http://www.cyprus-mail.com/cyprus/dijsselbloem-cyprus-blame/20130508

( Kicking Cyprus while they're down..... )

Two Beauties from good ole Diesel BOOM !

Dijsselbloem: Cyprus to blame

By Poly PantelidesPublished on May 8, 2013

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Cyprus, Eurogroup,Jeroen Dijsselbloem,Sylvie Goulard

DIESELBOOM STRIKES AGAIN! UNINSURED DEPOSITORS ACROSS EU TO BAIL-IN BANKS FAILING STRESS TESTS!

MAY 8, 2013 BY THE DOC 4 COMMENTS

The Diesel has just dropped the boom again, as the Chairman of Eurozone Finance Minsters warned Wednesday that uninsured depositors in Eurozone banks could face losses in Eurozone bank stress tests- as the Eurozone stress tests could result in banks being shut down by the EU, with the Cyprus template bail-in resolution used to impose losses on depositors.

Is Dieselboom trying to start a Eurozone wide bank run?

As The Telegraph reports, Dieselboom warned that ECB stress tests could result in banks being shut down by the ECB:

Jeroen Dijsselbloem, the chairman of eurozone finance ministers, warned that that the ECB checks on the quality of banking assets could lead to banks being shut down, highlighting the need for eurozone agreement on bank resolution rules this summer.

Depositors will face losses on banks shut down by the ECB:

To avoid the cost of banking bailouts falling on highly indebted eurozone governments, banks that fail the ECB stress tests will face having losses and writedowns imposed on their creditors.

The ECB appears undecided on whether to include ALL depositors on bail-ins, or simply those with balances over €100,000:

Ahead of a meeting next week, eurozone finance ministers remain divided on how to impose writedowns on banks following controversy over how losses were inflicted on depositors in the recent EU-IMF rescue of Cyprus.

“The treatment of uninsured depositors remains a key issue particularly after recent events,” according to an internal eurozone negotiating text seen by Bloomberg.

The question of how to bail-in bank creditors is likely to avoid writedowns on the value of deposits, over the guaranteed or insured level of €100,000, so that “in many instances” depositors will not face losses.

There are also divisions over using national “deposit guarantee systems” (DGS), aimed at protecting depositors under €100,000, to contribute to writedowns when unsecured senior creditors face losses.

Dieselboom admitted that announcing the ECB banks that fail the stress tests without the appropriate depositor confiscation plan in place would have catastrophic results:

Mr Dijsselbloem warned that unless the eurozone agreed common deposit guarantees, meaning that there would collectively guaranteed insurance for bank savers, then an EU banking union might fail with catastrophic consequences.

“That will be the final building block of the banking union, a necessary block,” he said. “We need to have the instruments to deal with the problems, because just exposing problems in banks and not having an answer would be very dangerous.”

And Dieselboom’s forced retraction in 3…2…1…

and.....

http://www.zerohedge.com/news/2013-05-08/chinese-trade-data-manipulation-innocent-excel-glitch-or-something-far-more-sinister

( Glitch in The Matrix from China ? )

Chinese Trade Data Manipulation: Innocent "Excel Glitch" Or Something Far More Sinister?

Submitted by Tyler Durden on 05/08/2013 08:05 -0400

Bank of England

BLS

BOE

Bond

Bureau of Labor Statistics

People's Bank Of China

There was a time when talking about fabricated Chinese data was relegated to the darker corners of polite society, along the lines of saying that the Fed was manipulating stocks or that the BLS was fudging employment data upward: everyone knew it was happening, but nobody dared to say it in public - after all suggesting such things happened discredited the entire status quo system built on a pyramid of lies (and if China does it, the US and everyone else likely does it too) and exposed one to being labeled a conspiracy theorist. That is no longer the case. Following the last three months of far stronger than expected Chinese trade data, the fact that China's data is openly manipulated is no longer disputed by anyone - either the press, or the analyst community. Case in point, last night's surging Chinese imports and exports. On the surface: great news. Below the surface: fabricated mumbo jumbo, like virtually everything else derived from the goalseek function in China_Econ.xls, or US_seasonal_adjustments.123.

Incidentally China is not even trying any more: as we pointed out over a year ago, catching trade data fudging is the easiest to spot, as one's nation exports have to equal another nation's imports, period. It is a zero-sum game. Yet over the past several years, this has not happened (and certainly not at the global level, considering the entire world was somehow a net exporter). The discrepancy has gotten especially bad in recent months however in the mainland, especially when trying to reconcile Chinese trade data with that from Hong Kong or Taiwan.

First to debunk the Chinese random numbers was SocGen:

China’s export growth reaccelerated to 14.7% yoy in April from 10% yoy in March, well above expectations (Cons. 9.2%; SG 7%). Import performance was even more stellar, rising 16.8% yoy (Cons. 13%; SG 9%). Both figures were again at odds with the unambiguous disappointment in Korean and Taiwanese data as well as in China’s own purchasing managers’ indices from the same month.

Head-scratching discrepancies in bilateral data comparison persisted on both sides of the ledger. Compared with the data from Taiwan – the only economy besides China that has published the complete set of April data – growth of mainland exports to Taiwan was 57.7ppt faster based on China’s data (+49.2% yoy vs. -2.7% yoy) and that of mainland’s imports from Taiwan was 58.6ppt faster (+55.7% yoy vs. -2.9% yoy)! The gaps narrowed only marginally from March. In previous months, the most notorious data inconsistency was with Hong Kong.

Although Hong Kong has not published its April data, the reported export growth of 57.2% yoy by China’s customs continued to look too good to be true.

Aside from outright fraud, is there any justification for the data "drift"?

our observation from the trips to the mainland led us to believe that there is indeed a large amount of speculative capital flows. Nearly all corporates we met admitted that they were conducting some forms of interest rate arbitrage on the expectation of further yuan appreciation. We estimate the distortion to headline trade growth (both exports and imports) to be about 3-8ppt.

Another way to visualize how China is using Hong Kong as a capital flow sieve is the following chart from Diapason showing net exports to Hong Kong and export to the rest of the world ex-HK. In short - it is all Hong Kong.

This should raise some red flags because while China manipulating data is nothing new, there appears to be a far more sinister play at hand here, especially with the data manipulation so overt nobody can ignore it any longer: namely an attempt by China to hide blistering "hot capital" inflows generated by the global printing press behind the manipulated trade data. Reuters is on the beat:

China's central bank signaled on Wednesday it was prepared to change its monetary strategy to fend off inflows of speculative capital, as Beijing struggles to control a tide of cash washing in from overseas markets.

The move came as April exports blew past expectations, which appeared on the surface to indicate that both China's economy and global demand were on the mend.But economists were quick to suspect the figures were artificially inflated by investors who were disguising speculative bets on the yuan currency as trade payments.

Faced with the risk that such inflows could cause the yuan to appreciate so quickly that it destabilizes exports and the broader economy, the People's Bank of China (PBOC) has begun intervening heavily in the domestic currency market this year, buying up dollars and selling yuan.

This leaves the question of how to keep the yuan it has sold from distorting domestic markets.

As a reminder, it is the broken dam of Chinese runaway inflation, which can no longer be moderated by any means: legitimate or manipulated, that sends the Politburo scrambling and demanding an end to QE out of the US or anywhere else: this is precisely what happened in 2011, but not before soaring Chinese inflation sent demand for gold through the roof and hitting a record over $1900.

For now, China appears to be at the "manipulated" stage of covering capitlal inflows. Soon, however, these will no longer be sufficient.

The move suggests that the PBOC is preparing to make systematic longer-term cash drains from the money supply to blunt the impact of hot money flows, with a potential knock-on impact on interest rates, market sentiment and economic growth.

The announcement came days after the country's foreign exchange regulator released new rules to crack down on inflows of hot money disguised as trade payments.

The last time the government made technical adjustments to its money management methods in February, domestic equity markets swooned as investors bailed out of stocks, worried that the changes heralded a wider monetary tightening that would constrict growth.

But the PBOC must balance the risk that the change will negatively impact markets against the distorting effect the inflows are having on the wider economy, in particular on exports, and by signs that capital is once again being misrouted internally into speculative channels like property instead of the real economy.

So just how big of a "hot money" problem are we talking. Big:

A Reuters estimate of hot money flows based on official data indicates that as much as $181 billion in speculative cash may have entered China in the first quarter, fueled in part by loose monetary policy from the United States and Europe. And that estimate likely understates the true figure, since it doesn't account for inflows disguised as trade payments.

$181 billion per quarter is some $60 billion per month - that's nearly the entire amount of liquidity injected by the Fed in the Q1! And that was before Japan joined the printing fun

So how does this tie in to manipulated Chinese trade data again? Simple:

While China's capital account is tightly restricted, it is not hermetically sealed, and some of the speculative inflows are conducted through legal channels.

But there are two major points of concern. One is that domestic trading companies are betting too much on further yuan appreciation, to the extent that they are borrowing the dollars they need for trade with foreign companies in order to increase their yuan stockpiles, which most economists see as unsustainable.

The other is that companies are falsifying trade transactions to get their hands on even more yuan, muddying macroeconomic indicators and embarrassing regulators.

Official data showed that April exports grew by 14.7 percent from a year earlier, well above expectations of 10.3 percent, but the numbers only fueled skepticism that financial maneuvering by exporters and speculative inflows are masking weakness in real demand.

Particularly suspicious were figures in both March and April showing explosive growth in exports to Hong Kong and bonded trading zones, that appeared completely disconnected from export growth to ultimate destination markets in the U.S. and Europe - and from tepid export figures for neighboring Asian economies.

For now Reuters does not see all of the above as a reason to panic:

Liu Junyu, a bond and money market analyst at China Merchants Bank in Shenzhen, said that the market did not read the PBOC's move as a portent of more drastic tightening measures like interest rate hikes or increases to reserve requirement ratios at banks, both of which would make more profound and durable adjustments to base money supply that might choke off China's economic recovery.

"Given so much weak economic data and recent dubious trade data, the PBOC will probably keep monetary policy unchanged and neutral," he said.

Perhaps: but if all it took was just one Fed for China to be forced to use all channels to mask the true latent inflation imported courtesy of insolvent "developed" G-7 nations, what will happen when the full impact of Japan's $75 billion per month washes ashore month, after month, after month? And what happens when the BOE joins the party?

If indeed the PBOC is stuck and unable to tighten conditions (which would also backfire as the global credit carry trade suddenly sniffs out higher Chinese yield), look for simmering Chinese inflation to finally spill over. When that happens, keep an eye on gold, which incidentally is now at the same level it was at time in late 2010 and early 2011 when China could no longer mask that it has a big inflation problem, and which, despite what clueless sellside analysts will tell you, is and always will be the best inflation hedge.

Just ask 1+ billion Chinese and a like amount of Indians.

http://www.zerohedge.com/news/2013-05-08/quiet-overnight-session-punctuated-made-chinese-stronger-expected-german-data

Quiet Overnight Session Punctuated By Made Up Chinese, Stronger Than Expected German Data

Submitted by Tyler Durden on 05/08/2013 06:56 -0400

The overnight economic data dump started in China, where both exports and imports rose more than expected, at 14.7% and 16.8% respectively, on expectations of a 9.2% and 13% rise. The result was a trade surplus of $18.16 billion versus expectations of $16.15 billion. The only problem with the data is that as always, but especially in the past few months, it continued to be completely made up as SocGen analysts, and others, pointed out. The good data continued into the European trading session, where moments ago German Industrial Production rose 1.2% despite expectations of a -0.1% drop, up from 0.6% and the best print since March 2012. The followed yesterday's better than expected factory orders data, which also came at the best level since October. Whether this data too was made up, remains unknown, but it is clear that Germany will do everything it can to telegraph its economic contraction is not accelerating. It also means that any concerns of an imminent ECB rate cut, or a negative deposit rate, are likely overblown for the time being, as reflected in the knee jerk jump in the EURUSD higher.

Also out of Europe we got Swiss Consumer prices which extended their longest slump in four decades, decreasing by 0.6% Y/Y the same as March. UK house prices rose to the highest in three years according to Halifax, as home values increased 1.1% from March, with the average price rising to $257,200, the highest since 2010. In the Netherlands, Industrial Production declined 5.3% in March, much more than the forecast 2.1% drop, while output fell 2% from a 0.7% drop previously.

Perhaps most importantly out of Europe, the ECB's Asmussen said that the ECB is looking at ways to revive the market for asset-backed securities (ABS) to allow banks to pass some credit risk on to other investors as they try to boost their capital and liquidity buffers to meet new regulatory standards. As earlier reported in the German newspaper Die Welt, citing a central bank source, a majority of Governing Council members seemed to be in favor of the ECB buying asset-backed securities (ABS). Responding to a question about the Welt story, Asmussen said ECB work on what it could do to spur SME lending was ongoing. "We have an open mind to look at all things that we can do within our mandate and this relates to how can the market for asset-backed securities, especially backed by SME loans, be revived in Europe," he told a European Parliament committee. This explains how the ECB will engage the other world central banks at a time when everyone is going full throttle with diluting their currencies. After all Draghi made it quite clear in the latest press conference that the Euro is rather overvalued and that the ECB is considering ways to push it lower.

In US macro news there is little to note, with MBA mortgage application the key item on the docket. Those following the hedge fund lemming herd, are likely aware that the Ira Sohn hedge fund idea conference takes place today where many hedge funds to everything they can to either pitch their ideas to willing listeners, or to offload their positions which have been put up long ago.

And with that, let the no volume "market" levitation begin.

SocGen recaps the macro events from an FX perspective

It was not the most exciting of trading sessions yesterday but the gyrations in the Swiss Franc are captivating nevertheless and make us wonder whether the first break this month above 1.2300 in EUR/CHF is the breakthrough that markets have been waiting for. Rallies above 1.2300 have flattered to deceive since February and the return to the January highs above 1.2500 has proved a bridge too far on several occasions. The price action now was partly being driven by the purchase of topside option strikes (1.2300-1.2500), but it also coincided with the release of FX reserves data yesterday. April CPI data follow this morning. SNB fx currency reserves dropped in April for the first time in four months and though details over composition by currency are still missing, the bullish price action in EUR/CHF shows long CHF positions have been scaled back since the ECB cut rates last week. Key short-term levels to watch for the pair are 1.2344 and 1.2349 where a break brings 1.2400 in play. Data this morning is forecast to show that CPI 'accelerated' from -0.6% to -0.5%. The SNB have pencilled in -0.4% for Q2, unchanged from the Q1 average so the data should not have much bearing on SNB policy.

Amid the dearth of economic data, we will keep an eye on German industrial output where a positive surprise, on the heels of strong new orders data, should temper speculation of more ECB easing in the short-term and could see EUR/USD extends towards 1.3158 (100d ma). This should however not pose too many problems for the sale of approx E5bn of EUR2018 bonds. The back up in 5y yields to 0.39% yesterday puts us back in March territory but markets will not be too unnerved until we reach 0.45%. Portugal marked its successful return to the capital markets yesterday with the launch of an E3bn 2024 syndicated issue, with offers in excess of E10bn and 369 investors expressing interest. Priced at mid-swaps +400bp, non-domestic buyers picked up 86% of the issue (US investors 16%, French and Scandi accounts took 10% each).

For USD/CAD, housing starts may not be trivial and a strong print would add momentum for a push towards parity after yesterday's break below the May 1 low of 1.0052. Finally, we look for Norges Bank to keep rates unchanged. A more dovish take would embolden EUR/NOK bulls for a run at 7.70 after having averted a break below 7.55 last week.

* * *

DB's Jim Reid completes the overnight recap:

Overnight the sun shone on Dow Mountain as the index closed above 15,000 for the first time (+0.58%, S&P 500 +0.52%). Nine out of the ten major S&P 500 sectors closed higher on the day with IT (-0.24%) the only sector that lagged. Credit spreads also marched tighter with the CDX IG index closing below 70bps for the first time since November 2007. It proved to be a good day for company results with positive headlines from HSBC’s lower bad debts to Walt Disney’s after market EPS beat on theme park performances. This momentum has continued into the overnight Asian session. US data was mixed with lower jobs opening and a downbeat consumer economic outlook. However the market probably took comfort from better-than-expected German factory orders (+2.2% mom vs -0.5% expected) which have now gained for two consecutive months.

In Asia major equity benchmarks are mostly higher led by the ASX 200 (+1.0%) and the Nikkei (+0.9%) as we type. The Shanghai Composite (+0.2%) is also benefitting from the better-than-expected trade data. Indeed China’s trade surplus came in at $18.16bn in April (market consensus of $16.15bn) as exports outpaced imports. In other overnight news, the RBNZ Governor said the central bank had sold the kiwi which added downward pressure on the NZD. Asian credit spreads continue to march tighter overnight with the Japan iTraxx rallying 3bps tighter. The latest round of new issues from EM Asia are also performing well in secondary markets.

Moving on to today, the data calendar remains fairly quiet with Germany’s IP perhaps the only key release of note. In the US we have the $24bn 10yr UST auction but bottom-up stock pickers will probably be paying some attention to the 18th annual Ira Sohn Conference which kicks off at 12PM EST in New York today. The conference goes on for three days and has historically been a forum for industry heavyweights to present their top alpha ideas.

Catharsis Ours

Wednesday, May 8, 2013

Dijsselbloem: Cyprus to blame

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RELATED CONTENT

DIESELBOOM STRIKES AGAIN! UNINSURED DEPOSITORS ACROSS EU TO BAIL-IN BANKS FAILING STRESS TESTS!

Chinese Trade Data Manipulation: Innocent "Excel Glitch" Or Something Far More Sinister?

Quiet Overnight Session Punctuated By Made Up Chinese, Stronger Than Expected German Data

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