Gloom, Doom, or Boom? Finance and Economics

[Mr. Perfect]

I swear Matt Tbibib is the biggest dumb@$$ in the known universe. You hand several trillion dollars to banks and you expect them to do what with it, other than buying assets. What a moron.

[YMix]

Six.

An investment banker on Tuesday jumped to his death from the roof of Chater House in Central, where Wall Street bank JP Morgan has its Asia headquarters, several witnesses told the South China Morning Post.

Witnesses said the man initially went to the roof of Chater House, a 30-floor building in the heart of Hong Kong’s central business district – and later jumped. The incident happened between 2pm and 3pm, one witness said.

Several policemen were seen on the roof but apparently failed to convince the man not to jump, one of the witnesses said. Police later confirmed to the Post that a 33-year-old man – surnamed Li – was found in a dangerous position on the roof of Chater House on Connaught Road Central at 2.08pm local time. Li threw himself off the building before the city’s emergency crew arrived.

The man landed on the four-lane western-bound carriageway outside the building. A police spokeswoman said Li was taken to Ruttonjee Hospital, where he was declared dead at 2.31pm. Police are investigating the case.

According to several JP Morgan employees, the man was a junior-level investment banker who played a supporting role on various projects.

[Nonc Hilaire]

Somebody has counted 8.

JumP Morgan

[Heracleum Persicum]

Underwater Mortgages.png (105.81 KiB) Viewed 1630 times

[Mr. Perfect]

When the Communists start getting nervous, watch out.

http://www.cnsnews.com/news/article/ter ... ble-levels

Federal Reserve Chairman Janet Yellen, referencing the Congressional Budget Office's long-term budget projections, told the Joint Economic Committee of Congress today that under current policies the federal government’s deficits “will rise to unsustainable levels.”

The debt held by the public is the part of the U.S. government debt that is not held by the federal government itself. It primarily consists of marketable Treasury securities, including bills, notes and bonds. It does not include what the government calls “intragovernmental debt," which is the money the Treasury has borrowed out of the Social Security Trust Fund and other government trust funds to pay current expenses.

The total debt of the federal government at the end of fiscal 2013--including both the debt held by the public and the intragovernmental debt--was $16.719 trillion. The CBO estimates that by 2024, the total debt of the federal government will be $27.159 trillion—of which $20.947 trillion will be debt held by the public.

We of course will not make it that long. obamunism doomed this country from 2008 forward, 2012 was a hail mary at best to elect Romney/Ryan.

It's always interesting to see what will cause a bubble to pop. For Americans, we've always been immune to international economic trouble. I'm thinking this time it may come from the outside.

[Typhoon]

When the Communists start getting nervous, watch out.

http://www.cnsnews.com/news/article/ter ... ble-levels

Federal Reserve Chairman Janet Yellen, referencing the Congressional Budget Office's long-term budget projections, told the Joint Economic Committee of Congress today that under current policies the federal government’s deficits “will rise to unsustainable levels.”

The debt held by the public is the part of the U.S. government debt that is not held by the federal government itself. It primarily consists of marketable Treasury securities, including bills, notes and bonds. It does not include what the government calls “intragovernmental debt," which is the money the Treasury has borrowed out of the Social Security Trust Fund and other government trust funds to pay current expenses.

The total debt of the federal government at the end of fiscal 2013--including both the debt held by the public and the intragovernmental debt--was $16.719 trillion. The CBO estimates that by 2024, the total debt of the federal government will be $27.159 trillion—of which $20.947 trillion will be debt held by the public.

We of course will not make it that long. obamunism doomed this country from 2008 forward, 2012 was a hail mary at best to elect Romney/Ryan.

It's always interesting to see what will cause a bubble to pop. For Americans, we've always been immune to international economic trouble. I'm thinking this time it may come from the outside.

The failure of the Creditanstalt bank in Austria in 1931 is considered to be the trigger of the 2nd and longer stage of the Great Depression.

The US stock market crash of 1929 being the 1st stage.

[Typhoon]

chindit13 - Mon, May 12, 2014 - 11:28 PM

QE and ZIRP, in and of themselves, create the framework whereby all of these other things can take place.

The Fed isn't that clever. Even at its generous pay levels, relative to the rest of government or semi-private entities, what a skilled trader or manipulator can make at the Fed is nothing compared to what a good HF or PE player can make. The Fed gets some combination of leftovers and geeky eco-wonks from the available pool of talent, while those that have real trading savvy (mercenary or otherwise) end up in the private sector (there is one fairly sizable HF that 'invests' primarily in small cap issues, which its size allows it to ramp into quarter ends for the snapshot that dictates the 20 part of 2 and 20, proving the old adage 'some of the people can be fooled all of the time').

Owing to QE and the minimal cost of funds, mercenaries who understand markets have literal and figurative free reign. They can run stops, squeeze shorts---even finance massive long positions in commodities. They can toy with markets, because they know that despite appearances, market liquidity is almost non-existent. Everybody is already all-in. Most HFs are more than all-in, as they are leveraged to an uncomfortable degree, and margin debt is running at historical highs. Moves that run stops are exacerbated (partly owing to leverage and partly owing to fear of any loss in a zero-yielding world), and the flood of panic covering allows the "Playah" to cash out and book the gain.

Underlying the behavior of long term holders---mutual funds, pensions, insurers, endowments, SWFs---is the chase for yield. That chase--also a direct result of the Fed and other CBs actions---forces people into equities, sovereign bonds and even junk, while either their bylaws or lack of yield keeps them away from commodities (oil is another story altogether).

Two things seemed clear to me listening to Yellen mumble through her testimony last week. One is that she is not especially clever despite her academic pedigree, and two, she has no concept of what a powder keg she and her CB peers have created in the world's financial system. (A close friend who did time on the policy committee of a major central bank says as much; he claims CBs are winging it, many are scared, and few understand the actual mechanics and psychology that determine market movements.)

The real bomb is the lack of liquidity, especially in the sovereign paper used by everyone to fund positions (via re-hypothecation). Because everything is geared fast forward, there is no real bid under markets. The chase for yield keeps everyone long, but in the event some marginal percent of players want to exit, nobody is there to take them out.

The music can play a long time, though not if the taper continues. The market needs that constant juice. Right now Yellen is still effectively monetizing the US deficit, but as QE slips below $40-50 billion per month, there's deficit overflow she isn't neutralizing. That has to be absorbed by somebody, which means the funds have to come out of something else (or another serial printer will have to pick up the slack).

Of course Yellen might blink and keep a full monetization of the debt, but if she doesn't, there will be stress. Musical chairs usually has one chair removed at a time. We're all playing a game where most, if not all, the chairs are gone.

Look for stresses. They will be small at first, but accelerate as---of if---tapering continues. They could show up in sovereign rates, could show up in emerging market equities (which have exploded to the upside recently), could show up in leveraged spec real estate. (It seems to be showing up in the high-end art market already, though that is just a canary at best.) It'll take a few months, I suspect, so let it breathe.

[Typhoon]

chindit13 - Wed, May 14, 2014 - 08:16 AM

There is a Marginal Conjured Dollar....

...that renders every previously printed dollar worthless.

Is the Fed near that point?

Tough to say. The Fed has a $4.3 trillion balance sheet in a $16.8 trillion economy, for a BS/GDP of .256

In Japan, the BoJ has a $1.57 trillion balance sheet in a $4.9 trillion economy, for a BS/GDP of .320

The Swiss National Bank has a balance sheet of $556 billion in a $365 billion economy, for a BS/GDP of 1.52

Nobody seems worried about Switzerland, despite the massive SNB balance sheet. Of course much of the SNB BS is a result of pegging the Sfr to the euro. 86% of the BS is FX reserves. Still, since mot of that is euros, then the SNB's fortunes are tied rather intimately with the future of the euro.

Switzerland gets a free pass amongst the market worriers, but I don't quite understand why. The country has two massive banks whose combined assets are a multiple of Swiss GDP (talk about TBTF), and the two banks (CS and UBS) are still levered near 30:1. In addition, both hold on the order of 25% worth of Swiss GDP in loans to emerging markets.

So while the Fed's balance sheet is worrying, and it cannot continue to balloon at the rate it has since November 2009, it may not be quite as worrying as Japan and Switzerland. Perhaps that is small consolation, but if the Fed's BS peaks under $5 trillion, and gets worked down as positions mature, maybe smoke and mirrors pulled off a miracle.

Odds are still against that, but there is a chance.

[Mr. Perfect]

Also known as a bubble.

The unavoidable outcome of Keynesian policy.

[Nonc Hilaire]

Bubble. Momentum. Strong/weak hands. Some days I think economists make their careers out of neologisms and cute word selection. I never really paid much attention to economcs before Bush used our tax money to bail out the big banks, but it didn't take long to self-educate.

Economics would not be that obscure if its academic plenipotentiaries didn't insist on the hyperjargonification of their multitudinal vocabularial effluences.

[Mr. Perfect]

Bubble. Momentum. Strong/weak hands. Some days I think economists make their careers out of neologisms and cute word selection. I never really paid much attention to economcs before Bush used our tax money to bail out the big banks, but it didn't take long to self-educate.

Apparently the education process is in the early stages, else you would have said "Bush and the Democrats".

And of course you didn't mention why it happened in the first place.

People can be educated here:

IyqYY72PeRM

Economics would not be that obscure if its academic plenipotentiaries didn't insist on the hyperjargonification of their multitudinal vocabularial effluences.

Some things about the consequences of incuriosity come to mind.

[Heracleum Persicum]

.

ECB Plans Negative Rate on Bank Deposits

When it meets on June 6, SPIEGEL has learned, the European Central Bank may implement a negative interest rate for financial institutions seeking to park their money at the Frankfurt powerhouse. The move is aimed at spurring loans.

good for German stocks

.

[Nonc Hilaire]

Italy will include prostitution and illegal drug sales in the gross domestic product calculation this year.

Now they have put the ass back into assets, they just need to bail out Berlesconi so he can show them how to re-hypothecate their new GDP.

http://www.bloomberg.com/news/2014-05-2 ... udget.html

[Typhoon]

Italy will include prostitution and illegal drug sales in the gross domestic product calculation this year.

Now they have put the ass back into assets, they just need to bail out Berlesconi so he can show them how to re-hypothecate their new GDP.

http://www.bloomberg.com/news/2014-05-2 ... udget.html

Tip of the hat to the Italians for their creativity.

[Typhoon]

Saw this US retail list of alledged headlines posted:

Wal-Mart Profit Plunges By $220 Million as US Store Traffic Declines by 1.4%
Target Profit Plunges by $80 Million, 16% Lower Than 2013, as Store Traffic Declines by 2.3%
Sears Loses $358 Million in First Quarter as Comparable Store Sales at Sears Plunge by 7.8% and Sales at Kmart Plunge by 5.1%
JC Penney Thrilled With Loss of Only $358 Million For the Quarter
Kohl’s Operating Income Plunges by 17% as Comparable Sales Decline by 3.4%
Costco Profit Declines by $84 Million as Comp Store Sales Only Increase by 2%
Staples Profit Plunges by 44% as Sales Collapse and Closing Hundreds of Stores
Gap Income Drops 22% as Same Store Sales Fall
American Eagle Profits Tumble 86%, Will Close 150 Stores
Aeropostale Losses $77 Million as Sales Collapse by 12%
Best Buy Sales Decline by $300 Million as Margins Decline and Comparable Store Sales Decline by 1.3%
Macy’s Profit Flat as Comparable Store Sales decline by 1.4%
Dollar General Profit Plummets by 40% as Comp Store Sales Decline by 3.8%
Urban Outfitters Earnings Collapse by 20% as Sales Stagnate
McDonalds Earnings Fall by $66 Million as US Comp Sales Fall by 1.7%
Darden Profit Collapses by 30% as Same Restaurant Sales Plunge by 5.6% and Company Selling Red Lobster
TJX Misses Earnings Expectations as Sales & Earnings Flat
Dick’s Misses Earnings Expectations as Golf Store Sales Plummet
Home Depot Misses Earnings Expectations as Customer Traffic Only Rises by 2.2%
Lowes Misses Earnings Expectations as Customer Traffic was Flat

Is US [mid to low range] retail like the proverbial skateboarder hitting a railing crotch first?

[Typhoon]

Negative interest rate | ECB cuts banks deposit rate to -0.1%

[Typhoon]

Saw this US retail list of alledged headlines posted:

Wal-Mart Profit Plunges By $220 Million as US Store Traffic Declines by 1.4%
Target Profit Plunges by $80 Million, 16% Lower Than 2013, as Store Traffic Declines by 2.3%
Sears Loses $358 Million in First Quarter as Comparable Store Sales at Sears Plunge by 7.8% and Sales at Kmart Plunge by 5.1%
JC Penney Thrilled With Loss of Only $358 Million For the Quarter
Kohl’s Operating Income Plunges by 17% as Comparable Sales Decline by 3.4%
Costco Profit Declines by $84 Million as Comp Store Sales Only Increase by 2%
Staples Profit Plunges by 44% as Sales Collapse and Closing Hundreds of Stores
Gap Income Drops 22% as Same Store Sales Fall
American Eagle Profits Tumble 86%, Will Close 150 Stores
Aeropostale Losses $77 Million as Sales Collapse by 12%
Best Buy Sales Decline by $300 Million as Margins Decline and Comparable Store Sales Decline by 1.3%
Macy’s Profit Flat as Comparable Store Sales decline by 1.4%
Dollar General Profit Plummets by 40% as Comp Store Sales Decline by 3.8%
Urban Outfitters Earnings Collapse by 20% as Sales Stagnate
McDonalds Earnings Fall by $66 Million as US Comp Sales Fall by 1.7%
Darden Profit Collapses by 30% as Same Restaurant Sales Plunge by 5.6% and Company Selling Red Lobster
TJX Misses Earnings Expectations as Sales & Earnings Flat
Dick’s Misses Earnings Expectations as Golf Store Sales Plummet
Home Depot Misses Earnings Expectations as Customer Traffic Only Rises by 2.2%
Lowes Misses Earnings Expectations as Customer Traffic was Flat

Is US [mid to low range] retail like the proverbial skateboarder hitting a railing crotch first?

On the other hand:

[Typhoon]

So who can Americans thank?

Could it be

[Nonc Hilaire]

Is US [mid to low range] retail like the proverbial skateboarder hitting a railing crotch first?

I think it's the US [mid to low range] retail customer who hit the railing. The retailers are innocent bystanders.

[Heracleum Persicum]

So who can Americans thank?

Could it be

self explanatory

seconded

.

[Typhoon]

So who can Americans thank?

Could it be

On the other hand,

the thanks may be more short lived than most expect:

Confessions of Ben Bernanke

~ Stephanie Pomboy

fKviBNo76iI

Continue QE and lose dollar hegemony or taper QE and risk higher interests.

[Nonc Hilaire]

Excellent video.

[Mr. Perfect]

Teabagger talking points for over 5 years now.

Everyone becomes a teabagger in the end.

[noddy]

the slow grind downward economically is the true frog boiling going on right now.

[Parodite]

Americans believe in resurrection.