The Housing Bubble

What? It’s SuperBowl Sunday. Everything starts selling tomorrow!

Top News
Fri Feb 5, 2016 | 1:30 PM EST
Emerging market dollar credit boom may be at turning point -BIS
By Marc Jones

LONDON Feb 5 (Reuters) - The years-long boom in dollar borrowing by emerging market firms may be coming to an end, the head of the Bank for International Settlements (BIS) said on Friday, warning that could trigger more currency market volatility.

Jaime Caruana, the General Manager of the Swiss-based forum for major central banks, said the latest data, which is from the end of September, showed there had been no increase in dollar-denominated debt of EM companies for the first time since 2009.

“The feedback loop between deleveraging and emerging market economy (EME) currency depreciation presents challenges that should not be underestimated,” Caruana said in a speech at the London School of Economics.

“That feedback loop has started to impact the broader economy in EMEs.”

A strong dollar can be problematic for emerging markets because it makes it more expensive in local currency terms to pay back any debt that is in dollars.

The BIS estimates that EM firms have $3.3 trillion of debt in dollars outstanding, roughly one-third of it in bonds. The dollar jumped roughly 30 percent against many EM currencies last year.
…

You can run but you can’t hide.

BIS Warns Against Easier Policies to Support Markets
By Paul Hannon

Central bankers should resist the temptation to support tumbling financial markets by pursuing easier monetary policies, the head of the Bank for International Settlements said on Friday.

Speaking at the London School of Economics, Jaime Caruana said the turbulence in financial and commodity markets and big moves in foreign exchange rates don’t constitute a new “shock” to the global economy, but are part of a “longer movie” that is driven by excessive levels of debt.
…
While Mr. Caruana didn’t specifically address the actions of any single central bank, he urged policy makers to return to more “normal” monetary policy conditions.

“Bumpiness should be expected, but should not be a reason to delay normalization,” Mr. Caruana said, according to a text of his remarks.

In particular, Mr. Caruana warned against efforts to sustain or revive rises in asset prices by lowering interest rates or adding to quantitative-easing programs.

“The temptation may be to try to keep the financial booms going, or to give them a new lease of life, but this will be just a palliative unless the stock of debt is adjusted and vulnerabilities are reduced,” he said.

The BIS is the global organization for central banks, and has long warned of a buildup of excessive debt, and is in favor of tighter monetary policies.

In his speech, Mr. Caruana focused on the dangers posed by the rising levels of debt denominated in U.S. dollars on the books of companies based in China and other developing economies. When the dollar appreciates–as it did in 2015 in anticipation of the Federal Reserve’s December move–it becomes more expensive to repay those debts in terms of the yuan or other local currencies.

“This is important because the expected mechanism through which currency devaluation may bring export benefits may be offset or even reversed by stock valuation effects that operate through balance sheets,” Mr. Caruana said.

Mr. Caruana also repeated the BIS’ view that lower oil prices may not quickly reduce supply because highly-indebted producers must maintain or even increase output to meet their interest payments.

“The measure of outstanding stocks…is an indication that lower prices have not removed excess capacity from the market, but instead have exacerbated it,” he said.

Write to Paul Hannon at paul.hannon@wsj.com

“Are central bankers more likely to follow or to ignore BIS guidance on propping up asset prices?”

Ignore.

Party on …

The central bankers have lost control of the markets, and been exposed as the Keynesian fraudsters that they are. Look at the BoJ - they “shockingly” institute NIRP, and that only juices the market for less than two days. Yellen the Felon will shortly announce NIRP, but by now the adverse effects of QE are so well documented that even the Fed might finally recognize the folly of trying this failed gifting of trillions to their oligarch handlers yet again. The long-deferred financial reckoning day is finally at hand.

Got popcorn?

Here’s an interesting story about the variances of the cost to operate a well.

“In DeWitt County, which produced more than 100,000 barrels a day in November from the Eagle Ford formation, the average well can be profitable with U.S. benchmark crude at $22.52 a barrel, $4 below the lowest level this year.”

“Ni ne areas had break-even costs at $30 or below. Those include some of the biggest oil-producing counties in Texas, such as DeWitt, Midland, Martin and Reeves, with combined output of 430,000 barrels a day in November, according to the Texas Railroad Commission.”

http://www.bloomberg.com/news/articles/2016-02-03/texas-toughness-in-oil-patch-shows-why-u-s-still-strong-at-30

There’s more detail in the article.

Tower of Babel?
Prophet of Basel Battles Yellen, Draghi and Easy Money
Jul 3, 2014 1:48 PM EDT
By Leonid Bershidsky

It is painful to see how out of sync Jaime Caruana is. The general manager of the Basel-based Bank for International Settlements, Caruana wants to remove the punch bowl from a party that other monetary policymakers claim hasn’t gotten started. Less than a week ago, Caruana called for an end to ultra-low interest rates, saying they were no longer helping to stimulate demand. The increased risk-taking fostered by lax monetary policies, he added, might not “turn into productive investment.” In the short time since his speech, his view has been rebutted by Federal Reserve Chair Janet Yellen, Bank of England chief economist Andy Haldane, European Central Bank President Mario Draghi and Sweden’s central bank.

The consensus among these policymakers, who have actual responsibility for economic performance in their respective domains, is that monetary easing is necessary, too-low inflation is evil and tighter supervision of banks will suffice to stave off future financial crises. For the second year in a row, Caruana’s lonely voice is being drowned out by a Keynesian chorus.

In a lecture this week, Yellen delivered a paean to the macroprudential approach to building financial stability. “I do not presently see a need for monetary policy to deviate from a primary focus on attaining price stability and maximum employment,” she declared. If banks have more capital and are more tightly regulated in general, she reasoned, they become more resilient. “Because a resilient financial system can withstand unexpected developments, identification of bubbles is less critical,” Yellen said.

On the same day, Haldane made a cheerful speech at a financial conference in London. “Has monetary policy aided and abetted risk-taking? I hope so,” he said. “That’s why we did it.” If at some point the financial “pudding” becomes “over-egged,” macroprudential regulation — a new arm central banks have grown, Haldane said — will be brought to bear.

During the ECB’s monthly press conference this week, Draghi said that interest rates would “remain at present levels for an extended period of time” to lift inflation closer to the ECB target — slightly less than two percent. The ECB will start regulating banks in November, at which point Draghi will surely follow the consensus line on regulation, as well.

Sweden’s Riksbank, meanwhile, rejected Caruana’s arguments in the most forceful way. It cut its key rate to 0.25 percent from 0.75 percent, ending a three-year effort to prevent bubbles with tighter monetary policy.

In April, Nobel laureate Paul Krugman subjected Riksbank to a vitriolic attack, calling its decision to raise its benchmark rate to 2 percent in 2011 a “terrible mistake” and accusing it of “sadomonetarism.” (The BIS, according to Krugman, is a “sadomonetarist stronghold.”) Because of the rate hike, Krugman wrote, Swedish unemployment stopped falling, then deflation set in (consumer prices have indeed been falling for the past four months in Sweden), and “the rock star of the recovery turned itself into Japan.”
…

Maybe, but we’ll still have that angry, glowing red Coke bottle, accompanied by the call of the muezzin.

There’s plenty of Papa Johns deals all the time. Sign up and they’ll pepper your email inbox like Professor Troll posting antiTrump spam.

“As much as I’d like to see Cam Newton carried off the field in a stretcher 6 minutes into the 1st quarter,”

Denver’s defense does rally to the ball and hit hard. They hammered Andrew Luck the whole game this year, but even after they lacerated one of his kidneys and tore a muscle in his abdomen in the fourth quarter, Luck stayed in the game and threw the winning touchdown pass.

PS

Luck never took another snap in a game for the rest of the year.

Andrew Luck Injury Injured Kidney vs Broncos 2015 4th … - YouTube
http://www.youtube.com/watch?v=7fjNOCEyC6E - 243k - Cached - Similar pages
Nov 10, 2015 ..

By Josh Wilson @JoshWilsonSB on Nov 10, 2015

The Colts said that Luck was injured in the fourth quarter and was sore after the game, but after he was feeling worse on Monday and so was sent for tests. Those tests revealed a laceration in one kidney and a partially torn muscle in his abdomen.

No free pizza in Region VIII tomorrow.

The Bronco’s luck runs out today. The defense can’t win all the matches, And their O-line sucks at protecting the QB. It’s gonna be a repeat of SB 48; it’ll be over before the second quarter starts.

‘Newton carried off the field ’ That’d be a terrible way to win. You’re right though in that Denver will have to knock him around to have a chance. I think Denver can stay close as long as the D plays great and Manning doesn’t make turnovers. I’m pulling for Denver, I’d like to see Ware get a ring, Phillips too. If Miller and Ware get going….

I got ribs marinating in Apple juice and apple vinegar, slow cook them with some wings on the side, mac and cheese, fries, and of course a big ole fat pineapple to make it a healthy meal!

This was funny.

Peyton Manning United Way Parody

http://www.youtube.com/watch?v=uEEYbXVCoT0 - 236k -

today is the perfect day for another terrorist attack……just wonder would or servicemen would go fight them if the score was tied in the 4th quarter with 2 minutes to play and the ball on the 2 yard line???

exactly, just sit back and watch the cash roll in buddy.

People that own stocks and homes have the upper hand.

A lot of people have to actually work to get cash.

Seems like this is creating the haves and have nots isnt it?

The poor guy workn a job struggles to get ahead. Maybe that’s why a lot of people have quit working?

If you paid your mortgage off, it means you probably did not manage your funds efficiently over the years. It’s as if you had 500,000 dollar bills stuffed in your mattress.

As long as there is another money launderer seeking an investment property — any property — and a title to change hands, the condition of the property may matter little if any to the price. If the pool of money laundering flippers ever dries up and price reverts to fundamental use value, the latest buyer becomes the bagholder.

Looks more like money-losing than money laundering to me ??

You can’t lose when you turn dirty money into clean money even if you get 1/2 back…There is that organization called the IRS that keeps tabs on your cash…If a pile of cash just happens to show up in your bank accounts, alarm Bells go off in the data base at the IRS….

Those who have an interest in being “led” want more blood. The Ron Paul voters got out of politics and saw through Rand Paul as a compromiser. We did not forget his endorsement of Romney. We became voluntaryists. I am more sure that the non voters are less statist, based on the more statist sentiment for tyrants. The crop of thugs this year lacks the Ron Paul and non of the voters miss him. We non voters respect and are grateful for Ron Paul showing us how the system is rigged. So much that only the statists want more statism.

Dear Rand Paul Supporters, Here’s Why Your Guy Didn’t Win

https://pjmedia.com/trending/2016/02/04/dear-rand-paul-supporter-heres-why-your-guy-didnt-win/

Read it all, and the comments.

TLDR: libertarianism ignores the real world we live in and the faux pretending for ideological purity by a rich Senator is easily seen through.

As a philosopher, a standard bearer, a codifier of policy and a man of principle, there’s none better than Ron Paul.

As a leader, he is a “real joke”. If that sounds way harsh, it is. And it’s not undeserved. He had many supporters, but I realized something was wrong when I contacted his campaign office in DC, asked what I could do and was told “join a meet-up group”. After being treated to a rambling discourse on principles by a very nice guy. What were they thinking? That some sort of movement would just magically coalesce behind him and carry him on their shoulders in triumph to the White House? First fail: little to no organization.

And when I read Ben’s post about what happened at the Republican convention, and how the rules were changed mid-stream to invalidate his delegates, I realized he had thrown his supporters under the bus.

If the whole point of his campaign was to do nothing more than call attention to the issues, fine. But be honest with your supporters. How do you manage to serve 23 years in Congress and be active in the Republican party without realizing how vicious and underhanded it can get and putting in place some strategy and tactics to deal with the snake’s nest?

If you don’t want to get your hands dirty, stop cooing about “all the young people” and use some of that internet Ron Paul Money Bomb to get someone on board who will. Get a Walsingham or even a Roger Stone, for Jeebus’ sake.

He’s no leader and should never have pretended to be one. In doing so, he let a lot of people down who were willing to go to the wall to support him. And my guess is he was too much of a purist to allow anyone to do what was necessary. He’d make a great policy adviser to a President, but he’d probably throw a hissy the minute his candidate deviated or compromised just the slightest bit on some point or another, so no one’s gonna beat a path to his door. Who wants to have to deal with Joan of Arc?

As to his son, that’s a real “what might have been”. There’s this:

http://www.businessinsider.com/rand-paul-just-had-a-sitdown-with-al-sharpton-2014-11

And this:

https://www.youtube.com/watch?v=PI8rCleTbSo

Does Ted Cruz believe the Earth is a mere 6,000 years old?

And does his belief on this point matter to his supporters?

Considering the massively inflated price oil has been for the better part of 15 years, the falling price of crude is a very bullish indicator.

What bailout authority does the BIS have?

How much of Obama’s $10 a bbl tax on oil will flow directly to his oligarch puppetmasters, who can then fill up the DNC’s coffers with a percentage of their ill-gotten loot?

Donald Trump Wants to Authorize ‘Something Beyond Waterboarding’
By NICKI ROSSOLL
Feb 7, 2016, 11:50 AM ET
PHOTO: Republican presidential candidate Donald Trump gestures as he speaks at a campaign rally, Feb. 5, 2016, in Florence, S.C. John Bazemore/AP Photo

Republican presidential candidate Donald Trump said the United States needs to authorize “something beyond waterboarding” in order to better fight terror groups.

Trump justified the use of waterboarding and other unnamed advanced interrogation techniques because terror groups use greater measures to inflict fear and harm. He added that groups like ISIS go well beyond waterboarding.

“I would absolutely authorize something beyond waterboarding and believe me, it will be effective,” he said Sunday on ABC’s “This Week With George Stephanopoulos.” “You have our enemy cutting heads off of Christians and plenty of others, by the hundreds, by the thousands.”

“Do we win by being more like them?” asked Stephanopoulos.

“Yes,” replied Trump. “I’m sorry. You have to do it that way.”
…

Our leaders are a reflection of the dolts who elected them.

Our leaders are stupid,

Is that why you’re leading in the polls?

Citi: World economy seems trapped in ‘death spiral’
Katy Barnato
Fri, 5 Feb ‘16 | 11:05 AM ET
CNBC.com

The global economy seems trapped in a “death spiral” that could lead to further weakness in oil prices, recession and a serious equity bear market, Citi strategists have warned.

Some analysts — including those at Citi — have turned bearish on the world economy this year, following an equity rout in January and weaker economic data out of China and the U.S.

“The world appears to be trapped in a circular reference death spiral,” Citi strategists led by Jonathan Stubbs said in a report on Thursday.

“Stronger U.S. dollar, weaker oil/commodity prices, weaker world trade/petrodollar liquidity, weaker EM (and global growth)… and repeat. Ad infinitum, this would lead to Oilmageddon, a ’significant and synchronized’ global recession and a proper modern-day equity bear market.”

Stubbs said that macro strategists at Citi forecast that the dollar would weaken in 2016 and that oil prices were likely bottoming, potentially providing some light at the end of the tunnel.

“The death spiral is in nobody’s interest. Rational behavior, most likely, will prevail,” he said in the report.
…

Cramer: The stock market is not working
Krysia Lenzo | Anita Balakrishnan
Fri, 5 Feb ‘16 | 2:45 PM ET
CNBC.com
Stock quotes and silhouette of a bear

The mechanism of the stock market is not working, CNBC’s Jim Cramer said Friday.

“We are paying far less for earnings than we were willing to pay just a few months ago, particularly for high-growth companies. This is a sign that the market attacks one area after another, after another,” Cramer said on “Squawk on the Street.”

Major stock indexes opened lower Friday, falling more than 1 percent after nonfarm payrolls rose less than expected in January. At one point, the telecom sector was the only one trending higher, as shares of companies from media to technology hit lows. The indexes were all down more than 1 percent midafternoon Friday.

There is not enough money going into one sector without leaving another sector, Cramer added. One example? Shares of metals manufacturer Alcoa and Freeport-McMoRan popped Thursday as money cycled back into the commodity sector.

Cramer said part of the problem is people are drawn to the cheapest stocks for fear of getting hurt.

“On any given day, if you owned Alcoa, you’d say, ‘What is Cramer talking about? We had a great day,’” he said. “But its a rolling bear market, through sectors.”

On Friday, the technology and biotech sector were the latest to feel the pain as shares of companies like LinkedIn were pummeled.

“We’re in a bear market — we can’t get away from it,” Cramer said.
…

TheStreet
To the Perma-Bulls Out There: We Are in a Bear Market
Richard Gobel
Feb 5, 2016 4:55 PM EST

The U.S. stock market ended the first trading week in February with huge losses. The DJIA lost 1.59% for the week, while the S&P 500 lost 3.26%. The Nasdaq was down 5.5% on the week and the Russell 2000 was lower by 4.79%.

For the year 2016, the DJIA is down 7%, the S&P is down 8.17%, the Nasdaq has lost 12.93%, and the Russell 2000 has lost 13.22%.

If that is not bad enough, the Russell 2000 is down an incredible 24% from its June 2015 high and the Nasdaq is lower by 16% from its July 2015 high.

Folks, we appear to be heading much lower during the course of 2016, so prepare yourself for what lies ahead. It will not be a pretty picture.

The Bureau Of Labor Statistics reported non-farm payrolls on Friday morning that came in up 151,000, with the unemployment rate at 4.9%. That was a big miss in jobs added.

However, unless we see a number of new jobs added at a very disappointing clip, say less than 100,000 during the next jobs report, it would appear that the Fed and Janet Yellen are still on course for a March interest rate increase at the next meeting. Things could change if the stock market continues to go down and the S&P losses another 200 points or so from these levels.

The markets appear to be thinking that the Fed is done raising rates in 2016, so another shock to the system of raising rates at the March meeting will continue to send the stock market much lower. In the meantime, stay extremely defensive, and if you find the need to buy stocks in the market, make your trades short and quick.
…

I hope you all got out in the 18k range.

Pain!

Trending Now
Investing
Top 20 Stocks for 2016
Feb 7, 2016 @ 01:04 AM
Does The Stock Market Have You Singing The Blues?
John S. Tobey
Contributor
I write about investment themes being overlooked or misinterpreted.
Opinions expressed by Forbes Contributors are their own.

Stocks got you in a funk? Small wonder, given the noisy, negative gyrations, seemingly going nowhere. “Just get it over with, already!” is the general cry of investors, immersed in uncertainties that were missing last July, and are now in full force. Sitting back and watching the market as little as possible helps somewhat, but we really need a sense of what the future will bring. Unfortunately, the popular choices are negatively arranged from okay to same-ol’ to bad to worse.

The good news is that there is a cure: Steps to take that can help move thoughts and emotions past this nerve-wracking roadblock and into the future.
…

Money
Thu Feb 4, 2016 | 6:47 PM EST
U.S.-based stock funds post 5th straight week of withdrawals: Lipper
By Tariro Mzezewa

NEW YORK (Reuters) - Investors pulled $6.5 billion out of U.S.-based stock funds during the week ended Feb. 3, Lipper data showed on Thursday, as investors largely shunned risky financial assets for the fifth straight week.

U.S.-based corporate investment-grade bond funds, another gauge of risk appetite, also saw significant cash withdrawals, with investors yanking $1.5 billion from the sector for an 11th straight week. U.S.-based emerging market debt funds posted $415 million in outflows, the group’s 15th straight week of cash withdrawals, Lipper said.

Taxable bond mutual bond funds had outflows of $523 million, their lightest since they began cash withdrawals 13 weeks ago, according to Lipper data.

As investors shied away from risky assets, they continued to add U.S.-based government Treasury funds and high-yield municipal bond funds. Treasury funds attracted inflows totaling $1.5 billion for the eighth consecutive week, Lipper data showed. U.S.-based high yield muni funds posted inflows of $78.6 million, marking their 18th straight week of gains.
…

Once upon a time, IIRC, New Zealand would allow US Navy ships in their ports. Now their leaders are rolling over like leaders everywhere else.

The Billionaires have won. Game over.

You have to wonder how bad things are going to get when Jim Cramer throws in the towel and declares that a bear market has arrived.

“In the end a $700,000 crap shack is still a crap shack. That $1.2 million piece of junk in San Francisco is still junk. And you better make sure you can carry that housing nut for 30 years.”

Yep, financial suicide.

Or is it Russian propaganda?

Like RT, the German branch of Sputnik — named after the satellite that established the Soviet claim to supremacy in space almost 60 years ago — is part of the Rossiya Segodnya media empire. Its mandate is to broadcast Moscow’s worldview at Putin’s behest. Dmitry Kiselyov, the Kremlin’s chief propagandist, serves as Sputnik’s general director. The only Russian journalist on the EU sanctions list against Moscow, he sees himself as being involved in an “information war.” In fact, he says, this is the “primary form of warfare” today.

http://www.spiegel.de/international/europe/putin-wages-hybrid-war-on-germany-and-west-a-1075483.html

Do u see JEB literately wheel out his mom this week who proceeded to bash trump? LMAO

As Jeb’s oligarch donors switch their support to Marco Rubio

I have a feeling that this is yet another one that you’ve just made up.

The thing here is, China isn’t dumping Uncle Sam’s IOUs because they’re worthless; rather it’s because it’s the only thing of value that they have, and someone is buying them. Remember, when the SHTF, money makes a beeline to safety in the US.

Seems like everyone is trying to print fiat and get something of value for basically the cost of ink and paper.

Aren’t they supposed to have trillions in foreign reserves?

i only hope they do things backwards this time, and bail out CIT instead of AIG….save the little guys, small business, and let the big guys use up their cash….instead of using it for hundreds of billions in stock buybacks. and huge bonuses

Isn’t it interesting how the Bernanke Moment was postponed for a protracted period of time after he left office?

Do u have any new material on your script?

That’s a lot of houses in Vancouver and Sydney.

2.7 more years at that burn rate would exhaust their reserves entirely.

A detestable individual. He used similar tactics here to stonewall state legislation on illegal immigration when he was $peaker of the Florida House. I’ll never forget the video of him burying the vote.

He more or less rose by hanging on to JEB!’s coattails. Charlie Crist had already turned on JEB! and Marco saw an opening to use this to get support to run for US Senate. He got it and ran on a Tea Party platform and people actually fell for this. Those who fell for it the most were the ladies in retirement communities all over Florida who fell for his greasy charm and he worked them to the point they were practically dropping their panties for him whenever he made an appearance at their clubhouse. I don’t know who was more disgusting, Rubio or the women. “Such a nice young man. And he’s Latino!”

There’s a huge retirement community in the middle of Florida called The Villages, I don’t know if anyone’s heard of it, it’s notorious in Florida for a number of reasons, one of which is the high level of STDs among the residents. The Villages and similar communities pretty much put him into office. The nastier side of me almost wishes he’d become president just to see SS yanked from these useless half-wits. I’d be happy to deliver dog and cat food to them with the Rubio label on it.

Marco Rubio, a true candidate for the donorist class and a Banana Republican.

The drain of gold out of the U.S. continues while the Keynesians and their peanut gallery followers laugh.

Precious metals won’t be confiscated by the U.S. government. 401ks, IRAs, bank accounts, and brokerage accounts will.

And illegals will still make more money busing tables in the USA than working for any automaker in Mexico. Heck, they make more than newly minted college grads do in Mexico, even the ones with STEM degrees.

seems like the problem really is we are trying to substitute paper for real wealth?

3. Does his hair count?

MisanTrumpy

America’s earnings recession deepens
Alex Rosenberg
3 Hours Ago
CNBC dot com
Corporate America, we have a problem.

The fourth quarter of 2015 looks to be the third straight quarter in which S&P 500 companies’ profits fell versus the year prior. This would be the first time this has happened since 2009 (when profits fell in Q1, Q2 and Q3).

The official numbers aren’t out yet, since not every S&P 500 company has reported results for the period. However, a combination of the results from the first 63 percent that have reported, and the expected results from those companies yet to report, yields a combined earnings decline of 3.8 percent, according to FactSet. (Note that this number should rise a bit as results are released, as the average company beats expectations.)

To be sure, the low-oil-plagued energy sector, and its 74 percent earnings decline, has been a big contributor to the overall drop. But it’s worth noting that six of the ten S&P 500 sectors are seeing their earnings fall compared with fourth quarter of 2014.
…

ft dot com > World > Asia-Pacific >
China
February 7, 2016 1:18 pm
What stock market turmoil means for China’s economy
Yuan Yang
* Efforts to expand equity financing and move away from banks being stymied
* An investor looks at an electronic screen showing stock information at a brokerage house in Nanjing, Jiangsu province, January 26, 2016. China stocks plunged more than 6 percent on Tuesday after yet another late bout of panic selling triggered by a resumed slide in global equity markets and oil prices.
REUTERS/China Daily

China’s stock market tremors this year have shaken investors across the world. But there is some consolation from January’s 23 per cent fall in the Shanghai Composite index: the panic has little direct effect on the country’s economy.

A drop in stock prices can lead to lower demand: people consume less when they become poorer. But this so-called wealth effect is small in China. “Domestic wealth invested in stock markets is insignificant as a proportion of Chinese household wealth,” says Chen Long of Gavekal Dragonomics, an investment research firm, who estimates that households hold about 5 per cent of their total assets in the stock market.

China’s stock market plays only a small role in financing the real economy. In 2015, China’s domestic stock market supplied Rmb760bn in funding to non-financial firms, through initial public offerings and follow-on offerings. This represents only 5 per cent of total financing flows to the real economy.

Credit in the Chinese economy has boomed since the 2008 credit stimulus. Since then, the stock of total social financing (the government’s chosen metric for credit) as a proportion of gross domestic product has increased by 88 percentage points. Meanwhile, equity financing as a proportion of GDP has increased by only 3 percentage points.

Banks still run the show . . .

Instead of stock markets, banks run the financial system. Bank loans made up 69 per cent of new financing in 2015. The sector is dominated by the Big Four state-owned banks, which loosen their purse-strings when the economy needs stimulus. Because of this, there is no threat of China’s finances drying up.

Yet this model is itself a problem. Policymakers know the economy needs other sources of finance. Ideally, companies would draw more from stock markets and bond markets, and rely less on bank lending.
…

Business
China Economy 2016 Forecast: After Slowdown, Stock Market Uncertainty Continues
By Jess McHugh
On 02/07/16 AT 12:23 PM

Following a stock market slowdown in August 2015 that saw the Shanghai Composite fall 8.5 percent – its worst single day in eight years – the Chinese economy continues to struggle amid continuing uncertainty, as labor unrest and lagging GDP growth spread throughout the vast country. As businesses, factories and financial services firms grapple with the economic reality in China, economists disagree on the nation’s fiscal outlook.

China has the world’s second-largest economy behind the United States, and the rapidly developing nation has become an industrial giant over the past two decades. The economy slowed down throughout 2014 and 2015 and the stock market tumble in August 2015, dubbed China’s Black Monday, sent shockwaves throughout the world. Chinese economic growth has continued to shrink, hitting a 25-year low of 6.9 percent in January, the Wall Street Journal reported.

Factories have been unable to pay their employees, and many workers have skipped New Year celebrations to stage protests. “The developer has kept using the fact that they have no money as an excuse. As of now they haven’t paid us a single penny,” Fan Fu, a laborer in Hebei province, told Reuters, adding, “We really don’t have any other options.”
…

Business
Japan, Australia Stocks Fall As China, Other Asian Markets Stay Closed For Lunar New Year Holidays
By Coco Alcuaz On 02/07/16 AT 8:08 PM
A man watches firecrackers and fireworks during celebrations for the start of the Lunar New Year in Beijing early Feb. 8, 2016.
Photo: Reuters

Japan and Australia stocks fell on Monday morning after oil extended declines last week and many Asian stock markets were shuttered for the Lunar New Year holidays. Financial markets are waiting for U.S. Federal Reserve Chair Janet Yellen to speak on Wednesday, amid speculation the agency will hold off on further interest rate increases amid the global market turmoil since the start of the year.

Japan’s Nikkei 225 fell 1.3 percent, Australia’s ASX 200 0.4 percent.

The three major U.S. stock indexes fell on Friday resulting in weekly declines of 1.6 percent for the Dow Jones Industrial Average, 3.1 percent for the Standard and Poor’s 500 and 5.4 percent for the Nasdaq Composite. The U.S. oil benchmark fell 83 cents, 2.6 percent, to $30.89 per barrel after U.S. inventories rose to a record, Reuters reported. The global benchmark fell 40 cents, 1.2 percent, to $34.06 per barrel.

Financial markets in China, Hong Kong, Taiwan, South Korea, Singapore, Indonesia, Malaysia, New Zealand and the Philippines are closed Monday. China will remain shut all week.

Yellen will testify before the House Financial Services Committee on Wednesday. The declines and gyrations in stock and oil prices have fueled speculation the Fed will hold off on raising interest rates in March. The Fed raised rates for the first time since the global financial crisis in December, leaving many observers to speculate on four more rate increases this year, starting in March. Speculation that interest rates won’t rise has, in turn, helped make the U.S. dollar less attractive, boosting currencies like the yen and making it tougher for Japanese and other manufacturers to sell to the U.S.
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Trump’s popularity among Republicans is slipping.

Donald Trump
February 04, 2016
Republican Race Tightens Nationally; Clinton Still Solid

PPP’s newest national poll finds the race on the Republican side tightening considerably in the wake of Donald Trump’s surprise loss in Iowa on Monday night. Trump’s lead has fallen to just 4 points- he’s at 25% to 21% each for Ted Cruz and Marco Rubio, 11% for Ben Carson, 5% each for Jeb Bush, John Kasich, and the now departed Rand Paul, 3% each for Chris Christie and Carly Fiorina, and 1% for Jim Gilmore. Rick Santorum had literally zero supporters on our final poll including him.

Trump’s 25% standing reflects a 9 point drop from our last national poll, which was taken the week before Christmas. It reflects an overall decline in Trump’s popularity with GOP voters. Trump’s favorability has dropped a net 17 points, from a previous +24 standing at 58/34 to now just +7 at 48/41.Trump is particularly starting to struggle on the right- he’s dropped to 3rd place with ‘very conservative’ voters at 19% with Cruz at 34% and Rubio at 22% outpacing him with that group. He does still lead with moderates and ‘somewhat conservative’ voters to give him the overall advantage.
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The Financial Times of London
February 7, 2016 2:26 pm
Donald Trump and Ted Cruz alarm corporate America
Barney Jopson in Washington and Gregory Meyer in Miami Beach
Republican presidential candidates Donald Trump (L) and Ted Cruz (R) participate in the Republican Presidential Candidates Debate on February 6, 2016 at St. Anselm’s College Institute of Politics in Manchester, New Hampshire. Seven Republicans campaigning to be US president are in a fight for survival in their last debate Saturday before the New Hampshire primary, battling to win over a significant number of undecided voters.
/ AFP / Jewel SamadJEWEL SAMAD/AFP/Getty Images

Bemusement over the Republican presidential race is giving way to alarm in corporate America as the traditional party of business toys with nominating two candidates — Donald Trump and Ted Cruz — who many executives view as intolerable.

The spectre of Mr Trump’s caustic bluster and Mr Cruz’s unbending conservatism has left some Republican-leaning business people discussing a previously unthinkable prospect: voting for Hillary Clinton, the Democratic frontrunner.

Speaking ahead of Tuesday’s New Hampshire primary, Jim Newsome, a derivatives lobbyist who chaired the Commodity Futures Trading Commission under President George W Bush, said until recently he was laughing about the Trump campaign.

“I’m not laughing any more . . . I’m slightly worried about it,” he told a conference following last week’s Iowa caucuses, where the property mogul saw victory snatched from his grasp by Mr Cruz, the Texas senator.

“If it comes down to Hillary and Trump or Cruz, Hillary’s got my vote. While I don’t agree with Hillary on a lot of issues, I know what I’m getting if we elect Hillary versus a Trump or a Cruz,” said Mr Newsome.

Joshua Lewis, founder of Salmon River Capital, a New York private equity group, said: “I think it’s a devil’s choice. I categorise myself as an independent. There are Republicans I could vote for. But neither one of those two under any circumstance.”

An executive at one of America’s biggest companies said of Mr Trump and Mr Cruz: “They are getting invested in issues that are not of interest to business — or actively anti-business.”

Despite Mr Trump’s credentials as a billionaire entrepreneur, he has dismayed business people with his attacks on women, Mexicans and Muslims and his tendency to offer more vague promises of greatness than concrete policies.

“Trump has been so bereft of any detail that it’s very hard to know what you are going to get,” said the executive.

Mr Trump has suggested mass deportations that would risk paralysing the US economy, declared a new Pacific Rim trade deal backed by business a “disaster” and vowed to make Apple manufacture all its devices in the US, an idea experts say is implausible.
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Mr Cruz, a slick speaker with sharp intellect, has a reputation for arrogance and is regarded by many as too rightwing to win the general election.

He gained notoriety in 2013 when he helped to shut down the government in a protest over President Barack Obama’s healthcare reforms, an episode that many executives saw as a triumph of ideology over good sense.

“Even if I were a libertarian — which I’m not — I don’t think Cruz is capable of governing,” said Mr Lewis. “He’s better at burning the house down than building it.”
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75-80 degrees in CA today.

GRANTHAM: The stock market sell-off makes me nervous, but I fear the big crash is coming later
Myles Udland
Feb. 6, 2016, 6:00 AM 25,512 22

Jeremy Grantham is surprisingly bullish!

In his latest quarterly outlook, Grantham, cofounder and chief investment officer at GMO, outlines his views on the markets and the economy.

And in somewhat of a contrast to his recent commentary, sees the oil crash as a big tailwind for the economy and doesn’t think the stock market, though it is expensive and potentially heading into a bear market, is going to crash.

“Looking to 2016, we can agree that uncertainties are above average,” Grantham writes.

“But I think the global economy and the U.S. in particular will do better than the bears believe it will because they appear to underestimate the slow-burning but huge positive of much-reduced resource prices in the U.S. and the availability of capacity both in labor and machinery.”
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Why?

Donald Trump will be dumped by Americans
Tim Montgomerie
The Times
January 21, 2016 11:00AM

When I asked a few American contacts what would happen if The Donald makes it to the Oval Office I was assured it would never happen — and not just because voters will eventually realise that a Trump presidency would be a car crash. One contact predicted a literal car crash. Another suggested “they” would inject Mr Trump with a drug that would induce a fatal heart attack. Another predicted “they” would shoot him, JFK-style. “They” being the CIA or other shadowy organisations that Americans brought up on a diet of conspiracy theories have come to believe are the real powers in the land.

But what if neither the American electorate nor the Langley Illuminati stop Mr Trump? What happens if, God forbid, some terrorist outrage or economic crisis leads enough voters to conclude they need a strongman in the White House? What happens if Sarah Palin (one of the few politicians in the US who can make Trump look statesmanlike) becomes US Secretary of State, keeping an eye on Russia from her Alaskan vantage point?

If Mr Trump did half of what he has suggested he might do, there is no doubt that his presidency would be a calamity. The only question is which of his most outrageous policies would be most calamitous. How about his idea of slapping 45 per cent tariffs on Chinese imports? With China, a motor of the world economy, already slowing down, even the threat of such a move could chill markets and investors. Proud politicians in Beijing would almost certainly retaliate. The Smoot-Hawley tariff bill of 1930 helped to deepen the great depression of the pre-war years. World trade shrank by 66 per cent as nations engaged in round upon round of beggar-my-neighbour retaliations. We mustn’t go down that road again.

A second candidate for the most calamitous Trump idea is his proposal to deport 11 million illegal immigrants. The cost would be more than $10,000 per head but the political and personal cost would be even greater. The spouses and children of between a third and a half of illegals are American citizens. Deportations would produce waves of civil unrest as families were torn apart. Barack Obama has come under fire for his limited policy of returning trafficked migrants to their home countries but at least he has the benefit of the doubt from vulnerable minorities. He hasn’t tweeted out incendiary and entirely fictional claims from a neo-Nazi organisation that 81 per cent of white murders have been perpetrated by black people. The correct statistic is 15 per cent.
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Letter from Britain
Dear Americans, What Are You Thinking?
And why does it feel so familiar?
By Alex Massie
1/31/2016

If you think millions of Americans are terrified by the looming prospect of Donald Trump securing the Republican presidential nomination, you should see what we Brits think of him. Many of us—and countless millions of other Europeans—are wondering, not always politely, if the United States has succumbed to a kind of mass outbreak of madness.

Prime Minister David Cameron—Trump’s would-be partner in the special relationship, and a conservative—considers Trump “divisive, stupid and wrong.” George Osborne, chancellor of the Exchequer, decries Trump’s “nonsense.” Not to be outdone, London Mayor Boris Johnson recently noted, “The only reason I wouldn’t want to go to some parts of New York is the real risk of meeting Donald Trump.” It was perhaps Harry Potter author J.K. Rowling who put it best when she said that, compared with Trump, “Voldemort was nowhere near as bad.” At least 500,000 other Brits appear to agree: In response to Trump’s call to ban any Muslim from entering the United States, they signed a petition calling to ban Trump from Britain.

For a long time, most foreign observers have confidently expected the Trump bubble to burst. Sure, he might be a blowhard, and sure, he might do well in early polls, when name-recognition is a candidate’s most valuable attribute. But, come the choosing time, everything would be different, we told ourselves. The fever would break, and the American people would, as they usually do, choose wisely. Or if not wisely, then at least not stupidly.

Those predictions may still prove sensible, but they’ve taken a battering as severe as anything seen in the stock markets of late. The choosing time is almost upon you, and you still—I am afraid there is no soft way of saying this—appear to be out of your minds. Or, at least, according to the polls, a plurality of those Republicans preparing to vote in Iowa and New Hampshire appear to have departed from the planet of sanity.

Of course, snake-oil peddlers and two-bit hucksters have a long and dishonorable history in American affairs, and most Brits think all U.S. presidential elections are a circus on a P.T. Barnum scale. (A little secret: That’s one reason they have such a devoted international following.) But this one seems, at least for now, to have taken the circus to places never previously enjoyed, or endured. I mean, when the alternative to Trump is Ted Cruz— whose hatred for the government he aspires to run remains a thing of wonder—you begin to worry there might be something in the water. In an ordinary U.S. election, Cruz would be the candidate terrifying Europeans, but he would soon enough bow to a more popular mainstream candidate. In this election, no such candidate appears to exist.
…

LOL, at halftime they had all the rainbows, flowers and butterflies. The Brotherhood of Man, while security is armed to the teeth to prevent the odd Allahu Achbar from sneaking through.

And does this Beyonce gal do anything besides a stamping dominatrix schtick? Makes me nostalgic for Madonna. Almost.

“Who owns your narrative? Who is paying for it?”

Who cares? Free pizza for you!

Sure did. It was a lame game but the best team won.

Can Peyton go away now? And send Tom Brady home too.

ft dot com > Companies >
Transport
February 7, 2016 4:05 pm
Shipowners in financial distress as dry bulk crisis deepens
Robert Wright in New York
Cranes unload coal from a container ship as a wheel loader dumps coal into a tipper truck at the Kirshnapatnam Co. port in Kirshnapatnam, Andhra Pradesh, India, on Monday, June 15, 2015. A southern Indian port has established the nation’s newest facilities to handle the world’s largest ships.
Photographer: Prashanth Vishwanathan/Bloomberg

Record low prices for transporting coal, iron ore and other dry bulk commodities by sea have pushed shipping companies into severe financial distress.

The suspension of payments to creditors and big write-offs by publicly listed entities are likely to reflect similar hidden crises at smaller, private operators that own most of the world’s vessels for carrying these products.

Shipowners are reacting to a slump in charter rates brought on by a mix of faltering trade growth, particularly with China, and a glut of ships as vessels ordered in better times arrive on the market.

The collapse has dragged on far longer than anticipated, with average charter rates for dry bulk carriers — already at the lowest level since the Baltic Dry Index started in 1985 — declining every day so far in 2016.

Average short-term charter rates for Capesize ships, which are the largest carriers, were at $2,824 a day on Friday. This is well below the cost of operating which is about $8,000 a day.

Basil Karatzas, a New York-based maritime finance adviser, said the market was “very bad” and that on a recent trip to Greece he had encountered owners who for the first time appeared scared about the market’s outlook.

“The shipowners have been burning cash now for about 18 months,” he said. “They’re running very low on capital.”
…

Dry-bulk shipping under water as bankruptcies rise
in Dry Bulk Market,International Shipping News 08/02/2016

The global commodities bust has rocked the dry-bulk shipping industry, with a wave of bankruptcies washing across the sector and major players forced to restructure, divest or scrap assets.

On Jan. 5, the Shanghai International Shipping Institute issued a striking report after polling about 50 of the nation’s largest bulk shippers. The survey concluded that more than 60% of the firms it polled were struggling with long-term losses and about 40% faced liquidity problems.

“The market is extremely depressed and these conditions are likely to continue in 2016, exacerbating dry bulk firms’ losses, increasing costs and creating obstacles to obtaining financing. This will kick-start a wave of bankruptcies,” government-run SISI said in the report.

Already so far, more than half a dozen shipping companies from countries including Hong Kong, China, South Korea, Japan and the U.S. have filed for bankruptcy in the past two years. In 2015, bankruptcies gathered pace as orders dried up while new ships continued to enter the market.

Japan’s fifth largest dry-bulk shipping company Daiichi Chuo Kisen and its wholly owned subsidiary Star Bulk Carriers Co. filed for bankruptcy in September. Prior to that, in the first quarter of 2015, privately owned Danish company Copenship, South Korea’s Daebo International Shipping Co., China’s Winland Ocean Shipping Corp. and Hong Kong-based Shagang Shipping filed for bankruptcy proceedings.

The bad news rolled on into 2016. Japan’s “Big Three” shipping companies — Mitsui O.S.K Lines, Nippon Yusen and Kawasaki Kisen (K Line) — all slashed their earnings outlooks drastically in January.

Mitsui said that for the year ended March 2016, it expected to now report a consolidated net loss of 175 billion yen ($1.47 billion) from a previously projected profit of 17 billion yen. It will book 180 billion yen in extraordinary losses due to the retirement of vessels and other restructuring expenses.
…

Davos 2016
Fears grow of repeat of 2008 financial crash as investors run for cover
As leaders gathered in Davos, FTSE 100 was gripped by panic selling and entered bear market with Dow Jones also plunging
A man at the New York stock exchange
The Dow Jones Industrial Average slid more than 450 points, or 2.9%, in morning trading.
Photograph: Richard Drew/AP
Phillip Inman Economics correspondent
Wednesday 20 January 2016 17.07 EST
Last modified on Friday 22 January 2016 06.33 EST

Fears that the global economy could be heading for a repeat of the 2008 financial crash have sent shockwaves through financial markets – prompting a rush to safe havens by investors.

Oil prices fell to a fresh 12-year low on Wednesday and metal prices tumbled in response to warnings that China’s slowdown could derail the global recovery at a time when central banks, which came to the rescue in the credit crunch, have only limited firepower.
…

ft dot com > Comment >
The Big Read
January 29, 2016 7:03 pm
Federal Reserve: Credibility on the line
Sam Fleming in Washington
Last month’s rate rise is drawing criticism. Some say it should abandon plans to increase again soon
The Marriner S. Eccles Federal Reserve building stands past moving vehicles in Washington, D.C., U.S., on Tuesday, Sept. 15, 2015. While economists are almost equally divided on whether Federal Reserve chair Janet Yellen will raise U.S. interest rates this week, the bond market suggests policy makers will wait.
Photographer: Andrew Harrer/Bloomberg
©Bloomberg

As Janet Yellen, chair of the Federal Reserve, was preparing last month for the first increase in US interest rates for a decade, protesters in New York’s financial district were holding a candlelight vigil bemoaning the end of near-zero monetary policy.

In the crowd bearing illuminated signs saying “what recovery?” and “wage growth is good” was Mauricio Jimenez, a 44-year-old construction worker from Queens, who warned against the move as he stood outside the New York Fed.

“It was a mistake,” he said this week, arguing the central bank should have paid more attention to working families and minorities who had seen paltry wage growth, and that the Fed should reverse course. “We are the people most affected.”

Complaints about the prospect of higher rates had long been levelled by left-of-centre groups such as Fed Up, which arranged the protest, as well as Democratic politicians including Bernie Sanders, the presidential challenger, as a way to highlight the stagnating fortunes of millions of Americans.

This month, however, fears of a global slowdown and the crash in commodity prices have prompted a flurry of criticisms from a different constituency. Stung by brutal declines in the S&P 500 index, some Wall Street investors are accusing the Fed of failing to appreciate the dangers brewing overseas.

Instead of soothing the markets, US policymakers are accused of fraying nerves and exacerbating outflows from emerging markets by purportedly clinging to a strategy that envisages further increases this year.

“The market views tightening as a mistake now,” says Jordi Visser, chief investment officer at Weiss Multi-Strategy Advisers. “I don’t think 25 basis points matters much but the market clearly does. We’re now closer to a recession than we all realise.”
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A Panic-Inducing Night for the GOP Establishment
At Saturday night’s debate, Republicans wanted Marco Rubio to soar and Donald Trump to stumble. The opposite happened.
By Brian Beutler
February 6, 2016

The Republican establishment’s fondest hope before Saturday night’s debate was that Marco Rubio would deliver yet another solid (if unmemorable) debate performance, and that Donald Trump would fall on his face—compounding the damage he suffered in Iowa, and surrendering more, if not all, of his lead in New Hampshire over to Rubio, who’s in second place and climbing.

Instead, the establishment got almost exactly the opposite.

The single biggest spoiler wasn’t Trump, or even Ted Cruz, but New Jersey Governor Chris Christie, who—let’s not euphemize—humiliated Rubio in an exchange about Rubio’s dearth of experience and accomplishments. Christie became the first Republican presidential candidate this cycle to weaponize Rubio’s grating habit of pivoting to relevant portions of his stump speech rather than answering the questions posed to him.

“I want the people at home to think about this,” Christie said. “That’s what Washington, D.C. does. The drive-by shot at the beginning with incorrect and incomplete information, and then the memorized 25-second speech that is exactly what his advisers gave him.”

Rubio responded to Christie by proving his point, pivoting not just to a portion of his stump speech, but the exact same portion of the stump speech he had just recited.

“There it is,” Christie gloated. “There it is. The memorized 25-second speech. There it is, everybody.”

Then Rubio did it again. When he repeated the same lines, nearly verbatim, a fourth time—“Let’s dispel once and for all with this fiction that Barack Obama doesn’t know what he’s doing. He knows exactly what he’s doing.”—the audience booed him.
…

Saturday, Feb 6, 2016 05:00 AM PST
Secrets of Donald Trump’s cult: This is why the angriest white voters will not leave his side
Trump may have finished second in Iowa, but he’s far from finished.
His base is as fearful as ever
Chauncey DeVega

Donald Trump is a political cult leader. In that role, he is also a political necromancer, beating a drum of nativism and fear to control the right-wing political zombies that follow him.

The Republican Party’s base of voters is rapidly shrinking. Contemporary conservatism is a throwback ideology that is unpopular with a large and growing segment of the American public. The result of these two factors is a Republican Party and American conservative establishment that is under threat, obsolescent and in a deep existential crisis.

These are the conditions that have catapulted Donald Trump to the forefront of the 2016 Republican presidential primary.

Trump’s most strident supporters are found among the alienated, disaffected, fearful, white working class. This is a cohort whose members are facing greatly diminished life chances in an age of globalization, extreme wealth inequality, neoliberalism and a reduction in the unearned material advantages that come as a result of white privilege. As recent research by public health experts, sociologists, economists and others has detailed, the white American working class and poor are, quite literally, dying off. They are killing themselves with pills and alcohol, committing suicide with guns, and dying of despair.

For many decades, if not centuries, racism (and sexism for white men) artificially buoyed the life prospects of the white working class in American society. With those palliatives and aids removed, the white working class and poor are left exposed and vulnerable to the realities of the American neoliberal nightmare and the culture of cruelty. They are ill-equipped for life in this new world.

Donald Trump knows that a crisis is an opportunity: he is transforming the fear and anxiety of the white American working class into political capital and energy.

To that end, Trump is leveraging what social psychologists have termed “terror management theory.” If “Trumpmania” is a puzzle, then terror management theory is a decoder ring or cipher. In many ways, the logic of terror management explains almost all of Trump’s popularity.
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