The Banking and Strategy Initiative

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US Economy (EoD review) : BHP speak still scares CAT, 5 yr Auction, SCOTUS and unburnt crude

Crude inventories climbed as perhaps over optimistic importers increased local supplies to 9 mln bpd and inventories climbed 7 mln barrels this week. Rest it’s as bad as ever but with factories not producing inventories are being lopped off for Gasoline and Distillates

Meanwhile all Caterpillar had to do was convince people that mining equipment demand does no t depend on demand or prices of metals and minerals but instead reported slowing sales at Dealers as the BHP prediction of single digit ferrous demand growth was backed by Chinese data on Q1 profits with 94% fall in profits of Ferrous mines  and downstream producers and Caterpillar swung wildly to $104

Meanwhile SCOTUS continued a day of arguments on the individual mandate to the third day of arguments as justices showed their darker side, leaning towards repealing the complete “train wreck” called Patient protection and Affordable Care Act towards the end with Judge Roberts , expected to be a “fence sitter” witht he pivotal vote or even the other such swing factor Justice A Kennedy looking smug about the deal. meanwhile close watchers still continue to bat for a 6-3 decision in favor of the Act remaining on statute, both according to the Reuters live blog.

Dartmouth College President Jim Yong Kim

Dartmouth College President Jim Yong Kim (Photo credit: Wikipedia)

Also the threat of repercussions is unlikely to stop BRICS from buying Iranian crude even as purchases have come down by at least a fifth and Iran has also reduced its daily production. World Bank Candidate, Korean Doctor and Dartmouth college President Jim Yong Kim was caught up in news of his rapping days and a book that is not all pro US policy even as he looks set to beat emerging markets candidates Ocampo from Colombia and the Nigerian Finance Minister, if only for his own clarity to developmental objectives. Meanwhile, China’s predilection with Yuan lending leads to speculation of a new Development Bank being set up ( unlikely!) as the five BRICS nations’ leaders get together in New Delhi

As the Jakarta Globe reports: (Indonesia : the new $1 Tln economy)

 Brazil, Russia, India, China and South Africa account for 45 percent of the world’s population and a quarter of its economy at $13 trillion.

After a successful 2 yr note auction yesterday with a 0.34% awarded yield and a 3.75 cover led by strong demand meant only 44% to Dealers, the 5 yr Auction also repeated the feat today ahead of the 7 yr Auction tomorrow but slightly weaker as always at 2.75 cover and 1.04% awarded yield

ECB deposits remain above EUR 800 bln as the Fed Balance Sheet reports its own $3 Tln saga in tomorrow’s report. Meanwhile even as the ESM grows to the near EUR 1 tln mark with the carryover of current facilities the LTRO seeking banks are being hit with a 107 bps extra spread and CDS of non LTRO encumbered banks showing improvement instead of the others, seeking the German / DB threatened LTRO stigma effect as zerohedge follows with aplomb. even though European markets correct, the Euro is likely to remain strong and that currency headwind has been stripped off the equities too which will continue to move up the rest of the year after most of the bad news runs in advance in the markets.

My irrational reason for buoyancy in the Economy.? Magic Johnson was fronted $2 bln by Guggenheim to buy the Dodgers franchise on an emotional appeal ahead of Steve Cohen !! And yes, Abu Dhabi will likely own RBS too. HSBC owned BOCOM(19%) that brought in 25% of the franchise profits printed a great growth story despite $226 bln in LGFV loans and will likely succeed in a new raising of $9 bln in Capital. Its NPLs from LGFVs? a 100% jump to 0.34% or a third of the CCB NPL rate from twice the loans!!  That says, efficiency pays.

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