Tag: finance

Authored by Simon Black via SovereignMan.com,

Are you ready for this week’s absurdity? Here’s our Friday roll-up of the most ridiculous stories from around the world that are threats to your liberty, your finances, and your prosperity.

County government seizes home over $8.41 in unpaid tax

When an 83-year old retiree paid his property taxes late, he miscalculated the interest owed to the county government.

All told, he was $8.41 short. Yes you read that correctly, i.e. less than nine dollars.

So the county seized the home over that trivial amount.

Then they sold the man’s home at auction for $24,500, even though the house was worth about $128,000.

But the county didn’t just keep the $8.41 they were owed. They kept the entire $24,500.

Although this was the most egregious case, the man found out he was far from alone.

The county has been systematically robbing homeowners, selling their homes, and keeping the proceeds over much smaller tax bills than the homes are worth.

In case you’re wondering, the county in question is Oakland County, Michigan, which is part of the Detroit area, and one of the most fiscally vanquished municipalities in the country.

(Detroit even declared bankruptcy in 2013.)

This highlights a very important lesson: when governments are broke, they will plunder the wealth of their citizens in order to make ends meet, even if it means stealing a retired man’s home.

Click here for the full story.

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San Francisco commuter arrested for eating a sandwich

Maybe you heard that San Francisco recently announced they will no longer prosecute public urination, amid a homelessness epidemic.

In contrast, one rule they are still enforcing apparently is an ordinance that bans eating on public transit platforms.

A video went viral last week that showed a legitimate commuter who was on his way to work being arrested for eating a sandwich on a train station platform.

He is approached by a transit officer, who told him, “You are detained and not free to go. You’re eating. It’s against the law.”

Click here for the full story.

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New York Cops brag about big drug bust… of legal hemp

FedEx flagged a package of legal hemp that was being shipped from a grower in Vermont to a company in New York City.

Generally speaking, hemp is legal as long as it doesn’t contain more than a certain amount of the psychoactive substance THC.

And the local Vermont police department cleared the shipment because it the hemp was well below the THC threshold.

But when the shipment got to New York City, NYPD treated it as a major drug bust.

They kept it at the station and arrested the man who came to pick it up.

The police are still holding on to the product, even though it was legally grown and shipped.

Click here for the full story.

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China assigning Communist officials to sleep with detained men’ wives

The Chinese government has detained an estimated one million Uighurs, a Muslim minorty.

Many Uighur men have been taken to what China calls ‘reeducation camps’.

While these men are off at camp, Communist party officials are assigned to stay at the detainees’ homes.

These officials “help” the families of detained men “with their ideology, bringing new ideas.”

They are referred to as the family’s new “relative.” Essentially while the husbands and fathers are being brainwashed in concentration camps, these officials do the job at home.

But some of them go one giant step further; according to a source within the government, “it is now considered normal for females to sleep on the same platform with their paired male relatives.”

Click here for the full story.

For the past 5 weeks, net futures for VIX non-commercial spec positions have hit consecutive record shorts, with the latest print of -206,157 the highest on record.

So besides a reflexive trade in which record market highs prompt carry-seeking traders to short even more VIX, which in turn results in even higher highs, even more short VIX carry and even more VIX shorting, does this unprecedented shorting activity in spot VIX imply anything else, besides the risk of an unprecedented VIX short squeeze of course?

One answer comes courtesy of Goldman’s derivatives strategist, Rocky Fishman, who this week writes that to get a full picture of vol positioning, one has to look not only at VIX futures but also VIX ETPs, which have become increasingly popular as hedges (perhaps not so much in February 2018 but we digress).

According to Fishman, the net vega position in VIX ETPs is now above $300mm vega, or roughly the equivalent of 300k VIX futures: “This reflects conservative investor positioning, since long VIX products can be used as a hedge.”

And since derivative markets are zero-sum, the byproduct of long VIX ETP position (and corresponding long VIX futures position from the “Commercial” group that likely includes ETP issuers) is a large short VIX futures position from the “Non-Commercial” group shown in the chart above, which Goldman sees as likely holding these shorts as part of relative value strategies. And while the Goldman derivatives strategist may be correct that much of the futures space is used to hedge the ETP space, we disagree that VIX ETPs are using derivatives to hedge exposure, as would be the case in the zero-sum world shown in the chart below.

What are the implications? According to Fishman, with the majority of VIX ETP assets in unlevered long strategies and very little activity in short ETPs, daily rebalancing of ETPs is not likely to materially exacerbate moves in volatility. “However, the constant shifting of exposure from the first VIX future to the second (currently from November to December) has the potential to be adding to VIX curve’s steepness.”

If Fishman is correct, there is never point in worrying about record VIX net spec exposure ever, as every position merely represents an offset to an equally matched long position somewhere else. We know that’s incorrect however, because the biggest one week surge on record in non-commercial specs took place during the February 2018 VIXplosion week, which confirms that not only were ETPs not perfectly hedged, but there was an epic VIX short squeeze which as many recall sent spot VIX into the 50s.

So for all those who hope to mitigate the importance of a record VIX net short in futures, not only do we disagree that this position is “perfectly” hedge with commercial longs, but since non-commercial actors are more likely to reverse positions, catching commercial longs offside and unwilling to part with their longs, it is our belief that the potential for a historic VIX short squeeze is now far greater than it was during the Feb 2018 VIXplosion which ended up wiping out all those who were long inverse VIX ETNs. We, for one, can’t wait to find out just what “collecting pennies in front of a steamroller” trade will be wiped out during the next epic VIX squeeze.

Authored by Paul Joseph Watson via Summit News,

Former US secretary of state Henry Kissinger warns that a catastrophic conflict between America and China that will be “worse than world wars” is inevitable unless the two sides sort out their differences.

Kissinger made the comments at an event hosted by the National Committee on US China Relations in New York last night.

“We are in a difficult period now. I am confident the leaders on both sides will realise the future of the world depends on the two sides working out solutions and managing the inevitable difficulties,” said Kissinger.

A permanent conflict between Washington And Beijing would be unwinnable and lead to “catastrophic outcome,” he added.

“It’s no longer possible to think that one side can dominate the other…it will be worse than the world wars that ruined European civilisation,” said Kissinger.

The U.S. and China have been embroiled in a trade war since President Trump began imposing tariffs on thousands of Chinese-made products in a bid to end unfair trading practices.

“我们应该把目前的状况看作是不可避免的过渡”，美国前国务卿 #基辛格 14日晚在美中关系全国委员会的纽约年度晚宴上谈到当前的 #美中关系 状况时说。95岁的基辛格鼓励双方领导人设法解决贸易与国家安全争端，他认为“世界的未来”取决于双方的合作。#Kissinger #USChinaRelationshttps://t.co/HcIMjfALcj pic.twitter.com/EGCG6VYuXU

— 美国之音中文网 (@VOAChinese) November 15, 2019

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My voice is being silenced by free speech-hating Silicon Valley behemoths who want me disappeared forever. It is CRUCIAL that you support me. Please sign up for the free newsletter here. Donate to me on SubscribeStar here. Support my sponsor – Turbo Force – a supercharged boost of clean energy without the comedown.

Ugly retail sales and dismal industrial production capped a gravely disappointing week for US macro data, tumbling into the red for the first time in 3 months…

Source: Bloomberg

As four GDP-tracking estimates came down an average 0.43-pp between last Friday and today.

And by the end of the week, stocks had pushed to record highs and Treasury yields had collapsed to two-week lows (an implied 500-Dow-point divergence)…

Source: Bloomberg

How will that end?

Dow led on the week as multiple “trade deal is close” comments juiced the markets again and again (Trannies lagged)…

Source: Bloomberg

Chinese stocks were ugly this week…

Source: Bloomberg

European stocks were more mixed with Spain lower and the rest marginally higher…

Source: Bloomberg

The US equity market open appears to be a very bullish event…

Vol was crushed at the close to force The Dow to close above 28,000 for the first time…

In the US, defensives dominated the market gains…

Source: Bloomberg

Healthcare surged to new record highs on President Trump’s statement…

Source: Bloomberg

Short squeeze after short squeeze were ignited this week on the heels of various “trade deal is close” bullshit headlines…

Source: Bloomberg

The S&P is now at its most overbought since late April…

Source: Bloomberg

Buybacks continue to dominate…

Source: Bloomberg

VIX continued its collapse this week…

..crashing to an 11 handle…

…and sending the term structure to its steepest since just before the VIXmageddon as XIV imploded…

Source: Bloomberg

But that doesn’t stop the world and their pet rabbit shorting vol – to yet another new record short (5th week in a row)…

Source: Bloomberg

Credit markets continue to decouple from stocks…

Source: Bloomberg

Especially in CLO-land…

Source: Bloomberg

Treasury yields all tumbled on the week with the short-end underperforming…

Source: Bloomberg

This was the biggest weekly yield compression since September…

Source: Bloomberg

The Dollar ended the week lower (with the last two days saw the biggest drop in a month)

Source: Bloomberg

Yuan ended the week marginally lower (but rebounding back above the Yuan fix overnight)…

Source: Bloomberg

Cryptos all drifted lower this week after a big surge last weekend…

Source: Bloomberg

Gold and Silver both rallied this week while copper dropped (and crude played insane ping pong on trade/OPEC headlines)…

Source: Bloomberg

WTI continues to swing between rails in a tight range…

 

 

Notably, precious metals rallied this week amid the biggest outflows since Dec 2016…

 

 

And finally, amid all the political circus this week, President Trump’s approval rating surged to a 5-week high…

Source: Bloomberg

And in case you wondered why stocks just keep rising despite dismal earnings and deteriorating macro data…

Source: Bloomberg

It’s simple – the Fed is expanding its balance sheet at the fastest pace since the very peak of QE3 money-printing…

Source: Bloomberg

It was just about 2 weeks ago that we pointed out Ken Fisher’s efforts to “fight back” against the deluge of withdrawals and redemptions his firm was facing as a result of lewd comments he made at a financial conference several months ago.

The firm’s efforts included taking out “women friendly ads”. “You Heard Their Story. Now Hear Ours,” the headline to one of his ads read. It featured 7 female employees at Fisher Investments and statistics that put the company in a favorable light. “Over 800 women strong, with women leading 63% of employees,” the ad read. 

But now it appears as though all of the women asked to participate in these ads weren’t exactly happy about it, according to Bloomberg. 

Hundreds of female employees were “surprised” last month when they were asked at a meeting to pose for a group picture showing their support for Fisher. They were told that participation in the ad would be “voluntary”. When one woman asked if she could share both positive and negative experiences, she was told that it could be discussed “offline”, before the meeting was directed to more logistical questions. 

The women were then asked to sign photo waivers at the meeting and were given “little time to make a decision”, the report notes. 

And the counteroffensive effort has now “dividend women within the company”. Some said they were eager to step in and defend their job, while others – well, not so much. 

Rachel Winfield, a vice president at Fisher, said: “I would say I understand and agree with some of the stuff that’s in the media that Ken’s comments were inappropriate. What Ken says and the experience of the culture are two separate things.”

Other women, however, have complained about feeling pressured to participate and are fearful of losing their jobs or being retaliated against. 

Margaret Duffy, executive director of the University of Missouri’s Novak Leadership Institute said:

“A lot of observers would wonder, ‘Did they really have much choice to appear in the ad?’”

John Dillard, a Fisher spokesman, said: “Women from across the company had written or expressed their support of the company internally and on social media sites before the meeting. Those individuals were brought together on that day to share their stories. In an effort to be inclusive, we asked women at all of our locations if they wanted to be part of our message.”

Jessica Smith, a vice president in the Camas office, said:

“Many women reached out [to her] before the photo shoot. They felt like what the media has put out there is completely opposite of what they experienced. Many women were very, very eager to have an opportunity to tell our story.”

Some women were uncomfortable when they found out that the ad was being used as a way to generate sales leads. The ad referred people to a website that provides more information on women at the firm. From there, visitors are asked to fill out personal information to “learn what else makes Fisher Investments special.”

Bloomberg notes that “since 2016, 125 people have filed complaints with the Federal Trade Commission about repeated Fisher phone calls, emails and mailings.”

Meanwhile, Fisher clients continue to hit the exits, with a over $3 billion pulled from the company since Fisher’s remarks. 

Fisher was managing about $10.9 billion on behalf of 36 state or municipal government entities at the end of 2018, down from $13.2 billion at the end of 2017. That number will likely be sizeably lower at the end of 2019.

Authored by James Howard Kunstler via Kunstler.com,

For now, it comes down to this: the US State Department is at war with the White House.  State’s allies in the Democratic majority congress want to help overthrow the occupant of the White House because he’s interfering in the department’s foreign policy. The lifers at State are the same ones who executed a coup in 2014 against Ukraine’s government and threw out the elected president Victor Yanukovych because he tilted to join a Russian-backed regional customs union rather than NATO.  State’s diplomatic lifers are old hands at coups. Now they’re at it at home, right here in the USA.

Ever since the Maidan Revolution of 2014, they have worked sedulously to exert control over Ukrainian affairs. And they especially can’t stand that the recently elected president Zelensky declared that he wants to improve his country’s relationship with next-door-neighbor (and ex-sovereign) Russia. The occupant of the White House, Mr. Trump, had often expressed a similar interest to improve the USA’s relations with Russia. State would prefer to amp up a new cold war. Mr. Trump has some nerve interfering with that!

The lifers at State also have something to hide: their exertions to connive with Ukraine government officials they controlled to interfere in the 2016 US presidential election in favor of their former boss, Mrs. Clinton. The current impeachment spectacle is an attempt to pitch a smokescreen over that embarrassing mess, which includes the CIA’s and FBI’s efforts to blame Russia for their own illegal interventions in the 2016 election — the heart of the three-year impeachment narrative. The Joe-and-Hunter Biden affair is the left anterior descending artery in that heart.

The current testimony in the House Intel Committee raises another question. Whose back-channel diplomats are legitimate in US foreign policy: Mr. Trump’s personal lawyer, Rudolf Giuliani, or State’s own boy, billionaire freelance international political adventurer George Soros? The president dispatched Mr. Giuliani to Ukraine because he didn’t trust the State lifers to get to the bottom of the mischief emanating from Kiev during the 2016 election, in which State lifers played an active role, along with Mr. Soros and his agents — in particular an outfit called the AntiCorruption Action Center, jointly funded by Mr. Soros and State (i.e. US taxpayers).

Mr. Soros’s AntiCorruption Action Center was one entity that then US Ambassador Marie Yovanovitch submitted to Ukraine’s then General Prosecutor Yuriy Lutsenko on a “do not investigate” list, according to reporter John Solomon (story here). Solomon writes:

In other words, State was confirming its own embassy had engaged in pressure on Ukrainian prosecutors to drop certain law enforcement cases, just as Lutsenko and other Ukrainian officials had alleged…. More recently, George Kent, the embassy’s charge d’affaires in 2016 and now a deputy assistant secretary of state, confirmed in impeachment testimony that he personally signed the April 2016 letter demanding Ukraine drop the case against the Anti-Corruption Action Centre.

Translation: an activist US embassy meddled in Ukraine’s internal political affairs. That’s a breach of international law. No doubt Marie Yovanovitch will be asked about these matters starting in about 15 minutes from as I write. Mr. Soros funded a network of nonprofits operating in Ukraine going back a decade, including the International Renaissance Foundation, the Open Society Foundation, Project Syndicate, and the CIA-connected Atlantic Council, which also received millions in support from Ukrainian gas pipe oligarch Victor Pinchuk. (Guess who else is a consort of the Atlantic Council — International Man of Mystery and 2016 election meddler Joseph Mifsud.) In 2015, Pinchuk paid $150,000 to Donald Trump’s foundation for Mr. Trump to speak by video-link to a Kiev conference for strengthening Ukraine’s ties to the West. At the same time, Pinchuck had contributed $25 million to the Clinton Foundation.

As you can see, the relationship between Ukraine and the USA since 2012 has developed more rabbit holes than Watership Down. Ukraine also happens to be an economic basket-case with a GDP equal to about half the GDP of Connecticut. Poor Ukraine, a semi-failed state of our own making, used by the State Department as a launching pad for intrigues against both Russia and the President of the United States. Maybe Mr. Trump sincerely wants to clean up that mess and shut down the State Department’s rogue outside operations channel as represented by George Soros. If only they can get rid of Mr. Trump, wouldn’t that make everything just peachy again? (Though probably not so much for Ukraine.)

As Hong Kong’s protest-pummeled streets increasingly resemble a warzone, and its economy collapses, there is another, very ominous signal coming from the banking system.

As Bloomberg reports, cracks are starting to emerge in Hong Kong’s currency and money markets, as traders speculate the local dollar’s resilience to increasingly violent protests won’t last.

While Hong Kong stocks were already showing pain…

Source: Bloomberg

Now, liquidity conditions in the FX market are the tightest since the late 1990s, or the aftermath of the Asian financial crisis.

Source: Bloomberg

An increase in this gauge – resulting from a short-term drainage of cash – coupled with a weaker spot rate “signify an increase in risk-aversion to Hong Kong dollar assets,” Chun Him Cheung, a strategist at Morgan Stanley, wrote in a note.

Additionally, signaling as the chart below shows that traders are aggressively betting on notable weakness in the Hong Kong Dollar in the short-term…

Source: Bloomberg

Amid all of this liquidity chaos, the one-month Hong Kong Interbank Offered Rate (HIBOR) soaring 100bps this week to hit 2.75% on Thursday, not too far off a decade-high of 2.99% marked in July when protestors occupied the city’s legislature.

Source: Bloomberg

Some have suggested that this sudden cash shortage is due to Alibaba Group’s $13.4 billion Hong Kong listing hoovering up cash temporarily:

“Timing wise, it’s not good for the liquidity to get sucked out of the system as there’s a bit of capital outflow happening due to the protests,” said a Hong Kong-based senior banker at a European bank, who asked not to be identified.

However, the move has been going on for months as the protests escalated and given the massive divergence between US-HK borrowing rates (and the huge implicit carry that would provide), it is shocking that the HKD remains so weak…

Source: Bloomberg

In fact, this divergence is a strong signal that this liquidity crisis much more about capital flight (and total risk aversion) than any short-term cash needs for an IPO.

“In contrast with the situation in July, August, the Fed has already cut twice but local rates are driving higher still. Capital outflow concerns seem pretty severe,” said Ken Cheung, chief Asian FX strategist at Mizuho Bank.

While, the Hong Kong Monetary Authority is desperately attempting to play down any fears of a run, saying in late October that there was no obvious capital outflow from its banking system, the above shifts in the short-term money-markets suggests otherwise, and Goldman Sachs has estimated that Hong Kong may have lost as much as $4 billion in deposits to rival financial hub Singapore between June and August alone.

The aggregate balance, a gauge of banks’ cash balances with the HKMA, is down 87% from its 2015 high of HK$426 billion.

Source: Bloomberg

If nothing else, this is a massive distraction for Xi and he purportedly attempts to squeeze Trump in the trade deal discussions.

This is obvious censorship. YouTube is planning to silence those who disagree with the political/ruling class and have taken sides. Speaking truth to power is now borderline criminal. The censorship continues…

Authored by Ethan Huff via Natural News,

Content creators everywhere are starting to panic about an upcoming policy change over at YouTube that threatens to eliminate all accounts and channels on the Google-owned video platform that are deemed to no longer be “commercially viable.”

In the “Account Suspension & Termination” section of YouTube’s “Terminations by YouTube for Service Changes,” guidelines, the company explains that, as of December 10, 2019, “YouTube may terminate your access, or your Google account’s access to all or part of the Service, if YouTube believes, in its sole discretion, that provision of the Service to you is no longer commercially viable.”

In other words, if you have a YouTube channel that YouTube employees decide isn’t profitable enough for Google, then the company has now granted itself the option to completely shut down your account without warning or consequence.

What this means is that YouTube content creators who’ve built their entire livelihoods around the platform are going to need a backup option in the event that they end up being terminated. One such option is Brighteon.com, which you can sign up for here.

It also means that YouTube has created for itself yet another legal loophole to continue targeting channels that disseminate politically incorrect content, which YouTube has been trying to silence from its platform for at least the past several years.

In essence, YouTube now has a blanket excuse to pull down all channels that it wants to see eliminated by simply claiming that these channels are no longer profitable. And there will likely be no way for targeted YouTube users to prove otherwise.

According to YouTube, these changes merely make the company’s Terms of Service “clearer and easier to understand.” But for most people carefully observing what’s going on, the obvious reality is that YouTube is once again up to no good.

“The terms could be a way for YouTube to remove channels that promote hate speech, conspiracy theories, or harmful messages whose content isn’t extreme enough to warrant an outright ban, as these are unlikely to be commercially viable,” writes Rob Thubron for Techspot, illustrating this point.

“But if this is the case, it needs to be clearly explained,” he adds.

For more related news about Big Tech’s plot to subvert online free speech, be sure to check out Censorship.news.

ALL YOUTUBE HAS TO DO NOW TO SILENCE FREE SPEECH IS DEMONETIZE CHANNELS IT DOESN’T LIKE AND FORCE THEM INTO COMMERCIAL NON-VIABILITY

It doesn’t take a rocket scientist to figure out what YouTube is planning to do once this policy change comes into full effect.

We already know that many conservative-leaning YouTube channels have been demonetized by YouTube with the goal of driving them out of business. However, thanks to workarounds like Patreon, many of these channels are still up and running, despite YouTube’s best efforts to financially destroy them.

Since mere demonetization hasn’t led to the outcome that YouTube hoped for, the Google-owned video platform is now making “commercial viability,” as arbitrarily defined by YouTube, a new requirement to maintain a presence on YouTube.

“First they’ll demonetize you, then they’ll remove you completely because you are no longer ‘commercially viable,’” warns Twitter user “Raging Golden Eagle” about where this all is headed.

If you’re a YouTube creator or know someone who is, let this be the writing on the wall as to what’s coming in less than a month. YouTube wants total control over everything that happens on its platform, just like its parent company Google wants over its search engine platform.

“Just another backdoor attempt at censorship and traffic steering,” wrote one Techspot commenter in response to the news.

“In a few years, YouTube will only allow creators that have a minimum of 100K followers within 90 days of launch and they’ll have to be a member of the local communist party.”

Exercise your free speech, without commercial censorship, at Brighteon.com.

Oh, the irony…

The Fed has just released its twice-yearly Financial Stability Report and it is full of two things – ominous warnings… and swift “but, there’s nothing to worry about” retorts.

Our view on the current level of vulnerabilities is as follows:

• Asset valuations. Asset prices remain high in several markets relative to income streams. However, risk appetite measures that account for the low level of long-term yields on U .S . Treasury securities are more aligned with historical norms for most markets . With the exception of riskier corporate debt, commercial real estate (CRE), and farmland markets, these measures point to a reduction in risk appetite from the elevated levels of 2017 and 2018 .

• Borrowing by businesses and households. Borrowing by businesses is historically high relative to gross domestic product (GDP), with the most rapid increases in debt concentrated among the riskiest firms amid weak credit standards . By contrast, household borrowing remains at a modest level relative to income, and the amount of debt owed by borrowers with credit scores below prime has remained flat .

• Leverage in the financial sector. The largest U .S . banks remain strongly capitalized, and the leverage of broker-dealers is at historically low levels . However, several large banks have announced plans to reduce their voluntary capital buffers . Leverage among life insurance companies is moderate, while hedge fund leverage remains elevated relative to the past five years.

• Funding risk. Estimates of the total amount of financial system liabilities that are most vulnerable to runs, including those issued by nonbanks, remain modest . Short-term wholesale funding continues to be low compared with other liabilities, and the ratio of high-quality liquid assets to total assets remains high at large banks .

Stresses in Europe, such as those related to Brexit; stresses in emerging markets; and an unexpected and marked slowdown in U .S . economic growth are among the near-term risks that have the potential to interact with these vulnerabilities and pose risks to the financial system.

All sounds fine right? But there is this…

“If interest rates were to remain low for a prolonged period, the profitability of banks, insurers, and other financial intermediaries could come under stress and spur reach-for-yield behavior, thereby increasing the vulnerability of the financial sector to subsequent shocks,”

In fact this is exactly what BofA recent warned…

“…some have argued, including former NY Fed President William Dudley, that the last financial crisis was in part fueled by the Fed’s reluctance to tighten financial conditions as housing markets showed early signs of froth. It seems the Fed’s abundant-reserve regime may carry a new set of risks by supporting increased interconnectedness and overly easy policy (expanding balance sheet during an economic expansion) to maintain funding conditions that may short-circuit the market’s ability to accurately price the supply and demand for leverage as asset prices rise.”

Fed Governor Lael Brainard reiterated this warning in a statement today that the low-for-long environment “and the associated incentives to reach for yield and take on additional debt could increase financial vulnerabilities.”

The current combination of “very low credit spreads” – measured as the gap between yields on U.S. Treasurys and assets such as corporate debt – “and high levels of indebtedness among risky nonfinancial corporates, including through leveraged loans, merits heightened vigilance.”

However, despite this warning, as Bloomberg reports, The Fed seems to take a more relaxed view of the rising stock market than it did in its last report in May.

While equity prices remain high relative to corporate earnings, they are consistent with the low level of interest rates, the Fed said.

“Over the past couple of years, equity prices have been high relative to forecasts of corporate earnings,” according to the report.

“However, other measures of investors’ risk appetite in domestic equity markets are in the middle of their historical ranges.”

But then again, The Fed warns about liquidity issues,

For equity futures, “liquidity has become more fragile over time,” the report said.

“It tends to disappear when it is needed the most, when asset price volatility is high.”

The Fed touches on the repocalypse problem, but again the tone is one of “problem solved”…

“Pressures in the repo market spilled over to other markets, including the federal funds market,” the report said.

“The Federal Reserve took a number of steps beginning in mid-September to maintain the federal funds rate within its target range and to ensure an ample supply of reserves. Pressures in short-term funding markets subsequently abated.”

But one last warning…

“Should a no-deal Brexit cause distress in systemically important financial institutions in Europe, it would amplify the transmission of economic disturbances to U S and global financial systems,“ the Fed said.

In summary, The Fed is carefully covering their asses by warning that things are getting scary (just in case the world falls apart, “don’t say we didn’t warn you”) and at the same time, that everything is ‘contained’.

 

*  *  *

Full Financial Stability Report

Submitted by Market Crumbs

It’s not just citrus farmers in Florida that are having a tough time as of late. According to the Federal Reserve Bank of Kansas City’s latest report, conditions in the region point to a struggling agricultural sector.

Farm credit conditions in the Federal Reserve’s Tenth District deteriorated in the third quarter despite an increase in the price of certain commodities and additional aid to farmers. The Tenth District, which includes Colorado, Kansas, Nebraska, Oklahoma, Wyoming, and portions of western Missouri and northern New Mexico, is the heart of America’s agricultural sector. The size of the geographic area served in the district is second only to the Federal Reserve Bank of San Francisco.

Farm income in the region fell in each state within the district from a year ago.The ongoing trade war, volatile crop prices and steep decline in cattle prices due to disruptions at a major beef processing facility weighed on farm income.

The decline in farm income has caused farmers to cut back on capital spending. Farm household spending and capital spending both declined, with bankers in the region saying they expect the trends to continue.

Credit conditions are also deteriorating as the rate of farm loan repayments and borrower liquidity continued to decline. Bankers expect credit conditions to decline, leading to an increase in asset liquidations.

Even outside of the Tenth District, in Iowa, farm finances continue to falter. 85% of Iowa land is used for farmland and it’s ranked first in U.S. corn and egg production. One-third of the country’s hogs are raised in Iowa.

Iowa farm debt hit the highest level in the nation at $18.9 billion in the second quarter. 44% of farmers in Iowa are struggling to cover costs. “It’s very, very concerning,” said Alejandro Plastina, the Iowa State agricultural economist who conducted the study. “It’s getting harder and harder for farm operations to cash-flow their business.”

U.S. farm debt is projected to reach a record high of $416 billion, according to the U.S. Department of Agriculture. Adjusted for inflation, the current farm debt is just below the 1980 record at $431.6 billion. That was just before the 1980s farm crisis struck. Farm bankruptcies across the U.S. rose 24% from a year ago to 580 filings in September, according to the American Farm Bureau Federation. That marks the highest monthly total since 676 filings in 2011.

With the administration focusing on the stock market, saying the economy is booming and repeatedly touting a trade deal as being close, farmers throughout the country are not experiencing the same level of success. We can only imagine the reaction of farmers when they were told to think about buying bigger tractors.