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Ealier today, around the time the US market opened sharply lower despite the attempt to send it soaring with the traditional and well-expected USDJPY ramp, the Euronext exchange… broke.
Shortly thereafter this initial “issue” was fixed… Only for the Euronext to break again moments ago.
We find it somewhat odd how these market breaks always happen on sharp downdays.
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In the days after the Crimean referendum, we presented our take on “who is next” in the great annexation scramble and said that the most likely region to enter the USSR 2.0 next is Moldova’s Transnistira region, where in a 2006 referendum some 97% of the population had voted to become part of Russia.
Moments ago this appears to have been confirmed after the president of the territory said the following, via Bloomberg:
One thing is certain: the “west” will not be happy as the Russian territorial expansion continues.
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New mortgage originations fell over 23% month-over-month and a stunning 47% year-to-date according to Black Knight (formerly LPS). As they show in their detailed presentation, with a 65% year-over-year drop, new mortgage originations are at their lowest since their records began and what is perhaps more concerning is prepayment speeds signal further declines are ahead and the ratio of serious deterioration to foreclosure (along with huge numbers of loan mods due to reset) suggest the housing market is anything but recovering fundamentally with the average loan in foreclosure now 2.6 years past due.
But apart from that – prices are up so that must be good right? as affordability for the average joe collapses.
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Over the weekend the world was gripped by the drama surrounding the mysterious murder-homicide of the former CEO of Dutch bank ABN Amro and members of his family, and whether there is more foul play than meets the eye. However, that is nothing compared to what just happened in the tiny, and all too quiet Principality of Lichtenstein, where moments ago the CEO of local financial institution Bank Frick & Co. AG, Juergen Frick, was shot dead in the underground garage of the bank located in the city of Balzers.
Based on preliminary reports, the murder is the result of a disgruntled fund manager, Juergen Germann, who had previously been embroiled in a “bitter dispute” with the government and the bank. Bloomberg has more:
A 48-year-old man was shot dead in the underground garage of a financial institution in Balzers at 7:30 a.m. local time, the principality’s police said on its website. The suspect, Juergen Hermann, fled the scene in a Smart car with Liechtenstein number plates, according to police. Neither the victim nor the institution were identified in the statement.
The deceased was Juergen Frick, CEO of Bank Frick & Co. AG, Switzerland’s Radio 1 said in an e-mailed statement, citing employees of the bank. Calls to Bank Frick were answered by a voice-mail message saying the company is closed because of “a death.” It gave no further details.
Hermann is a fund manager who has been embroiled in a dispute with the Liechtenstein government and Bank Frick for many years, Switzerland’s Radio 1 said.
The Liechtenstein government and the country’s Financial Market Authority “illegally destroyed my investment company Hermann Finance and its funds, depriving me of my livelihood,” according to a website registered under the name Juergen Hermann of Hermann Finance AG.
He has filed lawsuits seeking recovery of 200 million Swiss francs ($225 million) from the government and 33 million francs from Bank Frick, according to the website. The lender “illegally enriched itself,” among other alleged crimes, it said.
A representative of Hermann’s lawyer declined to comment when reached by telephone. A call to Hermann Finance’s office was answered by an employee of a law firm who said his company isn’t related to Hermann Finance.
The narrative against the “publicly hostile” alleged shooter has already been flushed out.
Hermann has been “publicly hostile” to the country’s Financial Market Authority and some of its employees, forcing it to take security measures in consultation with the police, FMA spokesman Beat Krieger said in an e-mail today.
The escape vehicle was later found in the village of Ruggell, 25 kilometers (16 miles) north of Balzers, police said.
“The area is being searched by police with dogs and helicopters,” the 120-member police force said. Zurich police are helping to document the crime scene, spokesman Mario Cortesi said.
Here is the update form the local police station:
On Monday morning, it came in Balzers a homicide, the suspect is currently volatile.
Against 07.30 clock in an underground garage of a financial institution is a homicide in which a 48-year-old man was shot occurred. When volatile suspects are Jürgen Hermann from the Moors. He is armed and dangerous, according to police reports, the investigation of the National Police is in full swing.
Notes on a possible whereabouts of the suspects are requested immediately to the police landing +423 / 236 71 11. Upon encountering the suspect, it is important to exercise extreme caution.
Below is the profile of the murdered CEO, still on the bank’s website:
As CEO Jürgen Frick is closely involved in all business activities of the bank with a special focus lying on client advisory, financing and financial product development. As well he supervises all real estate development projects of the Bank.
Jürgen is also Chairman of the Board at Crystal Fund Management AG, a subsidiary of Bank Frick & Co.
As for the bank itself:
Bank Frick is active in modern wealth management and provides a range of advisory services. As well it specializes in fund development and fund administration.
Our Bank entertains close ties to an efficient network of fiduciaries, insurers, tax experts, investment funds and law firms around the world.
We are completely independent. Our advice and our services cater exclusively to the individual needs and requirements of our clients.
Combinvest Establishment serves as holding for all bank shares. Family Frick is the majority stake holder.
After a successful career in international banking and fiduciary services, Kuno Frick senior founded in December 1998 Bank Frick & Co. AG. Due to his wide experience and excellent connections, Bank Frick proved an immediate success.
Since then, the bank’s assets under management have risen steadily. New business segments are continuously being added to the bank’s service portfolio, while existing ones are constantly being refined.
In autumn 2011, Bank Frick’s international presence was significantly enhanced with the opening of Bank Frick UK Branch in Mayfair, London.
Up until now it was mostly banker suicides. With the first open bank CEO murder, one wonders if there will be a change in the pattern.
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UPDATE: V-shaped recovery in stocks as 103 USDJPY marks line in the sand…
BTFD failed and momentum has broken. Growth stocks and Biotech dreams are lying shattered in a pool of margin calls once again this morning. Nasdaq being dragged by another more-than-1% drop in Biotechs (now negative year-to-date) and nearing the 20% high-to-low drop of a bear market. Bonds are bid as JPY carry unwinds drag broad US equity markets lower… The USD is weaker (led by EUR strength) and precious metals are down modestly (gold at $1300)
Nasdaq and Russell well into the red with the Dow as the S&P is fading fast…
Biotechs in trouble…
And growth in pain (but the ubiquitous reaction bounce is coming)…
As USDJPY leads us lower (testing 103)
Charts: Bloomberg
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Brad Katsuyama played by Brad Pitt? We wouldn’t have too much of a problem with that.
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"Whatever it takes," appears to have become the new mantra across global financial systems and with Chinese shadow banks under increasing pressure (as cash-for-commodity deal financing dries up and "hedge" losses mount on 'surprise' Yuan weakness), property developers are increasingly desperate for liquidity. The solution, as The FT reports, Chinese property companies are buying stakes in banks and raising fears that the country’s already stretched developers are trying to cosy up to their lenders. 10 Chinese developers, who have been active in recent bank IPOs, have invested an 'unprecedented' $3bn in their potential lifeline lenders.
As The FT reports, Chinese property developers are buying themselves a piggy bank:
Ten Chinese property companies have invested Rmb18.4bn ($3bn) in banks, according to the Financial News, an official newspaper published under the aegis of China’s central bank.
…
Some of the developers are heavily indebted, sparking questions about the motivation for these deals, and specifically whether the property companies are hoping to use their links to the banks to obtain preferential financing.
…
There had been some cross-pollination between Chinese developers and banks in the past, with China Resources and Shanghai-based Greenland holding investments in both. But there is no precedent in China for the flurry of recent tie-ups.
Moodys is unimpressed…
Rating agencies have so far taken a cautious view of the deals, noting that property developers are hoping to see benefits but that the investments are still small in scale.
“We don’t think they [the developers] expect to get funding from the banks directly, but they will be looking for opportunities for mortgage financing for their clients or financing for their contractors,” said Kaven Tsang of Moody’s.
How they are doing it? Through debt-financing ponzi of course…
Developers have been active as cornerstone investors in some of the recent Chinese bank initial public offerings in Hong Kong…made the deal “to better meet its customers’ demands for financial services”.
In these IPOs, other mainland Chinese companies have often bought up more than half the total available shares, leading some bankers to label them “IPOs without the P” for public.
…
But a sharp rise in Evergrande’s debt level has fuelled doubts about the wisdom of devoting capital to a bank stake. Evergrande’s gearing ratio – net debt relative to equity – nearly doubled last year to 160 per cent, prompting Barclays analysts to describe it as “a bit out of control”.
So, in summary, as a Chinese property developer, you are dying in the vine from falling asset prices (new home prices are being slashed as 'investors' are desperate for liquidity) and unavilability of cheap lending.. so you borrow – at whatever rate you can (likely mortgage on already mortgaged property and land) – and use that money to finance a bank IPO buying spree – which may (or may not) enable you to pressure the bank to agree better terms for your loans and enable you to live just another day, week, quarter.
The problems is – the regulators are watching closely now as reforms and graft are increasingly not accepted:
“Whether from the perspective of the banks or regulators, as soon as a property company becomes a bank’s shareholder, their business dealings will become related-party transactions, and so will be controlled and supervised more closely,”
via Zero Hedge http://ift.tt/PFh3GX Tyler Durden
The big story developing in the US markets regards the sudden crackdown by regulators, most notably the SEC and Justice Department, on High Frequency Trading or HFT.
For well over five years now, certain trading firms have been using high-speed computers to front-run orders from other investors.
In simple terms, the market exchanges, like the NYSE, would let these firms (for a price of course) see when someone put in a market order to buy or sell shares on the market.
The trading firm would then use super fast computer programs to buy or sell shares in front of that order, before turning around and selling the shares to the investor at a slightly higher price. The trading program may only make a $0.01 profit by doing this, but because they were doing it millions of times a day, they were making billions of Dollars per year.
At one point, this practice accounted for as much as 70% of all market volume. Put another way, 70% of all shares being traded on the market were not from investors actually placing buy and sell orders, but from computers front-running investors and each other.
These firms argued that they were providing liquidity to the markets (an outright lie). The reality is that they spent millions of dollars lobbying in Washington DC to make sure that the regulators didn’t crack down on them.
However, it would appear that things have finally hit a boiling point with author Michael Lewis publishing a book exposing HFT as the immoral and illegal activity it is.
Between this, and a number of high profile media appearances, Lewis has finally raised public awareness on the issue of HFT. And the public is not happy about it As a result both the SEC and Justice Department have opened investigations.
As far as stocks are concerned, we’ve seen a sharp drop in the companies that were highly favored by HFT firms.
Amazon, an HFT favorite, has imploded from its highs.
The same goes for Facebook:
This was always the problem with HFT: that these firms were pushing prices higher, through artificial pressure, not real buying power. Now that they’re moving out of the market, we’re seeing the consequences of this.
Indeed, the sharp drop in those companies favored by HFT firms predicted the recent collapse in the NASDAQ index as a whole:
Today, the NASDAQ is resting on its 100-day moving average. As you can see in the above chart, this line has help during every correction since 2013.
IF we see a breakdown here (meaning this line doesn’t hold), then the HFT crackdown could become a very serious issue for the markets. With these programs dominating trading so much, removing them from the market will have serious consequences for prices.
The whole situation is very reminiscent of the computer trading, which led to the 1987 Crash.
Could the markets crash again? We’ll see. But smart investors should be prepared for whatever may come.
This concludes this article, swing by http://ift.tt/RQfggo for a FREE investment reports outlining how to Protect Your Portfolio from bear market collapses.
Best Regards
Phoenix Capital Research
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Submitted by Charles Hugh-Smith of OfTwoMinds blog,
This is not doom-and-gloom for society–it is only doom-and-gloom for the current unsustainable arrangement (Plan A).
The Grand Narrative of the past few centuries goes something like this: from religious authority to secular authority, from agriculture to industrial, from rural to urban, from local to global, from periphery to center, from decentralized to centralized, from low-density energy to high-density energy (from wood to coal to oil/natural gas), from industrial to communication technology, from gold to fiat currencies, from linear to non-linear (complex/fractal), from local scarcity and high cost to global abundance, from islands of prosperity to continents of prosperity, from cash to credit, from collateral to leverage,from productive to consumerist and from sustainable to unsustainable.
Many of these linear trends are running out of oxygen or reversing. Rigid hierarchies are being disrupted by self-organizing systems, centralization is being disrupted by decentralization, lower density alternative energy is distributed rather than concentrated, commodity costs are rising globally due to demand outstripping supply and leveraged credit is destabilizing financial systems across the globe.
In the past few decades, the growth narrative has depended on "the Next Big Thing" –the new disruptive technology that drives wealth and job creation.
In the early 20th century, the next big things were plentiful, and they clustered around transport and communication: autos, highways, aircraft, radio, telephony and most recently the Internet.
The progress of technologies tends to track an S-Curve, with a slow gestation (experimentation that drives rapid evolution of innovations), a period of widespread adoption and technological leaps, and then a maturation phase in which advancements are refinements rather than leaps.
Air travel is a good example: the leap from open-cockpit aircraft of the 1910s to the long-distance comfort of the DC-3 in the 1930s was enormous, as was the leap from the prop-driven DC-3 to the greater capacity and speed of the 707 jet airliner.
But since the advent of the Boeing 727 in 1964 and the jumbo-jet 747 in 1969, very little about the passenger experience of flight has changed (or has changed for the worse): the envelope of speed is little changed, and efficiency has improved, but these are mostly invisible to the passengers.
My 1977 Honda Accord was extremely safe, reliable, powerful, efficient, comfortable, etc. Improvements in the past 37 years since have been modest in these fundamental technologies. (I actually prefer the smaller, older, less luxurious Accords.)
Once computers reached the Mac OS X/Windows XP level, improvements have been of marginal utility. The lack of blockbuster medications–and the skepticism regarding the efficacy and cost of existing blockbuster meds–raise the same question: maybe the low-hanging fruit of present technologies have all been picked.
What Happens After the Low-Hanging Fruit Has Been Picked? (April 2, 2014)
No More Industrial Revolutions, No More Growth? (December 27, 2012)
The costs of our lifestyle continue to rise, due to financialization, cartel/fiefdom skimming, higher energy costs, bureaucratic bloat and related systemic causes. At the same time, more of our collective consumption is being funded with debt, which is another way of saying that present consumption is being paid for with future income.
For the past two centuries, each Next Big Thing magically created more wealth and more jobs. The progression has been straightforward: production moves to lower-labor cost areas or is automated/mechanized, and labor moves to providing higher-value services.
What if we've run out of Next Big Things that generate more jobs? What if the next big thing is Degrowth, i.e. consuming less and doing more with less? This is a problem, as the Status Quo has optimized only one pathway: higher consumption, costs and debt.Any reduction in any of these three collapses the system.
TEDx Tokyo: The "De" Generation (8 minutes) (de-ownership, de-materialism, de-corporatism)
Degrowth, Anti-Consumerism and Peak Consumption (May 9, 2013)
The American Model of "Growth": Overbuilding and Poaching November 19, 2013
When Conventional Success Is No Longer Possible, Degrowth and the Black Market Beckon(February 7, 2014)
Labor-saving software/communication technology has chewed through much of production and is now feeding ravenously on the service sector. As costs inexorably rise, enterprise has only one real way to reduce costs: reduce labor. As a result, the current Big Thing–the world-wide web–is the first technology that is not creating more jobs than it eliminates.
Many smart people retain the faith that technology always creates more jobs than it destroys, but if we look at our daily lives, I see little evidence to support this faith. Thanks to technology, sole proprietors in information/design businesses can create the same output that took multiple people just 20 years ago.
Russ in Redding: The Human Face of The End of Work (September 2, 2011)
America's Social Recession: Five Years and Counting (August 28, 2013)
The Ten Best Employers To Work For (Peak Employment) (March 28, 2013)
The Python That Ate Your Job (December 11, 2013)
In my view, the Status Quo has no Plan B, not just from habit and the desire of those in power to retain power; we collectively have a failure of imagination. We cannot imagine a world that consumes less, generates fewer conventional jobs and reduces debt rather than creates more debt. The only strategy left in a systemic failure of imagination is to do more of what has failed spectacularly.
Why the Status Quo Is Doomed (June 27, 2013)
A Degrowth economy is not only entirely feasible in my view, it is the only way forward. The low-hanging fruit of Next Big Things have been picked, and wearable computing (Google glasses, etc.) is simply not a global growth engine. Robotic vehicles will eradicate millions of jobs without creating any more jobs at all; manufacturing self-driving cars will add very little labor to the manufacturing process.
Wages are no longer an adequate means of distributing the surplus of an economy. But this is not doom-and-gloom for society–it is only doom-and-gloom for the current unsustainable arrangement (Plan A). Plan B is actually a better plan, though few are able to see that yet.
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There is a reasonably quiet start to the week before we head into the highlights of the week including the start of US reporting season tomorrow, FOMC minutes on Wednesday and IMF meetings in Washington on Friday. On the schedule for today central bank officials from the ECB including Mersch, Weidmann and Constancio will be speaking. The Fed’s Bullard speaks today, and no doubt there will be interest in his comments from last week suggesting that the Fed will hike rates in early 2015.
On Tuesday, the Q1 reporting season unofficially kicks off with earnings from Alcoa. First-quarter earnings from S&P 500 companies are expected to have increased about only 1.2% yoy according to Thomson Reuters data — that is down from earlier estimates of a circa 6% increase. Staying with tomorrow, the BoJ releases its latest Monetary Policy Statement and the expectation is that the central bank will keep its policy unchanged for the time being. In terms of data, UK industrial production will be the main focus. The ECB’s Weidmann speaks again and the Fed’s Kocherlakota and Plosser (both voters) will be giving speeches.
On Wednesday, the FOMC minutes from the February meeting will be the main focus of the day. The minutes will hopefully provide more colour around the recent shift in the Fed’s rate expectations as well as the Fed’s shift to more qualitative guidance. The US also releases whole inventories data. The BoE meets on Thursday on the same day that the ECB publishes its monthly bulletin. China reports its March trade numbers which will be an important data release following the volatility in export numbers year-to-date. US jobless claims are also scheduled for Thursday.
On Friday, JPMorgan and Wells Fargo will be the first of the major US banks to report earnings for Q1. On the macro side, we get the preliminary UofMichigan confidence report together with US PPI. The BoJ releases its March Meeting minutes on Friday. A three day World Bank and IMF spring meeting is scheduled to commence on Friday in Washington, which will be attended by the world’s central bankers and finance ministers. Ahead of that, the IMF publishes its Global Financial Stability report on Wednesday.
The complete weekly US macro event calendar:
And the detailed breakdown:
Monday, April 7
Tuesday, April 8
Wednesday, April 9
Thursday, April 10
Friday, April 11
Source: Deutsche, BofA, Goldman
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