Tag: finance

Today was a day when not one but two credit analysts, Citi’s Hans Lorenzen and BofA’s Barnaby Martin, both declared that the ECB was doing “too much” QE.

As Lorenzen showed in one or his slides to the presentation we highlighted previously, the ECB is now officially dominating the secondary € credit market, by purchasing approximately 50% of the traded volume of bonds.  This was part of a presentation which alleged not only that the ECB has injected “too much money & not enough supply”, but that the costs of QE in general are now outweighing the benefits.

BofA’s Barnaby Martin likewise wrote in a report today that the ECB’s “CSPP is simply “too big”, by which he means that it is “Too big – in buying terms – not to remain a consistently bullish tailwind for credit spreads.” He further notes that despite a jump in near-term supply, spreads will head tighter into year end and that “European credit can continue to rally. We look for Euro IG spreads to end the year at 95bp, Sterling IG to end at 105bp and Euro HY spreads to end the year at 340bp… the ECB have waited three months for decent primary, and now it is here we believe they are keen to buy in size.”

However, with seemingly nothing in the world capable of impairing the relentless grind tighter in spreads as everything trade is now merely frontrunning future ECB purchases, Martin does point out something worth contemplating, namely “that CSPP could quickly become its own worst enemy if it leads to a rapid rise in releveraging.” Specifically, Martin believes that an outbreak of the most extreme form of “animal spirits” , i.e., LBOs is imminent, to which he then adds:

And lo and behold, over the last few weeks TDC has confirmed that it has received private equity interest (which the company later rejected), and last week Bloomberg reported that KKR was one of the bidders for Repsol’s stake in Gas Natural.

 

The last European LBO cycle in 2005 and 2006 was relatively light in deals compared to the US LBO cycle. Many of the obstacles then to European take-privates – such as the prevalence of government shareholdings (chart 4) – are still relevant today. But there were enough big European LBOs a decade ago (TDC, VNU, ISS, Boots) for the risk to become a systemic one for spreads. And the LBO rumour mill was often enough to drive credit spreads of a highlighted company much wider.

A surge in LBOs in itself, is not a problem; what Martin is far more concerned about is a thought experiment in which “the unthinkable” happens, namely  BB yields going negative. As we explains, “such has been Draghi’s influence across the whole credit market that we are close to seeing our first negative yielding BB-rated bond. But if debt costs for speculative grade companies become “inverted”, then the economics of LBOs will be transformed, and the quality of the assets they are buying will become secondary. We see a growing risk that another private equity cycle emerges in Europe now, and the severe rating deterioration that LBOs pose would become the greatest challenge to central banks’ credit buying.”

To emphasize this point, the BofA strategist, in Chart 5, shows the most negative yielding corporate bond (or the
smallest if positive) over time in each rating category. He notes that we
are very close to having our first negative yielding BB-rated bullet
bond (HeidelbergCement €18s yield 18bp and Peugeot €18s yield 20bp). Moreover, the lowest-yielding single-B (bullet) bond is now just above 1%.

Why are BB-yields turning negative considered an unthinkable outcome? He explains:

The concept of negative debt-costs for high-yield companies will transform the traditional economics of LBOs. Take interest coverage, for instance, as chart 6 shows. Private equity pushed the envelope with interest coverage during the last LBO cycle. Interest coverage fell to just over 2x for European LBOs in 2007. But now, with the rapid decline in non-IG yields, note that interest coverage of European LBOs has begun to rise this year. Cheap debt can suddenly make unviable candidates appear “viable” for private equity.

Which brings us again to the TDC case study, a “very telling” example of what may be about to happen, according to Martin: “TDC was a previous large take-private in late 2005. With the cost cutting that has been implemented since, profit margins for the company are now high, so news of a second LBO seems strange. Low debt costs can alter the equation, however. Recall that in 2006, the high-yield debt  financing that accompanied the TDC LBO had coupons of 8%+ (second lien debt). But today we stand close to the reality of negatively yielding speculative grade bonds, and private equity firms will realise that using debt to go “long” the European equity market has never been easier.“

In other words, we are about to enter a world in which the debt tranche may actually pay itself down, an outcome even more perverse than the recently reported deal where the ECB was directly funding the acquisition of Krispy Kreme by JAB Holdings.

Putting it all together, Martin’s conclusion is that the inevitable surge in LBOs may prove to be the catalyst that forces the ECB to step back from its frenzied corporate bond-buying pace:

LBOs would be the biggest headache for Draghi: The point about a take-private is that it rapidly deteriorates credit quality. When TDC was LBOd, the rating on the senior bonds went from BBB1 to BB2 within three months (and eventually fell further). This, in our mind, would be a very challenging type of event risk for the ECB to manage and could sap their enthusiasm for continuing with CSPP. LBOs would mean CSPP bonds going from eligible to non-eligible. As we have seen recently with K+S, the risk of non-eligibility can have a profoundly negative impact on spreads (chart 7). While K+S bonds are already in our high-yield bond index, the recent negative watch on S&P’s BBB- rating has seen spreads jump wider (a loss of this rating would render the name ineligible for CSPP). We know from the CSPP ISIN disclosure that the ECB hold three K+S bonds (the €18s, €21s, and €22s).

Martin is probably right, which means that eventually the ECB will back off (much to the delight of Citigroup too, as noted above). However, before that happens, Europe is about to see an unprecedented LBO frenzy as double-Bs go negative. Which also means that it may once again be time to start buying CDS on some of the most popular LBO candidates, as no matter the ECB jawboning, unless Draghi assures the market that the ECB will monetize everything through D(efaulted) bonds, event risk such as a major chunk in new leverage will inevitably lead to a spike in default risk, especially if and when names fall out of eligibility.

It also means that the bubble frenzy to purchase Europe’s assets with lots of margin, this time by PE shops, is about to get a whole lot more “exciting.”

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

Authored by Michael Boskin, originally posted at Project Syndicate,

 Little more than two months from America’s presidential election, Hillary Clinton leads Donald Trump by five points in opinion polls, nationally and in several important swing states. But nothing is decided yet, especially given the Trump campaign’s staffing shakeup and major policy speeches, not to mention the email scandals that continue to plague the Clinton campaign, including recently released email correspondence between top staff from the Clinton Foundation and officials from the State Department under Clinton.

 

So far, the media and public have focused on immigration, terrorism, foreign policy, and each candidate’s potentially problematic personality traits, but far less has been said about economic policy. This is a serious oversight, because there are substantial differences between the candidates’ economic-policy platforms.

First, consider government spending. Clinton favors welfare-state expenditures such as expanded Social Security benefits (the unfunded liabilities of which already exceed the national debt), free tuition at public colleges and student-loan debt relief, as well as an added “public option” to the 2010 Affordable Care Act, known as Obamacare. She also says she will double down on President Barack Obama’s costly green-energy industrial policy, which favors some energy sources, and even specific companies, at the expense of others.

 

By contrast, Trump says he will leave Social Security as is, repeal and replace Obamacare, and make government spending more efficient and effective (though here he has not been specific).

 

On taxation, Clinton says she will make the US tax system more progressive, even though it is already the most progressive system among the advanced economies. Specifically, Clinton calls for increases to the estate tax and the personal tax rate for the highest earners – which also affects small businesses – and caps on itemized deductions. She shows little inclination to lower corporate taxes.

 

Trump is proposing lower tax rates for individuals and US companies. The US currently has a federal corporate tax rate of 35%, the highest in the OECD. Trump is calling for it to be lowered to a below-average 15%, with first-year business investments to be deductible in full.

 

On trade, Clinton has flip-flopped to oppose the Trans-Pacific Partnership, a multinational trade deal negotiated by the Obama administration and 11 other Pacific Rim countries. Unlike her husband, who supported and signed free-trade agreements during his presidency, Clinton is inching closer to the protectionist wing of the Democratic Party.

 

Clinton’s trade position has little to recommend it, but Trump’s is even worse. Among other things, Trump has threatened a trade war with China and Mexico, and says he would renegotiate America’s existing trade agreements. Clinton and Trump are understandably giving voice to lower- and middle-class workers who have been left behind by globalization. But the best policy response is not to embrace protectionism (which would leave many more people worse off), but to assist displaced workers better.

 

Lastly, Clinton and Trump differ on deficit spending and the national debt. Clinton’s Social Security expansion and other spending, and her plans to entrench the Obamacare health-care system further, without reining in future entitlement costs – which are projected to soar – suggest that large deficits would only continue during her presidency. That’s a far cry from her husband’s record: Bill Clinton worked with a Republican-controlled Congress to balance the budget in the final years of his presidency.

 

Trump recently reduced the budget cost of his proposed tax reductions to bring them more in line with Republican legislators’ own targets. If properly scored to account for increased tax revenue from economic growth, he would still need to pair his tax cuts with controls on spending, and especially on entitlements. Otherwise, a Trump presidency could also have serious debt problems.

 

One proposal the candidates agree on is massive infrastructure spending. Unfortunately, while a portion of this is appropriate for the federal government, neither candidate has ensured that money wouldn’t be misspent through politicization or cronyism. The United States does not need a repeat of the Obama administration’s “shovel-ready” stimulus-spending boondoggle.

All told, Clinton would prioritize redistribution above economic growth, while Trump is more growth-oriented. American growth is a global concern because it fuels growth elsewhere through US consumer demand and trade. But the two primary sources of growth, productivity gains and labor inputs (such as total man-hours worked), have both fallen off sharply in recent years. The US economy grew at an average annual rate of 3% during the decades after World War II, but it has not had even three consecutive quarters of 3% growth during the past decade.

There are different explanations for slowing productivity growth. Northwestern University economist Robert Gordon singles out technological innovation for contributing less to economic growth than did previous breakthroughs such as electricity, locomotion, aviation, and computing. Harvard University economist Lawrence Summers points to “secular stagnation,” a term coined by the economist Alvin Hansen in the 1930s to describe long-term tepid demand and insufficient opportunity for profitable investment. My own opinion is that poor economic policy has discouraged business investment, entrepreneurship, and work.

Polling shows that undecided voters deeply distrust both candidates. To get elected and actually have the mandate to enact her agenda, Clinton will need to be more transparent and honest about past mistakes. And on economic policy, she should move to the center, toward growth-focused measures, and away from leftist positions she adopted during her primary campaign against Vermont Senator Bernie Sanders. Trump, for his part, will need to show some humility and inclusiveness, and be open to advice from others on issues where he lacks experience.

While the Republicans are in a tight battle with the Democrats to retain control over the Senate, they are likely to maintain a majority in the House of Representatives. As a result, on many policy issues, all eyes will be on House Speaker Paul Ryan, who would likely operate either as a counterbalance – and occasional partner – to Clinton, or as a guide and more regular partner for Trump.

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Senate Republican Whip John Cornyn, of Texas, is having a little "buyer's remorse" over his decision to vote in favor of confirming Hillary as Secretary of State back in 2009.  Cornyn was one of the Republicans that originally held up Hillary's confirmation over concerns that the Clinton Foundation created an insurmountable "conflict of interest."  That said, Republicans, including Cornyn, ended up breaking party lines and confirmed Clinton after the Foundation entered into a "memorandum of understanding" that called for, among other things, transparency around donations, particularly those from foreign governments. 

That said, Cornyn now says that all the "reassurances she gave me back at the time her confirmation was considered" have for all practical purposes been "violated."  Per comments made to The Hill:

“Once again the rules don’t apply to them like they apply to everybody else. Can you imagine if anybody else in the United States government had tried to get away with something like this? It wouldn’t have happened.”

 

“When I put a hold on Mrs. Clinton’s nomination as Secretary of State, she reassured me that they would take appropriate steps.  As seems to be usual for the Clintons, they crossed the line and all the concerns that she reassured me would not occur did in fact occur."

 

“She was playing both sides. As she was performing her job of secretary of State, the Clinton Foundation was shaking down donors who were buying access. It’s absolutely deplorable.”

 

“The reassurances she gave me back at the time her confirmation was considered, she, for all practical purposes, violated.  Those representations she made to me about the integrity of the screening process and of the ethics concerns with regard to the foundation.”

The MOU, included below in its entirety for your reading pleasure, stated that, among other things, the Clinton Foundation would publish the names of all its existing contributors as well as the names of all new contributors.  The MOU was executed in December 2008 between the Clinton Foundation and President Obama's office.

The Parties seek to ensure that the activities of the Foundation, however beneficial, do no create conflicts or the appearance of conflicts for the Senator Clinton as Secretary of State.

 

In anticipation of Senator Clinton's nomination and confirmation as Secretary of State, the Foundation will publish its contributors this year.  During any service by Senator Clinton as Secretary of State, the Foundation will publish annually the names of new contributors.

 

Should an existing contributing country elect to increase materially is commitment, or should a new contributor country elect to support CHAJ, the Foundation will share such countries and the circumstances of the anticipated contribution with the State Department designated agency ethics official for review, and as appropriate, the State Department's designated agency ethics official will submit the matter for review by a designated official in the White House Counsel's office.  In the event the State Department or White House has concerns about a proposed contribution that are related to Senator Clinton's service as Secretary of State, those concerns will be conveyed to her and to the Clinton Foundation for appropriate action.  For purposes of this paragraph, an agency or department of a foreign country, as well as a government-owned corporation, will be treated as a foreign country.

But it wasn't long before the Clinton Foundation was found to be in breach of the MOU. 

Per The Hill, the Clinton Health Access Initiative, a fund within the foundation, did not meet its reporting requirements from 2009 to 2013.  Moreover, Clinton Foundation officials acknowledged to The Washington Post last year that they made a mistake by not seeking prior approval from the State Department ethics office for a $500,000 donation from the Algerian government.

In addition, State Department records obtained by the conservative group Judicial Watch and made public last month showed that Doug Band, a senior executive at the Clinton Foundation, helped set up a meeting between Crown Prince Salman of Bahrain with Clinton in 2009 after the prince’s efforts to reach out through normal channels failed.  Band described Salman as a “good friend of ours.” By 2010, a scholarship fund set up by Salman gave $32 million to the Clinton Global Initiative, according to Judicial Watch.

Finally, just yesterday we called out the "curious" timing of a meeting between Dow Chemical CEO, Andrew Liveris, and Hillary back in July 2009 (see "Did Foundation Donor Dow Chemical Seek Hillary "Favor" To Settle $9 Billion Lawsuit With Kuwait?").  Per the email below from Huma, apparently Bill was really eager for Hillary to meet up with the CEO of the large Clinton Foundation donor.  That said, we're sure it had nothing to do with open litigation initiated by Dow Chemical against Kuwait (another large Clinton Foundation donor) for backing out of the $17 billion K-Dow joint venture that would have netted Dow Chemical $9 billion in cash.  

From: Huma Abedin Huma@clintonemail.com
To: Valmoro, Lona J
Sent: Monday, Jul 27 06:02:01 2009
Subject:

 

Wjc wants to be sure hrc sees Andrew Liveris, ceo of dow tomorrow night. Apparently he is head of us china business council. Is he definitely going to be there?

But we urge Senator Cornyn to relax.  While there seems to be a lot of smoke here, Hillary has assured us that these are all simple, honest mistakes and there "is no fire."

 

 

 

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Submitted by Simon Black via SovereignMan.com,

One of the members of Team Sovereign Man just arrived for the first time in his life to the United States.

This is pretty unusual, especially for the incredibly well-traveled members of our team.

Peter, an Australian in his mid-40s who has been living in Asia for most of his adult life, is taking a few days rest in Arizona in transit from his home in Bangkok to our headquarters in Chile.

It’s not every day that someone I’ve known for several years comes to the country of my birth for the first time ever, and I thought his impressions were quite interesting.

I’m forwarding them to you below:

I’ve been to 30 countries, so I’m not widely traveled by Sovereign Man standards, but I do have an interesting perspective: I’ve never been to America. Until now.

 

I was expecting everything to be big and awesome and based on consumption, but I simply wasn’t prepared for what I was going to see.

 

Old town Scottsdale, where I’m staying, is beautiful, clean, and full of fun people.

 

The biggest 4x4s I’ve ever seen cruise up and down the roads, along with golf carts, a Thai tuktuk, and some contraption with eight young women pedaling while they drank cocktails (they had a sober driver) and waved to the odd Australian who was actually walking.

 

Nobody seems to walk here. I asked about the comedy club which is a 10-minute walk from my hotel. They told me it’s a 3-minute drive. Everything is an x-minute drive away.

 

And everything is mind-bogglingly big.

 

I walked into the convenience store and they had seven types of hot coffee, five types of cappuccino, and a larger wine collection than most wine shops in Bangkok where I live.

 

There were two long walls of fridges: one for soft drinks and one for alcohol.

 

And the breakfast at my hotel had six types of coffee cream for God’s sake.

 

Simon reckons that America is the best place in the world to be a consumer. I had no idea how spot on he was until I arrived here.

 

The place is tidy, quiet, and has everything you could possibly want for a good life. I keep thinking, “Yes, this is a place and a lifestyle you would fight to preserve. And it’s a damn shame how quickly it’s disappearing for so many.”

 

After seeing a small piece of America and talking to a few of the locals, I finally understood the feelings behind the two strangest things that I witnessed at the airport.

 

The first was the high regard Americans seem to have for their military:

 

• There was a welcome message over the public address system from LA mayor Eric Garcetti, with a special message for service men and women.
• Convenience stores have donation boxes so that an American serviceman can make a phone call home. (They haven’t heard of Skype?)
• Billboards and notices on the wall had welcoming and thank you messages for service men and women.

 

This is bizarre for me. Nobody in Australia (where I served in the Army Reserve) or any other country really cares one way or the other if you serve in the armed forces.

 

Heck, when I joined the Australian military and told the interview panel that I “want to serve my country” the senior officer just shook his head and replied, “You can serve your country just as well as an engineer working at a private company.”

 

But here in the US of A, I can really see what they want to protect.

 

People here do seem to feel that this lifestyle could be in danger from radical Islam. Maybe so.

 

But it’s even more in danger from exploding national debt, endless money printing at the Federal Reserve, and a mountain of laws and rules that get passed each day.

 

The second strange thing that I witnessed was the two women ahead of me in the security line at LAX getting a “second level” screening.

 

I was shocked.

 

Female officers felt up their entire bodies: boobs, crotch, and backside included.

 

What was most strange to me, though, was the way the lady in front of me took the body search. It didn’t faze her at all.

 

I caught up with her after security and asked her about it.

 

“I think it’s something to do with the baby formula that sets off the machine.” (She had a 2-year old daughter and her husband with her.)

 

“Are you ok with it? Has this happened before?”

 

“Yes, many times. I’m used to it now. Thanks for asking.”

 

And just like that, Stockholm Syndrome has set in.

 

People just accept that they have to send soldiers overseas and have to submit to government intrusion for the price of being free.

 

Everyone knows it doesn’t make a difference, but everyone just accepts it because they don’t have the power to change it and don’t want to think about what the government will do to them next.

 

This is a wonderful country, but it’s clear to me that the Land of the Free has already lost a host of freedoms… and a bunch more will be on the chopping block under either Clinton or Trump.

 

At least the woman’s daughter, who watched her mother willingly submit to a humiliating body search by government officials, will grow up to be an accepting model citizen.

via http://ift.tt/2bP3T9W Tyler Durden

The debacle involving Deutsche Bank’s failure to deliver physical gold from the Xetra-Gold exchange traded commodity (ETC) continued on Friday after a press release from Deutsche Bank. Zero Hedge covered the “non-response” from the beleaguered German bank over the weekend:

And so another non-response, because in the same press release Deutsche Bank both admits that it has an obligation to deliver the gold “as a matter of course”, and then tacitly confirms that it failed to do so, by first saying that it evaluates the “economic efficiency of physical delivery”, something it should have no right to do since the Xetra prospectus explicitly mandates that it should release gold on demand, and then adds that “should an investor’s request for the handover of physical gold not have been complied with immediately in individual cases, this will be reviewed and an individual solution will be found with the client.”

As we already know, this handover of physical gold failed on at least one occasion, and while we are comforted that Deutche Bank is reviewing the situation and a “solution will be found with the client”, it certainly does not even remotely explain why the situation should have arisen in the first place.

However, what is most notable is how quickly every entity involved in this failure to deliver, from Xetra-Gold, to Deutsche Börse, and ultimately to Deutsche Bank, responded with an attempt to placate public concerns about the availability of physical gold with statements that may have, paradoxically, only raised concerns whether the gold is in fact still there.

It remains to be seen if this one individual case spills over, and leads to more gold redemption requests, first at Xetra-Gold as well as at other similar “gold-backed” ETFs. We will promptly report any notable development in this fascinating escalation of a topic that has been near and dear to many gold bugs’ hearts for years.

As we wrote on Friday and emphasise again – paper is paper, digits are digits and gold is gold. Gold is not a safe haven unless the buyer owns actual physical gold in the safest way possible.

Why take chances with your safe haven asset and money? Test your gold investment vehicle or provider today and see can you take delivery of at least some of your allocation to gold.

If you can’t take delivery of physical gold, you don’t own gold. If you cannot hold your gold, you don’t own your gold. Possession remains 9/10s of the law. This will especially be the case in the coming global financial and monetary crisis.

 

Gold and Silver Bullion – News and Commentary

Gold steady in wake of disappointing jobs data (Reuters)

Gold Jumps as U.S. Jobs Disappointment Dims Tightening Prospects (24hGold)

Traders trim bets on Fed rate hike as U.S. job gains slow (Reuters)

Draghi Nears His QE3 as ECB Seen Relying on More Stimulus (Bloomberg)

North Korea fires three ballistic missiles as G20 leaders meet in China (Reuters)

Deutsche Bank Tries To Explain Why It Did Not Deliver Physical Gold, Fails (ZeroHedge)

RBS becomes the first UK bank to set negative interest rates (DailyMail)

EU is a thing of the past – our future is with an Atlantic Ireland (Independent)

Kuroda Says New Ideas Not Off Table as BOJ Reviews Policy (Bloomberg)

Italian Referendum Could Result In The Death Of The Euro (ZeroHedge)

Gold Prices (LBMA AM)

05Sep: USD 1,328.30, GBP 9,996.23 & EUR 1,189.49 per ounce
02Sep: USD 1,311.50, GBP 1,987.95 & EUR 1,172.74 per ounce
01Sep: USD 1,305.70, GBP 1,985.80 & EUR 1,172.13 per ounce
31Aug: USD 1,314.45, GBP 1,000.30 & EUR 1,179.19 per ounce
30Aug: USD 1,318.85, GBP 1,008.39 & EUR 1,180.90 per ounce
26Aug: USD 1,324.90, GBP 1,002.95 & EUR 1,173.33 per ounce
25Aug: USD 1,324.50, GBP 1,001.06 & EUR 1,172.98 per ounce

Silver Prices (LBMA)

05Sep: USD 19.46, GBP 14.60 & EUR 17.43 per ounce
02Sep: USD 18.75, GBP 14.15 & EUR 16.76 per ounce
01Sep: USD 18.65, GBP 14.08 & EUR 16.73 per ounce
31Aug: USD 18.74, GBP 14.27 & EUR 16.82 per ounce
30Aug: USD 18.78, GBP 14.35 & EUR 16.82 per ounce
26Aug: USD 18.67, GBP 14.15 & EUR 16.54 per ounce
25Aug: USD 18.50, GBP 14.02 & EUR 16.39 per ounce

Recent Market Updates

– Physical Gold Delivery Failure By German Banks
– Avoid Paper Gold – “Gold Delivery” Refused By Gold Exchange Traded Commodity
– Debt Bubble in Ireland and Globally Sees Wealthy Diversify Into Gold
– “Why Case Against Gold Is Wrong” – James Rickards
– Obama To Leave $20 Trillion Debt Crisis For Clinton Or Trump
– Gold Bullion Averages Biggest Seasonal Gains in September Over Past 20 Years
– Gold Futures See Massive $1.5 Billion “Non Profit” Liquidation In “One Minute”
– Jim Grant Is “Very Bullish On Gold”
– Germans Warned To ‘Stockpile’ Cash In Case Of ‘War’
– Ireland’s Biggest Bank Charging Depositors – Negative Interest Rate Madness
– Rothchilds Buying Gold On “Greatest Experiment” With Money In “History of the World”
– Gold – “Mother of All Bull Markets Has Only Just Begun” – Grandich
– 45th Anniversary Of Nixon Ending The Gold Standard

via http://ift.tt/2bP1yM9 GoldCore

One month ago, Donald Trump urged his followers to sell stocks, warning of “very scary scenarios” for investors, and accused the Fed of setting the stage for the next market crash when he said that “interest rates are artificially low” during a phone interview with Fox Business. “The only reason the stock market is where it is is because you get free money.”

Earlier today, speaking to a reporter traveling on his plane who asked Trump about a potential rate hike by the Fed in September, Trump took his vendetta to the next level, saying that the Fed is “keeping the rates artificially low so the economy doesn’t go down so that Obama can say that he did a good job. They’re keeping the rates artificially low so that Obama can go out and play golf in January and say that he did a good job. It’s a very false economy. We have a bad economy, everybody understands that but it’s a false economy. The only reason the rates are low is so that he can leave office and he can say, ‘See I told you.'”

He then lashed out at Yellen, whom he accused of having a political mandate when conducting monetary policy: “So far, I think she’s done a political job. You understand that.”

On whether we can have a rate hike in September: “Well, the only thing that’s strong is the artificial stock market. That’s only strong because it’s free money because the rates are so low. It’s an artificial market. It’s a bubble. So the only thing that’s strong is the artificial market that they’re created until January. It’s so artificial because they have free money… It’s all free money. When rates are low like this it’s hard not to have a good stock market.“

His conclusion: “At some point the rates are going to have to change.”

Indeed they will, and that’s precisely what almost every bank, from Goldman yesterday to Citi today, and many others inbetween, have been warning about in recent months.

Until recently, Trump’s latest anti-Fed outburst would have been swept under the rug as just another example of the deranged ramblings of an anti-Fed conspiracy theorist (trust us, we’ve been there). However, considering the spike in anti-Fed commentary in recent weeks coming from prominent, and established institutional sellside analysts all the way to the WSJ, it may be that Trump was once again simply saying what everyone else thought but dared not mention.

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Submitted by Elizabeth Harrow via SchaeffersResearch.com,

 

via http://ift.tt/2ca5Tdk Tyler Durden

It’s probably nothing, or maybe it isn’t?

As Hillary Clinton began her speech at a rally in Cleveland, Ohio this afternoon, the democratic presidential candidate suffered what MSNBC anchor Ari Melber described as “one of the worst coughing fits I have ever seen.” She coughed and cleared her throat through over 4 minutes of almost incoherent babble before MSNBC cut away, joking that hillary had quipped “every time I think about Trump I get allergic.”

I’m shocked she’d allow herself to be seen in this condition…#HillarysHealth http://pic.twitter.com/w49SXPgbeX

— Stefan Molyneux (@StefanMolyneux) September 5, 2016

We are not so sure she can just blame this away on Trump however.

Should we be worried about this 69-year-old woman?

 

And just as she started another unprecedented coughing fit again, MSNBC cuts away to spare the public (around 4:45)

 

Is it such a conspiracy theorist comment to question just how her health is? Has anyone got an EpiPen?

via http://ift.tt/2c0ATHU Tyler Durden

Turns out politicians do occasionally keep their promises.  For example, in 2008 Obama vowed to “bankrupt” the coal industry by imposing massive fines on greenhouse gas emissions. Obama made the following comment to the San Francisco Chronicle in 2008:

“So if somebody wants to build a coal-powered plant, they can; it’s just that it will bankrupt them, because they’re going to be charged a huge sum for all that greenhouse gas that’s being emitted,”

In fact, six of America’s largest public coal mining companies, including Walter Energy, James River, Patriot Coal, Alpha Natural Resources, Arch Coal and Peabody Energy have all filed for bankruptcy over the past 2 years destroying billions in shareholder value and leaving 1,000s of people unemployed in Kentucky, West Virginia, Ohio and Pennsylvania. 

Per BLS data, coal mining jobs in the U.S. peaked around 90,000 at the end of Obama’s first term but have since declined by over 42% to around 50,000 as mining companies have filed for bankruptcy and shuttered mines.

 

And here is Obama’s fateful promise, in his own words, from 2008:

 

Unfortunately for the folks employed in the coal industry, Hillary has vowed to continue Obama’s war on coal.  Per Politifact, Hillary made the following comment at a CNN town hall meeting earlier this year.

“So for example, I’m the only candidate which has a policy about how to bring economic opportunity using clean renewable energy as the key into coal country. Because we’re going to put a lot of coal miners and coal companies out of business, right?”

Hopefully the people of Kentucky, West Virginia, Pennsylvania and Ohio took some comfort from Hillary’s vow to replace their jobs with “clean renewable energy” opportunities.  After all, we hear there is huge demand from employers looking for people to watch their solar farms.

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By EconMatters

There are often unintended market consequences of adopting various market strategies, such as the Bank of Japan going into negative interest rates territory. If the BOJ wants to really weaken the Yen at any cost, there is the Turkish Lira Model. Ultimately, currency markets are going to go where they belong by market forces, not Central Bank short term Gimmicks.

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