors, what does that say? While reading this piece, please keep in mind that financial institutions now mark their assets to whatever they please, no matter how farcical the price. I would venture to say with few exceptions, none of the firms that have gone under were considered at risk a month or two before their doors were closed.
Looking at the situation from a systemic standpoint you must ask yourself what is to stop this type of scenario from happening to the whole system overnight and not just firm by firm.
The answer is very simple – the printing presses. Central banks will create as much money as necessary, whenever necessary to prevent a systemic default. Yes I know, I sound like a broken record but this is what will happen because there are no other alternatives. Please think long and hard about this topic because your financial lives depend on it. We know that the system is over leveraged, we know that ALL the monies (currencies) are based on and backed by all of this debt, we know that governments have always responded (including the last 4 years) by debasing their currency. We know all of this yes, yet people are still depressed because their Gold and Silver is down. You can see the falsehoods everywhere and you know what the government responses have been. You also know what those responses will do to the currency and that in a collapsing currency, what it does to the precious metal’s values. Don’t let boredom, frustration or fear separate you from your insurance!
Regards,
CIGA Bill H.
Dear Bill,
I cannot understand why any reader is failing to take delivery of
their certificates, their metals and there monies as getting anything
back from a clearinghouse is a pure gamble on the unknown. The only
reason I can see is dumbed downed laziness.
You are all involved in third parties holding your assets. This is madness and self destructive.
Audits are no good. Insurance is not funded to cover all the risk out there.
Why do you hold securities with a clearing firm? Why do you own any
public gold company that will not direct register or deliver
certificates for you? Why are you long paper gold and think you really
own gold? How do you hold ETFs and really believe you own gold? You do
not! How do you buy gold anywhere you never will see or touch.
It is raving madness that affects 9.9 out of 10 people reading this.
The system is BROKEN and all the King’s men cannot put it back together
again.
Your tax accounts are traps set for you. You are sitting targets that
already know that your fiduciary, like all so called fiduciaries, is
not worth a lead nickel because that is what your assets will be –
worthless.
What can I do for you if the most simple act you need to do you continue to fail to do? Wake up, damn it!
Jim
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