From James Harkin (Webmaster & Editor of LindseyWilliams.net). Here is a summary of articles of interest from around the world for this week. Please LIKE the Lindsey Williams Online Facebook Page to see stories posted daily regarding the current state of the economy around the world.
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Latest News From September 30, 2016 to October 6, 2016:
- BofA Says It Has Found Evidence Of An “Imminent Recession”
As Bank of America's Savita Subramanian writes in an overnight note titled “Is it about time for a recession?”, while the bank's economists do not officially predict a recession in the coming year, instead forecasting slow and steady growth in the US, the strategist admits that over seven years and more than 270% into this bull market, “one wonders how much longer this cycle can last.” While BofA writes that it has not yet found a model that accurately forecast recessions, “and even if we did, not all recessions result in bear markets” in examining some of some of the bank's favorite indicators’ recent trends, it has “found evidence for an imminent recession.” It adds that while the range of signals is wide, in aggregate they do suggest that, if data were to continue to weaken in line with the recent pace, history would point to a recession in the second half of 2017. - Here’s some compelling data about the next recession
In the modern history of the US economy over the past seven decades, the longest period of time the country has gone without a recession was 10 years. Since the end of World War II there have been 11 recessions in the United States of America, so the average time in between recessions is 6 years and 5 months. The average length of recession was 336 days; the longest recession in modern history was 18 months in 2008-2009, and the shortest was 6 months in 1980. - China Shocker: A Quarter Of All Companies Can't Pay The Interest On Their Debt
Almost exactly one year ago, we reported that as a result of the commodity crash of 2015, more than half of Chinese companies in the commodity sector did not generate enough cash flow to pay the interest on their debt. Months later this has manifested in a countrywide push for debt-for-equity exchanges, and outright bankruptcies including the first ever liquidation of a Chinese state-owned enterprise. While dramatic, the question remained: what about other Chinese companies not directly involved in the commodity space? We now know the answer: according to Reuters, profits at roughly a quarter of all Chinese companies were too low in the first half of this year to cover their debt servicing obligations, i.e., merely the mandatory interest payment let along debt maturities, as earnings languish and loan burdens increase. - Governments must heed IMF warning of $152tn global debt timebomb
First it was the august Bank for International Settlements. Now it is the International Monetary Fund sending out a warning about global debt. For the first time, the IMF has had a comprehensive look at indebtedness and the numbers are huge. Global debt is estimated at $152tn, or about 225% of annual global output. Two-thirds of the debt – approximately $100tn is held by the private sector. The IMF hopes the debt data published in its half-yearly fiscal report will chivvy governments into action before it is too late. - The big chop: European banks slash over 20,000 jobs
European banks are set to slash more than 20,000 jobs as tougher capital requirements and negative interest rates bite into the sector’s profitability, putting fresh pressure on many lenders to cut costs further. Dutch lender as it focuses on internet and mobile banking and automates systems. ING expects to save about $1bn (£780m) a year through its job-cutting programme. - Pew: Most Americans Don’t Believe in ‘Scientific Consensus’ on Climate Change
Nearly three-quarters of Americans don’t trust that there is a large “scientific consensus” amongst climate scientists on human behavior being the cause of climate change, according to an in-depth survey on “the politics of climate” released Tuesday by Pew Research Center. According to the survey, only 27 percent of Americans agree that “almost all” climate scientists say that human behavior is mostly responsible for climate change, while 35 percent say that “more than half” of climate scientists agree on this. An additional 35 percent of those surveyed say that fewer than half (20%) or almost no (15%) climate scientists believe that human behavior is the main contributing factor in climate change. - It’s official: US government ends fiscal year with $1.4 trillion debt increase
It’s official. The United States government closed out the 2016 fiscal year that ended a few days ago on Friday September 30th with a debt level of $19,573,444,713,936.79. That’s an increase of $1,422,827,047,452.46 over last year’s fiscal year close. Incredible. By the way, that debt growth amounts to roughly 7.5% of the entire US economy. By comparison, the Marshall Plan, which completely rebuilt Western Europe after World World II, cost $12 billion back in 1948, or roughly 4.3% of US GDP at the time. The initial appropriation for the WPA, perhaps the largest of Roosevelt’s New Deal “make work” programs that employed millions of people, cost 6.7% of US GDP. And, more recently, the US $700 billion bank bailout at the beginning of the 2008 financial crisis was the equivalent of 4.8% of GDP. So basically these people managed to increase the national debt by a bigger percentage than the cost of the New Deal, Marshall Plan, and 2008 bank bailout. - Banks With $12 Trillion In Assets Threatened By Persistent “Shocks”, IMF Finds
In its latest report on financial stability released today, the IMF, which is also currently meeting to find a solution to globalization that benefits all people not just the very top, warned that risks to financial stability are growing. It warned about what it calls “medium-term” dangers in both emerging and developed economies, and expressed particular concerns about Europe, Japan and China. As cited by the BBC the report says investors were taken by surprise by the result of the British referendum on the European Union, but the political shock was absorbed by markets. They passed what it calls “this severe stress test”. But looking further ahead, the IMF sees growing risks. A key factor for future bank health is profits or lack thereof. As Deutsche Bank has found out the hard way in recent weeks, weak profitability makes it harder for banks to build up their capital – which they can do by holding on to some profit rather than giving it all to shareholders as dividends. It also makes it harder for them to expand lending to business and consumers, as is needed to support economic recovery. - Investors Piling Into Junk Bonds Could Be Overlooking Warning Signs
More warning signs are flashing in the junk-bond market. Investors that have been loading up on the securities as an alternative to ultra-low interest rates are now barely getting paid more than higher-ranking bank lenders, who would typically get their money back first in the event of a default. The difference in yields between junk bonds and the more senior leveraged loans is the narrowest in two years, data compiled by Bloomberg show. “The risk-reward is getting skewed,” said Peter Tchir, head of macro strategy at Brean Capital LLC. “It’s a sign markets are not assigning enough risk to those high-yield bonds.” - For Crispin Odey This Is The Engame: Hedge Fund Billionaire Goes All In Betting On “Violent Unwind” Of QE Bubble
In mid-August, when the market was enjoying its low-volatility grind higher, we observed that one of the biggest bears in the hedge fund industry, Crispin Odey, was having a bad year, with his hedge fund sinking some 30% through the end of July. Since then, conditions have only gotten more precarious for the billionaire hedge fund manager, and as the FT writes, for Odey, who is betting it all “on a violent unwind of a QE bubble”, the endgame may have arrived. As Miles Johnson writes, “many financial commentators have warned that current monetary policy has inflated a bubble that will one day violently pop. Few of them have risked money betting on the precise manner in which a chaotic unwinding of quantitative easing will play out through financial markets. This makes the portfolio of Crispin Odey, a London-based hedge fund manager, an interesting outlier. Mr Odey is one of only a handful of investors who has backed up his dire prognosis for the global economy with a series of large, leveraged trades designed to pay off in the event of a crash.” To be sure, as we noted two months ago, Odey's bets are predicated on a collapse of Japanese bond prices, a surge in the price of gold and immolation of equities. Or as the FT puts, it, “If it works he may make hundreds of millions of dollars for his clients. If wrong his fund may not survive.” - TARGET2 Shows Europe's Banking Crisis Is Escalating Again (Fast)
Problems of Deutsche Bank, Commerzbank, Monte dei Paschi and other German, Italian and Spanish banks are not the only concern of the European Banking System. Trouble is much deeper than it is thought because there is a systemic imbalance that has been increasing for almost ten years. Politicians do not want to tell us the truth, but soon we will experience the same crisis in the Monetary Union as we did in 2012. The extent of the problems in the European Banking System is TARGET2 and its balances of the National Central Banks of the Eurosystem. These balances, or rather imbalances, reflect the direction of the capital flight. And there is only one way: from Southern Europe into Germany. After Mario Draghi’s famous words “I do whatever it takes to save the euro”, things seemed to improve; however, since January 2015 problems have been escalating again. - Another Banking Crisis Begins?
When financial systems begin to fail, the banks are always at the center. When your assets are mostly tied up in long-term, relatively illiquid transactions while your funding is mostly of the overnight variety, from depositors, money market funds and other banks, trouble is never far away. Banks are the perfect stress indicator within the system. Deutsche Bank (DB) became the story last week as its $14 billion market cap would be wiped out by a proposed $14 billion fine from the U. S. Justice Department for various transgressions going back to the financial crisis. Most expect the eventual settlement will be much less. For a better perspective, DB's $14 billion market cap should be compared to its debt, which totals around $160 billion. The markets may not be able to pull apart a typically labyrinthine bank balance sheet, but extreme imbalances like this can be understood. To put this ratio in context, Citicorp, hardly a paragon of virtue, has a market cap of around $130 billion backing its debt of $163 billion. - Deutsche Bank Brings Too-Big-to-Fail Quandary Home to Merkel
When it comes to speculation about German government support for Deutsche Bank AG, Chancellor Angela Merkel has no good answer. After years spent leading the push for new European Union rules to contain banking crises without putting taxpayers on the hook, you might expect Merkel to rule out state aid for Deutsche Bank. She hasn’t, even though that would be politically expedient with an election looming next year. Confronted with ailing banks, Merkel and other EU leaders face a quandary. Markets assume they won’t deploy their biggest weapon — bail-in, or imposing losses on private investors — when it comes to a giant like Deutsche Bank because of the risk of contagion. Yet policy makers are also increasingly ambivalent about the bloc’s solution for too-big-to-fail banks, largely for the same reason. - Minnesota Commissioner Slams Obamacare As “Unfair & Unsustainable” As Rates Soar
Soaring Obamacare premiums and declining insurer participation rates in exchanges across the country have been a frequent topic of conversation for us (see “Obamacare On “Verge Of Collapse” As Premiums Set To Soar Again In 2017″ and “Stunning Maps Depict Collapse Of Obamacare “Coverage” In 2017″). So it should come as no surprise to our readers that Minnesota has just announced that 2017 Obamacare rates have been set and are expected to soar nearly 60% on average. Minnesota Commerce Commissioner Mike Rothman posted a letter to the state's website saying that the state succeeded in preserving the exchanges for one more year by agreeing to massive rate hikes but warned they are on the “verge of collapse.” The letter goes on to describe Minnesota's healthcare rate environment as “unsustainable and unfair” and notes that “middle-class Minnesotans” are being “crushed by the heavy burden of these costs.” - 5 Stories The Mainstream Media Ignored While Reporting On Kim Kardashian's Robbery
One of the saving graces of the ailing corporate media – for the folks setting the agenda, anyhow – is its relentless ability to hyper-focus the public’s attention on altogether meaningless events. Take, for instance, an armed robbery that sees property stolen but no one harmed. Such an event is unfortunate, yes, but such is life. People get robbed. It certainly isn’t something that should consume the news cycle — particularly when developments of actual importance are unfolding around the world. Yet that’s exactly what happened this week after reality TV star Kim Kardashian was robbed at gunpoint in Paris on Monday morning. Kardashian, who was in town for Fashion Week, was forced into the bathroom of her hotel room, tied up, and robbed at gunpoint. The perpetrators, men dressed as police officers, stole about $10 million. Again, it was an unfortunate incident, but the starlet is fine, and Paris officials have assured the Kardashian clan the perpetrators will be brought to justice. At this point, had the celebrity been an average citizen, the media would have likely concluded there was nothing more to the story and moved on. But then, if she were an average citizen, the media wouldn’t have covered the story in the first place. - WARNING: Protect Yourself As China Seizes Control Of The Internet
With many investors worried about the economic turmoil that has engulfed the globe, protect yourself as China seizes control of the internet. Also, this will be the greatest bull market in history. Gold’s Greatest Bull Move And China’s Seizure Of The Internet. Stephen Leeb: “If today seems like just another ordinary Saturday, think again. Someday Oct. 1, 2016 will be recognized as a momentous day in world history, for it marks the official transfer of economic power from the West to the East and in particular to China, the East’s clear hegemon… - In Major Victory For Gold And Silver Traders, Manipulation Lawsuit Against Gold-Fixing Banks Ordered To Proceed
Back in April, precious metal traders felt vindicated when Deutsche Bank agreed to settle a July 2014 lawsuit alleging precious metal manipulation by a consortium of banks. As a reminder, In July 2014 we reported that a group of silver bullion banks including Deutsche Bank, Bank of Nova Scotia and HSBC (later UBS was also added to the defendants) were accused of manipulating prices in the multi-billion dollar market. The lawsuit, which was originally filed in a New York district court by veteran litigator J. Scott Nicholson, a resident of Washington DC, alleged that the banks, which oversee the century-old silver fix manipulated the physical and COMEX futures market since January 2007. The lawsuit subsequently received class-action status. It was the first case to target the silver fix. The alleged conspiracy started by 1999, suppressed prices on roughly $30 billion of silver and silver financial instruments traded each year, and enabled the banks to pocket returns that could top 100 percent annualized, the plaintiffs said. - The Biggest Scandal
Certainly, any attempt to identify the most serious current financial scandal involves stiff competition and the need for objective measurement. Scandals have become almost commonplace and come in all varieties and sizes and vary in the degree of publicity they attract. But there’s a big difference between the scandals that create the most headlines compared to the scandals that financially damage the greatest number of victims. I would contend that the biggest scandal must be defined by the greatest financial damage to the most people and not the amount of publicity a scandal might generate. A case in point is the current scandal involving the bank Wells Fargo. For sure, the bank was fined an attention-getting amount ($185 million) and admitted to firing 5300 employees involved in the fraudulent opening of millions of accounts without the knowledge or permission of customers. No doubt there will be more shoes to drop in the Wells Fargo affair, including compensation claw backs from upper level managers, a variety of lawsuits and possible labor violations, but in terms of financial damage to aggrieved customers, the scandal hasn’t amounted to much – a few million dollars at best. - Bill Gross on Today’s Markets: “This Cannot End Well”
Bill Gross of Janus Capital published his monthly investment outlook yesterday, and once again the famous “Bond King” put out a scathing review of central banking policy. - Pentagon Paid British PR Firm $500mm To Create Fake Al Qaeda Propaganda Videos
Per new discoveries revealed by the The Bureau of Investigative Journalism, the United States government paid over $500mm to a British public relations firm, Bell Pottinger, between May 2007 and December 2011 to create fake Al Qaeda propaganda films aimed at tracking terrorist viewing locations. According to a Bell Pottinger insider, propaganda films were categorized into three categories with “White” being accurately attributed, “Grey” being unattributed, and “Black” being falsely attributed material. The media firm created various types of content ranging from TV commercials to news items and “fake Al Qaeda propaganda films.” - Iraq Will Use Sept 11 Bill To Sue US Government For 2003 Invasion, Demand Compensation
As reported on Saturday, a September 11 widow was the first American to take advantage of the recently passed Justice Against Sponsors of Terrorism (JASTA), aka the “Sept.11” bill courtesy of Congress which for the first time in Obama's tenure overrode his veto, by suing the Kingdom of Saudi Arabia. Stephanie Ross DeSimone alleged the kingdom provided material support to al-Qaeda and its leader, Osama bin Laden leading to the death of her husband, Navy Commander Patrick Dunn, who was killed at the Pentagon on Sept. 11, 2009, when Stephanie was two months pregnant at the time with the couple's daughter. Her suit is also filed on behalf of the couple’s daughter. She sued for wrongful death and intentional infliction of emotional distress, and is seeking unspecified compensatory and punitive damages. - Saudi Arabia Responds To US 9/11 Bill Veto
With the first 9/11 lawsuit already winging its way to The Kingdom following Congress' decision to un-vet, Saudi officials have broken their silence “stressing their concern” and warning of “consequences.” - FBI Allowed 2 Hillary Aides To “Destroy” Their Laptops In Newly Exposed “Side Agreements”
Just when you think the Hillary email scandal can't get any more bizarre and corrupt, it does. According to a just released letter from the Chairman of the House Judiciary Committee, Bob Goodlatte (R – Virginia), to Attorney General Lynch, the FBI apparently struck “side agreements” with both Cheryl Mills an Heather Samuelson to “destroy” their “laptops after concluding its search.” - Morgan Stanley charged with running unethical sales contests: regulator
Morgan Stanley was charged with “dishonest and unethical conduct” by Massachusetts' top securities regulator on Monday for having pushed its brokers to sell loans to their clients. Secretary of the Commonwealth William Galvin alleges that the bank ran high-pressured sales contests in Massachusetts and Rhode Island where brokers could earn thousands of dollars for selling so-called “securities based loans.” (SBLs) The contests, designed to boost business, were officially prohibited by Morgan Stanley but turned out to be lucrative for the bank with the pace of loan origination tripling and adding $24 million in new loan balances, Galvin said. - Podcast: European Banks In The Eye Of The Storm
Deutsche Bank, Commerzbank, the Italian banks…it’s getting ugly across the pond, and the worst is yet to come. Here’s a brief look at the reasons why, including derivatives, ridiculous capital rules, dumb lending practices and, of course, negative interest rates. If you’re looking for short sale candidates, Europe’s banks should be on the list. - Bring Back The Cold War — Paul Craig Roberts
Pundits have declared a “New Cold War.” If only! The Cold War was a time when leaders focused on reducing tensions between nuclear powers. What we have today is much more dangerous: Washington’s reckless and irresponsible aggression toward the other major nuclear powers, Russia and China. During my lifetime American presidents worked to defuse tensions with Russia. President John F. Kennedy worked with Khrushchev to defuse the Cuban Missile Crisis. President Richard Nixon negotiated SALT I and the anti-ballistic missile treaty, and Nixon opened to Communist China. President Carter negotiated SALT II. Reagan worked with Soviet leader Gorbachev and ended the Cold War. The Berlin Wall came down. Gorbachev was promised that in exchange for the Soviet Union’s agreement to the reunification of Germany, NATO would not move one inch to the East. - China’s elderly population 240 mln by 2020
The National Health and Family Planning Commission predicts the number of China’s elderly (above 60) to reach 240 million – or 17 per cent of the population – by 2020. The Commission’s deputy head Liu Qian said the government would improve the medical insurance system and basic public health services. But he also said that there were about 260 million Chinese afflicted with chronic disease. The growing number of elderly and the falling number of working age people is a concern for Chinese leaders. China faces the risk of ending up with an outsized elderly population before it becomes a developed economy. - Obama Wages “Economic War” Against Deutsche Bank, ATM’s Go Dark
As you’ll learn below, on Friday things seemed to be turning around, if only slightly, for the much beleaguered German Deutsche Bank. The bank’s stock rose around 14% on rumors that Deutsche Bank had reached a settlement with Obama’s Department of Injustice regarding a $14 billion demand. It was believed that a settlement was reached with the DOJ for $5.6 billion, which would still utterly cripple Deutsche Bank, but since the $14 billion originally demanded is the entire market capitalization of the bank, $5.6 billion felt like a little hope anyway. As it turns out, the rumors were false, and there was no validity to the existence of a settlement. - October Surprise Coming-Gerald Celente
Trends researcher Gerald Celente sees an “October surprise” coming for the economy, terror or war. Celente contends, “Even that sellout, Mario Draghi (Head of the European Central Bank-ECB) the former head of the Goldman Sachs European division, now playing the ECB President, came out and said the central banks can’t do anymore, and they are looking now for government stimulus. That’s going to be the new game. What I am saying is it’s collapsing. Look what happened in Japan a week and a half ago. Everybody was waiting for the bank of Japan to play another card, and they had none to play. So, look for October for things to go bad. Traditionally, when things go bad in markets, it’s October, and they are going bad now. By the way, we are now going into the sixth consecutive quarter in the United States with the S&P 500 negative. Negative earnings in the S&P 500. The only reason the markets are going up is like Trump said, the cheap dough going in there, stock buybacks and mergers and acquisitions. Number two: This is number two A and B. That is either a terror strike, false flag or real. You almost saw it in New York a couple of weeks ago when some guy went nuts. Now, multiply that times 70. Also, war because they are heating it up, and they are putting out more war talk. The anti-Russian propaganda is like nothing we have ever seen before, and it continues. Even at the debate, Hillary put it out there blaming Russia for hacking into the DNC. There is absolutely no positive proof. Do you think they have bigger things to do? Oh, and this is an important one . . . Julian Assange says he’s holding on to information that is going to be very detrimental to Clinton.” - US and Russia Close to War, Global Economy on Brink of Collapse, NBC Biased for Clinton
The United States is reportedly suspending diplomacy with Russia, and it also says it’s preparing military options in Syria. The U.S. has asked Russia to stop its bombing campaign in Syria, and Russia will not agree to do so. State Department spokesman John Kirby says, “More Russian lives will be lost, and more Russian aircraft will be shot down.” This is a serious escalation between Washington and the Kremlin, and the only outcome to this is a wider war in Syria that could mean an eventual global war between America and Russia that would, no doubt, involve all allies as well. - Repeat of 2008 Financial Crisis Coming-Only Worse-Peter Schiff
In Monday night’s first Presidential debate, Donald Trump criticized the Federal Reserve’s handling of the economy and warned, “. . . if you raise interest rates even a little bit, that’s going to come crashing down. We are in a big, fat, ugly bubble.” Money manager Peter Schiff explains, “Trump says if we raise rates, a lot of bad things are going to happen. Then, he criticizes the Fed for keeping rates low. So, which is it? He’s trying to have his cake and eat it too. What Trump has to explain is low interest rates don’t help the economy. Low interest rates are one of the biggest headwinds to the economy because all they do is inflate asset bubbles and prevent legitimate economic growth. Donald Trump has to explain that rates have to go up, and when they do, it’s going to burst the bubble, and it’s not going to be fun. If we are ever going to have a real recovery that’s going to produce a higher standard of living and good paying jobs . . . we are going to have to let this bubble deflate. That means raising interest rates, and we are going to have to live with the consequences. That means a collapsing stock market, a collapsing bond market, a collapsing real estate market and failing banks. It’s a repeat of the 2008 financial crisis–only worse.” - Deutsche Bank Collapse: The Most Important Bank In Europe Is Facing A Major ‘Liquidity Event’
The largest and most important bank in the largest and most important economy in Europe is imploding right in front of our eyes. Deutsche Bank is the 11th biggest bank on the entire planet, and due to the enormous exposure to derivatives that it has, it has been called “the world’s most dangerous bank“. Over the past year, I have repeatedly warned that Deutsche Bank is heading for disaster and is a likely candidate to be “the next Lehman Brothers”. If you would like to review, you can do so here, here and here. On September 16th, the Wall Street Journal reported that the U.S. Department of Justice wanted 14 billion dollars from Deutsche Bank to settle a case related to the mis-handling of mortgage-backed securities during the last financial crisis. As a result of that announcement, confidence in the bank has been greatly shaken, the stock price has fallen to record lows, and analysts are warning that Deutsche Bank may be facing a “liquidity event” unlike anything that we have seen since the collapse of Lehman Brothers back in 2008. - State Dept: Washington Halts Bilateral Contact With Moscow Over Syria
According to the US State Department, the US has officially stopped all bilateral contact with Russia on Syria. “The United States is suspending its participation in bilateral channels with Russia that were established to sustain the Cessation of Hostilities,” US State Department spokesperson John Kirby said on Monday. The US will withdraw personnel who were preparing to establish the Joint Implementation Center (JIC). Kirby added that channels will remain open to address air operations over Syria. Kirby also blamed the Russian and Syrian governments for the collapse of the ceasefire, though it was a US strike on Syrian government positions that started renewed fighting. - Some Deutsche Bank Clients Unable To Access Cash Due To “IT Outage”
While it now seems that Friday's rumor of a substantially reduced Deutsche Bank settlement with the DOJ, which sent the stock price soaring from all time lows, was false following a FAZ report that CEO John Cryan has not yet begun the renegotiation process, and in the “next few days” is set to fly to the US to discuss the proposed RMBS misselling settlement with the US Attorney General, Germany's largest lender continues to be impacted by the public's declining confidence, exacerbated over the weekend by a disturbing “IT glitch.” For one, it remains unclear if Friday's report halted, or reversed, the outflow of cash from DB's prime brokerage clients, which as Bloomberg first reported last week was a major catalyst for the swoon in the stock price. However, as UniCredit's chief economist Erik Nielsen notes in a Sunday notes, one thing is certain: “so long as a fine of this order of magnitude ($14 billion) is an even remote possibility, markets worry.” - U.K.’s May Unveils Brexit-Day Plan for ‘Great Repeal’ of EU Law
U.K. Prime Minister Theresa May on Sunday will unveil her most detailed plan yet for the U.K.’s withdrawal from the European Union, saying she’ll repeal a 1972 law that gives direct effect to all EU legislation. The planned “Great Repeal Bill” will abolish the 1972 European Communities Act, while converting all EU laws governed by it into domestic laws on the day Britain eventually completes its EU pullout, May’s Conservative Party said in an statement e-mailed on the eve of the party’s annual conference. The government will then be able to amend and repeal individual laws if deemed necessary. - The Complete A To Z Of Nations Destroyed By Hillary Clinton's “Hubris”
In an email sent to his business partner and Democratic fundraiser Jeffrey Leeds, former Secretary of State Colin Powell wrote of Hillary Clinton, “Everything HRC touches she kind of screws up with hubris.” Clinton’s tenure as Secretary of State during Barack Obama’s first term was an unmitigated disaster for many nations around the world. Neither the Donald Trump campaign nor the corporate media have adequately described how a number of countries around the world suffered horribly from Mrs. Clinton’s foreign policy decisions. Millions of people were adversely harmed by Clinton’s misguided policies and her “pay-to-play” operations involving favors in return for donations to the Clinton Foundation and Clinton Global Initiative. - As The Monetary Madness Continues, Here Is A Dire Warning
“Inflation makes it possible for some people to get rich by speculation and windfall instead of by hard work. It rewards gambling and penalizes thrift. It conceals and encourages waste and inefficiency in production. It finally tends to demoralize the whole community. It promotes speculation, gambling, squandering, luxury, envy, resentment, discontent, corruption, crime, and increasing drift toward more intervention which may end in dictatorship.” — Henry Hazlitt - Should You Be Concerned About Bank Runs? Maybe
Fears of a banking crisis and memories of the 2008 financial crisis are being whispered about on Wall Street today. Hedge funds are reportedly pulling billions out of the German bank Deutsche Bank amid concerns about the lender's stability this week. Can Bank Runs Still Happen? While a true bank run in the United States hasn't occurred since the 1930's, some point to troubled Wachovia Bank in 2008 that faced what bank executives called “a silent run” on deposits. On a Friday in 2008 large depositors began fleeing from Wachovia. - ECB Watch – Will the ECB buy equities?
The ECB stepped up its unconventional policy around the middle of 2014, by taking its deposit rate into negative territory. Early in 2015, it launched a large-scale QE programme focused on public sector bonds. Since then it has added regional bonds and investment-grade credit bonds to the mix. Despite the positive effects on financial conditions, the outlook for growth and inflation remains disappointing. At the same time, there are market concerns that there are not enough bonds available to be bought and that current monetary policy is losing its effectiveness. This has led to questions about what else the ECB can add to its policy mix. In this research note, we consider whether the ECB will turn to equity purchases. We first look at whether equity purchases are possible from a legal and practical perspective and what such a programme could look like. We then go on to assess how effective buying equities would be in boosting equity prices, and hence growth and inflation, drawing on the experience of Japan. Finally, we look at the risks that the ECB would be exposing itself to. We do this in a Q&A format. - It’s Not Just Deutsche Bank. The Entire Financial Sector Is Sick
These are great times for financial assets — and by implication for finance companies that make and sell them, right? Alas, no. Just the opposite. Each part of the FIRE (finance, insurance, real estate) economy is imploding as “modern” finance hits the wall. Interest rates, for instance, have fallen for three decades… - What to do to Prepare for Financial Collapse: “Get Out Of Debt. Store. Prep. Cash. Gold.”
Prepare by balancing debt. Before you max out your credit cards on top notch gear, make sure you can survive the economic conditions that are coming. Mass unemployment. Loss of income. Heavy dependence on assistance. And the biggest strain on the system we can imagine. The United States is once again brought to the brink of collapse. Regardless of how dismissive mainstream voices are on the issue, it is clear that Americas is only a few shades and another crisis away from an all out return to the Great Depression era. - Federal Reserve Note Dying and Gold and Silver Recognized
Some say the U.S. dollar may die 5 days hence. The Chinese renminbi will kill it. Much is being made of plans by the International Monetary Fund (IMF) to add the renminbi to its basket of strategic reserve currencies called Special Drawing Rights (SDR). The IMF will make the change on October 1. While the implications for the Federal Reserve Note, currently the U.S. dollar, as the world’s primary reserve currency may be profound over time and the importance of this even should not be overlooked, the impact is unlikely to happen overnight. - Bonds Are a Potential Powder Keg in the “New Normal”
“Despite low yields on safe assets, investors are reaching for duration rather than risk,” says Jim Puplava. Duration is the overall maturity value of a bond portfolio. Investors are buying bonds with longer maturities because those are the bonds that appreciate the most when interest rates go down. Investors have been accumulating large position holdings in these safe securities because of the rate of return they offer, Puplava added. However, the danger here is that longer maturities mean a greater potential for capital gains AND a greater potential for loss. - About That Deutsche “Settlement” Rumor: Cryan Hasn't Even Started Negotiations With The DOJ
Friday's market session was about one thing: will Deutsche Bank stock close the week ahead of a three day holiday at a record low. It did not because, as we reported, the AFP announced that based on “sources” (most likely from Twitter), the DOJ was willing to reduce the $14 billion settlement that sent DB stock on a rollercoaster ride over the past two weeks, to just under $6 billion. The news unleashed a massive short squeeze relief rally, which sent DB stock soaring on Friday, pushing the entire market up 1%. And while repeated attempts by the likes of Reuters to get additional information from either the DOJ, the German government or Deutsche Bank itself, have proven fruitless, overnight Frankfurter Allegemeine Zeitung reported that Deutsche Bank executives are heading to the United States in the coming days to negotiate the $14 billion settlement over a fine the infamous $14 billion for misselling RMBS. - Market Report: Option expiry and Deutsche Bank
Gold and silver drifted lower over the week, in falls which are commonly accepted to reflect prices being massaged ahead of option expiry on Comex. Gold lost $16 to $1325, and silver, 58 cents to $19.11 in early European trade this morning (Friday). If this sort of thing happened on a regulated market in London, the regulators would be crawling all over the suspected riggers. But hey, it’s America. Putting this behind us, we should focus on the rapidly developing banking crisis in Germany and on its impact on the US dollar. These are separate issues, but they are much intertwined. This week, a collapse of Deutsche Bank was openly discussed in the general media, and there are signs that institutional depositors in wholesale money markets have begun to minimise their exposure. The result is that DB’s shares on Wall Street last night dropped 7% into new low ground and continued this weakness overnight (Thursday/Friday) into the Frankfurt opening in heavy volume. - Republicans Slam Clinton for Deutsche Speeches as Firm Slumps
The Republican National Committee reignited calls for Hillary Clinton to release details surrounding her paid private speeches to Deutsche Bank on Thursday just as the firm's New York-listed shares fell to a record low. Officials from the German-bank, which U.S. regulators slapped with a massive $14 billion fine earlier this month, paid the Clintons $955,000 between 2012 and 2014 for a total of four speeches, according to financial disclosure records. Hillary Clinton was paid $225,000 for an April 24, 2013 speech and $260,000 for an Oct. 7, 2014 speech. Her husband was paid $200,000 for an Oct. 10, 2012 speech and $270,000 for a speech he gave on Aug. 27, 2014. - Three reasons why the banking system is rigged against you
If there were ever any doubt about how completely RIGGED the banking system is against depositors, allow me to introduce the following: Exhibit A: Governments are working to make banks LESS safe. Yesterday an unelected bureaucrat that no one has ever heard of made a stunning announcement that has sweeping implications for anyone with a bank account. Dombrovskis is Europe’s top financial services official, so he controls bank regulations in the European Union. He issued a stern warning to global bank regulators yesterday that he is prepared to reject any further plans they might have to tighten bank capital requirements. - Deutsche Bank’s Woes Put $2 Trillion of Bonds Beyond ECB’s Reach
The troubles of Deutsche Bank AG are making European Central Bank President Mario Draghi’s job more complicated. The surge this week in relatively safe sovereign securities left about a third of the Bloomberg Eurozone Sovereign Bond Index ineligible for purchase under the ECB’s quantitative-easing program. The gains mean $2.2 trillion of debt in the index now yields less than the institution’s deposit rate — currently minus 0.4 percent — and is therefore off-limits. - IMF Says Brazil Needs Major Reforms Now, or Recession Will Continue
The International Monetary Fund sent out a warning to Brazilian lawmakers yesterday, urging the new regime to make the difficult policy decisions needed to rescue the country from its deep recession. - Deutsche Bank Paranoia Crosses Atlantic
It's no secret Deutsche Bank has struggled with U.S. demands to pay $14 billion to settle mortgage claims from the financial crisis. So why did the bank suddenly become the center of attention in U.S. financial markets on Thursday? Mainly because about 10 hedge funds that are Deutsche Bank clients have decided to withdraw some cash and listed derivatives positions from the bank, according to a Bloomberg News report. Listed derivatives positions refer to things like equity options and futures contracts, not the more esoteric over-the-counter contracts that caused so much trouble in the financial crisis. - BlackRock: Get Ready for More Fiscal Easing
Policymakers are changing their tone on fiscal policy. More governments are now looking at fiscal support, and the focus on austerity has faded as monetary easing reaches its limits. The shift away from austerity and the acknowledgement of the need for fiscal and monetary coordination matter for financial markets. In our inaugural Global Macro Outlook, we assess the potential for more fiscal easing in key economies, and gauge the impact on global growth and asset prices. - Trucker shortage prompts calls for driverless big rigs
America is facing a trucker crisis. As it readies for the busy holiday delivery season, the industry is expecting to be short about 73,000 long-distance drivers, more than three times the shortage of 2005, and that could lead to delivery delays and higher shipping costs. “It's at a point today where it is an operational hardship. It could soon be that at your store, not everything is there that you are accustomed to being there,” said Bob Costello, chief economist and senior vice president of the American Trucking Associations. “This is an industry that has problems finding drivers,” he told the Washington Examiner. - U.S. Signed Secret Document to Lift U.N. Sanctions on Iranian Banks
The Obama administration agreed to back the lifting of United Nations sanctions on two Iranian state banks blacklisted for financing Iran’s ballistic-missile program on the same day in January that Tehran released four American citizens from prison, according to U.S. officials and congressional staff briefed on the deliberations. The U.N. sanctions on the two banks weren’t initially to be lifted until 2023, under a landmark nuclear agreement between Iran and world powers that went into effect on Jan. 16. - REPORT: Billionaires Donate More to Hillary Than Trump. WAY More…
It’s safe to say the majority of leftists despise big business, right? Or at least that’s what they claim. It seems like the left consistently blames capitalism for all of its big business woes. But as it turns out, most of those huge corporations? Yeah, they’re in bed with the government. Democrats in particular. You might say that the two appear to enable one another. In fact, you might even say that there’s not much of a distinction between the two (see Dear Millennial Socialists: Actually, You Hate Big Government, Not Big Business…). Especially thanks to sneaky troglodytes like Hillary Clinton. Due to “pay to play” schemes and government bailouts, business and government stay close friends. - Secret Alpine Gold Vaults Are the New Swiss Bank Accounts
Deep in the Swiss Alps, next to an old airstrip suitable for landing Gulfstream and Falcon jets, is a vast bunker that holds what may be one of the world’s largest stashes of gold. The entrance, protected by a guard in a bulletproof vest, is a small metal door set into a granite mountain face at the end of a narrow country lane. Behind two farther doors sits a 3.5-ton metal portal that opens only after a code is entered and an iris scan and a facial-recognition screen are performed. A maze of tunnels once used by Swiss armed forces lies within. The owner of this gold vault wants to remain anonymous for fear of compromising security, and he worries that even disclosing the name of his company might lead thieves his way. He’s quick to dismiss questions about how carefully he vets clients but says many who come to him looking for a safe haven for their assets don’t pass his sniff test. “For every client we take, we turn one or two away,” he says. “We don’t want problems.” - Largest Dutch Bank To Fire Thousands
One day after Germany's second largest lender confirmed reports of a massive restructuring when it announced it would lay off nearly 10,000 employees, or about 20% of its entire workforce while slashing the bank's dividend for the rest of the year, the Dutch newspaper Het Financieele Dagblad reported that ING Groep, the largest Netherlands lender, will announce thousands of job cuts at its investor day on Monday. The reorganization will result in more central management and may generate billions of euros in savings, the paper said cited by Bloomberg. Raymond Vermeulen, a spokesman for the Amsterdam-based bank, declined to comment on the report. The bank employs about 52,000 people, according to its website. - BlackStone Group Says The Market Is The Most Treacherous They Have Seen
There has rarely ever been another time like this. Not since 1999 and not since 1929 before that, have so many billionaires, central banksters, financial elites and fund managers, warned that we are on the verge of a catastrophic bust. And now, Joe Baratta, Blackstone Group LP’s top private equity deal maker, admits at a WSJ conference this week, “You have historically high multiples of cash flows, low yields. I’ve never seen it in my career. It’s the most treacherous moment.” The most treacherous moment! - Commerzbank plans to cut 9,600 jobs
Germany's second-biggest lender, Commerzbank, is planning to cut 9,600 jobs over the next four years and end dividend payments for the first time. In a statement, the bank said by the end of 2020 it would have “sustainably increased its profitability”. However, the bank also said it aimed to create 2,300 new posts in areas where its business was growing. Commerzbank's strategy for achieving this will be debated by the bank's board on Friday. Last year, it had about 51,300 employees. - WARNING: We Are Going To Be Living In An Incredibly Chaotic World
As the monetary madness continues, some of what you will read below is difficult to comprehend because it seems totally unimaginable. “If you have the power to print money, you’ll do it. Regardless of any ideologies or statements, that you should limit your counterfeit operations to three percent a year as the Friedmanites want to do. Basically you print it. You find reasons for it, you save banks, you save people, whatever, there are lot of reasons to print.” — Murray N. Rothbard - Legend Who Oversees $180 Billion Warns World Financial System ‘Is Headed For A Train Wreck’
On the heels of continued problems at Deutsche Bank, a legend who oversees more than $180 billion warned King World News that the world financial system “is headed for a train wreck.” ric King: “Rob, the central banks have been insane for some time now but that insanity is escalating. Can you talk about that?” Rob Arnott: “Of course the Fed did not hike in September. They have set the stage for what is characterized as a likely hike in December, but who knows? It’s not at all unlikely that they will flinch again. At the end of last year they were signaling four rate hikes for 2016 and it looks like we might very well finish with zero. So they talk a little hawkish but do not have the spine to do anything. - ECB “Refused To Answer Questions” – “Systemic Threat” Of Deutsche Is “Not ECB Fault”
The potential collapse of Deutsche Bank and the systemic risk it poses to banks and the European financial and monetary system moved into the German political sphere yesterday. The German government denied it was preparing a rescue of the embattled bank and the Bundestag attempted to ask questions of ECB President Mario Draghi about the causes of the “systemic risks” posed by the bank. - Deutsche Bank Charged By Italy For Market Manipulation, Creating False Accounts
For Deutsche Bank, when it rains, it pours, even when everyone tries to come to its rescue. One day after its stock soared from all time lows, following what so far appears to have been a fabricated report sourced by AFP which relied on Twitter as a source that the DOJ would reduce its RMBS settlement amount with Deutsche Bank from $14 billion to below $6 billion (and which neither the DOJ nor Deutsche Bank have confirmed for obvious reasons), moments ago Bloomberg reported that six current and former managers of Deutsche Bank, including Michele Faissola, Michele Foresti and Ivor Dunbar, were charged in Milan for colluding to falsify the accounts of Italy’s third-biggest bank, Monte Paschi (which itself is so insolvent it is currently scrambling to finalize a private sector bailout) and manipulate the market. Two former executives at Nomura Holdings Inc. and five at Banca Monte dei Paschi di Siena were also charged. - Yellen Dodges Questions on Interest Rates and Political Motives
On Wednesday, Federal Reserve Chairwoman Janet Yellen testified before the House Financial Services Committee on financial regulation. The Fed Chair took criticism from both sides, with Democrats and Republicans criticizing the regulatory body for doing too much and for doing too little. Among the topics was the over-reach of Dodd-Frank, breaking up “too big to fail” firms, and the recent Wells Fargo phony account scandal. However, one important topic side stepped was the impact of low interest rates on any of the problems brought up at the hearing. - Mickey Fulp: Gold is Money, That's why I own Precious Metals! – Maurice Jackson
Mickey Fulp, the Mercenary Geologist, sits down with Maurice Jackson of ‘Proven & Probable‘ to discuss: Current State of the Natural Resource Space, Are we out of the Bear Cycle, What are the catalyst’s, Gold, Silver, Platinum, Palladium, Stewardship of Precious Metals, How much allocation should investors have in bullion, Identifies the difference between bullion and mining companies, Investing Vs. Speculation. - Gerald Celente – What Is Happening In The Real World Is Extremely Distressing
With the world focused on the usual propaganda from the mainstream media, today top trends forecaster Gerald Celente said what is happening in the real world is extremely disturbing. Trend Alert®: Presidential Election will not affect economy. What will?? Gerald Celente —From Asia, to Europe to America, equity markets around the world on Monday swayed in anticipation of who would win the Presidential Reality Show® “debate” between Hillary Clinton and Donald Trump… - Look At The Remarkable Flight From The U.S. Dollar
With continued uncertainty in key global markets, look at the remarkable flight from the U.S. dollar. From Jason Goepfert at SentimenTrader: Traders are giving up on the dollar. Currency-hedged ETFs have seen some of the biggest outflows among all funds in recent days, and funds that bet on a rising U.S. dollar have seen their assets dwindle to the lowest in years. That usually means limited downside for the buck going forward… - There’s currently a $2 quadrillion derivatives bubble, which is about to take down the entire global economy. ($2 quadrillion is 22 times all global GDP combined.)
All the world’s largest banks are overleveraged on these toxic derivatives contracts: Deutschebank, Goldman Sachs, Wells Fargo, Bank of America, etc. Basically a derivatives contract is like insurance. I always use the example of oil. If an energy company knows it’s going to need oil to run their electricity plant, but the price of oil fluctuates daily, they might want to negotiate a “set-price” [to make it easier for them to build the cost into the accounting models]. Such an energy company might go to Goldman Sachs and say, “Can you negotiate with Saudi Arabia to give us a stable price?” Whereupon Goldman Sachs creates an insurance contract, locking in a spot-price of, say, $100 a barrel. No matter where the international price goes, Goldman Sachs is now contractually obliged to deliver the oil at that price. But what if oil plunges from $100 to $20 a barrel? Goldman Sachs has to eat $80 for every barrel sold. (And that’s just what happened.) So Goldman Sachs, that has $900 billion in assets, now owes $54 trillion on these derivatives contracts. - FBI Docs: Hillary Deleted Nearly 1,000 Emails With David Petraeus
A potentially explosive nugget from the FBI's Friday document dump of investigatory notes from the Clinton email probe has been all but ignored by the media. And that is the revelation that Hillary Clinton deleted 1,000 work-related emails between herself and General David Petaeus from his time as the director of the United States Central Command. - How October Could Signal a Stock Market Collapse
You’re probably unaware that the apocalypse is fast approaching. Indeed, it’s almost here. And how does the apocalypse manifest itself? As a Chinese financial takeover of the world: The Chinese renminbi soars; the U.S. dollar sinks, thus relinquishing its reserve-currency status; the U.S. stock market, with its assets denominated in dollars, collapses. Kick-off is this Saturday. I’ve actually been privy to this short-and-tidy rendition of doom and gloom for some time now. A stock-trading acquaintance of mine, who I’ll call Matt (because that’s his name), is always sure to remind me of impending doom and gloom every time we meet, approximately twice weekly. How does he know doom and gloom is impending? The surfeit of gold-hoarding, run-for-the-hills financial publications that feed his biases. - The countries where cash is on the verge of extinction
My dad, a former Wall Street trader always advised me “cash is king” and to “hold on to it” when the economy gets tough. But in the Netherlands, cash is definitely not getting the royal treatment. In so many places, it has simply ceased to be recognised as legal tender. More and more Dutch stores, from upscale health-food store Marqt to my local baker and bagel shop, take pin — or debit — cards exclusively. Some retailers even describe going cash-free as “cleaner” or “safer”. Tucking my debit card firmly away, I decide to see how far a bundle of cash will get me. Not far. The big-ticket items are strictly cashless affairs: my rent and my telephone bill among them. - Stocks Soar After French Press “Confirm” Deutsche Bank Near Settlement With DOJ
Seemingly confirming the rumor, Agence France Press reports that Deutsche Bank is nearing a $5.4 billion settlement with the US Justice Department. This has catalyzed another leg higher in Deutsche Bank stock and lifted the whole market as it would appear that unconfirmed sources have ‘fixed' the world's most systemically dangerous bank (despite the fact that short-dated counterparty risk is soaring). - Deutsche Bank Hangs By A Thread On Eve Of Jubilee
Nearly a year ago to the day, on September 28th, we wrote “Will Deutsche Bank Be This Cycle’s Lehman Brothers?” In it we asked, “In 2008, the financial crisis was set-off by the collapse of Lehman Brothers. Could this year’s crisis be caused by a collapse of Deutsche Bank?” The day after the end day of the Shemitah in 2015, on September 14th, Deutsche Bank announced that it was laying off 23,000 employees, about 25% of its workforce. At the time, it was trading around $26 per share. Now, on the eve of the end of the Jubilee Year, Deutsche Bank was down another 7% on Thursday and is now at an all-time low near $11.50. - World Trade Collapsing On Schedule
The World Trade Organization (WTO) has warned that there is a “dramatic slowing of trade growth” unfolding. The WTO has revised downward its projections, saying trade is now on track this year to grow at the slowest pace since 2009. The hunt for taxes is destroying the world economy and on January 1, 2017, all governments will begin sharing info on foreigners. The assumption is that anyone doing anything outside the USA is hiding money from taxes. With this attitude, world trade will continue to collapse into 2020. - Bix Weir – Final Collapse is Happening Now
Bix Weir joined the show today. Deutsche Bank is imploding before our very eyes. Their bonds will soon be worthless and no one is coming to their rescue. Bix thinks it’s the end of the world economic system as we know it, and it can’t come soon enough for Bix. There’s nothing that can save it now. According to Bix the end is imminent, so buckle your seat-belts and be prepared. - Pastor Lindsey Williams introduces Pastor David Bowen – September 29, 2016
Pastor Lindsey Williams introduces Pastor David Bowen with his new 10 minute weekly video for readers of Pastor Williams’ weekly newsletter. - Deutsche Bank's seesaw shares bounce back amid rumours stricken bank is close to a cut price fine over sale of toxic mortgages
A report that Germany's largest bank is close to a cut-price fine deal with American authorities over the sale of toxic mortgage bonds has helped boost its share price. Deutsche Bank, which employs about 100,000 people, has been engulfed by crisis after being handed a demand for up to $14 billion earlier this month by the Department of Justice for mis-selling mortgage-backed securities. The bank is fighting the fine but would have to turn to investors for more money if it is imposed in full. The German government this week denied a newspaper report that it was working on a rescue plan for the bank. - Here’s How the Government Is Turning the Entire United States into a Debt Prison
Since the United States was founded, citizenship has represented a safe haven from oppressive regimes around the world. By preserving the principles of small government and free markets, those who were willing to work hard found success, and America became a magnet for innovation. But as the U.S. continues to erode personal and economic freedom, more people than ever before are handing over their U.S. passports to seek better opportunities abroad. - ‘Partnership on AI' formed by Google, Facebook, Amazon, IBM and Microsoft
Google, Facebook, Amazon, IBM and Microsoft are joining forces to create a new AI partnership dedicated to advancing public understanding of the sector, as well as coming up with standards for future researchers to abide by. Going by the unwieldy name of the Partnership on Artificial Intelligence to Benefit People and Society, the alliance isn’t a lobbying organisation (at least, it says it “does not intend” to lobby government bodies). Instead, it says it will “conduct research, recommend best practices, and publish research under an open license in areas such as ethics, fairness and inclusivity; transparency, privacy, and interoperability; collaboration between people and AI systems; and the trustworthiness, reliability and robustness of the technology”. - The era of robots: thousands of builders to lose jobs as machines take over, says construction boss
Skyscrapers in the City of London could soon be built by robots rather than by people, according to the boss of one of the UK’s biggest construction firms. The result would be huge productivity gains as more work could be done by fewer people – but also mass layoffs as traditionally labour-intensive construction projects hire fewer and fewer staff. “We’re moving into the era of the robots,” said Alison Carnwath, the chairman of Land Securities, the £8.2bn FTSE 100 construction company. - US Central Bank Chair: Blockchain Could Have ‘Significant' Impact
During an appearance before a House of Representatives committee hearing today, Federal Reserve chairwoman Janet Yellen remarked that the US central bank is “trying to understand” financial technologies like cryptocurrencies and blockchain. Yellen was speaking before the Committee on Financial Services, during which she was asked by Rep. Mick Mulvaney about the Fed’s position on cryptocurrencies and whether it investigating internal applications of blockchain. While Yellen said that the Fed wasn’t doing so, she did indicate that the US central bank was pursuing lines of inquiry within the broader context of fintech. However, she did remark that blockchain tech could have a major impact on payments and banking in the future. - Treasuries Gain as Deutsche Bank Contagion Fear Fuels Haven Bid
Treasuries rallied, reversing earlier losses, as traders sought haven assets on reports that some Deutsche Bank AG clients are pairing back their exposure to the beleaguered German lender. Treasury 10-year yields fell one basis point, or 0.01 percentage point, to 1.56 percent as of 2:43 p.m in New York, according to Bloomberg Bond Trader data. The price of the 1.5 percent security due in August 2026 climbed to 99 13/32. Traders bid up traditional quality assets including Treasuries, gold and the yen after a Bloomberg News report said some funds that clear derivatives trades with Deutsche Bank had withdrawn some excess cash and positions held at the bank. Investors fled financial securities amid concern the Frankfurt-based bank’s woes could spread to counterparties, damping Europe’s fragile economic recovery. - This Is How Much Liquidity Deutsche Bank Has At This Moment, And What Happens Next
It is not solvency, or the lack of capital – a vague, synthetic, and usually quite arbitrary concept, determined by regulators – that kills a bank; it is – as Dick Fuld will tell anyone who bothers to listen – the loss of (access to) liquidity: cold, hard, fungible (something Jon Corzine knew all too well when he commingled and was caught) cash, that pushes a bank into its grave, usually quite rapidly: recall that it took Lehman just a few days for its stock to plunge from the high double digits to zero. It is also liquidity, or rather concerns about it, that sent Deutsche Bank stock crashing to new all time lows earlier today: after all, the investing world already knew for nearly two weeks that its capitalization is insufficient. - “It’s A Lot More Negative Than People Think” – China Beige Book Issues Stark Warning About The Economy
While China's excess debt problems have been extensively documented, the overall economy appears to also be slowing substantially as a result of the decline in the most recent credit impulse, noted as recently as one week ago when we reported that “Chinese Loan Demand Dropped To All Time Low.” Overnight, the latest warning about China's economy came from the authors of the China Beige Book, a quarterly survey that tracks the world’s second-largest economy, who said that recent stability in the Chinese economy masks deep-seated problems that threaten to rattle global markets in advance of a leadership change next year, and added that ignoring these risks is shortsighted. - General Collateral Rate Surges To Highest Level In 7 Years
In what may be an indication of a major collateral shortage, but most likely is simply a case of quarter-end “window dressing”, the overnight general collateral rate soared to 0.82% this morning, its highest print in nearly seven years, and roughly where it would trade if the Fed had hiked in September. GC soared to 0.85% yesterday afternoon yesterday after opening at around 0.68%. As SMRA points out, the GC rate often spikes as quarter end approaches. The early morning fed funds rate is at 0.40% this morning, unchanged from 0.40% yesterday. Both the effective fed funds rate and overnight bank funding rate were in line with the fed funds rate at 0.40% on Monday, unchanged from the prior couple weeks. - PANIC As Margin Calls Begin: Deutsche Bank Has Financial System On The Cusp Of Collapse
DB stock is now in a full panic sell-off as I write this. It just hit another new all-time NYSE low on by the heaviest volume ever in the stock since its 2001 NYSE listing. It’s currently down almost 10%. No doubt the Central Banks will try to bounce it. Deutsche Bank may well be the scapegoat this time around just like Lehman was the scapegoat in 2008. Central Banks in collusion can prevent just one bank from collapsing. It was the co-collapsing of AIG and Goldman Sachs that prompted then-Secretary of Treasury, ex-Goldman CEO Henry Paulson, to put in motion the bailout of the U.S. and European banking system. - Draghi Lays Blame for European Banks’ Woes on Industry Behavior
Mario Draghi said the financial industry must stop blaming the actions of central banks for their problems and focus on fixing internal management and risk failings. “Many banks have problems that don’t have primarily to do with the low level of interest rates but possibly with other reasons,” the European Central Bank president said after a meeting with German lawmakers in Berlin on Wednesday. He cited business models and risk management and said this was “generally acknowledged” by those at the talks. - Yuan in October 1st will be officially “into the basket” SDR what is the impact?
The international monetary fund strategy policy and evaluation department said in a conference call, adding SDR RMB currency basket has milepost sense, persistent China responded to the reform measures have been confirmed and strengthened. During the conference call, a spokesman for the International Monetary Fund said it was working with the Chinese side to carry out the final cooperation with the Chinese side, in order to ensure the final preparations for the international circulation of RMB after the entry into the basket. China's central bank and the major financial institutions have been well prepared in the past year, the International Monetary Fund has also set up a good circulation platform for RMB and new management architecture in the world. - Obama Humiliated: For The First Time, Congress Votes To Override President's “Sept 11” Bill Veto
US Congress, first the Senate and then the House, humiliated the president when it voted on Wednesday to override Obama for the first time in his eight-year tenure, as the House rejected a veto of legislation allowing families of terrorist victims to sue Saudi Arabia. The House easily cleared the two-thirds threshold with a 348-77 vote to push back against the veto. The Senate voted 97-1 in favor of the override earlier in the day, with only Democratic Leader Harry Reid voting to sustain the president’s veto. - The Run Begins: Deutsche Bank Hedge Fund Clients Withdraw Excess Cash
Deutsche Bank concerns just went to '11' as Bloomberg reports a number of funds that clear derivatives trades with Deutsche Bank AG have withdrawn some excess cash and positions held at the lender, a sign of counterparties’ mounting concerns about doing business with Europe’s largest investment bank. While the vast majority of Deutsche Bank’s more than 200 derivatives-clearing clients have made no changes, some funds that use the bank’s prime brokerage service have moved part of their listed derivatives holdings to other firms this week, according to an internal bank document seen by Bloomberg News.
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