Sumner Redstone competency case tossed out by judge
The challenge to Sumner Redstone’s mental competency was dismissed by a Los Angeles judge Monday. …read more
Source: Sumner Redstone competency case tossed out by judge
Archive for the ‘Uncategorized’ Category
Brazilian Stocks, Currency Tumble After Brazil House Chief Said To Accept Annulment Of Rousseff Impeachment
By Tyler Durden
Late last week, we shared what may be the most concise summary of the ongoing political theater involving the impeachment process of Dilma Rousseff, who as is well known has already been impeached, but where virtually every other actor is just as guilty of corruption and/or kickbacks. To wit:
A Brazilian Supreme Court justice ruled on Thursday that the powerful lawmaker who orchestrated the effort to impeach President Dilma Rousseff must step down as he faces graft charges, ratcheting up tensions in the country.
And in a further blow to Brazil’s scandal-plagued political establishment, Vice President Michel Temer, the man preparing to take control of the government from Ms. Rousseff, had his conviction on charges of violating limits on campaign financing upheld earlier this week, a ruling that makes him ineligible to run for elected office for eight years.
The rulings are not expected to save Ms. Rousseff’s presidency. Support for her ouster remains strong in the Senate, which is preparing to vote next week on whether to remove her from office and put her on trial over claims of budgetary manipulation. But the decisions reflect the potential for greater political turmoil in the country.
Today, the story of Rousseff's impeachment took another unexpected, and sharp U-turn when moments ago, Bloomberg reported that the interim chief of Brazil’s lower house, Waldir Maranhao, accepted a request from the government's attorney general to annul the procedure that approved the impeachment motion in the house, according to reports from Folha de S.Paulo newspaper and Epoca magazine. The stated reason: procedural flaws.
Waldir Maranho
More details from Reuters and Bloomberg:
- LOWER HOUSE ACTING SPEAKER MARANHAO SAYS IN DOCUMENT IMPEACHMENT VOTE MUST BE ANNULLED DUE TO PROCEDURAL FLAWS
- BRAZIL LOWER HOUSE CHIEF CALLS NEW SESSION TO VOTE IMPEACHMENT
- BRAZIL HOUSE CHIEF ASKS SENATE TO RETURN IMPEACHMENT MOTION
Whether this means that Rouseff's entire impeachment process has now been derailed (arguably as a lot of money has been transferred under the table) will be revealed shortly.
And while nobody expected Rousseff to exit without a fight, if this new twist in the Brazilian political soap opera is confirmed and is actually implemented – just three months before the Rio Summer Olympics – it would mark a dramatic anticlimax to a process that was supposed to conclude with the expulsion of Dilma from the presidential seat and unveil a new (if just as corrupt) government, which has been the catalyst for a 40%+ surge in Brazilian stocks YTD, even as Brazil's economy has continued to deteriorate sharply.
The immediate result: a slump for both Brazilian stocks and the currency, both of which are sharply lower on the initial report.
Stocks Jump, Oil Tumbles As Gartman Says "It Is Time To Buy Crude Oil And To Sell Equity Futures"
By Tyler Durden
Gartman has done it again. From his letter as of this morning.
We are weary… and very so… about hearing of the supposed strong relationship between stock prices and energy and we have had quite enough of it to last a very long while. The simple fact of the matter is, judging from the two charts the page previoius of WTI crude and the S&P in monthly terms going back to the spring of ’11, that if there is a correlation between the two it is utterly negative, not positive. Note then that since the spring of ’11, stocks have gone higher, and markedly, relentlessly so. What then of crude oil prices? Well, they have gone markedly and relentlessly lower.
So, let us put this nonsense behind us that crude and stocks trade one with the other; they do not, and thinking that they do can and will lead to eventual chaos and massive losses… both of mental and real capital. ‘Nuff said, save to say that it is time to buy crude oil and to sell equity futures, with the only problem now to decide how to weight the position; that is, do we sell equal dollar sums on both sides or do we weight the trade for “beta,” if there is such a thing for crude oil.
We shall try to research that today and tomorrow and perhaps for most of this week, for that shall be a critical, deciding factor in the implementation of this position.
He better do it fast before his is “stopped out” of his “position.”
Source: Stocks Jump, Oil Tumbles As Gartman Says "It Is Time To Buy Crude Oil And To Sell Equity Futures"
These Are The 8 Triggers For A New Financial Crisis
By Tyler Durden
Authored by Satyajit Das (Author of A Banquet of Consequences), via The Independent,
There are a number of potential triggers to a new crisis.
The first potential trigger may be equity prices.
The US stock market runs into trouble. A stronger dollar affects US exports and foreign earnings. Emerging market weakness affects businesses in the technology, aerospace, automobile, consumer products and luxury product industries. Currency devaluations combined with excess capacity, driven by debt fuelled over-investment in China, maintain deflationary pressures reducing pricing power. Lower oil prices reduce earnings, cash flow and asset values of energy producers. Overinflated technology and bio-tech stocks disappoint.
Earnings and liquidity pressures reduce merger activity and stock buybacks which have supported equity values. US equity weakness flows into global equity markets.
The second potential trigger may be debt markets. Heavily indebted energy companies and emerging market borrowers face increased risk of financial distress.
According to the Bank of International Settlements, total borrowing by the global oil and gas industry reached US$2.5 trillion in 2014, up 250 percent from US$1 trillion in 2008.
The initial stress will be focused in the US shale oil and gas industry which is highly levered with borrowings that are over three times gross operating profits. Many firms were cash flow negative even when prices were high, needing to constantly raise capital to sink new wells to maintain production. If the firms have difficulty meeting existing commitments, then decreased available funding and higher costs will create a toxic negative spiral.
A number of large emerging market borrowers, such as Brazil’s Petrobras, Mexico’s Pemex and Russia’s Gazprom and Rosneft, are also vulnerable. These companies increased leverage in recent years, in part due to low interest rates to finance significant operational expansion on the assumption of high oil prices.
These borrowers have, in recent years, used capital markets rather than bank loans to raise funds, cashing in on demand from yield hungry investors. Since 2009, Petrobras, Pemex and Gazprom (along with its eponymous bank) have issued US$140 billion in debt. Petrobras alone has US$170 billion in outstanding debt. Russian companies such as Gazprom, Rosneft and major banks have sold US$244 billion of bonds. The risk of contagion is high as institutional and retail bond investors worldwide are exposed.
A third possible trigger may be problems in the banking system fed by falling asset prices and non-performing loans. European banks have around €1.2 trillion in troubled loans. Chinese and Indian bank problem loans are also high.
A fourth potential trigger may be changes in liquidity conditions exacerbate stress. Since 2009, asset prices have been affected by the central banks’ attempted reflation. Today, as much as US$200-250 billion in new liquidity each quarter may be needed to simply maintain asset prices. However, the world is entering a period of asynchronous monetary policy, with divergences between individual central banks.
The US Federal Reserve is not adding the liquidity it did between 2009 and 2014. While the Bank of Japan and European Central Banks continue to expand their balance sheets, it may not be sufficient to support asset …read more
Source: These Are The 8 Triggers For A New Financial Crisis
P2P Bubble Bursts? LendingClub Stock Plummets 25% After CEO Resigns On Internal Loan Review
By Tyler Durden
Back in February we showed that it is not only China which is troubled by non-performing loans: America’s own nascent private Peer 2 Peer industry was having very similar issues, evident most notably in the books of category “leader” LendingClub, whose write-offs had soared to nearly double the company’s own forecasts.
First, a quick reminder on the industry dynamics over the past year. As we reported last May, P2P loan volume was set to surpass $76 billion in 2015 and one driver of the boom is demand from the likes of BlackRock, Morgan Stanley, and Goldman, who had all underwritten securitizations of loans originated on P2P platforms like LendingClub, the number one player in the space. For those unfamiliar, P2P loans create the conditions whereby borrowers can refi high-interest debt via personal loans, transferring credit risk from large financial institutions to private lenders in the process.
It’s not entirely clear what the implications of that shift might ultimately be, especially if the market continues to grow rapidly. “One thing,” we said, “is clear”: Using a relatively low-interest P2P loan to pay off a high-interest credit card is no different in principle than using a new credit card that comes with a teaser rate to pay off an old credit card. In the end, the borrower will very often max out the old card again and thus end up with twice the original amount of debt.
The same dynamic applies to P2P lending. “So what’s to stop consumers from levering their credit cards back up?” Bloomberg asked last year. “Such behavior could spell bad news for investors in P2P loans if an interest rate hike or an unforeseen shock pressures borrowers,” Michael Tarkan, an equities analyst at Compass Point Research said.
“We’ve created a mechanism to refinance a credit card into an unsecured personal loan,” he added. “This may prove to be a superior model, but we just don’t know because it hasn’t been tested yet through a full credit cycle.”
No, we “just don’t know”, but we may be about to find out because a new presentation from LendingClub indicates that the cracks are starting to show. “LC Advisors, an investment adviser owned by LendingClub that helps people buy loans arranged by the company, said last week in a presentation that some of the debt is ‘underperforming vs. expectations,’” Bloomberg wrote on Friday. “A chart on one of the slides shows that write-off rates for a portion of five-year LendingClub loans were roughly 7 percent to 8 percent, compared with a forecast range of around 4 percent to 6 percent.” Here’s the slide in question:
What the slide above shows is that LendingClub is terrible at assessing credit risk. A write-off rate of 7-8% may not sound that bad (well, actually it does, but because P2P is relatively new, we don’t really have a benchmark), it’s double the low-end internal estimate. That’s bad. In other words, we said, the algorithms LendingClub uses to assess credit …read more
Source: P2P Bubble Bursts? LendingClub Stock Plummets 25% After CEO Resigns On Internal Loan Review
813-carat rough diamond sells for $63M
Canadian mining firm Lucara has sold a massive 813-carat diamond for $63 million, a new record for a rough gem.
…read more
Source: 813-carat rough diamond sells for $63M
Will "Inevitable USD Strength" Lead To Another Market Selloff
By Tyler Durden
With stocks the biggest beneficiary of the late January “Shanghai Accord” (that shall not be named), it stands to reason that the US Dollar was the biggest loser. Sure enough, overnight the WSJ writes that the “powerful rallies that have lifted stocks, crude oil and emerging markets for the past three months have one important thing in common – the falling dollar – and investors are growing anxious that it could prove to be the weak link.”
But is a strong dollar about to make another appearance and unleash the next leg lower in risk assets?
While the dollar is down 4.5% this year and near a one-year low against a basket of currencies, other investments have surged. U.S. crude prices are up 69% from their February lows. Gold was up 16.5% in the first quarter, its best in three decades. And emerging-market stocks, bonds and currencies have enjoyed double-digit gains in 2016.
Morgan Stanley analysts quantified the relationship, and found that the correlation between a weak dollar and their own index of investor appetite for riskier assets is near its highest level in 20 years. As the WSJ writes, “the concern is that it is a relationship that could easily go in the opposite direction.”
The dollar is heavily dependent on perceptions of what the Federal Reserve will do with interest rates, and those perceptions could change quickly. Meanwhile, analysts warn that the fundamentals for oil, emerging-market assets and even many stocks look too weak to support the recent price gains on their own.
“Currency is the most influential factor for markets this year,” said Graham Secker, head of European equity strategy at Morgan Stanley. “If the dollar starts moving higher, global risk appetite will fall.”
But just when you think the dollar tide is about to turn, you get such ugly US macroeconomic update as Friday’s payrolls report, and suddenly it feels like the USD has much more room to fall (and, in tried and true centrally-planned fashion, the worse the data, the higher stocks could rally).
To be sure, conventional wisdom and positioning agrees with a “lower dollar for longer” thesis: hedge funds and other speculative investors are now more bearish on the dollar than at any other time since February 2013, according to CFTC data.
However, that bearish positioning also means any sign the Fed is turning more hawkish could send investors scampering to buy dollars, pushing the U.S. currency sharply higher.
“The market has become complacent,” said Steven Englander, head of G-10 FX strategy at Citigroup Inc. “There’s the risk…the Fed gives a sudden indication that really surprises the market.”
The biggest risk, of course, is that Goldman will remain bullish on the USD as it has for the past 5 months, leading to thousands of pips in P&L pain for Goldman FX clients.
But maybe not even Goldman flip-flopping will be necessary for the USD to make a U-turn.
Here is another report, courtesy of Morgan Stanley’s Hans Redeker, head of global FX, who …read more
Source: Will "Inevitable USD Strength" Lead To Another Market Selloff
Blocked in China, Facebook wins trademark ruling
Facebook has emerged victorious in a China trademark ruling, even though the social media site remains blocked in the country. …read more
Source: Blocked in China, Facebook wins trademark ruling
HSBC’s London Gold Vault: Is This Gold’s Secret Hiding Place?
By Tyler Durden
Submitted by Ronan Manly of Bullionstar
HSBC’s London Gold Vault: Is This Gold’s Secret Hiding Place?
HSBC’s main gold vault in London regularly comes under the media spotlight for a number of reasons. These reasons include:
a) the HSBC London vault stores a very large amount of gold on behalf of gold-backed Exchange Traded Funds, primarily the well-known SPDR Gold Trust (GLD)
b) along with the Bank of England vaults and JP Morgan vault, the HSBC vault is one of the 3 largest gold vaults in London
c) the location of the HSBC vault in London is not publicised and so the secrecy creates intrigue
d) HSBC every so often throws out some visual or audio-visual media bait about the vault, most famously in the case of CNBC’s Bob Pisani and his camerman and producer visiting and filming inside the actual vault
Despite all of the above, no one seems to have ever tried to figure out where this gold vault is actually located. Until now.
In some ways HSBC has done a very good job keeping the location of its London gold vault under wraps. The main challenge is where does one begin to look for a vault in London from scratch. At first it would appear that there is nothing in the public domain pointing to the HSBC vault location. This is not entirely true however. The gold bullion activities of HSBC in London stem from two companies that over time became part of the HSBC group. My approach was to start by thinking about which London locations HSBC used to be based at. I took this approach because it became obvious that the HSBC London gold vault being used was still a battered looking old vault space in 2004 and 2005, which was after the entire HSBC company had moved to its spanking new London headquarters in Canary Wharf by 2003.
In New York, the location of the HSBC Bank USA precious metals vault in Manhattan is well-known and is even listed in CFTC documents such as here. The vault is at 1 West 39th Street, SC 2 Level , New York, New York 10018 , which is the same building as 450 Fifth Avenue, which is the former Republic National Bank building that HSBC took over in 1999-2000. This Republic building at 450 Fifth Avenue, when it was being built, “had special vault requirements that reportedly added significantly to the project’s cost“. So its hard to see why HSBC makes such a big deal of not revealing its London vault location.
History of HSBC gold operations in London
In 1993, HSBC Holdings plc relocated its headquarters to London after having acquired Britain’s Midland Bank the previous year. Midland in turn had fully acquired Samuel Montagu in 1974 to form Midland Montagu. Samuel Montagu & Co was a City of London bullion broker, and one of the 5 original gold fixing members of the London Gold Fixing, and in turn, Midland Montagu was also a Gold Fixer. In 1999, HSBC began using …read more
Source: HSBC’s London Gold Vault: Is This Gold’s Secret Hiding Place?
‘The Good Wife’ series finale: The verdict is in
Expectations were high for the series finale of “The Good Wife,” which had become one of TV’s best dramas. …read more
Source: ‘The Good Wife’ series finale: The verdict is in
