by clarisezoleta - September 30th, 2016 8:51 pm
Financial Markets and Economy
The U.S. economy is on track to grow at a 2.4 percent annualized rate in the third quarter, the Atlanta Federal Reserve's GDP Now forecast model showed on Friday, following the latest data on inventories, trade and consumer spending this week.
China, the world’s largest energy consumer, may have stored more oil than official estimates, according to an analysis of satellite images by Orbital Insight Inc.
Oil in storage was about 600 million barrels as of May, according to the geospatial analytics startup based in Palo Alto, California.
OPEC's oil output is likely to reach its highest in recent history in September, a Reuters survey found on Friday, as Iraq boosted northern exports and Libya reopened some of its main oil terminals.
What Moves Futures Markets [INFOGRAPHIC] (Value Walk)
We’ve always loved the CME Group’s great infographics slicing and dicing the ‘facts behind food prices‘, ‘facts behind oil prices‘, and ‘facts behind beef prices‘ going into items like the percent of Corn mandated for Ethanol, Bovine Spongiform Encephalopathy (mad cow), and oil rich Iran’s nuclear ambitions.
The banks face fines from the US Department of Justice, led by Attorney General Loretta Lynch, for the illegal sale of mortgage bonds in the US before the 2008 financial crisis.
No one yet has made money from calling an end to 35 years of gains in world bonds, but that has not stopped investors fretting that an era of central bank largesse is drawing to a close and a seismic shift in global markets is under way.
Investors Today Prefer Companies with Fewer Physical Assets (Harvard Business Review)
Having physical stuff just isn’t as
by stjeanluc - September 30th, 2016 7:32 pm
A thought from Jean-Luc:
Every day that goes by brings more shady deals from Trump's past – now Cuba, more stuff about his foundation, his taxes! No wonder he doesn't want to release his taxes either – who the heck knows is buried in there.
In the meantime, Trump gets up at 5:00 AM to tweet about Alicia Machado! What a despicable coward little man-child!
Atrios sums up my feelings:
I admit I find it hard to keep up the sense of humor about things these days. We laughed a lot during the Bush years, didn't we, my fellow pony aficionados. Trump should just make me laugh and laugh and laugh and laugh. But with Bush we could sorta pretend that people voted for him because they didn't quite see him for what he was. There's no doing that with Trump. Trump is Trump. He won't win, but a lot of people… a lot of people… are going to vote for him.
by ilene - September 30th, 2016 4:56 pm
Stumpf's actions were not merely "unethical" — they were criminal. And in the current system, he'll not only get away with it, he'll profit more than handsomely.
Courtesy of NOMI PRINS
(Published at BillMoyers.com)
Consider this. You’re a mob boss. You run a $1.8 trillion network of businesses across state lines and continents. Many of these are legit, but a select subset of them – not so much. Every so often the illegal components flare up; some Washington commission launches an investigation, someone blows a whistle, people lose their homes, a pack of investors sheds a ton of money and lawsuits fly. You get reprimanded and have to pay lawyers and accountants overtime to deal with the paperwork. You settle on fines with the government — $10 billion worth. Then you keep going with no one the wiser, no wings clipped, no hard time. After all of that — you say you’re sorry, forfeit some money you didn’t even make yet, and (maybe) resign with boatloads more of it.
This is what we’re dealing with regarding Wells Fargo CEO and Chairman John Stumpf. He could be a really nice guy and wears some lovely tailored attire. (Hell, even Al Capone cared about proper milk expiration date labels.) But he’s also a crook, plain and simple. He’s cheated shareholders and taxpayers and customers, and used a stockpile of FDIC-backed deposits as fodder for illicit activities that have been repeatedly investigated and fined. And he made hundreds of millions of dollars doing it.
This is not conjecture, nor sour grapes from the nonmillionaire swath of the population. It’s based on documented facts. But by no means is Wells the only guilty bank on the street, or Stumpf the only “apologetic” CEO. Apologies are cheap, and so is money when it’s a small piece of a much larger pie. Somewhere, JPMorgan Chase Chairman and CEO Jamie Dimon and Goldman Sachs Chairman and CEO Lloyd Blankfein are sighing in relief that this time it was Stumpf and not one of them, the other two of the three (of the Big Six bank) CEOs left standing since the crisis.
These are just some highlights of those nearly $10 billion in total fines Wells agreed to,
by Market Shadows - September 30th, 2016 11:43 am
Financial Markets and Economy
Eight years ago this month, Lehman Brothers failed in large part due to panicked hedge funds pulling their money. With some big hedge funds worried enough to cut their exposure to Deutsche Bank AG, the parallel is obvious—but also deeply misleading.
Deutsche Bank’s shares have plummeted in recent weeks after The Wall Street Journal reported that the U.S. Justice Department suggested the bank pay $14 billion to settle allegations around mortgage securities. The bank expects to agree to a lower figure.
While global markets remain calm(ish), distracted by OPEC headlines, US election 'entertainment', and Middle East proxy wars, the reality is, something very ugly is accelerating in Europe.
U.S. index futures were little changed as investors assessed the implications of deepening woes in the European banking industry.
The Philippine peso completed its biggest monthly decline since October 2000 amid the biggest outflow from the nation’s stocks in a year.
European banks borrowing dollars are paying the most since the height of the region’s sovereign-debt crisis as concerns mount about the health of Germany’s largest lender.
10 things you need to know before European markets open (Business Insider)
Deutsche Bank fell in New York trading. Hedge funds have reduced their exposure to the lender, setting up a potential showdown with German authorities.
Inflation in the euro area accelerated to the fastest since late 2014 in September, the European Union’s statistics office in Luxembourg said on Friday.
Take futures on the CBOE Volatility Index, whose volume surged 50 percent this month and is on pace for a record year, according to
by phil - September 30th, 2016 8:36 am
What a scam!
As soon as the market drops, Yellen drops a bombshell, saying last night that: "The Federal Reserve might be able to help the U.S. economy in a future downturn if it could buy stocks and corporate bonds. It could be useful to be able to intervene directly in assets where the prices have a more direct link to spending decisions," she said, adding that buying equities and corporate bonds could have costs and benefits. Currently, the Fed does not have the power to buy equities directly – but they want it!
And if that wasn't enough Fed manipulation for one day, now Fed Gov Kaplan will be unleashed at 1pm and he was not scheduled when we looked on Monday. Kaplan is from Dallas, which is still depressed, and he's a big dove AND he's a former Goldman Sachs (GS) executive, so guess what's going to happen at 1pm? Kaplan is the guy who replaced the hawkish Fisher and had a lot to do with knocking back Fed rate expectations this year. Fisher was was very against QE3 and also was the only guy on the Fed who saw the housing crisis coming. He was "retired" last year at 64 and replaced by a Goldman stooge.
And why shouldn't the Fed buy stocks? The Bank of Japan is already the largest shareholder of 70% of the listed companies and look how well that's working for Japan. After all, when your Central Bank buys stocks at ridiculous multiples near their all-time highs – how can they lose? Even if the stock goes down, they write off the loss and it becomes part of the National Debt and the Bottom 99% pay it off – either way the Top 1% people and corporations get another massive transfer of wealth. Go Top 1%.
That chart, by the way, shows the MINIMUM amount you need to be in the club so, next time you are at an event, watch out for posers… It turns out that most of the Top 10% THINK they are in the Top 1% and vote like they are in the Top 1% – even…
by Market Shadows - September 29th, 2016 8:14 pm
Financial Markets and Economy
U.S. stocks fell as banks retreated amid growing concern that Deutsche Bank AG’s woes will spread to the global financial sector. Health-care shares sank on speculation tighter regulations will crimp profits.
Shares of Deutsche Bank fell more than 6.5 percent in New York trading Thursday after a Bloomberg report said a small fraction of hedge funds that do derivatives business with the bank have cut their exposure.
Barry Bausano, chairman of Deutsche's hedge fund business, told CNBC there have been outflows, but also inflows, typical of the ebbs and flows of the business. He also said the prime brokerage was "still very profitable" for the bank and there's "no question we have a perception issue."
How gold helped South Korea repay its debt (Global Investors)
The Asian financial crisis had spread like a virus. Thailand, Malaysia, Singapore and other Southeast Asian countries were all affected, inciting fears of a global economic meltdown if the crisis couldn’t be contained.
All of these things can be made with one barrel of oil (Visual Capitalist)
Many people think of crude oil as a thick, black liquid that is used to source our unquenchable thirst for gasoline. However, the reality is that each barrel of oil is refined to be used in a variety of applications that includes fuel, cosmetics, plastics, rubber, and candle wax.
Denmark received information on Danish citizens from the so-called Panama papers after paying almost 6 million kroner (around $900,000) to an anonymous source, the Danish Tax Authority said in a statement Thursday.
Speculative buyers have eschewed Chinese stocks in favor of property, prompting even the chief economist at the central bank of the world's second largest economy to declare that housing was in a "bubble."
by ilene - September 29th, 2016 5:25 pm
Courtesy of Michael Batnick
Add Julian Robertson and Howard Marks to the long list of billionaires that are less than optimistic about the future. All the reasons they cite are unfortunately very compelling, but pessimists always sound intelligent. You can probably count on one hand the number of investors that were actually able to capitalize on their pessimism.
But let’s say all these billionaires are right and U.S. stocks will in fact experience lower returns going forward. A good strategy would be to have your rate of investment outpace the return on your investment. As an example, let’s say you’ve saved some money and have $10,000 to invest. And let’s also assume that you add an additional $100 a month and grow that investment by 1% a month, so that by month two you’re investing $101, $102 by month three and so on. By the 240th month, your last investment in your future of $1,078 will be 978% higher than your initial $100 deposit. A total of $109,000 invested will turn into $138,788 if you earned 3%, $151,481 if you earned 4%, and $164,100 if you earned 4%. Not great, but not terrible either.
The last time U.S. stocks had a twenty-year period that compounded at less than six percent was in the early 1950s as we slowly recovered from the great depression. But nobody can be certain that low returns won’t happen again and in fact, I’d guess it’s likely they will at some point. Maybe Central Banks are inflating bubbles right now and I just don’t know it. Or maybe past is not prologue and in three hundred years people will look back at the twentieth century and realize those high returns for U.S. stocks was an outlier.
If we are in a low return environment, there are two ways alchemists can get high returns: they can either pick stocks that do better than the market, or they can time the market, both difficult propositions and games that I personally have no desire to play. I can’t control the returns that the market will deliver, but by investing at a higher growth rate than my investments, I can stack the odds in my favor.
by Market Shadows - September 29th, 2016 1:18 pm
Financial Markets and Economy
Federal Reserve Bank of Atlanta President Dennis Lockhart said the central bank is nearing its goals of maximum employment and steady inflation near 2 percent, leaving the economy primed for an increase in borrowing costs.
The U.S. economy expanded more in the second quarter than previously estimated, reflecting a smaller drag from business spending on structures and equipment.
Wall Street was lower in choppy trading late Thursday morning, pulled lower by Apple and healthcare stocks.
The S&P healthcare index fell 0.7 percent, marking the second straight day of decline as shares of Merck and Johnson & Johnson booked losses
Bonds fell, while the dollar rose as data added to evidence the world’s largest economy continued to strengthen and policy makers signaled they’re moving closer to raising rates. Oil gained.
Q2 GDP Revised Up to 1.4% Annual Rate (Calculated Risk)
Real gross domestic product increased at an annual rate of 1.4 percent in the second quarter of 2016 (table 1), according to the "third" estimate released by the Bureau of Economic Analysis. In the first quarter, real GDP increased 0.8 percent.
The decline of the middle class is causing even more economic damage than we realized (The Washington Post)
I have just come across an International Monetary Fund working paper on income polarization in the United States that makes an important contribution to the secular stagnation debate.
Saudi Arabia has ended its flirtation with free oil markets.
How do you solve a problem like Deutsche Bank AG?
Its share price fell to an all-time low this week amid concerns that the bank may lack the
by phil - September 29th, 2016 8:23 am
Well, we got through Wednesday.
I love this chart which shows what the Fed has, in the past, SAID rates would be and what, in fact, they actually were for the past 3 years. So it's not too surprising that, no matter what Yellen and Co. say about raising rates this year – no one is going to believe them. If you bet against rates rising every single time (20) that the Fed said they would be raising rates in an upcoming meeting – you only would have been wrong once – last December.
There are new traders who have been on the job for 7 years now and have never seen a Fed Fund Rate at 1%. Money is essentially free if you want it – that's just a fact of life – why would you plan for anything else? If you want to expand – borrow money, if you want to buy out a competitor – borrow money, if your stock price is too low – borrow money to buy it yourself.
Non-Financial Corporate Debt is up $3 TRILLION since 2008 – and that is just the S&P 500 – globally, 16Tn has been borrowed by Corporations at a rate of $2Tn per year, 3% of our Global GDP is borrowed! It took 50 years for corporations to rack up their first $3Tn in debt but the next $3Tn came in just 8 years. Yes, of course the first $3Tn in debt led to a complete meltdown of the Global markets as companies found themselves unable to service that debt but this time is different – because they borrowed twice as much…
Less than 25% of that debt is considered "distressed" (yields that exceed Treasury yields by at least 10 percentage points), that's nothing to be alarmed about, is it? Only 112 companies have been declared in default by S&P as of January of this year but, in 2008, it was 125 – so we still have room to improve on that front before panic sets in. We have a long position on SJB ($25) in our Options Opportunity Portfolio, which makes money when junk bonds…
by Market Shadows - September 29th, 2016 2:13 am
Financial Markets and Economy
Just as it's been announced, US oil producers may readying to thwart OPEC's plan (Business Insider Australia)
While the specifics over how it will be achieved are as yet unknown, and there are already signs that some members are uncomfortable with the decision, it appears that OPEC will reduce oil output for the first time in eight years when the group next meets on November 30 in Vienna.
Asian stocks rose as oil prices soared, boosting energy shares, after OPEC agreed to a preliminary deal that will cut production for first time in eight years.
The MSCI Asia Pacific Index gained 0.7 percent to 141.82 as of 10:31 a.m. in Tokyo, set for its best quarter since the first three months of 2012.
One of China’s richest men is warning about the 'biggest bubble in history' (Business Insider)
The tycoon who made his fortune in the real estate market and owns China's largest real estate developer, Dalian Wanda Group, appeared on CNNMoney Wednesday to warn that China's overheated real estate market is the "biggest bubble in history."
China’s capital outflow through cross-border sales of funds is accelerating amid expectations the yuan will weaken further.
Oil popped more than $3 from the lows of the day (as much as 7%) on news OPEC has agreed to a production cut.
We’ve talked a lot throughout the year about the price of oil. When it collapsed to the $20s, it put the entire energy
Asian stocks rose with Malaysia’s ringgit and oil climbed to a three-week high after OPEC agreed to a preliminary deal that will cut crude production for the first time in eight years.