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  • US Treasury Secretary Mnuchin Still Interested In Ultralong (High Duration) Sovereign Debt As Argentina Sees strong demand for surprise 100-year bond

    This is a syndicated repost courtesy of Confounded Interest. To view original, click here. Reposted with permission.
    US Treasury Secretary Steve ‘The Munchkin’ Mnuchin said on Bloomberg News today that Treasury is still considering issuing ultra-long sovereign debt. This comes on the news that Argentina is issuing a 100 year sovereign bond that is in hot demand. Reuters – Argentina sold $2.75 billion of a hotly demanded 100-year bond in U. S. dollars on Monday, just over a year after emerging from its latest default, according to the government.
    The South American country received $9.75 billion in orders for the bond, as investors eyed a yield of 7.9 percent in an otherwise low yielding fixed income market where pension funds need to lock in long-term returns.
    Thanks to a stronger-than-expected peso currency, the government has increased its overall 2017 foreign currency bond issuance target to $12.75 billion from its previous plan of issuing $10 billion in international bonds, Finance Minister Luis Caputo told reporters in Buenos Aires.

    This post was published at Wall Street Examiner by Anthony B Sanders ‘ June 20, 2017.


  • Hong Kong Warns: Its Housing Bubble is a ‘Dangerous Situation’

    The HK financial system is ‘very strong’ and ‘can withstand an adjustment in the property market.’
    The Hong Kong dollar is pegged to the US dollar. Hong Kong’s monetary policy is follows the Fed’s monetary policy. The Fed has embarked on a tightening cycle, raising rates four times so far. The Hong Kong Monetary Authority has followed each time. Last week, it raised its policy rate by 25 basis points to 1.5%. This will have consequences for the most expensive and ludicrously inflated housing bubble in the world.
    ‘We have to warn our people about the dangerous situation of the property market at the moment,’ Hong Kong Financial Secretary Paul Chan told Bloomberg TV.
    ‘No one can tell how deep the adjustment will be or what is the appropriate level of adjustment because it is market force,’ he said. ‘It is not up to the government to dictate, but I think it is important for people to recognize it is risky.’
    But he doesn’t expect a repeat of what happened when Hong Kong’s prior housing bubble imploded during the Asian Financial Crisis.

    This post was published at Wolf Street on Jun 20, 2017.


  • Trader: “We Need Another 20 Basis Points For The Entire Narrative To Change”

    As noted yesterday, Bloomberg trading commentator Richard Breslow refuses to jump on the bandwagon that the Fed is hiking right into the next policy mistake. In fact, he is pretty much convinced that Yellen did the right thing… she just needs some help from future inflationary print (which will be difficult, more on that shortly), from the dollar (which needs to rise), and from the yield curve. Discussing the rapidly flattening yield curve, Breslow writes that “the 2s10s spread can bear-flatten through last year’s low to accomplish the break, but I don’t think you get the dollar motoring unless the yield curve holds these levels and bear- steepens. Traders will set the bar kind of low and start getting excited if 10-year yields can breach 2.23%. But at the end of the day we need another 20 basis points for the entire narrative to change.”
    To be sure, hawkish commentary from FOMC members on Monday (with the semi-exception of Charles Evans) and earlier this morning from Rosengren, is doing everything whatever it can to achieve this. Here are the highlights from the Boston Fed president.
    ROSENGREN SAYS LOW INTEREST RATES DO POSE FINANCIAL STABILITY ISSUES ROSENGREN: LOW RATES MAKE FIGHTING FUTURE RECESSIONS TOUGHER ROSENGREN SAYS REACH-FOR-YIELD BEHAVIOR IN LOW INTEREST RATE ENVIRONMENT CAN MAKE FINANCIAL INTERMEDIARIES, ECONOMY MORE RISKY

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


  • Oil Plunges To November Lows On Sudden Volume Spike

    Oil dropped to the lowest in seven months, with both Brent and WTI sliding to prices not seen since November, following a burst of volume just after 6am, amid a revival in output from Libya and rising volumes of fuel held in floating storage, although today’s move was likely yet another hedge fund capitulating and liquidating long positions. As a reminder, Pierre Andurand was down 17.3% through end of May.
    Brent hit new year-to-date low at $45.85, after a one-minute burst of volume of a day-high 5,208 lots at 6:04am, taking out a 38.2% Fib support, after a one-minute spike in volume to a day-high 5,208 lots just after 6am. The move could spur a move toward the $44.66 measured support line according to Bloomberg technician Sejul Gokal.

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


  • Amid Dreary Landscape, Event Funds Stage A Comeback

    The US hedge fund industry is in rough shape as the Federal Reserve’s lift-all-boats monetary policy has made it increasingly difficult to beat the market. US hedge funds endured nearly $100 billion in redemptions last year, as only 30% of US equity funds beat their benchmarks. But as confidence in traditional stock pickers dwindles, so-called ‘event-driven’ funds are attracting renewed interest in investors, particularly in Europe, where near-zero rates and relatively attractive valuations are expected to stoke a boom in M&A activity, Bloomberg reports.

    After these funds experienced some high-profile stumbles in recent years – one such fund managed by John Paulson’s Paulson & Co. posted a 49% loss and endured billions of dollars in redemptions – some Europe-based funds are seeing billions in inflows. Kite Lake Capital Management, Everett Capital Advisors and Melqart Asset Management have garnered billions in fresh investor capital over the past two years.
    ‘Kite Lake Capital Management almost doubled client assets this year, while Everett Capital Advisors nearly tripled its funds since launching in January 2016. The money overseen by Melqart Asset Management has grown 12-fold since the firm started less than two years ago. The three event-driven funds have $1.5 billion in combined assets and invest across Europe, where an increasingly buoyant economy and record-low interest rates are boosting dealmaking. Their resurgence is part of a comeback effort by a hedge-fund industry that’s only now starting to recover from a wave of investor redemptions and years of disappointing returns.

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


  • Martin Shkreli, Disclosing $70 Million Net Worth In 2015, Says “Doesn’t Have Any Cash” Left

    Ahead of Martin Shkreli’s fraud trial which begins next week, the disgraced biopharma executive appeared in court Monday, asking the judge to cut his bail from $5 million to $2 million, citing a lack of funds and the need to pay for his defense and back taxes. He faced were two problems: as prosecutor Alixandra Smith countered, Shkreli has plenty of cash as per his own relentless twitter boasts, and also his self-disclosed net worth.
    ***
    According to Reuters, Smith said at Monday’s hearing that Shkreli had reported his net worth at $70 million when he was arrested in 2015, although as Shkreli’s lawyer, Benjamin Brafman, conceded most of that is locked up in stock: while Shkreli still owned a share of Turing Pharma worth $30 to $50 million he could not sell it without the consent of the other partners in the company.
    And then there are the tweets. In addition to his self-reported assets, Smith said that Shkreli has plenty of cash citing a recent series of boasts he’s made on social media.
    Quoted by Bloomberg, Smith said that in a May 26 post, Shkreli offered a $100,000 bounty to find Seth Rich’s killer. She also said he flaunting purchases like a $2 million Wu-Tang Clan album, an unreleased Lil Wayne album, a Picasso, a World War II-era Enigma code breaking machine and had recently promised a Princeton University student $40,000 for solving a mathematical proof.

    This post was published at Zero Hedge on Jun 19, 2017.


  • Cry For Argentina! Issuing 100 Year Sovereign Debt As Fiscal Deficits Grow To Worst Since 2000

    Cry for Argentina.
    Argentina, which has defaulted on its debt seven times, is now faced with the worst fiscal gap since 2000.
    (Bloomberg) Argentina is planning to sell its first 100-year bond a year after returning to global capital markets, as it grapples with a soaring budget deficit.
    The bond, which will be used to shore up its budget and refinance debt, may be priced as soon as Monday and yield about 8.25 percent, according to a person with knowledge of the matter, who asked not to be named because the deal is private. Citigroup Inc. and HSBC Holdings Plc are managing the sale. The debt-issuance plan was announced on Twitter by the Argentine Finance Ministry, which hasn’t provided further details.

    This post was published at Wall Street Examiner on June 19, 2017.


  • NY Fed’s Dudley: ‘Remain Calm!! All Is Well! Flattening Yield Curve Is NOT A Bad Sign For The Economy!!’

    The New York Fed’s President and CEO William (Bill) Dudley just uttered one of the silliest statements of all time at a business forum in Plattsburgh, New York.
    (Bloomberg) – Federal Reserve Bank of New York President William Dudley sounded a positive note on the U. S. economy, saying the central bank wanted to tighten monetary policy ‘very judiciously’ to avoid derailing the expansion that began in mid-2009.

    This post was published at Wall Street Examiner on June 19, 2017.


  • SWOT Analysis: Is India’s Gold Market Recovering?

    Strengths
    The best performing precious metal for the week was gold, off just 1.02 percent despite a Fed rate hike. The Fed may not be in a position to continue with multiple rate hikes. Mike McGlone, BI Commodity Strategist, points out the current situation that both crude oil futures and Treasury bond yields are falling. Since 1983, the Fed has never sustained a rate hike cycle while both crude and Treasuries are falling. Gold has risen from a three-week low as investors digest the latest rate hike and anticipate the probability of additional rate hikes, reports Bloomberg. Suki Cooper, an analyst with Standard Chartered, writes, ‘If the market starts pricing in the end to the current hiking cycle, this would remove a major headwind for gold and allow prices to breach the stubborn $1,300 threshold in a sustained move higher.’ Bloomberg reports that public sector investors increased their net gold holdings to an estimated 31,000 tons last year, an increase of 377 tons. This is the highest level since 1999. Weaknesses
    The worst performing precious metal for the week was silver with a loss of 2.90 percent. Money managers cut their net-long by about 10 percent this past week. For the second week in a row, gold traders and analysts surveyed by Bloomberg are bearish. This is the first time survey results have indicated two-week run of bearish outlook since December. Gold futures have had the longest losing streak in three months, as investors have anticipated the Fed’s actions this week. Bullion futures for August delivery closed down for the fourth straight session earlier this week.

    This post was published at GoldSeek on Monday, 19 June 2017.


  • Richest Americans Will Control 70% Of Country’s Wealth By 2021, BCG Says

    Being rich is great. But being rich in America? That’s even better.
    With US stock benchmarks trading just below record highs, and Treasury yields not too far from the all-time lows reached last summer, the gulf between the world’s wealthy elite – those 18 million households worldwide with more than $1 million in assets – and everybody else is rapidly widening.
    According to a new study by Boston Consulting Group via Bloomberg, these households – with a total head count of roughly 70 million people, or about 1% of the world’s population – control 45 percent of the $166.5 trillion in wealth. By 2021, they will control more than half, suggesting that, while wealth inequality in the rest of the world is simply accelerating, in America, it’s gone into overdrive. Right now, 63 percent of America’s private wealth in the hands of U. S. millionaires and billionaires, BCG said. By 2021, their share of the nation’s wealth will rise to an estimated 70 percent.

    This post was published at Zero Hedge on Jun 17, 2017.


  • Demand For Hong Kong Micro Apartments Surges As Buyers “Downgrade Expectations”

    The surge in Hong Kong housing costs has lifted home prices well beyond the bounds of affordability for most local families and young professionals, leading to long lines at housing sales that were sometimes oversubscribed by as much as 15x. But while home prices have risen for every type of home, Bloomberg notes that the intensifying demand for micro-apartments – some of which are as small as 128 square feet (about the size of a garden shed) – has caused prices for this segment of the housing market to climb more quickly than normal-sized homes. Why? Because they’re practically all Chinese buyers can afford.
    ‘The pool of buyers for small flats is getting bigger and bigger because people have to downgrade their expectations of the size of flats they can live in,’ said Nicole Wong, regional head of property research at CLSA Ltd. in Hong Kong. One 161 square foot micro apartment sold by property giant Henderson Land Development Co. was bought for just under $500,000. For that amount, buyers would be better off sleeping in their cars. Specifically, a Tesla Model X, which, as Bloomberg notes, is about 160 square feet, the same size of the above-mentioned apartment. Bizarrely, this is one instance where a Tesla Model X might be considered a bargain: They start at $150,000 in Hong Kong.

    This post was published at Zero Hedge on Jun 16, 2017.


  • Quants Dominate The Market; Unexpectedly They Are Also Badly Underperforming It

    Two days ago, JPM’s head quant made a striking observation: “Passive and Quantitative investors now account for ~60% of equity assets (vs. less than 30% a decade ago). We estimate that only ~10% of trading volumes originates from fundamental discretionary traders.” In short, markets are now “a quant’s world“, with carbon-based traders looking like a slow anachronism from a bygone era.
    Bloomberg confirmed as much today, when looking at another divergence between quant funds and traditional, discretionary managers: “systematic strategies have barely budged from near-record participation in U. S. stocks. Meanwhile, fundamental equity long-short managers can’t afford to be anything but picky, considering the market’s narrow leadership. The result: the largest gap on record between humans’ and computers’ gross exposure to U. S. equities, data compiled by Credit Suisse Group AG show.”

    This post was published at Zero Hedge on Jun 15, 2017.


  • Anbang Just Became A “Systemic Risk”: Revenues Crash 90% As Its Chairman Is “Detained”

    As reported earlier this week, overnight Bloomberg confirmed that Wu Xiaohui, the chairman of China’s insurance conglomerate which recently made headlines in the US for nearly reaching a deal with Jared Kushner over 666 Fifth Ave., was detained by a joint team of Central Commission for “Discipline Inspection” and police for questioning. It adds that that Chinese investigators who detained Wu are carrying out a wide probe that includes looking into the sources of funding for the firm’s acquisitions overseas, possible market manipulation by insurers, and ‘economic crimes.”
    The Wall Street Journal reported earlier that investigators were seen checking whether Wu – whose fortune last year was calculated to be just over $1 billion – was involved in bribery and other economic crimes at Anbang and that Wu couldn’t be contacted for comment. As noted on Wednesday, Anbang said Wu couldn’t perform his duties for personal reasons, a story which has since been disproved.
    The authorities are said to be examining Anbang transactions including acquisitions overseas and their funding. According to Bloomberg;s sources, the probe also fits into a broader investigation of possible market manipulation by insurers, although they didn’t specifically define the term ‘economic crimes.’ The action is the result of the government’s crackdown on a sector that is “supposed to help families and companies cut their financial risks, but has recently become a hub for rampant financial speculation.”
    Yet while Wu’s fate now appears sealed, swallowed by China and unlikely to reemerge any time soon if ever, questions have emerged about the viability of Anbang Insurance Group itself, which as the NYT reported overnight, has seen its growth come to a “screeching halt” as Chinese investors who helped fund its meteoric rise no longer want to have anything to do with the politically connected company which is “no longer in Beijing’s good graces.”

    This post was published at Zero Hedge on Jun 15, 2017.


  • The Next Economic Crisis Is Going To Leave The Majority Of People In Shock – Episode 1307a

    The following video was published by X22Report on Jun 15, 2017
    EU has decided to put Greece further into debt. It is becoming clear that Greece will never get out of this debt hole. 70% of the people support the BREXIT. Canada’s existing home sales has declined rapidly. Bitcoin dropped on worries about cyber attacks and regulations. Nike cutting 1500 people. The US manufacturing industry declines once again. Illinois is worse now than back in the great depression of the 30s. Bloomberg’s Mike Cudmore says the Fed has just pushed us into a recession, what he really means a collapse of the economy. Japan has decided that they will look into joining China’s belt and road trade system. The Fed is now pushing the collapse is not holding back, most of the people are going to be shocked when this hits.


  • Trader: “The Downside Doesn’t Get Interesting Until S&P Hits 2,400…”

    “Keep It Simple Stupid,” is the key lesson from Bloomberg’s Richard Breslow note this morning as he conjures doves, snakes, hawks and starfish to make his point. Simply put, don’t panic… yet. Here are the assets he’s watching and levels to trade…
    Sometimes when you just can’t keep the story simple, it’s best to do so in your trading. The world is a complicated place and there’s great risk in trying to reduce all causality to one factor. There’s a tug of war going on and the rope resembles a starfish not a snake. Although I’d have to admit, a lot of what we’re witnessing has a distinctly reptilian aura about it.
    So what are some of the things we need to factor in?
    Chair Yellen was hawkish. Why various assets responded to her in the way they did is a story about them. And well worth considering. But it doesn’t change the underlying fact. Bonds being bid doesn’t mean they don’t believe her or we’re watching a different press conference than precious metals traders.

    This post was published at Zero Hedge on Jun 15, 2017.


  • Despite Bank Of Canada Hubris, Existing Home Sales Crash In May

    The Bank of Canada is stuck between the rock of a housing bubble (textbook-based trickle-down confidence-inspiration) and a hard place of a housing bubble (total lack of affordability) as it proclaimed this week that it may withdraw stimulus because, paraphrasing, everything was awesome. Well, today’s existing home sales collapse may change that tune quickly…
    Bloomberg reports that in a speech she’s delivering in Winnipeg, Manitoba, Senior Deputy Governor Carolyn Wilkins highlighted how the nation’s recovery is broadening across regions and sectors, giving policy makers ‘reason to be encouraged.’
    ‘As growth continues and, ideally, broadens further, Governing Council will be assessing whether all of the considerable monetary policy stimulus presently in place is still required,’ Wilkins said in the text of a speech she’s giving Monday.
    ‘At present, there is significant monetary policy stimulus in the system.’

    This post was published at Zero Hedge on Jun 15, 2017.


  • Global Stocks Slide On Trump Probe Report, Fed Indigestion

    Is it going to be another May 17, when US stocks tumbled as concerns of a Trump impeachment over obstruction of justice and impeachment surged ahead of Comey’s tetimony?
    Overnight, S&P500 futures accelerated their decline following yesterday’s WaPo report that Special Counsel Mueller has launched a probe into potential obstruction of justice by Trump…

    … while European and Asian markets dropped dragged lower by commodities which reacted to the latest Fed rate hike, as copper dropped and oil fluctuated. The Bloomberg commodity index fell to the lowest in more than a year, pressuring miners and E&P companies which were among the big losers as the Stoxx Europe 600 Index retreated for a second day. The dollar advanced after the Fed raised interest rates for the second time in 2017 and Yellen suggested the strength of the U. S. labor market will ultimately prevail over recent weakness in inflation, which however the bond market strongly disagrees with, sending the curve the flattest its has been since October.

    This post was published at Zero Hedge on Jun 15, 2017.


  • Cudmore: Yellen Just Made A Big Mistake

    One of the lingering questions to emerge from yesterday’s FOMC meeting, after Yellen’s “first dovish, then hawkish” statement rocked the dollar and markets, is whether the Fed chair has some more accurate way of forecasting inflation than the rest of market to justify her optimistic outlook, and to explain why the divergence between the Fed’s dot plot and the market’s own FF forecasts is nearly 100%. And, if not, is the Fed about to make another major policy mistake by forecasting a far stronger economy than is possible, culminating with a recession.
    According to Bloomberg’s Mark Cudmore, the answer is that while Yellen is desperate to infuse confidence in the market, the Fed, which “hasn’t been correct for seven years”, remains as clueless as ever, which is why the Fed’s hawkishness is actually a signal to buy long-end bonds, which will add to further curve tightening and ultimately precipitate the next recession.
    Put otherwise, “if Yellen had acknowledged that the policy frameworks she and her colleagues have been using since the crisis have all been incorrect, then we might believe she has a chance of now applying a more appropriate framework and has a credible plan to sustainably hit the inflation target. Instead, traders can’t help but feel that no lessons are being learned and will have to raise the probability of a major policy mistake in market pricing. This means that the yield curve will need to flatten further through long-end yields dropping.”
    In simple words: the Fed has just brought the next recession that much closer, which shouldn’t come as a surprise. As we showed before, every Fed tightening akways ends with a recession. The only question is when.

    This post was published at Zero Hedge on Jun 15, 2017.


  • One Massive, Global, Serial Bubble

    Precious metals expert Michael Ballanger reflects on the state of the stock and bond markets and their effect on the gold market.
    ***
    These missives that I construct periodically usually have as their genesis a “Eureka!” moment while reading a research piece or a written commentary from one of the thousands of self-styled market authorities or if I have the random luck of catching an interview on Bloomberg or (UGH!) CNBC. During a normal week, I will text myself a quick note or leave myself a voice note when and if an idea comes to mind so when I am travelling, it is usually preferable that I be close to a decent WiFi signal in order for my ramblings to be relevant.

    This post was published at GoldSeek on Thursday, 15 June 2017.


  • June FOMC Announcement: Rate Hike and Balance Sheet Plans

    June’s FOMC meeting concluded today and the meeting announcement revealed an interest rate hike of .25% to bring the Federal Funds target to between 1 and 1.25%. Additionally, we also learned that the FOMC anticipates one more rate in 2017, 3 more in 2018, and the beginning of a balance sheet reduction effort starting this year. Of course, the balance sheet reduction is actually just a taper in the amount of reinvestment. Since they are simply slowing down how much in assets they are buying every month, the balance sheet will still be increasing.
    There are still concerns at the FOMC (and in monetary officialdom in general) that the devaluation of our purchasing power (colloquially known as “inflation”) is not occurring rapidly enough. From their own statistics, which exclude things most important to consumers such as food and energy, price inflation dipped a bit to 1.7%. This, of course, is an utter outrage to the experts.
    We also got more specific detail about the balance sheet plan, which as we have said all year is going to be the primary narrative of the second half of 2017 in place of interest rate hike talks. Bloomberg reports:
    In a separate statement on Wednesday, the Fed spelled out the details of its plan to allow the balance sheet to shrink by gradually rolling off a fixed amount of assets on a monthly basis. The initial cap will be set at $10 billion a month: $6 billion from Treasuries and $4 billion from mortgage-backed securities.

    This post was published at Ludwig von Mises Institute on June 15, 2017.