Stocks Drop, Bonds Pop As Crude & Credit Crash Continues

Overheard in the Oval Office when Yellen unleashes her rate hike into dismal economic growth expectations tomorrow…
Since the last fed rate hike, bonds are lower, banks are best…
Trannies and Small Caps are in the red since the last Fed rate hike…
A down day for stocks…but the dip-buyers were active once again after Europe closed…

This post was published at Zero Hedge on Mar 14, 2017.

A Look at the Yield Curve and Why the Fed Is Raising Rates

All attention is once again on Janet Yellen and the Federal Reserve this week, as the FOMC meets to determine whether an interest rate hike is warranted.
At this point, with Fed Funds futures prices pointing toward a 95% chance of a rate hike, an increase to the federal funds rate is a near certainty. But the implications and consequences of a rate hike are less so. Let’s dig into that further.
One thing I’ve noticed in speaking to investors is that there is often an inclination to group all interest rates together. When they hear about the Fed ‘raising rates,’ many assume that interest rates across the board, for nearly everything, will rise. This couldn’t be further from the truth and warrants more explanation.
Interest rates come in all shapes, sizes and most importantly, maturities. That is, the length of the term over which money is borrowed, and therefore accrues interest.
Take US Treasuries as an example. If you want to loan the US government money, they’ll pay you a different interest rate based on the term of the loan. You can see today’s pricing for a few select maturities in the table below:

This post was published at FinancialSense on 03/14/2017.

British Lord Compares Brexit Voters To “Hitler, Mussolini, And Stalin”, Rejects “People’s Will”

Addressing his peers moments before the House of Lords voted to accept the European Union (Notification of Withdrawal) Bill, paving the way for Prime Minister Theresa May to trigger Article 50 by the end of the month, a Liberal Democrat Lord was jeered as he explained how anyone who voted for Brexit was akin to Hitler and that the people’s will should be ignored… because the lords know best.

This post was published at Zero Hedge on Mar 14, 2017.

US Government Down To It’s Last $66 Billion, Which Will Only Last Until Memorial Day – Episode 1228a

The following video was published by X22Report on Mar 14, 2017
UK Parliament give the green-light for Theresa May to implement Article 50. Marine Le Pen wants to do the same thing as May. Economic confidence starts to rollover. Inflation hits and it is rising fast. Shiller is worried about the stock market, it now costs the same as 1929 to buy a share of stock. A crash is coming and either it will be stock, oil or both. China starts the year off with the worst retail sales. The US Government is down to it’s last 66 billion dollars, this will only last until Memorial Day.

Economic, Business Confidence Starts To Roll Over

One week after Gallup measured US economic confidence at the highest level on record, just days after Trump gave his now long-forgotten “conciliatory” address to Congress, the mood appears to be souring somewhat not only for regular Americans but also small businesses. In Gallup’s latest weekly economic confidence reading, it found that Americans’ confidence in the economy returned to its recent levels last week after a record-setting post-recession high the week before. Gallup’s U. S. Economic Confidence Index was 9 for the week ending March 12. This is down from 16 the previous week, and in line with weekly scores recorded throughout February.
In the latest weekly survey, 48% of Americans say the economy is getting better, and 45% say it is getting worse. That compares with 54% and 39%, respectively, the prior week. As a result, the economic outlook component of Gallup’s index fell to 3 from 15. Meanwhile, Americans’ assessments of current economic conditions were largely unchanged. For the week ending March 12, 34% of Americans rated the economy as “excellent” or “good,” and 20% rated it as “poor,” resulting in a 14 current conditions score, roughly where it has been since late January.

This post was published at Zero Hedge on Mar 14, 2017.

Rachel Maddow Claims To Have Trump’s Tax Returns; Will Reveal At 9pm

But if you're in IRS and have a certain president's tax return that you'd like to leak, my address is: NYT, 620 Eighth Ave, NY NY 10018. — Nicholas Kristof (@NickKristof) March 6, 2017

Five months after President Trump’s 1995 tax return cover-page was leaked to The New York Times, and one week after The New York Times’ Nick Kristoff urged IRS employees to illegally leak Trump’s tax return, MSNBC’s Rachel Maddow dropped a somewhat shocking tweet-bomb (if it’s true)… “we’ve got Trump tax returns… (seriously)” and she will reveal them at 9ET tonight.
In October, the New York Times reports that “Trump Tax Records Obtained by The Times Reveal He Could Have Avoided Paying Taxes for Nearly Two Decades.” Specifically, it reports that according to a previously undisclosed 1995 tax filing, Trump reported a $916 million loss on his income tax returns that year which could have allowed him to legally avoid paying any federal income tax for up to 18 years. As it explains, “the 1995 tax records, never before disclosed, reveal the extraordinary tax benefits that Mr. Trump, the Republican presidential nominee, derived from the financial wreckage he left behind in the early 1990s through mismanagement of three Atlantic City casinos, his ill-fated foray into the airline business and his ill-timed purchase of the Plaza Hotel in Manhattan.”

This post was published at Zero Hedge on Mar 14, 2017.

Everything You Need to Know About Currency Wars

Currency wars can best be defined as a ‘competitive devaluation’ of a national currency.
Think of currency wars as the purest form of competitive devaluation for financial warfare purposes.
Under such conditions the value of currency can be a ‘make or break’ for a national economy. A currency that is too high can push down export demands. If it is too low, it could cause imports to be too expensive and cause higher inflation rates.
The International Monetary Fund (IMF) defined these actions in 1976 when it revised its charter to warn of policymakers ‘manipulating exchange rates…to gain an unfair competitive advantage over other members.’
The objective of currency wars are to boost national exports through gaining advantage of cheaper goods compared to foreign competition. If another country does not match in currency devaluations, then exports from the non-actor will be negatively impacted.
The currency at the center of global currency wars is the U. S dollar. The dollar continues to face competitive devaluation that plays out in the story of lower prices, avoidance of U. S dollar paper assets and varying economic policy.
By understanding the origin of currency wars, exactly how they undermine effective policy and what the future may hold can leave you and your money better positioned for the future.
History of Currency Wars
At the onset of the great depression that hit western industrialized countries starting in 1929, rampant unemployment continued to compound problems in the international financial system.

This post was published at Wall Street Examiner on March 14, 2017.

How Negative Sentiment Will Continue To Drive The Market Higher

As I noted two weeks ago as we were striking the 2400 region on the S&P 500 (SPX): “As we now find ourselves striking our target of 2400-2440SPX, now is the time to emotionally prepare yourself for a ‘pullback.’”
Since that time, the market has been consolidating lower.
In just the last 24 hours on Seeking Alpha alone, where I publish frequently, I have counted no less than nine bearish articles, with headlines such as, “Convincing Traits Of A Market Bubble,” “When This All Blows Up…” and “The Correction In The S&P 500 Is Already Here.”
Yes, it seems that the market is quite bearish, at least based upon the plethora of negative articles about the market. Moreover, with the SPX dropping 47 points from its all-time high (registering a 2% pullback), bearish sentiment, according to AAII Investor Sentiment Survey, reached levels not seen since the bottom of the market in February 2016. That is an astounding statistic to me.

This post was published at GoldSeek on 14 March 2017.

Drudge: “Republicans Lied About Tax Cuts”, Wants His Vote Back

BTW, Republicans lied about wanting tax cuts. Can we get our votes back?
— MATT DRUDGE (@DRUDGE) March 14, 2017

In what may be his most vocal complaint aimed at the Republican party since the Trump presidential victory, prominent conservative voice Matt Drudge on Tuesday accused the GOP of “lying” about wanting tax cuts, and asked to “get his vote back.”
Delays surrounding the repeal of Obamacare, which as Goldman earlier said will likely be postponed by several months if not longer following the controversial CBO report, will asure significant delays with the implementation of Trump tax cuts. Furthermore, the Republican healthcare plan would repeal most of ObamaCare’s taxes: a prospect that looks increasingly distant. Earlier this month, the Joint Committee on Taxation released estimates showing the repeal and delay of many of ObamaCare’s taxes in the GOP healthcare plan would result in more than $500 billion in lost federal revenue.

This post was published at Zero Hedge on Mar 14, 2017.

Border Hassles and Economic Growth

Here’s a new party game: Summarize the world’s postwar economic history in 10 words. Take all the time you need. Go.
There, wasn’t that fun? My answer:
Borders once mattered. Then they didn’t. Now they matter again.
I know, that misses some details, but it’s a good framework.
Soon after World War II ended, we split the planet into East and West, with an Iron Curtain in between. Lesser barriers subdivided each side.
Time passed. Borders loosened. People and goods started flowing more freely.
This was okay at first, but eventually it became too much. People yelled, ‘Enough!’ Now we’re in a great debate over which visitors, immigrants, and goods can cross national borders, and on what terms.
It’s a debate worth having, but we can’t forget that our choices will have economic consequences. Sometimes, a medicine’s side effects are worse than the disease.
We’re starting to find out now.
Exporting Dollars
This week, I’m at the South by Southwest Conference (SXSW) in Austin. Among other things, SXSW is a big meeting place for start-up companies and venture capital investors. A lot of deals get made here.
Many of the investors and entrepreneurs who are attending are from other countries. I’ve met people from as far away as Brazil, Israel, Indonesia, South Africa, and Greece.

This post was published at Mauldin Economics on MARCH 14, 2017.

Not The Onion: “Fed Is Jeopardizing The Buy-The-Dip Trade”, BofA Warns

Conceived several years ago, “buy the (fucking) dip” was a joke among traders seeking to explain the market’s nearly-instant upward mean reversion, which as we have alleged since 2009, has been pushed higher by central bank policy and various HFT strats. Since then it has, sadly, become perhaps the only “explanation” for the behavior of the most bizarre market traders have ever encountered.
Luckily, the buy the dip quote-unquote “market” may be about to end, perhaps as soon as tomorrow, if Bank of America is right.
In a note titled “Reasons to increasingly fear, not love, the dip“, BofA analyst Nitin Saksena writes that a “faster US rate hiking cycle jeopardizes the buy-the-dip trade.”
His observations will be familiar to anyone who has tried to top-tick the S&P over the past 8 years, to short stocks, or to otherwise do anything besides “buy” (the dip):
Saksena writes that a “buy-the-dip mentality is dominating US equities as Fed put has become self-fulfilling. It has now been 104 trading days since the S&P 500 last fell by more than 1% (on a close-to-close basis), a stretch of calm in US equities not seen since 1995.

This post was published at Zero Hedge on Mar 14, 2017.

‘In the Short Run, It’s Very Difficult to See When to Bail Out’

Robert Shiller turns sour on ‘way overpriced’ stock market.
The stock market is still flying high. OK, so the Russell 2000, the index of small-cap stocks, dipped into the negative for the year. The Nasdaq is still up 7.5%, the S&P 500 and the DOW about 5%. They’ve been edging down recently. But they’re still hovering near record highs. So why worry? Stocks can only go up. That’s what we’ve learned since 2009.
Robert Shiller, the Nobel Prize winner who correctly turned sour on the stock-market bubble of the late 1990s and the housing bubble a few years later, has turned sour on stocks again. He isn’t a perma-bear. On the contrary. But he is an interesting voice that folks ignored the last two times to their detriment.
‘The market is way overpriced,’ he told Bloomberg. ‘It’s not as intellectual as people would think, or as economists would have you believe.’
But that doesn’t mean the market has to go down right this minute. Irrationally priced financial markets, by definition, don’t have a rational limit anymore. Housing markets do have a rational limit: affordability. Affordability can be expanded with lower interest rates, higher leverage, and more government involvement. But in the end, enough people have to be able to live there, or else the market seizes. But no one has to live in irrationally priced stocks. So they can continue to surge way beyond any rational limit. Until they too flip.

This post was published at Wolf Street on Mar 14, 2017.

Americ-exit: US Applications For New Zealand Citizenship Soar 70% Since The Election

Following the “millionaire exodus” writing-on-the-wall, it appears Americans, who are renouncing citizenship in record numbers, have found their new safe haven from the Trumpian dystopia they appearently fear. In the 12 weeks since the election, the number of Americans applying for New Zealand citizenship has soared 70%.
Millionaires are already moving…
And with New Zealand becoming the place to be for hedge fund managers and elites alike, who are building airstrips across the islands as their ultimate escape routes…

This post was published at Zero Hedge on Mar 14, 2017.

WTF Chart Of The Day: Consumers ‘Love’ Trump’s Economic Policies

While the CBO poured cold water on the RyanCare plan – and implicitly delayed the bill and thus tax reform – Bloomberg’s Michael McDonough discovered that deep inside the University of Michigan Consumer Sentiment Survey, there is reason for President Trump to be optimistic on passing his fiscal agenda.
In February, 28% of respondents voluntarily mentioned news they heard about the government’s economic policy in a favorable light, a record high. The previous, pre-2016 election peak for positive mentions was just 9%. This is especially notable as the survey doesn’t specifically ask participants to respond about government or political news.

This post was published at Zero Hedge on Mar 14, 2017.

Hawkier Fed, Drowning Oil, and Insiders Jumping Ship

The Fed is going to hike this Wednesday. They’ve made that clear. But why the complete reversal in tone since their last meeting?
The answer is obviously because of the Fed’s unspoken third mandate – putting caps on bubbles. This is something it’s historically been poor at. But Yellen and team have commented in recent weeks on the market’s seemingly lack of concern over economic and political ‘uncertainty’.
Charts like the one below are evidence of this:

This post was published at FinancialSense on 03/14/2017.

Oil Jumps After Saudis “Explain” Production Surge

Having sent crude oil pries tumbling overnight by admitting they cheated on OPEC production cuts, Saudi officials are desperately trying to unwind that faux pas by claiming the over-production was purely for domestic storage. The problem with this “explanation” is that Saudi deliveries to China soared in January…
Bloomberg reports that Saudi Arabia didn’t raise supply to the international oil market in February, according to a person familiar with the kingdom’s oil policy.

This post was published at Zero Hedge on Mar 14, 2017.

Can Valeant Go To Zero?

Valeant (VRX) stock is now at $10. After a brief, Roman Candle launch to $260, $10 is the level where it traded in early 2009. It may be one of the few stocks that has gone back its financial crisis trading level. It is now likely on a long, slow death march to zero.
It was reported that Bill Ackman has completely liquidated his Pershing Square hedge fund position in VRX. Any institutional investment manager or pension fund who left its investment in Pershing Square long enough to see this happen should be investigated for breach of fiduciary duty. Ackman’s fund reportedly lost over $4 billion in VRX. I suspect that number was massaged to the low side for public consumption purposes.
I began to look at VRX with a fine-tooth comb just about 12 months ago. On March 15, 2016, I wrote: ‘The SEC Should Suspend VRX Trading: The Company Smells Like Enron.’ The stock had dropped fro $260 to $37 in less than a year:
The initial triggers were concerns over the Valeant’s drug-pricing policies and questions surrounding its methodology for booking revenues. However, with just a casual ‘look under the hood’ at VRX’s SEC-filed financials, there is likely a great deal of fraud lurking beneath what’s already been questioned. In fact, this is starting to smell a lot like Enron or Bear Stearns. The only component missing from this story is a CNBC rant from Cramer issuing a table-pounding buy on VRX stock. That may yet occur.
To begin with, the Company is carrying $30.2 billion in long term debt against just $9 billion of tangible assets. $39 billion of VRX’s assets is in the form of goodwill and intangibles. VRX’s self-assessed book value is $6.4 billion. But VRX’s tangible book value is negative $32.6 billion.

This post was published at Investment Research Dynamics on March 14, 2017.