06Apr2015 Market Close: DOW Closed Up Triple Digits, U.S. Dollar Recovers And The Oils Rise To New Near-Term Highs

Blast Hits China Chemical Plant, One Injury Reported

An explosion hit part of an oil storage facility at Dragon Aromatics, a petrochemical producer in eastern China, Xinhua reported.

White Collar Watch: U.S. Weighs Whether to Act or Wait on Insider Trading

Prosecutors and the S.E.C. will most likely take a wait-and-see approach on the new limitations to the law against insider trading.

Breakingviews: Call for Activism at IBM Is Likely to Go Unheard

Investors have reason to be dissatisfied. The trouble is that IBM has already exhausted the typical activist playbook.

Oil jumps 5 percent on tempered Iran view, slower U.S. inventory rise

NEW YORK (Reuters) – Oil prices jumped more than 5 percent on Monday as traders reassessed how quickly Iran might increase exports after a preliminary nuclear deal and anticipated that a months-long rise in U.S. crude inventories may be slowing.

Wall St. Gains, With a Lift From Oil Prices

Asian markets drifted and many other markets were closed overseas.

How To Alleviate The Alleged “Worker Shortage” – Stop Subsidizing Non-Work

Submitted by Heritage’s Stephen Moore via David Stockman’s Contra Corner blog,

The great conundrum of the U.S. economy today is that we have record numbers of working age people out of the labor ‎force at the same time we have businesses desperately trying to find workers. As an example, the American Transportation Research Institute estimates there are 30,000 – 35,000 trucker jobs that could be filled tomorrow if workers would take these jobs-a shortage that could rise to 240,000 by 2022.

While the jobs market overall remains weak, demand is high for in certain sectors. For skilled and reliable mechanics, welders, engineers, electricians, plumbers, computer technicians, and nurses, jobs are plentiful; one can often find a job in 48 hours. As Bob Funk, the president of Express Services, which matches almost one-half million temporary workers with emplo‎yers each year, “If you have a useful skill, we can find you a job. But too many are graduating from high school and college without any skills at all.”

The lesson, to play off of the famous Waylon Jennings song: Momma don’t let your babies grow up to be philosophy majors

Three years ago the chronic disease of the economy was a shortage of jobs. This shortage persists in many sectors. But two other shortages are now being felt—the shortage of trained employees and of low-skilled employees willing to work. Patrick Doyle, the president of Domino’s Pizza, says that the franchises around the country are having a hard time filling delivery and clerical positions. “It’s a very …

India’s Private Equity Industry Shakes Off Its Doldrums

A rebounding stock market in the country is clearing the way for private equity investors to pursue fresh opportunities.

Machinists withdraw bid to unionize Delta’s flight attendants

NEW YORK (Reuters) – The International Association of Machinists and Aerospace Workers said on Monday it had temporarily withdrawn its application to organize flight attendants at Delta Air Lines.

Bonds Are Right! DoubleLine’s Gundlach Warns Fed “Has Been Wrong For So Long… Offers No Value”

History is on the market’s side, says DoubleLine’s Jeff Gundlach, noting the Fed’s forecast for how much benchmark rates will rise is still too high, even after central bankers lowered their estimates last month. BlackRock’s Jeffrey Rosenberg says the bond market’s too complacent and is poised for a correction, claiming The Fed has “a tremendous ability” to send bond yields higher. But as Bloomberg reports, “if the burden of proof is on anybody, it’s on the Fed,” and for now, as Gundlach exclaims, The Fed has “been wrong for so long,” that their forecasts have been literally of no value, “the market’s pricing has been closer.”

Despite policy-makers including New York Fed President William C. Dudley suggesting there’s something wrong with debt yields that aren’t climbing as the economy recovers, Bloomberg reports traders are signaling there’s little reason long-term Treasury yields can’t, and won’t, stay depressed…

Perhaps the bond market’s most important message is that the Fed’s own forecast for how much benchmark rates will rise is still too high, even after central bankers lowered their estimates last month. The marke …

Valuing (Greek) Banks: A Sum-Of-The-Parts Approach

Submitted by Alcimos

Valuing (Greek) Banks: A Sum-Of-The-Parts Approach

What do you buy, when you buy a bank stock? You effectively buy the constituent parts of a bank, which are:

1. its existing book; and

   its future business,

the latter of which can further be broken down to:

1. its deposit-gathering line-of-business;

   its loan-servicing business; and

   its loan-origination/distribution business

Don’t think we are forgetting something here, so let’s give it a shot at valuing them one-by-one.

Let’s start by looking at Eurobank’s existing book as an example. The market value of the bank’s equity and debt is around €72.5bn (liabilities are valued at par, as they mainly comprise deposits and Eurosystem funding). With that, one buys tangible assets of a book value of €71.5bn. In other words, holders of Eurobank equity are valuing the existing book and the future business almost on a par with the book value of the existing assets.

Let’s see then how some of these assets are valued on their own. Take, for example, Themeleion IV, Eurobank’s largest outstanding RMBS issue (placed, not retained). The A tranche currently trades at around 78 cents (if anything, the price of Themeleion IV is supported by purchases form Eurobank, which can book a capital gain by buying Themeleion paper and putting it in its hold-to-maturity portfolio). Also taking into account the B and C tranches, this translates into buying the underlying loans at 76 cents.

Wall St. climbs as weak data reduces rate worries

NEW YORK (Reuters) – U.S. stocks rose on Monday as expectations the Federal Reserve will push any interest rate increases further into the year offset concerns over Friday’s surprisingly weak jobs report.

Beppe Grillo Disarms The 7 Unfounded Fears Of A Euro Exit

Having previously warned that “the eurozone chess game is entering its final stage,” and exclaimed that “we are not at war with Russia or ISIS, we are at war with the Troika,” Italy’s erstwhile populist leader, Italy’s Five Star Movement’s Beppe Grillo unveils his Plan B by destroying seven unfounded myths with regard an exit from the euro…

7 unfounded fears about an exit from the Euro

1) Mortgages
Mortgages will be converted into the new currency the day we exit the Euro. For anyone with a variable interest rate, this will still remain linked to the Euribor and thus it will remain stable. In relation to mortgages, Italians will benefit.

2) Inflation
Just think that the goods (home, car, telephone) that we want to buy will come down in price. If we don’t spend, the economy stagnates. This is what is happening today with deflation. A low level of inflation is thus necessary to keep the economy going. On the other hand, it mustn’t be too high to avoid devaluing our ability to spend. This won’t happen because Italian products will become more competitive than foreign products and the products that we are obliged to import from abroad (for example: crude oil) have a limited impact on the final price (for example: in the last year the value of the Euro has fallen by about 25% in relation to the dollar, but the high level of cus …

Bank of America Merrill Lynch Hires Banker for Equity Capital Markets

Michael Wise will join the bank from Goldman Sachs, where he was head of equity market offerings for financial institutions.

James Koukios Leaves Justice Department for Morrison & Foerster

The former federal prosecutor is named a partner in the law firm’s securities litigation and white-collar criminal defense group.

We’ve Never Seen This Before In The Gold Market

Submitted by Dave Forrest via OilPrice.com,

It might prove to be a one-off. But one group in the gold industry this week forged ahead with a unique strategy – which might just change the market.

The group is India’s largest jewellery-maker, Rajesh Exports. Which said that it is taking an unusual step in securing gold supply for its operations.

Buying gold mines.

The firm’s owner, Rajesh Mehta, told reporters in Australia this week that he is visiting the country to vet potential mining acquisitions. Adding that his company has hired investment bankers to identify assets that could “ensure a reliable and permanent gold supply-line to our company”.

The buys are apparently sizeable. With Mehta indicating that he may spend up to $700 million to acquire “equity or loan” interests in mining projects.

“We would also like to invest in the retail jewelry sector in Australia,” he said. “That is, take the gold from here, process it in India and then supply the jewelry back here in the retail line that we set up here.”

Of course, the words of one company don’t make an industry trend. But in the case of Rajesh Exports, the firm does have substantial clout in terms of gold demand — currently consuming about 140 tons per year of the metal. Equal to about 15% of India’s total yearly gold import volume.

It also signals an interesting trend in natural resources of late. Where end users of metal globally are becoming some of the most active parties in funding new mining projects.

We’ve seen similar moves from state-owned met …

I.S.M. Services Index Shows Slightly Slower Growth in March

The Institute for Supply Management said a measure of sales fell in March, but hiring and orders rose, suggesting future growth.

Greece Calculates Germany Owes It A Third Of Its GDP In WWII Reparations

With almost 70% of Europeans already believing that Greece is a drag on the EU economy, this morning’s statement by Greek Alternate Finance Minister Dimitris Mardas – coming just a week after the war-raparations committee was set-up, telling lawmakers in Parliament that he has calculated that Germany owes Greece EUR 278.7 billion in World War II reparations, will surely deepen the rift (at almost 40% of Germany’s EUR 735 billion GDP) whether right or wrong.

As Bloomberg reports,

Greece’s total war reparations claim amounts to EUR 278.7b, Greek Alternate Finance Minister Dimitris Mardas tells lawmakers in Parliament.

The claim was calculated by Greece’s General Accounting Office, which has collected archival material.

This includes a EU10.3b repayment of loan country was forced to make to Germany during Nazi occupation…

Another legal issue that has surfaced concerns the 476 million reichsmarks lent against its will to Germany by the Greek National Bank during the war. If this were to be considered a form of war damage, then in principle it would be subject to reparation — except that according to the 1990 treaty, Germany would not have to pay it.

If the money were, however, to be considered a normal credit, then Greece would be entitled to get the money back. The problem is this: even partial recognition of such a deb …

Sketch Guy: Simple Financial Solutions Often Beat the Complex Ones

Seekers of money advice overlook simple answers because when they hear simple, they make the leap to easy. But sticking with good decisions isn’t easy.

Fed watching recent U.S. weakness; rate-hike timing unclear: Dudley

NEWARK, N.J. (Reuters) – The timing of the Federal Reserve’s interest rate hike, which would be its first in nearly a decade, is unclear and for now policymakers must watch that the U.S. economy’s surprising recent weakness does not signal a more substantial slowdown, a top Fed official said on Monday.

Even The Fed Admits Bureau Of Labor Statistics Data Is Now Meaningless

Shortly after Japan admitted all of its “rising wages” data for 2014 had been fabricated and on close examination all the optimistic increase in base wages was merely pre-election propaganda by the Abe government…

… we now find none other than the Philly Fed admitting that it no longer can report its state coincident and leading indexes because “the recent benchmark data revisions from the Bureau of Labor Statistics produced greater changes to the Philadelphia Fed’s estimating methodology than are typical. While estimates for most states do appear to be reasonable, those for some states are not.”

In other words, the BLS has “adjusted” its “data” so much (to fit within its political propaganda goalseek parameters) not even the Federal Reserve can make any sense of it, and can no longer use it for its own data analysis purposes.

Luckily for the permalgobulls, the BLS had enough credibility that its horrible March jobs data was enough to launch the S&P 500 on the biggest intraday ramp so far in 2015.

Source: Philly Fed, h/t James

US financier Rogers says now may be time to invest in Russia

MOSCOW (Reuters) – Now may be the time to invest in Russian shares because oil prices have hit bottom and the Russian stock market is rising, veteran U.S. financier Jim Rogers said on Monday.

State Street may roll out more ETFs linked to star managers

BOSTON (Reuters) – Ron O’Hanley, the new leader of State Street’s $2.45 trillion asset management division, says he will look closely at expanding the bank’s stable of bond-related products as exchange-traded funds run by rivals Vanguard and BlackRock have been more dominant in attracting investor money.

Deadly East Village Explosion Allegedly Due To Owner Sabotage

In a world seemingly bereft of consequences for all but the lower classes, the removal of an “illegally rigged gas supply” before a ConEd visit, appears to have been the cause of the deadly explosion in New York’s East Village last week. A plumber who worked at the building has allegedly, according to NY Post, admitted to illegally tapping into a gas line there – saying that the landlord’s son ordered him to do it (who, perhaps karmically, was hurt in the blast).

As NY Post reports,

A plumber who worked at the East Village building where two people died in an explosion last month has admitted to illegally tapping into a gas line there — but said the landlord’s son ordered him to do it, The Post has learned.

The unidentified tradesman confessed to rigging a gas-supply system for apartments at 121 Second Ave. but blamed it on his boss to “deflect” any fault from himself, law enforcement sources said.

Authorities haven’t decided whether to cut a deal with the worker in exchange for his testimony or use his statement against him, one source said.

The official investigation is still in its preliminary stage, with probers trying to recover evidence from the rubble, sources added.

Investigators suspect an illegal hookup in the building was removed from a gas line ahead of a Con Ed inspection on the day of the explosion, then reinstalled before the devastating b …

Cuba says U.S. companies won’t get preferential treatment

HAVANA (Reuters) – U.S. companies can expect the same treatment as those from the rest of the world, receiving neither special benefits nor punishment, if there is a further commercial opening between Cuba and the United States, Cuba’s foreign trade minister said.