No Image

Bank of America Throws In The Towel: “Clients Don’t Believe The Rally, Continue To Sell Stocks”

15.03.2016 Tyler Durden 0

One week ago, as the bear market rally was about to hit its peak post-ECB crescendo, we reported that according to Bank of America data, “The “Smart Money” Is Quietly Getting Out Of Dodge: Sells For A Sixth Straight Week As Buybacks Soar.” 

The writing was on the wall with the selling prevalent across every investor class: “similar to the prior week, hedge funds, institutional clients, and private clients (aka the “smart money”)were all net sellers, though sales last week were led by private clients (vs. hedge funds the week prior). Our hedge fund clients remain the biggest net sellers of US stocks year-to-date.”

As for the ‘buyer’ no surprise there either: “buybacks by corporate clients accelerated last week to their highest level since August, and are tracking above levels we saw this time last year, though below levels we observed in 2014.”

In other words, the smart money sold to corporations buying back their stock, courtesy of bondholders who continue to eagerly fund this transfer of money, something even Bloomberg figured out yesterday with its report showing the “Only One Buyer Keeping The Bull Market Alive” (buybacks, for those who missed it).

Which brings us to the latest week, where in the latest BofA report on client flow trends, we find that Bank of America has largely thrown in the towel and reports that “Clients don’t believe the rally, continue to sell US stocks” and notes that the “smart money” has now sold stocks in the face of this bear market rally for a near record seven consecutive weeks.

The details:

Last week, during which the S&P 500 climbed 1.1%, BofAML clients were net sellers of US stocks for the seventh consecutive week. Net sales of $3.7bn were the largest since September and led by institutional clients (where net sales by this group were the second-largest in our data history). Hedge funds and private clients were also net sellers, as was the case in each of the prior two weeks, but a different group has led the selling each week. Clients sold stocks across all three size segments, and net sales of mid-caps were notably the largest since June ’09. 

The details:

  • Hedge funds have been net sellers on a 4-week average basis since early Feb.
  • Institutional clients have been net sellers on a 4-week average basis since early Feb.
  • Private clients have been net sellers of US stocks on a 4-week average basis since early January.



And if the smart money continues selling, means…that’s right, the corporations are buying their own stock:

Buybacks by corporate clients accelerated for the third consecutive week to their highest level in six months, which is also above levels at this time last year. This suggests that overall S&P 500 completed buybacks—which are reported with a lag—have likely picked up significantly as well.

It gets better: “Buybacks of Industrials stocks by our corporate clients last week were the largest in our data history, and Materials buybacks were also near record levels. These two sectors, along with Staples, have led the pick-up in overall buybacks in recent weeks.”

The stunning long-term chart which confirms that without buybacks, the S&P would be orders of magnitude lower:

Which brings us to BofA’s chart of the week: buybacks are picking up (in case someone was not aware).

No Image

Why Our Financial System Is Like The Titanic

15.03.2016 Tyler Durden 0

Submitted by Charles Hugh-Smith via OfTwoMinds blog,

The “unsinkable” global financial system is rushing headlong toward its encounter with the iceberg.

Why did the Titanic sink, despite being considered unsinkable? The conventional answer is the design of its watertight compartments was flawed: the watertight bulkheads were limited in height to a few feet above the waterline.

The ship was designed such that if the first few compartments were flooded, the flooding would be contained by the watertight bulkheads.

But the iceberg ripped open a gash almost a third the ship’s length, flooding the first six compartments. As the ship’s bow sank, water poured over the bulkhead into the seventh compartment, and so on, until the ship’s bow sank deep enough to bring the ship almost vertical, at which point the hull broke roughly in half–hence the two hull sections discovered on the bottom of the Atlantic in 1985.

But further analysis has revealed this isn’t the only reason Titanic sank. It turned out the ship’s hull plates were brittle due to high sulfur content in the steel, especially at cold temperatures (the water was near freezing at the time of the wreck).

Causes and Effects of the Rapid Sinking of the Titanic

Rather than deform as the iceberg scraped against the hull, the plates and rivets fractured, opening the gash that sank the ship.

The technologies of the early 1900s enabled shipbuilders to construct enormous ships almost 900 feet in length capable of steaming at 24 knots, transporting passengers across the Atlantic in comfort, but the technologies that made such ships and transits low risk were not yet developed.

The fact that large ships and powerful engines could be built created the illusion of low risk, because the risk factors were invisible until disaster struck. After the disaster, the flaws in the design of the watertight bulkheads, the inadequacy of the lifeboat requirements (there were not enough lifeboats for the crew and passengers), and the deficiencies in the wireless/radio requirements (ships were not required to have radio operators on duty 24 hours a day) were all obvious.

But the flaws in the steel plates and rivets would remain invisible until the technologies of steel production finally caught up with the other shipbuilding technologies. And better detection and tracking of icebergs would have to wait for radar and better navigational technologies.

Our financial system is like the Titanic: technologies such as high-frequency trading (HFT) and innovations such as securitization and complex derivatives have enabled major players to construct an enormous, fast-moving financial system that creates the illusion of low risk because the risks are not visible until disaster strikes.

The Global Financial Meltdown of 2008-09 was a close call, the equivalent of the Titanic veering off and barely missing the iceberg. In response, authorities imposed a variety of new regulations that are the equivalent of changing the regulations guiding lifeboats and radio operations.

But these regulations did nothing to address the risks created by the technologies of financialization that have leapfrogged safety systems and the real economy. In effect, the idea that the financial system is unsinkable remains intact, even though the flaws in its design (the equivalent of the watertight bulkheads) and its core technologies (the equivalent of the flawed steel plates) remain invisible.

The financial system’s huge size and apparent strengths have created a false confidence that it is unsinkable, and the ineffective regulations imposed after 2008-09 have only added to the illusion that the risk of a complete collapse is low.

All that has been accomplished since 2008-09 is there are a few more lifeboats and better communication when disaster strikes. But the risks of financial disaster have actually increased since 2008-09, as participants have bypassed regulations via shadow banking, dark pools,etc., and deepened their dependence on HFT skimming via superfast trades executed by superfast computers.

The “unsinkable” global financial system is rushing headlong toward its encounter with the iceberg, while the passengers and crew remain supremely confident and unaware of the risks, risks that will only become “obvious” after the global financial system has broken in half and sunk to the bottom, destroying most of those who believed it unsinkable.

No Image

Caught On Tape: Sarah Palin Goes Crazy On “Punk-Ass Thuggery” At Trump Rallies

15.03.2016 Tyler Durden 0

Sarah Palin is a Donald Trump fan. 

The former VP candidate endorsed the billionaire in January and was stumping for Trump in Florida on Monday, before saying she would be returning to Alaska to be with her husband Todd, who was apparently injured in a snow machine accident. 

In Tampa, Palin had a message for voters about just how valuable “time” is. Her husband’s accident, she said, reminds her that “time” isn’t something we can get back. “It makes me appreciate the time that we have to spend and doing something so worthy and that’s to get Donald J. Trump elected president,” she added. 

She then launched into a hilarious tirade about the protesters that have recently shown up en masse at Trump rallies across the country. Listen below as Palin lambasts “punk-ass thuggery” (for the impatient readers, fast forward to 1:10):

Here’s the full quote:

“And what we don’t have time for is all that petty punk-a– little thuggery stuff that’s been going on with these quote, unquote protesters who are doing nothing but wasting your time and trying to take away your First Amendment rights — your rights to assemble peacefully,” 

No Image

One Week After Trolling Zero Hedge For Being Negative, Jefferies Posts Worst Quarter Since Financial Crisis

15.03.2016 Tyler Durden 0

One weekend ago, in an unexpected episode of Zero Hedge trolling by Jefferies economists, the junk-bond focused mid-tier investment bank sent out a note in which it defended the “recovery” as follows:

“Lightweights like Zero Hedge might point to a sub-50 ISM as another reason to hate equities, but there’s a reason why little ZH is a choker, a reason he’s got one of the worst records in predicting markets anywhere, just a harrable record, harrable, I mean, successful people have pointed out that he’s 0 for 2600. He’s succeeded at being wrong. Success is my son-in-law, I’m successful, my daughter is both beautiful and successful. I have many successful friends.” Made up quote, but the point is that it’s hard to be successful when just reacting to backward looking information. Our work suggests that by the time the ISM breaks 50 to the downside the market is already pricing in much of the concern–actually a break through 50 to the downside tends to be quite positive for the market over the next 12M even when you include recessionary periods. When that break of 50 hasn’t been associated with an immediate recession (i.e. perhaps now), median market performance is up 11% over the next 6M, and 21% over the next 12M. This week we got a better than expected ISM, and skeptics point to the fact that it’s still below 50, but that may be a positive.  See supporting chart, table and methodology below. (T.J. Thornton, US Product Management).

We responded not by retaliating with childish name calling, but by showing both the recent collapse in Jefferies revenues, the stock price of Jefferies Group owner Leucadia…

… as well as the massive restructuring in the company’s investment bank group, as a result of which countless current Jefferies employees would become former:

Jefferies Group LLC will merge its junk-rated loans and bonds business with the junk debt unit of its joint venture with MassMutual Financial Group, according to people familiar with the matter, in the biggest reorganization by a U.S. investment bank since the leveraged finance markets seized up last year.


Jefferies’ management presented the changes internally as a way to boost efficiency and focus on clients, rather than a response to troubled deals, the sources said. It was not immediately clear if the combination would offer Jefferies more financial resources to increase lending.

In retrospect it appears the changes were indeed in response to troubled deals, but more in that in a second.

We further said, that if instead of trolling “fringe blogs”, the company’s economists actually did their job and actually “predicted” what was coming instead of cherrypicking goalseeked economic datapoints to “justify” the bank’s falsely bullish outlook and help their employer be better positioned for the proper trading environment, Jefferies wouldn’t be forced to report quarter after quarter of abysmal results.

Well, make that after another quarter.

Moments ago Jefferies, which is still on the investment banking cycle of reporting where its earnings (and in this case, losses) arrive one month ahead of the other banks, and as such is a good bellwether into overall Wall Street revenue trends, reported an absolute disaster of a quarter, its worst since the financial crisis.

The appalling numbers: trading revenue plunged 82% in the fiscal first quarter, leading to the firm’s first non-GAAP loss for the period since 2008. Unlike previous quarters, this time the collapse in sales and trading was not led by massive losses in bond trading but by a massive remarking to market of its equity exposure, which is not to say bond trading was ok: revenue from fixed income plunged 55%, while equities imploded by an unprecedented 99%, down from $203 million to just $2 million!


The result: a ghastly net loss of $166.8 million, which not even non-GAAP adjustments could make stink any less.


Dick Handler’s apologetic commentary for the third month in a row could make life for the firm’s CEO difficult if its main shareholder, Leucadia decides it has had enough. This is what he said:

“Our overall first quarter results reflect an exceptionally volatile and turbulent market environment during our first fiscal quarter, although our core businesses performed reasonably, considering the environment. A quiet December was followed by an extremely challenging January and first few weeks of February. Almost every asset class, including equities and fixed income, suffered significantly amid concerns about the pace of global economic growth, outflows from the high yield market, forced selling from hedge funds, uncertainty over China, a potential Brexit, and an overall void in liquidity.

But wait, aren’t your “economists” expected to anticipate events such as these and help your traders position accordingly? Perhaps they have “more important things” to do with their time.

What caused the collapse? First equity:

Although our Equities revenues declined to $2 million for the quarter from $203 million for the first quarter of 2015, this was primarily attributable to a $145 million difference in net revenues related to two listed equity block positions, including KCG, and our share of the results of our Jefferies Finance joint venture. The two equity block positions generated pre-tax, mark to market losses during the quarter that totaled $82 million, $67 million of which is unrealized, including KCG, which was written down by $37 million. This compares to the combined net revenues of the same positions of positive $30 million during the first quarter of 2015, a year-on-year decline of $112 million.

And then credit:

Leverage lending activity and related liquidity was very muted during the quarter, and two loans Jefferies Finance closed during the quarter and held for sale as of the end of the quarter were marked down by a total of $38 million. That is reflected in our share of Jefferies Finance’s results. The two loans held for sale in Jefferies Finance as of the end of February 2016 were marked at prices believed to be required to clear their sale, with the potential for gains should markets improve prior to sell-down.

There was the odd defense of the balance sheet, which explained the firm’s ongoing gross derisiking as well as its dramatic reduction in risk positions as confirmed by the 13% drop in VaR:

Our balance sheet at February 29, 2016 was $35.2 billion, down $3.4 billion from 2015 year-end and $8.6 billion from the year ago period. We estimate period-end tangible leverage to be 9.8 times. We continue to have ample excess liquidity. At the end of the first quarter our liquidity buffer was about $4.3 billion and represented 12.9% of gross tangible assets. We repaid our $350 million March debt maturity today from cash on hand and have retired a net $784 million of debt in the last six months. Our Level 3 assets decreased 10% to $489 million, from the year end level of $542 million and represents 3.6% of inventory. Average VaR for the quarter of $8.4 million was lower by 13%, compared to $9.7 million for the fourth quarter.”


Jefferies Finance’s equity is $949 million. Jefferies Finance is highly liquid and positioned well to serve our clients in this important business as the market recovers. We recently strengthened our Leveraged Finance origination team and expect to grow further our presence in this segment.

But first the team will be substantially trimmed, as reported last weekend. Handler went on:

New issue equity and leveraged finance capital markets were virtually closed throughout January and February, which resulted in many of our potential Investment Banking capital markets transactions being postponed until some stability returns to the markets. As we have done through many other turbulent periods in our history, we reduced our already smaller balance sheet to continue to reduce risk during this difficult period. We are humbled by Jefferies’ quarterly loss and will strive to deliver the better results that our shareholders deserve and Jefferies is more than capable of achieving.

Humbled enough to actually read the economy correctly, or still unhumbled to where your novelty clown “economist” appears on Bloomberg TV wearing “I Heart QE” hats? Actually, we have a feeling said economist was instrumental in soothing investor nerves with the following Dick Handler line:

While we are early in the second quarter and one can never predict the future, it appears markets have not only stabilized, but aggressively snapped back. Bank holding company stocks in the U.S. and globally have halted their sell-off, high yield inflows have been at record levels, hedge funds appear to have stabilized, equity markets have rebounded, and energy/commodity prices have improved significantly. We are experiencing mark-ups in our block equity positions and believe there may be potential upside in the value of the loans held for sale in Jefferies Finance should the current market tone continue. Our core businesses are performing well, with total sales and trading net revenues for the first ten trading days of our second quarter averaging above our recent periods’ mean results, and our investment banking backlog is stronger.

Yes, Jefferies just extrapolated a trend based on 10 trading days, which considering its novelty “market strategist” – who seems to be good at anything but actually ‘strategizing markets’ – appears on TV dressed as follows…

Typical Wall Street economist: betting it all on central bank bailouts for 2600 days running

— zerohedge (@zerohedge) February 21, 2016


… is not really unexpected.

We wish Jefferies well, and that sooner or later the much “hearted” Fed QE will return and help the bank regain its central-bank infused mojo, in lieu of actual analysis by its highly overpaid cadre of forecasters.

No Image

“We Can Always Come Back”: Video Shows Beginning Of Russia’s Withdrawal From Syria

15.03.2016 Tyler Durden 0

“Putin is a wily guy. He is showing he’s a statesman. Russia is also sending a message to Assad who has been sounding too confident.”

That’s from Joshua Landis, director of the Center for Middle East studies at the University of Oklahoma, and a frequent commentator on Syria’s five-year conflict.

On Monday, Putin surprised the world by announcing a partial withdrawal of the Russian military presence from Syria. Moscow’s warplanes, backed by Hezbollah ground troops, had effectively encircled Aleppo where rebels were preparing to make what amounted to a last stand just prior to the ceasefire that took effect late last month.

I think that the tasks set to the defense ministry are generally fulfilled,” Putin said. “That is why I order to begin withdrawal of most of our military group from Syria starting from tomorrow,” he added.

Indeed. Despite President Obama’s early contention that Russia would end up in a “quagmire” in Syria, The Kremlin instead showed what happens when a mishmash of loosely aligned rebels squares off against a modern air force.

Five months and thousands upon thousands of sorties later, the rebel cause has become virtually hopeless. It’s much easier to broker a ceasefire when the enemy has been, for all intents and purposes, decimated.

Now, all eyes are on peace talks in Geneva where there is “no Plan B,” according to United Nations special envoy for Syria Staffan de Mistura.

De Mistura has called a political transition the “mother of all issues,” with the only alternative being a return to war. But Syrian Foreign Minister Walid Muallem has shown little willingness to negotiate for the future of President Assad while the main Syrian opposition umbrella group, the High Negotiations Committee looks determined to demand the installation of some manner of interim government devoid of Assad and his top brass. 

“[We don’t know] who we are negotiating with and what the issues are,” Syria’s UN representative, Bashar Jaafari complains. All sides probably feel the same way. 

The media is generally pitching Putin’s pullback as a move designed to put pressure on Assad to negotiate. That may be partially true, but make no mistake, it also puts pressure on the rebels. They are not, after all, negotiating from a position of strength. Moscow will keep a presence at its airbase in Latakia and it’s no longer clear that the anti-Assad elements which are party to the ceasefire are in any kind of shape to mount a counteroffensive. In other words: they probably aren’t optimistic about their chances if the war resumes. 

“For Putin, who’s worked with the U.S. to promote diplomacy in Syria even though the two powers backed opposite sides in the war, it’s an opportunity to display peacemaking credentials while preserving the gains Assad’s army made under Russian air cover,” Bloomberg writes, in what’s probably a reasonably accurate assessment of Moscow’s gambit. 

If both sides come to some kind of tenuous agreement, Putin will get to claim that Russia came, saw, and conquered, then brokered a peace settlement – two things no country had been able to do in Syria since the beginning of the war in 2011.

“[It’s] a symbolic gesture to sweeten the opposition’s pill, because Assad is clearly not going to go away even if Russia slightly reduces its operations,” Anton Lavrov, an independent Russian military analyst told Bloomberg, adding that “this is clearly linked to the start of negotiations in Geneva [and] it’s a signal to the opposition and an attempt to influence their agreeability.” That underscores our assessment above: the opposition has now seen what can happen when there’s a lack of “agreeability,” so now Putin will play good cop to his own original bad cop and see if that works to bring the rebels to the table.

Meanwhile, Russian state television has begun to air the first footage of Russian warplanes triumphantly departing from Hmeymim air base in Latakia.

“The personnel are loading equipment, logistics items and stock onto transport aircraft,” the Russian Defense Ministry said.

“Aircraft from the Hmeymim base will fly back to the airfields where they are permanently based on Russian territory accompanied by military transport aircraft.”

Meanwhile, on the ground, al-Nusra is stirring up trouble in Idlib. As we wrote yesterday evening, the al-Qaeda affiliate overran Division 13 at Marat al-Numan on Sunday, seizing US-made weapons including TOWs and armored vehicles. “On Monday, there were reports of demonstrations against the Nusra Front in territory it holds in Idlib province in north-western Syria,” BBC reports. “Photos and videos circulated on social media by an analyst with the Brookings Institution think-tank showed supporters of Western-backed rebels marching in the town of Marat al-Numan [and] there were also reports the protestors had stormed a Nusra Front prison, freeing detainees.”

Are we seeing a mini-civilian uprising v. Nusra in Marat al-Numan? Civilians stormed AQ prison, freeing 4 detainees

— Charles Lister (@Charles_Lister) March 14, 2016

#BREAKING Al-Qaeda in Syria vows new offensive after Russian pullout

— AFP news agency (@AFP) March 15, 2016

As for ISIS, the SAA is reportedly advancing on Palmyra, the UNESCO heritage site seized by the militants last year in what commentators decried as a major blow to the effort to preserve antiquity.

Russia has indicated it will still support Syria in the fight against “the terrorists.” 

#BREAKING Russian planes to keep striking ‘terrorist’ targets: Russian official in Syria

— AFP news agency (@AFP) March 15, 2016

And what, you might ask, happens if the SAA and the US-led coalition still can’t manage to finish off ISIS and al-Nusra? Here’s Viktor Ozerov, head of the defense committee in the upper house of Russia’s parliament with the answer: “We can come back.”

No Image

Frontrunning: March 15

15.03.2016 Tyler Durden 0
  • Bank of Japan Holds Fire on Stimulus, Negative Rate Unchanged (BBG)
  • Donald Trump Aims for a Knockout in Tuesday Primaries (WSJ)
  • Global Stocks Fall on Commodities Decline, Ahead of Fed Meeting (WSJ)
  • Oil prices fall as clouds gather over supply picture (Reuters)
  • Many Shale Companies Are Unable to Ramp Up Oil Output (WSJ)
  • Valeant Slashes Guidance, stock crashes (WSJ)
  • Fed to sit tight on rates at March meet, hint at hikes to come (Reuters)
  • Big Money Gets On China’s Lifeboats (BBG)
  • Republican Party gears up to fight Obama court nominee (Reuters)
  • BOJ Move Backfires as 0.001% Deposits Lure Cash of Fund Managers (BBG)
  • VW Whistle-Blower’s Suit Accuses Carmaker of Deleting Data (NYT)
  • Apple fight could escalate with demand for ‘source code’ (Reuters)
  • Near-Record Cash `Comfort’ for Canada Oil Firms Amid Price Rout (BBG)
  • The Koch Brothers Have Started a New Family Office to Quietly Invest Their Fortune (BBG)
  • Stanley Fischer and Lael Brainard Are Battling for Yellen’s Soul (BBG)
  • Ex-Sequoia Partner Goguen Calls Sex-Abuse Suit Extortion (BBG)
  • State TV shows Russian troops in Syria packing up (Reuters)
  • Cost-Cutting Shale Drillers Limit Potential for Oil Rally (BBG)
  • U.S. Investors Have Capitulated on Europe at the Worst Possible Time (BBG)


Overnight Media Digest


– Chinese insurance company Anbang Insurance Group Co lobbed in a roughly $13 billion bid for Starwood Hotels & Resorts Worldwide Inc, an effort to break up the hotelier’s pending sale to Marriott International Inc and the latest sign of China’s growing appetite for overseas takeovers. (

– North Korean leader Kim Jong Un claimed a key advance in ballistic missile technology and called for further missile and nuclear warhead tests “in a short time”, the latest in a string of recent threats aimed at creating fear of war in the U.S. and South Korea. (

– Sony Corp has reached an agreement with the estate of Michael Jackson for Sony to obtain ownership of Sony/ATV Music Publishing LLC by purchasing the estate’s 50% stake. (

– Bottles of Honest laundry detergent say they don’t contain SLS, a chemical that the consumer-products company says can irritate skin. But Earth Friendly Products LLC, the company that makes the detergent for Honest, dropped such marketing claims from its own website last year. (

– Avon Products Inc said Monday that it would eliminate around 2,500 jobs and move its corporate headquarters to the United Kingdom, the latest step in a years-long turnaround of the struggling beauty company. (

– Goldman Sachs Group Inc’s investment-management division said it would buy Honest Dollar, an online retirement-savings startup that is barely a year old, consisting of portfolios of low-cost exchange-traded funds to small companies, charging $8 to $10 an employee a month. Terms of the deal were not disclosed. (

– JPMorgan Chase & Co is trying to sell new securities that would pass along most of the credit risk on $1.9 billion in mortgages, in an attempt to revive a debt market that has been largely left to the government since the financial crisis. (



China’s Anbang Insurance Group has challenged Marriott International Inc’s merger with U.S. hotel operator Starwood with a $12.8 billion cash offer.

Russian President Vladimir Putin announced on Monday that “the main part” of Russian armed forces in Syria would start to withdraw.

Brussels is urging European banks to stay away from Russia’s first sovereign bond issue, creating doubts about the viability of the offering.



– A fired Volkswagen AG employee in Michigan contends that employees erased electronic files as U.S. officials were investigating its emissions cheating. (

– China’s Anbang Insurance Group hopes to expand its hotel empire with an unsolicited bid to acquire Starwood Hotels & Resorts Worldwide’s, hoping to derail Starwood’s $10.8 billion cash-and-stock merger with Marriott International Inc that is set to be considered by shareholders of both hotel operators this month. (

– As China’s economy slows after more than two decades of breakneck growth, strikes and labor protests have erupted across the country. Factories, mines and other businesses are withholding wages and benefits, laying off staff or shutting down altogether. Worried about their prospects in a gloomy job market, workers are fighting back with unusual ferocity. (

– Goldman Sachs Group Inc is adding a little robo to its investment management business, buying Honest Dollar, a digital retirement savings tool aimed at millions of small-business employees who do not have access to traditional employer-sponsored savings plans. (

– The Obama administration is expected to withdraw its plan to permit oil and gas drilling off the southeast Atlantic coast, yielding to an outpouring of opposition from coastal communities from Virginia to Georgia but dashing the hopes and expectations of many of those states’ top leaders. (




** The largest shareholder in Postmedia Network Canada Corp is soliciting offers to sell its stake in the media company, signalling a potential shift in the ownership of Canada’s biggest chain of newspapers. (

** Federal prison authorities are under criminal investigation for possible illegal surveillance, The Globe and Mail has learned. The probe centres on Correctional Service Canada’s use of a dragnet surveillance device inside a penitentiary. (


** London’s city council has lambasted Bombardier Inc for “duping” the British capital into awarding it a train-signalling contract that it was incapable of delivering, creating “nothing short of a disaster” for the London Underground. (

** Low oil prices could cost Canada’s federally owned mortgage insurer C$7 billion ($5.23 billion) a year in lost profits, though the organization’s top executive said Monday the oil price collapse will not drain its capital to unsustainable levels. (

** Airfares are falling across the globe but that isn’t affecting the financial performance of North America’s airlines, according to a new report by the International Air Transport Association. (



The Times

The chief executive of Britain’s biggest supermarket, Tesco Plc, has warned that the retail sector could come under intolerable pressure unless British finance minister George Osborne pledges to reform business rates. (

Shares of London Stock Exchange Group Plc hit a record high Monday as expectations grew that it will reveal the details of an agreed merger with Deutsche Boerse AG within days, valuing the combined group at more than 20 billion stg. (

The Guardian

Weaker growth and a deterioration in public finances will force the Treasury to make an additional 4 billion stg of savings by the end of the current parliament, British finance minister George Osborne has said. (

Fever-Tree, the supplier of premium tonic water and other carbonated mixers, is toasting a surge in profits after it won new business with Marks and Spencer Group Plc and British Airways. (

The Telegraph

Supporters of Brexit are more likely to vote in the forthcoming referendum which could give the Leave campaign a decisive edge in the final result, a new Telegraph poll suggests. (

Iran has vowed to resist a move to cut oil production as its output soared by the largest monthly amount in nearly 20 years. (

Sky News

Royal Bank of Scotland Group Plc is to cut around 550 jobs in the UK as it moves away from offering face-to-face advice to automated services. (

British people on low incomes will be eligible for a bonus of up to 1,200 stg over four years if they put money away in a new savings scheme, Prime Minister David Cameron has announced. (

The Independent

British Chancellor of the Exchequer George Osborne has been warned that he risks damaging the struggling UK economy with another round of spending cuts. (

No Image

Bear Market Rally Fizzles: Global Stocks Down On BOJ Disappointment; Oil Slides For 2nd Day

15.03.2016 Tyler Durden 0

Was that it for the great February/March bear market rally?

After soaring by 200 S&P point from the February 11 lows, the S&P 500 appears to have finally hit a resistance at a point where GAAP P/E is now a frothy 23x, and where even Goldman says the S&P500 is overvalued based on conventional market valuation metrics. Perhaps it was the fundamentals finally catching up, or perhaps it was disappointment that the BOJ added nothing new to the stimulus menu, after last week’s Draghi’s bazooka, and coupled with the stunning announcement by China it was willing to launch a Tobin Tax, a move that confirms that under the surface China’s capital flight is accelerating, overnight global markets and US equity futures have dropped while the yen jumped the most in a week.

What is surprising, is that not even a week after Draghi’s bazooka, some are already concerned it won’t be enough: “Monetary policy does not work without fiscal reform,” Brett McGonegal, chief executive officer of Capital Link International, told Bloomberg TV. “You can keep the monetary stimulus going, but if you’re not changing anything and there’s no reform going on, you’re at this point where it’s not going to work.”

Also notable is that oil has continued its decline for the second day, and at last check WTI was down $1, or over 2% – the lowest price in a week – as focus returns to the market oversupply, Russia signalling Iran won’t join a production freeze (which means neither will Kuwait, and likely most other OPEC members) and today’s API inventory data today which will forecasts another big inventory build at Cushing. As a result, there has been notable weakness among commodities, with currencies of resource-exporting nations sliding as copper and gold prices fell, while iron ore, last week’s record highlight short squeeze, plunged the most in eight months.

“Market participants now appear to be paying greater attention to the current oversupply again,” Commerzbank analyst Eugen Weinberg says in a note. “The primary focus is on Iran, which for understandable reasons is refusing at the current time to sign up to any agreement to cap production.”

Adding more pressure on the rally, Bloomberg explains that while world equities have staged a comeback since reaching a two and a half-year low in mid-February, “so far there are few signs that monetary easing in China, Europe and Japan is pulling the global economy out of a slump. The BOJ’s decision to maintain policy was forecast by most economists and the authority said it’s prepared to ease further if needed to revive inflation expectations. The European Central Bank announced unprecedented stimulus last week, while the Federal Reserve will conclude a review on Wednesday and the Bank of England a day later.”

“Monetary policy does not work without fiscal reform,” Brett McGonegal, chief executive officer of Capital Link International, told Bloomberg TV. “You can keep the monetary stimulus going, but if you’re not changing anything and there’s no reform going on, you’re at this point where it’s not going to work.”

But as we wrote yesterday, the one event that will truly make or break the market is tomorrow’s FOMC announcement: if Yellen turns overly hawkish and there is no major revision to the dots, or – don’t even think it – the Fed shocks the market and hikes another 25 bps, then we go right back to square one, where the market was in December of 2015, terrified every time China sneezes.

Market snapshot:

  • S&P 500 futures down 0.6% to 1998
  • Stoxx 600 down 0.9% to 342
  • FTSE 100 down 0.6% to 6137
  • DAX down 0.3% to 9956
  • German 10Yr yield up 1bp to 0.29%
  • Italian 10Yr yield up 2bps to 1.32%
  • Spanish 10Yr yield up 3bps to 1.49%
  • S&P GSCI Index down 1.3% to 322.9
  • MSCI Asia Pacific down 0.9% to 127
  • Nikkei 225 down 0.7% to 17117
  • Hang Seng down 0.7% to 20289
  • Shanghai Composite up 0.2% to 2864
  • S&P/ASX 200 down 1.4% to 5111
  • US 10-yr yield down 2bps to 1.93%
  • Dollar Index up 0.1% to 96.72
  • WTI Crude futures down 2.7% to $36.18
  • Brent Futures down 2.9% to $38.38
  • Gold spot down 0.1% to $1,234
  • Silver spot up less than 0.1% to $15.35

Global Top News

  • Avon Plans to Move Headquarters to U.K. and Cut 2,500 Jobs: Will generate one-time expenses of ~$60m in 1Q, expects to generate savings of as much as $70m from the cuts by 2017
  • Kuroda Holds Fire on Stimulus as Japan Digests Negative Rate: BOJ kept the target for increasing the monetary base unchanged, and left benchmark rate at minus 0.1%
  • Apollo Said to Seek $700 Million for CLO Firm as New Rules Loom: New firm will issue collateralized loan obligations, as part of its effort to comply with rules designed to curb excessive risk-taking by managers of the vehicles, according to 2 people with knowledge
  • Sony Buys Jackson Stake in Music Venture for $750 Million: Co. exercised right to acquire partner’s stake
  • Brookfield, Qube Join Forces in A$9.1 Billion Asciano Bid: Former rival groups led by Brookfield Asset and Qube joined forces to buy Asciano in a A$9.05b ($6.8b) bid
  • U.S. Steel Vows to Escalate War on Imports If Duties Fall Short: CEO Longhi vows to file 201 case if final penalties fall short
  • Cliffs Natural Investors Sue for Being Shut Out of Debt Swap: Investors say Cliffs Natural has two classes of bondholders
  • U.S. Ethanol Glut Begins to Test Limits of Storage Capacity: Kinder Morgan rerouted deliveries away from Illinois terminal
  • Herbalife Spent $700,000 Protecting Its CEO From Threats in 2015: CEO faced threats to his well-being after Bill Ackman began accusing the company of being an illegal pyramid scheme
  • Outerwall Rises 9% Post-Mkt on Strategic Alternatives, Div Boost: Hires Morgan Stanley for strategic and financial alternatives
  • Question Looming Over Aubrey McClendon Crash May Go Unanswered
  • GM Offers Rentals to Lyft Drivers Accelerating Challenge to Uber
  • Trump Victories in Key Races Could Vanquish Kasich, Rubio
  • JPMorgan Said to Prepare to Sell $1.9b RMBS: WSJ: Expected to price residential mortgage-backed deal over next 2 weeks; would hold 90% of the deal, WSJ reports
  • Amazon Set to Launch Cloud Migration Service: WSJ: Thomas Publishing to transport data from own servers to Amazon’s data centers, WSJ reports
  • U.S Govt May Withdraw Plan for SE Atlantic Coast Drilling: NYT

Looking at regional markets, Asian stocks traded negative following Wall St.’s lacklustre lead amid weakness in commodities, while Japan reacted to the BoJ decision to keep the policy unchanged. Nikkei 225 (-0.7%) was pressured as JPY strengthened following the BoJ decision to leave policy unchanged while also dropping its reference regarding deeper cuts into negative territory. Energy and basic materials underperformed in the ASX 200 (-1.4%) after commodity prices declined. Shanghai Comp (+0.2%) completed the somber tone with materials underperforming, while the PBoC kept its liquidity injections reserved and weakened the reference rate. 10yr JGBs traded lower and fell below 151.00 amid a lack of demand and disappointment from a lack of BoJ action.

BoJ kept policy steady with the annual rise in monetary base at JPY 80trl and interest rates held at -0.10% as expected.

  • BoJ voted 8-1 to maintain monetary base and voted 7-2 to maintain its negative rate.
  • BoJ said that additional easing will happen if required but removed phrase regarding cutting interest rates deeper into negative territory if deemed necessary.

PBoC sets CNY mid-point at 6.5079 vs. close. 6.5015 (Prey. mid-point 6.4913), injects CNY 20bIn via 7-day reverse repo.

Top Asian News

  • Foxconn Said to Delay Sharp Deal for Clarity on Quarterly Result: Delaying finalization of its deal for Sharp to get a clear understanding of Sharp’s performance in the current qtr, increasing the chances an agreement won’t be reached this month, according to people familiar with the matter
  • China Said to Draft Currency Transaction Tax to Damp Speculation: Initial rate of levy may be kept at zero, people familiar said
  • Bangladesh Central Bank Chief Ready to Quit Over Cyber Heist: Atiur Rahman offers to resign
  • Singapore Developers Post Lowest New Home Sales in 14 Months: Builders sold 301 units in Feb., -7% m/m
  • Day of Reckoning Coming for India’s ‘Pigs With Lipstick’ Lenders: Central bank audit ending March 31 to uncover more bad debt

European markets follow on from Asia to see equities trade in the red this morning, with dampened sentiment apparent across asset classes. In terms of the session’s laggard’s, financials, material and energy names underperform , as the likes of Anglo American (-9.6%) and BHP Billiton (-5.8%) are among the worst performers in Europe. Despite the edginess in equities, fixed income have done their own thing for much of the morning, trading lower by around 20 ticks and around 161.50. Ultimately, price action could remain relatively rangebound as participants look ahead to today’s tier 1 data releases which include US Retail Sales, PPI Final Demand, Empire Manufacturing and Business Inventories.

Top European News

  • Legal & General Full-Year Profit Rises on Retirement Revenue: 2015 oper. profit GBP1.46b vs est. GBP1.47b; Solvency II ratio was 169%, based on a surplus of GBP5.5b
  • Antofagasta Scraps Dividend as Metal Rout Erases Most Profit: Net income ex-some items fell to $5.5m from $422.4m yr earlier, dividend scrapped as interim payment exceeds 35% payout ratio
  • Sainsbury Joins Listed Supermarket Rivals Back in Growth Mode: For the first time since 2011, LFL sales are rising at Sainsbury, Tesco and Morrison; Sainsbury 4Q LFL sales rose 0.1%
  • Russia Begins Syria Withdrawal as Putin Puts Onus on Assad: Jets have started to return to Russia, Defense Ministry says
  • Traders Missing Rebound Yank Billions From European Stocks: U.S. traders withdraw money from euro-area ETF for fifth week
  • U.K. Bond Sales Seen Jumping Most Since 2009 as Osborne Thwarted: Median forecast from dealers is for GBP139b issuance
  • Italy Recovery From Recession Seen Continuing Slowly but Surely: Will extend the expansion that started last year, said 19 of 25 respondents in a Bloomberg survey published Tuesday
  • Campari Agrees to Acquire Grand Marnier for $760 Million: Bid of EU8,050/shr is 60% premium to closing price

In FX, the big move this morning was expected to have been USD/JPY, but the modest dip below 113.00 was modest given the BoJ’s no change policy decision. 112.90 is the low seen here so far, and little aggressive interest to push lower from these levels seen in London. However, no such respite for GBP, which has been under the cosh since yesterday, after both NY and Tokyo sold moderate pullbacks but London more aggressively so . The latest Telegraph/ORB poll on the EU vote puts the leave camp in the lead at 49% vs 47%, but the selling began ahead of this. Cable is now in the mid 1.4100’s, while EUR/GBP is eyeing a test of the double top at .7847. Elsewhere, the USD index has ripped higher, adding momentum to Cable losses, but EUR, AUD, NZD and CAD all losing out to a more modest degree. AUD support seen in the mid .7400’s — now being tested, while USD/CAD is now close to 1.3400.

In commodities, WTI and Brent continue to slide during European trade as concerns of a global glut take hold of markets due to Iran not budging on the production freeze. Gold has rallied in the last couple of hours but it is yet to reach the highs at the beginning of the Asian sessions of 1238.13/oz. Base metals are retracing some of the moves seen yesterday after China hinted it will invest further in property sector with copper futures down nearly 1%.

After several days of quiet on the US macro front today we have a spike in data updates and the February retail sales report looks set to be the highlight where market expectations are for a -0.2% mom decline in the headline and +0.2% mom gain in the core and control group components. Also out today will be the NY Fed empire survey which is expected to remain consistent with the weakness in the manufacturing sector. The February PPI report will also be important and it’s worth keeping an eye on the healthcare subcomponent given it is used in the core PCE deflator. Also due out will be January business inventories and the March NAHB housing market index print. Away from this, tonight will see five more primaries in the US President race

Bulletin Headline Summary from Bloomberg and RanSquawk

  • European equities trade lower across the board after taking the lead from Asia which saw the BoJ refrain from carrying out any additional easing
  • As such, the JPY remains firmer against its major counterparts, while GBP remains out of favour as London continues aggressive selling of the currency
  • Looking ahead, highlights include US Retail Sales, PPI Final Demand, Empire Manufacturing and Business Inventories
  • Treasuries rise in overnight trading while global equity markets, oil sell off after BOJ refrained from additional monetary easing as they await impact of the negative rate strategy adopted in January; FOMC begins two-day meeting today.
  • Deutsche Bank, whose debt plunged last month, is offering three-year notes in euros. The sale will test investor appetite for the bank’s debt following management efforts to allay concerns about capital levels
  • Britain is set to increase government-bond sales by the most since the financial crisis as a cooling economy and asset- sale delays hinder plans to balance the books. Gross issuance may jump 17% in the next fiscal year
  • The chances of a U.K. interest-rate cut are rising, the big risk on the horizon is June’s European Union referendum. A vote to leave the bloc could push Britain toward a recession and force the BOE to respond
  • Lenders are getting stingier when it comes to funding risky U.S. real estate developments, putting pressure on landlords in need of fresh funding to keep their projects afloat
  • German Chancellor Angela Merkel got her marching orders from voters to cut the flow of refugees. Now she needs Turkish President Recep Tayyip Erdogan to play along and help lift her out of a career-threatening jam
  • Russia said its forces have started leaving Syria after President Vladimir Putin ordered the military withdrawal in a surprise move that puts pressure on the regime of Bashar al-Assad and opposition groups to reach a peace deal
  • $8.3b IG corporates priced yesterday; MTD $94.72b, YTD $388.97b; $1.1b HY priced yesterday, $15.125b MTD
  • Sovereign 10Y bond yields mostly steady; European, Asian equity markets lower; U.S. equity- index futures drop. WTI crude oil, copper, gold fall

US Event Calendar

  • 8:30am: Retail Sales Advance, Feb. est. -0.2% (prior 0.2%)
    • Retail Sales Ex Auto, Feb., est. -0.2% (prior 0.1%)
    • Retail Sales Ex Auto and Gas, Feb., est. 0.2% (prior 0.4%)
    • Retail Sales Control Group, Feb., est. 0.2% (prior 0.6%)
  • 8:30am: PPI Final Demand m/m, Feb., est. -0.2% (prior 0.1%)
    • PPI Ex Food and Energy m/m, Feb., est. 0.1% (prior 0.4%)
    • PPI Ex Food, Energy, Trade m/m, Feb., est. 0.1% (prior 0.2%)
    • PPI Final Demand y/y, Feb., est. 0.1% (prior -0.2%)
    • PPI Ex Food and Energy y/y, Feb., est. 1.2% (prior 0.6%)
    • PPI Ex Food, Energy, Trade y/y, Feb. (prior 0.8%)
  • 8:30am: Empire Manufacturing, March, est. -10.5 (prior -16.64)
  • 10:00am: NAHB Housing Market Index, March, est. 59 (prior 58)
  • 10:00am: Business Inventories, Jan., est. 0% (prior 0.1%)
  • 4:00pm: Total Net TIC Flows, Jan. (prior -$114b)
    • Net Long-term TIC Flows, Jan. (prior -$29.4b)

DB’s Jim Reid concludes the overnight wrap

So with the ECB ticked off, next on the central bank conveyor belt line was the BoJ this morning. Unlike what we saw from its European counterpart on Thursday, the BoJ has refrained from adding further stimulus this month. That means Japan’s new benchmark interest rate has been held at -0.1% and the annual purchases also maintained at ¥80tn a year. The decisions to hold fire on both were met with fairly convincing 7-2 and 8-1 respective majorities by BoJ board members. The bigger event now will be what Governor Kuroda chooses to say in his statement, the outcome of which we should know shortly.

Taking a look at the price action, an initial modest weakening in the Yen (touching 114.1) has given way to a decent bounce now, with the currency now +0.30% stronger on the day at 113.5. JGB yields are little changed relative to the moments prior to the decision, with the 10y currently up 2bps at -0.026%. The Nikkei is -0.89% and near its lows.

At this stage its worth putting some colour around the moves in Japanese assets since the BoJ cut rates into negative territory on January 29th. In that time (based on the intraday level just prior to the announcement and the current level this morning) the Nikkei is flat, while the Yen has strengthened over 4.5%, and 10y JGB’s are 24bps lower in yield (although have been more). In contrast, the S&P 500 and Stoxx 600 are +6.7% and +2.9% respectively, the USD index is -2%, the Euro -1.7% and 10y Treasury and Bund yields are unchanged and 12bps lower respectively. So clearly the effect has had a far greater impact on bond yields as opposed to Japanese equities, while the move for the Yen is perhaps the most curious of all.

Before we move on, a quick look at the rest of Asia this morning where it’s been a broadly weaker start on the whole. Along with those declines in Japan, the Hang Seng (-0.72%), Shanghai Comp (-1.13%), Kospi (-0.21%) and ASX (-1.30%) are all lower, while Aus and Asia credit indices are 5bps and 2bps wider respectively. Oil markets are off another percent or so which has helped US equity market futures turn negative this morning. Also of note this morning is news out of China where Bloomberg reports are suggesting that PBoC is in the process of drafting rules for a form of tax on FX transactions, in what’s said to be aimed at curbing currency speculation.

Moving on. Consolidation was the name of the game for markets yesterday and one which certainly reflected a ‘wait and see’ mode between the ECB and BoJ/Fed meetings. This was reflected by what was a fairly mundane session for US equity markets in particular where we saw the S&P 500 eventually close -0.13% (a rare decline this month) with the intraday high-to-low range a lowly 0.62% which is the smallest in 2016 so far. It’s amazing to see that the average range of the 49 trading days so far this year has been 1.73% and that 39 of those sessions have seen ranges of greater than 1%. Prior to this, European equities extended their gains with the Stoxx 600 closing +0.71%, although the post-ECB mammoth rally for European credit markets finally halted with iTraxx Main and Crossover closing 5bps and 9bps wider respectively. That said the indices are still 15bps and 47bps tighter than their pre-ECB levels. US credit also succumbed, with CDX IG over 2bps wider by the close of play.

With newsflow very light, it was Oil (a not too uncommon theme this year) which attracted the bulk of the headlines and ultimately dictated the price action for risk assets with WTI back below $38/bbl following a -3.43% decline yesterday. Much of this reflected stories emerging out of Iran with the country’s oil minister warning that the nation would not participate in an output freeze with other producers until they reached their production target of c.4m barrels a day, or roughly a third higher than current production levels. This follows the sanctions which were lifted on the country in January with the nation looking to ramp up output again to regain lost sales. Oil has risen nearly 50% from the intraday lows back in mid-February with the prospect of production freezes being a contributor in that rally. The WSJ touched on the possibility of these latest comments raising the risks that other countries involved in these talks (namely Saudi Arabia, Venezuela and Russia) may not follow through given the participation is contingent on Iran cooperating, however comments from Russia’s oil minister last night suggesting that Iran ‘may join us in the freeze with time’ and that ‘this is a normal, constructive position’ for them should abate major concerns for now.

One of the other interesting snippets from yesterday came from the European financials market and specifically UBS with the news that the Bank has issued Europe’s first coco bond since the huge sell-off which swept through the asset class in January. According to Bloomberg, the $1.5bn AT1 deal was said to have attracted $8bn of orders, with pricing also coming in tighter than the initial talk. Further evidence of the remarkable swing in sentiment that we’ve seen in the last six weeks or so.

Away from this there was little else to report yesterday. The only data of note was a robust industrial production print for the Euro area which bettered expectations at +2.1% mom (vs. +1.7% expected) in January which was the best monthly performance since 2009, with the data also helping support growth expectations for Europe. Meanwhile the ECB’s Villeroy spoke mid-morning and made mention to the need for the ECB to continue to adhere to its inflation mandate, highlighting the need for the target being essential for the ‘credibility of monetary policy’. Villeroy also noted that expanding purchases to corporate bonds is ‘a very significant signal for the real economy’.

Looking at the day ahead now, kicking off proceedings this morning will be France where we’ll receive the final revision to the February inflation report, followed later on by the Q4 employment report for the Euro area. This afternoon in the US is set to be a bumper session. The February retail sales report looks set to be the highlight where market expectations are for a -0.2% mom decline in the headline and +0.2% mom gain in the core and control group components. Also out today will be the NY Fed empire survey which is expected to remain consistent with the weakness in the manufacturing sector. The February PPI report will also be important and it’s worth keeping an eye on the healthcare subcomponent given it is used in the core PCE deflator. Also due out will be January business inventories and the March NAHB housing market index print. Away from this, tonight will see five more primaries in the US President race


No Image

Car Bomb Explodes In Berlin, One Killed

15.03.2016 Tyler Durden 0

A car exploded in Berlin on Tuesday, killing the driver. 

According to some reports, the vehicle was in motion when the blast occurred. 


Here are the visuals from the scene: 

Berlin car bomb looks very professional, pointed charge, only killed driver, no bystanders. Interesting signature.

— Julian Reichelt (@jreichelt) March 15, 2016

Gemäß unserer Kolleg. vort Ort, ist der PKW während der Fahrt explodiert und hat sich dann überschlagen.

— Polizei Berlin (@polizeiberlin) March 15, 2016

BREAKING: German police: Car explosion that killed driver in Berlin likely caused by bomb

— The Associated Press (@AP) March 15, 2016

Terror attack? Or perhaps a false flag to put still more pressure on the Merkel government to end the open-door refugee policy?

One certainly imagines it wasn’t faulty engineering – the vehicle was, after all, German-made.