Toys ‘R’ Us to File for Bankruptcy ‘as Soon as Today,’ Bonds Collapse

Brick-and-mortar meltdown: another retailer owned by private equity firms goes bust.
The bonds of Toys ‘R’ Us, the largest toy retail chain in the US, are getting crushed, as word is spreading that it is preparing to file for bankruptcy as soon as today, ‘according to people familiar with the situation,’ cited by Bloomberg. Standard & Poor’s rates the bonds a merciful CCC-. This is deep into junk, but still two notches above D for ‘default.’
The a $208 million issue of senior unsecured notes due in October 2018 with a coupon of 7.375% had plunged to 46 cents on the dollar on Friday, from 65 on Thursday. Today, according to FINRA data, they dropped to 44 cents on the dollar.
They have now plunged 55% since September 4, when they were still trading at 97 cents on the dollar. The plunge of those notes began in earnest on September 6, when it became known that the company had hired law firm Kirkland & Ellis, whose bankruptcy-and-restructuring practice is considered a leader in the industry [see… Brick & Mortar Meltdown: Toys ‘R’ Us Hires Bankruptcy Law Firm].
At the time, ‘sources familiar with the situation’ said that bankruptcy was one of the options. And all heck broke loose for those bonds. Now bankruptcy seems to be the only option.

This post was published at Wolf Street on Sep 18, 2017.

Why Is The BIS Flooding The System With Gold?

A consultant to GATA (Gold Anti-Trust Action Committee) brought to our attention the fact that gold swaps at the BIS have soared from zero in March 2016 to almost 500 tonnes by August 2017 (GATA – BIS Gold Swaps). The outstanding balance is now higher than it was in 2011, leading up to the violent systematically manipulated take-down of the gold price starting in September 2011 (silver was attacked starting in April 2011).
The report stimulated my curiosity because most bloggers reference the BIS or articles about the BIS gold market activity without actually perusing through BIS financial statements and the accompanying footnotes. Gold swaps work similarly to Fed report transactions. When banks need cash liquidity, the Fed extends short term loans to the banks and receives Treasuries as collateral. QE can be seen as a multi-trillion dollar Permanent Repo operation that involved outright money printing.
Similarly, if the bullion banks (HSBC, JP Morgan, Citigroup, Barclays, etc) need access to a supply of gold, the BIS will ‘swap’ gold for cash. This would involve BIS or BIS Central Bank member gold which is loaned out to the banks and the banks deposit cash as collateral to against the gold ‘loan.’ This operation is benignly called a ‘gold swap.’ The purpose would be to alleviate a short term scarcity of gold in London and put gold into the hands of the bullion banks that can be delivered into the eastern hemisphere countries who are importing large quantities of gold (gold swaps outstanding are referenced beginning in 2010).

This post was published at Investment Research Dynamics on September 18, 2017.

Mother of All Bubbles: Global Debt May Be Understated By $13 Trillion

The US national debt was in the news last week as Pres. Trump signed a spending bill that raised the debt ceiling limit for the next three months and added approximately $318 billion to the national debt. Officially, the US debt surged to to $20.16 trillion. Of course, the actual figure for government unfunded liabilities runs even higher. And Trump wants to do away with the debt ceiling altogether.
The US debt makes up just one part of a rapidly growing worldwide debt problem. Earlier this summer, US Global Investors CEO Frank Holmes called global debt ‘the mother of all bubbles.’ Now we have a report from the Bank of International Settlements saying worldwide debt may actually be understated by $13 trillion. Reuters reports the understatement is because ‘traditional accounting practices exclude foreign exchange derivatives used to hedge international trade and foreign currency bonds.’
Bank for International Settlements researchers said it was hard to assess the risk this ‘missing’ debt poses, but that the main worry was a liquidity crunch like the one that seized FX swap and forwards markets during the financial crisis. The $13 trillion unaccounted-for exposure exceeds the on-balance-sheet debt of $10.7 trillion that data shows was owed by firms and governments outside the United States at end-March.’

This post was published at Schiffgold on SEPTEMBER 18, 2017.

Top Financial Expert Warns Stocks Need To Drop ‘Between 30 And 40 Percent’ As Bankruptcy Looms For Toys R Us

Will there be a major stock market crash before the end of 2017? To many of us, it seems like we have been waiting for this ridiculous stock market bubble to burst for a very long time. The experts have been warning us over and over again that stocks cannot keep going up like this indefinitely, and yet this market has seemed absolutely determined to defy the laws of economics. But most people don’t remember that we went through a similar thing before the financial crisis of 2008 as well. I recently spoke to an investor that shorted the market three years ahead of that crash. In the end his long-term analysis was right on the money, but his timing was just a bit off, and the same thing will be true with many of the experts this time around.
On Monday, I was quite stunned to learn what Brad McMillan had just said about the market. He is considered to be one of the brightest minds in the financial world, and he told CNBC that stocks would need to fall ‘somewhere between 30 and 40 percent just to get to fair value’…
Brad McMillan – who counsels independent financial advisors representing $114 billion in assets under management – told CNBC on Monday that the stock market is way overvalued.
‘The market probably would have to drop somewhere between 30 and 40 percent to get to fair value, based on historical standards,’ said McMillan, chief investment officer at Massachusetts-based Commonwealth Financial Network.

This post was published at The Economic Collapse Blog on September 18, 2017.

Why I Expect Gold Prices to Rebound from Last Week’s 1.9% Drop

After a massive 8.7% rally since July 7, gold prices were due for some weakness. That weakness finally arrived last week, as prices dropped 1.9% between Friday, Sept. 8, and Friday, Sept. 15.
Fortunately, I had been warning investors that we should expect a pullback…
You see, the rally from Aug. 22 into Friday, Sept. 8, took the price of gold from $1,291 all the way to $1,351. That’s a massive 4.6% gain in just over two weeks.
I said those gains had to be digested. I also pointed out that the U. S. dollar had sold off too far, with the U. S. Dollar Index (DXY) falling to a 32-month low of 91.35 on Sept. 8. Since it had become technically oversold, we were due for some sort of near-term bounce, and now the DXY is back up to 91.88 today (Monday, Sept. 18).

This post was published at Wall Street Examiner by Peter Krauth ‘ September 18, 2017.

Debt Limit Gums Up Treasury’s Plan for Supply Bump as Fed Tapers

(Bloomberg) – The U. S. Treasury has been planning for years how to deal with the funding gap set to open up when the Federal Reserve begins unwinding its $2.5 trillion hoard of the government’s debt.
Now there’s a new wrinkle to prepare for, as the latest deal to extend the nation’s debt limit complicates matters for Treasury Secretary Steven Mnuchin just as the Fed is expected to unveil the start of its balance-sheet reduction.
With the debt-cap suspension expiring Dec. 8, there’s a growing sense among investors and analysts that Treasury will have to slow or hold off on the inevitable – increasing note and bond sales to deal with the shift in Fed policy and rising federal deficits. Most strategists had predicted that long-term tilt toward more coupon issuance would start in November, so a delay may provide a boost for bond bulls betting yields can stay near historic lows.
‘The debt-limit issue will in the near-term affect what Treasury does with coupon issuance,’ said Gene Tannuzzo, a money manager at Columbia Threadneedle, which oversees $473 billion. ‘At the end of the day, Treasury will have to do a lot more coupon sales. On the margin, for now, if there is less coupon issuance it is a modestly positive technical’ for Treasuries.

This post was published at Wall Street Examiner on September 18, 2017.

SEPT 18/ANOTHER RAID/GOLD DOWN $14.05 AND SILVER DOWN 50 CENTS/OPEN INTEREST IN SILVER RISES DESPITE FRIDAY’S WHACK/USA ACCUSED CHINA OF UPSETTING THE GLOBAL TRADING SYSTEM AS INTEND ON DECLARING…

GOLD: $1307.35 DOWN $14.05
Silver: $17.14 DOWN 50 CENT(S)
Closing access prices:
Gold $1307.40
silver: $17.20
SHANGHAI GOLD FIX: FIRST FIX 10 15 PM EST (2:15 SHANGHAI LOCAL TIME)
SECOND FIX: 2:15 AM EST (6:15 SHANGHAI LOCAL TIME)
SHANGHAI FIRST GOLD FIX: $1325.89 DOLLARS PER OZ
NY PRICE OF GOLD AT EXACT SAME TIME: $1319.40
PREMIUM FIRST FIX: $6.49
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
SECOND SHANGHAI GOLD FIX: $1319.20
NY GOLD PRICE AT THE EXACT SAME TIME: $1316.20
Premium of Shanghai 2nd fix/NY:$3.00
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
LONDON FIRST GOLD FIX: 5:30 am est $1314.40
NY PRICING AT THE EXACT SAME TIME: $1312.10
LONDON SECOND GOLD FIX 10 AM: $1312.10
NY PRICING AT THE EXACT SAME TIME. 1312.35
For comex gold:
SEPTEMBER/
NOTICES FILINGS TODAY FOR SEPT CONTRACT MONTH: 0 NOTICE(S) FOR nil OZ.
TOTAL NOTICES SO FAR: 54 FOR 5400 OZ (0.1679 TONNES)
For silver:
SEPTEMBER
198 NOTICES FILED TODAY FOR
990,000 OZ/
Total number of notices filed so far this month: 5,677 for 28,385,000 oz

This post was published at Harvey Organ Blog on September 18, 2017.

India Gold Imports Nearly Triple in August Despite Tax Increase and Government Regulations

Despite rising prices, a tax increase, and government attempts to tighten regulation of the jewelry industry, gold continues to flow into India.
Gold imports into the country nearly tripled year-on-year in August. An estimated 60 tons of the yellow metal flowed into the Asian nation last month, up from 22.3 tons in August 2017. This continues a trend for the year. Over the first 8 months of 2017, India’s gold imports climbed to 617.5 tons, a 158% increase over 2016.
As a Reuters report notes, the Indian gold market has an impact on the broader world market.
Higher purchases by India, the world’s second biggest consumer, could support global prices, trading near their highest level in a year.’
The continued flow of gold into India demonstrates the resilience of the market in that country. On July 1, the Indian government replaced a labyrinth of taxes with a nationwide 3% Goods & Services Tax (GST). The World Gold Council called it the ‘biggest fiscal reform since India’s liberalization in the early 1990s.’ The WGC said the new tax structure would ultimately increase demand for gold in India, but analysts braced for a short-term dip in imports as the tax went into effect and the market adjusted to the new system.

This post was published at Schiffgold on SEPTEMBER 18, 2017.

Pine River Closing Master Fund Following Surge In Redemptions

Back in January 2016, we reported that Pine River Capital Management, then run by noted hedge fund investor Steve Kuhn, was shuttering its Fixed Income fund, and returning roughly $1.6 billion to investors. The wind down was surprising for one of the industry’s most prominent names: Kuhn was one of four managers who helped the Pine River Fixed Income Fund score some of the industry’s biggest gains. They included a 93% return in 2009, fueled largely by bets on the housing market.
Unfortunately, the hedge fund had remained unable to replicate its profitable ways in recent years, and according to both Reuters and Bloomberg, Pine River is closing its master fund following a wave of client withdrawals that would bring assets below $300 million.
The fund, which started in 2002, had about $1 billion in assets prior to the latest redemption schedule. Because the withdrawals would cause the portion of illiquid assets to increase relative to the overall fund, the managers discussed placing those investments in a segregated account called a side pocket.

This post was published at Zero Hedge on Sep 18, 2017.

Defense Contractors on Cloud 9

The backdrop: Money. More than ever before. The Senate is expected to pass by a wide margin a $700-billion defense bill today. When it comes to extravagant military spending, Congress is relentlessly bipartisan, and all bickering stops, as long as the bacon gets spread to every district and state.
‘The 1,215-page measure defies a number of White House objections, but Trump hasn’t threatened to veto the measure,’ the Washington Post mused. ‘The bill helps him honor a pledge to boost military spending by tens of billions of dollars.’
So who gets this money?
It’s going to get spread around, but defense contractors are going to get a chunk of it, and they’ve been on cloud 9 all year. Their shares – fired up by plenty of saber-rattling – have mostly soared from all-time high to all-time high.
These are some of the biggest defense contractors and their shares year-to-date as of this morning:
Rockwell Collins (COL), to be acquired by United Technologies: $130.90, up 40.6% YTD United Technologies (UTX) is gobbling up Rockwell, got beaten down 8% since July, and is the exception: $113.04, up a measly 3.1% YTD Boeing (BA), after implementing a series of big layoffs in the US: $253.51, up 61% YTD Northrop Grumman (NOC): $274.23, up 16% YTD Orbital (OA) jumped 20% this morning to $132.60, up 48% YTD Raytheon (RTN) $183.06, up 26% YTD Lockheed Martin (LMT) $303.74, up 19.8% YTD Honeywell International (HON) $137.50, up 18.4% YTD Orbital jumped 20% this morning after the announcement that Northrop Grumman would acquire it for $134.50 a share, in a deal valued at $9.2 billion including the assumption of $1.4 billion in net debt.

This post was published at Wolf Street on Sep 18, 2017.

Yesterday, All My Market Troubles Seemed So Far Away…

We’re finally here. About 9 years after QE1 began, QT is about to start. If one believes that the stock market still is a discounting mechanism, then have nothing to fear with QT and that maybe it will actually be like ‘watching paint dry’ as Fed members so desperately want it to be. After all, the S&P 500 is at an all-time high. If you think, like me, that the stock market is not the same discounting tool as it once was because of the major distortion and manipulation of markets via central market involvement and the dominance of machines that are reactive instead of proactive in response to news, then we must review again the previous experiences when major Fed changes took place. After all, they were all well telegraphed as this week’s likely news has been.
Before I get to that, let me remind everyone that the 3rd mandate of QE was higher stock prices. Ben Bernanke in rationalizing the initiation of QE2 in a Washington Post editorial back in November 2010 said in regards to QE1 and the verbal preparation for QE2: ‘this approach eased financial conditions in the past and, so far, looks to be effective again. Stock prices rose and long-term interest rates fell when investors began to anticipate the most recent action.’ He then went on to say ‘higher stock prices will boost consumer wealth and help increase confidence, which can also spur spending. Increased spending will lead to higher incomes and profits that, in a virtuous circle, will further support economic expansion.’ Yes, the belief in the wealth effect which hasn’t worked in this expansion. Hence, the record high in stocks last week and the 2.9% y/o/y rise in core August retail sales, both below the 5-year average and well less than the average seen in the prior two expansions.

This post was published at FinancialSense on 09/18/2017.

US Fires Latest Shot In China Trade War: Warns Beijing Is “Threat To World’s Trading System”

It’s been at least a few weeks since the topic of trade war with China dominated the news flow, so moments ago U. S. Trade Representative Robert Lighthizer decided to poke that particular wound, in during a speech in Washington said that “China’s coordinated effort to create national champions and distort markets is a threat to the world’s trading system.”
Some headlines from his speech, via Reuters:
USTR LIGHTHIZER SAYS THERE IS A GROWING FEELING AMONG VOTERS THAT GLOBAL TRADING SYSTEM NOT FAIR TO U. S. WORKERS USTR LIGHTHIZER SAYS “WE WILL HAVE CHANGE IN TRADE POLICY” USTR LIGHTHIZER SAYS U. S. CAN COMPETE IF CONDITIONS ARE FAIR USTR LIGHTHIZER SAYS HE AND TRUMP BELIEVE U. S. SHOULD BE MORE PROACTIVE IN TRADE POLICY, DEMAND RECIPROCITY USTR LIGHTHIZER SAYS HE AND TRUMP BELIEVE THAT TRADE DEFICITS MATTER USTR LIGHTHIZER SAYS SCALE OF CHINA’S EFFORT TO SUBSIDIZE INDUSTRIES IS A THREAT TO WORLD TRADING SYSTEM USTR LIGHTHIZER SAYS 301 PROBE INTO CHINA’S INTELLECTUAL PROPERTY PRACTICES COULD LEAD TO WTO CASES

This post was published at Zero Hedge on Sep 18, 2017.

Asian Metals Market Update: September-18-2017

Yen as well as gold can be affected on speculation that Japanese prime minister may called a snap general election next month. But first we have the FOMC meet this week and thereafter the German general elections and later US September nonfarm payrolls on 6th October. Over the next three weeks there are market moving news and events which can change direction of metals, energies and currency markets. Just remember to have a key technical support in hand and key resistance in hand and trade accordingly. Do not drain your brain by over analyzing news and events. Life is never complicated. It is through our perception that we make life complicated. Trading and investment is also like life.
Gold and silver fell after the USA said that it will try peaceful pressure on North Korea. In my view they are just out of solutions as the USA knows that trade sanctions will be useless without the support of Russia and China. Except Japan, none of North Korea’s neighbour’s want an armed conflict.

This post was published at GoldSeek on 18 September 2017.

Apps Infected With Malware Are Secretly Stealing Money From People

Malware that secretly steals money from users has been downloaded by millions of people. The software is intentionally designed to steal money without people realizing they have been the victims of a theft.
‘ExpensiveWall’ is software designed to cheat users out of their money without them realizing it. The malware was hidden in at least 50 apps in the Google Play store. The malware’s been dubbed ExpensiveWall after hiding inside wallpaper apps. (A list of apps can be found further down.)
According to the Check Point researchers who discovered it, ExpensiveWall has been downloaded between one million and 4.2 million times but since it’s hidden in apps, it is difficult to tell exactly how many have been affected.
‘The malware registers victims to premium services without their knowledge and sends fraudulent premium SMS messages, charging their accounts for fake services,’ the researcherssaid.’In some cases, the SMS activity takes place without giving the user any notice. In other cases, the malware presents the user with a button called ‘Continue’, and once the user clicks the button, the malware sends a premium SMS on [their] behalf.’

This post was published at shtfplan on September 18th, 2017.

15 Risk Management Rules For Every Investor

Last week, I was discussing the rather ‘Pavlovian’ response to Central Bank interventions which has led investors into a false sense of security with respect to the risk being undertaken within portfolios.
This got me to thinking about ‘risk’ and reminded me of something Howard Marks once wrote:
‘If I ask you what’s the risk in investing, you would answer the risk of losing money. But there actually are two risks in investing: One is to lose money, and the other is to miss an opportunity. You can eliminate either one, but you can’t eliminate both at the same time. So the question is how you’re going to position yourself versus these two risks: straight down the middle, more aggressive or more defensive.
I think of it like a comedy movie where a guy is considering some activity. On his right shoulder is sitting an angel in a white robe. He says: ‘No, don’t do it! It’s not prudent, it’s not a good idea, it’s not proper and you’ll get in trouble’.
On the other shoulder is the devil in a red robe with his pitchfork. He whispers: ‘Do it, you’ll get rich’. In the end, the devil usually wins.
Caution, maturity and doing the right thing are old-fashioned ideas. And when they do battle against the desire to get rich, other than in panic times the desire to get rich usually wins. That’s why bubbles are created and frauds like Bernie Madoff get money.

This post was published at Zero Hedge on Sep 18, 2017.