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Stocks Spanked; Gold Glistens; Currencies Crushed; And Bond Bears Battered
Quite a day...
- All-time record lows in many Emerging Market Currencies (TRY, ARS, VENZ (unof.) most)
- Nikkei 225 -3.75% - biggest drop in 7 months
- Emerging Market Stocks -3% - (4 month lows)
- USD Index -0.7% - biggest drop in 3 months (2014 lows)
- USDJPY -1.3% - biggest drop in 5 months
- AUDJPY -2.35% - biggest drop in 7 months (4 month lows)
- Dow -1.3% - biggest drop in 5 months (5-week lows)
- 30Y Treasury Yield -9bps - near biggest drop since April 2013 (2-month lows)
- Gold +2.3% - biggest gain in 3 months (2 month highs)
- VIX +1.8vols - biggest jump in 3 months (1 month highs)
- IG Credit +2.5bps - biggest jump in 5 months (1 month wides)
- HY Credit -$0.5 - biggest drop in 4 months (1 month lows)
It seems that
without the safety net of Fed flows, the reality that bad news might just be
bad news and event risk is a real risk just started to hit home. The deer is back...
Early weakness
on the China PMI contraction dropped US equity futures to Tuesday's congestion
zone then BoJ… http://www.zerohedge.com/news/2014-01-23/stocks-spanked-gold-glistens-currencies-crushed-and-bond-yields-battered
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For those who
have forgotten, below is a quick schematic of what a WMP looks like:
Begin forwarded message:
From:
Marilyn
G
Bank of America Is Actively Preparing For The Chinese January 31 Trust Default
Last
week we were the first to raise the very real and imminent threat of
a default for a Chinese wealth management product (WMP) default -
specifically China Credit Trust's Credit Equals Gold #1 (CEQ1) - and its
potential contagion concerns. It seems BofAML is now beginning to get
concerned, noting that over 60% of market participants expects repo rates to
rise if a trust product defaults and based on the analysis below, they think there
is a high probability for CEQ1 to default on 31 January, i.e. no full
redemption of principal and back-coupon on the day. Crucially, with the
stratospheric leverage ratios now engaged in such products, BofAML warns trust
companies must answer some serious questions: will they stand back behind
every trust investment or will they have to default on some or potentially many
of them? BofAML believes the question needs an answer because investors and
Trusts can’t have their cake and eat it too. The potential
first default, even if it’s not CEQ1 on 1/31, would be important based on the
experience of what happened to the US and Europe; the market has tended to
underestimate the initial event.
++++++++++
China central bank offers emergency funds to banks amid latest cash squeeze
A man walks past the headquarters of the People's Bank of China (PBOC), the
central bank, in Beijing
China's central bank has provided emergency funding support to commercial banks and will add more cash on Tuesday, as authorities respond to a spike in cash rates ahead of a major holiday, the bank announced on Monday.
China's central bank has provided emergency funding support to commercial banks and will add more cash on Tuesday, as authorities respond to a spike in cash rates ahead of a major holiday, the bank announced on Monday.
Bankers and analysts say the PBOC is attempting to strike a balance by guiding interbank interest rates steadily higher to reduce excess credit growth, while avoiding an acute credit crunch that
could… http://www.reuters.com/article/2014/01/20/us-china-moneymarket-idUSBREA0J0KL20140120?feedType=RSS&feedName=businessNews
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Geithner Warned S&P Chairman US Would Retaliate For Downgrade
Who can forget
Tim Geithner's historic
interview from April 2011, in which he said:
Peter Barnes “Is there a risk that the United States could lose its AAA credit rating? Yes or no?”
Geithner’s response: “No risk of that.”
“No risk?” Barnes asked.
“No risk,” Geithner said.
Considering that
the US was downgraded by S&P just 4 months later, one person who certainly
will never forget his idiotic preannouncement, is the former Treasury secretary,
Tim Geithner. And being the sore loser that everyone suspected he was (although
one hopes his recent well-paid move to Warburg Pincus will help soothe his
sensitivity) it will come as no surprise that Geithner told the Chairman of
embattled rating agency Standard & Poor's, that its downgrade of the US
from AAA to AA+ "would
be met by a response."
From Bloomberg:S&P filed a declaration of McGraw yesterday in federal court in Santa Ana, California, as part of a request to force the U.S. to hand over potential evidence the company says will support its claim that the government filed a fraud lawsuit against it last year in retaliation for its downgrade of the U.S. debt two years earlier.
In his court statement, McGraw said Geithner called him on Aug. 8, 2011, after S&P was the only credit ratings company to downgrade the U.S. debt. Geithner, McGraw said, told him that S&P would be held accountable for the downgrade. Government officials have said the downgrade was based on an error by S&P.“S&P’s conduct would be looked at very carefully,” Geithner told… http://www.zerohedge.com/news/2014-01-21/geithner-warned-sp-chairman-us-would-retaliate-downgrade+++++++++++++++
Spot The Labor Force Collapse Culprit
A few
days ago we disproved, in what we hoped would be the last time, any
insinuation that the collapse in the labor force is due to demographics (a
topic we had
covered before) when we showed that it was just 10 short years ago that the
Bureau of Labor
Statistics itself was forecasting
an increase in the overall participation rate - here we assume logically that America's demographic
profile was known to its labor market experts in 2004 - only to slowly at
first, then very fast, revise it ever lower... and still it was unable to catch up to the unfolding gruesome
reality.
Yet somehow, so called finance experts, econ PhDs, central planners and other ivory tower dwellers still refuse to let this topic go, and continue to reference the participation rate and demographics in the same sentence. So to truly end any speculation
that… http://www.zerohedge.com/news/2014-01-20/spot-labor-force-collapse-culprit
Yet somehow, so called finance experts, econ PhDs, central planners and other ivory tower dwellers still refuse to let this topic go, and continue to reference the participation rate and demographics in the same sentence. So to truly end any speculation
that… http://www.zerohedge.com/news/2014-01-20/spot-labor-force-collapse-culprit
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1/20/14
Deutsche Bank reported a surprise pre-tax loss
of 1.15 billion euros for the fourth quarter of 2013 due to heavy costs for
litigation, restructuring and balance sheet reduction.
The bank was originally scheduled to report its results on January 29, but opted to release them early after the Wall Street Journal on Friday reported that a profit warning was possible.
Its shares opened down more than 5 percent, dragging down bank stocks across the region as Germany's Dax , down 0.3 percent, also led the region's list of losing bourses.
The bank was originally scheduled to report its results on January 29, but opted to release them early after the Wall Street Journal on Friday reported that a profit warning was possible.
Its shares opened down more than 5 percent, dragging down bank stocks across the region as Germany's Dax , down 0.3 percent, also led the region's list of losing bourses.
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