finance – Page 18474

Yen Momentum Ignition Launches S&P500 On Its Way To All Time High

The S&P 500 is screaching back towards its record all-time highs with a little help from a USDJPY-sparked momentum ignition and a $4-5 Billion POMO… behold the efficient markets…

What a farcical joke… For now, VIX ain’t buying it…

Chart: Bloomberg

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

Yen Momentum Ignition Launches S&P500 On Its Way To All Time High

The S&P 500 is screaching back towards its record all-time highs with a little help from a USDJPY-sparked momentum ignition and a $4-5 Billion POMO… behold the efficient markets…

What a farcical joke… For now, VIX ain’t buying it…

Chart: Bloomberg

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

Citi’s London Office Visited By Fed, Treasury Investigators

Either the Fed and the OCC are unaware of this thing called “computers” which allows them to find out what a bank’s trading desk somewhere, anywhere in the world has done at any point in the past 30 or so years, or they really felt the need to stretch their legs around London’s Canary Wharf, or they heard very good news about Citi’s seafood buffet at its London HQ, but whatever the reason Reuters reports that “the U.S. Federal Reserve and Office of the Comptroller of the Currency have sent investigators to Citigroup’s London headquarters as part of an international investigation into alleged manipulation of the global currency market, a source familiar with the matter told Reuters on Wednesday.”

Citi's London Office Visited By Fed, Treasury Investigators

Russell Joins Trannies And NASDAQ In The Green For 2014

For now unsupported by the usual VIX slam or JPY smash, US equities are spiking higher. The Dow and The S&P 500 remain in the red for the year still but Russell has now surged to new highs and joined Trannies and NASDAQ in the green for 2014.

But AUDJPY not supporting it for now…

Or VIX…

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Confused By The “Artificial Market”? Deutsche Bank Explains It All

Yesterday, Deutsche’s Jim Reid was kind enough to put modern capital markets in their most proper context: “in these artificial markets the percentages are skewed towards the bulls for now.” Today, for everyone confused how to navigate the “artificial market”, Reid has the much needed explanation. To wit: “So far this year markets have gone down on good data, gone up on good data, gone down on concerns over weaker data and also gone up on weaker data.“

And now you know everything there is to “know.”

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Confused By The "Artificial Market"? Deutsche Bank Explains It All

And now you know everything there is to “know.”

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

Volcker Is LOLkered As TruPS CDO Provision Eliminated From Rule To Avoid “Unnecessary Losses”

So much for the strict, evil Volcker Rule which was a “victory for regulators” and its requirement that banks dispose of TruPS CDOs. Recall a month, when it was revealed that various regional banks would need to dispose of their TruPS CDO portfolios, we posted “As First Volcker Rule Victim Emerges, Implications Could “Roil The Market“.” Well, the market shall remain unroiled because last night by FDIC decree, the TruPS CDO provision was effectively stripped from the rule.

This is what came out of the FDIC last night: “Five federal agencies on Tuesday approved an interim final rule to permit banking entities to retain interests in certain collateralized debt obligations backed primarily by trust preferred securities (TruPS CDOs) from the investment prohibitions of section 619 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, known as the Volcker rule.”

In other words, the first unintended consequences of the Volcker Rule was just neutralized after the ABA and assorted banks screamed against it.

But that’s not all.

As SIFMA announced today, the banks have more demands. To wit from Bloomberg:

“While we welcome the relief provided to certain holders of TruPS CDOs, we believe that regulators must address the larger problem of the inclusion of senior debt securities issued by collateralized loan obligations in the Volcker Rule’s prohibitions,” Securities Industry and Financial Markets Assoc. CEO Kenneth Bentsen says in statement. If not addressed, corporate borrowers may face higher credit costs, banks may endure “unnecessary losses wholly unrelated to the risk of the CLOs themselves, but rather due to the technical language of the final Volcker Rule.” Sifma encourages regulators to issue guidance clarifying that banks may hold CLO debt securities.

So TruPS “fixed”, and now comes the turn of the CLO exclusion. We give “regulators” 2-4 weeks before they fold on this demand as well, and soon on all other unintended Volcker consequences that the banks find cause “unnecessary losses.”

One wonders: just what in the view of ABA or SIFMA are necessary losses?

From the FDIC press release

Agencies Approve Interim Final Rule Authorizing Retention of Interests in and Sponsorship of Collateralized Debt Obligations Backed Primarily by Bank-Issued Trust Preferred Securities

Five federal agencies on Tuesday approved an interim final rule to permit banking entities to retain interests in certain collateralized debt obligations backed primarily by trust preferred securities (TruPS CDOs) from the investment prohibitions of section 619 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, known as the Volcker rule.

Under the interim final rule, the agencies permit the retention of an interest in or sponsorship of covered funds by banking entities if the following qualifications are met:

the TruPS CDO was established, and the interest was issued, before May 19, 2010;
the banking entity reasonably believes that the offering proceeds received by the TruPS CDO were invested primarily in Qualifying TruPS Collateral; and
the banking entity’s interest in the TruPS CDO was acquired on or before December 10, 2013, the date the agencies issued final rules implementing section 619 of the Dodd-Frank Act.

The federal banking agencies on Tuesday also released a non-exclusive list of issuers that meet the requirements of the interim final rule.

The interim final rule defines Qualifying TruPS Collateral as any trust preferred security or subordinated debt instrument that was:

issued prior to May 19, 2010, by a depository institution holding company that as of the end of any reporting period within 12 months immediately preceding the issuance of such trust preferred security or subordinated debt instrument had total consolidated assets of less than $15 billion; or
issued prior to May 19, 2010, by a mutual holding company.

Section 171 of the Dodd-Frank Act provides for the grandfathering of trust preferred securities issued before May 19, 2010, by certain depository institution holding companies with total assets of less than $15 billion as of December 31, 2009, and by mutual holding companies established as of May 19, 2010. The TruPS CDO structure was the vehicle that gave effect to the use of trust preferred securities as a regulatory capital instrument prior to May 19, 2010, and was part of the status quo that Congress preserved with the grandfathering provision of section 171.

The interim final rule also provides clarification that the relief relating to these TruPS CDOs extends to activities of the banking entity as a sponsor or trustee for these securitizations and that banking entities may continue to act as market makers in TruPS CDOs.

The interim final rule was approved by the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, the Commodity Futures Trading Commission, and the Securities and Exchange Commission, the same agencies that issued final rules to implement section 619. The agencies will accept comment on the interim final rule for 30 days following publication of the interim final rule in the Federal Register.

Attachments:

Interim Final Rule – PDF

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Volcker Is LOLkered As TruPS CDO Provision Eliminated From Rule To Avoid "Unnecessary Losses"

In other words, the first unintended consequences of the Volcker Rule was just neutralized after the ABA and assorted banks screamed against it.

But that’s not all.

As SIFMA announced today, the banks have more demands. To wit from Bloomberg:

One wonders: just what in the view of ABA or SIFMA are necessary losses?

From the FDIC press release

Agencies Approve Interim Final Rule Authorizing Retention of Interests in and Sponsorship of Collateralized Debt Obligations Backed Primarily by Bank-Issued Trust Preferred Securities

Under the interim final rule, the agencies permit the retention of an interest in or sponsorship of covered funds by banking entities if the following qualifications are met:

the TruPS CDO was established, and the interest was issued, before May 19, 2010;
the banking entity reasonably believes that the offering proceeds received by the TruPS CDO were invested primarily in Qualifying TruPS Collateral; and
the banking entity’s interest in the TruPS CDO was acquired on or before December 10, 2013, the date the agencies issued final rules implementing section 619 of the Dodd-Frank Act.

The federal banking agencies on Tuesday also released a non-exclusive list of issuers that meet the requirements of the interim final rule.

The interim final rule defines Qualifying TruPS Collateral as any trust preferred security or subordinated debt instrument that was:

issued prior to May 19, 2010, by a depository institution holding company that as of the end of any reporting period within 12 months immediately preceding the issuance of such trust preferred security or subordinated debt instrument had total consolidated assets of less than $15 billion; or
issued prior to May 19, 2010, by a mutual holding company.

Attachments:

Interim Final Rule – PDF

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

Producer Prices Jump Most Since June, Over Half Of Core Increase Due To Tobacco Prices

Following October and November’s disturbing declines in Producer Prices, which many misread as an indication that the Fed will delay tapering for a few months, today’s PPI reversed the recent drop, and posted a 0.4% jump for the headline number in line with expectations, following two months of declines and the highest print since June’s 0.6% sequential increase. And while the Foods PPI dropped by 0.6% in December, Energy prices jumped by 1.6% once again the highest monthly increase since June. But it was the core increase of 0.3%, the highest jump since July 2012 that caught everyone’s attention. So is inflation finally seeping back in the production channel? Not really: as the BLS reported, “Nearly half of the December increase is attributable to prices for tobacco products, which climbed 3.6 percent.” So bad inflationary news for smokers. For everyone else (who eats and drives hedonically) the status quo still remains.

Still at a 1.2% increase in headline PPI, compared to expectations of 1.1%, and November’s 0.7%, this was the first beat in annual producer price inflation expectations since June, and means that this data point will not deter the Fed from tapering more as it has warned it will likely continue to do.

Broken down by components:

The breakdown in finished goods PPI:

Leading the December rise in the finished goods index, prices for finished energy goods increased 1.6 percent. Also contributing to the advance, the index for finished goods less foods and energy moved up 0.3 percent. By contrast, prices for finished consumer foods decreased 0.6 percent.

Finished energy: Prices for finished energy goods climbed 1.6 percent in December, the largest advance since a 2.5-percent jump in June 2013. Over half of the rise in December can be traced to a 2.2-percent increase in the gasoline index. Higher prices for diesel fuel and home heating oil also were factors in the advance in the finished energy goods index. (See table 2.)

Finished core: The index for finished goods less foods and energy moved up 0.3 percent in December, the largest advance since a 0.5-percent rise in July 2012. Nearly half of the December increase is attributable to prices for tobacco products, which climbed 3.6 percent. Higher motor vehicle prices also contributed to the advance in the finished core index.

Finished foods: The index for finished consumer foods fell 0.6 percent in December following no change in November. Leading the decrease, prices for fresh and dry vegetables dropped 13.4 percent.

The real question remains: will Japan continue to export its deflation to the world, and the US, and if so is the recent jump just a one-time fluke?

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