The EU Just Did the Big Banks a Massive Favor

The European Union’s executive arm, the European Commission, made a lot of bank executives very happy this Tuesday by abandoning its multi-year pledge to break-up too-big-to-fail lenders. Despite the huge risk they still pose to Europe’s rickety financial system, big European banks like Deutsche Bank, BNP Paribas, ING, and Santander can breathe a large sigh of relief this week in the knowledge that they will not have to split their retail units from their riskier investment banking arms.
Breaking up the banks would remove much of the risk from today’s government-backed banks, such as derivatives and other instruments that were heavily involved in the Financial Crisis. Without these hedge-fund and investment-banking activities, even large banks would be smaller, less interconnected, and could be allowed to fail without jeopardizing the entire global financial system.
According to the Commission, such a drastic measure is no longer necessary since the main rationale behind ring-fencing core banking services from investment banking divisions – i.e. to make Europe’s financial system less disaster prone – has ‘already been addressed by other regulatory measures in the banking sector.’ That’s right: Europe’s banking system is already safe, stable and secure. Bloomberg:

This post was published at Wolf Street on Oct 25, 2017.

Stocks Slide On Report House Considering Capping 401(k) Plans Despite Trump Vow

After a NYT report last Friday that as part of Trump tax reform, 401(k) plan contributions could be capped at $2,400 annually, Trump was quick to deny tweeting on Monday that “There will be NO change to your 401(k). This has always been a great and popular middle class tax break that works, and it stays!”
There will be NO change to your 401(k). This has always been a great and popular middle class tax break that works, and it stays!
– Donald J. Trump (@realDonaldTrump) October 23, 2017
That, however, appears not to be the case because as NBC and the WSJ report, Republicans are still weighing adjustments the 401(k) program, according to the chief of the House tax writing committee, contradicting Trump’s statement this week that it would be unchanged in the forthcoming tax overhaul proposal.
Speaking at a Christian Science Monitor breakfast with reporters, House Ways and Means Chairman Kevin Brady, R-Texas, declined to rule out changes when asked whether Trump’s position had killed the idea. “We think in tax reform we can create incentives for Americans to save more and save sooner which can help,” Brady said. “We are exploring a number of ideas in those areas.” While he did not offer details, Brady said there were “continuing discussions with the president” on the topic.
That could be a signal that Republicans might pinch pretax savings for high-income households and use the money to beef up an underused tax break known as the saver’s credit, which acts like a government matching contribution to retirement accounts for low-and middle-income Americans.

This post was published at Zero Hedge on Oct 25, 2017.

With Malls In Full Meltdown Mode, GGP Goes All-In With $525MM Connecticut Mega-Mall

So what do you do when your business has entered a period of secular decline due to changing consumer trends which has created an environment of massive oversupply and no pricing power? Well, if you’re the once-bankrupt commercial REIT, General Growth Properties (GGP), then you build a brand new $525 million mega-mall and make the problem even worse. Per The Wall Street Journal:
On a bright August morning, GGP Inc., one of the country’s largest mall operators, broke ground on a new shopping mall. ‘We’re not building any more,’ said GGP Chief Executive Sandeep Mathrani. ‘This could be it for a long period of time.’
The seemingly risky bet on a new mall comes as retailers close hundreds of stores and malls across the country try to reinvent themselves. While GGP saw an opening to fill what it deemed an underserved area in Norwalk, Conn., about 50 miles north of New York City, it could be one of the last malls of its kind ever built in the U. S.
The $525 million SoNo Collection, as the new mall will be called when it opens in 2019, will be anchored by Nordstrom and Bloomingdale’s and house 80 to 100 smaller stores, including as many as 10 restaurants and potentially a health club. One change from malls of the past: There will be far fewer apparel retailers. GGP has pre-leased about 60% of the available space.
All of which has given GGP shorts a brand new reason to celebrate…

This post was published at Zero Hedge on Oct 25, 2017.

U.S. Deepwater Offshore Oil Industry Trainwreck Approaching

The U. S. Deepwater Offshore Oil Industry is a trainwreck in the making. The low oil price continues to sack an industry which was booming just a few short years ago. The days of spending billions of dollars to find and produce some of the most technically challenging deep-water oil deposits may be coming to an end sooner then the market realizes.
Drilling activity in the Gulf of Mexico hit a peak in 2013 when the price of oil was over $100 a barrel. However, the current number of rigs drilling in the Gulf of Mexico has fallen to only 37% of what it was in 2013. This is undoubtedly bad news for an industry that fetches upward of $600,000 a day for leasing these massive ultra-deepwater rigs.
One of the largest offshore drilling rig companies in the world is Transocean, headquartered in Switzerland. They lease ultra-deepwater rigs all over the globe. When the industry was still strong in 2014, nearly half of Transocean’s fleet of 27 ultra-deepwater rigs were leased in the Gulf of Mexico. Even though Transocean was quite busy that year, its ultra-deepwater rig utilization was 89% during the first half of 2014, down from an impressive 95% in 1H 2013.
The term utilization represents the total number of working rigs in the fleet. So, in 2013, Transocean had 95% of its rigs busy drilling oil wells. But if we look at the following chart, we can see the disaster that has taken place at Transocean since the oil price fell by more than 50%:

This post was published at SRSrocco Report on OCTOBER 25, 2017.

Amazon Is Asking Customers To Hand Over Their House Keys

Would you feel comfortable giving Jeff Bezos your house keys? Amazon is hoping that the answer is yes.
The e-commerce behemoth and creator of a global deflation impulse on Wednesday introduced a connected door-lock and security-camera system to let package carriers, guests and dog walkers into your home using an app, WSJ reports. The so-called ‘Amazon Key’ will be available for the bargain price of $25. ‘This is not an experiment for us,’ said Peter Larsen, vice president of delivery technology at Amazon. ‘We think this is going to be a fundamental way that customers shop with us for years to come.”

This post was published at Zero Hedge on Oct 25, 2017.

Stocks and Precious Metals Charts – We’ll Always Have Paris

For whatever reason, and I have some thoughts along those lines, the powers-that-be in American finance and politics are terrified of a decline in the US stock markets, ever since the election of His Donaldship.
And so once again this bloated pig of a market continued to float just above the dangerous waters of correction and disappointment, even one so slight it appears.
This year is the 75th anniversary of the movie Casablanca.

This post was published at Jesses Crossroads Cafe on 25 OCTOBER 2017.


GOLD: $1277.80 UP $0.70
Silver: $16.95 FLAT cents
Closing access prices:
Gold $1277.80
silver: $16.95
PREMIUM FIRST FIX: $17.63(premiums getting larger)
Premium of Shanghai 2nd fix/NY:$15.31 PREMIUMS GETTING LARGER)
LONDON FIRST GOLD FIX: 5:30 am est $1273.00
For comex gold:
For silver:
320,000 OZ/
Total number of notices filed so far this month: 1029 for 5,145,000 oz
Bitcoin: $5564 bid /$5784 offer UP $68.00 (MORNING)
BITCOIN CLOSING;$5562 BID:5582. OFFER up $65.00

This post was published at Harvey Organ Blog on October 25, 2017.

Loonie Plunges After Bank Of Canada Keeps Rates Unchanged

After two rate hikes earlier in the year, once in July and an unexpected rate hike in September, the Bank of Canada decided to tread lightly, and kept its overnight rate at 1%, as everyone expected stating that “the current stance of monetary policy is appropriate” and changes its hiking tune, warning that “less monetary policy stimulus will likely be required over time.”
Some more details from the statement:
Based on this outlook and the risks and uncertainties identified in today’s MPR, Governing Council judges that the current stance of monetary policy is appropriate. While less monetary policy stimulus will likely be required over time, Governing Council will be cautious in making future adjustments to the policy rate. In particular, the Bank will be guided by incoming data to assess the sensitivity of the economy to interest rates, the evolution of economic capacity, and the dynamics of both wage growth and inflation.

This post was published at Zero Hedge on Oct 25, 2017.

Housing Bubble 2 Gets Complicated: Pending Home Sales Plunge in San Francisco Bay Area, Drop in all California

But upward pressure on already crazy home prices persists.
Pending home sales in California fell 6% in September compared to a year ago, the third month in a row of year-over-year declines, after having dropped 3.5% in August and 2.6% in July.
‘Entering the fall home-buying season, the housing market momentum waned,’ the California Association of Realtors said in its report. Brokers ‘reported slower open house traffic, and listing appointments and client presentations fell below positive territory in September.’
The report cited ‘continued housing inventory issues and affordability constraints,’ as home prices have moved out of reach for many people, despite historically low mortgage rates. This ‘may have pushed the market to a tipping point.’
Pending home sales are an indication of what actual sales might look like over the next few months. They’re notoriously volatile. But in the San Francisco Bay Area, pending homes sales have been plunging in the double digits for months. And now Southern California is catching the cold.

This post was published at Wolf Street on Oct 25, 2017.

This Will Be The Biggest Buyer Of Stocks In 2018

In July, many were surprised to learn (even though we have shown this many times prior), that according to Credit Suisse analysts there has been just one buyer of stocks since the financial crisis: the corporate sector, also known as “stock buybacks.”
Well, don’t change the channel, because according to Goldman’s just released forecast of fund flows in 2018, it will be more of the same as the single biggest buyer of stocks next year will be the same one as before:corporationg buying back stock, some $590 billion of it to be precise, and more than all other sources of stock purchasing in the coming year combined. In fact, without buybacks, instead of net equity demand of $400 billion in 2018, there would be nearly $200 billion of outflows, something not seen since the financial crisis.
Here’s the summary from David Kostin: “Corporate buybacks and ETF inflows will drive US equity demand in 2018. We forecast corporate equity demand will rise by 3% to $590 billion next year. Increased authorizations and high cash balances should more than offset headwinds to buybacks from high valuations.”
In addition to buybacks, Goldman is confident that the passive investing euphoria will continue, and expects expect investor purchases of ETFs to hit a record high of $400 billion in 2018. Investor preference for passive vs. active funds should continue to drive demand for ETFs.

This post was published at Zero Hedge on Oct 25, 2017.

Vegas Gunman’s Brother Arrested For Child Porn; Laptop Hard Drive Missing

The story of Las Vegas shooter Stephen Paddock’s family just keeps getting weirder.
The Los Angeles Times is reporting one of Paddock’s younger brothers, Bruce Paddock, has been detained in North Hollywood on suspicion of crimes related to child pornography. Paddock, 58, was taken into custody Wednesday morning.
The LAPD said a man was detained in the 5300 block of Laurel Canyon Boulevard on suspicion of crimes related to child pornography. However the LAPD would not reveal the name of the man. Sandra Breault, a spokeswoman for the FBI in Las Vegas, declined to say whether Bruce Paddock’s detention was connected to the agency’s investigation into the concert shooting.
The Paddocks’ father, Benjamin Paddock, was famously revealed to be a former bank robber and con man who once made the FBI’s “most wanted” list. Paddock’s family has mostly avoided the media, though his youngest brother, Eric, spoke out when reporters descended on his Florida home in the days following the shooting. Eric Paddock said he wasn’t close with most of his brothers, but had once been involved in a lucrative real estate venture with Stephen. He said he was shocked to learn that his brother had been the shooter, and said his brother gave no indication that he might carry out such an atrocious act.

This post was published at Zero Hedge on Oct 25, 2017.

2017 Was The Year Of Gold’s Consolidation, So What Will 2018 Present?

One of the most frustrating charts to trade during 2017 has been almost any chart in the metals complex. In fact, if you speak to most metals investors, you would almost think that they have incurred a huge loss in 2017.
But, that is far from the truth. In fact, since we caught the low around 107 in the GLD at the end of 2016, we have seen it rally almost 20% off those lows when it struck its 2017 high back in early September. As I write this article, we are still 13% off those lows.
Even though we still have seen a nicely positive year for GLD to date, the sentiment is one of despondency and despair. You see, the complex has had multiple opportunities to strongly break out during 2017, but has failed to reach escape velocity despite several set ups to do so. And this has likely caused the negative sentiment pervasive through the market, despite the positive return year. In fact, the best categorization of the sentiment I am seeing in the market is indifference.

This post was published at GoldSeek on 25 October 2017.

Cable Soars After Strong UK GDP, Boosting Rate Hike Odds

It all started at 9:30am local time, when the UK reported a stronger than expected Q3 GDP print of 0.4% Q/Q, above the Exp. 0.3%, and 1.5% Y/Y, also above the Exp. 1.4%. Heading into the report there was much anticipation, due to chatter that a miss would drastically diminish the chance for a 2017 rate hike from the BOE. And while the initial response to the beat was rather muted, cable started gathering momentum after the report, with cable rising as high as 1.326, after nearly sliding below 1.31 earlier in the session.
And while the strong data will likely reassure those at the BoE in favour of hiking, it was not strong enough to convince those who are still on the fence. Still, given the split, most sellside desks believe that a hike is now more or less guaranteed, especially with Brexit noise dying down for the time being.

This post was published at Zero Hedge on Oct 25, 2017.

China Aims to Dethrone the Dollar

Last month, the Nikkei Asain Review reported on a move by China that could take a first step toward dethroning the US dollar. The proposed launch of a gold-backed, yuan-denominated oil futures contract got a lot of attention in alt-media circles, but didn’t make much of a splash in the mainstream. But now the mainstream is sitting up and taking notice.
During an interview with Bloomberg TV Tuesday, Graticule Asset Management Asia CEO Adam Levinson said China rolling out a yuan-denominated oil contract within the next few months will be ‘a wake-up call’ for investors who haven’t paid attention to the plans.
The move potentially creates a way for oil exporters to circumvent US dollar-denominated benchmarks by trading in yuan. The contracts will reportedly be priced in yuan, but convertible to gold.
Levinson said besides serving as a hedging tool for Chinese companies, the yuan-backed oil contracts will aid a broader government agenda of increasing the use of the yuan in trade settlement.

This post was published at Schiffgold on OCTOBER 25, 2017.

The Republican Trump Resistance Is Transforming Moderates Into Mavericks

The meeting with Republican Senators yesterday, outside of Flake and Corker, was a love fest with standing ovations and great ideas for USA!
— Donald J. Trump (@realDonaldTrump) October 25, 2017

Most observers of the American political discourse would probably agree that President Donald Trump is reshaping the Party of Lincoln in new and profound ways. Already, the president has dealt several stunning rebukes to the party’s establishment: from gatecrashing the Republican primary, to filling his administration with ‘Democrats’ Like Gary Cohn and Steve Mnuchin, to threatening the status quo of international trade.
But as Bloomberg points out, Trump’s push to foment a GOP revolution has come back to haunt him as his administration strains to pass what would be the first comprehensive tax-reform bill in 30 years. Trump had courted a rebellion – and now he’s got one. But instead of the party wholehearted embracing Trumpism, establishment Republicans like Bob Corker and Jeff Flake – both of whom have opted not to run again as they feud with the president – are positioning themselves as obstructionists of the Trump agenda.
And given the Republicans’ razor-thin majority in the senate, the two of them have nearly enough leverage to sink every major piece of legislation between now and the midterms. And in his surprise retirement speech, Flake promised to do everything he can to make Trump’s life hell. Meanwhile, Corker has accused Trump of pushing American to the brink of chaos.

This post was published at Zero Hedge on Oct 25, 2017.

Gold Prices Hit 3-Week Low as UK GDP Makes Rate Rise a ‘Done Deal’, GOP Back Taylor Rule at US Fed

Gold prices fell to the lowest in 3 weeks against all major currencies in London on Wednesday, falling as world stock markets rose after Wall Street set fresh all-time highs despite growing expectations of tighter central-bank policy in the US, UK, and Eurozone.
UK government Gilt yields jumped to their highest since February followed stronger-than-expected GDP growth for Q3, while US 10-year Treasury yields rose to fresh 7-month highs of 2.45% after news reports said Republican lawmakers advised President Trump to pick “hawkish” economist John Taylor as the next chair of the Federal Reserve.
“Nothing less than the big ‘taper’ plan for next year is expected from Mario Draghi” at tomorrow’s European Central Bank press conference, says CNBC.
Eurozone stock markets edged higher on Wednesday but London’s FTSE100 slipped and the UK-focused FTSE250 held flat after new GDP figures said economic growth held at 1.5% per year in the third quarter of 2017.

This post was published at FinancialSense on 10/25/2017.