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$1bn payout expected as Russian regulator pulls plug on ‘dubious’ bank

“Russia’s Central Bank (CBR) has revoked the license of Master Bank over $61 million in alleged illegal banking transactions. Over 1000 ATMs are frozen, and the head office is being raided by police. Massive money laundering operations and shady aсcounting prompted the regulator to withdraw the license, part of a larger overhaul to close down corrupt banks in Russia. The withdrawal of Master Bank’s license means that its estimated $1.5 billion (47.4 billion rubles) in private funds are now frozen, with Russia’s Deposit Insurance Agency promising to pay out $917 million (30 billion rubles) to bank customers by December 4.” Continue reading →

Median CPI Up 0.1% in October

“My advice: ignore all price inflation statistics that are not accompanied by publicly available methodologies. The Median CPI is accompanied by public explanations. It is published monthly by the Federal Reserve Bank of Cleveland. The trend of the Median CPI is toward lower price inflation. It is not yet price deflation. But prices are barely rising. This leaves the Federal Open Market Committee lots of room to continue its quantitative easing policy of buying half a trillion dollars a year of long-term Treasury bonds and half a trillion worth of Freddie/Fannie bonds. The FOMC can continue to subsidize the housing market without fear of political repercussions.” Continue reading →

Bitcoin continues to swing without any help from central banks

“The euro dropped against the dollar Wednesday on yet another signal that the European Central Bank is considering more unconventional policies at the same time that the Federal Reserve has shown a willingness to slow its bond purchases. Such central-bank inspired moves are absent from bitcoin by design; the virtual currency has no central bank and is created through a process called mining. So without monetary policy as a driver, what’s behind the big moves? Surging demand in China, growing legitimacy in the U.S. as demonstrated byhearings in the Senate, the closure of the bitcoin-only drug market Silk Road, and an open-ended bitcoin trust run by SecondMarket.” Continue reading →

ECB Said to Consider Minus 0.1 Percent Deposit Rate

“The European Central Bank is considering a smaller-than-normal cut in the deposit rate if officials decide to take it negative for the first time, according to two people with knowledge of the debate. Policy makers would reduce the rate for commercial lenders who park excess cash at the ECB to minus 0.1 percent from zero, said the people who asked not to be identified because the talks aren’t public. It would be the first time the central bank has adjusted interest rates by less than a quarter of a percentage point. The concept, which has been discussed by Governing Council members, doesn’t yet have a consensus, the people said.” Continue reading →

Bitcoin Could be Regulated as a Commodity: Senate Banking Hearing

“BitPay CEO Tony Gallippi also presented, and argued against regulation. He recommended that Congress take the same approach to bitcoin as they did to the commercial Internet in the early nineties: wait and see. ‘If America is the leader in Bitcoin technology, America will create more jobs and more exports,’ he said. ‘If the United States doesn’t allow our businesses to accept bitcoin and create more jobs and exports, then countries like Germany and China certainly will.’ He understood why banks might be nervous about virtual currencies, though, as it is a disruptive technology, which threatens to undermine their business models.” Continue reading →

The Manufacturing Index Reverses, Falls

“The New York Federal Reserve Bank’s latest survey indicates a slowing of the regional economy. This was not expected by economists. This is a major reversal. It took place across the boards. This could be a temporary fluke. But this is November. This is the month preceding the Christmas season. This should be a time of increasing demand. It isn’t in the New York City area — the heart of America’s financial center.” Continue reading →

The strangest bull market ever

“This bull market is really odd. The Dow and S&P 500 are near all-time highs. The Nasdaq is inching closer to 4,000 for the first time since the tech bubble did its best weasel impersonation and popped in 2000. Twitter (TWTR) surged on its first day of trading, despite the fact that it is not yet profitable. Snapchat has reportedly turned down offers to sell out to Facebook (FB) for $3 billion. This is a company that is not even generating sales yet. How are all those hot ‘pre-revenue’ Internet companies from 15 years ago doing? Are they still monetizing eyeballs? It looks like bears remain in hibernation and the bulls are … wait for the Rage Against the Machine reference … still on parade.” Continue reading →

Yellen Signals Continued QE Undeterred by Bubble Risk

“‘I don’t see evidence at this point, in major sectors of asset prices, misalignments,’ she said during her confirmation hearing to be the next Fed chairman. ‘Although there is limited evidence of reach for yield, we don’t see a broad buildup in leverage, where the development of risks that I think at this stage poses a risk to financial stability.’ Yellen signaled her determination to use bond buying to strengthen the economy and drive down the nation’s 7.3% unemployment rate. As benchmark U.S. stock indexes rose to records, she sought to dispel concerns from senators that the central bank’s policy is pumping up the values of equities and housing to an extent that jeopardizes market stability.” Continue reading →