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Blankfein: “Central Banks All Around The World Are Buying All The Risky Assets”

We can finally put to rest any financial, economic, ideological or simply philosophical debates why stocks have risen over 300% since the March 2009 post-crisis lows of 666, and we have Lloyd Blankfein’s underperformance mea culpa to thank for putting it so simply and succinctly, even a majority of fintwit might actually get it.

From today’s CNBC interview:

Frost: Let’s touch on your earnings yesterday, Lloyd, which was a beat on every line and overall EPS,  let’s talk about first of all about the bounceback in trading. There was a lot of focus on trading last year, back this quarter. Can that last the rest of the year or is it a one quarter bounceback, as it were?

Blankfein: If you asked it the opposite way, “this surely would last forever” I’d also discount that. Look, we don’t know. We’re more in the contingency planning business than the forecasting business but the conditions that prevail we’re not top decile or top quartile conditions in the world so, yes, they’re highly replicable I would say. Kind of feels almost standardish.

What didn’t feel standard were the conditions over the last couple of years. People will debate back and forth what’s normal what’s the new normal but conditions where interest rates are zero, yield curves are flat, there’s no risk premium. Where central banks all around the world are buying all the risky assets which then therefore put a damper on volatility and the opportunities to perform, that’s not a natural state.

We have not reversed all of that, but we’re walking that back and walking to so the first indications of a withdrawal from what is an unnatural state. The market becomes a bit more volatile, people get compensated for the risk that they’re taking.

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

Loonie Drops As Bank Of Canada Holds Rates (As Expected)

With Canadian economic data at its most disappointing in 20 months, domestic trade-wars over oil pipelines exploding, and a housing market on the verge of collapse, The Bank of Canada held rates unchanged (as expected), sending a weak signal that sparked Loonie selling

Bank of Canada Holds Benchmark Overnight Rate at 1.25%

2018 has not been a good one for Canada’s economy…

but BOC writes off 1Q growth weakness, saying it will rebound in 2Q.

Slower economic growth in the first quarter primarily reflects weakness in two areas. Housing markets responded to new mortgage guidelines and other policy measures by pulling forward transactions to late 2017. Exports also faltered, partly owing to transportation bottlenecks. Some of the weakness in housing and exports is expected to be unwound as 2018 progresses.

Also says the economy will be slightly above potential over the next 3 years, crediting federal and provincial budget measures.

But the FX market is not buying it…

The central bank played down a faster-than-expected pick-up in inflation as temporary, arguing the shocks of higher gas prices and minimum wages in some provinces will dissipate by 2019.

These releases codify Poloz’s narrative the expansion can be prolonged without fueling inflation.

Key highlights (vis Bloomberg):

  • BOC reiterates that “Governing Council will remain cautious with respect to future policy adjustments” and be “guided by incoming data”
  • BOC: “Higher interest rates will be warranted over time, although some monetary policy accommodation will still be needed”
  • Inflation expected to average 2.3% over 2018, from 2.0% previously; Core measures have edged up to near 2 percent, “consistent with an economy operating with little slack”
  • Wage growth is firming, but Bank “will continue to assess labour market data for signs of remaining slack”
  • Bank of Canada makes upward revision to 2019 growth: GDP expected to grow 2.0% in 2018 and 2.1% in 2019, from 2.2% and 1.6% respectively;
  • Housing will not contribute to growth in 2018 and 2019, exports will not contribute to growth in 2018 (from +0.6pp previously)

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

China Prepares “Emergency Response Plan” Amid Escalating US Trade War

While in recent days the growing trade war between China and the US has moved off the front page of market concerns despite now daily skirmishes such as today’s anti-dumping probe launch by the US into US steel wheels which followed a Chinese 179% tariff on US sorghum imports which in turn was in response to the US banning exports to Chinese telecom giant ZTE, in recent days China has drawn up comprehensive list of urgent measures as the war of words over US-China trade relations has threatened to escalate into open economic conflict with each side threatening to levy heavy tariffs and taxes on each other’s imports.

Commenting on the recent trade hostilities, National Development and Reform Commission spokesman Zeng Peiyan said on Wednesday that Beijing has all the political instruments it needs to respond to this trade conflict with the United States and minimize its economic effect.

“We have an emergency response plan at various levels and political means to retaliate to the trade challenges, initiated by the United States,” Zeng added.

He stressed that the trade conflict would affect the country’s economy only partially and that China “has the confidence, potential and ability to ensure the stable functioning of the country’s economy.”

Meanwhile, according to Reuters, Beijing’s international trade representatives have held multiple meetings with their counterparts in leading European economies as China, too, seek support in its trade brawl with the US. Recall the US was supposed to do the same with Trump canvassing support for the growing world trade war in Latin America last week, however he was held back by the diversionary Syrian airstikes.

China however, was not detained and Beijing officials met ambassadors from France, Germany, the United Kingdom, Spain and Italy last Thursday and Friday to propose a firewall against Trump’s protectionism, Reuters reported.

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

Autonomous Drones Will Soon Decide Who To Kill

The United States Army wants to develop a system that can be quickly integrated and deployed into its weaponized drone fleet to automatically Detect, Recognize, Classify, Identify (DRCI) and target enemy combatants and vehicles using artificial intelligence (AI). This is an impressive leap forward, whereas humans still operate current military drones, this technology could foster a new era of autonomous drones conducting operations in hybrid wars — without human oversight.

The project is called “Automatic Target Recognition of Personnel and Vehicles from an Unmanned Aerial System Using Learning Algorithms,” — a very original name, which the details were recently released on the Small Business Technology Transfer (STTR)website. In other words, the Department of Defense (DoD) via the Army is requesting private and research institutions that have developed image targeting AI platforms to form partnerships with them for the eventual technology transfer.

Once the technology transfer is complete, these drones will use machine-learning algorithms, such as neural networks blended with artificial intelligence to create the ultimate militarization of AI. Currently, military drones have little onboard intelligence, besides sending a downlink of high definition video to a military analyst who manually decides whom to kill.

Here is the program’s objective:

“Develop a system that can be integrated and deployed in a class 1 or class 2 Unmanned Aerial System (UAS) to automatically Detect, Recognize, Classify, Identify (DRCI) and target personnel and ground platforms or other targets of interest. The system should implement learning algorithms that provide operational flexibility by allowing the target set and DRCI taxonomy to be quickly adjusted and to operate in different environments.”

A full description of the program:

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

ECB Tells Deutsche Bank To Simulate A “Crisis Scenario”

In a stark reminder that despite all the operational and management turmoil over the past three years, few if any of the outstanding concerns involving Europe’s banking behemoth – Deutsche Bank, which has gone thorugh – with €48 trillion in net notional derivatives has been resolved…

… in its Monday edition, Suddeutsche Zeitung reports that the ECB has asked that Deutsche Bank simulate what a “crisis scenario” would look like, and what it would cost to complete a “resolution”, i.e. wind-down, of its own investment banking division. 

While DB’s calculations have reported been taking place for several months, SZ notes that this is the first time that the ECB supervisory authority has demanded such a measure from a major bank. The German publication also notes that the ECB will demand similar simulations of other banks.

According to the report, banking regulators want to know what the impact would be on the value of Deutshe Bank’s capital market and derivatives business if, as a solvent bank, it had to simulate an abrupt end to new business.

One possible need for such a simulation may stem from the recent termination of CEO John Cryan, and his replacement with Christian Sewing, a lifelong retail banker, who some have speculated may seek to wind-down Deutsche Bank’s i-Banking division.

To be sure, in order to avoid a panic that the ECB is preparing for the worst and simulating a full-blown Deutsche Bank bankruptcy, SZ adds that the exercise is not about simulating an event of bankruptcy, “which would be many times more expensive and difficult.” In response to the article, the ECB said that it generally gives banks many tasks, without elaborating on the “crisis scenario” it has requested.

Meanwhile, Deutsche Bank said it is routinely tasked by regulators to determine “the consequences of orderly settlement of positions in its trading books.” Perhaps, but never until now was Europe’s biggest bank asked to quantify how the abrupt end of its banking business, with its associated €48.3 trillion in gross notional derivatives, would affect both the bank itself, and would percolate across markets.

President Trump Orders Military Strikes On Syria, Loud Explosions Heard In Damascus

Update 2: Witnesses are reporting explosions heard in Damscus…


EXPLOSIONS HEARD IN DAMASCUS — WITNESSES


Loud explosions in damascus!!!!


*  *  *

Update 1: President Trump has now confirmed that in a combined operation with France and UK, a military strike is now under way against Syria

“The combined American, British, and French response to these atrocities will integrate all instruments of our national power, military, economic, and diplomatic.”

Additionally Trump says the Syria response will be military, economic, and diplomatic.

  • *TRUMP SAYS RUSSIA HAS DECISION TO MAKE ON WHO TO ALIGN WITH
  • *TRUMP: HOPEFULLY WE’LL GET ALONG WITH RUSSIA, IRAN; MAYBE NOT

Mr. Trump has threatened military action against Syria for days as retaliation for a suspected chemical weapons attack by the forces of President Bashar al-Assad on a Damascus suburb last week.

*  *   *

With two Tomahawk-capable destroyers in The Mediterranean Sea, and following “highly confident” intel that Syria launched the chemical attack, NYTimes reports that President Trump is expected to make a statement about Syria on Friday evening at the White House, an administration official said.

Additionally,  Gateway Pundit’s Josh Caplan reports that Vice President Mike Pence was seen “‘rushing back” to his hotel in Peru amid speculation about possible U.S. military action in Syria.

FOX News reports that President Trump has approved military strikes on Syria and is set to announce them within 30 minutes.

Watch Live:

The Donald Cook and The Winston Churchill are capable of carrying up to 150 Tomahawk missiles between them (last April Trump fired 59 Tomahawks into Syria).

As a reminder, here is the largest missile diplomacy strikes from Washington…

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

Russia Has “Irrefutable Evidence” UK Staged Syrian Chemical Attack

As the blame game over the alleged chemical attack in Syria escalates ahead of what is expected to be an imminent, if contained, air strike campaign by the US, UK and/or France against Syria, on Friday morning, Russia’s foreign minister Sergey Lavrov said Moscow had “irrefutable evidence” that the attack – which allegedly killed more than 40 people in an April 7 chemical weapons strike on the former rebel outpost of Douma  -was staged with the help of a foreign secret service.

“We have irrefutable evidence that this was another staged event, and that the secret services of a certain state that is now at the forefront of a Russophobic campaign was involved in this staged event,” he said during a press conference according to AFP.

Speculation that said “certain state” was the UK was confirmed shortly after, when Russia’s defense ministry alleged that Britain was involved in the suspected chemical attack. According to defense ministry spokesman, Major General Igor Konashenkov, the Kremlin has evidence that Britain was behind the attack.

Quoted by Reuters, he said: “We have… evidence that proves Britain was directly involved in organising this provocation.”

As RT further adds, the Russian Defense Ministry presented what it says is “proof that the reported chemical weapons attack in Syria was staged.” It also accused the British government of pressuring the perpetrators to speed up the “provocation.” During a briefing on Friday, the ministry showed interviews with two people, who, it said, are medical professionals working in the only hospital operating in Douma, a town near the Syrian capital, Damascus.

In the interviews released to the media, the two men reported how footage was shot of people dousing each other with water and treating children, which was claimed to show the aftermath of the April 7 chemical weapons attack.

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

Russian TV Instructs Citizens How To Prepare Bomb Shelters For Nuclear War

Russia-24 (Россия-24), a state-owned Russian-language news channel from Moscow, spent five minutes on Tuesday advising its viewers how to prepare for a nuclear war amid the increasing tensions with the United States over Syria. The television anchor urged the country’s citizens to purchase essential items and emergency supplies to stock their bomb shelters.

The title of the television broadcast “Inviolable stock: what should I take with me to the bomb shelter?,” explains how a nuclear war with the United States would be “catastrophic,” as a TV anchor from Russia-24 informed citizens how to get ready for World War III.

“If some people did give in to the panic, and decided to spend all their savings on a survival kit, we’ll tell you how to not waste money on something you won’t need.”

He recommended that people purchase salt, oatmeal, and other products that have a long shelf life. He even said powdered milk, grains, and sugar could last for years in storage, as one video during the broadcast demonstrated how to cook pasta while hiding in a bunker. The special broadcast then transitions to the next TV presenter Alexey Kazako, who explains the number one rule of surviving a nuclear blast is “fewer sweets, more water.”

He said: “All chocolates, candies and condensed milk will have to be left behind.

“Glucose is an unrivaled energy source but sweets will make you thirsty, and water will be the most valuable resource for bomb shelter residents.”

Eduard Khalilov, a specialist in survival, explained to viewers about the importance of stocking fresh water.

He said, “people can only survive up to three days without water, but can go up to three weeks without food.”

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

RBC Warns Cracks “Starting To Show” In Canadian Credit

One often wonders if the government will ever realize that, due to its policies, its “solutions” often wind up turning into bigger problems than the ones they set out to address initially? Not only that, but this has been the case for decades, and it will continue to be the case until we “engineer” ourselves into a crisis that is too big to fix or too overwhelming to print our way out of.

Every day we discuss various aspects of a system that ends up far worse off due to a government apparatus that is convinced it knows best and that intervention and interfering are the solution to the problem. In essence, much of the financial crisis of 2008 was a result of the government interfering in the housing market in years prior, combined with the Fed not being able to forecast the crisis, despite widely ostracized skeptics such as Peter Schiff stating repeatedly that the housing market was heading into the abyss.

Today, we face a new set of challenges as a result of the way governments and central banks dealt (or rather, didn’t) with the 2008 financial crisis. In the United States there are bubbles forming in student loans and subprime auto lending,  while mortgage debt and consumer credit both look to soon be out of control yet again.

Meanwhile, the problem is spreading geographically and today we are presented with yet another “solution turned into problem”, and as Bloomberg reports, RBC now sees “cracks” in consumer credit becoming a problem yet again, this time in Canada. The combination of low interest rates and the cheap and easy access to capital has yet again gone from being a solution to a problem, as Canadian lenders are seeing delinquency rates “roll” out in time and duration.

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

A shooting war between the US and Russia appears imminent.

Following overnight speculation that the US may launch a missile strike on Syria at any moment, this morning Trump tweeted that “Russia vows to shoot down any and all missiles fired at Syria. Get ready Russia,  because they will be coming, nice and new and “smart!” You shouldn’t be partners with a Gas Killing Animal who kills his people and enjoys it!”


Russia vows to shoot down any and all missiles fired at Syria. Get ready Russia, because they will be coming, nice and new and “smart!” You shouldn’t be partners with a Gas Killing Animal who kills his people and enjoys it!


Trump’s comments came in response to a statement by the Russian ambassador to Lebanon Alexander Zasypkin who said overnight that any U.S. missiles fired at Syria will be shot down and their launch sites targeted in response to Trump promise of a forceful response to an alleged chemical attack on a rebel enclave near Damascus.

“If there is a strike by the Americans, then we refer to the statements of President [Vladimir] Putin and the chief of staff that the missiles will be downed and even the sources from which the missiles were fired,” Zasypkin told Hezbollah’s al-Manar TV.

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

Economists Who Push Inflation Stunned That Rising Home Prices Put Buyers Deeper Into Debt

Once again, when the government intervenes – this time in housing – the left hand is starting a fire that the right hand is trying to put out.Rising prices for homes are once again pricing out prime borrowers and nobody can “figure out” why this is happening.

It is news like this article reported this morning by the Wall Street Journal that continues to perpetuate the hilarious notion of Keynesian economics as giving a job to one man digging a hole and another job to another man filling it, simply so that they both have jobs.

There is nothing funnier (or sadder) than “economists” struggling to understand how housing prices got so high and why people are taking on more debt in order to purchase them. However, that is the great mystery that the Wall Street Journal reported on Tuesday morning, making note of the fact that people are “stretching“ in order to purchase homes. What’s the solution to this problem? How about just easing lending standards again? After all, what could go wrong?

Apparently blind to the obvious – that forced inflation could amazingly make things more expensive relative to income – “economists” have hilariously blamed this price/debt delta on lack of supply. Of course, no one has mentioned the credit worthiness of borrowers getting worse or the fact that homes prices are being manipulated in order to offer home ownership to people who otherwise may not be in the market.

More Americans are stretching to buy homes, the latest sign that rising prices are making homeownership more difficult for a broad swath of potential buyers.

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

Massive Geomagnetic Storm Set To Hit Earth This Week

Over the weekend, a middle latitude coronal hole (88) started to face earth. This is the same coronal hole that was responsible for a moderate (G2) geomagnetic storm last month. Now it seems like the same coronal hole is at it again, spewing high-speed solar wind – headed towards Earth this week.

According to Space Weather Prediction Center (SWPC), a minor (G1) geomagnetic storm watch is now in effect for Tuesday and Wednesday. The storm watch was issued “due to the arrival of a negative polarity coronal hole high-speed stream,” SWPC detailed on its website.

C. Alex Young, associate director for science in the heliophysics science division at NASA’s Goddard Space Flight Center, published in a report Monday that “three substantial coronal holes” arrived on his radar last week. Young describes coronal holes as an “open magnetic field from which high-speed solar wind rushes out into space.” If the high-speed solar wind is earth facing, then “it interacts with Earth’s magnetosphere” and lead to all sorts of problems.

“For much of this week the sun featured three substantial coronal holes (Apr. 3-6, 2018). Coronal holes appear as large dark areas which are identified with arrows in the still image. These are areas of open magnetic field from which high speed solar wind rushes out into space. This wind, if it interacts with Earth’s magnetosphere, can cause aurora to appear near the poles. They are not at all uncommon. Credit: Solar Dynamics Observatory, NASA.”

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

“Imminent Announcement” Of US Action In Syria Coming Amid Expectations Of Air Strikes “Within Hours”

Update: FoxNews just reported that an announcement on US Action in Syria is imminent.


: Fox News is broadcasting that there is an imminent announcement on the ‘ action against .

UPDATE: The “imminent” announcement on the .S action against is coming.


* * *

Reports are pouring in of US and French aircraft headed towards Syria for what we assume is a major operation if true. As of now, these reports remains unconfirmed:


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

Global Debt Hits Record $237 Trillion, Up $21TN In 2017

Last June we reported  that according to the Institute of International Finance – perhaps best known for its periodic and concerning reports summarizing global leverage statistics – as of the end of 2016, in a period of so-called “coordinated growth”, global debt hit a new all time high of $217 trillion, over 327% of global GDP, and up $50 trillion over the past decade.

Six months later, on January 4, 2018, the IIF released another global debt analysis, which disclosed that global debt rose to a record $233 trillion at the end of Q3 of 2017 between $63Tn in government, $58Tn in financial, $68TN in non-financial and $44Tn in household sectors, a total increase of $16 trillion increase in just 9 months.

Now, according to its latest quarterly update, the IIF has calculated that global debt rose another $4 trillion in the past quarter, to a record $237 trillion in the fourth quarter of 2017, and more than $70 trillion higher from a decade earlier, and up roughly $20 trillion in 2017 alone.

The IIF report, which also sources data from the IMF and BIS, found that the share of global debt remains well above 300% of global GDP, with mature market, i.e., DM, debt/GDP now at 382%. The silver lining: that number was slightly below recent levels, as increasing GDP growth in DMs helped reduce the debt-to-GDP ratio. However, this was more than offset by a surge in debt in emerging markets, where total debt/GDP is now well above 200%.

The good news, if only temporarily, is that on a consolidated basis, global debt/GDP fell for the fifth consecutive quarter as global growth accelerated: the ratio is now around 317.8%, or 4% points below the all time high hit in Q43 2016. To be sure, even a modest slowdown in GDP growth, let alone a contraction, will promptly send the ratio surging to new all time highs.

 

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

U.S. Navy Destroyer Armed With Tomahawks Arrives Off Syrian Coast, “Harassed” By Russian Warplanes

As the situation in Syria continues to escalate, guided missile destroyer USS Donald Cook has weighed anchor off Syrian territorial waters, and is reportedly being “harassed” by low-flying Russian warplanes, which have buzzed the “Arleigh Burke” class warship at least four times according to CNN Turk

Of note, the Donald Cook has 60 Tomahawk cruise missiles on board.

Via @evacool_f

A Navy source confirmed the deployment with the Washington Examiner, who said that the guided-missile-destroyer had just completed a port call in Cyprus, while the Pentagon reportedly draws up plans for how to deal with the situation.

U.S. military planners have drawn up more than one option for possible military action against Syria, including a strike similar to last year’s attack in which 59 sea-launched cruise missiles inflicted heavy damage on a Syrian Air Force airfield in Homs.

Pentagon officials, speaking on condition of anonymity, said the options now are similar to those presented to President Trump after last year’s chemical attack in northern Syria that killed and injured hundreds of civilians, including women and children.

But officials said the president could decide to choose a more robust option this time, given that Syrian President Bashar Assad didn’t seem to get the message last time. –Washington Examiner

What is surprising is that according to the latest Stratfor naval map, there was no other major naval support – either amphibious or carrier strike groups – in the vicinity of Syria as of April 5.

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

Olduvai II: Exodus
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Olduvai
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Olduvai II: Exodus
Click on image to purchase

Olduvai III: Cataclysm
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