Category: zerohedge

If you ask anyone at The Fed (apart from Jeremy Stein) if there is a bubble in the credit markets, the answer is definitive “no” since bubbles are always obvious. Well, hopefully, the following chart will make it “obvious” that the Fed’s policy has driven a ‘reach for yield’ so excessive as to explode the growth of so-called cov-lite loans. This ‘riskiest of risky’ loan issuance, while already at record high levels, has now massively exceeded the previous bubble in terms of percent issued as the demand for anything with yield ‘enables’ the worst of the worst companies to refinance their zombie-like existence.

Cov-lite issuance is over 45% of all loan issuance in 2013!!!

(bear in mind that the great majority of this issuance is being used for refinancing – not capex or growth-related spending)

In context – that is more than double the amount of the last bubble peak!!

 

With firm leverage at record highs…

 

…and record margin debt in stocks, as we warned two months ago, record-high exposure to these risky credit structures (and the re-emergence of CLOs to concentrate them) is, we are sure, nothing to worry about… because it’s different this time.

 

[Addenda: while December is always a slower month, we do note that Cov-Lite issuance is at its lowest since the mid-sumer Taper tantrum… – perhaps risk is being repriced a little?]

 

Source: Bloomberg

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/YZoqYEEkXXo/story01.htm Tyler Durden

Who knew? Jane Austen was a dyed-in-the-wool, easy-money-loving, stimulus-demanding ‘expert’ on monetary policy. As Citi’s Steven Englander finds in his eloquent new year’s note, it seems the antiquated authoress has much sense-and-sensibility to reproach those of us who believe in real money and a return to a real economy. From justifying QE, “Money is the best recipe for happiness,” to the importance of the wealth effect, “If this man had not twelve thousand a year, he would be a very stupid fellow;” Austen offers some ‘balance’ to offer on Fed transparency, tapering, and congressional spending.

Via Citi’s Steve Englander,

‘Elinor now found the difference between the expectation of an unpleasant event, however certain the mind may be told to consider it, and certainty itself.” – particularly apt in light of the market reaction to tapering.

“Finish it at once. Let there be an end of this suspense. Fix, commit, condemn yourself.”  — more on tapering

“A watch is always too fast or too slow. I cannot be dictated to by a watch.”  — on the tapering calendar

“I have not wanted syllables where actions have spoken so plainly.”  — advice on communications policy

“I think we are a great deal better employed, sitting comfortably here among ourselves, and doing nothing.”  — insight into labor force participation

“I do not think it worth while to wait for enjoyment until there is some real opportunity for it.”  — the hysteresis effect

“A large income is the best recipe for happiness I ever heard of.” – on the need for more stimulus

“I am sorry to tell you that I am getting very extravagant and spending all my money: and what is worse for you, I have been spending yours too. ”  —  message to Congress

“If this man had not twelve thousand a year, he would be a very stupid fellow.” – the importance of the wealth effect for human capital

“Money is the best recipe for happiness.” – QE justified

“If things are going untowardly one month, they are sure to mend the next.”   — on economic forecasting

“There is a monstrous deal of stupid quizzing, & common-place nonsense talked, but scarcely any wit.”  — FOMC press conferences

“It would be most right, and most wise, and, therefore must involve least suffering.” –taking the easy policy route

“We do not look in great cities for our best morality.” – distribution effects of QE

“I don’t approve of surprises. The pleasure is never enhanced and the inconvenience is considerable.” — the argument for Fed transparency

“It is particularly incumbent on those who never change their opinion, to be secure of judging properly at first.”  — nothing more need be said

“..people always live forever when there is an annuity to be paid them”  — on the need for entitlements reform

“And we mean to treat you all,’ added Lydia, ‘but you must lend us the money, for we have just spent ours at the shop out there.” – on balance sheet expansion

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/dz_mLQs6oFg/story01.htm Tyler Durden

Death, (rising) taxes, and shorting stocks on POMO days resulting in lots of margin pain: those were the near certainties of 2013 even admitted by the US Treasury. So how does the first POMO schedule of 2014 look like? Well, as is by now well-known, the Fed will taper its monthly purchase of Treasury securities by $5 billion so instead of the old $45 billion per month, the NY Fed will “only” monetize $40 billion next month. However, since the reduction will be prorated across all POMO days, the old maxim still stands: shorting stocks on these POMO days can and likely will be hazardous for your health. Of note: no POMOs in the first week of the year until Monday January 6.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/IFnYcAOGtgg/story01.htm Tyler Durden

The COO of the Centers for Medicare and Medicaid Services, who supervised the disastrous rollout of Obamacare, is retiring. Michelle Snyder is the second official to depart the sinking ship CMS following CIO Tony Trenkle’s resignation in November. While in charge of day-to-day activities, the allocation of resources, and “standing up new programs and activities required by the Affordable Care Act,” the NY Times reminds readers that Kathleen Sebelius said “Michelle Snyder is not responsible for those debacles.” We can only wonder at the retirement package this 41-year veteran will receive…

 

Via NY Times,

The No. 2 official at the Centers for Medicare and Medicaid Services, who supervised the troubled rollout of President Obama’s health care law, is retiring, administration officials said Monday.

 

The official, Michelle Snyder, is the agency’s chief operating officer, in charge of day-to-day activities and the allocation of resources, including budget and personnel.

 

Technology experts who built the website for the federal insurance exchange, HealthCare.gov, reported to her.

 

…

 

Marilyn B. Tavenner, the administrator of the Medicare agency, said Ms. Snyder was retiring this week “after 41 years of outstanding public service.”

 

…

 

A former agency official who had predicted Ms. Snyder’s departure said Monday: “She had to go. She was responsible for the implementation of Obamacare. She controlled all the resources to get it done. She was in charge of information technology. She controlled personnel and budget.”

 

…

 

At a congressional hearing on Oct. 30, Kathleen Sebelius, the secretary of health and human services, was asked who was responsible for developing the federal website, and she named Ms. Snyder.

 

But Ms. Sebelius quickly added: “Michelle Snyder is not responsible for those debacles. Hold me accountable for the debacle. I’m responsible.”

The question is – why retire now? If things are looking so rosy going forward and the worst is behind us for the Obamacare rollout?

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/vG5WHBZsy7g/story01.htm Tyler Durden

The COO of the Centers for Medicare and Medicaid Services, who supervised the disastrous rollout of Obamacare, is retiring. Michelle Snyder is the second official to depart the sinking ship CMS following CIO Tony Trenkle’s resignation in November. While in charge of day-to-day activities, the allocation of resources, and “standing up new programs and activities required by the Affordable Care Act,” the NY Times reminds readers that Kathleen Sebelius said “Michelle Snyder is not responsible for those debacles.” We can only wonder at the retirement package this 41-year veteran will receive…

 

Via NY Times,

The No. 2 official at the Centers for Medicare and Medicaid Services, who supervised the troubled rollout of President Obama’s health care law, is retiring, administration officials said Monday.

 

The official, Michelle Snyder, is the agency’s chief operating officer, in charge of day-to-day activities and the allocation of resources, including budget and personnel.

 

Technology experts who built the website for the federal insurance exchange, HealthCare.gov, reported to her.

 

…

 

Marilyn B. Tavenner, the administrator of the Medicare agency, said Ms. Snyder was retiring this week “after 41 years of outstanding public service.”

 

…

 

A former agency official who had predicted Ms. Snyder’s departure said Monday: “She had to go. She was responsible for the implementation of Obamacare. She controlled all the resources to get it done. She was in charge of information technology. She controlled personnel and budget.”

 

…

 

At a congressional hearing on Oct. 30, Kathleen Sebelius, the secretary of health and human services, was asked who was responsible for developing the federal website, and she named Ms. Snyder.

 

But Ms. Sebelius quickly added: “Michelle Snyder is not responsible for those debacles. Hold me accountable for the debacle. I’m responsible.”

The question is – why retire now? If things are looking so rosy going forward and the worst is behind us for the Obamacare rollout?

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/vG5WHBZsy7g/story01.htm Tyler Durden

That didn’t take long.

It was only yesterday that Saudi Arabia pledged a record $3 billion to prop up Lebanon’s armed forces, in what the WSJ described as “a challenge to the Iranian-allied Hezbollah militia’s decades-long status as Lebanon’s main power broker and security force.” Lebanese President Michel Sleiman revealed the Saudi gift on Lebanese national television Sunday, calling it the largest aid package ever to the country’s defense bodies. The Saudi pledge compares with Lebanon’s 2012 defense budget, which the Stockholm International Peace Research Institute put at $1.7 billion.

The Saudi move was announced hours after thousands of Lebanese turned out for the funerals of former cabinet minister Mohamad Chatah and some of the other victims killed Friday in a bombing in downtown Beirut. The bomb was believed to have targeted Mr. Chatah, an outspoken critic of Hezbollah’s dominance of Lebanese affairs and security. No group has claimed responsibility. Saudi Arabia on Friday responded to the assassination by calling for Lebanon to build up the government and armed forces “to stop this tampering with the security of Lebanon and the Lebanese.”

Surprisingly, the biggest winner here may be none other than France: “Lebanon would use the Saudi grant to buy “newer and more modern weapons,” from France, said Mr. Sleiman, an independent who has become increasingly critical of Hezbollah. It followed what he called “decades of unsuccessful efforts” to build a credible Lebanese national defense force.”

However, back to the Lebanese quid pro quo: less than 24 hours after the announcement, what does Lebanon go ahead and do? Why it fired at Syrian warplanes (recall Syria is the archnemesis of Saudi Arabia’s Prince Bandar) of course, the first time it has done so since the start of the Syrian conflict. From BBC:

Lebanese troops have fired at Syrian warplanes violating its airspace, for what is thought to be the first time since the conflict in Syria began.

 

Lebanon’s National News Agency said the army had responded to a raid on Khirbet Daoud, near Arsal in the Bekaa Valley.

 

Syrian government forces have fired into Lebanon in the past, targeting rebels sheltering over the border.

 

The Lebanese authorities had until now not responded militarily, hoping they would not be dragged into the war.

 

Arsal is predominantly Sunni and its residents have been broadly supportive of the Sunni-dominated uprising against Syrian President Bashar al-Assad, whose Alawite sect is an offshoot of Shia Islam.

 

The north-eastern town has been flooded with refugees since the Syrian military launched an offensive in the Qalamoun mountains last month.

 

Some 20,000 people have settled in makeshift camps, as Syrian troops backed by members of the militant Lebanese Shia Islamist movement Hezbollah have sought to cut rebel cross-border supply routes.

And that is how Syria buys proxy war access on yet another front in an indication that its hopes that sooner or later the Syrian conflict will re-escalate enough to allow the “developed west” to stage another chemical attack and finally have the US topple Assad, are still alive. The only question is whether this time Putin, instead of simply diffusing the Syrian confrontation once again, will have an incendiary present or two for the Saudi princes, in part as gratitude for the string of recent Saudi-inspired terrorist attacks in Volgograd.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/IjJR3FWweHs/story01.htm Tyler Durden

Authored by Daniel Hannan, originally posted at The Telegraph,

How do you get a poll to register a large majority in favour of EU membership? Easy. Confine your survey to quangocrats, charity heads, civil servants, CEOs of multi-national corporations and the like. The pro-EU lobby group, British Influence, has been trying to get people excited about its poll of “leading figures” – that is, 700 bien pensant metropolitans of whom, sure enough, 69 per cent want to stay in the EU. Indeed, the only surprise is that, of a demographic specifically selected for pro-Brussels bias, 31 per cent don’t agree.

Not that I blame British Influence: when every poll of the general population shows an anti-EU majority, you have to clutch at whatever support you can find. Nor am I saying that all, or even most, of the people surveyed are beneficiaries of the Brussels racket. They don’t have to be. When enough NGOs get money from the Commission, even those that don’t tend to be inflected by the Euro-enthusiasm of their peers. When a large number multinationals and megabanks have invested in lobbying to get rules that suit them, other corporates get carried along by the groupthink.

Let’s run over some of the other things that all these “leading figures” have favoured over the years, shall we? State planning, prices and incomes policies, the SDP, the ERM. Almost without exception, the “leading figures” trotted out by British Influence to argue for the EU were, a decade ago, making precisely the same arguments about joining the euro: we’ll lose influence, overseas investment will dry up, blah blah fishcakes. If they were forecasters in the private sector, they’d have been sacked long ago. But because they represent the goody-goody consensus, they can always be sure of a sympathetic hearing from the BBC.

For as long as I can remember, the European debate has involved an element of snobbery. Supporters of the project are not so much pro-EU as anti-Eurosceptic, seeing themselves as defenders of moderate, decent, civilised values against Blimps, oiks and football hooligans. I’ve lost count of how many people in Brussels have said to me, “You know, Hannan, you’re very broadminded for a Eurosceptic”. They mean to be nice, but they reveal their narcissism.

Well, let me be broadminded now. It may be true that the Eurosceptic movement has more than its share of eccentrics. You know what? The same is true of every movement that takes on the orthodoxy. You can’t read history without being struck by how many oddballs and misfits were attracted, in the early stages, to the campaign against slavery, say, or the campaign for a universal franchise. Any movement that challenges the status quo will attract, as well as principled reformers, people who are simply grumpy about life in general. But this doesn’t make them wrong.

The Chartists and the Suffragettes were attacked by their opponents in exactly the same terms as Ukip today: as a bunch of mavericks and obsessives. When the vote was extended to all adults, the moderate men, the sensible men, the men of bottom and judgment, suddenly remembered that they had favoured the idea all along. The same will happen with Brexit. Just watch.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/SNdtV0t1ZwU/story01.htm Tyler Durden

Authored by Daniel Hannan, originally posted at The Telegraph,

How do you get a poll to register a large majority in favour of EU membership? Easy. Confine your survey to quangocrats, charity heads, civil servants, CEOs of multi-national corporations and the like. The pro-EU lobby group, British Influence, has been trying to get people excited about its poll of “leading figures” – that is, 700 bien pensant metropolitans of whom, sure enough, 69 per cent want to stay in the EU. Indeed, the only surprise is that, of a demographic specifically selected for pro-Brussels bias, 31 per cent don’t agree.

Not that I blame British Influence: when every poll of the general population shows an anti-EU majority, you have to clutch at whatever support you can find. Nor am I saying that all, or even most, of the people surveyed are beneficiaries of the Brussels racket. They don’t have to be. When enough NGOs get money from the Commission, even those that don’t tend to be inflected by the Euro-enthusiasm of their peers. When a large number multinationals and megabanks have invested in lobbying to get rules that suit them, other corporates get carried along by the groupthink.

Let’s run over some of the other things that all these “leading figures” have favoured over the years, shall we? State planning, prices and incomes policies, the SDP, the ERM. Almost without exception, the “leading figures” trotted out by British Influence to argue for the EU were, a decade ago, making precisely the same arguments about joining the euro: we’ll lose influence, overseas investment will dry up, blah blah fishcakes. If they were forecasters in the private sector, they’d have been sacked long ago. But because they represent the goody-goody consensus, they can always be sure of a sympathetic hearing from the BBC.

For as long as I can remember, the European debate has involved an element of snobbery. Supporters of the project are not so much pro-EU as anti-Eurosceptic, seeing themselves as defenders of moderate, decent, civilised values against Blimps, oiks and football hooligans. I’ve lost count of how many people in Brussels have said to me, “You know, Hannan, you’re very broadminded for a Eurosceptic”. They mean to be nice, but they reveal their narcissism.

Well, let me be broadminded now. It may be true that the Eurosceptic movement has more than its share of eccentrics. You know what? The same is true of every movement that takes on the orthodoxy. You can’t read history without being struck by how many oddballs and misfits were attracted, in the early stages, to the campaign against slavery, say, or the campaign for a universal franchise. Any movement that challenges the status quo will attract, as well as principled reformers, people who are simply grumpy about life in general. But this doesn’t make them wrong.

The Chartists and the Suffragettes were attacked by their opponents in exactly the same terms as Ukip today: as a bunch of mavericks and obsessives. When the vote was extended to all adults, the moderate men, the sensible men, the men of bottom and judgment, suddenly remembered that they had favoured the idea all along. The same will happen with Brexit. Just watch.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/SNdtV0t1ZwU/story01.htm Tyler Durden

The trapped-in-the-Antarctic-ice Australian research vessel’s mission, among others, is to examine the effect of global warming on a receding Antarctic ice shelf…

 

(h/t @Pedlar7)

 

Via The Spirit of Mawson blog (the research blog),

“Until recently it was thought this ice sheet was stable, sitting on the continental crust above today’s sea level. However there is an increasing body of evidence, including by the AAE members, that have identified parts of the East Antarctic which are highly susceptible to melting and collapse from ocean warming.

 

…The effects of this marked shift in westerly winds are already being seen today, triggering warm and salty water to be drawn up from the deep ocean, melting large sections of the Antarctic ice sheet with unknown consequences for future sea level rise“

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/1iL4MmrA0YA/story01.htm Tyler Durden

This morning we were treated to the usual stupifying comments from Greek leadership that “Greece won’t need more loans,” and will “start becoming a normal country,” because the Greek ‘recovery’ is “built on solid foundations.” However, it appears the public-at-large is not so happy as the BBC reports shots were fired at the German ambassador’s residence in Athens. Samaras said Greeks “have gone through hard times.” With over 60 bullets fired, it seems the someone is upset that their union overlords won’t lift those hard times anytime soon…

 

Via The BBC,

Shots were fired at the German ambassador’s residence in Athens early on Monday, without causing injury.

 

Bullets were found embedded in the steel gate, Greece’s Kathimerini news website reports.

 

Ambassador Wolfgang Dold’s residence is in the Greek capital’s Halandri district. The raid took place at around 03:30 local time (01:30 GMT).

 

It is not clear who the attackers were. Germany’s insistence on budget cuts has caused much resentment in Greece.

 

…

 

At least 60 spent bullet casings were found at the scene of the attack. Police say the bullets came from two Kalashnikov assault rifles.

 

 

So far no-one has admitted carrying out the attack.

 

In a message to the unidentified perpetrators, Mr Dold said “whoever is responsible for this act: you will not succeed in disrupting the close and friendly relations of our two countries”.

 

He was in the residence when the shots were fired.

 

German Foreign Minister Frank-Walter Steinmeier said Berlin took the attack “very seriously” and “nothing, absolutely nothing, can justify such an attack”.

 

The Greek government called it a “cowardly terrorist action” aimed at undermining Greece’s six-month presidency of the EU, which begins on 1 January.

 

Germany is the biggest lender involved in the Greek bailout – a 240bn-euro (£200bn; $331bn) rescue for the debt-laden country that started in 2010.

 

The bailout conditions require Greece to rein in public spending, and that has meant hardship for Greeks who have lost their jobs or who now pay more for essential services.

 

In 1999 the ambassador’s residence was hit by a rocket-propelled grenade, in an attack claimed by the now defunct radical left-wing group November 17.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/Ojnf5Jphksg/story01.htm Tyler Durden