“It Feels Like An Avalanche”: China’s Crackdown On Conglomerates Has Sent A “Shock Wave” Across Markets

The first to suffer Beijing’s crackdown against China’s private merger-crazy conglomerates, wave was the acquisitive “insurance” behemoth, Anbang, whose CEO Wu Xiaohui briefly disappeared as the Politburo made it clear that the “old way” of money laundering – via offshore deals – is no longer tolerated. Then, several weeks later and shortly after the stocks of the “famous four” Chinese conglomerates plunged after China officially launched a crackdown on foreign acquirers amid concerns of “systemic risk“, it was HNA’s turn, which as we described last week, risks becoming a “reverse rollup from hell“, as HNA’s stock tumbled, sending the LTV of billions in loans collateralized by the company’s shares soaring and in danger of unleashing an catastrophic margin call among the company’s lenders.
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Then Beijing’s attention shifted to the biggest conglomerate of them all: billionaire Wang Jianlin’s Dalian Wanda Group, which as the WSJ and Bloomberg reported was being “punished” by Beijing, and would see its funding cutoff after China “concluded the conglomerate breached restrictions for overseas investments.”
The scrutiny could rein in Wang’s ambitious attempt to create a global entertainment empire, including Hollywood production companies and a giant cinema chain he’s built up through acquisitions from the U. S. to the U. K. Six investments, such as the purchases of Nordic Cinema Group Holding AB and Carmike Cinemas Inc., were found to have violations, said the people, who asked not to be identified discussing a private matter. The retaliatory measures will include banning banks from providing Wanda with financial support linked to these projects and barring the company from selling those assets to any local companies, the people said.
The move is an unprecedented setback for the country’s second-richest man, who has announced more than $20 billion of deals since the beginning of 2016. By targeting one of the nation’s top businessmen, the government is escalating its broader crackdown on capital outflows and further chilling the prospects of overseas acquisitions during a politically sensitive year in China.

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

Russell Clark Speaks In RealVision’s “Most Requested Interview Ever”

According to RealVision, he’s one of the greatest investors you’ve never heard of. According to us, he ran what was (formerly) the world’s most bearish hedge fund, although at the end of 2016, after suffering substantial losses, he capitulated and went flat, after closing much of his short book.
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To be sure, Russell Clark, and his Horseman Global (which after phenomenal returns for much in the post-crisis period, closed 2016 with a thud, dropping 24% and down another 8% YTD, isn’t a household name. But in investment circles, he’s known as one of the world’s most aggresive, and better, short sellers.
In a rare camera appearance, Russell Clark sat down with Real Vision TV’s Raoul Pal in what has been dubbed as “one of RealVision’s most requested interviews ever”, to discuss investing and share his approach to markets.
In one part of the interview, Clark says that one reason for his success is his focus on currencies. While for many investors the risk and reward of currencies is an afterthought, it forms the base of Clark’s investment worldview. ‘What we try and do is invert the process,’ Clark says. ‘So, we’d put currencies at the beginning of the investment process rather than at the end. And that’s really been the heart of how I look at things…’

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

SILVER GREEN ALERT – ONE OF THE BEST BUYING OPPORTUNITIES FOR YEARS…

There will be no equivocating, fence sitting or any kind of hedging or expression of doubt in what is written in this update. Let me be absolutely clear: – we are now at the threshold of a barnburner rally in the Precious Metals sector, and silver is set to scream higher driven by a massive short covering panic, because short positions in it have ballooned in recent weeks to levels way above what we saw in December 2015, when silver hit its final bearmarket bottom, before the big sector rally during the 1st half of 2016.
We have been on to this for some time, hence the rash of articles over the past couple of weeks on the site recommending various good looking gold and silver stocks, and we will look at more this weekend. This is truly a massive opportunity, but these low prices are not going to be around for much longer. So if you want to fully partake of this rally and buy at the current crazy cheap prices, and haven’t done so yet, you had better pull your finger out and get on with it, because this market is not going to wait on your convenience.
Don’t be fooled into thinking that because silver has rallied towards still bearishly aligned moving averages over the past week or so that it must drop back towards its lows again. That huge candle early this month on big volume which we can see on the 6-month chart below was a final capitulation reversal candle – a bottom. While the price has since been edging higher, the COT has continued to improve to the point that it is even more extremely bullish, so we can expect this so far hesitant rally to gain serious traction soon. Even if we do see a dip, which is considered highly unlikely, it would simply make the picture even more positive, although it is now scarcely possible that it can look much more positive than it is already.

This post was published at Clive Maund on July 22, 2017.

Detroit Is Demolishing Homes With Federal Money Meant “To Save Them”

Contrary to popular perception, not all of the money approved as part of the federal government’s emergency effort to save the American financial system in the fall of 2008 went to the big banks. Some of it – nearly $10 billion, all told – went to support the government’s ‘hardest hit’ program, meant to help forestall foreclosures in 18 states.
And unsurprisingly, nearly a decade after the program was signed into law, government investigators are finding that much of this money was squandered by state governments. Money initially earmarked to help troubled homeowners struggling with underwater mortgages was instead spent on demolitions meant to boost prices of surrounding homes and help ward off crime in city neighborhoods. Except the money was often squandered by state governments, disproportionately robbing poor citizens in cities like Detroit of a program meant to save them from homelessness.

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

A Mixed Hero: A Libertarian Reassessment of Elon Musk

Many libertarians seem to love to hate Elon Musk these days. His crime is to live off the public purse. His companies would be bankrupt without green subsidies and cheap government loans and contracts. He seeks out favorable terms from governments and angles to capture subsidies and cheap loans with no reservation and with vast success at doing so. This situation, along with certain financing practices and relationships among his companies, has led to it becoming fashionable to disdain Musk as a public figure and to characterize him with sweeping put-downs.
I have a more complex assessment of Musk as a figure. I enjoyed listening to his 2015 biography by Ashlee Vance. I tend to look for the positive things in people. One positive quality here is the ability to re-envision products from the ground up in a completely different way. The Tesla is not just the evolution of the car, but a completely new way to think about what a car is. A car is a thing with an engine and a drive train, right? True for a century, but not any more. Musk has done in the fields of cars and rockets, what Steve Jobs did for computers and phones, completely re-envisioned what they could be, how they could be built, and how they could be used.

This post was published at Ludwig von Mises Institute on July 24, 2017.