Newsletter of Economic and Market Events
Year of 2015 Best Investments in 2015
2015 complete News (click)
Month of December 2015
Dow: 17,425
Dow 2015: 17,823.07 to 17425.03
Dow return for 2014: -2.23%
S&P 500 2015: 2,058.90 to 2043.94
S&P 500 return for 2014: -0.73%
NASDAQ 2015: 4,736.05 to 5007.41
NASDAQ return for 2015: 5.73%
10 year Treasury: 2.27% yield up 4.6%, prices down
World Equity Market: $66.09 trillion down -5%
MSCI Europe Index down -1%
MSCI Asia Pacific Index down -10%
S&P Latin America 40 down -33%
MSCI BRIC down -15%
S&P Middle East & Africa down -25%
* U.S. Total stock market returned -2% in 2015, Stocks had below average gains, Bonds had below average gains and inflation was below average 1.2%.
* Of the 5 largest sectors in the U.S. Economy: Healthcare 5.4, Technology 3.6%, Real Estate 2.8%, while Financials -3.3% and Natural Resources -23%. By size: Large Cap returned -1%, Mid Cap -3.6%, Small Cap -3.3% and Micro Cap -6.3% all had losses. Gold down -12% and oil fell -29% with commodity prices (CRB) down -23%.
* Global markets fell by -5% of the World's largest economic regions: Europe -1%, while Asia -10%, Emerging Markets -15% and Latin America -33%. Of the World's largest Developed non-U.S. Economies: Germany 8%, France 8%, Japan 7%, while Britain -5% and Canada -11%. In the Emerging markets China Shanghai/Shenzen up 9/63%, while India -5%, Russia -9%, and Brazil -13%. Hedge funds underperformed -3% and Private Equity 3% outperformed market indexes.
* Those who diversified with MPT did best, a trend which should accelerate indicative are the returns in China and U.S sectors.
* Separate yourself and your performance from retail investors by using Modern Portfolio Theory (MPT) and Tactical Portfolio Optimization. Institutional investors have for decades spread their investments across many asset classes seeking higher returns. Underperformance is caused by confining your investments to a few similar asset classes and neglecting risk management.
Months 2010-15 (click)
U.S. unemployment at 5.7% to 5.0%. 2015 gdp 2.4% with 2.5 million jobs added.
- U.S. monthly job gains in 2015: 1/15 201,000, 2/15 264,000, 3/15 119,000, 4/15 187,000, 5/15 260,000, 6/15 245,000, 7/15 223,000, 8/15 153,000, 9/15 145,000, 10/15 298,000, 11/15 211,000, 12/15 250,000.
2015 GDP 2.1%, quarterly growth for 2015 1Q 0.6%, 2Q 3.9%, 3Q 2.0%, 4Q 2.2%.
- U.S. employment participation rate falls to 62.4% lowest since October 1977 (peaked 67.2% 12/1997).
FOMC raises (Dec 16) Fed Funds rate 25bps to 0.25%-0.50%, the Discount rate to 1% from 0.75%, and raises the Reverse Repo rate (deposit) to 0.25% from 0.05%. Since 12/16/08 (nearly 8yrs) Fed Funds rates has been near 0% - last tightening cycle (3yrs 3mos) began 6/30/04 with Fed Funds rate raised to 1.25% from 1% ending at 5.25% on 9/18/07.
U.S. Dollar (7 Major Currencies, Euro, Canada, Japan, United Kingdom, Switzerland, Australia, and Sweden) Trade Weighted Index trades 94.8734 (12/2) appreciating 37% from 67.9944 low (5/2/11) highest since 4/2003 (113.0988 1/28/02, high 148.1244 2/25/85).
- U.S. Dollar (26 Broad Currencies) Trade Weighted Index trades 122.3686 (12/2) appreciating 27% from 93.86 (5/2/11, low 89.03 5/8/95) highest since 5/2003 (high 130.20 1/28/02).
U.S. 30yr Treasuries trade (1/30) 2.219%, U.S. 10yr Treasuries trade 1.6357% (1/30).
- DJIA falls 1,089 pts. (8/24, 6.6%) on opening on concerns of slowing global growth, Volatility index trades up 90% to 53.29 (8/24, up 390% from 10.88 on 8/5 in 13 days) from 28.03 (8/21).
U.S. merger and acquisition deals $5T breaking the 2007 record of $4.6T, 2Q15 of $631.2B exceed 2Q98 of $557.04B.
Gold trades $1045.40 (12/3) down 46% from $1,923.70 (9/6/11). Silver trades $13.62 (12/14) down 73% from $49.82 (4/25/11). Platinum trades $825 (12/3) down 64% from $2308.80 (3/4/08). CRB index trades 170.0562 (12/17) down 54% from $370.72 (5/2/11).
- WTI/Brent oil trades $34.53/35.99 (12/14,22) WTI down 70% from $113.97 4/28/11; Brent down 71.6% from $127.02 4/11/11.
ECB lowers (12/2) overnight deposit rate by 10bps to -0.3% (lending rate remains 0.05%), extends QE until March 2017, ECB will reinvest QE principal payments and include purchases of municipal bonds (local and regional).
- ECB begins (3/9) QE €1.14T ($1.2T) €60B/month ($68.8B) of bond purchases. €2.8T of EU sovereign debt yields less than zero (50% of €5.6T, 3/31). Euro depreciates to 1.0473 (3/13) down 25% (10 months) from €1.399 (5/6) against the dollar, lowest since January 2003.
- German 10yr bond trades (4/17) 0.049% yield falls 98% (19 months) from 2.087% (9/11/13), while Greek 10yr bond trades 13.93% (4/22) yield up 152% (7 months) from 5.52% (9/8/14).
Swiss National Bank drops (1/14) its minimum exchange rate of ₣1.20 (9/6/11) against the Euro. Swiss franc trades (1/15) ₣0.8517 from ₣1.2011 (29% apreciation against the Euro) and trades ₣0.7406 from ₣1.0221 against the U.S. dollar (27.5% apreciation). Swiss Market Index trades (1/16) 7,852.83 from 9,292.44 (1/13) a 15% loss.
Japan is the world's most indebted country at $8.9T (GDP ratio of 211%), Greece with $358B (173%), Italy (139%), Portugal (133%), UK (113%), Ireland (112%), and Belgium (110%).
Obama signs (11/2) Bipartisan Budget Act of 2015 a 2yr budget deal (through September 2017) which also raises the national debt limit (until mid-March 2017) by lifting sequester spending caps and boosting spending by $80B.
- Obama signs (12/18) Protecting Americans from Tax Hikes Act of 2015 a $1.15 trillion spending bill, a $680B tax package (over 10yrs) extending nearly 50 tax breaks, and removes the U.S. ban on exporting crude oil.
- Trans Pacific Partnership trade pact awaits (10/5) congressional approval - would lower tariffs and set common standards for 12 economies (Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, Vietnam and the U.S.) accounts for 40% of global economy.
Financial Stability Board to require (11/9, G-20 must endorse) 30 largest global lenders to raise $1.2T by 2022 (in debt or other securities that can be written off when winding down a failing bank): JP Morgan & HSBC (2.5% capital buffer); Barclays, BNP Paribas, Citigroup, Deutsche Bank (2.0% capital buffer); Bank of America, Credit Suisse, Goldman Sachs, Mitsubishi Bank, Morgan Stanley (1.5% capital buffer); Agricultural Bank of China, Bank of China, Bank of New York Mellon, China Construction Bank, Groupe BPCE, Groupe Credit Agricole, Industrial and Commercial Bank of China, ING Bank, Mizuho, Nordea, RBS, Santander, Societe Generale, Standard Chartered, State Street, Sumitomo Mitsui, UBS, Unicredit Group, Wells Fargo (1.0% capital buffer) - leverage ratio (capital held against its total assets) of at least 6% by 2019 rising to 6.75% by 2022.
Shanghai Composite Index declines 45% from 5,178.19 (6/12) to 2,850.71 (8/26) after rising from 1,849.65 (6/25/13) and 1,991.06 (5/21/14) up 160% in 13 months. Shenzhen Composite Index declines 47% from 3,156.96 (6/12) to 1,672.16 (8/26) after rising from 734.28 (12/12/12) and 1,007.27 (4/28/14) up 213% in in 14 months.
- China's PBOC cuts (10/24) 1yr lending rate to low 4.35% (10.98% high, 7/93-6/96) and deposit rate to 1.50% and Reserve requirement ratio (RRR, for commercial banks) cut 50bps to 17.5%.
- PBOC devaluation (8/11) of Chinese yuan from 元6.20 (8/10) to 元6.59 (8/12, depreciating 6.3% in international trade) - first Chinese devaluation since 1/1/1994 when yuan depreciated 50% from 元5.82 to 元8.72, yuan had appreciated 31% from 1/1/1994 to a high 元6.0393 on 1/14/2014.
- China Securities Regulatory Commission (CSRC) bans (7/8) major shareholders, corporate executives and directors from selling shares in listed companies for 6 months.
- China's $485B support of their currency and stock market in June and July (China's foreign exchange reserves, $3.65T as of July 31)
- IMF to add (11/30, effective late 2016) China's yuan to IMF's reserve-currency Special Drawing Right (SDR) lending basket: the U.S. dollar, Euro, Pound and Yen.
- China accelerates (1/5) 300 infrastructure projects, 元7T yuan ($1.1T) to support growth.
Japanese yen depreciates to ¥125.86 (6/5) down 65% from ¥75.31 (10/31/11). Japan 10yr bond trades 0.198% (1/20).
Greece's receives (8/20) 3rd bailout €86B ($96B, total bailout €320B), Greece's parliament passed reforms (8/14, more spending cuts, pension reforms, and market liberalizations) for 3rd bailout - ECB, EU Commission, ESM rescue fund and IMF (pending).
- Greek banks reopen (7/20) with capital controls intact after 23 days. Greek 10yr bond trades 10.95% (7/20) down 44% from 19.58% (7/8).
- Athens Stock Exchange reopens (8/3) after 5 weeks falling 22.9% from 797.52 (6/26) to 615.08 (8/3), trades 562.87 (8/24). Greek 10yr bond trades 8.954% (8/17) down 54% from 19.58% (7/8).
- Greek 10yr bond trades 19.58% (7/8) yield up 255% (10 months) from 5.52% (9/8/14).
- ECB has provided €130B of funding on €120B of Greek deposits.
- Greek capital controls imposed (6/28, €60 daily ATM withdrawal and bank transfers/payments abroad banned). Greece defaults (6/30, first developed country - 26th nation in arrears since 1980) owing the IMF €1.6B ($1.8B) - Greece's 5yr old EU rescue program expired 6/30. Greek PM Alexis Tsipras' announced public referendum (7/5) to vote on creditors' proposal - Iceland (10/27/2008) and Cyprus (3/25/2013) implemented capital controls as part of their bailout package. €323B Greek outstanding debt - €246B bailout: €56B Germany, €42B France, €37B Italy, €34B other EU nations, €32B IMF, €25B Spain, €20B ECB and €77B non-EU/ECB/IMF: private Greek bonds €48.8B, Greek banks €11B, private Greek loans €10.5B, Bank of Greece €4.3B, Foreign banks €2.4B.
Italy's PM Matteo Renzi establishes a €160B 5yr economic growth plan by funding CDP (Italy's national promotional bank, Cassa Depositi e Prestiti) - venture capital investments in private, infrastructure, real estate, and local and regional municipalities.
Russian ruble trades ₽74.35 (12/31) depreciates 46% from ₽48.14 (5/18). Russian central bank international reserves fall to $350B in April, from an all-time high $600B (8/2008).
- Russian stimulus package (1/28) ₽2.3T ($35B) of 60 measures including recapitalisation of the banking system and capital injection into Vnesheconombank (VEB), the state development bank.
Brazil (6/9) announces a $65B infrastructure package including a $40B bi-oceanic railway line connecting Brazil with the Pacific through Peru for trade with China.
Puerto Rico's governor Alejandro Garcia Padilla announced (6/29) the commonwealth (pop. 3.6 million) must restructure its $72B of debt and $37B in pension obligations - the U.S. territory is insolvent.
- Puerto Rico (PFC, Puerto Rico Government Development Bank subsidiary) defaults (8/3) on moral obligation bonds (not issued by legislature) missing $58M payment of principal and interest.
- Puerto Rico announces its partial default on (1/1/2016) paying $328.7M in GO debt and skipping $37.3M.
5 banks to pay (5/20) $5.8B and plead guilty to criminal felony charges (SEC to provide waivers to conduct business) of conspiring to manipulate LIBOR: Barclays $2.38B, Citigroup $1.27B (including a $925 million antitrust penalty), JP Morgan $892M, RBS $669M, and UBS pleads guilty to wire fraud $203M (and $342M for manipulation of forex rates). Bank of America to pay $205M for unsafe and unsound practices in the foreign exchange markets.
- 9 banks settle (8/14) $2B for conspiring in manipulating the $5.3T/day foreign exchange market: Barclays $375M, BNP $115M, Goldman Sachs 129.5M, HSBC $285M, and RBS - includes $808.5M of earlier agreements (Citigroup $394M, Bank of America $180M, UBS $135M, and JPMorgan $99.5M).
- 12 banks settle (9/11) $1.865B for investor claims of blocking competitive fair pricing in the CDS market ($58T 2007 and $16T end of 2014) - JPMorgan Chase $595M, Morgan Stanley $230M, Barclays $175M, Goldman Sachs $164M, Credit Suisse $160M, Deutsche Bank $120M, Bank of America $90M, (and $331M from:) BNP Paribas, Citigroup, HSBC, Royal Bank of Scotland and UBS.
- JPMorgan Chase settles (7/17) $388M with investors misled about $10B of sold residential mortgage-backed securities. JP Morgan Chase to pay (12/18) $307M for failing to disclose conflicts of interest with its wealth management clients. JPMorgan Chase settles (7/8) $166M for improper collection and sales of credit-card debt. JP Morgan Chase to pay (12/21) $150M to investors for hiding $6.2B in losses from London Whale trades of 2012. JPMorgan Chase pays (1/30) $99.5 million for antitrust rigging of foreign exchange market prices in $5.3T/day market.
- Morgan Stanley to pay (2/25) $2.6B to settle claims from its sale of residential mortgage-backed securities.
- Bank of New York Mellon to pay (3/19) $714M for overcharging clients on foreign currency transactions.
- Citigroup settles (7/21) $770M for illegal credit card practices ($700M consumer relief for 7 million and $70M in civil penalties).
- Goldman Sachs settles (8/13) $272M with investors about sales of $6B of residential mortgage-backed securities in 2007-08. Goldman Sachs (10/28) to pay $50M and 3yr limited ban for Rohit Bansal's leaking confidential information from the Federal Reserve Bank of New York.
- Wells Fargo to pay (11/5) $81.6M to home owners for failure to notify for increasing mortgage payments in violation of federal bankruptcy laws.
- Barclays to pay (11/18) an additional $150M penalty (total $2.5B) to N.Y. Dept. of Financial Services for order execution forex related misconduct.
- Commerzbank settles (3/12) deferred prosecution for $1.45 billion for dealings with Iran, Sudan, Cuba and Myanmar and violations of money laundering controls.
- Deutsche Bank settles (4/23) $2.5B for manipulation of LIBOR.
- Julius Baer to pay (12/30) $547M for aiding Americans evade taxes.
- Credit Suisse ordered (9/4) to pay $287.5M to Highland Capital Management for fraudulent real-estate transaction.
- Standard & Poor's settles (2/3) $1.5 billion for fraud ($687.5M Justice Dept., and $687.5M to states, and $125M with California Public Employees Retirement System) - inflated ratings of mortgage-backed securities. Standard & Poor's settles (1/21) $77 million and barred for 1 year from rating commercial mortgage-backed securities for misleading investors about the methodology it used.
BP settles (10/5) $20.8B for 2010 Gulf of Mexico Deepwater Horizon oil spill (including largest Clean Water Act fine), 3.2M barrels / 134M gallons (34M gallons recovered) - Justice, Commerce, Agriculture, Interior departments, EPA and Alabama, Florida, Louisiana, Mississippi and Texas - increasing total cost to about $55B.
- VW to recall (10/15) 8.5 million VW, Audi and Porsche diesel-engine cars in the European Union, VW admitted (9/21) to EPA fraud effecting 11 million diesel & 98,000 gasoline cars (492,000 in U.S.) 2009-2016 - Justice dept. initiates criminal investigation, possible EPA fines over $18B ($37,500/per vehicle).
- GM to pay (9/17) $900M deferred-prosecution agreement for ignition-switch defect responsible for 124 deaths, recalling 2.6 million vehicles, and a victim's compensation fund of $625M.
- Fiat Chrysler fined (7/27) by NHTSA $105M, and buy back 500,000 trucks, and offer 1 million owners of Jeeps Cherokee above market repurchase for recall lapses affecting more than 11 million vehicles. Fiat Chrysler to pay (12/9) $70M that it failed to disclose to NHTSA vehicle crash death and injury reports.
- BMW to pay (12/21) $40M for not complying with minimum crash protection standards, failing to timely notify owners of recalls, and failing to provide accurate information to NHTSA.
- Takata settles (11/3) $70M with NHTSA for failing to alert regulators of defective air-bag inflaters that explode and spray shrapnel - 12 automakers recall 19 million vehicles.
- Verizon and Sprint to pay (5/12) $158M for violations in billing customers, cramming charges.
- Novartis Pharmaceuticals to pay (11/20) $390M for paying specialty pharmacies illegal kickbacks for inducing patients to refill certain medications.
- Trinity Industries to pay (6/9) $663M judgement for manufacturing faulty guardrails that jam and spear through vehicles.
- Computer Sciences Corp (6/5) settles $190 million penalty with SEC for manipulating financial results.
- Dole Food's CEO David Murdock (and COO Michael Carter) to pay (8/27) investor shareholders $148.1M for undervaluing company in 2013 $1.2 billion buyout deal.
- Jon Corzine (and other former MF Global officials) to pay (7/7) $64.5M to MF Global shareholders. Underwriters settle (12/11/14) for $74.9M (Citigroup, Deutsche Bank, Goldman Sachs, J.P. Morgan, Merrill Lynch, RBS and Sandler O'Neill). PricewaterhouseCoopers settles (4/17/15) for $65M. MF Global's unsecured creditors to recover $0.72/$1.
GAO estimates (3/4) Federal improper payments totalled $124.7B in 2014 (across 124 programs in 22 agencies), 3 programs accounted for over $95B of waste, fraud, abuse, and mismanagement: Medicare ($60B of $603B), Medicaid ($17.5B), and IRS EITC ($17.7B).
- Medicare fraud criminal charges (6/17) against 243 doctors, nurses, and medical professionals - $712M in false billing, FBI currently has 2,700 open investigations.
- SEC charges (8/11) 32 with fraud for profiting from stolen non-public information about corporate earnings announcements, more than $100 million in illegal profits.
Ukraine secures agreement (8/27) to restructure its $72B of government debt - bond repayments extended by 4yrs coupon payments rise to 7.75% from 7.2% cutting $3.6B.
- Ukraine secures (2/12) up to $40 billion IMF international bailout package over 4yrs.
Dow month: -1.66%, 6 mo: -1.11%, ytd: -2.23%
S&P 500: 2,044
S&P 500 month: -1.73%, 6 mo: -0.92%, ytd: -0.73%
NASDAQ: 5,007
NASDAQ month: -1.99%, 6 mo: 0.79%, ytd: 5.73%
U.S. unemployment remains 5.0%, adding 262,000 jobs.
FOMC raises (Dec 16) Fed Funds rate 25bps to 0.25%-0.50%, the Discount rate to 1% from 0.75%, and raises the Reverse Repo rate (deposit) to 0.25% from 0.05%. Since 12/16/08 (nearly 8yrs) Fed Funds rates has been near 0% - last tightening cycle (3yrs 3mos) began 6/30/04 with Fed Funds rate raised to 1.25% from 1% ending at 5.25% on 9/18/07.
Obama signs (12/18) Protecting Americans from Tax Hikes Act of 2015 a $1.15 trillion spending bill, a $680B tax package (over 10yrs) extending nearly 50 tax breaks, and removes the U.S. ban on exporting crude oil.
ECB lowers (12/2) overnight deposit rate by 10bps to -0.3% (lending rate remains 0.05%), extends QE until March 2017, ECB will reinvest QE principal payments and include purchases of municipal bonds (local and regional).
WTI/Brent oil trades $34.53/35.99 (12/14,22) WTI down 70% from $113.97 4/28/11; Brent down 71.6% from $127.02 4/11/11.
Gold trades $1045.40 (12/3) down 46% from $1,923.70 (9/6/11). Silver trades $13.62 (12/14) down 73% from $49.82 (4/25/11). Platinum trades $825 (12/3) down 64% from $2308.80 (3/4/08). CRB index trades 170.0562 (12/17) down 54% from $370.72 (5/2/11).
Puerto Rico announces its partial default on (1/1/2016) paying $328.7M in GO debt and skipping $37.3M.
Italy's PM Matteo Renzi establishes a €160B 5yr economic growth plan by funding CDP (Italy's national promotional bank, Cassa Depositi e Prestiti) - venture capital investments in private, infrastructure, real estate, and local and regional municipalities.
Fiat Chrysler to pay (12/9) $70M that it failed to disclose to NHTSA vehicle crash death and injury reports.
BMW to pay (12/21) $40M for not complying with minimum crash protection standards, failing to timely notify owners of recalls, and failing to provide accurate information to NHTSA.
JP Morgan Chase to pay (12/18) $307M for failing to disclose conflicts of interest with its wealth management clients. JP Morgan Chase to pay (12/21) $150M to investors for hiding $6.2B in losses from London Whale trades of 2012.
Julius Baer to pay (12/30) $547M for aiding Americans evade taxes.
Month of November 2015
Dow: 17,720
Dow month: 0.32%, 6 mo: -1.62%, ytd: -0.58%
S&P 500: 2,080
S&P 500 month: 0.05%, 6 mo: -1.28%, ytd: 1.02%
NASDAQ: 5,109
NASDAQ month: 1.09%, 6 mo: 0.77%, ytd: 7.87%
U.S. unemployment remains 5.0%, adding 280,000 jobs.
Obama signs (11/2) Bipartisan Budget Act of 2015 a 2yr budget deal (through September 2017) which also raises the national debt limit (until mid-March 2017) by lifting sequester spending caps and boosting spending by $80B.
IMF to add (11/30, effective late 2016) China's yuan to IMF's reserve-currency Special Drawing Right (SDR) lending basket: the U.S. dollar, Euro, Pound and Yen.
Financial Stability Board to require (11/9, G-20 must endorse) 30 largest global lenders to raise $1.2T by 2022 (in debt or other securities that can be written off when winding down a failing bank): JP Morgan & HSBC (2.5% capital buffer); Barclays, BNP Paribas, Citigroup, Deutsche Bank (2.0% capital buffer); Bank of America, Credit Suisse, Goldman Sachs, Mitsubishi Bank, Morgan Stanley (1.5% capital buffer); Agricultural Bank of China, Bank of China, Bank of New York Mellon, China Construction Bank, Groupe BPCE, Groupe Credit Agricole, Industrial and Commercial Bank of China, ING Bank, Mizuho, Nordea, RBS, Santander, Societe Generale, Standard Chartered, State Street, Sumitomo Mitsui, UBS, Unicredit Group, Wells Fargo (1.0% capital buffer) - leverage ratio (capital held against its total assets) of at least 6% by 2019 rising to 6.75% by 2022.
Takata settles (11/3) $70M with NHTSA for failing to alert regulators of defective air-bag inflaters that explode and spray shrapnel - 12 automakers recall 19 million vehicles.
Novartis Pharmaceuticals to pay (11/20) $390M for paying specialty pharmacies illegal kickbacks for inducing patients to refill certain medications.
Wells Fargo to pay (11/5) $81.6M to home owners for failure to notify for increasing mortgage payments in violation of federal bankruptcy laws.
Barclays to pay (11/18) an additional $150M penalty (total $2.5B) to N.Y. Dept. of Financial Services for order execution forex related misconduct.
Month of October 2015
Dow: 17,664
Dow month: 8.47%, 6 mo: -2.00%, ytd: -0.89%
S&P 500: 2,079
S&P 500 month: 8.28%, 6 mo: -1.38%, ytd: 0.98%
NASDAQ: 5,054
NASDAQ month: 9.39%, 6 mo: 0.98%, ytd: 6.71%
U.S. unemployment falls to 5.0%, adding 307,000 jobs. U.S. participation rate falls to 62.4% lowest since October 1977 (peaked 67.2% 12/1997).
FOMC neutral stance (Oct 28) Fed Funds rate 0%-0.25% and the Discount rate of 0.75%.
- U.S. Treasury's sells (10/5) $21B of 3-month bills at 0% yield for the first time.
China's PBOC cuts (10/24) 1yr lending rate to low 4.35% (10.98% high, 7/93-6/96) and deposit rate to 1.50% and Reserve requirement ratio (RRR, for commercial banks) cut 50bps to 17.5%.
Trans Pacific Partnership trade pact awaits (10/5) congressional approval - would lower tariffs and set common standards for 12 economies (Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, Vietnam and the U.S.) accounts for 40% of global economy.
BP settles (10/5) $20.8B for 2010 Gulf of Mexico Deepwater Horizon oil spill (including largest Clean Water Act fine), 3.2M barrels / 134M gallons (34M gallons recovered) - Justice, Commerce, Agriculture, Interior departments, EPA and Alabama, Florida, Louisiana, Mississippi and Texas - increasing total cost to about $55B.
VW to recall (10/15) 8.5 million VW, Audi and Porsche diesel-engine cars in the European Union, VW admitted (9/21) to EPA fraud effecting 11 million diesel (482,000 diesel & 85,000 gasoline cars in U.S.) 2009-2016 - Justice dept. initiates criminal investigation, possible EPA fines over $18B ($37,500/per vehicle).
LifeLock to pay (12/17) $100M for deceptive claims about its identity-theft protection services and failing to protect user data.
Goldman Sachs (10/28) to pay $50M and 3yr limited ban for Rohit Bansal's leaking confidential information from the Federal Reserve Bank of New York.
Earnings season for 3Q15 YOY growth for the S&P 500 index was negative, -1%.
Month of September 2015
Dow: 16,285
Dow month: -1.88%, 6 mo: -8.39%, ytd: -8.63%
S&P 500: 1,920
S&P 500 month: -3.13%, 6 mo: -7.16%, ytd: -6.75%
NASDAQ: 4,620
NASDAQ month: -3.29%, 6 mo: -5.73%, ytd: -2.45%
U.S. unemployment remains 5.1%, adding 145,000 jobs.
FOMC neutral stance (Sept 17) Fed Funds rate 0%-0.25% and the Discount rate of 0.75%.
U.S. Dollar (26 Broad Currencies) Trade Weighted Index trades 121.2 (9/23) appreciating 27% from 93.86 (5/2/11, low 89.03 5/8/95) highest since 5/2003 (high 130.20 1/28/02).
GM to pay (9/17) $900M deferred-prosecution agreement for ignition-switch defects, recalling 2.6 million vehicles, and a victim's compensation fund of $625M for 124 death and 275 injury claims.
Credit Suisse ordered (9/4) to pay $287.5M to Highland Capital Management for fraudulent real-estate transaction.
12 banks settle (9/11) $1.865B for investor claims of blocking competitive fair pricing in the CDS market ($58T 2007 and $16T end of 2014) - JPMorgan Chase $595M, Morgan Stanley $230M, Barclays $175M, Goldman Sachs $164M, Credit Suisse $160M, Deutsche Bank $120M, Bank of America $90M, (and $331M from:) BNP Paribas, Citigroup, HSBC, Royal Bank of Scotland and UBS.
Month of August 2015
Dow: 16,597
Dow month: -6.18%, 6 mo: -8.47%, ytd: -6.88%
S&P 500: 1,982
S&P 500 month: -5.80%, 6 mo: -5.84%, ytd: -3.74%
NASDAQ: 4,777
NASDAQ month: -6.84%, 6 mo: -3.77%, ytd: 0.86%
U.S. unemployment falls to 5.1%, adding 153,000 jobs.
DJIA falls 1,089 pts. (8/24, 6.6%) on opening on concerns of slowing global growth, Volatility index trades up 90% to 53.29 (8/24, up 390% from 10.88 on 8/5 in 13 days) from 28.03 (8/21).
WTI/Brent oil trades $37.75/42.22 (8/24) WTI down 67% from $113.97 4/28/11; Brent down 67% from $127.02 4/11/11. Russian ruble trades ₽71.69 (8/25) depreciates 46% (3 months) from ₽48.14 (5/18). CRB index trades 185.13 (8/24) down 50% from $370.72 (5/2/11). Silver trades $13.91 (8/26) down 72% from $49.82 (4/25/11). Copper trades $2.209/lb (8/24) down 52% from $4.64/lb (2/15/11).
China's PBOC cuts (8/25) 1yr lending rate to low 4.6% (10.98% high, 7/93-6/96) and deposit rate to 1.75% and Reserve requirement ratio (RRR, for commercial banks) cut 50bps to 18%.
- Shanghai Composite Index declines 45% from 5,178.19 (6/12) to 2,850.71 (8/26) after rising from 1,849.65 (6/25/13) and 1,991.06 (5/21/14) up 160% in 13 months. Shenzhen Composite Index declines 47% from 3,156.96 (6/12) to 1,672.16 (8/26) after rising from 734.28 (12/12/12) and 1,007.27 (4/28/14) up 213% in in 14 months.
- PBOC devaluation (8/11) of Chinese yuan from 元6.20 (8/10) to 元6.59 (8/12, depreciating 6.3% in international trade).
Greece's receives (8/20) 3rd bailout €86B ($96B, total bailout €320B), pays (8/20) the ECB €3.2B, Greek Prime Minister Alexis Tsipras submit his resignation (8/20) and calls for elections on Sept 20. Greece's parliament passed reforms (8/14, more spending cuts, pension reforms, and market liberalizations) for 3rd bailout - ECB, EU Commission, ESM rescue fund and IMF (pending).
- Athens Stock Exchange reopens (8/3) after 5 weeks falling 22.9% from 797.52 (6/26) to 615.08 (8/3), trades 562.87 (8/24). Greek 10yr bond trades 8.954% (8/17) down 54% from 19.58% (7/8).
Ukraine secures agreement (8/27) to restructure its $72B of government debt - bond repayments extended by 4yrs coupon payments rise to 7.75% from 7.2% cutting $3.6B.
Puerto Rico (PFC, Puerto Rico Government Development Bank subsidiary) defaults (8/3) on moral obligation bonds (not issued by legislature) missing $58M payment of principal and interest.
Dole Food's CEO David Murdock (and COO Michael Carter) to pay (8/27) investor shareholders $148.1M for undervaluing company in 2013 $1.2 billion buyout deal.
SEC charges (8/11) 32 with fraud for profiting from stolen non-public information about corporate earnings announcements, more than $100 million in illegal profits.
9 banks settle (8/14) $2B for conspiring in manipulating the $5.3T/day foreign exchange market: Barclays $375M, BNP $115M, Goldman Sachs 129.5M, HSBC $285M, and RBS - includes $808.5M of earlier agreements (Citigroup $394M, Bank of America $180M, UBS $135M, and JPMorgan $99.5M).
Goldman Sachs settles (8/13) $272M with investors about sales of $6B of residential mortgage-backed securities in 2007-08.
Month of July 2015
Dow: 17,690
Dow month: 0.40%, 6 mo: 3.06%, ytd: -0.75%
S&P 500: 2,104
S&P 500 month: 1.99%, 6 mo: 5.46%, ytd: 2.19%
NASDAQ: 5,128
NASDAQ month: 3.22%, 6 mo: 10.64%, ytd: 8.28%
U.S. unemployment remains 5.3%, adding 223,000 jobs.
FOMC neutral stance (Jul 29) Fed Funds rate 0%-0.25% and the Discount rate of 0.75%.
Gold trades (7/24) $1,072.3 down 44% from $1,923.70 (9/6/11), lowest since Nov 2009.
China Securities Regulatory Commission (CSRC) bans (7/8) major shareholders, corporate executives and directors from selling shares in listed companies for 6 months. Shanghai Composite Index declines 35% from 5,178.19 (6/12) to 3,373.54 (7/9) and Shenzhen Composite Index declines 41% from 3,156.96 (6/12) to 1,851.61 (7/8). China's $485B support of their currency and stock market in recent days (China's foreign exchange reserves, $3.65T as of July 31)
Greek parliament passes sweeping reforms (7/15, Greek banks solvency assured on 7/7 by ECB President Mario Draghi) complying with EU demands to get 3rd bailout of €86B ($96B): pension reform, increasing VAT from 13% to 23%, overhauling labour collective bargaining, limits on public spending, and sequestering €50B of public assets as collateral - following Greek referendum (7/5) with 61% voting "NO" for continued austerity. Greek 10yr bond trades 19.58% (7/8) yield up 255% (10 months) from 5.52% (9/8/14).
- Greece receives 3 month loan from EU and ECB approve (7/17) a €7.16B EFSM (European Financial Stabilisation Mechanism). ECB ELA raised (7/16) from €88.6B to €89.5B for Greece pending implementation of Greece's 3rd bailout from ESM (European Stability Mechanism). ECB has provided €130B of funding on €120B of Greek deposits.
- Greek banks reopen (7/20) with capital controls intact after 23 days. Greece pays overdue IMF debt €2.05B, no longer in arrears. Greece pays ECB €4.2B, due 7/20 and €470M to the Bank of Greece. Greek parliament passes reforms (7/22) to qualify for 3rd EU bailout before ECB payment (8/20), Greek 10yr bond trades 10.95% (7/20) down 44% from 19.58% (7/8).
Fiat Chrysler fined (7/27) by NHTSA $105M, and buy back 500,000 trucks, and offer 1 million owners of Jeeps Cherokee above market repurchase for recall lapses affecting more than 11 million vehicles.
Jon Corzine (and other former MF Global officials) to pay (7/7) $64.5M to MF Global shareholders. Underwriters settle (12/11/14) for $74.9M (Citigroup, Deutsche Bank, Goldman Sachs, J.P. Morgan, Merrill Lynch, RBS and Sandler O'Neill). PricewaterhouseCoopers settles (4/17/15) for $65M. MF Global's unsecured creditors to recover $0.72/$1.
JPMorgan Chase settles (7/17) $388M with investors misled about $10B of sold residential mortgage-backed securities. JPMorgan Chase settles (7/8) $166M for improper collection and sales of credit-card debt.
Citigroup settles (7/21) $770M for illegal credit card practices ($700M consumer relief for 7 million and $70M in civil penalties).
Earnings season for 2Q15 YOY growth for the S&P 500 index was positive, 1%.
Month of June 2015
Dow: 17,620
Dow month: -2.17%, 6 mo: -1.14%, ytd: -1.14%
S&P 500: 2,063
S&P 500 month: -2.09%, 6 mo: 0.20%, ytd: 0.20%
NASDAQ: 4,968
NASDAQ month: -2.01%, 6 mo: 4.90%, ytd: 4.90%
U.S. unemployment falls to 5.3%, adding 245,000 jobs, U.S. participation rate participation rate falls to 62.6%, the lowest rate since October 1977.
FOMC neutral stance (Jun 17) Fed Funds rate 0%-0.25% and the Discount rate of 0.75%.
Greek capital controls imposed (6/28, €60 daily ATM withdrawal and bank transfers/payments abroad banned) - banks and Athens Stock Exchange not to open monday (6/29). ECB's ELA (Emergency Liquidity Assistance) to the Greek central bank rose to €88.6B (6/26) to slow bank run. Greece defaults (6/30, first developed country - 26th nation in arrears since 1980) owing the IMF €1.6B ($1.8B) - Greece's 5yr old EU rescue program expired 6/30. Greek PM Alexis Tsipras' announced public referendum (7/5) to vote on creditors' proposal - Iceland (10/27/2008) and Cyprus (3/25/2013) implemented capital controls as part of their bailout package. €323B Greek outstanding debt - €246B bailout: €56B Germany, €42B France, €37B Italy, €34B other EU nations, €32B IMF, €25B Spain, €20B ECB and €77B non-EU/ECB/IMF: private Greek bonds €48.8B, Greek banks €11B, private Greek loans €10.5B, Bank of Greece €4.3B, Foreign banks €2.4B. Greek 10yr bond trades 15.61% (6/30).
China's PBOC cuts (6/27) 1yr lending rate to low 4.85% (10.98% high, 7/93-6/96) and deposit rate to 2%. Shanghai Composite Index declines 25% from 5,178.19 (6/12) to 3,875.05 (6/29).
Puerto Rico's governor Alejandro Garcia Padilla announced (6/29) the commonwealth (pop. 3.6 million) must restructure its $72B of debt and $37B in pension obligations - the U.S. territory is insolvent.
Brazil (6/9) announces a $65B infrastructure package including a $40B bi-oceanic railway line connecting Brazil with the Pacific through Peru for trade with China.
2Q15 U.S. merger and acquisition deals of $631.2B exceed 2Q98 of $557.04B.
Trinity Industries to pay (6/9) $663M judgement for manufacturing faulty guardrails that jam and spear through vehicles.
Computer Sciences Corp (6/5) settles $190 million penalty with SEC for manipulating financial results.
Medicare fraud criminal charges (6/17) against 243 doctors, nurses, and medical professionals - $712M in false billing, FBI currently has 2,700 open investigations.
Month of May 2015
Dow: 18,011
Dow month: -0.07%, ytd: 1.05%, 6 mo: 1.03%
S&P 500: 2,107
S&P 500 month: -0.05%, ytd: 2.34%, 6 mo: 1.89%
NASDAQ: 5,070
NASDAQ month: 1.30%, ytd: 7.05%, 6 mo: 5.91%
U.S. unemployment rises to 5.5%, adding 260,000 jobs.
Verizon and Sprint to pay (5/12) $158M for violations in billing customers, cramming charges.
5 banks to pay (5/20) $5.8B and plead guilty to criminal felony charges (SEC to provide waivers to conduct business) of conspiring to manipulate LIBOR: Barclays $2.38B, Citigroup $1.27B (including a $925 million antitrust penalty), JP Morgan $892M, RBS $669M, and UBS pleads guilty to wire fraud $203M (and $342M for manipulation of forex rates). Bank of America to pay $205M for unsafe and unsound practices in the foreign exchange markets.
Month of April 2015
Dow: 18,024
Dow month: 1.40%, ytd: 1.13%, 6 mo: 3.64%
S&P 500: 2,108
S&P 500 month: 1.93%, ytd: 2.38%, 6 mo: 4.46%
NASDAQ: 5,005
NASDAQ month: 2.12%, ytd: 5.68%, 6 mo: 8.08%
U.S. unemployment falls to 5.4%, adding 187,000 jobs.
FOMC neutral stance (Apr 29) Fed Funds rate 0%-0.25% and the Discount rate of 0.75%.
German 10yr bond trades (4/17) 0.049% yield falls 98% (19 months) from 2.087% (9/11/13), while Greek 10yr bond trades 13.93% (4/22) yield up 152% (7 months) from 5.52% (9/8/14). Russian central bank international reserves fall to $350B in April, from an all-time high $600B (8/2008).
China's PBOC cuts (4/20) Reserve requirement ratio (RRR, for commercial banks) by 100bps to 18.5% and RRR (non-bank, shadow-banking) cut by 300bps.
Deutsche Bank settles (4/23) $2.5B for manipulation of LIBOR.
Earnings season for 1Q15 YOY growth for the S&P 500 index was positive, 2%.
Month of March 2015
Dow: 17,776
Dow month: -1.97%, ytd: -0.26%, 6 mo: 4.30%
S&P 500: 2,068
S&P 500 month: -1.76%, ytd: 0.44%, 6 mo: 4.87%
NASDAQ: 4,901
NASDAQ month: -1.27%, ytd: 3.48%, 6 mo: 9.08%
U.S. unemployment falls to 5.5%, adding 119,000 jobs.
FOMC neutral stance (Mar 18) Fed Funds rate 0%-0.25% and the Discount rate of 0.75%.
ECB begins (3/9) QE €1.14T ($1.2T) €60B/month ($68.8B) of bond purchases. €2.8T of EU sovereign debt yields less than zero (50% of €5.6T, 3/31). Euro depreciates to 1.0473 (3/13) against the dollar, lowest since January 2003. German 10yr bond trades 0.186% (3/12), Japanese yen depreciates to ¥122.03 (3/10). Japan is the world's most indebted country at $8.9T (GDP ratio of 211%), Greece with $358B (173%), Italy (139%), Portugal (133%), UK (113%), Ireland (112%), and Belgium (110%).
U.S. Dollar (7 Major Currencies, Euro, Canada, Japan, United Kingdom, Switzerland, Australia, and Sweden) Trade Weighted Index trades 93.3723 (3/13/15) appreciating 37% from 67.9944 low (5/2/11) highest since 4/2003 (113.0988 1/28/02, high 148.1244 2/25/85).
Commerzbank settles (3/12) deferred prosecution for $1.45 billion for dealings with Iran, Sudan, Cuba and Myanmar and violations of money laundering controls.
Bank of New York Mellon to pay (3/19) $714M for overcharging clients on foreign currency transactions.
GAO estimates (3/4) Federal improper payments totaled $124.7B in 2014 (across 124 programs in 22 agencies), 3 programs accounted for over $95B of waste, fraud, abuse, and mismanagement: Medicare ($60B of $603B), Medicaid ($17.5B), and IRS EITC ($17.7B).
Month of February 2015
Dow: 18,133
Dow month: 5.64%, ytd: 1.74%, 6 mo: 6.05%
S&P 500: 2,105
S&P 500 month: 5.51%, ytd: 2.24%, 6 mo: 5.09%
NASDAQ: 4,964
NASDAQ month: 7.10%, ytd: 4.81%, 6 mo: 8.38%
U.S. unemployment falls to 5.5%, adding 264,000 jobs.
EU finance ministers extend (2/20) Greece's €172B bailout (to receive last €7.2B in aid) by 4 months and accepts (2/24) Greece's list of reforms.
Morgan Stanley to pay (2/25) $2.6B to settle claims from its sale of residential mortgage-backed securities.
Standard & Poor's settles (2/3) $1.5 billion for fraud ($687.5M Justice Dept., and $687.5M to states, and $125M with California Public Employees Retirement System) - inflated ratings of mortgage-backed securities.
Ukraine secures (2/12) up to $40 billion IMF international bailout package over 4yrs.
Month of January 2015
Dow: 17,165
Dow month: -3.69%, ytd: -3.69%, 6 mo: 3.63%
S&P 500: 1,995
S&P 500 month: -3.10%, ytd: -3.10%, 6 mo: 3.31%
NASDAQ: 4,635
NASDAQ month: -2.13%, ytd: -2.13%, 6 mo: 6.06%
U.S. unemployment rises to 5.7%, adding 201,000 jobs.
FOMC neutral stance (Jan 28) Fed Funds rate 0%-0.25% and the Discount rate of 0.75%.
ECB QE recommends (1/22) bond purchases of €1.14T ($1.3T) (€60B/month, $68.8B) starting March 9 through September 2016. ECB 2nd TLTRO (1/8, Targeted Long Term Refinancing Operations) take-up to lenders €212B ($252 billion) - 6 more TLTRO auctions through 2016. EURO 1.1102 (1/26) down 20.5% (8 months) from €1.399 (5/6), German 10yr bond 0.298% (1/30), Greek 10yr bond 11.215% (1/30).
WTI/Brent oil trades $43.58/45.19 (1/29 and 1/13, U.S. shale oil oversupply) lowest since Jan 2009 commodity collapse. WTI falls 62% from $113.93 high 4/29/11; Brent falls 64% from $127.02 high 4/11/11.
U.S. 30yr Treasuries trade (1/30) 2.219%, U.S. 10yr Treasuries trade 1.6357% (1/30), Japan 10yr bond trades 0.198% (1/20).
Swiss National Bank drops (1/14) its minimum exchange rate of ₣1.20 (9/6/11) against the Euro. Swiss franc trades (1/15) ₣0.8517 from ₣1.2011 (29% apreciation against the Euro) and trades ₣0.7406 from ₣1.0221 against the U.S. dollar (27.5% apreciation). Swiss Market Index trades (1/16) 7,852.83 from 9,292.44 (1/13) a 15% loss.
China accelerates (1/5) 300 infrastructure projects, 元7T yuan ($1.1T) to support growth.
Russian stimulus package (1/28) ₽2.3T ($35B) of 60 measures including recapitalisation of the banking system and capital injection into Vnesheconombank (VEB), the state development bank.
JPMorgan Chase pays (1/30) $99.5 million for antitrust rigging of foreign exchange market prices in $5.3T/day market.
Standard & Poor's settles (1/21) $77 million and barred for 1 year from rating commercial mortgage-backed securities for misleading investors about the methodology it used.
Earnings season for 4Q14 for the S&P 500 index was positive, 7%.
Year of 2014 Best Investments in 2014
2014 complete News (click)
Dow 2014: 16,576.66 to 17,823.07
Dow return for 2014: 7.52%
S&P 500 2014: 1,848.36 to 2,058.90
S&P 500 return for 2014: 11.39%
NASDAQ 2014: 4,176.59 to 4,736.05
NASDAQ return for 2014: 13.40%
10 year Treasury: 2.17% yield down 28%, prices up
World Equity Market: $69.42 trillion up 11%
MSCI Europe Index down -2.8%
MSCI Asia Pacific Index up 10.7%
S&P Latin America 40 down -13.7%
MSCI BRIC down -6.8%
S&P Middle East & Africa up 2.3%
* U.S. Total stock market returned 11% in 2014, Stocks had average gains, Bonds had above average gains and inflation was below average 1.5%.
* Of the 5 largest sectors in the U.S. Economy: Real Estate 29.3%, Healthcare 23.5%, Technology 16.2%, Financials 13.5% while Natural Resources -10.3%. By size: Large Cap returned 10%, Mid Cap 9%, Small Cap 5% and Micro Cap 3% all had losses. Gold down -2% while oil fell -45% with commodity prices (CRB) down -18%.
* Global markets rose by 11% of the World's largest economic regions: Asia 11%, Europe -3%, while Emerging Markets down -7% and Latin America down -14%. Of the World's largest Developed non-U.S. Economies: Japan 7%, Canada 7%, Germany 3%, France -1%, Britain -2%. In the Emerging markets China Shanghai/Shenzen 54/35%, India 30% while Brazil -3% and Russia -45%. Hedge funds underperformed 4% and Private Equity 11% outperformed market indexes.
* Those who diversified with MPT did best, a trend which should accelerate indicative are the returns in U.S sectors, China and India.
* Separate yourself and your performance from retail investors by using Modern Portfolio Theory (MPT) and Tactical Portfolio Optimization. Institutional investors have for decades spread their investments across many asset classes seeking higher returns. Underperformance is caused by confining your investments to a few similar asset classes and neglecting risk management.
Months 2010-15 (click)
U.S. unemployment at 6.7% to 5.6% remained a major concern. 2014 gdp 2.4% with 3 million jobs added.
- U.S. monthly job gains in 2014: 1/14 144,000, 2/14 222,000, 3/14 203,000, 4/14 304,000, 5/14 229,000, 6/14 267,000, 7/14 243,000, 8/14 203,000, 9/14 256,000, 10/14 261,000, 11/14 423,000, 12/14 329,000.
2014 GDP 2.4%, quarterly growth for 2014 1Q -2.1% (largest loss since 1Q09), 2Q 4.6%, 3Q 5.0% (largest gain since 3Q03), 4Q 2.2%.
FOMC neutral stance Fed Funds rate 0%-0.25% and the Discount rate of 0.75%. QE3/QE4 ended, FMOC (Oct 29) "decided to conclude its asset purchase program [will maintain] its existing policy of reinvesting principal payments from its holdings" Federal Reserve's balance sheet stands at $4.48T.
- Federal Reserve extends (12/18) compliance of Volcker rule from 7/21/15 to July 21, 2017 for "legacy covered funds" (covered funds and foreign funds prior to 12/31/13); Federal Reserve previously extended (4/7) collateralized loan obligations (CLOs) compliance to July 21, 2017.
- Federal Reserve's balance sheet exceeds $4.4T.
- Federal Reserve returned to the federal government a record $98.7 billion in 2014.
- Federal Reserve new chairwoman Janet Yellen confirmed (1/6) first woman ever to head bank.
CFPB (Consumer Financial Protection Bureau, 1/10) new mortgage rules ensure that consumers can repay mortgages with protections (if problems occur) to avoid foreclosure. Lenders must document consumer's income and assets, along with debt, against the long-term monthly payments.
Consumerfinance.gov
TARP closed (12/18) with $15.35B profit - $426.35B disbursed with repayments of $441.7B, U.S. Treasury sold over $80 billion of stock and convertible warrants from 2010-12. TARP ownership positions end in: AIG, Citigroup, Bank of America, Fannie Mae, Freddie Mac, General Motors, Chrysler, GMAC, and Ally Financial. AIG - total $182.3B ($67.8B disbursed), profit $5.1B. Banks: total 245.1B, profit $29.7B. Auto: total $79.7B, lost $9.35B. Credit: total $19.1B, profit $4.5B. Housing: total $14.6B, lost $14.6B.
US 10yr Treasuries trades 1.8622% (10/15) yield falls 39% (10 months) from 3.0516% (1/2) and 30yr Treasuries trades 2.6744% (10/15) yield falls 33% (10 months) from 3.9744% (1/2). VIX trade 31.06 (10/15) rises 202% (3 months) from 10.28 (7/3).
Global debt rose to $199T (286% of global GDP) up from $142T (269% of GDP) in 2007.
Treasuries gained 6.1% in 2014, -3.4% in 2013, 2.2% in 2012, 9.8% in 2011, 5.9% in 2010. U.S. Aggregate Bond index up 5% .
Mergers and acquisitions $3.4T in 2014, up from $2.63T in 2013, $2.19T in 2012 and $2.26T in 2011. Venture capital $40B in 4,195 deals in 2014.
WTI/Brent oil trades $52.44/55.82 (12/31) falls 53/51% (16 months) from $112.24/117.29 (8/26/13). Gold trades $1130.4 (11/7) down 41% from $1,923.70 (9/6/11), 5-year low. Silver falls to $14.10 (12/1) down 72% from $49.82 (4/25/11). CRB index falls to 228.99 (12/31) down 38% from $370.72 (5/2/11).
U.S. participation rate falls to 62.7% lowest since February 1978, 92,898,000 not in labor force - 156,129,000 of 249,027,000 civilian noninstitutional population (16yrs and older, not Armed Forces, health/mental facilities, or incarcerated).
Obama signs (12/19) Tax Increase Prevention Act of 2014 - individual, business, energy tax extenders through 12/31/14, $41.6 billion in tax relief.
ECB cuts (9/4) lending rate to 0.05% (from 0.15%) and overnight deposit rate to -0.2% (from -0.1%). Starting 10/1 ECB will purchase ABS (asset-backed securities) and covered bonds. ECB balance sheet to rise from €2T to €2.7T euros (3/1/12, record €3.02T, $3.96T). TLTRO facility (9/18, 4yrs) €82.6B ($106.5B) to 255 EU banks at 0.15%.
- German 10yr trades 0.535% (12/30) yield falls 74% (16 months) from 2.087% (9/11/13).
- Euro trades €1.2151 (12/26) down 13% (7 months) from €1.399 (5/6).
- European Fund for Strategic Investment (11/26) €21B (€16B EU and €5B from the European Investment Bank) invested to issue €60B in bonds, proceeds will then be invested in €315B of loans for infrastructure and small businesses. ECB (11/21) begins purchases of €1T of asset-backed securities.
- ECB (10/26) tests 130 EU banks (covering 85%) ability to withstand future crises. 25 banks failed stress tests (17 have already covered their capital shortfalls) remaining shortfall €6.35B ($8B) and non-performing EU bank exposure about €879B. ECB (10/20) begins purchases of €1T of covered-bonds - EU has a €2.6T covered-bond market.
- ECB initiates negative rates (6/5): deposit rate to -0.1%, benchmark to 0.15% (down 10bps), and emergency borrowing rate to 0.4% (down 35bps). Also, a €400B ($542B) TLTRO facility to increase lending (Targeted Longer-Term Refinancing Operations in 9/18/2014 and 12/2014) and possible future asset-purchase plan. Denmark's Nationalbanken (Jul 5, 2012 - Apr 24, 2014) cut CD rate to -0.20% (down 25bps, to maintain Danish Krone's peg to the Euro). Swedish Riksbank from July 8, 2009 - Sept. 7, 2010 deposit rate -0.25%.
- EU Single Resolution Mechanism (SRM 4/16, EU banks) to unwind/restructure lenders. Bank Recovery and Resolution Directive (BRRD) requires 8% of failing bank's liabilities wiped out before rescue. Cross-border bank resolution fund €55B ($76B) financed by bank levies. Clients' bank deposits insured up to 100,000 euros (starting 11/2014). ECB will supervise EU's largest banks - EU governments provided €592B ($818B) to support banks from 10/2008-12/2012.
124 major EU banks (over 50% of banking assets in each member state) will be stress tested (common Tier 1 capital above 5.5% of risk-weighted assets).
Greece issues (4/10) $4.14B (€3B) of 5yr bonds yielding 4.95%, unlocking €8.3B of bailout funds - 6 years of recession, €246B in rescue loans from EU, ECB and IMF, current debt 175.6% of GDP 12/31/13.
- Greek 10yr trades 9.85% (12/26) yield up 78% (3 months) from 5.52% (9/8).
- Ireland issued (3/13/2013) €5B ($6.52B) of 10yr bonds at 4.15%. Ireland (12/15/2013) received final bailout loan from EU and IMF pending budget reforms - financial rescue €85B ($117B) program.
- Portugal (4/23) issued €750M ($1.04B) of 10yr bonds at 3.575% - €78B ($107.8B) bailout and ends rescue programs on May 17. Portugal bought back (2/27) €1.32B ($1.8B) of bonds (first buyback since 3/9/2011).
- Portugal will spend €4.9B ($6.58B, 8/3) to rescue Banco Espirito Santo "good bank" (Novo Banco) and a "bad bank" (losses incurred by junior bondholders and shareholders), dipping into Portugal's EU/IMF bank resolution fund (2012) of €6.4B.
Bank of Japan (10/31) to buy ¥80T annually ($716B) increased from ¥60-70T under Quantitative and Qualitative Easing (QQE) on April 4, 2013 monetary easing stimulus - extending the "average remaining maturity" to 7-10 years (up from 3 years of Japanese government bonds) and triple its purchases to ¥3T for ETFs, ¥90B for J-REITs. BOJ holds about 20% of Japan's outstanding government bonds.
Japan's Government Pension Investment Fund (GPIF, $1.2T, ¥127.3T the world's largest pension fund) would increase its Japanese and overseas equity holdings to 25% each (from 12%), 15% in foreign bonds (from 11%), and reducing Japanese debt to 35% from 60%.
- Japan approves 12/27 ¥3.5T ($29 billion) fiscal stimulus package to boost economy.
- Japanese 10yr yield fell to all time low of 0.31% (12/24).
- Yen trades ¥121.85 (12/8) down 62% (2 years) from ¥75.31 (10/31/11).
China's PBOC (11/21) cuts 1yr lending rate (first since July 6, 2012) to 5.6% from 6.0% and 1yr deposit rate to 2.75% from 3.0% - PBOC's new Medium-term Lending Facility injected 元769.5B yuan ($126B) to lenders in September and October. China's outstanding value of shadow-banking products estimated 元21.87T yuan ($3.52T).
- PBOC cuts (6/16) Reserve Requirement Ratio (RRR, 20%) for Rural Commercial Banks (RCBs) to 18% and Rural Credit Cooperatives (RCCs) to 16% - China raised (from 7.5%) its RRR 19 times (to 17.5%) from 7/2006 to 7/2008 to moderate growth, then cut RRR 3 times 9/2008 to 12/2008 (to 15.5%) to support the global downturn, then starting in 1/2010 raised 13 more times to cool their property market to 21.5% (a high in June 2011) before cutting in 11/2011.
- China's foreign reserves touches $4T 6/2014 - $3T, 4/2011, China holds $1.27T of U.S. Treasury market (10.6% of the U.S.'s $12T).
- Chinese yuan apreciates to 元6.0393 (1/14) up 13% from 6.83 (6/17/10).
- BRICs (7/15) Brazil, Russia, India, China and South Africa establish $100B development bank.
- Alibaba IPO (9/19, $68 a $167.6B market capitalization) sold 368M shares raising $25B - opening $92.70 ($228.5B market cap) with 2013 gross receipts of $248B (vs Amazon $116B). Agricultural Bank of China IPO $22.1B in 2010, Industrial & Commercial Bank of China $21.9B in 2006, Visa's $19.7B in 2008, General Motor's $18.1B in 2010 and Facebook's $16B in 2012.
Argentina defaults (7/30) for second time (2001) with about $200B in foreign-currency debt (including $29B of restructured bonds) - ISDA (International Swaps & Derivatives Association) determines Argentina's failure is a credit event that will trigger settlement of $1B of CDSs. Argentina defaulted (12/26/2001) on $102.6B (National bank run), on (1/14/2005) Argentina restructured 76.2% of debt ($62.3B), on (8/11/2010) Argentina debt exchange restructuring rose to 92.6% ($12.4B).
Russian ruble trades ₽81.1 (12/16) falls 59% (6 months) from ₽33.55 (6/27, ruble high ₽23.15 7/15/2008 4 days after oil hit $147.27, ₽27.15 on 5/5/11). Russia's central bank raises interest rate to 17% from 10.5% (12/15). Russia's RTS Index falls 73% to 578.21 (12/16) from 2,134.23 (4/11/11). Russia's central bank's reserves fell from over $509.6B to under $388B defending the ruble. Russia's Deposit Insurance Agency takes control (12/22) of National Bank Trust (15th-largest by retail deposits) with ₽127B ($2.1B) bailout, Russia's National Wealth Fund injects (12/31) ₽100B ($1.7B) into VBT Bank (2nd-largest) and injects (12/31) ₽150B ($2.5B) into Yamal LNG (the Arctic gas project of Novatek).
U.S. Government settlements against 6 largest U.S. bank totals $128B (2010-14).
- Banks (11/12) settle $4.25B for rigging foreign exchange benchmarks: Citigroup $1.02B, JPMorgan Chase $1.01B, UBS $799M, RBS $634M, HSBC $618M, and Bank of America $250M to U.S's CFTC & OCC, the U.K.'s FCA, and the Swiss FMSA.
- Bank of America settles (8/21) $16.65B for selling mortgage-backed securities to investors. Bank of America settles (7/30) $1.27B for defective mortgages sold by Countrywide. Bank of America settles (7/16) $650M payment to AIG for mortgage-backed securities sold. Bank of America settles (4/9) $783M for deceiving customers in sales of credit-card debt cancellation and theft-protection insurance. Bank of America (3/26) settles with FHFA $9.5B for mortgages sold to Fannie Mae and Freddie Mac. Bank of America (Countrywide) $8.5B 11/18/13 settlement (1/31 approved) with institutional investors. Bank of America sold RMBS ($424B with $100B losses) - Private RMBS totaled $2.2T (2008), with losses 2006-2012 of $449B (exceeding total losses on $9T of non-private mortgage debt).
- Citigroup settles (7/14) $7B for fraud related to mortgage-backed securities. Citigroup to pay (6/9) SEC $285M to settle fraud for CDO sold. Citigroup settles (4/7) $1.13B with investors for sold RMBS.
- Goldman Sachs to repurchase (8/22) $3.15B of FHFA mortgage-backed securities.
- Morgan Stanley settles (2/4) $1.25B for selling mortgage-backed securities to Fannie Mae and Freddie Mac. Morgan Stanley settles (7/24) $275M with SEC for misleading investors about mortgage-backed securities.
- JPMorgan Chase settles (Feb 14) $614M they defrauded FHA and VA by selling RMBS packaged mortgage loans. JPMorgan Chase (Feb 28) pays bond insurer Syncora Guarantee $400M selling RMBS.
-Wells Fargo settles (5/29) $62.5M to institutional investors for improper advertising.
- SunTrust Banks settles (6/17) $968M for mortgages to Fannie Mae and Freddie Mac. SunTrust Banks to pay (7/3) up to $320M to resolve a criminal probe in administering HAMP from 3/2009-12/2010.
- Fannie Mae (10/24) settles $170M for misleading shareholders about its finances.
- AIG settles (8/4) $960M to investors for not disclosing its financials accurately.
- U.S. Bancorp, settles (6/30) $200M for mortgages sold to Fannie Mae and Freddie Mac.
- GE Capital settles (6/14) $169M for credit card lending discrimination.
- MF Global (12/24) fined $100M penalty ($1.2B of client funds ordered returned) for misuse of customers funds.
- Credit Suisse pleads guilty (5/19) $2.615B to helping Americans evade taxes. 106 Swiss banking institutions have agreed with IRS tax evasion disclosure initiatives. Credit Suisse (3/21) settles $885M with FHFA for mortgages sold to Fannie Mae and Freddie Mac between 2005 and 2007. Credit Suisse (2/21) settles $196.5M with SEC for avoiding paying U.S. taxes.
- BNP Paribas settles (6/30) for $8.97B and pleads guilty to criminal charges of filing false business records and conspiracy involving Sudan, Iran and Cuba. BNP also banned from dollar clearing for clients for 2015.
Credit Suise (2009) $1.2B banned transactions $536M settlement.
ABN Amro (2010) $3.2B banned transactions $50M settlement.
Standard Chartered (2012) $667M banned transactions $667M settlement.
RBS (2013) $32M banned transactions $100M settlement.
- HSBC settles (9/12) $550M for failing to disclose the risks on mortgage bonds it sold to Fannie Mae and Freddie Mac.
- Standard Chartered settles (8/19) $300M and indefinitely suspends some dollar clearing for money laundering compliance failures required in their 12/10/12 settlement.
- Lloyds' settles (7/28) for $370M for LIBOR rate rigging.
- Pricewaterhouse Coopers fined (8/18) $25M for sanitizing reports to regulators on sanctions and money-laundering controls for Bank of Tokyo-Mitsubishi.
- Bank Leumi Le-Israel settles (12/22) deferred-prosecution agreement for $400 million admitting to helping American clients evade taxes.
- Four former Countrywide executives will receive over $200M of whistleblower payments as part of $16.65B settlement against Bank of America.
45,000 America tax evaders have accepted IRS offshore accounts amnesty program and paid more than $6.5B in back taxes, interest and penalties. 145,000 foreign banks will share information about US $50k (or greater) account holders - complying with Foreign Account Tax Compliance Act (7/1/14, FATCA) and stemming offshore tax evasion.
Anadarko Petroleum (4/3) settles $5.15B of environmental liabilities for Kerr-McGee acquisition in 2006.
- Halliburton to pay (9/2) $1.1B to Gulf Coast residents, local governments and businesses for fatal 2010 Macondo well oil spill.
- PG&E to pay (9/2) $1.4B for fatal natural-gas pipeline explosion in San Bruno, California.
- Alstom guilty of violating Foreign Corrupt Practices Act settles (12/22) $772M for bribery to win power-plant contracts.
- Apple settles (11/21) $450M for harming consumers by colluding in raising e-book prices.
- Hewlett-Packard fined (9/13) $108M for paying bribes through its subsidiaries in Russia, Poland and Mexico.
- T-Mobile to pay (12/19) $90M for violations in billing customers, cramming charges.
- AT&T to pay (10/8) $105M for violations in billing customers, cramming charges.
- Toyota (3/19) settles $1.2B for cars unintended vehicle acceleration between 2009 and 2010, recalling more than 10 million U.S. vehicles.
- General Motors recalls over 30 million cars, repairs and fund to compensate victims killed/injured in accidents expected to cost $2.5B.
Medicare Fraud Strike Force (5/13) charges 90 doctors, nurses, licensed medical professionals, health care company owners and others of conspiring to submit approximately $260M in fraudulent billings. Since March 2007 1,900 charged and $19.2B recovered of estimated $60B/yr of fraudulent billings.
- Mathew Martoma sentenced (9/8, SAC Capital Advisors) 9 years (and forfeit $9.3M) for record insider trading of $275M of illegal gains and avoided losses, guilty 2 counts securities fraud and 1 count conspiracy.
Ukraine's emergency rescue package IMF approved (4/30) $17.5B and unlocks an additional $15B in international financing. Kiev, Ukraine (3/27) over $30B in IMF bilateral and multilateral support over the next 2 years. U.S. (3/27) grants $1B in loan guarantees to Ukraine and sanctions against Russia for takeover of Crimea. UN votes Crimea secession invalid. Kyiv parliament's renunciation (12/23) of Ukraine's neutral status a move towards joining NATO.
Sochi 2014 Olympics - Norway's Ole Einar Bjoerndalen becomes most medaled winter Olympian with 13 (8 gold medals, 2 in Sochi). Russia wins 13 golds and 33 total; US wins 9 golds and 28 total.