Jim Sinclair’s Commentary
Fear of the strong Euro is at the heart of this.
Jim Sinclair’s Commentary
One little step forward, another little step backwards.
Bank of China Sydney branch issues 2 bln yuan bonds
BEIJING, April 10 (Xinhua) — Bank of China’s Sydney branch issued 2 billion yuan (325 million U.S. dollars) of yuan bonds on Wednesday, the first yuan bond in Australia, the bank announced on Thursday.
The two-year bonds, with a coupon rate of 3.25 percent, were well-received in the market, oversubscribed 1.45 times.
Some 27.5 percent of the bonds were subscribed by local investors, said the bank.
The leading underwriters of the issue include Bank of China, ANZ, National Australia Bank, Royal Bank of Scotland and Westpac Banking Corporation.
The Bank of China said it has filed application to the Australian Stock Exchange for the bond to be traded at the exchange.
The moves came amid China’s increasing efforts to facilitate use of yuan in the global market.
Earlier in February, the Sydney branch of Bank of China and the Australian Stock Exchange signed a yuan clearing settlement to jointly develop an RMB clearing system.
Eastern Ukraine erupts. Should we be surprised?
This week’s outpouring of pro-Russian sentiment in eastern Ukraine was long in the making, despite the apparent calm there after Crimea’s annexation.
By Mike Eckel April 9, 2014 5:23 PM
For many, the sudden seizure of buildings in Donetsk was as unexpected as the arrival of masked, armed soldiers in Crimea six weeks ago.
In eastern Ukraine, as in Crimea, a majority of the population is ethnically Russian. In many regions, such as Donetsk, Kharkiv, and Dnipropetrovsk, loyalties to Russia also run strong, and distrust of the new government in Kiev runs deep. And as in Crimea, many ethnic Russians voice fears – exaggerated or not – of discrimination at the hands of Ukrainian nationalists who helped topple the previous government.
However, until this weekend, eastern Ukraine had appeared calm. Nobody had attempted a coup or uprising; no paramilitary soldiers patrolled the streets.
But while Sunday’s separatist upheaval may have appeared spontaneous, its underlying forces had been building for some time. And tacit encouragement from Moscow, if not outright manipulation, helped to bring Donetsk and other cities to the boil.
Jim Sinclair’s Commentary
Victim of Obama Care?
Sebelius Resigns After Troubles Over Health Site
By MICHAEL D. SHEAR
APRIL 10, 2014
WASHINGTON — Kathleen Sebelius, the health and human services secretary, is resigning, ending a stormy five-year tenure marred by the disastrous rollout of President Obama’s signature legislative achievement, the Affordable Care Act.
Mr. Obama accepted Ms. Sebelius’s resignation this week, and on Friday morning, he will nominate Sylvia Mathews Burwell, the director of the Office of Management and Budget, to replace her, officials said.
The departure comes as the Obama administration tries to move beyond its early stumbles in carrying out the law, convince a still-skeptical public of its lasting benefits, and help Democratic incumbents, who face blistering attack ads after supporting the legislation, survive the midterm elections this fall.
Officials said Ms. Sebelius, 65, made the decision to resign and was not forced out. But the frustration at the White House over her performance had become increasingly clear, as administration aides worried that the crippling problems at HealthCare.gov, the website set up to enroll Americans in insurance exchanges, would result in lasting damage to the president’s legacy.
Even last week, as Mr. Obama triumphantly announced that enrollments in the exchanges had exceeded seven million, she did not appear next to him for the news conference in the Rose Garden.
Yes, the SEC was colluding with banks on CDO prosecutions
By Felix Salmon
April 9, 2014
Back in 2011, I asked whether the SEC was colluding with banks on CDO prosecutions. And now, thanks to an American Lawyer Freedom of Information Request, we have the answer: yes, they were.
This comes as little surprise: it beggared belief, after all, that every bank would end up being prosecuted for one and only one CDO. But now we have chapter and verse: the key precedent, it seems, was the first one, Goldman Sachs.
The SEC filed its case against Goldman and Tourre on April 16, 2010. Three days later Goldman reached out with a $500 million settlement offer, according to an email that Reisner sent Khuzami. Although that proposal was close to the final payment, it took another three months to announce a settlement. As Khuzami described to Kotz, Goldman wanted a global settlement that resolved not just the Abacus investigation but the SEC’s probes into roughly a dozen other Goldman CDOs.
Khuzami didn’t want to give Goldman that public victory. When the SEC and Goldman announced on July 16, 2010, that the investment bank would settle the Abacus case for $550 million, the SEC said in a press release that the settlement “does not settle any other past, current or future SEC investigations against the firm.”
Khuzami was determined that Goldman’s payment only be linked to ABACUS. “This was not a $550 million settlement for 11 cases,” Khuzami told Kotz. “We may tell Goldman that we are concluding our investigations in these other matters without recommending charges, but that doesn’t mean we’re settling them. And that was an important point for us, because we didn’t want them out there saying, you know, they settled 12 CDO investigations for an average of $30 million each, and, you know, didn’t [Goldman] get a great deal.”
IMF chief says eurozone stimulus is likely
Paul Davidson, USA TODAY2:46 p.m. EDT April 10, 2014
WASHINGTON — International Monetary Fund Managing Director Christine Lagarde predicted Thursday that the European Central Bank will soon launch stimulus measures to combat low inflation, saying the main question is timing.
"We have an ongoing dialogue with European authorities," Lagarde told reporters at the outset of the annual spring meeting of the IMF and World Bank. "I think it is going to be a question of timing now."
IMF officials have called for European officials to take bolder steps to jump-start the euro zone’s sluggish recovery. Last week, ECB President Mario Draghi said he has "unanimous" backing from board members to use "unconventional tools" to fight meager inflation that threatens growth.
One tool is bond purchases to lower long-term interest rates — similar to the U.S. Federal Reserve’s program that is now being wound down. Another is adopting negative short-term interest rates, which means the ECB would charge banks to hold their excess cash to encourage them to lend it instead.
Some ECB officials have suggested it may be too soon for those steps, noting that a drop in annual inflation in March to just 0.5% may be due to a late Easter that weakened consumer spending, and prices could rebound in April. Draghi said last week that the ECB does not currently see an increased risk of deflation, or falling wages and prices, but more information is needed to assess the outlook.
Military assaults against pro-Russian occupiers rumoured in eastern Ukraine
Buildings in Donetsk and Luhansk remain occupied despite an offer of amnesty for those who leave peacefully
theguardian.com, Thursday 10 April 2014 12.58 EDT
Rumours of imminent military assaults on the government buildings seized by pro-Russian protestors kept tensions simmering in eastern Ukraine on Thursday, despite an offer of amnesty for those who leave the buildings peacefully.
After pro-Russian protesters demanding referenda on greater autonomy from Kiev stormed government buildings in the eastern regional capitals of Donetsk, Kharkiv and Luhansk over the weekend, rumours of a military response by the Ukrainian authorities have run rampant. While negotiations have been held in recent days, reports on Thursday suggested government forces were poised for a possible attack. A masked guard told those entering the occupied Donetsk building on Thursday afternoon: "You’ve been warned – you may not come out!"
Although police managed to quickly evict protestors from the Kharkiv administration building and a security service building in Donetsk, the Donetsk administration building and the security service headquarters in Luhansk remain in protesters’ hands. But interior minister Arsen Avakov said on Wednesday morning that "a solution to this crisis will be found within 48 hours", noting that an "anti-terrorist operation" was ready to spring into action at any moment. Avakov’s suggested deadline will run out on Friday morning.
A Donetsk news publication tweeted a photo on Thursday of a long line of transport trucks and artillery it said was a Ukrainian military deployment on the outskirts of the city. Television news reports later said locals armed with clubs had blocked an artillery brigade moving toward Donetsk and forced it to turn around.
The situation was also fraught in Luhansk, where combat veterans calling themselves the Army of the Southeast have kept a tight hold on the security service building and reportedly seized a cache of machine guns. Protesters outside the building continued to stockpile Molotov cocktails and laid down spike strips to puncture tyres on nearby roads, Ukrainian news agency UNIAN reported. On Thursday morning, police cleared 10 vehicles that had blocked off a military base in Luhansk late the night before, according to local media.
Jim Sinclair’ Commentary
This is already here.
Christine Lagarde: huge government and bank debts risk new financial crash
IMF head argues for global co-operation on financial stability, warning against risky investments and low eurozone inflation
Phillip Inman Washington
theguardian.com, Thursday 10 April 2014 08.47 EDT
Head of the International Monetary Fund Christine Lagarde issued a warning to world leaders on Thursday that they need to do more to deal with huge government and bank debts that continue to drag on growth and undermine the stability of the financial system.
Ahead of a set-piece address at the organisation’s spring conference in Washington, Lagarde said leaders need to co-operate in their efforts to repair government and bank finances to protect against a repeat of the 2008 crash.
Lagarde also vented her frustration at persistent delays to the IMF’s own reform programme, which was agreed in 2010 to increase representation from developing nations but has yet to be implemented.
She described the delay as "utterly disappointing" and pledged to press ahead "to ensure the continued legitimacy, relevance, financial strength, and effectiveness of the Fund".
The warnings against complacency echoed a report earlier in the week by the IMF that chastised Brussels for failing to put in place a financial lifeboat capable of rescuing more than a few small banks.
Putin warns Kiev against irreversible mistakes
By Nicolas Miletitch and Dmitry Zaks in KievApril 9, 2014 12:43 PM
Lugansk (Ukraine) (AFP) – Russian President Vladimir Putin urged Wednesday a positive outcome to the first international peace talks on Ukraine but also upped the pressure by warning Kiev’s interim leaders against making any irreversible mistakes.
The veteran strongman’s mixed message came as Kalashnikov-wielding separatists barricaded inside state offices in the Russified east of Ukraine remained locked in a standoff that the country’s police chief said should be resolved within 48 hours but may require the use of force.
A seeming breakthrough in the worst East-West crisis since the Cold War era emerged Tuesday when US and EU diplomats managed to convince both Moscow and Kiev to come together for four-way negotiations that one source in Brussels said should be held in Vienna on April 17.
At stake are not only the vast ex-Soviet state’s territorial integrity and political future but also the fate of the West’s relations with Moscow and all the repercussions this carries for global security in the coming years.
Putin signalled that he expected the talks to follow his idea of turning Ukraine into a loose federation whose eastern regions could establish their own diplomatic and trade relations with Russia — a proposal rejected by Kiev outright.
Jim Sinclair’s Commentary
Here is the cause of a lot of concern over the petro dollar.
Russia rejects US warnings over oil deal with Iran
Senior diplomat suggests Russia may go ahead with deal to buy Iranian oil, possibly undermining nuclear talks.
By The Associated Press | Apr. 10, 2014 | 2:39 PM
MOSCOW (AP) — A senior Russian diplomat on Wednesday angrily rejected U.S. warnings against striking an oil-for-goods contract with Iran, saying that Moscow wouldn’t be intimidated by threats.
Deputy Foreign Minister Sergey Ryabkov said in remarks carried by the state RIA Novosti news agency that an increase in Russian-Iranian trade is a "natural process that doesn’t involve any elements of political or economic challenge to anyone."
Russian business daily Kommersant has reported that Moscow plans to buy 500,000 barrels of Iranian oil a day, a deal that would shatter an export limit defined by an interim nuclear agreement world powers and Iran reached last year.
Iran has agreed to temporarily limit its atomic work, which the West fears could be a cover for developing nuclear weapons, in return for some sanctions relief. Six world powers, including Russia, and Iran are working on a fuller deal that would place long-term restrictions on Iran’s nuclear program in exchange for an end to all economic sanctions.
The six-month interim agreement, which went into effect in January and expires in July, allows Iran to continue exporting a total of 1 million barrels a day of oil to six countries: China, India, Japan, South Korea, Taiwan and Turkey. The promise didn’t apply to Russia, which wasn’t an existing customer of Iran’s petroleum industry.
Stocks take another tumble; eBay heads lower
Stocks slide on Wall Street; Volatile biotechnology sector takes another plunge; eBay down
By Matthew Craft, AP Business Writer 2 hours ago
NEW YORK (AP) — Another plunge in the biotechnology sector led stock indexes down Thursday, as Biogen Idec, Gilead Sciences and other biotech companies extended a recent slump. EBay fell after Carl Icahn abandoned an effort to shake up the company and Bed Bath & Beyond fell after reporting weak sales figures.
KEEPING SCORE: The Standard & Poor’s 500 index fell 24 points, or 1.2 percent, to 1,848 as of 12:50 p.m. Eastern time.
The Dow Jones industrial average lost 144 points, or 0.9 percent, to 16,292 and the Nasdaq composite index lost 98 points, or 2.4 percent, to 4,085.
OUT OF FAVOR: Biotech stocks have gone from investor favorites to pariahs. After making big gains last year, biotechs have been crushed in recent weeks as they come under pressure to lower prices for their drugs. Biogen dropped $14.33, or 5 percent, to $286.35 and Gilead slid $4, or 6 percent, to $66.65. Both roughly doubled in value last year.
Other recent favorites also took a drubbing. Facebook, another stock that doubled last year, sank $2.28, or 4 percent, to $60.15.
UP, THEN DOWN: The market’s drop wiped out gains made earlier in the week. On Wednesday, minutes from the Federal Reserve’s latest meeting reassured investors that the central bank wasn’t in a hurry to raise interest rates. The S&P 500 had its best day in a month.
"I look at this and I think the market is looking for a reason to go higher," said Brad McMillan, Chief Investment Officer for Commonwealth Financial. "Every time it seems to have one, the next day it goes, ‘Nah, not good enough.’ "
What economic recovery is the Fed looking at?
Thu, Apr 10 13:54 PM EDT
By Phil Wahba
April 10 (Reuters) – Family Dollar Stores Inc, seeking to reverse declining sales and profit, said on Thursday it is slashing prices to win shoppers, cutting jobs, and shutting hundreds of weak performing stores.
The discount retailer, which caters to lower income shoppers, many living paycheck to paycheck, reported sales at stores open at least a year fell 3.8 percent in the quarter ended March 1. It expects sales to decline this quarter, too.
Family Dollar Chief Executive Howard Levine on a call with investors pointed to "a more financially constrained consumer," echoing recent comments from rivals. Wal-Mart Stores Inc a few weeks ago said sharp cuts in food stamp benefits and higher payroll taxes had pinched its customers.
"There’s still in a big part of the economy where price matters," said Wharton Business School professor Barbara Kahn.
A group of U.S. retailers posted sales figures suggested consumers remained cautious in March.
The Thomson Reuters Same Store Sales Index, which tracks monthly sales at stores open at least a year at some key retailers, registered a 2.4 percent increase for March, below last year’s result of 2.7 percent.
Jim Sinclair’s Commentary
A victory for the banks, yet a defeat for mankind.
Derivatives Rules Softened in Victory for Banks
By Matthew Leising Apr 10, 2014 10:20 AM ET
In a victory for banks, global financial regulators revised rules governing how much money must be set aside to cover losses by swaps traders, backing away from guidelines that firms warned would destabilize the $693 trillion derivatives market.
The Basel Committee on Banking Supervision’s final rule, released today, would require swaps dealers to hold less cash to protect against defaults than did a proposal published last year. The plan now applies a minimum 20 percent risk weighting to money deposited at clearinghouses, which are third parties that guarantee the transactions, down from 1,250 percent in the originalproposal. The change takes effect on Jan. 1, 2017.
The interim plan had threatened to boost costs as much as 92 times, according to calculations by three banks shared with Bloomberg News. The risk from that original rule, which was last revised in 2013, was the higher costs could have caused market participants to flee rather than take advantage of the clearinghouses, making it more difficult for the third parties to safeguard the swaps market.
“They really had people spending a year thinking about it, and they reversed it,” said Chris Cononico, president of GCSA LLC, a New York-based underwriter that’s seeking to insure derivatives clearinghouses. “The banks should be very happy,” he said. The proposed rule “seems to have evaporated,” he added.
Moscow may be planning intervention in eastern Ukraine, US warns
John Kerry fears potential Crimea-style action after pro-Russian forces cement control of government building in Donetsk
Paul Lewis in Washington, Shaun Walker in Moscow, and Oksana Grytsenko in Kharkiv
theguardian.com, Tuesday 8 April 2014
The US issued a stark warning on Tuesday that Moscow could be orchestrating another Crimea-style intervention in eastern Ukraine, after pro-Russian forces cemented their control of a government building in the city of Donetsk and there were claims that in Lugansk protesters had taken up to 60 people hostage.
The US secretary of state, John Kerry, described recent developments in eastern Ukraine as "more than deeply disturbing" and repeated threats of western sanctions against Russia, which he said would be extended to the country’s energy, banking and mining sectors.
Kerry blamed pro-Russian protests in eastern Ukraine on "special forces and agents" sent by Moscow in a move he said "could potentially be a contrived pretext for military intervention just as we saw in Crimea".
He was speaking to the Senate foreign relations committee as Ukraine’s state security service said pro-Russian separatists had placed explosives in a building they seized in the eastern city of Lugansk on Sunday and were holding about 60 people against their will.
The protesters, who are believed to have weapons, denied they had taken any hostages.
Pro-Russian occupiers of Ukrainian security service building voice defiance
Army of the Southeast members say they are former members of Ukraine’s Berkut special police force
Alec Luhn in Luhansk
theguardian.com, Wednesday 9 April 2014 19.32 EDT
"You want to know our demands, talk to the people," said a masked commander of the pro-Russian protesters occupying the security service headquarters in Luhansk.
The commander declined to provide his name but said he had fought protesters during deadly clashes in Kiev as a member of the infamous Berkut riot police, lifting his shirt to show a long scar.
"I’ll tell you this much: We will fight these faggots," he said, referring to the new government in Kiev.
As negotiations continued on Wednesday with government representatives, the apparently well-organised group of pro-Russian protesters who call themselves the Army of the Southeast struck a defiant stance after seizing the security service building on Sunday.
Members of the building’s defence who identified themselves as former Berkut (special police) officers from other regions said they would not to fire first but that if attacked they would fight back until Russian forces arrived.
NATO commander says US troops may be deployed to Europe over Ukrainian crisis
Published time: April 09, 2014 20:45
Edited time: April 09, 2014 22:33
The United States Air Force commander in charge of the NATO alliance’s military presence in Europe said on Wednesday this week that US troops may soon be deployed to the region as tensions continue to worsen near the border between Ukraine and Russia.
In an interview with the Associated Press, US Air Force Gen. Philip Breedlove said that forthcoming plans intended to ensure stability in Europe for the NATO partners in the area could involve the mobilizing of American troops.
Representatives from the 28 countries involved in the multinational organization have asked Breedlove — a four-star general who has since last year served as the supreme allied commander of NATO’s European operations — to have a plan ready by early next week, according to the AP’s John-Thor Dahlburg, to reassure partners in the region “that other alliance countries have their back.”
Breedlove told the newswire that he has every intention of unveiling his proposal ahead of next Tuesday’s deadline, and that he wouldn’t "write off involvement by any nation, to include the United States."
When asked by the AP for clarification about the potential for US military involvement, Breedlove reportedly reiterated, "I would not write off contributions from any nation.”
Putin tells Europe Ukraine gas debt ‘critical’, transit threatened
Published time: April 10, 2014 12:25
Edited time: April 10, 2014 16:59
President Putin has written to 18 European countries, warning that Ukraine’s debt crisis has reached a “critical” level and could threaten transit to Europe. He also called for urgent cooperation, blaming Russia’s partners for a lack of action.
Among the countries who’ll receive the letter are major consumers of Russian gas such as Germany, France, Italy, Greece, Turkey, Bulgaria, Moldova, Poland and Romania.
Given the accumulated $2.2 billion gas debt owed by Ukraine’s Naftogas, Russia’s Gazprom will be forced to ask Ukraine for advance payments, Putin said in his letter to European partners, referring to the 2009 gas contract signed between Moscow and Kiev.
“In other words, we’ll be supplying exactly the volume of gas that Ukraine pays for a month in advance,”as Itar -Tass quotes Putin’s letter.
Putin added that introducing advance payments would be an extreme measure.
“We understand that this increases the risks of unsanctioned retrieval of gas flowing through the territory of Ukraine to European consumers. And it could also hinder accumulation of gas supplies in Ukraine necessary to provide for consumption during the autumn-winter period.”
Stable transit of Russian gas to Europe would require an additional 11.5 billion cubic meters of gas for Ukraine’s underground storages, which would cost $5 billion, Putin explained.