Business Summary Links By Day

Greece Has Defaulted - Which Country In Europe Is Next? http://albertpeia.com/greecehasdefaultedwhonext.htm ‘Well, it is official.  The restructuring deal between Greece and private investors has been pushed through and the International Swaps and Derivatives Association has ruled that this is a credit event which will trigger credit-default swap contracts. , Goldman Cuts Q1 GDP Forecast To 1.8% On Trade Deficit Surge Durden 3-9-12 Moments ago we tweeted that today's surge in the trade deficit will force banks to start cutting GDP forecasts. Sure enough, Goldman as usual, is the first to set the tone, by cutting its ultra real time GDP forecast from 2.0% to 1.8%. , The Part-Time Economy (Redux) Durden 3-9-12 While not shocking to most, the jump in temporary workers that we cited earlier is perhaps the biggest indicator of job 'quality' gains. As we discussed here last month, the US market economy remains mired in a low quality (“first-fired, first-hired categories rather than the type of core hiring that would build a stronger foundation for income growth,”  as FTN's Jim Vogel describes it) recovery. About 160k of private jobs added in Feb are 'low-paying work' which left average hourly earnings up only 0.1% (notes David Ader at CRT) - hardly the recipe for a sustainable recovery and perhaps the slow leak in stocks post the number is the rude awakening to that reality. As w enoted before, "not only is America slipping ever further into a state of permanent "temp job" status, but that a "quality analysis" of the jobs created shows that the US job formation machinery is badly hurt, and just like the marginal utility of debt now hitting a critical inflection point, so the "marginal utility" of incremental jobs is now negative" , US Trade Balance Worst In 39 Months With Largest 3 Month Drop In 20 Years Durden 3-9-12 , NFP Prints At 227K On Expectations Of 210,000, Unemployment Rate At 8.3% Boosted By Temp Jobs Durden 3-9-12 , Import surge sends China trade to decade-deep deficit , Dave’s Daily: http://www.etfdigest.com STOCK RALLY FADES WITH CDS ISSUE 3-9-12 ‘The all-important Employment Report was positive beating estimates but was lower than previous reports (227K new jobs vs 210K expected & prior revised higher 284K: unemployment rate unchanged @ 8.3%). Under the radar screen were Business Inventories missed (.4% vs .6% expected & 1% prior), and the Trade Deficit worsened (-$52.6B vs $-50.4B). The latter was caused by petroleum which will heighten domestic energy policy debates. The trade report caused Goldman Sachs (GS) to lower GDP estimates to 1.8% as if anyone cared.  “Soon or late, everyone sits down to a banquet of consequences.”Robert Louis StevensonStevenson’s quote reminded markets late the Greek default (structured or otherwise) has triggered CDS (Credit Default Swap) events. Some major investment banks (you know, the usual suspects) have underwritten and sold these products for generous fees. Now it’s time to pay the piper. , Unpopular but True - The Larger Bear Market Still Looks Intact , Jobs Data Improve, but Growth Picture Darkens The Wall Street Journal , Train Reading: The Underlying Trouble With the Jobs Report The Wall Street Journal-Stephen Grocer , Jobs report shows unemployment steady, but there’s underlying trouble — Zachary Karabell , Iceland calls its former PM to account for financial crash Esther Addley | Haarde is to date the only politician anywhere in the world to face criminal charges over the financial crisis., GE’s Immelt: Global Economy In ‘New Era’ Of Instability wsj.com | Expects interest rates to stay low for an extended period. , U.S. Still Down 6 Million Jobs smartmoney.com | Damage to employment done by the Great Recession is still far from repaired. , Gallup: Unemployment Jumps 0.5 Percent in February Washington Free Beacon | Largest month-to-month increase since December 2010. , Greece Default Is Official; Insurance Payouts Triggered CNBC | That entitles holders of Greek credit default swaps to compensation., Greeks in Despair: Suicide rate record high Russia Today | Greeks’ financial woes continue to snowball., Fitch Downgrades Greece to ‘Restricted Default’ Business Insider | Fitch just downgraded Greece from “C” to “restricted default.”, Security: UK ‘must plan for euro collapse’ BBC | Ministers should draw up plans to deal with a break-up of the eurozone “as a matter of urgency”, a committee of MPs and peers has warned., 18 Statistics That Prove That The Economy Has Not Improved Since Barack Obama Became President http://albertpeia.com/18statseconomynotimprovedsinceobama.htm ‘Has the economy improved since Barack Obama became the president of the United States?  Of course not.  Despite what you may be hearing in the mainstream media, the truth is that when you compare the U.S. economy on the day that Barack Obama was inaugurated to the U.S. economy today, there is really no comparison.  The unemployment crisis is worse than it was then, home values have fallen, the cost of health insurance is up, the cost of gas is way up, the number of Americans living in poverty has soared and the size of our national debt has absolutely exploded.  Anyone that believes that things are better than they were when Barack Obama was elected is simply being delusional. , Greece Has Defaulted: Here Is Where We Stand Durden 3-9-12 After reading this, everyone should have a fairly good grasp of what happened not only today, but ever since the great (and quite endless) European financial crisis took center stage, and what to look forward to next... , Chris Martenson Interviews Robert Mish: Front-Line Evidence That We are Nowhere Near a Gold Bubble Durden 3-9-12 , Germany Wants New European Constitution: "There Are New Centers Of Power In The World." Durden 3-9-12 , As First Greek CDS "Anstalt" Appears, A Question Emerges: Did Banks Not Square Off Margins? Durden 3-9-12 The irony is not lost on us that Bloomberg is reporting that KA Finanz, an Austrian bad-bank supported by the Austrian government, faces as much as a €1 billion need for funding to cover its exposures to Greek CDS (coughcreditanstaltcough). In a statement this morning, which we noted in a tweet, the bank noted "activation of the CDS with an assumed loss ratio of about 80% would mean an additional provisioning charge of EUR 423.6 million". KA Finanz's total amount of Greek CDS exposure is around EUR1bn. What is shocking and should be of great concern is that we have been led to believe that very little net cash will change hands on the basis of the $3.2bn net aggregate market exposure. This was based on the now false premise that variation margin was maintained and transferred throughout the process (as we note below from recent IMF filings). What appears to have happened is that dealer to dealer variation margin has been, let's say, less rigorous as perhaps all collateral was netted up across all exposures (or simply ignored on the basis of government backstops). The far bigger question then is: are banks simply marking ALL sovereign CDS at par, and not paying off cash to other dealers? Remember it only takes one counterparty in the chain to turn net into gross and quality collateral seems tied up a little right now at the ECB (or with margin calls). , ISDA CDS Trigger Decision Is Unanimous Durden 3-9-12 In light of today’s EMEA Determinations Committee (the EMEA DC) unanimous decision in respect of the potential Credit Event question relating to The Hellenic Republic (DC Issue 2012030901), the EMEA DC has agreed to publish the following statement:The EMEA DC resolved that a Restructuring Credit Event has occurred under Section 4.7 of the ISDA 2003 Credit Derivatives Definitions (as amended by the July 2009 Supplement) (the 2003 Definitions) following the exercise by The Hellenic Republic of collective action clauses to amend the terms of Greek law governed bonds issued by The Hellenic Republic (the Affected Bonds) such that the right of all holders of the Affected Bonds to receive payments has been reduced. The EMEA DC has resolved to hold an auction with respect to the settlement of standard credit default swaps for which The Hellenic Republic is the reference entity. To maximise the range of obligations that market participants may deliver in settlement of any such credit default swaps, the EMEA DC  has agreed to run an expedited auction process such that the auction itself will take place on March 19, 2012. In light of this expedited auction process, market participants should submit any obligations that they would like to include on the list of deliverable obligations to ISDA as soon as possible. , ISDA Finds Greek Credit Event Has Occurred Reports Bloomberg Durden 3-9-12 Total confusion around this, as there is no formal Press Release from ISDA yet, but since this one comes from Bloomberg, let's assume they have double checked their data. From Bloomberg: *ISDA EMEA DETERMINATIONS COMMITTEE: RESTRUCTURING CREDIT EVENT *ISDA SAYS CREDIT EVENT HAS OCCURRED WITH RESPECT TO GREECE *COMMITTEE DETERMINES AUCTION TO BE HELD ON MARCH 19 *ISDA EMEA: AUCTION TO BE HELD ON OUTSTANDING CDS TRANSACTIONS , Greece - Round III, In Which We Learn That Greek Debt Actually INCREASED Post-Default Durden 3-9-12 , The 18 Most Important Names For The Rally To Be Sustained Durden 3-9-12 While everyone is focused on AAPL, or tech names, or energy sector growth, or multiple expansion as the driver of the next leg up in stocks, we take a slightly different tack. US equities are back above the highs of last year while US investment grade credit markets are still well below their best levels of last year. Until credit markets come along for the exuberant ride, and buy into the recovery/growth/no-tail-risk story we will not see a sustained rally (no matter how much fiat currency devaluation is undertaken) and as BARCAP notes today, there are 18 names that account for more than 50% of the discrepancy between equity's ebullience and credit curmudgeon-ness. Of these 18 names, 13 are financials (unsurprisingly) and indeed these are among the most liquid credits traded. So if you are bullish on a sustainable recovery, buying these credits seems the best high beta 'value' trade while bears should continue to watch the lack of confirmation of USD/fiat-numeraired equity market enthusiasm by risk-based credit markets. , Part Time Workers Celebrate The Recovery With Soaring Gun Purchases Durden 3-9-12 Following continued strength in earnings (and analyst upgrades), Smith & Wesson is up 23% this morning (near three year highs). It seems all those freshly printed temporary workers are spending their hard-earned minimum wage on 'defense' instead of iPads , Why JPM Sees A "Lot More Printing" By The ECB Durden 3-9-12 While the catalyst for much of the recent rally in risk assets seems to have been on the back of Europe clambering back from the edge of the abyss (and admittedly hope for better global growth and US decoupling), JPMorgan's Michael Cembalest notes that Europe remains very much an Achilles Heel going forward. With former ECB member Stark's recent comments on the already 'shocking' quality of the ECB's balance sheet, it is the outflows (or net balance of payments) from the periphery that means the ECB will simply have to keep printing. , Guest Post: Our "Let's Pretend" Economy: Let's Pretend "Job Growth Is Best Since 2006" Durden 3-9-12 The Ministry of Propaganda and its media minions are announcing that "job growth is on a tear" and the "best growth since 2006." How about we look under the hood of the employment euphoria? Here is an example of the Ministry's work: Best U.S. employment growth in 12 years Almost all the data agree — labor market’s on a tear.Over the past six months, the number of people who are employed has risen by 2.3 million — an average of 385,000 per month. That’s the best growth since early 2000, when the dot-com bubble was in full flower. Since August, the unemployment rate has fallen by 0.8 of a percentage points, to 8.3%. For adults over 25, the jobless rate has fallen to 7%.In other words, people who generally work full time so they don't have to share a bunk in a flop house or live in their parents' basement are almost fully employed, as 'full employment" typically generates an unemployment rate of 5% just due to churn. Would we as a nation be better off dealing with the truth rather than believing fantasies that prop up the Status Quo and the Fed's dearly beloved measure of the economy, the stock market? How often does accepting illusion help us navigate real life? Short answer: never. , Guest Post: Backing Into World War III? Durden 3-9-12 According to the doctrine of pre-emptive war, Iran can be attacked based on its alleged desire to develop nuclear weapons, just as Iraq was attacked in 2003. In fact, Congress is currently debating whether a nuclear capability alone (which Brazil, Japan, and other countries enjoy) could justify the 'preventive' attack. I believe it is time to negate this doctrine by postulating that Iran in fact has a right, as a sovereign nation, to a nuclear capability. Having traveled to Iran recently, I can attest to the Joint Chiefs' General Dempsey's reference to Iran as a 'rational' actor. The Iranians have no interest in destroying America, or Israel, at the expense of one of the oldest continuous civilizations in the world, dating back about 2600 years. Iran is currently surrounded by over 40 U.S. military installations, not counting Israel's still-unaccounted nuclear arsenal. To assert that Iran would jeopardize its culture for a one-shot nuclear attack is a complete miscalculation of the Iranian spirit; that spirit gave rise to a revolution in 1979 against what they perceived as Anglo-American imperialism in the form of the Shah, much as our own revolution opposed British imperialism.