Hofstra University Unveils “Trigger Warning” For Tonight’s Debate

It was inevitable. With much of the debate over the past year focusing on Social Justice Warriors, “safe spaces”, and – most notably – “trigger warnings,” moments ago the first such caution emerged when Hofstra University- the venue of tonight’s historic debate – posted a ‘trigger warning’ sign to warn students about the potentially disturbing content that may be discussed during Monday night’s presidential debate.
According to CBS New York reporter Tony Aiello, a sign inside of the student center at Hofstra reads, ‘Trigger warning: The event conducted just beyond this sign may contain triggering and/or sensitive material. Sexual violence, sexual assault, and abuse are some topics mentioned within this event. If you feel triggered, please know there are resources to help you.’

This post was published at Zero Hedge on Sep 26, 2016.

The Undemocratic Nature of the Transatlantic Trade and Investment Partnership

Mounting Resistance Thousands of people recently demonstrated in Brussels against free trade deals negotiated by the EU. This happened just days before a meeting of EU trade ministers in Bratislava last Friday, which was considered the last push to salvage the Transatlantic Trade and Investment Partnership (TTIP) between the EU and the United States. Not only is Europe divided on the deal, but the talks have been extremely secretive.
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It appears that the two partners wanted the negotiations process to remain well under the public’s radar, counting on people being distracted by other matters, such as ‘Brexit’, terrorism, the refugee crisis, and the ongoing economic slump.
It proved impossible though to keep voters and taxpayers on both sides of the Atlantic completely in the dark about the terms of a deal that has the potential to affect their lives, jobs and businesses directly and decisively.
What is the story behind this secret agreement that Obama and Merkel have been pushing for so strongly? Why is there no transparency? Why has information that is of crucial public interest been withheld throughout the process?

This post was published at Acting-Man on September 27, 2016.

P2P Meltdown Continues: LoanDepot’s CDO Collapses Just 10 Months After Issuance

We first noted Wall Street’s misguided plan to feed its securitization machine with peer-to-peer (P2P) loans back in May 2015 (see “What Bubble? Wall Street To Turn P2P Loans Into CDOs“). Obviously we warned then that the voracious demand for P2P loans was a direct product of central bank policies that had sent investors searching far and wide for yield leaving them so desperate they were willing to gamble on the payment streams generated by loans made on peer-to-peer platforms.
In addition to the pure lunacy of using unsecured, low/no-doc, micro-loans as collateral for a CDO, we pointed out that the very nature of P2P loans meant that borrower creditworthiness likely deteriorated as soon as loans were issued. The credit deterioration stemmed from the fact that many borrowers were simply using P2P loan proceeds to repay higher-interest credit card debt. That said, after paying off that credit card, many people simply proceeded to max it out again leaving them with twice the original amount of debt.

And, sure enough, it only took about a year before the first signs started to emerge that the P2P lending bubble was bursting. The first such sign came in May 2016 when Lending Club’s stock collapsed 25% in a single day after reporting that their write-off rates were trending at 7%-8% or roughly double the forecasted rate (we wrote about it here “P2P Bubble Bursts? LendingClub Stock Plummets 25% After CEO Resigns On Internal Loan Review“).

This post was published at Zero Hedge on Sep 26, 2016.

Trump, Trade and Taxes

The best way to restart investment (and thus employment opportunities) is to make the U. S. a magnet for productive capital rather than a graveyard of tax-avoidance strategies.
Donald Trump has made trade agreements a central issue in this presidential election, declaring trade treaties such as the North American Free Trade Agreement (NAFTA) as unfair and subject to cancellation or renegotiation. Setting aside the issue of whether presidents can cancel trade treaties via executive orders, let’s look at the underlying issue: the erosion of manufacturing and entry-level job opportunities that lead to middle-class security and pay. The question then becomes: what are the causes of this erosion of manufacturing and the middle class? Trade is relatively easy to finger because the flood of cheap goods into the U. S. coincided with the wholesale offshoring of manufacturing capacity. But it isn’t quite that simple. “Free” Trade, Jobs and Income Inequality: It’s Not As Easy As We Might Think (March 22, 2016) There are many other issues in play, including: 1. Currency manipulation, i.e. pegging one’s currency (such as the Chinese RMB) to the US dollar to maintain a predictable cost advantage. 2. Technology, as automation reduces the inputs of human labor per output even in nations with few trade treaties.

This post was published at Charles Hugh Smith on MONDAY, SEPTEMBER 26, 2016.

SWOT Analysis: Notes from the Denver Gold Forum

Strengths
The best performing precious metal for the week was silver, with a gold-inspired lift of 4.80 percent. It is typical for silver to have a higher beta to gold. Gold is headed for its biggest weekly advance since July, reports Bloomberg, following the Federal Reserve’s decision this week to leave interest rates unchanged. The 25-percent rally that gold bullion saw in the first half of the year has sputtered this quarter, partly on concern that the Fed could have raised rates as soon as this week. In a similar fashion, gold futures gained after the Bank of Japan changed its focus on Wednesday (as traders awaited the Fed decision), from expanding the money supply to controlling interest rates. According to the average estimate in a survey of 16 participants at the Denver Gold Forum this week, gold prices will reach $1,385.63 an ounce by year end, reports Bloomberg. This forecast is 4.1 percent higher than Wednesday’s closing futures prices. As seen in the chart below, investors poured $249 million into gold-backed ETFs over the last week, the article continues. This has helped keep holdings near a three-year high. Weaknesses
Although gold was the worst performing precious metal for the week, it was a welcome gain none-the-less in light of worries surrounding a possible rate hike this month. Saxo Bank’s head of commodity strategy Ole Hansen believes that gold is due for a correction. Hansen recognizes that gold gains have been elusive lately, but says that the ‘market has become stale’ and prices have ‘struggled to move higher.’ He sees the metal falling back to the $1,250 per ounce level, but says once the stale longs have been cleared out of the market, gold could rise to $1,375 per ounce.

This post was published at GoldSeek on 26 September 2016.

Goldman Cuts Oil Price Target From $50 To $43 On Rising Global Surplus

While we await every new headline out of Algiers, overnight Goldman threw in the towel on its “transitory” oil market bullishness, and in a note by Damien Courvalin looking “Beyond Algiers, Weakening Oil Fundamentals”, the bank cut its Q4 oil price target from $50 to $43, as the bank admits the previously anticipated rebalancing will take longer to achieve, and now expects “a global surplus of 400 kb/d in 4Q16 vs. a 300 kb/d draw previously.”

Speaking of the Algiers meeting, Goldman also notes that “while a potential deal could support prices in the short term, we find that the potential for less disruptions and still relatively high net long speculative positioning leave risks skewed to the downside into year-end. Importantly, given the uncertainty on forward supply-demand balances, we reiterate our view that oil prices need to reflect near-term fundamentals – which are weaker – with a lower emphasis on the more uncertain longer-term fundamentals.”

This post was published at Zero Hedge on Sep 27, 2016.

Gold Extends Advance as Fed Decision Breathes Life Into Demand

Gold’s on a roll, courtesy of the Federal Reserve.
The precious metal is heading for the biggest weekly advance since July after U.S. central bankers opted to leave interest rates unchanged while reining in their outlook for future increases. Investors added 6.3 metric tons to exchanged-traded funds backed by gold this week through Thursday, data compiled by Bloomberg show.
Bullion has awakened from a slumber after Fed rate concerns had helped wipe out gains for the quarter. Money is pouring back in as low borrowing costs in the U.S. and economic stimulus by central banks from Japan to Europe drive demand for the precious metal as a store of value.
‘The fact that they didn’t raise rates breathes some life back into the gold market,’ Bob Haberkorn, a senior market strategist at RJO Futures in Chicago, said in a telephone interview. ‘Traders are in a buy and hold mode right now. They’re looking at adding to positions.’

This post was published at bloomberg

Fed Seeks Aggressive Limit on Wall Street Commodity Holdings

Goldman Sachs Group Inc.’s and Morgan Stanley’s sometimes lucrative romance with metals, coal and oil could become prohibitively expensive under a proposed rule released Friday by the Federal Reserve.
The long-awaited regulation would require banks to put up much more capital to support investments in physical commodities, restrict involvement with power plants and limit the amount of trading banks can do. While the Fed doesn’t have the power to sever banks’ ties to physical commodities, it is seeking massive capital increases for the activities — especially at Goldman Sachs and Morgan Stanley, which have special legal exemptions to stay in those businesses.
Fed officials estimated that the rule would mean about $4 billion in additional capital for the industry’s current level of investment, though Wall Street has been steadily backing away.
‘The proposal would help reduce the catastrophic, legal, reputational, and financial risks that physical commodity activities pose to financial holding companies,’ the Fed said in a statement. Though it’s unstated, the proposal also addresses years of criticism that banks could seize unfair advantages in metal and energy markets by owning hard assets and operating huge trading desks at the same time.

This post was published at bloomberg

Mothballing the World’s Fanciest Oil Rigs Is a Massive Gamble

In a far corner of the Caribbean Sea, one of those idyllic spots touched most days by little more than a fisherman chasing blue marlin, billions of dollars worth of the world’s finest oil equipment bobs quietly in the water.
They are high-tech, deep water drill ships — big, hulking things with giant rigs that tower high above the deck. They’re packed tight in a cluster, nine of them in all. The engines are off. The 20-ton anchors are down. The crews are gone. For months now, they’ve been parked here, 12 miles off the coast of Trinidad & Tobago, waiting for the global oil market to recover.
The ships are owned by a company called Transocean Ltd., the biggest offshore-rig operator in the world. And while the decision to idle a chunk of its fleet would seem logical enough given the collapse in oil drilling activity, Transocean is in truth taking an enormous, and unprecedented, risk. No one, it turns out, had ever shut off these ships before. In the two decades since the newest models hit the market, there never had really been a need to. And no one can tell you, with any certainty or precision, what will happen when they flip the switch back on.
It’s a gamble that Transocean, and a couple smaller rig operators, felt compelled to take after having shelled out millions of dollars to keep the motors running on ships not in use. That technique is called warm-stacking. Parked in a safe harbor and manned by a skeleton crew, it typically costs about $40,000 a day. Cold-stacking — when the engines are cut — costs as little as $15,000 a day. Huge savings, yes, but the angst runs high.

This post was published at bloomberg

Why Canadians Are Being Offered Cash to Abandon Their Homes

On the far eastern edge of Canada sits Little Bay Islands, a beautiful, dying village divided by crisis. The fish plant was shuttered half a decade ago, and most supporting businesses – as well as the school – have closed with it. Perry Locke is among the tiny population that’s left. He served as the mayor, the fire chief and now runs the power-generating station. His son was the last student enrolled in town.
Fishing villages like this one built Newfoundland and Labrador, a coastal province sent into a tailspin by a fishery collapse, oil-price slump and mounting debt that left it with Canada’s most severe fiscal and demographic crisis. The provincial government now is pushing to close places like Little Bay Islands altogether rather than service them, offering Locke and his neighbors at least C$250,000 ($189,000) each to leave – and spurring a bitter, three-year fight over whether to cash out or endure.
‘It’s like a disease. Once a community gets infected, there’s no cure for it. You’ll either stay sick from it, or you’ll die,’ said Locke, 51, standing on his porch in July overlooking the bay. He voted to stay, worried he’ll lose his job if everyone leaves and the power station closes. Many residents now blame him for ruining a windfall. ‘Nothing we can do to change it now. The damage is done. And the damage is irreversible.’
Little Bay Islands is a world away from Canada’s glamorous global cities: Toronto and its big banks, Vancouver and its housing boom, Calgary and its oil patch. The town, and all of Newfoundland for that matter, have come to represent the grim underbelly of Canada’s economic outlook: a commodity bust, weak growth, mounting provincial debt and an aging population. The province is closing libraries and schools, reining in health care and boosting taxes, all while International Monetary Fund Managing Director Christine Lagarde and others praise Prime Minister Justin Trudeau for using fiscal policy to drive national expansion.

This post was published at bloomberg

Greenspan Warns Bond Rally Untenable as Bill Gross Says Go Long

A day after Bill Gross said central-bank support limits the downside for long-term government debt, former Federal Reserve Chairman Alan Greenspan called the bull market in Treasuries unsustainable.
The yield on the U.S. 10-year note fell to the lowest level in two weeks even as Greenspan warned it may rise in the long run to as much as 5 percent. On Wednesday, the Fed lowered projections for the path of interest rates, while the Bank of Japan shifted the focus of its stimulus to controlling bond yields. The actions prompted Gross, manager of the $1.54 billion Janus Global Unconstrained Bond Fund, to say he favors longer-dated sovereign debt.
“Whenever you have a bull market, it looks as though it is never going to turn,” Greenspan, the second-longest serving Fed chairman, said in an interview on Bloomberg Television. “This is a classic case of a peak in a speculative security.”
Investors globally have regarded monetary policy with growing skepticism that there’s more central banks can do to stoke inflation and economic growth. Asset-purchase programs and negative interest rates have pushed yields on more than $9 trillion of government securities worldwide below zero, according to Bloomberg Barclays index data. The European Central Bank triggered a global sell-off this month after signaling it wouldn’t pursue further stimulus.

This post was published at bloomberg

The Fed is Good for Gold

Purveyors of Economic Stability It’s almost like magic. The Fed can say something, or in the case of this Wednesday it can say nothing, and gold and especially silver get a boost of rocket fuel.
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Actually, the Fed said both yes to rate hikes – in the future – and no to a rate hike now. This was good, if not for people, at least for gold. Well, if not for gold, at least the price of the metal.
And especially silver. The price of silver had been up sharply on Monday, it inched up on Tuesday, and shot up another 60 cents on Wednesday, the day of the announcement.
We have expressed our view many times that this is not gold or silver going up, but the dollar going down. Measured in grams of silver, the dollar went down from 1.66 last week to end this week at 1.58, -0.08g or -4.8%.

This post was published at Acting-Man on September 27, 2016.

What A Commodity Trading Legend Is Buying Ahead Of The Next Crisis

When a commodity trading guru like Dwight Anderson, founder of the iconic Ospraie Management, has something to say on the market outlook, people tend to listen, especially when he’s consigning the last great commodity bull run to the dustbin of history and buying gold and farmland for the next crisis.
Anderson is the former Tiger Cub, whose Ospraie Management at one time ran the world’s biggest commodity hedge fund, with close to $4 billion at the peak. In what’s billed as a MasterClass of commodity investing, Dwight granted Real Vision a rare ‘one-on-one’ interview. Hosted by macro heavyweight Dan Tapiero, the former Tiger, Duquesne and SAC industry veteran, the interview showcases the factors influencing markets across the commodities spectrum through the perspective of a commodity trading giant.
Below we present a highlight clip of some of Anderson’s key insights, but we urge readers to see the full interview, not just for the astonishing market insights, but to hear Anderson lift the lid on his incredible backstory in the hedge fund business. Dwight relives his early days at Tiger, guided by Julian Robertson and explains why he partnered with Paul Tudor Jones, who would go on to seed Ospraie.

This post was published at Zero Hedge on Sep 26, 2016.

What Blows Up First, Part 3: Really, Deutsche Bank?

Calling Wall Street’s banks stupid and dangerous is like calling the sun ‘big and warm.’ It’s a clear understatement of an obvious fact. The same goes for calling Japan and China economically clueless. Their actions pretty much guarantee that they’ll ultimately enter some sort of death spiral.
Germany, meanwhile, is many things, but clueless and stupid aren’t normally on the list. So why is that country’s biggest bank causing nightmares for global policy makers and investors? Because – in a sign of just how close we are to the end of the fiat currency/fractional reserve banking era – Deutsche Bank is behaving in ways that would make executives at Lehman Brothers and Bear Stearns step back in alarm. It seems, for example, to have become a derivatives junkie. Like a Vegas high-roller who can’t stop raising his bets, DB’s exposure to this unregulated, largely off-balance-sheet market now exceeds not just its host country’s GDP, but that of its entire continent:

This post was published at DollarCollapse on SEPTEMBER 26, 2016.

WARREN BUFFETT IS THE LATEST BILLIONAIRE TO JUMP SHIP FROM THE MARKETS

Right now the market is perceived to be so dangerous that it’s even chased the most fearless value investors to the sidelines.
Just this evening, in the Presidential debate, Trump warned that the stock market was a bubble ‘about to pop’.
Now, the bearish billionaire circle has grown even wider with the addition of Warren Buffett.
The ‘Oracle of Omaha’ as he’s known, currently has more money outside the markets than ever before in his five decades running Berkshire-Hathaway.

This post was published at Dollar Vigilante on SEPTEMBER 27, 2016.

The QE Premium

It has been eight years since the great financial crisis of 2008, and the Federal Reserve (Fed) is still maintaining an unprecedented level of accommodation in monetary policy. The Federal Funds rate has been pinned at or near zero since 2008. Recent discussions on raising the rate a mere quarter of a percent are met with a palpable level of angst and incredulity by economists and investors alike. Since the crisis, the Fed quadrupled their balance sheet using printed money to buy U. S. Treasury and mortgage securities. The economic results, supposedly the justification for these aggressive actions, have mostly been disappointing. That said, one can credit Fed policy actions for driving financial asset valuations to historic levels.
Over the last eight years investors have adopted a mindset that Fed intervention is good for asset prices, despite clear evidence that it has contributed little to the fundamental rationale for owning such assets. Fixed income yields are at or near record lows and stock indices trade at valuations that have only been eclipsed twice in history, just prior to the great depression (1929) and at the height of the technology bubble (2000). High end real-estate and various collectibles trade at unparalleled levels. The eye-popping valuations on these less liquid assets further confirm how impactful Fed policy has been on asset prices.
We have written numerous articles highlighting rich valuations and the infectious behavior that can compel investors to make investment decisions that they would not otherwise make. In this article we employ a cash flow model to quantify the potential ramifications on the equity market. The goal is to provide investors with a simple tool to calculate total return outcomes that could occur if investors were to lose confidence in the Fed and as a result stretched market valuation premiums built up since 2008 diminish or vanish altogether.

This post was published at Zero Hedge on Sep 26, 2016.