Zions (ZION) aims to eliminate its holding company to simplify structure with the primary objective of getting rid of the systemically important regulatory label.
Энди Холл, ветеран нефтяного рынка, в этом году вынужденно закрывший свой фонд вследствие преследовавших его последнее время неудач, решил заняться журналистикой. По сообщению Bloomberg News, господин Холл (наряду с представителями Citigroup и Schlumberger) станет одним из докладчиков на завтрашней конференции ОПЕК в Вене, где он обещает задать представителям Картеля пару вопросов насчет перс читать далее…
В мировой экономике грядет нечто великое, событие, которое по своим масштабом окажет серьезнейший эффект на всю глобальную финансовую систему. Подобный тезис мог бы показаться попросту популистским, если бы не одно "но". Те тенденции, которые можно сейчас наблюдать в центральных банках по всему миру, а также слухи, распространяющиеся среди инсайдеров, явно указывают на приближение подобного исторического […]
it has been a rocky session for the dollar which has dumped to a 4-week low, dragging with it USDJPY, the Nikkei and Treasury yields - and to a lesser extend US equity futures - all of which have slumped in the Japanese am session, following a WSJ report that Robert Mueller’s team "caught the Trump campaign by surprise" in mid-October by issuing a document subpoena to more than a dozen top officials. The campaign had previously been voluntarily complying with the special counsel’s requests for information, and had been sharing with Mr. Mueller’s team the documents it provided to congressional committees as part of their probes of Russian interference into the 2016 presidential election. The Trump campaign is providing documents in response to the subpoena on an “ongoing” basis, the person said. If confirmed, this would be the first time Trump’s campaign has been ordered to turn over information to Mueller’s investigation, even if subpoena has not - for now - compelled any officials to testify before Mueller’s grand jury. According to Citi, and a handful of other desks,the news of the report is what initially sent the USDJPY below 113, at which point stop loss selling accelerated and has seen the pair tumble to 112.50 at last check. While it took the other major currencies a while to catch on, the dollar eventually did selloff across the board, with cable and EUR leading the AUD and kiwi. Meanwhile, the Korean won has surged, sending the USDKRW below 1,100, ignoring the latest jawboning and verbal intervention from Korean central bankers. Still, not everyone is convinced and Citi for one, thinks the sell-off in US assets has been exaggerated due to diminished liquidity conditions and stop runs, especially since the news that Mueller issued a subpoena "doesn't really have any implications for markets." Others, such as Westpac's FX strategist Sean Callow, agree: “USD/JPY’s apparent fatigue is consistent with a speculative market already very short yen”he said, adding that “USD/JPY seems to have already factored in not only a Fed hike in December but some form of tax cut package as well.” Furthermore, while the subpoena news may seem surprising, Citi's Ding notes that "we already know that the investigation is ongoing and links between Russia and the Trump campaign are under scrutiny", in other words the WSJ report was to be expected, even if the market appears to be overplaying it for the time being. In any case, at least for now the mood is one of risk off, and in addition to the dollar, Nikkei, yields and US futures all heavy, Chinese stocks are also down with the Shanghai Comp -0.7% lower, although that may be more a function of the sharp reversal in PBOC liquidity injections, because after yesterday's gargantuan 310Bn net reverse repo - and 810Bn net this week - today's 10Bn liquidity drain once again prompted fears that the PBOC just may be serious about the deleveraging after all.
Via The Daily Bell Why are governments so interested in breaking up monopolies? To protect the biggest monopoly of all, the government. The American people are skilled mental gymnasts. They can totally agree that monopolies in the private sector are bad. But monopolies on defense, law enforcement, courts, education, roads, and so on are perfectly fine, even necessary! This comes down to the myth of the process. People have been convinced that since companies are motivated by profit, they are untrustworthy. Governments are allegedly altruistic, working in the best interests of the people. In reality, the people in government take their profits in power. We pay businesses voluntarily and use their services if we like them. We are taxed whether we like it or not when it comes to government. Yet everyone goes crazy over alleged private monopolies, and doesn’t bat an eye at the worst coercive monopoly of all! Democracy is the buzzword meant to convince us that governments are not truly monopolies. After all, we get to participate! We choose the leaders, and they represent us. An opinion piece in the New York Times by Jonathan Taplin is titled, Is It Time to Break Up Google? He says: We are going to have to decide fairly soon whether Google, Facebook and Amazon are the kinds of natural monopolies that need to be regulated, or whether we allow the status quo to continue, pretending that unfettered monoliths don’t inflict damage on our privacy and democracy. He assumes democracy is something worth protecting. At the same time, he ignores the damage that can occur from unfettered monoliths like government. You know, the type of government who has the arbitrary power to break up companies. “We” are going to decide whether a business should be allowed to exist. Democracy is mob rule, so “we” can simply destroy a business by force. Nevermind that we could actually peacefully stop Google’s monopoly by not using Google! The fact that this question is being asked seriously proves how much worse government monopolies are than economic monopolies. Governments have such a vast monopoly on the “legitimate” use of force, that they can openly discuss whether or not they will violently destroy a business. I say violently because ultimately all their power is exercised through actual violence, or the threat of violence. Just look at how the government used anti-trust laws to break up “monopolies” in the past. In an attempt to follow antitrust laws, General Electric charged the same prices as its smaller competitors. GE and about 25 other electric companies were taken to court in 1961 for this “conspiracy to set prices.” The truth was the companies competed for the lowest prices. But the government just couldn’t understand how this would lead to identical prices. It must be a conspiracy, they thought. Turns out a government agency had legally fixed these prices during WWII. When that government agency was ended after the war these companies continued to engage in the same activity, unsuccessfully. But regardless of their failure to set and abide by prices within the industry, now it was illegal just to attempt to set prices. Legal when the government did it, illegal when an industry did the same. Businessmen got jail time, and one killed himself on the way to prison. Ironically, the prices and profits of the companies were lower during the times of “collusion” than during the previous period. This supports the fact that prices were set low by competition, not collusion. (Some of this information came from Ayn Rand’s collection of articles, Capitalism: The Unkown Ideal.) This also shows that the electrical industry was not truly a monopoly. Nor is, for example, Amazon. Amazon and Walmart regularly compete with each other on prices. A few years ago, a $50 video game quickly fell to $13 when the companies went back and forth taking cents off their online price. The Big Dogs Change Taplin seems to miss the lesson from the very first sentence of his article. In just 10 years, the world’s five largest companies by market capitalization have all changed, save for one: Microsoft. Exxon Mobil, General Electric, Citigroup and Shell Oil are out and Apple, Alphabet (the parent company of Google), Amazon and Facebook have taken their place. So then what’s the big deal? In the marketplace, the top dogs are always changing. They compete with each other. And each one has an interest in taking a bit of the other’s market share. That is the case with Amazon and Walmart. The truth is, the government wants to bust monopolies in order to protect its own. Google has more influence over what you see than the FCC. Facebook knows more about you than the NSA. Amazon would be delivering goods to your doorstep by drone if the government wasn’t stopping them. Amazon is also introducing a program that allows deliveries inside the home. They are doing this by providing the equipment to monitor your front door from their headquarters, and unlock it remotely. Sounds creepy for sure. But the real story is what this service could become. The police only come after a crime is committed, and they are not great at solving it. Imagine if Amazon handled your home’s personal security? They would finally be offering a viable alternative to publicly funded protection. They would be threatening the government’s monopoly by competing. I can choose not to use Google, Facebook, and Amazon. Each has 88%, 77%, and 74% market shares respectively. Yes, that is a lot, but there are still alternatives. I’m not saying it would be easy or convenient to completely divorce yourself from these companies. But you could do it without landing in a jail cell. So yes, these companies are gigantic monoliths. You might say they are almost starting to resemble governments. Competitive governments. Governments that have to earn their market share. Governments that have to serve the customer, and entice them to use their services. They may think they are untouchable by market pressures for now, but just look who was on top of the industry in 2006: not them. And don’t take this as a wholesale endorsement of these companies business practices. I have criticized Facebook and Zuckerberg plenty in the past. That doesn’t mean the government has the right to break up his company. Google can be very manipulative, and is joining the fight against “fake news.” This means they will censor whatever they want, including content on Youtube. Their current 88% market share sounds pretty insurmountable. But as soon as their algorithms stop delivering what the consumer wants, someone from the other 12% will step up and fill the void. The only problem is when these companies collude with the biggest monopoly of all–government–to protect their market share by force. Then they can use the government’s monopoly on force to bludgeon their competition to death or get special legal advantages. That is what Peter Thiel is doing by donating hundreds of thousands of dollars to any state Attorney Generals who open anti-trust investigations into Google. This supposed libertarian is using the government as a tool to undermine the market. And perhaps one reason is Thiel’s own technology company called Palantir. Palantir is named after the crystal ball used by the evil Lord Sauron in Tolkien’s classic Lord of the Rings Trilogy. Through this ball, the evil ruler can see all that goes on in Middle Earth. It is a fitting name for a company that specializes in big data analysis technology. Even more fitting is that they sell this technology to the U.S. government and law enforcement. It is the ultimate software in spying, conglomerating every piece of data available, analyzing social connections, buying habits, and travel patterns of anyone in the U.S. government’s crosshairs. It seems Thiel is working on behalf of the biggest monopoly out there in order to destroy through force his data competitors at Google and Facebook. Who Cares About Democracy? Taplin thinks Google, Facebook, and Amazon are undermining democracy. Well, democracy sucks. It is mob rule. It is a false choice between the colluding Republicans and Democrats. It is time to break up the only true monopoly in the United States, the federal government. There are 50 subsidiary states ready to compete with each other for business, rather than being cajoled into servitude by the feds.
До начала регулярной сессии поступили сообщения о повышении целевой стоимость акций следующих компаний
Аналитики Nomura повысили целевую стоимость акций Cisco System (CSCO) до $33 с $29; рейтинг Neutral Аналитики KeyBanc Capital Mkts повысили целевую стоимость акций Cisco System (CSCO) до $39 с $33; рейтинг Overweight Аналитики Jefferies повысили целевую стоимость акций Cisco System (CSCO) до $40 с $37; рейтинг Buy Аналитики Deutsche Bank повысили целевую стоимость акций Cisco System (CSCO) до $45 с $40; рейтинг Buy Аналитики Barclays повысили целевую стоимость акций Cisco System (CSCO) до 37 с $34; рейтинг Overweight Аналитики Oppenheimer повысили целевую стоимость акций Cisco System (CSCO) до $40 с $36; рейтинг Outperform Аналитики Citigroup повысили целевую стоимость акций Cisco System (CSCO) до $40 с $36; рейтинг Buy Аналитики UBS повысили целевую стоимость акций Cisco System (CSCO) до $39 с $37; рейтинг Buy ------------------------------------------------------------- Воспользоваться сервисом "Рейтинги акций" TeleTrade можно, заполнив форму на одноименной странице нашего сайта или в Личном кабинете трейдера в разделе "Аналитика" (для подключения услуги необходимо связаться со своим менеджером).Источник: FxTeam
Множество людей, интересующихся состоянием мировой экономики, наверняка хоть раз задавали себе простой и естественный вопрос: «Почему при вкачанных в мировую финансовую систему за последние пару лет триллионы долларов и евро при абсурдно низких учтенных ставках не привели к росту кредитования и оживлению спроса в реальном секторе экономики, а цены на все основные товары, включая недвижимость […]
Authored by Matt Barrie via Medium.com, Co-authored with Craig Tindale. I recently watched the federal treasurer, Scott Morrison, proudly proclaim that Australia was in “surprisingly good shape”. Indeed, Australia has just snatched the world record from the Netherlands, achieving its 104th quarter of growth without a recession, making this achievement the longest streak for any OECD country since 1970. Australian GDP growth has been trending down for over forty yearsSource: Trading Economics, ABS I was pretty shocked at the complacency, because after twenty six years of economic expansion, the country has very little to show for it. For over a quarter of a century our economy mostly grew because of dumb luck. Luck because our country is relatively large and abundant in natural resources, resources that have been in huge demand from a close neighbour. That neighbour is China. Out of all OECD nations, Australia is the most dependent on China by a huge margin, according to the IMF. Over one third of all merchandise exports from this country go to China- where ‘merchandise exports’ includes all physical products, including the things we dig out of the ground. Source: Austrade, IMF Director of Trade Statistics Outside of the OECD, Australia ranks just after the Democratic Republic of the Congo, Gambia and the Lao People’s Democratic Republic and just before the Central African Republic, Iran and Liberia. Does anything sound a bit funny about that? Source: Austrade, IMF Director of Trade Statistics As a whole, the Australian economy has grown through a property bubble inflating on top of a mining bubble, built on top of a commodities bubble, driven by a China bubble. Unfortunately for Australia, that “lucky” free ride is just about to end. Societe Generale’s China economist Wei Yao said recently, “Chinese banks are looking down the barrel of a staggering $1.7 trillion?—?worth of losses”. Hyaman Capital’s Kyle Bass calls China a “$34 trillion experiment” which is “exploding”, where Chinese bank losses “could exceed 400% of the U.S. banking losses incurred during the subprime crisis”. A hard landing for China is a catastrophic landing for Australia, with horrific consequences to this country’s delusions of economic grandeur. Delusions which are all unfolding right now as this quadruple leveraged bubble unwinds. What makes this especially dangerous is that it is unwinding in what increasingly looks like a global recession- perhaps even depression, in an environment where the U.S. Federal Reserve (1.25%), Bank of Canada (1.0%) and Bank of England (0.25%) interest rates are pretty much zero, and the European Central Bank (0.0%), Bank of Japan (-0.10%), and Central Banks of Sweden (-0.50%) and Switzerland (-0.75%) are at zero or negative interest rates. Summary of Current Interest Rates from Central Banks (16th October 2017). Source: Global-rates.com As a quick refresher of how we got here, after the Global Financial Crisis, and consequent recession hit in 2007 thanks to delinquencies on subprime mortgages, the U.S. Federal Reserve began cutting the short-term interest rate, known as the ‘Federal Funds Rate’ (or the rate at which depository institutions trade balances held at Federal Reserve Banks with each other overnight), from 5.25% to 0%, the lowest rate in history. When that didn’t work to curb rising unemployment and stop growth stagnating, central banks across the globe started printing money which they used to buy up financial securities in an effort to drive up prices. This process was called “quantitative easing” (“QE”), to confuse the average person in the street into thinking it wasn’t anything more than conjuring trillions of dollars out of thin air and using that money to buy things in an effort to drive their prices up. Systematic buying of treasuries and mortgage bonds by central banks caused the face value of on those bonds to increase, and since bond yields fall as their prices rise, this buying had the effect of also driving long-term interest rates down to near zero. Both short and long term rates were driven to near zero by interest rate policy and QE. Source: Bloomberg, CME Group In theory making money cheap to borrow stimulates investment in the economy; it encourages households and companies to borrow, employ more people and spend more money. An alternative theory for QE is that it encourages buying hard assets by making people freak out that the value of the currency they are holding is being counterfeited into oblivion. In reality, the ability to borrow cheap money was mainly used by companies to buy back their own shares, and combined with QE being used to buy stock index funds (otherwise known as exchange traded funds or “ETFs”), this propelled stock markets to hit record high after record high even though this wasn’t justified the underlying corporate performance. Almost all flows into the equity market have been in the form of buybacks. Source: BofA Merrill Lynch Global Investment Strategy, S&P Global, EPFR Global, Convexity Maven In literally a “WTF Chart of the Day” on September 11, 2017, it was reported that the central bank of Japan now holds 75% of all ETFs. No, not ‘owns units in three out of four ETFs’?—?the Bank of Japan now owns three quarters of all assets by market value in all Japanese exchange traded funds. In today’s world Hugo Chavez wouldn’t need to nationalise assets, he could have just printed money and bought them on the open market. Bank of Japan now owns 75% of all Japanese ETFs. Source: Zerohedge Europe and Asia were dragged into the crisis, as major European and Asian banks were found holding billions in toxic debt linked to U.S. subprime mortgages (more than 1 million U.S. homeowners faced foreclosure). One by one, nations began entering recession and repeated attempts to slash interest rates by central banks, along with bailouts of the banks and various stimulus packages could not stymie the unfolding crisis. After several failed attempts at instituting austerity measures across a number of European nations with mounting public debt, the European Central Bank began its own QE program that continues today and should remain in place well into 2018. In China, QE was used to buy government bonds which were used to finance infrastructure projects such as overpriced apartment blocks, the construction of which has underpinned China’s “miracle” economy. Since nobody in China could actually afford these apartments, QE was lent to local government agencies to buy these empty flats. Of course this then led to a tsunami of Chinese hot money fleeing the country and blowing real estate bubbles from Vancouver to Auckland as it sought more affordable property in cities whose air, food and water didn’t kill you. QE was only intended as a temporary emergency measure, but now a decade into printing and the central banks of the United States, Europe, Japan and China have now collectively purchased over US$19 trillion of assets. Despite the lowest interest rates in 5,000 years, the global economic growth in response to this money printing has continued to be anaemic. Instead, this stimulus has served to blow asset bubbles everywhere. Total assets held by major central banks. Source: Haver Analytics, Yardeni Research This money printing has lasted so long that the US economic cycle is imminently due for another downturn- the average length of each economic cycle in the U.S. is roughly 6 years. By the time the next crisis hits, there will be very few levers left for central banks to pull without getting into some really funny business. It wasn’t until September 2017 that the U.S. Federal Reserve finally announced an end to the current program, with a plan to begin selling-off and reducing its own US$4.5 trillion portfolio beginning in October 2017. How these central banks plan to sell these US$19 trillion in assets someday without completely blowing up the world economy is anyone’s guess. That’s about the same in value as trying to sell every single share in every single company listed on the stock markets of Australia, London, Shanghai, New Zealand, Hong Kong, Germany, Japan and Singapore. I would think a primary school student would be able to tell you that this is all going to end up going horribly wrong. To put into perspective how perverted things are right now, in September 2017, Austria issued a 100 year euro denominated bond which yields a pathetic 2.1% per annum. That’s for one hundred years. The buyers of these bonds, who, on the balance of probability, were most likely in high school or university during the global financial crisis, think that earning a miniscule 2.1% per annum every year over 100 years is a better investment than well anything else that they could invest in- stocks, real estate, you name it, for one hundred years. They are also betting that inflation won’t be higher than 2.1% on average for one hundred years, because otherwise they would lose money. This is even though in 20 years time they’ll be holding a bond with 80 years left to go to be paid out in a currency that may no longer exist. The only way the value of these bonds will go up is if the world continues to fall apart, causing the European Central Bank to cut its interest rate further and keep it lower for 100 years. Since the ECB refinancing rate is currently zero percent, that would mean that if you wanted to borrow money from the European Central Bank, it would literally have to pay you for the pleasure of borrowing money from it. The other important thing to remember is that on maturity, everyone that bought that bond in September will be dead. So if one naively were looking at markets, particularly the commodity and resource driven markets that traditionally drive the Australian economy, you might well have been tricked into thinking that the world was back in good times again as many have rallied over the last year or so. The initial rally in commodities at the beginning of 2016 was caused by a bet that more economic stimulus and industrial reform in China would lead to a spike in demand for commodities used in construction. That bet rapidly turned into full blown mania as Chinese investors, starved of opportunity and restricted by government clamp downs in equities, piled into commodities markets. This saw, in April of 2016, enough cotton trading in a single day to make a pair of jeans for everyone on the planet, and enough soybeans for 56 billion servings of tofu, according to Bloomberg in a report entitled “The World’s Most Extreme Speculative Mania Unravels in China”. Market turnover on the three Chinese exchanges jumped from a daily average of about $78 billion in February to a peak of $261 billion on April 22, 2016?—?exceeding the GDP of Ireland. By comparison, Nasdaq’s daily turnover peaked in early 2000 at $150 billion. While volume exploded, open interest didn’t. New contracts were not being created, volume instead was churning as the hot potato passed between speculators, most commonly in the night session, as consumers traded after work. So much so that sometimes analysts wondered whether the price of iron ore is set by the market tensions between iron ore miners and steel producers, or by Chinese taxi drivers trading on apps. Average futures contract holding times for various commodities. Source: Bloomberg In April 2016, the average holding period for steel rebar and iron ore contracts was less than 3 hours. The Chief Executive of the London Metal Exchange, said “Why should steel rebar be one of the world’s most actively-traded futures contracts? I don’t think most people who trade it know what it is”. Steel, of course, is made from iron ore, Australia’s biggest export, and frequently the country’s main driver of a trade surplus and GDP growth. Australia is the largest exporter of iron ore in the world, with a 29% global share in 2015–16 and 786Mt exported, and at $48 billion we’re responsible for over half of all global iron ore exports by value. Around 81% of our iron ore exports go to China. Unfortunately, in 2017, China isn’t as desperate anymore for iron ore, where close to 50% of Chinese steel demand comes from property development, which is under stress as house prices temper and credit tightens. In May 2017, stockpiles at Chinese ports were at an all time high, with enough to build 13,000 Eiffel Towers. Last January, China pledged “supply-side reforms” for its steel and coal sectors to reduce excessive production capacity. In 2016, capacity was cut by 6 percent for steel and and 8 percent for coal. In the first half of 2017 alone, a further 120 million tonnes of low-grade steel capacity was ordered to close because of pollution. This represents 11 percent of the country’s steel capacity and 15 percent of annual output. While this will more heavily impact Chinese-mined ore than generally higher-grade Australian ore, Chinese demand for iron ore is nevertheless waning. Over the last six years, the price of iron ore has fallen 60%. Iron ore fines 62% Fe CFR Futures. Source: Investing.com While the price of iron ore briefly rallied after the U.S. election in anticipation of increasingly less likely Trumponomics, DBS Bank expects that global demand for steel will remain stagnant for at least the next 10–15 years. The bank forecasts that prices are likely to be rangebound based on estimates that Chinese steel demand and production have peaked and are declining, that there are no economies to buffer this slowdown in China, and that major steel consuming industries are also facing overcapacity issues or are expected to see lower growth. Australia’s second biggest export is coal, being the largest exporter in the world supplying about 38% of the world’s demand. Production has been on a tear, with exports increasing from 261Mt in 2008 to 388Mt in 2016. Australian Coal Exports by Type 1990–2035 (IEA Core Scenario). Source: International Energy Agency, Minerals Council of Australia While exports increased by 49% over that time period, the value of those exports has collapsed 38%, from $54.7 billion to $34 billion. The only bright side for Australian coal in 2017 was that, unexpectedly, Cyclone Debbie wiped out several railroads and forced the closure of ports and mining operations, which has caused a temporary spike in coal prices. Australian Thermal Coal Prices. (12,000- btu/pound,
NVIDIA, Herbalife, Fossil Group, 1-800-Flowers.com and Pandora Media highlighted as Zacks Bull and Bear of the Day
NVIDIA, Herbalife, Fossil Group, 1-800-Flowers.com and Pandora Media highlighted as Zacks Bull and Bear of the Day
The Deutsche Bank story has evolved rapidly this morning: Bloomberg reports that Deutsche Bank had attracted a “new top investor” in the ongoing process of its endless restructuring, then Handelsblatt tweeted that Morgan Stanley acquired a 6.68% shareholding on behalf of activist investors. The bank confirmed shortly thereafter that the new DB shareholder was Cerberus Capital Management, the New York-based private investment form with $40Bn AUM. Cerberus CEO, Steve Feinberg, owns 3% according to the report, although it’s not clear which parties own the other 3.86% acquired by Morgan Stanley at this stage. Cerberus specializes in distressed investing which, obviously, is a perfect description of Deutsche Bank’s current circumstances. It was set up in 1992 by Feinberg and William L. Richter, currently senior managing director. Feinberg started his career as a trader at Drexel in 1982 and was described as “secretive” by the New York Times. He famously said to Cerberus shareholders. "If anyone at Cerberus has his picture in the paper and a picture of his apartment, we will do more than fire that person. We will kill him. The jail sentence will be worth it." As a major Republican donor, Feinberg became a leading economic advisor to the Trump presidential campaign. It also brags about the benefit of its high-level political connections on its website. Former Treasury Secretary, John Snow, is the firm’s chairman, while former Vice President, Dan Quayle, is chairman of Cerberus Global Investments. Some recent transactions complete by Cerberus include purchasing a controlling interest in Staples’ European operations, acquisition of ABC Group (a leading Middle East retailer, acquisition of GE Money Bank and the purchase of 80% of Avon North America (giving it nearly 17% of Avon Products Inc.). Europe's biggest bank does not seem like a logical progression, but neither was Cerberus' ill-fated acquisition of a controlling stake in GMAC before the financial crisis. The company lists four investment strategies: Distressed securities and assets; Private Equity; Middle-market lending; and Real estate. As we have discussed previously, it now appears that after several stalled attempts to restructure the bank, Deutsche CEO, John Cryan’s time is running out. Deutsche’s 3Q 2017 results confirmed that revenue growth was not only elusive, but the situation was getting worse. A week ago, we discussed Deutsche Bank’s decision to ramp up its leveraged loans business as part of Cryan’s desperate need for growth: So if you were Deutsche CEO Cryan and you needed revenue growth and you needed it fast, what would you do? One thing is to identify a “hot” sector in capital markets with high margins and go all out for growth, never mind the risk. Which is exactly what Deutsche Bank is doing in the leveraged loan market. It is unclear if that "other" famous DB investor, Qatar, is still involved, or if as some speculated, it was selling some or all of its DB holdings to shore up the blacklisted nation's sagging finances, despite earlier hopes of adding more to its DB stake. It is also unclear if that other embattled investor, China's HNA Conglomerate is part of the activist consortium. In any case, it seems that investors, including Cerberus, are unhappy with the strategy Cryan is pursuing and the pace at which benefits are impacting the DB’s P&L. We don’t blame them and the pressure on Cryan is about to ratchet up dramatically. After the news broke, DB's shares reversed an earlier 3.2% loss to trade up as much as 1.1%. Commerzbank, in which Cerberus owns approximately 5%, pared a 4.9% loss to 0.8%. In Summer 2016, news was leaked that the two banks held negotiations about a potential merger. Besides turning around Deutsche Bank, it remains to be seen whether Steve Feinberg has a grand plan for the overdue restructuring of the German banking sector.
Moody's Investors Service upgraded the ratings outlook of Citigroup (C) and its subsidiaries to 'positive' from 'stable'. However, the firm affirmed all the ratings.
Last week, Capital One Financial (COF) announced that is was formally withdrawing from the residential mortgage loan market. Some observers mistook this announcement for news, thinking that COF had actually been engaged in residential lending in a serious way. Housing Wire, for example, reported that COF had “suddenly” exited the mortgage and home equity business. In fact, despite several acquisitions, these motivated mostly by a desire to accumulate deposits, COF had never really cared about mortgage lending or anything other than credit cards and consumer loans. “The challenging rate environment and marketplace ... do not allow us to be both competitive and profitable for the foreseeable future,” Sanjiv Yajnik, the president of financial services at COF, said in an internal memo. At the end of Q2 ’17, COF had about 21% of its loan book in all real estate loans, including residential at 8% and about 12% commercial real estate loans. Almost 60% of the balance sheet is “loans to individuals,” including credit cards, auto loans and other consumer revolvers. Most large banks that inhabit Peer Group 1 have a third of their balance sheet in real estate exposures of one sort or another. COF owns a big slug of mortgage backed securities, however, something to ponder as the Treasury yield curve slowly inverts under the weight of the Yellen Put. The reason that COF looks askance at asset classes such as resi comes down to simple returns. COF’s margin on net interest income is almost 7% on a tax equivalent basic compared with an average of 3% for Peer Group 1. That’s more than 2x JPM, BAC, WFC, etc. That fat spread comes from consumer loans. Indeed, the yield on earning assets for COF was over 400bp higher than its asset peers at the end of Q3 ’17. Even with all that yield, however, COF still delivers high single digit equity returns overall. Or put more bluntly, things like residential mortgages were dragging down the overall equity returns for the bank. Indeed, real estate loans including residential and CRE, are currently the lowest yielding loan category on COF’s book at 418bp. Credit cards comes in at a handsome 1,400bp and consumer loans is 725bp, according to the FDIC. With fees and other goodies added in, total net revenue margin for the cards business rises to almost 17%. Commercial & Industrial loans at 560bp are actually quite respectable for the large banks, with the weaker players such as Citigroup (C) laboring at less than half of that spread for C&I loans. Real estate loans at COF have been falling as a percentage of total loans for the past five years. During this same period, COF’s total assets have grown and its deposit base has essentially doubled. The bank securitizes about $1 billion per quarter, including about $400 million in residential mortgage loan production that will gradually go away. But this is actually a positive for COF, since the risk-adjusted return on residential lending is probably negative anyway. Note that the bank is actually pursuing retail investment advisory business alongside the consumer credit products. Thanks to the blessing of the Dodd-Frank law and the constant intercessions of the folks at the Consumer Finance Protection Bureau, who have turned extortion into a form of public policy, residential mortgage lending is now a loss leader for most of the US banking industry. COF is merely the latest commercial bank to make the obvious decision, namely that residential lending is not a business worth doing – at least without significant scale. And in any event, the double digit return available from credit cards is pretty hard to argue with any day of the week. Last thought. COF is the largest monoline consumer credit card issuer, but Citi is the largest credit card shop in the industry. Given that the latter has already bailed out of asset management and residential mortgages, may be time to slam these two consumer credit shops together and call it a day. There may not be much organic growth in the banking industry and even less alpha, but there is always M&A.
Соглашение о сокращении добычи нефти, достигнутое странами ОПЕК+ во главе с Саудовской Аравией и Россией, должно быть продлено, иначе цены на нефть вновь обвалятся, уверен руководитель отдела исследований глобальных сырьевых рынков Citigroup Эд Морс. Подробнее читайте на нашем сайте www.oilru.com
A day after the Atlantic revealed that Donald Trump Jr. exchanged direct messages with somebody (possibly Julian Assange) running Wikileaks’ Twitter account, Buzzfeed has published another ostensibly tantalizing piece of news that, like yesterday’s Trump Jr. non-story, fails to deliver on its headline’s lofty promise. According to Buzzfeed, on Aug. 3 of last year, just as the US presidential election was entering its final months, the Russian foreign ministry sent nearly $30,000 to its embassy in Washington. The wire transfer, which came from a Kremlin-backed Russian bank, landed in one of the embassy’s Citibank accounts and contained the memo line: “To finance election campaign of 2016.” As it turns out, that transfer was one of 60 sent to Russian embassies around the world. The transactions, which moved through Citibank accounts and totaled more than $380,000, each came from the Russian foreign ministry. And at least one of the transactions that made its way into the US originated with Kremlin-owned VTB Bank, which has been under US sanctions since 2014. After discovering the $30,000 transfer to the embassy in Washington, Citibank launched a review of other transfers by the Russian foreign ministry. It unearthed dozens of other transactions with similar memo lines. Compliance officers in Citibank’s Global Intelligence Unit flagged them as suspicious, noting that it was unable to determine the financial, business, or legal purpose of the transactions. It soon unearthed dozens of other similar transactions. All financial institutions are required to tell FinCEN about any transactions they deem suspicious. However, such “suspicious activity reports” do not necessarily prove or even indicate wrongdoing. Federal law also requires financial institutions to file reports on any cash transactions of more than $10,000 in a single day, even if those transactions are legitimate. Banks must also file the reports whenever they suspect money laundering or other financial crimes. Records of the transactions were turned over to Congressional investigators by Citibank, part of materials including more than 650 suspicious transactions between November 2013 and March 2017 totaling about $2.9 million. That money was sent to four Russian accounts operating in the US: the embassy; the Office of Defense, Military, Air and Naval Attaches; and Russian cultural centers in Washington and New York City. The FBI was first made aware of the suspicious transactions at the end of September. One FBI special agent told Buzzfeed that even if there is a logical explanation for the suspicious wire transactions, the FBI still has to investigate what the money was used for. “We had an election and the intelligence community concluded Russia interfered in it,” said the FBI agent. “How could we not investigate a suspicious financial transaction that contained a memo that said, ‘finance election campaign 2016?’ Given the climate and what was in that memo line it would be very irresponsible for us not to investigate. It’s a good lead.” Thanks for clearing that up... Two FBI sources said that FBI legal attaches in other countries are now investigating whether the money may have been used for the US presidential election and, if so, how. However, there’s no conclusive evidence that this money was used to run interference in the US election.
Соглашение о сокращении добычи нефти, достигнутое странами ОПЕК+ во главе с Саудовской Аравией и Россией, должно быть продлено, иначе цены на нефть вновь обвалятся, уверен руководитель отдела исследований глобальных сырьевых рынков Citigroup Эд Морс.
Top central bankers vow to talk investors out of easy money (Reuters) Sessions Considers Probe to Evaluate Clinton-Russia Ties (WSJ) Trump Jr. Exchanged Messages With WikiLeaks (WSJ) German growth surprise lifts Europe as China subdues Asia (Reuters) Kremlin tells companies to deliver good news (Reuters) Venezuela’s Bondholder Meeting Is a Bust as S&P Declares Default (BBG) GOP megadonor Adelson publicly breaks with Bannon (Politico) Trump Kept One Eye on Re-Election With His Push for Deals in Asia (BBG) Japan's PM says North Korea still developing missiles despite launch pause (Reuters) Wall Street Fines Fall In Trump’s First Year, Research Shows (WSJ) Barred From the Bar: The Rough Road From Prisoner to Lawyer (BBG) Millionaire Bankers Feel Sorry for Struggling Millennials (BBG) Plaza Hotel’s Secret Backer Is a Qatari Royal With Big Ambitions (BBG) Home Depot profit beats as hurricanes spur demand (Reuters) EgyptAir signs $1.1 billion preliminary deal for 12 Bombardier CSeries jets (Reuters) Bloomberg expects eight figures for new Twitter network (BBG) Citigroup, UBS Are Among the Banks Most Exposed to Saudi Rich (BBG) U.S. approves digital pill that tracks when patients take it (Reuters) Weinstein Co. Lender Sues to Recover $45 Million Loan (WSJ) Overnight media Digest WSJ - General Electric Co's new leader outlined a restructuring plan that will slash the annual dividend by $4 billion and streamline the industrial giant's operations, but warned investors it will take years to fix some of the company's businesses and for profits to begin to improve. on.wsj.com/2zIeADS - Treasury Secretary Steven Mnuchin said the Trump administration wouldn't support tax legislation with a corporate tax rate of more than 20 percent as part of any future compromise between the House and the Senate. on.wsj.com/2zJ4EtU - Dozens of banks received the biggest signal yet that they may soon be freed from some of the most onerous rules put in place after the financial crisis, as lawmakers from both parties agreed to a plan that would enact sweeping changes to current law. on.wsj.com/2zG19nL - President Donald Trump on Monday announced he was nominating Alex Azar as secretary of health and human services, picking a former George W. Bush administration official who has criticized the Affordable Care Act to lead the agency that is tasked with carrying out the health law. on.wsj.com/2zGQGsg - Venezuela was ruled in default on a missed interest payment by S&P Global Ratings, pushing the cash-strapped South American country and its creditors one step closer to a reckoning of its $150 billion debt load. on.wsj.com/2zIiYT8 - Qualcomm Inc rejected Broadcom Ltd's unsolicited $105 billion offer, setting up a potentially hostile showdown between two giants of the chip industry over what would be the biggest technology takeover ever. on.wsj.com/2zIiMmS FT - Missouri’s attorney general said Monday his office would investigate whether Alphabet Inc’s Google violated the state’s consumer protection and antitrust laws. - Mick Davis, the former head of Xstrata, has emerged as a frontrunner to become the next chairman of Anglo Australian miner Rio Tinto Plc. Davis has held talks with Rio, according to people familiar with the matter. - General Electric Co is cutting its dividend and will divest two of its longest-held divisions, including the remainder of the lighting business created by Thomas Edison, as a part an effort by its new chief executive John Flannery to revive the storied conglomerate. NYT - The Justice Department said prosecutors were looking into whether a special counsel should be appointed to investigate political rivals U.S. President Donald Trump has singled out for scrutiny, including Hillary Clinton. nyti.ms/2hwQIyt - John Flannery, the new chief of General Electric Co , is backing away from the ambitious designs of his two predecessors. The new G.E., he declared repeatedly in his first detailed presentation on its future, will be a smaller company with fewer businesses. nyti.ms/2hxBSaH - U.S. President Donald Trump nominated Alex Azar II, a former president of the American division of Eli Lilly and Co and a health official in the George Bush administration, on Monday to be secretary of health and human services. nyti.ms/2jnGFfB - Two U.S. Navy SEAL commandos under investigation in the strangling of an Army Green Beret soldier in June in Mali have also been under scrutiny in the theft of money from a fund used to pay confidential informants, according to three service members briefed on the matter. nyti.ms/2jo8556 - For the first time, the U.S. Food and Drug Administration has approved a digital pill — a medication embedded with a sensor that can tell doctors whether, and when, patients take their medicine. The approval, announced late on Monday, marks a significant advance in the growing field of digital devices designed to monitor medicine-taking and to address the expensive, longstanding problem that millions of patients do not take drugs as prescribed. nyti.ms/2jsvTF2 Canada THE GLOBE AND MAIL ** Mutual-fund seller AGF Management Ltd has settled a federal tax case over income shifted from Canada to an overseas subsidiary during a time when Finance Minister Bill Morneau was a company director. tgam.ca/2hybj5p ** Whitecap Resources Inc has struck a deal to acquire a controlling interest in a major Saskatchewan oil property from Cenovus Energy Inc for C$940 million ($738.5 million). tgam.ca/2iVoXfl NATIONAL POST ** Rogers Communications Inc wants more time to implement new rules that outline how wireless providers must alert customers that exceed data or roaming caps, arguing it's impossible to make the changes by the Dec. 1 deadline. bit.ly/2z0t2tS ** Canada will give no ground on the Trump administration's protectionist demands when the renegotiation of the North American Free-Trade Agreement resumes this week in Mexico City, but will try to quickly reach deals on easier issues in hopes of showing goodwill, sources familiar with Ottawa's strategy said. tgam.ca/2mnJ6Qw Britain The Times * Alphabet's Google faces a new regulatory battle on an unexpected front after Missouri attorney-general launched an investigation into its business practices, saying that he would not allow the state's consumers and companies to be "exploited by industry giants". bit.ly/2hvu5dH * Halving the number of European Union immigrants to the UK would cost every Briton only 60 pounds in lost GDP by 2030, according to analysis by PricewaterhouseCoopers. bit.ly/2hyVN9k The Guardian * Ineos, the petrochemicals company founded by billionaire Brexit backer Jim Ratcliffe, has announced plans to buy Swiss football club, FC Lausanne-Sport. bit.ly/2hxdvde * Channel 4 has joined an alliance of Europe's biggest broadcasters to run commercials across their video-on-demand services, in a move to combat Google and Facebook's dominance of online advertising. bit.ly/2hwkpQd The Telegraph * British taxpayers could be on the hook for as much as 50 billion pounds under Labour's pledge to end private finance initiative contracts and bring the schemes back under state control. bit.ly/2hwl3ND * Centrica's British Gas is set to roll out its Hive smart home devices into the European market before the end of winter through a major deal with one of Italy's largest household suppliers. bit.ly/2hxhmaw Sky News * Business groups from across the European Union have warned British Prime Minister Theresa May on the threat to investment and jobs without "urgent progress" in Brexit talks within the next two weeks. bit.ly/2hwQFCF * Conservative Party chief executive Mick Davis, is plotting a return to Rio Tinto as its next chairman, according to Sky News. bit.ly/2hwQNSF The Independent * The squeeze on UK wages is set to continue for another five years, a think tank has warned. Average pay will be more than 20 pounds a week lower in 2022 than it was at the start of the financial crisis in 2007 as the UK economy continues its faltering recovery, the Resolution Foundation said on Monday. ind.pn/2hxeZo0
В отсутствие геополитических шоков $65 за баррель Brent в ближайшие 2-3 года станет верхней границей диапазона, в котором будет колебаться цена нефти. Такое мнение высказали аналитики Citigroup на организованном банком медиасаммите в Лондоне. Устойчивое превышение этого уровня маловероятно из-за того, что такая цена стимулирует значительное производство сланцевой нефти США, с одной стороны, и подталкивает ОПЕК и присоединившиеся к картелю страны к отказу от ограничения добычи - с другой, сказал Крис Мейн, стратег по энергетическим рынкам Citi.
Two weeks ago we noted how the savings rate in the US had plunged to 3.1% in September 2017, its lowest rate since December 2007 which, coincidentally, was when the last recession started. Probably nothing. The September 2017 figure was less than half the most recent peak of 6.3% in October 2015. As we noted at the time, spending surged 1.0% month-on-month while personal incomes grew at a modest 0.4% and savings took the strain. In its latest US Economics Weekly, Citi asks “Can the savings rate keep falling?”. On the negative side, Citi notes how consumption has exceeded income growth since 2016, leading to a rapid decline in the personal savings rate, especially in 2016. Consumer credit as a percentage of disposable income is at a four-decade high, which is due to student debt. In aggregate, however, household borrowing is somewhat lower than pre-crisis levels. Providing a further level of comfort, the household debt-service ratio is at a four decade low and net worth is at a high. Citi conducts a scenario analysis for potential outcomes for the savings rate. The two base case scenarios are as follows: Scenario 1 - consumption and income growth continue at the same pace as over the past twelve months; and Scenario 2 - consumption and income grow at the same pace as they have in 2017. Scenario 1 implies that the savings rate will fall to 1.6% by the end of 2018, taking it below the previous all-time low of 1.9% in July 2005. Based on Scenario 2, the savings rate would flatline at 3.1%. Assuming that the tax reform legislation is passed, Citi believes that consumption might continue to run stronger than income. Tax reform changes the calculus somewhat. Lower tax payments would imply more personal disposable income, and a boost to savings or higher consumption. Even without tax reform, consumers’ balance sheets appear in better shape than in the pre-crisis period, implying they may be inclined to continue to increase spending even at the expense of lower savings. The implication of Citi’s analysis is that consumers’ strong balance sheets are encouraging them to continue the consumption binge without taking undue risk. Of course, we’d like to believe in a rosy outlook for U households too. The only problem is that the aggregate data is masking the rapidly deteriorating situation for the majority of Americans. Earlier this month, we published a guest piece “The Savings Rate Conundrum” by Lance Roberts vof RealInvestmentAdvice.com. As Roberts noted. I just have one question. If things are so good, then why is America’s saving rate posting such a sharp decline? The answer is not surprising. Despite the bullish economic optics, the reality for the majority of Americans is they simply have not yet recovered from the financial crisis. As the chart below shows, while savings spiked during the financial crisis, the rising cost of living for the bottom 80% has outpaced the median level of “disposable income” for that same group. As a consequence, the inability to “save” has continued. We don’t disagree with Citi’s conclusion that the savings rate can keep on falling. However, we strongly disagree that it’s a function of “healthy consumer metrics”. In contrast, it’s a horrendous reflection of the creeping erosion in living standards across the broad swath of the population.
(Bloomberg) -- Соглашение стран-производителей нефти во главе с Саудовской Аравией и Россией о сокращении добычи, подтолкнувшее котировки к максимуму двух с половиной лет, должно быть существенно продлено, или цены обвалятся, говорит руководитель отдела исследований глобальных сырьевых рынков Citigroup Inc. Эд Морс.Инвесторы уже исходят из того,...