• Category Archives Banking
  • $5.5 Billion In CMBS Exposed To Toy’s ‘R’ Us Bankrutpcy

    This is a syndicated repost courtesy of Snake Hole Lounge. To view original, click here. Reposted with permission.
    Trepp findings show that 109 outstanding loans totaling about $5.5 billion currently carry Toys ‘R’ Us exposure. A large portion of the loans are CMBS 2.0 and 3.0 notes issued after 2010. Backed by 123 Toys ‘R’ Us and Babies ‘R’ Us stores, the $404.7 million Toys R Us portfolio is the loan with the largest CMBS exposure. The loan is the only one behind the single-asset/single-borrower TRU 2016-TOYS transaction, and also includes a $102.4 million freely payable portion. Those 123 collateral properties span a combined five million square feet across 29 different states. The loan, which amortizes on a 30-year schedule, features relatively conservative underwriting metrics. At securitization in 2016, DSCR (NCF) and LTV clocked in at 1.85x and 58.3%, respectively.
    The $380 million Bronx Terminal Market loan, which is split into a $140 million piece that makes up 12.06% of COMM 2014-CR17, a $135 million note that comprises 13.96% of COMM 2014-CR18, and a $105 million piece that represents 10.13% of COMM 2014-UBS3. Toys ‘R’ Us is listed as the fourth-largest tenant (8.43% of the net rentable area) at the 912,333 square-foot, superregional mall in Bronx, New York with a lease that runs through January 2020.

    This post was published at Wall Street Examiner by Anthony B Sanders ‘ September 22, 2017.


  • The Federal Reserve’s Unspoken Truth

    Originally posted at Briefing.com
    The Federal Reserve’s latest policy announcement has generated a lot of opinions about its implications for the capital markets. What it didn’t generate is a lot of movement in the stock market.
    The September Federal Open Market Committee (FOMC) meeting was a two-day affair that concluded on September 20 with the issuance of an updated policy directive, the release of updated economic and policy rate projections, an announcement that the Federal Reserve will start its balance sheet normalization process in October, and a press conference by Fed Chair Yellen to discuss it all.
    Check out Interview: Louise Yamada on Stocks, Tech, and Interest Rates
    There was a whole lot of information to digest. The key talking points from the Fed Day bonanza included the following:
    The target range for the fed funds rate was left unchanged at 1.00% to 1.25%. The vote was unanimous. The Federal Reserve said it will start its balance sheet normalization process in October in accord with the framework laid out in the June 2017 Addendum to the Committee’s Policy Normalization Principles and Plans

    This post was published at FinancialSense on 09/22/2017.


  • Fed’s Kaplan Makes A Stark Admission: Equilibrium Rate May Be As Low As 0.25%

    As we have hammered away at for years, “the math doesn’t work”, and it appears The Fed just admitted it.
    In a stunning admission that i) US economic potential is lower than consensus assumes and ii) that the Fed is finally considering the gargantuan US debt load in its interest rate calculations, moments ago the Fed’s Kaplan said something very surprising:
    KAPLAN SAYS NEUTRAL RATE MAY BE AS LOW AS 2.25 PCT, LEAVING FED “NOT AS ACCOMMODATIVE AS PEOPLE THINK” Another way of saying this is that r-star, or the equilibrium real interest rate of the US (calculated as the neutral rate less the Fed’s 2.0% inflation target), is a paltry 0.25%.
    What Kaplan effectively said, is that with slow secular economic growth and ‘fast’ debt growth, there’s only so much higher-rate pain America can take before something snaps and as that debt load soars and economic growth slumbers so the long-term real ‘equilibrium’ interest rate is tamped down. It also would explain why the curve has collapsed as rapidly as it did after the Wednesday FOMC meeting, a move which was a clear collective scream of “policy error” from the market.
    This should not come as a surprise. As we showed back in December 2015, in “The Blindingly Simple Reason Why The Fed Is About To Engage In Policy Error“, when calculating r-star, for a country with total debt to GDP of 350%…

    This post was published at Zero Hedge on Sep 22, 2017.


  • The forthcoming global crisis

    The global economy is now in an expansionary phase, with bank credit being increasingly available for non-financial borrowers. This is always the prelude to the crisis phase of the credit cycle. Most national economies are directly boosted by China, the important exception being America. This is confirmed by dollar weakness, which is expected to continue. The likely trigger for the crisis will be from the Eurozone, where the shift in monetary policy and the collapse in bond prices will be greatest. Importantly, we can put a tentative date on the crisis phase in the middle to second half of 2018, or early 2019 at the latest.
    Introduction
    Ever since the last credit crisis in 2007/8, the next crisis has been anticipated by investors. First, it was the inflationary consequences of zero interest rates and quantitative easing, morphing into negative rates in the Eurozone and Japan. Extreme monetary policies surely indicated an economic and financial crisis was just waiting to happen. Then the Eurozone started a series of crises, the first of several Greek ones, the Cyprus bail-in, then Spain, Portugal and Italy. Any of these could have collapsed the world’s financial order.

    This post was published at GoldMoney on September 21, 2017.


  • Fed QT Stocks, Gold Impact

    This week’s landmark Federal Open Market Committee decision to launch quantitative tightening is one of the most-important and most-consequential actions in the Federal Reserve’s entire 104-year history. QT changes everything for world financial markets levitated by years of quantitative easing. The advent of the QT era has enormous implications for stock markets and gold that all investors need to understand.
    This week’s FOMC decision to birth QT in early October certainly wasn’t a surprise. To the Fed’s credit, this unprecedented paradigm shift had been well-telegraphed. Back at its mid-June meeting, the FOMC warned ‘The Committee currently expects to begin implementing a balance sheet normalization program this year’. Its usual FOMC statement was accompanied by an addendum explaining how QT would likely unfold.
    That mid-June trial balloon didn’t tank stock markets, so this week the FOMC decided to implement it with no changes. The FOMC’s new statement from Wednesday declared, ‘In October, the Committee will initiate the balance sheet normalization program described in the June 2017 Addendum to the Committee’s Policy Normalization Principles and Plans.’ And thus the long-feared QT era is now upon us.
    The Fed is well aware of how extraordinarily risky quantitative tightening is for QE-inflated stock markets, so it is starting slow. QT is necessary to unwind the vast quantities of bonds purchased since late 2008 via QE. Back in October 2008, the US stock markets experienced their first panic in 101 years. Ironically it was that earlier 1907 panic that led to the Federal Reserve’s creation in 1913 to help prevent future panics.
    Technically a stock panic is a 20%+ stock-market plunge within two weeks. The flagship S&P 500 stock index plummeted 25.9% in just 10 trading days leading into early October 2008, which was certainly a panic-grade plunge! The extreme fear generated by that rare anomaly led the Fed itself to panic, fearing a new depression driven by the wealth effect. When stocks plummet, people get scared and slash their spending.

    This post was published at ZEAL LLC on September 22, 2017.


  • Pensions and Debt Time Bomb In UK: 1 Trillion Crisis Looms

    – 1 trillion crisis looms as pensions deficit and consumer loans snowball out of control
    – UK pensions deficit soared by 100B to 710B, last month
    – 200B unsecured consumer credit ‘time bomb’ warn FCA
    – 8.3 million people in UK with debt problems
    – 2.2 million people in UK are in financial distress
    – ‘President Trump land’ there is a savings gap of $70 trillion
    – Global problem as pensions gap of developed countries growing by $28B per day
    Editor: Mark O’Byrne
    ***
    There is a 1 trillion debt time bomb hanging over the United Kingdom. We are nearing the end of the timebomb’s long fuse and it looks set to explode in the coming months.
    No one knows how to diffuse the 1 trillion bomb and who should be taking responsibility. It is made up of two major components.
    710 billion is the terrifying size of the UK pensions deficit 200 billion is the amount of dynamite in the consumer credit time bomb How did the sovereign nation that is the United Kingdom of Great Britain and Northern Ireland get itself so deep in the red?
    This is not a problem that is bore only by the Brits. In the rest of the developed world a $70 trillion pensions deficit hangs heavy.

    This post was published at Gold Core on September 22, 2017.


  • PHYSICAL GOLD – THE ONLY PENSION FUND TO SURVIVE

    There are probabilities in markets and there are certainties. It is very probable that investors will lose a major part of their assets held in stocks, bonds and property over the next 5-7 years. It is also probable that they will lose most of their money held in banks, either by bank failure or currency debasement.
    WHO BUYS A BOND THAT WILL GO TO ZERO?
    What is not probable, but absolutely certain, is that investors who buy the new Austrian 100-year bond yielding 2.1% are going to lose all their money. Firstly, you wonder who actually buys these bonds. No individual investing his own money would ever buy a 100-year paper yielding 2% at a historical top of bond markets and bottom of rates.
    The buyers are of course institutions who manage other people’s money. These will be the likes of pension fund managers who will be elated to achieve a 2% yield against negative short yields and not much above zero for anything else. These managers will hope to be long gone before anyone finds out the disastrous decision they have taken with pensioners’ money.
    But the danger for them is that the bond will be worthless long before the 100 years are up. It could happen within five years.

    This post was published at GoldSwitzerland on September 21, 2017.


  • The Demise of the Dollar: Don’t Hold Your Breath

    So let’s look at currency flows, reserves and debt.
    De-dollarization is often equated with the demise of the dollar, but this reflects a fundamental misunderstanding of the currency markets. The demise of the U. S. dollar has been a staple of the financial media for decades. The latest buzzword making the rounds is de-dollarization, which describes the move away from USD in global payments
    Look, I get it: the U. S. dollar arouses emotions because it’s widely seen as one of the more potent tools of U. S. hegemony. Lots of people are hoping for the demise of the dollar, for all sorts of reasons that have nothing to do with the actual flow of currencies or the role of currencies in the global economy and foreign exchange (FX) markets.
    So there is a large built-in audience for any claim that the dollar is on its deathbed.
    I understand the emotional appeal of this, but investors and traders can’t afford to make decisions on the emotional appeal of superficial claims–not just in the FX markets, but in any markets.
    So let’s ground the discussion of the demise of the USD in some basic fundamentals. Now would be a good time to refill your beverage/drip-bag because we’re going to cover some dynamics that require both emotional detachment and focus.

    This post was published at Charles Hugh Smith on SEPTEMBER 21, 2017.


  • Interview: Louise Yamada on Stocks, Tech, and Interest Rates

    While we normally see markets face pressure around this time of the year, it appears we may have dodged a bullet. This time on Financial Sense, we spoke with technical analyst Louise Yamada of LY Advisors about her take on equities, the tech sector, and what she looks for to determine market direction.
    Markets Healthy
    From the long-term perspective, markets appear to be healthy, Yamada stated. The advance-decline lines are confirming the new highs, she noted.
    Some indicators have been showing negative divergence over the year, such as new highs versus new lows. While these have come back into positive territory recently, they haven’t exceeded the readings of the past year, leaving the negative divergences in place to possibly be overcome if things improve, Yamada noted.

    This post was published at FinancialSense on 09/21/2017.


  • Asian Metals Market Update: September-21-2017

    A December interest rate hike and more hikes next year is more or less a certainty. This is the first time this year that the Federal Reserve has been very clear on the US economy and the US interest rate cycle. Any reduction on North Korean risk can result in another wave of sell off for gold and silver. The fall is good for a sustained medium term rise in gold and silver. Indian demand for gold will rise for the next month. I can expect the media to be filled with all kinds of bearish views on gold and silver. I prefer to use the sharp fall (if any) in gold and silver for the rest of the year to invest for a period of three years and more. Once again my preference will always be for physical gold as opposed to a gold ETF. I will be looking for price bottom formation every day for medium term opportunities.
    China has a holiday from 1st October to 6th October. On 9th October the USA is closed. In between we have the US September nonfarm payrolls on 6th October. Chinese are the great gobblers of gold. I expect massive Indian demand and massive Chinese demand for gold (if they continue to fall) on or before 30th September.

    This post was published at GoldSeek on 21 September 2017.


  • Gold Investment ‘Compelling’ As Fed May ‘Kill The Business Cycle’

    Gold Investment ‘Compelling’ As Fed Likely To Create Next Recession
    – Is the Fed about to kill the business cycle?
    – 16 out of 19 rate-hike cycles in past 100 years ended in recession
    – Total global debt at all time high – see chart
    – Global debt is 327% of world GDP – ticking timebomb…
    – Gold has beaten the market (S&P 500) so far this century
    – Safe haven demand to increase on debt and equity risk
    – Gold looks very cheap compared to overbought markets
    – Important to diversify into safe haven gold now
    ***
    by Frank Holmes via Gold.org
    Global debt levels have reached unprecedented levels, pension deficits are rising and the US interest rate cycle is on the turn. Frank Holmes, chief executive of highly regarded investment management group US Global Investors, believes that investing in gold is a logical response to current, unnerving conditions.
    For centuries, investors and savers have depended on gold in times of economic and political strife, and its investment case right now is as compelling as it’s ever been.

    This post was published at Gold Core on September 21, 2017.


  • Traders Yawn After Fed’s “Great Unwind”

    One day after the much anticipated Fed announcement in which Yellen unveiled the “Great Unwinding” of a decade of aggressive stimulus, it has been a mostly quiet session as the Fed’s intentions had been widely telegraphed (besides the December rate hike which now appears assured), despite a spate of other central bank announcements, most notably out of Japan and Norway, both of which kept policy unchanged as expected.
    ‘Yesterday was a momentous day – the beginning of the end of QE,’ Bhanu Baweja a cross-asset strategist at UBS, told Bloomberg TV. ‘The market for the first time is now moving closer to the dots as opposed to the dots moving towards the market. There’s more to come on that front. ‘
    Despite the excitement, S&P futures are unchanged, holding near all-time high as European and Asian shares rise in volumeless, rangebound trade, and oil retreated while the dollar edged marginally lower through the European session after yesterday’s Fed-inspired rally which sent the the dollar to a two-month high versus the yen on Thursday and sent bonds and commodities lower. Along with dollar bulls, European bank stocks cheered the coming higher interest rates which should help their profits, rising over 1.5% as a weaker euro helped the STOXX 600. Shorter-term, 2-year U. S. government bond yields steadied after hitting their highest in nine years.
    ‘Initial reaction is fairly straightforward,’ said Saxo Bank head of FX strategy John Hardy. ‘They (the Fed) still kept the December hike (signal) in there and the market is being reluctantly tugged in the direction of having to price that in.’
    The key central bank event overnight was the BoJ, which kept its monetary policy unchanged as expected with NIRP maintained at -0.10% and the 10yr yield target at around 0%. The BoJ stated that the decision on yield curve control was made by 8-1 decision in which known reflationist Kataoka dissented as he viewed that it was insufficient to meeting inflation goal by around fiscal 2019, although surprisingly he did not propose a preferred regime. BOJ head Kuroda spoke after the BoJ announcement, sticking to his usual rhetoric: he stated that the bank will not move away from its 2% inflation target although the BOJ “still have a distance to 2% price targe” and aded that buying equity ETFs was key to hitting the bank’s inflation target, resulting in some marginal weakness in JPY as he spoke, leaving USD/JPY to break past FOMC highs, and print fresh session highs through 112.70, the highest in two months, although it has since pared some losses.

    This post was published at Zero Hedge on Sep 21, 2017.


  • Running Out The Clock; They Really Don’t Know What They Are Doing

    This is a syndicated repost courtesy of Alhambra Investments. To view original, click here. Reposted with permission.
    If it wasn’t perfectly clear before, and it really was, there is no way it isn’t now. The Fed is not in any way data dependent. The data on the economy remains in some category of insufficient, longer-term stuck much too far in the direction of atrocious. Yet, the central bank will exit anyway because there is nothing left for them here in the present.
    The economy is, in their judgment, what it is. Monetary policy, such that it is, must now turn toward tomorrow. After fighting yesterday’s battles for ten years, and losing, the FOMC knows that time is against it in more ways than one. Even in traditional terms viewing the period after the Great ‘Recession’ as somehow a business cycle, it is already a long one. Recession is inevitable, and there is no longer anything the Fed can do about the last one to make the next one more tolerable.
    So they will focus entirely on the next one before the clock strikes zero. That means getting their main interest rate levers back up near as normal as they possibly can, and the balance sheet as close to whatever and however they define neutral in this brave new world without actual growth.

    This post was published at Wall Street Examiner on September 20, 2017.


  • Questions Remain as the Fed Finally Begins to Reverse QE

    Today the Federal Reserve announced that it will finally begin the process of reversing quantitative easing. Following the process it outlined earlier this year, the Fed will start allowing assets (Treasurys and mortgage-backed securities) to mature off its balance sheet, rather than re-investing them as had been its prior policy. The current plan is to start with a $10 billion roll off in October, and increasing quarterly until it reaches $50 billion by October of next year. Considering the Fed’s balance sheet currently stands $4.5 trillion, the Fed is envisioning a slow, multi-year process. As Philadelphia Fed president Patrick Harker described it earlier this year, the goal is for it to be ‘the policy equivalent of watching paint dry.’
    Of course the old saying about the ‘best laid plans of mice and men’ also applies to central planners, and as Janet Yellen once again noted today, ‘policy is not on a pre-set course.’ Should markets react negatively, as they did when Bernanke hinted at reducing their purchases in 2013, the markets have reason to expect the Fed to act. In fact, when asked, Yellen kept the door open to both lowering interest rates and stalling its roll off should market conditions worsen. In fact, it appears that markets are already betting on the Fed to not follow through on its projected December rate hike.
    As the Fed has been signaling for months now that a taper was in the works, the mainstream narrative suggests that tapering has been priced in (though stocks dropped on the news.) There are still major questions left unanswered.

    This post was published at Ludwig von Mises Institute on September 21, 2017.


  • SEPT 20/BANKERS SET UP ANOTHER GOLD AND SILVER RAID ON THE CLOWNS FOMC BALANCE RUNOF/YIELD CURVE FLATTENS WITH THE FOMC ANNOUNCEMENT INDICATING FED FAILING POLICY/DEVASTATION IN BOTH MEXICO AND P…

    GOLD: $1312.75 UP $5.25
    Silver: $17.29 UP 5 CENT(S)
    Closing access prices:
    Gold $1300.00
    silver: $17.15
    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: $1316.24 DOLLARS PER OZ
    NY PRICE OF GOLD AT EXACT SAME TIME: $1312.70
    PREMIUM FIRST FIX: $3.54
    xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
    SECOND SHANGHAI GOLD FIX: $1318.43
    NY GOLD PRICE AT THE EXACT SAME TIME: $1313.85
    Premium of Shanghai 2nd fix/NY:$4.58
    xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
    LONDON FIRST GOLD FIX: 5:30 am est $1314.90
    NY PRICING AT THE EXACT SAME TIME: $1315.20
    LONDON SECOND GOLD FIX 10 AM: $1311.30
    NY PRICING AT THE EXACT SAME TIME. 1311.80
    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
    71 NOTICES FILED TODAY FOR
    355,000 OZ/
    Total number of notices filed so far this month: 5,881 for 29,405,000 oz

    This post was published at Harvey Organ Blog on September 20, 2017.


  • Russian Depositors On Edge After Second Major Bank Fails In Under A Month

    If once is happenstance, twice is coincidence, and three times is a full-blown collapse in the financial system, then Russia may be getting close.
    Just three weeks after Russia bailed out its largest and very politically connected private bank, Otkritie, after an unexpectedly acute bank run resulted in the bank’s near-collapse, already nervous Russian depositors shifted their attention to another domestic lender, and earlier today Russia’s B&N Bank, the country’s 12th biggest lender by assets, also sought a bailout from the central bank. While it is unclear how much this bailout would cost Russian taxpayers, when the central bank took over Otkritie last month, it said it might need up to $6.9 billion, the biggest ever bailout in the country.
    B&N Bank, which is controlled by Russian oligarch Mikhail Gutseriev and was not on the central bank’s list of systemically important lenders, said it had under-estimated the problems within the banks it had bought during an expansion drive. ‘Our objective is, with the support of the central bank … to conduct an effective financial rehabilitation of the bank,’ said Mikail Shishkhanov, who was named as chairman of B&N Bank, whose assets account for 2 percent of the Russian banking system, according to ratings agency Fitch.

    This post was published at Zero Hedge on Sep 20, 2017.


  • Russia and China’s Golden Plan to Shift Economic Power East

    Russia and China seem to be betting their monetary futures on gold. Their long-term maneuverings could seriously undermine the dominance of the US dollar and shift the world’s economic center of power from West to East.
    Russia and China buy more gold than any other countries in the world, with Russia leading the way. Over the last decade, the the Central Bank of the Russian Federation has added more than 1,250 tons of gold to its reserves, according to the World Gold Council. At 1,700 tons, Russia’s has the sixth largest gold reserves in the world. Russian gold makes up about 17% of the nation’s wealth.
    In 2016 alone, the Russian central bank purchased 201 tons of gold, far more than any other central bank in the world. The People’s Bank of China ranked second, adding 80 tons to its reserves.
    In June 2015, the Chinese central bank announced its gold holdings had grown by 57% to about 1,658 tons. It was the first official update to China’s gold reserves since 2009. Since then, the Chinese have aggressively added to their holdings and taken other steps to increase their influence on the world’s economic stage. Many analysts believe China drastically understates the amount of gold it owns.

    This post was published at Schiffgold on SEPTEMBER 20, 2017.


  • Will The Fed Really ‘Normalize’ It’s Balance Sheet?

    To begin with, how exactly does one define ‘normalize’ in reference to the Fed’s balance sheet? The Fed predictably held off raising rates again today. However, it said that beginning in October it would no longer re-invest proceeds from its Treasury and mortgage holdings and let the balance sheet ‘run off.’
    Here’s the problem with letting the Treasuries and mortgage just mature: Treasuries never really ‘mature.’ Rather, the maturities are ‘rolled forward’ by refinancing the outstanding Treasuries due to mature. The Government also issues even more Treasurys to fund its reckless spending habits. Unless the Fed ‘reverse repos’ the Treasurys right before they are refinanced by the Government, the money printed by the Fed to buy the Treasurys will remain in the banking system. I’m surprised no one has mentioned this minor little detail.
    The Fed has also kicked the can down the road on hiking interest rates in conjunction with shoving their phony 1.5% inflation number up our collective ass. The Fed Funds rate has been below 1% since October 2008, or nine years. Quarter point interest rate hikes aren’t really hikes. we’re at 1% from zero in just under two years. That’s not ‘hiking’ rates. Until they start doing the reverse-repos in $50-$100 billion chunks at least monthly, all this talk about ‘normalization’ is nothing but the babble of children in the sandbox. I think the talk/threat of it is being used to slow down the decline in the dollar.

    This post was published at Investment Research Dynamics on September 20, 2017.


  • Stock And Financial Markets Pause Ahead Of FOMC Statement, Yellen Comments

    World stock markets were mixed in subdued trading overnight. U. S. stock indexes are pointed toward narrowly mixed openings when the New York day session begins.
    Gold prices are higher in pre-U. S.-session trading, on bargain hunting, short covering and some safe-haven demand following a fiery speech by U. S. President Trump at the U. N. on Tuesday. Trump threatened to completely destroy North Korea.
    Markets have paused ahead of the Federal Reserve’s Open Market Committee (FOMC) meeting that began Tuesday morning and ends Wednesday afternoon with a statement.

    This post was published at Wall Street Examiner on September 20, 2017.