In the absence of major data releases, the focal point of the week for markets becomes the release of the minutes of the May FOMC meeting. The most notable change in the statement was the inclusion of the new language: “the Committee is prepared to increase or reduce the pace of its purchases to maintain appropriate policy accommodation as the outlook for the labor market or inflation changes.” In the May meeting minutes, the market will be looking for any clarification of the motivation behind this change as well as any evidence that the committee members may be becoming less comfortable with the unemployment rate threshold or more specific about tapering timelines and dates.

The May BOJ meeting will also attract significant market attention. It is not expected that the BOJ stance will change in the upcoming meeting given how little time has passed since it adopted its current quantitative and qualitative easing stance on April 4th. However it is likely they will upgrade its economic assessment slightly given current trends in personal consumption, and the overarching desire to boost confidence and sentiment regardless of facts and reality.

In Europe, Flash PMIs for May are the key release on Thursday, while the IFO on Friday will also be key to watch. The expenditure breakdown of Q1 GDP for Germany and UK will be interesting to follow too.

Finally, China Flash PMI will be interesting particularly for the AUD underperformance trend.

Monday, May 20

• Interesting: Japan Reuter Tankan, Chile/Thailand GDP, Chicago Fed President Evans speaks

Tuesday, May 21

• UK CPI: We forecast 2.6%yoy, down from last month’s 2.8%.
• Also interesting: Poland IP, Korean Exports, Fed’s Bullard and Dudley speak

Wednesday, May 22

• Fed Chairman Bernanke testifies before Congress
• Japan Monetary Policy Meeting
• US FOMC Minutes
• UK MPC Minutes
• Also interesting: Canada Retail Sales, Brazil Current Account, Mexico Retail Sales, US Existing Home Sales

Thursday, May 23

• China Flash PMI: Consensus expects 50.3, slightly below last month’s 50.4.
• US Initial Claims: Consensus expectations are for a read of 346k, down from last week’s 360k.
• South Africa MPC: We expect the MPC to leave the policy rate unchanged at 5% in line with consensus, although the policy statement may turn more dovish.
• European Flash PMIs
• Euro Area Consumer Confidence
• Also interesting: UK GDP Q1 (revised), UK/Italy Retail Sales, US New Home Sales, Poland MPC minutes, Fed President Bullard speaks

Friday, May 24

• US Durable Goods: We forecast +1.2%, below consensus at +1.5% and up from last month’s -6.9%.
• German IFO Business Survey
• Also interesting: German GDP Q1 (revised), France Business Confidence, Italy Consumer Confidence, Mexico Current Account and Unemployment

The above visually:

And via SocGen, the key issues for the week ahead:

TOP ISSUES FOR THE WEEK AHEAD

FEW BUT BETTER US DATA

A bounce back in April durable goods, a decline in initial claims to 340K (from the 360K surprise last week) and a 1.0% mom gain in existing home sales should all  reassure on the temporary nature of the soft patch. The one grey cloud is set to come from a decline in Markit PMI to 50.6 from 52.1 previously.

MARKET ISSUES: Our preliminary spadework ahead of the May employment report suggests non-farm payrolls at 180K with upward revisions to past data of 55K. This will keep the debate focused on the Fed’s exit strategy (cf. above).

EU COUNCIL ON TAX EVASION

The 22 May EU Council will focus on energy and tax fraud and evasion. Discussion on broader economic policy, including the conclusion of the European Semester will take place at the 27-28 June Council.

MARKET ISSUES: Sustainable, secure and competitive energy supply is a key issue for all member states. The EU Commission point to fragmentation, low investment and high taxes as issues to be discussed. As the US enjoys a shale gas supply side shock, Europe risks falling behind unless policy action is taken swiftly.

BOJ ON HOLD, BUT WATCH BOND SPEAK

Recent volatility in JGB yields has triggered some concern that the BoJ’s policy may already be backfiring. At this stage, we do not share these concerns. The BoJ will accept the higher bond yields that naturally come with recovery, but will also “carefully examine risk factors of market conditions and developments in economic activity and prices”. Such a discussion is likely to be held at Wednesday’s meeting and the BoJ may consider (1) front-loading bond purchases and/or (2) intervening more frequently.

MARKET ISSUES: The risk is that more BoJ intervention will further weigh on JGB liquidity. On the key question of allocations, our rate strategists find that Japanese investors are favouring domestic stocks over JGBs, but appetite for foreign bonds remains modest.

BOE MINUTES AS WE WAIT FOR CARNEY

Coming after the Inflation Report, the BoE minutes Wednesday will offer little new information. Nonetheless, the vote will be important. For three meetings in a row, Miles, Fisher, and King have voted for £25bn more in QE. Logically after the May Inflation Report, this number should decline. Tuesday, Mark Carney, will offer his  last press conference as BoC governor.

MARKET ISSUES: Better fundamentals have eased pressure for the BoE to do more and Mr. Osborne may be disappointed if Carney – as we expect – offers little  action. Indeed, Governor King in an interview Sunday praised Carney, but also reminded that he will work with the MPC and not run a one-man show. Mr. Osborne has asked Carney to report on forward rate guidance, but, as we have discussed previously we believe such a policy would be sub-optimal for the UK.

The post Key Events And Market Issues In The Coming Week appeared first on MORTGAGE FRAUD EXAMINERS.

In the absence of major data releases, the focal point of the week for markets becomes the release of the minutes of the May FOMC meeting. The most notable change in the statement was the inclusion of the new language: “the Committee is prepared to increase or reduce the pace of its purchases to maintain appropriate policy accommodation as the outlook for the labor market or inflation changes.” In the May meeting minutes, the market will be looking for any clarification of the motivation behind this change as well as any evidence that the committee members may be becoming less comfortable with the unemployment rate threshold or more specific about tapering timelines and dates.

The May BOJ meeting will also attract significant market attention. It is not expected that the BOJ stance will change in the upcoming meeting given how little time has passed since it adopted its current quantitative and qualitative easing stance on April 4th. However it is likely they will upgrade its economic assessment slightly given current trends in personal consumption, and the overarching desire to boost confidence and sentiment regardless of facts and reality.

In Europe, Flash PMIs for May are the key release on Thursday, while the IFO on Friday will also be key to watch. The expenditure breakdown of Q1 GDP for Germany and UK will be interesting to follow too.

Finally, China Flash PMI will be interesting particularly for the AUD underperformance trend.

Monday, May 20

• Interesting: Japan Reuter Tankan, Chile/Thailand GDP, Chicago Fed President Evans speaks

Tuesday, May 21

• UK CPI: We forecast 2.6%yoy, down from last month’s 2.8%.
• Also interesting: Poland IP, Korean Exports, Fed’s Bullard and Dudley speak

Wednesday, May 22

• Fed Chairman Bernanke testifies before Congress
• Japan Monetary Policy Meeting
• US FOMC Minutes
• UK MPC Minutes
• Also interesting: Canada Retail Sales, Brazil Current Account, Mexico Retail Sales, US Existing Home Sales

Thursday, May 23

• China Flash PMI: Consensus expects 50.3, slightly below last month’s 50.4.
• US Initial Claims: Consensus expectations are for a read of 346k, down from last week’s 360k.
• South Africa MPC: We expect the MPC to leave the policy rate unchanged at 5% in line with consensus, although the policy statement may turn more dovish.
• European Flash PMIs
• Euro Area Consumer Confidence
• Also interesting: UK GDP Q1 (revised), UK/Italy Retail Sales, US New Home Sales, Poland MPC minutes, Fed President Bullard speaks

Friday, May 24

• US Durable Goods: We forecast +1.2%, below consensus at +1.5% and up from last month’s -6.9%.
• German IFO Business Survey
• Also interesting: German GDP Q1 (revised), France Business Confidence, Italy Consumer Confidence, Mexico Current Account and Unemployment

The above visually:

And via SocGen, the key issues for the week ahead:

TOP ISSUES FOR THE WEEK AHEAD

FEW BUT BETTER US DATA

A bounce back in April durable goods, a decline in initial claims to 340K (from the 360K surprise last week) and a 1.0% mom gain in existing home sales should all  reassure on the temporary nature of the soft patch. The one grey cloud is set to come from a decline in Markit PMI to 50.6 from 52.1 previously.

MARKET ISSUES: Our preliminary spadework ahead of the May employment report suggests non-farm payrolls at 180K with upward revisions to past data of 55K. This will keep the debate focused on the Fed’s exit strategy (cf. above).

EU COUNCIL ON TAX EVASION

The 22 May EU Council will focus on energy and tax fraud and evasion. Discussion on broader economic policy, including the conclusion of the European Semester will take place at the 27-28 June Council.

MARKET ISSUES: Sustainable, secure and competitive energy supply is a key issue for all member states. The EU Commission point to fragmentation, low investment and high taxes as issues to be discussed. As the US enjoys a shale gas supply side shock, Europe risks falling behind unless policy action is taken swiftly.

BOJ ON HOLD, BUT WATCH BOND SPEAK

Recent volatility in JGB yields has triggered some concern that the BoJ’s policy may already be backfiring. At this stage, we do not share these concerns. The BoJ will accept the higher bond yields that naturally come with recovery, but will also “carefully examine risk factors of market conditions and developments in economic activity and prices”. Such a discussion is likely to be held at Wednesday’s meeting and the BoJ may consider (1) front-loading bond purchases and/or (2) intervening more frequently.

MARKET ISSUES: The risk is that more BoJ intervention will further weigh on JGB liquidity. On the key question of allocations, our rate strategists find that Japanese investors are favouring domestic stocks over JGBs, but appetite for foreign bonds remains modest.

BOE MINUTES AS WE WAIT FOR CARNEY

Coming after the Inflation Report, the BoE minutes Wednesday will offer little new information. Nonetheless, the vote will be important. For three meetings in a row, Miles, Fisher, and King have voted for £25bn more in QE. Logically after the May Inflation Report, this number should decline. Tuesday, Mark Carney, will offer his  last press conference as BoC governor.

MARKET ISSUES: Better fundamentals have eased pressure for the BoE to do more and Mr. Osborne may be disappointed if Carney – as we expect – offers little  action. Indeed, Governor King in an interview Sunday praised Carney, but also reminded that he will work with the MPC and not run a one-man show. Mr. Osborne has asked Carney to report on forward rate guidance, but, as we have discussed previously we believe such a policy would be sub-optimal for the UK.

The post Key Events And Market Issues In The Coming Week appeared first on MORTGAGE FRAUD EXAMINERS.

U.S. Bonds Cheapest
Since ’90 Versus Bunds Counter Buffett Pity

The longest decline in Treasuries this year has left U.S.
government debt the cheapest since March 2011 when measured by real yields and
the best relative value compared with German bunds in more than two decades.
After inflation, 10-year U.S. notes yielded 0.91 percent last week, or 1.77
percentage points more than real yields on U.K. gilts, the widest spread in 25
months. Versus Germany, the securities are the least costly in 23 years when
adjusted for the recent record-low interest rates around the world that
distorted the normal relationship, according to FTN Financial. Federal Reserve
Chairman

http://www.financialjuice.com/News/108215/US-Bonds-Cheapest-Since-90-Versus-Bunds-Counter-Buffett-Pity.aspx

China ‘hard-landing’
trades revisited

A string of banks trimming their Chinese growth forecasts
last week does not have alarm bells sounding yet. But as well as reviewing
China’s misfiring economy, it is probably time to revisit some “China
hard-landing” trades. So far this year, the principal China story has been one
of growth and policy disappointments, leading to a steady de-rating of Chinese
equities. A key debate has been the extent to which we are witnessing a
cyclical downturn or a harder-to-fix structural one. The former used to hold no
fear — the expectation being that Beijing had the financial resources in
reserve to backstop

http://www.financialjuice.com/News/108212/China-hard-landing-trades-revisited.aspx

QE Halt Would Be ‘Too
Violent’ for Market: Fed’s Fisher

The Federal Reserve should go from “wild turkey”
monetary policy to “cold turkey” overnight, Dallas Fed President
Richard Fisher told CNBC on Monday, saying that when the dial back is the key
because stopping would be “too violent for the market.” Fed Chairman
Ben Bernanke’s principle concern is the efficacy of the central bank’s $85
billion a month bond-buying program, Fisher said in a “Squawk Box”
interview.

http://www.financialjuice.com/News/108209/QE-Halt-Would-Be-Too-Violent-for-Market-Feds-Fisher.aspx

No Love for Precious
Metals – Silver Gets Slammed

First it was gold, and now it’s silver. The metal fell
victim to heavy selling on Monday, dragging gold down with it, on U.S. dollar
strength and as investors turned more cautious on precious metals as an
alternate investment, said experts. “We feel silver weakness has been a
liquidation trade as investors grow increasingly wary of precious metals and
traders are forced to close positions to meet margin calls elsewhere,”
said Stan Shamu, strategist at trading firm IG Markets.

http://www.financialjuice.com/News/108181/No-Love-for-Precious-Metals–Silver-Gets-Slammed.aspx

Hedge Fund Owner Gets
Subpoena to Testify

Steven A. Cohen has received a subpoena to testify before a
grand jury in the government’s insider trading investigation into his hedge
fund, SAC Capital Advisors, a development that signals a newly aggressive phase
in the multiyear inquiry, according to lawyers and executives briefed on the
case. Issued last week, the grand jury subpoena came as part of a broader round
of requests from criminal authorities. Other SAC executives were also named in
the subpoenas, the lawyers and executives said, and the fund itself received
requests for information about its activities.

http://www.financialjuice.com/News/108214/Hedge-Fund-Owner-Gets-Subpoena-to-Testify.aspx

USD/JPY retreats on
comments from Amari

The USD/JPY has held the spotlight overnight, as the move
towards 103.00 was slowed after comments made by Japan’s Economy Minister Akira
Amari. He stated concern over the recent depreciation of the Japanese currency

http://www.financialjuice.com/News/108168/USDJPY-retreats-on-comments-from-Amari.aspx

End of Gold’s Dead
Cat Bounce

May 20, 2013 – Gold (daily chart) has approached an end to
its “dead cat bounce” that brought the precious metal up to an early May high
of 1488, which was also right at the 61.8% Fibonacci retracement of the prior
plunge

http://www.financialjuice.com/News/108204/End-of-Golds-Dead-Cat-Bounce.aspx

EU law key to ending
‘too big to fail’ banks: BoE’s Tucker

A European Union law up for a vote on Monday will only fully
shield taxpayers from bailing out troubled banks if there is a global framework
as well, a top UK regulator said on Monday

http://www.financialjuice.com/News/108203/EU-law-key-to-ending-too-big-to-fail-banks-BoEs-Tucker.aspx

Gulf wealth funds
raising private equity investments: study

Sovereign wealth funds in the Gulf Arab region are raising
their allocations to private equity investments at a faster rate than other
types of investment, U.S. fund manager Invesco says in a new study

http://www.financialjuice.com/News/108188/Gulf-wealth-funds-raising-private-equity-investments-study.aspx

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The post The Juice – News That Matters appeared first on MORTGAGE FRAUD EXAMINERS.

• Obama’s Counsel Was Told of IRS Audit Findings Weeks Ago (WSJ)
• North Korea fires sixth missile in three days (Reuters)
• Enron No Lesson to Traders as EU Probes Oil-Price Manipulation (BBG)
• Don’t cry for me, Eurozone: Thinking the Unthinkable – Quitting a Currency (WSJ)
• H-1B Models Strut Into U.S. as Programmers Pray for Help (BBG)
• Gold Bear Bets Reach Record as Soros Cuts Holdings (BBG)
• Yahoo has agreed to pay $1.1 billion for Tumblr (WSJ)
• JPMorgan Holders Led by Chairmen-CEOs to Vote on Dimon (BBG)
• Apple faces grilling over US tax rate (FT)
• Nissan to Sell First Joint Minicar to Expand in Japan Market (BBG)
• Fierce battle for corporate loans sparks US bank risk concerns (FT)
• Microsoft Updates Xbox as Apple to Facebook Gain in Games (BBG)

Overnight Media Digest

WSJ

* New York’s top financial regulator subpoenaed a handful of Wall Street investment firms about their entries into a corner of the insurance industry that guarantees steady payments to hundreds of thousands of retirees and other consumers.

The New York Department of Financial Services on Sunday sent subpoenas to Apollo Global Management LLC, Guggenheim Partners and Harbinger Group Inc as part of an investigation seeking more information on investments that back so-called fixed annuities, according to people familiar with the inquiry. ()

* Chesapeake Energy Corp has picked 46-year-old executive Robert Douglas Lawler from rival Anadarko Petroleum Corp to succeed its co-founder, Aubrey McClendon, as chief executive of the nation’s second-largest natural-gas producer.

* As 787 Dreamliner commercial flights resume after a lengthy grounding for battery problems, Boeing Co and its customers are refocusing on fixing the host of other technical and mechanical issues that affect the reliability of the cutting-edge aircraft.

* DirecTV is weighing a potential bid for Hulu, the latest company to show interest in the six year-old video site, according to a person familiar with the matter.

Other firms that have bid or expressed interest in Hulu include cable operator Time Warner Cable Inc, Guggenheim Partners, Yahoo Inc and former News Corp president Peter Chernin’s investment group.

* Roger Carr, chairman of U.K. gas utility Centrica Plc , is the front runner to replace Dick Olver as chairman of Britain’s defense contractor BAE Systems Plc, a person familiar with the matter said.

FT

Hennes & Mauritz is looking at sourcing clothes from Latin America and Africa for the first time with the retailer rethinking its sourcing strategy following the Bangladesh factory collapse.

Apple Inc Chief Executive Tim Cook will appear before the U.S. Senate’s permanent investigations subcommittee on Tuesday where he is likely to face questions over Apple’s tax planning.

U.S. hedge fund Monarch Capital plans to open an office in London as it looks to ramp up its European business at a time when financial institutions are increasingly selling troubled assets and undervalued loans.

Barry Sternlicht’s Starwood Capital is in talks with the developers of London’s Heron Tower to provide a 250 million pound loan to refinance the tallest skyscraper in the City.

Tesco Plc is looking at setting up a joint venture in China so it can keep expanding in the market but in way that will help it contain capital expenditure.

Yahoo Inc has agreed a deal to buy blogging and social networking site Tumblr for about $1 billion.

Bank of England Governor Mervyn King has warned finance minister George Osborne that his scheme to boost mortgage lending could cause future problems.

NYT

* Yahoo’s move to purchase Tumblr aims to make up for years of missing out on the growth of social networks and mobile devices.

* Three months after hackers working for a cyber unit of China’s People’s Liberation Army went silent amid evidence that they had stolen data from scores of American companies and government agencies, they appear to have resumed their attacks using different techniques, according to computer industry security experts and American officials.

* The Swedish retail giant H&M faced public pressure to accelerate its efforts to improve garment factory conditions, though it had no ties to a disaster in Bangladesh.

* Executives from Silicon Valley say that the Senate immigration bill imposes too much regulatory control over a company’s hiring of temporary foreign workers or laying off an American worker.

* At JPMorgan Chase, the move to split the jobs of chairman and chief executive, now held by Jamie Dimon, comes as the bank is actually prospering.

* Gary Pruitt, the head of The Associated Press, said the Obama administration’s handling of a leak investigation had already diminished journalists’ capacity to report on the government.

* Given the more generous subsidies offered in other states and countries, major studios including NBCUniversal, Paramount and Disney all have large-scale, long-term expansion plans.

Canada

THE GLOBE AND MAIL

* Prime Minister Stephen Harper’s chief of staff has resigned over his role in the C$90,000 ($87,600) bailout of former Conservative Senator Mike Duffy’s expense account. Nigel Wright issued a statement Sunday morning to announce his resignation, which Harper has accepted.

* The federal government is spending hundreds of thousands of dollars advertising a program that does not yet exist. Prime-time ads began airing this week during NHL playoff games – currently the priciest advertising real estate on the dial – that tout a new Canada Jobs Grant for training workers. The trouble is, the freshly announced program is at present little more than a concept that has yet to be negotiated with provincial governments, and requires buy-in from employers as well.

Reports in the business section:

* PBF Energy Inc is making a big bet to bring Alberta crude by train to its refinery near Philadelphia. The company is already receiving 40,000 barrels per day of Alberta’s oil sands bitumen by rail at its Delaware City refinery on the U.S. East Coast, and is working to double that capacity to 80,000 barrels each day. But the rail strategy of PBF and other energy players took a knock this week from Prime Minister Stephen Harper, who questioned the environmental impacts of crude by rail.

NATIONAL POST

* A group that includes some prominent Canadian actors, writers and politicians is calling on Prime Minister Stephen Harper to change the name of Victoria Day. Author Margaret Atwood, Green Party leader Elizabeth May and actor Gordon Pinsent are among those behind an online petition to rename the public holiday, which is celebrated on Monday, as “Victoria and First Peoples Day.”

FINANCIAL POST

* In 2008, Ottawa took bold steps explicitly designed to shake up a wireless communications sector dominated by three big players, determined to give consumers more choice and a break on pricing. Five years later, competition may have has cropped up in some regions, but new entrants serving Ontario, Alberta and British Columbia are floundering and the federal government’s strategy looks to have failed, leaving many wondering what went wrong and whether there’s any hope for a viable fourth competitor in those markets.

* Canada’s Competition Bureau is gearing up to launch a formal inquiry into the business practices of Google Inc’s Canadian operations. Google was recently notified by the Competition Bureau of the watchdog organization’s intentions to investigate the Silicon Valley giant’s business in Canada.

China

CHINA SECURITIES JOURNAL

- More cities are expected to be included in a property tax pilot scheme, which now involves only Shanghai and Chongqing, sources said.

- The price of newly built commercial homes rose 0.95 percent in April in 70 large and medium cities, 0.14 percentage points slower than the pace of growth between February and March, which is the first such decline in seven months.

SECURITIES TIMES

- Investment in the real estate industry in Shanghai surged 50.4 percent to 21.27 billion yuan ($3.46 billion) in April.

CHINA DAILY

- A higher court in Hunan province has accepted the appeal of a woman sentenced to “re-education through labour” and who is now seeking an apology and compensation from the government. The woman was sentenced after repeatedly petitioning the government for justice for her daughter, who was kidnapped, raped and forced into prostitution.

SHANGHAI DAILY

- A draft amendment of the consumer rights law will mandate a minimum compensation of 500 yuan for consumers if they are found to be victims of fraud, said a senior official at Shanghai’s market watchdog. The existing regulation stipulates compensation equal to the price of the product.

GLOBAL TIMES

- The situation in the China-India border areas is much better than that on Diaoyu Islands and other disputed islands in South China Sea, an editorial said. India and China have both been trying to divert the focus of their relationship from border disputes to other areas and share a common will in terms of preventing border problems.

Corporate Finance

* Greece’s second-largest lender Piraeus Bank SA has hired four international investment banks as advisers on its 7.33-billion-euro ($9.4 billion) share issue, two bankers close to the procedure told Reuters on Saturday.

* Yahoo Inc’s board has approved a deal to buy blogging and social networking site Tumblr for $1.1 billion in cash, the Wall Street Journal cited people familiar with the matter as saying on Sunday.

* The offer for miner Eurasian Natural Resources Corp made by its founding shareholders and the Kazakh government included shares in rival miner Kazakhmys Plc, a British newspaper reported on Sunday.

* Bus and rail operator FirstGroup Plc plans to announce a 600-million-pound ($918.48 million) rights issue in the coming days to help pay off debt, British media reported on Sunday.

* The French stock market authority has found LVMH Moet Hennessey Louis Vuitton secretly bought shares in rival Hermes International SCA to build a stake, and not merely make a financial investment as the luxury group has claimed, a newspaper reported.

* Qatar Holding and an Italian state-controlled investment fund are interested in investing in Italian fashion house Versace, Il Sole 24 Ore said on Saturday.

Fly On The Wall 7:00 AM Market Snapshot

ANALYST RESEARCH

Upgrades

Abbott (ABT) upgraded to Buy from Neutral at Goldman
Accenture (ACN) upgraded to Buy from Neutral at Goldman
NetEase.com (NTES) upgraded to Buy from Neutral at Citigroup
Northrop Grumman (NOC) upgraded to Fair Value from Sell at CRT Capital
Pandora (P) upgraded to Equal Weight from Underweight at Barclays
priceline.com (PCLN) upgraded to Buy from Hold at Deutsche Bank
Realogy (RLGY) upgraded to Buy from Fair Value at CRT Capital
T-Mobile (TMUS) upgraded to Buy from Hold at Deutsche Bank
Vectren (VVC) upgraded to Outperform from Neutral at RW Baird
WNS Holdings (WNS) upgraded to Buy from Neutral at Goldman

Downgrades

Artisan Partners (APAM) downgraded to Market Perform from Outperform at Keefe Bruyette
Bank of America (BAC) downgraded to Market Perform from Outperform at Keefe Bruyette
Bed Bath & Beyond (BBBY) downgraded to Hold from Buy at Jefferies
BlackRock (BLK) downgraded to Market Perform from Outperform at Keefe Bruyette
Cavium (CAVM) downgraded to Market Perform from Outperform at JMP Securities
Charles Schwab (SCHW) downgraded to Underperform from Market Perform at Keefe Bruyette
Dunkin’ Brands (DNKN) downgraded to Neutral from Buy at Longbow
Equifax (EFX) downgraded to Neutral from Buy at Goldman
Leap Wireless (LEAP) downgraded to Sell from Hold at Deutsche Bank
Lowe’s (LOW) downgraded to Perform from Outperform at Oppenheimer
MicroStrategy (MSTR) downgraded to Market Perform from Outperform at JMP Securities
NetApp (NTAP) downgraded to Underperform from Neutral at RW Baird
NeuStar (NSR) downgraded to Neutral from Buy at Goldman
Red Hat (RHT) downgraded to Market Perform from Outperform at BMO Capital
Ruby Tuesday (RT) downgraded to Market Perform from Outperform at Wells Fargo
Synovus (SNV) downgraded to Sell from Neutral at Goldman
TD Ameritrade (AMTD) downgraded to Underperform from Market Perform at Keefe Bruyette
Thoratec (THOR) downgraded to Neutral from Buy at Goldman

Initiations

M/I Homes (MHO) initiated with an Overweight at JPMorgan
Michael Kors (KORS) initiated with a Buy at Canaccord
MusclePharm (MSLP) initiated with a Strong Buy at Ascendiant Capital
Taylor Morrison (TMHC) initiated with a Buy at Citigroup
Taylor Morrison (TMHC) initiated with an Outperform at Credit Suisse
Taylor Morrison (TMHC) initiated with an Overweight at JPMorgan

HOT STOCKS

GE Capital board to pay $6.5B of dividends to parent GE (GE) in 2013
Accenture (ACN) acquired Acquity Group (AQ) for $316M
Fitch affirmed Verizon’s (VZ) IDR at ‘A’, outlook stable
Elan (ELN) announced transactions to transform company, $200M share repurchase plan
Live Nation (LYV) formed JV with Lushington Entertainments in Asia

EARNINGS

Companies that beat consensus earnings expectations last night and today include:
JA Solar (JASO)

Companies that matched consensus earnings expectations include:
Qihoo 360 (QIHU)

NEWSPAPERS/WEBSITES

• The New York Department of Financial Services yesterday sent subpoenas to Apollo Global Management (APO), Guggenheim Partners and Harbinger Group (HRG) as part of an investigation seeking more information on investments that back so-called fixed annuities, sources say, the Wall Street Journal reports
• As Home Depot (HD) and Lowe’s (LOW) report fiscal Q1 results this week, the reconstruction phase from last year’s superstorm Sandy will be looming large as cooler-than-normal temperatures delay spring selling, the Wall Street Journal reports.
• Danone Group (DANOY) will invest $417M in two deals with China Mengniu Dairy Co., marking a comeback for the French group in China where scandals have hurt confidence in food safety, Reuters reports
• The Nikkei share average surged to a new 5 1/2 year high today, boosted by further weakness in the yen and optimism over the growth outlook after the Japanese government raised its assessment of the economy for the first time in two months, Reuters reports
• The longest decline in Treasuries this year has left U.S. government debt the cheapest since March 2011 when measured by real yields and the best relative value compared with German bunds in more than two decades, Bloomberg reports
• As JPMorgan Chase’s (JPM) Jamie Dimon prepares for a vote Tuesday on whether he should keep his chairman and CEO titles, he may take comfort knowing that seven of the bank’s 10 largest owners are run by CEOs who are also chairmen, Bloomberg reports

BARRON’S

Cisco (CSCO) looks the best of tech comeback stocks (MSFT, INTC)
Walter Energy (WLT) executives bought shares near lows
Ryder (R) shares could see $75
Tencent Holdings (TCEHY) stock could rise 20%
France Telecom (FTE) could provide investors with short-term gains but Telefonica (TEF),   Deutsche Telekom (DTEGY) are better long-term options
ING U.S. (VOYA) could see 30% or more jump in share price as ING Groep (ING) must fully divest by December 31, 2016
Northfield Bancorp (NFBK) looks attractive
Time to ring the cash register in Big 5 Sporting (BGFV)
Bears’ arguments for Orbitz (OWW) are more convincing
Six Flags (SIX) may eventually disappoint

SYNDICATE

CombiMatrix (CBMX) files to sell 1.06M shares for holders
PLX Technology (PLXT) files to sell $30M of common stock, depositary shares
Saul Centers (BFS) files to sell 15.5M shares for holders
Ubiquiti Networks (UBNT) files to sell 7.7M shares for holders

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The longest ongoing government “sting” operation against a hedge fund, possibly in all of history, that which absolutely everyone has known about for years now i.e., against Steve Cohen’s SAC and its Bernie Madoff-esque series of profitable years (at least until recently that is, when “expert networks” no longer accept any calls originating out of Connecticut or New York), may be coming to an end, following what the WSJ reports may be an imminent filing of criminal charges against the hedge fund. “U.S. prosecutors are considering possible criminal charges against SAC Capital Advisors LP as a result of the government’s insider-trading investigation of the hedge-fund firm, according to people familiar with the matter.  It isn’t clear what led prosecutors to warn the Stamford, Conn., hedge-fund operator that it could be charged criminally. But the move is the strongest sign yet that prosecutors and the Federal Bureau of Investigation are trying to ratchet up the pressure as a five-year deadline looms to file the most serious charges related to trading that allegedly involved Mr. Cohen.”

Don’t worry about Stevie though: the probability that he will spend even an HFT nanosecond in prison, let alone ever be forced to pay restitution in a “victimless crime” is virtually nil, because collecting 3 and 50 for decades buys a lot of lawyers. A lot of lawyers who are well versed with the legal system’s latest loophole: deferred-prosecution.

SAC and its lawyers have also discussed with federal prosecutors the possibility of alternatives including negotiating a deferred-prosecution agreement, in which criminal charges could be filed against the company and basically settled at the same time, the people said.

 

Deferred-prosecution agreements often include specified facts regarding the circumstances of the alleged criminal violation, fines and onerous conditions such as an outside monitor of a company’s operations.

 

Such deals spare the defendant the damage of a criminal prosecution, and charges usually are dismissed later if the company abides by the agreement and avoids trouble.

That said, even a limited criminal escalation will likely mean the exit of all outside investors, with BlackStone as the likely catalyst (and other FoFs to follow):

Some big investors have grown increasingly concerned about the vulnerability of SAC to the criminal investigation, according to people familiar with the matter.

 

The company’s new policy of silence about the probe is likely to deepen those concerns. After reviewing their investing guidelines or seeking advice from superiors, some clients have concluded they can no longer invest with the hedge-fund firm.

 

SAC’s largest outside investor, Blackstone Group LP, has made preparations to yank $200 million to $300 million from the hedge-fund company, according to people involved in discussions about the plans.

 

As of March, Blackstone’s asset-management unit had $550 million invested with SAC on behalf of Blackstone clients, including public pension funds.

 

Blackstone has been weighing the planned withdrawals for several weeks. A spokesman declined to comment. The firm’s moves are watched closely by other investors because of Blackstone’s heft: It had $48 billion in hedge-fund investments at the end of March.

 

Some other SAC clients have sought information about Blackstone’s withdrawal plans, partly to assess by how much the hedge-fund firm’s assets might shrink.

All of which simply means that Cohen will merely convert into a “friend, employees and family” office: at last check just the employees had billions of their own cash invested in the hedge fund.

Then again, with SAC able to generate just a 6% return through April, or far below the broader market now managed much better by Portfolio Manager Ben Bernanke, very soon no hedge fund will be needed, because with every passing day it becomes clearer that no correction will ever be allowed again. Ever. And when one does happen, no amount of “hedging” will preserve any invested capital – there will be far bigger concerns on that day…

Finally, for an amusing take of what may have been the catalyst that sent the government over the edge, we go to Charlie Gasparino who has some advice for art lovers everywhere: maybe put off that $100 million painting purchase until after the government is done investigating you…

FBN NEWS: One deal on the table included a “re start” of SAC after deferred prosecution where SAC would raise money for a new fund

— Charles Gasparino (@CGasparino) May 20, 2013

The post Steve Cohen’s SAC May Face Criminal Charges appeared first on MORTGAGE FRAUD EXAMINERS.

A quiet day unfolding with just Chicago Fed permadove on the wires today at 1pm, following some early pre-Japan market fireworks in the USDJPY and the silver complex, where a cascade of USDJPY margin calls, sent silver to its lowest in years as someone got carted out feet first following a forced liquidation. This however did not stop the Friday ramp higher in the USDJPY from sending the Nikkei225, in a delayed response, to a level surpassing the Dow Jones Industrial Average for the first time in years. Quiet, however, may be just how the traders at 72 Cummings Point Road like it just in case they can hear the paddy wagons approach, following news that things between the government and SAC Capital are turning from bad to worse and that Stevie Cohen, responsible for up to 10-15% of daily NYSE volume, may be testifying before a grand jury soon. The news itself sent S&P futures briefly lower when it hit last night, showing just how influential the CT hedge fund is for overall market liquidity in a world in which the bulk of market “volume” is algos collecting liquidity rebates and churning liquid stocks back and forth to one another.

In other news, we have a $1.25 – $1.75 billion POMO ending at the usual time of 11 am, which may not be sufficient for the usual 0.1x-0.15x daily S&P500 multiple expansion.

Geopolitical tensions in Syria are getting increasingly more acute, even as North Korea continues to pummel the Eastern Sea, having now fired six missiles in the past three days, in a desperate show of “force.” The sea has yet to retaliate.

Key overnight bulletin highlights via Bloomberg:

• Treasuries steady, yields holding near highest since March amid Fed tapering speculation; JPY gains vs. USD as Japan’s Economy Minister Amari said a further slide in the yen would have negative effects after its 21% drop over the last six months.
• Japan 30Y yields surged after a Cabinet Office official told reporters that BoJ’s Kuroda said it’s natural for yields to increase gradually as the economic outlook improves
• Bernanke said in a speech that technological change will remake fields like health care and belie predictions that innovation will fade and economic growth will wane; testifies before Congress on Wednesday
• China’s new-home prices rose last month in 68 of 70 cities tracked by the government, indicating Premier Li Keqiang will need to maintain efforts to cool the property market even as economic growth slows
• Hedge-fund managers are making the biggest ever bet against gold as Soros sold holdings last quarter and Goldman predicted more declines after the longest slump in four years
• EU leaders struggling to find a consensus on how to overcome the debt crisis and revive economic growth will use a summit meeting this week to focus on fighting tax evasion and on the bloc’s energy policy
• North Korea fired its sixth missile in three days, demonstrating its military capabilities in defiance of global sanctions and diplomatic efforts to convince the totalitarian state to return to talks
• BofAML Corporate Master Index OAS at 142bp, tight for the  year, as $44.3b priced last week. Markit IG narrows to 70bps, YTD low 69bps. High Yield Master II OAS at 437bps; $15.27b priced last week. CDX High Yield at 107.13, near record 107.37
• Sovereign yields mostly higher. Asian stocks gain, with Nikkei +1.5%, Shanghai Composite +0.8%. European stocks mostly higher, U.S. stock-index futures fall.  WTI crude, copper, gold fall

Some comments on Amari’s most recent jawboning of the Yen over the weekend: the same jawboning he said previously said would not be appropriate.

A slow start to the week has been animated in Asia by Japanese economy minister Amari comments that JPY strength has largely corrected and that further weakness could be harmful. This briefly knocked JPY crosses back but should not put a permanent dent in bearish JPY sentiment. BoJ governor Kuroda made a separate intervention, referring to the volatility in JGBs by stating that it is only natural for long-term yields to rise as inflation expectations pick-up. He does not expect the long-term yield rise to be sustained and if that’s the case, then Amari’s statement may prove futile as Japanese investors continue their search for higher returns overseas.

A quiet day for Europe with most markets closed for Whit Monday (only Italy new orders and current account data, French bill sale scheduled) means light positions are likely to be observed. We get a first look at the EU PMIs for May on Thursday and the German IFO is due on Friday, but the big day is Wednesday when Fed chairman Bernanke will testify on the economy and the FOMC minutes may offer further insight on the ongoing ‘stimulus exit’ discussions, captured by comments from various voters and non-voters in recent days and weeks. The USD has enjoyed its best start to a calendar year in 2013 since 2005 on speculation that Fed monetary policy is slowly nearing a turning point this year, and further clues that the Fed is planning ahead (even without committing to a timetable as unemployment remains too high, inflation low) would probably convince the market to add to long USD positions and push yields and swaps higher in the process. Commodities have been hit hard as the Fed debate hots up (though Asia/China curbing overcapacity should be apportioned some blame too) and US/EU 10y swaps have widened markedly and are now on the verge of breaking though the 50bp barrier for the first time since April 2010. Our colleagues from Economics preview Bernanke’s testimony and the FOMC minutes in the note ‘Never too early to plan’.

DB’s Jim Reid recaps the relatively quiet day today

Bernanke’s congressional testimony before the Joint Economic Committee this Wednesday will be the highlight in a week where we may learn more about the Fed’s intentions with regards to potential QE tapering. Indeed, Bernanke’s speech will be made on the same day as the Fed publishes minutes from its Apr30th/May1st policy meeting which may shed some further light on the FOMC’s deliberations with respect to asset purchases. In advance of Wednesday, Chicago Fed president Evans will be speaking today, followed by the NY Fed’s Dudley and St Louis Fed’s Bullard who will speak on Tuesday – all are voting members of the FOMC this year.

Outside of the Fed, there’s also a fair bit going on at other central banks. Wednesday will see the Bank of Japan publish its latest monthly policy statement, following the conclusion of its two-day policy meeting which starts on Tuesday. The BoE will be publishing minutes from its last meeting on Wednesday. On Thursday, Draghi will be speaking at an event in the City of London on the topic of “The future of Europe in the global economy” at an event organised by the Lord Mayor. Rounding out the week ahead in policy, the European Council meets on Wednesday where tax policy and initiatives to promote growth are on the official agenda.

In terms of the data flow, Thursday’s global flash PMIs for the Euroarea, US and China will be taking centre stage. The market is broadly looking for a 0.2pt to  0.4pt improvement in the manufacturing and service PMIs across the Euroarea, as well as the individual German and French readings. In China, economic  forecasters are expecting the country’s flash manufacturing PMI to be unchanged at 50.4. In the US, the main data releases this week are existing home sales (Wednesday), new home sales and jobless claims (Thursday) and durable goods (Friday). The UK’s retail sales/Q1 GDP revisions and Euroarea consumer confidence numbers are out on Thursday. The German IFO survey is scheduled for Friday.

Returning to markets, precious metals have been making headlines overnight after spot silver prices dropped by as much as 9% at one stage in early Asian trading. Silver prices have since recovered to trade 4% lower on the day as we type. Gold (-1%) has also recovered after being down 2% at one stage in sympathy with the drop in silver prices. There has been chatter suggesting that the outsized move was driven by a margin call and subsequent liquidation by an investor. Notably, gold is poised to close weaker for the tenth time in 11 sessions, and is now trading at similar levels as the April lows ($1345/oz).

The Japanese yen is also in focus overnight after trading below 102 at point during the Asian session. The move followed comments from Japan’s economy minister Mr Amari who said over the weekend that the yen’s excessive strength has been largely “corrected” and that further weakness could be harmful in terms of living costs (Nikkei). USDJPY has pared initial losses, but is still 0.5% lower this morning. Elsewhere in Asia, equities have begun the week on a firmer footing, helped by the S&P500’s performance on Friday when it finished near the day’s highs of +1%.

Asian gains are being led by Hang Seng (+1.7%), ASX200 (+0.9%) and the KOSPI (+0.2%). The Nikkei (+1.3%) has broken through the 15300 level for the first  time since late 2007, and is trading higher despite the strengthening in the yen. Asian credit markets are about 2-3bp better overnight.

Returning to last Friday, the European subordinated financials credit index’s 14bp tightening (to 200bp) was amongst the interesting market moves. The result capped a three-day streak which saw the index tighten by a cumulative 24bp, outperforming the senior financials index which tightened 9bp in the same period. The sub-senior financials multiple (1.5x) is at its lowest level since Q4 2010. Partially behind the move were recent announcements from ISDA who are considering adding a “bail-in” credit event to financial CDS contracts in response to the EU’s potential bank resolution rules. Other changes include allowing written down bonds to be delivered into a CDS auction based on the outstanding principal balance before the bail-in occurred. Other instruments that bonds may be converted to in the event of bail-ins, such as equities, may be deliverable into a CDS auction under proposals (IFR).

Turning to the day ahead, it will be relatively quiet start to the week with Whit Monday public holidays in parts of Europe. Economic data will be relatively thin today. The Chicago Fed’s Charles Evans will be speaking at 6pm London time.

The post Lack Of Overnight Euphoria Follows Japan Yen Jawboning In Light Trading Session appeared first on MORTGAGE FRAUD EXAMINERS.

A quiet day unfolding with just Chicago Fed permadove on the wires today at 1pm, following some early pre-Japan market fireworks in the USDJPY and the silver complex, where a cascade of USDJPY margin calls, sent silver to its lowest in years as someone got carted out feet first following a forced liquidation. This however did not stop the Friday ramp higher in the USDJPY from sending the Nikkei225, in a delayed response, to a level surpassing the Dow Jones Industrial Average for the first time in years. Quiet, however, may be just how the traders at 72 Cummings Point Road like it just in case they can hear the paddy wagons approach, following news that things between the government and SAC Capital are turning from bad to worse and that Stevie Cohen, responsible for up to 10-15% of daily NYSE volume, may be testifying before a grand jury soon. The news itself sent S&P futures briefly lower when it hit last night, showing just how influential the CT hedge fund is for overall market liquidity in a world in which the bulk of market “volume” is algos collecting liquidity rebates and churning liquid stocks back and forth to one another.

In other news, we have a $1.25 – $1.75 billion POMO ending at the usual time of 11 am, which may not be sufficient for the usual 0.1x-0.15x daily S&P500 multiple expansion.

Geopolitical tensions in Syria are getting increasingly more acute, even as North Korea continues to pummel the Eastern Sea, having now fired six missiles in the past three days, in a desperate show of “force.” The sea has yet to retaliate.

Key overnight bulletin highlights via Bloomberg:

• Treasuries steady, yields holding near highest since March amid Fed tapering speculation; JPY gains vs. USD as Japan’s Economy Minister Amari said a further slide in the yen would have negative effects after its 21% drop over the last six months.
• Japan 30Y yields surged after a Cabinet Office official told reporters that BoJ’s Kuroda said it’s natural for yields to increase gradually as the economic outlook improves
• Bernanke said in a speech that technological change will remake fields like health care and belie predictions that innovation will fade and economic growth will wane; testifies before Congress on Wednesday
• China’s new-home prices rose last month in 68 of 70 cities tracked by the government, indicating Premier Li Keqiang will need to maintain efforts to cool the property market even as economic growth slows
• Hedge-fund managers are making the biggest ever bet against gold as Soros sold holdings last quarter and Goldman predicted more declines after the longest slump in four years
• EU leaders struggling to find a consensus on how to overcome the debt crisis and revive economic growth will use a summit meeting this week to focus on fighting tax evasion and on the bloc’s energy policy
• North Korea fired its sixth missile in three days, demonstrating its military capabilities in defiance of global sanctions and diplomatic efforts to convince the totalitarian state to return to talks
• BofAML Corporate Master Index OAS at 142bp, tight for the  year, as $44.3b priced last week. Markit IG narrows to 70bps, YTD low 69bps. High Yield Master II OAS at 437bps; $15.27b priced last week. CDX High Yield at 107.13, near record 107.37
• Sovereign yields mostly higher. Asian stocks gain, with Nikkei +1.5%, Shanghai Composite +0.8%. European stocks mostly higher, U.S. stock-index futures fall.  WTI crude, copper, gold fall

Some comments on Amari’s most recent jawboning of the Yen over the weekend: the same jawboning he said previously said would not be appropriate.

A slow start to the week has been animated in Asia by Japanese economy minister Amari comments that JPY strength has largely corrected and that further weakness could be harmful. This briefly knocked JPY crosses back but should not put a permanent dent in bearish JPY sentiment. BoJ governor Kuroda made a separate intervention, referring to the volatility in JGBs by stating that it is only natural for long-term yields to rise as inflation expectations pick-up. He does not expect the long-term yield rise to be sustained and if that’s the case, then Amari’s statement may prove futile as Japanese investors continue their search for higher returns overseas.

A quiet day for Europe with most markets closed for Whit Monday (only Italy new orders and current account data, French bill sale scheduled) means light positions are likely to be observed. We get a first look at the EU PMIs for May on Thursday and the German IFO is due on Friday, but the big day is Wednesday when Fed chairman Bernanke will testify on the economy and the FOMC minutes may offer further insight on the ongoing ‘stimulus exit’ discussions, captured by comments from various voters and non-voters in recent days and weeks. The USD has enjoyed its best start to a calendar year in 2013 since 2005 on speculation that Fed monetary policy is slowly nearing a turning point this year, and further clues that the Fed is planning ahead (even without committing to a timetable as unemployment remains too high, inflation low) would probably convince the market to add to long USD positions and push yields and swaps higher in the process. Commodities have been hit hard as the Fed debate hots up (though Asia/China curbing overcapacity should be apportioned some blame too) and US/EU 10y swaps have widened markedly and are now on the verge of breaking though the 50bp barrier for the first time since April 2010. Our colleagues from Economics preview Bernanke’s testimony and the FOMC minutes in the note ‘Never too early to plan’.

DB’s Jim Reid recaps the relatively quiet day today

Bernanke’s congressional testimony before the Joint Economic Committee this Wednesday will be the highlight in a week where we may learn more about the Fed’s intentions with regards to potential QE tapering. Indeed, Bernanke’s speech will be made on the same day as the Fed publishes minutes from its Apr30th/May1st policy meeting which may shed some further light on the FOMC’s deliberations with respect to asset purchases. In advance of Wednesday, Chicago Fed president Evans will be speaking today, followed by the NY Fed’s Dudley and St Louis Fed’s Bullard who will speak on Tuesday – all are voting members of the FOMC this year.

Outside of the Fed, there’s also a fair bit going on at other central banks. Wednesday will see the Bank of Japan publish its latest monthly policy statement, following the conclusion of its two-day policy meeting which starts on Tuesday. The BoE will be publishing minutes from its last meeting on Wednesday. On Thursday, Draghi will be speaking at an event in the City of London on the topic of “The future of Europe in the global economy” at an event organised by the Lord Mayor. Rounding out the week ahead in policy, the European Council meets on Wednesday where tax policy and initiatives to promote growth are on the official agenda.

In terms of the data flow, Thursday’s global flash PMIs for the Euroarea, US and China will be taking centre stage. The market is broadly looking for a 0.2pt to  0.4pt improvement in the manufacturing and service PMIs across the Euroarea, as well as the individual German and French readings. In China, economic  forecasters are expecting the country’s flash manufacturing PMI to be unchanged at 50.4. In the US, the main data releases this week are existing home sales (Wednesday), new home sales and jobless claims (Thursday) and durable goods (Friday). The UK’s retail sales/Q1 GDP revisions and Euroarea consumer confidence numbers are out on Thursday. The German IFO survey is scheduled for Friday.

Returning to markets, precious metals have been making headlines overnight after spot silver prices dropped by as much as 9% at one stage in early Asian trading. Silver prices have since recovered to trade 4% lower on the day as we type. Gold (-1%) has also recovered after being down 2% at one stage in sympathy with the drop in silver prices. There has been chatter suggesting that the outsized move was driven by a margin call and subsequent liquidation by an investor. Notably, gold is poised to close weaker for the tenth time in 11 sessions, and is now trading at similar levels as the April lows ($1345/oz).

The Japanese yen is also in focus overnight after trading below 102 at point during the Asian session. The move followed comments from Japan’s economy minister Mr Amari who said over the weekend that the yen’s excessive strength has been largely “corrected” and that further weakness could be harmful in terms of living costs (Nikkei). USDJPY has pared initial losses, but is still 0.5% lower this morning. Elsewhere in Asia, equities have begun the week on a firmer footing, helped by the S&P500’s performance on Friday when it finished near the day’s highs of +1%.

Asian gains are being led by Hang Seng (+1.7%), ASX200 (+0.9%) and the KOSPI (+0.2%). The Nikkei (+1.3%) has broken through the 15300 level for the first  time since late 2007, and is trading higher despite the strengthening in the yen. Asian credit markets are about 2-3bp better overnight.

Returning to last Friday, the European subordinated financials credit index’s 14bp tightening (to 200bp) was amongst the interesting market moves. The result capped a three-day streak which saw the index tighten by a cumulative 24bp, outperforming the senior financials index which tightened 9bp in the same period. The sub-senior financials multiple (1.5x) is at its lowest level since Q4 2010. Partially behind the move were recent announcements from ISDA who are considering adding a “bail-in” credit event to financial CDS contracts in response to the EU’s potential bank resolution rules. Other changes include allowing written down bonds to be delivered into a CDS auction based on the outstanding principal balance before the bail-in occurred. Other instruments that bonds may be converted to in the event of bail-ins, such as equities, may be deliverable into a CDS auction under proposals (IFR).

Turning to the day ahead, it will be relatively quiet start to the week with Whit Monday public holidays in parts of Europe. Economic data will be relatively thin today. The Chicago Fed’s Charles Evans will be speaking at 6pm London time.

The post Lack Of Overnight Euphoria Follows Japan Yen Jawboning In Light Trading Session appeared first on MORTGAGE FRAUD EXAMINERS.

Who will care for you when you get old? If that’s a scary or uncomfortable question, you are in good company. Most people don’t want to think about their long-term care needs and when they do, they tend to have major misperceptions of what it costs and what the government will pay for.

This high degree of denial or optimism — take your pick — was reaffirmed last month in a survey released last month by the Associated Press and the NORC Center for Public Affairs Research. One particularly striking finding: almost 70 percent of Americans believe they will be able to rely on their family to meet their long-term care needs. Yet the Baby Boomers, that large postwar generation now crossing the threshold of 65 at the rate of 10,000 per day, are the least likely generation in history to be married or have children. Over one-third of Boomers have never married, a jump of 50 percent from the previous generation. Between 20-25 percent are childless. How realistic is it to expect that every Boomer’s family will be able to provide what is needed? In this context, who is “family”?

Family caregiving remains the bedrock of our long-term care system, partly because families’ love and support their older members, but also because no one else will do it. The government provides very little support for long-term needs, and even that is diminishing. For the record, Medicare does not cover long-term care and Medicaid imposes strict income and asset limits before it will cover nursing home and other long-term care. And caring for an older person is not just making decisions at the end of life or whether to go into a nursing home, but also providing the security that there is someone to call who can provide both emotional support and on the ground support whenever needs arise.

In some ways, the lesbian, gay, bisexual and transgender (LGBT) community faced this issue sooner than the rest of the population. In an environment where biological families were often hostile, relationships were not legally recognized and child rearing was not the norm, LGBT people came to rely on their “family of choice” rather than a “family of origin.” Fortunately, most LGBT folks no longer have to choose between one and the other, but the system of relying on friends and neighbors much more systematically and broadly offers an important lesson for Boomers in general.

Another factor: We all rejoice in the “longevity bonus” of much longer life that most of us will receive, but it also brings its own challenges. My grandmother lived to be 100. If my mother lives to be the same age (and, at age 82, she shows no signs of doing otherwise), I will be the 81-year-old “child” taking care of her. Even for Boomers who are married, inevitably one spouse will die before the other, leaving the remaining spouse (usually the woman) to address these challenges alone. Indeed, some commentators feel that growing older alone is one of the most important — and ignored — women’s issues of the next 30 years.

The challenges are real, but so is the determination of Boomers to make this work, and their ingenuity and willingness to improvise can be effective. For example, individuals are coming together informally to develop networks of friends who have responsibilities when a member of the group needs help. Some older people are living together (like the “Golden Girls”) informally or co-locating to a neighborhood where they can help each other when needed, at least in places where zoning and other ordinances do not make this type of living arrangement difficult or impossible.

Where are other successful support models to be found? The fastest growing network to help older people find services is the Village to Village network. Villages are based on the model of neighbors helping neighbors, but provide a structure and consistency for the work. They are membership-based, created and governed by older adults, and offer their members a network of services that support “aging in community,” such as transportation and home repairs delivered by both paid providers and volunteers; social, cultural and educational programs; health and wellness activities; and member-to-member volunteer support. In fact, remaining active and engaged by volunteering is a popular aspect of membership and 51 percent of members volunteer within their Village. While most Villages require individual members to pay a fee to join (generally around $500), about two-thirds of Villages offer discounts or subsidies to low-income seniors. In California, grants from the SCAN Foundation and the Archstone Foundation have helped both support individual Villages and document what makes them work and how they can be sustained and expanded.

The Village to Village network is part of a growing movement to create age-friendly communities where people can grow up as children and also grow old in place. Instead of segregating older people into special facilities or communities, it tries to find ways make places better for both the old and the young and to link the groups together. Grantmakers In Aging offers great resources that can help. These include a database that can be searched by state so you can see what’s already going on in or near your community, or find workable solutions to adapt to your community’s needs.

Today’s generation of older adults looks forward to the longest life span of any group in human history. If that reality, and the related possibility of growing old alone, gives you pause, join us in supporting a more age-friendly future, with a greater range of choices for all people to find the support they will someday need. The challenges of living longer and living alone can be formidable, but there are lots of creative solutions already helping people across America. What ideas can you add? It’s time to pull together and put all our ideas to work.

Earlier on Huff/Post50:

The post John Feather, PhD: The Big Question That Comes With Getting Older appeared first on MORTGAGE FRAUD EXAMINERS.

Cheerleading the argument for exporting our newly developing bounty
of natural gas, Mr. Joe Nocera regales us in his recent New York Times
op-ed “Energy Exports Are Good!” with a plethora of reasons of why we should
sanction the unbridled export of this newly evolving American treasure.
He calls into question the motives of Dow Chemical in their lobbying to
keep a lid on gas exports given the fact that Dow has a minutiae
interest in a Gulf Coast facility originally built to import Liquified
Natural Gas (LNG) and, along with our new natural gas bounty, is being
converted to handle gas exports.

Dow’s argument, as put forward by Mr. Andrew N. Liveris, chairman of
Dow Chemical, is that the newly found gas offers”a historic opportunity
to streghen the economy, increase national competiveness and create
jobs.” Nocera then goes on to instruct us that Liveris’ real objective
is “are you ready for this-limiting gas exports” given Liveris’ stated
agrumentation that the new jobs the natural gas boom is expected to
create, is dependent on “affordable” and “plentiful supply.”

While Nocera is instructing us on the benefits of gas exports, almost
concurrently the European Union announced this past week that it is
opening an investigation of myriad oil companies over suspected price
manipulation bringing to the fore the thesis that pricing on the international oil
market has nothing to do with supply and demand (please see “EU’s Oil
Probe Years Overdue. Targets Wrong Benchmark” 05/16/2013).

And that is the point that is consistently overlooked. Natural has is unique in that it is priced both globally and domestically. While American manufacturers such as Dow or Dupont
are paying about $4/mmbtu, Japanese manufacturers are paying nearer
$18mmbtu. An enormous difference, and in this writer’s opinion, a
reflection of and on the distortion of the trading dynamics for virtually all energy
commodities traded interntaionally.

Consider the following. The United States has become natural gas
self-sufficient. No natural gas is imported into the U.S. market and no
natural gas is exported. The American natural gas market is therefore
uniquely American and subject to clear oversight by the Federal Trade
Commision and the Justice Department. Any attempts at collusion between
U.S producers would result in jail time for those so engaged. This, as
opposed to the manipulations of such as OPEC as but one instance, for
oil prices on the international market, and whatever new findings that will be borne out
by the EU investigation. Permitting unlimited exports of U.S.
natural gas would be tantmount to exposing the U.S.-traded natural gas
market to the same supply-demand discipline destruction that have
impacted virtually all energy products traded on the commodity exchanges worldwide.

Unlimited exports of U.S. natural gas without restoring honest supply-and-demand-based markets worldwide will permit us to kiss goodbye to the
jobs that would have been created, as gas prices will be pumped to
artificially determined world levels, much to the glee of the ‘oil patch.’

The post Raymond J. Learsy: Energy Exports Are Good! But! appeared first on MORTGAGE FRAUD EXAMINERS.

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By CHRISTINA REXRODE AP Business Writer May 20, 2013 1:56AM

FILE – In this Wednesday, June 13, 2012, file photo, JPMorgan Chase CEO Jamie Dimon, head of the largest bank in the United States, testifies before the Senate Banking Committee on Capitol Hill in Washington. Dimon, chairman and CEO of the biggest U.S. bank, faces a key test this week: His shareholders are voting on whether to let him keep both jobs. (AP Photo/J. Scott Applewhite, File)

storyidforme: 49503800
tmspicid: 18435735
fileheaderid: 8289733

NEW YORK — Jamie Dimon, chairman and CEO of the country’s biggest bank, faces a key test this week: His shareholders are voting on whether to let him keep both jobs.

It has been just more than a year since his bank, JPMorgan Chase, revealed a surprise trading loss that tarnished its usually stellar reputation in Washington and on Wall Street, and what a difference it has made. Shareholder groups are calling for the bank to strip him of his chairman job, a move that would be a bruising referendum against a man who’s normally chieftain even among other big-bank CEOs. They’re also lobbying to kick out multiple longtime board members, saying they should have done more to detect or prevent the trading loss.

In all, it’s a powerful reminder of how fortunes can quickly shift in the banking industry, and how banks, supposedly chastened by the financial crisis, are still stumbling through regulatory and legal crises.

On Tuesday, at the bank’s annual meeting in Tampa, Fla., union group AFSCME, the New York City Comptroller’s Office and other fund managers will ask bank shareholders to approve a proposal asking JPMorgan to split the roles of chairman and CEO, and to give the chairman job to someone who isn’t a bank employee. The underlying idea is to install stricter checks and balances against Dimon and other top bank executives.

A similar measure got 40 percent approval at last year’s meeting, which was held just days after the bank announced the so-called London whale loss. In the previous six annual meetings where Dimon has been both chairman and CEO, shareholders have been asked about separating the roles four times, and last year marked the highest level of votes in favor of the idea. In 2007 and 2008, only about 15 percent of shareholders voted for similar measures.

“Even a Master of the Universe can be swallowed by a London whale,” said AFSCME president Lee Saunders. The loss is nicknamed for the location of the trader who made the outsized bets on complex debt securities that went wrong, eventually losing the bank $6 billion.

Both Glass Lewis and Institutional Shareholder Services, two influential firms that give advice to big shareholders, are recommending that the jobs be split. Glass Lewis is also recommending getting rid of six of the 10 independent board members, and ISS recommends booting three.

The board has defended Dimon. It says that keeping him in both jobs is its “most effective leadership model.” It’s an arrangement that they are used to: Six of the 10 independent board members are or have been the simultaneous chairman and CEO of other businesses. Lee Raymond, who is No. 2 on the board behind Dimon, is the retired chairman and CEO of Exxon Mobil.

The board also points out that JPMorgan has done well under Dimon, who guided it through the financial crisis and nursed it to emerge as one of the strongest banks in the country. It says it meets regularly without him and has taken steps to clean up the practices that caused the trading loss, including cutting Dimon’s 2012 pay — down 19 percent to $18.7 million, according to Associated Press formulas for executive compensation, though the bank calculates that it cut his pay by half.

At an investor conference in February, Dimon dismissed the groups lobbying to separate the jobs as “all the union investors,” and called the debate “a sideshow.” He also said that he wouldn’t have gone to Bank One, a troubled Chicago bank that he took over and turned around in the early 2000s, if the bank hadn’t given him the leeway to be both chairman and CEO. “Troubled company, big turnaround, divided board?” he said. “Not me. Life is too short.”

It’s not clear what would happen if shareholders vote to take away Dimon’s chairman job. The proposal is non-binding, so technically the bank doesn’t have to follow it. In 2009, shareholders at Bank of America voted to split the jobs, and the bank took away the chairman title from chairman and CEO Ken Lewis. Later that year, he resigned from the bank entirely.

Last year, shareholders at just four U.S. companies voted to split chairman and CEO roles, according to ISS. So far this year, shareholders at only one company, department store chain Kohl’s, have voted to separate the jobs.

At a public company, the board is essentially supposed to be the boss of the CEO, hiring and firing him and reining him in from risky practices that could hurt shareholders. Shareholder activists say that if the CEO is also running the board, then the board can hardly police him. Many companies argue that the CEO knows the company better than anyone and is best equipped to run the board as well.

Dimon, 57, a native of Queens and grandson of a Greek immigrant, is an essential player in banking’s world order. During a time of increased public anger against the industry, and as some of his peers tried to fly under the radar, he was outspoken, defending big paydays for bankers and criticizing some of the government’s proposed new rules for the industry. He was President Obama’s confidante in the banking industry, and then the banking leader with the guts and credibility to challenge him.

“He’s obviously a brilliant executive,” said Brandon Rees, acting director of the investment office at the AFL-CIO, a union group that supports splitting the roles. “But it’s a rare quality for brilliance to be accompanied by lack of hubris.”

Not everyone thinks that getting rid of Dimon would be best for shareholders. CLSA analyst Mike Mayo predicts that the stock would plunge 10 percent, noting there’s no obvious successor. Nomura analyst Glenn Schorr, writing to clients last week after a meeting with Dimon, said he found it “fascinating” that investors were considering “shrinking the role of one of the best managers there’s ever been in the business.”

What everyone agrees on is this: From a public relations perspective, it’s been a tough year at JPMorgan Chase & Co. Many of Dimon’s highest-level executives have departed, including co-chief operating officer Frank Bisignano, who left in April to become CEO of payment processor First Data. The bank is also under extra scrutiny from regulators who are examining not only the trading loss but also the bank’s foreclosure practices, its controls for preventing money laundering and other areas.

“Let me be perfectly clear: These problems were our fault, and it is our job to fix them,” Dimon wrote in the annual letter to shareholders this year. “In fact, I feel terrible that we let our regulators down.”

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By JOSHUA FREED AP Airlines Writer May 20, 2013 1:56AM

FILE – In this Thursday, Jan. 17, 2013 file photo, a United Airlines Boeing 787 is parked at Narita international airport in Narita, east of Tokyo. United Airlines is getting its 787s back in the air. The planes are returning after being grounded for four months by the federal government because of smoldering batteries on 787s owned by other airlines. The incidents included an emergency landing of one plane, and a fire on another. The incidents never caused any serious injuries. But the January grounding embarrassed Boeing, which makes the 787, and disrupted schedules at the eight airlines that were flying the planes. United’s first 787 flight was scheduled for 11 a.m. Monday, May 20, 2013 from Houston to Chicago. (AP Photo/Kyodo News, File) JAPAN OUT, MANDATORY CREDIT

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United Airlines is getting its 787s back in the air.

The planes are returning after being grounded for four months by the federal government because of smoldering batteries on 787s owned by other airlines. The incidents included an emergency landing of one plane, and a fire on another.

The incidents never caused any serious injuries. But the January grounding embarrassed Boeing, which makes the 787, and disrupted schedules at the eight airlines that were flying the planes. The company had delivered 50 of the planes worldwide.

The grounding forced United to delay planned international flights and hurt its first-quarter earnings by $11 million. Others, including Japan Airlines and South America’s LATAM Airlines Group, also said profits were reduced. LATAM said it still had to make payments on the plane and pay for crews and maintenance. It expects to resume flying soon.

United’s first 787 flight was scheduled for 11 a.m. Monday from Houston to Chicago.

Passengers didn’t appear to be too worried. “We saw strong demand for the flight from the first weekend it opened for sale,” United spokeswoman Christen David said.

United is planning to use 787s on shorter domestic flights before resuming international flights on June 10 with new Denver-to-Tokyo service as well as temporary Houston-to-London flights. It’s adding flights to Tokyo, Shanghai, and Lagos, Nigeria, in August.

Those long international flights are the main reason the 787 exists. Its medium size and fuel efficiency are a good fit for long routes. Starting with shorter domestic flights “will give us a period to ramp up full 787 operations,” David said.

United Continental Holdings Inc. was the first U.S. airline to get the 787 and now has six. United has said it expects to have four fixed by Monday, with the other two getting their batteries modified in coming days.

The 787 uses more electricity than any other jet. And it makes more use of lithium-ion batteries than any other jet, because it needs to be able to provide power for things like flight controls and a backup generator when its engines are shut down. Each 787 has two of the batteries.

Boeing Co. never did figure out the root cause of the battery incidents. Instead, it redesigned the battery and its charger. The idea was to eliminate all of the possible causes, 787 chief engineer Mike Sinnett said in an online chat on Thursday where he and a Boeing test pilot took questions about the plane.

The changes include more heat insulation between each cell and charging the battery to a lower maximum voltage.

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Following an 80% rise off October 2012 lows, Japan’s Nikkei 225 nominal price just exceeded that of the Dow Jones Industrial Average for the first time since May 6th 2010. Though the Dow is around 8% above its 2007 all-time highs, the Nikkei remains 16% below its 2007 highs (and over 60% below its 1989 all-time highs). While the Dow is pushing its P/E towards 15x, the Nikkei just passed 28x – quite a ‘valuation’ difference. JGB futures – though not halted yet – are plunging notably (with JGB yields up 3-4bps). The last time the Nikkei was here a USD bought 95 JPY, now it buys 103… and 10Y Japanese government bonds yielded 1.29% against today’s 86bps (compared to 10Y Treasuries 3.5% then and 1.96% now) … In those three years the Fed has expanded its balance sheet by just over $1 trillion and the BoJ by about $400 billion equivalent.

and JGB Futures are plunging…

Charts: Bloomberg

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It has been a tough weekend for the President. First, the CEO of the Associated Press states the government’s seizure of AP phone records was “so broad and so secret,” among other factors, “that it was an unconstitutional act,” adding that it had already had a chilling effect on newsgathering and press freedom…

Add to that James Goodale’s comments (the leading force behind the release of the Pentagon Papers and first amendment lawyer), that President Obama is “worse for press freedom than Nixon” and things are not going well…

But, the problems did not stop there as the Wall Street Journal reports that while President Obama claims not to have been made aware of the IRS indiscretions until May 10th it seems the White House’s chief lawyer learned weeks ago that an audit of the IRS likely would show that agency employees inappropriately targeted conservative groups.

Via The Wall Street Journal,

…

 

In the week of April 22, the Office of the White House Counsel and its head, Kathryn Ruemmler, were told by Treasury Department attorneys that an inspector general’s report was nearing completion, the White House official said. In that conversation, Ms. Ruemmler learned that “a small number of line IRS employees had improperly scrutinized certain…organizations by using words like ‘tea party’ and ‘patriot,’ ” the official said.

 

…

 

The White House, which declined to make Ms. Ruemmler available for comment Sunday, wouldn’t say whether she shared the information with anyone else in the senior administration staff.

 

…

 

When findings are so potentially damaging, the president should immediately be informed, said Lanny Davis, who served as a special counsel to President Bill Clinton.

 

Of the controversies dogging Mr. Obama, including the terrorist assault in Benghazi, Libya, and the Justice Department’s seizure of phone records of Associated Press journalists, the IRS case “is the most nuclear issue of all,” Mr. Davis said. It involves the “misuse of the IRS” and “anyone who knew about this a few weeks ago and didn’t tell the president shouldn’t be in the White House,”

 

…

 

Republican lawmakers on House oversight committees are pressing the investigation, with more hearings set for this week.

 

“Exactly who in the administration knew what about the IRS targeting is one of the key outstanding questions,” said Rep. Darrell Issa

 

…

 

“… President Obama and his administration seem more preoccupied with having deniability than quickly addressing serious wrongdoing…”

 

 

The President’s response so far is that “we’re not going to participate in is a partisan fishing expedition.”

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With unemployment rates running at all-time record highs across the peripheral European nations and the rise of nationalist (some might say extremist) parties, it remains somewhat surprising that there has not been greater social unrest (yet). The people of Europe are caught in a hinterland of knowing what is best in the long-run but fearing the short-term band-aid ripping pain of exiting the political farce known as the European Union. But some have found a way… There is another way to ‘exit’ on personal terms from the austerity and pain induced by a centrally planned overlord. Immigration to Germany from Italy, Spain, Greece, and Portugal has ‘never’ been higher… leaving us wondering – at what point does the free and open exchange of everything in the union gets its share of ‘protectionism’ from an over-stuffed Germany freezing the import of labor? So it seems that not only is the money (deposits) finding a new home but the people too are moving to where the money is..

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While women are equipped with the necessary skills to perform well as leaders, they are not exercising the ability to self-promote. They hesitate getting their accomplishments known to the people in the highest rungs of the organization resulting to their inability to get the support they need to advance.

This was one of the findings of the latest Conference Board of Canada report released last week. Donna Burnett Vachon and Carrie Lavis authored Women in Leadership: Perceptions and Priorities for Change which is based on the results of a national survey of more than 800 men and women as well as in-depth interviews with female leaders and women who are aspiring for these positions.

The research revealed that the problem does not stem from a women’s leadership style which is anchored primarily on consensus, collaboration, and teamwork. In fact, they receive high marks as leaders, with 74 per cent of women and 73 per cent of men in both management and non-management roles agreeing that “women and men make equally effective leaders.” They even perform better than their male counterparts in business-oriented and people-oriented competencies.

The issue lies, in part, with a woman’s confidence or lack thereof. Compared to men who are more aggressive in putting their names forward for positions where they do not have the requisite skills or experience, women tend to “self-select out.” That is, they don’t generally take on projects or positions that allow them to advance “unless they feel certain they already have all of the skills required.”

But women are also walking a tightrope when it comes to self-promotion, the research points out. Current cultural norms don’t look too favorably on females who are proactive and aggressive in flaunting their qualifications to advance as “she runs the risk of alienating her audience.” Not speaking up, on the other hand, will also mean not getting noticed as “it’s likely that no one else is going to do it on her behalf.”

The study authors stressed that this is where mentors, sponsors, and advisors play a crucial role. They give women visibility by allowing them to “let their skills shine in front of the people who make decisions about advancement and career growth opportunities.”

Aside from leadership abilities, the report also examined the leadership attitudes, organizational opportunities, and career advancement motivation that affect women’s ability to ascend to the ranks of senior management. Their findings show that “attitudes about the need for more women in senior management are still polarized along gender lines.”

Some strategies for change include getting the board of directors involved by making woman’s advancement a priority; making sponsorship programs of emerging women leaders transparent; and providing more family-friendly policies in the workplace.

Still, the researchers conclude that more women are needed in senior management roles before significant change is felt: “A shift in attitudes will only come when we stop seeing a woman in senior management as the exception and start seeing her as the norm.”

By Nicel Jane Avellana, contributor to Femme-O-Nomics.com and r/ally

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The most important force that has lifted the US dollar across the board is the sense, encouraged by official comments, of the potential divergence in the trajectory of monetary policy between the US and most of the other major high income countries. 

In particular, the pendulum of market psychology has swung back toward speculation of tapering off of QE-related asset purchases by the Federal Reserve.  At the same time, ECB officials continue to indicate they are carefully considering a negative deposit rate. Many still expect the Bank of England to resume its gilt purchases program and new initiatives on its forward guidance in Q3 after Carney takes the helm. 

Meanwhile, Carney and the Bank of Canada continue to push further out when they anticipate full capacity will be reached and when it will remove some accommodation by increasing interest rates. The recent string of economic data, including prices, has been generally softer than expected and the forward guidance the central bank has offered is becoming less credible. Additional easing by the Reserve Bank of Australia, though the recent sharp drop in the Australian dollar appears to tempering expectations of a rate cut as early as next month.

Japan’s quantitative and qualitative easing is not even two months old. It is far too early to suggest a reassessment, though Q4 12 GDP was revised up and Q1 13 GDP came in stronger than expected and may be revised after Japan releases the latest capex figures in early June. Capital investment was an unexpected drag on Q1 GDP and may be adjusted higher.

Although there are several important pieces of economic data in the days ahead, including UK inflation and retail sales reports, euro area flash PMI readings, German IFO, Japan’s latest trade figures, US durable goods orders, the focus is on the central banks.

The Fed’s Dudley and Bollard speak on Tuesday, but the real interest is on Bernanke’s testimony on the economic outlook on Wednesday. Comments by regional Fed presidents who do not vote this year on the FOMC has helped fan speculation of tapering off of Fed purchases in Q3.   Bernanke is likely to reiterate that the Fed is vigilantly watching the impact of QE on the financial markets and risk-taking generally.  However suspect it is too early for Bernanke to signal a shift in the pace of QE. Not only has the full impact of the fiscal tightening this year not yet been fully transmitted, but also the decline in core inflation readings suggests no strong urgency to alter the pace of the asset purchases.

There are at least eight ECB officials that speak in the coming days, including Draghi and Weidmann on Thursday. The official line is that the ECB is technically prepared to adopt a negative deposit rate, and there were rumors last week that it had contacted at least one bank to discuss.

Most analyses seem to focus on the potential unintended consequences. More problematic, we suspect are the unforeseeable consequences to financial disintermediaries of policies that frankly have not been tried by other major central banks. In addition, shrinking margins and attempts to secure deposits may become more challenging, for example, and could lead to new borrowing from the ECB or ELA (emergency lending assistance).  

Moreover, the intended benefits—to bolster lending, especially to small and medium size businesses– may be elusive in the face of soft demand and recessionary conditions in much of the euro area, including several core countries.  We expected that when the cost/benefits have been analyzed, the ECB will decide to refrain from pushing the deposit rate below zero.  

The BOJ is the only major central bank meeting this week. Its two day meeting concludes Tuesday. For the most part BOJ Governor Kuroda must be fairly pleased. The growth is sufficient that the BOJ is likely to revise up its assessment of the economy. Inflation expectations, as revealed in the break-even rates of its inflation linked bonds have increased. The yen has weakened and the Nikkei has rallied. International resistance has been quite modest despite the traditional and social media playing up the “currency war” metaphor.

The main problem has been the Japanese government bond market. The increase in yields seems considerably earlier and more dramatic than officials anticipated. The marked increase in volatility is poses a significant threat to some market segments whose investment strategies that are particularly sensitive to shifts in value-at-risk models.  

Just like the low vol environment encouraged investors such as banks and leveraged accounts to trade large size, the increase in volatility is forcing them to reduce exposures. This aggravates the lack of liquidity and tends to reinforce the increase in volatility. The BOJ has already tried to alter is asset purchases, making smaller and more frequent transactions. 

Officials may steps up their verbal assurances and large scale injections of short-term liquidity did help stabilize the JGB market at the end of last week.  Economic Minister Amari’s comment that the yen’s weakness has been corrected and additional weakness may be counter-productive, suggests heightened concern about the bond market.  

Minutes from the recent Reserve Bank of Australia’s meeting that resulted in a 25 bp rate cut will be released. We look for the minutes to reiterate the statement issued after the rate cut. Previously, the RBA had identified scope to ease and they used part of that scope. This still leaves the door open to additional rate cuts. Concerns about the impact of the strength of the Australian dollar may seem a bit dated given the recent slide in the Australian dollar, though by most measures, it remains significantly over-valued.

The BOE publishes minutes from the recent MPC meeting on Wednesday. The minutes will likely echo the sentiments of the latest quarterly inflation report in which the BOE shaved its inflation forecast and lifted its growth forecast. In April, three MPC members, including the governor, voted to resume gilt purchases. They have failed to persuade a majority. With stronger economic data and the proximity of Carney’s ascension, it will be interesting to see if there were defections from the minority.

At the BOJ, Kuroda was able to secure a majority in favor of new and more aggressive quantitative easing, even though some similar measures had been previously rejected by the same board.  The Bank of England is horse of a different color. The thinking seems to be more independent. Critics have harangued about Governor King’s management style, but he is a rare species of central bank heads that has allow himself to be outvoted on several occasions. Carney may find it more difficult than Kuroda in bending the central bank’s monetary policy to his will.

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CNN reports:

The European Commission raided the offices of Shell, BP and Norway’s Statoil this week as part of an investigation into suspected attempts to manipulate global oil prices spanning more than a decade.

 

None of the companies have been accused of wrongdoing, but the controversy has brought back memories of the Libor rate-rigging scandal that rocked the financial world last year.

 

***

 

A review ordered by the British government last year in the wake of the Libor revelations cited “clear” parallels between the work of the oil-price-reporting agencies and Libor.

 

“[T]hey are both widely used benchmarks that are compiled by private organizations and that are subject to minimal regulation and oversight by regulatory authorities,” the review, led by former financial regulator Martin Wheatley, said in August . “To that extent they are also likely to be vulnerable to similar issues with regards to the motivation and opportunity for manipulation and distortion.”

 

***

 

In a report issued in October, the International Organization of Securities Commissions — an association of regulators — said the ability “to selectively report data on a voluntary basis creates an opportunity for manipulating the commodity market data” submitted to Platts and its competitors.

 

Responding to questions from IOSCO last year, French oil giant Total said the price-reporting agencies, or PRAs, sometimes “do not assure an accurate representation of the market and consequently deform the real price levels paid at every level of the price chain, including by the consumer.” But Total called Platts and its competitors “generally… conscientious and professional.”

 

***

 

“Even small distortions of assessed prices may have a huge impact on the prices of crude oil, refined oil products and biofuels purchases and sales, potentially harming final consumers,” the European Commission said this week.

USA Today notes:

The Commission … said, however, that its probe covers a wide range of oil products — crude oil, biofuels, and refined oil products, which include gasoline, heating oil, petrochemicals and others.

 

***

 

The EU said it has concerns that some companies may have tried to manipulate the pricing process by colluding to report distorted prices and by preventing other companies from submitting their own prices.

 

***

 

Unlike oil futures, which set prices for contracts, the data used in the MOC process is based on the physical sale and purchase of actual shipments of oil and oil products.

 

***

 

According to Statoil, the EU investigation stretches back to 2002, which is when Platts launched its MOC price system in Europe. The suspicion is that some companies may have provided inaccurate information to Platts to affect the oil products’ pricing, presumably for financial gain.

Fox points out:

At issue is whether there was collusion to distort prices of crude, refined oil products and ethanol traded during Platts’ market-on-close (MOC) system – a daily half-hour “window” in which it sets prices.

 

But the European Commission also is examining whether companies were prevented from taking part in the price assessment process.

The Guardian writes:

The commission said the alleged price collusion, which may have been going on since 2002, could have had a “huge impact” on the price of petrol at the pumps “potentially harming final consumers”.

 

Lord Oakeshott, former Liberal Democrat Treasury spokesman, said the alleged rigging of oil prices was “as serious as rigging Libor” – which led to banks being fined hundreds of millions of pounds.

 

He demanded to know why the UK authorities had not taken action earlier and said he would ask questions of the British regulator in Parliament. “Why have we had to wait for Brussels to find out if British oil giants are ripping off British consumers?” he said. “The price of energy ripples right through our economy and really matters to every business and families.”

 

***

 

Shadow energy and climate change secretary Caroline Flint said: “These are very concerning reports, which if true, suggest shocking behaviour in the oil market that should be dealt with strongly.

 

“When the allegations of price fixing in the gas market were made, Labour warned that opaque over-the-counter deals and relying on price reporting agencies left the market vulnerable to abuse.

 

“These latest allegations of price fixing in the oil market raise very similar questions. Consumers need to know that the prices they pay for their energy or petrol are fair, transparent and not being manipulated by traders.”

 

Shadow financial secretary to the Treasury Chris Leslie said: “If oil price fixing has taken place it would be a shocking scandal for our financial markets.

The Telegraph reports:

“97 per cent of all we eat, drink, wear or build has spent some time in a diesel lorry,” said a spokesman for FairFuel UK, the lobbyists. “If it is proved, they have been gambling with the very oxygen of our economy.”

 

***

 

Platts – to determine the benchmark price – examines just trades in the final 30 minutes of the trading day. A group of half a dozen analysts gather round a trading screen and decide on the final price. As with much that goes on in the City, it is a surprisingly old-fashioned method, reliant on gentlemanly conduct. Critics say it leaves the market open to abuse, and the price can suddenly spike or fall in the final minutes of the day.

The New York Times notes of agencies like Platt and Argus Media:

Their influence is extensive. Total, the French oil giant, estimated last year that 75 to 80 percent of crude oil and refined product transactions were linked to the prices published by such agencies.

The Observer points out that manipulation of the oil markets has long been an open secret:

Robert Campbell, a former price reporter at another PRA, Argus – he is now a staffer at Thomson Reuters, which also competes with Platts and others on providing energy news and data – said this a few days ago in a little-noticed commentary: “The vulnerability of physical crude price assessments to manipulation is an open secret within the oil industry. The surprise is that it took regulators so long to open a formal probe.”

Reuters reports that the probe may be expanding to the U.S.:

In Washington, the chairman of the Senate energy committee asked the Justice Department to investigate whether alleged price manipulation has boosted fuel prices for U.S. consumers.

 

“Efforts to manipulate the European oil indices, if proven, may have already impacted U.S. consumers and businesses, because of the interrelationships among world oil markets and hedging practices,” Sen. Ron Wyden (D-Ore.), chairman of the Senate Energy and Natural Resources Committee, wrote in a letter to Attorney General Eric H. Holder Jr.

 

Wyden also asked Justice to investigate whether oil market manipulation was taking place in the United States.

Not only are petroleum products a multi-trillion dollar market on their own, but manipulation of petroleum prices would effect virtually every market in the world.

For example, the Cato Institute notes how many industries use oil:

U.S. industries use petroleum to produce the synthetic fiber used in textile mills making carpeting and fabric from polyester and nylon. U.S. tire plants use petroleum to make synthetic rubber. Other U.S. industries use petroleum to produce plastic, drugs, detergent, deodorant, fertilizer, pesticides, paint, eyeglasses, heart valves, crayons, bubble gum and Vaseline.

The India Times reports that:

The price variation in crude oil impacts the sentiments and hence the volatility in stock markets all over the world. The rise in crude oil prices is not good for the global economy. Price rise in crude oil virtually impacts industries and businesses across the board. Higher crude oil prices mean higher energy prices, which can cause a ripple effect on virtually all business aspects that are dependent on energy (directly or indirectly).

The Federal Reserve Bank of San Francisco notes:

When gasoline prices increase, a larger share of households’ budgets is likely to be spent on it, which leaves less to spend on other goods and services. The same goes for businesses whose goods must be shipped from place to place or that use fuel as a major input (such as the airline industry). Higher oil prices tend to make production more expensive for businesses, just as they make it more expensive for households to do the things they normally do.

 

***

 

Oil price increases are generally thought to increase inflation and reduce economic growth.

 

***

 

Oil prices indirectly affect costs such as transportation, manufacturing, and heating. The increase in these costs can in turn affect the prices of a variety of goods and services, as producers may pass production costs on to consumers.

 

***

 

Oil price increases can also stifle the growth of the economy through their effect on the supply and demand for goods other than oil. Increases in oil prices can depress the supply of other goods because they increase the costs of producing them. In economics terminology, high oil prices can shift up the supply curve for the goods and services for which oil is an input.

 

High oil prices also can reduce demand for other goods because they reduce wealth, as well as induce uncertainty about the future (Sill 2007). One way to analyze the effects of higher oil prices is to think about the higher prices as a tax on consumers (Fernald and Trehan 2005).

The Post Carbon Institute notes (via OilPrice.com) that high oil prices raise food prices as well:

The connection between food and oil is systemic, and the prices of both food and fuel have risen and fallen more or less in tandem in recent years (figure 1). Modern agriculture uses oil products to fuel farm machinery, to transport other inputs to the farm, and to transport farm output to the ultimate consumer. Oil is often also used as input in agricultural chemicals. Oil price increases therefore put pressure on all these aspects of commercial food systems.

Figure 1: Evolution of food and fuel prices, 2000 to 2009
Sources: US Energy Information Administration and FAO.

Economists Nouriel Roubini and Setser note that all recessions after 1973 were associated with oil shocks.

Interest Rates Are Manipulated

Unless you live under a rock, you know about the Libor scandal.

For those just now emerging from a coma, here’s a recap:

• The big banks have conspired for years to rig interest rates … upon which $800 trillion in assets are pegged

• This was the largest insider trading scandal ever … and the largest financial scam in world history

• Local governments got ripped off bigtime by the Libor manipulation

• Libor is still being manipulated

Derivatives Are Manipulated

The big banks have long manipulated derivatives … a $1,200 Trillion Dollar market.

Indeed, many trillions of dollars of derivatives are being manipulated in the exact same same way that interest rates are fixed: through gamed self-reporting.

Gold and Silver Are Manipulated

The Guardian and Telegraph report that gold and silver prices are “fixed” in the same way as interest rates and derivatives – in daily conference calls by the powers-that-be.

Everything Can Be Manipulated through High-Frequency Trading

Traders with high-tech computers can manipulate stocks, bonds, options, currency and commodities. And see this.

Manipulating Numerous Markets In Myriad Ways

The big banks and other giants manipulate numerous markets in myriad ways, for example:

• Engaging in mafia-style big-rigging fraud against local governments. See this, this and this

• Shaving money off of virtually every pension transaction they handled over the course of decades, stealing collectively billions of dollars from pensions worldwide. Details here, here, here, here, here, here, here, here, here, here, here and here

• Charging “storage fees” to store gold bullion … without even buying or storing any gold . And raiding allocated gold accounts

• Committing massive and pervasive fraud both when they initiated mortgage loans and when they foreclosed on them (and see this)

• Pledging the same mortgage multiple times to different buyers.  See this, this, this, this and this.  This would be like selling your car, and collecting money from 10 different buyers for the same car

• Cheating homeowners by gaming laws meant to protect people from unfair foreclosure

• Pushing investments which they knew were terrible, and then betting against the same investments to make money for themselves. See this, this, this, this and this

• Engaging in unlawful “frontrunning” to manipulate markets. See this, this, this, this, this and this

• Engaging in unlawful “Wash Trades” to manipulate asset prices. See this, this and this

• Otherwise manipulating markets. And see this

• Participating in various Ponzi schemes. See this, this and this

• Charging veterans unlawful mortgage fees

• Cooking their books (and see this)

• Bribing and bullying ratings agencies to inflate ratings on their risky investments

The post Is EVERY Market Rigged? appeared first on MORTGAGE FRAUD EXAMINERS.

We are so deep inside the centrally-planned, Keynesio-monetarist Twilight zone, that the best we can advise is just laughing at the utterly ridiculous amounts of daily idiocy hitting the tape now on an hourly basis.

h/t @andrewyorks

The post A Dollar-Yen Tale Told By An Idiot, Full Of Sound And Fury, Signifying Nothing appeared first on MORTGAGE FRAUD EXAMINERS.