Bear Market

Euro-Zone States Discuss Plan to Give ESM Unlimited Funding From ECB

July 31, 2012 by · Leave a Comment 

ECB President Mario Draghi hinted at such purchases last week, but the new element would be that the ESM could place the purchased bonds with the ECB as collateral and obtain fresh money from the central bank with which to support ailing euro states. Supporters of the idea hope that the award of such a banking license to the ESM in itself would calm financial markets….The plan isn’t new. France proposed it last year but Germany and other countries shot it down. But German Chancellor Angela Merkel faces increasing European pressure to drop her Nein and make way for a measure that many hope would end the two-year crisis plaguing the continent. The German Finance Ministry on Tuesday rejected the plan. A spokesman said the ministry saw no need for an ESM banking license. “And we’re not holding talks on this issue.” Also see this article. To wit: Lawmakers from all three parties in Merkel’s coalition immediately repudiated the suggestion. It is a “dangerous attempt” to bypass the ban on the central bank financing states directly, said Hans Michelbach of the Bavarian Christian Social Union. The Free Democratic Party’s Rainer Bruederle told Die Welt newspaper such a mechanism is a “wealth-destroying weapon,” while Norbert Barthle of Merkel’s Christian Democratic Union said it won’t happen.

Read more….

Greece ‘on the brink’ as cash reserves dry up

July 31, 2012 by · Leave a Comment 

Greece’s European partners have repeatedly promised the country will be funded through August, when it must repay a €3.2bn (£2.5bn) bond, but the details of the funding have yet to be disclosed.In the absence of that money, Greece would run out of funds to pay everyday public expenses ranging from police and other public service wages to pensions and social benefits, Reuters reported….”But we are certainly on the brink, we did not receive the aid tranche we were supposed to and we have the pending issue of an ECB bond maturing on August 20.”

Read more….

Spain Capital Outflows Reach Record Levels in Euro Crisis

July 31, 2012 by · Leave a Comment 

Capital outflows from Spain quadrupled in May to €41.3 billion from May 2011 in a sign of waning confidence in the country’s ailing banking sector. In the first five months of this year, outflows reached a record €163 billion, according to figures from the country’s central bank….The outflow has resulted from domestic banks sending money abroad, foreign lenders pulling out cash and mostly non-resident investors dumping Spanish assets. The steep rise was likely due to Bankia, the banking conglomerate, having requested a bailout in May….EU officials are increasingly worried that if Spain, the euro zone’s fourth largest economy, needs a full bailout, financial markets will target Italy, which is too big to be rescued.

Read more….

California’s Lt. Governor Gavin Newsom on Eminent Domain — A Politician with True Grit

July 31, 2012 by · Leave a Comment 

What the heck was that? It’s so rare, that I could hardly recognize it, but sure enough, it was a politician with true grit. Go figure. According to a story in Mortgage News Daily, California’s Lt. Governor Gavin Newsom took a couple of shots at a Washington D.C. trade group called the Securities Industry and Financial Markets Association (“SIFMA”) in response to their threatening San Bernardino County’s Board of Supervisors because they approved a plan to use eminent domain to seize and restructure underwater mortgages.

Read more….

Crime and Mayhem in the USA

July 31, 2012 by · Leave a Comment 

Despite widespread crime of various types across all classes of society, most Americans polled were comfortable trusting their own “moral compass.” Let’s see how we did with that in July.

Read more….

Mortgage markets react to GSE principal write-down rejection

July 31, 2012 by · Leave a Comment 

Mortgage bond investors may see some prices ease on agency MBS after FHFA Acting Director Edward DeMarco refused principal reduction on GSE loans. “This should be the final story on principal forgiveness at the GSEs,” said one analyst. But is it the final story for DeMarco himself?

read more

Read more….

SEC loses lawsuit against former Citi CDO director

July 31, 2012 by · Leave a Comment 

A jury found Brian Stoker, ex-director of Citi’s CDO structuring group not liable for misleading investors in a faulty $1 billion CDO that cost those investors $700 million.

read more

Read more….

Freddie to adjust LTV-entry requirements for refinance programs

July 31, 2012 by · Leave a Comment 

Freddie plans to expand HARP and the Relief Refinance programs by tweaking the guidelines so mortgages with LTV ratios of 80% or under have the same entry requirements into the refinance programs as loans with LTV scores of 80% or above.

read more

Read more….

Weekly Forex Market Forecast (July 30th – August 3rd 2012)

July 31, 2012 by · Leave a Comment 

By Michael Trinkle, ForexTraders

Key Fundamental Forex Events and Forecasts for the Coming Week

The following table lists the key economic data and other events that are due out during the week of July 30th – August 3rd, with release times displayed for the GMT time zone.

The list also includes the current market consensus forecast for each event and indicates what sort of deviation might affect the forex market valuation of the indicated currency positively.

Monday, July 30th

  • 8:00am EUR Spanish Flash GDP (-0.4% expected, > good for currency)
  • Tentative EUR Italian 10-y Bond Auction (last 5.82 average yield and 1.7 bid-to-cover ratio, < yield good for currency)

Tuesday, July 31st

  • 2:00am NZD NBNZ Business Confidence (12.6 expected, > good for currency)
  • 2:30am AUD Building Approvals (-15.0% expected, > good for currency) 
  • 1:30pm CAD GDP (0.2% expected, > good for currency) 
  • 3:00pm USD CB Consumer Confidence (61.5 expected, > good for currency)

Wednesday, August 1st

  • 2:00am CNY Manufacturing PMI (50.4)
  • All Day CHF Bank Holiday 
  • 8:15am EUR Spanish Manufacturing PMI (41.1 expected, > good for currency) 
  • 9:30am GBP Manufacturing PMI (48.7 expected, > good for currency)
  • 1:15pm USD ADP Non-Farm Employment Change (122K expected, > good for currency) 
  • 3:00pm USD ISM Manufacturing PMI (50.4 expected, > good for currency)
  • 7:15pm USD FOMC Statement (hawkish = good for currency)

Thursday, August 2nd

  • 2:30am AUD Retail Sales (0.6% expected, > good for currency)
  • 2:30am AUD Trade Balance (-0.38B expected, > good for currency) 
  • 8:15am CHF Retail Sales (3.6% expected, > good for currency) 
  • 9:30am GBP Construction PMI (48.3 expected, > good for currency)
  • 12:00pm GBP Asset Purchase Facility (375B expected, < good for currency) 
  • 12:00pm GBP Official Bank Rate (0.50% expected, > good for currency) 
  • Tentative GBP MPC Rate Statement (hawkish = good for currency)
  • 12:45pm EUR Minimum Bid Rate (0.75% expected, > good for currency) 
  • 1:30pm EUR ECB Press Conference (hawkish = good for currency)
  • 1:30pm USD Unemployment Claims (375K expected, < good for currency)

Friday, August 3rd

  • 9:30am GBP Services PMI (51.7 expected, > good for currency)
  • 1:30pm USD Non-Farm Employment Change (101K expected, > good for currency) 
  • 1:30pm USD Unemployment Rate (8.2% expected, < good for currency) 
  • 3:00pm USD ISM Non-Manufacturing PMI (52.2 expected, > good for currency)

Technical Forecast and Levels to Watch for the Majors This Week

EURUSD: Mildly Lower

Initial: 1.2323/33, 1.2389, 1.2407/96, 1.2519, 1.2588, 1.2623, 1.2668, 1.2692, 1.2747, 1.2857/86, 1.2904, 1.2946/94, 1.3000/55, 1.3133/59, 1.3211/24 and 1.3251/92.
Above: 1.3321, 1.3376/85, 1.3433, 1.3485/95, 1.3546/68, 1.3614, 1.3795/98, 1.3836, 1.3969, 1.4000, 1.4246, 1.4500/17, 1.4695 and 1.4939.

Initial: 1.2288, 1.2162, 1.2143, 1.2041, 1.1938, 1.1876, 1.1639, 1.0762 and 1.0206.
Below: 0.9607, 0.9599, 0.9338, 0.8410, 0.8347 and 0.8225.


Initial: 78.59/99, 79.07/17, 79.40/49, 79.74/79, 79.94/80.22, 80.56/61, 80.82, 81.14/46, 81.76/96, 82.01/22, 82.53 and 82.64.
Above: 83.01/83.96, 84.09/17, 84.51, 84.80, 85.51, 85.92, 87.11/13, 87.95, 93.77 and 94.97.

Initial: 78.28/37, 78.06, 77.89/99, 77.66, 77.00, 76.73/83 and 76.02/41.
Below: 75.94/98, 75.70 and 75.56.

GBPUSD: Mildly Lower

Initial: 1.5767, 1.5777/81, 1.5804/07, 1.5890, 1.5907, 1.5921/27, 1.5983/90, 1.6035, 1.6061/92, 1.6109 and 1.6182/98.
Above: 1.6297, 1.6301, 1.6452/56, 1.6474, 1.6546, 1.6570, 1.6589/98, 1.6616, 1.6741/45 and 1.6876.

Initial: 1.5714/37, 1.5668/91, 1.5624/50, 1.5580/1.5601, 1.5514/16, 1.5458/99, 1.5403, 1.5392, 1.5375, 1.5293, 1.5267/77, 1.5267, 1.5232 and 1.5123.
Below: 1.5066, 1.5000, 1.4785/98, 1.4348, 1.4232, 1.3653 and 1.3501.  

AUDUSD: Mildly Higher

Initial: 1.0486/98, 1.0508, 1.0556, 1.0596 and 1.0608/38.
Above: 1.0654, 1.0668/86, 1.0751/53, 1.0792/98, 1.0842/54, 1.1010, 1.1064 and 1.1079.

Initial: 1.0474, 1.0443/51, 1.0422, 1.0384, 1.0303/19, 1.0280, 1.0257/66, 1.0216/23, 1.0177, 1.0117, 1.0099/1.0100, 1.0052, 1.0000/18, 0.9925/83, 0.9900 and 0.9849/96.
Below: 0.9794, 0.9732, 0.9620/89, 0.9585, 0.9536/41, 0.9500 and 0.9486.

USDCAD: Mildly Lower

Initial: 1.0099, 1.0105, 1.0128, 1.0142/72, 1.0199/1.0232, 1.0249, 1.0262/1.0311, 1.0334/37, 1.0353/61, 1.0415/23, 1.0438/39, 1.0481 and 1.0500.
Above: 1.0506, 1.0522, 1.0646/56, 1.0669 and 1.0742/85.

Initial: 1.0029, 1.0018, 0.9924/97, 0.9906, 0.9828/99, 0.9789/99 and 0.9724.
Below: 0.9686, 0.9645, 0.9525, 0.9445 and 0.9405.

NZDUSD: Mildly Higher

Initial: 0.8109/35, 0.8204, 0.8227, 0.8240/62, 0.8279 and 0.8294.
Above: 0.8317/95, 0.8405, 0.8420/27, 0.8504, 0.8571, 0.8764 and 0.8841.

Initial: 0.8052/99, 0.8038, 0.8013, 0.7996, 0.7906/50, 0.7804/88, 0.7783/95, 0.7723, 0.7605/76, 0.7552/85, 0.7521, 0.7500 and 0.7404/67.
Below: 0.7321/69, 0.7189, 0.7115, 0.7099 and 0.7000.

More articles from ForexTraders….

The Central Banking Theater of the Absurd

July 31, 2012 by · Leave a Comment 

By Charles Hugh Smith, OFTWOMINDS

The astounding hubris of central bankers is comical, but the consequences of their actions are playing out as needless tragedy.

Central bankers present themselves as Masters of the Universe. They are, but only in their own little Theater of the Absurd. In the real world, they are as clueless as any other mortals about the unintended consequences of their actions and the speed with which the corrupted, unsustainable financial Status Quo will decay and die.
The only attribute they possess in abundance is hubris. Their claims to godhood are comical when viewed in their little Theater of the Absurd, but they become tragic when the consequences of their actions play out in the real world.
Their job, such as it is, is to deflate a tottering system based on phantom assets slowly enough that it doesn’t implode. Stripped of mumbo-jumbo, their strategy to accomplish this is to inflate other phantom assets to replace the phantom assets that are falling to zero.
All their promises, preening and posturing boil down to patting their breast pocketand speaking vaguely about a “secret plan” to end the crisis without bringing down the system that spawned the crisis as a consequence of its very nature.
There is no secret plan, of course, and no secret financial weapons; all they really have is artifice and the hubris to present artifice as reality.
To admit the usustainable is not sustainable would bring the entire rotten edifice crashing down, so the central bankers invite us into their little Theater of the Absurd and evince a phantom confidence in their phantom solutions that depend on phantom assets.
A swollen cloud of doom hangs over the central banker’s little Theater of the Absurd; all their chest-pounding hubris and empty confidence is artifice, as phantom as the assets they claim will replace the phantom assets that have been destroyed by exposure to reality.
On their absurd little stage, they claim the Emperor’s robes are thick and fine; and we laugh, bitterly, for these threadbare lies are all they have to “save” a parasitic, predatory, anti-democratic financial Status Quo.
Entries and email may be sporadic this week.

Resistance, Revolution, Liberation: A Model for Positive Change (print $25)
(Kindle eBook $9.95)

We are like passengers on the Titanic ten minutes after its fatal encounter with the iceberg: though our financial system seems unsinkable, its reliance on debt and financialization has already doomed it.We cannot know when the Central State and financial system will destabilize, we only know they will destabilize. We cannot know which of the State’s fast-rising debts and obligations will be renounced; we only know they will be renounced in one fashion or another.
The process of the unsustainable collapsing and a new, more sustainable model emerging is called revolution.
Rather than being powerless, we hold the fundamental building blocks of power. We need neither permission nor political change to liberate ourselves. A powerless individual becomes powerful when he renounces the lies and complicity that enable the doomed Status Quo’s dominance.

Thank you, Frederik A. ($50), for your splendidly generous contribution to this site– I am greatly honored by your support and readership.

Go to my main site at
for the full posts and archives.

More articles from Charles Hugh Smith….

Next Page »

Bear Market