http://www.zerohedge.com/news/overnight-sentiment-everyone-bailout-trough
Submitted by Tyler Durden on 05/29/2012 07:01 -0400
Submitted by Tyler Durden on 05/29/2012 07:37 -0400
Cross Currency Table – (Bloomberg)
Spain’s debt issues are igniting worries about the eurozone financial stability again which has sent the euro to a 2 year low against the US dollar and is seeing euro gold consolidate over €1,200/oz at €1,257/oz.
XAU/EUR Currency 1 Year Chart – (Bloomberg)
Submitted by Tyler Durden on 05/29/2012 08:09 -0400
If those in charge are still confused why the general population is not very "appreciative" of the banker social substratum, the following example should provide some color. Following the ever greater public bailout fund black hole that Spain's Bankia has become (first of many zombies), we now learn that one of its financial directors, Aurelio Izquierdo, will be entitled to €14 million in pension and termination benefits. Supposedly in compensation for running the bank straight into the ground after just one year of operation, and lying fabulously about its financial performance, in the process suckering in thousands into investing their hard earned cash so that oligarchs such as Aurelio can promptly retire to a non-extradition locale. And this, dear powers that be, is why the general public continues to scratch its head at how it is remotely possible that incompetent crony capitalists get paid tens of millions for blowing up their firms, while everyone else is stuck footing the soon to be soaring inflation bill (because print they must, and print they will).
Overnight Sentiment: Everyone At The Bailout Trough
Futures are well bid overnight even though following a modest short covering squeeze of the new record number of EUR shorts, the primary driver of risk, the EURUSD is now back to mere pips above its 2010 lows. It is somewhat confusing why equities are so jubilant about what can only be more imminent bailouts, following statements by the ECB's Nowotny who made it clear that the ECB is not discussing the renewal of bond purchases and that the central bank provides "liquidity not solvency." Adding to the confusion was a release in Chinese daily Xinhua which said that China has no intention of introducing large scale stimulus. All this simply means that the only possible source of liquidity remains the Fed, whose June FOMC decision could make or break the global stock markets, pardon economy, and why this Friday's NFP print is so critical. Absent a huge miss, it will be difficult to see the Chairman pushing through with another $750 bn-$1 trillion in LSAP. Which Europe desperately needs: first we got Italy pricing €8.5 billion in 6 month bills at much worse conditions than April 26, with the yield rising over 2%, or 2.104% to be precise, compared to 1.772% previously, and a BTC of 1.61, declining from 1.71. More importantly, the Spanish economic deterioration gets even worse after Spain just recorded a record (pardon the pun) plunge in retail sales. From AP: 'A record drop in retail sales added to Spain's woes Tuesday as the country struggles to contain the crisis crippling its banking industry and investors remained wary of the country's ability to manage its debt. Retail sales dropped 9.8 percent in April in year-on-year on a seasonally-adjusted basis as the country battles against its second recession in three years and a 24.4 percent jobless rate that is expected to rise. The fall in sales was the 22nd straight monthly decline, and was more than double the 3.8 percent fall posted in March, the National Statistics Institute said Tuesday." So all those focusing on the Greek economic freefall may want to shift their attention west.
Finally, even as PIIGS bonds slide, the bulk of core European countries saw their bond yields drop to record lows as the pan-European capital flight continues.
More from BofA:
Market Action
Asian equity markets rallied on speculation that China would inject new stimulus into the economy to boost growth. That sent the Hang Seng up 1.4% and the Shanghai Composite 1.2% higher. The cyclically sensitive Korean Kospi managed to rise 1.4%. The Japanese Nikkei managed a respectable 0.7% gain while the Indian Sensex eked out a 0.1% rise.
Earlier in the day, European equities were trading in positive territory until a Chinese news agency reported that China has no intentions of introducing a large stimulus program. Currently, in the aggregate European equities are down 0.1%. After the holiday weekend unofficially kicking off the Summer season, US investors are coming back to their desks upbeat pushing US futures on the S&P 500 up 0.5%.
In bondland, Treasuries are bid across the curve. The US 10-year is trading at 1.73% down 0.2 bps while the long bond is trading at 2.83% down 0.1 bps. In Europe, German bunds contain to make new lows as investors seek their safe haven status. German bunds are currently trading at 1.35%. The bailout of Bankia and the downgrade of several Spanish banks over the weekend helped drive yields on Spain's 10-year yield up to 6.42%.
The dollar is trading down 0.2% against a basket of other major currencies. Meanwhile commodities are higher. WTI crude oil is trading up 0.8% at $91.60 a barrel while gold is trading at $1,576 an ounce, up 0.2%.
Overseas data wrap-up
Spanish retail sales spending collapsed in April falling 11.3% yoy. In the prior month, retail sales were down 3.8% yoy. In our view, the drop in retail sales is a result of the current deterioration in the economic outlook, the ongoing credit contraction and the fiscal contraction.
The week's events
The data mills churn again this week, with the employment report and ISM on Friday and the second estimate to Q1 GDP on Thursday. We expect non-farm payrolls to increase 140,000 in May and the unemployment rate to increase to 8.2% from 8.1%. The ISM survey should show that the manufacturing sector continues to expand, but at a decelerating pace. We expect the ISM manufacturing index to tick down to 53.5 in May from 54.8 in April. We look for GDP to be revised down to 1.9% in Q2 from the advance estimate of 2.2%.
and.....
http://www.zerohedge.com/news/risk-bank-runs-and-forcible-fx-conversion-savings-deepens
Risk Of Bank Runs And Forcible FX Conversion of Savings Deepens
From GoldCore
Risk Of Bank Runs And Forcible FX Conversion Of Savings Deepens
Gold’s London AM fix this morning was USD 1,573.75, EUR 1,254.48, and GBP 1,003.67 per ounce. Yesterday's AM fix was USD 1,579.00, EUR 1,255.67, and GBP 1,006.63 per ounce.
Silver is trading at $28.36/oz, €22.71/oz and £18.16/oz. Platinum is trading at $1,440.75/oz, palladium at $603.60/oz and rhodium at $1,275/oz.
The New York Exchange was closed yesterday because of a national holiday. Gold has been trading erratically in Asia rising and falling and keeping within a range of just under $10 from $1,570/oz-$1579/oz. Gold spiked higher soon after the open in Asia but determined selling at the $1,580/oz level has capped prices.
Cross Currency Table – (Bloomberg)
Spain’s debt issues are igniting worries about the eurozone financial stability again which has sent the euro to a 2 year low against the US dollar and is seeing euro gold consolidate over €1,200/oz at €1,257/oz.
Spain’s 10 year interest rates hit 6.53% today as the Spanish economy appears to be collapsing.
Spanish retail sales saw a massive fall in April, dropping 9.8% after March's downwardly revised 3.8% decline. This marked the 22nd straight month of falling retail sales.
Gold is consolidating over $1,500, €1,200 and £1,000 per ounce against the backdrop of spiralling Spanish debt costs and the growing chance markets are attaching to Greece exiting the single currency bloc.
A further sign of China’s importance in the global financial system and in the gold market is seen in Chinese bank, Industrial and Commercial Bank of China Ltd (ICBC), seeking membership of overseas exchanges and endeavouring to become a major global bullion market maker. Shen Shisheng, vice-general manager of financial markets at ICBC told Reuters on the sidelines of a conference in Shanghai that this is exactly their intention.
Today, US consumer confidence data for May is published at 1400 GMT.
The risk of stealth bank runs in periphery euro nations turning into full scale bank runs are deepening and this is likely supporting gold.
European policy makers have failed to build a shield robust enough to prevent a bank run in one country sending others in the bloc deeper into crisis. The risk of a Greek exit is leading policymakers to attempt to create such a shield or buffer according to Reuters.
XAU/EUR Currency 1 Year Chart – (Bloomberg)
A push by the ECB for the euro zone to stand behind banks suffering from bank runs is slowly gaining traction but the bloc has yet to build backstops to prevent, or cope with, a sudden collapse of confidence in banks and mass deposit withdrawals.
Last week, European leaders discussed pan European means of supporting banks, measures the ECB hopes will include a bank resolution fund to deal with the fallout from the wind up or restructuring of a failing bank.
But a wave of withdrawals by depositors - either for fear that their government is too weak to stand behind its banks or that their country will exit the euro and forcibly convert their savings into a vastly devalued national currency - would represent a crisis of completely new proportions.
Greece’s exit and reversion to their national currency, the drachma, could precipitate electronic bank runs in other periphery nations. The risk is that even savers who may trust their bank as being safe, come to the conclusion that there is a risk that their euro deposits may, in the event of a sovereign crisis, be forcibly converted to drachmas, pesetas, liras, punts and escudos.
OTHER NEWS
(Bloomberg) -- ETF Securities Gold ETPs Had Biggest Inflows Since December
ETF Securities Ltd.’s long gold exchange-traded products had $240 million of inflows last week, the most since December, the company said in a report e-mailed today.
(Sydney Morning Herald) – Platinum: So Rare Total World Production To Date Would Fit Inside An Average Size Living RoomMention precious metals and people's minds go immediately to gold. But platinum is even more valuable than the yellow metal and its value is driven by both decorative an industrial usage. Platinum is so rare total world production to date would fit inside an average size living room.
Tens of tonnes of ore must be mined and put through a five-month refining process to make one ounce of the metal. South Africa accounts for 80 per cent of world production followed by Russia and North America.
It is chemically inert, so it never loses its rich white lustre. As a result, it is highly sought after by the jewellery trade which accounts for 51 per cent of annual production. The remainder goes into various industrial uses. Investors can get exposure to platinum on the US Nymex futures market or on the Australian Securities Exchange through an exchange-traded fund coded ETPMPT.
* * *
http://www.zerohedge.com/news/director-spains-failed-bankia-leave-%E2%82%AC138-million-termination
Director Of Spain's Failed Bankia To Leave With €13.8 Million Termination
If those in charge are still confused why the general population is not very "appreciative" of the banker social substratum, the following example should provide some color. Following the ever greater public bailout fund black hole that Spain's Bankia has become (first of many zombies), we now learn that one of its financial directors, Aurelio Izquierdo, will be entitled to €14 million in pension and termination benefits. Supposedly in compensation for running the bank straight into the ground after just one year of operation, and lying fabulously about its financial performance, in the process suckering in thousands into investing their hard earned cash so that oligarchs such as Aurelio can promptly retire to a non-extradition locale. And this, dear powers that be, is why the general public continues to scratch its head at how it is remotely possible that incompetent crony capitalists get paid tens of millions for blowing up their firms, while everyone else is stuck footing the soon to be soaring inflation bill (because print they must, and print they will).
More from Delta World:
Bancaja and general Bank of Valencia, Aurelio Izquierdo, former financial director is entitled to a pension for cessation of 13.8 million euros, according to the annual report of bank financial and savings (BFA), matrix of Bankia, corresponding to 2011.In accordance with the information contained in the report submitted to the National Commission of the market of values (CNMV) and Tuesday indicated in various media, Izquierdo would receive this payment in respect of the insurance policy contracted to his retirement, death and disability, which joins a savings insurance by early retirement.“Box of the savings bank of Valencia, Alicante, Castellon, Bancaja, has made the following commitments with a person during the year 2011 was part of the high Directorate of the Bank and causing the same low 13 October 2011: 7.633 thousands of euros in a policy of defined contribution covering the contingency of retirement, death and disability”", and 6,285 thousands of euros in insurance of individual savings contribution defined to cover the option of that, under certain circumstances, the person taking by early retirement”, explains BFA in its report.The compensation to which he was entitled was already known, but it is the first time that it appears fixed in a public document.According to the newspaper ‘Expansion’, the now Chief Financial Officer of Bancaja, Aurelio Izquierdo, published in March has an armor that could charge about 14 million euros if he ceases the entity between compensation and pension, which has not gone through the governing bodies of the entity or it has been reflected in the report of the Council.So... with one hand taxpayers (either those of Spain, or of Germany, assuming Spain "bails out" Bankia with more debt, which is then pledged at the ECB as worthless repo further diluting the value of the joint currency, and whose unwind costs are now solely footed by Germany) are paying billions to preserve the illusions that Spain's zombies are in check, while on the other they fund the expatriation costs of the bank's former directors before all those who have lost everything - investment and deposits - come knocking on Aurelio's door? Fear not: according to El Pais:
According to sources of the Finance and Savings Bank (BFA), that money will not come out of the accounts of the entity, but from Bancaja, and therefore "not a single euro" of the 23,500 million of public money will go to pay such compensation.
Oh, ok, so this is money of the non-fungible variety. Something like the JPM deposit cash not being used to fund JPM's prop trading operations.
Got it. That makes everything so much better.
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