AUG 10 SIT EC y POL
ZERO HEDGE
China
Enters Currency War - Devalues Yuan By Most On Record. S-by Tyler
Durden on 08/10/2015
As we first
warned in March, and as became abundantly clear over the weekend when
weaker than expected export
data as well as the steepest
decline in factory gate prices in six years underscored the extent to which
the engine of global growth and trade has officially stalled, Beijing has no
choice but to join the global currency wars, as the yuan's dollar peg will
ultimately prove to be too painful going forward. And sure enough this evening
the PBOC weakens the Yuan fix by the most on record. As the details sink
in, the Chinese currency complex is collapsing... 12 month NDFs just hit a
new 5 year lows against the USD.
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Don't
Be Fooled By The Political Game: The Illusion Of Freedom In America. Submitted by Tyler
Durden on 08/10/2015
Being a citizen in
the American corporate state is much like playing against a stacked deck:
you’re always going to lose. The game is rigged, and “we the people” keep
getting dealt the same losing hand. Even so, most stay in the game, against
all odds, trusting that their luck will change. The problem, of course, is
that luck will not save us.
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Trainwreck?
US Freight Carloads Collapse, Flash Recession Warning. S-by Tyler
Durden on 08/10/2015
Trainwreck? Rail
traffic fell in July from a year ago as
WSJ reports an increase in container volumes couldn’t offset a steep
decline in oil and coal shipments according to the Association of American
Railroads. Despite almost constant reassurance that plunging oil prices are
'unequivocally good" for America, AAR analysts warn "railroads are
overexposed, relative to the economy in general, to the energy sector,"
adding that traffic data indiates "growth is slow and the recovery
could be threatened by an interest-rate increase by the Fed."
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Escaping
Serfdom. Submitted by Tyler
Durden on 08/10/2015
The concept of government is that the people grant to a
small group of individuals the ability to establish and maintain controls over
them. The inherent flaw in such a concept is that any government will
invariably and continually expand upon its controls, resulting in the
ever-diminishing freedom of those who granted them the power.
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The
Sad Truth About the State of the Financial System Today . Posted by: Phoenix Capital... Post date: 08/10/2015
We are heading for a crisis that will be exponentially worse
than 2008. The global Central Banks have literally bet the financial system
that their theories will work. They haven’t.
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This
Wasn't Supposed To Happen: Household Spending Expectations Crash. Submitted
by Tyler Durden on 08/10/2015
For the past 8 years, the US consumer has dutifully spent,
spent and then spent some more. This all came to a screeching halt earlier
today when courtesy of the latest New York Fed Survey of Consumer Expectations,
we learned that the US consumer has finally tapped out. Households
reported that they expected to increase their spending by just 3.5% in the next
year, a major drop from the 4.3% the month before. This was the lowest reading
in series history.
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A
Message From Generation Z: Thanks For Nothing. Submitted by Tyler
Durden on 08/10/2015
Generation X, Y, … Z: the baby boomer
The up and coming
generations have plenty to blame on the "baby boomer" generation and
the scores of bad fiscal and monetary policy
decisions that has robbed them of their future. The job of each generation is to leave
the world in a better place than they found it. It is clear, we failed.
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NEW
STUDY EXPOSES THE "DARK SIDE" OF ETFS. Submitted by Tyler
Durden on 08/10/2015
A new academic
study from researchers at Stanford, UCLA, and the Arison School of Business in
Israel suggests that ETFs are contributing to a lack of liquidity for the
stocks they hold. Essentially, the argument is that increased ETF ownership
leads to wider bid-asks, less analyst coverage, and higher correlations with
broad market moves.
…
KEY
TERMS:
HY = emergency situation..
a rate hike cycle for instance, on HY energy names, or an exogenous
geopolitical shock –
ETF = exchange-traded
funds.
OPEN: mask this problem IN ETFs and other portfolio products mask this problem as long as flows are diversifiable.
Extracts:
Two months ago, in “ETF
Issuers Quietly Prepare For Meltdown With Billions In Emergency Liquidity,”
we outlined the rather disconcerting circumstances that have led some large
fund managers to quietly line up emergency liquidity facilities that can be
tapped in the event of a sudden retail exodus from bond funds.
"The biggest providers of exchange-traded funds, which have been
funneling billions of investor dollars into some little-traded corners of the
bond market, are bolstering bank credit lines for cash to tap in the event of a
market meltdown.
At a base level, these precautionary measures are the result of the
interplay between central bank policy and the unintended consequences of the
post-crisis regulatory regime. ZIRP creates a hunt a for yield and
simultaneously incentivizes companies (especially cash strapped companies) to
tap the bond market while borrowing costs remain artificially suppressed.
Clearly, this is a self-fulfilling prophecy. The longer rates on risk free
assets remain near, at, or even below zero, the more demand there is for new
corporate issuance (the rationale being that at least corporate credit offers
some semblance of yield). More demand means rates on corporate credit are
driven still lower, and once yields on high grade issues get close to the lower
limit, yield-starved investors are then herded into HY.
All of this supply in the primary market comes at a time when liquidity
in the secondary market for corporate credit is non-existent thanks to the
shrinking dealer books that resulted from the government’s (maybe) well-meaning
attempt to crack down on prop trading. The result: a crowded theatre with a
tiny exit.
This situation
has been exacerbated by the proliferation of bond ETFs which have allowed
retail investors to pile into corners of the fixed income world where they
might not belong.
All of the above can be summarized as follows.
"MF assets too large versus dealer inventories" (via Citi)... SEE GRAPHS AT :
... clear evidence of "structural damage in corporate bond trading
liquidity" (via JP Morgan)...
So given the above, the question is this: if something were to spook the market - a rate hike cycle for instance, or an October revolver raid on HY energy names, or an exogenous geopolitical shock - causing an exodus from these funds, what would happen to prices if fund managers were suddenly forced to transact in size in an illiquid secondary market in order to meet redemptions?
"Nothing
good", is the answer.
The solution is to avoid selling the underlying bonds - even when
investors are selling their shares in the funds.
But how is this possible?
To a certain extent, outflows in one fund can be offset by inflows to
another. These "diversifiable flows" are one happy byproduct of the
great ETF proliferation. Here's a refresher on how this works courtesy of
Barclays.
***
Portfolio
Products Replace Dealer Inventory
In the pre-crisis period, dealers ran large inventories that
effectively facilitated the netting of flows across funds (Figure 1). A fund
with an outflow would sell bonds into the dealer community, and funds with
outflows would buy bonds out of the dealer inventory. When inventory is large,
the fact that the specific bonds bought and sold did not match was largely
irrelevant. Funds with outflows could sell the bonds of their choice, and the
funds with inflows could pick investments from the large variety of inventory
held by dealers.
The matching
problem has become more acute as dealer inventories have declined. … This is where
portfolio products come in. Investors can use portfolio products to fund outflows/invest
inflows immediately and execute the necessary single-name bond trades over time
as liquidity in the underlying bond market allows (Figure 2). In this
scenario, funds with inflows and outflows simply exchange portfolio products,
sidestepping the immediate need to trade single-name corporate bonds.
***
Ok great, so ETFs provide a kind of "phantom" liquidity if
you will. There are two problems with this:
- It only works when flows are diversifiable. Once flows become unidirectional, it all goes out the window.
- It makes the underlying markets even more illiquid.
Here's how we put it last month in "How
Fund Managers Use ETF Phantom Liquidity To Avert A Meltdown":
In other words, if I'm a fund manager, the idea that ETFs provide
liquidity rests on the assumption that when I experience outflows, someone else
will be experiencing inflows and thus I can sell ETFs and avoid offloading my
bonds into an illiquid corporate credit market. Put another way: I am depending
on new money coming into the market to fund redemptions from previous investors
who are exiting the market, all so that I can avoid liquidating assets that are
declining in value and that I believe will be difficult to sell. There's a term
for that kind of business. It's called a ponzi scheme and just like all other
ponzi schemes, when the new money dries up (so, for example, when HY bond ETF
flows are all headed in the wrong direction), the only way to meet redemptions
is to get what I can for the assets I have and when the market for those assets
is thin (as the secondary market for corporate credit most certainly is), I may
incur substantial losses.
Note also that the more often ETFs are used as a way of avoiding the
underlying bond market, the more illiquid that market becomes, making the
situation still more precarious in the event of a panic.
So what is a
fund manager to do? …
In order to avoid tapping the underlying illiquid bond market in a
situation where flows are unidirectional, fund managers may instead pay out
redemptions in borrowed cash.
This is, to quote Citi's Matt King, "creative destruction
destroyed." .. Only worse.
This strategy is
yet another example of delaying the inevitable… It’s a delay-and-pray scheme
designed to avoid selling the debt of companies whose similar delay-and-pray
schemes have run their course.
In
closing, it's important to note that no fund manager in the world will be able
to line up enough emergency liquidity protection to avoid tapping the corporate
credit market in the event of panic selling in the increasingly crowded market
for bond funds.
In other words, when the exodus comes, the illiquidity that's been
chasing markets for the better part of seven years will finally catch up, and
at that point, all bets are officially off.
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The
Assault On Donald Trump Shows That The "2 Party System" Is Really A
"1 Party System". S by Tyler
Durden on 08/10/2015 [ A clown has been
assaulted by one of the managers of their circus..]
Normally,
candidates that are not part of the “establishment” do not pose much of a threat. In order to win
elections in this country, especially on a national level, you need name
recognition and you need lots and lots of money. Donald Trump has both, and no
matter what you may think of him you have to admit that he has star power. And
he was never supposed to run for president. You see, the truth is that only
members of “the club” are allowed to play. The elite very carefully groom
their candidates, and they are usually able to maintain a very tight grip on
both major political parties. This two-headed abomination that we call a
“two party system” is in reality just a one party system.
[ The fact is that the billionaire D Trump
is part of the circus “establishment”
.. internal contradictions generate movement, said Hegel... this means that the “one party system” works ..
not for the working classes, but for the rich. The only way to put dawn this
system is to support a liberal, either
the GOP: Ran Paul or DEM: Sanders. If we manage to get one of them.. then we
can say that the 2 party system has been defeated and real democracy is opening
its way in America … I we do not get it.. the right choice is abstention .. so, WE WON’T VOTE ]
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THE
US ECONOMY CONTINUES ITS COLLAPSE. by
Paul Craig Roberts, Submitted
by Tyler Durden on 08/10/2015 [ Patriotism means NO questions ]
Do you remember when real reporters existed? Those were the
days before the Clinton regime concentrated the media into a few hands and
turned the media into a Ministry of Propaganda, a tool of Big Brother. The
false reality in which Americans live extends into economic life. Last
Friday’s employment report was a continuation of a long string of bad news spun
into good news.
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Towards
A State Of Near Chaos.... Submitted by Tyler
Durden on 08/10/2015
The rise and persistence of Trump raises a more pertinent question: why
are all the other candidates such obvious shills for the implacable engine of
grift that is destroying the Republic? Why has nobody with the possible
exception of Bernie Sanders, called bullshit on the basic operations of the
machine? Why have no other persons of real stature stepped forward
to challenge the suicidal dynamic of the age? I’m with those who think that
the 2016 election campaign is going to be a wild spectacle beyond the
current imaginings of news media. I’m serenely convinced that, among other
things, the banking system is going to implode so hard and fast well
before the nominating conventions that the nation will be in a state of near
chaos. What’s out there now is just a tired dumb-show replaying the shopworn
themes of an era that is about to slam to a close.
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EPA
Admits Spilling Millions Of Gallons Of Toxic Waste Into Colorado River -
Stunning Aerial Footage. Submitted by Tyler
Durden on 08/10/2015
"We are very
sorry for what happened. This is a huge tragedy. It’s hard being on the
other side of this. Typically we respond to emergencies; we don’t cause them.
... It’s something we sincerely regret,”
[ This is the issue that need attention in America…
NO bombing Syria.. we’re creating a genocidal mess over-there ]
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The
Destruction Of Real Estate Fundamentals. Submitted by Tyler
Durden on 08/10/2015
Housing is a very important component of any economy, and often an
indicator of the well-being of a society. In the US, housing has been
deteriorating since the sub-prime crisis. The changes are not only
cyclical but structural. Past experiences need to yield to an
objective analysis of where we are heading. Here is the way we see it...
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And
The Biggest Beneficiary Of The Greek Crisis Is.... Submitted by Tyler
Durden on 08/10/2015
"These
savings exceed the costs of the crisis - even if Greece were to default on its
entire debt. [That is] even if Greece doesn't pay back a single cent, the
public purse has benefited financially from the crisis."
[ If that is so… there is no crisis in Greece. .. This is
another way of legitimizing the Troika ]
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Four
Economic Myths That Perpetuate The Euro Crisis. Submitted by Tyler
Durden on 08/10/2015
Too much of the commentary about the Greek crisis has focused on
whether or not Greece should drop the euro and not enough on the structural
problems arising out of decades of socialism. Meanwhile, the Greek
government has borrowed more money than the Greek people can possibly repay,
and debased money will not make this fact disappear. On the contrary, more
easy money will cause even more harm. The best thing that Europe and Greece can
do for itself right now is to confront some of the economic fallacies that have
long driven the debate over Greece, the euro, austerity, and debt.
[ Another stupid reasoning .. The fact is
that most of the money never went down .. it was used to repay previous debt .. so it worsen the sovereign debt ]
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ACA
2.0? Hillary Clinton Rolls Out $350 Billion College Affordability
"Fix". Submitted by Tyler
Durden on 08/10/2015
[ She already said the same story-tell on the Health system .. that was a fiasco.. a scum ]
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Iran's
Ayatollah Trolls Obama's Human Rights "Flag Bearing". S- by Tyler
Durden on 08/10/2015
Human rights issue still not solved in the country claiming
liberty& human rights. Still people are insecure for being black! 8/97
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Sorry
Bloomberg, Someone DID Notice That China Is Dumping A Record Amount Of Bonds. Submitted by Tyler
Durden on 08/10/2015
Earlier today, Bloomberg TV blasted an amusing snippet from an article
that was based on some deep revelations about what is happening in the bond
market: It says: "China sells $180 billion of US Treasuries but no one
notices." Which is ironic considering the following ZH headlines:
May 18: Revealing
The Identity Of The Mystery "Belgian" Buyer Of US Treasurys
June 15: China Dumps Record $120 Billion In US Treasurys In Two Month Via Belgium
July 17: China Dumps Record $143 Billion In US Treasurys In Three Months Via Belgium
and of course July 22: "China's Record Dumping Of US Treasuries Leaves Goldman Speechless"
June 15: China Dumps Record $120 Billion In US Treasurys In Two Month Via Belgium
July 17: China Dumps Record $143 Billion In US Treasurys In Three Months Via Belgium
and of course July 22: "China's Record Dumping Of US Treasuries Leaves Goldman Speechless"
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Ferguson
Turns Bloody Again As Multiple Shootings, Clashes With Police Mar Protests. Submitted by Tyler
Durden on 08/10/2015
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Submitted by Tyler Durden on 08/10/2015 - 07:22
- Grim China data keeps stimulus hopes alive (Reuters)
- Berkshire Hathaway to Buy Precision Castparts for About $37 Billion (BBG)
- Greece, lenders in final push to seal new bailout (Reuters)
- Quantitative Easing With Chinese Characteristics Takes Shape (BBG)
- Greece nears €86bn accord with creditors (FT)
- Oil Futures Signal Weak Prices Could Last Years (WSJ)
- Drop in long-term investment hinders eurozone recovery (FT)
- Two shot in Ferguson amid standoff between police, protesters (Reuters)
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Chinese
Stocks Soar On Terrible Economic Data; US Futures Levitate; Brent Drops To 6
Month Lows. Submitted by Tyler Durden on 08/10/2015
Following last week's bad news for the economy (terrible ADP private
payrolls, confirmed by a miss in the NFP) which also resulted in bad news for
the market which suffered its worst week in years, many were focused on how the
market would react to the latest battery of terrible economic news out of China
which as we observed over the weekend reported
abysmal trade data, and the worst plunge in Chinese factory
prices in 6 years. We now know: the Shanghai Composite soared by 5%, rising
to 3,928 and approaching the key 4000 level because the ongoing economic
collapse led Pavlov's dog to believe that much more easing is coming from the
country which as we showed last night has literally thrown the kitchen sink at stabilizing
the plunge in stocks.
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Gunmen
Attack US Consulate In Turkey After Explosion Kills Three. S- by Tyler
Durden on 08/10/2015
Just as the Ferguson night turned violent, again, and at least two
people were struck by gunfire during the latest riot to "commemorate"
the death of Michael Brown, reports of violence came from another part in the
world, Turkey where moments ago CNN Turk reported
that two attackers, a man and a woman, opened fire on the U.S. consulate
building in Turkey's biggest city, Istanbul, on Monday and fled when police
shot back.
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INFORMATION
CLEARING HOUSE
Obama
on Iran: The Specter of World War III
By Bill Van Auken
By Bill Van Auken
A powerful factions within Congress and the state apparatus are
determined to carry out a war against Iran that would have incalculable
consequences
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US’s
Saudi Oil Deal from Win-Win to Mega-Loose
By F. William Engdahl
By F. William Engdahl
Kerry and Abdullah agreed on September 11, 2014 that the Saudis would
use their oil muscle to bring Putin’s Russia to their knees today
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US
Intelligence Confirms US Support for ISIS
By Ron Paul
By Ron Paul
What kind of game is the US government playing in the Middle East?
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Netanyahu
and His Marionettes
By David Bromwich
By David Bromwich
Benjamin Netanyahu is laying siege to the Congress of the United
States, not for the first time.
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From
Palestine to Yemen: Honour and Shame of the Arab World
By Sayed Hasan
By Sayed Hasan
Saudi Arabia is trying its best to supplant Israel in terms of crime,
terror and barbarism
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Greece:
Raped, Humiliated, Frightened But Standing!
By Andre Vltchek
By Andre Vltchek
Greece is now obviously on the same hit list of the Empire, as are
countless other “unruly” nations, from Ecuador and Venezuela, to Russia, China
and Iran
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Evoking
the Wrath of Nature
By Chris Hedges
By Chris Hedges
The placing of monetary profit above the maintenance of life, the
refusal to understand and accept limits, have turned the victimizers into the
victims
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GLOBAL
RESEARCH
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NEWS
IN SPANISH
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PRESS
TV
Argentina
ruling coalition wins primaries. Tue Aug 11, 2015 The presidential candidate
for Argentina's ruling coalition secures the majority of votes in the country’s
primary elections.
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Americans
slam Schumer for Iran stance. Tue Aug 11, 2015 More than 170,000 Americans
have signed a petition condemning Jewish Senator Charles Schumer’s open
hostility towards the Iran nuclear agreement.
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264
died in Egypt jails over 'medical neglect'. Tue Aug 11, 2015
Over 260 Egyptian prisoners have died in jail since the 2013 due to ‘medical
negligence’ of prison authorities, a report says.
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Trump
says not ruling out 3rd party run . Mon Aug 10, 2015 Donald Trump has declined
to rule out a third party presidential run, saying he might contest as an
independent if denied the GOP nomination.
[ Fuera del
chiquero GOP, Trump dejaria de ser cerdo y deviene pork. He is a pig in his realm.. out of
it .. is a pork.. a dead pig. Who really lose if Trump is dumped .. of course the GOP .. worse
if he run as independent. .. The US
doesn’t have proportional representation .. this is not a democracy.. Trump
will became nothing.. zero at the left.. and the GOP a bunch of stupid war-mongers. .. Who
benefit?.. Hillary’s mafia .. ]
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