IEHI Feed: The Hedge Fund Implode-o-Meter http://implode-explode.com/ Tracking the many faces of the global credit implosion. en-us iehi-feed-62444 Wed, 21 Jun 2017 21:10:51 GMT High-Yield Carnage Stays Contained for Now - Bloomberg http://hf-implode.com/viewnews/2017-06-21_HighYieldCarnageStaysContainedforNowBloomberg.html Oil's latest foray into a bear market has left the world's biggest junk bond ETF mostly unscathed, with the damage so far contained to the energy sector.

Investors still aren't demanding higher overall premiums for the riskiest corporate debt and the $18.4 billion iShares iBoxx High Yield Corporate Bond ETF has gained 3.9 percent this year, even as credit spreads for energy companies widened to the highest since September after crude slid below $43 a barrel. 

"There may be more pain on the way" for the energy patch, warns Bloomberg Intelligence senior credit analyst Spencer Cutter.

...

In 2015, "there was a significant lag between oil really cratering and credit catching up," writes Peter Tchir, head of macro strategy at Brean Capital LLC. "While I think the energy related credit selling was overdone by late 2015, it seems to me that we have hit a point yet again where the lag effect has to start kicking in -- credit can't ignore ongoing weakness for so long."

Yeah, everything bad is "contained" and will remain so, and everything bullish will continue forever... don't you just love it when we reach the point in market/crisis cycles that the word "contained" has to be trotted out? We're certainly reassured...

]]>
iehi-feed-62440 Wed, 21 Jun 2017 13:48:47 GMT The Data Says: 100% Chance of Recession Within 7 Months http://hf-implode.com/viewnews/2017-06-21_TheDataSays100ChanceofRecessionWithin7Months.html iehi-feed-62439 Wed, 21 Jun 2017 13:39:30 GMT Britain charges Barclays, ex-bosses over 2008 Qatari deal http://hf-implode.com/viewnews/2017-06-21_BritainchargesBarclaysexbossesover2008Qatarideal.html Barclays and four former top executives were charged with fraud on Tuesday over undisclosed payments to Qatari investors as part of a 12 billion pound ($15 billion) emergency fundraising during the financial crisis in 2008.

...

The case centers on agreements between Barclays and Qatari investors during two fundraisings in June and October 2008.

Qatar Holding, part of the Qatar Investment Authority sovereign wealth fund, and Challenger, an investment vehicle of former Qatari prime minister Sheikh Hamad bin Jassim bin Jabr al-Thani, invested around 5.3 billion pounds in Barclays.

Authorities have examined whether payments from Barclays to Qatar at the same time, such as around 322 million pounds in "advisory services agreements" (ASA), alongside the $3 billion loan, were honest and properly disclosed.

Wonder why this is being brought now... perhaps because Qatar "funds terrorism" (while Saudi Arabia doesn't)?

]]>
iehi-feed-62437 Tue, 20 Jun 2017 21:13:55 GMT Charles Hugh Smith: We're in a Boiling-Point Crisis of Exploitive Elites http://hf-implode.com/viewnews/2017-06-20_CharlesHughSmithWereinaBoilingPointCrisisofExploitiveElites.html Which brings us to the present-day Crisis of Exploitive Elites. The "fixes" to the stagnation of postwar Elite/state-dominated Capitalism in the 1970s were financialization, globalism, and the sustained expansion of debt in all sectors--state, corporate and household.

Now all three engines of "growth" have run out of steam. All three greatly exacerbated wealth and income inequality... The Exploitive Elites cannot turn back the tides of history, but they can immiserate millions. That seems to be "solution" enough for them, but you cannot destroy rising moral revulsion to soaring inequality and the abject failure of debt-based global capitalism with mere media propaganda.

]]>
iehi-feed-62436 Tue, 20 Jun 2017 21:11:47 GMT Fed is Careening Into Housing and Stock Bubble... Look Out Below! - Ben Hunt http://hf-implode.com/viewnews/2017-06-20_FedisCareeningIntoHousingandStockBubbleLookOutBelowBenHunt.html What has happened (and apologies for the ten dollar words) is that the Fed's reaction function has flipped 180 degrees since the Trump election. Today the Fed is looking for excuses to tighten monetary policy, not excuses to weaken. So long as the unemployment rate is on the cusp of "instability", that's the only thing that really matters to the Fed (for reasons discussed below). Every other data point, including a market sell-off or a flat yield curve or a bad CPI number -- data points that used to be front and center in Fed thinking -- is now in the backseat.

I'm not the only one saying this about the Fed's reaction function. Far more influential Missionaries than me, people like Jeff Gundlach and Mohamed El-Erian, are saying the same thing. If you think that this Fed still has your back, Mr. Investor, the way they had your back in 2009 and 2010 and 2011 and 2012 and 2013 and 2014 and 2015 and 2016 ... well, I think you are mistaken. I think Janet Yellen broke up with you this week.

]]>
iehi-feed-62432 Tue, 20 Jun 2017 14:23:43 GMT China's "Ghost Collateral" Arrives In Canada, "Heralding A Crisis" http://hf-implode.com/viewnews/2017-06-20_ChinasGhostCollateralArrivesInCanadaHeraldingACrisis.html ... the stunner: "Postmedia confirmed that Canadian banks are allowed by the federal regulator, the Office of the Superintendent of Financial Institutions, to accept collateral from China to secure real estate mortgages in B.C."

...

The Vancouver Sun adds that as a result of tighter federal lending rules, borrowers trying to buy million-dollar-plus properties in Vancouver's market "are increasingly taking out dangerous loans from shadow bankers in a fast-growing and poorly regulated financial market."

...

"These properties in Vancouver are so expensive that you need people either laundering money or loan fraud or people borrowing such large amounts of money that should never be allowed, in order to keep it going," MacBeth said. "If everyone is reporting their incomes honestly in Vancouver, there is no way that housing prices can stay where they are.

]]>
iehi-feed-62431 Mon, 19 Jun 2017 21:34:26 GMT Amazon Is Now Cash-Poor -- Big Contrast From Tech Giant Peers http://hf-implode.com/viewnews/2017-06-19_AmazonIsNowCashPoorBigContrastFromTechGiantPeers.html The purchase price knocks the net cash balance down to virtually zero. This doesn't even account for Whole Foods trading above the offer price with expectations that a bidding war might ensue causing Barclays to place a $48 price target on the stock.

For Amazon, another billion in cash doesn't really alter the equation for owning the organic food retailer. What it does though is highlight the vast differences between the retail giant and tech giants that are so commonly lumped into the same investment discussions.

On a related note, see Amazon Just Created A Huge Risk And Opportunity By Acquiring Whole Foods.

]]>
iehi-feed-62428 Mon, 19 Jun 2017 17:29:06 GMT Less Stressful Tests Seen Boosting U.S. Bank Payouts $30 Billion http://hf-implode.com/viewnews/2017-06-19_LessStressfulTestsSeenBoostingUSBankPayouts30Billion.html After seven annual exercises in which at least one U.S. bank failed, all of the nation's 34 largest lenders will probably pass this year's Federal Reserve exam when results are revealed this week and next. That's because the toughest component of the analysis of how firms would fare during a hypothetical crisis, the so-called qualitative review, no longer applies to the majority of those being tested.

The easing pressure will allow banks including Bank of America Corp. and Citigroup Inc., which struggled with the tests in early years, to put about $30 billion more cash in shareholders' pockets, according to analysts' estimates.

...

Wells Fargo & Co. is the wild card, the one U.S. bank that might fail the qualitative section, analysts at Morgan Stanley and UBS said in reports this month. The Fed could find the bank's control mechanisms insufficient in light of revelations last year that employees may have opened millions of accounts without customer authorization

]]>
iehi-feed-62427 Mon, 19 Jun 2017 16:31:43 GMT Ten years since the global financial crisis, world still suffers 'debt overhang' http://hf-implode.com/viewnews/2017-06-19_Tenyearssincetheglobalfinancialcrisisworldstillsuffersdebtoverha.html Today, the scars of the global financial crisis remain. There have been trillions of dollars in losses. And in a world of subpar economic growth, even optimists are downbeat about whether the economic medicine has been taken...

Firstly, excessive debt. In the aftermath of the world market crash, rather than pushing for debt destruction, world leaders used fiscal and monetary policy to fan demand. Global debt now stands at a staggering US$215 trillion.

]]>
iehi-feed-62425 Mon, 19 Jun 2017 16:11:22 GMT Fed Losing Control: 100% Proof That A Massive Economic Meltdown Is Closer Than You Think http://hf-implode.com/viewnews/2017-06-19_FedLosingControl100ProofThatAMassiveEconomicMeltdownIsCloserThan.html This past Wednesday we heard from the Federal Reserve with regard to monetary policy, and as I predicted they did raise the federal funds rate 25 basis points however, instead of yields rising, they are dropping.

More than a year and a half ago I had said publicly that the Federal Reserve's attempt at trying to normalize bond yields would backfire-and this is exactly what is happening. It is clear to me that the Federal Reserve has absolutely lost control of what is occurring in the bond market.

...

The yield curve as seen in the picture above continues to flatten out, and this trend will continue until the curve inverts. The last time the yield curve inverted, the 2008 economic meltdown occurred, and the time before that we suffered the.com bubble meltdown.

The fact is we are existing in a multiple bubble economy at this time, worse, and unlike anything which has ever been seen before. The reason why these bubbles exist is simple: the Federal Reserve has not allowed the market to do its one and only job, and that is to determine fair value.

]]>
iehi-feed-62424 Mon, 19 Jun 2017 00:58:08 GMT Coming Apart: The Imperial City At The Brink http://hf-implode.com/viewnews/2017-06-18_ComingApartTheImperialCityAtTheBrink.html iehi-feed-62422 Sun, 18 Jun 2017 20:25:37 GMT History of Great Depression Interest Rates Shows "Waiting-for-Recovery Exhaustion Effect" Echoed in the Present http://hf-implode.com/viewnews/2017-06-18_HistoryofGreatDepressionInterestRatesShowsWaitingforRecoveryExha.html The similarities are remarkable, particularly in this "reflation" view. It proves, I suppose, irresistible because of human nature; again the belief that lack of full recovery is somehow impossible. At some point after so many years, "we" believe recovery just has to kick in if for no other reason than luck, and therefore amplify whatever small positive indication into the convincing proof it never was. Belief in authorities certainly plays a role, but as the history of all these curves really shows, that belief isn't permanent. The longer it goes without recovery, the lower curves drop in each cycle, meaning the more jaded (for every good reason) these markets become. It is not so much despair vs. reflation or hope, rather it's making peace with reality.

To today's policymakers, the yield curve as well as eurodollar futures are some kind of mystery. They aren't. They simply prove that these people who claimed to have studied all the necessary facets of the Great Depression didn't actually do that. How else could 2008 have happened, let alone the aftermath? They surely didn't listen to Friedman.

]]>
iehi-feed-62420 Sat, 17 Jun 2017 17:14:25 GMT Small and midsized banks could get regulatory relief from Senate. Wall Street? Probably not http://hf-implode.com/viewnews/2017-06-17_SmallandmidsizedbankscouldgetregulatoryrelieffromSenateWallStree.html House Republicans and the Trump administration want a major rollback of the 2010 Dodd-Frank financial reform law, including changes that would help the nation's largest banks. But as debate shifts to the Senate, those changes are likely to be scaled back significantly because Republicans lack the votes to push many of them through.

"We will have an easier time getting bipartisan agreement at the smaller size level of institution," Senate Banking Committee Chairman Mike Crapo (R-Idaho) told an industry trade group this week. "As you move up the size level for institutions, the ability to get bipartisan agreement diminishes. But it doesn't go away."

...

One of the key targets of the House bill and the Treasury report is the Consumer Financial Protection Bureau, which would have its authority gutted.

The changes include making its director subject to removal by the president for any reason, eliminating the independent funding stream so Congress could reduce its budget, and stripping the agency of its ability to send supervisors into banks to make sure they are complying with consumer protection laws.

For [Sen. Sherrod] Brown and Senate Democrats, changes like that amount to a poison pill for any legislation.

]]>
iehi-feed-62419 Fri, 16 Jun 2017 23:59:21 GMT Higher prices squeezing renters, would-be homeowners, study finds http://hf-implode.com/viewnews/2017-06-16_Higherpricessqueezingrenterswouldbehomeownersstudyfinds.html A diminished supply of available homes is swelling prices in large U.S. metro areas from New York to Miami to Los Angeles, squeezing out would-be buyers and pushing up rents as more people are forced to remain tenants.

...

The tight supply of homes and a shortage of affordable rental housing have improved little in recent years for a variety of reasons. Among the key factors is that construction has yet to regain the pace of homebuilding that predated the bust.

"As the economy continues to recover, as income picks up as household formations pick up, it's not spurring a supply response," said Chris Herbert, managing director of Harvard's Joint Center for Housing Studies. "It's a worsening of the situation that was evident last year."

The real fascinating thing is the "not spurring a supply response" part. That suggests to us that there's a huge amount of corporate trepidation about the economy (and at this point, namely, that it's about to fall off a cliff...)

]]>
iehi-feed-62418 Fri, 16 Jun 2017 23:56:15 GMT For Whole Foods workers, fears of robots, drones and culture clash http://hf-implode.com/viewnews/2017-06-16_ForWholeFoodsworkersfearsofrobotsdronesandcultureclash.html iehi-feed-62416 Fri, 16 Jun 2017 20:31:56 GMT Debt improves Greece's lot, Tsakalotos says http://hf-implode.com/viewnews/2017-06-16_DebtimprovesGreeceslotTsakalotossays.html iehi-feed-62415 Fri, 16 Jun 2017 20:29:27 GMT It's a 'scary' time with a global crisis on the way, LVMH CEO says http://hf-implode.com/viewnews/2017-06-16_ItsascarytimewithaglobalcrisisonthewayLVMHCEOsays.html A financial crisis could be just around the corner, according to the chief executive of LVMH, who has described the global economic outlook as "scary".

...

"I don't think we will be able to globally avoid a crisis when I see the interest rates so low, when I see the amounts of money flowing into the world, when I see the stock prices which are much too high, I think a bubble is building and this bubble, one day, will explode."''

]]>
iehi-feed-62414 Fri, 16 Jun 2017 20:26:18 GMT Brexit talks: Government yet to submit opening positions despite EU negotiations being days away http://hf-implode.com/viewnews/2017-06-16_BrexittalksGovernmentyettosubmitopeningpositionsdespiteEUnegotia.html iehi-feed-62413 Fri, 16 Jun 2017 18:41:39 GMT The Amazon-Walmart Showdown That Explains the Modern Economy http://hf-implode.com/viewnews/2017-06-16_TheAmazonWalmartShowdownThatExplainstheModernEconomy.html With Amazon buying the high-end grocery chain Whole Foods, something retail analysts have known for years is now apparent to everyone: The online retailer is on a collision course with Walmart to try to be the predominant seller of pretty much everything you buy.

Each one is trying to become more like the other -- Walmart by investing heavily in its technology, Amazon by opening physical bookstores and now buying physical supermarkets. But this is more than a battle between two business titans. Their rivalry sheds light on the shifting economics of nearly every major industry, replete with winner-take-all effects and huge advantages that accrue to the biggest and best-run organizations, to the detriment of upstarts and second-fiddle players.

That in turn has been a boon for consumers but also has more worrying implications for jobs, wages and inequality.

...

If retail were the only industry becoming more concentrated, it would be one thing. But a relative few winners are taking a disproportionate share of business in a wide range of industries, including banking, airlines and telecommunications. A study by the Obama White House's Council of Economic Advisers found that in 12 of 13 industry sectors, the share of revenue earned by the 50 largest firms rose between 1997 and 2012.

That in turn may help explain why the income gap has widened in recent years. Essentially, the corporate world is bifurcating between winners and losers, with big implications for their workers.

Research by Jae Song of the Social Security administration and four colleagues found that most of the rise of inequality in pay from 1978 to 2013 was because some companies were paying more than others -- not because of a wider gap between high-paid and low-paid workers within a company.

"Employees inside winning companies enjoy rising incomes and interesting cognitive challenges," the Stanford economist Nicholas Bloom, one of the co-authors of that paper, wrote recently in Harvard Business Review. "Workers outside this charmed circle experience something quite different."

And David Autor of M.I.T. and four colleagues found in a recent paper that the rise of these "superstar firms" -- the big winners in the kind of face-off that Walmart and Amazon are now engaged in -- is a likely explanation for the decrease in the share of the overall economic pie that is going to workers.

How much of that is because of shifting technology -- as opposed to changing corporate behavior, or loose antitrust policy -- is an open debate.

]]>
iehi-feed-62409 Thu, 15 Jun 2017 21:23:26 GMT After shooting at GOP baseball practice, investigators probe trail of political anger left by attacker http://hf-implode.com/viewnews/2017-06-15_AftershootingatGOPbaseballpracticeinvestigatorsprobetrailofpolit.html In his letters, he decried income inequality, encouraging the government to tax the rich and supporting President Barack Obama, according to the Belleville News-Democrat. "A strong middle class is what a country needs to prosper," he wrote in one of his letters to the editor. "The only thing that has trickled down in the last 30 years came from Mitt Romney's dog."

...

The shooting brought temporary displays of unity among lawmakers across America's sharp political divide. But the attack also resonated far beyond the crime itself into possible reckonings over the country's drift toward increasingly angry and uncompromising politics.

]]>