Tag: finance

Submitted by Charles Hugh Smith from Of Two Minds

Technologies such as the blockchain are enabling alternative ways of creating and distributing money outside central banks and states.

If we don’t change the way money is created and distributed, we will never change anything. This is the core message of my book A Radically Beneficial World: Automation, Technology and Creating Jobs for All.

The Panama Papers offer damning proof of this: increasing concentrations of wealth and power that are free of any constraint (such as taxes) is not just the consequence of centralized money and state power–this inequality is the only possible output of centralized money and state power.

Here is a graphic portrayal of just how concentrated global wealth really is: the top .7% (less than 1%) own 45% of all global wealth, and the top 8% own 85%.

Here is a depiction of wealth in the U.S.:

Here is my description of how centralized money and finance inevitably creates debt-serfdom as its only possible output:

Once the creation and distribution of money is centralized, the corruption of political power is inevitable, as wealth can always buy political favors, such as tax evasion schemes.

Concentrations of private wealth and the central state are simply two sides of the same coin. Private wealth, monopolies and cartels are all protected and enforced by the state/central bank: the status quo exists to protect the privileges of the few at the expense of the many.

Well-meaning but hopelessly naive people are constantly proposing “reforms” of the status quo–reforms that are doomed from the start because they fail to change the way money is created and distributed.

As long as central banks create and distribute money to banks, which are free to use the money for speculation and lend vast sums at near-zero rates of interest to corprorations and financiers, nothing can possibly change.

Recall that the central state enforces moral hazard: if banks reap vast profits on their gambles, they keep the winnings and can use a sliver of this wealth to buy political favors from politicos like Hillary Clinton.

If they lose the bets and are insolvent, the federal government and the central bank (Federal Reserve) bail them out by transferring the losses to the public or by rigging the system to funnel cash to the banks via paying interest on deposits held at the Fed (while slashing interest income to the serfs to near-zero).

There is another way to run the world: if money is decentralized, i.e. created by a distributed, decentralized system that pays people directly for their labor, rather than being distributed to banks to lend at interest, the sort of concentrations of wealth, power and exploitation enabled by central banking would no longer be possible.

Technologies such as the blockchain are enabling alternative ways of creating and distributing money outside central banks and states. I describe a labor-backed crypto-currency in my book A Radically Beneficial World. The potential of the blockchain to disrupt and bypass central banks’ monopoly of money creation is revolutionary, which explains why Goldman Sachs and their cronies are desperate to own their own versions of blockchain technologies.

But the cats are out of the bag, and central bankers and their cronies will have a difficult time herding these new technologies back into the enforced serfdom of central banking. The only way to bring down the corruption created by the concentration of wealth and power is to dismantle the monopoly of money creation held by central banks and their private-bank cronies.

The Future of Money

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

Almost exactly one month ago, on March 10,Mario Draghi unveiled his quadruple bazooka, which among other features, included the first ever monetization of corporate bonds (this has unleashed such an unprecedented scramble for European bonds that there are virtually none left in the open market leading to massive illiquidity and forcing yield chasers to sell CDS instead of buying bonds, thus laying the ground work for the next AIG debacle). More importantly, this was Draghi’s latest “whatever it takes” moment, and the “end justifying the means” was for European risk assets to rebound and the Euro to drop. This did not happen.

In fact, none of what has transpired to the assets that Draghi was intent to help, was supposed to happen. Here is DB’s Jim Reid explaining it.

It’ll be four weeks tomorrow that Draghi fired his quadruple bazooka and yet European markets are in apathetic mode. We show the returns of our usual selection of global assets since the cob the night before the last ECB meeting on March 10th. Perhaps markets haven’t been helped by a renewed but unrelated fall in Oil (Brent -9.1%, WTI -6.3%) since this point but it’s noticeable that outside of commodities the worst performers have generally been areas of the market that Draghi tried to help. European banks (-9.5%), FTSE-MIB (-6.0%), IBEX (-4.0%), and the Stoxx 600 (-3.0%) make up most of the other negative returning assets over this period.

 

The DAX has also slipped into negative territory over the period (-1.6%) after a -2.63% fall yesterday. These five European assets are now down -13.4%, -9.8%, -8.0%, -4.6% and -4.3%, respectively from their post-Draghi highs.

 

Things haven’t been helped by a +3.5% rally in the Euro over the period as a more dovish Fed and a belief that the ECB might be moving away from further rate cuts have shifted the debate. A more positive reaction has been seen in credit which is comfortably in positive return territory since the announcement and we’d still find it unlikely that many investors will be prepared to short European credit ahead of more details of the ECBs asset purchase plan.

 

Notwithstanding the current weaker sentiment we’d conclude that a softer dollar is probably better for reducing global systemic risk (not least as it helps China), even it causes headaches for the likes of Europe and Japan. Much attention was yesterday focused on the fact that the Yen briefly strengthened below $110 for the first time since October 2014 and also that the Nikkei is now down -16.7% YTD. The chatter is increasingly that this is a strong signal Japanese policy isn’t currently working in spite of seemingly aggressive action. Recent economic data out of Japan has been soft (Tankan and PMI’s in particular) and the question everyone is starting to ask is what the policy response from the BoJ may be. Further equity purchases have been mentioned while yesterday the former BoJ Governor Iwata suggested that the Central bank will hit its limit of government bond purchases in 2017 and suggested that further deeper negative rates would be more likely instead. The next BoJ meeting is the 28th of April and away from that another key decision is on the fiscal side and whether PM Abe will delay the upcoming hike in the consumption tax, a decision he has sounded ambivalent on so far.

 

 

Meanwhile the Stoxx 600, the DAX and European banks are now down -9.5%, -11.0% and -23.7% respectively YTD so there is a fear that Japan and Europe are becoming more resistant to central bank policies. Before getting too concerned, despite a -1.01% fall yesterday we should remember that the S&P 500 is +0.7% YTD and was at YTD highs only 2 days ago. So a softer dollar helps the US, leads to lower systemic risk but causes growth and asset return problems elsewhere.

And there is the post-mortem of the Shanghai Accord (which may or may not have happened): as long as the USD is tentatively weaker and keeps the Yuan contained, Europe and Japan will suffer, not only their capital markets, but also their exports and economies. The alternative is to allow the USD to resume its appreciation and to push both European and Japanese stocks higher, at the risk of inflaming the “Chinese problem” all over again.

How much longer will Draghi (and Merkel) and Kuroda (and Abe) keep their mouths shut and take the punishment unleashed on them by China (and a no longer data-dependent, dovish Yellen) before they snap and unleash the next leg in the global currecny devaluation race. That is the real ¥64 quadrillion question.

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By Dana Lyons of My401kPro.com

In terms of global reach, the post-February equity rally has been a fairly broad advance. Some markets, most notably the U.S., have resumed their former relative strength while other regions, like emerging markets and Latin America, have seen strong mean-reversion bounces from very oversold levels, One region conspicuously lagging during this rally, however, has been Europe.

After bouncing into mid-March, bourses across the European continent have struggled to maintain any momentum. In fact, as of today, many of the broader European averages are trading back at late-February levels. Furthermore, on a relative basis, European stocks have lagged so badly that they have now set a new record for futility. Specifically, when measuring the performance of the Dow Jones STOXX Europe 600 Index versus the S&P 500, the resultant relative ratio just dropped to an all-time low (since the beginning of our data in 1998).

 

Zooming in, we can see more easily how the STOXX 600:S&P 500 ratio has, importantly, just dropped below the former all-time low set in December 2014.

So is this new relative low another nail in the coffin for European stocks, or are the forces of mean-reversion due to take hold at any time? We could see either outcome – or both, depending on the time frame.

Obviously, the last time the ratio was down near current levels, European stocks embarked upon an impressive mean-reversion bounce. However, the difference is that in December 2014, the technical picture for European stock markets was much brighter than it is currently.

While the ratio was plumbing lows at the time, it was more a result of U.S. markets that continued to make successive new highs throughout 2014. And although European stocks were failing to do likewise, they did at least repeatedly test their prevailing highs on numerous occasions. And eventually, in January 2015, they broke out in strong fashion to new highs. That breakout led to a furious 4-month rally that helped European stocks erase several years worth of relative under-performance.

Currently, the technical picture is not so bright. First of all, the STOXX 600 is a good 25% off of its April 2015 highs. Secondly, the index has actually breached the level of its January 2015 breakout. And while this test/failure at that breakout area is not yet definitively decided, the potential breach is certainly discouraging, as is the fact that the test is occurring so soon after the breakout.

On top of that disappointment, the STOXX 600 has also failed soundly in its attempt at recovering its broken post-2009 and post-2012 Up trendlines (which just so happen to line up in the same vicinity as the 2015 breakout point). In contrast, we have seen multiple indices in the U.S. succeed in recovering their corresponding broken trendlines.

So is it possible that European stocks might enjoy a mean-reversion bounce following their pronounced under-performance of the past month? Of course, anything is possible – especially in the “whatever it takes” era. Although there is really no way to game-plan for it (nor do we recommend attempting it), don’t forget that in this era, once a country or region’s equity markets suffer enough damage, either on an absolute or relative basis, one can expect the local central bank cavalry to come to the rescue.

Even so, such relief may only be short-term in nature. We have seen the shelf-life of recent central bank stimulus attempts becoming shorter and shorter. Furthermore, again, there is considerable technical resistance standing in the way of a more substantial bounce. The fact that prices have already failed at that resistance – and feebly, at that – suggests that the area will be a tough nut to crack.

Thus, while European stocks may be “due” for a relative snapback bounce, until further notice expect any snapback to be limited in scope. The evidence continues to suggest that the relative European downtrend is still firmly intact. Furthermore, the technical picture suggests that European stocks have considerable resistance overhead and, in fact, may have already begun to roll over once again.

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

In his speech yesterday, following the Treasury’s crack down on corporate tax inversions, Obama blamed “poorly designed” laws for allowing illicit money transfers worldwide. Since the speech came at a time when the entire world is still abuzz with the disclosure from the Panama Papers, Obama touched on that as well: “Tax avoidance is a big, global problem” he said on Tuesday, “a lot of it is legal, but that’s exactly the problem” because a lot of it is also illegal.

There is one major problem with that: of all the countries in the world, it is none other than the country of which Obama is president, the United States, that has become the world’s favorite offshore “tax haven” destination.

As Bloomberg, which first broke the story about Nevada’s use as a prominent tax haven early this year, writes, “Panama and the U.S. have at least one thing in common: Neither has agreed to new international standards to make it harder for tax evaders and money launderers to hide their money.”

Over the past several years, amid increased scrutiny by journalists, regulators and law enforcers, the global tax-haven landscape has shifted. In an effort to catch tax dodgers, almost 100 countries and other jurisdictions have agreed since 2014 to impose new disclosure requirements for bank accounts, trusts and some other investments held by international customers — standards issued by the Organization for Economic Cooperation and Development, a government-funded international policy group.

In short: while Obama is complaining about corporate tax avoidance and slamming Panama, he is encouraging it in the U.S.

Places like Switzerland and Bermuda are agreeing, at least in principle, to share bank account information with tax authorities in other countries. Only a handful of nations have declined to sign on. The most prominent is the U.S. The other ona is, of course, Panama, and we just saw what happened there.

 

The latest reporting “underscores the secrecy in Panama,” said Stefanie Ostfeld, the acting head of the U.S. office of the anti-corruption group Global Witness. “What’s lesser known, is the U.S. is just as big a secrecy jurisdiction as so many of these Caribbean countries and Panama. We should not want to be the playground for the world’s dirty money, which is what we are right now.”

For Obama, however, it is important to not let facts get in the way of a good speech, or welcoming the dirty, laundered money of the world’s uber wealthy, be they criminals or not, as they transfer their wealth from Panama to Nevada, Wyoming and other tax sheltering destinations in the U.S.

To be sure, the US has taken steps to keep track of US assets abroad, but not of foreign assets in the US.

In 2010, Congress passed the Foreign Account Tax Compliance Act, or Fatca, as the U.S. Justice Department began prosecuting Swiss banks for enabling tax evasion. Fatca forces certain financial firms to disclose to the Internal Revenue Service any foreign accounts held by U.S. citizens.

 

Fatca doesn’t, however, bind banks to provide information on foreigners with U.S. accounts to regulators abroad. The U.S. has entered into agreements with some other countries requiring such exchange with foreign regulators, but tax planners say they are considered relatively easy to avoid.

 

That’s where the OECD came in, with its own international take on Fatca that the U.S. declined to sign.

Panama has been one country which has done everything in its power to delay and dilute its compliance with OECD regulations.

In a January interview, an official at Trident Trust Co., a big provider of offshore vehicles, said it was seeing a large number of accounts moving into Panama because of its weak commitment to the OECD regulations. “The Panama office was extremely overworked, because a lot of people are re-domiciling to Panama from BVI and Cayman,” said Alice Rokahr, a Trident official based in South Dakota. In late February, OECD officials said publicly that Panama had been “removed from the list of committed jurisdictions” that agreed to share information.

 

The latest coverage of shell companies created by a Panamanian law firm could give the OECD new ammunition to put pressure on the country to sign onto the information-sharing agreements, some tax experts said.

But while one can criticize Panama, and with cause, for enabling tax evasion, at least its leaders don’t pretend to be saints, who do precisely what they condemn. Far less can be said about Obama.

“The U.S. doesn’t follow a lot of the international standards, and because of its political power, it’s able to continue,” said Bruce Zagaris an attorney at Berliner Corcoran & Rowe LLP who specializes in international tax and money laundering regulations.  “It’s basically the only country that can continue to do that. Others like Panama have tried, but Panama can’t punch as high as the U.S.“

And confirming just that, in a statement issued Monday by OECD secretary general Angel Gurria, the OECD said “Panama is the last major holdout that continues to allow funds to be hidden offshore from tax and law-enforcement authorities.”

The statement didn’t mention the U.S., which is the OECD’s largest funder.

And there it is: the US, simply because it is the biggest – and wealthiest – bully in the yard, can dispense morality all day long, but just don’t ask it to practice what it preaches.

Meanwhile, advisers around the world are increasingly using the U.S. resistance to the OECD’s standards as a marketing tool – attracting overseas money to U.S. state-level tax and secrecy havens like Nevada and South Dakota, potentially keeping it hidden from their home governments.

Advisors such as Rothschild, profiled initially by Bloomberg’s Jesse Drucker.

Rothschild, the centuries-old European financial institution, has opened a trust company in Reno, Nev., a few blocks from the Harrah’s and Eldorado casinos. It is now moving the fortunes of wealthy foreign clients out of offshore havens such as Bermuda, subject to the new international disclosure requirements, and into Rothschild-run trusts in Nevada, which are exempt.
 
* * *
 
For financial advisers, the current state of play is simply a good business opportunity. In a draft of his San Francisco presentation, Rothschild’s Penney wrote that the U.S. “is effectively the biggest tax haven in the world.” The U.S., he added in language later excised from his prepared remarks, lacks “the resources to enforce foreign tax laws and has little appetite to do so.”

And that is all you need to know.

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

• Cruz, Sanders score decisive victories in Wisconsin (Reuters)
• Clinton Can’t Get to New York Fast Enough After New Sanders Win (BBG)
• Trump, Clinton Have Single-Digit Leads in Pennsylvania (BBG)
• Panama law firm says data hack was external, files complaint (Reuters)
• ‘Panama Papers’ Puts Spotlight on Boom in Offshore Services (WSJ)
• Barclays partners with Goldman-backed bitcoin payments app (FT)
• China Inc. Scraps $7 Billion of Bond Offerings as Defaults Rise (BBG)
• Activists Reap Olive Garden Bounty (WSJ)
• Russia sees oil price of $45-$50 per barrel ‘acceptable’ as it prepares for freeze deal (Reuters)
• Deposition ordered for woman in debunked Rolling Stone rape article (Reuters)
• Some Asking If Disney CEO Will Extend Tenure (WSJ)
• NYU Graduates Seeking $11 Billion of Gold in Ransacked Mine (BBG)
• Oil glut up close: How Cushing copes with full crude tanks (Reuters)
• PayPal pulls North Carolina plan after transgender bathroom law (Reuters)
• Currency Traders Brace for Wild Ride as Volatility Curves Invert (BBG)
• Zika mystery deepens with evidence of nerve cell infections (Reuters)
• Rising U.S. inflation would take a bite out of the dollar (Reuters)

 

Overnight Media Digest

WSJ

– Pfizer Inc has decided to kill its planned $150 billion takeover of Allergan PLC, after the Obama administration took aim at a deal that would have moved the biggest drug company in the U.S. to Ireland to lower its taxes, according to people familiar with the matter. (http://on.wsj.com/1N7RRA3)

– Iceland Prime Minister Sigmundur David Gunnlaugsson yielded his post Tuesday, becoming the first major casualty of renewed global scrutiny into offshore accounts sparked by millions of documents allegedly leaked from a Panamanian law firm. (http://on.wsj.com/1N7RVzF)

– Bank of America Corp named Andrei Magasiner new treasurer on Tuesday. Magasiner replaces Greg Hackworth who had been the treasurer since 2013. (http://on.wsj.com/23a5H1t)

– Twitter Inc obtained the rights to stream 10 of the National Football League’s Thursday night games, a bid to move from the periphery to the center of live events by leveraging the most popular U.S. sport. (http://on.wsj.com/1N7SeKP)

– Johnson & Johnson is deepening its business in Africa, adding new research, development and distribution capabilities to boost sales of new medicines to fight HIV/AIDS and other major killer diseases. (http://on.wsj.com/23a6rnk)

 

FT

Iceland’s prime minister stepped down on Tuesday, becoming the first casualty in the Panama papers tax scandal. (http://on.ft.com/1TAykPc)

The U.S. Justice Department is planning to sue to stop the Halliburton Co and Baker Hughes merger. (http://on.ft.com/1TAyw0Z)

WhatsApp said it has bolstered encryption protections that will prevent law enforcement agencies from obtaining access to its users. (http://on.ft.com/1TABeDL)

Glencore is close to selling a stake in its agricultural business to Canada’s pension fund, Canada Pension Plan Investment Board. (http://on.ft.com/1TABCBX)

 

NYT

– Pfizer Inc plans to abandon its $152-billion merger with Allergan Plc, the largest deal yet aimed at helping an American company shed its United States corporate citizenship for a lower tax bill. This comes just days after the Obama administration introduced new tax rules, a person briefed on the matter said late Tuesday. (http://nyti.ms/239ZEtE)

– Puerto Rico took steps on Tuesday toward a unilateral moratorium on all government debt payments, rejecting efforts in Washington to allow it to restructure only under close federal supervision. Puerto Rico took steps on Tuesday toward a unilateral moratorium on all government debt payments, rejecting efforts in Washington to allow it to restructure only under close federal supervision. (http://nyti.ms/23fuSMz)

– The leak of millions of private financial documents linking scores of the world’s rich and powerful to a secretive Panamanian law firm peddling in shell companies and offshore bank accounts began more than a year ago with a cryptic message to a German newspaper from an anonymous whistleblower. (http://nyti.ms/1S9Whrj)

– On Tuesday, the FBI’s top lawyer shed a bit more light on the question regarding what secrets did the iPhone used by San Bernardino shooter hold, a week after the Justice Department announced that it had gotten into the phone without Apple Inc’s help. (http://nyti.ms/1VvuKGd)

 

Canada

THE GLOBE AND MAIL

** The federal agency responsible for monitoring money laundering across the country said that it has fined a Canadian bank more than C$1.1 million for failing to report a suspicious transaction, a hefty penalty that is designed to send a message of deterrence in the financial sector. (http://bit.ly/1RXzCSa)

** Canadians will be shut out from a landmark deal that the National Football League has struck to live-stream Thursday night games for free online through Twitter during the coming season. (http://bit.ly/25KCZmz)

** The privatization of Hydro One will most likely be completed before Premier Kathleen Wynne’s Liberals face re-election in 2018, the man in charge of the sell-off said. (http://bit.ly/1UI0fhe)

** Hudson’s Bay Co is racing to add robots to its Toronto distribution centre that handles e-commerce orders, betting that the investment will give it an edge in the retail digital wars. (http://bit.ly/1TBzk5E)

NATIONAL POST

** Valeant Pharmaceuticals International Inc stock saw a double-digit surge after the company’s ad-hoc committee announced it had not identified any additional items that need restating following its review of the controversial Philidor specialty pharmacy. (http://bit.ly/1MR2oVr)

** An arbitration tribunal has ordered the Venezuelan government to pay $1.386 billion to Canadian miner Crystallex International Corp, saying the state caused all of Crystallex’s investments “to become worthless”. (http://bit.ly/1SPiEFs)

 

Britain

The Times

Tough new U.S. Treasury rules on corporate tax inversions that could scupper Pfizer’s record $150 billion takeover of Allergan wiped nearly 17 per cent off the Botox maker’s shares yesterday.(http://bit.ly/1RD4MiM)

Cerberus Capital Management confirmed it is on course to sell more than 6 billion pound of loans once owned by Northern Rock mortgages. (http://bit.ly/22aNawf)

The Guardian

Profits in investment banking arm will not be as high as last year, Barclays said, as it asked shareholders for permission to sell off its African operations. (http://bit.ly/1RMuLAK)

Stock markets across Europe have fallen following weaker than expected economic indicators, falling oil prices, and a warning from the International Monetary Fund stoked fears of a slowing global recovery.(http://bit.ly/22aIrdX)

The Telegraph

Prince Andrew from the Royal family has stepped into the crisis engulfing Britain’s steel industry which has thrown into doubt the future of 40,000 UK jobs. (http://bit.ly/1S8ouyz)

Five former Barclays bankers rigged key interest rate benchmark Libor “for their own advantage” in a conspiracy “driven by money”, a court has heard. (http://bit.ly/238tHC1)

Sky News

HSBC is to reinforce its commitment to the strategy it outlined last year by signing a deal to sponsor a high-speed rail-link between two cities in the Pearl River Delta, one of China’s most important economic regions. (http://bit.ly/1MQEp8H)

The trade body, Investment Association, which represents fund managers overseeing 5.5 trillion pound in assets is to name Chris Cummings as its next chief executive as the industry undergoes unprecedented regulatory reform. (http://bit.ly/1RWR6xV)

The Independent

PayPal will not move forward with planned expansion in Charlotte, North Carolina following the passage of a widely condemned anti-LGBT law. (http://ind.pn/1VuDIDH)

The head of the International Monetary Fund, Christine Lagarde, has put Britain voting to leave the EU in June’s referendum among what she says are immediate threats to the global economy. (http://ind.pn/1RVMsQH)

 

via Zero Hedge http://ift.tt/1SA6Cx7 Tyler Durden

Less than two days after the US Treasury cracked down on inversion deals, and one deal in particular, Pfizer’s pharma record $160 billion acqisition of Allergan, moments ago the two companies announced the deal is officially over.

From the press release:

Pfizer Announces Termination of Proposed Combination with Allergan

 

Pfizer Inc. today announced that the merger agreement between Pfizer and Allergan plc has been terminated by mutual agreement of the companies. The decision was driven by the actions announced by the U.S. Department of Treasury on April 4, 2016, which the companies concluded qualified as an “Adverse Tax Law Change” under the merger agreement.

 

“Pfizer approached this transaction from a position of strength and viewed the potential combination as an accelerator of existing strategies,” stated Ian Read, Chairman and Chief Executive Officer, Pfizer. “We remain focused on continuing to enhance the value of our innovative and established businesses. Our most recent product launches, including Prevnar 13 in Adults, Ibrance, Eliquis and Xeljanz, have been well-received in the market, and we believe our late stage pipeline has several attractive commercial opportunities with high potential across several therapeutic areas. We also maintain the financial strength and flexibility to pursue attractive business development and other shareholder friendly capital allocation opportunities.”

 

“We plan to make a decision about whether to pursue a potential separation of our innovative and established businesses by no later than the end of 2016, consistent with our original timeframe for the decision prior to the announcement of the potential Allergan transaction,” continued Read. “As always, we remain committed to enhancing shareholder value.”

 

In connection with the termination of the merger agreement, Pfizer has agreed to pay Allergan $150 million for reimbursement of expenses associated with the transaction.

The biggest losers here, aside from senior AGN management who stood to cash out of their newly vested, debt-propped up shares, are the advising investment banks among which are Goldman, Guggenheim, Centerview, Moelis & Company (advising Pfizer), who were supposed to split $100 million among each other as part of the deal. JPMorgan and Morgan Stanley were advising Allergan and they two will miss out on dozens of millions in ibanking revenue.

via Zero Hedge http://ift.tt/1V8XJ3N Tyler Durden

Unlike yesterday’s overnight session, which saw some substantial carry FX volatility and tumbling European yields in the aftermath of the TSY’s anti-inversion decree, leading to a return of fears that the next leg down in markets is upon us, the overnight session has been far calmer, assisted in no small part by the latest China Caixin Services PMI, which rose from 51.2 to 52.2 (even if the employment index dropped to a three year low, suggesting China’s labor problems are only just starting).

Adding to the overnight rebound was crude, which saw a big bounce following yesterday’s API inventory data, according to which crude had its biggest inventory draw in 2016, resulting in WTI rising as high as $37.15 overnight. The oil market is now looking at today’s more definitive EIA report, which is also expected to show an inventory build. “The API surprised the market at a time when it was looking to move higher after several days of losses; the API provided this trigger,” says Saxo Bank head of commodity strategy Ole Hansen. “Kuwait saying a deal is still a possibility at the Doha meeting has also helped.”

Curiously, the rebound in oil took place even as the BBG Dollar index saw a sharp increase overnight.

 

But while the dollar rose, the Yen failed to drop, and as a result, the USDJPY has remained just barely above 110, leading to another session in the red for Japan’s Nikkei: surely by now Abe and Kuroda must be asking themselves if complying with the Shanghai Accord was really worth it. A few more percent drop, which wipes out a few dozen trillion in local pensions, and the Japanese people may ask themselves too.

“It is still difficult to buy stocks because of the yen. There are hardly any positive factors for stocks,” Chihiro Ohta, general manager of investment information at SMBC Nikko, told Bloomberg. “Investors are concerned about the global economy again and are turning to risk-off as the IMF may downgrade its growth forecasts.”

Meanwhile in China, good news was bad, as the better than expected Services PMI led to a 0.1% drop in the Composite after the benchmark index hit a three-month high on Tuesday. Data released on Wednesday by Caixin Media and Markit Economics showed their services purchasing managers’ index increased to 52.2 in March. An official factory gauge last week showed improving conditions for the first time in eight months, while industrial profits halted a seven-month losing streak.

E-mini futures on the S&P 500 Index rose 0.3 percent. The underlying U.S. equity benchmark index slipped 1 percent on Tuesday. The rally that lifted the S&P 500 as much as 13 percent from a 22-month low in February has started to lose momentum, with sentiment shifting as investors assess whether central banks can fend off weakness in the global economy. The U.S. central bank releases the minutes from its latest meeting on Wednesday.

E-mini futures on the S&P 500 Index rose 0.3 percent. The underlying U.S. equity benchmark index slipped 1 percent on Tuesday. The rally that lifted the S&P 500 as much as 13 percent from a 22-month low in February has started to lose momentum, with sentiment shifting as investors assess whether central banks can fend off weakness in the global economy. The U.S. central bank releases the minutes from its latest meeting on Wednesday.

This is where all key markets stood as of this moment.

• S&P 500 futures up 0.2% to 2042
• Stoxx 600 up 0.4% to 329
• FTSE 100 up 0.5% to 6122
• DAX down less than 0.1% to 9563
• German 10Yr yield up 3bps to 0.13%
• Italian 10Yr yield up less than 1bp to 1.27%
• Spanish 10Yr yield up less than 1bp to 1.5%
• S&P GSCI Index up 0.9% to 313.2
• MSCI Asia Pacific down less than 0.1% to 124
• Nikkei 225 down 0.1% to 15715
• Hang Seng up 0.1% to 20207
• Shanghai Composite down less than 0.1% to 3051
• S&P/ASX 200 up 0.4% to 4946
• US 10-yr yield up 3bps to 1.75%
• Dollar Index up 0.25% to 94.87
• WTI Crude futures up 2.8% to $36.88
• Brent Futures up 2% to $38.64
• Gold spot down 0.5% to $1,226
• Silver spot down 0.1% to $15.12

Top Global News

• Pfizer Said to Terminate $160 Billion Merger With Allergan: Pfizer decided to terminate largest-ever health-care acquisition as officials in Washington crack down on corporate inversions, according to a person familiar with the matter; Bankers Risk Losing Millions If Pfizer-Allergan Deal Falls Apart; Shire May Become Target If Pfizer-Allergan Deal Blows Up: BofAML; Shire/Baxalta Deal Risk Increased on U.S. Inversion Rules: HSBC
• Glencore Sells $2.5b Agriculture Stake to Canadian Fund: Canada’s largest pension fund to acquire 40% in unit; Glencore selling assets to help curb $25.9b of debt
• Cruz, Sanders Win Wisconsin Vote in Setback to Front- Runners: Trump’s loss makes delegate math for nomination more difficult; Clinton had downplayed contest as not affecting delegate math
• Mitel Networks, Polycom Said to Be in Advanced Merger Talks: agreement is said to be possible as soon as next week; deal would value Polycom at about $1.7b
• Staples Merger Hearing Ends With Skeptical Judge Urging Accord: office supply retailers ask judge to reject FTC injunction bid; government seeks to block merger, citing loss of competition
• Puerto Rico’s House Approves Moratorium on Bond Payments: general obligations, Cofina debt would stop paying investors; measure would give governor authority to suspend payments
  Bill Ackman’s Pershing Square holds 1Q investor call; follow TOPLive for our blog coverage starting 10am
• Pfizer Wins Dismissal in Zoloft Birth-Defect Warning Cases: a federal judge in Philadelphia granted co.’s request to dismiss more than 300 lawsuits attempting to link the antidepressant Zoloft to heart defects in newborns

Looking at regional markets, we start as usual in Asia, where equities shrugged off the negative lead from Wall St. with the region mostly positive as an improvement in Chinese PMI data provided some reprieve. Nikkei 225 (-0.1%) saw choppy price action driven by JPY movements, with the index extending on its recent losing streak. ASX 200 (+0.4%) was underpinned by gains in energy following an unexpected drawdown in API Inventories, which pushed WTI crude futures towards the USD 37/bbl level. Elsewhere, Shanghai Comp (-0.1%) recovered off its worst levels following an improvement in Chinese Caixin Services and Composite PMI’s with the latter returning to expansionary territory and matching a 1-year high. Finally, 10 year JGBs were flat amid similar range-bound trade in riskier Japanese asset classes, while the result of the BoJ’s JPY 1.24tr1 buying operation also provided no surprises.

Asian top news:

• China Forex Losses Jump 13-Fold as Investors Brace for More: Air China, Agile Property to cut exposure to dollar debt
• Yen at Strongest in 17 Months Probing Limit of Japan’s Tolerance: More jawboning would be “meaningless,” JPMorgan’s Sasaki says
• Chinese Online Property Site Said Raising $1b in Funding: Beijing Homelink plans to expand its reach across China; Tencent, Baidu said to take part in Homelink fundraising
• Rajan Supercharges India Rate Cut by Easing Bank Funding Squeeze: Central bank lowers benchmark, takes measures to boost cash
• Samsung Rewrites Playbook to Juice S7 Sales Before IPhone: Estimates of S7 sales raised to 9m units from 7m
• Amid 1MDB Probes, BSI Suffers Exits and Wrangling Over Liability: Departing Asia staff said to include trio vetting big clients

European equities trade mostly higher with the move to the upside propelled by energy names after WTI crude futures reclaimed USD 37.00/bbl to the upside. Bucking the trend however, is the DAX which trades relatively flat given the lack of energy names in the index, with newsflow otherwise relatively light from a European perspective. Alongside the modest upside in European stocks, fixed income markets have ebbed lower with Bunds breaking back below 164.00 to the downside. Furthermore, prices have also edged lower in tandem with USTs as market participants continued to keep a close eye on the price action of USD/JPY where the BoJ is yet to stem the recent sell-off.

European top news:

• H&M Sees Dollar Sourcing Headwinds Easing by End of Year: headwinds from strong dollar will ease by end of year as co. reported 1Q profit that slightly beat analysts’ estimates
• Panama Secrecy Leak Claims First Casualty as Iceland PM Quits: decision follows protests that drew thousands of Icelanders
• Air France-KLM Shares Fall as De Juniac Steps Down: shares decline after surprise departure of CEO, who’s stepping down to take IATA job
• BTG Pactual, Generali at Odds on Indemnity Linked to 1MDB Case: cos. in disagreement over which firm should bear potential losses tied to Swiss bank BSI’s dealings with a Malaysian fund

In FX, in the absence of any data or news, it is no surprise to see FX markets in range bound mode today. Commodities have seen a small recovery, while equities stabilise, but this has failed to spark any significant moves in the majors. The FOMC minutes this evening is the perfect excuse to stand pat on for now, and in that respect, USD/JPY is holding off any notable recovery, despite having held the key 110.00 level in Asia. More warnings from Japanese government spokesmen that markets are being monitored, but to little effect. Some signs that the market is primed for fresh GBP weakness, but EUR/GBP continues to hold off the top end of the .8030-65 resistance zone, with Cable defensive against the key support area at 1.4050-55. EUR/USD naturally tight in the mid 1.1300’s, with the broader USD perspective key here today, but also likely to hold off committing to any major direction ahead of the ECB meeting account Thursday. DoE report later today could see a little Cad shakeout — API last night saw an unexpected drawdown.

In commodities, oil prices have extended on yesterday’s advances following an unexpected drawdown in API Inventories which lifted WTI crude futures above the USD 37/bbl level with prices shrugging off upside seen in the USD-index this morning. Gold (-0.2%) trades modestly lower alongside broad strength in the USD with newsflow otherwise relatively light thus far. Elsewhere, copper prices benefited from the improvement in risk-sentiment while iron-ore remained pressured on rising stockpiles as Chinese port inventories are at its highest level in a year.

There’s no data out of the US expected but the main focus will of course be on the release of the March FOMC minutes which we’ll get at 2.00pm. Yellen’s dovish comments last week mean the minutes perhaps take on slightly less importance than usual, particularly with the Fed Chair due to speak tomorrow, but it’s still worth keeping a close eye on any interesting snippets. Away from this the Fed’s Mester is due to speak along with Bullard later on.

Bulletin Headline Summary from Ransquawk and Bloomberg

• European equities trade modestly higher as upside in energy prices supported sentiment with newsflow otherwise relatively light
• FX markets have been largely rangebound with USD/JPY holding off any notable recovery, despite having held the key 110.00 level in Asia
• Looking ahead, today sees the release of the FOMC Meeting Minutes and potential comments from Fed’s Mester (Voter, Soft Hawk) and Bullard (Voter, Neutral)
• Treasuries drop in overnight trading as global equity markets mostly higher along with crude oil after Kuwait claims producers can reach an agreement to arrest output even if Iran doesn’t join in.
• Global regulators are considering how to raise capital requirements for the world’s biggest banks as they implement tougher debt-financing limits designed to rein in too-big-to fail lenders
• Germany is on a collision course with the European Commission over enforcing bank-failure rules the EU introduced two years ago to end an era of taxpayer bailouts. The finance ministry in Berlin is warning against “watering down” the rules
• Negative rates have become counter-productive, since they have produced uncertainty by signaling that something is wrong with the economy. Moreover, the Riksbank’s unprecedented government bond buying program has also sparked liquidity concerns
• Puerto Rico’s Government Development Bank is on the verge of a collapse as the lender in recent years saw politicians turn it into a piggy-bank that lent to the government and its agencies
• Puerto Rico’s House of Representatives approved a bill calling for a moratorium. The measure would give Governor Padilla authority to suspend payments on debt backed by the government
• A funny thing has happened in the U.S. stock market, where rather than loosen their grip bears have grown ever-more impassioned. They’ve sent short interest to an eight-year high and above $1 trillion
• When the next corporate default wave comes losses on bonds from defaulted companies are likely to be higher than in previous cycles because U.S. issuers have more debt relative to their assets
• The Chinese central bank’s appetite for trade-weighted weakness in the yuan appears to be increasing, according to Australia & New Zealand Banking Group Ltd., spurring warnings of increasing risks to emerging-market currencies
• India’s central bank governor renewed his criticism of unorthodox monetary policy. “I don’t think this is a stable situation,” Governor Rajan said. “Either we need stronger growth or we need to recognize we’ve reached the limits of monetary policy”
• Pfizer Inc. decided to terminate its $160 billion merger with Allergan Plc, a person familiar with the matter said, marking an end to the largest-ever health-care acquisition as officials in Washington crack down on corporate inversions
• Sovereign 10Y bond yields mostly higher; European and Asian equity markets rise; U.S. equity-index futures rise. WTI crude oil rallies; gold and copper drop

US Event Calendara

7:00am: MBA Mortgage Applications, April 1 (prior -1%)

Central Banks

• 12:20pm: Fed’s Mester speaks in Cleveland
• 2:00pm: Fed Releases Minutes from March 15-16 FOMC Meeting
• 6:30pm: Fed’s Bullard speaks in St. Louis
• 8:00pm: Fed’s Kaplan speaks in Dallas
• 8:30pm: Bank of Japan’s Kuroda speaks

DB’s Jim Reid concludes the overnight wrap

Notwithstanding the current weaker sentiment we’d conclude that a softer dollar is probably better for reducing global systemic risk (not least as it helps China), even it causes headaches for the likes of Europe and Japan. Much attention was yesterday focused on the fact that the Yen briefly strengthened below $110 for the first time since October 2014 and also that the Nikkei is now down -16.7% YTD. The chatter is increasingly that this is a strong signal Japanese policy isn’t currently working in spite of seemingly aggressive action. Recent economic data out of Japan has been soft (Tankan and PMI’s in particular) and the question everyone is starting to ask is what the policy response from the BoJ may be. Further equity purchases have been mentioned while yesterday the former BoJ Governor Iwata suggested that the Central bank will hit its limit of government bond purchases in 2017 and suggested that further deeper negative rates would be more likely instead. The next BoJ meeting is the 28th of April and away from that another key decision is on the fiscal side and whether PM Abe will delay the upcoming hike in the consumption tax, a decision he has sounded ambivalent on so far.

Meanwhile the Stoxx 600, the DAX and European banks are now down -9.5%, -11.0% and -23.7% respectively YTD so there is a fear that Japan and Europe are becoming more resistant to central bank policies. Before getting too concerned, despite a -1.01% fall yesterday we should remember that the S&P 500 is +0.7% YTD and was at YTD highs only 2 days ago. So a softer dollar helps the US, leads to lower systemic risk but causes growth and asset return problems elsewhere.

Indeed the moves yesterday underscored what was a pretty rough day all round for risk assets with some soft European data, downbeat comments the IMF’s Lagarde and concerns emanating from the new US Treasury Department rules on corporate inversions. European DM bond markets were the biggest winners in the risk-off move with evidence no more obvious than the move across the Bund curve where 10y Bunds closed yesterday at 0.098% and the lowest in nearly 12 months. That all-time intraday low of 4.8bps this time last year is creeping closer.

Before we deep diver on some of the above, this morning in Asia we’re seeing a bit more of mixed performance relative to that of the past 24 hours. The Nikkei (+0.04%), Hang Seng (+0.35%), Kospi (+0.56%) and ASX (+0.37%) are all up modestly with just China currently unchanged. That’s despite some improvement in the March Caixin PMI’s for China where the services number has increased 1pt to 52.2, helping to take the composite up to 51.3 from 49.4 in February and to the highest level since April last year.

Meanwhile the other breaking news this morning is that, according to the WSJ, Pfizer has announced that it intends to walk away from the proposed $150bn mega-merger with Allergan. This comes after the news out of the Treasury yesterday regarding the proposed inversion rules. The overall feeling was that the new rules were stricter than previously assumed. Specifically the rules focus on two main parts, the first focusing on a three-year lookback period in calculating the size of the inversion and disregarding assets acquired in the previous 36 months, while the second action would be to limit earnings stripping. Those changes had investors concerned about the putting the aforementioned merger in jeopardy which appears to now to be confirmed. US equity index futures are modestly firmer this morning.
Back to yesterday and firstly those comments from Lagarde in the morning. The IMF Chief warned that global growth remains too slow, too fragile and risks to its durability are increasing. She also noted that downside risks have increased and that the Fund does not ‘see much by the way of upside’. Lagarde also made mention to threats of a geopolitical nature as also underlining the uncertainty globally at the moment. Specifically she referred to the uncertainty concerning Brexit which was something also mentioned by the Fed’s Evans too who highlighted this and also the US Presidential election race as complicating decisions for policymakers. While both events still have a way to run, the various headlines linking PM David Cameron with the Panama Papers have the potential to have an indirect bearing on the

Brexit debate, particularly from a credibility perspective.
Meanwhile, yesterday’s economic data in Europe saw some disappointment in the final March PMI revisions. The Euro area composite reading was revised down 0.6pts to 53.1 after the services number fell to its softest since January 2015, down 0.9pts from the flash reading to 53.1. Much of the weaker read-through in the services number was attributed to a big downward revision for France (-1.3pts to 49.9) and a 2.6pt monthly decline in Italy. Our European economists noted that the Euro area composite PMI points to GDP growth of around 0.4% qoq in Q1 which is in line with their projection. Also of note was a much softer than expected February factory orders print out of Germany where orders were unexpectedly down -1.2% mom in the month (vs. +0.3% expected).

The US data was a little bit more mixed. Notably and for the first time since September, we saw the ISM non-manufacturing reading strengthen after rising 1.1pts last month to a slightly higher than expected 54.5 (vs. 54.2 expected). The details also showed encouraging gains for the employment and new orders components and it means the spread between the two ISM series is now 2.7pts which is the least since December 2014 (albeit the overwhelming contributor to that being a move lower in the services component). In any case yesterday’s data was also backed up by a slight upward revision in the final March services PMI to 51.3 (from 51.0). Away from that the February trade balance reading revealed a slightly wider than expected deficit in the month ($47.1bn from $45.9bn), while the IBD/TIPP economic optimism reading for April was down 0.5pts from March to 46.3 (vs. 47.0 expected). Finally the February JOLTS job openings showed openings fell to 5.45m in the month from an upwardly revised 5.60m in the month prior. Also of note was the news that the Atlanta Fed had revised down their Q1 GDP growth forecast by three-tenths to 0.4% although this appeared to be more of a reflection of that softer US auto sales data from Friday.

Back to bonds, along with those moves for Bunds, we also saw similar moves lower in yield for the bulk of DM sovereign bond markets in Europe, while 10y Treasury yields closed over 4bps lower at 1.721% and the lowest since the end of February. Peripheral assets were the notable underperformer (Italy 10y +3bps, Portugal 10y +21bps) with Greece back in focus. The latest news there being that German Chancellor Merkel has reinforced her position that the IMF should remain a part of the Greek bailout program and that a debt haircut for Greece is not possible. These headlines are all starting to feel a bit 2015 again.

Credit markets were not immune to be the risk off move yesterday and it was European indices in particular which were under most pressure. The iTraxx Main and Crossover indices finished 4bps and 14bps wider respectively with senior and subs fins underperforming and closing 5bps and 17bps wider respectively.

Bucking the weaker trend for risk yesterday were the moves into the close for Oil. In fact, after trading lower for the bulk of the day and contributing to part of the selloff certainly in Europe, WTI has rallied back close to $37/bbl this morning after hovering in the low $35’s yesterday. As well as some supportive output numbers, again the move has come about on the back of more headlines concerning the upcoming Doha meeting, this time out of Kuwait where the OPEC Governor there suggested that a production freeze pact is still possible between producers even without the agreement from Iran.

Looking at the day ahead, the calendar is a lot lighter this morning with the only data of note out of Germany where the February industrial production data is due (-1.8% mom expected). There’s no data out of the US expected but the main focus will of course be on the release of the March FOMC minutes which we’ll get at 7.00pm BST. Yellen’s dovish comments last week mean the minutes perhaps take on slightly less importance than usual, particularly with the Fed Chair due to speak tomorrow, but it’s still worth keeping a close eye on any interesting snippets. Away from this the Fed’s Mester (5.20pm BST) is due to speak along with Bullard (11.30pm BST) later on.

 

via Zero Hedge http://ift.tt/22bT8gk Tyler Durden

‘$5 Million Coin’ Now On Sale – One of Largest, Purest and Rarest Gold Coins In World

One of the largest, the purest and rarest gold coins in the world – the first ‘million dollar coin’ which at today’s market prices is valued at $5.36 million (USD), €4.85 million (EUR) and £3.8 million (GBP) has come on the market and is now on sale.

Mounties Guarding The “$5 Million Dollar Coin” In The Royal Canadian Mint

 

There are only five of these majestic bullion coins, weighing 100 kilos or 3,215 troy ounces each in existence today. They were first minted by The Royal Canadian Mint in 2007.

One of these beautiful, ‘collector item’ and 99.999% pure gold coins has become available for sale and GoldCore have secured exclusive rights in the UK and Ireland for the sale of the rare coin.

The coins were minted by the world renowned Royal Canadian Mint, which operates world-class refineries, as well as minting Canadian bullion coin products including the popular Canadian Maple Leaf gold and silver bullion coins (0.9999 pure or 24 karat).

Coin Specifications

• Face Value: $1,000,000
• Composition: 99999 fine gold
• Weight (troy oz): 3,215
• Weight (kg): 100
• Coins in Existence Worldwide: 5
• Coins Currently for Sale Worldwide: 1

Her Majesty Queen Elizabeth II portrait on the obverse side is a work by celebrated Canadian portrait artist Susanna Blunt. The reverse features an elegant hand-polished maple leaf design by Royal Canadian Mint artist and engraver Stan Witten.

The 100 kg, 99.999% pure gold bullion coin with a $1 million legal tender face value was originally conceived as a unique showpiece. This incredible coin combines craftsmanship and artistry with the unprecedented technical achievement of 99.999% purity in gold bullion.

• Incredibly Rare Gold Coin
• Purest Gold in the World
• One of Largest Gold Coins in the World
• Own a Piece of History

There were only five made – all of which are in private hands. It is a collector’s item and commands a premium both for its gold bullion content but also for being incredibly rare.

A piece of history – the Royal Canadian Mint’s unique, pristine and beautiful ‘100 Kilo’ gold coin – one of the largest, the purest and rarest gold coins in the world.

For more information, call GoldCore on 203 086 9200 (UK) or 302 635 1160 (U.S.)

www.GoldCore.com

via Zero Hedge http://ift.tt/1S1spU1 GoldCore

Submitted by Pepe Escobar via SputnikNews.com,

So now Iran is back to being demonized by the West as “provocative” and “destabilizing”. How come? Wasn’t the nuclear deal supposed to have brought Iran back to the Western-concocted “concert of nations”?

 

via Zero Hedge http://ift.tt/1Wb75LJ Tyler Durden

Brazil has been in crisis for some time now.

The country’s economy shrunk -3.8% last year, and its President, Dilma Rousseff, is holding on for dear life. Once chairman of Petrobras, the state-run oil giant currently engulfed in a colossal political scandal, she is now being threatened with impeachment just 15 months into her second four-year yerm.

Her approval remains at an all-time low of just 11%. The currency has halved in value since 2011, and the country’s credit has been downgraded to junk status.

However, as VisualCapitalist's Jeff Desjardins explains, it’s not only the economic and political spheres that are troubling in Brazil. The country also has the dubious distinction of being the world center for homicides. Today’s chart, from The Economist, shows the 50 most murderous cities in the world – and Brazil is home to a mind-boggling 32 of them.

The good news is that key cities, such as Rio de Janeiro, are on the lower side of the spectrum. That said, the host of the 2016 Olympic Games is barely safer than Compton, with a murder rate of 18.6 per 100,000 people each year.

The bad news is that Brazil now has more than 10% of all the world’s murders. While the murder rate has fallen in the largest cities around the country, it has picked up in many of the smaller ones. Cities such as Fortaleza or Natal are among the most violent in the world, with rates above 60 murders per 100,000.

 

 

Other Notes on the Study

The United States made the list with two of the 50 most violent cities: Baltimore and St. Louis.

Latin America was home to 44 of 50 of the cities. The only cities not in Latin America: Baltimore, St. Louis, Kingston (Jamaica), and Cape Town (South Africa).

Venezuela was omitted from these rankings because of highly inaccurate data, but Caracas and other cities in the country are known to be some of the most dangerous cities in the world.

via Zero Hedge http://ift.tt/1oAwlh1 Tyler Durden