We’re Now In The Eye Of The Perfect Storm: Europe’s Banking System Is Breaking Down Again, APPLE Is Following An Ominous Path, China Trust Loans Jump Sevenfold, And Several Measures Of Market Sentiment Are Now Hitting Extremes

Europe’s Banking System Is Breaking Down Again

Greece’s four largest banks need to boost their capital by 27.5 billion euros ($36.3 billion) after taking losses from the country’s debt swap earlier this year, the largest sovereign restructuring in history.


National Bank of Greece SA, the country’s biggest lender, needs to raise 9.8 billion euros, according to an e-­?mailed report by the Athens-­?based Bank of Greece (TELL) today. Eurobank Ergasias SA (EUROB) needs 5.8 billion euros, Alpha Bank (ALPHA) needs 4.6 billion euros and Piraeus Bank SA (TPEIR) needs 7.3 billion euros, according to the report. Total recapitalization needs for the country’s banking sector amount to 40.5 billion euros, the report said.

source: bloomberg.

US taps pension fund to avoid passing debt limit

Why The Entire Bond Universe Looks Toxic In 2013


Bond Bubble Will Be Bigger Catastrophe than Real Estate Bust – Doug Casey

We’re now in the eye of the storm, which was created by these governments creating trillions of currency units. I think 2013 we’re going to come out through the trailing edge of the storm, & it’s going to be much worse & much longer than what we saw in 2008.”


George Soros, SDR, US Dollar and Gold: Time For A New Reserve Currency

Let’s rephrase: the US trade deficit is by design, and it was sustained by the members of the Breton Woods Agreement. It would be practically impossible to maintain a trade deficit of this proportion naturally–and even more impossible with a gold standard, as the gold reserves would have to be sent to foreigners to balance trade deficits. The table below shows the leading foreign holders of US debt, which are China and Japan as the main financiers of the US trade deficit.



APPLE Is Following An Ominous Path

From Kimble Charting Solutions:

Eiffel Tower patterns can be painful to an asset!!!

Last November, when Apple was trading over $600 per share, the Power of the Pattern reflected that Apple could be in the early stages of an Eiffel Tower pattern.

The 4-pack below reflects Eiffel Tower patterns in a variety of assets over the past 15 years. Notice that the right side of the tower looks very much like the left side, just in the opposite direction. Also notice that on the right side of the pattern, “counter trend rallies do take place” in an overall downtrend!

The key to this 4-pack above… each of these assets fell so much in price that they returned to…


The key to this 4-pack above.…each of these assets fell so much in price that they returned to where the pattern began on the left side.  In other words the entire rally disappeared!

Article Continues Below


Several measures of market sentiment are now hitting extremes

Investor appetite for risk rises to 9-year high…
We got another data set of sentiment data yesterday, this time from BAML. According to their survey of 254 fund managers, sentiment towards equities hasn’t been this high since February 2011 (before the market dropped 6%), and their economic outlook hasn’t been this rosy since April ’10 (as the market topped out and fell roughly 15%).

From MarketWatch:

“The new year sees asset allocators assigning more funds to equities than at any time since February 2011, while their confidence in the world’s economic outlook has reached its most positive level since April 2010,” according to the report released Tuesday.
A net 59% now expect the global economy to strengthen this year, compared to a net 40% a month ago.
Along with that, profit expectations have surged to net 29%, their highest. But analysts’ earnings revisions will need trend higher to keep pace with rising expectations.

Does this mean we must see a correction in equities from here and drop 6-15%? Not necessarily. Equity markets have done practically nothing in the last three days and outside of the first day of trading in 2013 we have been a fairly tight range between 1455 and 1473 on the S&P 500.

As we approach the debt ceiling fiasco debate, we’ll see if…

Default Alarm Rings in China as Trust Loans Jump Sevenfold

A seven-fold jump in last month’s lending by China’s trust companies is setting off alarm bells for regulators to guard against the risk of default.

So-called trust loans rose 679 percent to 264 billion yuan ($42 billion) from a year earlier, central bank data showed on Jan. 15. That accounted for 16 percent of aggregate financing, which includes bond and stock sales. The amount of loans in China due to mature within 12 months doubled in four years to 24.8 trillion yuan, equivalent to more than half of gross domestic product in 2011, and the People’s Bank of China has set itself a new goal of limiting risks in the financial system.

“Short-term financing instruments such as trust loans have been rising really quickly,” said Zhang Zhiwei, chief China economist at Nomura Holdings Inc. in Hong Kong. “Quite a number of companies resort to trust loans when they face financing troubles. A breakdown in this financing chain will eventually lead to a default on debt this year.”



Rocky road ahead: Global economic challenges 2013

The next several years will be crucial not only for Russia, but the whole world, which enters an epoch of intensive geopolitical transformations, and possibly upheavals, as President Vladimir Putin noted in his annual Address to parliament.

We are facing enhanced competition not only for traditional raw materials, but mainly for human resources, intellect and innovative technology. Those nations that fail in this global race, as British Prime Minister David Cameron describes it, could become more dependent on external factors and end up finding themselves in the backyard of international life.

The Global Financial Crisis has been going on for more than four years and prospects remain uncertain and unpredictable. To our deep concern the eurozone problems persist, while Europe is the main trade and investment partner both for the UK and Russia.

Ineffective and protracted government measures to resolve the “eurocrisis” and the “fiscal cliff” problem in the US make markets and investors jittery. As a result, we see continued falls in business activity, jobs, trade and investment. The forced fiscal consolidation in developed counties leads to cyclical and spillover decrease in growth in the emerging markets.

We are also concerned about wide-spread direct central bank financing, particularly, the so-called programs of “quantitative easing”, i.e. money “printing” instead of normal market financing, while growing budget deficits are not accompanied by concrete and realistic plans of consolidation in the medium-term.



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