Posts Tagged ‘European banks’

European Banks Still on the Brink

European Banks Still on the Brink

european banksCourtesy of MIKE WHITNEY writing at CourterPunch 

The EU banking system is in big trouble. That’s why European Central Bank (ECB) head Jean-Claude Trichet continues to purchase government bonds and provide "unlimited funds" for underwater banks. It’s an effort to prevent a financial system meltdown that could wipe out bondholders and plunge the economy back into recession.

"We have the best track record on price stability over 11 1/2 years in Europe and among the legacy currencies,” Trichet recently boasted. “What we have done and what we do with the same purpose is to help restore an appropriate functioning of the monetary-policy transmission mechanism.”

Nonsense. EU banks and other financial institutions are presently holding more than 2 trillion euros of public and private debt from Greece, Spain and Portugal. All three countries are in deep distress and face sharp downgrades on their sovereign debt. The potential losses put large parts of the EU banking system at risk. Trichet knows this, which is why he continues to support the teetering system with "unlimited funds". It has nothing to do with restoring the "functioning of the monetary-policy transmission mechanism". That’s deliberately misleading. It is a straightforward bailout of the banks.

Imagine that you are deeply in debt, but the bank offers to lend you as much money as you need to keep you from bankruptcy. To help maintain appearances, the bank agrees to accept the worthless junk you’ve collected in your attic in exchange for multi-million dollar loans. Does the bank’s participation in this charade mean that you are not really broke after all? Does it increase the value of the garbage collateral you’ve exchanged for cash?

The ECB is providing billions of euros per week to maintain the illusion that the market is wrong about the true value of the bonds. But the market is not wrong, the ECB is wrong. The value of Greek bonds (for example) has dropped precipitously. They are worth less, which means the banks need to take a haircut and write down the losses. More liquidity merely hides the problem.

This is from Reuters:

"Despite the open-arms approach, outstanding ECB lending has fallen more than a third since the start of July to 592 billion euros…. Liquidity remains abundant though. Over 120 billion euros was deposited back at the ECB overnight, the latest figures show."

So, overnight…
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7 Out of 91 European Banks Fail Toothless (Read: Useless) Stress Tests

7 Out of 91 European Banks Fail Toothless (Read: Useless) Stress Tests

Courtesy of Jr. Deputy Accountant 

First the results.

NYT:

Seven of Europe’s 91 largest banks would struggle to survive an unexpected decline in economic growth or a sharp deterioration in the value of European government bonds, and will need to raise more capital, regulators said Friday in releasing results of closely watched bank stress tests.

Banks to flunk were Hypo Real Estate, a bank based in Munich that is already government-owned after a bailout, ATEBank of Greece and five Spanish savings banks.

Several other banks passed the test, but narrowly enough that they may also face market pressure to increase their reserves. That group included Postbank, one of Germany’s biggest publicly traded banks, which is 25 percent owned by Deutsche Bank.

Like our own stress tests last year, European regulators came up with a few different scenarios, one of which was supposed to mirror sovereign default. The problem being it doesn’t exactly do that. 

Business Week:

In the last scenario, banks will publish their estimated losses on sovereign debt held in their trading book as well as “additional impairment losses on the banking book” that they may suffer after a sovereign debt crisis, according to the document dated July 15.

Under accounting rules, banks have to adjust the value of sovereign bonds held in the trading book according to changes in market prices, said Konrad Becker, a financial analyst at Merck Finck & Co. in Munich. For government debt held in the banking book, lenders must write down their value only if there is serious doubt about a state’s ability to repay its debt in full or make interest payments, he said.

The sovereign-shock scenario doesn’t assume a European nation will default, said a person with knowledge of the matter, who spoke on the condition of anonymity because the information is private. Instead, it will assume that rising government-bond yields will push up borrowing costs, spurring defaults in the private sector that would lead to losses in lenders’ banking books, said the person.

Ambrose Evans-Pritchard already called the tests toothless over at the Telegraph. I say that’s being kind.

Again, when we did the whole stress test thing last year the numbers were strange and scenarios incredibly optimistic. Since Treasury had to act sketchy about what they were up to,…
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European Banks Prepare For €1 Trillion Debt Rollover Tidal Wave

European Banks Prepare For €1 Trillion Debt Rollover Tidal Wave

By Ambrose Evans-Pritchard, courtesy of Clusterstock/Business Insider    

From The Telegraph:

European banks need to roll over €1 trillion (£877bn) of debt over the next two years at a much higher cost and in direct competition with hungry sovereign states, according to a report by Morgan Stanley.

The bank has advised clients to prepare for chillier times as monetary tightening begins in the US and China, causing major spill-over effects in Europe.

Roughly €560bn of EU bank debt matures in 2010 and €540bn in 2011. The banks will have to roll over loans at a time when unprecedented bond issuance by governments worldwide risks saturating the debt markets. European states alone must raise €1.6 trillion this year.

Read more at The Telegraph>>

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Zero Hedge

Donald Trump Explains His Immigration Policy - Live Feed

Courtesy of ZeroHedge. View original post here.

Following what even the mainstream media sheepishly admitted was a relatively successful trip across the border to meet with Pena Nieto this afternoon, Donald Trump is about to unveil his all-new - perhaps slightly softer on the rhetoric side - immigration policy (in an attempt to put to rest weeks of uncertainty).

So far the media's reaction can be summarized thus...

...



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ValueWalk

Dividend Safety Analysis: Southern Company (SO)

By Simply Safe Dividends. Originally published at ValueWalk.

This week, I will be taking a look at the dividend safety of Southern Company (SO). If there are other companies you would like me to analyze for dividend safety, please leave a comment at the bottom of this article.

My full thesis on Southern can be seen here, but I will be focusing on the company’s Dividend Safety Score in this article.

Before analyzing Southern’s dividend, let’s review how the company makes money. After all, the most effective investors understand that one of the best pieces of investing advice is to only invest in simple, easy-to-understand businesses.

...

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Phil's Favorites

Hillary's Approval Rating Plunges to Record Low, Neck and Neck With Trump

Courtesy of Mish.

Hillary Clinton’s approval rating has plunged in the past few weeks to an all-time low.

56% have an unfavorable opinion of Hillary and only 41% have a favorable opinion.

Among registered voters, 59% hold an unfavorable opinion. That’s neck-and-neck with Trump at 60%.

The Washington Post reports A record number of Americans now dislike Hillary Clinton.

Hillary Clinton hit her stride after the Democratic National Convention, riding to a double-digit lead over Donald Trump in some national ...



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Chart School

Moving Averages: August Month-End Update

Courtesy of Doug Short's Advisor Perspectives.

The S&P 500 closed August with a monthly loss of 0.12% after a gain of 3.56% last month, its first monthly loss since February. All three S&P 500 MAs are signaling "invested" and all five Ivy Portfolio ETF MAs are signaling "invested".. In the table, monthly closes that are within 2% of a signal are highlighted in yellow.

The Ivy Portfolio

The above table shows the current 10-month simple moving average (SMA) signal for each of the five ETFs featured in The Ivy Portfolio. We've also included a table of 12-month SMAs for the same ETFs for this popular alternative strategy.

For a ...



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Market News

News You Can Use From Phil's Stock World

 

Financial Markets and Economy

Why September Could Be Huge for Markets All Around the World (Bloomberg)

The first debate of the U.S. presidential campaign. A Group of 20 (G20) central bank interest rate announcement nearly every other trading day. And a key meeting among commodity nations around the world.

Treasury Secretary Lew Criticizes EU Decision to Issue Apple $14.5 Billion Tax Bill (The Wall Street Journal)

WASHINGTON—U. S. Treasury Secretary Jacob Lew took the European Union to task Wednesday for its decision to ...



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Kimble Charting Solutions

Gold Miners, slipping below steep rising support

Courtesy of Chris Kimble.

Gold miners have had a great run this year. They could be losing grip on key support of late!

Below looks at the Gold & Silver mining index (XAU) over the past decade.

CLICK ON CHART TO ENLARGE

I like to keep an eye on the XAU index because it is the oldest mining index in the states and it includes both Gold & Silver mining stocks. 

T...



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OpTrader

Swing trading portfolio -week of August 29th, 2016

Reminder: OpTrader is available to chat with Members, comments are found below each post.

 

This post is for all our live virtual trade ideas and daily comments. Please click on "comments" below to follow our live discussion. All of our current  trades are listed in the spreadsheet below, with entry price (1/2 in and All in), and exit prices (1/3 out, 2/3 out, and All out).

We also indicate our stop, which is most of the time the "5 day moving average". All trades, unless indicated, are front-month ATM options. 

Please feel free to participate in the discussion and ask any questions you might have about this virtual portfolio, by clicking on the "comments" link right below.

To learn more about the swing trading virtual portfolio (strategy, performance, FAQ, etc.), please click here ...



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Biotech

Epizyme - A Waiting Game

Reminder: Pharmboy is available to chat with Members, comments are found below each post.

Epizyme was founded in 2007, and trying to create drugs to treat patient's cancer by focusing on genetically-linked differences between normal and cancer cells. Cancer areas of focus include leukemia, Non-Hodgkin's lymphoma and breast cancer.  One of the Epizme cofounders, H. Robert Horvitz, won the Nobel Prize in Medicine in 2002 for "discoveries concerning genetic regulation of organ development and programmed cell death."

Before discussing the drug targets of Epizyme, understanding epigenetics is crucial to comprehend the company's goals.  

Genetic components are the DNA sequences that are 'inherited.'  Some of these genes are stronger than others in their expression (e.g., eye color).  Yet, some genes turn on or off due to external factors (environmental), and it is und...



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Digital Currencies

Man Who Introduced Millions to Bitcoin Says Blockchain Is a Bust

 

Man Who Introduced Millions to Bitcoin Says Blockchain Is a Bust 

By  at Bloomberg

Excerpt:

Stefan Thomas, who introduced millions of people to bitcoin, has had a change of heart.

Blockchain, the ledger software that makes the digital currency possible...



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Mapping The Market

Illusion of Choice

From Jean-Luc:

Looks like we are down to about 10 companies for our consumer goods:

http://www.visualcapitalist.com/illusion-of-choice-consumer-brands/

Just like banks, airlines and cable companies! 

The Illusion of Choice in Consumer Brands

Explore the full-size version of the above graphic in all its glory.

If today’s infographic looks familiar, that’s because it originates from a well-circulated report that Oxfam International puts together to show consolidation i...



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All About Trends

Mid-Day Update

Reminder: Harlan is available to chat with Members, comments are found below each post.

Click here for the full report.




To learn more, sign up for David's free newsletter and receive the free report from All About Trends - "How To Outperform 90% Of Wall Street With Just $500 A Week." Tell David PSW sent you. - Ilene...

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PSW is more than just stock talk!

 

We know you love coming here for our Stocks & Options education, strategy and trade ideas, and for Phil's daily commentary which you can't live without, but there's more!

PhilStockWorld.com features the most important and most interesting news items from around the web, all day, every day!

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Help One Of Our Own PSW Members

"Hello PSW Members –

This is a non-trading topic, but I wanted to post it during trading hours so as many eyes can see it as possible.  Feel free to contact me directly at jennifersurovy@yahoo.com with any questions.

Last fall there was some discussion on the PSW board regarding setting up a YouCaring donation page for a PSW member, Shadowfax. Since then, we have been looking into ways to help get him additional medical services and to pay down his medical debts.  After following those leads, we are ready to move ahead with the YouCaring site. (Link is posted below.)  Any help you can give will be greatly appreciated; not only to help aid in his medical bill debt, but to also show what a great community this group is.

http://www.youcaring.com/medical-fundraiser/help-get-shadowfax-out-from-the-darkness-of-medical-bills-/126743

Thank you for you time!




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