Posts Tagged ‘credit bubble’

Hugh Hendry: “If There Was A Way To Short Obama, I Would”

Hugh Hendry: "If There Was A Way To Short Obama, I Would"

Courtesy of Tyler Durden at Zero Hedge 

Obama In his traditionally curt and to the point way, Hugh Hendry proclaims his "love" for the president, in this rare profile piece on the Scottish fund manager by the NYT. While none of his opinions will come as a surprise to Zero Hedge regulars ("The euro? It’s finished, Mr. Hendry proclaims.  China? Headed for a fall."), we do recommend the article to those still unfamiliar with one of the truly iconoclastic fund manager still left in the open.

While Hendry does not run a fund nearly as large as some behemoths out there (his Ecletica is less than $1 billion, John Paulson is $30), it does afford him a nimbleness that JP (whose recent rumored liquidations in the gold market are destined to create feedback loops that further accelerate liquidations) or, much more blatantly, Pimco (with its $1 trillion + in Treasuries, Corporates, Sovereigns and Mortgages) which is the market in all its verticals, can only dream about. It also affords him the opportunity to say what is on his mind, and on those of many others, who however dread the political consequences for being a little too honest. It is this forthrightness and honesty that has reserved Hendry a sterling place within the Zero Hedge community, his candor regularly scoring posts receiving well over 20k reads (and at 60k hits, his "I recommend you panic" is among the Top 20 most popular Zero Hedge posts of all time).

Some snippets from Julia Werdigier’s profile of Hendry:

Mr. Hendry runs the successful hedge fund firm Eclectica Asset Management. It is an old-school macroeconomic fund company with a big-think, globe-straddling style more akin to the Quantum Fund, of George Soros fame, than to the high-tech razzle-dazzle of Wall Street’s math-loving quant analysts.

“Hugh is an anachronism,” said Steven Drobny, a founder of Drobny Global Advisors. “He reminds one of the original hedge fund managers from the ’70s and ’80s.”

At 41, Mr. Hendry is also emerging from the normally secretive world of hedge funds to captivate fans and foes with a surprising level of candor.

And speaking of "I recommend you panic" which is must watch for everyone…

Last May, on British television, he verbally sparred with Jeffrey D. Sachs, director of the


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Canaries in Coalmine: China, Asia, not Participating in Euro Bailout Lovefest; Beginnings of China Credit, Real Estate Bust

Canaries in Coalmine: China, Asia, not Participating in Euro Bailout Lovefest; Beginnings of China Credit, Real Estate Bust

Courtesy of Mish 

Taxidermy canary under glass dome.

Is China a canary in the coalmine of an impending global slowdown, or is China simply overloved as a beacon of growth as it was in 2008? I think it’s both.

China’s property and infrastructure bubbles are massive; that is for certain. Moreover, China’s biggest export trading partner is Europe, just as Europe is headed for numerous austerity programs.

While it’s doubtful the European austerity programs bring deficits down to where they are supposed to be, those programs will for a while cause a decline in European spending along with much social unrest.

Can China take a double whammy like this without overheating? I think not. And China will have to show things down, whether it wants to or not.

China Overheating, Tightening Coming

Please consider Hong Kong Stocks Fall as China Prices Prompt Tightening Concern

Hong Kong stocks fell as rising consumer inflation and housing prices in China stoked concern the country will act further to rein in its economy. The city’s developers pared losses after a government land sale.

“Domestic concerns are more important in terms of the policy measures coming out in China to cool things down,” said Binay Chandgothia, who oversees about $2.2 billion as chief investment officer at Principal Global Investors (Hong Kong). For Europe, “the question is the credibility of the billions of dollars of government debt that resides with European banks.”

“Domestic concerns are more important in terms of the policy measures coming out in China to cool things down,” said Binay Chandgothia, who oversees about $2.2 billion as chief investment officer at Principal Global Investors (Hong Kong). For Europe, “the question is the credibility of the billions of dollars of government debt that resides with European banks.”

“Price pressures have been building throughout the economy, strengthening the case for higher interest rates and a stronger yuan,” said Brian Jackson, a Hong Kong-based strategist at Royal Bank of Canada. “China is at risk of overheating, with spot fires breaking out in various parts of the economy.”

Chinese policy makers should focus on preventing excessive gains in asset prices and liquidity as Europe’s rescue package makes another global slump less likely, central bank adviser Li Daokui said in an interview yesterday. The increase in property prices across


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Why the “Nascent Recovery” Won’t Last

Why the "Nascent Recovery" Won’t Last

Democratic Donkeys Blowing Financial Bubbles

Courtesy of Charles Hugh Smith, Of Two Minds 

The "nascent recovery" continues to be nascent a year later. Why? Because it’s constructed on sand and hyped by smoke and mirrors.

The "nascent recovery" will soon be revealed as "failed" rather than "nascent." How long can "nascent" be deployed as cover for a "recovery" constructed of propaganda, manipulated statistics and "confidence-building" spin?

As my esteemed blogging colleague Mish pointed out not long ago, "nascent" continues to be the word of choice in the MSM, as if no one dares declare the "recovery" real for fear that such a claim will be easily revealed as utterly false. So to keep the spin machine intact, the "recovery" will remain "nascent" as cover for the less rosy reality.

Let’s run through the fundamental reasons the recovery is bogus, not nascent.

1. Propaganda and "confidence-building" are constantly substituted for reality. The problem, we are repeatedly told, is a "lack of confidence." Consumers’ and corporations’ accounts are bulging with idle trillions awaiting "renewed confidence" to gush back into the economy, creating millions of new jobs and trillions in new wealth.

Here is a typical example:

Forecasters optimistic about economy, job creation

How many MSM stories have you read which refer to the "162,000 jobs created last month" as evidence that the "economy is turning around? Dozens, if not hundreds. How many note that the 162,000 number is entirely bogus, boosted by temporary Census Bureau hiring and tens of thousands of fictitious "birth/death model" phantom jobs?

The spin, hype and forced good cheer is essentially unlimited. As I write, stocks are up on news that Caterpillar reported an 11% decline in revenue to $8.24 billion, a huge "miss" since analysts polled by Thomson Reuters had forecast $8.84 billion in revenue.

The "surge in profits" didn’t come from sales; it came from squeezing costs, a strategy which has some upper limit of effectiveness on goosing the bottom line.

Machinery sales surged 40% in the Asia-Pacific region, but of course no one explores the source of that "surge:" out of control spending on empty cities and luxury highrises in China. If that unprecedented real estate bubble in China ever pops-- and can any bubble continue forever?--then Cat sales will go into freefall.

That’s not "confidence building" so it goes unsaid, despite being glaringly obvious.

2. Tax/borrow and spend is alive
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2007 Redux?

2007 Redux?

Courtesy of Michael Panzner at Financial Armageddon

The market value of the high yield FINRA-BLP Active U.S. Corporate Bond Index relative to its investment grade counterpart has now exceeded the level seen in May 2007, at the peak of the credit bubble.

HYIG

If you ask me, it looks like risk-taking is back with a vengeance.


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The Fed’s Lacker: More Threats

The Fed’s Lacker: More Threats

Courtesy of Karl Denninger at The Market Ticker

If you’ve done nothing wrong, why are you threatening people Mr. Lacker?

Lacker criticized legislation before Congress that would rescind an exemption on government audits of monetary policy and give politicians a greater say over the appointment of Fed bank directors and presidents.

“Such moves would present very serious risks to the effectiveness of monetary policy and ultimately to economic growth and stability,” Lacker said in a speech today to the Risk Management Association in Richmond, Virginia.

In a word: Why?

If The Fed has made "policy mistakes", which Lacker acknowledges, why doesn’t he want exposed to public view why those mistakes were made, who wanted them to be made and what happened as a consequence?

While the Fed has made “policy mistakes” leading up to the financial crisis, its structure has “given us a good record over the better part of three decades.”

I challenge Mr. Lacker to prove that. 

To expose the entire structure of monetary policy decisions. 

To "bare all."

See, I think he’s lying. 

I believe that an honest examination of The Fed’s monetary policy will show that The Fed has willfully and intentionally blown asset bubbles for the last 30 years.  That it has willfully and intentionally ignored risks to the economy posed by those bubbles.  That despite more than 30 years of knowledge of the below graphs and facts (all drawn from The Fed’s own data!) the institution has chosen a path of knowing monetary ruin, and wishes to conceal not only the "who" but also the "why."

It is my believe that the displayed willful and intentional ignorance of the above chart, along with an intentionally-blind eye toward the reality of compound growth in credit beyond that of GDP, will, if examined and audited, prove that The Fed has intentionally and willfully violated its lawful mandate:

The Board of Governors of the Federal Reserve System and the Federal Open Market Committee shall maintain long run growth of the monetary and credit aggregates commensurate with the economy’s long run potential to increase production, so as to promote effectively


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Way too much risk in the equity market

Way too much risk in the equity market

Courtesy of Edward Harrison at Credit Writedowns

Following up on my “Sell equities” post, I want to highlight a factoid from today’s David Rosenberg’s Breakfast with Dave distribution.

Never before has the S&P 500 rallied 60% from a low in such a short time frame as six months. And never before have we seen the S&P 500 rally 60% over an interval in which there were 2.5 million job losses. What is normal is that we see more than two million jobs being created during a rally as large as this.

In fact, what is normal is for the market to rally 20% from the trough to the time the recession ends. By the time we are up 60%, the economy is typically well into the third year of recovery; we are not usually engaged in a debate as to what month the recession ended. In other words, we are witnessing a market event that is outside the distribution curve.

I had been pretty bullish in March and April.  But almost immediately, this rally just went straight up in a moon-shot kind of way that makes someone like me who is more oriented toward fundamentals a bit nervous. After months of wondering how long this thing could last, I’ve finally said sell.

I’m not saying that the rally can’t continue (after a correction).  That depends in part on the economy and reflation. What I am saying is that a two- or three-sigma move should have you asking yourself a lot of questions. And since this is a two- or three-sigma move to the upside, you should be taking profits, not chasing that last dollar.

The video below from 7 Sep with Cazenove’s Robin Griffiths gives one the bigger picture.  Going into treasuries is a flight to safety. Going into gold is the same. Notice that Griffiths dispels the notion that Gold is an inflation hedge alone.  In reality, it is a paper money hedge and its rise represents a fiat currency rejection as much as a portend of inflation.

Source: Breakfast with Dave, 18 Sep 2009 (PDF) – David Rosenberg, Gluskin Sheff

 


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Phil's Favorites

Icahn Called BlackRock "An Extremely Dangerous Company"; the Fed Has Chosen It to Manage Its Corporate Bond Bailout Programs

Courtesy of Pam Martens

Carl Icahn Created a Cartoon About BlackRock and Its Junk Bond ETFs Going Over a Cliff

In 2015, the legendary Wall Street investor, Carl Icahn, called BlackRock “an extremely dangerous company.” (See video clip below.) Icahn was specifically talking about BlackRock’s packaging of junk bonds into Exchange Traded Funds (ETFs) and calling them “High Yield,” which the average American doesn’t understand is a junk-rated bond. The ETFs trade during market hours on the New York St...



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Kimble Charting Solutions

Tech Testing 9-Year Support, With Fear Levels At 2009 Highs!

Courtesy of Chris Kimble

Is an important Tech Index sending a bullish message to investors? It is making an attempt!

Does that mean a low in this important sector is in play? Humbly it is too soon to say at this time!

This chart looks at the Nasdaq Composite Index over the past 25-years on a monthly basis.

The index has spent the majority of the past 9-years inside of rising channel (1), as it has created a series of higher lows and higher highs. It created bearish reversal patterns in January & February as it was kissing the underside of the top of the channel and...



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Zero Hedge

Gold Is Now "Unobtanium"

Courtesy of ZeroHedge View original post here.

By now it becoming clear to many that demand for precious metals, as the world 'turns', is far outpacing supply as major gold suppliers and sellers exclaim "there is no gold."

One glance at APMEX pages and two things are immediately clear:

1) There is no gold or silver....

2) And if there is, the premium for physic...

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Insider Scoop

Amazon Warehouse Workers Plan Monday Walkout To Protest Lack Of Coronavirus Protection

Courtesy of Benzinga

Amazon.com Inc.'s (NASDAQ: AMZN) workers at the company's Staten Island warehouse are planning a mass walkout on Monday to protest against what they call a lack of protection provided during the novel coronavirus (COVID-19) pandemic.

What Happened

Anywhere between 50 to 200 workers are expected to participate in the walkout, Christian Smalls, as assistant manager at the New York...



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Members' Corner

10 ways to spot online misinformation

 

10 ways to spot online misinformation

When you share information online, do it responsibly. Sitthiphong/Getty Images

Courtesy of H. Colleen Sinclair, Mississippi State University

Propagandists are already working to sow disinformation and social discord in the run-up to the November elections.

Many of their efforts have focused on social media, where people’s limited attention spans push them to ...



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Biotech/COVID-19

The world before this coronavirus and after cannot be the same

 

The world before this coronavirus and after cannot be the same

Gettyimages

Courtesy of Ian Goldin, University of Oxford and Robert Muggah, Pontifical Catholic University of Rio de Janeiro (PUC-Rio)

With COVID-19 infections now evident in 176 countries, the pandemic is the most significant threat to humanity since the second world war. Then, as now, confidence in international cooperation and institutions plumbed new lows.

While the on...



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Digital Currencies

While coronavirus rages, bitcoin has made a leap towards the mainstream

 

While coronavirus rages, bitcoin has made a leap towards the mainstream

Get used to it. Anastasiia Bakai

Courtesy of Iwa Salami, University of East London

Anyone holding bitcoin would have watched the market with alarm in recent weeks. The virtual currency, whose price other cryptocurrencies like ethereum and litecoin largely follow, plummeted from more than US$10,000 (£8,206) in mid-February to briefly below US$4,000 on March 13. Despite recovering to the mid-US$6,000s at the time of writin...



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The Technical Traders

These Index Charts Will Calm You Down

Courtesy of Technical Traders

I put together this video that will calm you down, because knowing where are within the stock market cycles, and the economy makes all the difference.

This is the worst time to be starting a business that’s for sure. I have talked about this is past videos and events I attended that bear markets are fantastic opportunities if you can retain your capital until late in the bear market cycle. If you can do this, you will find countless opportunities to invest money. From buying businesses, franchises, real estate, equipment, and stocks at a considerable discount that would make today’s prices look ridiculous (which they are).

Take a quick watch of this video because it shows you ...



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Chart School

Cycle Trading - Funny when it comes due

Courtesy of Read the Ticker

Non believers of cycles become fast believers when the heat of the moment is upon them.

Just has we have birthdays, so does the market, regular cycles of time and price. The market news of the cycle turn may change each time, but the time is regular. Markets are not a random walk.


Success comes from strategy and the execution of a plan.















Changes in the world is the source of all market moves, to catch an...

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ValueWalk

Entrepreneurial activity and business ownership on the rise

By Jacob Wolinsky. Originally published at ValueWalk.

Indicating strong health of entrepreneurship, both entrepreneurial activity and established business ownership in the United States have trended upwards over the past 19 years, according to the 2019/2020 Global Entrepreneurship Monitor Global Report, released March 3rd in Miami at the GEM Annual Meeting.

Q4 2019 hedge fund letters, conferences and more

The Benefit Of Entrepreneurial Activity ...

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Click HERE to join the PSW weekly webinar at 1 pm EST.

Phil will discuss positions, COVID-19, market volatility -- the selloff -- and more! 

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Mike will show off the TradeExchange's new platform which you can try for free.  

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Lee's Free Thinking

Why Blaming the Repo Market is Like Blaming the Australian Bush Fires

 

Why Blaming the Repo Market is Like Blaming the Australian Bush Fires

Courtesy of  

The repo market problem isn’t the problem. It’s a sideshow, a diversion, and a joke. It’s a symptom of the problem.

Today, I got a note from Liquidity Trader subscriber David, a professional investor, and it got me to thinking. Here’s what David wrote:

Lee,

The ‘experts’ I hear from keep saying that once 300B more in reserves have ...



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Mapping The Market

How IPOs Are Priced

Via Jean Luc 

Funny but probably true:

...

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About Phil:

Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...

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