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This chart accompanies the podcast recorded                                                                               ...
This chart accompanies the podcast recorded                                                                               ...
This chart accompanies the podcast recorded                                                                               ...
This chart accompanies the podcast recorded                                                                               ...
This chart accompanies the podcast recorded                                                                               ...
This chart accompanies the podcast recorded                                                                               ...
This chart accompanies the podcast recorded                                                                               ...
This chart accompanies the podcast recorded                                                                               ...
This chart accompanies the podcast recorded                                                                               ...
This chart accompanies the podcast recorded                                                                               ...
This chart accompanies the podcast recorded                                                                               ...
This chart accompanies the podcast recorded                                                                               ...
This chart accompanies the podcast recorded                                                                               ...
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Global insights audio-slides-11-04-11

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  • HEADLINESWHAT YOU WERE WITNESSING WAS THE ATTEMPT TO MAKE THE IMF THE LENDER OF LAST RESORT OR THE WORLDS UNOFFICAL CENTRAL BANK – IT FAILED MISERABLY!WHITE HOUSE PRESS RELEASE: “Europe’s Leaders agreed to restore debt sustainability in Greece, strengthen European banks, build firewalls to avoid contagion, and lay the foundations for robust economic governance reform in the Euro area and call for their swift implementation. To take all actions necessary to preserve the stability of banking systems and financial markets, and to ensure that banks are adequately capitalized. To ensure that the IMF has adequate resources to fulfill its systemic responsibilities.“WSJ:G-20 Ends With Little to Show Obama Leaves G-20 Empty-Handed SCUTTLED BY NON G7 POWERSWHO WHAT WHOM1-GREECE REFERENDUM SARKOZY, MERKEL & EU2- CHINA, BRIICS ONLY THROUGH IMF EFSF3- US CONGRESS (GOP) NO US IMF FUNDS OBAMA, IMF
  • High STAKES POLITICAL POWER STRUGGLE – Europe is only the battlefieldUS THE PROBLEMGerman newspaper Die Welt is reporting (in German) that the U.S. is proving the main obstacle to an IMF plan (via @andrs_mr). IMF aid has always been a sore point for the success of the EFSF plan, given the strong opposition from the United States to boosting IMF resources. The U.S. is by far the largest contributor of IMF resources, with a quota of 17.7%Other countries are reportedly on board with a plan to expand the fund. Merkel told reporters that "hardly any" G-20 countries said they will participate in the EFSF. It was unclear whether they opposed participation within the framework of the IMF rather than on an individual basis.WHY OBAMA CAN’T SUPPORT ITFrom Occupy Wall Street to steadfast Republican opposition, President Barack Obama would be hard-pressed to gain authorization to send more U.S. aid to help stem the Eurozone crisis — and the political downside for him would be extreme. Rep. Cathy McMorris Rodgers, the Vice Chair of the House Republican Conference, is leading voice on Capitol Hill against the initial transfer of $100 billion to the IMF — and she has pledged to stop any more U.S. funds from going to help Europe. She will speak to reporters today to reiterate her opposition to new aid for "Euro-TARP," as she calls it. To put it simply, the United States can't give the IMF more funding — there simply isn't the political will for it in the White House, in Congress, or on Main Street.WHAT EUROPE & THE WORLD WANTSBecause Central Banks Just Aren't Enough: G-20 Will Ask IMF To Print Reserve Currency World leaders may mandate the International Monetary Policy to print more of its special currency to help solve the euro zone crisis, according to several people familiar with the matter. Asking the IMF to print more of its Special Drawing Rights, essentially an IOU that countries can exchange for cash, is one of the ways the Group of 20 industrialized and developing countries is considering supplementing European efforts to stem a debt crisis threatening to spark a global financial meltdown and another recession. The ECB itself has said the scope of its own rescue efforts through a bond buying program would be limited both in time and volume. But under the idea currently being considered by officials, the IMF would be the lender of last resort. Two people familiar with the matter said the SDR issue could total $250 billion. One option under discussion is to use some of that money to beef up the European Financial Stability Facility, the euro zone's bailout fund.
  • In the next few weeks, Greece must approve: its second international bailout deal, secure a promised €8 billion aid installment under its first bailout program, pass a stringent 2012 budget and negotiate a deal with its private-sector bondholders to halve the amount that it owes them.If Athens can't achieve a political consensus to carry out its commitments under the bailout plan set forth by the European Union and the International Monetary Fund, it risks being cut off from European funding and pitched into a default on its €355 billion in debt. Cross-party talks are expected to begin in earnest over the weekend, in the hope of having a new government in place by Monday, ahead of a meeting of euro-zone finance ministers in Brussels that is expected to discuss whether to release Greece's next aid payment.Athens has enough cash to operate now until about the middle of December.PEOPLE – TAXATION WITHOUT REPRESENTATION!We will not implement any program by force, but only with the consent of the Greek people. This is our democratic tradition and we demand that it is also respected abroad."— Mr. Papandreou WednesdayGreeks are fuming at the antics of their political leaders, and few hold much hope that the promised national-unity government will haul the country out of its economic misery anytime soon.1- A 38-year-old bank employee - Costas Ioannou: "There is complete chaos. These [politicians] don't know what they are doing. They are just reacting to being slapped around in Europe.A cross-party government that overcomes the squabbling between Greece's ruling Socialists and opposition conservatives could be a good thing if politicians make a serious stab at bipartisanship, butI doubt whether they have this maturity.“2- A 46, a Marketing Director for a multinational cable company - ApostolosDendrinos: “he is always at the center of attention for being Greek. He has to listen to foreign colleagues telling him how much Greece's bailouts are costing other countries' taxpayers. They ask…questions as if it is my fault. I am ashamed, angry and embarrassed that a bunch of power-hungry amateurs brought us to such a sad state.“3- A 33-year-old consultant - AvgiOikonomidou: “Greeks are feeling worn out by escalating crises. Many citizens have realized they can no longer live beyond their means and have adjusted their lifestyles.But the politicians who ran up Greece's disastrous debts haven't changed their ways, they just look after themselves.“4-A 25-year-old designer with her own fashion label - StefaniaFrangista: “I don't believe in either of the two big parties, the Socialists and the New Democracy party, neither of the two leaders gives me any sense of security. I am having troubles collecting money from customers and do not know which customer will pay as being the hardest part of her job. Everyone, myself included, faces serious cash-flow pressure and this creates a huge amount of insecurity. Whoever can look to exports…is much better off, because customers abroad are reliable and timely in paying.“5-A62 Taxi driver - PetrosLollis: "A military dictatorship is the only answer to the corrupt practices adopted by politicians.“THE PEOPLE WILL NOT FOLLOW!!!!!!!The governments don’t have the confidence nor support of the people – Therefore the EU plans will fail!
  • That massive inversion in Portuguese bonds with the 10-Year bond yield at 11.88% and the 2-year bond yield at 20.14% is a sign Portugal may blow sky high any time. Ireland recovered from a similar setup -- Portugal failed to do so.
  • It's really hard to imagine that Europe is not right now in a recession.Fresh ISM Services data shows that the continent's situation is quite grim.In Italy, the ISM Services fell to 43.9, the fastest contraction since summer 2009, according to Markit.In Spain, the number fell to 41.8.This chart from Markit shows combined ISM numbers vs. GDP.Doesn't take a rocket scientist to see which way Italian GDP is going next.Read more: http://www.businessinsider.com/eurozone-services-pmi-numbers-2011-11#ixzz1cjeqCCqHGerman factory Orders: They just declined at a stunning 4.3% rate month over month.This was well worse than the 0.1% gain that was expected and far below the 1.4% decline from last month.Read more: http://www.businessinsider.com/september-factory-orders-in-germany-2011-11#ixzz1cjhUfsacGerman factory orders have just suffered their worst three, post-Reunification months outside of the late crash itself, falling at a 28% annualized rate, to take the total back to where it first stood over five years ago. Reaction is swift: Italian and Spanish bonds immediately drop, with the yield returning to 6.23% and 5.52%, forcing the ECB's monetization actions to have to fight not only "speculators" but also reality.
  • FOREIGN OFFICIAL CUSTODIAL ACCOUNTS – USAWhen Lehman filed for bankruptcy in September 2008, one thing caught everyone's attention: the epic surge in the Fed Reverse Repos originated by "foreign official and international accounts": essentially cash placed at the Fed by foreign institutions in exchange for collateral, primarily in the form of Treasurys, as well as other securities. This is nothing but an immediate cash parking in a 'safe place', which withdraws overall liquidity from the market, and as has been noted elsewhere, serves as an indirect gauge of banking system funding stress. In the week of September 24, this number soared from $46.6 to $93.7 billion, a $44 billion increase, or the single biggest jump in the history of the series. As the chart demonstrates, what happened with MF Global, caught foreign banks entirely by surprise - over the past several weeks they have been dumping US Treasury and MBS paper as they scrambled to withdraw the last traces of available liquidity from the market, and to place as much of it as possible within the safetyof the Fed. In the just released H.4.1 update, foreign Reverse Repos with the Fed soared from $81.3 billion to $124.5 billion, the most ever, and a weekly surge of $43.2 billion, the second largest ever, second only to the Lehman collapse. Furthermore, European banks have been doing precisely that with local cash from non-US subsidiaries, and parking near record amounts with the ECB (today the European central bank disclosed a whopping €253 billion had been deposited with it: just shy of the 2011 high), even as they have been dumping US Treasurys on one hand, and now are forced to repo what little paper they have left with the Fed due to systemic uncertainties in the MF aftermath, one can see why suddenly there was absolutely no liquidity left in the market, and why the meager €3 billion EFSF bond offering, so desperately needed to fund the ongoing Irish bailout and which incidentally is the story of the week, had to be pulled. Behold the surge in weekly international reverse repos: >>> Next chart
  • FOREIGN OFFICIAL CUSTODIAL ACCOUNTS – GLOBALAnd the total weekly international reverse repo notional: we have a new all time record!
  • Yesterday we reported that in the aftermath of MF Global, and concurrent with Greece nearly allowing democracy for one brief second, European banks had scrambled to put a record amount of cash with the Federal Reserve. Next we get confirmation from the ECB that like in the US, so in Europe, in the absence of any confidence in one another (ignore Liebor, which while up again is and has always been a collusive joke intended to convey bank strength), the only place banks have left to dump money is the ECB. As of this morning, a 16 month high of €275 billion in cash had been parked with Mario Draghi, an amount which is promptly removed from the Keynesian money multiplier myth, and which confirms that there is a behind the scenes liquidity panic unlike anything we have seen since Lehman, and in fact, as the second chart from Sean Corrigan showing ECB fixed and deposit usage as well as Fed reverse repo and overall foreign bank cash parking, the liquidity in the market now from a European point of view, contrary to what broken indicators may show, is the worst it has ever been with nearly $1.6 trillion in liquidity removed from broad circulation and parked with either just the Fed or the ECB. Translated: as goes democracy, so goes confidence.
  • Yesterday we reported that in the aftermath of MF Global, and concurrent with Greece nearly allowing democracy for one brief second, European banks had scrambled to put a record amount of cash with the Federal Reserve. Next we get confirmation from the ECB that like in the US, so in Europe, in the absence of any confidence in one another (ignore Liebor, which while up again is and has always been a collusive joke intended to convey bank strength), the only place banks have left to dump money is the ECB. As of this morning, a 16 month high of €275 billion in cash had been parked with Mario Draghi, an amount which is promptly removed from the Keynesian money multiplier myth, and which confirms that there is a behind the scenes liquidity panic unlike anything we have seen since Lehman, and in fact, as the second chart from Sean Corrigan showing ECB fixed and deposit usage as well as Fed reverse repo and overall foreign bank cash parking, the liquidity in the market now from a European point of view, contrary to what broken indicators may show, is the worst it has ever been with nearly $1.6 trillion in liquidity removed from broad circulation and parked with either just the Fed or the ECB. Translated: as goes democracy, so goes confidence.MF GLOBALThe moral of the story is that the MF Global bankruptcy happened at the worst possible time. On one hand, European banks have been dumping tens of billions of US Treasurys, yet with the aftermath of this primary dealer bankruptcy, they have had to halt such sales and instead pledge USTs as collateral, thereby completely soaking up all incremental liquidity in the market. Recall that reverse repos are used by the Fed as a liquidity absorbing mechanism. Which means that, all else equal, the pain for European banks, courtesy of the allegedly criminal mismanagement of the company of one Jon Corzine, is about to hit previously unseen levels.My guess is that the missing cash was grabbed by one (or more) of the big players in the global bond market. MF did not sign off on the cash grab. The banks moved on them and their customer accounts. MF had no say in the matter. Given Corzine’s relationship with Goldman I put them high on the list of probable plug pulling bankers. Nomura was a place to go to finance AAA sovereign positions. One of the French or German banks could have been the warehouse for MF’s sovereign exposure. It wouldn’t surprise me if any one of them pulled the plug on the leveraged bets. It should be noted that all of the big players talk when they are moving on collateral and closing relationships with financial firms.When the SHTF, they act as one.
  • Transcript of "Global insights audio-slides-11-04-11"

    1. 1. This chart accompanies the podcast recorded November 5th, 2011 MOMENT OF TRUTH Listen to the original podcast for this slide at either www.GordonTLong.com/GlobalInsights or www.TraderView.com/GlobalInsightsThe content of this slide should not be considered investment advice of any sort, nor should it be used to make investment decisions. Use of thisslide is considered to be your explicit acceptance of the Disclosure Statement and the Terms of Use found on the last page of this document.
    2. 2. This chart accompanies the podcast recorded November 5th, 2011 G-20 A FAILURE Listen to the original podcast for this slide at either www.GordonTLong.com/GlobalInsights or www.TraderView.com/GlobalInsightsThe content of this slide should not be considered investment advice of any sort, nor should it be used to make investment decisions. Use of thisslide is considered to be your explicit acceptance of the Disclosure Statement and the Terms of Use found on the last page of this document.
    3. 3. This chart accompanies the podcast recorded November 5th, 2011 IMF CONTROL FED,BOE,BOJ, ECB 37.4% Listen to the original podcast for this slide at either www.GordonTLong.com/GlobalInsights or www.TraderView.com/GlobalInsightsThe content of this slide should not be considered investment advice of any sort, nor should it be used to make investment decisions. Use of thisslide is considered to be your explicit acceptance of the Disclosure Statement and the Terms of Use found on the last page of this document.
    4. 4. This chart accompanies the podcast recorded November 5th, 2011 GREECE Listen to the original podcast for this slide at either www.GordonTLong.com/GlobalInsights or www.TraderView.com/GlobalInsightsThe content of this slide should not be considered investment advice of any sort, nor should it be used to make investment decisions. Use of thisslide is considered to be your explicit acceptance of the Disclosure Statement and the Terms of Use found on the last page of this document.
    5. 5. This chart accompanies the podcast recorded November 5th, 2011 PORTUGAL Listen to the original podcast for this slide at either www.GordonTLong.com/GlobalInsights or www.TraderView.com/GlobalInsightsThe content of this slide should not be considered investment advice of any sort, nor should it be used to make investment decisions. Use of thisslide is considered to be your explicit acceptance of the Disclosure Statement and the Terms of Use found on the last page of this document.
    6. 6. This chart accompanies the podcast recorded November 5th, 2011 CONTAGION IN PROGRESS Listen to the original podcast for this slide at either www.GordonTLong.com/GlobalInsights or www.TraderView.com/GlobalInsightsThe content of this slide should not be considered investment advice of any sort, nor should it be used to make investment decisions. Use of thisslide is considered to be your explicit acceptance of the Disclosure Statement and the Terms of Use found on the last page of this document.
    7. 7. This chart accompanies the podcast recorded November 5th, 2011 CONTAGION IN PROGRESS Listen to the original podcast for this slide at either www.GordonTLong.com/GlobalInsights or www.TraderView.com/GlobalInsightsThe content of this slide should not be considered investment advice of any sort, nor should it be used to make investment decisions. Use of thisslide is considered to be your explicit acceptance of the Disclosure Statement and the Terms of Use found on the last page of this document.
    8. 8. This chart accompanies the podcast recorded November 5th, 2011 MOMENT OF TRUTH Listen to the original podcast for this slide at either www.GordonTLong.com/GlobalInsights or www.TraderView.com/GlobalInsightsThe content of this slide should not be considered investment advice of any sort, nor should it be used to make investment decisions. Use of thisslide is considered to be your explicit acceptance of the Disclosure Statement and the Terms of Use found on the last page of this document.
    9. 9. This chart accompanies the podcast recorded November 5th, 2011 MOMENT OF TRUTH Listen to the original podcast for this slide at either www.GordonTLong.com/GlobalInsights or www.TraderView.com/GlobalInsightsThe content of this slide should not be considered investment advice of any sort, nor should it be used to make investment decisions. Use of thisslide is considered to be your explicit acceptance of the Disclosure Statement and the Terms of Use found on the last page of this document.
    10. 10. This chart accompanies the podcast recorded November 5th, 2011 MOMENT OF TRUTH Listen to the original podcast for this slide at either www.GordonTLong.com/GlobalInsights or www.TraderView.com/GlobalInsightsThe content of this slide should not be considered investment advice of any sort, nor should it be used to make investment decisions. Use of thisslide is considered to be your explicit acceptance of the Disclosure Statement and the Terms of Use found on the last page of this document.
    11. 11. This chart accompanies the podcast recorded November 5th, 2011 MOMENT OF TRUTH Listen to the original podcast for this slide at either www.GordonTLong.com/GlobalInsights or www.TraderView.com/GlobalInsightsThe content of this slide should not be considered investment advice of any sort, nor should it be used to make investment decisions. Use of thisslide is considered to be your explicit acceptance of the Disclosure Statement and the Terms of Use found on the last page of this document.
    12. 12. This chart accompanies the podcast recorded November 5th, 2011 MOMENT OF TRUTH Listen to the original podcast for this slide at either www.GordonTLong.com/GlobalInsights or www.TraderView.com/GlobalInsightsThe content of this slide should not be considered investment advice of any sort, nor should it be used to make investment decisions. Use of thisslide is considered to be your explicit acceptance of the Disclosure Statement and the Terms of Use found on the last page of this document.
    13. 13. This chart accompanies the podcast recorded November 5th, 2011 MOMENT OF TRUTH DISCLOSURE STATEMENT AND TERMS OF USE THE CONTENT OF THIS SLIDE PRESENTATION AND ITS ACCOMPANYING RECORDED AUDIO DISCUSSION ARE INTENDED FOR EDUCATIONAL PURPOSES ONLY. This slide presentation and its accompanying recorded audio discussion are not a solicitation to trade or invest, and any analysis is the opinion of the author and is not to be used or relied upon as investment advice. Trading and investing can involve substantial risk of loss. Past performance is no guarantee of future returns/results. Commentary is only the opinions of the authors and should not to be used for investment decisions. You must carefully examine the risks associated with investing of any sort and whether investment programs are suitable for you. You should never invest or consider investments without a complete set of disclosure documents, and should consider the risks prior to investing. This slide presentation and its accompanying recorded audio discussion are not in any way a substitution for disclosure. Suitability of investing decisions rests solely with the investor. Your acknowledgement of this Disclosure and Term of Use Statement is a condition of access to it. Furthermore, any investments you may make are your sole responsibility. THERE IS RISK OF LOSS IN TRADING AND INVESTING OF ANY KIND. PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS.Listen to the original podcast for this slide at either www.GordonTLong.com/GlobalInsights or www.TraderView.com/GlobalInsights
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