October 17, 2018

Forced Buy-Ins Spark "Liquidity Crisis" In China's 'Nasdaq'

Marking the worst year since 2008, China's tech-heavy (Nasdaq-equivalent) Shenzhen Composite index is down a shocking 35% year-to-date, and it's starting to become a self-feeding vicious circle...

As Bloomberg reports, the most recent slump in the teach-heavy index comes despite regulators' efforts to rein in risks of share-backed loans following reports over the weekend that insurers are being 'encouraged' to invest in listed companies to reduce liquidity risks connected to such loans.

Share pledges, where company founders and other major investors put up stock as collateral, have emerged as a pressure point in China’s debt-laden economy, especially as the stock market tumbles.

There’s a liquidity crisis in the stock market, and pledged shares are again starting to sound the alarm,” said Yang Hai, analyst at Kaiyuan Securities Co.

"Stocks in Shenzhen typically bear the brunt of loss of confidence in the stock market because of their higher valuations.”

Read the entire article

October 16, 2018

Zero-Down Subprime Mortgages Are Back, What Could Possibly Go Wrong?

Ten years after the collapse of Lehman Brothers, banks are once again taking bets on the same type of loans that nearly collapsed the economy amid a flurry of emergency bailouts and unprecedented consolidations. 

Bank of America has backed a $10 billion program from Boston-based brokerage Neighborhood Assistance Corporation of America (NACA), to offer zero-down mortgages to low-income borrowers with poor credit scores, according to CNBC. NACA has been conducting four-day events in cities across America to educate subprime borrowers and then lend them money - with a 90% approval rate and interest rates around 4.5%

"It's total upside," said AJ Barkley, senior vice president of consumer lending at BofA. "We have seen significant wins in this partnership. Just to be clear, when we get those loans with all the heavy lifting here, we're over a 90 percent approval, meaning 90 percent of the people who go through this program that we actually underwrite the loans."

Borrowers can have low credit scores, but have to go through an education session about the program and submit all necessary documents, from income statements to phone bills. Then they go through counseling to understand their monthly budget and ensure they can afford the mortgage payment. The loans are 15- or 30-year fixed with interest rates below market, about 4.5 percent. -CNBC

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October 15, 2018

The Inevitable De-Industrialization Of Europe

EU ministers agreed to binding cuts in CO2 emissions of 35% by 2030. The German auto industry won't be able to deliver.

The Telegraph reports Berlin court orders German capital to ban most diesel vehicles on 11 major roads to counter pollution.

Hamburg was first in May. Stuttgart, home of Mercedes and Porsche, was second in July.

A diesel ban in Frankfurt came third.

Only older cars that do not meet emission standards are banned, but diesel is now toxic. No one wants to buy diesel.

Merkel Can No Longer Protect Car Makers

Adding to the woes, Merkel has lost control. She is no longer able to protect German industry.

The European Parliament just voted to cut CO2 emissions by 40%. The European ministers voted for a 35% reduction. The latter is binding.

Car sales dropped sharply in September.

Eurointelligence on Autos and German Industry

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October 12, 2018

Whalen: Donald Trump Is Right About The Fed

President Donald Trump has been criticizing the Federal Open Market Committee for raising interest rates.  The reaction of the US equity markets is self explanatory.  But while the economist love cult in the Big Media may take umbrage at President Trump’s critique of the central bank, in fact Trump is dead right.

First, the Fed’s actions in terms of buying $4 trillion in Treasury debt and mortgage paper has badly crippled the value of the fixed income market as a measure of risk.  The Treasury yield curve no longer accurately describes the term structure of interest rates or risk premiums. This means that the Treasury yield curve is useless as an indicator of or guide for policy.  Nobody at the Federal Reserve Board understands this issue or cares.

Second, Operation Twist further manipulated and distorted the Treasury market.  By selling short-term paper and buying long dated securities, the Fed suppressed long-term interest rates, again making indicators like the 10-year Treasury bond useless as an measure of risk. Without QE 2-3 and Operation Twist, the 10-Year Treasury would be well over 4% by now.  Instead it is 3% and change and will probably rally to test 3% between now and year end.

Third is the real issuing bothering President Trump, even if he cannot find the precise words, namely liquidity.  We have the illusion of liquidity in the financial markets today.  Sell Side firms are prohibited by Dodd-Frank and the Volcker Rule from deploying capital in the cash equity and debt markets.  All bank portfolios are now passive.  No trading, no market making.  There is nobody to catch the falling knife.

The only credit being extended today in the short-term markets is with collateral.  There is no longer any unsecured lending between banks and, especially, non-banks. As we noted in The Institutional Risk Analyst earlier this week, there are scores of nonbank lenders in mortgages, autos and consumer unsecured lending that are ready to go belly up.  Half of the non-bank mortgage lenders in the US are in default on their bank credit lines.  As in 2007, the model builders at the Fed in Washington have no idea nor do they care to hear outside opinions.

Read the entire article

October 11, 2018

Sears Creditors Push For Bankruptcy Liquidation As Vendors No Longer Paid

Amid recent reports that Sears is set to file for bankruptcy as soon as this weekend ahead of a $134 million debt payment due on Monday, the only question is whether the filing will be a Chapter 11 debt for equity reorganization or a Chapter 7 liquidation. And contrary to the desires of Sears CEO and biggest creditor, Eddie Lampert, who would like to preserve the core business, others are pushing for an outright liquidation.

According to the WSJ, a group of Sears' biggest lenders, including Bank of America Corp., Wells Fargo & Co. and Citigroup Inc., are pushing for the company to liquidate its assets under a chapter 7 bankruptcy filing, as opposed to reorganizing the business under chapter 11, this person said.

The consensus reportedly emerged after Sears met with its lenders Wednesday night to discuss emergency financing for the embattled retailer. The meeting ended without an agreement that would keep Sears operating as a going concern, the WSJ reports.

At Wednesday’s meeting, Sears proposed a restructuring plan to shrink its store base dramatically, at which point it expected to be profitable, the person said. But the banks argued the safest way for them to recoup their money is to sell all of the remaining stores and liquidate the inventory, the person said.

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October 10, 2018

Sears Preparing To File Bankruptcy As Soon As This Week

The neverending saga of the world's longest melting ice cube, that of Sears Holdings which has flirted with bankruptcy for years only to get bailed out in the 11th hour by its biggest investor and CEO Eddie Lampert each and every time, is finally coming to its logical end.

With its stock crashing to a new all time low, and with a $134 million in debt due on Monday on a bond issue that is currently yielding over 1,000% in the 3 or so business days left to maturity...

... the iconic if cash-strapped Sears Holdings, whose predecessor was the de facto originator of "online" retail with its innovative mail order catalogues, and which has been losing money for years, has hired M-III Partners to prepare a bankruptcy filing that could come as soon as this week, the WSJ reported citing people familiar with the situation, as the cash-strapped company that once dominated American retailing faces a debt payment deadline.

The WSJ reports that employees at M-III Partners, a boutique advisory firm, have spent the past few weeks working on the potential filing, with M-III staff seen at the retailer’s headquarters in Hoffman Estates, Illinois. That said, a Chapter 11 may still be avoided as Sears "continues to discuss other options and could still avert an in-court restructuring."

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October 9, 2018

IMF Slashes US Growth Outlook, Blames Rates & Trade; Sees Venezuelan Inflation 10-Million-Percent

Confirming Director Lagarde's warning that "clouds on the horizon have materialized," The International Monetary Fund is downgrading its outlook for the world economy, citing rising interest rates and growing tensions over trade.

The IMF said Monday that the global economy will grow 3.7 percent this year, the same as in 2017 but down from the 3.9 percent it was forecasting for 2018 in July.

It slashed its outlook for the 19 countries that use the euro currency and for Central and Eastern Europe, Latin America, the Middle East and Sub-Saharan Africa.

Furthermore, The IMF expects the U.S. economy to grow 2.9 percent this year, the fastest pace since 2005 and unchanged from the July forecast.

But it predicts that U.S. growth will slow to 2.5 percent next year as the effect of recent tax cuts wears off and as President Donald Trump's trade war with China takes a toll.

As The IMF blog details, there are clouds on the horizon. Growth has proven to be less balanced than hoped. Not only have some downside risks that the last WEO identified been realized, the likelihood of further negative shocks to our growth forecast has risen. In several key economies, moreover, growth is being supported by policies that seem unsustainable over the long term. These concerns raise the urgency for policymakers to act.

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October 8, 2018

Italian Stocks, Bonds Collapse After EU Rejects Rome's Budget Plans

Italian stocks tumbled with the FTSE MIB dropping 2.3% - the worst performer among major European markets on Monday - and hitting its lowest level since April 2017, while the country's bonds plunged to the lowest level since February 2014 amid what now appears to be an inevitable showdown between Italy and the EU, after the European Commission said Italy’s budget plans are in breach of common rules.

Over the weekend, the European Commission told Italy it is concerned about its budget deficit plans for the next three years since they breach what the EU asked the country to do in July, but a defiant Rome insisted on Saturday it would “not retreat” from its spending plans.

In a letter to Italy’s Economy Minister Giovanni Tria, the Commission said that with a planned headline deficit of 2.4 percent of GDP in 2019, Italy’s structural deficit, which excludes one-offs and business cycle effects, would rise by 0.8 percent of GDP. Under EU rules Italy, which has a public debt to GDP ratio of 133 percent and the highest debt servicing costs in Europe, should cut the structural deficit every year until balance.

“Italy’s revised budgetary targets appear prima facie to point to a significant deviation from the fiscal path” commonly agreed by European Union governments, EU Commissioners Valdis Dombrovskis and Pierre Moscovici wrote in a letter to Italian Finance Minister Giovanni Tria. “This is therefore a source of serious concern,” the commission’s finance chiefs said in their letter Friday responding to a note sent by Tria the day before.

“We call on the Italian authorities to ensure that the Draft Budgetary Plan will be in compliance with the common fiscal rules,” the letter added at the same time as the council of EU ministers asked Italy in July to reduce that structural deficit by 0.6% of GDP next year, which means the deficit would be 1.4 points off track, Reuters reported.

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October 5, 2018

Inverted Global Yield Curve Creates “The Perfect Cocktail For A Liquidity Crunch” As The IMF Warns Of “A Second Great Depression”

Why would the IMF use the phrase “a second Great Depression” in a report that they know the entire world will read?  To be more precise, the IMF stated that “large challenges loom for the global economy to prevent a second Great Depression”.  Are they saying that if we do not change our ways that we are going to be heading into a horrific economic depression?  Because if that is what they are trying to communicate, they would be exactly correct.  At this moment, global debt levels are higher than they have ever been before in all of human history, and in their report the IMF specifically identified “global debt levels” as one of the key problems that could lead to “another financial meltdown”…

The world economy is at risk of another financial meltdown, following the failure of governments and regulators to push through all the reforms needed to protect the system from reckless behaviour, the International Monetary Fund has warned.

With global debt levels well above those at the time of the last crash in 2008, the risk remains that unregulated parts of the financial system could trigger a global panic, the Washington-based lender of last resort said.

And the IMF report also seemed to indicate that global central banks were responsible for the situation in which we now find ourselves.

Read the entire article

October 4, 2018

Chinese Imports Of US Crude Have "Totally Stopped" As Tariff Threats Persist

It has been roughly two months since China threatened to impose a 25% tariff on US energy imports (it eventually went back on those threats), and less than two weeks since the latest round of tariffs has been implemented. But even as China has shied away from its threats to punish the US energy industry, Reuters data are showing that imports of US oil to China have ground to a halt.

Confirming the data, Xie Chunlin, the president of China Merchants Energy Shipping Co, said on Wednesday that crude oil shipments to China have "totally stopped" as the trade war has taken its toll, reversing growth in what had been a rapidly expanding market for US shale producers.

"We are one of the major carriers for crude oil from the U.S. to China. Before (the trade war) we had a nice business, but now it’s totally stopped," Chunlin said on the sidelines of the Global Maritime Forum’s Annual Summit in Hong Kong.

"It’s unfortunately happened, the trade war between the U.S. and China. Surely for the shipping business, it’s not good," the CMES president said.

He also said the trade dispute was forcing China to seek soybeans from suppliers other than the United States, adding that China now bought most its soybeans from South America.

Read the entire article

October 3, 2018

The Retail Apocalypse Picks Up Speed As Sears, JCPenney, Brookstone And Mattress Firm Spiral Toward Bankruptcy

Over 20 major retailers have filed for bankruptcy since the beginning of last year, and in 2018 we may break the all-time record for annual store closings that was established just last year.  We are in the midst of the worst retail apocalypse in American history, and it appears to be picking up speed as retail giants such as Sears, JCPenney, Brookstone and Mattress Firm spiral toward bankruptcy.  We live at a time when the middle class is being systematically destroyed, and so the truth is that U.S. consumers simply do not have as much discretionary income as they once did.  Many large retailers believed that things would eventually turn around, and they have been fighting very hard to survive, but now time has run out for quite a few of them.

Mattress Firm

Everyone knew that Mattress Firm was in deep trouble, but it still surprised many of us when it was announced that they are officially planning to file for bankruptcy.  The following comes from Reuters

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October 2, 2018

"They Are Worried About Panic": China Blocks Bad Economic News As Economy Slumps

China's Shadow-banking system is collapsing (and with its China's economic-fuel - the credit impulse), it's equity market has become a slow-motion train-wreck, its economic data has been serially disappointing for two years, and its bond market is starting to show signs of serious systemic risk as corporate defaults in 2018 hit a record high.

But, if you were to read the Chinese press, none of that would be evident, as The New York Times reports a government directive sent to journalists in China on Friday named six economic topics to be "managed," as the long hand of China's 'Ministry of Truth' have now reached the business media in an effort to censor negative news about the economy.

The New York Times lists the topics that are to be "managed" as:

  • Worse-than-expected data that could show the economy is slowing.
  • Local government debt risks.
  • The impact of the trade war with the United States.
  • Signs of declining consumer confidence
  • The risks of stagflation, or rising prices coupled with slowing economic growth
  • “Hot-button issues to show the difficulties of people’s lives.”

Read the entire article

October 1, 2018

Goodbye Nafta, Hello USMCA, Trump's "Wonderful New Trade Deal"

Out with the old, in with the new...

Just hours before the end-of-month deadline, US trade rep Robert Lighthizer and Canadian Foreign Affairs Minister Chrystia Freeland announced last night that Canada and the US had successfully agreed on a sweeping revision of the Nafta trade accord (an agreement that had been reached with Mexico's outgoing PRI government weeks ago), maneuvering the final leg of the new trilateral deal, which will henceforth be known as the US-Mexico-Canada Agreement, or USMCA, into place. The US heralded the deal by proclaiming that it would mean "freer markets, fairer trade and robust economic growth." After both President Trump and Canadian Prime Minister reportedly approved the agreement, markets rejoiced, sparking rallies in the loonie, Mexican peso and US stock futures.

The preliminary terms reflected a resolution of the dairy-market problem, which had proved to be an intractable point of contention, with Canada offering access to roughly 3.5% of domestic dairy market to the US and will agree to a vehicle export quota of 2.6 million vehicles that could be exported to the US tariff free or near tariff free. Meanwhile, as reported previously, the Chapter 19 dispute resolution process - something that Canada demanded be preserved in the final accord - will remain unchanged.

Given that, in the Trump era, nothing is done until it's done, Trump lauded the agreement on Twitter Monday morning, saying it would correct "deficiencies and mistakes in NAFTA, greatly opens markets to our Farmers and Manufacturers, reduces Trade Barriers to the U.S. and will bring all three Great Nations together in competition with the rest of the world."

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September 28, 2018

British Gov't Report Suggests US Is Currently Winning Trade War With China

China has already declared its intent to retaliate against US President Donald Trump’s new tariffs on $200 billion in Chinese imports, a move set to raise prices on consumer goods for both countries.

Several analysts have demonstrated how Trump’s tariffs will blowback on the US economy. Moody’s Investment Service previously warned that the tariffs would reduce US GDP by 0.25 percent in 2019, to about 2.3 percent. The American economy could take an even bigger hit if Trump proceeds with tariffs on $200 bn worth of Chinese products, Moody’s warned.

But whatever the impact on the American economy, an assessment by the British government’s Foreign Office (FCO) confirms that China’s stock market has indeed taken a direct hit from Trump’s tariffs, that so far is much worse than anything the US has experienced.

The newsletter report, China Financial Policy Focus, published in July by the Foreign Office’s China Economics Network based out of the British Embassy in Beijing, says that:

“Rising trade tensions between the US and China have only added further fuel to the fire, causing the stock market to fall more than 20% against its peak in January and leading the currency to depreciate substantially against the dollar.”

The biggest impact is visible in the Shanghai Composite Index, which has “declined more than 20% since its January 2018 peak. By 28 June the index was below 2800 points.”

Read the entire article

September 27, 2018

Why Are So Many People Talking About The Potential For A Stock Market Crash In October?

It is that time of the year again.  Every year, people start talking about a possible stock market crash in October, because everyone remembers the historic crashes that took place in October 1987 and October 2008.  Could we witness a similar stock market crash in October 2018? 

Without a doubt, the market is primed for another crash.  Stock valuations have been in crazytown territory for a very long time, and financial chaos has already begun to erupt in emerging markets all over the globe.  When the stock market does collapse, it won’t exactly be a surprise.  And a lot of people out there are pointing to October for historical reasons.  I did not know this, but it turns out that the month with the most market volatility since the Dow was first established has been the month of October…

The difference is quite significant, as judged by a measure of volatility known as the standard deviation: For all Octobers since 1896, when the Dow Jones Industrial Average was created, the standard deviation of the Dow’s daily changes has been 1.44%. That compares to 1.05% for all months other than October.

Like me, you are probably tempted to think that the reason why October’s number is so high is because of what happened in 1987 and 2008.

But even if you pull out those two months, October is still the most volatile…

You might think that this difference is caused by a few outliers, such as the 1987 crash (which, of course, occurred in October) or 2008 (the Dow suffered several thousand-point plunges that month as it reacted to the snowballing financial crisis). But you would be wrong: The standard deviation of daily Dow changes is much higher in October than other months even if we eliminate 1987 and 2008 from the sample.

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September 26, 2018

Insider Selling Soars: Fastest Pace Of September Sales In Past Decade

One month ago, we reported that insider selling reached $450 million daily in August, the highest level this year; on a monthly basis, insiders sold more than $10 billion of their stock, the most of any month this year and near the most on record.

"As corporate buying is at least taking a breather, corporate insiders are ramping up share selling as the major U.S. stock market averages are at or near record highs," TrimTabs wrote in a note.

One month later, TrimTabs is out with a follow up monthly report which finds even more of the same: according to the investment research company, the "best-informed market participants" are selling their own stocks at the fastest pace in September in the past decade, even as stock buyback announcements have hit record levels.

Corporate insiders have sold an average of $400 million daily in September through Friday, September 21, TrimTabs founds, adding that this month’s volume of $5.7 billion is already the highest in any September in the past decade.

Of course this comes at a time of record corporate stock buybacks, resulting in a perverse loops in which insiders dumping near record amount of stock to their own, far less informed, shareholders.

“While insiders are selling hard with their own money, they’ve committed record amounts of shareholders’ money to prop up stock prices this year,” said David Santschi, Director of Liquidity Research at TrimTabs Investment Research.

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September 25, 2018

How Long Before China's Exports Are Hammered By Trade War

Two weeks ago we asked "when will the US finally feel the pain from trade wars" and answered: as soon as the $200BN in "phase II" tariffs are implemented, which happened just after midnight on Monday at which point is is only a matter of time before rising prices catch up with ordinary Americans. Today, we reverse the query and ask a similar question for China, which unlike the US has already suffered substantially in its capital markets (and the slumping currency), if not so much where it really matters - at least according to Trump - its exports, the reason behind the US trade deficit.

In other words: When will the trade war affect China's exports?  

Echoing the above observations, Deutsche Bank, which once again deconstructs the answer, notes that while the US-China trade war has caused "visible damage" to China's stocks, it seems to have had no impact on China's exports so far. But now that the US has announced a tariff on US$ 200bn of China's exports, when will the actual pain to exporters, corporates, and consumers start to be felt?

Well, according to DB's Zhang Zhiwei, the damage of the trade war has already shown up in disaggregate data. Specifically, after the US imposed a 25% tariff on $34bn of Chinese exports on July 6, US Customs data show that the imports of this group of goods dropped by 10% yoy in July. However, disaggregate data on this level is only available with a lag of about two months, which is why DB expects imports in August for this group of goods to drop further.

The flipside, of course, is that aggregate US  imports from China were strong in July, because of interesting "front running" behavior as traders rushed to lock in deliveries, and prices, ahead of the next tariff round. The US government announced on June 15 that a 25% tariff would be imposed on another group of Chinese goods worth US $16bn, which came into effect on August 23. This caused a surge of imports for this group in July, up to 40% yoy, which in turn helped to offset the slump of imports for the US$ 34bn of goods already facing tariffs in July. Meanwhile, the headline trade data, which is the total US imports from China, remained strong at 8% yoy in July.

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September 24, 2018

China Vows Not To Negotiate Under Threat, As Trump Teases "Major Broadside" Against Beijing

Investors had managed to cling on to optimism that the 'trade skirmish' between the US and China would reach a swift conclusion - and that the US would ultimately be better off, as China would be forced to curtail practices like its IP theft from US companies.

But as downbeat markets observed on Monday morning, hope of a harmonious resolution died when Beijing cancelled plans to send two delegations to Washington. The delegates would have engaged in the fifth round of talks since the trade conflict - war, whatever you want to call it - began earlier this year.

Meanwhile, the US formally imposed 10% tariffs on roughly $200 billion in Chinese goods just after midnight on Monday morning, pushing China to impose tariffs on roughly $60 billion of goods. Even before the tariffs took effect, US stock futures and the yuan tumbled after the start of trading Sunday night, leading European and Asian stocks lower (to be sure, these moves took place with holidays in China, Japan and South Korea, which led to much thinner trading volumes).

Those losses were exacerbated when Beijing-run Xinhua news wire published a white paper where Chinese officials revealed that they would not engage in any further negotiations while the US continues to threaten further tariffs, per Bloomberg.

"The door for trade talks is always open but negotiations must be held in an environment of mutual respect," according to a white paper carried by the state-run Xinhua News Agency. Negotiations "cannot be carried out under the threat of tariffs."

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September 14, 2018

"The World Is Sleepwalking Into A Financial Crisis": Former UK PM Gordon Brown

"We are in danger of sleepwalking into a future crisis," Brown told The Guardian in a recent interview at his estate in Scotland. "There is going to have to be a severe awakening to the escalation of risks, but we are in a leaderless world."

The former prime minister, who lost the 2010 election following Britain’s deepest recession on a post-war basis, said that countercyclical measures by governments and central banks have become widely exhausted. He warned the ability for global central banks to drop interest rates is not as readily possible today as it was a decade ago, while finance ministries would also have difficulty injecting fiscal stimulus, and here is the surprise: there is no guarantee that China would bail out the world, again.

"The cooperation that was seen in 2008 would not be possible in a post-2018 crisis both in terms of central banks and governments working together. We would have a blame-sharing exercise rather than solving the problem."

Brown had its doubts that China would be as cooperative for the second time to provide a global stimulus, primarily due to the Trump administration's trade war launched squarely at Beijing. "Trump’s protectionism is the biggest barrier to building international cooperation," he said.

Read the entire article

September 13, 2018

Global Stocks Rise Ahead Of Central Bank Barrage, Inflation Data

Global trade was front and center again, after the Trump administration proposed another round of trade talks with Beijing before slapping China with $200BN in tariffs in the absence of key concessions from Beijing, while traders were on edge ahead of a slew of central bank announcements and critical CPI data in the US.

One day after Apple's latest iPhone unveiling disappointed shareholders who sold AAPL stock and pressured tech stocks, world markets calmed and MSCI’s All World index was set for a fourth straight day of gains with S&P futures slightly higher after Asian shares jumped ending a 10 day losing streak, the longest in 16 years, on renewed hopes of fresh trade negotiations between the US and China.

Shanghai, Tokyo, Jakarta stocks all gained around 1% following Wednesday's sharp drop in the dollar, while Hong Kong’s Hang Seng finished up 1.8%, while China’s yuan also edged higher in the currency markets even if the Shanghai Composite barely budged amid ongoing skepticism inside Ground Zero, China, that talk this time will be different.

Initially, Europe also moved higher, led by automakers with gains between 0.2% and 0.6% for German, French, Italian and Spanish shares offsetting a weaker FTSE in London which was hit by weaker oil and tobacco stocks. However, Europe's Stoxx 600 index erased gains of as much as 0.3% as the Turkish lira plunged after country’s President Recep Tayyip Erdogan attacked the central bank for continuously missing inflation targets and saying the CBRT "should cut this high interest rate", just hours before rate decision.

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September 12, 2018

Whole Foods Workers Revolt Against Amazon – Aim To Unionize After Awful Working Conditions

Jeff Bezos, Amazon’s founder, earns $268,000,000 every day, while regular Amazon and Whole Foods Market employees make an average of $15 per hour. Reports have uncovered the horrible working conditions inside Amazon’s massive warehouses — as some employees had to pee in bottles because they lived in fear of being disciplined over ‘idle time’. Now a group of workers at Whole Foods is trying to form a union, seeking better compensation after the Amazon buyout left the company with deteriorating working conditions, workers claim.

In a memo sent to nearly every Whole Foods employee on Thursday, the union’s organizers said Amazon is accelerating layoffs and consolidating stores put employees’ livelihoods at risk, and that more consolidation was expected. This is the second time Whole Foods workers have tried to organize, but it is the first time under the new ownership of Amazon, said the Fast Company.

The union demanded a $15-an-hour minimum wage, better retirement benefits, paid maternity leave and lower health insurance costs, among other benefits — as the current situation shows all is not well in the popular grocery store as Amazon is their new corporate overlord.

“Over the past year, layoffs and the consolidations of store-level positions at Whole Foods Market have upset the livelihood of team members, stirred, anxiety, and lowered morale within stores,” the memo declared. It then claims that Whole Foods CEO John Mackey sold the store to Amazon “with an agreement to trim hundreds of millions of dollars of labor from our stores.” The letter continues, “There will continue to be layoffs in 2019 and beyond as Amazon aims to aggressively trim our labor force before it expands with new technology and labor models.”

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September 11, 2018

Why The U.S. Is Suddenly Buying A Lot More Saudi Oil

For a few months now, OPEC has been boosting production to ease concerns about high oil prices amid expected supply losses from Venezuela and Iran.

The cartel’s largest producer and exporter, Saudi Arabia, has been specifically targeting an increase in crude oil exports to the most transparent market, the United States, which reports crude oil imports and inventory levels every week.

On the one hand, the Saudis are looking to regain their foothold in the American market after having cut shipments to the United States to a 30-year-low at the end of last year, when OPEC’s efforts to erase the global oil glut were in full swing.

On the other hand, the Saudis are responding to the demands of their staunch ally U.S. President Donald Trump, who has repeatedly slammed OPEC for the high gasoline prices, urging the cartel in early July to “REDUCE PRICING NOW!”

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September 10, 2018

The New Normal In Europe: Increasing Population, Decreasing GDP

Leading European politicians and economists argue that the influx of immigrants is an economic necessity.

Naturalization of foreigners implemented for the purpose of executing a re-population program (resembling the Sinicization of Tibet) has become a national policy in most European countries. Replacing the dying European population with workers from Africa and the Middle East is supposed not only to save national economies and support the pension systems but also to boost economic growth.

Basic economic indicators, however, show that the opposite is true.

A year ago The Economist wrote that migration is beneficial to the global economy.

The Gefira team has shown that economic immigrants are more frequently beneficiaries of social benefits, and are less professionally active than non-native Europeans.

Our analysis is also validated by the scientists from the University of Basel. The result is that indigenous Europeans have to provide for immigrants.

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September 7, 2018

The 11th Hour: 8 Examples Of Mainstream Media Sources Warning Us Of Imminent Economic Disaste

Are we on the verge of another great financial crisis, a devastating recession and a horrific implosion of the global debt bubble?  On my website I have been relentlessly warning my readers about the inevitable consequences of our very foolish actions, but now the mainstream media is beginning to sound just like The Economic Collapse Blog.  The coming crisis is so close now that a lot of them are starting to see it, and of course economic disaster is already a reality for much of the rest of the planet.  For years, the mainstream media told us that things would get better, and in a lot of ways we did see some improvement.  But now the tone of the mainstream media has become quite ominous, and that is definitely not a positive sign.  The following are 8 examples of mainstream media sources warning us of imminent economic disaster…

#1 Forbes: “Disaster Is Inevitable When America’s Stock Market Bubble Bursts”…

#2 CNBC: “Tech stock sell-off could be just beginning if trade war with China worsens”…

#3 Bloomberg: “Emerging-market rout is longest since 2008 as confidence cracks”…

#4 CNN: “Emerging Markets Look Sick. Will They Infect Wall Street?”…

#5 The Motley Fool: “6 signs the next recession might be closer than we realize”…

#6 Forbes: “U.S. Household Wealth Is Experiencing An Unsustainable Bubble”…

#7 Savannah Now: “Global debt soars, along with fears of crisis ahead”…

#8 CNBC: “The emerging market crisis is back. And this time it’s serious”…


Read the entire article

September 6, 2018

Bitcoin Plunges For Second Time In One Day As Cryptocurrency Turmoil Deepens

The selloff across cryptocurrencies accelerated late on Wednesday, when bitcoin and other digital tokens dropped for the second time in less than 24, sinking to a nine-month low amid growing concern broader adoption of digital assets will take longer than some anticipated following an earlier report that Goldman was suspending its cryptocurrency trading desk plans.

Bitcoin tumbled as much as 10% percent and was trading at $6,408 on Thursday morning, down 7.8%. The Bloomberg Galaxy Crypto Index, a gauge of the largest digital assets, traded near its lowest level since November 2017 as rival coins Ripple, Ether and Litecoin also tumbled in sympathy.

The Goldman decision to pull back from trading crypto followed more bad news last month, when the SEC rejected another round of Bitcoin ETF proposals.

“Their name carries weight across the globe,” said Ryan Rabaglia, head trader at digital asset brokerage OSL in Hong Kong, referring to Goldman Sachs. "When people see their name, their eyes may light up, and they say: OK, we’ve finally made it -- the bigger players are going to start to enter."

Separately, Bloomberg reported on Wednesday that enthusiasts drawn to Bitcoin’s original promise of anonymity and freedom from government control were also dealt a blow when veteran Erik Voorhees’s trading platform ShapeShift AG said it will begin asking users for personal information.

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September 3, 2018

Dollar Poised To Soar As China Refuses New Plaza Accord

The Federal Reserve monetized debt. It took existing debt and swapped it for Federal Reserve notes. The effect was not a resumption of credit growth to pre-crisis levels because banks create new money when they create new credit. Even with massive federal deficits in the wake of the 2008 crisis, deflation in the financial and household sector overwhelmed credit growth. As the federal government eased its credit growth, the economy barely picked up the slack. Credit growth remains at levels associated with recessions prior to 2008.

The Federal Reserve did achieve a transformation of debt into equity. Instead of making new loans, money flowed into stocks. The wealth effect caused by rising stock prices is a fraction of the wealth generated by productive credit creation. How much money flowed into stocks? Until the 2016 presidential election, the U.S. stock market moved in lock-step with the Federal Reserve's balance sheet, so much so that the chart below only has one axis. The percentage changes in the Fed balance sheet and S&P 500 Index are too close to be a coincidence.

How did market participants behave in response to Fed policies? First they expected hyperinflation. Commodities ran up into the first inflation hysteria of 2011. Then it all fell apart. Inflation was forecast again in 2014. Then it all fell apart. Inflation was forecast again in 2017/8 and we don't have the full results yet, but the gold market is telling me it's all falling apart again.

Aside from betting on inflation, hot money poured into emerging markets. Money flowed into China. The Chinese growth story fell apart in 2011, 2014 and again in 2018. Resource exporter Brazil saw its currency tumble and it may be headed lower still as another EM crisis forms.

Most importantly, emerging markets inflated like crazy and in countries such as China, if the private economy wasn't willing to lend and borrow, the government forced state-owned banks and companies to do it. China's M2 money supply growth matches that of Turkey. The first chart shows GDP + CPI growth in Turkey along with M2.

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August 31, 2018

Economic Doom Returns: Emerging Market Currencies Collapse To Record Lows As Global Financial Chaos Accelerates

After a little bit of a lull, the international currency crisis is back with a vengeance.  Currencies are collapsing in Argentina, Brazil, India, Turkey and other emerging markets, and central banks are springing into action.  It is being hoped that the financial chaos can be confined to emerging markets so that it will not spread to the United States and Europe.  But of course the global financial system is more interconnected today than ever before, and a massive wave of debt defaults in emerging markets would inevitably have extremely serious consequences all over the planet.  It would be difficult to overstate the potential danger that this new crisis poses for all of us.  Emerging market economies went on an unprecedented debt binge over the past decade, and a high percentage of those debts were denominated in U.S. dollars.  As emerging market currencies collapse, it is going to become nearly impossible to service any debts denominated in U.S. dollars, and that could ultimately mean absolutely enormous losses for international lenders.  Our system tends to do fairly well as long as everybody is paying their debts, but once the dominoes begin to tumble things can get messy really quickly.

Let’s start our roundup today with India.  While India is currently not in as bad shape as some of the other emerging markets, the truth is that they could get there pretty rapidly if they keep going down this path.

On Thursday, concerns about rising oil prices drove the Indian rupee to a brand new all-time record low…

The Indian rupee fell to a record low on Thursday morning, following a declining trend all year — which economists attributed to rising oil prices, broader emerging market concerns, and strong month-end dollar demand.

It slid to 70.8100 against the dollar, after a previous new low just a day before at 70.475. That marked a 10.97 percent decline since the start of the year.

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August 30, 2018

Is China Losing Control? Yuan More Volatile Than Euro For First Time Ever

For the first time, FX traders are grappling with wilder swings from China than Europe.

As Bloomberg notes, the offshore yuan has been more volatile than the euro all month after first overtaking the shared currency in July, according to 30-day realized data. And while euro uncertainty remains relatively bracketed between 6 and 8 for the last two years, yuan volatility has soared from 2 to almost 9 - the highest since 2015's devaluation.

The narrow spread (lower pane) shows China is moving to a more “flexible arrangement” when it comes to managing its currency, Bank of America analysts wrote in a note, predicting the yuan will weaken more this year.

For now it appears the temporary respite from Yuan's freefall, that 'mysteriously' occurred right before the US-China trade talks, has begun to lose momentum.

But while Yuan has become increasingly volatile, the realized volatility of gold (when priced in yuan) has collapsed to record lows...

Perhaps supporting the idea that the Chinese care more about the 'stability' of the yuan relative to gold then to the arbitrary US dollar fiat money.

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August 29, 2018

Turkish Lira Tumbles As Central Bank Intervention Fails

The Turkey’s lira tumbled as much as 3% against the dollar, making it the worst performing currency in the world, and extending its slump to a third day after the central bank announced it double banks' borrowing limit for overnight transactions at the interbank money market - effectively tightening liquidity by ending the unrestricted funding it has 
offered since Aug. 13 - failed to bolster investor sentiment.

"Banks’ borrowing limits for overnight transactions at the Interbank Money Market established within the CBRT would be twice the limits applicable before Aug. 13", The Turkish central bank said.

However, like many of the measures introduced in recent weeks to contain a slide of more than 40 percent in the lira this year, this one also failed as investors do not see the bank's approach to market pressure as a sustainable way to tackle double-digit inflation and a widening current-account deficit, when what the bank should be doing it raising rates and making the country more attractive for foreign investors.

"It’s yet more smoke and mirrors from the central bank," said Nigel Rendell, an analyst at Medley Global Advisors LLC in London. "The change in banks’ overnight borrowing limits is aimed at trying to ease pressures on the banking system, rather than tackling Turkey’s underlying problem, which remains persistently high inflation."

The lira plunged 3.0% lower, dropping as much as 6.4786 per dollar. Together with the Argentine peso, it’s the worst-performing emerging-market currency this year. As the selling resume, the yield on 10-year bonds climbed 19 bps to 21.95%, and fast approaching the record set earlier this month.

Separately, on Wednesday the Turkish economic confidence fell to the lowest level since 2009 in August, while the country’s trade deficit widened in July from the previous month.

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August 28, 2018

Barclays Is First Bank To Sell Commercial Paper Linked To Libor Alternative

One month after Fannie Mae became the first issuer to sell debt linked to the Libor alternative, Barclays became the first commercial bank to issue commercial paper tied to the benchmark which regulators hope will replace the scandal-plagued London Interbank Offered Rate, the so-called secured overnight financing rate, or SOFR.

According to Bloomberg, on Friday the British bank sold $525 million of the short-term debt, linked to SOFR, Bloomberg reported and added that the borrowings took place via its flagship asset-backed commercial paper conduit, Sheffield Receivables Corp.

"Investor response was immediate, and fairly broad across different types of investors," Joe Muscari, head of securitized portfolio management at Barclays, said about the bank’s commercial paper deal. "Our support of SOFR with these issuances is just a recognition that this is the direction the industry is headed."

Commenting on the new bond issues, Barclays managing directors Chris Conetta told Bloomberg that "you should expect to see additional SOFR-linked deals across a broad spectrum of issuers. These will likely include bank issuers as well as other types of borrowers in the short-term debt markets. Both issuers and investors have a vested interest in seeing SOFR become an established and liquid market."

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August 27, 2018

BIS Warns Of "Perfect Storm" For Global Economy

To those hoping for a quick resolution to the US-China trade war, Axios had some bad news earlier today, reporting that the trade feud is "likely to last much longer than originally thought — extending well into the second half of next year and perhaps beyond, experts say." According to Axios, the main reason for the protracted conflict is that neither side is prepared to appear politically weak at home, and both are ready to absorb economic pain.

With few probable winners, the biggest losers would be farmers, users of steel, and consumers in the US, manufacturers of all types will see business leave to neighbors like Vietnam and Malaysia in China, while dampening economic growth in both nations and around the globe.

However, as the general manager of the Bank of International Settlements, Agustin Carstens warned, the greater risk is not how many points of GDP the rising tariffs will subtract from the US and China, but the growing danger to globalization itself, and on Saturday, Karstens delivered a scathing critique of rising protectionism, a not-so-subtle rebuke to Trump’s use of tariffs and trade talks to wring concessions from China, Mexico and many other countries.

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August 24, 2018

"No Further Talks Scheduled": China-U.S. Trade Negotiations A Complete Bust

When reports emerged last week of a low-level Chinese delegation coming to meet with members of the Treasury department ahead of what the WSJ described would be a November trade summit in the US, stocks spiked and yields ran up (they have since tumbled with the 2s10s yield curve collapsing to just 20 basis points) on hopes that the long-running trade feud between the US and China may finally be coming to an end.

Skeptics laughed and said that after three rounds of failed trade talks, the fourth one would be no different.

The skeptics were right because after the conclusion on Thursday of the second day of the closely watched trade talks between the U.S. and China, there was "no major progress" according to Bloomberg, with the stage once again set for further escalation of the trade war between the US and China.

Worse, according to the Bloomberg source, not only are no further talks scheduled at this point but the Chinese officials have reportedly raised the possibility that no further negotiations could happen until after November’s mid-term elections in the U.S.

The White House issued a statement which said the countries “exchanged views on how to achieve fairness, balance, and reciprocity in the economic relationship, including by addressing structural issues in China” identified by the U.S. in an investigation into Chinese intellectual-property practices. The Chinese commerce ministry was even more terse, stating that two nations had "constructive, candid" communication, and will keep in touch about the next steps.

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August 23, 2018

The 5 Previous Times This Stock Market Indicator Has Reached This Level Stock Prices Have Fallen By At Least 50 Percent

Have you ever heard of the “Sound Advice Risk Indicator”?  Every single time in our history when it has gone above 2.0 the stock market has crashed, and now it has just surged above that threshold for the very first time since the late 1990s.  That doesn’t mean that a stock market crash is imminent, but it is definitely yet another indication that this stock market bubble is living on borrowed time.  But for the moment, there is still quite a bit of optimism on Wall Street.  The Dow set another brand new all-time record high earlier this week, and on Wednesday we learned that this bull market is now officially the longest in our history

For context, a bull market is defined as a 20% rally on a closing basis that’s at no point derailed by a subsequent 20% decline. March 9, 2009, has long been the agreed-upon starting point for such calculations because that was the absolute bottom for the prior bear market, which ended that day.

The S&P 500 has surged a whopping 323% over the period, with its roughly 19% annualized return slightly lagging behind the historical bull market average of 22%.

Of course the U.S. economy has not been performing nearly as well.  Even if you accept the highly manipulated numbers that the federal government puts out, we haven’t had a year when GDP grew by at least 3 percent since the middle of the Bush administration.

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August 22, 2018

Bank Of England Chief Economist Warns Of Disruptive AI Threat In "Fourth Industrial Revolution"

Meanwhile, the UK government's chair of the newly formed Artificial Intelligence Council, Tabitha Goldstaub, echoed Haldane's sentiment, warning of a "huge risk" of people being left without jobs that computers and robots have taken. She says that the challenge will be ensuring that people are prepared for the cultural and economic shifts - and that hte focus would be on creating "the new jobs of the future" in order to replace those at risk of robotic-replacement. 

Mr. Haldane told the BBC: "Each of those [industrial revolutions] had a wrenching and lengthy impact on the jobs market, on the lives and livelihoods of large swathes of society," adding "Jobs were effectively taken by machines of various types, there was a hollowing out of the jobs market, and that left a lot of people for a lengthy period out of work and struggling to make a living.

"That heightened social tensions, it heightened financial tensions, it led to a rise in inequality. This is the dark side of technological revolutions and that dark-side has always been there."

"That hollowing out is going to be potentially on a much greater scale in the future, when we have machines both thinking and doing - replacing both the cognitive and the technical skills of humans."

That's a lot of words, but solutions are elusive

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August 21, 2018

Chinese Oil Imports From Iran Surge As Beijing Shifts To Iran Tankers To Bypass Sanctions

One month ago, when discussing the shift in Iran's oil customer base as a result of Trump's withdrawal from the 2015 Nuclear treaty and the potential blowback from China, we noted that in a harbinger of what's to come, an executive from China's Dongming Petrochemical Group, an independent refiner from Shandong province, said his refinery had already cancelled U.S. crude orders. "We expect the Chinese government to impose tariffs on (U.S.) crude," the unnamed executive said. "We will switch to either Middle East or West African supplies," he said. We also said that China may even replace most if not all American oil with crude from Iran: "Chinese importers are not going to be intimidated, or swayed by U.S. sanctions."

And sure enough, today Reuters reported that Chinese buyers of Iranian oil are starting to shift their cargoes to vessels owned by National Iranian Tanker Co (NITC) for nearly all of their imports to keep supply flowing amid the re-imposition of economic sanctions by the United States.

To safeguard their supplies, state oil trader Zhuhai Zhenrong Corp and Sinopec Group, Asia’s biggest refiner, have activated a clause in its long-term supply agreements with National Iranian Oil Corp (NIOC) that allows them to use NITC-operated tankers, according to four sources with direct knowledge of the matter.

The expected shift demonstrates that China - Iran’s biggest oil customer with India and the EU in 2nd and 3rd spot -  will keep buying Iranian crude despite the US sanctions .

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August 20, 2018

Tesla Shorts Up $1.2 Billion Since Musk "Going Private" Tweet As Saudis Plan Investment In Competitor

It was less than three weeks ago when we posted "Tesla Shorts Refuse To Cover Despite Suffering Massive Losses" in which we wrote that "Tesla shares rocketed higher on August 2, by almost $50, the day after the company reported its second-quarter results" and added that "despite the stock rising more than 15% immediately after the report, WSJ analytics showed that short sellers are standing their ground in the name despite an estimated $1.7 billion paper loss resulting from the violent move higher."

At the start of the month, and heading into Tesla earnings, there was about $10.5 billion in short interest according to S3 Partners. And as the below chart shows, Tesla has remained the most heavily shorted stock in the U.S. both before and after its report.

Of course, the pain for the shorts only spiked on August 7 when first the Saudi Sov. Wealth Fund announced a 5% stake, promptly followed by Musk tweeting his intention to take the company private at $420, which sent the stock just shy of its all time highs.

Still, the shorts refused to cover, because as the FT reported on Sunday, while the buyout plan pitched by Musk may have been nothing more than a way to "burn the shorts", something the SEC is now allegedly investigating, less than 4 per cent of the short positions have been closed since his tweet.

And in retrospect, good thing they did not because as the bizarre events in the subsequent days demonstrated, Musk's market manipulative tweet - it has since emerged that funding was not secured - may have been the catalyst to not only an SEC investigation, but the last nail of what has been one long, at times surreal emotional collapse for the Tesla CEO.

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August 17, 2018

5 Signs That Global Financial Markets Are Entering A Bear Market, And 11 Ways That You Can Get Prepared For The Chaos That Is Coming…

We haven’t seen carnage like this in the global financial marketplace in quite some time.  On Wednesday, U.S. stocks were down some, but things were much, much worse around the rest of the world.  Global banking stocks are plunging, emerging market stocks are cratering, and emerging market currencies continue their stunning decline.  This represents a dramatic change from the relative stability that we have seen throughout most of 2018.  It is almost as if someone flipped a switch once the month of August began, and the shakiness of global financial markets has many investors wondering what trouble fall will bring.  What we are witnessing right now is not a full-blown panic yet, but it definitely has the potential to turn into one.

The term “bear market” is being thrown around a lot lately, but a lot of people don’t understand what a “bear market” actually is.

A bear market is generally considered to be when we see a decline of 20 percent or more from the 52-week high, and after the carnage of this past week a lot of those thresholds are now being crossed.

It would probably be too early to call this a “global stock market crash”, but we are well on the way to getting there.  The following are 5 signs that global financial markets are entering a bear market…

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August 16, 2018

Yuan, Futures Jump On Report China Delegation Coming To US To Discuss Trade

The Yuan is surging, alongside S&P futures, while the Japanese Yen has erased its gains and US Treasury futures are slumping on a Bloomberg report that China's Vice Commerce Minister, Wang Shouwen, will lead a delegation to the U.S. in late August, the Ministry of Commerce says on website, adding that the visit comes at the invitation of the US.

Additionally, China reiterates that it opposes unilateralism and trade protectionism, and won’t accept any unilateral trade restriction measures. It also "welcomes communications and dialogue on the basis of equality and integrity."

The news is quickly being interpreted by the market as a possible thaw in the trade war tit-for-tat, and has sent H-shares sharply higher, while S&P futures jumped 10 points:

The news may explain why the PBOC fixed the onshore far stronger than the offshore yuan suggested, because as some desks have suggested, the last thing China will want when it comes to the US is a plunging Yuan.

So is this the end of the trade war? Hardly: after all, a Chinese delegation visited the US not that long ago, and just before Trump announced even more tariffs. Furthermore, why would Trump seek to end the "trade war" when the US is clearly winning based on the US vs Chinese stock market, and the divergence in economic growth.

For the time being, however, the market mood is clearly risk on.

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August 15, 2018

This Political Event Will Be Unlike Anything We've Seen In 50 Years

Do you ever feel—despite the supposed economic "recovery" of recent years—that something in America is still not quite right?

If so, you are not alone.

After all, how can things be "OK" when nearly half the men ages 18-34 now live with their parents—the highest level since the Great Depression?

How can it be "normal" when in one of America's richest cities (Seattle) there are now 400 unauthorized homeless camps under bridges and along freeway medians?

How can it be a "recovery" when 78% of the U.S. population now lives paycheck to paycheck, with essentially zero savings?

How can you explain things like the dramatic rise of the militant left-wing group ‘Antifa'... the resurgence of White Supremacists... and the booming popularity of the Democratic Socialists—they've doubled membership in recent months.

Sure, some people—CEOs, tech entrepreneurs, and other members of the "1%"—are doing great. There's never been a better time for wealthy Americans. But the truth is, for most people, the situation is getting much, much worse.

Today I want to share a few facts our politicians are afraid to tell you—including the secret reason why working class Americans have gotten dramatically poorer over the past 40 years.

I've never seen this information published anywhere else. It's a secret that explains why the rich are really getting so much richer—while everyone else is falling behind.

Once you understand this secret, you'll see why, for millions of Americans, a crisis is coming.

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August 14, 2018

That Escalated Quickly: The Emerging Market Currency Crisis Of 2018 Threatens To Destabilize The Entire Global Financial System

We haven’t seen emerging market currencies crash like this in over a decade, and analysts are warning that if this continues we could witness a devastating global debt crisis.  Over the past decade, there has been an insatiable appetite for cheap loans in emerging market economies, and a very substantial percentage of those loans were denominated in U.S. dollars.  When emerging market currencies crash relative to the U.S. dollar, lending dries up and servicing the existing loans becomes extremely oppressive, and that is precisely what we are witnessing right now.  This week, most of the top headlines in the financial media have been about the crisis in Turkey.  The Turkish lira fell another 8 percent against the U.S. dollar on Monday, and it is now down about 35 percent over the past week.  Overall, the lira has fallen 82 percent against the U.S. dollar in 2018, and this is putting an enormous amount of stress on the Turkish financial system

“It is about credit, since Turkey has been a huge borrower in global capital markets over the past number of years when the world’s central banks were encouraging investors to stretch for yield,” David Rosenberg, chief economist and strategist at Gluskin Sheff, said in his daily market note. “Over half of the borrowing is denominated in foreign currencies, so when the lira sinks, debt-servicing costs and default risks rise inexorably.”

Turkey’s economy, just like all of the other major economies around the world, is utterly dependent on the flow of credit, and now lending is becoming greatly restricted.

Meanwhile, any existing loans that were made during the lending spree of the past decade that are denominated in foreign currencies are going to be causing major problems.  The following comes from CNBC

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