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Thursday, February 4, 2016

BACKDOC UPDATE, 4 FEB

BACKDOC:  THUNDER ITS AN OBVIOUS FACT IN WORLD MARKETS THAT THE YUAN HAS BEEN UNDER PRESSURE TO DEVALUE SINCE CHINA HAS BEEN BURNING THROUGH ITS RESERVES TO DEFEND ITS CURRENCY! WE SEE CHINA CONTINUE TO SAY THEY ARE KEEPING THE YUAN STABLE! HAVE THEY BEEN WAITING TO DECOUPLE THE YUAN WHEN ALL COUNTRIES ARE READY TO RESET? MMMM THEY KEEP TALKING ABOUT DE PEGGING AGAINST THE DOLLAR BUT SO FAR NO ACTION! SEEMS LIKE A LOGICAL TIME TO DO IT IS THE BEGINNING OF THEIR NEW YEAR WHICH IS THE 8TH! MMMM OH BY GOSH BY GOLLY IT’S….. SLAP! DOC QUIT MESSIN AROUND THIS IS SERIOUS STUFF! OHH I’M SORRY I THINK TWO SHIA BROTHERS WERE SUPPOSED TO TEAM UP AROUND THAT TIME AS WELL. BAAA HAA  (Iraq and Iran) WELL, WE WILL SEE IF THEY FOLLOW THROUGH BUT THIS DECOUPLING NARRATIVE RAISED MY EYEBROW TODAY! HEE HEE 8@8, DOC    IMO
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Backdoc Alert U.S. Treasury Secretary urges China to communicate FX policy clearly U.S. Treasury Secretary Jack Lew reiterated to China the importance of transitioning to a market-determined exchange rate in an orderly and transparent way, the Treasury said on Wednesday. During a phone call with Chinese Vice Premier Wang Yang on Tuesday evening, Lew also urged Beijing to clearly communicate its exchange rate policies and actions to financial markets, the Treasury said in a statement. Wang said in the call that China remained capable of keeping the exchange rate of China’s currency, the renminbi, “basically stable at a reasonable and balanced level”, the official Xinhua news agency reported late on Wednesday. Xinhua added Wang and Lew also discussed how to push forward a bilateral investment treaty, under discussion for much of last year, to help improve business ties between the two countries. http://www.reuters.com/article/us-usa-c … SKCN0VC1OL ************ 

BACKDOC:   CLEARLY, WE ARE ONE FINANCIAL STUMBLE FROM MORE THAN A STUBBED TOE! LOL  (see article below) IF WE SEE THE ACCIDENT ON PURPOSE, THE FINANCIAL LANDSCAPE WILL END UP A LOT DIFFERENT THAN IT IS TODAY! WHICH CURRENCIES WILL SURVIVE AND WHICH ONES WILL GO? HOW WILL THIS ASSET BACKED TRANSITION TAKE PLACE INTO THE NEW REALITY? WILL THERE BE A BANKRUPT EURO? WHAT ASSETS ARE THERE TO BACK IT? NONE! ITS ONLY BACK BY A TREATY AND THAT TREATY IS UNDER PRESSURE WITH THE SHENZENG AGREEMENT AS WELL AS CATALONIA SPLITTING FROM SPAIN! OH AND LETS NOT FORGET ABOUT GREECE AND POSSIBLY GREAT BRITAIN EXITING THE EURO! CERTAINLY PRESSURE IS MOUNTING! WHERE WILL THE SYSTEM BLOW UP AT? DOC    IMO 

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Thunderhawk:   Backdoc Alert VIDEO: European banks near ‘terrifying’ crisis: Raoul Pal With European banks sitting at multiyear lows, one widely followed market watcher said some of the biggest ones could go bankrupt. 

Former hedge fund manager and Goldman Sachs alumnus Raoul Pal said his scenario is one most investors aren’t looking at right now. Pal said the banking issues have the potential to overtake risks associated with China’s growth slowdown and cheap oil. “So many of these [bank stocks] are falling so sharply. I think people haven’t even caught up with what is going on, and that really concerns me,” the founder of Global Macro Investor told CNBC’s “Fast Money” on Tuesday. “I look at the big long-term share charts of them, and I think this looks very terrifying indeed. I have not seen anything like this for a long time.” For Pal, negative interest rates are the chief reason why the bank stocks are in trouble. He said European banks have a tougher time coping in the environment than U.S. banks. The major European banks, he added, are already being stretched by global worries and issues within the banking system. He said the trouble could spread to U.S. banks. He suggested going short in this type of market despite a potential “free-fall” scenario http://www.cnbc.com/2016/02/03/european … l-pal.html 

BACKDOC:  BOY, THAT’S A BET I WOULDN’T TAKE IN LIGHT OF THE POSSIBILITIES!! (see article below) CAN YOU IMAGINE HOW THE MARKET WOULD REACT IF INSTEAD OF DEVALUING THE YUAN DE PEGS ALONG WITH SAUDI ARABIA? IF THE SAUDIS’ SWITCH THEIR SETTLEMENT OF OIL SALES TO BE IN YUAN THERE WOULD BE NO REASON TO DEVALUE THE YUAN WOULD THERE?

 ALSO THE SAUDIS WOULD WIN BIG BECAUSE THEY GET A HIGHLY VALUED CURRENCY THATS COMPATIBLE WITH THEIR MUSLIM BROTHERS AND TRADING PARTNERS! MMMMM COULD THIS BE WHY “OK JACK” WANTS THEM TO WARN THE MARKETS AND BE CLEAR? MMMMM HOW IN THE WORLD COULD THEY TELL THE MARKETS THAT? THAT WOULD CREATE A BLACK SWAN EVENT FOR SURE! I HAD A CHANCE TO VISIT OZ AND HE TOLD ME GOVERNMENTS AND PEOPLE WILL QUESTION WHAT IS OR WILL BE A RESERVE CURRENCY THEY CAN TRUST IN? HEE HEE    DOC  IMO

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Thunderhawk:   Backdoc Alert Bets against China’s yuan build as traders eye G20 deal Billions of dollars in new bets against China’s yuan have been placed on derivatives markets this week as currency dealers weigh the chance of an official devaluation around this month’s G20 finance chiefs’ meeting in Shanghai. 

Yuan volatility and the bias toward a weaker yuan in options markets have surged to record highs in the past week and dealers say billions of “low delta puts”, which pay out only when the offshore yuan rate gets above 7.20 per dollar, have been taken out. The yuan is also back under pressure in the offshore spot market, falling to a three-week low of 6.6510 yuan as London opened on Wednesday CNH=D3. Onshore rates, which China controls tightly, were steady at 6.5778 CNY=. One-month volatility on the offshore yuan jumped from below 8 percent to almost 10 percent, a record high, versus 8.5 percent on the euro-dollar equivalent. Traders said option volumes – difficult to track because most of the market is conducted over-the-counter rather than on traceable platforms or exchanges – reached $12 billion on Monday and almost $17 billion on Tuesday. 

In morning trade in London, when dealers in the world’s biggest currency trading center are operating alongside their counterparts in Beijing and Shanghai, the bias toward a weaker yuan – essentially a net measurement – on 1-, 2-, 3- and 6-month contracts all surpassed record levels hit in August. “Clearly, the market sees that the intensive intervention from PBoC (People’s Bank of China) is not sustainable, and therefore the central bank will have to let the currency go at some point,” said Hao Zhou, a currency strategist at Commerzbank in Singapore. Much talk centers around how much more China will have leaked in reserves in January, in data due by the end of this week.

 Reuters polling ECONCN of more than a dozen banks puts the fall at a record $130 billion, reducing China’s war chest to combat yuan weakness to $3.2 trillion. Some hedge funds betting against the yuan have speculated the drop will be $200 billion or more. The sales desk of one large international bank in London was circulating an estimate of $262 billion to selected clients on Tuesday in an email seen by Reuters. 

WARNINGS Analysts from Bank of America Merrill Lynch called on Friday for G20 financial leaders to agree next month in Shanghai to joint steps that would include a one-off devaluation of the yuan and a commitment to a stable dollar to prop up flagging growth and head off another financial market panic. Against that, China has repeatedly warned “speculators” in the run up to the week-long Lunar New Year starting this weekend that it will keep the yuan steady. China launches its 12-month presidency of the G20 group of developed and developing economies with the Shanghai meeting of finance ministers and central bank governors on Feb. 26-27. Another big report this week on the yuan, from analysts at French bank Societe Generale, gave a one-in-three probability of the currency sliding to 7.50 by the end of 2016. “The People’s Bank of China (PBoC) may insist that it has no intention to devalue the yuan, but capital flows are putting significant downward pressure on the currency. China’s FX reserves are large but far from unlimited, or even sufficient, if large capital outflows persist. “Our central scenario (65 percent probability) envisions USD/CNY reaching 6.80 in 2016 in a largely gradual and controlled manner, but there is a large and growing risk that USD/CNY trades up to 7.50 this year.” http://www.reuters.com/article/us-china … SKCN0VC1HU

 BACKDOC:   PART OF THE DOLLARS RETREAT WAS DUE TO THE FED DOING A MOONWALK ON THEIR INTEREST RAISING POLICIES! HEE HEE IT SEEMS THE WORLD JUST CAN’T HANDLE ANY LITTLE RAISE BECAUSE COUNTRIES ARE SO FRAGILE FINANCIALLY DUE TO OVERWHELMING DEBT LOADS! AS I WRITE THIS WE ARE HEARING OF MASSIVE LAYOFFS WHICH WILL SHOW UP IN DATA IN THE NEXT FEW WEEKS! IT SEEMS THE WHOLE WORLD NEEDS SOME SORT OF A BAILOUT! GIVE ME A “G” GIVE ME A “C” GIVE ME A “R”  (see article below: DOC 

   IMO Thunderhawk:   Backdoc Alert Fed’s Dudley warns conditions are tightening Financial conditions have tightened since the Fed raised interest rates in December, New York Fed President Bill Dudley said Wednesday, according to a report from news service MNSI. Dudley also said in an interview with the agency that continued tightening on conditions would weigh on the Fed, MNSI reported.

He also reportedly warned that additional strength of the U.S. dollar could have “significant consequences” for the U.S. economy. Dudley is president of the Federal Reserve Bank of New York and a voting member on the federal central bank’s policymaking committee. His comments come as the Fed ponders its next move on monetary policy. The Federal Open Market Committee in December raised its interest-rate target a quarter point after seven years of keeping it near zero. It was the first rate hike in more than nine years. Read MoreWall St jobs surge at highest rate in 10 years Since then, despite policy that Fed officials insist is accommodative, financial markets have been in revolt. 

Major stock market averages have fallen considerably, with the S&P 500 down more than 8 percent. At the January meeting last week, the FOMC declined to raise rates and made some changes to its post-meeting statement that Wall Street considered significant. One move was the removal of the word “balanced” when describing risks to the Fed’s outlook. http://www.cnbc.com/2016/02/03/feds-dud … eport.html 

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 BACKDOC:  IT SEEMS THAT EVERYWHERE WE LOOK THE BEST MINDS ARE WARNING US! THIS IS A WARNING OF OUR BOND MARKET! IT SEEMS LIKE FRAUD THAT WE COULD ACTUALLY HAVE A BANK CHARGE US INTEREST TO KEEP OUR MONEY IN THEIR BANK! THIS NEGATIVE INTEREST ISSUE IS MADDENING! DOC    IMO

 Thunderhawk:   Backdoc Alert Bill Gross: ‘Shades of 2007’ as central banks flunk Low interest rates and massive levels of central bank intervention have failed to generate strong economic growth and are beginning to endanger investors, bond guru Bill Gross said in his latest analysis. Around the world, high debt levels combined with slow economic growth and tumbling oil prices are providing obstacles that extreme easing has been unable to cure, he said. In the U.S., Gross said even the Federal Reserve is unsure that risks to its optimistic outlook are “balanced,” generating “shades of 2007” in terms of what the headwinds are for growth. In sum, the problems challenge the assumption of central bankers like Janet Yellen in the U.S. and Mario Draghi in Europe that low interest rates are a cure for whatever ails the global economy.

 “They all seem to believe that there is an interest rate SO LOW that resultant financial market wealth will ultimately spill over into the real economy. … How successful have they been so far?” he wrote. “Why after several decades of 0 percent rates has the Japanese economy failed to respond? Why has the U.S. only averaged 2 percent real growth since the end of the Great Recession?” His comments come as monetary authorities around the world ponder tightening financial conditions despite loose monetary policy. In the U.S., the Federal Open Market Committee hiked rates in December for the first time in nine years, then followed with a post-meeting statement in January that equivocated on its economic assessment.

 Importantly, the Fed removed the word “balanced” to describe risks to its outlook. Futures markets have reacted, indicating that the Fed’s cautious but progressive course for rate-hiking likely would be deterred by tightening financial conditions. Traders on Wednesday were pricing in no chance for a rate hike in 2016 and only a 31 percent probability for a move as far out as February 2017, according to the CME’s FedWatch tracker. Gross, who runs the $1.3 billion Janus Global Unconstrained Bond fund and founded bond giant Pimco more than 40 years ago, said debt problems are coming into clearer focus for the U.S. “The household sector has delevered, but the corporate sector never did, and with investment grade and high yield yields 200-1,000 basis points higher now, what does that say about future rollover, corporate profits and solvency in many commodity-sensitive areas?” he asked. Indeed, ratings agency Moody’s has issued two warnings this week about deteriorating conditions in the corporate bond market. The number of corporate issuers in the distressed category rose 6 percent from December to 264, which is just 27 away from its credit crisis peak, Moody’s said Wednesday. The total has grown 44 percent from a year ago, pressured mainly from energy companies. However, Moody’s said the energy contagion is beginning to spread, with more than half its downgrades coming outside the sector. Its Liquidity Stress Index jumped to 7.9 percent in January, the highest level since December 2009 and the biggest single-month gain since March 2009. The index’s long-term average is 6.7 percent, with the all-time high of 20.8 percent hit in March 2009. Moody’s said a reading above 10 percent with 40 percent of the 21 sectors above that level “would be more worrisome for the default rate.”

 The agency expects the spec-grade corporate default rate to hit 4.4 percent in 2016. Gross warned investors to focus on safety. “What I do know is that our finance-based global economy is transitioning due to the impotence of monetary policy which has always, and is now increasingly focused on the elixir of low/negative interest rates,” he said. “Don’t go near high-risk markets, stay safe and plain vanilla. It’s not predetermined or guaranteed, but a more prosperous outcome should be somewhere around the corner if you do.” http://www.cnbc.com/2016/02/03/bill-gro … -fail.html 

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Thunderhawk:    FULL STEAM AHEAD !!!!!! DEALS – CONTRACTS – THE WORKS !!!! MAY TAKE 2 YEARS to RATIFY BUT THE GAME IS ON NOW!!!!   (See article below) What say you DOC BACKDOC:   THE RATIFICATION WILL HAVE SOME CHALLENGES ON THE SOVEREIGNTY ISSUES FOR SURE! DOC    IMO

 Dnari131:  yep Hawk and Bacdoc the game of thrones going full throttle indeed! ThunderHawk:   Trans-Pacific Partnership trade deal signed, but still require years of negotiations to become reality The Trans-Pacific Partnership (TPP), one of the world’s biggest multinational trade deals, was signed by 12 member nations on Thursday in New Zealand, but the massive trade pact will still require years of tough negotiations before it becomes a reality. 

The TPP, a deal which will cover 40% of the world economy, has already taken five years of negotiations to reach Thursday’s signing stage. The signing is “an important step” but the agreement “is still just a piece of paper, or rather over 16,000 pieces of paper until it actually comes into force,” said New Zealand Prime Minister John Key at the ceremony in Auckland. The TPP will now undergo a two-year ratification period in which at least six countries – that account for 85% of the combined gross domestic production of the 12 TPP nations – must approve the final text for the deal to be implemented. The 12 nations include Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States and Vietnam. Given their size, both the United States and Japan would need to ratify the deal, which will set common standards on issues ranging from workers’ rights to intellectual property protection in 12 Pacific nations. 

Opposition from many US Democrats and some Republicans could mean a vote on the TPP is unlikely before President Barack Obama, a supporter of the TPP, leaves office early in 2017. US Trade Representative Michael Froman has said the current administration is doing everything in its power to move the deal and on Thursday told reporters he was confident the deal would get the necessary support in Congress. In Japan, the resignation of Economics Minister Akira Amari – Japan’s main TPP negotiator – may make it more difficult to sell the deal in Japan. There is wide spread grassroots opposition to the TPP in many countries. 

Opponents have criticised the secrecy surrounding TPP talks, raised concerns about reduced access to things like affordable medicines, and a clause which allows foreign investors the right to sue if they feel their profits have been impacted by a law or policy in the host country. In New Zealand on Thursday, more than 1,000 protesters caused traffic disruptions in and around Auckland and the polics said a large number of police force has been deployed. Chile’s Foreign Minister Heraldo Munoz predicted “robust democratic discussion” in his South American nation. Australian Trade Minister Andrew Robb said the agreement would be tabled next week in parliament. Opposition to the deal in Australia has been building, but Robb was confident it would be approved, despite the government not control the Senate. Canada’s new government signed the deal on Thursday, but Trade Minister Chrystia Freeland has said “signing does not equal ratifying.” She emphasised that the government committed itself to a wide-ranging consultation on the TPP during its election campaign and that process was currently underway. Secretary of the Economy for Mexico, Illdefonso Guajardo, said the TPP would be voted on before the end of 2016, while Malaysia said the deal had already been approved, although some legislative changes were still needed. http://www.dnaindia.com/money/report-tr … ty-2173819 BACKDOC:  GOOD NIGHT FAMILY! THANKS FOR ALL THE OTHER ARTICLES AND COMMENTS TODAY! DOC

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