Tag: finance

While, for now, depositors at Austria’s Hypo-Alde-Adria-Bank (nationalized in 2009) have not had assets confiscated, Austrian authorities are shifting in an unusual (scary precedent-setting) direction. Amid the resignation of the bank’s CEO, the government is taking aim at ‘speculators’ who dared to buy the bank’s bonds below par – and made money therefore on the back of the taxpayer. “What financial markets expect is not always what you want politically,” Austria’s finance minister warned, “if someone buys today at a lower price, saying ‘shortly, I’ll get 100 back,’ that’s what’s agitating the people.”It seems Europe has a new template.

 

Via Bloomberg,

• *HYPO ALPE PRESIDENT LIEBSCHER STEPS DOWN: STANDARD
• *AUSTRIA FINMIN TARGETS CONTRIBUTION FROM HYPO ALPE BONDHOLDERS
• *AUSTRIA REVIEWING WAYS TO GET HYPO ALPE BONDHOLDER CONTRIBUTION

Austria targets holders of Hypo Alpe-Adria-Bank International bonds that have bought below face value, Finance Minister Michael Spindelegger tells reporters in Vienna.

“If someone buys today at a lower price, saying ‘shortly, I’ll get 100 back,’ that’s what’s agitating the people,” Spindelegger says. “We need to review if that’s possible to distinguish”

 

“What financial markets expect is not always what you want politically,” Spindelegger says. “We need to find the model that’s the best result for taxpayers. That may not comply with the markets, but it will be necessary.”

Review only affects bonds with guarantee of Carinthia province, federal govt’s guarantee on other bonds will be honored

Plans decision on Hypo Alpe wind-down plan by end of March, necessary legislation by end-June

 

It seems Europe has a new template…

via Zero Hedge http://ift.tt/1nTGRsw Tyler Durden

"We are not clueless," Kevin Warsh notes in this September 16th 2008 Federal Reserve transcript (as the entire financial system was imploding around them); but it is the final 'debate' in this brief section that sums up what Marc Faber has feared all along. Adjective or Abverb?

 

Via FOMC Transcripts,

MR. WARSH. I think the sentiment we are trying to suggest is watchful waiting. We are not indifferent, we are not clueless, we are paying attention, but we are not predisposed. Hence, Governor Kohn’s suggestion.

MR. KOHN. My suggestion was to substitute “carefully” for “closely.” I agree that “monitor closely” had this other connotation, but I think we should be seen as paying more attention than usual. There might be another alternative.

MR. DUDLEY. “The Committee will carefully evaluate economic and financial market developments.” That means you are on the case.

CHAIRMAN BERNANKE. Well, it is not an analytical thing we are doing. We are just watching closely.

MR. WARSH. Keenly? Carefully?

MR. LACKER. Mr. Chairman?

CHAIRMAN BERNANKE. Yes. President Lacker.

MR. LACKER. Including “closely,” what does that imply about the opposite? I mean, are we going to be able to take that out?

MR. WARSH. Well, we have done things like “in a timely manner” and other kinds of phraseology.

MR. LACKER. Yes, but this is an adjective.

CHAIRMAN BERNANKE. No, it’s an adverb.

MR. LACKER. There goes my credibility. [Laughter]

 

(h/t@Not_Jim_Cramer)

 

Perhaps that's why they get paid the big bucks (or not as it appears)

via Zero Hedge http://ift.tt/1cxVJLv Tyler Durden

While it’s useful to keep the dream alive (and blame the weather for any weakness that ruins the “sustainable recovery” meme) the data (once again) does not support that “common knowledge” whatsoever…

 

 

The Northeast – decimated by home-sales-destroying cold weather – saw the smallest drop in sales

The West – supported by the driest and most home-sales-encouraging warm weather – saw the biggest drop in sales of all regions

 

So what does that do to the “recovery” meme?

Can we finally put to death the “it’s the weather’s fault” meme?

We anxiously await Joe Lavorgna’s clarification of the weather effect.

via Zero Hedge http://ift.tt/NicsJc Tyler Durden

While it’s useful to keep the dream alive (and blame the weather for any weakness that ruins the “sustainable recovery” meme) the data (once again) does not support that “common knowledge” whatsoever…

 

 

The Northeast – decimated by home-sales-destroying cold weather – saw the smallest drop in sales

The West – supported by the driest and most home-sales-encouraging warm weather – saw the biggest drop in sales of all regions

 

So what does that do to the “recovery” meme?

Can we finally put to death the “it’s the weather’s fault” meme?

We anxiously await Joe Lavorgna’s clarification of the weather effect.

via Zero Hedge http://ift.tt/NicsJc Tyler Durden

 

….

 

0

 

….

 

Well, what did you expect.

However, there's more.

First, the reason why the familiar histogram showing the trading days profits (we would say losses but TBTFs don't lose money in the New Normal) such as the one seen here is no longer present, is because JPM has decided to no longer show it as of this quarter.

Prior to the fourth quarter of 2013, the Firm disclosed a histogram which presented the results of daily backtesting against its daily market risk-related gains and losses for positions included in the Firm’s Risk Management VaR calculation. Under this previous presentation, the market risk related revenue was defined as the change in value of: principal transactions revenue for CIB, and Treasury and CIO; trading-related net interest income for CIB, Treasury and CIO, and Mortgage Production and Mortgage Servicing in CCB; CIB brokerage commissions, underwriting fees or  other revenue; revenue from syndicated lending facilities that the Firm intends to distribute; mortgage fees and related income for the Firm’s mortgage pipeline and warehouse loans, MSRs, and all related hedges; and market-risk related revenue from Asset Management hedges; gains and losses from DVA were excluded.

If JPM had used this old methodology, JPM would have shown the following: "Under this prior measure there were no VaR band breaks nor any trading loss days for the year ended December 31, 2013."

Needless to say, this has never happened before.

So what's wrong with no trading losses: after all a bank works mostly on a flow basis, right, so the customers take on principal risk, right? Wrong.

We already know for a fact that JPM's primary business model until the beaching of the London Whale was abusing excess deposits and using them precisely as prop trading capital. However, for the best picture of the firm's Old Normal trading day win/loss distribution, we go back to JPM's trading day histogram for 2008. This is what it should look like.

 

Perhaps it is out of shame that JPM did not want to disclose the fact that based on an apples to apples methodology the firm no longer loses money. Any money. Ever. So what did JPM do? Why it introduced oranges of course. From the just released 10-K:

Effective during the fourth quarter of 2013, the Firm revised its definition of market risk-related gains and losses to be consistent with the definition used by the banking regulators under Basel 2.5. Under this definition market risk-related gains and losses are defined as: profits and losses on the Firm’s Risk Management positions, excluding fees, commissions, fair value adjustments, net interest income, and gains and losses arising from intraday trading. The following chart compares the daily market risk-related gains and losses on the Firm’s Risk Management positions for the year ended December 31, 2013, under the revised definition. As the chart presents market risk-related gains and losses related to those positions included in the Firm’s Risk Management VaR, the results in the table below differ from the results of backtesting disclosed in the Firm’s Basel 2.5 report, which are based on Regulatory VaR. The chart shows that for the year ended December 31, 2013, the Firm observed two VaR band breaks and posted gains on 177 of the 260 days in this period.

 

In other words when one excludes such trivial things as "f,ees, commissions, fair value adjustments, net interest income, and gains and losses arising from intraday trading" and why one would exclude gains and losses from intraday trading when the bulk of JPM's revenue comes precisely from this is beyond us, JPM did in fact lose money. It just didn't lose money when everything is included.

And that, among all the other well-known reasons, is why Jamie Dimon is once again richer than you.

via Zero Hedge http://ift.tt/1oVULxM Tyler Durden

Existing home sales plunged 5.1% (considerably worse than the 4.1% drop expected) to its lowest level in 18 months. This extends the string of missed expectations to 5 months as even the ever-credible NAR chief economist said it was not the weather but “we can’t ignore the ongoing headwinds of tight credit, limited inventory, higher prices and higher mortgage interest rates.” First-time homebuyers plunged to a mere 26% of the total – the lowest share on record as all-cash (and spec) investors rose to a record 53% share of sales.

 

Key highlights from the report:

NAR President Steve Brown, co-owner of Irongate, Inc., Realtors® in Dayton, Ohio, said that in addition to disruptive weather, higher flood insurance rates are impacting the market in areas designated as flood zones, which account for roughly 8 to 9 percent of sales. “Thirty percent of transactions in flood zones were cancelled or delayed in January as a result of sharply higher flood insurance rates,” he said. “Since going into effect on October 1, 2013, about 40,000 home sales were either delayed or canceled because of increases and confusion over significantly higher flood insurance rates. The volume could accelerate as the market picks up this spring.”

 

The median time on market for all homes was 67 days in January, down from 72 days in December and 71 days on market in December 2013. Short sales were on the market for a median of 150 days in January, while foreclosures typically sold in 58 days and non-distressed homes took 66 days. Thirty-one percent of homes sold in January were on the market for less than a month.

No first-time homebuying. Anywhere:

First-time buyers accounted for 26 percent of purchases in January, down from 27 percent in December and 30 percent in January 2013. This is the lowest market share for first-time buyers since NAR began monthly measurement in October 2008; normally, they should be closer to 40 percent.

And your bubble full-frontal: 53% of all sales were either to “all cash” or investors “flippers”:

All-cash sales comprised 33 percent of transactions in January, up from 32 percent in December and 28 percent in January 2013. Individual investors, who account for many cash sales, purchased 20 percent of homes in January, compared with 21 percent in December and 19 percent in January 2013. Seven out of 10 investors paid cash in January.

Goodbye housing recovery, snow or no snow.

via Zero Hedge http://ift.tt/1daqWB6 Tyler Durden

In a world in which there is no risk, only return (thank you Federal Reserve Risk Management LLC), hedge funds – used to generating Profits just by sitting on legacy positions – see no need to reallocate their portfolios. Nowhere was this more evident than in the position turnover in Q4. As Goldman calculates, total asset turnover in Q4 dropped to 28% – a new all time low. In fact, the only increase in turnover, either buying or selling, was in the tech and infotech spaces. Everything else saw an unprecedented buyers and sellers strike.

 

Needless to say, this explains the epic, and ongoing, collapse in trading volumes: since nobody is repositioning their portfolios, there is virtually no trading volume, and as a result stocks move, higher of course, on ever lower and lower trading block size. Which means that if and when the current regime fails, and the real block size re-emerges, watch out below. It also means that banks which are reliant on flow trading commission for revenues, are out of luck again, as there is virtually no flow to speak of.

Finally, for those curious what diversification means for hedge funds, the following chart shold explain it:

What it means is that Hedge fund returns are highly dependent on the performance of a few key stocks. The typical hedge fund has an average of 63% of its long-equity assets invested in its 10 largest positions compared with 31% for the typical large-cap mutual fund, 22% for the average small-cap mutual fund, 18% for the S&P 500 and just 3% for the Russell 2000 Index.

This is good when said 10 largest positions perform well. Naturally, once the Fed’s all too visible hand is pulled from under the market, it may be time to consider other options.

via Zero Hedge http://ift.tt/1gRqcpc Tyler Durden

In a world in which there is no risk, only return (thank you Federal Reserve Risk Management LLC), hedge funds – used to generating Profits just by sitting on legacy positions – see no need to reallocate their portfolios. Nowhere was this more evident than in the position turnover in Q4. As Goldman calculates, total asset turnover in Q4 dropped to 28% – a new all time low. In fact, the only increase in turnover, either buying or selling, was in the tech and infotech spaces. Everything else saw an unprecedented buyers and sellers strike.

 

Needless to say, this explains the epic, and ongoing, collapse in trading volumes: since nobody is repositioning their portfolios, there is virtually no trading volume, and as a result stocks move, higher of course, on ever lower and lower trading block size. Which means that if and when the current regime fails, and the real block size re-emerges, watch out below. It also means that banks which are reliant on flow trading commission for revenues, are out of luck again, as there is virtually no flow to speak of.

Finally, for those curious what diversification means for hedge funds, the following chart shold explain it:

What it means is that Hedge fund returns are highly dependent on the performance of a few key stocks. The typical hedge fund has an average of 63% of its long-equity assets invested in its 10 largest positions compared with 31% for the typical large-cap mutual fund, 22% for the average small-cap mutual fund, 18% for the S&P 500 and just 3% for the Russell 2000 Index.

This is good when said 10 largest positions perform well. Naturally, once the Fed’s all too visible hand is pulled from under the market, it may be time to consider other options.

via Zero Hedge http://ift.tt/1gRqcpc Tyler Durden

An agreement in the Ukraine has just been signed, which sees early presidential elections. Europe is delighted by this development as confirmed by the following statement by the unelected Herman Van Rompuy:

Statement by the President of the European Council, Herman Van Rompuy, on Ukraine

 

I welcome the agreement reached between the government and the opposition in Ukraine. The agreement is a necessary compromise in order to launch an indispensable political dialogue that offers the only democratic and peaceful way out of the crisis that has already caused too much suffering and bloodshed on all sides. It is now the responsibility of all parties to be courageous and turn words into deeds for the sake of Ukraine’s future. This agreement was facilitated by important work by the Foreign Ministers of France, Germany, Poland and the Special Representative of the President of Russia and based on the persistent efforts during the last two months by High Representative Ashton and Commissioner Füle. The EU continues to stand ready to support Ukraine.

The Foreign Ministers of Germany, France, and Poland said the following:

The Foreign Ministers of France, Germany and Poland welcome the signing of the agreement on the Settlement of the crisis in Ukraine, commend the parties for their courage and commitment to the agreement and call for an immediate end to all violence and confrontation in Ukraine.

And the full agreement is below (link):

Agreement on the Settlement of Crisis in Ukraine

 

Concerned with the tragic loss of life in Ukraine, seeking an immediate end of bloodshed and determined to pave the way for a political resolution of the crisis,

We, the signing parties, have agreed upon the following:

 

1. Within 48 hours of the signing of this agreement, a special law will be adopted, signed and promulgated, which will restore the Constitution of 2004 including amendments passed until now. Signatories declare their intention to create a coalition and form a national unity government within 10 days thereafter.

 

2. Constitutional reform, balancing the powers of the President, the government and parliament, will start immediately and be completed in September 2014.

 

3. Presidential elections will be held as soon as the new Constitution is adopted  but no later than December 2014. New electoral laws will be passed and a new Central Election Commission will be formed on the basis of proportionality and in accordance with the OSCE & Venice commission rules.

 

4. Investigation into recent acts of violence will be conducted under joint monitoring from the authorities, the opposition and the Council of Europe.

 

5. The authorities will not impose a state of emergency. The authorities and the opposition will refrain from the use of violence. The Parliament will adopt the 3rd amnesty, covering the same range of illegal actions as the 17th February 2014 law.

 

Both parties will undertake serious efforts for the normalisation of life in the cities and villages by withdrawing from administrative and public buildings and unblocking streets, city parks and squares.

 

Illegal weapons should be handed over to the Ministry of Interior bodies within 24 hours of the special law, referred to in point 1 hereof, coming into force. After the aforementioned period, all cases of illegal carrying and storage of weapons will fall under the law of Ukraine. The forces of authorities and of the opposition will step back from confrontational posture. The Government will use law enforcement forces exclusively for the physical protection of public buildings.

 

6. The Foreign Ministers of France, Germany, Poland and the Special Representative of the President of the Russian Federation call for an immediate end to all violence and confrontation.

 

Kyiv, 21 February 2014

As a reminder, this won’t be the first “crisis settlement” agreement that will be promptly violated.

via Zero Hedge http://ift.tt/1bRK7oH Tyler Durden

Today’s AM fix was USD 1,320.75, EUR 963.63 and GBP 792.20 per ounce.
Yesterday’s AM fix was USD 1,313.75, EUR 959.22 and GBP 788.90 per ounce.   

Gold rose $13.50 or 1.03% yesterday to $1,323.70/oz. Silver climbed $0.39 or 1.82% at $21.83/oz.

Gold is marginally lower today but is 0.3% higher for the week. A higher weekly close today will be the third week of consecutive gains which would be bullish from a momentum and technical perspective.

Gold in U.S. Dollars – 5 Day – (Bloomberg)

Concerns about emerging markets including China, the U.S. economy and worries about global economic growth are underpinning gold’s safe haven appeal. This has led to the 6% gains in February and the 9% gains so far in 2014. Yet prices are 45% below the nominal record high of  $1,915 an ounce reached in 2011.

Investment and store of wealth physical demand is underpinning prices and led to gold reaching 3 month highs of $1,332.45/oz last Tuesday.

Premiums for gold bars in Singapore were steady as they were in Hong Kong, but fell in Tokyo because of sharp gains of gold in yen terms.  Premiums for gold bars in Singapore were little changed at $1.20 to $1.50; Hong Kong premiums were at $1.30 to $1.70 according to Reuters.

The most active December gold contract on the Tokyo Commodity Exchange rose 43 yen/gram to 4,346 yen, within sight of a five-month high of 4,366 yen/gram hit on Tuesday on the back of a weakening yen.

Gold in Japanese Yen, 5 Years – (Bloomberg)

The technicals suggest that after a pullback, the precious metal may continue to rise. A period of correction and consolidation would ordinarily be expected after such rapid gains. The question is – do we see it now or after further gains?

If gold closes lower today and for the week, it would be bearish in the short term as follow through technical selling would be expected. A higher weekly close should lead to more gains next week.

To sum up, gold is vulnerable after the recent sharp gains. In the short term, technicals and momentum may dictate, rather than the positive fundamentals.

Gold traders and analysts are divided on the outlook for gold next week. The weekly Bloomberg gold survey shows that 14 are bullish, 15 are bearish and 4 are hold.

Gold in U.S. Dollars, 5 Years – (Bloomberg)

Last week reports showed retail sales and factory output unexpectedly fell in January and housing starts slumped causing renewed concerns about the U.S. housing market. The anemic economic recovery in the U.S. is very dependent on the fragile U.S. housing recovery.

Macquarie analysts said in a report this week that the annual gold demand figures for 2013 may signal a ‘mystery buyer.’ The World Gold Council’s ‘Gold Demand Trends’ report released Tuesday showed OTC investment, stock flows of 595 tonnes in 2013, with 317 tonnes in Q4, plus “excessive” Chinese gold imports. This “has given rise to much market speculation about a ‘mystery buyer’ of gold in 2013,” Macquarie said in a report picked up on by Bloomberg.

OTC investment demand includes opening of gold deposit accounts and other gold-backed products, especially in Turkey and China. Macquarie estimated stock build in China of about 300 tonnes. The WGC “did not rule out the possibility that some of the unknown demand was caused by unidentified central bank buying.”

The People’s Bank of China’s (PBOC) stealth gold reserve diversification programme likely continues.

IMF Gold Reserves – U.S., China, Germany and Russia (Bloomberg)

Russian gold buying slowed down in January. Russian January gold holdings were unchanged at 33.3 million troy ounces. The Russian gold reserves are valued at $41.7 billion as of the end of January versus $40.0 billion as of the end of December, the Russian central bank reported on its website.

The Chinese Gold & Silver Exchange Society is prepared to spend at least HK$ 1 billion to set up a gold vaulting warehouse in mainland China that will be able to store a massive 1,500 tonnes of gold.

President Haywood Cheung Tak-hay told the South China Morning Post of the development. Society members, who include all gold jewellery makers and jewellery and bullion retailers in Hong Kong, support the planned project in Qianhai.

A key issue, Cheung said, is for the warehouse to be given special status by Beijing so members can freely transfer gold and silver between Hong Kong and Qianhai. China still has capital controls and only 11 mainland banks are allowed to import gold.

Qianhai, about an hour by car from Hong Kong, was named in July 2012 as a testing ground for the free flow of yuan and other policies to encourage overseas investment. “At present, many foreign gold investors dare not trade in China as there are too many restrictions. They prefer to trade in Hong Kong which is a free market. If we can have a Qianhai warehouse, it would further increase our attractiveness,” said Cheung.

The 7 Key Allocated Gold Storage Must Haves
A diversification into gold remains prudent and will again protect investors, both retail and institutional, pensions owners and savers, over the medium and long term. However, this is only the case if the gold owned is physical bullion coins and bars and not digital gold, pooled gold or paper gold. Fully segregated and fully allocated gold coin and bar storage remains the safest way to own gold.
 
There are a number of key storage must haves and we have compiled the absolute benchmark allocated gold storage list that will enable those seeking an allocation to physical gold to evaluate potential bullion and more importantly storage partners.

The 7 Key Allocated Gold Storage Must Haves

1. Ability to take delivery: Ensure that can you take delivery of your bullion when you want and where you want
2. Bullion authenticity: Ensure your gold bullion is produced and stored within the LBMA chain of integrity
3. Gold bullion audits: Ensure your bullion is audited daily, and annually by internationally recognised auditors
4. On-Line storage inventory: Ensure that you can log-on to view your bullion item description for bars or coins, quantity, gross weight, fineness and item value
5. Being able to visit and view holdings: Ensure that you can arrange to visit and view your physical gold coins and bars
6. Insurance of bullion at storage facilities: Ensure that your bullion provider and its storage partners have adequate insurance cover
7. Guarantee of bailment: Ensure that the legal ownership of the bullion remains with you

Conclusion
Guarantee of bailment is potentially the most important point. In the event that the company you store your bullion with is nationalised – insolvent governments are known to nationalise companies of a strategic value –  or goes into liquidation, your gold could be forfeited.

Some gold services offer ultra cheap storage, in many cases below the actual vaulting costs of ownership. This means that the storage rate you are getting is being subsidised by some other revenue stream, such as interest on currency deposits or possibly profits from speculation. If this is the case your bullion may be at risk. When choosing your provider steer away from the deep discounters and seek quality, otherwise, may then get exactly what you paid for in terms of access.

Thus owning gold directly and in a fully allocated and fully segregated account remains vital.   

Download your copy of 7 Key Allocated Gold Storage Must Haves here.

via Zero Hedge http://ift.tt/1bRK6RM GoldCore