Would A Leveraged Buyout Help Sears Turnaround Its Business?

Practically since the day he took the reins at Sears, CEO and Chairman Eddie Lampert has been steadily stripping the once mighty retailing behemoth of assets and protecting his hedge fund’s investment as the company continues its steady march toward bankruptcy.
Any customer with the temerity to visit one of the remaining Sears or K-Mart stores will be greeted with the same depressing vision: Shelves that are mostly vacant of the most popular consumer brands, as many of Sears’ suppliers have become wary of working with the company. Displays are unkempt, and even the selection of appliances that were once Sears’ bread and butter has been dramatically reduced.
Back in October, Sears Canada announced its plans to liquidate, leaving behind only this video to remind investors and customers just how bad things got before the plug was pulled.
But despite all of this, Swiss asset manager Memento, a firm that primarily manages assets belonging to Switzerland’s Spadone family, believes the short-selling of Sears’ stock is the most pressing obstacle plaguing the floundering retailer.

This post was published at Zero Hedge on Dec 7, 2017.

US Homelessness Rate Rose This Year For First Time Since 2010

Here’s one statistic about the US economy that you probably won’t find in President Trump’s twitter feed.
Thanks to a surge in homelessness centered around several large west coast cities, the overall rate of homelessness in the US ticked higher this year, the first increase since 2010, according to a survey from the Department of Housing and Urban Development.
The U. S. Department of Housing and Urban Development released its annual Point in Time count Wednesday, a report that showed nearly 554,000 homeless people across the country during local tallies conducted in January. That figure is up nearly 1 percent from 2016.
Of that total, 193,000 people had no access to nightly shelter and instead were staying in vehicles, tents, the streets and other places considered uninhabitable. The unsheltered figure is up by more than 9 percent compared to two years ago.
Increases are higher in several West Coast cities, where the explosion in homelessness has prompted at least 10 city and county governments to declare states of emergency since 2015.
The homelessness crisis is only one byproduct of the burgeoning wealth inequality in the US caused by the Federal Reserve’s decision to pump trillions of dollars of ‘stimulus’ into the markets.
Central-bank money printing has caused asset valuations to balloon while wages for everyone but the most highly skilled workers have stagnated, as the chart below illustrates.

This post was published at Zero Hedge on Dec 7, 2017.

Does Trump’s Tax Plan Single Out Family Trusts As A Way To Subsidize Corporate Tax Cuts?

According to an analysis from the Tax Policy Center, the Senate’s recently passed tax plan will increase the after-tax income of folks in every income bracket. Of course, there are exceptions to every rule and plenty of arguments to be had between the Left and Right over how the tax savings scraps should be divvied up, but in the aggregate individual tax payers should see their net incomes increase in 2019.
But when it comes to the taxation of business income, one group of small business owners is about to get a massive tax increase, on a relative basis, compared corporations and other pass-through entities: Family Trusts.
As the Wall Street Journal points out this morning, many small businesses in the U. S. are organized as family trusts as a way to preserve an enterprise for succeeding generations, protect against estate taxes or a divorcing spouse or other claimants who might try to seize a stake. But while the Senate tax bill provides a massive tax cut for corporations and individually-owned pass-through corporations, small businesses organized as family trusts will see no changes making them much less competitive on a pro forma basis.

This post was published at Zero Hedge on Dec 7, 2017.

Middle or Late Innings of Economic Expansion?

Each year of this enduring slow-growth expansion cycle starting in 2009 has had a growing chorus of doomsayers looking for the next recession. The evidence in forecasting the next economic peak resembles a litany of what if’s to justify a visceral conclusion. Rising interest rates or simply the ‘feeling’ that this expansion is just too darn long are the most popular ‘reasons’ proffered for toil and trouble bubbling around the corner. For years we have heard the sky is falling with regards to the ‘bond bubble’. Yet interest rates have actually fallen in 2017 despite accelerating economic growth. The yield curve is flattening, yet current yield curve spreads have always been positive for the economy for at least the next 2 years.
The current 8 and a half year long economic expansion is also branded as long in the tooth – a quirky expression emanating from the practice of examining the length of a horse’s tooth to determine its ‘age’. Just as popular of a caption is the assertion this cycle is in the late innings of the ball game. Since 1945 the average economic growth phase has lasted just under 5 years and the longest expansions in history were the 9 to just under 10-year expansions of the 1960’s and 1990’s. Thus the current growth phase must clearly run out of steam between mid-2018 and early 2019 at the latest, right? Such logic is a bit irrational.

This post was published at FinancialSense on 12/07/2017.

Philly Soda Tax Continues To ‘Disappoint’

The City of Philadelphia’s tax collections from its controversial tax on sweetened beverages are continuing to fall well short of the levels that the city’s politicians desired. For taxes assessed on sales from January 2017 through preliminary data for October 2017, total beverage tax collections in the city are running over 14% below the amount that city officials were counting upon to support their desired level of spending for a new “free” pre-K school programs, to cover a portion of the debt that the city will take on to make physical improvements to parks, libraries and recreation centers, and also to fund benefits for city employees.

In the chart above, we’ve projected the amount of tax collections that Philadelphia would need to collect in each month of the year to reach its annual target of $92.4 million if sales of the sweetened beverages distributed in the city followed the seasonal pattern for soft drink distribution in the United States, which we’ve shown in blue. Meanwhile, we’ve shown the actual tax collections that Philadelphia’s revenue department has taken in from the tax assessed in the indicated months in red. As you can see, the city’s actual sweetened beverage tax collections have continually fallen anywhere from 4% to 21% short of the monthly revenue targets needed to meet their annual revenue target.

This post was published at Zero Hedge on Dec 7, 2017.

Former Soros Analyst Warns on Growing Risks

Despite last Friday’s pullback, nearly all markets have been heading higher with no end in sight.
Market strategist John Roque at Key Square Capital Management recently spoke with Financial Sense Newshour to discuss his outlook and a number of risks building under the surface.
For related podcast and slides, see Interview With Key Square’s John Roque.
Tech Market Concentration
The former strategist for Soros Fund Management said even though bears have been wrong for years and it’s pretty hard to fight the upward trend, we do see high levels of concentration that are concerning.
For example, if you look at Apple, Amazon, Facebook, Google, and Microsoft, they now make up almost 15% of the S&P 500. At the 2000 peak, Cisco, Intel, Microsoft, and Oracle made up 15.4%.

This post was published at FinancialSense on 12/07/2017.

Crackdown Comes To Wall Street: Morgan Stanley Fires Harold Ford Jr Over Alleged Sexual Misconduct

Ten years after leaving Congress, Harold Ford Jr could be the canary in the coal-mine for Wall Street as the global awakening to sexual abuse strikes a bulge-bracket bank.
Harold Ford Jr. ‘has been terminated for conduct inconsistent with our values and in violation of our policies,’ Morgan Stanley spokeswoman Michele Davis said in a statement to Bloomberg News.
Huffington Post reports that the bank’s human resources department investigated claims he harassed a woman he met in a professional capacity.
In two interviews with HuffPost, the woman alleged that Ford engaged in harassment, intimidation, and forcibly grabbed her one evening in Manhattan, leading her to seek aid from a building security guard. The incident took place several years ago when Ford and the woman were supposed to be meeting for professional reasons. Ford continued to contact her after the encounter until she wrote an email asking him to cease contact.
The email, which was reviewed by HuffPost, shows that the woman emailed Ford after he repeatedly asked her to drinks. She asked him not to contact her anymore, citing his inappropriate conduct the evening where he forcibly grabbed and harassed her. Ford replied to the email by apologizing and agreeing not to contact her.

This post was published at Zero Hedge on Dec 7, 2017.

Earnings Don’t Matter After All!

Our long-time readers are familiar with the work of Professor Baruch Lev of the NYU Stern School of Business, whose research forms the basis for the Knowledge Leaders investment strategy. In his decades-long study of financial records, Lev first discovered a link between a firm’s knowledge capital and its subsequent stock performance, ultimately identifying a market inefficiency that leads highly innovative companies to deliver excess returns. We call this market anomaly the Knowledge Effect.
In a new article in Financial Analysts Journal, Lev and co-author Feng Gu continue to advance the findings on intangibles. The article, ‘Time to Change Your Investment Model,’ identifies that earnings prediction has lost ‘much of its relevance in recent years.’
As a form of predicting corporate results, ‘earnings no longer reliably reflect changes in corporate value and are thus an inadequate driver of investment analysis.’
The basis for this shift, the authors explain, occurred after the emergence of the semiconductor.

This post was published at Zero Hedge on Dec 7, 2017.

One Of Bank of America’s “Guaranteed Bear Market” Indicators Was Just Triggered

It is undisputed that the last 2 quarters have demonstrated an impressive jump in corporate earnings growth, if mostly due to a beneficial base effect from plunging 2016 earnings which pushed them below levels reached in 2014. And naturally, this rebound has been more than priced into a market which has seen substantial multiple expansion since the Trump election to boot. But what is much more important for the market is what corporate earnings look like in the future, and it is here that Bank of America has just raised a very troubling red flag.
According to BofA’s Savita Subramanian, in November the S&P 500’s three-month earnings estimate revision ratio (ERR) fell for the fourth consecutive month to 0.99 (from 1.03), indicating that for the first time in seven months, there were more negative than positive earnings revisions, needless to say a major negative inflection point in the recent surge in profits. The bank’s more volatile one-month ERR also weakened to 0.94 (from 1.16).

This post was published at Zero Hedge on Dec 7, 2017.

Senator Al Franken Officially Confirms His Resignation In Senate Speech

Update (11:55AM EST): After weeks of speculation, the #MeToo movement has just claimed its latest conquest with Senator Al Franken of Minnesota officially confirming his resignation on the Senate floor.
‘Today I am announcing that in the coming weeks I will be resigning as a member of the United States Senate.’
Of course, Franken’s resignation came only after he once again denied the validity of the allegations against him saying “some of the allegations against me are simply not true. Others I remember differently.”
It’s unclear if Franken recalls this picture “differently”…


This post was published at Zero Hedge on Dec 7, 2017.

Record Calm Stock Market Gets A Shock

After a record run of muted movement, will recent volatility send negative shock waves through stock market?
The recent uptick in stock volatility has some investors on edge (OK, it is mostly just financial news editors on edge). The truth is, while volatility over the past week has seen an increase, it is not all that far away from the historical norm. Last Thursday through Monday, for example, the Dow Jones Industrial Average (DJIA) experienced 3 straight ‘volatile’ days, with daily ranges of between 1% and 1.6% on all 3 days. Looking historically, however, we find that the average daily range in the DJIA over the last 90 years is 1.6%. Even during the current bull market since 2009, the average range is 1.08%. Thus, the recent action should hardly be characterized as volatile.
The reason it perhaps seems so tumultuous is because we are emerging from a long stretch of calm in the market – record calm, at that.

This post was published at Zero Hedge on Dec 7, 2017.

Finally, An Honest Inflation Index – Guess What It Shows

Central bankers keep lamenting the fact that record low interest rates and record high currency creation haven’t generated enough inflation (because remember, for these guys inflation is a good thing rather than a dangerous disease).
To which the sound money community keeps responding, ‘You’re looking in the wrong place! Include the prices of stocks, bonds and real estate in your models and you’ll see that inflation is high and rising.’
Well it appears that someone at the Fed has finally decided to see what would happen if the CPI included those assets, and surprise! the result is inflation of 3%, or half again as high as the Fed’s target rate.
New York Fed Inflation Gauge is Bad News for Bulls (Bloomberg) – More than 20 years ago, former Fed Chairman Alan Greenspan asked an important question ‘what prices are important for the conduct of monetary policy?’ The query was directly related to asset prices and whether their stability was essential for economic stability and good performance. No one has ever offered a coherent answer even though the recessions of 2001 and 2008-2009 were primarily due to a sharp correction in asset prices.

This post was published at DollarCollapse on DECEMBER 6, 2017.

Here’s Why Trump’s Lawyer Is Denying that Deutsche Bank Got a Subpoena

A lawyer who is part of President Donald Trump’s legal defense team, Jay Sekulow, has denied the news reports that Deutsche Bank has received a subpoena from Special Counsel Robert Mueller’s office for banking records related to Trump and his family members.
In a statement to Reuters, Sekulow stated:
‘We have confirmed that the news reports that the Special Counsel had subpoenaed financial records relating to the president are false. No subpoena has been issued or received. We have confirmed this with the bank and other sources.’
But in the same article that relayed that statement from Sekulow, Reuters’ reporters Arno Schuetze and Karen Freifeld undercut the credibility of Sekulow’s statement by writing the following:
‘A U. S. federal investigator probing alleged Russian interference in the 2016 U. S. presidential election asked Deutsche Bank for data on accounts held by President Donald Trump and his family, a person close to the matter said on Tuesday, but Trump’s lawyer denied any such subpoena had been issued.’

This post was published at Wall Street On Parade on December 7, 2017.

CFPB Reportedly Funneled Billions Into “Secret Democrat Slush Fund”, Consultant Claims

A consultant who worked with the highly politicized Consumer Financial Protection Bureau (CFPB) claims the organization funneled a large portion of over $5 billion in collected penalties to “community organizers aligned with Democrats” as part of a giant slush fund, the Post reports.
[The CFPB] Funneled a large portion of the more than $5 billion in penalties collected from defendants to community organizers aligned with Democrats – ‘a slush fund by another name,’ said a consultant who worked with CFPB on its Civil Penalty Fund and requested anonymity.

This post was published at Zero Hedge on Dec 7, 2017.

A young foreigner’s first impressions of America

Last weekend while I was in Denver, I had the opportunity to speak with a young man from the Netherlands who was attending our charity event.
It was his first trip to the United States, and I’m always interested to hear people’s first impressions.
He told me he was really overwhelmed with the size and scale of everything. China is about the only other country in the world that does everything as big as the US.
He also told me he couldn’t get over how much stuff there is to buy in the US… and how easy it is.
He’s absolutely right. The US is an amazing place for a number of reasons; it’s modern, generally safe, and boasts a high standard of living.
And, yes, as a consumer, it’s one of the best places in the world.
(Though I would suggest that there are parts of Asia that are even better; Hong Kong, for example, has a similar selection of goods and services from all over the world, yet ZERO tax.)

This post was published at Sovereign Man on December 6, 2017.

Mount Vesuvius Anyone?

‘In the face of a shock, investors may be surprised to find themselves jammed running for the exit.’ That quote is from Paul Tudor Jones, who was one of the pioneers of the modern hedge fund and is considered a brilliant investor and trader. He went on to say that things are ‘on the verge of a significant change’ and that the current market reminds him of 1999.
The current market reminds me of the demise of Pompeii, which was destroyed by the massive volcanic eruption of Mt Vesuvius in 79 AD. Pompeii was a prosperous city of the Roman Empire on the coast of southwest Italy. It sits at the base of Mt. Vesuvius, a volcano that had been dormant for a long time. Earthquakes and seismic activity, scientists believe, began to ‘warn’ the population of Pompeii roughly 17 years before the big eruption, when a massive earthquake largely leveled Pompeii. Shortly before the eruption more signs began occurring, hinting that something wasn’t right. Though some people evacuated the area, most of Pompeii’s populace was not worried. The rest is history.
Though there are many warning signs, similar to the citizens of Pompeii living at the base of an active volcano, the American public does not seem the least worried
about having their money in the stock market. Retail margin debt, at 100% of market capitalization, is at its highest ever. The percentage of U. S. household wealth (not including home equity) invested in stocks in some form is in its 94th percentile. This is the highest allocation to equities since just before the tech bubble popped in 2000. In other words, despite the numerous warnings for those paying attention, investors have piled most of their savings/wealth into the stock market with complete disregard to the growing probability of a down-side accident.

This post was published at Investment Research Dynamics on December 7, 2017.

A Potential Government Shutdown Is Literally Just Hours Away, But Congressional Leaders Insist That Everything Will Be Just Fine

Either the Republicans are going to give Democrats virtually everything that they want, or the federal government will shut down at the end of the day on Friday. We have been through this process time after time, and in every single instance the Republicans have always folded like a 20 dollar suit. Unfortunately, it looks like the Democrats are going to win big this time around too. The spending agreement is essentially an updated Obama budget that fully funds Planned Parenthood, that contains no money for a border wall, and that doesn’t reflect any of President Trump’s other important priorities either. On Thursday, the House is expected to pass this horrible bill, and the Senate is expected to take up the matter on Friday. According to Bloomberg, right now this plan would keep the government open through December 22nd…
The House Rules Committee approved a rule setting the bill up for a floor vote Thursday, after which the Senate will have until the end of the day Friday to avoid a partial government shutdown. A formal check of how members would vote on the Dec. 22 deadline came back showing widespread support, said Representative Dennis Ross, a member of the vote-whipping team.
So even if this plan gets through both the House and the Senate, we will be facing another government shutdown deadline in just a few weeks.

This post was published at The Economic Collapse Blog on December 6th, 2017.

Got It Figured Out Yet?

Has the light come on yet?
Why do you think the US Congress passed the Sexual Assault Taxpayer Bailout Act by unanimous vote in 1995 — and Bill Clinton signed it? Why has it not been repealed — and in fact, even today there is no bill on the floor of either House or Senate to repeal it, nor has Trump called for it to be repealed and stated he will refuse to sign any other bill (which is within his power) until it is?
The Hollyweird cabal’s escapades are not just limited to harassment. We all know about the Michael Jackson allegations. Then there’s Epstein — and his connections to both the entertainment and political “industries.” Epstein, I remind you, was convicted and yet of all the people who I’ve ever read about being convicted of that sort of offense he’s the only one who was basically given a slap on the wrist instead of decades in prison.
Worse, all of the others connected to him were not pursued. At all. Herr Clinton was of course one of those persons but hardly the only one. Number of prosecutions of those others? Zero.
So let’s ask the inconvenient question: Is all of this in the political and media sphere nothing more or less than a monstrous blackmail scheme and that is why it never came out until it suddenly was forced into the public eye by some damning revelations that could not be silenced once they got circulating on Social Media?

This post was published at Market-Ticker on 2017-12-07.

New Study Says 40% Of American Households Will ‘Cut The Cord’ By 2030

Cord cutting is a topic which we discuss on a fairly regular basis, particularly over the last several quarters as the subscriber losses for cable companies have seemingly accelerated (see: Cord-Cutting Accelerates, Sends Shock Wave Across Traditional TV). Not surprisingly, one of the biggest losers of the cord cutting phenomenon has been ESPN, a media giant that ironically was one of the largest, if not the largest, beneficiaries of the cable TV bundle since it made its debut in 1979 (see: ESPN Lost 15,000 Subscribers A Day In October).
Of course, as TDG Research notes this morning, the wave of Americans electing to forego the massively overpriced cable TV bundle is only getting started and will see some 40% of American households ditch their service by 2030.
Generally, TDG expects that the penetration of live multi-channel pay-TV services will decline from 85% of US households in 2017 to 79% in 2030. While statistically a loss of only 7%, it nonetheless illustrates the ongoing secular decline of a once healthy market space. TDG predicts that, by 2030, roughly 30 million US households will live without an MVPD service of any kind, be it virtual or legacy.
During this time, legacy MVPDs will experience considerable subscriber losses, due not only to long-term industry trends but also growing competition from virtual pay-TV providers. Consequently, legacy pay-TV penetration will fall from 81% of US households in 2017 to 60% in 2030, down 26%. At the same time, virtual pay-TV penetration will grow from roughly 4% of US households to 14%, up 350% but from a very small base.
“TDG said early on that the future of TV was an app. Unfortunately, most incumbent MVPDs weren’t taking notes,” notes Joel Espelien, TDG Senior Analyst. “The question is no longer if the future of TV is an app, but how quickly and economically incumbents can adapt to this truth and transition to an all-broadband app-based live multi-channel system.”

This post was published at Zero Hedge on Dec 6, 2017.