• Category Archives Politics
  • ‘Junk Equity’ Comes to Haunt $30-billion Startup

    Snap Inc. tried to turn Big Investors into zombies. It didn’t work. Snap Inc., the parent of Snapchat, was dealt another blow today. FTSE Russell, which owns numerous indices for stock markets around the world, including the US Russell 3000, 2000, and 1000 indices, said today that it would exclude Snap from its indices because of Snap’s share structure that denies public investors the right to vote.
    Though Reuters reported the story after the market had already closed, the shares of Snap fell 3.5% today to $13.40, a new all-time low.
    Shares are now 21% below the IPO price of $17. Back then, on March 2, Snap was considered ‘too big to fail.’ It would have such a massive market capitalization that it would be included in all major indices, including the S&P 500 and the MSCI USA Index. Fund managers would be forced to buy Snap shares to keep their funds in line with the indices. Given the relatively small number of shares traded, this buying pressure would push up the price even further. It was simply a matter of creating a lot of artificial demand.

    This post was published at Wolf Street on Jul 26, 2017.


  • Mr. Trump: You May Not Want To Take Credit For The Stock Market Just Yet

    Stock market is still bullish
    If you have followed my analysis through the years, you would know that I have correctly been steadfastly bullish the stock market for quite some time. In fact, I was one of the very few who expected the market to rocket higher even after Donald Trump won the election last year.
    And, now, we are approaching the S&P 500 target in the 2500SPX region we expected to strike in 2017. However, just because the market has rallied strongly after the election as we expected, it does not mean we expect it to continue into the next election season. And, let me explain why that is so important.
    ‘It’s the economy, stupid’
    James Carville, one of President Clinton’s campaign strategists, coined a term years ago which has been considered the most important factor for an incumbent President being able to win re-election:
    ‘It’s the economy, stupid.’

    This post was published at GoldSeek on Wednesday, 26 July 2017.


  • Seattle’s Minimum Wage Supporters Ignore the Facts

    In what has become a running joke amongst those skeptical of the claim that minimum wage increases have no effect on unemployment, a recent report by the Employment Policies Institute showed that 174 of the 184 co-sponsors of a bill to raise the federal minimum wage to $15 an hour hired unpaid interns.
    My personal favorite example of this type of this is when the Freedom Socialist Party, which was pushing for an even more ridiculous $20 minimum wage, posted ads for new employees offering $13 an hour.
    The party’s national secretary doused himself in irony to defend his organization by saying ‘We’re practicing what we’re preaching in terms of continuing to fight for the minimum wage… But we can’t pay a lot more than $13.’
    Hmmm, perhaps some of the unemployment a higher minimum wage would bring might actually be beneficial. Maybe we’ve gotten this whole debate wrong…
    At the federal level Nancy Pelosi promised to pass a $15 an hour minimum wage if the Democrats take control of the House in 2018. Increasing the federal minimum wage across the nation is far more vulgar than increasing a state or city minimum wage. Having spent some time in New York recently, I can definitely understand the desire to increase wages. When a 350 sq. ft. studio that lacks enough space for anything more than a mini fridge rents for $2500 a month, taxes are through the roof and a pack of cigarettes costs $13, it can be hard to get by. Artificially raising the minimum wage isn’t going to fix that, but the desire to is understandable.

    This post was published at Ludwig von Mises Institute on July 25, 2017.


  • Wall of Optimism Cracking? IMF Lowers US Economic Growth Forecast

    Over the last several years, mainstream analysts have built a wall of optimism about the US economy. ‘Everything looks great,’ they say. ‘Look at the jobs numbers!’ ‘Look at the stock market!’
    A number of contrarians have said things aren’t so great and a massive crash is on the horizon. The mainstream has pretty much ignored the naysayers. But a recent report by the International Monetary Fund shows some cracks in the wall of mainstream optimism. And in the current political climate, it may not take much to cause the wall to crumble down.
    The recent collapse of Republican efforts to reform healthcare has rekindled doubts about Trump’s ability to push through his ambitious economic agenda. The real concern is if enough people lose faith in the Republican’s ability to fix healthcare, reform the tax system, and pass a significant infrastructure spending bill, it will prick the stock market bubble and set off a crash.
    It seems we’re beginning to see signs of doubt. On Monday, the IMF released its World Economic Outlook, featuring a downward revision in the economic growth forecast for the United States. The IMF estimated US growth at 2.1% both this year and next. In the April World Economic Outlook, it had forecast US growth of 2.3% in 2017 and 2.5% in 2018.

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


  • Inside the Mind of a Crowd

    John Maynard Keynes once wrote what may be one of the most insightful observations on financial markets ever conceived:
    We have reached the third degree where we devote our intelligence to anticipating what average opinion expects the average opinion to be. And there are some, I believe, who practice the fourth, fifth, and higher degrees.
    Now, what exactly is he talking about?
    While it sounds like Keynes may have been practicing some rare form of martial arts, or Zen meditation, he was actually talking about financial markets … in particular, how to predict them.
    Most subscribers are probably familiar with the old ‘Newspaper Beauty Contest’ story. If not, you can click here for a longer description, but here’s the gist:
    A newspaper would run photographs of beautiful women and ask readers to mail in a ballot with their choice of which girl was the prettiest. Those who picked the girl that received the most votes would be entered into a drawing for a prize.
    The decision-making hierarchy for submitting an entry to this contest goes like this:
    – First-degree reasoning: ‘I think this girl is the prettiest, so I’ll pick her.
    – Second-degree reasoning: ‘I think that most people will find this girl the prettiest, so I’ll pick her.’

    This post was published at FinancialSense on 07/25/2017.


  • New Age Mandate — Doug Noland

    There is no doubt that central bank liquidity backstops have promoted speculation, securities leveraging and derivatives market excess/distortions. I also believe they have been instrumental in bolstering passive/index investing at the expense of active managers. Who needs a manager when being attentive to risk only hurts relative performance? And the greater the risk associated with these Bubbles – in leveraged speculation, derivatives and passive trend-following – the more central bankers are compelled to stick with ultra-loose policies and liquidity backstops.
    After all, who will be on the other side of the trade when all this unwinds? Who will buy when The Crowd moves to hedge/short bursting Bubbles? This is a huge problem. Central bankers have become trapped in policies that promote risk-taking and leveraging at this precarious late-stage of an historic Global Bubble. These days, central bankers cannot tolerate a ‘tightening of financial conditions,’ and they will have a difficult time convincing speculative markets otherwise.
    I’m reminded of the Rick Santelli central banker refrain, ‘What are you afraid of?’ Yellen and Draghi seemingly remain deeply concerned by latent market fragilities. How else can one explain their dovishness in the face of record securities prices and global economic resilience. A headline caught my attention Thursday: ‘Bonds: ECB Gives ‘Green Light’ to Summer Carry Trades, BofA says.’ It’s been another huge mistake to goose the markets this summer with major challenges unfolding this fall – waning central bank stimulus, Credit tightening in China and who knows what in Washington and with global geopolitics.

    This post was published at Credit Bubble Bulletin


  • There Is Only One Empire: Finance

    Any nation-state that meets these four requirements is fully exposed to a global loss of faith in its economy, debt, balance of payments and currency.
    There’s an entire sub-industry in journalism devoted to the idea that China is poised to replace the U. S. as the “global empire” / hegemon. This notion of global empire being something like a baton that gets passed from nation-state to nation-state is seriously misleading, in my view, for this reason: There is only one global empire: finance. China and the U. S. both exist within the Empire of Finance. Virtually every mercantile nation with access to global markets lives, works and thrives/dies within the Empire of Finance. Every nation that allows capital to flow into its economy is subservient to the Empire of Finance. Every nation with capital and debt markets exposed to (or dependent on) global financial flows is just another fiefdom in the Empire of Finance. China has thrived within the Empire of Finance by creating more debt and at a faster rate of expansion than any other fiefdom. China has brought 20 years of future growth and income forward, and eventually that vein of “wealth” runs out as time advances into the stripmined future.

    This post was published at Charles Hugh Smith on MONDAY, JULY 24, 2017.


  • IMF Sharply Lowers US Growth Forecasts As Hopes For Fiscal Boost Fade

    Bullish traders who insist that US economic fundamentals remain rock-solid despite tepid growth, inflation and other signs the postelection ‘Trump bump’ in consumer confidence is already beginning to fade should take a look at the International Monetary Fund’s latest batch of quarterly forecasts for global growth.
    The fund left its all-world forecasts for 2017 and 2018 unchanged from its previous quarterly update, which was released in April: It anticipates 3.5% and 3.6% growth, respectively.
    However, those numbers mask a sharp decline in the fund’s forecasts for US growth, which have been lowered sharply to reflect expectations that President Donald Trump’s promised fiscal expansion package likely won’t arrive until next year, according to a report published by the IMF. In an update that shouldn’t surprise anyone who’s been following US macro data since the start of the year, the fund revised its forecasts for 2017 and 2018 down 0.2% to 2.1% and 0.4% to 2.1%. It continues to expect the US economy to expand by 1.6% in 2016.
    The fund said its decision to lower US growth forecasts reflects in part the weak growth experienced during the first quarter. But what it calls the ‘major factor’ behind the revision, especially for 2018, is the assumption that ‘fiscal policy will be less expansionary than previously assumed, given the uncertainty about the timing and nature of U. S. fiscal policy changes. Market expectations of fiscal stimulus have also receded.’

    This post was published at Zero Hedge on Jul 24, 2017.


  • The Value of Everything

    This is a syndicated repost courtesy of Kunstler. To view original, click here. Reposted with permission.
    We are looking more and more like France on the eve of its revolution in 1789. Our classes are distributed differently, but the inequity is just as sharp. America’s ‘aristocracy,’ once based strictly on bank accounts, acts increasingly hereditary as the vapid offspring and relations of ‘stars’ (in politics, showbiz, business, and the arts) assert their prerogatives to fame, power, and riches – think the voters didn’t grok the sinister import of Hillary’s ‘it’s my turn’ message?
    What’s especially striking in similarity to the court of the Bourbons is the utter cluelessness of America’s entitled power elite to the agony of the moiling masses below them and mainly away from the coastal cities. Just about everything meaningful has been taken away from them, even though many of the material trappings of existence remain: a roof, stuff that resembles food, cars, and screens of various sizes.
    But the places they are supposed to call home are either wrecked – the original small towns and cities of America – or replaced by new ‘developments’ so devoid of artistry, history, thought, care, and charm that they don’t add up to communities, and are so obviously unworthy of affection, that the very idea of ‘home’ becomes a cruel joke.

    This post was published at Wall Street Examiner on July 24, 2017.


  • Canadian Trading Trends: What Makes Markets Tick

    Everybody wants to make a buck on the markets. The problem for so many of us is that the financial markets can be confusing and intimidating at times. The S&P/TSX is the premier stock exchange for Canadians. It lists a large selection public companies and the market capitalization was reported at $2.2841 trillion as at 30 March 2017.
    There are multiple indices on the Toronto Stock Exchange (TSX) including the S&P/TSX Completion Index, the S&P/TSX 60 and the S&P/TSX Composite Index. Recently, the Toronto Stock Exchange hit an 8-month low. This presents many challenges to Canadian investors are looking to profit off the appreciation of stocks.
    Why are Markets Bearish in Canada? It’s important to understand that the Canadian economy is driven largely by commodities, notably crude oil. On Friday, 7 July 2017, the TSX plunged to a near 8-month low at 15,027.16. This was driven by multiple factors including weakness in oil prices and a desire for an interest rate hike by the Bank of Canada. Investors don’t miss an opportunity to make a buck on the markets. Since then however, the TSX has rallied. By Monday 17 July, 2017 the TSX was trading at 15,175.76 and is on a gradual uptrend. This is also being fuelled by rising oil prices, spurred by strong demand from China.

    This post was published at ZenTrader on July 24, 2017.


  • When Is A P/E Not A P/E: How To Turn Nasdaq’s 90x Into 22x In 3 Easy Steps

    Having previously exposed the greatest trick the market has pulled on Biotech investors in the past – What Is The PE Of The iShares Biotech ETF? It Depends On Whether You Read The Fine Print – it appears investors need another lesson in reality versus perception.
    As Horizon Kinetics puts it so eloquently – It’s One Thing to Not Know, It’s Another to Be Told What Isn’t So “So, in reality one knows that an unprofitable company makes an investment more expensive, while in the world of indexation, such as in the QQQ, unprofitable companies are lower.”
    Unpacking a Mainstream Index, the NASDAQ 100
    First, the Label
    The essential value of an index is that it is a passive form of investing, the opposite of active management. The active manager’s results are dependent upon security selection; in contrast, indexation’s foundational intent is that the results will derive from broad exposure to a vast array of securities; that no individual security will dramatically impact the result – the entire idea is to avoid company?specific risk.

    This post was published at Zero Hedge on Jul 23, 2017.


  • Mueller Tries To Turn Manafort In Trump Russia Probe

    Special Counsel Robert Mueller’s full-court press on anyone and everyone involved with the Trump campaign has finally begun – and the first target in his sights is, of course, former Trump Campaign Manager Paul Manafort, by far the easiest mark. According to Reuters, Mueller and his team are trying to recruit Manafort as a cooperating witness in the Russia investigation in exchange for immunity for possible money laundering charges.
    The focus on Manafort isn’t a surprise. Not only did Manafort attend the now-infamous June 2016 Russia meeting organized by Donald Trump Jr., but investigators have already been scrutinizing his ties to deposed Ukrainian President Viktor Yanukovych, along with several shady real-estate deals.
    ‘U. S. investigators examining money laundering accusations against President Donald Trump’s former campaign manager Paul Manafort hope to push him to cooperate with their probe into possible collusion between Trump’s campaign and Russia, two sources with direct knowledge of the investigation said.
    Special Counsel Robert Mueller’s team is examining Manafort’s financial and real estate records in New York as well as his involvement in Ukrainian politics, the officials said.’
    Specifically, Special Counsel Robert Mueller’s team is investigating several New York City real estate deals involving Manafort for evidence that the properties might have been paid for with money funneled to Manafort by former Ukrainian President Viktor Yanukovych. The former Ukrainian leader hired Manafort’s firm to do political consulting work. Last summer, ledgers found by Ukrainian investigators surfaced purporting to show millions of dollars in undisclosed payments to Manafort’s firm, though they haven’t been proved genuine.

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


  • Broke And Bleeding Cash, DNC Ends June $3.3 Million In Debt

    After spending a truly obscene amount of money on the Georgia special election last month, money that was proven to be completely wasted after Jon Ossoff was destroyed by Karen Handel, the DNC’s balance sheet is looking a little deflated. Of course, spending $22 million dollars for a seat where candidates usually spend about $1 million each tends to take a toll on your political war chest.
    ***
    Unfortunately, even $176 per vote, or roughly 7.6x more than what Karen Handel spent, wasn’t enough to buy a Georgia House seat. Oops.

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


  • Trumptopian Markets – Where Hope Triumphs Over History

    Since the election of Donald Trump as President, ‘hope’ has triumphed over reality…
    As this Trumptopia has evolved (and as yet achieved very little in reality), hard data – real actual economic output – has collapsed to two year lows, as surveys of economic activity reached record levels of delusion… and over the last couple of months fell back somewhat to reality.

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


  • ‘A Stock Market Crash is Coming!’

    Conventional ‘Wisdom:’ Markets move up and down, but the stock market always comes back. The DOW is frothy and needs a correction, but the stock markets are healthy and big gains lie ahead.
    Pessimistic version: Jim Rogers said, ‘the next crash will ‘the biggest in my lifetime.” [Coming soon …]
    Question: Given the craziness in politics, the Middle-East, Central Banking, and global debt levels … do you own enough gold bullion?
    Conventional thinking: ‘Trump will save the markets, reduce taxes, and boost stock prices even higher.’ [Don’t plan on it.]
    ‘Gold pays no interest and has gone down for six years.’ [True but irrelevant.]
    ‘The Yellen Fed can’t let market bubbles pop so they will create more QE, more bond monetization, ‘printing,’ and Fed support. In short, the ‘Yellen Put’ is alive and will protect investors.’ [Maybe not…]
    ‘The market got hurt in 1987, 2000, and 2008. It rallied back each time and went higher. This time will be no different. Stocks may correct but they are a good long term investment.’ Read ‘The Bull Case: S&P is heading to 3,000.’ [How big a loss before the rally?]

    This post was published at GoldStockBull on July 20th, 2017.


  • Meow

    This is a syndicated repost courtesy of Kunstler. To view original, click here. Reposted with permission.
    For all his blunders and stumbles in his first half-year as President (cough cough), Donald Trump seems to have more lives than Schrdinger’s Cat. Or maybe it just seems that way. Or maybe he isn’t really there at all (like the news these days). Maybe Trump only represents one comic probability in an infinite number of universes of probability, both comic and tragic. I begin to understand why the folks in Hollywood are having a whack attack over the chief executive: you can’t storyboard this bitch; it’s like leaving The Three Stooges on their own in a sound stage to re-make Gone With the Wind.
    But then, you begin to wonder: is Russia really there, or is it, too, just another figment of possibility? Don’t try to figure that out by reading the oracular observations of The Washington Post. These days Russia seems to be at once everywhere and nowhere, like the Devil north of Boston in 1693. For example, this fellow Jeff Sessions. Have you noticed that his name rhymes with Russians? Hmmmm. And wasn’t he caught chatting with the Russian Ambassador at the very same convocation of Republicans that picked notorious colluder Donald Trump to stand for President? That’s enough of your damn evidence right there!

    This post was published at Wall Street Examiner on July 21, 2017.


  • Is The Real Dollar Pain-Trade Lower?

    Although I am sure they were some traders advocating shorting the US dollar into the Trump bump, they sure seemed few and far between (apart from this badass cat who nailed the trade and is now covering into the USD weakness).
    In fact, when I think about the opinions from the ‘cool kids’ over the past six months, I can only recall all-out-bulls, or unsure fence sitters. Name me a big-name US dollar bear pounding the table – none spring to mind.
    And in the heyday period following Trump’s election, the US dollar bullishness was downright exuberant.

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


  • Bank of America Pulls Ripcord on Chinese Conglomerate HNA

    Are the Conglomerates the Black Swan in China? Bank of America suddenly pulled back from doing business with HNA Group, a privately held Chinese conglomerate that has been on the forefront of highly leveraged, opaque Chinese conglomerates out on a mind-boggling debt-funded acquisition binge around the world.
    ‘We simply don’t know what we don’t know, and are not prepared to take the risk,’ Bank of America president for Asia Pacific, Matthew Koder, wrote in an internal email, dated June 28 that was leaked to The New York Times. ‘Given the importance of maintaining rigorous client selection standards, we have decided not to be involved with transactions with the HNA Group at this point in time.’
    So Bank of America is getting scared and won’t do business with HNA. It’s walking away from a lucrative customer that has been generating piles of fees and interest income for the banks. The Times:
    On one side of business, banks have helped HNA buy companies by arranging what is called collateralized financing. That has entailed allowing HNA to borrow money against the shares of the company that it is acquiring.
    Big banks have also received large paydays for advising on HNA’s acquisitions. HNA and its affiliates overseas have paid an estimated $100 million in fees to banks advising on mergers and acquisitions since 2016….

    This post was published at Wolf Street by Wolf Richter ‘ Jul 20, 2017.