Tag: news

With Marco Rubio pollig dismally in Ohio, and having gained ZERO delegates in the most recent primaries, it appears he has folded…

BREAKING: @marcorubio communications director @AlexConant tells us Rubio supporters in Ohio should vote for @JohnKasich.@ThisHour

— John Berman (@JohnBerman) March 11, 2016

The question is – how is this in anyway helping ‘the establishment’ beat Trump? It merely strengthens (maybe) a 3rd place “loser” leaving the vote split still.

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With the Trump juggernaut (which was unthinkable for most of the “sophisticated” media punditry and analysts) growing stronger by the day toward the all important Florida and Ohio primaries, and after that straight to the showdown with Hillary Clinton, the real estate tycoon is gradually showing a more moderate side, one which was put on display during last night’s GOP debates.

As the Telegraph writes, Donald Trump’s push to appear presidential was exposes on Thursday night in the latest Republican debate, as he “strangled his natural instinct to respond to attacks with bombast and insults.” Trump’s “do no harm” strategy was clear from the start, and even more so after he walked offstage and said: “We’ve had enough of the debates, wouldn’t you say?”

The Republican front-runner’s focus is protecting his lead, and he pledged earlier this week that if he were to win the election he would become more presidential than anyone “other than the great Abe Lincoln”, leading to an uncharacteristic civil and understated debate performance, and a significant departure from last week’s debate which, as the Telegraph put it, “was characterized by playground insults.”

Trump’s recent pivot to placate potential moderate voters may already be reaping results, and in a most unexpected place – the liberal bastion of Hollywood.

According to The Hollywood Reporter, the entertainment industry’s rare conservatives (and independents) are lining up behind Trump — the real-estate mogul considered one of their own as a former TV star and producer.

This is how THR reveals the building support for The Donald:

At an undisclosed location somewhere in the Los Angeles area, about 200 members of Hollywood’s private group of conservative Republicans — known as “Friends of Abe” — gathered to watch Thursday’s GOP debate between Donald Trump, Ted Cruz, Marco Rubio and John Kasich. It was an invite-only list that included everyone from recognized actors to rank-and-file studio workers.

 

They watched the candidates spar over radical Islamic terrorists, social security’s future and illegal immigration. But, it was a moment early in the debate that turned heads: Trump blasted the entertainment industry about Disney employees who allegedly lost their jobs due to abuse of the guest-worker program. 

 

One industry worker clapped and looked around to see if others were equally enthusiastic. Some were, including one invitee sporting a hat emblazoned with “TRUMP.”

 

It marked a snapshot in what could be the entertainment industry’s rare conservatives (and independents) lining up behind Trump — the real-estate mogul considered one of their own as a former TV star and producer.

The numbers in support of Trump are staggering: “For every Cruz or Rubio supporter I talk to, there are 10 Trump supporters,” says one conservative wealth manager who has a deep bench of entertainment industry clients. He didn’t want to speak publicly, though he admitted most of his firm’s left-leaning clientele support Democrats Hillary Clinton and Bernie Sanders.

“I tell them, ‘if you don’t want to feel the Bern, convert your IRAs now rather than pay his 92 percent tax rate.’ I know they like their Teslas, private schools and million-dollar-mansions, but they won’t afford all that if they’re allowed to keep only 8 percent of their income.”

THR whether this “could this be a turning point among Hollywood’s conservative branch?”

To be sure, there’s the conservative stars that are openly Republican. Actor John Voight, whose daughter Angelina Jolie is famously Liberal-leaning, threw his support to Trump on March 8. “I pray all Americans who have seen and felt the meltdown of America with the Obama years, to please fight for Donald Trump,” Voight said in his endorsement. Beyond Voight, celebrities outwardly supporting The Donald include Ted Nugent, Kid Rock, Stephen Baldwin and Duck Dynasty’s Willie Robertson, though there are many more in Hollywood are supportive but less vocal.

Many more may be about to appear: it’s those so-called closeted entertainment industry stalwarts that remain a mystery. Author and screenwriter Bret Easton Ellis suggested in a tweet on Feb. 21 that it’s tough to know for sure which Hollywood figures are throwing their support to frontrunner Trump. The American Psycho author said he was “shocked” that most of his companions at a recent dinner would vote for the billionaire — though they “would never admit it publicly.”

To make an impressionon these “on the fencers”, Trump began wooing Hollywood early on, speaking to Friends of Abe (FOA), in July at the lavish Luxe Sunset Blvd. Hotel in the Brentwood area of Los Angeles. At that event, he told THR that his support among celebrities and entertainment workers was stronger than outsiders realize. “I think the liberals in Hollywood support me behind my back,” he quipped.

Trump’s biggest advocate, of course, is Ann Coulter, and she has been working behind the scenes to drum up support for him in Hollywood, including championing his signature issue, illegal immigration, at dinners with Clint Eastwood and a few dozen others in the industry that she won’t name.

“Hollywood should support him for all sorts of reasons, not least of which is the fact that it’s impossible to get around in L.A. with 2 million illegals on the road,” she told THR. “On the other hand, Hollywood liberals may have to start paying their maids more.”

As tough as it is to openly support Trump and still work in liberal Hollywood, many conservatives say he’s safer than Ted Cruz, probably the only other candidate with a chance to win the GOP nomination.

“The liberal majority in Hollywood looks at Trump as a joke, so if you support him, they dismiss you. But if you back Cruz, you’re looked at with great suspicion. As fate has it, I back Cruz,” says writer-producer Lionel Chetwynd, one of the founders of FOA. Indeed, Caitlyn Jenner received a mountain of nasty commentary from liberals who were upset that she praised Cruz.

“When I say ‘Cruz,’ liberal Hollywood hears ‘Himmler,’” says Chetwynd, referencing Adolf Hitler’s former henchman. “I was at a lunch with top executives at a studio. I can’t tell you their names,” Chetwynd says. “When I said I supported Cruz, one says, ‘See. I told you so!’ Then they all chuckled. They were so thrilled to meet a real Nazi!”

In the end, Trump may get the last laugh.

via Zero Hedge http://ift.tt/1Rcm1ms Tyler Durden

Authored by Attain Capital, via Valuewalk.com,

While many investors may be breathing a sigh of relief thanks to the bounce off the February low, with the S&P up 11% since the start of February – it’s still not all lollipops and rainbows out there in market-land. There’s some worrying undercurrents that could spell more trouble ahead, not to mention pros like Jeff Gundlach claiming there’s just 2% of upside in the S&P 500 and 20% downside.

Just what’s on the mind of some of the sharpest investment managers out there?  We were lucky enough to have Mike Melissinos of Melissinos Trading send along a collection of charts and indicators he’s been looking at with a worried eye, and thought it was worth sharing here. Enjoy…

Decline in Profit Margins

When margins shrink, business activity contracts. Businesses cut budgets and jobs. Recessions typically follow. Stock prices tend to fall more than 10% in recessions.

 

Price-to-Sales – Expensive

The Industrials sector provides some insight into the health of U.S. manufacturing.

At October-end, the sector recorded one of the highest P/S ratios ever. Only the two-year window of the dot-com bubble produced higher readings.

 

Industrial Production is Rolling Over

The most recent Chicago PMI reading of 42.9 has never been this low outside of a recession.

 

NYSE Margin Debt at Record Levels

Investors have borrowed capital at a record clip to buy stocks. Since 2009, investors have gone all in and then some.

Margin Debt has spent the last few months beneath the 12-month moving average. In the past 20 years, this indicator serves as a decent bear market signal.

 

Margin Debt to GDP – Higher than 2000 and 2007

As a percentage of GDP, margin debt hit a record high in 2015. The Fed played a massive role in this – allowing investors to borrow tons of money to buy stocks. But that’s another conversation for another day.

Some people think the Fed will ab
andon its plans to tighten and begin lowering rates again, or to adopt NIRP (No Interest Rate Policy). If so, the belief is that the bull market will continue.

 

Margin Debt-to-GDP and 3-Year Stock Returns

When speculation runs wild, future returns typically suffer. Today, we have wild speculation – a general belief that the bull market will continue because (insert your reasons here).

During the heydays of the dot-com and housing bubbles, margin debt-to-GDP levels were the same as today. If given a reason to a sell, over-extended investors may begin selling more intensely.

 

How Much Stock Do People Own? The 2^nd Highest Amount in History.

How to read this chart: In general, the higher the reading the lower your future returns.

Highest Reading = March 2000. The S&P 500 fell 43.40% over the next three years.

Second Highest Reading = January 2015. The S&P 500 has fallen 7% since (13 months).

Third Highest Reading = September 1968. The S&P 500 fell 1.70% over the next three years.

 

Investors Sell Dividend Funds, MLPs, REITs and High Yield

In mid-2010, the Fed launched QE2. Investors increasingly ran into assets that provided at least some yield; this being dividend funds, MLPS, REITs and high yield bonds (blue line).

Today, the blue line is rolli

ng over – possibly suggesting that investors are beginning to prefer safer cash accounts and shorter duration bonds. This may add to the selling pressure in stocks.

 

Bull to Bear Ratio – Unprecedented Optimism

The Bull to Bear Ratio over 3.0 (red lines) may suggest overconfidence and a lack of worry. If so, we have a lot of confident bulls out there.

 

Turmoil in High Yield Bonds

The “smart money” lives in the bond world. Bond prices have a tendency to move before stocks do – as evidenced by the chart below. Will this time be different than the previous three?

That was a long post, but I think you get the picture. Whether the price trend follows suit is another discussion. No one knows, especially me. But I hope this information helps you develop your own opinion and strategy to handle the ever-changing market conditions.

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

Because… fundamentals…

First gold was clubbed lower, then after tagging stops above $39, WTI crude is tumbling:

 

Don’t worry this all makes sense to someone.

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After January's record-smashing CNY3.4 trillion (half a trillion dollars!) surge in aggregate credit expansion in China, the post-lunar-new-year hangover hit hard in February as credit growth tumbled 77% from Janaury's level to just CNY780 ($112bn). This is the weakest February loan growth since 2011. Drastically missing expectations, and following authorities comments on the need to "monitor" excess credit growth, all categories of total social finance registered a sharp drop.

After a huge spike in loan growth in January (which appeared to have absolutely no marginally positive impact on any real economic data)…

 

China total loan growth collapses….

 

As it appears massive amounts of loan issuance were pulled forward (before the new year), prompting the People’s Bank of China to crack down on excess lending at some banks always making the slump in February a possibility. But as Bloomberg notes, looking at the data for the first two months of the year together, credit growth remains on a rapid upward trend, and the government is targeting a faster credit expansion for 2016 as a whole. Industrial output data for January and February, slated for release Saturday, will be critical in determining the immediate policy outlook.

In the details of today’s data release, all categories of total social finance registered a sharp drop. Yuan bank loans fell to 810 billion yuan in February from 2.5 trillion yuan in January. Corporate bond issuance fell to 86 billion yuan from 454 billion yuan. Bankers acceptances dropped 370 billion yuan, after registering a 130 billion-yuan increase in January. Trust loans and entrusted loans, the other major "shadow banking" categories, fell from January’s level but remained in positive territory.

Goldman Sachs explains…

February credit data was weak. Part of the fall in the level of credit supply was because of seasonality — February credit supply is always substantially lower than that in January. However, normal seasonality certainly cannot explain the magnitude of the fall, as the level of RMB loans last February was only around Rmb 500 bn less than that in January. Another perspective on seasonality is to compare this February with last. Since the outstanding loan growth rate is in the teens, the newly increased amount is normally larger than that of the same month the prior year–but this February's level is clearly below last year's, pointing to factors other than seasonality as playing an important role. TSF flows were weak, although there was around RMB 167 bn net issuance in local government bonds in February. After adjusting for local government bonds, TSF growth was still relatively weak, with sequential (month-over-month) growth at the lowest level since mid 2015. Among the components under TSF, bank acceptance bills declined RMB 371 bn, which likely reflected the impact from discount bill frauds that surfaced in late January.

 

However, sequential M2 growth accelerated in February. Fiscal policy stance was supportive, although not quite as supportive as February last year, and FX flows likely became less of a drag.

 

The weakness in February credit data was policy driven, in our view, and should be viewed in light of exceedingly strong January data. Although the government likely wanted to loosen policy in light of renewed downward pressures on growth, which are due in large part to weak exports, the actual amount of loosening in January may have breached policymakers’ comfort zone (consistent with reports on PBOC guidance to slow lending in mid January).

 

Concerns about rising CPI inflation, leverage and public perception remain key constraints on the extent of monetary policy loosening. Although doves tend to dismiss the rise in CPI inflation, which has been mostly food driven, as driven by temporary factors especially adverse weather conditions, hawks may view it differently as the result of the very loose monetary conditions in January. Historically, China's CPI inflation is almost always mainly food driven and its behavior is very pro-cyclical, contrary to that in many developed economies. As food prices continue to be high in March, CPI is likely to remain at above 2% in March, in our opinion, limiting the extent of short-term policy loosening. There also is a rising number of media comments on policy stance questioning whether the high credit growth in January is turning out to be another Rmb 4 trillion stimulus, which may make the case for loosening more difficult for policymakers who are in favor of this.

 

Strong January money and credit data led to overly high market expectations about future liquidity supply, which likely gave domestic equity market and commodities market a boost recently. Today's downside surprise may raise questions about whether the government still intends to loosen. Our view is it still does, just not as aggressively as it appeared after the release of January data. The combined level of liquidity supply in the first two months of the year was still around RMB 700 bn, higher than during the same period of last year, which should support domestic demand growth, especially fixed asset investment, and partially offset the weakness in external demand. While the problem of “policy laziness” (a phrase coined by PM Li to describe the lack of action by officials tasked with implementing stimulus) certainly has not been eliminated, the severity likely has lessened amid heightened administrative pressures from the leadership. Aggregate demand growth on the other hand likely weakened from the high level reached in November and December (based on IP sequential growth). As such, we think reaching the annual GDP growth target of 6.5-7.0% will be a challenging task and will require continued policy support, including monetary policy.

What is potentially most troubling is that despite all this yuuge issuance and declining credit quality, yields on China corporate bonds continue to compress in the biggest bubble that noone is talking about…

 

And as Bloomberg concludes, the signals from China’s policy makers remain somewhat confused. Ahead of the National People’s Congress, the PBOC flagged a shift to a "slight easing bias" in monetary policy. In the last few days they have appeared to try to row that back, saying the "prudent" policy stance remains essentially unchanged. That said, a target for 13% growth in M2 in 2016, up from 12% in 2015, and a 13% target for expanding aggregate finance, suggests the government is preparing to continue the credit stimulus. A 13% expansion in aggregate finance implies 17.9 trillion yuan in new lending and equity issuance in 2016, up from 15.3 trillion yuan in 2015.

Which is notable since M1 growth and M2 growth missed expectations significantly in February (M1 +17.4% vs +18.09% exp and M2 +13.3% vs 13.7% exp.)

 

Charts: Bloomberg

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

Submitted by Julianne Geiger via OilPrice.com,

Moody’s Investors Service placed 11 West Texas governments and municipalities under review for a potential downgrade last week.

The review will consider downgrading the credit ratings of 11 local governments, which include Odessa and Midland, Pecos County, and 7 hospital districts. The review would affect US$477 million in outstanding public debt.

Everyone knows a downgrade is bad news, but how bad is bad—really?

The Moody’s ratings have little forward-looking value, and are more a reflection of what the market already knows—that times are tough, and lending in this industry—or within the geographical boundaries of oil-dependent locations—comes at a risk.

Moody’s will consider the oil downturn and the ability of each government to adapt in this difficult environment. They review the debt burden and liquidity levels, and even management strategies. This particular review focuses specifically on the local governments and districts that have a proportionately high rate of tax exposure to the oil and gas industry—mainly from players in the Permian Basin.

Although a credit downgrade from Moody’s doesn’t spell doom and gloom for West Texas, the ratings do, to some extent, influence the confidence of lenders and investors with interests in the area.

But the fact that the oil industry is facing difficult times is not news. That the Permian Basin is in trouble is not news. That oil companies are cutting costs, reining in exploration activities, and laying off employees is also not news. That the tax bases of these locations are shrinking—again, not news.

Of the 11 entities now under review, the McCamey County Hospital District, just south of the City of Odessa, which is also under review; and Reagan Hospital District, just south-east of Odessa, have the least favorable ratings of those under review—a rating of Baa2, which is defined by Moody’s as “medium grade, with some speculative elements and moderate credit risk.” This is still considered an investment-grade rating, but a downgrade to the next rung on the ratings ladder to Baa3 is as low as it can go before it sits solidly in the speculative-grade rating.

Image courtesy of Clineshalecentral.com

A downgrade for these two nearly adjacent districts would likely mean higher interest rates on any debt, but little else. The market itself is more effective in stifling the economic activities within oil heavy areas.

To add perspective to this potential downgrade, Reagan County, Texas, has a total population of 3,601 as of 2013, while Upton County, immediately to the west and encompassing the McCamey County Hospital District, boasts a population of 3,372. The largest city in Reagan County is Big Lake, population 3,139. Other than oil wells, Big Lake has a Subway, a courthouse, a hardware store, an auto parts store, a small grocery store, and a smattering of other businesses, many of which have shuttered within the last year.

What Reagan County does have is a day population of 12,000, with 115 currently producing operators, and 1,573 producing leases. Big Lake has 13,235 wells on file—about four times its resident population, and was responsible for producing 9,542,592 MCF of gas and 2,442,882 barrels of oil in 2015. In 2014, Big Lake votes approved a $32 million bond for a new hospital—a move in response to the increased demands placed on the city by the oil industry.

The people-to-oil ratio in nearby Upton County is similarly situated, with 81 current operators, 4,341 leases, and 16,002 wells.

Moody’s reported that the review may take up to 90 days to complete.

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Authored by Steve H. Hanke of the Johns Hopkins University. Follow him on Twitter @Steve_Hanke.

The Banco Central de Venezuela (BCV) wins the prize as the world’s worst central bank – at least for the time being.  Venezuela’s annual inflation has been in triple-digit territory for more than three years.  As the accompanying chart shows, the implied annual inflation rate soared as high as 800% last summer.  Since then, inflation has fallen to its current 320% annual rate.  This is still well above the phony 180.9% annual rate reported by the BCV in December.

Yes, the BCV’s inflation number is phony.  The only reliable method for calculating inflation in countries where the rates are elevated, like Venezuela, is to observe changes in the black market (read: free market) exchange-rate data.  These changes can then be translated into implied inflation rates.  It’s nothing more than an application of standard purchasing power (PPP) theory.  When inflation is elevated, it is deadly accurate, and it is the method I use to estimate Venezuela’s inflation rate.

While the triple-digit inflation tragedy coincided with the rise of the late Hugo Chávez and his Bolivarian Revolution, serious inflation problems have plagued Venezuela – courtesy of the BCV – for over 30 years.  The accompanying chart makes that clear.

via Zero Hedge http://ift.tt/1QMzdm3 Steve H. Hanke