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Hayes: “A Lot Of What I Know Even The DOJ Is In The Dark”

Hayes: “A Lot Of What I Know Even The DOJ Is In The Dark”

An exclusive excerpt from the hot new financial and legal thriller “The Spider Network” by David Enrich

The small ski resort town, nestled in the mountains outside the city of Karuizawa, was a popular destination for day trips for Japanese families. Bustling during the day, it was mostly quiet this Saturday night. Clouds cloaked the moon.

A chartered bus pulled up outside a bar, its windows aglow. A light snow was falling. Out into the peaceful evening stumbled dozens of rowdy bankers, some toting tall cans of Asahi and Kirin. Most of them were drunk. They quickly took over the small bar.

The drinkers were employees of the American bank Citigroup, one of the world’s largest and most troubled financial institutions. A year earlier, at the beginning of 2009, American taxpayers had finished pumping a staggering $45 billion into Citigroup to bail out the collapsing behemoth. Now the transfused recipient was treating dozens of its investment banking employees to a weekend getaway. The bankers were housed nearby in a sprawling luxury hotel, each employee’s room designed in Japan’s typical spare style.

These festivities weren’t so spartan. The point was to foster camaraderie, and that was happening in spades. The party had begun on the hundred-mile ride on the bullet train out from Tokyo. After a day of hitting the slopes, Citigroup ferried the bankers to a bowling alley, where they drank and bowled and drank some more. Their bus had then deposited the intoxicated crew at this bar, before leaving the partiers behind to fend for themselves.

…click on the above link to read the rest of the article…

Venezuela Stops Publishing Money Supply Data For Obvious Reasons

Venezuela Stops Publishing Money Supply Data For Obvious Reasons

More than a year after hyperinflating banana republic Venezuela stopped reporting official inflation data, Venezuela has stopped publishing money supply data, depriving the general public of the last, and best, available tool to ascertain soaring inflation in what has become the world’s worst-performing economy. Then again, one hardly needs official data to confirm the blistering wave of hyperinflation sweeping through the nation which has seen the value of the bolivar disintegrate under the Maduro regime.

The money supply indicator suddenly stopped appearing on the central bank’s website on Feb. 24. The data in question, which will no longer be updated, looked as follows most recently.

Despite the halt of CPI data, consumer price rises are widely seen to be in triple digits, driven by an unraveling socialist system in which many people struggle to obtain meals and medicines. The M2 money supply was up by nearly 180% in mid-February from a year earlier, according to the central bank before it halted the release of the weekly data without explanation last month Reuters reports. In contrast, Reuters reports that neighboring Colombia’s M2 was up 7 percent in the same period and the United States’ was up 6 percent.

“If they are not publishing, you know it must be skyrocketing,” Aurelio Concheso, director of the Caracas-based business consultancy Aspen Consulting, stated the obvious. The central bank and ministry of communications did not respond to a request for comment, Reuters adds.

An increase in M2, the sum of cash together with checking, savings and other deposits, means more currency is circulating. That can accelerate inflation when coupled with a decline in the output of goods and services – such as in Venezuela, which is in the fourth year of a recession. When money supply is growing exponentially, as it has been in Venezuela, academics usually point to the infamous example of the Weimar Republic and leave it at that.

…click on the above link to read the rest of the article…

“This Is Going To Blow Sky High” – Observations On Canada’s Housing Market

“This Is Going To Blow Sky High” – Observations On Canada’s Housing Market

For months we’ve been warning about real estate bubbles re-emerging in various markets around the world from Canada to Australia (see “There Are 66,719 Empty Mansions In Vancouver” and “Vancouver Home Sales Crash 40%, As Toronto Home Prices Soar 22%“).  And while facts and figures clearly indicate that certain markets are bubbling over courtesy of all the same mistakes that caused the ‘great recession’ in 2008, nothing helps to confirm the truly obscene nature of a real estate bubble quite like attending a good ole-fashioned, get-rich-quick real estate expo. As such, below are the musings of one financial market observer who recently attended the Canadian Real Estate Wealth Expo as a joke but walked away convinced the system is about “to blow sky high.”

* * *

Originally Authored By Tim Bergin of On Beyond Investing

Originally, I thought this would be a bit of a joke.  There were billboards in all the Toronto subway cars advertising the Canadian Real Estate Wealth Expo – learn how to become a millionaire.  I thought this was so ridiculous, it may be fun.  What better way to experience the top of the housing market than watching Tony Robbins and Pitbull along with a bunch of US real estate professionals explain how Toronto real estate is the path to riches.

Prices were originally $150 per ticket, but I was able to buy for $50.  While it deeply bothers me that I paid $50 to these shameless (amoral) self-promoters, I thought it would be worth it to witness, in person, the top of the housing market.

I had thought, there can’t be that many people stupid enough to attend this, but I was very wrong – 15,000 people were there!  I was blown away.  Bubbles are largely psychological.  This crowd was tangible proof of that.

…click on the above link to read the rest of the article…

Bank Loan Creation Crashes At Fastest Pace Since The Financial Crisis

Bank Loan Creation Crashes At Fastest Pace Since The Financial Crisis

Last weekend, after looking at the latest H.8 statement by the Fed, we noted something concerning: total loans and leases by U.S. commercial banks were rising at an annual pace of about 4.6%, based on weekly Fed data. That is down from a 6.4% pace for all of last year and peak rates of around 8% in mid-2016. This is the slowest pace of debt creation since the spring of 2014. This deceleration has prompted numerous questions about the sustainability of the recovery, and led the WSJ to noted that the slowdown, “is at odds with the idea of a stronger economy and rising sentiment.”

But the slowdown was especially acute in the all important for growth Commercial and Industrial loan category, which after growing at a pace of 10% in the first half of 2016, had unexpectedly slowed to just 4.0%, nearly 50% lower than the 7% growth notched at the start of the year.  This was the lowest pace of loan growth since July of 2011.

Fast forward one week, when after the latest update to the Fed’s latest weekly commercial bank loan data, we find that the trends have deteriorated substantially.

As shown in the chart below, after growing 4.6% one week ago, total loans and leases grew only 4.2% in the week ended March 8: the lowest growth rate since May 2014. However, it was once again the Commercial and Industrial loans creation – or lack thereof – which was more problematic, because after growing 4.0% on a year over year basis as of March 1, and 5.7% one month ago as of February 8, the growth rate has since tumbled to just 2.9%, a 1.1% decline in the growth rate over the past week.

As shown in the chart below, on a cumulative 4-week basis the slowdown in C&I loan creation tumbled by 2.8% as of the latest period: this was the biggest monthly slowdown going back to the financial crisis.

…click on the above link to read the rest of the article…

“We Are All Doing It”: Thousands Of Canadian Bankers Admit Lying To Customers To Boost Sales

“We Are All Doing It”: Thousands Of Canadian Bankers Admit Lying To Customers To Boost Sales

Several days after shares of Canada’s TD Bank tumbled following reports that its employees were engaging in practices similar to those which led to a major scandal at Wells Fargo, which cost CEO John Stumpf his job and led to bonus clawbacks and numerous terminations over the practice of “cross-selling”, employees from all five of Canada’s big banks have flooded CBC’s “Go Public” whistleblower hotline with stories of how they too feel pressured to upsell, trick and even lie to customers to meet unrealistic sales targets and keep their jobs.

In nearly 1,000 emails, employees from RBC, BMO, CIBC, TD and Scotiabank locations across Canada describe the pressures to hit targets that are monitored weekly, daily and in some cases hourly.  “Management is down your throat all the time,” said a Scotiabank financial adviser. “They want you to hit your numbers and it doesn’t matter how.”

The deluge is fuelling multiple calls for a parliamentary inquiry similar to that which followed the Wells Fargo revelations, even as the banks claim they’re acting in customers’ best interests, CBC reported, adding it has agreed to protect their identities because the workers are concerned about current and future employment.

Some examples:

An RBC teller from Thunder Bay, Ont., said even when customers don’t need or want anything, “we need to upgrade their Visa card, increase their Visa limits or get them to open up a credit line.” “It’s not what’s important to our clients anymore,” she said. “The bank wants more and more money. And it’s leading everyone into debt.”

A CIBC teller said, “I am expected to aggressively sell products, especially Visa. Hit those targets, who cares if it’s hurting customers.”

…click on the above link to read the rest of the article…

China Prepares Countermeasures Against South Korea Missile Shield

China Prepares Countermeasures Against South Korea Missile Shield

The recent deployment by South Korea of the controversial US-made Terminal High Altitude Area ­Defence (THAAD) anti-missile system in response to potential ballistic threats from North Korea, has led to a furious response by China, whose first-strike ability would be compromised under the existing military configuration.  And as BBC reports, “the deployment in South Korea of the US Terminal High Altitude Area Defense (THAAD) missile defense system has been slammed by Beijing. Now the Chinese Communist Party is calling on its people to embrace their ill will towards their neighbours” and notes that as anti South-Korea fever sweep China, local school students chant “Boycott Sth Korea!”, and smash South Korean appliances as the “communist Party unleashes anti-Korea spirit.”

However, while eliciting up a traditional nationalistic response by China was to be expected, what is more troubling is that according to the South China Morning Post, China is set to deploy anti-radar countermeasures which will neutralize the South Korean THAAD. The THAAD system consists of a sophisticated radar and interceptor missiles designed to spot and knock out incoming ballistic missiles.

Speaking to retired PLA general Wang Hongguang, the SCMP reports that China knew it might not be able to stop Seoul deploying a US anti-missile system “and was prepared to counter with its own anti-radar equipment.” The comments came as a South Korean court’s decision to uphold the impeachment of former president Park Geun-hye had fanned hopes Seoul might put plans for the Terminal High Altitude Area ­Defence system on hold.  Park supported the installation of the system to help protect South Korea against threats from North Korea, which Beijing says can peer through China’s defences. However, such a de-escalation does not appear to be imminent.

 

…click on the above link to read the rest of the article…

Water Wars Coming To California? Is The Drought Really Over?

Water Wars Coming To California? Is The Drought Really Over?

Authored by Capt. William E. Simpson II – USMM Ret.,

In California, the poor growth and development policies that have resulted from a lack of vision have led-to and are continuing to lead Californians down a path of unsustainable growth and a widening gap between the demand and availability of critical resources, especially water.

This gargantuan problem is augmented by a growing financial crises in California as evidenced by an out of control and growing debt problem. All the while, many elected officials in the State along with Governor Jerry Brown are thumbing their noses at the Fed and losing Federal funding for cities that obstinately insist on violating long-established immigration laws. Of course this too is not helpful to the growing State debt, which elected officials will certainly cast-off onto the weakening shoulders of taxpayers using a combination of direct tax increases and other legislative and regulatory ploys that also amount to taxes and less money in the pockets of the People.

The term ‘drought’ has been used in reference to the severe water shortages that California is experiencing. But what is the real culprit or causation of the growing water shortage? Is drought caused by a lack of precipitation as most people believe? Or is the shortfall of water availability due to some other principal factor, such as water-use outstripping supply?

The recent record precipitation in California during the winter of 2016-2017 has certainly soaked the landscape, replenishing many of California’s reservoirs and in the process giving Californians the impression that the drought is over. But that is a misconception according to sources provided herein.

 

…click on the above link to read the rest of the article…

50 Million Americans Brace For Major Blizzard In US Northeast

50 Million Americans Brace For Major Blizzard In US Northeast

A major Nor’easter threatens to shut down travel due to heavy snow and strong winds from Washington, D.C., to New York City and Boston early this week, as weather forecasters on Sunday put the U.S. East Coast on a blizzard watch, warning some 50 million people of potential snowfall from 12 to 18 inches, coupled with wind blasts in some areas from Monday night into Wednesday. New York City issued a snow alert for Monday night, preparing its fleet of snow plows to deal with the fallout.

Bliz March 12

Washington, which often grinds to a halt with even low levels of snow, is expecting 5 inches in the city and twice that in outlying areas.

The National Weather Service warns that the storm has raised the potential for dangerous travel and power outages with damaging wind gusts up to 50 mph possible across eastern Long Island and southeastern Connecticut. The likelihood of blowing snow and strong winds could lead to “whiteout” conditions with visibility as poor as a quarter mile, the service said. Sub-freezing temperatures were forecast in the upper 20s Fahrenheit, Reuters adds.

Noreaster March 11

According to Accueweather, areas from northern Virginia to northern Maryland, central and eastern Pennsylvania, northern New Jersey, central and southeastern New York state and a large part of New England will be shoveling out of 6 inches or more of snow from the storm. A widespread zone of around a foot or more of snow is expected from the western suburbs of Philadelphia to New York City, Boston and Portland, Maine.

“New York City’s Central Park has not recorded more than 10 inches of snow from one storm in March since the 1993 Storm of the Century,” AccuWeather Senior Meteorologist Kristina Pydynowski said.

…click on the above link to read the rest of the article…

We’ve Created A Monster – Ron Paul Says It’s “Fantastic” That WikiLeaks Exposed The CIA

We’ve Created A Monster – Ron Paul Says It’s “Fantastic” That WikiLeaks Exposed The CIA

Ron Paul, the prominent libertarian communicator and three-time US presidential candidate, declared this week in a Fox Business interview that it is “fantastic” that WikiLeaks revealed on Tuesday thousands of US Central Intelligence Agency (CIA) documents and files. 

Speaking with host Kennedy, Paul further says that the information exposed “indicates that liberty is in big trouble” and states his concern about there having been insufficient media coverage of the information and outlines the potential dangers related to technology…

Paul’s discussion raises the very crucial question “do we live in a police state?” As AntiWar’s Justin Raimondo warnsthe latest wikileaks revelations tell us the answer is ‘Yes’.

WikiLeaks and Julian Assange would have gone down in history as the greatest enemies of government oppression of all kinds in any case, but their latest release – a comprehensive exposé of the US intelligence community’s cyberwar tools and techniques – is truly the capstone of their career. And given that this release – dubbed “Vault 7” – amounts to just one percent of the documents they intend to publish, one can only look forward to the coming days with a mixture of joyful anticipation and ominous fear.

Fear because the power of the Deep State is even more forbidding – and seemingly invincible – than anyone knew. Joyful anticipation because, for the first time, it is dawning on the most unlikely people that we are, for all intents and purposes, living in a police state. I was struck by this while watching Sean Hannity’s show last [Wednesday] night – yes, Fox is my go-to news channel – and listening to both Hannity and his guests, including the ultra-conservative Laura Ingraham, inveigh against the “Deep State.”

…click on the above link to read the rest of the article…

China Central Bank Admits It Has A Debt Problem, Warns No Easy Solution

China Central Bank Admits It Has A Debt Problem, Warns No Easy Solution

It’s a well-known risk, perhaps the biggest to the global financial system: China’s debt is too high, with estimates ranging from 250% to 300% of GDP per the IIF:

And while China has largely ignored, or avoided, discussing the troubling implications of its unprecedented debt load, this changed today when the head of China’s central bank, Zhou Xiachuan finally admitted that it has a debt “problem” saying that corporate debt levels are too high and that “it will take time to bring them down to more manageable levels”, underlining what has become the defining battle to put the world’s second-largest economy on a more sustainable footing: keeping GDP growing at 6.5% (or above) while injecting trillions in new debt.

“Non-financial corporate leverage is too high,” PBOC Governor Zhou Xiaochuan told reporters at a news conference on the sidelines of the annual parliament session.

Quoted by Reuters, he said that efforts will be made to contain debt levels, including restructuring of firms with heavy debt burdens, alongside a push to reduce excess industrial capacity.  Furthermore, banks will withdraw support for financially unviable firms, he added, repeating pledges by other officials last year to drive such “zombie” firms out of the market.

“I personally think this process is relatively medium-term. It won’t have very obvious results in the short-term because the existing stock (of debt) is very large,” he said.


Zhou Xiaochuan, Governor of the People’s Bank of China, attends a news 

conference in Beijing China March 10, 2017. REUTERS/Jason Lee

Zhou also said that measures by local governments to cool rising house prices will slow mortgage growth to some degree, but housing loans will continue to grow at a relatively rapid pace. We profiled China’s mortgage debt problem last October when we showed that over 70% of all new loans went to fund mortgages, which in turn now account for a fifth of total Chinese outstanding loans.

…click on the above link to read the rest of the article…

Bill Gross: “Our Financial System Is A Truckload Of Nitroglycerin On A Bumpy Road”

Bill Gross: “Our Financial System Is A Truckload Of Nitroglycerin On A Bumpy Road”

Courtesy of Bill Gross’ latest monthly letter “Show Me The Money“, here are some perspectives on the only thing that has kept the global economy going since the financial crisis: debt, and lost of it.
in 2017, the global economy has created more credit relative to GDP than that at the beginning of 2008’s disaster. In the U.S., credit of $65 trillion is roughly 350% of annual GDP and the ratio is rising. In China, the ratio has more than doubled in the past decade to nearly 300%. Since 2007, China has added $24 trillion worth of debt to its collective balance sheet. Over the same period, the U.S. and Europe only added $12 trillion each. Capitalism, with its adopted fractional reserve banking system, depends on credit expansion and the printing of additional reserves by central banks, which in turn are re-lent by private banks to create pizza stores, cell phones and a myriad of other products and business enterprises. But the credit creation has limits and the cost of credit (interest rates) must be carefully monitored so that borrowers (think subprime) can pay back the monthly servicing costs. If rates are too high (and credit as a % of GDP too high as well), then potential Lehman black swans can occur. On the other hand, if rates are too low (and credit as a % of GDP declines), then the system breaks down, as savers, pension funds and insurance companies become unable to earn a rate of return high enough to match and service their liabilities. 

U.S. Total Credit Market Debt as a Percent of GDP

Chart: U.S. Total Credit Market Debt as a Percent of GDP

Central banks attempt to walk this fine line – generating mild credit growth that matches nominal GDP growth – and keeping the cost of the credit at a yield that is not too high, nor too low, but just right. Janet Yellen is a modern day Goldilocks.

…click on the above link to read the rest of the article…

Whose Banks Are Riskiest: A Surprising Answer From The BIS

Whose Banks Are Riskiest: A Surprising Answer From The BIS

When one thinks of unstable, risky banking systems, the first thing that comes to mind are visions of insolvent, state-backed building – with or without long ATM lines – in China, Greece, Italy or, in recent times, Germany. However, according to the most recent report by the Bank for International Settlements, the country with the riskiest banking system is neither of these, and is a rather “unusual suspect.”

As part of its latest quarterly report, the BIS looked at highlights of global financial flows, and found that after a modest slowdown in 2015, growth in both claims and international denominated debt securities resumed its rise in 2016, leaving banks even more exposed as counterparties to international issuers, especially should the world hit another “Dollar margin call” situation, where borrowers are unable to make payments on their obligations due to a surge in the global reserve currency.

However, cross-border international debt flows is just one aspect of bank riskiness. As part of a separate excercise profiling the domestic banking systems of some of the most prominent Developed and Emerging nations, the BIS looked at four distinct “risk” or crisis early warning indicators: i) Credit-to-GDP gap, or the difference in the current ratio from the long-run trend; ii) Property Price Gap, or the deviation of real residential property prices from their long-run trend, iii) Debt Service Ratio (DSR), which also is the deviation in the current DSR from the long-run average, and finally iv) DSR assuming a 2.50% increase in interest rates.

What it found is that the early warning indicators for financial crises continue to signal vulnerabilities in several jurisdictions. Here is what it found:

…click on the above link to read the rest of the article…

California Floods To Trigger “The Big One”? – Geologists Warn Of Quake Risks From Snowpack, Rising Reservoirs

California Floods To Trigger “The Big One”? – Geologists Warn Of Quake Risks From Snowpack, Rising Reservoirs

For years geologists have warned that Southern California is overdue for “The Big One”, a massive 8.0 or greater earthquake that would undoubtedly cause unprecedented death and destruction in several heavily populated urban centers sprinkled along the San Andreas Fault line.

While predicting earthquakes remains an uncertain science, there has been concern in recent years among experts that the San Andreas fault may be close to a new, major ruction if only by virtue of the length of time since it happened last, when the southern portion of the fault was struck by a 7.9 shaker all the way back in 1857.

Since then the tectonic plates that meet at the fault have been continuously on the move at a rate of about 2 inches per year. That means that over 159 years there has been a shift of 26 feet as the Pacific plate moves in a northwesterly direction against the American continental plate.  Every additional inch creates additional pressures on the rocks beneath the earth’s surface that builds and builds until it eventually snaps.

San Andreas

 

Now, as the Los Angeles Times points out, the recent flooding in California has prompted some scientists to raise concerns over whether or not Californians are at a greater risk of being struck by an imminent quake.  According to geologists, flooding can cause earthquakes in one of two ways: i) the sheer weight of rising reservoirs and snowpack causes tectonic plates to shift and/or ii) increasing pressure created from the refilling of underground water basins pushes plates apart, therefore reducing friction and allowing the earth’s crust to shift.

…click on the above link to read the rest of the article…

Production, Rig Count Surge As Exxon Bets Big On U.S. Shale

Production, Rig Count Surge As Exxon Bets Big On U.S. Shale

US oil rig counts rose for the7th straight week (up 7 to 609) to the highest level since October 2015. 

With production surging back above 9mm b/d – the highest in a year – the trend in the rig count implies considerably more production to come…

And it’s all in the Permian…

And with rig counts rising (in the Permian), production shows no signs of slowing, as OilPrice.com’s Nick Cunningham notes, ExxonMobil’s new CEO Darren Woods announced a dramatic shift towards shale drilling this week, a new strategy that will prioritize drilling thousands of smaller wells while reducing spending on the massive projects that the oil major has long been accustomed to pursuing.

Mr. Woods gave a presentation to investors on March 1, selling his vision after recently taking over from Rex Tillerson, who left to become U.S. Secretary of State. Exxon will now ramp up spending on shale drilling, after watching dozens of smaller companies profit from the surge in production in Texas, North Dakota and elsewhere over the past decade.

Exxon will dedicate a quarter of its 2017 spending budget on shale, putting $5.5 billion into the effort. “More than one quarter of the planned spending this year will be made in high-value, short-cycle opportunities, including in the Permian and Bakken basins,” Exxon wrote in a March 1 statement. The oil major says that it has 5,500 wells in its queue for drilling in the Permian and the Bakken shales, each with a return of 10 percent or more at $40 per barrel.

Exxon was able to build up this inventory of shale wells with the $6.6 billion it spent in January to double its Permian acreage.

The shift towards shale should pay off over time, with a portfolio of thousands of tiny shale wells making up a growing share of the oil major’s production portfolio.

…click on the above link to read the rest of the article…

 

Have Central Banks Finally Unleashed Inflation?

Have Central Banks Finally Unleashed Inflation?

Globally inflation is on the rise.

On Monday Spain reported a year over year 7.5% jump in its PPI reading (a measure of inflation). Take a look at that chart.

Spain is just the latest major economy to join the inflationary tide.

German also saw a recent spike in PPI.

 

In the US, inflation is now well above the Fed’s target 2%, having ripped over 3% higher in the last six months alone.

This is much bigger than Trump or any single factor. After eight years of low interest rates and Trillions of Dollars in QE spent, global Central banks have finally unleashed inflation…

The big problem with this is that inflation is like ketchup in a bottle. It always takes longer to get achieve than you’d predict… but once it hits, you usually get more than you hoped for.

This is the sort of environment in which a major market event could happen. Over $100 trillion in bonds are at risk of entering a bear market if inflation REALLY takes hold.

And while the odds are low that we get an actual Crash… this environment is more conducive to Black Swan events than any other in the last seven years.

Olduvai II: Exodus
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Olduvai
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Olduvai II: Exodus
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Olduvai III: Cataclysm
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