‘Seriously Delinquent’ Auto Loans Surge

Bank regulators have been warning, now it’s happening.
The New York Fed, in its Household Debt and Credit Report for the fourth quarter 2016, put it this way today: ‘Household debt increases substantially, approaching previous peak.’ It jumped by $226 billion in the quarter, or 1.8%, to the glorious level of $12.58 trillion, ‘only $99 billion shy of its 2008 third quarter peak.’
Yes! Almost there! Keep at it! There’s nothing like loading up consumers with debt to make central bankers outright giddy.
Auto loan balances in 2016 surged at the fastest pace in the 18-year history of the data series, the report said, driven by the highest originations of loans ever. Alas, what the auto industry has been dreading is now happening: Delinquencies have begun to surge.
This chart – based on data from the Federal Reserve Board of Governors, which varies slightly from the New York Fed’s data – shows how rapidly auto loan balances have ballooned since the Great Recession. At $1.112 trillion (or $1.16 trillion according to the New York Fed), they’re now 35% higher than they’d been during the crazy peak of the prior bubble. Note that during the $93 billion increase in auto loan balances in 2016, new vehicle sales were essentially flat:

This post was published at Wolf Street by Wolf Richter ‘ Feb 16, 2017.

FEB 16/GOLD ADVANCES BY $8.30/SILVER BY 11 CENTS AND SURPASSES BIG RESISTANCE AT 18 DOLLARS/OPEN INTEREST IN SILVER RISES TO 199,000 PLUS CONTRACTS/SOUTH KOREA’S COURT ISSUES AN ARREST WARRANT FO…

Gold at (1:30 am est) $1240.00 UP $8.30
silver was : $18.06: UP 11 CENTS
Access market prices:
Gold: $1239.40
Silver: $18.10
THE DAILY GOLD FIX REPORT FROM SHANGHAI AND LONDON
The Shanghai fix is at 10:15 pm est last night and 2:15 am est early this morning
The fix for London is at 5:30 am est (first fix) and 10 am est (second fix)
Thus Shanghai’s second fix corresponds to 195 minutes before London’s first fix.
And now the fix recordings:
THURSDAY gold fix Shanghai
Shanghai FIRST morning fix Feb 16/17 (10:15 pm est last night): $ 1243.46
NY ACCESS PRICE: $1235.60 (AT THE EXACT SAME TIME)/premium $8.06
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
Shanghai SECOND afternoon fix: 2: 15 am est (second fix/early morning):$ 1244.06
NY ACCESS PRICE: $1233.80 (AT THE EXACT SAME TIME/2:15 am)
SPREAD/ 2ND FIX TODAY!!: 10.26
China rejects NY pricing of gold as a fraud/arbitrage will now commence fully
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
London FIRST Fix: Feb 16/2017: 5:30 am est: $1236.75.75 (NY: same time: $1237.21 (5:30AM)
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
London Second fix Feb 16.2017: 10 am est: $1240.55(NY same time: $1240.50 (10 am)
It seems that Shanghai pricing is higher than the other two , (NY and London). The spread has been occurring on a regular basis and thus I expect to see arbitrage happening as investors buy the lower priced NY gold and sell to China at the higher price. This should drain the comex.
Also why would mining companies hand in their gold to the comex and receive constantly lower prices. They would be open to lawsuits if they knowingly continue to supply the comex despite the fact that they could be receiving higher prices in Shanghai.

This post was published at Harvey Organ Blog on February 16, 2017.

Stock Dip Kills Longest Win Streak In 4 Years As Catalyst-Crusher Comes To An End

Once again all eyes were on “soft” data (Philly Fed) as “hard” data (housing starts miss) disappointed and the forced buy-in pressure lifted…
7 days up in a row for the S&P 500 (longest streak since March 2013) was the limit it seems as Catalyst’s statement that it had completed its forced buy-in to cover and Trump’s comments about how awesome stocks are capped it…
The Dow managed to creep green (record high) as VIX was crushed…

This post was published at Zero Hedge on Feb 16, 2017.

US Household Debt Rose To $12.6 Trillion In 2016: Biggest Jump In A Decade

While it does not contain any new information to those who track the monthly, G.19, consumer credit releases by the Fed, the quarterly NY Fed report on Household Debt and Credit Developments provides a convenient one-stop summary of quarterly changes in household finances. What the latest report issued this morning revealed, is that total US household debt jumped in Q4 driven by increases in credit card debt, auto and student loans, and a Q4 surge in mortgage originations, and as of December 31, 2016, stood at $12.58 trillion, a $226 billion (1.8%) increase from the third quarter of 2016. For the full year 2016, total household debt rose by $460 billion, the biggest annual increase in a decade.

This post was published at Zero Hedge on Feb 16, 2017.

U.S. Political Crisis Foments While China & India Devour Gold

The demand for gold in India and China so far this year has soared, a fact which is completely ignored by the western financial media. The ex-duty Indian gold import premiums (approximately $10 earlier this week) are quite remarkable, ‘as the need to import kilo bars only arises if Indian demand is not satisfied by Dore imports (which had a duty advantage of $15.52/oz this afternoon) and smuggled gold. Reports of apprehensions at Indian airports are continuing to appear, indicating that smuggling has in fact revived’ – John Brimelow’s Gold Jottings, brimelowgoldjottings@gmail.com).
Brimelow also reported that 162 tonnes of gold were delivered into into Shanghai Gold Exchange on Monday this week, preceded by 79 tonnes on Friday. The Friday delivery is the largest by far that I’ve observed in watching this statistic over the last several years.
While the eastern hemisphere is busy converting fiat currency into physically delivered gold, the United States political system is becoming increasingly unstable and unpredictable, as the Trump White House, in an effort to repair the frayed relations with Russia, is under systematic attack from the Deep State. Trump’s erratic leadership combined with the Deep State’s political terrorism will likely spark political and social chaos in the U. S.

This post was published at Investment Research Dynamics on February 16, 2017.

Judge Finds “Probable Cause” To Charge Chris Christie In Bridgegate Scandal

Earlier this morning Bergen County municipal judge Roy F. McGeady ruled that there is probable cause to believe that New Jersey Governor Chris Christie was aware that the so-called Bridgegate scandal from 2013, resulting from unnecessary lane closures on the George Washington Bridge, was “purposely created, it was contrived, it was orchestrated for political retribution.”
As such, Governor Christie has been ordered to appear before the court on March 10th at 1:30 p.m. to face prosecutors, who, according to local press, could still bring charges, but are not expected to. Per NJ.com:

This post was published at Zero Hedge on Feb 16, 2017.

Sell Now: Multifamily Rentals in San Francisco & New York, the Most Expensive Markets in the World (Reports)

Here are the top ‘Sell Markets’ in an overpriced world where ‘the apartment cycle is drawing closer and closer to the end.’
Two reports – one on the most expensive rental markets in the world, and the other on the top multifamily ‘Sell Markets’ in the US – have the same winners: San Francisco and New York City, where the dynamics have changed and, for landlords, are veering for the worse.
Of the 120 global cities researched by online property service Nested, the top three most expensive rental markets are San Francisco, New York City, and Boston. They easily blow away other global hot spots such as Hong Kong, London, Tokyo, Paris, Vancouver, and Toronto. After years of soaring rents in the US, eight US cities are among the 15 most expensive rental markets.
To measure affordability, Nested’s report compares the cost of rents per square foot. Based on the minimum recommended dwelling size for a single person (420 square feet or 39 square meters) and for a family of four (800 square feet or 74 square meters), the report calculates the minimum incomes required to be able to rent in these cities (with rents not to exceed 29% of gross salary).
The table below shows the top 27 cities in Nested’s 2017 Rental Index. I chose the top 27, rather than the top 25 or 20, to get Toronto on the list. We’ve covered the ballooning house price bubble in Toronto (#27 on the list) and the now deflating house price bubble in Vancouver (#18) many times, most recently with the January numbers. Both cities measure among the most expensive in the world in terms of house prices, but are way down in terms of rents. This is another indication of just how precarious their house price bubbles have become.

This post was published at Wolf Street on Feb 16, 2017.

Fed president says US banks have ‘half the equity they need’

In a scathing editorial published in the Wall Street Journal today, the president of the Federal Reserve Bank of Minneapolis, Neel Kashkari, blasted US banks, saying that they still lacked sufficient capital to withstand a major crisis.
Kashkari makes a great analogy.
When you’re applying for a mortgage or business loan, sensible banks are supposed to demand a 20% down payment from their borrowers.
If you want to buy a $500,000 home, a conservative bank will loan creditworthy borrowers $400,000. The borrower must be able to scratch together a $100,000 down payment.
But when banks make investments and buy assets, they aren’t required to do the same thing.
Remember that when you deposit money at a bank, you’re essentially loaning them your savings.
As a bank depositor, you’re the lender. The bank is the borrower.
Banks pool together their deposits and make various loans and investments.
They buy government bonds, financial commercial trade, and fund real estate purchases.

This post was published at Sovereign Man on February 15, 2017.

“Market Players No Longer Trust The BOJ”: Why Kuroda Is Suddenly Facing Market Mutiny

While we doubt anyone will laugh, we find it amusing that none other than arguably the “last holdout” of ZIRP and then NIRP, BOJ governor Haruhiko Kuroda, finally joined the chorus of people warning that low interest rates will “sow the seeds of the next financial crisis.” Echoing concerns voiced by Deutsche Bank and virtually every other bank over the past year, Kuroda said that “a new challenge has emerged in the form of low profitability at financial institutions,” adding that rapid growth in shadow banking and new financial technology were bringing big changes to the global banking environment.
“These developments suggest that a different kind of financial crisis could happen in the future,” he told an international conference on deposit insurers on Thursday, without elaborating. As Reuters writes overnight, “the remarks contrast with Kuroda’s previous comments emphasizing that the benefits of massive stimulus on the economy make up for potential negatives such as the hit to banks.”
Hoping to spread the blame, Kuroda said the problem of low interest rates hurting bank profitability was a global one, pointing to bad loans piling up at some European banks and headwinds plaguing Japanese banks from sluggish lending driven by an aging population. “For the financial system to ensure future stability, it is becoming more and more important in the long term to think about possible responses to low profitability at financial institutions,” he said.
In other words, Kuroda must have gotten an earful in his last meeting with bank execs.

This post was published at Zero Hedge on Feb 16, 2017.

China’s $3 Trillion Countdown Clock

It’s very difficult to think of a really important economic issue today that is not also a geopolitical issue. The geopolitical becomes the economic. For every economic issue discussed, there’s a geopolitical face to it, and vice versa. You really need to mash up the two together.
One of the biggest convergences today between economics and geopolitics is China’s three trillion dollar countdown clock.
The first that needs to be made is that this problem used to be a four trillion dollar countdown clock, and it’s now down to three trillion. Currently, numbers have that figure slightly below three trillion when evaluating China’s hard currency reserve position. Any country has a currency reserve. Think of it like a savings account, to make it really simple. You stick it in the bank, or a brokerage account, and that’s your savings.
Countries are not that much different than individuals. They make money, and they spend money. A country that exports more than it imports is going to have a trade surplus. China is an example of this.
China sells considerably more to the world than it buys. They get paid predominantly in U. S dollars and the excess is what has been built up in the Chinese economy and its reserve position.

This post was published at Wall Street Examiner on February 16, 2017.

Putin Orders Russian Media To “Cut Back” On Positive Trump Coverage

Trump’s honeymoon with capital markets is on the rocks, kept alive only by the occasional soundbite about “massive” or “phenomenal” tax cuts; it now appears that the US president’s – until recently – amicable relationship with Russia is also quickly souring.
According to Bloomberg, the Kremlin has ordered Russian state media to cut “way back” on their fawning coverage of President Donald Trump, in what three sources told BBG is a “reflection of growing concern among senior Russian officials that the new U. S. administration will be less friendly than first thought.”
The Russian president has defended his decision saying it is the result of declining interest among the Russian viewers in Trump’s rise to power, but Bloomberg adds that some of the most popular TV segments on Trump touched on ideas the Kremlin would rather not promote, such as his pledge to ‘drain the swamp.”

This post was published at Zero Hedge on Feb 16, 2017.

Gold and Silver Market Morning: Feb 16 2017 – Gold stronger in all currencies!

Gold Today – New York closed at $1,232.60 on the 15th February after closing at $1,227.40 on the 14th February. London openedat $1,238.00 today.
Overall the dollar was weaker against global currencies early today. Before London’s opening:
– The $: was stronger at $1.0627: 1 from $1.0572: 1 onyesterday.
– The Dollar index was weaker at 100.80 from 101.29 onyesterday.
– The Yen was stronger at 113.70:$1 from yesterday’s 114.47 against the dollar.
– The Yuan was stronger at 6.8603: $1, from 6.8694: $1, yesterday.
– The Pound Sterling was stronger at $1.2494: 1 from yesterday’s $1.2457: 1.
Yuan Gold Fix
Shanghai was trading at 274.40 Yuan towards the close today. This equates to $1,239.08, but allowing for the different quality of gold being traded [.9999 fineness]. As you can see Shanghai is leading the way over London and New York but only slightly now.
Shanghai is once again leading the way higher and pulling other markets with it. But the differential between the global gold markets is only slight now.

This post was published at GoldSeek on 16 February 2017.

Trump Could Cause Global Financial Crisis, Warns ECB Head

During a Feb. 6 hearing in the European Parliament, the head of the European Central Bank issued a dire warning about President Trump’s latest moves to repeal Dodd-Frank’s Wall Street reforms.
President Trump’s actions are ‘exactly the ground on which the financial crisis developed,’ said ECB President Mario Draghi.
The regulations President Trump wants to deplete are aimed at keeping ‘too big to fail’ banks from sparking a repeat of the 2007-2009 financial crisis.
‘Frankly, I don’t see any reason to relax the current regulatory stance which has produced a much, much stronger banking – and, generally, financial services – industry than we used to have before the crisis,’ said Draghi.

This post was published at Wall Street Examiner on February 16, 2017.

US Manufacturing Jumps to 33-Year High

The Philly Fed’s Manufacturing Business Outlook Survey is a monthly report for the Third Federal Reserve District, covers eastern Pennsylvania, southern New Jersey, and Delaware. While it focuses exclusively on business in this district, this regional survey gives a generally reliable clue as to the direction of the broader Chicago Fed’s National Activity Index.
The latest Manufacturing Index came in at 43.3, up from last month’s 23.6. The 3-month moving average came in at 28.9, up from 17.3 last month. Since this is a diffusion index, negative readings indicate contraction, positive ones indicate expansion. The Six-Month Outlook came in at 56.6, an increase over the previous month’s 48.7.
Today’s 43.3 came in well above the 18.0 forecast at Investing.com.
Here is the introduction from the survey released today:
Results from the February Manufacturing Business Outlook Survey suggest that growth in regional manufacturing is broadening. The diffusion indexes for general activity, new orders, and shipments were all positive this month and increased notably from their readings last month. The surveyed firms continued to report growth in employment and work hours. Although they moderated from last month, the future indexes for growth over the next six months continued to reflect a high degree of optimism. (Full Report)

This post was published at FinancialSense on 02/16/2017.

Greek Bank Run Re-accelerates: Massive Deposit Withdrawals Despite Capital Controls

Delays in the talks between Greece and its lenders have brought back the ghost of Grexit.
The grave disagreement between the International Monetary Fund and the European lenders, Grexit bombshells flying around and Greece’s reluctance to accept additional austerity measures have increase uncertainty among citizens – for one more time.
And so, as KeepTalkingGreece.com notes, what do citizens do when they feel political and economical insecurity? The run to banks and withdraw deposits.
2.5 billion euros left Greek banks in the last 45 days.
And this despite the capital controls that allow Greeks to withdraw a maximum of just 1,800 euro per month.

This post was published at Zero Hedge on Feb 16, 2017.

JPM’s Kolanovic: Volatility Is About To Return, Could Lead To “Accidents”

Last September, JPM’s Quant guru Marko Kolanovic forecasted a short-term increase of market volatility and equity outflows at a time when volatility was “unsustainably low”, and pointed to catalysts that would trigger de-risking by systematic investors. In a just released note, he warns that “a similar set-up is developing now, this time driven by extremely low levels of market correlations.”
First question: what has driven the recent collapse in vol?
The JPM quant answers that one of the main drivers of the recent collapse of volatility (and hence high leverage of systematic and fundamental investors) is the record decline in market correlations. Not just that the sector, stock, and country correlations are at all-time lows, but the recent change (drop) is the largest on record.
Next question: what has led to this decline in correlation, and a follow up: is this a sign of more calm, fundamentally driven markets ahead or just a temporary dislocation?

This post was published at Zero Hedge on Feb 16, 2017.