Tag: finance

Days after the US escalated, announcing it will be sending a Navy warship back into The Black Sea, and on the heels of NATO ordering its military planners to draft measures to beef up defenses amongst its Eastern European members, Russia is demanding answers for this escalation. As Reuters reports, Russian Foreign Minister Sergei Lavrov said any increase in NATO’s permanent presence in eastern Europe would violate a 1997 treaty on NATO-Russian cooperation: “We have addressed questions to the north Atlantic military alliance. We are not only expecting answers, but answers that will be based fully on respect for the rules we agreed on.” De-Escalation-Off.

 

As Reuters reports, NATO has ordered military planners to draft measures to reassure nervous Eastern European countries – which were under Moscow’s domination until the 1989 end of the Cold War – but stopped short of calls by Poland to base more forces there.

Foreign ministers from the 28-nation, U.S.-led NATO met this week to discuss responses to Russia’s Crimea takeover, including sending NATO soldiers and equipment to allies in eastern Europe, holding more exercises, ensuring NATO’s rapid-reaction force could deploy more quickly, and reviewing NATO’s military plans.

 

Military planners will come back with detailed proposals within weeks, a NATO official said.

The Russians are not amused…

Russian Foreign Minister Sergei Lavrov said any increase in NATO’s permanent presence in eastern Europe would violate a 1997 treaty on NATO-Russian cooperation.

 

“We have addressed questions to the north Atlantic military alliance. We are not only expecting answers, but answers that will be based fully on respect for the rules we agreed on,” Lavrov told reporters at a briefing with his Kazakh counterpart.

 

…

 

“It is necessary to de-escalate rhetoric which overshoots the mark and crosses into the unreasonable,” he said.

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

Having successfully negotiated the exposure of a potential “false flag” attack on Syria, corruption probes, financial system chaos, court rulings of the ban’s unconstitutionality, and a “successful” election, Turkey’s Erdogan has decided to lift the ban on Twitter…

Turkey’s Telecoms regulator lifts the Twitter ban after court decision. Twitter not yet working but govt officials say will be open shortly.

— Joe Parkinson (@JoeWSJ) April 3, 2014

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

The last year or two has seen a deluge of Fed speakers pay lip-service to watching/monitoring/keeping-an-eye-on potential bubbles… but as yet having found none… That is all except one – Jeremy Stein – who explicitly called out high yield bonds as in a ‘frothy’ bubble last year… it appears he has grown weary of smashing his head against that wall…

• *FED SAYS STEIN SUBMITTED RESIGNATION LETTER TO OBAMA
• *YELLEN SAYS STEIN WAS ‘AN INTELLECTUAL LEADER’ ON FED BOARD

Stein plans to return to teaching at Harvard but in his resignation letter noted that more work is needed on the job market and that the financial market needs strengthening.

Stein’s Feb Speech here

Stein’s warning…

One of the most difficult jobs that central banks face is in dealing with episodes of credit market overheating that pose a potential threat to financial stability. As compared with inflation or unemployment, measurement is much harder, so even recognizing the extent of the problem in real time is a major challenge. Moreover, the supervisory and regulatory tools that we have, while helpful, are far from perfect.

 

Waiting for decisive proof of market overheating may amount to an implicit policy of inaction on this dimension

Stein’s resignation letter…

Dear Mr. President:

 

April 3, 2014

 

JEREMY STEIN
MEMBER OF THE BOARD

 

I am writing to let you know that I intend to resign as a member of the Board of Governors of the Federal Reserve System on May 28,2014, and return to my teaching position in Harvard University’s department of economics.

 

It has been a great privilege to serve on the Federal Reserve Board. During my time here, the economy has moved steadily back in the direction of full employment, and a number of important steps have been taken to make the financial system stronger and more resilient. There is undoubtedly more work to be done on both dimensions.

 

But under the leadership of Chairman Ben Bemanke and Chair Janet Yellen, and thanks to  the efforts of our colleagues on the Federal Open Market Committee and around the  entire Fed system, much progress has been made as well. Working alongside these talented and selfless men and women has been an extraordinarily rewarding experience.

 

I am grateful to you, and to the Senate, for having given me the opportunity to be involved with ·these remarkable people and this special institution.

And The Fed’s farewell note…

Jeremy C. Stein submitted his resignation Thursday as a member of the Board of Governors of the Federal Reserve System, effective May 28, 2014.

 

Stein, who has been a member of the Board since May 30, 2012, submitted his letter of resignation to President Obama and plans to return to his teaching position in Harvard University’s department of economics.

 

“Jeremy has made important contributions and served as an intellectual leader during his time at the Board,” said Federal Reserve Chair Janet L. Yellen. “His understanding of monetary policy and markets as well as his expertise in banking and financial regulation has proven invaluable in his service to the Federal Reserve and the country. My colleagues and I will miss him.”

 

Stein, 53, was appointed to the Board by President Obama to fill an unexpired term that ends January 31, 2018. During his time on the Board, he served on the Committee on Bank Supervision and Regulation, and as co-chair of the Financial Stability Board’s Official Sector Steering Group on reforming interest-rate benchmarks. This international group of regulators has been charged with developing alternative reference rates and transition strategies in the wake of the well-documented problems with LIBOR.

 

While at the Board, Dr. Stein has been on leave from his position as the Moise Y. Safra Professor of Economics at Harvard University, where he taught courses in finance in the undergraduate and Ph.D. programs. From February to July 2009, Dr. Stein served in the Obama administration as a senior adviser to the Secretary of the Treasury and on the staff of the National Economic Council.

 

Before joining the Harvard faculty in 2000, Dr. Stein taught finance at the Massachusetts Institute of Technology’s Sloan School of Management. Prior to joining the MIT faculty, Dr. Stein was an assistant professor of finance at the Harvard Business School from 1987 to 1990.

via Zero Hedge http://ift.tt/Pq26YI Tyler Durden

Having changed her Facebook profile picture to a “V…for Vendetta” face mask, the widow of former Zurich Insurance CFO Pierre Wauthier said she and her family cannot accept Zurich’s claim that his death wasn’t brought on by undue stress. As Bloomberg reports, Switzerland’s biggest insurer said in November that no “undue pressure” was put on Wauthier, who said in a suicide note that then-Chairman Josef Ackermann had created an unbearable working environment. But, his wife is demanding to know why her husband’s former boss resigned if he had not accepted blame for the death, and why details of tensions at work were not made public. Her anger is clear, as she blasted “I am not worth talking to… or is it that I would raise unbecoming questions????“

 

As Bloomberg reports, more than seven months after the suicide of Zurich Insurance Group AG (ZURN) Chief Financial Officer Pierre Wauthier, his widow said she and her family cannot accept Zurich’s claim that his death wasn’t brought on by undue stress.

“We who knew him best cannot accept your conclusion that his suicide is simply inexplicable,” said Fabienne Wauthier, speaking at the insurer’s annual general meeting in Zurich today, which she attended together with her daughter, mother-in-law and brother-in-law.

 

Switzerland’s biggest insurer said in November that no “undue pressure” was put on Wauthier, who said in a suicide note that then-Chairman Josef Ackermann had created an unbearable working environment. The Aug. 26 suicide, which prompted Ackermann to resign, raised doubts about Zurich Insurance’s financial health, prompting it to review its earnings statements and commission an investigation into the relations between executives and the supervisory board.

The dead banker’s widow is not buying Zurich’s ‘cover-up’…

Zurich Insurance should explain exactly why Ackermann stepped down, if he had not accepted blame for the death, and why details of tensions at work were not made public, Wauthier told shareholders.

 

She changed her Facebook profile picture to a face mask labeled “V…like Vendetta” on Dec. 16, the day after SonntagsZeitung published an interview with new Chairman Tom de Swaan in which he said he never had contact with her. She re-posted the article on Facebook the same day with the comment “Yep, that’s true. I am not worth talking to… or is it that I would raise unbecoming questions????”

 

…

 

“We sincerely wish we could believe” that Zurich has improved, “but the way it handled Pierre’s suicide is a sign that unaccountability remains part of Zurich’s corporate culture,” she said today.

 

Before his death, Wauthier had met with the human resources department after his team reported that he was suffering from excessive stress, she told Reuters yesterday.

And, as Bloomberg continues, Wauthier had even called out Ackermann specifically in his suicide note…

In a typed and signed suicide note, under the heading “to whom it may concern,” Wauthier had criticized Ackermann. He stepped down a few days later, saying the allegations that he bore some responsibility for the suicide were “unfounded.”

 

“I find it important and am thankful that we and the responsible authorities examined the circumstances very conscientiously and thoroughly,” de Swaan told shareholders. “We did not have any indication that Pierre was contemplating such a step. It remains a tragedy and we lost a very valued colleague.”

Zurich Insurance has launched an internal probe…

An internal investigation by Zurich Insurance involved evaluating “numerous documents and correspondence,” while questioning individuals who worked with the former CFO.

A separate review held by the company into its financial statements showed that they were “appropriate.” The reviews were conducted under the direction of Swiss financial markets regulator Finma.

Meanwhile, the insurer is planning $250 million annual cost cuts, and slashing as many as 800 jobs as it removes various mamagement layers… not ‘stressful’ at all…

via Zero Hedge http://ift.tt/Pq25UP Tyler Durden

DAILY PRICE REPORT
Today’s AM fix was USD 1,287.25, EUR 935.09 and GBP 775.13 per ounce.                                  

Yesterday’s AM fix was USD 1,284.00, EUR 930.91 and GBP 771.26 per ounce.

Gold climbed $9.50 or 0.74% yesterday to $1,290.00/oz. Silver rose $0.15 or 0.76% yesterday to $19.96/oz.   

Gold in Euros – January 2008 to April, 3, 2014 – (Thomson Reuters)

Gold added to sharp overnight gains today due to physical demand. Traders appear to be squaring positions before the release of U.S. nonfarm payrolls data. With the U.S. economic recovery faltering of late, a worse than expected number could lead to safe haven buying.

 

The ECB is unlikely to further reduce interest rates today. Despite risks that the eurozone is falling into recession and the more dovish tone adopted recently by some policy makers, only a few analysts expect the ECB to adopt an even looser monetary policy at its monthly interest rate policy meeting today.

Indian gold imports likely jumped in March from the previous month after the central bank allowed more private banks to import gold bullion, the head of the country’s biggest jewellery trade body said. In 2013, India’s government restricted gold imports to cut a current account deficit. Reserve Bank of India Governor, Raghuram Rajan, said today that curbs will be removed gradually.

 

“Bail-In” Risk High In Banks – New Rating Agency
The risk that creditors, savers and bondholders, rather than taxpayers will bear the brunt of rescuing a bank in trouble form part of the first credit ratings given to 18 of Europe’s biggest banks yesterday by new ratings agency, Scope.

 

Scope said its ratings reflected the likelihood that if a bank runs into trouble, bondholders will be “bailed in” to strengthen the bank rather than a taxpayer-funded rescue as happened during the financial crisis, according to Reuters.

The company, which set up in Berlin in 2002 and started credit ratings two years ago, said it aims to offer a new approach for corporate bond investors that typically rely on the three major ratings firms – Moody’s Investors Service, Standard & Poor’s and Fitch Ratings.

Scope focused on the risk posed to bank bondholders rather than the very real risk posed to bank’s other creditors – the depositors.

 

“Banks are still too big to fail, the only difference is that somebody else will pay to avoid a failure, and that somebody else is the creditors,” said Sam Theodore, Scope’s Managing Director for Financial institutions.

 

“Through bail-in you could call this the privatisation of bank rescues, which to us is one of the most significant regulatory steps taken in recent years in respect to banks,” Theodore said.

 

A new resolution and recovery regime for banks is in place in Switzerland and is coming in across the European Union, the UK and G20 nations.

The measures mean that large banks will remain “too big to fail” and that rather than taxpayers being on the hook for the poor performance of banks, now hitherto protected depositors, including the deposits of employment creating companies, will be used to bail-out “too big to fail” banks.

Banks globally remain vulnerable. Our recent research on the developing bail-in regimes clearly shows this. It is now the case that in the event of a bank getting into difficulty, deposits could be confiscated as happened in Cyprus.

 

It is important to realise that not just the EU, but also the UK, the U.S., Canada, Australia, New Zealand and most G20 nations have plans for bail-ins in the event that banks and other large financial institutions get into difficulty.

The coming bail-ins pose real risks to investors and of course depositors – both household and corporate. Return of capital, rather than return on capital is now of paramount importance.
 

Evaluating counterparty risk and only using the safest banks, investment providers and financial institutions will become essential in order to protect and grow wealth.

It is important that one owns physical coins and bars, legally in your name, outside the banking system. Paper or electronic forms of gold investment should be avoided as they, along with cash deposits, could be subject to bail-ins.

For more information about Bail-In risks please read our most recent research below:
Bail-In Guide: Protecting your Savings In The Coming Bail-In Era (10 pages)

Bail-In Research: From Bail-Outs to Bail-Ins: Risks and Ramifications (50 pages)  

Webinar: Dr Marc Faber On Gold, Silver and Asset Allocation In An Uncertain World

This Friday, April 4th at 0900 BST, Dr Marc Faber will give insights into his strategies for protecting and growing wealth in 2014 and beyond. Register today and don’t miss this opportunity to hear one of the world’s most respected investment experts.

In this webinar, some of the topics covered with Dr Faber include:

 

Asian Century?
Western stagnation or collapse?

Implications of events in Ukraine
Allocations to precious metals?

How to own precious metals?

Dollar cost average or lump sum?

Take profits/ rebalance or buy and hold for long term?

When to sell?

Favoured asset allocation?

Other investment and business opportunities?

Dr Faber’s webinar takes place this Friday, April 4th, 2014, at 0900 BST (0900 British Standard Time or London and UK time). Register to attend the event or to receive a recording of the webinar.

NEWS
Gold Nudges Up But Still Near 7-Week Low; China Demand Rises

http://ift.tt/1lqZANb

Asian Stocks Extend Rally As Yen Slips; Kiwi Weakens

http://ift.tt/OciYRT

Gold Trades Near 7-Week Low As Equity Rally Cuts Demand

http://ift.tt/1ok4IHC

Gold Eases Towards 7-Week Low As U.S. Data Lifts Stocks

http://ift.tt/1j3cS1t

Bottom for Gold This Year Before a Rebound To Record

http://ift.tt/1ouctKW

COMMENTARY

Biggest Risk To Today’s Markets – An End To Perpetual Bailouts
http://ift.tt/1lqZANf
Lack Of ‘Too Big To Fail’ Plan Could Cost Taxpayers Billions, Warns IMF
http://ift.tt/1ouctKX
Things That Make You Go Hmmm… Like Iron Fists And Velvet Gloves
http://ift.tt/Oczsti
The HFT Fight That Stopped NYSE Trading
http://ift.tt/1oucs9O
Are Markets Rigged? Asia Experts Weigh In On Debate
http://ift.tt/1lqZxRz

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

First this…

We are revising down our estimate of Q1 real #GDP growth to +2.0% from +3.1% previously in light of the deterioration in net exports.

— Joseph A. LaVorgna (@Lavorgnanomics) April 3, 2014

 

…. then this.

 

We are adding one full percentage of growth back to our estimate of current quarter real GDP which is now 4.2%.

— Joseph A. LaVorgna (@Lavorgnanomics) April 3, 2014

 

At least it’s not this.

via Zero Hedge http://ift.tt/1pWzN1n Tyler Durden

Thanks to more jawboning promises of QE from Draghi this morning, peripheral bond yields in Europe have collapsed once again. Any minute now, Spain will be a lower-yielding bond than the US… and at this pace, you will have to pay Spain to lend it money within a few months… we are sure someone has figured out how entirely useless asset-purchases would be at these levels.. but for now, fight the fed in the US (they remind us that tapering is not tightening remember) but don’t fight the promise of the ECB…

 

 

via Zero Hedge http://ift.tt/1h7Td1P Tyler Durden

Markit’s Services PMI missed expectations (55.3 vs 55.5 flash) and dropped from last month – as it seems an easing of the ‘weather disruption’ did nothing for pent-up services demand. Services employment growth slowed (suggesting a weak NFP) as did new business (very significantly) but optimism rose (so that’s good). On the heels of that the ISM Services print missed expectations for the 4th month of the last 5 (53.1 vs 53.6) but rose modestly MoM.

Markit’s Services PMI is not the big post-weather bounce everyone was hoping for…

“Service sector business activity rebounded in March after being hit by the adverse weather, and companies have grown more upbeat about the outlook. But hiring remained disappointingly subdued, suggesting firms are reluctant to expand capacity until they see firm evidence of stronger demand feeding through to their businesses.”

 

And ISM Services missed expectations for the 4th of last 5 months with what can only e described as a limp bounce…

 

The tabular breakdown:

 

And the respondents, where we find that Obamacare continues to wreak havoc:

• “Outlook remains positive.” (Information)
• “Cold weather played more havoc on revenue, causing steep declines
  for nearly a week, and then picked up well beyond expectations. Overall,
  per capita spending increases, but frequency of visits are down; net
  neutral to slightly positive.” (Arts, Entertainment & Recreation)
• “Demand is rising; while at the same time there is pressure to reduce staffing expenses.” (Finance & Insurance)
• “Healthcare reform continues to adversely impact hospital projected/actual revenue.” (Health Care & Social Assistance)
• “Weather in Northeast — lost business days/business travel and site
  visits impacted. Energy costs rapidly increasing.” (Professional,
  Scientific & Technical Services)
• “Business was a little slower than expected due to harsh weather
  conditions across much of the country, but we expect a rebound as spring
  approaches.” (Retail Trade)
• “Economic environment continues to moderate slowly.” (Management of Companies & Support Services)

At least everyone agrees that spring follows winter.

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

On one hand CNBC does its darnedest to refute Michael Lewis’ claim that markets are rigged (even if it woefully does so by showcasing the most clueless “defenders” it can afford), and yet on the other “mom and pop’s” preferred retail broker Charles Schwab, just came out and slammed HFT as a “growing cancer that needs to be addressed.” Hmmm…. who to believe?

From Charles Schwab:

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

From Goldman’s David Kostin, who first looks back: “S&P 500 began 2014 with a pullback of 6%, repeating its 2013 trend, but then rallied 8% to reach a new high of 1885. The market has not had a drawdown of 10% since the summer of 2012, rallying nearly 50% during that time. Gold and bonds have outperformed stocks YTD” and then forward: “S&P 500 rises 2% in 1Q to hit new high; we expect 3% appreciation during next 12 months” In other words, by the end of this week the Market should hit Goldman’s 12 month forward price target.

So far so good, it’s all driven by corporate profitability, the permabull pundits will say (barring the occasional snowfall in the winter). However, there is a problem: based on a Goldman calculation of implied 5-year EPS growth rates for the S&P based on a senstivity for the Equity Risk Premium, for which Goldman uses the range of 2% to 4%, and finds a range of -2% to -9% for the EPS growth rate in the next half decade. Surely enough to send the S&P to 1900 today .

via Zero Hedge http://ift.tt/1h7I3dw Tyler Durden