May 03

draghi prayerMario-Draghi-Just-EvilHyper-Mario-Draghi

“Stop Being So Negative”: Putting It All Together (ZeroHedge, May 2, 2015):

Putting it all together

Considering:

1) governments are unable to eliminate deficits

2) global government debt is increasing exponentially

3) 0% interest rates are allowing governments to borrow more to pay off old loans and fund deficits

4) Global growth is declining despite money printing and bailouts And, we’ve saved the latest and greatest fact for last: as stunning as 0% interest rates sound, the mathematically-challenged-fantasyland called Europe has just one upped everyone by introducing NEGATIVE INTEREST RATES.

As of writing, over 25% of all bonds issued by European governments has a guaranteed negative return for investors. Continue reading »

Tags: , , , , , , , , , , ,

Apr 29

Gundlach Considers 100X Leveraged Bet Against German Bunds (ZeroHedge, April 29, 2015):

A little over a week ago, the “old” Bond King Bill Gross called the 10-year German Bund the “short of a lifetime.” Shortly thereafter, David Einhorn challenged Mario Draghi to explain what he imagines would constitute signs of a bubble in the sovereign debt market that aren’t “already evident.” While there’s little question that the ECB has succeeded (whether through QE itself or whether by triggering a bid for EGBs from market participants intent on front-running future central bank purchases) in artificially suppressing yields across the Bund curve, we suggested that because the Bundesbank will face a shortage of supply as it attempts to hit its monthly purchase targets under the capital key, those selling in the secondary market will be able to demand prices commensurate with the depo rate yield floor until the entire curve converges on -0.20%:

Far from being the short of a lifetime right now, Bunds are in fact quite the opposite, and their progression to the hard -0.20% floor across the curve is just a matter of time before everyone decides to frontrun the ECB’s purchases over the next year. Because if the ECB will have no choice but to buy even more Bunds from the private market, then the sellers can demand any prices for these Bunds, up to and including the ECB’s hard (for now) floor of -0.20%!

Once the entire German curve is trading at -0.20% then Bill Gross will be spot on, and Bunds will indeed be the short of a lifetime. Continue reading »

Tags: , , ,

Apr 23

parthenon

Forget “Grexit”, “Grimbo” Has Arrived (ZeroHedge, April 23, 2015):

If you didn’t know any better you might think “Grimbo” was a new Sesame Street character. Far from being the name of something that brings smiles to the faces of young children however, it’s actually the latest one-word take on the likely outcome of Greece’s protracted, painful negotiations with creditors, which will continue tomorrow in Riga where progress is, according to pretty much everyone that will be involved, unlikely. The new term follows in the footsteps of the classic (but now tired) “Grexit” and its underrated predecessor “Graccident,” and refers to two of the four outcomes Citi imagines are possible in the unfolding Greek drama. Here, via Citi, are the scenarios that would constitute Grimbo: Continue reading »

Tags: , , , , , , , ,

Apr 22

Related info:

ECB Prepares To Sacrifice Greek Banks With 50% Collateral Haircut:

The bottom line – it’s over! Absent Russian ‘loans’ or Chinese infrastructure deals, the “Cyprus”-ing will begin shortly which perhaps Greek depositors will front-run better than the Cypriots.”


GREXIT

Grexit: Remaining In The Eurozone Is No Longer ‘The Base Case’ For Greece (Economic Collapse, April 21, 2015):

According to the Wall Street Journal, Greece staying in the eurozone is no longer “the base case” for European officials, and one even told the Journal that “literally nothing has been achieved” in negotiations with the new Greek government since the Greek election almost three months ago.  In other words, you can take all of that stuff you heard about how the Greek crisis was fixed and throw it out the window.  Over the next few months, a big chunk of Greek government bonds held by the IMF and the European Central Bank will mature.  Unless negotiations produce a load of new cash for Greece, there will be a default, and right now there is very little optimism that we will see an agreement any time soon.  In fact, as I wrote about the other day, behind the scenes banks all over Europe are quietly preparing for a Grexit.  European news sources are reporting that the Greek banking system is on the verge of collapse, and over the past couple of weeks Greek bond yields have shot through the roof.  Most of the things that we would expect to see in the lead up to a Greek exit from the eurozone are happening, and now we will wait and see if the Greeks actually have the guts to pull the trigger when push comes to shove. Continue reading »

Tags: , , , , , , ,

Apr 21

This is of course perfectly normal and nothing to worry about.

matrix-system-failure

Prepare for collapse.


European Banks Are Paid To Borrow For First Time Ever As Euribor Goes Negative (ZeroHedge, April 21, 2015):

Mario Draghi said this week that the transmission channels for European Q€ were opening up and crowed how well his cunning plan was working (by well we assume he means stocks are up). Today we get the ultimate test of that ‘transmission’ as 3-Month EURIBOR fell below 0.00% for the first time ever (likely wreaking havoc on European derivative pricing models). In English that means banks are being paid to borrow from one another in the interbank money-markets (which sounds a lot like a ‘glut’ of excess cash) seemingly confirming ICMA’s de Vidts fears: “We are scared about the [repo] market freezing,” as the ECB is “driving without headlights in the dark.”Of course this is yet another disturbing distortion on the heels of homeowners being paid to take out mortgages…

Banks now paid to borrow from one another…

20150419_euribor

As fears of the repo market in Europe freezing appear to be confirmed… (via Reuters),

The European Central Bank (ECB) risks secured-lending or repo markets grinding to a halt unless it works more closely with national central banks (NCBs) to improve liquidity, a senior trade association official told Reuters. Continue reading »

Tags: , , , , ,

Apr 18

pelosi-emmanuel-corruptionrahm-emanuel

Chicago Credit Risk Soars On Rahm Emanuel’s Re-Election (ZeroHedge, April 18, 2014):

It appears the re-election of Rahm Emanuel as Chicago Mayor has done nothing to assuage concerns about the city’s insolvency. As Emanuel’s victory became more assured, credit risk (measured by the spread between Chicago Muni yields and Treasury yields) has soared from 180bps to over 240bps.

20150418_chicago

Chart: Bloomberg

Furthermore, it has accelerated even more since the April 7th election. Recent statements by S&P that if the city fails to articulate & implement a plan by the end of 1015 to sustainably fund pension contributions, or if it substantially draws down reserves to fund contributions, they will likely lower the rating; has not helped (given that Moody’s already have Chicago at Baa2 – just 2 notches above junk). Continue reading »

Tags: , , , ,

Apr 17

You can’t make this stuff up!!!


Greece Is About To Be ‘Fixed’ For Good (ZeroHedge, April 17, 2015):

What could possibly go wrong?

Just wait until he tells the Greek PM that “debt doesn’t matter.” Continue reading »

Tags: , , , , , , , , ,

Apr 17

negative

Meet the latest country with negative interest rates (Sovereign Man, April 16, 2015):

Let’s talk about idiots.

Somewhere out there, some absurdly well-paid banker just placed his investors’ capital in yet another financial instrument which is guaranteed to lose money: Australian government debt.

47 investors participated in the Australian government’s $200 million bond tender; the participants typically bid the amount they’re willing to pay, and the highest bids win the auction.

In this case, and for the first time in Australia, every single one of the 47 bidders offered a price so high that it implies a negative interest rate. Continue reading »

Tags: , , , , , , ,

Apr 16

In Last 9 Months Russia Repaid $100 Bn of Debt (Russia Insider, April 15, 2015):

Painful in the short term, but not exactly weakening Russian economy in terms of debt to GDP

This article originally appeared at True Economics

With Q1 out of the way, Russia passed a significant milestone in terms of 2015 external debt redemptions.

In total USD36.647 billion of external debt matured in Q1 2015, the highest peak for the period of Q1 2015 – Q3 2016. Even controlling for inter-company loans and equity positions, the figure was around USD24 billion for Q1 2015, again, the highest for the entire 2015 and the first three quarters of 2016.

Here is the breakdown of maturing external debts:

Russia-debt

All in, over the last 3 quarters alone, Russia has managed to repay and roll over USD156.23 billion worth of external debt, with net repayment estimated at around USD96.5 billion. Continue reading »

Tags: , , , ,

Apr 16

Russia Ready to Sue Ukraine Over $3 Billion Debt (Russia Insider, April 15, 2015):

In late 2013, Russia bought $3 billion worth of Ukraine’s non-tradable Eurobonds with a coupon of 5 percent and maturity in December 2015. Russia has notified Ukraine that it expects it to honor its obligations

MOSCOW, April 15 (RAPSI) – Russia will turn to courts should Ukraine fail to repay its $3 billion debt on time, RIA Novosti reported, citing Finance Minister Anton Siluanov. Continue reading »

Tags: , , , , , ,

Apr 15

Ahead Of Varoufakis’ Meeting With Famous Sovereign Bankruptcy Lawyer S&P Downgrades Greece To CCC+ (ZeroHedge, April 15, 2015):

To think it was just recently in September of last year when the S&P, seemingly unaware of the tragic reality facing Greece in just a few months (by reality we meen democratic elections which overthrew the previous regime which was merely a group of Troika picked technocrats), upgraded Greece to B and said “The upgrade reflects our view that risks to fiscal consolidation in Greece have abated.” Well, the risks have unabated, and two months after S&P flipflopped and downgraded Greece back to B- on February 6, moments ago it downgraded it again, this time to triple hooks, aka the dreaded CCC+. But, as City AM reports, the biggest news is that the Greek Finance Minister will on Friday meet with infamous sovereign debt lawyer Lee Buchheit, who has helped numerous countries restructure their debt. Buchheit is a partner at top US law firm Cleary Gottlieb.

Tags: , , , , , , , ,

Apr 15

bank

Negative Yields and the End of Deposit Insurance  (Acting Man, April 14, 2015)

Tags: , , , , , , , , ,

Apr 15

German 10Y Bond Yield Plunges To 10bps, Negative To 8 Years (ZeroHedge, April 15, 2015):

German yields cratered-er today (as DAX flash-crashed into the close). 10Y yields are now at 10.5bps – record lows – and the entire German yield curve is now at negative rates to 8 year maturity. Must all be a signal of the economic success of Q€ right?

Tags: , , , , , ,

Apr 15


Apr 12, 2015

Description:

Renowned financial analyst Martin Armstrong says you can forget about the U.S. dollar crashing in value. Armstrong contends, “No, that’s absurd. The euro is in terrible shape. The yen is in terrible shape, and honestly, you can’t park money in yuan or Russian rubles, yet. I mean, let’s be realistic here, but eventually–yes.”

Armstrong says the bond market is a different story as the Fed is going to be forced to raise rates. He contends just a few percentage points in rising rates are going to cause big losses and big changes. Armstrong predicts, “People will be losing huge money. We are looking at a few percentage points, and you are going to blow the national debts of all these countries way out of whack, and that’s what’s going to force political change.”

Join Greg Hunter as he goes One-on-One with Martin Armstrong of ArmstrongEconomics.com.

* * *

keep-calm-buy-goldGold-101

Tags: , , , , , , , , , ,

Apr 14

Sure!


Greek Prime Minister Alexis Tsipras
Greek Prime Minister Alexis Tsipras

Greece isn’t preparing default – Tsipras dispels rumor (RT, April 14, 2015):

Greece isn’t planning a debt default, contrary to reports in the Financial Times, says Prime Minister Alexis Tsipras.

“Greece … is not preparing for any debt default and the same goes for its lenders. Negotiations are proceeding swiftly towards a mutually beneficial solution,” Prime Minister Tsipras’ office said in a statement, Reuters reported.

Greece is scheduled to make several payments to the IMF in the next few months. On May 1 €203 million is due, another €770 million on May 12, and about another €1.6 billion in June in Special Drawing Rights (SDRs), an artificial currency created by the IMF that the institution uses to give out extra funds. Continue reading »

Tags: , , , , , , , , ,

Apr 13

Greece

“We Have Come To The End Of The Road” – Greece Prepares For Default, FT Reports (ZeroHedge, April 13, 2015):

Update: as always is the case in Europe, nothing is confirmed until it is officially denied by officials, so here you go: GREEK GOVT OFFICIAL DENIES FT REPORT GREECE PLANNING DEFAULT

There was no explanation from the government official where Greece would get the €2.5 billion it needs to fund upcoming IMF interest and principal payments.

* * *

It should hardly come as a surprise that after the latest round of Greek pre-negotiation negotiations with the Troika, in which the Greek representative was said to behave like a taxi driver, who “just asked where the money was and insisted his country would soon be bankrupt” and in which the Eurozone members “were disappointed and shocked at Athens’ lack of movement in its plans, and in particular its reluctance to talk about cutting civil servants’ pensions” that the next Greek step is to fall back – yet again – to square zero: threats of an imminent default. Which is precisely what, according to the FT, has happened “Greece is preparing to take the dramatic step of declaring a debt default unless it can reach a deal with its international creditors by the end of April, according to people briefed on the radical leftist government’s thinking.” Continue reading »

Tags: , , , , , , ,

Apr 13

Lemmings Look Like A Pack Of Individualists Compared To Wall Street

LEMMINGS LOOK LIKE A PACK OF INDIVIDUALISTS COMPARED TO WALL STREET (The Burning Platform, April 12, 2015):

Since most of you are too lazy to read Hussman’s brilliant analysis every week, I’ve picked out the key paragraphs from this week’s letter. For the really lazy, I’ve bolded the key sentences. The lemmings on Wall Street are still confident as they march in lockstep towards the cliff.

“A group of lemmings looks like a pack of individualists compared with Wall Street when it gets a concept in its teeth.”Warren Buffett

I had very vocal concerns about valuation during the tech bubble and the housing bubble, well before they burst. But it was a specific combination: extreme valuation coupled with fresh deterioration in market internals – the same combination we observe presently – that provided us with timely evidence that market conditions had shifted to urgent risk at what in hindsight turned out to be the very beginning of the 2000-2002 and 2007-2009 collapses. Those collapses wiped out the entire total return of the S&P 500 – in excess of Treasury bills – all the way back to May 1996, and June 1995, respectively, despite aggressive Fed easing in both instances. Don’t imagine that the current bubble will avoid a similar completion. Continue reading »

Tags: , , , , , ,

Apr 11

None Dare Call It Fraud—–Its Just A “Savings Glut” (David Stockman’s Contra Corner, April 10, 2015):

They were jawing again this morning about the low “natural rate” of interest on bubble vision, implying that the workers of the world have succumbed to an atavistic fit of wild-eyed thrift. Gosh, the world is so inundated in a savings glut, averred Wall Street economist Ed McKeon, that the interest rate would be near zero—–even without the concerted action of the central banks.

Hogwash! Since the turn of the century the major central banks have purchased upwards of $15 trillion worth of government bonds and other fixed income assets. Yes, these reckless money printers have suspended common sense, but they have not repealed the law of supply and demand, nor even suspended its relentless operation for a nanosecond.

So in adding massively to “demand” for something that sells at a price (the interest rate), the big fat bid of the central banks has caused fixed income markets to clear at much higher prices (lower yields) than would otherwise be the case. That’s just economics 101.

By contrast, were the market dependent solely upon the savings of America’s hand-to-mouth middle class, Europe’s legions of socialist pensioners, Japan’s mushrooming retirement colony or the millions of former peasant girls who labor for comparatively meager in Foxcon’s sweatshops, one thing would be certain: There would not be trillions of government bonds trading at negative nominal interest rates this very moment, or tens of trillions trading close to the zero bound and therefore at negative rates after inflation and taxes.

In a word, there is a $100 trillion bond market out there that has been priced by a handful of central bankers, not a planet teeming with exhuberant savers. The mad descent of the former into the whacky world of QE and ZIRP has caused a double whammy distortion in the bond markets of the world. Continue reading »

Tags: , , , , , ,

Apr 09

Dumb-and-Dumber1

When you think the financial world can’t get any crazier… this happens (Sovereign Man, April 9, 2015):

When you think the financial world can’t get any crazier… this happens

The world has truly gone mad.

We’ve become accustomed somewhat in the last several years to historical anomalies such as zero percent interest rates, Quantitative Easing, competitive currency devaluation, etc. by governments and central banks the world over.

It’s almost become the new norm.

But then there’s always something that happens that shocks us all over again. Continue reading »

Tags: , , , , , ,

Apr 09

IMF Payment Sends Greek Yields Lower; Athens Warns “Next Month Is A Different Matter” (ZeroHedge, April 9, 2015):

A central bank official, according to The FT, said that Greece has repaid the €450m it owed the International Monetary Fund today. Bond yields have fallen across the Greek curve with 10Y GGBs now at 11.1% (down 70bps from Tuesday’s highs). Greek stocks are not as impressed and are giving back their gains. Tsipras, on return from Moscow, explained Greece “was not a beggar…asking other countries to solve its problem,” but as a senior Greek official earlier this week said that while it would be able to make Thursday’s IMF repayment, it will still exhaust its cash reserves very soon and “next month is a different matter.” HSBC points out that the real crisis point looms on the 12th May and FinMin Varoufakis warns the “asymmetric union” that they “have learned nothing from economic history.”

Greece Wins More ECB Emergency Cash (Bloomberg, April 9, 2015):

Greece secured an increase in emergency funding available to its banks as Finance Minister Yanis Varoufakis said he’s confident of reaching an aid agreement with European partners this month.

The European Central Bank’s Governing Council raised the cap on Emergency Liquidity Assistance provided by the Bank of Greece by 1.2 billion euros ($1.3 billion) to 73.2 billion euros in a telephone conference on Thursday, said two people familiar with the discussion. That was more than the 700 million-euro increase granted last week. An ECB spokesman declined to comment. Continue reading »

Tags: , , , , , , ,