Bigger Delay to ESM

Court May Take Longer to Rule on Euro Measures

 

The German Constitutional Court may take several months, rather than the expected three weeks, to decide on a request that it issue a temporary injunction blocking measures to rescue the euro. Finance Minister Wolfgang Schäuble urged the court to hurry up Tuesday, warning that a delay could lead to a further market turbulence. more...

• The Power Struggle: Merkel Wrestles with Court over Europe's Future

http://www.spiegel.de/international/

BLS Comes Clean That Market-Moving Data Is Consistently Leaked

Submitted by Tyler Durden on 07/11/2012 - 08:53 BLS Bureau of Labor Statistics

The Labor Department released a report Tuesday investigating possible leaks of economic data and raised concerns about self-identified new organizations that primarily serve high-speed stock traders. These 'news' agencies - enabling profits to be made from the millisecond early data release include (and have since had access revoked) 'Need To Know News' and RTTNews. But the most telling insight from the report, noted by USAToday, is the following: The room where news organizations, including The Associated Press, receive early copies of the employment report is supposed to be secure. Before the data were released, reporters gave up their cell phones and temporarily lost Internet access. But the system still suffered from security flaws, according to the report conducted by Sandia National Laboratories on behalf of the Labor Department. So, it seems that BLS has consistently been leaked 'early' as the report outlined 'ways that technology could be used to bypass security and prematurely leak the data... including hidden transmitters in computer equipment and compromised phone or data lines," and proposes access be granted to 'the room' based on "whether a news outlet produces original reporting and distributes it to a wide audience".

http://www.zerohedge.com/

Violent protests erupt in Spain after miners' protest

Riot police and protesting miners clashed in Madrid today as the Spanish prime minister Mariano Rajoy announced further austerity measures.

 

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A woman covered in blood is surrounded by riot policemen during violent clashes in Madrid today.

 

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Flares are thrown at riot police outside the industry ministry during a demonstration by Spanish coal miners in Madrid today.

By Fiona Govan, Madrid

10 Year Bond Smashes All Records In WTF Auction

Submitted by Tyler Durden on 07/11/2012 - 13:16 10 Year Bond Bond High Yield Primary Market

Only one word to explain the just completed 10 year reopening auction. WTF!!! While the 10 year When Issued was trading at 1.516% at 1pm, when the release hit of the final High Yield on the bond, jaws dropped, as it came at a shocking 1.459%, nearly 6 bps inside of the WI, a record, a yield which also was a record, a Bid To Cover of 3.61 which was the second highest ever, second only to the 3.72 in April 2010, but it was the internals that were the most jarring of all. Unlike all recent auctions in the past 4 years, the Primary Dealer take down was only 14% a record low in recent years, and a hit rate of 6.8%, another record low. The offset: Directs, which took down a whopping 45.4%, another record, after tendering a record $16.9 billion in bids. All in all there was no definitive reason to explain why this auction was so very, very off the charts, and so mispriced by the secondary market, suffice to say WTF, and that this is what happens when there continues to be just one game in town: frontrun the Fed! Three possibilities: i) either someone was caught massively wrong-footed going into the auction and covered a massive short into the primary market, ii) capital reallocation from European money market funds which as we explained last week are now all dead, or iii) some "Direct" entity somewhere, has a gaping need for good collateral and would literally pay anything for US paper ahead of an even bigger margin call. The reason we say this is that only 51.7% of the auction priced at the high yield (remember: Dutch Auction): and the low yield was 1.36% - someone, supposedly a Direct Bidder, was in a furious rush to get any paper, at any price. If the latter, we will find out very soon.

http://www.zerohedge.com/

The Seeds For An Even Bigger Crisis Have Been Sown

Submitted by Tyler Durden on 07/11/2012 17:10 -0400

On occasion of the publication of his new gold report (read here), Ronald Stoeferle talked with financial journalist Lars Schall about fundamental gold topics such as: "financial repression"; market interventions; the oil-gold ratio; the renaissance of gold in finance; "Exeter’s Pyramid"; and what the true "value" of gold could actually look like. Via Matterhorn Asset Management.

By Lars Schall

Ronald Stoeferle, who is a Chartered Market Technician (CMT) and a Certified Financial Technician (CFTe), was born October 27, 1980 in Vienna, Austria. During his studies in business administration and finance at the Vienna University of Economics and the University of Illinois at Urbana-Champaign in the USA, he worked for Raiffeisen Zentralbank (RZB) in the field of Fixed Income / Credit Investments. After graduating, Stoeferle joined Vienna based Erste Group Bank (http://www.erstegroup.com), covering International Equities, especially Asia. In 2006 he began writing reports on gold. His five benchmark reports on gold such as “A Shiny Outlook” and “In Gold We Trust” drew international coverage on CNBC, Bloomberg, the Wall Street Journal and the Financial Times. Since 2009 he also writes reports on crude oil. The latest gold report by Stoeferle was published today.

Lars Schall: What is “financial repression“ according to Ronald Stoeferle?

Ronald Stoeferle: Financial repression as a perfidious form of redistribution. It always means a combination of incentives and restrictions for banks and insurance companies, which cause the investment universe to be substantially reduced for investors. This means that capital is channelled away from the asset classes that it would flow into in a more liberal environment.

I sincerely believe that financial repression will continue to crop up in many shapes and sizes over the coming years. However, the long-term costs of the lack in efforts made towards consolidating national finances are substantial. While low bond yields in the short run suggest that the saving measures are on course, one has to bear in mind that this has mainly been achieved by market interventions.

Therefore, we regard the gradual transfer of assets as a disastrous strategy in the long run.

What happens is that none of the previous problems of misallocation are resolved, but instead redistribution takes place (at the beginning mostly invisibly) and problems are dragged out, having to be addressed later. As the dependence on these measures rises, so does the collateral damage to be expected later, and the seeds for an even bigger crisis have been sown.

L.S.: What does all that mean for gold?

R.S.: Negative real interest rates are an important cornerstone of financial repression. And negative real interest rates represent the perfect environment for the gold price. During the 20 years of the gold bear market in the 1980s and 1990s, the average real interest rate level was around 4%. Real interest rates were negative in only 5.9% of all months. The situation in the 1970s, however, was completely different: real interest rates were negative in 54% of the months. Since 2000 real interest rates have been negative for 51% of the time, which constitutes an optimal environment for gold. Due to the overindebtness (that I am also
discussing in my report), I believe that this trend will continue.

L.S.: Are the interventions undertaken by western central banks and commercial banks in the gold and other markets more obvious than ever?

R.S.: Yes, especially after the 29th of February. In general I write in my report that there is a fine line between intervention (usually a governmental / political interference) and manipulation (negative connotation in terms of “exerting influence”)....

http://www.zerohedge.com/news/seeds-even-bigger-crisis-have-been-sown

Italy’s bond rating was cut and its negative outlook reiterated by Moody’s Investors Service as the euro area’s third-biggest economy faces higher funding costs and contagion risk from Greece and Spain.

The ratings company lowered Italy’s government bond rating by two steps to Baa2 from A3, citing a greater risk of a Greek exit from the euro and the Spanish banking system experiencing greater credit losses, according to a statement released in Frankfurt today. That makes Italy’s rating the same as those of Kazakhstan, Bulgaria and Brazil, according to data compiled by Bloomberg.

“Italy’s near-term economic outlook has deteriorated, as manifest in both weaker growth and higher unemployment, which creates risk of failure to meet fiscal consolidation targets,”Moody’s said. “Failure to meet fiscal targets in turn could weaken market confidence further, raising the risk of a sudden stop in market funding.”

The euro fell toward a two-year low after the downgrade. The 17-nation currency bought $1.2189 as of 9:06 a.m. in Tokyo, from $1.2203 yesterday in New York, when it touched $1.2167, the least since June 2010.

Italy yesterday sold 7.5 billion euros ($9.1 billion) of Treasury bills.

Moody’s also cited “increasingly fragile market confidence, contagion risk emanating from Greece and Spain and signs of an eroding non-domestic investor base.”

Prime Minister Mario Monti has been lobbying European partners to agree on a plan to give the region’s permanent bailout fund, or ESM, more leeway to buy the bonds of countries meeting their fiscal goals, such as Italy and Spain, in order to lower their borrowing costs.

http://www.bloomberg.com/news/2012-07-13/italy-s-bond-rating-cut-by-mood...

Singapore’s economy unexpectedly contracted last quarter as manufacturing fell, adding to signs of a deepening slowdown in Asian expansion as Europe’s debt crisis curbs demand for the region’s goods.

Gross domestic product fell an annualized 1.1 percent in the three months through June from the previous quarter, when it climbed a revised 9.4 percent, the Trade Ministry said in an e-mailed statement today. The median of 14 estimates in a Bloomberg News survey was for a 0.6 percent gain. The economy expanded 1.9 percent from a year earlier.

The Asian Development Bank cut its growth forecast for the region yesterday and South Korea unexpectedly reduced interest rates as it joined countries from Brazil to China in cutting borrowing costs in July. Singapore’s exports declined in May from the previous month, and a shrinking economy could put pressure on the central bank to ease monetary policy, according to Bank of America Corp.

“The outlook on the growth side looks dim,” said Chua Hak Bin, a Singapore-based economist at Bank of America, who accurately predicted today’s GDP contraction. “If a technical recession does occur, chances are the Monetary Authority of Singapore may have to ease policy come October.”

The Singapore dollar pared earlier gains and was little changed, trading at 1.2715 against the U.S. currency as of 8:58 a.m. local time after the report.

Elevated Inflation

Manufacturing slid 6 percent last quarter from the previous three months, compared with a 20.9 percent gain in the first quarter....

U.S. to China: open talks on South China Sea

PHNOM PENH - The United States urged China to open talks with Southeast Asian nations to calm tensions over their rival claims to the potentially oil-rich and increasingly militarized South China Sea. Full Article | Slideshow

JPMorgan Chase & Co. (JPM)’s announcement that an internal inquiry may show “intent” to misprice trades in a unit that lost $5.8 billion may help a U.S. investigation while putting distance between management and any wrongdoers.

“E-mails, voice tapes and other documents, supplemented by interviews” were “suggestive of trader intent not to mark positions where they believed they could execute,” the bank said in a presentation today as it reported net income fell 9 percent to $4.96 billion. “Traders may have been seeking to avoid showing full amount of losses,” the bank said, noting management had concerns about the integrity of the prices used. The bank didn’t provide evidence to support the allegations.

The U.S. Department of Justice and the Federal Bureau of Investigation in New York in May began a probe of the bank’s trading losses, a person familiar with the matter said. The Securities and Exchange Commission and the Commodity Futures Trading Commission, which regulates derivatives trading, are also examining New York-based JPMorgan’s trading activities, according to people familiar with those probes.

The largest U.S. bank by assets today restated first-quarter results to reduce net income by $459 million after a review of the prices used in the unit. Yet multibillion-dollar losses and an internal report by the bank are just the beginning of any federal prosecution, said Sam Buell, a former U.S. prosecutor in New York who worked on the Enron Corp. Task Force and is now a professor at Duke University School of Law.

http://www.bloomberg.com/news/2012-07-13/jpmorgan-claim-of-possible-trad...

Four Saudi security personnel were injured in an attack by masked gunmen while on patrol in Awwamiya in the oil-rich Eastern Province, the Saudi Press Agency reported, citing an Interior Ministry spokesman.

Gunmen also fired at the police station in the village and threw a Molotov cocktail while riding motorcycles, the Riyadh-based news service said today, citing Major General Mansour al-Turki. One of the assailants was killed in the attack on the station and three others escaped, it said.

While Sunni-majority Saudi Arabia largely avoided the unrest that spread across the Arab world last year, minority Shiite protesters have clashed with security forces in Awwamiya, al-Qatif and other eastern towns. In February, Saudi Arabia accused “a number of elements” of trying to provoke violence by firing on security forces in Awwamiya.

“A new cycle of Shiite protests against the Saudi regime and its policing tactics is developing in the Eastern Province of Saudi Arabia,” Crispin Hawes, director for the Middle Eastand North Africa at Eurasia Group in London, wrote in an e-mailed note yesterday. “The immediate implications for state stability and crude oil production are limited, but the repercussions for the stability of the province in the longer-term are potentially significant.”

http://www.bloomberg.com/news/2012-07-14/saudi-security-forces-hurt-by-g...