Author: admin

Seemingly angered at the temerity of Apple's Tim Cook's defense of individual's privacy and security, Congress has escalated the 'crypto-wars' that are dividing Washington and Silcon Valley. In its most directly totalitarian move yet, WSJ reports that Senate Intelligence Committee Chairman Richard Burr (R., N.C.) is working on a proposal that would create criminal penalties for companies that don’t comply with court orders to decipher encrypted communications. It seems Edward Snowden was right, The FBI is creating a world where citizens rely on Apple to defend their right, rather than the other way around.

Liberty Blitzkrieg's Mike Krieger provides some much-needed background in the escalation of the crypto-wars. The feds, and the FBI in particular, have been very vocal for a long time now about the desire to destroy strong encryption, i.e., the ability of citizens to communicate privately. A year ago, I wrote the following in the post, By Demanding Backdoors to Encryption, U.S. Government is Undermining Global Freedom and Security:

One of the biggest debates happening at the intersection of technology and privacy at the moment revolves around the U.S. government’s fear that the American peasantry may gain access to strong encryption in order to protect their private communications. Naturally, this isn’t something Big Brother wants to see, and the “solution” proposed by the status quo revolves around forcing technology companies to provide a way for the state to have access to all secure communications when they deem it necessary.

 

Many technology experts have come out strongly against this plan. Leaving aside the potential civil liberties implications of giving the lawless maniacs in political control such power, there’s the notion that if you create access for one group of entitled people, you weaken overall security. Not to mention the fact that if the U.S. claims the right to such privileged access, all other countries will demand the same in return, thus undermining global privacy rights and technology safeguards.

 

We are already seeing this play out in embarrassing fashion. Once again highlighting American hypocrisy and shortsightedness, as well as demonstrating that the U.S. government does’t actually stand for anything, other than the notion that “might means right.” Sad.

And today's decision by Tim Cook not to comply with the government's latest demands confirms what Edward Snowden noted on Twitter:

The @FBI is creating a world where citizens rely on #Apple to defend their rights, rather than the other way around. https://t.co/vdjB6CuB7k

— Edward Snowden (@Snowden) February 17, 2016

 

Krieger adds that Tim Cook deserves tremendous credit for the courage to come out and so aggressively and publicly denounce what the FBI is trying to do.  

If he hadn’t decided to publicly challenge the court order and write a detailed treatise on precisely why, the American citizenry would be left completely in the dark. This would be an unethical and unacceptable position.

 

Second, this case could very well be headed up to higher courts. The greatest risk in these sorts of cases revolves around judicial ignorance when it comes to technology issues. The government knows all too well that most judges are clueless when it comes to tech, and that all they have to do is scaremonger with the word “terrorism” and judges will almost always default to the government position. Cook’s very public stance will at least shine some light on the issue and hopefully fuel robust, intelligent public debate which could inform judges ahead of being presented with technology related cases they don’t really understand.

Which is perhaps why Congress is escalating the situation, as The Wall Street Journal reports,

Senate Intelligence Committee Chairman Richard Burr (R., N.C.) is working on a proposal that would create criminal penalties for companies that don’t comply with court orders to decipher encrypted communications, four people familiar with the matter said, potentially escalating an issue that is dividing Washington and Silicon Valley.

 

…

 

Mr. Burr hasn’t finalized plans for how legislation would be designed, and several people familiar with the process said there hasn’t been an agreement among any other lawmakers to pursue criminal penalties. It’s also unclear whether Mr. Burr could marshal bipartisan support on such an issue during an election year that has divided Washington in recent months.

 

The bill could be written in a way that modifies the Communications Assistance for Law Enforcement Act, a 1994 law that compels telecommunications companies to construct their systems so they can comply with court orders.

 

…

 

Mr. Burr has spent months pressuring technology companies to work more closely with law enforcement and others to prevent encryption tools from being used to plan and carry out crimes. He warned technology firms that they need to consider changing their “business model” in the wake of the widening use of encrypted communications.

Read that last sentence again!! Since the scale of criminal penalty could be anything – as opposed to the 'cost of doing business' fines associated with the US banking system – this theoretically forces tech companies to comply, no matter what.

The critical question then, once again, as Mike Krieger concludes, is:

Do we really want to sacrifice overall privacy and security in order to get information from one person’s phone?

Or what about the following question posed by cryptography professor Matthew Green:

If the US government dictating iPhone encryption design sounds ok to you, ask yourself how you'll feel when China demands the same.

— Matthew Green (@matthew_d_green) February 17, 2016

 

These are enormous questions with tremendous implications. I just hope we as a society choose wisely.

via Zero Hedge http://ift.tt/20HwBqS Tyler Durden

As we predicted over a year ago, in a world in which QE has failed, and in which the ice-cold grip of NIRP has to be global in order to achieve its intended purpose of forcing savers around the world to spend the taxed product of their labor, one thing has to be abolished: cash.

This explains the recent flurry of articles in outlets such as BBG and the FT, and op-eds by such “established” economists as Larry Summers, all advocating the death of cash, a process which would begin by abolishing high denomination bills and continue until all physical cash in circulation is eliminated, something we warned about when the first made it first NIRP hint last September.

We were s rather surprised by the candor of a WSJ piece overnight which actually told it how it is:

The real reason the war on cash is gearing up now is political: Politicians and central bankers fear that holders of currency could undermine their brave new monetary world of negative interest rates. Japan and Europe are already deep into negative territory, and U.S. Federal Reserve Chair Janet Yellen said last week the U.S. should be prepared for the possibility. Translation: That’s where the Fed is going in the next recession.

* * *

By all means people should be able to go cashless if they like. But it’s hard to avoid the conclusion that the politicians want to bar cash as one more infringement on economic liberty. They may go after the big bills now, but does anyone think they’d stop there? Why wouldn’t they eventually ban all cash transactions much as they banned gold and silver as mediums of exchange?

 

Beware politicians trying to limit the ways you can conduct private economic business. It never turns out well.

We were even more surprised when we read that in Switzerland, the place which offers the highest denomination banknote in Europe, the 1,000 Swiss Franc note (and the second highest in the world after the Singapore $10,000 note) two politicians, Philip Brunner and Manuel Brandberg, members of the right-wing Swiss People’s Party, have proposed a motion that they hope Zug will support for a cantonal initiative seeking changes to the federal currency law.

They argue that the creation of 5,000-franc notes will ensure that the Swiss franc maintains its status as a safe haven currency.

As we reported previously, this proposal is the diametrical opposite of what the ECB hopes to do, and of where the European Union wants to go, where finance ministers have talked about withdrawing 500-euro bills from circulation to deter their use for “financing terrorism, money laundering and other illegal activities”, all made up terms designed to give the impression that politicians are slowly eliminating physical currency in circulation for your own good.

They are not.

This is what the Swiss politicians admit too: Brunner and Brandberg maintain that the tendency in the EU and in OECD member countries is to “weaken individual liberties” and to exercise greater control over citizens.

But it is what they say next that may define the libertarian political platforms around the globe for the next several years – also known as the global NIRP period – because it is 100% spot on:

In this context “cash is comparable to the service firearm kept by Swiss citizen soldiers,” the pair argued in their motion, saying they both “guarantee freedom”.

 

“In France and Italy already cash payments of only up to 1,000 euros are allowed and the question of the abolition of cash is being seriously discussed and considered in Europe, “ Brunner said on his Facebook page.

 

The move toward electronic payments allows governments “total surveillance” over individuals, the pair claim.

Of course, the proposal was promptly shot down by the Swiss National Bank: “Walter Meier, a spokesman for the Swiss National Bank, which is responsible for Switzerland’s money, told 20 Minuten newspaper the introduction of banknotes of a higher denomination is “not an issue.” 

Keep in mind this is the same central bank which in late 2014 pushed hard against a popular referendum to replenish Swiss sovereign gold by buying gold in the open market, only to generate billions in paper losses months later when it admitted defeat in the currency war with the ECB; a central bank which then lost even more billions when it decided to buy shares of AAPL at their all time high price and is now sitting on substantial paper losses.

As for the Swiss proposal to print higher denomination currencies, we are confident it won’t pass now: if it did, there would be an unprecedented rush from around the globe to park savings in Swiss cash, just like in the good old days.

But the time of big currency denominations is coming one way or another: after all, NIRP is the falling Keynesian system’s penultimate hope. When it fails, there is just one last option, the one we have said is coming ever since 2009, the one which even the “smartest money in the world” agreed today is inevitable: helicopter money.

And as Ben Bernanke made it all so clear in 2002, once the helicopter money comes, hyperinflation is very close behind. And one thing hyperinflation always brings with it, is very highly denominated bank notes. Just ask Zimbabwe.

via Zero Hedge http://ift.tt/1oNSA3N Tyler Durden

Dale Dorsey isn’t happy.

After working 33 years, he’s facing a 55% cut to his pension benefits, a blow which he says will “cripple” his family and imperil the livelihood of his two children, one of whom is in the fourth grade and one of whom is just entering high school.

Dorsey attended a town hall meeting in Kansas City on Tuesday where retirees turned out for a discussion on “massive” pension cuts proposed by the Central States Pension Fund, which covers 400,000 participants, and which will almost certainly go broke within the next decade.

“A controversial 2014 law allowed the pension to propose [deep] cuts, many of them by half or more, as a way to perhaps save the fund,” The Kansas City Star wrote earlier this week adding that “two much smaller pensions also have sought similar relief under the law, and still more pensions are significantly underfunded.”

“What’s happening to us is a microcosm of what’s going to happen to the rest of the pensions in the United States,” said Jay Perry, a longtime Teamsters member.

Jay is probably correct.

Public sector pension funds are grossly underfunded in places like Chicago and Houston, while private sector funds are struggling to deal with rock bottom interest rates, which put pressure on expected returns and thus drive the present value of funds’ liabilities higher.

Illinois’ pension burden has brought the state to its knees financially speaking and in November, Springfield was forced to miss a $560 million payment to its retirement fund. In the private sector, GM said on Thursday that it will sell 20- and 30-year bonds in order to meet its pension obligations. 

“At the end of last year GM’s U.S. hourly pension plan was underfunded by $10.4 billion,” The New York Times writes. “About $61 billion of the obligations were funded for the plan’s roughly 360,000 pensioners.” Maybe it’s time for tax payers to bail themselves out. 

Speaking of GM, Kenneth Feinberg – the man who oversaw the distribution of cash compensation to victims who were involved in accidents tied to faulty ignition switches – is now tasked with deciding whether the Central States Pension Fund’s proposal to cut benefits passes legal muster. “Central States’ proposal would allow the retirees to work and still collect their reduced benefits. But some are no longer able to work, and the idea didn’t seem plausible to others,” the Star goes on to note.

“You know anybody hiring a 73-year-old mechanic?” Rod Heelan asked Feinberg. “I’m available.”

“I’ll have to go find a job. I don’t know. I’m 68,” Gary Meyer of Concordia, Mo said. “It would probably be a minimum-wage job.” 

To be sure, retirees’ frustrations are justified. That said, the fund is simply running out of money. “We simply can’t stay afloat if we continue to pay out $3.46 in pension benefits for every $1 paid in from contributing employers,” a letter to retirees reads. 

The fund is projected to go broke by 2026. Without the proposed cuts, no benefits at all will be paid from that point forward. 

According to letters shared with The Star, cuts range from around 40% to 61%. “[The] average pension loss was more than $1,400 a month,” the paper says.

As for what will become of those who depend upon their benefits to survive, the above quoted Gary Meyer summed it up best: “I guess food stamps. Hopefully not. It would be a last resort.”

Don’t worry Gary, you aren’t alone…

via Zero Hedge http://ift.tt/1WuJkfm Tyler Durden

Submitted by Robert Romano via NetRightDaily.com,

Interest rates in Switzerland, Denmark, Sweden, the European Central Bank and now the Bank Japan have now plunged into negative territory, starting a new phase in the era of central banking that is very much uncharted.

Time will tell if it leaves the global economy lost at sea.

So far, banks are primarily being charged for keeping excess reserves on account at these central banks, a policy designed to jumpstart lending by making it more expensive for banks to sit on reserves. In some cases, like Sweden, the deposit rates have gone negative, too.

Whether it will all work out or not remains to be seen — initiating inflation and economic growth.  Maybe it will, but so far it’s not really looking good.

So what if it doesn’t work? The longer term implication is that central banks will then feel compelled to move their discount rates and other rates negative, too. Once that Pandora’s Box is open, it will mean that when financial institutions borrow money from the central bank, they will earn interest instead of owing it.

You read that right. When, not if, central banks go completely negative, they will wind up paying banks to borrow money from them.

That’s quantitative easing by another name.

Say, the interest rate is -1 percent. For every $1 trillion that is lent, the central bank in theory would owe an additional $10 billion in interest to the borrowing banks.

Fast forward 10 or 20 years into the future. Can you imagine a world where commercial banks pay their customers to borrow money?

Sure, scoff now. But mark my words. Central banks are so desperate to kick start the economy and credit creation, they will do almost anything. So, if they have to bribe you to borrow money to start acquiring more things, then that’s exactly what they’ll do.

A few problems immediately emerge.

If it ends up costing money for banks to lend money, how will they make any profits?

The answer might be that the profits will be the difference between the interest earned from that bank borrowing the money from the central bank less the interest owed to the borrowing customer.

So, say the bank borrowed from the central bank at -5 percent and then issued a loan with that money at -1 percent. The customer still earns 1 percentage point of negative interest, and the bank still gets to pocket the remaining 4 percentage points of negative interest from the central bank.

But what about savers? Would they be charged just to put money into the bank? If so, why would they keep it there?

Since banks depend on deposits to make up their capital requirements, they would have a powerful disincentive against charging customers to keep deposits, lest it provoke a run on the banks.

But why invest in bonds?

This is where the real rub comes. Already the Japan 10-year treasury is testing 0 percent levels.

Can you imagine a retirement fund that earns less than zero percent? That would mean less than zero percent return on investment. An investor has to pay to hold the bond, only to have principal returned when it comes due. Why bother?

The only way that might make sense would be in an outright deflationary environment. So, say, inflation is at -10 percent, and you’re in a bond that charges -1 percent to hold the bond. In theory, the investor would come out 9 percent ahead because the value of holding cash is still technically appreciating via increased purchasing power.

But even then, it would still make more sense to simply just hold cash to begin with.

So to incentivize bond-buying still and deposits, central banks would simply ban keeping cash. Already the discussion is of discontinuing higher-denomination bills like €500 or $100 bills. To fight crime, they say. Yeah, sure it is. This forecasts eventually our society will be cashless.

In the future, perhaps the only way to get paid will be via a bank account. Then it would be a simple equation. Keep money in an account for too long, pay more. Put it into a bond or spend it all immediately, pay less or nothing.

Then, buying bonds could become the digital equivalent of stockpiling physical gold or silver to prepare for a financial Armageddon. You can see the slogans now: “Buy bonds now and only lose 2 percent this year!”

Okay, so we’ve worked through how financial institutions might survive the scourge of negative interest rates and remain profitable, and how central banks would forestall any more bank runs by simply banning them. And how even investors could in theory still come out “ahead” by putting money into bonds that cost less than keeping it idle.

Which brings us to the issue of deflation. By going negative, are not central banks basically forecasting that deflation — that is, outright asset price depreciation whether in stock prices or home values — is at hand? Perhaps banks can get by in such an environment since they apparently plan on getting paid to borrow money. But what about everyone else?

For, what negative interest rates are really projecting are low-to-no growth and zero-profit environments for the entire global economy sometime in the future, where businesses simply cannot make money. Not now, but perhaps soon.

In the Great Depression, when it came to such price volatilities for, say, farmers, the government instituted a series of agricultural subsidies to keep the farms profitable so they could pay their mortgages.

The implication of no growth and deflation today are that all businesses will come to the government seeking subsidies. We already see it in agriculture. Education. Health care. Housing. Whether it is loan programs for customers or outright grants. There will be more.

This is why capitalism cannot survive no growth. Economies would naturally revert to some form of subsistence, where the need to trade is reduced greatly. But investors demand return on investment. Remember, it’s a world without profits. In a no-growth, deflationary environment, those who over-produce are the ones who get punished by markets. So businesses will demand subsidies for their surplus stock, or for not producing at all, as in the Depression.

Of course, this is all madness. Negative interest rates have never really been tried before. And if they fail to jumpstart the economy and inflation now, the implication is that deflation and low-to-no growth are already at hand. Can you say, “Sell?” It’s almost as if central banks are trying to create the conditions for a bear market. Maybe they’ll ban those, too.

via Zero Hedge http://ift.tt/1WuJjYQ Tyler Durden

2015 was not a good year for job creation in Alberta.

In fact, the net 19,600 jobs the province shed marked the worst year for job losses since 1982.

Alberta is of course suffering from the dramatic collapse in oil prices, which look set to remain “lower for longer” in the face of a recalcitrant Saudi Arabia and an Iran which is hell bent on making up for lost time spent languishing under international sanctions.

Suicide rates are up in the province, as is property crime and foodbank usage. The malaise underscores the fact that Canada’s oil patch is dying. WCS prices are teetering just CAD1 above marginal operating costs, and the BoC failed to cut rates last month, meaning it’s just a matter of time before the entire Canadian oil production complex collapses on itself.

On Thursday, a new industry report shows that crude’s inexorable decline could end up costing 84% of oilsands construction jobs over the next four years.

“The oilsands sector is in danger of losing its reputation as a job-creating machine,” The Calgary Herald writes. “A new industry report shows the sector may require 84% fewer construction workers in 2020 compared to 2015 as project cancellations pile up amid a crippling oil-price environment.” Here’s more:

“Overall workforce requirements for the oil and gas industry has been severely impacted by a reduction in investment,” said Carol Howes, vice-president of communications at Petroleum Labour Market Information, part of the industry-funded Enform based in Calgary.

 

As crude oil prices plunged, capital expenditures in the oilsands declined 30 per cent last year from $35 billion in 2014. Canada has led the world in project deferrals during the 16-month downturn, as oilsands projects with a combined production of three million barrels per day have been shelved, according to Tudor Pickering Holt & Co.

 

The downturn has taken the shine off Alberta’s job-creating engine and has wiped out 100,000 direct and indirect jobs according to one industry estimate.

 

Recruitment consultancy Hays estimates Canadian oil and gas workers saw a 1.4 per cent decline in their paychecks last year, compared to a cumulative eight per cent growth over the previous five years.

 

“Hiring has pretty much seized, unless it’s for a business critical position,” said Neil Gascoigne, global business development expert at Hays, based in Houston.

 

“A lot of the E&P business are going through significant restructure and looking to further reduce costs, and wages and salaries are one of their high costs.”

 

“Companies have cut as much as they can without jeopardizing their actual business.”

That reflects something we said back in October. Namely, there’s no more “fat” to be trimmed. In other words, further cost savings will have to come from salary cuts because going forward, cutting jobs altogether will imperil companies’ ability to operate.

Meanwhile, the number of people receiving jobless benefits in Alberta jumped more than 100% in December. “Statistics Canada said 62,500 Alberta residents received job-insurance benefits in December, up from 31,200 a year earlier and accounting for most of the 7.3% increase in job-insurance beneficiaries nationally,” WSJ wrote on Thursday, adding that Vancouver-based Finning International Inc., the world’s largest dealer of Caterpillar Inc. equipment, “said it would cut 400 to 500 jobs globally on top of the 1,900 positions since the start of last year.”

Going forward, the outlook is bleak as underlined by Canada’s Conference Board which on Thursday reported that its business-confidence index “suffered its third consecutive decline in the fourth quarter of 2015, falling 1.5 percentage points to 86.6.” That’s the lowest level since the crisis.

But don’t worry, “the decline was modest compared with the previous quarter, when the index plunged from 105.6 to 88.1.” 

So things are still getting worse in Canada. Just at a slower pace. Allahu akbar. 

via Zero Hedge http://ift.tt/1WuJjIs Tyler Durden

Submitted by Lance Roberts via RealInvestmentAdvice.com,

Biggest Rallies Occur In Bear Markets

As expected, the market was oversold enough going into last Friday to elicit a short-term reflexive bounce. Not surprisingly, it wasn’t long before the “bulls” jumped back in proclaiming the correction was over.

If it were only that simple.

First, as I have discussed in the past, market prices remain in a “trend” until something causes that trend to change. This can be most easily seen by looking at a chart of the S&P 500 as compared to its 400-day moving average.

As you will notice in the main body of the chart, during bull markets, prices tend to remain ABOVE the 400-dma (orange-dashed line). Conversely, during bear markets, prices tend to remain BELOW the 400-dma.

The one event in 2011, where all indicators suggested the market was transitioning back into a bear market, was offset by the Federal Reserve’s intervention of “Operation Twist” and eventually QE-3.

During cyclical bear markets, bounces from short-term oversold conditions tend to be extreme. Just recently Price Action Lab blog posted a very good piece on the commonality of short-term rebounds during market downtrends:

“The S&P 500 gained 3.63% in the last two trading sessions. About 75% of back-to-back gains of more than 3.62% have occurred along downtrends. Therefore, a case for a bottom cannot be based solely on performance.”

“It may be seen that 73.85% back-to-back gains of more than 3.62% have occurred along downtrends, i.e., this performance is common when markets are falling. The sample size consists of 195 back-to-back returns greater than 3.62%.

Therefore, strong rebounds along a downtrend cannot be used to support a potential bottom formation.”

After a rough start to the new year, it is not surprising that many are hoping the selling is over.

Maybe it is.

But history suggests that one should not get too excited over bounces as long as the downtrend remains intact.

I Bought It For The Dividend

One of the arguments for “buy and hold” investing has long been “dividends.” The argument goes this way:

“It really doesn’t matter to me what the price of the company is, I just collect the dividend.”

While this certainly sounds logical, in reality, it has often turned into a very poor strategy, particularly during recessionary contractions.

A recent example was Kinder Morgan (KMI). In late-2014, as I was recommending that individuals begin to exit the energy sector, Kinder Morgan was trading around $40/share. The argument then was even if the share price of the company fell, the owner of the shares still got paid a great dividend.

Fast forward today and the price of the company has fallen to recent lows of $15/share (equating to a 62.5% loss in value) and the dividend was cut by 80%.

Two things happened to the investor’s original thesis. The first, was that after he had lost 50% of his capital, the dividend was no longer nearly as important. Confidence in the company eroded and the individual panic sold his ownership into the decline. Secondly, when a company gets into financial trouble, the first thing they will do is cut the dividend. Now you have lost your money and the dividend.

But it is not just KMI that has cut dividends as of late. Many companies have been doing the same to shore up internal cash flows. As pointed out recently by Political Calculations:

“Speaking of which, the pace of dividend cuts in the first quarter of 2016 has continued to escalate. Through Friday, 12 February 2016, the number of dividend cuts has risen into the “red zone” of our cumulative count of dividend cuts by day of quarter chart.”

Importantly, while the media keeps rambling on that we are “nowhere” close to a recession, it is worth noting the following via NYT:

“The only year in recent history with more dividend cuts was 2009, when the world was staggering through a great financial crisis. A total of 527 companies trimmed dividends that year, Mr. Silverblatt’s data shows. Coca-Cola and other dividend-paying blue chips like IBM and McDonald’s were under severe stress in those days, too, but their financial resources were deep enough to allow them to keep the dividend stream fully flowing.”

Buying “dividend yielding” stocks is a great way to reduce portfolio volatility and create higher total returns over time. However, buying something just for the dividend, generally leads to disappointment when you lose your money AND the dividend. It happens…a lot.

Preservation of capital is first, everything else comes second.

Empathy For The Devil

Danielle DiMartino Booth, former Federal Reserve advisor and President of Money Strong, recently penned an excellent piece that has supported my long-held view on the fallacy of “consumer spending.” To wit:

“As for the strongest component of retail sales, it’s not only subprime loans that are behind the 6.9-percent growth in car sales over 2015. Super prime auto loan borrowers’ share of the pie is now on par with that of subprime borrowers – each now accounts for a fifth of car loan originations. What’s that, you say? Can’t afford that new set of wheels? Not to worry. Just lease. You’ll be in ample company — some 28 percent of last year’s car sales were made courtesy of leases, an all-time high. ”

What has been missed by the vast majority of mainstream economists is that in a country driven 68% by consumer spending, there are limits to that consumption. A consumer must produce (work) first to be paid a wage with which to consume with. Each dollar is finite in its ability to create economic growth via consumption. A dollar spent on a manufactured good has a greater multiplier effect on the economy than the same dollar spent on a service. Likewise, a dollar spent on a manufactured good or service has a greater economic impact than a dollar spent on paying taxes, higher healthcare insurance costs, or interest payments.

The only way to increase the level of spending above the rate of income is through leverage. However, rising debt levels also suggests more of the income generated by households is diverted to debt service and away from further consumption. The chart below shows the problem.

Over the 30-year period to 1982, households accumulated a total of $2 trillion in debt in an economy that was growing at an average rate of 8%. Wages grew as stronger consumption continued to push growth rates higher. Over the next 25-year period, households abandoned all fiscal responsibility and added over $10 trillion in debt as the struggle to create a higher living standard outpaced wage and economic growth.  Since the turn of the century, average economic growth has been closer to 2%. See the problem here.

The bailouts following the financial crisis kept households from going through a much needed deleveraging. Likewise, since banks were taught they would be bailed out repeatedly for bad behavior, no lessons were learned there either. Not surprisingly, as shown by the recent Fed Reserve 2016 Loan Officer Opinion Survey, lending standards are now back to levels seen just prior to the financial crisis.

What could possibly going wrong? The problem is the consumer is all spent out and all leveraged up. While you shouldn’t count the consumer out, just don’t count on them too much.

Just some things to think about.

via Zero Hedge http://ift.tt/1Lw6YlK Tyler Durden

It was all too easy there eh? Never. Gets. Old…

 

The US Open and NYMEX Close were the triggers today…

 

Stocks did not go higher today confounding business TV anchors worldwide…

 

But off last Thursday's lows, it is still impressive…

 

The "short squeeze" ended today…

 

FANGs dropped 1.4% on the day – the biggest drop in 8 days (after 5 straight up days)…

 

Ugly afternoon for the FANGs…

 

Credit wasn't buying it again…

 

Treasury yields declined for the first time in 4 days, led by a 6bps plunge in 30Y (3.5bps 2Y)…

 

As extreme options skews unwind…

 

The USD gained modestly again today, led by EUR weakness but we note JPY was bid (following overnight comments from Kuroda)…

 

USDJPY plunged into the close of NY trading…

 

Extending The BoJ's utter fail even more… NKY back below 16000

 

Crude tumbled back to earth a little but gold (and silver) were the best performers today with a ramp starting as US opened and accelerating after EU closed…

 

Gold's 2nd best day in 13 months…

 

Crude roundtripped its gains from API 'draw' overnight…

 

Charts: Bloomberg

Bonus Chart: You Are Here

via Zero Hedge http://ift.tt/1Q4aIjY Tyler Durden