Month: November 2018

Want a free $100K a year? Quit your job and move here…

According to the latest jobs report, averages wages for US workers increased 3.1% – the strongest growth since 2009.

 Median individual income in the US is now around $31,000, which means the typical American put an extra $1,000 in their pocket last year.

That’s solid extra cash.

But if you really want to see your wages grow, quit your job and become homeless.

 Just be sure you move to San Francisco.

There are about 7,500 homeless people in San Francisco.

The number of homeless in the city has stayed constant for years, but the rest of the population has been booming. And that expansion means tech companies and their workers are now coming face to face with homelessness on a daily basis.

And the collective guilt of the Silicon Valley elite is just too much to handle.

Before Tuesday’s election, San Francisco was already spending over $50,000 on each and every homeless person.

That’s well above the median individual income… and it actually rivals the median household income of about $60,000.

So the average homeless person in San Francisco is using up more resources each year than the average American household earns in wages (and has to pay tax on).

And that money does NOT include the costs of police officers, nurses, doctors, and prison staff who deal with the consequences of homelessness.

But on Tuesday, the good people of San Francisco saw fit to almost double that homeless benefit. 60% of San Franciscans voted for a tax on businesses to support homeless people.

And now the city will spend over $90,000 per year, for each homeless person in the city.

If those costs were split evenly among the residents of San Francisco, each man woman and child would fork over $770 per year to support the city’s homeless.

But Silicon Valley will foot the extra $300 million.

The new tax levies an extra 0.5% on large businesses’ total receipts… No, not profit, but revenue.

So a business could turn no profit, but bring in $100 million in revenue, and it would still owe the homeless people of San Francisco half a million dollars.

That’s half a mil that can’t be used to hire new workers or invest back into the business.

But why bother toiling for 3% wage growth anyway? Homeless people just got an 80% raise.

Now, each homeless person in San Francisco takes three times as much as the median individual income, and 150% of the median household income.

But hey, San Francisco is a rich city. Maybe they can afford to lift homeless people above the middle class.

So what’s the plan then? How will all this extra money be used to alleviate homelessness?

Actually… the money was the plan.

And it has been the plan for the 30 years that spending on homeless programs has increased in San Francisco.

And that plan hasn’t changed as homelessness has increased along with the cash.

So the new plan is throw more money at the same problem, and hope it goes away.

San Francisco doesn’t even have the metrics to say what “success” is with this new tax. Where is that money going? Who is it helping? Has it improved the situation? By what measures?

The data just isn’t there. No one has bothered to track it.

For $90k per person, you could hire someone to follow every homeless person around and clean up the, well, let’s say “mess” they leave behind on the streets.

Hell for that price, you could rent every homeless person in San Francisco a room at the Marriott every single night of the year, and still have money left over… or just buy them a home outside of town.

But the streets are still littered with waste, next to the tents that house the homeless on every street corner.

It should be obvious by now that the problem isn’t a lack of funding. The problem is handing out an absurd amount of free money to the homeless population and having absolutely no plan for how that money will be put to work to solve the homeless problem.

But now that there’s a free $100k worth of benefits up for grabs, why wouldn’t every hobo west of the Mississippi come running?

It’s a gold rush fit for the times we live in.

Source

from Sovereign Man https://ift.tt/2AWVVq5
via IFTTT

Malibu Evacuated As “Apocalyptic” Fire Rages; 75,000 Told To Flee Ventura County

The upscale California town of Malibu has been ordered to evacuate after a raging wildfire jumped the 101 freeway at approximately 5 a.m. and barreled towards the seaside community amid high winds. 

MANDATORY evacuation is in effect for the entire area south of the 101 Fwy from the Ventura County line to Las Virgenes / Malibu Canyon, and southward to the ocean, including all of City of Malibu. (Update 6:55 AM) Residents should use PCH to evacuate and avoid canyon roads. -Malibucity.org

Live coverage: 

75,000 homes in LA and Ventura counties were ordered to evacuate as a second fire broke out Thursday afternoon, destroying an unknown number of structures. The Woolsey Fire was zero percent contained as of 6 a.m. Friday after destroying at least 8,000 acres. 

CBS2 reporter Tom Wait described conditions on the ground as “apocalyptic,” as ember and ash rained down on the streets below.

A large swatch of Malibu was under a new mandatory evacuation Friday morning: from Liberty Canyon, west to Decker Canyon, south to the Pacific Coast Highway.

Ventura County Fire Department spokesman Scott Dettorre told CBS2 that “dozens of homes” had been damaged or destroyed, but there was no exact count. –CBS Los Angeles

“The fire has progressed down into the city of Thousand Oaks,” said Dettorre.  

“It’s a mandatory evacuation, what that means is, you don’t have to leave, we want you to leave,” said Ventura County Fire spokesman Rich Macklan. “But people know they can’t get back in once they do leave. We want people to leave early, when firefighters ask you to, because firefighting equipment needs to come in and do their work. And if you leave early, it helps us tremendously.”

Developing…

via RSS https://ift.tt/2zBEBFc Tyler Durden

“A Chinese Recession Is Inevitable” – Ken Rogoff Ruins ‘Decoupled-America’ Narrative

Authored by Kenneth Rogoff, op-ed via The Guardian,

Analysts say a Chinese recession would only hurt the region. That may be wishful thinking…

When China finally has its inevitable growth recession – which will almost surely be amplified by a financial crisis, given the economy’s massive leverage – how will the rest of world be affected? With US President Donald Trump’s trade war hitting China just as growth was already slowing, this is no idle question.

Typical estimates, for example those embodied in the International Monetary Fund’s assessments of country risk, suggest an economic slowdown in China will hurt everyone. But the acute pain, according to the IMF, will be more regionally concentrated and confined than would be the case for a deep recession in the United States.

Unfortunately, this might be wishful thinking.

First, the effect on international capital markets could be vastly greater than Chinese capital market linkages would suggest. However jittery global investors may be about prospects for profit growth, a hit to Chinese growth would make things a lot worse. Although it is true that the US is still by far the biggest importer of final consumption goods (a large share of Chinese manufacturing imports are intermediate goods that end up being embodied in exports to the US and Europe), foreign firms nonetheless still enjoy huge profits on sales in China.

Investors today are also concerned about rising interest rates, which not only put a damper on consumption and investment, but also reduce the market value of companies (particularly tech firms) whose valuations depend heavily on profit growth far in the future. A Chinese recession could again make the situation worse.

I appreciate the usual Keynesian thinking that if any economy anywhere slows, this lowers world aggregate demand, and therefore puts downward pressure on global interest rates. But modern thinking is more nuanced. High Asian saving rates over the past two decades have been a significant factor in the low overall level of real (inflation-adjusted) interest rates in both the US and Europe, thanks to the fact that underdeveloped Asian capital markets simply cannot constructively absorb the surplus savings.

Former US Federal Reserve chair Ben Bernanke famously characterised this much-studied phenomenon as a key component of the “global savings glut”. Thus, instead of leading to lower global real interest rates, a Chinese slowdown that spreads across Asia could paradoxically lead to higher interest rates elsewhere – especially if a second Asian financial crisis leads to a sharp draw-down of central bank reserves. Thus, for global capital markets, a Chinese recession could easily prove to be a double whammy.

As bad as a slowdown in exports to China would be for many countries, a significant rise in global interest rates would be much worse. Eurozone leaders, particularly German Chancellor Angela Merkel, get less credit than they deserve for holding together the politically and economically fragile single currency against steep economic and political odds. But their task would have been well-nigh impossible but for the ultra-low global interest rates that have allowed politically paralysed eurozone officials to skirt needed debt write-downs and restructurings in the periphery.

When the advanced countries had their financial crisis a decade ago, emerging markets recovered relatively quickly, thanks to low debt levels and strong commodity prices. Today, however, debt levels have risen significantly, and a sharp rise in global real interest rates would almost certainly extend today’s brewing crises beyond the handful of countries (including Argentina and Turkey) that have already been hit.

Nor is the US immune. For the moment, the US can finance its trillion-dollar deficits at relatively low cost. But the relatively short-term duration of its borrowing – under four years if one integrates the Treasury and Federal Reserve balance sheets – means that a rise in interest rates would soon cause debt service to crowd out needed expenditures in other areas. At the same time, Trump’s trade war also threatens to undermine the US economy’s dynamism. Its somewhat arbitrary and politically driven nature makes it at least as harmful to US growth as the regulations Trump has so proudly eliminated. Those who assumed that Trump’s stance on trade was mostly campaign bluster should be worried.

The good news is that trade negotiations often seem intractable until the 11th hour. The US and China could reach an agreement before Trump’s punitive tariffs go into effect on 1 January. Such an agreement, one hopes, would reflect a maturing of China’s attitude toward intellectual property rights – akin to what occurred in the US during the late 19th century. (In America’s high growth years, US entrepreneurs often thought little of pilfering patented inventions from the United Kingdom.)

A recession in China, amplified by a financial crisis, would constitute the third leg of the debt super-cycle that began in the US in 2008 and moved to Europe in 2010. Up to this point, the Chinese authorities have done a remarkable job in postponing the inevitable slowdown. Unfortunately, when the downturn arrives, the world is likely to discover that China’s economy matters even more than most people thought.

via RSS https://ift.tt/2z1XGky Tyler Durden

Paradise Lost: Aggressive “Wall Of Fire” Decimates Entire California Town, “God Help Us”

One year after the deadliest and costliest wildfire season in California’s history, three wildfires have broken out in Northern California. On Friday, the most aggressive of the three fires destroyed most of the town of Paradise, a community with 27,000 residents, forcing residents to frantically flee for their lives. According to USA Today, as strong winds fanned the flames, they also hindered aircrafts’ ability to drop flame retardant on the fire.

In a 24 hour period, the Camp fire surged through the town of Paradise, located in the Sierra foothills, torching some 31 square miles, or 20,000 acres. Panicking residents dropped everything, with some abandoning cars to flee on foot as the fire blocked off escape routs. The state issued a mandatory evacuation order as the smoke from the flames darkened the skyline.

Fire

Two

Residents described being surrounding by a “wall of fire” which left them only minutes to grab what little precious belongings they could before leaving.

“We were surrounded by fire, we were driving through fire on each side of the road,” said police officer Mark Bass, who lives in Paradise and works in neighboring Chico.

Bass evacuated his family and then returned to the fire to help rescue several disabled residents, including a man trying to carry his bedridden wife to safety. “It was just a wall of fire on each side of us, and we could hardly see the road in front of us.”

Sherri Pritchard said she only had time to grab a few pictures before fleeing with her family and dogs, even leaving clothes behind.

“It was crazy, because when we were sitting in traffic people were panicking,” she said. “It was chaos. I couldn’t believe what people were doing.”

One Paradise resident who spoke with the Associated Press described the final harrowing moments before she and her husband fled their mobile home.

Shari Bernacett said her husband tried to get people to leave the Paradise mobile home park they manage. He “knocked on doors, yelled and screamed” to alert as many residents as possible, Bernacett said.

“My husband tried his best to get everybody out. The whole hill’s on fire. God help us!” she said before breaking down crying. She and her husband grabbed their dog, jumped in their pickup truck and drove through flames before getting to safety, she said.

Horrifying videos circulating on social media showed cars driving through what looked like tunnels of fire…

…While others showed the flames engulfing homes with alarming speed.

Grass and brush, severely parched from months without rain, along with the extremely dry air, helped accelerate the fire, officials said.

“Basically, we haven’t had rain since last May or before that,” said Butte County CalFire Chief Darren Read. “Everything is a very receptive fuel bed. It’s a rapid rate of spread.”

Amid the chaos, the strong winds whipped the flames into a ‘firenado’.

 

 

At one local hospital, more than 60 patients were evacuated to other facilities and some buildings caught fire and were damaged.

Four

Some patients had to be airlifted to safety due to the gridlocked traffic. Four hospital employees who were trapped in its basement had to be rescued by CalFire.

Fire

While fires have been especially severe in recent years thanks to drought conditions that have persisted across the state, one long-time former volunteer firefighter said he hasn’t seen a fire as aggressive as the Camp Fire in his 40 years of working and living in the region.

No death toll has been published yet. But several residents are still missing. And it’s possible that a count of fatalities could be available soon.

via RSS https://ift.tt/2DvTRrM Tyler Durden

Stocks, Gold, Yields Tumble After ‘Hot’ PPI

US equities are extending post-FOMC losses following a hotter-than-expected producer price print. Bond yields and bullion prices are also tumbling as the dollar holds on to its gains…

Gold and stocks are lower as bond safe-havens are bid…

US equities are quickly erasing the week’s gains…

The major indices are breaking or testing back to critical technical levels…

As the dollar extends post-Powell gains…

 

However, anxiety over the hot-flation print seems overdone as Ian Sheperdson notes – the crude collapse means this is the peak for now…

via RSS https://ift.tt/2qExEPG Tyler Durden

Hedge Funds Brace For A November 15 Bloodbath

A few weeks ago, we reported that even when the market was hitting all time highs ahead of the historic October bloodbath, hedge funds investors were growing increasingly nervous, and rushed to redeem $15 billion from the space, the largest single monthly outflow in years, bringing year-to-date net flows to flat after being stubbornly in the green for much of the year despite what has been another deplorable performance year for hedge funds.

This was not the first time either: over the last three years, investors had removed over $100 billion from the industry, but performance gains had offset these losses… at least until last month.

And then October came which was not only a “bloodbath across almost every strategy“, but was the worst month for the broader hedge fund space in 7 years. 

Which is why just one week ago,  we warned that what may be the most underappreciated risk to the market is a surge in redemptions requests as limited partners got their monthly performance reports showing the worst month in years, and in kneejerk response faxing in their request to have most or all of their money redeemed now before the rout accelerated.

Today, Bloomberg picks up on this risk, with reporter Saijel Kishan writing that following the second worst month of the decade for the hedge fund industry, many are bracing for an industry D-Day: Nov. 15.

That, as Kishan explains, is the deadline for investors to put managers on notice to get some – or all – of their money at year end.

Investors can cash out of most hedge funds quarterly after giving 45 days notice. Withdrawal schedules can vary, as do notice periods. Firms can also levy penalties on clients who want to bail outside of agreed schedules, while investors can cancel redemption plans if they change their minds.

Only this time few will be changing their minds, and the total redemption total will be a bloodbath, because if history is any guide, “the rush for the exits will be swift and accelerate.”

Having previously noted that September outflows – at a time of record stock prices – jumped the most in years, the October total will be a sight to behold. The industry lost 3% in October and is down 1.7% this year, according to HFR. It largely reflected the worst month for US stocks since 2011.

As Bloomberg notes, the last time the industry careened toward annual losses – as it does now – was in 2015, when managers were tripped up by events including the unexpected surge in the Swiss franc and the devaluation of the Chinese yuan.  Back then clients withdrew $77.2 billion between the fourth quarter of that year and the first quarter of 2017 – the biggest withdrawals since the global financial crisis.

Why does this matter? Because with hedge funds expecting a flood of redemption requests on November 15 – with few outperforming there is little reason for even the marquee names to be spared – and with cash levels in the single digits, the question becomes who sells first ahead of everyone else, to satisfy the cash calls.

This is also the warning raised by Nomura’s Charlie McElligott, who reminds us this morning that while systematic, vol-targeting, CTA and other quant funds may have ended their selling (and in the case of Trend CTAs are again “max long”), a key point raised by JPM’s Marko Kolanovic to justify his bullish thesis, the slow money outflows are only now just beginning as the redemptions requests come in:

One point brought-up last night at an excellent client dinner I hosted and put on by the good folks at Instinet: the upcoming “redemption notice” window for Hedge Funds, which in-theory closes next week ~Nov 15th (mid-qtr date) and looks to be an inevitability after the worst month for HF’s in seven years

Perhaps this “getting ahead of redemption risk” phenomenon could explain a large part of yesterday’s “return to de-grossing” behavior in the U.S. Equities space, with the pain-trade telltale sign of “Value” again outperforming “Growth” was evident

How bad will the coming redemption bloodbath be, if not for the “hedge” funds for whom “hedge” means 5x beta and fully deserve everything they get in the coming days, then for everyone else? Keep an eye on stocks today and over the next few days as the great rush to sell before everyone else begins.

via RSS https://ift.tt/2Daz7Vs Tyler Durden

UMich Sentiment Slides As Hope Fades, Buying-Plans Plunge

After sliding across the board in October, November’s flash University of Michigan Sentiment was expected to extend that decline and it did , dropping from 98.6 to 98.3 (though better than the expected 98.0). Expectations slipped lower as ‘current conditions’ flatlined.

Even with the second straight decline, sentiment remains close to the highest since 2004, and the UMich Sentiment Index remained higher thus far in 2018 than in any prior year since 2000…

But buying expectations slipped lower across Homes, Autos (lowest since Nov 2013), and major appliances…

Income expectations have improved (reversing October’s plunge) and consumers anticipate continued robust growth in employment, but consumers also anticipate rising inflation and higher interest rates.

Among the working age population, those between the ages of 25 and 54, the anticipated annual gain in nominal household income was 3.6% in November, the best in the past decade.

While these positive and negative changes act to offset each other in the aggregate, younger consumers have benefited most from more positive income trends and older consumers are more likely to complain about the erosion of their living standards due to rising prices.

via RSS https://ift.tt/2DuJ4Of Tyler Durden

Commerce Secretary Wilbur Ross May Be On His Way Out

Just two days after President Trump ousted Attorney General Jeff Sessions, Politico is reporting that Commerce Secretary Wilbur Ross might be the next cabinet official to leave the administration as part of Trump’s widely expected cabinet reshuffle.

Trump has reportedly grown frustrated with Ross over reports of his unsavory and ruthless business practices as well as his perceived ineptitude in negotiating trade deals. The president has repeatedly humiliated Ross in front of other administration officials, and accused him of being “past his prime,” according to Bob Woodward’s book “Fear.”

Ross

The most likely candidate to replace Ross at Commerce would be Linda McMahon, the Small Business Administration head and former CEO of WWE wrestling.

Ross’s fate could hinge on whether Democrats follow through with threats to investigate his business practices and finances after a Forbes reporter published a scathing report earlier this year accusing Ross of ripping off investors and former business partners.

Speculation is growing about the fate of Commerce Secretary Wilbur Ross, about whom Trump has expressed private frustration. The 80-year-old billionaire has supported Trump’s controversial tariffs on trade partners, but may be asked to resign as Trump weighs post-midterm personnel changes.

The leading candidate to replace Ross if that happens is now Small Business Administration chief Linda McMahon, according to two sources familiar with the discussions. McMahon has made clear she is interested in the position and would accept it if it is offered, according to a source familiar with the conversations.

Whether Ross stays or goes will depend on the extent to which newly empowered Democrats in the House decide to probe the Commerce secretary’s finances and questions about his divestment of assets, a White House official said. If Democrats decide to press those issues, Ross could have a harder time staying.

McMahon and her husband, Vince — the CEO of World Wrestling Entertainment — have known the Trumps for years and were early and active supporters of Trump’s presidential campaign. McMahon, who initially backed Christie’s 2016 White House bid, is credited in part with helping secure his support for Trump during the campaign.

Inside the White House, McMahon is viewed as largely pro-free trade and less friendly to tariffs than Ross. So her takeover at Commerce, if it happens, might be seen as a shift away from economic policies that critics call protectionist. In an administration filled with big personalities and which has struggled to attract talent, she is appreciated for being low-key, competent, loyal — and easily confirmable by the Senate.

Ross isn’t the only scandal-plagued Trump cabinet official who might be on his way out; Politico reported last night that Ryan Zinke, the secretary of the interior, has reached out to Fox about possibly working as a conservative news commentator as ethics investigations into his use of taxpayer money. Zinke could be out within a week, and is expected to leave by the end of the year.

via RSS https://ift.tt/2OAVKEz Tyler Durden

GE Collapses To $8 Handle – Unchanged Since 1995

Following yet another downgrade, by JPMorgan this time, GE is trading back with an $8 handle for the first time since its crash in the financial crisis (and unchanged since 1995).

Specifically, JPMorgan analyst Stephen Tusa cut his price target to $6 from previous $10. The current target is the lowest among all the analysts covering the stock, according to data compiled by Bloomberg.

“While the stock is down about 70 percent from the peak of $30, this move still does not sufficiently reflect the fundamental facts,” Tusa wrote in a note.

Tusa, who has carried the equivalent of a sell rating on GE since May 2016, said he expected continued erosion in the stock, given ongoing fundamental declines in power-related businesses, high leverage and a weak free cash flow.

“We are skeptical around calls for a bottom until management resets EPS expectations that are closer to free cash flow, something we believe they haven’t done for almost 20 years.”

And GE default risk is surging…

 

We’re gonna need a bigger kitchen-sink.

via RSS https://ift.tt/2SZq7rJ Tyler Durden