Millennials: Read this

Every year the Swiss banking giant Credit Suisse publishes a detailed report about Global Wealth.
And while drawing conclusions about ‘wealth’ (i.e. ‘net worth’) for the world’s 7.6 billion people is far from an exact science, the report routinely offers some interesting insights and trends.
This year’s report was just released this morning.
As an interesting finding, researchers noted that at the early part of this millennium, between 2000 and 2008, the wealth of the POOREST 50% of people in the world actually climbed at a HIGHER rate than everyone else.
And over that same period, the share of global wealth owned by the top 1% actually declined.

This post was published at Sovereign Man on November 14, 2017.

Wall Street Banks Sued Again for Conspiring to Control a Market

As summer draws to a close and the Wall Street titans enjoy the last of their lazy long weekends in the Hamptons, summering next door to the army of lawyers that keep them out of jail, it’s a curious time to be reading about a major new lawsuit that has the potential to shake Wall Streeters right down to their Gucci loafers. The charges include conspiracy to restrain trade in violation of the Sherman Act and unjust enrichment in a $1.7 trillion market.
Since the Senate hearings of the early 1930s, which examined the Wall Street practices and conspiracies that led to the 1929-1932 stock market collapse and Great Depression, there have been rumblings that Wall Street’s system for lending stock for traders to short is a viper’s nest of ripoffs. Now two major law firms, Quinn Emanuel Urquhart & Sullivan and Cohen Milstein are suing six of the largest Wall Street banks, alleging that they illegally colluded in this market. The defendants are the usual suspects: JPMorgan Chase, Goldman Sachs, Bank of America, Morgan Stanley, Credit Suisse, UBS and their stock lending units. (The only surprise here is that Citigroup is not named.)
You know there’s some high minded legal talent involved when the lawsuit quotes Tolstoy. The plaintiffs’ lawyers tell the Federal Court:
‘To paraphrase Tolstoy, all efficient markets resemble one another, but each inefficient market is inefficient in its own way. This case concerns a market variously called the ‘stock loan,’ ‘stock lending,’ or ‘securities lending’ market. It is one of the largest and most important financial markets that exists in the world today. Unlike many other financial markets, the stock loan market has not evolved to reflect the ways in which modern technology can facilitate efficient and transparent electronic trading. Instead, the stock loan market remains an inefficient, antiquated, and opaque over-the-counter (‘OTC’) trading market dominated by large dealer banks, principally the Prime Broker Defendants. These banks have structured the market in such a way that they take a large cut of nearly every stock loan trade that is made. This arrangement is good for the Prime Broker Defendants. But it is bad for virtually everyone else, including the class members in this case.’

This post was published at Wall Street On Parade on August 22, 2017.

Credit Suisse: Customer Blowback Over Starbucks’ Refugee Hiring Spree Could Crush Same Store Sales

A few weeks ago we wrote about how the controversial decision of Starbucks’ CEO Howard Schultz to hire 10,000 refugees, a clear shot at the Trump administration’s immigration policies, seemingly backfired as his “brand perception” took a sudden and massive hit, a clear signal once again that coffee drinkers would prefer to not have a side of political propaganda with their $5 morning java (see “Starbucks’ ‘Brand Perception’ Takes A Massive Hit After Announcing Plans To Hire 10,000 Refugees“).
Now, Credit Suisse’s Restaurant team, led by Jason West, is warning that Schultz’s latest attempt to cram his political opinions down the throats of his customers could cause the company to miss upcoming same-store-sales estimates.
We have analyzed online ‘net sentiment’ data (positive vs. negative online mentions) provided by NetBase to gauge changes in Starbucks’ brand perception. This follows recent media reports that SBUX’s decision to hire 10,000 refugees over the next five years could have upset some customers, perhaps negatively impacting sales trends. Our work shows a sudden drop in brand sentiment following announcement of the refugee hiring initiative on Jan. 29th, to flattish from a run-rate of ~ 80 (on an index of -100 to 100). Net sentiment has since recovered, but has seen significant volatility in recent weeks. While this is only one data point, the analysis leaves us incrementally cautious on SBUX’s ability to meet consensus US SSS forecasts, which call for SSS to accelerate from 3% in F1Q17 (Dec. qtr.) to ~ 3.5% in F2Q and ~ 5.5% in 2H17.

This post was published at Zero Hedge on Mar 10, 2017.

The Global War on Cash Is Here – This Is How to Fight Back

The intensifying global war on cash is destined to give the government more control over your money than ever.
Evidence that most of the world’s governments are working toward a ‘cashless society’ has mounted over the past couple of years.
The latest government to launch a major assault in the global war on cash was India. This could foreshadow what’s to come in the United States…
This Is What a Government War on Cash Looks Like
In November, Indian Prime Minister Narendra Modi shocked his citizens by announcing a plan to ban existing 500- and 1,000-rupee notes.
These aren’t high denominations – 500 rupees is $7.37, while 1,000 rupees is $14.75. Together the two bills accounted for 86% of India’s cash in circulation.
Credit Suisse has estimated that more than 90% of consumer transactions in India are made in cash.
‘We can gradually move from a less-cash society to a cashless society,’ Modi said.
Modi gave his citizens until the end of 2016 to exchange the old banknotes – now no longer spendable – for new ones. But there was a shortage of the new bills. People were waiting in long lines at ATMs and bank branches, often to be disappointed as supplies of the new banknotes ran out.

This post was published at Wall Street Examiner on January 4, 2017.

Credit Suisse Settles With DOJ For $5.3 Billion; Will Pay $2.5 Billion Civil Penalty

As the FT first reported yesetrday, in a dramatic development for Sino-US relations, Trump picked Peter Navarro, a Harvard-trained economist and one-time daytrader, to head the National Trade Council, an organization within the White House to oversee industrial policy and promote manufacturing. Navarro, a hardcore China hawk, is the author of books such as “Death by China” and “Crouching Tiger: What China’s Militarism Means for the World” has for years warned that the US is engaged in an economic war with China and should adopt a more aggressive stance, a message that the president-elect sold to voters across the US during his campaign.

This post was published at Zero Hedge on Dec 23, 2016.

Deutsche Bank’s CoCo Bonds Speak of Fear of the Worst

The fine that broke the bank? Deutsche Bank investors just can’t catch a break. They keep thinking that shares have dropped so low that it’s time to grab them. Herd instinct sets in, and this buying perks up the shares. Then the bank’s sins once again come to the foreground. And what investors had grabbed was a falling knife, and fingers are now getting sliced off.
Early morning on Friday in Frankfurt – in the US, Thursday after the markets had closed, a strategic time for bad news – Deutsche Bank announced that the US Justice Department was trying to wring $14 billion out it. The fine is based on the investigation into mortgage backed securities that the bank had rolled into complex toxic products and sold to unsuspecting investors between 2005 and 2007, just before the Financial Crisis.
The Justice Department already nailed other banks for it and extracted large fines; and it’s still investigating some banks, including UBS, Credit Suisse, Royal Bank of Scotland, and Barclays – which saw their shares get pummeled today.

This post was published at Wolf Street on September 16, 2016.

As Deutsche Bank Comes Unglued, its CoCo Bonds Plunge

The fine that broke the bank? Deutsche Bank investors just can’t catch a break. They keep thinking that shares have dropped so low that it’s time to grab them. Herd instinct sets in, and this buying perks up the shares. Then the bank’s sins once again come to the foreground. And what investors had grabbed was a falling knife, and fingers are now getting sliced off.
Early morning on Friday in Frankfurt – in the US, Thursday after the markets had closed, a strategic time for bad news – Deutsche Bank announced that the US Justice Department was trying to wring $14 billion out it. The fine is based on the investigation into mortgage backed securities that the bank had rolled into complex toxic products and sold to unsuspecting investors between 2005 and 2007, just before the Financial Crisis.
The Justice Department already nailed other banks for it and extracted large fines; and it’s still investigating some banks, including UBS, Credit Suisse, Royal Bank of Scotland, and Barclays – which saw their shares get pummeled today.

This post was published at Wolf Street on September 16, 2016.

US Futures; Euro Stocks Slide On Deutsche Bank Liquidity Fears; Bonds Bid

Following yesterday’s paradoxical S&P surge catalyzed by a bevy of dreadful economic news, the overnight session has seen some good old “risk off” mood which first hit European shares as a result of the previously reported $14 billion DOJ claim against Deutsche Bank, which sent Europe’s biggest bank tumbling, dragging the banking sector lower, while a continued drop in the price of oil pushed energy companies lower, and then spilling over to US equity futures which were down 10 points at last check.
In early trading, DB was trading down around 8%, while Deutsche Bank’s 1.75 billion of 6% additional Tier 1 bonds, the first notes to take losses in a crisis, fell 4 cents to 79 cents. The bank’s 650 million pounds of 7.125% notes dropped 5 pence to 81 pence on the pound on concerns the bank may be forced to shore up billions more in liquidity.
‘The Deutsche Bank news kind of rattled markets,’ said Jasper Lawler, an analyst at CMC Markets in London. ‘It just goes to show that we’re still dealing with the same old headwinds: this low-interest rate environment, which will go on for a while, and the regulatory scrutiny.’
“None of the European banks has settled with the DOJ on RMBS yet so Deutsche Bank is the first to enter negotiations with Barclays, UBS, Credit Suisse and RBS also facing this issue,’ RBC analyst Fiona Swaffield said in note. ‘We would expect Deutsche Bank’s final settlement to be significantly below the starting negotiation amount as seen at other banks although it remains uncertain where the final settlement will end up and the final impact on the capital ratios. Resolving this issue remains key for Deutsche Bank as it will give more clarity on capital, although there are a number of other moving parts – namely the Russian equities investigation and also the IPO of Postbank.’

This post was published at Zero Hedge on Sep 16, 2016.

More On Yesterday’s New Home Sales Fraud

As I detailed yesterday – LINK – yesterday’s new home sales report was complete fiction. Notwithstanding all of the other statistical manipulations that go into the Government’s Seasonally Adjusted Annualized Rate of sales metric, including flawed data sampling, Mark Hanson – who does cutting edge housing market analysis – reduced yesterday’s new home sales report to its essence:
A rounded 4,000 more homes sold on a Not Seasonally Adjusted basis than in June, ALL from the Southern region. This added up to a massive 72,000 month to month and 114,000 year over year Seasonally Adjusted Annualized Rate surge and headlines of ’9-year highs,’ all due to bogus seasonal adjustments that should not have applied due to the number of weekends in the month…’ – Mark Hanson, M Hanson Advisors
The 4,000 more homes sold in the South month to month more than likely results from flawed data collection, for which the Census Bureau is notorious. But even assuming that the number is good, the Government’s ‘seasonal adjustment’ sausage grinder translated that into 72,000 more homes sold in July vs June and 114,000 year over year on a Seasonally Manipulated Annualized Rate basis.
Not to pile on to what now should be the obvious fact that the Government’s new home sales report is not more credible than its employment report – both for which the Census Bureau collects the data – Credit Suisse published research earlier in this month for July in which its market surveys showed that:

This post was published at Investment Research Dynamics on August 24, 2016.

This Week’s Main News From The Oil Sector

For those who need a quick and easy recap of all the main events that took place in the oil and gas services sector, here it is courtesy of Credit Suisse’s James Wicklung who present the various “things we’ve learned this week.“
* * *

You Will Get Nothing and Like It. According to Bloomberg, in the final gathering of OPEC officials prior to the June 2 meeting, no discussions of a production cut took place. Officials at the meeting concurred with OPEC’s most recent research report that supply and demand will start to balance in the second half 2016.
Foot on the Gas. Sunday, Iranian Deputy Oil Minister Rokneddin Javadi noted that the country has no plans to slow oil production, saying, “Currently, Iran’s crude oil exports, excluding gas condensates, have reached 2M bpd; Iran’s crude oil export capacity will reach 2.2M barrels by the middle of summer.” Prior to economic sanctions, Iran produced 4.5M bpd, which is down from peak production of ~7M bpd in the 1970s.
Time for a Change. Volatile oil and natural gas prices have accelerated planning by energy executives to change their business models; KPMG Global Energy Institute said in a May 24 release of annual survey results of US senior energy executives. Of more than 150 executives responding, 94% said commodity pricing coupled with the regulatory environment will require significant changes to their business models in 3-5 years. Executives said their top organizational priorities for the next 2 years are developing new growth strategies and implementing changes to their business models. When asked about mergers and acquisitions, 92% of respondents expect to be involved in a merger or acquisition in 2 years with 38% saying asset acquisitions are more likely than acquiring an entire company. Slightly more than half of oil and gas executives surveyed, about 51%, said they believe restructuring or bankruptcies primarily will drive acquisitions. Companies see the best way to remain competitive is by focusing on capital spending efficiency. ‘This new lower-for-longer commodity pricing environment has made it necessary for energy executives to devise new ways get access to capital,’ said KPMG, adding that executives listed an unstable price environment as the leading factor hindering growth over the next year.

This post was published at Zero Hedge on 05/27/2016.

JANET YELLEN MEETS WITH OBAMA IN EMERGENCY MEETINGS AS CRISES ERUPT WORLDWIDE

The Credit Suisse Fear Barometer just hit an all-time high as reports circulated through the alternative media that Barack Obama discussed the imposition of martial law when he and Vice President Joe Biden met with Yellen on Monday in an ‘emergency meeting.’
The reports may be exaggerated but not the crisis-like feel of the meetings. This was reportedly a first: having the president and VP meeting directly with the Fed head. Does it have something to do with the ‘survival of the government’ at a time when the US banking system may be facing a general default? According to some reports: ‘Members of the House and Senate are said to have been ‘up all night’ in discussions and meetings; with floods of phone calls back and forth. ‘

This post was published at Dollar Vigilante on APRIL 12, 2016.

Behold The European Recovery: Deutsche Bank To Fire 25% Of All Workers

Deutsche Bank has witnessed an exodus of executives this year in what’s been a tough stretch for the German lender. Here’s a brief recap of the bank’s recent trials and travails for those who need a refresher:
The bank, which has paid out more than $9 billion over the past three years alone to settle legacy litigation, has become something of a poster child for corrupt corporate culture. In April, Deutsche settled rate rigging charges with the DoJ for $2.5 billion (or about $25,474 per employee) and subsequently paid $55 million to the SEC (an agency that’s been run by former Deutsche Bank employees and their close associates for years) in connection with allegations it deliberately mismarked its crisis-era LSS book to the tune of at least $5 billion.
But it was out of the frying pan and into the fire so to speak, because early last month, the DoJ announced it would seek to extract a fresh round of MBS-related settlements from banks that knowingly packaged and sold shoddy CDOs in the lead up to the crisis. JP Morgan, Bank of America, and Citi settled MBS probes when the DoJ was operating under the incomparable (and we mean that in a derisive way) Eric Holder but now, emboldened by her pyrrhic victory over Wall Street’s FX manipulators, new Attorney General Loretta Lynch is set to go after Barclays PLC, Credit Suisse Group AG, Deutsche Bank AG, HSBC Holdings PLC, Royal Bank of Scotland Group PLC, UBS AG and Wells Fargo & Co.

This post was published at Zero Hedge on 09/14/2015.

What’s Really Behind the Flash Crash Trader Prosecution?

The Justice Department’s case against the 36 year old lone bedroom trader in the U. K., Navinder Singh Sarao, has now been thoroughly discredited by every Wall Street veteran who has studied it, most pointing out that what Sarao did is happening every second that Wall Street is open for business. Business writers at the New York Times, Financial Times, Newsweek, and Bloomberg View have given the charges an unequivocal thumbs down.
The Justice Department’s complaint itself is unusual. It consists of a one page complaint cover sheet followed not by a detailed breakdown of the counts but by an affidavit from an FBI agent. The case is filed in the Federal District Court in the Northern District of Illinois but no U. S. Attorney or Assistant U. S. Attorney from that district has signed this complaint. The names listed at the top of the first page, more as a reference since they have not signed any part of this complaint, are Department of Justice Fraud Section Assistant Chief Brent S. Wible and Fraud Section Trial Attorney Michael T. O’Neill. Both show phone numbers with the 202 area code, meaning this case came out of the Washington, D. C. office of the Justice Department, not the Northern District of Illinois where the futures market that Sarao is charged with manipulating is located.
The case is based largely on analysis from an unnamed ‘consulting group’ and a ‘professor and academic researcher who studies and has written extensively on financial markets and algorithmic trading.’ Given the public drubbing of this case, that professor is now likely climbing deeper into his hole of anonymity.
Add all of the above to the fact that the case is coming out of the blue, five long years after the Flash Crash of May 6, 2010, and after regulators had already fingered mutual fund company Waddell & Reed as the key culprit in their lengthy report of 2010, and you are left with the highly intriguing question as to what the real motivation is for the Justice Department to go out on such a precarious limb with this case.
Four schools of thought come readily to mind. First is that the Justice Department wants to frighten off the tens of thousands of solo day traders who are jazzing up pre-packaged software and periodically beating the Wall Street big boys at their own game of spoofing and layering. Next is that Sarao may be some kind of genius trader or software developer and Wall Street wants him extradited to deploy his talents on this side of the pond. Third, there may be more to the FBI’s case than we know: for example, why was a mega global bank like Credit Suisse financing Sarao’s trading. Was there more to this relationship than is presently known? And, finally, elements of all three of the above scenarios may be in play. We’ll look at each of the first three elements separately.
READ MORE

This post was published at Wall Street On Parade By Pam Martens and Russ Marte.

Credit Suisse bosses pay price for big fines

Credit Suisse chief executive Brady Dougan has agreed to give up 20% of his bonus after the bank’s $2.8 billion (CHF2.5 billion) tax evasion fine last year. His fellow executives will take the same cut while directors have agreed to slash their pay by a quarter.
But top bosses are not the only staff to feel the consequences of the United States prosecution. Total compensation at the bank fell 9% last year, partly as a result of the financial sanctions, Credit Suisse announced as it released 2014 earnings.
In a pre-recorded video interview, Dougan praised the bank’s staff for “working through this issue”. He added that the voluntary pay cut decision at executive and board level was taken “in order to reflect the impact of the settlement on the overall results of the firm.”

This post was published at SwissInfo

Occupied by Wall Street Part 2 – Creating CLOs to Bypass Regulations

Leon Black’s Apollo Global Management LLC, Carlyle Group LP and a unit of Credit Suisse Group AG have all taken steps in the past two months to create CLOs now that they may be able to refinance after the rules take effect in December 2016 without having to comply with the new regulations, according to three people with knowledge of the matter. The firms are trying to avoid a requirement to hold a stake in the funds they manage.
– From the Bloomberg article: Wall Street Creating CLOs That May Bypass Rules: Credit Markets
As the U. S. inches closer to a cyclical downturn within the secular theft up-cycle known as the oligarch recovery, the craftiest of financial oligarchs will be scurrying to position themselves as beneficially as possible while not missing out on any crumbs that remain ripe for the taking. As such, it behooves us all to pay increasingly close attention to their shenanigans. In this regard, we have some excerpts from the following Bloomberg article:
(Bloomberg) – Wall Street has another rule it’s trying to get around: regulations seeking to limit risk-taking by managers of collateralized loan obligations.
Leon Black’s Apollo Global Management LLC, Carlyle Group LP and a unit of Credit Suisse Group AG have all taken steps in the past two months to create CLOs now that they may be able to refinance after the rules take effect in December 2016 without having to comply with the new regulations, according to three people with knowledge of the matter. The firms are trying to avoid a requirement to hold a stake in the funds they manage.

This post was published at Liberty Blitzkrieg on Jan 29, 2015.

Look Who’s Dragging Down the Global Economy Though No One Is Allowed to Say it

‘A bit of inequality is good as it creates incentives for hard work and rewards entrepreneurship,’ explained Mohamed El-Erian, Chief Economic Advisor of Allianz and former CEO of PIMCO. ‘Lots of inequality is bad, disenfranchises segments of society, and erodes the social fabric,’ he said, joining the chorus of voices that have been lamenting income and wealth inequality as an economic problem.
But none of these voices dare to mention the cause – though they all know it. And we just got numerical confirmation.
Hundreds of millions of people have been lifted out of abject poverty over the last two decades, mostly in Asia. In that respect, inequality has been reduced. But on a national level, ‘you get a different picture,’ El-Erian said in the interview published on Monday:
Whether in the US, Brazil or China: there has been a significant increase in both income and wealth inequality, and so much so that it is now affecting access to equal opportunities. The minute you start talking about opportunities, you start making it a much deeper problem and harder to solve.
‘Social cohesion is at risk,’ said Allianz Chief Economist Michael Heise in the same interview. ‘That is a danger for industrialized and developing countries alike. In recent times we have seen social upheavals and conflicts where poverty played a major role.’
As if they’d coordinated this, Oxfam, a non-profit that works in over 90 countries, published a research report on Monday that found that the richest 1% have been on a global wealth-grab. In 2008, the 99% still owned 56% of global wealth, based on data from Credit Suisse, whereas the 1% owned 44%. Then the Financial Crisis happened. It impacted both groups in similar proportions, and there was no change in 2009. But 2010 was the ‘inflection point,’ when the 1% started grabbing an ever larger share of global wealth, while the 99% began to lose their grip. By 2014, the 99% was down to 52% of global wealth, the bottom 80% owned a measly 5.5%, but the top 1% had squirreled away 48%.

This post was published at Wolf Street by Wolf Richter ‘ January 20, 2015.

American Upper Middle Class Share of Wealth is Worse than Every Country Besides Russia and Indonesia

One of Liberty Blitzkrieg’s most popular posts in 2013 was titled: How Does America’s Middle Class Rank Globally? #27. Here’s an excerpt:
We are number 1 right? USA! USA! No one can beat our wealth creation machine, our economic dynamism, our level playing field and our bastions of higher education. We have a middle class that is the envy of the world, right?
Well, like so much of the ‘American dream’ we have been force fed for a generation or more, this perception is not based in reality whatsoever. Sure it may have been the case for a couple of decades immediately after World War 2. Before the military-industrial-Wall Street complex fully took over the political process, but it certainly isn’t true any longer. Myths die hard and this one is particularly pernicious because it prevents people from changing things.
The data in that article was based on a comprehensive study published by Credit Suisse titled Global Wealth Data Book. Well, the 2014 version is now out, and the results are not pretty.
Paul Buchheit has crunched the numbers, and highlighted some of his conclusions here. Here is some of what he found:
A recent posting detailed how upper middle class Americans are rapidly losing ground to the one-percenters who averaged $5 million in wealth gains over just three years. It also noted that the global 1 percent has increased their wealth from $100 trillion to $127 trillion in just three years.
The information came from the Credit Suisse 2014 Global Wealth Databook (GWD), which goes on to reveal much more about the disappearing middle class.

This post was published at Liberty Blitzkrieg on Nov 6, 2014.