These Hedge Funds Are Getting Slammed By The Rite Aid Deal Collapse

As noted earlier, the stocks of both Rite Aid and Fred’s are tumbling this morning, after Walgreen’s terminated its long-running merger agreement, instead opting to buy over 2,000 RAD stores outright. For those who missed it, here is pain trade for Fred’s shareholders this morning…

… and Rite-Aid.

However, besides regular retail and vanilla institutional investors, one class that is being hit especially hard on today’s news are hedge funds, who according to Bloomberg own ~32% of Fred’s shares and ~26% of Rite Aid. 

So who is hurt hardest this morning?  By far the most hurt, is Alden Global – the top holder of Fred’s, with 9.27m shares, or 24% stake, as of April 24, when both firms signed a cooperation pact to appoint two directors; Alden bought shares from Nov. 28-Dec. 22, with its largest purchases when FRED was trading ~$20-share

Courtesy of Bloomberg, here is a breakdown of the other top holders as of March 31:

Here are the others:

  • Adage Capital 19.5m shares (1.9% stake) in RAD, 2.4m shares (6.3%) in FRED
  • Greenlight Capital 16.8m shares (1.6% stake) in RAD, 2.2m shares (5.7%) in FRED
  • Mason Capital 7.2m shares (0.7% stake) in RAD, 313k shares (0.8%) in FRED
  • Sand Grove Capital 3.2m shares (0.3% stake) in RAD, 187k shares (0.5%) in FRED

Other top hedge fund holders of FRED:

  • TIG Advisors 1.5m shares (4% stake)
  • ADI Capital Management 391k shares (1% stake)
  • Hudson Bay Capital 391k shares (1% stake)
  • Highbridge Capital 293k shares (0.8% stake)
  • Melvin Capital 150k shares (0.4% stake)

Meanwhile, over in RAD:

  • Highfields Capital 19m shares (1.8% stake)
  • Two Sigma 21.9m shares (2.1% stake)
  • Pentwater Capital 15.6m shares (1.5% stake)
  • CNH Partners 12.5m shares (1.2% stake)
  • PAR Capital Management 9m shares (0.9% stake)
  • Coastland Capital 7.3m shares (0.7% stake)
  • Litespeed Management 4.7m shares (0.5% stake)

Source: Bloomberg

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Some Really Stupid Things Uttered By Some Really Smart People

Submitted by Doug Kass via Seabreeze Partners,

"Remain calm, all is well."

–Kevin Bacon, "Animal House"

History is littered with very smart people saying very stupid things.

Here are some examples of quotes that their authors would like to take back:

* Irving Fisher (economics professor at Yale University in 1929): " Stocks have reached what looks like a permanently high plateau."
* Albert Einstein: "There is not the slightest indication that nuclear energy will ever be obtainable. It would mean that the atom would have to be shattered at will."
* The president of Michigan Savings Bank urging Henry Ford not to invest in The Ford Motor Company:  "The horse is here to stay but the automobile is a novelty, a fad."
* Ken Olsen (president of Digital Equipment and MIT graduate): "There is no reason for any individual to have a computer in their home." 
* Tom Watson, IBM chairman (1943): "I think there is a world market for maybe five computers."
* Bill Gates (2004): "Two years from now spam will be solved."
* You Tube Founder Steve Chen: "(I am worried that) there's just not that many videos people want to watch."
* Robert Metcalfe (inventor of ethernet): "I predict the Internet will soon go spectacularly supernova and in 1996 catastrophically collapse."
* Darryl F. Zanuck (founder of 20th Century Fox studio): "People will soon get tired of staring at a plywood box every night."
* Clifford Stoll (astronomer and author of Silicon Snake Oil (1995): "Nicholas Negroponte, director of the MIT Media Lab, predicts that we'll soon use books and newspapers straight over the Internet. Uh, sure!"
* And another head scratcher From Bill Gates: "No one will need more than 637KB of memory for a personal computer. 640KB ought to be enough for anybody."  
* Linus Torvalds (founder of Linux): "Really, I'm not out to destroy Microsoft. That will just be a completely unintentional side effect." 
* Steve Ballmer, former Microsoft CEO (2007): "There's no chance that the iPhone is going to get any significant market share. No chance."
* Steve Jobs (2008) in discussing Amazon Kindle: "The whole conception is flawed at the top because people don't read any more."
* New York Times (1936): "A rocket will never be able to leave the earth's atmosphere."
* Henry Morton, president of Stevens Institute of Technology on Thomas Edison's light bulb (1880): "Everyone acquainted with the subject will recognize it as a conspicuous failure." 
*  Variety passing judgment on rock 'n roll (1955): " It will be gone by June."
* Book publishing executive writing to J.K. Rowling (1996): " Children just aren't interested in witches and wizards anymore."
* Astronomer Simon Newcomb (1888): "We are probably nearing the limit of all we can know about astronomy."
* Newsweek predicting where popular holidays will be in the late 1960s: "And for the tourist that really wants to get away from it all, safaris in Vietnam."
* Senator James Inhofe (R-Ok) in 2004: "God's still up there. The arrogance of people to think that we human beings would be able to change what HE is doing in the climate is to me outrageous."

And over a decade ago we had some unique pearls of wisdom from…

Dumb

"All this time I've been going through such pain and personal ANGUISH … SUCH HELL, for NOTHING!"

 

"Life is a fragile thing, Har. One minute you're chewin' on a burger, the next minute you're dead meat."

 

–Lloyd, "Dumb and Dumber"

Dumb: Ben Bernanke, the former Federal Reserve chairman, who famously made the following statements shortly before The Great Recession during the 2005-07 period: 

"We've never had a decline in house prices on a nationwide basis. So, what I think what is more likely is that house prices will slow, maybe stabilize, might slow consumption spending a bit. I don't think it's gonna drive the economy too far from its full employment path, though." (July, 2005)

 

"With respect to their safety, derivatives, for the most part, are traded among very sophisticated financial institutions and individuals who have considerable incentive to understand them and to use them properly." (November, 2005)

 

"Housing markets are cooling a bit. Our expectation is that the decline in activity or the slowing in activity will be moderate, that house prices will probably continue to rise." (February, 2006)

 

"At this juncture, however, the impact on the broader economy and financial markets of the problems in the subprime market seems likely to be contained. In particular, mortgages to prime borrowers and fixed-rate mortgages to all classes of borrowers continue to perform well, with low rates of delinquency." (March, 2007)

And to cap all these extraordinarily stupid quotes over the years, on Tuesday at a presentation in England we got:

"Would I say there will never, ever be another financial crisis? … You know, probably that would be going too far, but I do think we're much safer and I hope that it will not be in our lifetimes and I don't believe it will be."

 –Janet Yellen

I don't know whether I should laugh or cry.

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Carried Interest Tax to Carry Water for Reform?: New at Reason

President Trump and House Speak RyanMuch of the difficulty Republicans are experiencing in passing tax reform is self-inflicted. They’ve fallen into a trap of the left by trying to ensure that the much-needed reforms to our outdated and punitive tax code are “revenue-neutral”—meaning the government continues to take just as much out of the economy in taxes going forward.

It’s all well and good to avoid increasing the debt, but it’s irresponsible to not even try accomplishing this with spending cuts. Deficit neutrality doesn’t prohibit all increases in revenue through reform, but it emphasizes the need to address Washington’s spending addiction through cuts—the only realistic way to address our long-term debt problem, writes Veronique de Rugy.

View this article.

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This Is What Americans Spent The Most Money On In The First Quarter

As noted earlier, it was a stronger than expected quarter for the US, in which US households reportedly spent far more than initially estimated, with Real Consumer Spending rising 1.1%, above the 0.6% expected, and contributing 0.75% to the bottom line annualized growth, or just over half the 1.4% GDP print. As Citi commented after the GDP data, "The market didn’t expect this much of a positive revision in the Q1 GDP print; in fact, it didn’t expect a revision at all. We zoom in on the personal consumption print, which has seen an uptick of 0.5% to 1.1%."

So, as we always do, we decided to take a look at what Americans spent the most money on in Q1, to find what the source of this unexpected spending splurge.

Here traditionally we expect healthcare (i.e., the Obamacare tax) to provide the bulk of the upside, but in Q1 we found only a modest contribution, with a spending increase of only $11.2 billion compared to Q4. Additionally, we found that in the quarter American spending actually declined on such staples as housing and utilities, clothing and footwear, gasoline (to be expected with dropping gas prices) and, perhaps the biggest surprise, motor vehicles and parts, which declined by a whopping $17.5 billion annualized: a bright red flag over the US auto industry.

So what jumped? Well, as was the case in the first GDP estimate, for some inexplicable reason, in the first quarter American consumer were scrambling to buy… recreational vehicles!?

Incidentally, this won't be the first time Americans splurged on RVs. The last time they did this? Exactly one year ago.

To be sure, the ongoing surge in RV purchases sure would explain why the housing recovery, overdue by about 5 years, still fails to materialize.

And another observation: if it wasn't for the inexplicable splure on RVs, GDP would have grown by one third less, or less than 1%.

Source: BEA

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FBI Investigations Have Become Like Tabloid Stories

Via The Daily Bell

Is the FBI a political organization run rampant, using trumped up charges against anyone with whom they or the political elites disagree?

That’s what you would be told from the likes of Hillary Clinton, Donald Trump, and now Bernie Sanders. All three (or Bernie’s wife rather) have been embroiled in some sort of FBI shenanigans within the last year.

For Hillary, even though she was obviously a corrupt crook, she was not charged, despite Comey basically admitting she should be charged. But still, the FBI released a damaging letter just weeks before the election. Officially, this hurt an “innocent person”, but in real life, it was a meager attempt to assign blame to someone everyone knew could outmaneuver any authorities.

So in that case alone, no matter how you slice it, the FBI was alternatively corrupt, incompetent, complicit, and political.

Interestingly Clinton supporters had no problem wholeheartedly condemning the investigation into Clinton assuming it to be a political charade to damage an innocent woman. But then those same people had no problem flipping and assuming an FBI investigation to equal guilt as soon as Donald Trump was dragged into one.

But what is more, is that Trump was actually never personally under investigation by the FBI. So not only does the FBI have the power to ruin reputations over investigations, the agency doesn’t even have to have a case to bring its weight to bear.

Comey’s silence is what really made the media blow up over the whole Russian ties meme. No wonder Trump fired a guy who refused to publicly state the truth about the investigation, knowing his silence was fueling false rumors.

Bernie Sanders’ wife may have committed fraud while filling out applications for student aid for the now bankrupt Burlington College of which she was President. Go figure a Socialist ran a college into the ground. Maybe that’s why she had to lie on the applications; the true problem was she wasn’t being given enough of other people’s money!

But no, I am only joking, because an investigation does not itself prove guilt. In America, you are supposed to be innocent until proven guilty, despite how strong the evidence is against you. And that is the problem, that the FBI has massive power to throw their weight around, smear and drag down politicians all outside of their official capacity as an investigation agency.

Whoever directs the FBI will have to much power, because a simple letter or remaining silent can throw the media into a frenzy of finger-pointing, accusations, and false conclusions. They can turn nothing into a scandal and a scandal into nothing.

And while people sway back and forth, deciding based on the circumstances whether the FBI is legit or not, all I see is a big steaming bowl of corruption. It seems that an FBI investigation is just a political tool available for purchase. It seems also that the dropping of an FBI investigation is a political product available for purchase. Power is the currency in Washington, and politicians have countless ways to pay their debts or collect what is owed to them.

This behavior should not be surprising from such an organization as the FBI. Every level of government behaves the same way. They take your rights and sell them back to you for the price of a license. The IRS points a gun at your head and says the price to put it down is about 50% of what you earned last year. The local police do the same, as well as the state tax collectors and enforcers, and so on.

But there appears to be little coordination or organization in who the FBI strikes. Clearly, the Clinton investigation would have benefited Trump the most. And then, it was a Trump staffer from Vermont who made the original allegations against Sanders, which appear to be at least somewhat true. But Trump was also targeted by the FBI for some bad press at least.But despite all the investigations, nothing really comes of it.

Despite all the investigations, nothing really comes of it. So is the FBI really just the newest tabloid, the National Enquirer for politics, quietly dropping any initially well-publicized story that either turned out to be false or an inconvenient truth?

What conclusion can we come to other than that the FBI cannot be trusted to do its job, do its job right, and only do its job? And this is only talking about what disorganization the agency has fallen into over the past year or two. There are a million other reasons to believe that the FBI is hopelessly corrupt; just look briefly into the agency’s founding under J. Edgar Hoover or one of their darkest moments surrounding the assassination of Martin Luther King Jr.

The only real solution would be disbanding the FBI. It, like most other government agencies, has simply become a tool of politicians and bureaucrats to wield power and climb the DC ladder.

With most government agencies, we should be asking, would this organization still exist in a free market? The way the current FBI behaves it would likely see customers and investors flee. The agency cannot be trusted and is currently a larger threat to individuals’ rights and freedoms than it is a protector of those liberties.

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Trump Slams Morning “Psycho” Joe, Says Mika “Bleeding Badly From A Face-Lift”

Just when you thought President Trump’s tweet tirade against his denigrators in the media had peaked, it appears he just turned up the anger amplifier to ’11’…

Yes, the president of the United States just said that. And cue the CNN meltdown over this outburst…

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In Light of the Philando Castile Shooting, Should You Tell That Cop You Have a Gun?

Philando Castile was trying to avoid trouble when he informed the police officer who pulled him over that he was carrying a pistol. But as everyone who has followed the case knows, the disclosure quickly set off a chain of events that led to Castile’s death. The officer who stopped him, Jeronimo Yanez, panicked and shot Castile as he was reaching for his pocket, apparently to retrieve the driver’s license that Yanez had requested. Had Castile said nothing about the gun, he in all likelihood would still be alive.

The shooting, which happened nearly a year ago in Falcon Heights, Minnesota, led to criminal charges against Yanez, who was acquitted of second-degree manslaughter on June 16, and a $3 million civil settlement announced this week. The horrifying incident also reinvigorated an old debate about how people who are licensed to carry a concealed weapon (CCW) should handle interactions with police.

Minnesota, like most states, does not require CCW licensees to inform law enforcement officers that they are armed. But police generally prefer to be told so as to avoid unsettling surprises. For that reason many gun owners argue that disclosure is considerate and prudent, while others worry that it will escalate a routine traffic stop into a tense, unpleasant, and possibly life-threatening encounter. Even if an officer does not react as Yanez did, he might insist on taking possession of the gun and unloading it, which could be dangerous if he is unfamiliar with the weapon.

“If you’re carrying legally,” writes one gun owner at usacarry.com, “you should have nothing to worry about, even with an overzealous rookie. I’d prefer to notify over having the LEO catch a glimpse (for whatever reason) on their own and go into panic mode. I don’t like kissing pavement.” Another participant in the discussion takes a different view: “I do not want an untrained or poorly trained officer putting me in danger while he is trying to unload my gun.” He adds: “What does your legally carrying a concealed weapon have to do with a legally conducted traffic stop? There is no surprise because it doesn’t come up. There is no scary dash cam video possible because you are a law abiding citizen simply executing your constitutional right….I have no problem with anyone who wants to notify, but I do believe that presents the possibility of everyone involved being put in danger if the officer decides to take possession of the gun.”

Regardless of where they come down on this question, gun owners agree that the conversation should begin with an understanding of the relevant legal requirements, which vary from state to state and sometimes even from one local jurisdiction to another. The most common rule requires that someone carrying a handgun keep his CCW permit with him and present it to police on demand. Colorado’s law, for example, says “the permittee shall carry the permit, together with valid photo identification, at all times during which the permittee is in actual possession of a concealed handgun and shall produce both documents upon demand by a law enforcement officer.”

Ten states and the District of Columbia go further, requiring an armed person stopped by police to immediately disclose that he has a gun. In Texas, for example, “if a license holder is carrying a handgun on or about the license holder’s person when a magistrate or a peace officer demands that the license holder display identification,” he is obligated to “display both the license holder’s driver’s license or identification certificate issued by the department and the license holder’s handgun license.”

The District of Columbia demands that a licensee “disclose to the officer that he or she is carrying a concealed pistol,” “present the license and registration certificate,” “identify the location of the concealed pistol,” and “comply with all lawful orders and directions from the officer, including allowing a pat down of his or her person and permitting the law enforcement officer to take possession of the pistol for so long as is necessary for the safety of the officer or the public.” Ohio is even more prescriptive:

If a licensee is the driver or an occupant of a motor vehicle that is stopped as the result of a traffic stop or a stop for another law enforcement purpose and if the licensee is transporting or has a loaded handgun in the motor vehicle at that time, the licensee shall promptly inform any law enforcement officer who approaches the vehicle while stopped that the licensee has been issued a concealed handgun license and that the licensee currently possesses or has a loaded handgun; the licensee shall not knowingly disregard or fail to comply with lawful orders of a law enforcement officer given while the motor vehicle is stopped, knowingly fail to remain in the motor vehicle while stopped, or knowingly fail to keep the licensee’s hands in plain sight after any law enforcement officer begins approaching the licensee while stopped and before the officer leaves, unless directed otherwise by a law enforcement officer; and the licensee shall not knowingly have contact with the loaded handgun by touching it with the licensee’s hands or fingers.

As the Texas example shows, you cannot assume that disclosure is optional in a state with relatively permissive gun laws. The converse is also true. Hawaii has strict gun laws, and getting a CCW permit there is very difficult. But according to handgunlaw.us, the lucky few who are allowed to carry guns are not legally required to disclose that fact upon contact with the police.

In addition to the 10 states that require immediate disclosure (red in the map below) and the 38 that do not (green), two states have mixed rules (purple). Although California has no law requiring people with guns to tell police they are armed, usacarry.com reports that “some counties (Orange County in particular) require that during any contact with law enforcement, you must ‘immediately announce’ you are carrying a concealed weapon and have a license to do so.” Handgunlaw.us likewise notes that “some Issuing Authorities [in California] are putting a restriction on issued Permit/Licenses that the holder must inform any Police Officer that contacts them [in] any type of official capacity.”

Maine, which since 2015 has allowed people to carry concealed weapons without a permit, says someone who is stopped by a cop while taking advantage of that option “shall immediately inform that law enforcement officer of the fact that the individual is carrying a concealed handgun.” By contrast, an armed person with a CCW permit (from another state, say) “shall display the same on demand of any law enforcement officer.”

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‘Amazing Progress’ Illinois Style: Welcome To The Obama Expressway!

Authored by Mike Shedlock via MishTalk.com,

Yesterday, in response to alleged “progress” on Obamacare I penned Mish’s Rule of Progress.

Today, I am pleased to announce even more amazing budget progress in the state of Illinois.

First, let’s recap progress at the national level.

  1. On Tuesday, President Trump called all the Republican Senators to a meeting to resolve the Obamacare bill in the Senate.
  2. Ahead of the meeting, four Republican Senators were against the bill. At most, 2 Senators can vote against the bill or it will fail.
  3. After the roughly hour-long huddle in the East Room, Senator Mitch McConnell told reporters “We made good progress.”
  4. Following the meeting, seven Republican Senators were against the bill.

As amazing as that progress sounds, Illinois can beat it by a mile.

Progress Illinois Style

  1. Illinois has been without a budget for two years and its bonds, already the lowest in the nation, face a downgrade to junk.
  2. On June 15, Illinois Governor Bruce Rauner called a special 10-Day legislative session to finalize a budget.
  3. We are now in the eighth day of the special session.
  4. The Special Sessions Cost Illinois Taxpayers $50,000 a Day.
  5. The special sessions have lasted from 10 to 23 minutes at the longest.
  6. Progress was announced yesterday: My sources tell me that by an 84-0 vote, part of I-55 will be renamed the Obama Expressway.

Progress Extended

Today, the Wall Street Journal reports Illinois Governor to Extend Session if Lawmakers Miss June 30 Budget Deadline.

On Tuesday Mr. Madigan unveiled a $36 billion budget proposal but didn’t spell out how much taxes would have to increase to get the state’s fiscal house in order.

 

If a budget isn’t passed by Friday, credit-rating firms have warned they will downgrade the state’s rating to junk.

Rauner Already Caved In

An even more amazing part of this reconciliation process is that Rauner has already caved in. On June 21, I commented Governor Rauner Screws Illinois.

In exchange for virtually nothing, the Governor agreed to a massive tax hike.

Proposed Deal

  1. Four-year tax hike to 4.95%, up from 3.75%
  2. Expansion of sales taxes
  3. New taxes on cable  and satellite TV
  4. Four-year property tax freeze
  5. No right-to-work reform
  6. No collective bargaining reform
  7. No pension reform
  8. No workers’ compensation reform
  9. No spending cuts
  10. No term limits
  11. No gerrymandering reform

The alleged property tax freeze is only 4 years and it excludes Chicago, home rule districts, cities in trouble, etc. One can drive a truck trough the loopholes.

Yet, that was not enough for Madigan or the special session would not still be in session.

Rule of Nothing

This brings us to Mish’s Rule of Nothing proposed on June 22.

In any given political situation, the best outcome one can reasonably expect generally happens when politicians do nothing.

 

Implied corollary#1: When politicians attempt to fix any problem, they are highly likely to make matters worse.

 

Corollary #2: Politicians almost never do nothing. It’s why we have a messed up healthcare system, education system, public pension system, etc..

For whatever perverse reason, Rauner is willing to break every promise he has ever made on budgets, on taxes, on reforms.

Not only did Rauner cave in on everything he has stood for, by extending the special session he has shown willingness to toss more taxpayer red meat to Madigan and his progressives who have already bankrupted the state.

Hope Against Hope

Our only hope at this point is that Madigan asks for so much that Rauner regains his sanity.

Given that Powerball, Mega Millions to Halt Illinois Lottery Due to State’s Inability to Pay Winners on June 30, I rate the odds of sanity returning at under 10%.

On the off chance that sanity prevails, I once again outline what Illinois needs.

Five Desperately Needed Reforms

  1. Municipal bankruptcy legislation
  2. Pension reform
  3. Right-to-Work legislation
  4. End of prevailing wage laws
  5. Workers’ compensation reform

Bankruptcy, the ONLY Solution

Number one on my list of Illinois reforms is bankruptcy legislation. It is the only hope for numerous Illinois cities strapped with impossible-to-pay pension liabilities.

As part of any budget package, Rauner must demand municipal bankruptcy legislation. Bankruptcy is the only solution for Illinois that works.

The system is simply too broke to fix.

Pension Puzzle

Illinois pension plans are going bust. Why is that? Did Illinois not tax enough?

For sure, Illinois did not fund the plans, but to fund them, the state would have had to raise taxes even more.

For discussion, please see Illinois Too Broke to Fix: Chicago Police Pension Fund Broke by 2021 at the Latest.

Supporting Evidence of Socialist Tax Hike Madness

  1. March 25, 2017: Cook County Illinois Suffers Largest Population Drop In Entire US
  2. July 14, 2016: Welcome to Illinois (Where Every 5 Minutes Someone Moves Out)
  3. April 4, 2017: Illinois Revenue Freefall: Fiscal Year-to-Date -8.1% and Worsening
  4. February 7, 2013: Platitudes, Promises, and the Failed Pro-Union Policies of Illinois Governor Pat Quinn
  5. June 14, 2017: Unable to Pay Bills, Illinois Sends “Dear Contractor” Letter Telling Firms to Halt Road Work on July 1
  6. May 18, 2016: Illinois State Workers, Highest Paid in Nation, Demand 11.5 to 29% Hikes
  7. August 31, 2011: Illinois Loses Most Jobs in Nation Following Tax Hikes.
  8. April 13, 2011: 35% of Illinois State Employees are on Workers’ Comp
  9. October 28, 2015: Chicago’s Sheep Dogs Approve Mayor’s Tax on Sheep; Quote of the Day “It’s Not a Piece of Art”
  10. February 13, 2016: “Bond Girl” Blasts Chicago Public School Bonds, Says “CPS Genuinely Insolvent”
  11. March 25, 2016: US Population Growth +0.79%, Illinois -0.17%, Illinois Second Worst to Coal Plagued West Virginia
  12. January 20, 2016: “B” Word Hits Chicago: Illinois Governor Proposes Bankruptcy for Chicago Public School System
  13. January 14, 2016: Illinois Too Big a Risk: GE Moves Corporate Headquarters to Boston, Bypassing Chicago Citing Litany of Issues
  14. June 23, 2017: Illinois Too Broke to Fix: Chicago Police Pension Fund Broke by 2021 at the Latest

Illinois is F*d up beyond repair and caving into demands from Madigan is exactly the wrong thing to do. Illinois truly deserves Junk status, and tax hikes will not solve the problem.

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A.M. Links: Trump’s Revised Travel Ban Begins Today, South Korean President Visits U.S., Iraq Retakes Mosul Mosque

  • President Donald Trump’s executive order banning travelers from six majority-Muslim countries is set to go into partial effect today after the Supreme Court on Monday lifted some parts of the order that had been blocked by lower courts.
  • “The Trump administration has set new criteria for visa applicants from six mainly Muslim nations and all refugees that require a ‘close’ family or business tie to the United States…. The new guidelines sent to U.S. embassies and consulates on Wednesday say that applicants from the six countries must prove a relationship with a parent, spouse, child, adult son or daughter, son-in-law, daughter-in-law or sibling in the U.S.”
  • President Trump and South Korean President Moon Jae-in are scheduled to meet today.
  • Iraqi forces have retaken control of the mosque in Mosul from ISIS.
  • “U.S. officials on Wednesday announced enhanced security and screening measures for all commercial flights to the United States but backed away from a proposal to expand a ban on laptops and other electronic devices—unless airlines and airports refuse to comply with the new rules.”

Follow us on Facebook and Twitter, and don’t forget to sign up for Reason’s daily updates for more content.

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Are Central Bankers Going to Intentionally Crash the System?

Since 2007, the world has packed on a truly staggering amount of debt.  That year (2007) is now commonly referred to as a debt bubble. And at that time, global debt was $149 trillion.

Today, 10 years later, it stands at $217 trillion.

Put another way, the world has packed on another $68 trillion in debt since the last debt bubble. In terms of Debt to GDP, the world has risen from 276% in 2007 (an already insane amount) to 327%.

Why does this matter?

Because this debt was built on the back of low interest rates.

In the last 10 years, bond yields have fallen dramatically thanks to endless Central Bank intervention.

In the US, Treasuries hit all time lows.In Europe and Japan, sovereign bond yields actually went to ZERO or even negative as far out as 10 years.

So we have a massive debt bubble based on interest rates remaining at or near record lows…

This is a $217 TRILLION bubble in search of a needle. And unfortunately for the financial world, Central Banks have just that.

Globally, Central Bankers have sent a clear message: the cost of money, AKA bond yields, is going up.

Global central bankers are coalescing around the message that the cost of money is headed higher — and markets had better get used to it.

Just a week after signaling near-zero interest rates were appropriate, Bank of England Governor Mark Carney suggested on Wednesday that the time is nearing for an increase. His U.S. counterpart, Janet Yellen, said her policy tightening is on track and Canada’s Stephen Poloz reiterated he may be considering a rate hike.

Source: Bloomberg.

Let’s break this down…

The world is sporting a Debt to GDP ration of 327%.

All of this debt was issued at a time when bond yields were FALLING.

Central Bankers now want bond yields to RISE.

Are these people TRYING to crash the system?

A Crash is coming…

And smart investors will use it to make literal fortunes.

We offer a FREE investment report outlining when the market will collapse as well as what investments will pay out massive returns to investors when this happens. It's called Stock Market Crash Survival Guide.

We made 1,000 copies to the general public.

As I write this, only 53 are left.

To pick up one of the last remaining copies…

CLICK HERE!

Best Regards

Graham Summers

Chief Market Strategist

Phoenix Capital Research

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