Monday, January 4, 2016

Today's links

1---The Russian National Security Strategy notes that the determining factor in the relationship with NATO is “the unacceptability to Russia of the growing military activity by the alliance, the approach of its military infrastructure to Russia’s borders, deployment of anti-missile defense system and any attempts to empower the alliance with the global functions, implemented in violation of the international law norms.”

Read more: http://sputniknews.com/world/20160104/1032660660/russia-security-strategy-reaction.html#ixzz3wHhbenlk



2--Saudi footprint in all regional crises: Iran's Judiciary chief


3--Hezbollah's Secretary General, Sayed Hassan Nasrallah, has slammed Riyadh for its unjust execution of prominent Saudi cleric Nimr al-Nimr.
http://www.presstv.ir/Detail/2016/01/04/444392/Hezbollah-Saudi-Execution-condemn/


The land of Islam was unjustly named after one family, the Saudi family, who forced itself onto the people itself through murder and terror with the British producing the financial support. The Saudi rule was established on the bodies of the people it massacred.


Iran's Judiciary Chief Ayatollah Sadeq Amoli-Larijani has slammed Saudi Arabia’s execution of prominent Shia cleric Sheikh Nimr al-Nimr, saying all conflicts in the region can be traced back to the Saudi regime.
“The Muslim world, today, is witnessing numerous crimes [committed] by Saudis in different regions and in all [instances of] belligerency happening in Iraq, Syria, Lebanon, Yemen and Bahrain, Saudis’ footprint and their support for terrorists are seen,” Amoli-Larijani said on Monday.
He added that Saudi rulers hatch “the most evil plots” on behalf of hegemonic powers and colonialists, saying “undoubtedly, their crimes in Syria, Iraq and Yemen will serve the interests of Israel and the US.


4--Saudi Arabia wages a phony war on terror
http://www.irishexaminer.com/viewpoints/analysis/saudi-arabia-wages-a-phony-war-on-terror-373729.html


beyond Saudi Arabia’s strategic manipulations lies the fundamental problem with which we started: The kingdom’s official ideology forms the heart of the terrorist creed.....


Saudi Arabia has been bankrolling Islamist terrorism since the oil-price boom of the 1970s dramatically boosted the country’s wealth. According to a 2013 European Parliament report, some of the €9bn invested by Saudi Arabia for “its Wahhabi agenda” in South and Southeast Asia was “diverted” to terrorist groups, including Lashkar-e-Taiba, which carried out the 2008 Mumbai terror attacks.
Western leaders have recognised the Saudi role for many years. In a 2009 diplomatic cable, then-US secretary of state Hillary Clinton identified Saudi Arabia as “the most significant source of funding to Sunni terrorist groups worldwide”. Thanks largely to the West’s interest in Saudi oil, however, the kingdom has faced no international sanctions.
Now, with the growth of terrorist movements like the Islamic State, priorities are changing. As German vice chancellor Sigmar Gabriel said in a recent interview: “We must make it clear to the Saudis that the time of looking the other way is over.”


5--Putin names United States among threats in new Russian security strategy
http://www.reuters.com/article/russia-security-strategy-idUSKBN0UG09Q20160102


6---Putin's success in Syria???


The key issue here is what criteria to use to measure “success”. And that, in turns, begs the question of what the Russians had hoped to achieve with their intervention in the first place. It turns out that Putin clearly and officially spelled out what the purpose of the Russian intervention was. On October 11th, he declared the following in an interview with Vladimir Soloviev on the TV channel Russia 1:
Our objective is to stabilize the legitimate authority and create conditions for a political compromise...
  • Primary objective: stabilize the legitimate authority and create conditions for a political compromise
  • Secondary objective : tip the balance of the war in favor of the Syrian armed forces. 
  • 7---Syria is ME Stalingrad
    http://www.informationclearinghouse.info/article43847.htm


    8---Stocks fall 2%; Dow briefly plunges 400 after China market rout
    http://www.cnbc.com/2016/01/04/us-markets.html


    9---The Federal Reserve's Brave New Interest Rate World
    http://www.forbes.com/sites/francescoppola/2016/01/01/the-federal-reserves-brave-new-interest-rate-world/


    10--Fed awards record $474.59 billion in one-day reverse repos


    11--This time isn't different
    http://www.zerohedge.com/news/2016-01-04/time-isnt-different


    12--Here's how the Fed actually raises interest rates
    http://www.cnbc.com/2015/12/15/heres-how-the-fed-actually-raises-interest-rates.html
    If things go as Wall Street expects, the Fed will be lifting the current funds rate target from 0 to 0.25 percent to 0.25 to 0.50 percent — a number that the investors will see as a quarter-point hike, though the mechanics may not quite work out that way.
    ...
    The effort will be an attempt to drain reserves at a level that keeps the funds rate in the range the FOMC specifies, likely close to 0.50 percent from the current 0.14 percent. Bank of America Merrill Lynch strategists believe the rate actually will settle around the 0.32 to 0.34 percent range. The changes will be implemented the day after the committee approves the rate hike
    ..
    The Fed has never had to conduct rate operations with $2.42 trillion in reserves and a $4.5 trillion balance sheet consisting of the various debt products — primarily Treasurys and mortgage-backed securities — it has purchased since conducting three rounds of quantitative easing in a six-year period starting in 2008. ...


    Bank of America Merrill Lynch provides a good explainer:
    We expect that the Fed will increase the ON RRP cap to somewhere between $500 billion and $800 billion at liftoff. This should provide adequate headroom to meet demand, which we think will initially total $200 billion to $300 billion
    ...."In a world of zero rates, these excess reserves pose few challenges for implementing monetary policy," Pashtan said. "However, in a non-zero rate regime, excess reserves create a challenging operating framework for the Federal Reserve as it seeks to raise overnight funding rates."...


    Should the IOER-RRP strategy fail to work — and there are fears it won't due to the size of the operations — the Fed either can expand the programs or conduct short-term asset sales, a scenario generally considered unlikely but certainly on the table...


    While the central bank ultimately will have to shrink its mammoth balance sheet, most expect that process won't begin for a few years.
    "Fed officials have communicated their concerns that asset sales pose the risk of sending unintended hawkish policy signals, along with the potential to create unexpected financial market reactions," Pashtan said. "Accordingly, we do not expect any balance sheet normalization until mid-2017."


    13---Recalibration, Santelli
    http://video.cnbc.com/gallery/?video=3000470336


    14--Lenders drove the boom and the bust
    Pools
    In the years leading up to the 2008 financial crisis, trillions of new dollars flooded into housing.  Why?
    Was it coaxed into the housing market by borrowers who convinced bankers they could pay back the loans?
    No. It gushed into the housing market from financiers with piles of money they needed to invest.
    In other words, the housing boom was driven by lenders, not by borrowers, say several economists.




    15--The Fed’s Rate Increase: A New Test Looms  
    http://www.wsj.com/articles/the-feds-rate-increase-the-next-test-looms-1450294388

    The Fed’s move to raise its interest-rate target is only the first step. Now begins the complex and untested task of implementing policy with new tools in a very different market environment







    the central bank has never before exited such a period of superlow rates. The mechanics of adjusting rates have changed.
    Before the financial crisis, monetary policy was implemented almost entirely by transactions between large banks and the Fed. The Fed hit its target for the fed-funds rate by buying or selling small amounts of securities.


    Now the process involves not just banks but government-sponsored entities and mutual funds. Instead of buying or selling small amounts of securities, the Fed pays interest on reserves and may have to engage in massive short-term borrowing.
    Thanks to Fed bond buying, reserve balances have grown to about $2.6 trillion, nearly all of which are “excess reserves” not required to back bank deposits. This vast oversupply means the Fed will be unable to move the effective federal-funds rate up or down with small changes in reserve amounts.


    Instead, the main tool will be adjustments in the rate the Fed pays on excess reserve balances. This should act as a magnet for the fed-funds rate. But it won’t be enough.....


    But capital regulations and deposit assessments raise the cost of holding reserves for banks, reducing the overnight rate the banks are willing to pay. So this could fall below the floor—meanings the Fed’s ability to implement its policy rate could come unmoored.
    To avoid this, the Fed has been testing a new tool: the overnight reverse repurchase agreement. These are effectively collateralized loans to the Federal Reserve that temporarily drain excess reserves from government entities or excess cash from money-market funds.
    This, however, has risks, too. If the Fed doesn’t limit the amount of repurchases, the opportunity of earning risk-free interest at the Fed’s new higher rate could trigger a potentially destabilizing flight from risk assets such as bond mutual funds. Should the Fed set too low a cap, it risks losing control of overnight borrowing rates.
    Further complicating things: During tests of the new tool, demand for the reverse repurchases rose sharply around quarter and-year ends. So demand could be far stronger due to the timing of the Fed’s first increase.
    If the Fed doesn’t accommodate that appropriately, it again may find rates falling below its target.
    More than any time in the past, all eyes will be on the effective fed-funds rate and short-term money market rates, not just the Fed’s target. This will be where the effectiveness of the Fed’s new tools will be demonstrated—or not.
    And it will decide whether rates can hold a new orbit.

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