Tag: finance

 

“Raymond, you’re going to die.”

– Tyler Durden

Hedging for Utopia, or at least a repeat of yesterday.

Many of us on Zero Hedge believe we are well hedged for zero.  Lord knows I have written plenty of articles on just that topic.

http://ift.tt/2p9wRnz

However, are you hedged for infinity?  

What if the Central Banks really are omnipotent?  What if King Dollar reigns for our lifetime and longer?  What if ever increasing debt is totally sustainable?  What if there is plenty of cheap oil for everyone on the planet?  What if BTFDYFI always works?  What if there is no such thing as a black swan?  What if all the remaining days of our lives look pretty much like yesterday? 

We would have nothing to worry about.  Right?

Would you do anything differently?

Would it cause you to re-prioritize your life?

Well, however likely Utopia may be, we cannot ever be sure, despite what we are told by Wall Street sell-side analysts.    

Consider the words of two great sages, Jesus Christ and Tyler Durden.

Jesus said…

Do Not Worry

  

“Therefore I tell you, do not worry about your life, what you will eat or what you will drink, or about your body, what you will wear. Is not life more than food, and the body more than clothing? Look at the birds of the air; they neither sow nor reap nor gather into barns, and yet your heavenly Father feeds them. Are you not of more value than they? And can any of you by worrying add a single hour to your span of life? And why do you worry about clothing? Consider the lilies of the field, how they grow; they neither toil nor spin, yet I tell you, even Solomon in all his glory was not clothed like one of these. But if God so clothes the grass of the field, which is alive today and tomorrow is thrown into the oven, will he not much more clothe you—you of little faith? Therefore do not worry, saying, ‘What will we eat?’ or ‘What will we drink?’ or ‘What will we wear?’ For it is the Gentiles who strive for all these things; and indeed your heavenly Father knows that you need all these things. But strive first for the kingdom of God and his righteousness, and all these things will be given to you as well.

  

“So do not worry about tomorrow, for tomorrow will bring worries of its own. Today’s trouble is enough for today.

  

http://ift.tt/1IetlMg…

 

Tyler Durden has a different perspective, entirely, and puts it in more modern terms.

Do Worry.  I know where you live.

 

It is simultaneously true that the sun will most likely come up tomorrow, and that on a long enough timeline, the survival rate for everyone does drop to zero.  

That being said, Astrobase asks some very important hypothetical questions in his excellent song, Me In The Past.  The most important one being…

“How shall we live?”

So, Raymond K. Hessel, what is it going to be?  Worry?  Do not worry?  

Me?  

I am going to stick to my same old simple strategy of disintermediation.  I have cut out the priests and counselors, and it’s been working pretty well for years.  Please, allow me to share it with you.  

Each day I run the following in my own mind, usually while meditating, swimming, or trail running.

From the past, what regrets am I holding against myself?  

I say them, and then I ask God to remove them.

From the past, what resentments am I holding against others?

I say them, and then I ask God to remove them.

For the future, what fears for myself do I have?

I say them, and then I ask God to remove them.

For the future, what expectations of others do I have?

I say them, and then I ask God to remove them.

 

In what instances have I failed to live in the present?  

I say them, and then I ask God to help me to live in the present.

 

In what instances have I failed to love unconditionally?

I say them, and then I ask God to help me to love unconditionally.

 

That is it.  Simple.  Give it a try, if the urge comes over you.  I think you will be amazed.

Hopefully, in the comments below, some of you will also take this opportunity to share your strategy or habits for mental health in this mad world.

Peace,

h_h

via http://ift.tt/2qsNMp6 hedgeless_horseman

Just ignore it…

 

More crazy pills…

 

Bonds and Bullion were sold post-Fed…

 

But all in all only The Dow managed to cling to gains – even with the panic-Buy The fucking Fed Dip…

 

S&P closes the last 7 days….2388 2387 2388 2384 2388 2391 2387

 

VIX rose on the day… (despite a quick flash crash on The Fed)…but was monkey-hammered lower after The Fed to ensure

 

As Realized vols drop to near 90 year lows..

 

Treasury yields ended the day higher…

 

Except for 30Y which outperformed as chatter of ultra-long bond issuance was dismissed)…

 

The USD Index rallied, breaking to one-week highs, but in a very narrow range…

 

AUD weakness dominates along with JPY but Cable tumbled on comments from May about EU bitchiness…

 

The dollar strength did not help commodities which were already under pressure (Crude and Copper both hit by surges in inventories)

 

Just like in stockland, energy traders bought the inventories dip…

 

Gold and Silver tumbled into the close with the former busting below $1250 and its 100-day moving average…Gold sinks to 6 week lows.

 

And Dr. Copper was clubbed like a baby seal…

via http://ift.tt/2pG5bb1 Tyler Durden

When we summarized yesterday’s disappointing monthly car sales report, which badly missing expectations showing the fourth consecutive month of declining auto sales – the first time this has happened since July 2009 –  we noted what may be the biggest concern for the auto industry: inventory days continued to trend higher as OEMs push product on to dealer lots even though sale-through to end customers has seemingly stalled.

We highlighted GM, one of the few OEMs to actually disclose dealer inventories in monthly sales releases, which reported that April inventories increased to 100 days (935,758 vehicles) from 98 days at the end of March and just 71 days (681,402 vehicles) in April 2016. Indicatlvely, analysts say an overall inventory level of 60 to 70 days is healthy. 100 is not.

Of course, GM management was eager to deflect attention from this troubling statistic, and said that soaring inventories are normal and, somehow, “reflect strong sales”, as per the press release: “As planned, GM’s inventories reflect strong sales, lower car production and strategic, launch-related growth in truck and crossover stocks.”

Or maybe not, because around the time of our post, Automotive News reported Nick Bunkley pointed out something troubling: with 935,758 unsold GM units collecting dust in dealer lots, this was the highest inventory number in 9.5 years, the highest since Nov. 2007, and, as Bunkley reminds us, “one month before the recession officially began.“

GM inventories now at 9.5-year high. 935,758 units (100-day supply) is most since Nov. 2007, 1 month before the recession officially began.

— Nick Bunkley (@nickbunkley) May 2, 2017

Here is what GM’s auto inventory since emergency from bankruptcy looks like.

Will this time the GM inventory cycle indicator be different? With widespread operating shutdowns planned in the coming weeks, it better be, or else something is far more broken with the US consumer than even the paltry 0.7% GDP would suggest.

via http://ift.tt/2pZgiyy Tyler Durden

Authored by Charles Hugh-Smith via OfTwoMinds blog,

No wonder the "middle class" has lost political power – it has lost the economic power of the ownership of productive assets.

Longtime correspondent Mark G. observed that the key phrase in yesterday's excellent commentary by correspondent Ron G. is property-owning middle class. Mark wrote: "It appears to me that the income bracket method used today isn't very informative."

Here is Ron's commentary again:

"The American economy and people are not being served by a government that was designed to be a Democratic Republic, whose architecture and balance of power depended on a property-owning middle class to be the countervailing force against Oligarchy; given the irreversible nature of the market and technology that contributed to the decline of the US middle class, (globalization, automation and AI), it is apparent that we will stay on this downward track of the middle class for the immediate future, and therefore more disparity, dispossession, and coercion will be needed to maintain control, and to me this means a future of intimidation, censorship and continued involuntary servitude."

What does property-owning actually mean? to answer that, we have to tease apart earnings, debt and what assets are owned.

The core contradiction in the present-day version of capitalism is between production and consumption: The system must produce goods and services that can be sold at a profit, and there has to be consumers who are able to buy the goods and services.

Over time, the focus in our culture and economy has shifted from production to consumption, and from acquiring capital to credit-funded consumption. The balance between production and consumption is dynamic and can become dangerously asymmetric; if there are only producers and no consumers, the goods and services pile up unsold and enterprises go bankrupt. If there are only consumers and no producers, the system eats its seed corn (capital) and sinks into impoverishment.

As Mark noted, the income of a household reflects very little of this distinction. Many households enjoy incomes above $100,000 annually but they own essentially nothing. By income alone, we categorize the household as "middle class."

But if we consider their total debt load, their ownership of income-producing assets and assets they own free and clear–essentially nothing–then they must be re-categorized as well-paid proletarians.

So what happens when we redefine the qualifications of "middle class" from what you earn and owe to what you own free and clear that generates income? How many American households qualify as "middle class" under this new definition?

Longtime readers know I have addressed the characteristics of the middle class in some depth for many years. For example:

What Does It Take To Be Middle Class? (December 5, 2013)

The Destabilizing Truth: Only the Wealthy Can Afford a Middle Class Lifestyle (May 6, 2014)

Under this new definition, every household one housing-bubble-burst away from the destruction of their home-equity "wealth" isn't really middle class. Neither are households a paycheck or two away from insolvency.

In Endangered Species: The Self-Employed Middle Class (May 2015), I reported on the results of poring over IRS income and deduction data. Of the 141 million taxpayers reporting income, only 7 million earn a middle class income from an enterprise they own (sole proprietorship or professional corporation).

Compare this to what the wealthy own. Note that the bottom 90%'s assets are largely the family home, an asset which is offset by a heavy burden of debt. The wealthy own income-producing assets: business equity, stocks, bonds, trusts and rental real estate.

No wonder the "middle class" has lost political power–it has lost the economic power of the ownership of productive assets, which is the foundation of political power. A class of well-paid proletarians burdened with debt is not middle class –it is a class of debt-serfs who have been persuaded that debt-fueled consumption is wealth because this delusion is politically useful to the self-serving elites who own the wealth and thus the power.

Mark's conclusion is sobering: "With no genuine middle class exerting power we are left merely with competing groups of oligarchs, with both groups recruiting supporters in the plebeian "mob".   This most resembles Rome  when the Republic was breaking down.  I would therefore not rule out civil war, or even a political partition.   Proletarians have much less to lose in such an event than a real middle class."

via http://ift.tt/2p9GzGz Tyler Durden

After numerous media appearances, Macron and Le Pen are facing each other in a TV debate tonight, which Barclays’ analyst Francois Cabau dubs “Crucial.”

According to Barclays, this debate is key for two main reasons: 1) it will allow Le Pen to clarify her views on Europe (that she has tried to soften to a large extent recently in an apparent move to attract Fillon’s voters) which are arguably a weak point on her side; and 2) it may be seen to, informally, mark the start of the campaign for the legislative elections.

Some further thoughts from Barclays:

Since the first round, there has been unclear second-round voter guidance from some of the Republicans, including Laurent Wauquiez, Interim president of the Republicans, as well as Jean-Luc Mélenchon, who declined to announce how he would vote next Sunday. This has reduced clarity, and has weakened the so-called ‘Republican front’ against Front National. Despite Le Pen striking an historical alliance with another party (of the sovereignist candidate Nicolas Dupont-Aignant), polls have remained largely stable, only tightening very slightly recently, pointing to a c.20pp lead for Macron – with polls having shown very good reliability in the first round.

 

As we have analysed in previous research reports, the French political landscape is undergoing significant structural changes, with four (possibly five) main political forces. This has been accompanied by a lack of conviction (and ultimately of participation) towards the Presidential election. Given the second round takes place during a bank holiday weekend, it will be key for candidates to mobilise voters through the debate to ensure maximum turnout (especially for Macron), which so far has been estimated to be below the first round (77%), and probably even more importantly to minimise the number of nil votes. Indeed, according to the latest Kantar Sofres poll (2 May), 58% of voter decision is driven by rejection, while the latest ipsos poll (2 May) highlights the risk of having a high share of nil votes in the second round, thus suggesting a risk of a hung Parliament at the 11-18 June parliamentary election rounds. In other words, while polls suggest that Macron remains poised to win the Presidential election, a substantial winning margin, a strong turnout, and a low number of nil votes will be necessary but may not be sufficient for his party is to follow up with a good result at the Parliamentary elections, given the lack of local presence EM has.

 

Extrapolating the results from the first round of the presidential election to the legislative election based on outcomes in the 577 constituencies (Opinion Way, Harris Interactive, Atlantico) suggests that the probability of a hung parliament is high: 50 to 70 deputies for FN, 40 to 60 for the Socialists, 120 to 150 for LR, 200 to 230 for EM, 15 for UDI, 20 to 50 for the far left and the rest being uncertain.

 

According to these projections (which are notably not based on opinion polls, in particular the personality of each local politician could have a significant influence) would suggest that even EM, the movement of Emmanuel Macron, would be short of the absolute majority (289). Therefore, based on these calculations, it looks likely that the new president will have to rely either on a coalition, or on a minority government. Meanwhile, Emmanuel Macron looks more likely to be in a position to avoid a ‘cohabitation’ than Marine Le Pen. Our view is that the legislative elections will likely be followed by a comprehensive reshuffling of the political landscape, triggered by the formation of a new majority.

Watch the debate live below

via http://ift.tt/2p6luMo Tyler Durden

Via Disobedient Media

Documents leaked online today appear to show that French Presidential Candidate Emmanuel Macron entered into an operating agreement for a Limited Liability Company (LLC) in the Caribbean island of Nevis, and that the company may have had a business relationship with a bank which has been previously involved in tax evasion cases in the Cayman Islands. Macron claimed he was not concealing assets or holding secret offshore accounts less than a month ago.

The first document is an operating agreement drawn up on May 4th, 2012 to form “La Providence LLC” under the 1995 Nevis Limited Liability Company Ordinance bearing Mr. Macron’s name and signature. La Providence is the name of Macron’s former high school in Amiens, where he first met his wife. The decision to form a company in Nevis is suspect, as the Nevis Confidential Relationship Act prohibits the disclosure of information and guarantees the secrecy and privacy of offshore LLCs in Nevis. Nevis has been described by Bloomberg as one of a number of popular tax havens in the Caribbean.

A second document is a letter sent to La Providence Ltd. from the First Caribbean International Bank, indicating a business relationship with Macron’s LLC. Forbes reported that First Caribbean International Bank was implicated as a facilitator of tax evasion in 2013. It has also been named by Reuters as a player in fraud relating to the 2015 Fédération Internationale de Football Association (FIFA) scandals, after it emerged that a representative for First Caribbean had personally collected a check from a FIFA official and then returned to deposit it in an account in the Bahamas.

In April, Macron denied that he was hiding offshore accounts of inheritances from French authorities, even as his opponent Francois Fillion became mired in similar allegations. If confirmed as authentic, the documents would prove these claims to be untrue and provide important clues as to where the hidden funds might be located.

via http://ift.tt/2p6AbPb William Craddick

Earlier this morning we reported that according to Korea Times, China had allegedly sent North Korea what amount to a final warning over its military provocations. The rumor cited the May issue of Hong Kong monthly news outlet Dong Xiang. It said a Chinese Ministry of Foreign Affairs junior minister invited Park Myung-ho, an official of North Korea, for a meeting. China's Foreign Minister Wang Yi attended the meeting and asked his junior to read aloud the warning to the North over the nuclear test. The memorandum mentioned that China will condemn strongly, pull back on all economic cooperation and even blockade North Korea if it conducted the test.

It didn't take Korea long to respond…

In an almost unprecedented criticism of China on Wednesday, North Korea's state media said Chinese state media commentaries calling for tougher sanctions over Pyongyang's nuclear program were undermining relations with Beijing and worsening tensions. As Reuters reports, a commentary carried by the official Korean Central News Agency (KCNA) slammed China’s "insincerity and betrayal," referring to recent commentaries in China's People's Daily and Global Times newspapers, which it said were "widely known as media speaking for the official stand of the Chinese party and government."

The response was terse and aggressive…

"A string of absurd and reckless remarks are now heard from China every day only to render the present bad situation tenser."

 

"China had better ponder over the grave consequences to be entailed by its reckless act of chopping down the pillar of the DPRK-China relations,"

The KCNA commentary charged that the Chinese articles had attempted to shift the blame to Pyongyang for "deteriorated relations" between China and North Korea and U.S. deployment of strategic assets to the region. It also accused China of "hyping up" damage caused by North Korean nuclear tests to China's three northeastern provinces.

Chinese state media calls for North Korea to dismantle its nuclear program were "a wanton violation of the independent and legitimate rights, dignity and supreme interests" of North Korea and constituted "an undisguised threat to an honest-minded neighboring country which has a long history and tradition of friendship," it said.

North Korea's "media" responded by explaining that the nuclear program was needed for the "existence and development" of the country and "can never be changed nor shaken."

The bottom line is that the window for threading a diplomatic solution, brokered by China, is closing rapidly…

"The DPRK will never beg for the maintenance of friendship with China."

via http://ift.tt/2oYqBCV Tyler Durden

As expected, there were no fireworks in the Fed statement which on balance was rather hawkish thanks to the Fed’s explicit assurance that recent weak data was “transitory” (we wonder how the “data-dependent” Fed will react if the weakness is not transitory). And as the Wall Street reactions start trickling in, the consensus is that the Fed remains on “autopilot” until June, when it will hike once again.

And while the dollar is stronger, Citi’s Todd Elmer made an interesting observation, namely that “if anything the knee-jerk response to the statement saw USD selling. While this very modest move has since unwound, this suggests that market lean was not quite as dovish as recent softer data flow might suggest. The forward looking implications are two-fold: 1) It may take a much more significant shift in signals from the Fed either on rates or the balance sheet to see investors add to expected tightening in the quarters ahead. With limited incentive for the Fed to induce such a move, we doubt that this factor will offer USD much support for the time being. 2) This may denote a more hawkish lean into the data later this week.”

Citi’s conclusion – the dollar may be prone for a selloff: “The elevated payrolls forecast is partly a function of presumed seasonality and payback, but insomuch as this points to investor willingness to shrug off recent weaker indicators, this points to potential for USD-negative disappointment“

First, here is Citi’s Todd Elmer:

Fed on autopilot

 

Today’s policy statement is unlikely to drive many ripples in the market, so the likelihood is that we will continue to see broadly range bound trade until the heavier hitting events later this week. Specifically, speeches by Fed Vice-Chairman Fischer on monetary policy and other Fed officials, as well as the payrolls release are far more likely catalysts for moves in FX. The former provides more freedom for the Fed to offer nuanced shifts on forward guidance than is possible in the constrained policy statement, while the latter will be seen as a key marker on whether or not the recent soft patch in data flow is extending.

 

For the Fed’s part, the policy statement hits slightly hawkish notes. The expectation is that recent slowing will be ‘transitory’ and there is acknowledgement of improved labor data. This should reinforce the view that recent developments are unlikely to interrupt the Fed from its measured tightening, but provide little to prod the market to price in a faster pace of tightening beyond June. The forward guidance was unchanged. This means that pass through to FX is likely to be limited.

 

Indeed, if anything the knee-jerk response to the statement saw USD selling. While this very modest move has since unwound, this suggests that market lean was not quite as dovish as recent softer data flow might suggest. The forward looking implications are two-fold: 1) It may take a much more significant shift in signals from the Fed either on rates or the balance sheet to see investors add to expected tightening in the quarters ahead.

 

With limited incentive for the Fed to induce such a move, we doubt that this factor will offer USD much support for the time being. 2) This may denote a more hawkish lean into the data later this week. The elevated payrolls forecast is partly a function of presumed seasonality and payback, but insomuch as this points to investor willingness to shrug off recent weaker indicators, this points to potential for USD-negative disappointment. 

And BMO’s Ian Lyngen:

FOMC statement shows committee is still viewing the economy as “just fine” and a rate hike in June is still possible, BMO strategist Ian Lyngen writes in note. 

 

Changes from previous statement in line with expectations

 

“Treasuries are only modestly weaker in the wake of the Fed, in line with the interpretation that very little was said and the big story of the day remains the lower odds of an ultra-long bond”

via http://ift.tt/2qzZQll Tyler Durden

From just below 70% before to 94% now, June is on like Donkey Kong –

 

No matter how shitty economic data is…

 

The reaction in asset markets is modest to say the least…

Citi: “Treasuries are only modestly weaker in the wake of the Fed, in line with the interpretation that very little was said and the big story of the day remains the lower odds of an ultra-long bond”

The Dollar Index is higher (though the siz of the move is marginal)

via http://ift.tt/2qFQuns Tyler Durden

Having perfectly top-ticked US economic data with its March rate-hike, the subsequent collapse in 'data' has been shrugged off as transitory (or seasonal) and by all indications The Fed seems set on two more rate hikes this year no matter what (even as the market diverges dovishly).

• *FED SAYS GROWTH SLOWDOWN IN 1Q LIKELY TO BE TRANSITORY
• *FED SAYS 12-MONTH INFLATION RUNNING CLOSE TO ITS 2% GOAL
• *FED: JOB GAINS SOLID, HOUSEHOLD SPENDING ROSE ONLY MODESTLY
• *FED: LABOR MKT CONTINUED TO STRENGTHEN EVEN AS GROWTH SLOWED
• *FED REPEATS IT MAINTAINING BALANCE-SHEET REINVESTMENT STRATEGY
• *FED SAYS FOMC VOTE WAS UNANIMOUS

Here are some notable redlined changes:

• "Information received since the Federal Open Market Committee met in March indicates that the labor market has continued to strengthen even as growth in economic activity slowed"
• "Job gains were solid, on average, in recent months, and the unemployment rate declined"
• "Household spending rose only modestly, but the fundamentals underpinning the continued growth of consumption remained solid"

The Fed commented that inflation is reaching its goal:

• Inflation measured on a 12-month basis recently has been running close to the Committee's 2 percent longer-run objective

… although:

• "Excluding energy and food, consumer prices declined in March and inflation continued to run somewhat below 2 percent"

But the key phrase: slowing growth was transitory:

• The Committee views the slowing in growth during the first quarter as likely to be transitory and continues to expect that, with gradual adjustments in the stance of monetary policy, economic activity will expand at a moderate pace, labor market conditions will strengthen somewhat further, and inflation will stabilize around 2 percent over the medium term

On net: a more hawkish than dovish statement.

*  *  *

First things first, The Fed offered no explanation for the fact that they hiked rates during a quarter that saw just 0.7% GDP growth – the weakest quarter for a rate hike since 1980…

 

Since The Fed hiked rates in March, things have not gone the way they may have hoped… Gold and bonds are bid, stocks are unchanged and banks have been battered…

 

It is perhaps noteworthy that The Fed rate hike in March was the absolute top-tick in post-Trump US economic data – the collapse since then has been anything but 'transitory'…

 

Federal Reserve officials have suggested it will probably be appropriate to begin unwinding the central bank’s $4.5 trillion balance sheet later this year, but that guidance is premised in part on projections that they will be able to raise interest rates twice more before the year is out. However, investors see just one more hike in 2017 as more likely than two, according to the prices of federal funds futures contracts.

 

June rate hike odds continue to hover near 70% (despite economic data's collapse)…

 

But the market remains notably less hawkish than The Fed…

 

All eyes are on any commentary with regard The Fed Balance Sheet…

 

And don't forget, the maturation of The Fed balance sheet is chunky…

As Bloomerg reports, analysts expect the Fed will have to decide whether to roll over a certain percentage of its principal or announce a fixed dollar target of its Treasury and mortgage securities to unwind the $4.26 trillion of debt in a “passive and predictable manner.” Under the percentage option, the scale of the Fed’s balance-sheet reduction “will fluctuate significantly” from month-to-month.

Don't worry – *BERNANKE: I'M "QUITE CALM" ABOUT PLAN TO SHRINK BALANCE SHEET

*  *  *

The FOMC word count continues to slide… The word count fell 4 from March to 517

 

Full Redline below:

 

via http://ift.tt/2pYS6we Tyler Durden