Investment Markets Overview — 10th October 2014

As if there isn’t enough war in the world, this week regulators in the US and the UK announced a planned “banking war-game,” to “test crisis defences,” or in plain English, to simulate the failure of a major cross-border bank, like Lehman Bros, to test their systems against a repeat of 2008, when Lehman went spectacularly bust and tax-payers from the two countries were committed to $/£ Billions to bail-out the banking sector. The exercise, involving the Fed’s Chair Yellen and the Bank of England Governor Carney, will take place on Oct. 13 in Washington, with the US Treasury Secretary Lew and the UK Chancellor George Osborne tagging along for good measure, as will the heads of a host of financial regulatory outfits from both sides of the pond. Osborne told reporters, “We need to make sure that taxpayers are not on the hook for future bank failures,” whilst the Financial Stability Board, also headed by Carney, maintains a list of global systemically important banks, currently numbering 29 banks and identifying HSBC and JPMorgan Chase & Co. as the banks whose failure would do the most damage to the global economy. Quite why this exercise is required beggars belief as one look at the Office of the Comptroller of the Currency’s US banking system derivatives report (available online) reveals that the aforementioned banks, together with a hand-full of others, hold derivatives exposure of up to 800% of their worth. QED.

10 Oct 14

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Additional Commentaries:
•US economic data . . .
•Euro-Zone . . .
•The UK . . .
•Out East . . .
•The $US index . . .
•Within the commodities complex . . .
•Economic data due next week includes . . .

In our “week-ending” 11th October 2013 we wrote, “The IMF revised lower its forecasts for global growth, its second downward revision this year …..

Charts:
1.Indices Weekly
2.US Revolving V Non-Revolving Credit
3.German Exports M on M V German Exports Y on Y
4.China M2 MS V Shanghai Comp Index
5.Commodity 1 Week Moves

Table:

13 Indices, 11 columns of detailed information, for accurate analysis

Leverage lurks unrecognised and unappreciated

Click Here to view Details of the full version of this Newsletter which includes full text and detailed Charts for each section

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