Creditors Accuse Portugal Of “Unfair, Populist Short-Cut” In 2 Billion Bank Bail-In

Two weeks ago, The Bank of Portugal shocked markets by bailing in senior Novo Banco bondholders.
Novo Banco was the ‘good’ bank forged from the ashes of Banco Espirito Santo which had to be bailed out by the state in August of 2014. The idea was to sell Novo Banco to pay for the cost of the bailout, but the auction process eventually floundered amid turmoil in Chinese markets (at least two of the potential bidders were Chinese) and uncertainty about whether this ‘good’ bank would in fact need more capital given the elevated level of NPLs already on its books.
In November, the ECB told Novo it woudl indeed need to raise some 1.4 billion in fresh capital which the bank initially said would come from asset sales. A little over a month later, Portugal’s central bank essentially just gave up. On December 29, the bank announced it was transferring 2 billion in NB senior notes back to Banco Espirito Santo which, like a ghost skyscraper in China, is set for demolition.
In other words, Novo Banco plugged the 1.4 billion hole by essentially declaring 2 billion in bonds null and void.

This post was published at Zero Hedge on 01/14/2016.

Lowest Ever: The Baltic Dry Index Plunges To 394 As Global Trade Grinds To A Standstill

For the first time ever, the Baltic Dry Index has fallen under 400. As I write this article, it is sitting at 394. To be honest, I never even imagined that it could go this low. Back in early August, the Baltic Dry Index was sitting at 1,222, and since then it has been on a steady decline. Of course the Baltic Dry Index crashed hard just before the great stock market crash of 2008 too, but at this point it is already lower than it was during that entire crisis. This is just more evidence that global trade is grinding to a halt and that 2016 is going to be a ‘cataclysmic year’ for the global economy.
If you are not familiar with the Baltic Dry Index, here is a helpful definition from Wikipedia…
The Baltic Dry Index (BDI) is an economic indicator issued daily by the London-based Baltic Exchange. Not restricted toBaltic Sea countries, the index provides ‘an assessment of the price of moving the major raw materials by sea. Taking in 23 shipping routes measured on a timecharter basis, the index covers Handysize, Supramax, Panamax, and Capesize dry bulk carriers carrying a range of commodities including coal, iron ore and grain.’
The BDI is one of the key indicators that experts look at when they are trying to determine where the global economy is heading. And right now, it is telling us that we are heading into a major worldwide economic downturn.
Some people try to dismiss the recent drop in the Baltic Dry Index by claiming that shipping rates are down because there is simply too much capacity out there these days. And I don’t dispute that. Without a doubt, too many vessels were built during the ‘boom years’, and now shipbuilders are paying the price. For example, Chinese shipyards reported a 59 percent decline in orders during the first 11 months of 2015…

This post was published at The Economic Collapse Blog on January 14th, 2016.

Fed Starts To Walk Back Its Rate Hike. Next Step: More QE, Bigger Experiments

That didn’t take long. A month after the Fed’s dreaded quarter-point interest rate hike, the markets tank and out come the talking heads to promise that whatever is bothering traders, Daddy will make it right.
Falling inflation expectations could mean policy rethink: Fed’s Bullard (Reuters) – The continued rout on global oil markets has caused a ‘worrisome’ drop in U. S. inflation expectations that may make further rate hikes hard to justify, St. Louis Federal Reserve President James Bullard said on Thursday. Since the dramatic fall in oil began in 2014 Fed officials have insisted the impact on U. S. price levels would be temporary, bottoming out at some point and allowing inflation to rise to the Fed’s 2 percent target.
Bullard said he has so far been willing to look beyond a slip in expectations as likely passing. But he is now worried the plunge in oil has unmoored inflation expectations as well, a fact that would make it more difficult for the Fed to lift inflation to its 2 percent target and could force officials to rethink the four quarter-point rate hikes expected this year.

This post was published at DollarCollapse on January 14, 2016.

The ‘Real’ Price Of Oil Is Below $17

“You see a big destruction in the income of the oil and commodity producers,” exclaims on analyst but, as Bloomberg notes, while oil prices flashing across traders’ terminals are at the lowest in a decade, in real terms the collapse is considerably deeper. Adjusted for inflation, WTI is its lowest since 2002 and worse still Saudi Light Crude is trading at below $17 (in 1998 dollar terms) – the lowest since the 1980s…
Slumping prices are a critical signal that the boom in lending in China is ‘unwinding,’ according to Adair Turner, chairman of the Institute for New Economic Thinking.

This post was published at Zero Hedge on 01/14/2016.

“The Job Gains Have Gone To The Least Educated, And Lowest-Paid, Workers”

One of the recurring themes in Obama’s final State of the Union address was describing the strength of the economic recovery as witnessed by the number of job gains over the past 6 (if not exactly 7) years, clearly a purely quantitative metric. There was no discussion of the qualitative component of these job gains for one simple reason: as we have explained for years, the bulk of new labor has gone to undereducated, minimum wage (and often part-time) workers.

This post was published at Zero Hedge on 01/14/2016.

Trapped Inside The Zero-Bound: Crossing The Economic “Event Horizon”

A friend of mine, a very successful tech CEO who is also profoundly astute in matters of finance, once asked his economics prof during a lecture on interest rates in his university days ‘could interest rates ever go negative?’.
The professor, gazing over his glasses and down his nose at what obviously had to be an imbecile in his lecture hall calmly set aside a second of his podium time to shoot the idea down: ‘No.’, he said quite simply, as if he couldn’t believe he had to be explaining this to university level students, ‘it has to be a positive number….’.
My colleague believed him. After all, being in technology he was familiar with the computer code analogy of a negative interest rate, that being the dreaded divide by zero error. Coders take great pains to avoid these because if it actually happens, the currently running program basically ‘shits the bed’ and all bets are off.

This post was published at Zero Hedge on 01/14/2016.

Presenting Turkey’s “Vicious” Depreciating Currency Cycle

In late November, Turkey dropped the word ‘independence’ from its central bank mandate.
Although a few analysts and strategists attempted to downplay the omission by advising the market to ‘focus on the meaning rather than individual words’ and despite assurances from Deputy Prime Minister Mehmet Simsek, who said ‘speculation over wording on central bank independence in the new government program doesn’t reflect the truth,’ there’s reason to be concerned.
President Recep Tayyip Erdogan has repeatedly called for lower interest rates in Turkey and what Erdogan wants, Erdogan usually gets.
“In Turkey, the interest rates are high. Our rates are not those in the West, where they are low. First you have to reduce the cost of money. As long as the cost of money is on the rise, you can neither find young businessmen nor young businesswomen,’ he said at the the G20 summit in Antalya, where central bank governor Erdem Basci was forced to look on as Erdogan the rates strategist lectured everyone, including Christine Lagarde, on monetary policy.
Put simply, some fear Erdogan may be moving to effectively hijack monetary policy at a time when the CBT desperately needs to move towards normalization.

This post was published at Zero Hedge on 01/14/2016.


Gold: $1073.90 down $13.60 (comex closing time)
Silver $13.74 down 40 cents
In the access market 5:15 pm
Gold $1078.30
Silver: $13,83
At the gold comex today, we had a poor delivery day, registering 9 notices for 900 ounces. Silver saw 0 notices for nil oz.
Several months ago the comex had 303 tonnes of total gold. Today, the total inventory rests at 199.63 tonnes for a loss of 103 tonnes over that period.
In silver, the open interest fell by 1289 contracts down to 164,883. In ounces, the OI is still represented by .824 billion oz or 117% of annual global silver production (ex Russia ex China).
In silver we had 0 notices served upon for nil oz.
In gold, the total comex gold OI rose by 3893 contracts to 401,458 contracts as gold was up $1.90 in yesterday’s trading.
Today both the gold comex and the silver comex are in severe stress.
We had no changes into inventory at the GLD / thus the inventory rests tonight at 654.06 tonnes. The appetite for gold coming from China is depleting not only gold from the LBMA and GLD but also the comex is bleeding gold. Our 670 tonnes of rock bottom inventory in GLD gold has been broken. It looks to me that China has taken the last amounts of physical gold from the GLD. I guess the only place left for China to receive physical gold, after they deplete the GLD will be the FRBNY and the comex. In silver,/we had no changes to inventory/Inventory rests at 316.368 million oz.
First, here is an outline of what will be discussed tonight:

This post was published at Harvey Organ Blog on January 14, 2016.

Norway’s Black Gold Fields Are A Sea Of Red – A Real-Time Map Of Crude Carnage

Norway is in trouble. As we have detailed previously (here, here, here, and here), the world’s largestsovereign wealth fund has begun liquidating assets (after its largest quarterly loss) as the nation faces recessionary fears (key data deterioration as oil stays lower for longer) with expectations building (despite denials by the central bank) that ZIRP (or even NIRP) is coming. Why? Simple – as the following real-time map shows – every one of Norway’s oil fields are currently underwater!
As we explained previously, while the slump in oil has pressured the krone and thus helped the country preserve some semblance of export competitiveness, the fact that i) everyone else is easing, and ii) global demand and trade are in the doldrums, serves as a kind of counterweight, leading directly to a situation wherein the currency, in Bloomberg’s words, ‘just can’t get weak enough.’
Now, Svenska Handelsbanken is out predicting that ‘lower for longer’ crude will eventually force Norway to cut rates to zero.
Here’s more, via Bloomberg:

This post was published at Zero Hedge on 01/14/2016.

Analysts Are Wrong About Bank Earnings – Here’s What to Expect

Starting today, America’s big banks turn in their fourth-quarter 2015 report cards.
A handful of analysts, citing the pounding big banks’ stocks have taken, driving them deeply into ‘Oversold’ territory (with a few trading near their 52-week lows), expect positive earnings news to push share prices sharply higher.
I say, good luck with that.
That’s because there probably won’t be any positive bank earnings surprises – and any unexpected good news will likely get discounted quickly as investors look past short-term revenue bumps or cost-cutting measures and see a tough year ahead.
The KBW Nasdaq Bank Index shows bank shares down 17% from their July 2015 highs, down 15% since December, and down almost 10% so far in 2016. That much negative momentum is going to be hard to overcome.
And if the big banks don’t turn in good report cards – it could spell trouble for markets that have plenty of bad news to deal with already.
Here’s what to expect…

This post was published at Wall Street Examiner by Shah Gilani ‘ January 14, 2016.

So You Want To Be A Citadel Trader: Here Are The Requirements

In the current turbulent times, in which one after another hedge fund is posting miserable performance numbers, gating or simply shutting down, one stalwart remains: Chicago’s appropriately named financial megalith Citadel, which year after year posts tremendous returns purely on the back of its retail orderflow frontrunning HFT platform.
No surprise then that thousands of disenchanted traders are eager to move from their current underpaying employer, to Ken Griffen’s financial powerhouse. But what skills would one need to be considered for employment and make the cut: fundamental, technical, charting, “blue horseshoe”?
Here is the answer from a just issued job seach posting by Citadel:
Quantitative Trading Systems Developer: Undergraduate, Master’s, PhD and Postdoc (New Grads)
Location: Chicago, IL
Are you a natural programmer who loves to optimize and make systems more efficient? Do you have a sophisticated computational skillset – code optimization, systems architecture and library design? Do you know your core languages like you do your native tongue?

This post was published at Zero Hedge on 01/14/2016.

As China Dumps More Treasuries The Economy Continues To Slide Into The Abyss- Episode 867a

The following video was published by X22Report on Jan 14, 2016
Canada is in a panic their currency is dropping and inflation is picking up, Canada is in a collapse situation. Continuous jobless claims are now trending up, more and more people are losing their jobs. Another retailer comes out and says sales were terrible this holiday season. Q4 is going to be the worst earning period for corporations. More strategists are now saying we are headed to a major crash. Baltic Dry Index falls again to new lows. China dumps more treasuries as the US economy falls into the abyss.

Why GoPro’s Going To Go Low in 2016

The GoPro stock price plunged more than 20% to an all-time low of $11.26 intraday Thursday and is now down more than 80% since mid-August. And the GoPro stock price drop doesn’t look like it will end anytime soon.
After hours Wednesday, GoPro Inc. (Nasdaq: GPRO) provided a dismalearnings forecast and announced sharp job cuts.
The company said it only expects to post revenue of $435 million in Q4 2015. That’s 14% short of analysts’ estimates of $508 million. Full-year 2015 revenue is forecast to come in at $1.6 billion. That’s also shy of the $1.7 billion analysts were projecting.
GoPro cited ‘lower than anticipated sales of its capture devices due to slower than expected sell through at retailers’ for the shortfall.

This post was published at Wall Street Examiner by Diane Alter ‘ January 14, 2016.

“It’s All The Fed’s Fault” Santelli Rages, They “Will Certainly Turn Us Into Japan”

Who is to blame for all this volatility? CNBC’s Rick Santelli scoffs at the growing mainstream media’s recognition that The Fed is to blame for daring to raise rates – “a group of unelected officials ruining the party and taking away the punch-bowl.”
Santelli’s problem is that “every time the picture of the world was not what The Fed wanted us to see, they changed the channel,” and now they are cornered in their lies, “all along The Fed should have been honest about the true quality of the jobs data.. and now they are force to tell the truth about it, they risk losing all of their credibility.”

This post was published at Zero Hedge on 01/14/2016.

SP 500 and NDX Futures Daily Charts – Flippity Flop

Stocks were in rally mode today, in an attempt to dampen fear and encourage confidence.
While they were most likely short term oversold, the ‘rally’ was all artifice, and had the feel of the kind of forced cheeriness in the big household during times of plague.
And so the half-hearted rally faded into the close.
The economic news this morning was rather poor. And yet there was happy talk being given out by the creatures of the financial sector, both in the States and the UK.
There will be no sustainable rally based on fundamentals, and no general return to prosperity and growth, until the system is reformed.
As Simon Johnson noted a few years ago, there has been a financial coup d’etat. We talk about these things like they are abstractions, almost stories, things that are happening to someone else.
But it is real, and it is affecting your lives, and the real economy, every day.

This post was published at Jesses Crossroads Cafe on 14 JANUARY 2016.

Complacent Correction Cause For Concern?

Despite recent stock market carnage, the reaction by the VIX has been a relative yawner.
Well, the New Year hangover continues. Another day, another drubbing in the stock market. With indices pushing double digit losses just 8 days into the new year, it certainly seems reasonable to expect some panic on the part of investors. However, at least based on one metric, market participants have remained relatively calm – even unprecedentedly so.
The metric we are referring to is the VIX, or the Volatility Index on the S&P 500. The VIX, a.k.a., the ‘Fear Gauge’, measures the expected volatility of the index. During times of crisis, or even a garden variety stock market decline, one can expect the VIX to rise. That has indeed been the case during the current stock weakness. However, based on the magnitude of the S&P 500’s decline, the VIX has risen by a historically small amount.
Specifically, the S&P 500 has now dropped over 9% in the past 2 weeks. Despite that, the VIX has risen to just 25.22. Since 1987 (the VIX’ inception was in 1986), there have been 129 days on which the S&P 500 was down as much as 7% over the past 2 weeks. Today’s VIX reading is the lowest of any of those days.

This post was published at Zero Hedge on 01/14/2016.