Tag: finance

Talking heads were positively orgasmic at the fact that Greece managed to get a five-year bond deal off in the public markets… at a 4.75% coupon and was 8-times oversubscribed. That must be great news, right? So, kindly explain to us where all that exuberant “Greece is the best thing since sliced bread” demand is today as the bond price has collapsed 1.5 points and yields smashed higher by over 30bps…?

 

 

As a gentle reminder here is yesterday’s news… (from The FT)

Greece has raised €3bn in a five-year bond deal after attracting in excess of €20bn in orders for its eagerly anticipated return to the bond market.  The yield on the deal was confirmed at 4.95 per cent – much lower than most analysts expected.

And here is The FT from January 25th 2010…

International alarm over Greece’s debt crisis abated on Monday when investors flocked to buy the government’s first bond issue of the year, an indication that it may run into less trouble than anticipated in meeting its short-term financing needs.  Investors placed about €20bn ($28bn, £17bn) in orders for the five-year, fixed-rate bond, four times more than the government had reckoned on.

It’s different this time.

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

For the first time in over two months, all the major US equity indices are negative year-to-date (as Trannies finally succumb to the selling pressure). Russell and Nasdaq are down 4% YTD.

 

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

From Deutsche Bank’s Jim Reid:

We can’t help thinking that as it becomes ever clearer that the Fed is pretty much fixed in its determination to stop QE late this year, the oxygen that has fuelled the 5 year bull market is slowly draining out of the market. Clearly the Fed is still buying a significant amount of bonds and thus providing a lot of liquidity but clearly only for a few more months. We think this is creating a lot more two-way tension in equity markets. Supporting this argument is the fact that those sectors that have done best since the bull market/high liquidity period started are suffering in the recent correction. If we define the beginning of the bull market as having started on the 9th of March 2009 when stocks hit their financial crisis-lows, the NASDAQ Technology and Biotech indices have gained 254% and 281% respectively. The S&P 500 homebuilders index has gained 256% over the same period. For comparison, the S&P 500 has gained “only” 177%. Tech, biotech and homebuilders are now down 5%, 19% and 12% from their YTD peaks. This compares with 3.1% retracement in the S&P 500 from the record highs posted in early April this year. So it does seems that sectors that have benefited the most from easy policy are those that are selling off the most right now.

But… what about the fun-der-mentals?

via Zero Hedge http://ift.tt/1jygQQ3 Tyler Durden

Ahhh, the smell of “fake” headlines in the morning. It smells like victory, especially as there goes another conspiracy “theory”

 

We have been pointing out the massive discrepancies in Chinese trade data for the last 2 years (e.g. here) and it seems, once again, that conspiracy “theory” has become conspiracy “fact.”

Since early 2011, when the murky world of commodity-backed financing really gathered pace and the even more shadowy accounting framework of fake trade invoices began, Chinese trade data has been remarkably over stated relative to the trade data of the rest of the world. As the charts below show, the gap is large and as Bloomberg reports, RBS believes it will not be possible to ‘judge’ just how bad China’s economic data is until June when the debris of a shadow-banking-system credit creation boom will be “cleaned” from the entirely “fake” trade data that we are treated to each month. As Nomura notes, “The Chinese economy is changing quickly on a massive scale, making it difficult for its statistics machine to catch up with the reality.”

 

As Bloomberg reports, China’s data distortions will muddy analysis of the nation’s trade until at least June, making it harder to assess the strength of the world’s biggest exporter and second-largest economy.

That’s when China will provide figures that compare with what Royal Bank of Scotland Group Plc economist Louis Kuijs says are “pretty clean” numbers from May 2013 that followed a crackdown on inflated invoices used to disguise capital inflows.

 

 

…

 

The distortions add to investor and analyst concerns that the quality of data from jobs to gross domestic product isn’t good enough for a country that’s driving commodity prices and Asian growth.

 

…

 

People see a very weak number and then you need to explain that the reality is not so bad because of very complicated reasons that included fake invoices and stuff. It makes all of us doubt more about what the reality really is.”

It seems to us like there is a long way to go in the de-faking of trade data…

China’s GDP figures have attracted skeptics

 …including analysts at Capital Economics Ltd., who said in 2012 that third-quarter growth that year was about 6.5 percent, rather than the 7.4 percent reported by the government. Premier Li said in 2007, when he was party secretary of Liaoning province, that GDP figures were “man-made” and unreliable, according to a diplomatic cable published by WikiLeaks in 2010.

 

Economists pay little attention to China’s main unemployment gauge, the quarterly urban jobless rate, which excludes migrant workers and has barely budged from 4.1 percent for more than three years. Its impact on markets is minimal compared with the U.S. government’s monthly jobs report.

 

The discrepancy between Hong Kong data for imports from China and Chinese figures for exports to the city in early 2013 highlighted the practice of over-invoicing that inflated China’s export data. Regulators started a crackdown in May, leading to a slump in reported overseas shipments.

 

The correlation in China between commodity imports and growth has been small and there is “clear evidence” showing import figures overstate the strength of domestic demand, she said. Some Chinese companies may have used imported goods as collateral to borrow funds last year, distorting the picture of demand, she said.

 

“I really don’t put much weight on import data,” she said.

 

“The Chinese economy is changing quickly on a massive scale, making it difficult for its statistics machine to catch up with the reality,”

So take your pick – the trade data is not as bad as the real drop in exports BUT the previous trade data is entirely fake and so this is catch-down to an old normal reality that suggests growth and demand is dramatically slower than many saw and hoped would last forever.

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

Producer Price Inflation data soared higher than expectations across the board this morning with Final Demand up 1.4% YoY (against 1.1% expectation) to its highest since Aug 2013. The main driver was food and apparel prices (rather unexpectedly) but we also note that ex-Food-and-Energy was a 0.6% rise (vs 0.2% exp.) which is the biggest month over month jump since March 2011.

Final demand services:

 The index for final demand services rose 0.7 percent in March, the largest advance since a 0.8-percent jump in January 2010. In March, over 60 percent of the broad-based increase can be traced to margins for final demand trade services, which climbed 1.4 percent. (Trade indexes measure changes in margins received by wholesalers and retailers.) Prices for final demand services less trade, transportation, and warehousing increased 0.4 percent, and the index for final demand transportation and warehousing services rose 0.5 percent.

In March, MoM Ex Food and Energy surged (well above expectations) thanks to a 3.3-percent increase in margins for apparel, jewelry, footwear, and accessories retailing led the advance in prices for final demand services.

 

Final demand goods: Prices for final demand goods were unchanged in March after moving up 0.4 percent in each of the prior three months. In March, a 1.1-percent increase in the index for final demand foods and a 0.1-percent rise in prices for final demand goods less foods and energy offset a 1.2-percent decline in the index for final demand energy.

Product detail: In March, advances in the indexes for pork; residential natural gas; pharmaceutical preparations; sausage, deli, and boxed meats; and fluid milk products offset declines in prices for gasoline, diesel fuel, liquefied petroleum gas, primary basic organic chemicals, and fresh fruit and melons.

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

Overnight weakness in Asia spilled into Europe and the bloodbath is continuing – especially in the peripheral markets which have until now been invincible in the face of deteriorating fundamentals. Just like US hyper-growth hope, Portugal, Spain, and Italy stock markets have soared this year – among the world's best performers – but are getting monkey-hammered in the last 2 days (down over 5%). Despite more chatter of ECB QE, peripheral bond spreads are also jumping higher (+7bps) as German Bund yields are slumping back below 1.5% – the lowest in 10 months. US futures are ugly too.

 

European exuberance is fading fast…

 

and even the unstoppable idiocy of peripheral bond spreads are being bashed wider…

 

Bunds are ripping loweer in yield…

 

US Stock futures are not happy either extending yesterday's losses (as Nasdaq hits it 150DMA)

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

So much for the infallible Mr. Dimon.

Moments ago, JPM reported Q1 earnings which missed across the board, driven by the now traditional double whammy of collapsing mortgage revenues – the lifeblood of any old normal bank – and fixed income trading revenues  – the lifeblood of new normal banks. Specifically, JPM reported revenues of $23.9 billion, well below the expected $24.5 billion, matched by a reported earnings miss of $1.28, down from $1.59 a quarter ago (and down $0.02 from Q4, 2014), also missing consensus estimates of $1.38.

The breakdown was as follows:

 

However, recall that as Zero Hedge first reported last quarter, JPM recently jumped on the FVA bandwagon, to wit:

In addition to analyzing the Firm’s consolidated results on a reported basis, management reviews the Firm’s results and the results of the lines of business on a “managed” basis, which is a non-GAAP financial measure. The Firm’s definition of managed basis starts with the reported U.S. GAAP results and includes certain reclassifications to present total consolidated net revenue for the Firm (and total net revenue for each of the business segments) on a fully taxable-equivalent (“FTE”) basis. Accordingly, revenue from investments that receive tax credits and tax-exempt securities is presented in the managed results on a basis comparable to taxable securities and investments. This non-GAAP financial measure allows management to assess the comparability of revenue arising from both taxable and tax-exempt sources. The corresponding income tax impact related to tax-exempt items is recorded within income tax expense. These adjustments have no impact on consolidated net income/(loss) as reported by the Firm or net income/(loss) as reported by the lines of business.

… which means one has to look at revenue on both a GAAP and non-GAAP basis. Sure enough, the company’s non-GAAP revenue, reported quietly in the footnotes, was $1.1 billion less than the non-GAAP print.

 

Fine, revenue you can’t fudge as easily. But what about EPS – after all the firm should be quite able to boost “earnings” by taking out another abnormally sized loan loss reserve release. It is here that we observe something curious: while last quarter JPM generated $1.3 billion in “bottom line earnings” from loan reserve releases, this quarter the number was down to a far smaller print, as JPM took only $417MM in releases, down substantially from $1.2 billion a year ago. Considering JPM still has a total reserve of $15.8 billion it was strange why it didn’t take out more – it is almost as if Jamie Dimon wanted to miss the bottom line!

 

Going back to the firm’s actual operations, here is where the bulk of the pain came from: mortgages, or rather the lack thereof.

Of note here: Mortgage Production was a disaster with mortgage related revenue of only $292 million, and net loss of $58 million.

As JPM says, “Revenue 76% lower YoY, primarily on lower volumes; originations down 68% YoY and 27% QoQ”

Nothing better in the servicing division: “Mortgage Servicing pretax loss of $270mm, down $169mm YoY“

The culprit: mortgage originations, which tumbled from $52.7 bn in Q1 2013, and $23.3bn in Q4 2013, to just $17.0 billion as the US consumer continues to not want to buy houses on credit.  Which also means that as JPM further writes, “Headcount down ~14,000, or ~30% since the beginning of 2013, and ~3,000 QoQ.”

Oh well, at least those “all cash” Chinese and Russian buyers are happy, if not so much JPM’s soon to be terminated mortgage bankers.

Tied with this is the fact that as we expected, JPM’s market-based Net Interest Margin continues to decline, hitting a new record low of just 0.84%. The recent uber flattening in the yield curve will certainly not help.

 

And then, looking at the Investment Bank, things are just as bad if not worse:

 

Yup – fixed income markets, that key profit center for every bank – crashed by $1 billion Y/Y to only $3.8 billion as even equity market revenue dropped by $45 million to $1.3 billion. Also note the average VaR which tumbled from $62mm to only $42mm – as if Jamie is telling the traders to take zero risk.

Which ties in with the last slide – remember the London Whale operation, the CIO, which was a revenue and income goldmine for so long until it blew up? So much for that.

Full earnings presentation below.

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

• Sensitive Market Data Leaked After Government Phone Call (WSJ)
• This is a actual Bloomberg headline: China Fake Data to Skew More Export Numbers (BBG)
• This is another actual BBG headline: U.S. as Global Growth Engine Putt-Putts Instead of Purring (BBG)
• Ukraine wants to buy European gas to boost energy security (Reuters)
• JPMorgan Profit Falls 19% on Trading, Mortgage Declines (BBG)
• Record Europe Dividends Keep $2.8 Trillion From Factories (BBG)
• Why is Goldman shutting down Sigma X: SEC eyes test that may lead to shift away from ‘dark pools’ (Reuters)
• Ebola Outbreak Empties Hotels as West Africa Borders Closed (BBG)
• Australian PM says searchers confident of position of MH370’s black boxes (Reuters)
• Gross Says El-Erian Should Explain Reason for Exit (BBG)
• PC recalls next: Sony Issues Warning Over Vaio Battery Fire Risk (WSJ)
• SAC Record $1.8 Billion Insider Plea Caps 7-Year Probe (BBG)
• Texan Discovers Key to Euro Going Against Consensus (BBG)
• GM Raises Recall Costs to $1.3 Billion (WSJ)
• London’s Wealthy Expanding Realms by Buying Out Neighbors (BBG)
• Coldwater Creek Files Bankruptcy After Apparel Sales Fall (BBG)

 

Overnight Media Digest

WSJ

* The fallout from General Motors Co’s troubled recalls escalated on Thursday with the auto maker raising its estimated costs to $1.3 billion and suspending two engineers involved in fateful early decisions.(http://ift.tt/1lVcMfW)

* PG&E Corp will offer a $250,000 reward for information resulting in the arrest and conviction of people who attacked its Metcalf transmission substation near San Jose, California, last year.(http://ift.tt/1gfqlQ6)

* China’s tougher stance on imports of genetically modified corn is roiling U.S. agribusiness, largely halting trade in the biggest U.S. crop in its fastest growing market. By one industry estimate, exports are down by 85 percent compared with last year. (http://ift.tt/1gfqlQa)

* After a decade-long probe into SAC Capital Advisors LP, federal prosecutors won approval of a $1.8 billion settlement with the hedge fund but appear to have all but given up efforts to charge its billionaire founder, Steven A. Cohen. (http://ift.tt/1gfqjYH)

* The Justice Department is investigating whether a Citigroup Inc unit in California failed to alert the government to suspicious banking transactions along the U.S.-Mexico border that in some cases involved suspected drug-cartel members, said people familiar with the probe. (http://ift.tt/1gfqjYL)

* Regulators have stepped up their scrutiny of the booming bond markets, launching an inquiry into Wall Street banks’ trading profits and expanding a probe into how new offerings are doled out to investors, according to officials. (http://ift.tt/1lVcMg2)

* Market-sensitive information vitally important to health-insurance companies has once again reached Wall Street before the public, and this time it appears to have come from the government itself. (http://ift.tt/1gfqlQk)

* A group of investors with Hollywood ties is seeking to revive bankrupt bitcoin-trading exchange Mt. Gox, according to people familiar with the matter. The investor group, which includes Brock Pierce, a former child actor-turned technology entrepreneur, is offering a token payment of one bitcoin, or about $400, to buy the exchange outright, according to these people. (http://ift.tt/1lVcMg4)

 

FT

Russia’s second-largest bank VTB said the Bank of England had made demands of its UK subsidiary regarding capital and liquidity that were “unjust” although it saw no immediate threat to its business there.

Some UK news websites have begun the use of automatically embedded advertising service provided by the Finnish start-up company Kiosked, which charges a commission of sales via these advertisements, and calls the phenomena the next phase of ecommerce.

BP Plc’s heavy presence in Russia may prove to be a weakness rather than once considered strength for the oil major as tensions between the country and Ukraine continue after its annexation of Crimea.

Gulf carrier Etihad Airways is seeking to become the largest shareholder in Alitalia, and wants to slice off 12,000 staff of the Italian national carrier’s staff, people with direct knowledge said.

Britain’s Co-operative Bank is expected to cancel millions of pounds of bonuses to former employees including former Chief Executive Officer Neville Richardson in an attempt to steer out of controversy over past misconduct.

 

NYT

* General Motors Co on Thursday suspended two engineers and added another repair to its recall of cars with a faulty ignition switch that has been linked to 13 deaths. G.M. said it would cost $1.3 billion in the first quarter to pay for all of its recalls – a significant increase over the $750 million it had previously estimated. (http://ift.tt/1lVcMg6)

* The Chinese pork company that bought Smithfield Foods, America’s biggest pork producer, formally began an attempt to raise as much as 41.2 billion Hong Kong dollars, or $5.3 billion, by listing the business in Hong Kong. The combined business has since been renamed WH Group, and its IPO would be the largest in the world since that of a Brazilian insurer, BB Seguridade Participacoes, in April 2013. (http://ift.tt/1lVcKon)

* The potential for harm by the “Heartbleed” bug could extend to the many devices that connect to the Internet, security experts say. Cisco Systems Inc and its rival Juniper Networks Inc, providers of equipment that move traffic through the Internet, said on Thursday that their main products such as routers and servers were unaffected. (http://ift.tt/1lVcMg8)

* A federal judge on Thursday approved a plea deal by Steven Cohen’s investment firm that resolved criminal insider trading charges and required a $1.2 billion penalty. Cohen is hoping for a less litigious transition for his firm, now re-christened Point72 Asset Management, that will manage about $9 billion of his own fortune. (http://ift.tt/1gfqkfe)

* Investors dumped Internet, biotechnology and other fast-growing companies at a dizzying pace on Thursday, dragging down the rest of the stock market and stirring up painful memories of the dot-com bust in 2000. The anxiety threatens to put a chill over the market for IPOs. (http://ift.tt/1lVcMgb)

* The Oversight and Government Reform Committee voted on Thursday to hold a former IRS official in contempt for refusing to answer its questions about her role in holding up applications for tax exemption. The official, Lois Lerner, faced the panel last year and made a statement denying any wrongdoing. Then she refused to answer questions, invoking her Fifth Amendment right to not incriminate herself. (http://ift.tt/1gfqm6O)

* Activist-investor Carl Icahn agreed to settle differences with eBay Inc and dropped his demands for two board seats and a spin-off of the company’s Paypal unit. He also agreed to sign a confidentiality agreement. In return, eBay will add a director, David Dorman, a former CEO of AT&T Inc, whom both sides have agreed on. (http://ift.tt/1gfqm6S)

* The number of Americans filing new applications for unemployment benefits tumbled last week to the lowest level in nearly seven years, strengthening views of faster job growth. The report on jobless claims on Thursday was the latest sign of economic momentum after an unusually cold winter slowed activity. (http://ift.tt/1lVcMws)

* The Treasury Department said on Thursday that the federal budget deficit for the first half of the 2014 fiscal year totaled $413 billion, down $187 billion from where it stood at this point last year, as tax revenue surged and spending sank. (http://ift.tt/1gfqmn8)

 

Canada

THE GLOBE AND MAIL

* All federal departments using software vulnerable to the so-called Heartbleed bug have been ordered to immediately disable public websites. The directive issued late Thursday calls this a precautionary measure until the “appropriate security patches are in place and tested”. (http://ift.tt/1lVcMwu)

* Former Canadian Finance Minister Jim Flaherty, who stepped down from his position last month, died of a heart attack on Thursday. Flaherty changed fiscal conservatism in Canada by delivering one of the largest deficits in modern history. When he quit as finance minister after eight years, he left the country on the road to balance. (http://ift.tt/1gfqmnc)

Reports in the business section:

* The Canadian Broadcasting Corporation will cut 657 positions and get out of the business of airing professional sports, a pillar of its programming for more than 60 years, as part of a plan to confront a C$130 million revenue shortfall projected for the 2014-15 broadcast year. (http://ift.tt/1lVcMwx)

NATIONAL POST

* Upon hearing of the death of former Canadian Finance Minister Jim Flaherty, doctors expressed worry about the side-effects that treatments for his rare skin disorder do “to the body and mind.” In January 2013, Flaherty told the public he suffered from bullous pemphigoid, an incurable autoimmune skin disorder that causes painful lesions. (http://ift.tt/1lVcMwB)

* A Quebec court has ruled that the province’s language police went too far in trying to force such major retailers as Wal-Mart Stores Inc, Gap Inc and Best Buy to add French to their outdoor signs. (http://ift.tt/1lVcMwD)

FINANCIAL POST

* Canadian Imperial Bank of Commerce’s Deputy Chief Economist Benjamin Tal never imagined himself as the defender of the Canadian housing market, but he is doing exactly that as he squares off against a U.S. commentator calling out what he sees as a bloated real estate market. (http://ift.tt/1gfqmDD)

* Goldcorp Inc hiked its hostile bid for Montreal-based Osisko Mining Corp on Thursday to C$3.6 billion, or C$7.65 a share in cash and stock. The dollar value is roughly C$1 billion more than what Goldcorp offered in January, when its own share price was significantly lower. (http://ift.tt/1lVcKoz)

 

China

SECURITIES TIMES

– China’s decision to allow cross-border stock investment between Shanghai and Hong Kong will boost large-capitalised blue chips on the Shanghai Stock Exchange as well as the overall Chinese stock market, analysts said.

– A study of the 2013 annual results of 22 major Chinese property firms shows their profit margins dropped sharply last year after a slew of government steps to cool housing prices.

CHINA SECURITIES JOURNAL

– Economists widely expect China’s exports to recover in the second quarter of this year despite weak trade data for the first quarter posted by the government on Thursday.

CHINA DAILY

– China’s state-owned enterprises are searching for changes amid the country’s reform drive as they are losing competitiveness under many years of government protection.

PEOPLE’S DAILY

– The keynote speech made by Chinese Premier Li Keqiang at the Boao Forum for Asia in China’s southern island province of Hainan on Thursday signalled China’s intention to use reforms to boost its economy instead of investment stimulus, analysts said.

CHINA BUSINESS NEWS

– The Shanghai Stock Exchange has no plan to abolish its 10 percent daily limit system for individual stocks for now, Xiao Gang, chairman of the China Securities Regulatory Commission, told reporters on Thursday on the sidelines of the Boao Forum.

 

Britain

The Telegraph

BRITISH ECONOMY TOO RELIANT ON PEOPLE SPENDING MONEY, WARNS IMF

(http://ift.tt/1lOqEpJ)

Britain is still too reliant on consumer spending to drive growth, and further action is needed to foster stronger exports and investment to ensure the economy is “three engines powered”, according to the head of the International Monetary Fund.

CO-OP BANK FACES FRESH QUESTIONS AHEAD OF RESULTS

(http://ift.tt/1lOqEpN)

The Co-op Bank will on Friday face fresh questions over its future as it announces losses for last year of as much as 1.3 billion pounds.

The Guardian

TESCO ARE EYEING A SLICE OF THE LUCRATIVE TAKEAWAY TRADE IN LONDON

(http://ift.tt/1sJ9xtF)

Tesco is understood to be working on a high-street takeway-food chain that would compete with Pret à Manger, Eat and Greggs. Analysts said the supermarket is putting the finishing touches to a new format called “Tesco Express food to go” that would be focused on the large London market.

WH SMITH TO MOVE INTO OPERATING FRANCHISE STORES FOR OTHER RETAILERS

(http://ift.tt/1sJ9xtL)

WH Smith is moving into operating franchise stores for other retailers, including Marks & Spencer, as the books-to-paper clips retailer develops a growing portfolio of brands.

The Times

BP GIVEN A BLOODY NOSE OVER ATTEMPT TO TREBLE CHIEF’S PAY

(http://ift.tt/1sJ9xtN)

Almost a third of BP’s shareholders refused to back “complacent” management at a stormy annual meeting during which the leadership was accused of turning the oil giant into a “laughing stock” because of spiralling payouts over the Gulf of Mexico disaster.

TESCO CHIEF NOT GOOD ENOUGH, SAY EX-DIRECTORS

(http://ift.tt/1sJ9Apd)

Former Tesco Plc directors are “dismayed and angry” at the cull of senior talent at the retailer and fear that Philip Clarke, the chief executive, is driving the business “in the wrong direction”.

Sky News

HOUSE PRICES TO SOAR AMID PROPERTY SHORTAGE

(http://ift.tt/1lOqChz)

Housing sales have reached their highest level in six years, fuelling fears that many buyers will be priced out of the market, according to the Royal Institution of Chartered Surveyors (Rics).

FUND MANAGERS GAIN NEW VOICE WITH ABI MERGER

(http://ift.tt/1lOqChD)

The investment affairs division of the Association of British Insurers is to merge with the Investment Management Association to create a focal point for asset managers.

 

 

Fly On The Wall 7:00 AM Market Snapshot

ECONOMIC REPORTS
Domestic economic reports scheduled today include:
PPI final demand for March at 8:30–consensus up 0.1% from prior month
U. of Michigan consumer sentiment index for April at 9:55–consensus 81.0

ANALYST RESEARCH

Upgrades

BofI Holding (BOFI) upgraded to Outperform from Market Perform at Keefe Bruyette
Corporate Executive Board (CEB) upgraded to Buy from Hold at Deutsche Bank
Demandware (DWRE) upgraded to Outperform from Market Perform at BMO Capital
E-Trade (ETFC) upgraded to Overweight from Underweight at Barclays
Ford (F) upgraded to Buy from Hold at Deutsche Bank
Hub Group (HUBG) upgraded to Strong Buy from Outperform at Raymond James
Imperva (IMPV) upgraded to Buy from Neutral at Sterne Agee
JAKKS Pacific (JAKK) upgraded to Outperform from Market Perform at BMO Capital
KB Home (KBH) upgraded to Market Perform from Underperform at Keefe Bruyette
LinnCo (LNCO) upgraded to Buy from Neutral at UBS
NewBridge Bancorp (NBBC) upgraded to Outperform from Market Perform at Keefe Bruyette
Principal Financial (PFG) upgraded to Equal Weight from Underweight at Evercore
SQM upgraded to Neutral from Underperform at BofA/Merrill
Sensata (ST) upgraded to Buy from Neutral at Longbow
Shutterfly (SFLY) upgraded to Buy from Neutral at Goldman
SolarWinds (SWI) upgraded to Outperform from Market Perform at Cowen
TD Ameritrade (AMTD) upgraded to Overweight from Equalweight at Barclays
TE Connectivity (TEL) upgraded to Buy from Neutral at BofA/Merrill
Toyota (TM) upgraded to Buy from Hold at Jefferies
Varonis (VRNS) upgraded to Overweight from Equalweight at Barclays
Zynga (ZNGA) upgraded to Equal Weight from Underweight at Morgan Stanley

Downgrades

Apogee Enterprises (APOG) downgraded to Buy from Conviction Buy at Goldman
Bed Bath & Beyond (BBBY) downgraded to Neutral from Buy at Citigroup
Corning (GLW) downgraded to Neutral from Buy at UBS
Ellie Mae (ELLI) downgraded to Market Perform from Outperform at FBR Capital
Equity Residential (EQR) downgraded to Underperform from Hold at Jefferies
Gap (GPS) downgraded to Neutral from Buy at Janney Capital
Seadrill (SDRL) downgraded to Neutral from Outperform at Credit Suisse
Symantec (SYMC) downgraded to Equalweight from Overweight at Barclays

Initiations

ASML (ASML) initiated with a Cautious at ISI Group
Analog Devices (ADI) initiated with a Buy at ISI Group
Applied Materials (AMAT) initiated with a Strong Buy at ISI Group
Ares Commercial (ACRE) initiated with a Market Perform at Keefe Bruyette
Aruba Networks (ARUN) initiated with a Buy at SunTrust
Broadcom (BRCM) initiated with a Neutral at ISI Group
CSX (CSX) initiated with an Outperform at Macquarie
Cisco (CSCO) initiated with a Buy at SunTrust
F5 Networks (FFIV) initiated with a Neutral at SunTrust
Freescale (FSL) initiated with a Cautious at ISI Group
Genesee & Wyoming (GWR) initiated with a Neutral at Macquarie
Intel (INTC) initiated with a Neutral at ISI Group
Juniper (JNPR) initiated with a Buy at SunTrust
KLA-Tencor (KLAC) initiated with a Neutral at ISI Group
Kansas City Southern (KSU) initiated with an Underperform at Macquarie
Lam Research (LRCX) initiated with a Strong Buy at ISI Group
Linear Technology (LLTC) initiated with a Cautious at ISI Group
Maxim Integrated (MXIM) initiated with a Neutral at ISI Group
Micron (MU) initiated with a Strong Buy at ISI Group
NVIDIA (NVDA) initiated with a Neutral at ISI Group
NXP Semiconductors (NXPI) initiated with a Strong Buy at ISI Group
Norfolk Southern (NSC) initiated with a Neutral at Macquarie
PNM Resources (PNM) initiated with an Outperform at RBC Capital
Polycom (PLCM) initiated with a Neutral at SunTrust
Qualcomm (QCOM) initiated with a Strong Buy at ISI Group
Riverbed (RVBD) initiated with a Neutral at SunTrust
SanDisk (SNDK) initiated with a Neutral at ISI Group
Tekmira (TKMR) initiated with an Outperform at RBC Capital
Teradyne (TER) initiated with a Buy at ISI Group
Texas Instruments (TXN) initiated with a Neutral at ISI Group
Trulia (TRLA) initiated with a Fair Value at CRT Capital
Trulia (TRLA) initiated with a Neutral at Susquehanna
Union Pacific (UNP) initiated with a Neutral at Macquarie
Zillow (Z) initiated with a Positive at Susquehanna

COMPANY NEWS

H&R Block (HRB) announced that it will divest its H&R Block Bank assets to BofI Federal Bank, the banking subsidiary of BofI Holding (BOFI)
Facebook (FB), WhatsApp deal cleared by FTC with caveat
Google (GOOG) said ‘Jelly Bean’ affected by Heartbleed
Gap (GPS) reported March SSS fell 6% and said it expects Q1 gross margins to decline more when compared to the prior year period than they did in the preceding quarter
NQ Mobile (NQ) said it identified an accounting overstatement related to share-based compensation for the three and nine months ended September 30
Zynga (ZNGA) appointed Best Buy’s (BBY) David Lee as CFO, succeeding CFO and CAO Mark Vranesh

EARNINGS

Companies that beat consensus earnings expectations last night and today include:
Ceres (CERE)

Companies that missed consensus earnings expectations include:
NQ Mobile (nq)

NEWSPAPERS/WEBSITES

Cisco (CSCO), Juniper (JNPR) say some products affected by Heartbleed bug, WSJ reports
Sony (SNE) issues warning over Vaio battery fire risk, Reuters reports
DreamWorks Animation (DWA) may look to take a piece of Vevo, Re/code reports
Apple (AAPL): iOS, OSX not affected by Heartbleed flaw, Re/code reports
JPMorgan (JPM) CEO Jamie Dimon hopes to minimize corporate cash, WSJ says
Deutsche Bank (DB) wins dismissal of FHFA case, Reuters reports
Apple (AAPL) may offer high-res iTunes tracks in 2 months, Apple Insider says
GM (GM) beats Volkswagen (VLKAY) in Q1 China deliveries, Bloomberg reports

SYNDICATE

Arthur J. Gallagher (AJG) 19M share Secondary priced at $43.25
ChinaCache (CCIH) files to sell 3.37M American Depositary Shares for holders
Enable Midstream (ENBL) 25M share IPO priced at $20.00
Farmland Partners (FPI) 3.8M share IPO priced at $14.00
GasLog (GLOG) files to sell 4.25M common shares
NTN Buzztime (NTN) files to sell common stock
Phibro Animal Health (PAHC) 11.765M share IPO priced at $15.00
Relypsa (RLYP) 3.59M share Secondary priced at $24.50
Voxeljet (VJET) 3M share Secondary priced at $15.00
Zoe’s Kitchen (ZOES) 5.833M share IPO priced at $15.00

via Zero Hedge http://ift.tt/1kBfIi7 Tyler Durden

After a selloff as violent as that of last night, usually the overnight liftathon crew does a great job of recovering a substantial portion of the losses. Not this time, which coupled with the sudden and quite furious breakdown on market structure, leads us to believe that something has changed rather dramatically if preserving investor confidence is not the paramount issue on the mind of the NY Fed trading desk.

Nikkei 225 (-2.38%) suffered its worst week since March’11 amid broad based risk off sentiment following on from a lower close on Wall St. where the Nasdaq Biotech index suffered its largest intra-day decline since August 2011. Negative sentiment carried over into European session, with stocks lower across the board (Eurostoxx50 -1.17%) and tech under performing in a continuation of the recent sector weakness seen in the US. JP Morgan (JPM) due to report earnings at 7:00AM EDT and Wells Fargo (WFC) at 8:00Am EDT.

Market Recap via Bloomberg

European shares remain close to intraday lows with the tech and travel & leisure sectors underperforming and food & beverage, utilities outperforming.
The Spanish and German markets are the worst-performing larger bourses, the Italian the best. The euro is little changed against the dollar. Greek 10yr bond yields rise; Italian yields increase. Commodities decline, with soybeans, natural gas underperforming and nickel outperforming. U.S. Michigan confidence, PPI due later.

• S&P 500 futures little changed at 1826.6
• Stoxx 600 down 1.3% to 328.9
• US 10Yr yield little changed at 2.64%
• German 10Yr yield up 1bps to 1.53%
• MSCI Asia Pacific down 0.9% to 138
• Gold spot up 0.3% to $1322.9/oz

Overnight Headline Summary

• Treasuries head for weekly gain, led by 5Y and 7Y notes, as technology and biotechs lead decline in global stock markets; markets also focused on China growth outlook and potential for higher fed funds next year.
• China’s central bank chief said the nation needs only minor policy adjustments when growth is within a normal range, adding to signals that the government will avoid taking broader action to counter a slowdown
• After building a reputation as a nay-sayer on the ECB, Bundesbank president Jens Weidmann’s tentative backing of QE will shore up its credibility as officials  debate whether they need to implement it
• Italy’s 3Y yield dropped to a record low at an auction of 2016 debt today
• Consumer inflation in China remained below the government’s target in March while factory-gate deflation deepened
• China’s Ministry of Finance failed to sell all of the bonds offered at an auction today for the first time in 10 months amid speculation short-term interest rates will climb as corporate tax payments tie up funds
• Obama will this morning announce the resignation of HHS secretary Kathleen Sebelius and the nomination of OMB director Sylvia Burwell to replace her, officials said; confirmation hearings will give GOP days of media exposure for their criticism of Obamacare, which remains unpopular
• Ukraine acting PM Yatsenyuk told reporters today in Donetsk, where pro-Russian protesters have seized the local- government headquarters, that his administration wants to give greater powers to the regions and to resolve the crisis that’s gripping the country as soon as possible
• Sovereign yields mixed. Asian stocks slide, Nikkei -2.4%, Shanghai -2%. European equity markets U.S. stock futures fall. WTI crude lower, gold little changed, copper higher

 

EUROPE

All 19 Stoxx 600 sectors fall; food & beverage, utilities outperform, tech, travel & leisure underperform

4.5% of Stoxx 600 members gain, 95.2% decline

Top Stoxx 600 gainers: Banca Monte dei Paschi di Sien +2.2%, Vienna Insurance Group +2%, WM Morrison Supermarkets PLC +1.3%, Danone SA +1.1%, Axel Springer SE +1.1%, Bollore SA +1%, Swedish Match AB +1%, Metso OYJ +0.9%, Croda International PLC +0.8%, Gjensidige Forsikring ASA +0.7%

Top Stoxx 600 decliners: Hargreaves Lansdown PLC -5.4%, Ocado Group PLC -5.4%, ARM Holdings PLC -4.7%, Thales SA -4.6%, Ashtead Group PLC -4.4%, Suedzucker AG -4.3%, GAM Holding AG -4.3%, International Consolidated Air -4.1%, Societe Television Francaise 1 -4%, Sports Direct International -4%

ASIA

Asian stocks fall with the Shanghai Composite outperforming and the Nikkei underperforming.

MSCI Asia Pacific down 0.9% to 138

Nikkei 225 down 2.4%, Hang Seng down 0.8%, Kospi down 0.6%, Shanghai Composite down 0.2%, ASX down 1%, Sensex down 0.4%

1 out of 10 sectors rise with utilities, energy outperforming and health care, tech underperforming

Gainers: Echo Entertainment Group Ltd +12%, Hong Kong Exchanges and Clearing +11.5%, TPK Holding Co Ltd +6.9%, Piramal Enterprises Ltd +6.2%, Adaro Energy Tbk PT +5.8%, Astra Agro Lestari Tbk PT +5.3%, Surya Citra Media Tbk PT +5.2%, NWS Holdings Ltd +4.8%, Zijin Mining Group Co Ltd +4.8%

Decliners: Coca-Cola Amatil Ltd -14.6%, Fast Retailing Co Ltd -7.9%, Anhui Conch Cement Co Ltd -7.2%, Adani Enterprises Ltd -6.8%, Tencent Holdings Ltd -6.7%, CITIC Securities Co Ltd -6.2%, Kakaku.com Inc -5.9%, Hermes Microvision Inc -5.8%, China Life Insurance Co Ltd -5.3%, Seiko Epson Corp -5.2%

 

EU & UK Headlines

Bunds recovered off the lowest levels of the session, supported by lower stocks as concerns over equity valuation on both sides of the pond continued to mount. Peripheral bond yield spreads traded mixed, with Finnish bonds under performing after S&P revised outlook to negative from stable, at the same time, Portuguese bonds benefiting from Fitch’s decision to revise its outlook to positive from negative. This morning lacked any major tier 1 data releases, with focus on reports that the BoE and ECB are expected to formalise their calls for a reinvigoration of the asset backed securities (ABS).

US Headlines

JP Morgan will be the first financial heavyweight to report earnings at 1200BST/0600CDT, followed by Wells Fargo at 1300BST/0700CDT. Analysts are not expecting too many shocks from JPM’s earnings release today as capital plans were approved by the Fed stress tests last month, however net interest margins (NIM) will be in focus, although is expected to be relatively stable. Headline EPS exp. at USD 1.46 and Exp. revenue USD 24.49bln.

Equities

Risk averse sentiment dominated the price action since the open, with tech underperforming and credit spreads widening the most in a continuation of the recent sector weakness seen in the US. The recent sell off in stocks is being linked to pricing concerns, with no value buyers able to establish a bottom ahead of earnings season. – Goldman Sachs cite the S&P 500’s P/E ratio as evidence of over-valuation: “The S&P 500’s forward P/E ratio up 33% to 16x at the beginning of 2014 from the beginning of 2012. The S&P 500 rose 45% over that period, suggesting 75% of the index’s returns are from valuation expansion rather than better earnings expectations.”

FX

EUR/USD and GBP/USD traded range bound this morning, with implied vols at lowest since mid-07 and Dec-12 respectively, amid light news flow and absence of any tier 1 macroeconomic data releases. Elsewhere, softer USTs supported USD/JPY via favourable interest rate differential flows, which also saw the spot rate recover off overnight lows. Despite the slide by the spot rate this week, 3m R/R is little changed on the week, capped by low vols and JPY call supply which has encouraged cash hedge of deeper spot decline.

Commodities

Heading into the North American open, WTI and Brent Crude futures are seen lower, albeit marginally, as risk averse sentiment weighs on prices. This morning, the IEA said that overall forecast for the increase in oil demand this year was cut by 100,000 barrels a day to 1.3 million barrels a day. The agency also noted that Saudi Arabian oil production fell 285,000 barrels a day to 9.57 million barrels a day last month, its lowest level in almost a year.

* * *

DB’s Jim Reid concludes the overnight recap

The yo-yo year continues as the S&P 500 last night sold off sharply (-2.09%) to yet again cross into negative territory for the year. We can’t help thinking that as it becomes ever clearer that the Fed is pretty much fixed in its determination to stop QE late this year, the oxygen that has fuelled the 5 year bull market is slowly draining out of the market. Clearly the Fed is still buying a significant amount of bonds and thus providing a lot of liquidity but clearly only  for a few more months. We think this is creating a lot more two-way tension in equity markets. Supporting this argument is the fact that those sectors that have done best since the bull market/high liquidity period started are suffering in the recent correction. If we define the beginning of the bull market as having started on the 9th of March 2009 when stocks hit their financial crisis-lows, the NASDAQ Technology and Biotech indices have gained 254% and 281% respectively. The S&P 500 homebuilders index has gained 256% over the same period. For comparison, the S&P 500 has gained “only” 177%. Tech, biotech and homebuilders are now down 5%, 19% and 12% from their YTD peaks. This compares with 3.1% retracement in the S&P 500 from the record highs posted in early April this year. So it does seems that sectors that have benefited the most from easy policy are those that are selling off the most right now.

We’re still overweight credit but as we published in our Q2 outlook we’re getting more nervous about the second half as the end of US QE will then be weeks and not months away. The ECB and BoJ still have the ability to soften the blow and the Fed can also help by being more dovish on expected future interest rate policy. On the Fed there does seem to be confusion at the moment as to these expectations, especially after the release of the FOMC minutes on Wednesday. It’s a confusing message they have delivered in recent weeks but at the end of the day policy will be data led so this is the most important factor determining monetary policy. The rest is noise, albeit potentially large trading noise.

Second guessing the ECB is also a fun pursuit at the moment and interestingly the Euro continues to bounce back from the ECB press conference of last week. It does seem that the FX markets want more action than words at the moment with EURUSD rallying 1.2% since Draghi’s press conference last week(1.3895 as we type) after initially falling. ECB Vice President Constancio, one of the more dovish members on the Board, weighed further into the debate yesterday. Constancio commented that the ECB “will do something, because inflation is too low” and that April’s advanced inflation reading will be important “to establish if inflation is low in a more permanent way”. So it seems that next Wednesday’s Eurozone CPI inflation will be key as will all the regional numbers in the next few weeks. Ahead of that, the ECB is seeking to loosen the capital charges and regulations for asset-backed securities collateralised by loans in an effort to make it easier for European banks to hold the securities. The ECB and BoE will jointly put forward a statement on this issue at the IMF meetings this weekend, hoping to jump start the ABS market as a way of increasing the flow of loans to the corporate sector. Some are noting that this may increase the size of the ABS market in advance of a potential private-market QE program from the ECB.

Turning to Asia this morning, we’re seeing a continuation of the selldown in equities with the Nikkei down 2.3% and Hang Seng down 0.4%. There hasn’t been much of bounce in risk assets since the S&P500 closed at the lows yesterday. The Nikkei is poised to close below 14,000 for the first time since October last year. Japanese equities have been spooked by a profit warning from the country’s largest clothing retailer, Fast Retailing Co, whose founder said today that he was pessimistic about the outlook for consumption in Japan. The BoJ’s March 11th meeting minutes contained very little surprises, and USDJPY is unchanged at 101.50. China’s March CPI came in pretty much in line with expectations with CPI up 2.4% YoY (in line) and PPI down 2.3% YoY (vs -2.2% expected). The next set of Chinese data to watch will be Retail sales and Industrial production on Wednesday, which should give a better picture of economic activity, free from the distortions which affected yesterday’s trade numbers. The boost from yesterday’s news that Shanghai and HK’s stock exchanges would link their markets is proving shortlived with the Shanghai Composite down 0.6%. Indonesian equities (+0.5%) are bouncing back from yesterday’s election-driven selloff, but the rupiah is still weaker against the USD (-0.9%).

Yesterday’s data flow was fairly light with US initial jobless claims for the week ending April 5 falling 32k to 316k, the lowest level since May 12, 2007. DB’s economics team notes that the 4-week moving average is down -5k to 316k, the lowest level since Sep 28, 2013 which was artificially low due to a processing backlog of claims in California (omitting this reading we are at a post recession low for the 4-week moving average). US treasury yields edged higher following the data, but this was overwhelmed shortly after by the selloff in equities and tech stocks. All in all, it was a classic risk off day with gold (+0.55%) higher, 10yr yields lower (-4bp) but in saying that DM credit and EM assets did surprisingly well in context. Indeed, the iBoxx USD Corporate  index is still within 0.5bp of its cyclical lows.

Despite the relative resilience in EM, there were a few negative EM headlines over the last 24 hours. Firstly, Moody’s changed the outlook on Turkey’s Baa3 rating to negative from stable. The announcement came around 1am London time. Moody’s said that there is “growing uncertainty about the medium-term growth trend because the prospects for growth-enhancing structural reforms may be diminished in the more uncertain policy environment that is accompanying the domestic political turbulence”. The lira is 0.6% weaker in Asian trading. Coming back to China, there’s a report doing the rounds that some Chinese importers have defaulted on at least 500,000 tonnes of US and Brazilian soybean cargoes worth $300m, as buyers struggle to credit (Reuters).

The article says that there are around five to six panamax vessels which are unable to be unloaded at Chinese ports because buyers cannot get letters of credit. Chicago Soybean futures are down close to 2% (-0.6% today) and the story reminds us of the fears of Chinese commodity-finance unwinds earlier this year. Elsewhere in EM, Russia threatened to cut supplies of gas to Ukraine, and indirectly to Europe, unless Kiev immediately took action to pay outstanding bills. NATO warned on Thursday that Russian forces across the Ukrainian border number about 40,000 across 100 sites with “high readiness”
to invade Ukraine. The G7 warned over further sanctions against Russia yesterday.

Turning to the day ahead, we get the final German and Spanish CPIs today in Europe. Following that, JPMorgan Chase and Wells Fargo will start off the US bank earnings season for Q1. Heading into the weekend, the focus will turn to the IMF and World Bank spring meetings in Washington DC and there are speeches scheduled from a number of central bankers including Draghi over the weekend. Stateside, the latest Univ of Michigan consumer sentiment reading will be published together with March PPI.

Then on Sunday we have Liverpool vs Man City in what could end up being a title decided. I did casually look at how I might be able to get tickets. I was slightly shocked to see them changing hands at north of 5k. Sadly my sofa is a much cheaper option. Expect the mood of Monday’s EMR to be determined  by the result of this game!

via Zero Hedge http://ift.tt/1jygLf6 Tyler Durden

There is much new info in the just released Bloomberg profile on the infamous ex-JPMorganite Blythe Masters, among which the disclosure that she had made it clear that she had wanted to go along with the disposable JPM physical commodities unit (which as was reported recently, was sold to Swiss commodities giant Mercuria) and “and continue as the group’s chief”, a plan which did not work out as she had planned since she has no plans to “join the unit’s purchaser” (although joining Glencore is another matter entirely, and one which looks increasingly plausible) but what we find most striking is the following revelation: “Masters is under investigation by federal prosecutors in Manhattan, according to two people with knowledge of the matter. That probe was opened following a settlement with regulators that alleged JPMorgan manipulated power markets in the Midwest and California.”

This is somewhat ironic because it was none other than Zero Hedge which asked nearly a year ago if “JPMorgan’s “Enron” Will Be The End Of Blythe Masters?” Suddenly, the answer appears to be yes.

More from Bloomberg:

The existence of a probe surrounding JPMorgan’s role in the energy market has been known since August, when it was reported by several news organizations, including Bloomberg News, and subsequently disclosed by the New York-based bank. What wasn’t known was prosecutors’ interest in Masters.

We also learn that in addition to Mercuria, two other bidders for the JPM unit were Blackstone and Macquarie:

Blackstone appeared to have an inside track on Mercuria and Macquarie in the final round of bidding, according to three people involved in the process. The buyout firm had a significant banking relationship with JPMorgan through its history of acquisitions.

 

Its limited presence in commodities and energy trading also made it the most likely candidate to buy JPMorgan’s business in its entirety and bring Masters and her team on board to run it, the people said.

it is here that Masters’ legal liabilities reared their, or technically her, ugly head:

As the January deadline for bids approached, the question of Masters’s legal exposure to the federal investigation remained, according to the people involved in the process.

 

JPMorgan didn’t provide a level of detail about the investigation that was satisfactory to some of the bidders, according to the people familiar with the process. Masters dismissed any concerns about the inquiry, one person said.

 

“We didn’t receive any complaints during the process,” said Marchiony, the bank spokesman, about information on the lingering investigation. 

 

Blackstone executives wondered whether there could be more to it than the bank was letting on, said one of the people. Given that Masters might end up as the public face of Blackstone’s commodities business, they were wary, this person said.

 

Macquarie also was wary about potential legal issues, said one of the people. The bank didn’t want any unforeseen developments to harm its reputation in the U.S. energy markets.

 

Mercuria’s executives were less concerned about the legal exposure, according to a person familiar with its bid. The firm, started in 2004 by two former Goldman Sachs Group Inc. traders, had a minimal presence in U.S. power and gas markets, and it could run JPMorgan’s business without Masters.

Could it perhaps be because Swiss regulators are even more clueless and coopted than their US peers? Considering the amount of Libor manipulators that ended up in Swiss asset managers the answer is a resounding yes. That said, even Mercuria appears to have nixed the idea of Blythe coming on board as part of the commodities group package.

This is not surprising. What is however, is just how concerned Blythe was about her own security.

During a due diligence period from mid-December through mid-January, a handful of bidders emerged. The most serious were Mercuria, New York-based buyout firm Blackstone Group LP (BX) and Macquarie Group Ltd. (MQG), an Australian bank. A fourth contender, Grupo BTG Pactual of Brazil, dropped out in part because of the extra capital Brazilian regulators would require it to hold, a person said at the time.

 

Masters met with senior executives from the three final bidders in New York and elsewhere, according to people involved in the process. Her arrival at some of the meetings, with an escort of bodyguards, left an impression on her unit’s suitors, said two of the people.

Now why would one go to a diligence meeting with bodyguards – it is almost as if she was convinced someone meant her harm regardless of the circumstances. Whyever could that be? Certainly not due to the way her group conducted itself full of “integrity” and abidance by the rules. Just recall from her CNBC interview in April 2012, in which she made the following revelations:

• JPM’s commodities business is not about betting on commodity prices but about assisting clients”… “it’s about assisting clients in executing, managing, their risks and ensuring access to capital so they can make the kind of large long-term investments that are needed in the long run to expand the supply of commodities”…
• “There’s been a tremendous amount of speculation particularly in the blogosphere on this topic. I think the challenge is it represents a misunderstanding as the nature of our business. As i mentioned earlier, our business is a client-driven business where we execute on behalf of clients to achieve their financial and risk management objectives. The challenge is that commentators don’t see that. So to give you a specific example, we store significant amount of commodities, for example, silver, on behalf of customers we operate vaults in New York City, Singapore and in London. And often when customers have that metal stored in our facilities, they hedge it on a forward basis through JPMorgan who in turn hedges itself in the commodity markets. If you see only the hedges and our activity in the futures market, but you aren’t aware of the underlying client position that we’re hedging, that would suggest inaccurately that we’re running a large directional position. In fact that’s not the case at all.
• “We have offsetting positions. We have no stake in whether prices rise or decline. Rather we’re running a flat or relatively flat matched book.
• “What is commonly out there is that JPMorgan is manipulating the metals market. It’s not part of our business model. it would be wrong and we don’t do it.”

Of course, if some or all of the above bullet points were flat our lies, one can imagine why Blythe could be concerned about her personal security. Which in the aftermath of the London Whale fiasco in which we learned that JPM mostly exceled in lying about everything, we know is the case.

In retrospect we can understand why Blythe would only dare go out in public with a couple of armed gorillas covering her back.

via Zero Hedge http://ift.tt/OMFG36 Tyler Durden