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Monday, 3 February 2014

Feb 3, 2014: News Updates

Latin American Currencies Plunge To 2003 Lows, Argentine BONARs Shrink

 02/03/2014 14:02 -0500

With today's plunge, Latin American currencies have collapsed by over 5% in th elast 2 weeks - the fastest drop in almost two years. Year-over-year this is a 15.75% drop, the largest such drop since Lehman. This drop breaks the 2009 lows and presses the currencies to their weakest since 2003... Bond markets are being crushed as short-dated Argentine BONARs have collapsed to 14 month lows.

European Central Bank seeks banks too troubled to lend money as it purges financial system

FRANKFURT - In Europe, the zombie hunt is on.

Not for undead humans, that is, but zombie banks — the walking dead among lenders, too financially troubled to loan money to an economy that desperately needs investment, growth and jobs.

The European Central Bank, the lead crisis-fighter for the 18 countries that use the euro, is embarking on an extensive search through the books of the biggest banks. It's an arcane exercise — but one whose results will impact people's jobs, businesses and lives. The idea is to restore the system's ability to lend by weeding out lame banks.

Loonie’s luck runs out as dollar forecasts revised even lower

Cross border shopping has suddenly become a lot less attractive for Canadians.

The Canadian dollar has nosedived, falling below the 90-cent (U.S.) mark last week for the first time since 2009.

Economists are calling January one of the worst months for the loonie since the 1950s, with no relief in sight for at least the next few months.

 Emerging Market FX Hits Fresh 5-Year Low - Contagion Unfixed

02/03/2014 11:37 -0500

It was only a few days ago that Emerging Market FX was rallying on the back of a Turkish Central Bank rate hike that "fixed" everything. It was only a few days ago that investors were told they were "stupid" if bearish on US stocks because of EM weakness. Things have not gone as planned. That temporary blip has been demolished and EM FX has crumbled lower to fresh 5-year lows with many hitting record lows... and no, this does not mean money will flow back into US stocks (as we exclaim below).


EM FX hits fresh 5-year low...

The Next 24 Hours Are Going To Be HUGE

Joe Weisenthal
Feb. 2, 2014, 4:00 PM   

First, to set the scene, last week was one of the more volatile weeks in global markets that we've seen in a long time. Stocks ended the week with two straight down days, resulting in the worst January for stocks since 2010.

Over the weekend, the official Chinese PMI report confirmed an economic slowdown, as manufacturing hit its worst level in six months, a fact that acts as a drag on global emerging markets.

Treasury Chief: US Will Run Out of Money in February

The U.S. government says it will run out of money to pay its bills in late February, a bit sooner than first thought.

In December, Treasury chief Jacob Lew wrote to congressional leaders that the borrowing limit would be reached in late February or early March. But on Thursday, he urged Congress to raise the country's borrowing limit again by the end of February, to make sure the country does not default on its debts.

European banks have $3 trillion of exposure to emerging markets

LONDON Mon Feb 3, 2014 6:20pm GMT

(Reuters) - European banks have loaned in excess of $3 trillion (1.83 trillion pounds) to emerging markets, more than four times U.S. lenders and putting them at greater risk if financial market turmoil in countries such as Turkey, Brazil, India and South Africa intensifies.

The risk is most acute for six European banks - BBVA, Erste Bank, HSBC, Santander, Standard Chartered, and UniCredit - according to analysts.

IMF sees limited room for Bank of Canada rate cut

Mon Feb 3, 2014 11:39am EST

OTTAWA (Reuters) - The International Monetary Fund (IMF) said Monday Canada's central bank is likely to hold its main interest rate steady until early 2015, and the bank has limited room to cut rates because of overvalued housing prices and record household debt.

Citigroup, And Former Fed, Economist To Take Top Treasury Post

02/03/2014 15:42 -0500

Confirming the floating rumor from last week that yet another Wall Streeter from a bailed out bank is going to set US economic policy, moments ago the Treasury announced that indeed the Citigroup economist Nathan Sheets - the bank's global head of international economics - will start working next week as a counsellor to U.S. Treasury Secretary Jack Lew.

.... Previously, Mr. Sheets worked at the Federal Reserve Board for 18 years in a variety of positions. From September 2007 to August 2011, he served as Director of the Board’s Division of International Finance and one of three Economists to the Federal Open Market Committee. He advised the Committee on macroeconomic and financial developments in foreign economies, as well as on the outlook for U.S. trade, the dollar, and global commodity prices. He also played a key role in developing the Fed’s swap line program with other central banks. From 2006-07, while on leave from the Board, he served as a Senior Advisor to the U.S. Executive Director at the International Monetary

Reuters link from above article:

Lloyds delays dividend prospect after mis-selling charge

Feb 3, 2014 8:58am GMT

(Reuters) - Lloyds Banking Group (LLOY.L) said it won't ask Britain's financial regulator to allow it to start paying dividends again until the second half of the year, disappointing investors who had hoped for a payout on 2013 earnings.

The state-backed bank pushed back its dividend prospects on Monday after taking a further 1.8 billion pound ($3 billion) charge for the mis-selling of loan insurance.

February 3, 2014

Shake me, wake me!

     The rot moves from the margins to the center, but the disease moves from the center to the margins. That is what has happened in the realm of money in recent weeks due to the sustained mispricing of the cost of credit by central banks, led by the US Federal Reserve. Along the way, that outfit has managed to misprice just about everything else  — stocks, houses, exotic securities, food commodities, precious metals, fine art....

...Meanwhile, the rot of epic mispricing expresses itself in collapsing currencies and the economies they are supposed to represent: India, Turkey, Argentina, Hungary so far. Italy, Spain, and Greece would be in that club if they had currencies of their own. For now, they just do without driving their cars and burn furniture to stay warm this winter. Automobile use in Italy is back to 1970s levels of annual miles-driven. That’s quite a drop.

     Before too long, the people will be out in the streets engaging with the riot police, as in Ukraine. This is long overdue, of course, and probably cannot be explained rationally since extreme changes in public sentiment are subject to murmurations, the same unseen forces that direct flocks of birds and schools of fish that all at once suddenly turn in a new direction without any detectable communication.

Stock market live blog: S&P 500 loss steepest since June; Nasdaq down over 100 points

Hackers sue Merkel and entire German government over NSA spying

Published time: February 03, 2014 14:28

Europe’s largest association of hackers has filed a criminal complaint against the German government for aiding foreign spying by NSA and GCHQ, and violating the right to citizens’ privacy, basing their case on leaks by whistleblower Edward Snowden.

DOJ expands bribery probe; SAC’s London team finds a new home

February 3, 2014, 10:12 AM

More bank probes: The DOJ is widening its probe and looking at banks, hedge funds and private-equity firms for any violation of anti-bribery laws when it comes to Libya’s government-run investment fund, according to a report in The Wall Street Journal. The firms under the spotlight include Goldman Sachs Group Inc. GS -1.86% , Credit Suisse Group AG CS -2.52% , J.P. Morgan Chase & Co. JPM -1.38%  and private equity firm Blackstone Group L.P. BX -4.89% ........

Perth Mint and U.S. Mint See Higher January Gold Sales

Posted on February 3, 2014

Gold is marginally lower in all major currencies today except sterling which has weakened due to concerns that the Bank of England will continue its ultra loose monetary policies. Gold ticked higher in Asia prior to price falls....

Australia’s Perth Mint, which refines most of the bullion from the world’s second-biggest producer, joined the U.S. Mint in reporting gold demand climbed in January. Sales of coins and the increasingly popular minted gold bars at the Perth Mint increased 10% to 64,818 ounces last month from 58,944 ounces in December. The mint sold 912,388 ounces of silver compared with 845,941 ounces in December, it said.

Sales of gold coins by the U.S. Mint rose 63% in January to the highest since April. Sales climbed to 91,500 ounces from 56,000 ounces in December, while sales of silver coins almost tripled to 4.78 million ounces, the highest in a year, the data showed.

Financial world shaken by 4 bankers' apparent suicides in a week

Published time: February 03, 2014 12:16

The apparent suicide death of the chief economist of a US investment house brings the number of financial workers who have died allegedly by their own hand to four in the last week.

A Rash of Deaths and a Missing Reporter – With Ties to Wall Street Investigations

By Pam Martens: February 3, 2014

In a span of four days last week, two current executives and one recently retired top ranking executive of major financial firms were found dead. Both media and police have been quick to label the deaths as likely suicides. Missing from the reports is the salient fact that all three of the financial firms the executives worked for are under investigation for potentially serious financial fraud.

...The case of David Bird, the oil markets reporter who had worked at the Wall Street Journal for 20 years and vanished without a trace on the afternoon of January 11, has this in common with the other three tragedies: his work involves a commodities market – oil – which is under investigation by the U.S. Senate’s Permanent Subcommittee on Investigations for possible manipulation. The FBI is involved in the Bird investigation.

Web companies give first look at secret government data requests

Mon Feb 3, 2014 3:51pm EST

 SAN FRANCISCO (Reuters) - Facebook, Microsoft, Yahoo and Google on Monday began publishing details about the number of secret government requests for data they receive, hoping to show limited involvement in controversial surveillance efforts.

The tech industry has pushed for greater transparency on government data requests, seeking to shake off concerns about their involvement in vast, surreptitious surveillance programs revealed last summer by former spy contractor Edward Snowden.

The government said last month it would relax rules restricting what details companies can disclose about Foreign Intelligence Surveillance Act (FISA) court orders they receive for user information.

Total ban on GM food production mulled in Russia

Published time: February 03, 2014 09:38

A group of Russian MPs have prepared a bill severely restricting imports of genetically modified agricultural produce, and completely banning its domestic production.
...The pro-GMO businessman also pointed out that the discussion of the problem should not be limited to the agriculture and food industries. He said that 70 percent of genetically enhanced materials were used in pharmacology and medicine, 20 percent were used in industry and only 10 percent of GMOs were used in agriculture and food production.

Saudis snub US congressional delegation

By Joel Gehrke | JANUARY 31, 2014 AT 8:45 AM

Saudi Arabian diplomats and military officials refused to meet with a bipartisan delegation of senior congressional staffers who visited the Middle Eastern country last week, an unusual snub that suggests increased tension between the U.S. and a key ally.

According To Bank Of America The Outlook For The Entire World Has "Deteriorated" Due To Cold US Weather- 02/03/2014

It really doesn't get funnier than this, and explains the 7 figure comp for the Bank of America authors who can certainly get matching compensation in the comedy circuit. From BofA's Naeem Wahid:

    We recommend closing the short EUR/SEK trade that we initiated last week. While Swedish economic data have improved, as we expected, the global outlook has deteriorated – caused by a larger than expected weather effect in the US (the US ISM has fallen to 51.3, from December’s 56.5). As such we close out the trade at  8.8300 (entered at 8.8100) and look to reinitiate once risk appetite turns positive again.

Monday, February 3, 2014

Get your opiates for free: Capitalism meets the zombie apocalypse

I think I have found a new low in the pharmaceutical industry: giving away a month's free supply of potentially lethal high-grade opiods.

This ambitious marketing strategy allows more than enough time and supply to create addicts.

Coffee futures leap 7%, head for highest close since May

February 3, 2014, 12:41 PM

Coffee futures headed for their highest settlement in almost nine months on Monday, as traders fretted over the outlook for supplies on the back of record heat in Brazil.