Author: admin

Moments after AAPL announced on Wednesday that it would not comply with FBI demands to hack into its phone, Donald Trump was already arguing vehemently that Apple should help investigators crack the phone’s encryption system: “To think that Apple won’t allow us to get into her cell phone,” Trump said on Fox and Friends Wednesday morning. “Who do they think they are? No, we have to open it up.”

“Apple, this is one case, this is a case that certainly we should be able to get into the phone,” he said. “And we should find out what happened, why it happened, and maybe there’s other people involved and we have to do that.”

“I agree 100% with the courts,” the mogul added. “In that case, we should open it up. I think security over all — we have to open it up, and we have to use our heads. We have to use common sense.”

And then, moments ago during a campaign event in Pawleys Island, South Carolina, Trump had an epiphany: “It just occurred to me.” His solution: a boycott of Apple Inc products until the tech giant agrees to U.S. government demands that it unlock the cellphone of the San Bernardino killer.

“Boycott Apple until they give up the information,” Trump said. “The phone is owned by the government… Tim Cook is looking to do a big number probably to show how liberal he is. Apple should give up.”

The billionaire’s call to action followed an interview with Bloomberg in which he offered harsh words for Cook.

“Tim Cook is living in the world of the make believe,” Trump said Friday in a telephone interview. “I would come down so hard on him — you have no idea — his head would be spinning all of the way back to Silicon Valley.”

“I think Tim Cook is totally out of line and I think the government should come down on Tim Cook very, very hard,” Trump said in the interview Friday. “I think it’s a disgrace what he is doing, we’re talking about lives, potentially thousands of lives, and we should find out who else was involved in the plot where 14 people were killed.”

It was unclear initially it Trump had a specific cell phone company as an alternatives, or if this was all part of a grand marketing ploy by Tim Cook to get Trump’s opponents to rush out and purchase iPhones in retaliation. We will keep an eye on channels checks over the next few days for the answer.

But the biggest irony is shown is self-evident in the screengrab of Trump’s latest tweet below.

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

Come on… stocks are up large… everything must be awesome!!

This was S&P and Dow Transports best week of the year… (Dow Industrials best week in 3 months, Nasdaq and Small Caps best week in 4 months)

Today's moves were capped at the European close…

Trannies are up 5 weeks in a row – the same after The Oct 2014 Bullard Bounce…

Let's just look across assets this week:

• US equities Up 2.5% to 3.5%
• US Treasuries ~Unchanged
• Oil ~Unchanged
• Gold ~Unchanged
• USDJPY -0.5%
• IG Credit ~Unchanged

Homebuilders outperformed (despite weak Starts and Permits data, weak sentiment, weak mortgage applications and weak architecture billings), and Financials and Energy had their best week of the year…

But Credit markets did not play along with financial stocks…

The Wednesday panic spike in stocks appears to have been some kind of market-neutral liquidation as "Weak Momentum" stocks soared relative to "Strong Momentum" stocks…

And shorts were massively squeezed also… this was the biggest short-squeeze week since the first week of Feb 2015

And something very odd was going on in The VIX ETF complex…

Icahn Enterprises plunged after S&P shifted to negative watch, implying a junk rating looms…

Treasury yields see-sawed all week (shortened week), ending with 10Y practically unchanged and the short-end up 2-3bps…

USDJPY's tumble was the biggest news this week but EUR weakness helped USD Index rise 0.75% on the week…

Modest USD strength on the week left gold and silver lower. Copper and crude outperformed, after crude plunged to unch on the week early on today…

The crude futures roll today sparked panic-buying in the March contract into the close which ramped the cash-roll higher…

Notably Oil VIX plunged on the week (from over 80 to almost 60)…

Charts: Bloomberg

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

Having successfully called the market's retreat in the fall of 2015, Universa's Mark Spitznagel is not taking a victory lap as he warns Bloomberg TV that "the crash has only just begun."

Investors are facing the most binary "let's make a deal" market in history in Spitznagel's view: choose Door #1 to bet on Keynesianism, central planners, and monetary interventionism; or Door #2 to bet on free markets and natural price discovery.

"There is massive cognitive dissonance here," Spitznagel explains as history teaches us that door #2 is the right choice… but it's not possible to do that today as investors have been coerced to choose door #1, but when door #1 is slammed open "we will see that dreaded black swan monster."

That is what is going on right now:

"Investors want to go with The Fed when it's working – like David Zervos… the problem is, when do you know that it is not working?"

"At some point this stops working…"

 

"the market is going through a resolution process, transitioning from the cognitive dissonance of Door #1 to the harsh reality of Door #2… if everyone were to change doors at the same time, that is a market crash… it can't be done in a non-messy way."

Must watch reality check behind the smoke and mirrors we call markets… (we note Mark's excellent analogy starting at around 3:10)

via Zero Hedge http://ift.tt/1XCtY9P Tyler Durden

On Thursday, we revealed something truly shocking: ISIS is no longer handing out free Snickers bars and Gatorade to its fighters.

Apparently, the cash crunch created by Russia’s unrelenting assault on the group’s illicit oil trafficking operation has left Abu Bakr al-Baghdadi with little choice but to cut salaries by 50% and eliminate some of the perks soldiers have until now enjoyed.

Like free candy bars.

And complementary sports beverages.

For those unaware, ISIS brings in around a billion a year in proceeds from various illicit activities including, but certainly not limited to, illegal crude sales, slave trading, and taxes (and yes, we deliberately lumped taxes in with “illicit activities”, an editorial decision we’re sure readers will agree with).

Those profits are being eroded by the Russian Defense Ministry’s assault on militant oil smuggling routes, and unless Raqqa’s terror-crats can figure out how to extract a commensurate amount of profits from Libya’s oil riches, the caliphate may be set to enter a terminal decline.

As we also noted on Thursday, Islamic State’s balance sheet demise “isn’t a consequence of one airstrike on a Mosul cash center as AP and other Western media would have you believe.”

We were referring to the much balleyhooed strike on an ISIS “bank” in Mosul, Iraq’s second largest city that’s been controlled by ISIS for the better part of two years. “We’re talking about an organization that brings in a billion dollars a year here, so destroying a few million in hard currency isn’t going to make a difference,” we remarked.

Well, don’t look now, but ABC is out with a new piece claiming that “coalition” strikes have destoryed more than a half billion in illegal dollars procured by Islamic State. “The U.S. believes that airstrikes in Iraq and Syria have destroyed more than $500 million in cash that ISIS used to pay its fighters and fund its terror and military operations,” ABC reports. “Ten strikes have been conducted since then with the most high profile being two airstrikes in Mosul, in northern Iraq, targeting facilities that American officials characterized as ISIS banks.” 

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

BofA’s HY credit strategist Michael Contopoulos, whose work we have recently presented on several occasions, has been rather dour over the past year on the future of HY debt, as the junk bond market first descended into purgatory, and then right into the 9th circle of hell, courtesy of a collapse in the energy sector unlike anything seen in history…

… a collapse which virtually everyone admits will spread into all other sectors and products: it’s just a matter of time.

However, rarely if ever have we heard Contopoulos as downright apocalyptic as he is in his latest note, “A Minsky Moment”, which has to be read to be believed, if only for the selected excerpts below:

With a view that the market will eventually price in a much worse default environment than it is currently, we are left trying to determine when peak spreads will occur and for how long they will last. Unfortunately, when peak spreads are reached is not consistent across time periods, making it difficult to time the optimal entry. For example, in 1989 spreads peaked 178 days before the default rate peaked, in 2002 it was 165 days after, and in 2008 it was 290 days before (Chart 2). Convoluting the picture today is that the Energy default rate has the potential to skew that of the overall market. For example, if high yield E&P companies realize a 50% default rate this year and the rest of Energy experiences a 25% default rate, the Energy component of the market default rate could be nearly 6ppt. If the rest of the market experiences just a 4ppt rate, the market could realize double digit default rates in 2016, despite a relatively benign  non-commodity contribution.

 

* * *

In our opinion, however, we think the biggest issue in the market is the buildup of corporate leverage without a place for it to go. And what will likely cause peak spreads is not an increase in defaults, but a capitulation moment that creates a rush for the exits. In this way, we think the 1989 and 2008 cycles are more representative of what we could see this go around, as max spreads occur before the highest defaults – whether that is in 2016 or 2017 will depend on the timing of the catalyst.

* * *

Although we have argued for some time that what matters to market performance is underlying fundamental growth, we have further argued that should high yield be the canary in the coal mine for earnings and the macro economy, the ensuing crisis is likely to be one defined by the excessive credit creation in the corporate market. Should a market meltdown be accompanied with a lack of inflationary pressure, the credit creation of the last 5 years will likely be met with a period of significant credit destruction.

 

And in a world where corporate balance sheets are arguably the most unhealthy they have ever been (all-time high leverage in HG and HY) where companies have relied on cheap debt to fund a growth through acquisition strategy, what happens if funding is either unavailable or too expensive to make a growth through acquisition strategy make sense? Same goes for buybacks and special dividends? Then one would have to cut capex. But with little capex to cut, personnel could be cut next (particularly if those people are beginning to cost more). And when coupled with a consumer that is already saving 5.5% of disposable income, should we see layoffs amidst an already low GDP, poor CEO confidence, and banks that are risk averse and perhaps hurting with commodity exposure, things could potentially get messy in such a scenario.

* * *

… perhaps the biggest innovation of the post-GFC years, and potentially the most detrimental and levering, was the massive increase in the Fed’s balance sheet on the back of quantitative easing. As the Fed’s financial engineering created a lack of yield globally, opportunities to invest in corporate debt abounded both within the US and globally. Although consumer and bank balance sheets have been repaired, the post-GFC easy monetary world created an unsustainable thirst for corporate debt that earnings growth never supported (Chart 9 and Chart 10).

 

 

Herein lies our concern for markets and where the fear of a Fisherian debt deflation spiral can become worrisome. Although it is unlikely that the corporate market is enough to cause outright deflation, certainly a corporate credit bust can create disinflation or enhance deflation if it already exists. As liquidation leads to falling prices, dollar strength causes the very debt that needs to be paid down all the larger. Liquidation leads to defaults and layoffs, which, in a post-Volcker world, would likely cause banks to pull back on lending even further. The lack of lending coupled with job losses could create a weak consumer, which would further propagate a negative feedback loop to corporate earnings and further liquidation. Although we stress that this is not the scenario our economists envision for the US economy, we think attention needs to be paid to the potential impact credit markets can have on the macro economy, should the debt deflation cycle kick off.

And in a subsequent post we will lay out the three potential catalysts to the capitulations that BofA believes could unleash the endgame of this particular cycle of central planning. 

via Zero Hedge http://ift.tt/1mMJvX9 Tyler Durden

"We are either already in a recession or rapidly moving towards one," warns billionaire investors Sam Zell. A stunned Maria Bartiromo is shocked to hear from Zell that world trade has slowed dramatically and currency wars and election uncertainties have contributed to this. Most shocking of all to the Keynesian pump-primers (and oil bulls) is Zell's remarks that "when I look around the world for prospective demand, it's not there… demand is pretty weak." Markets are not pricing in recession and Zell warns, even with recent declines that "this is pretty frothy" thanks to easy money and he is a seller not a buyer.

Zell warns – "The Fed is out of tools [to save the markets].. and that is going to make this more problematic."

via Zero Hedge http://ift.tt/1QqS9lV Tyler Durden