Video: President Obama at the 2012 White House Correspondents' Dinner

Here's the CSPAN video of President Obama at the 2012 White House Correspondents' Dinner. He ripped on Huffington Post's business model.

Spain's Unemployment Rate Hits 24.44%, Youth Unemployment At 52%, Not Good (Q1, 2012)

Spain Unemployment Rate 24.44% (source: INE)
Wow, the Spanish government is trying to cut its budget deficit through austerity measures with the unemployment rate at an 18 year high, Spanish government bond yields and CDS rising, banks stressed with bad property loans, and regional governments possibly needing bailouts! You can see why S&P chopped Spain's credit rating to 'BBB+' from 'A' the other day and thinks there's a risk net government debt could rise further.

Spain's unemployment rate rose to 24.44% in the first quarter of 2012, which is near the multi-decade high of 24.5% in 1994 (Reuters chart via @pdacosta). And the youth unemployment (ages 16-25) rate hit 52% during the quarter (MarkitEconomics chart).

From Spain's Instituto Nacional de Estadística's (National Statistics Institute) data release on April 27, 2012:

Video Tours of North Korea and a Google Presentation; Government Prevents Technical Breakouts

VICE founder Shane Smith went on a "highly orchestrated" tour of North Korea and even saw one of their labor camps in Siberia, Russia. I also embedded Google Tech Talk and National Geographic videos on North Korea, which provide more detail on the country. You'll learn more about the regime's prison camps and nuclear program, as well as hear a defector's story. But, since this is a financial blog, Siegfried Hecker, of Stanford's Center for International Security and Cooperation, briefly talked about North Korea's private market activity during his Google presentation. But, unfortunately, the government prevents technical breakouts.

"There are signs of market activity all over North Korea. And the markets have gone up and down over the years because as soon as they become successful, then the government becomes scared and tries to shut them down. Soon as it shuts them down, the people try to figure out, you know, where they can actually get something so they build them back up. And so it sort of oscillates over time. What the Chinese would really like to do, they say look what we did thirty years ago and sort of let the strings out on the free market. But the North Korean regime is much too scared of that, so it is very careful." (see last video)

S&P Downgraded Spain to 'BBB+' From 'A' On Risk Net Government Debt Could Rise Further

Source: Flickr/Xavier68
From the S&P release: Ratings On Spain Lowered To 'BBB+/A-2' On Debt Concerns; Outlook Negative:
  • We believe that the Kingdom of Spain's budget trajectory will likely deteriorate against a background of economic contraction in contrast with our previous projections.
  • At the same time, we see an increasing likelihood that Spain's government will need to provide further fiscal support to the banking sector.
  • As a consequence, we believe there are heightened risks that Spain's net general government debt could rise further.
  • We are therefore lowering our long- and short-term sovereign credit ratings on Spain to 'BBB+/A-2' from 'A/A-1'.
  • The negative outlook on the long-term rating reflects our view of the significant risks to Spain's economic growth and budgetary performance, and the impact we believe this will likely have on the sovereign's creditworthiness.

Visit this post I did three days ago to keep abreast of the situation in Spain: Spanish Bank and Sovereign Debt Risk Monitor (Maturity Schedule, Yields, CDS) 4/23/2012.

Fitch's Quarterly Report on U.S. High Yield Bonds, Leveraged Loans and CLOs (BofA Merrill 'CCC' Yield Chart)

I couldn't find Fitch's U.S. High Yield Chart Book (there was a European Chart Book released), but today Fitch released its Q1 2012 U.S. Leveraged Market Quarterly, which is packed with charts showing trends in the U.S. high yield bond, leveraged loan, and CLO (collateralized loan obligation) markets. Fitch mentioned that $86.9 billion of high yield bonds were issued in Q1 2012, a new record high. From the press release:

"The U.S. high yield bond market set a new quarterly issuance record with $86.9 billion in the first quarter. The previous quarterly record was $80.6 billion, set in the fourth quarter of 2010. February's issuance total of $34.4 billion, was the second busiest month on record. Nearly 52% of total issuance during the quarter was directed toward refinancing or redeeming other bonds or notes. High yield retail funds took in strong inflows totalling more than $15 billion during the quarter.

Fitch's European High Yield Chart Book For April 2012

Fitch's April 2012 European High Yield Chart Book is available for free with a login. Below is the press release and charts of European high yield bond spreads by credit category and spread differentials from the Fitch report. From the spread differentials chart: "CCC vs BB spread rallied the most in Q112, coming within range of 2011 pre-summer levels, reflecting the return of risk appetite. Widening BBB vs BB spread since end March 2012 shows demand for safer assets in view of recent market volatility." I'm going to search for the U.S. high yield chart book.

Image source: Fitch
"Fitch: European High Yield Is Principal Alternative As Loan Issuance Subsides
26 Apr 2012 8:08 AM (EDT)

Link to Fitch Ratings' Report: European High Yield Chart Book April 2012

Fitch Ratings-London/Frankfurt-26 April 2012: Fitch Ratings has published the first edition of its new quarterly European High Yield (EHY) chart book, which illustrates recent trends in high yield bond issuance, maturities, default rates, fund flows and relative performance, as well as secondary market risk-adjusted pricing.

FOMC Statement, Fed's Economic Projections and Bernanke's Press Conference Video (4/25/2012)

Source: federalreserve.gov/monetarypolicy/files/fomcprojtabl20120425.pdf
If interested, here is yesterday's FOMC statement, the Federal Reserve's economic projections for 2012-2014 (change in real GDP, unemployment rate, PCE inflation and core PCE inflation from January's projections), and a video of Federal Reserve chairman Ben Bernanke's press conference.

The "central tendency" of the Fed's real GDP projection for 2012 rose to 2.4-2.9 from 2.2-2.7 in January, but for 2013 its projection declined to 2.7-3.1 from 2.8-3.2 in January. The central tendency "excludes the three highest and three lowest projections." Click the image for further review. Jim Rogers recently told Fox Business that the U.S. is due for a recession in 2013. They occur every 4-6 years.

Jim Rogers Says U.S. Due For Recession, Happens Every 4-6 Years; Gold Could Move Lower (Video)

Jim Rogers on Fox Business
On Fox Business on April 23, 2012, Jim Rogers, Chairman of Rogers Holdings, said he was "short some stocks" and believes the U.S. is due for a recession because they occur every four to six years. Also, "substantial tax increases" planned on January 1, 2013 could, if enacted, put pressure on economic growth. Jim Rogers is a long-term commodity bull and currently owns gold and agricultural commodities in his portfolio, but he still thinks gold and silver could move lower if the current trend continues. He also owns the "terribly flawed" U.S. dollar just in case there is global turmoil. Watch the interview below.

Money, Power and Wall Street (FRONTLINE)

Frontline (PBS) is out with a two part documentary on the 2008 financial crisis titled "Money, Power and Wall Street". Watch the first episode of parts 1, 2, 3 and 4 below.

Bear Stearns documents (source: Frontline/PBS, click for the video)
From Chapter 1:

"In 1994, a team of young, 20-something JPMorgan bankers on a retreat in Boca Raton, Fla. dreamed up the “credit default swap” — a complicated derivative they hoped would help manage risk and stabilize the financial system. Fourteen years later, they watched in horror as that global system — weighed down by the risk of credit default swaps tied to morgtage loans — collapsed." (PBS.org)

FIN 501 #FAIL!

Spanish Bank and Sovereign Debt Risk Monitor (Maturity Schedule, Yields, CDS)

Chart source: Tesoro.es
Since Spain seems to be the new Greece these days, I thought I'd link to quotes and charts of Spanish government bond yields, Spain's 5-year credit default swap, Spanish bank CDS, the German-Spanish 10Y yield spread (if bunds remain a safe haven), and a chart of Spain's monthly debt maturity schedule in 2012. April, July and October are the biggest months. You can also search for Spanish stocks on Bloomberg.com that trade on the Bolsa de Madrid (Madrid Stock Exchange). In this post I just linked to quotes that are hard to find on the web. I'm not sure where Spanish bank bond quotes are. Credit default swaps are essentially tradable bond insurance contracts that price and protect against default risk in the illiquid cash bond market. If there's a credit event (default), or in Greece's case a "restructuring event", the CDS holders would get a payout at par. But it all depends on the type of credit event and the contract language. The Spanish 5Y CDS spread (rate) made a new record high on 4/10/2012.

FYI: Letras del Tesoro = 3-18 months; Bonos del Estado = 3-5 years; Obligaciones del Estado = 10-30 years. More info here: http://www.tesoro.es/en/deuda/index_deuda.asp.

North Korea Threatens to Attack South Korea

Kim Jong-Un, Flickr/PetersSnoopy
Some breaking geopolitical news tonight via @mpoppel of BNO News:


On KCNA's site (says April 20):

I'm not sure what Lil' Kim is up to here, but definitely something to keep an eye on. ES (e-mini S&P) and GC (gold) are down 0.20% and 0.04%, respectively.