PE Legend Leon Black Is Buyer Of Tom Cruise’s $40 Million Bevely Hills Mansion

When it comes to financial assets, Apollo’s legendary founder Leon Black has been gloomy for years, and said in a recent Milken Conference that his firm has been “selling everything that is not nailed down.” The billionaire (who at last check was worth around $4.7 billion) however appears to have a soft spot for Hollywood A-lister real estate. Because we were surprised to learn that the buyer of Tom Cruise’s $40 million 10,000 square foot Beverly Hills home is none other than Leon Black.
As TMZ reports, Tom Cruise has decided to leave Los Angeles because he’s saying goodbye to the estate he called home for nearly a decade.
Tom has sold the mansion he shared with Katie Holmes for $40 million. Cruise first offered the house for $50 million in September 2015, and then lowered the price to $45 million but could find no buyers at even the reduced price. Nonetheless, he still cashed in: he bought the house from real estate guru Kurt Rappaport, who owed it back in 2007, for $32.5 million.
As for the house, it has 7 bedrooms, 9 bathrooms, a tennis court, a swimming pool (of course), a children’s playground and a couple of guesthouses. The heavily fortified, 1.3-acre spread includes a roomy motor court with swimming-pool-sized fountain, a lighted tennis court with basketball hoops, a lap-length swimming pool, a children’s playground, and a couple of guesthouses.

This post was published at Zero Hedge on 05/21/2016 –.

The U.S. Government Is Quietly Paying Billions to Wall Street Banks

Wall Street On Parade has learned, by piecing together the SEC filings of Freddie Mac and Fannie Mae and previous Federal Reserve studies, that these two companies that have been in U. S. government conservatorship since the 2008 financial crisis, continue to pay out billions of dollars to the biggest Wall Street banks on their derivatives contracts.
This raises multiple red flags, not the least of which is how much does the U. S. public really understand about the 2008 financial crisis and what appears to be a continuing taxpayer bailout. It is well known at this point that AIG had to be bailed out because it owed over $90 billion on its derivative and security loan contracts to Wall Street and foreign banks. Now, it’s looking like Fannie Mae and Freddie Mac were also Wall Street’s derivatives patsies – or ‘dumb tourists’ as author Michael Lewis might say.
According to Freddie Mac’s first quarter 10K filed with the Securities and Exchange Commission, this is how much it has paid to its derivatives counterparties in just the past four years: $2.1 billion in 2015; $2.6 billion in 2014; $3.46 billion in 2013; and $3.8 billion in 2012. Fannie Mae’s payouts have been smaller than Freddie Mac’s.

This post was published at Wall Street On Parade By Pam Martens and Russ Marte.

Suddenly Trump And Hillary Is All Goldman’s Clients Want To Talk About

A little over a month ago, conventional wisdom (and overrated pundits) said that Trump has no chance of being the republican nominee. They were all wrong, but so was the market which continued to ignore the possibility of a Trump presidency until well after the fact. And, as always happens, now is when if not the market, then certainly Goldman’s clients are finally trying to catch up. As Goldman strategist David Kostin (who just one week ago warned that there is now a substantial risk of a market drop ahead of the year end), writes “Politics is now a topic in every client discussion.”
Kostin remains short-term bearish, and still sees the S&P sliding as low as 1850 in the next several months, but he appears more focused on the the impact of the next president on the market and the economy, now that suddenly the market is starting to price it in.
So for all those curious, this is how Kostin is responding to all of Goldman’s clients questions about the upcoming presidential election and how to trade it.
* * *
United we stand, divided we fall: Equity strategies ahead of a rise in political uncertainty

The US Presidential election will take place in 170 days on November 8, 2016. Politics is now a topic in every client discussion. Last week we argued the S&P 500 was vulnerable to a 5%-10% drawdown and the index could fall to 1850-1950 during the next several months although it would end the year at 2100, roughly 3% above the current level. Rising political uncertainty was one of the risks we identified as a potential catalyst for a market drawdown.

This post was published at Zero Hedge on 05/21/2016 –.

Despite Rally, Hype, and NIRP, Bear Markets Hound the Globe

Even in the US.
The global stock market rally since mid-February has allowed stocks to recover at a blistering pace, or so it seems. And you’d think from all the hype that the bear-market episode is behind us.
By Friday afternoon, the Dow was just 4.6% below its all-time high, set a year ago, and the S&P 500 only 3.9%. On Friday, the S&P 500 edged back into the green year-to-date, while the Dow remains in the red. The Nasdaq is still down 8.8% from its high a year ago. But those were the cleanest dirty shirts of the major global indices.
So, now that we’re relieved the whiff of panic has blown over, it’s time to have a look again at our Bear Market Tracker, lest we think all is well in the world of equities.

This post was published at Wolf Street by Wolf Richter ‘ May 22, 2016.

21/5/16: Manipulating Markets in Everything: Social Media, China, Europe

So, Chinese Government swamps critical analysis with ‘positive’ social media posts, per Bloomberg report:As the story notes: ‘stopping an argument is best done by distraction and changing the subject rather than more argument’.
So now, consider what the EU and European Governments (including Irish Government) have been doing since the start of the Global Financial Crisis.
They have hired scores of (mostly) mid-educated economists to write, what effectively amounts to repetitive reports on the state of economy . All endlessly cheering the state of ‘recovery’.

This post was published at True Economics on Sunday, May 22, 2016.

State Of The States: New Jersey’s Problems Are Not “Mathematically Solvable”

While the warning flags are raging in Illinois and Connecticut, JPMorgan’s Michael Cembalest states that New Jersey’s problems are “not mathematically solvable.” The stunning admission from a status-quo-sustaining bank that is ‘very focused on the total indebtedness of US states,” should be worrisome enough but as Cembalest explains the answer to a debt problem is not always piling up more debt; the issue is to address the root of the problem, which can be a delicate and at times politically incorrect topic.
Reviewing the JPMorgan research might lead to several conclusions, one of them being that when any government starts to get ahead of logical debt ratios investors might best be advised to proceed with caution. As’s Mark Melin continues, Cembalest takes a step back and looks at the servicing cost for the mounting state debt.
What he does is look at unfunded liabilities and given several formula factors, including an allowance to return 6% on assets. Using this formula, he projects what starts are currently paying and what they might be paying on a 30-year accrual basis. Such forward modeling helps investors determine debt sustainability much more so than does an institutional research report that might seem to omit or de-emphasize material facts.

This post was published at Zero Hedge on 05/21/2016 –.

June, You’re Up!

This is a syndicated repost courtesy of Economy and Markets. To view original, click here. Reposted with permission.
For months we’ve been asking: Are the markets too concerned about what the Fed says and what it plans to do, or is the Fed too concerned about the markets? Its officials have walked back and forth on their comments all year, and no one’s really been sure what they’re up to. The markets have been permanently on edge!
Well, from the Fed meeting minutes earlier this week, it looks much more likely that a June hike is now on the table.
The economic data isn’t great, but it has improved. Wages are up a bit. Retails sales came in strong last month. U. S. markets have been flying high for three months now. Maybe, if the Fed can get the markets thinking about a hike ahead of time, they won’t freak out again like they did in January. That’s the idea, anyway.
But I think the Fed recognizes they’ve lost credibility and need toact. In a recent New York Times interview, St. Louis Fed President James Bullard admitted that credibility is a major issue for central bankers right now.

This post was published at Wall Street Examiner by Lance Gaitan ‘ May 20, 2016.

The Big Four Economic Indicators: April Real Retail Sales Up 0.8%

Note: With the release of this morning’s Consumer Price Index, we’ve updated this commentary to include the Real Retail Sales data for April.
Official recession calls are the responsibility of the NBER Business Cycle Dating Committee, which is understandably vague about the specific indicators on which they base their decisions. This committee statement is about as close as they get to identifying their method.
Listen to Davidowitz: We Are Seeing ‘Massive’ Store Closings Across the US Right Now
There is, however, a general belief that there are four big indicators that the committee weighs heavily in their cycle identification process. They are:
Nonfarm Employment Industrial Production Real Retail Sales Real Personal Income (excluding Transfer Receipts)

This post was published at FinancialSense on 05/18/2016.

What Bubble? Triple-Wide Mobile Home Sells For $5.3 Million In Malibu

As we’ve chronicled the pure insanity that has been taking place in the real estate market, most recently with the revelation that for just $499,000 one could be the proud owner of a 20-by-97 foot lot with a “house” on it in Brooklyn, we continue to be amazed at what we find.
Now we learn that an unidentified buyer has spent a mind-boggling $5.3 million for a triple-wide mobile home in Malibu, California. The four bedroom, four bathroom mobile overlooks the coastline, and comes with hardwood floors, skylights and a pair of gas fireplaces.

This post was published at Zero Hedge on 05/21/2016 –.

Why Deutsche Bank Thinks A Fed Rate Hike Would Unleash A Stock MarketCrash

Following this week’s FOMC Minutes shows, which violently repriced June rate hike odds from 4% to 30% and July from 20% to 50%, the cries of lenienecy have begun, and nobody is doing so louder than Deutsche Bank which in an overnight credit summary note tries to make it clear that “the market is not ready for a June hike.”
Why is Germany’s largest bank, whose stock price is trading just barely above 52 weeks lows and level not seen since the financial crisis so worried? Simple: “the hawkish minutes will weigh on risk, bias yields lower, and flatten the curve” for the simple reason that the Fed is so clueless it “seems to be interpreting recent easing in financial conditions as an opportunity to force rate expectations higher.” Instead, the Fed is once again confusing cause and effect, and DB says the “ease in financial conditions occurred precisely because of the Fed’s dovish turn earlier this year.” Hence why DB is confident a hawkish turn will push markets right back where they were in December and January, prior to the February Shanghai Accord.
Of course, we already gave this explanation last fall, just before the Fed’s December rate hike. It’s time to give it again, and amusingly, DB agrees because as Dominic Konstam writes, “If you think you’ve seen this movie before it’s because you have.”

This post was published at Zero Hedge on 05/21/2016 –.

“We Are Becoming Convinced That The System Won’t Stabilize” – Citi Explains How Central Banks Broke The Market

After taking a three month leave of absence, Citi’s Matt King has stormed right back to the front lines of financial reporting where his original perspective is very critically needed, and following up on his latest must read presentation which we posted two weeks ago and dubbed “the tipping point“, overnight Citi’s chief credit strategist is out with a new note titled “The race to the bottom”, which focuses on the negative feedback loop world in which “liquidity breeds liquidity and illiquidity breeds illiquidity” (we are now in the latter phase), and how this impacts both global markets and the global economy, and how central banks are desperately struggling to prevent it all from crashing down.
In this note we will layout King’s thoughts on the market; his observations on the economy will be presented at a later time.
From Citi’s Matt King
The race to the bottom
No, we’re not talking about currency wars, though they do illustrate the phenomenon. Nor are we thinking about credit spreads and yields rapidly converging on (and in some cases surpassing) the zero bound.
Rather, a significant theme of our research in recent years has been the tendency of investors to assume they live in a zero-sum world, only to face a rude awakening when they discover that markets think otherwise.

This post was published at Zero Hedge on 05/21/2016 –.

Doug Noland’s Credut Bubble Bulletin: Unambiguous Signals Disregarded

This is a syndicated repost courtesy of Credit Bubble Bulletin. To view original, click here. Reposted with permission.
May 20 – Bloomberg (Susanne Walker Barton): ‘Treasuries fell, heading for their biggest weekly drop since November, as Federal Reserve officials indicated they’re considering a June interest-rate increase should economic data remain steady… A measure of volatility in the $13.4 trillion Treasury market rose Thursday to the highest level in more than a month. Investors were caught off guard by the hawkish tone of Fed communications, lulled into complacency amid signs of sluggish global economic growth.’
I’ll assume the FOMC would prefer to boost rates another 25 bps. They seek to at least appear on a path of ‘normalization,’ dissatisfied with the ‘one and done’ tag. Perhaps they have also become more attentive to the risks associated with prolonged near-zero rates for banks, insurance companies, money funds and the financial industry more generally. Recent economic data would tend to support a more hawkish bent, with a firming of GDP and inflation trajectories. I’ll stick with the theme that currently the key economic dynamic is neither growth or recession, but instead major imbalances and various boom and bust dynamics.

This post was published at Wall Street Examiner by Doug Noland ‘ May 21, 2016.

James Grant Remembers The Forgotten Depression Of 1921: “The Crash That Cured Itself”

The Forgotten Depression tells of the slump of 1920-21: high unemployment, collapse in commodity prices, upsurge in bankruptcies and sharp break in stock prices. However, unlike the Great Depression, the 1920 affair was over in 18 months. What explains its brevity? James Grant, publisher of the prestigious Grant’s Interest Rate Observer, tells the story of America’s last governmentally-untreated depression; relatively brief and self-correcting which gave way to the Roaring Twenties…
As’s Jacob Wolinksy explains, in 1920 – 21, Woodrow Wilson and Warren G. Harding met a deep economic slump by seeming to ignore it, implementing policies that most twenty-first century economists would call backward. Confronted with plunging prices, wages, and employment, the government balanced the budget and, through the Federal Reserve, raised interest rates. No ‘stimulus’ was administered, and a powerful, job-filled recovery was under way by late in 1921.

This post was published at Zero Hedge on 05/21/2016 –.

Trump’s Grass Roots: Small Donors Flood Trump Super PAC In April

That the Great America PAC raised $514k in April in support of Donald Trump isn’t very surprising, what is surprising however, is the fact that 81% of those funds came from donors giving less than $200.

The PAC was established in early February, and during that month it raised $74k with just 22% from small donors. In March the PAC gained some momentum, collecting $479k in total donations, but the percentage of small donors was similar to January, coming in at 24%.
April’s high percentage of small donors giving money to a super PAC is unusual, and according to The Hill, could trigger a letter from the Federal Election Commission based on the FEC review policy.

This post was published at Zero Hedge on 05/21/2016 –.

David Morgan: There Will Soon Be a Run to Gold Like You’ve Never Seen Before

Mike Gleason: I’m happy to welcome back our good friend, David Morgan, David, it’s always a pleasure to talk with you. How have you been?
David Morgan: Mike, I’ve been well and thank you for the interview.
Mike Gleason: We’ve seen some very positive and encouraging market action in the metals this year with silver up close to 19% year-to-date, and gold up 18% as we’re talking here on Thursday morning. Although, the precious metals are pulling back sharply this week. Assess the market action so far here in 2016, and talk about what’s driving this recent pullback.
David Morgan: Well, early on, I stated that we would see a good 2016. I still believe that. Obviously, we got off to a great start. Gold had its best first quarter in like thirty-five years, and that’s not me saying it. That is like Reuters, Bloomberg, mainstream financial media. That’s a fact. However, that’s based on percentage terms. In other words, it’s had a huge run up on a percentage basis, but from a very low level. And the same thing with silver. So one, they were just really oversold. It’s been way overdone as far as time duration. I mean, silver’s been in the doldrums for almost five years, gold around the same amount of time, slightly less.

This post was published at SilverSeek on May 20, 2016 –.

SoT Market Update: Federal Reserve Intervention In Full Force

The Fed is in full market intervention mode right now. It is desperate to keep the S&P 500 above 2,000 and gold below $1300. Despite the intensified threats to hike interest rates at the June FOMC meeting, the stock market continues to spike up and gold is being pushed down. It’s blatant manipulation. Interestingly, research shows – LINK – that Fed interest rate hike cycles are bullish for gold.

This post was published at Investment Research Dynamics on May 20, 2016.

“The Sendai Dischord” – Japan Humiliated At G-7 Meeting In Sharp Rift Over Yen Intervention

At the end of February, shortly after Japan’s disastrous attempt to crush the Yen at the expense of a stronger dollar when the BOJ unveiled its first episode of Negative Interest Rates, only for everything to go spectacularly wrong for Kuroda, the world’s financial leaders met in Shanghai where the so-called Shanghai Accord took place when in no uncertain terms central bankers around the globe (and especially the Chinese) came down on Janet Yellen like a ton of bricks demanding that the Fed do a “dovish relent”, and stop the Fed’s monetary tightening talk, ease back on expectations of further rate hikes, and generally talk down the dollar.
This is precisely what happened (if only until this past week when the Fed has once again jawboned rate hike expectations higher).
However, while China was delighted because the weaker dollar meant less FX intervention and less capital outflows from China, Europe and especially Japan were livid: after all the offset of a weaker USD would be a stronger EUR and JPY.
And, heading into this weekend’s closely watched G-7 meeting in Japan’s Sendai, the Bank of Japan had made it quite clear it was not happy with being repeatedly singled out by the US Treasury as happened just a few weeks ago, when Jack Lew singled out Japan by putting it on a new currency watch list with a warning not to devalue its currency unilaterally and without prior approval of the international committee.

This post was published at Zero Hedge on 05/21/2016 –.

OK I Get it, Corporate Earnings are a Fairy Tale and Reality is Crummy, But Do They Have to Push it This Far?

Even the SEC woke up. But what will the media do?
All 30 companies in the Dow Jones Industrial Average have now reported earnings for the first quarter. As required, all of them reported these earnings under GAAP, the thicket of Generally Accepted Accounting Principles that is supposed to help investors get some insights into the financial condition of the company.
But 19 of these 30 companies also reported ‘adjusted’ earnings that they skillfully draped over their GAAP earnings, and now it all looks just so much prettier.
GAAP gives companies a lot of leeway to beautify their results. But in these challenging days of ours, it’s still too hard to make earnings look good enough. So companies, in collaboration with Wall Street analysts and the media, use their own principles that they make up as needed. And they’re certainly needed.
In Q1, according to FactSet, the companies in the DJIA that ‘adjusted’ their earnings inflated them on average by 28.9% over their earnings under GAAP.
And the inflation in ‘adjusted’ earnings is picking up. Last year, only 16 of the 30 companies in the DJIA resorted to this beautification strategy. And they inflated earnings by only 19.7% on average.

This post was published at Wolf Street on May 21, 2016.