Weekend Headlines
Bloomberg:
- Xi Borrows From Mao Playbook in Power Play Ahead of Plenum. The
mission for the near-dozen Communists sitting round a table at a
Beijing ministry was explicit: criticize their boss, who was present.
Party cadres carefully recorded their comments as they spoke, in an echo
of sessions held decades ago under Chairman Mao Zedong’s direction.
- Park Calls for Ending ’Vicious Cycle’ of Appeasing North Korea. South Korean President Park Geun Hye
called for ending the “vicious cycle” of rewarding North
Korean provocations, saying it complicates negotiations and
emboldens the Kim Jong Un regime to advance its nuclear program. “We
cannot repeat the vicious cycle of the past where
North Korea’s nuke threats and provocations were met with rewards and
coddling,” she told BBC World News in an interview that aired today.
“Otherwise, North Korea will continue to further advance its nuclear
capability.”
- Asian Stocks Fall After Fisher Speech on Fed Policy. Asian
stocks fell after Federal Reserve Bank of Dallas President Richard
Fisher said the U.S. central bank should end its record stimulus as soon
as possible. South Korean financial companies including Woori Finance
Holdings Co., Shinhan Financial Group Co., Mirae Asset Securities Co.
and Hana Financial Group Inc. dropped more than 1.6 percent. Coca-Cola
Amatil Ltd. (CCL), Australia’s largest listed drinks company, slumped
4.9 percent after forecasting 2013 earnings will decline. China
Resources Enterprise Ltd., a brewer and retailer with businesses in Hong
Kong and mainland China, gained 1.5 percent. The MSCI Asia Pacific excluding Japan Index fell 0.2
percent to 478.49 as of 11:47 a.m. in Hong Kong, after rising as
much as 0.2 percent.
- Euro at Six-Week Low on ECB; Aussie Climbs as Spending Surges. The euro fell to its lowest level in
more than six weeks before European Central Bank Executive Board
member Joerg Asmussen speaks in the run-up to a policy meeting
amid signs further stimulus may be needed in the region. The euro
fell 0.1 percent to $1.3480 as of 12:43 p.m. in Singapore, and last week
dropped 2.3 percent, the largest decrease since the five days ended
July 6, 2012. It fell as low
as $1.3442 today, the least since Sept. 18.
- Rebar Fluctuates as Investors Await China Party Plenum Meeting.
Steel reinforcement-bar futures swung
between gains and losses before a meeting of China’s top Communist Party
officials in Beijing which will map out a blueprint for economic
reform. Rebar for May delivery, the most-active contract by volume on
the Shanghai Futures Exchange, rose as much as 0.4 percent to 3,685
yuan ($603) a ton and fell as low as 3,666 yuan before
trading at 3,670 yuan by 10:41 a.m. local time. The contract
lost 1.5 percent last month.
- Junk Loans Approach $1
Trillion as Standards Dip: Credit Markets. Loans to junk related
companies in the U.S. are on pace to exceed $1 trillion this year, a
level not seen before the financial crisis, as concern rises that
lenders are lowering their standards. The almost $873 billion of
leveraged loans made in 2013 to borrowers ranging from hotel chain
Hilton Worldwide Holdings Inc. to coal producer Peabody Energy Corp. is
more than the $642.3 billion obtained in all of last year and up from
the post-crisis low of $161.5 billion in 2009, according to Bloomberg.
At the current rate, the record of $899.1 billion in 2007 may be
eclipsed as soon as this week.
- Fed Gives Banks New Dire Scenarios for 2014 Stress Tests. Lenders
including JPMorgan Chase & Co. (JPM) and Citigroup Inc. (C)
will have to show they can survive the demise of a trading partner or a
plunge in value of high-risk business loans in the 2014 version of U.S.
stress tests. The scenarios for the annual tests, outlined by the
Federal
Reserve in a statement yesterday, reflect some of the most
pressing threats seen by regulators as they gauge the ability of
the U.S. financial system to withstand economic shocks. Bankers
will have to show what would happen to the value of leveraged
loans they hold, the impact of another housing bust and how
they’d fare if a firm that owes them substantial sums collapses.
- Health Site Flaws Test Democrats’ Unity as Attacks Rise.
Democratic Senator Joe Manchin of West Virginia announced he is
drafting legislation with Republican Senator Johnny Isakson of Georgia
to postpone the law’s penalty for failing to obtain health insurance, a
core provision that the White House has insisted on maintaining without
delay. Senator Mary Landrieu of Louisiana, a Democrat facing re-election
in a state that backed Obama’s Republican opponents in 2008 and 2012,
said in an interview this week that Obama should
fire some staff members to hold them accountable for the
website’s problems. She stopped short of joining demands from
Republicans for Sebelius’s resignation. Health and Human Services officials who testified this week
before House committees will appear next week in front of two
Senate panels whose Republican members have been outspoken in
criticizing them.
- Obama’s ‘Dishonesty’ Could Slow Second Term.
President Barack Obama continued to take political heat for the
troubled debut of his signature health plan while his advisers
downplayed the significance of the program’s low enrollment rate. Mitt
Romney, the Republican candidate who lost the 2012 presidential race to
Democrat Obama, accused the president of lying. “He wasn’t telling the
truth,” Romney said today on NBC’s
“Meet the Press.” “That fundamental dishonesty has really -- has really put
in peril the whole foundation of his second term,” Romney said.
“I think it is rotting it away.” During the presidential campaign and later, as Congress
debated the Affordable Health Care Act, Obama repeatedly said
that no one would be forced to give up their existing health
coverage under the law. The statement “undermined the president’s credibility,”
Romney said.
- Obamacare Birth Control Rule Assailed by Court as Split Widens. A requirement of President Barack Obama’s health-care law that group insurance plans cover
contraceptives may violate religious freedom, a U.S. appeals
court said, widening a split among the circuits and making it
more probable the U.S. Supreme Court will take up the issue. A three-judge panel in Washington said a lower court was
wrong to deny an injunction sought in a lawsuit by two brothers
who are Catholic. The men sued on religious grounds, seeking to
exclude contraceptive coverage from health plans provided by
their produce-distribution companies. While the panel didn’t
rule on the actual challenge, they disagreed with the trial
judge’s determination that the suit was unlikely to succeed.
Wall Street Journal:
- Investors Return to IPOs in Force. Investors
are stampeding into initial public offerings at the fastest clip since
the financial crisis, fueling a frenzy in the shares of newly listed
companies that echoes the technology-stock craze of the late 1990s.
- You Also Can't Keep Your Doctor. I had great cancer doctors and health insurance. My plan was cancelled. Now I worry how long I'll live.
Everyone now is clamoring about Affordable Care Act winners and losers.
I am one of the losers. My grievance is not political; all my energies
are directed to enjoying
life and staying alive, and I have no time for politics. For almost
seven years I have fought and survived stage-4 gallbladder cancer, with a
five-year survival rate of less than 2% after diagnosis. I am a
determined fighter and extremely lucky. But this luck may have just run
out: My affordable, lifesaving medical insurance policy has been
canceled effective Dec. 31.
Fox News:
CNBC:
- For signs of bubble, look no further than LBOs.
Market watchers who have been out hunting for bubbles may want to look
at debt rather than equity. A number of measures that focus on leverage,
particularly in the area of corporate takeovers, show that kind of
risk-taking back at levels just before the financial system imploded and
sent the economy into its worst slump since the Great Depression. Leveraged
buyouts—LBOs—for both big and midsize companies are approaching debt
levels last experienced in 2007, according to the latest figures from
Thomson Reuters.
Business Insider:
New York Times:
- After Delay, Lenders Set To Visit Greece for Audit.
Inspectors from Greece’s international lenders have put a postponed
visit to the country back on the agenda and will return early this week
after Athens made a new proposal on filling a gap of 2 billion euros in
the 2014 budget, the European Commission has said.
New York Post:
Real Clear Politics:
- Obamacare's Widening Disconnect.
Our relationship with government is in shambles, our feeling of
disconnect with Washington at an historic level. Yet the real problem is
not a health-care website that doesn’t work.
The real problem is a president and a Washington culture which both
believe it is okay to lie to get a bill passed. There is no connection
between such behavior and the values of most
Americans beyond Washington, for whom getting what you want usually
results from hard work, honest bargaining and a little compromise.
Reuters:
- Egypt to look beyond U.S. for arms: foreign minister.
Egypt's Foreign Minister Nabil Fahmy said on Saturday that Egypt would
look beyond the United States to meet its security needs and warned
Washington that it could no longer ignore popular demands in a changed
Arab world. Speaking ahead of a visit by U.S. Secretary of State John
Kerry, Fahmy said the United States must take a long-term view of its
relations with Egypt and understand that in the wake of the Arab Spring,
"it would have to deal now with the Arab peoples, not only with Arab
governments".
- Italian banks' cut plans too modest despite strike call. With Italy mired in its longest recession since the Second World War, the country's hard-pressed banks are cutting jobs, closing branches and infuriating unions, but the cuts
are far too modest to achieve the profitability gains they need.
Financial Times:
- Europe's Big Banks Cut Corporate Lending, Boost Sovereign Debt.
Region's 16 largest banks lowered risk exposure to corporate credit by
9%, while raising risk exposure to sovereign debt by 26% in 2011, 2012,
citing Fitch Ratings. Fitch cites approaching Basel III capital rules as
being partly to blame for decline in corporate credit lending.
Telegraph:
Tagesspiegel:
- Schaeuble
Says No ESM Money for Ailing Banks. German Finance Minister Wolfgang
Schaeuble says his party agreed with potential coalition partner SPD not
to consent to spending tax money to save banks in Europe, particularly
not from the ESM.
China Securities Journal:
- China's Property Bubble Is "Danger" to Economy. China's real
estate bubble poses "danger" to economy and the government should
combine property controls with economic reform of land and tax policies,
according to a front-page editorial. It is urgent to reduce bubble
caused by speculation and reduce potential financial and economic risks.
Weekend Recommendations
Barron's:
- Bullish commentary on (CVA) and (DFS).
Night Trading
- Asian indices are -.50% to unch. on average.
- Asia Ex-Japan Investment Grade CDS Index 134.0 +4.0 basis points.
- Asia Pacific Sovereign CDS Index 103.50 +4.0 basis points.
- NASDAQ 100 futures +.25%.
Morning Preview Links
Earnings of Note
Company/Estimate
Economic Releases
10:00 am EST
- Factory Orders for September are estimated to rise +1.8%.
Upcoming Splits
Other Potential Market Movers
- The
Fed's Powell speaking, Fed's Rosengren speaking, Eurozone PMI, RBA rate
decision, ISM New York for October and the Robert W. Baird Industrial
Conference could also impact trading today.
BOTTOM LINE: Asian indices are modestly lower, weighed down by technology and commodity
shares in the region. I expect US stocks to open modestly higher and
to weaken into the afternoon, finishing mixed. The Portfolio is 50%
net long heading into the week.
Wall St. Week Ahead by Reuters.
Stocks to Watch Monday by MarketWatch.
Weekly Economic Calendar by Briefing.com.
BOTTOM LINE: I expect US stocks to finish the week modestly lower on rising global
growth fears, profit-taking, technical selling, rising
eurozone/emerging markets debt angst, more shorting and earnings
concerns. My intermediate-term trading indicators are giving neutral
signals and the Portfolio is 50% net long heading into the week.
S&P 500 1,761.64 +.11%*
The Weekly Wrap by Briefing.com.
*5-Day Change
Indices
- Russell 2000 1,095.67 -2.03%
- S&P 500 High Beta 28.64 unch.
- Wilshire 5000 18,489.03 -.18%
- Russell 1000 Growth 821.38 +.04%
- Russell 1000 Value 886.85 -.02%
- S&P 500 Consumer Staples 437.16 +1.14%
- Morgan Stanley Cyclical 1,384.67 +.37%
- Morgan Stanley Technology 845.27 -.10%
- Transports 7,047.77 +.55%
- Bloomberg European Bank/Financial Services 106.0 -.42%
- MSCI Emerging Markets 42.66 +.08%
- HFRX Equity Hedge 1,139.94 -.04%
- HFRX Equity Market Neutral 941.74 -.05%
Sentiment/Internals
- NYSE Cumulative A/D Line 194,884 -.51%
- Bloomberg New Highs-Lows Index 200 -432
- Bloomberg Crude Oil % Bulls 24.14 +49.7%
- CFTC Oil Net Speculative Position 299,196 -1.23%
- CFTC Oil Total Open Interest 1,785,295 -2.17%
- OEX Put/Call .99 +312.50%
- ISE Sentiment 112.0 +24.44%
- Volatility(VIX) 13.28 +1.45%
- S&P 500 Implied Correlation 40.29 +8.28%
- G7 Currency Volatility (VXY) 8.12 +7.27%
- Emerging Markets Currency Volatility (EM-VXY) 8.60 +7.23%
- Smart Money Flow Index 11,782.48 -.04%
- Money Mkt Mutual Fund Assets $2.669 Trillion +.04%
Futures Spot Prices
- Reformulated Gasoline 254.19 -1.20%
- Heating Oil 288.23 -1.03%
- Bloomberg Base Metals Index 193.97 +1.33%
- US No. 1 Heavy Melt Scrap Steel 335.67 USD/Ton unch.
- China Iron Ore Spot 135.30 USD/Ton +1.50%
- UBS-Bloomberg Agriculture 1,388.20 -2.92%
Economy
- ECRI Weekly Leading Economic Index Growth Rate 1.70% -30 basis points
- Philly Fed ADS Real-Time Business Conditions Index .1075 -.74%
- S&P 500 Blended Forward 12 Months Mean EPS Estimate 119.18 +.23%
- Citi US Economic Surprise Index 5.30 -11.7 points
- Citi Emerging Markets Economic Surprise Index -8.80 -3.20 points
- Fed Fund Futures imply 36.0% chance of no change, 64.0% chance of 25 basis point cut on 12/18
- US Dollar Index 80.72 +1.90%
- Euro/Yen Carry Return Index 138.86 -.97%
- Yield Curve 231.0 +10 basis points
- 10-Year US Treasury Yield 2.62% +11 basis points
- Federal Reserve's Balance Sheet $3.800 Trillion +.12%
- U.S. Sovereign Debt Credit Default Swap 30.21 -19.37%
- Illinois Municipal Debt Credit Default Swap 189.0 +4.83%
- Western Europe Sovereign Debt Credit Default Swap Index 68.38 -.89%
- Asia Pacific Sovereign Debt Credit Default Swap Index 103.55 +3.33%
- Emerging Markets Sovereign Debt CDS Index 233.26 +8.31%
- Israel Sovereign Debt Credit Default Swap 112.0 +3.22%
- Egypt Sovereign Debt Credit Default Swap 694.31 +1.36%
- China Blended Corporate Spread Index 364.0 -8 basis points
- 10-Year TIPS Spread 2.14% -5 basis points
- TED Spread 20.25 -.5 basis point
- 2-Year Swap Spread 11.75 -1.0 basis point
- 3-Month EUR/USD Cross-Currency Basis Swap -4.25 -.5 basis point
- N. America Investment Grade Credit Default Swap Index 74.25 +3.20%
- European Financial Sector Credit Default Swap Index 116.60 -6.99%
- Emerging Markets Credit Default Swap Index 277.66 +6.11%
- CMBS AAA Super Senior 10-Year Treasury Spread to Swaps 110.0 -2.5 basis points
- M1 Money Supply $2.684 Trillion +1.18%
- Commercial Paper Outstanding 1,081.50 +1.80%
- 4-Week Moving Average of Jobless Claims 356,300 +8,000
- Continuing Claims Unemployment Rate 2.2% unch.
- Average 30-Year Mortgage Rate 4.10% -3 basis points
- Weekly Mortgage Applications 483.70 +6.42%
- Bloomberg Consumer Comfort -37.60 -1.5 points
- Weekly Retail Sales +3.20% +20 basis points
- Nationwide Gas $3.27/gallon -.05/gallon
- Baltic Dry Index 1,504 -11.94%
- China (Export) Containerized Freight Index 1,011.55 +3.64%
- Oil Tanker Rate(Arabian Gulf to U.S. Gulf Coast) 32.50 +18.18%
- Rail Freight Carloads 261,231 -1.31%
Best Performing Style
Worst Performing Style
Leading Sectors
Lagging Sectors
Weekly High-Volume Stock Gainers (29)
- ZLTQ, NTRI, FLDM, NUVA, CRR, MSTR, DWA, BGFV, FARO, XYL, LOCK, CCIX, BWLD, THRM, KFRC, DIN, ATRC, PBI, POWI, MCHP, SCBT, ROG, TRI, ACHC, ZINC, EPIQ, STBZ, LOPE and PCCC
Weekly High-Volume Stock Losers (45)
- N, EXLS, ALSN, CAP, DATA, CVLT, QLIK, AGCO, PCL, MSM, EXAM, MASI, HWAY, WU, CROX, CRUS, MWV, IPHS, SFLY, HGG, FDP, CYNO, PLT, SANM, MDAS, BLKB, WTW, SPSC, ZEUS, WPP, DAN, DLR, PRXL, EW, AVP, DCO, TNGO, BBOX, AAWW, GTLS, JIVE, STRA, VOLC, RATE and BYD
Weekly Charts
ETFs
Stocks
*5-Day Change
Broad Equity Market Tone:
- Advance/Decline Line: Lower
- Sector Performance: Mixed
- Volume: Slightly Below Average
- Market Leading Stocks: Underperforming
Equity Investor Angst:
- Volatility(VIX) 13.53 -1.60%
- Euro/Yen Carry Return Index 138.94 -.28%
- Emerging Markets Currency Volatility(VXY) 8.60 +3.86%
- S&P 500 Implied Correlation 41.11 -1.06%
- ISE Sentiment Index 113,0 -3.42%
- Total Put/Call .93 +5.68%
Credit Investor Angst:
- North American Investment Grade CDS Index 73.77 +1.33%
- European Financial Sector CDS Index 116.62 -.69%
- Western Europe Sovereign Debt CDS Index 68.38 -2.31%
- Emerging Market CDS Index 277.54 +2.89%
- 2-Year Swap Spread 11.75 -.25 basis point
- TED Spread 20.25 -.25 basis point
- 3-Month EUR/USD Cross-Currency Basis Swap -4.25 -.25 basis point
Economic Gauges:
- 3-Month T-Bill Yield .04% unch.
- Yield Curve 231.0 +6 basis points
- China Import Iron Ore Spot $135.30/Metric Tonne +2.58%
- Citi US Economic Surprise Index 5.30 +1.5 points
- Citi Emerging Markets Economic Surprise Index -8.80 +2.3 points
- 10-Year TIPS Spread 2.14 -3 basis points
Overseas Futures:
- Nikkei Futures: Indicating +156 open in Japan
- DAX Futures: Indicating +19 open in Germany
Portfolio:
- Slightly Higher: On gains in my biotech sector longs and emerging markets shorts
- Disclosed Trades: Added to my (IWM)/(QQQ) hedges, then covered some of them
- Market Exposure: 50% Net Long
Bloomberg:
- Draghi’s Deflation Risk Complicates Recovery: Euro Credit. A price slowdown could turn into a negative spiral that derails the
recovery in the euro region. While the 17-nation economy exited six
quarters of recession in the three months through June, it still has
record unemployment and shrinking bank lending.
- Ukraine Rating Cut to Greek Level by S&P as Devaluation Seen. Ukraine’s
debt rating was cut to the
same junk level as Greece by Standard & Poor’s, which said the
government is struggling to weather a shortage of foreign currency,
increasing the likelihood of a hryvnia devaluation. The rating company lowered Ukraine’s long-term sovereign
credit rating one step to B-, six levels below investment grade,
with a negative outlook, according to a statement released
today. That leaves the eastern European nation on par with
Greece and Belize, both of which have restructured debt in the
past several years.
- RBS Sees ‘Substantial’ Full-Year Loss, Creates Bad Bank. Royal Bank of Scotland Group Plc expects to post a “substantial” full-year loss after transferring 38.3 billion pounds ($61 billion) of its worst loans to an internal bad bank under government pressure. Britain’s biggest publicly owned
lender expects to log as much as 4.5 billion pounds of writedowns in the
fourth quarter as it starts to sell the loans, Edinburgh-based RBS said
in a statement today. It will also speed up plans to sell its Citizens
Financial Group Inc. unit to bolster capital.
- European Stocks Drop, Paring Fourth Weekly Advance. European stocks dropped, paring a
weekly gain, as Royal Bank of Scotland Group Plc and Renault SA
fell, while investors weighed the U.S. manufacturing data to
gauge the outlook for the Federal Reserve’s stimulus program.
RBS slid 7.5 percent after predicting a “substantial”
annual loss because of writedowns. Renault declined 5 percent
after its partner Nissan Motor Co. cut its full-year profit
forecast. Vodafone Group Plc rose to the highest price in 12 1/2
years after people familiar with the matter said AT&T Inc. is
exploring a takeover of the company. The Stoxx 600 lost 0.3 percent to 321.5 points.
- Commodities Tumble to Four-Month Low as Crude, Gold Lead Losses. Commodities dropped to a four-month
low, paced by declines in crude oil and gold, on signs of
climbing supplies of raw materials at a time when the prospect
of reduced Federal Reserve stimulus may cut demand. The Standard
& Poor’s GSCI Spot Index of 24 raw materials lost 1.2 percent to
615.14 at 11:54 a.m. in New York, after touching 614.12, the lowest
since July 1. West Texas Intermediate fell below $95 a barrel for the
first time since
June. Gold reached a two-week low, while coffee extended its
longest slump since at least 1972. Cotton fell to the lowest
since January.
- China Home Prices Jump by Most This Year as Demand Defies Curbs.
China’s new home prices jumped by the most this year in October as
homebuyers defied the government’s property curbs and developers offered
more high-priced apartments to tap demand. The average price surged
10.7 percent last month from a year earlier to 10,685 yuan ($1,753) per
square meter (10.76 square feet), SouFun Holdings Ltd. (SFUN), the
nation’s biggest real
estate website owner, said in a statement after a survey of 100
cities. Prices rose 1.24 percent from September, the 17th
consecutive month of increases.
- Fed to Test Banks Against Interest Rate Rise, Housing Collapse. The
Federal Reserve said it will examine how the biggest banks might react
to a jump in long-term interest rates and another housing crash as it
released the next round of stress-test scenarios designed to monitor the
ability of the U.S. financial system to withstand economic shocks. The
central bank in two adverse scenarios will measure the impact from
rising prices in some U.S. property markets and tightening spreads on
high-yield, high-risk loans and bonds, according to a release by the Fed today in Washington.
- Plosser Sees Inflation as Risk When Fed Unwinds Balance Sheet. Charles
Plosser, president of the Federal Reserve Bank of Philadelphia, said
inflation will be a concern as the Fed unwinds its balance sheet
following unprecedented asset purchases. “We have created over $2
trillion of excess reserves that
are sitting on the balance sheets of the banks, it’s just
sitting there, it’s not inflationary,” Plosser said today on
CNBC television. “It will be inflationary when that starts to
flow out of the banking system, that’s when we’ll have to start
worrying about inflation.”
- Dollar Rises for Sixth Day as Treasuries, Commodities Retreat. The
dollar rose for a sixth day and
Treasuries slumped as faster-than-forecast growth in
manufacturing fueled speculation the Federal Reserve will taper
stimulus. The S&P GSCI Index of commodities dropped to a four-month
low. The Bloomberg U.S. Dollar Index climbed 0.4 percent as of
2:10 p.m. in New York. Ten-year Treasury yields added seven
basis points to 2.62 percent, the highest level in two weeks.
Wall Street Journal:
- 'Several' Injured After LAX Shooting; Suspect in Custody. FAA Curtails Planes Following Incident. A gunman opened fire at Los Angeles International Airport Friday
morning, hitting several people and causing the shutdown of at least one
terminal before being taken into custody, police said.
- Bubble Trouble for Tesla(TSLA). Tesla's
stock carries an extraordinarily high valuation and turns over
rapidly—two characteristics of irrational investor exuberance. That
hissing sound? It’s the air coming out of Tesla Motors’ shares. The
electronic-car maker’s stock fell 17.3% in October, registering
its first monthly decline since February, and the worst since 2010. Even
so, it is up 372% so far this year, a performance that marks it out as a
potential bubble.
Fox News:
- Gunman in LAX shooting wounded, in custody, 3 injured, officials say. The gunman in a shooting Friday at Los Angeles International Airport
was wounded and taken into custody after prompting authorities to
evacuate a terminal and stop flights headed for the city from taking off
from other airports, officials say. A law enforcement source tells Fox News that the suspect may be a former or current TSA employee.
CNBC:
- Balance sheet shows US $16 trillion in the hole. Anyone who ran a company with a balance sheet that looked like the U.S. probably wouldn't have a company anymore. The picture painted by the federal balance for fiscal year 2012 shows a
nation with a negative net worth of more than $16 trillion, according
to the Treasury Department's year-end reports and calculations from
banking analyst Dick Bove.
Zero Hedge:
Business Insider:
Reuters:
- Reduce QE3 given labor market rebound, Fed's Lacker says. A top Federal Reserve official repeated on
Friday that the U.S. labor market has recovered enough in the
last 14 months to allow the central bank to reduce its
bond-buying stimulus. "On a number of different dimensions for me personally it
looks like labor force conditions have improved pretty
significantly" since the latest round of quantitative easing
(QE3) was launched in September, 2012, said Richmond Fed
President Jeffrey Lacker, a hawkish policymaker. "The cumulative fall in the unemployment rate, the
cumulative increase in employment are the key things," he added
at a Philadelphia meeting of the Global Interdependence Center.
La Stampa:
- Letta Says Populist Movements Risk Destroying Europe. Italian
premier says next Eruopean Parliament risks becoming "the most
anti-European" in its history because of gains by populist movements.
Echoing fears that
European policymakers remain in a state of cognitive dissonance –
recognizing the need for root-and-branch overhaul of peripheral banks,
but backtracking on joint liability plans – Christopher Flowers, the
legendary FIG investor who now runs the £2.3 billion ($3.5 billion)
private equity group JC Flowers, sounded the alarm over the negative
sovereign-bank feedback loop.
In a shot across the bows of market bulls, who cite the return of
capital flows to weaker eurozone states, Flowers issued a stark warning:
"There is a scenario where we have a Lehman-type event: we wake up some
Thursday and a big country is in trouble.
"And the ECB will have to decide to support banks x, y, z. And then the
ECB will, in fact, decide to own bank x, y, z.
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