Nov 302018
 
 November 30, 2018  Posted by at 11:11 am Finance Tagged with: , , , , , , , , , , ,


Emil Nolde Zwei Schwimmer1914

 

Rising Rates Are Killing The Housing Market (Roberts)
Libor Surges Most In 8 Months, Squeezing $200 Trillion In Credit (ZH)
How Jay Powell Could Be Walking His Tightrope (Street)
German Police Raid Deutsche Bank Offices In Money Laundering Probe (CNBC)
Manafort’s Passport Stamps Don’t Match “Fabricated” Assange Story (ZH)
Cohen Pleads Guilty For Misstatements To Congress About Russia (Hill)
Has Prime Minister May Just Signed Her Own Warrant Of Execution? (Peston)
Ukraine’s Pinochet Scenario (Nation)
Poroshenko: IMF Endorses Key Indicators Of 2019 Ukraine Budget (UNIA)
Ukraine Bars Entry To Russian Men Of Combat Age Citing Invasion Fears (R.)

 

 

Hard to do a relevant news aggregator today. News has largely been replaced by opinion and unproven allegations. Whether it’s Assange, or Trump, or Russia, or any combination of the three, any tidbit of ‘news’ is greeted with the re-submission of all those tidbits entered earlier that died off because there was no proof for them (either).

Well, at least this first article is real, though Lance Roberts ignores that there really is no housing market today, no more than there is a stock market. Both have been replaced by central bank manipulation which prevents prioce discovery. And yes, both are under severe threat from rates creating that price discovery.

Rising Rates Are Killing The Housing Market (Roberts)

The housing recovery is ultimately a story of the “real” employment situation. With roughly a quarter of the home buying cohort unemployed and living at home with their parents, the option to buy simply is not available. Another large chunk of that group are employed but at the lower end of the pay scale which pushes them to rent due to budgetary considerations and an inability to qualify for a mortgage. Even after a “decade of recovery,” the full-time employment-to-population ratios remain well below levels normally associated with a strong economy, and wage growth remains stagnant. Both of which makes home affordability an issue.

Despite much of the media rhetoric to the contrary, I have warned repeatedly that rising rates would negatively impact the housing market which was still being supported by low interest rates. The mistake that mainstream analysts made was in the assumption that the recent increases in real estate prices were largely driven by first time home buyers creating an organic market. The reality, however, has been that market increases were being driven by speculators in the “buy to rent” game.

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Poeple have been calling for a replacement for Libor for years, but nothing has been forthcoming.

Libor Surges Most In 8 Months, Squeezing $200 Trillion In Credit (ZH)

While stocks, and with a notable delay bonds, were happy to run with Powell’s dovish reversal on Wednesday, one key market – arguably the most important one for financial conditions when it comes to the broader economy – has refused to respond. Earlier today, instead of reacting to what has been interpreted as the Fed Chair’s “dovish repricing” of future rate hike expectations, 3 month USD Libor jumped over 3 basis points to 2.73813%, the highest level in more than ten years. This was biggest daily jump in 3M Libor since March, and the second highest Libor increase of 2018. As a result, dollar funding conditions as measured by Libor-OIS have also tightened notably, as the spread widened to 36bp from 33.8bp prior session, and is once again approaching the levels seen during the spike earlier this year.

The reason why rising Libor remains a major risk to financial conditions is its footprint can be found everywhere, from OTC interest rate swaps, to leveraged loans – considered by many as the locus of the next credit crisis – to retail mortgages, to complex securitizations. According to the TBAC, just about $200 trillion in instruments are exposed to Libor’s interest rate footprint. Most affected by this ongoing rise may be the bond market, which has also been hit with the double whammy of tumbling oil, which earlier today dipped below $50/barrel, a price widely seen as a “red-line” for junk bond investors, below which some may sell their exposure indiscriminately. And since energy is one of the largest components of the junk bond index, it is only a matter of time before contagion spread from oil, through highly leveraged energy producers to the rest of the market.

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Jay Powell’s power is an enormous threat to all Americans.

How Jay Powell Could Be Walking His Tightrope (Street)

Federal Reserve Chairman Jerome Powell has sounded increasingly measured in his last two public appearances. But there could be a method to his madness. After Powell made reference to the possibility that there will be fewer interest rate hikes in 2019 than initially expected at The Economic Club in New York, stocks surged. Powell said interest rates are “just below” neutral, meaning that there may not be all four rate hikes in 2019. For now, it seems there’s a ‘One and Wait’ policy at the Fed. “He really didn’t mean to pigeon-hole himself into saying ‘I’m committed to three or four more rate hikes’ through 2019,” said Danielle DiMartino Booth, former adviser to the president of the Dallas Federal Reserve.

Now that housing prices, oil prices, and even the stock market have all dropped considerably of late, four rate hikes may not be a good thing for the economy. Still, there’s a flip side to Powell’s walking back of his hawkishness. He doesn’t want to seem as if he’s yielding to President Trump’s wishes that the Fed slows down its rate hiking path. Powell had been hawkish for much of 2018, so in his latest remarks, “he really had to back off of that without looking like he was kowtowing to politics,” DiMartino said. “He wanted to reorient, if you will, investors away from their rigidity with saying ‘oh my gosh,’ we’ve got at least four more in 2019,'” DiMartino added.

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Raids continue today, Deutsche shares hit all time low of €8.03.

German Police Raid Deutsche Bank Offices In Money Laundering Probe (CNBC)

German police raided Deutsche Bank’s offices in Frankfurt on Thursday in a probe of money laundering against the country’s flagship lender. Two Deutsche Bank staff members are suspected of helping clients set up off-shore businesses to launder money gained from criminal deeds. Some 170 police officers, prosecutors and tax inspectors searched six of Deutsche Bank’s offices Thursday morning, Frankfurt’s public prosecutor’s office said in a statement. Numerous written and electronic business documents were seized, it added. “We confirm that police are currently investigating our bank at various locations in Germany. The investigation concerns the Panama Papers,” Deutsche Bank said in a statement, according to a CNBC translation.

[..] The public prosecutor’s office in Frankfurt said an evaluation of data from the Panama Papers had triggered suspicion that the bank may have helped customers create offshore companies in tax havens around the world. In 2016 alone, more than 900 customers with a business volume of 311 million euros ($353.6 million) were thought to have been cared for by a Deutsche Bank subsidiary based in the British Virgin Islands, the prosecutor said. [..] Since 2015, the lender — which once had ambitions of competing on equal terms with Wall Street’s banking giants — has endured a failed stress test in the U.S., several attempts to restructure, a leadership shake-up and a ratings downgrade. Shares of the bank have tumbled almost 50 percent this year.

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More on that stupid Guardian story. WikiLeaks collects donations to sue the paper.

Manafort’s Passport Stamps Don’t Match “Fabricated” Assange Story (ZH)

Further evidence that The Guardian “entirely fabricated” a report that former Trump campaign chairman Paul Manafort visited Julian Assange in 2013, 2015 and the spring of 2016; his passports… The Washington Times reports that Manafort’s three passports reveal just two visits to England in 2010 and 2012, which support his categorical denial of the “totally false and deliberately libelous” report in The Guardian, which said that Manafort visited Assange in the Ecuadorian Embassy – ostensibly to coordinate on the WikiLeaks release of Hillary Clinton’s emails.

The Times does note that Manafort could have conceivably entered the UK from another European country and not received a stamp – however a representative for Manafort insisted to the Times that Manafort has only made those two visits to England since 2008, and that a libel suit against the Guardian is under discussion. While two of Manafort’s passports were entered as evidence at his tax evasion trial – something that The Guardian’s Luke Harding and Dan Collyns could have easily looked up – the Times has obtained a copy of his third passport which confirms the two visits. “His attorney explained the passports this way: One was lost, one was used to submit to foreign embassies for visas, and one was used as a backup. Manafort later found the third passport.” -Washington Times

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A thousanda articles today based on hearsay. At least the Hill says ‘misstatements’. not ‘lies’. But yeah, more Mueller docs out into the open.

Cohen Pleads Guilty For Misstatements To Congress About Russia (Hill)

President Trump’s former personal attorney Michael Cohen on Thursday pleaded guilty for misstatements he made to Congress while testifying about his contacts with Russians during the 2016 presidential campaign. Cohen appeared in a federal court in Manhattan after reaching a deal with special counsel Robert Mueller. He pleaded guilty to making a false statement about the effort to build a Trump Tower in Moscow during the 2016 presidential campaign while testifying before Congress, according to court documents, and made false statements about the timing of the project. Cohen made the misstatements while testifying before two congressional intelligence committees in 2017.

He also agreed to cooperate with Mueller’s investigation, according to a plea deal released by the special counsel. The plea from Cohen marks the first time he has been charged by Mueller as part of the special counsel’s investigation into Russian election interference and possible collusion between Trump’s campaign and Moscow. President Trump blasted Cohen as a “weak person” following the reports of his pleading guilty. The president accused Cohen of “lying” in order to receive a reduced sentence. “He’s trying to get a much lesser sentence by making up the story,” Trump said, adding “everybody knows about this deal.”

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“If she truly means what she says, that she has no plan B, she will be gone as PM within hours of losing the vote..”

Has Theresa May Just Signed Her Own Warrant Of Execution? (Peston)

The prime minister might have been a bit too clever when attacking Jeremy Corbyn’s and Labour’s opposition to her Brexit deal. Some four hours in to her 14-hour flight to the G20 leading nations’ summit in Argentina, she told journalists: “What they are doing is advocating rejecting the deal we negotiated with the EU without having any proper alternative to it. “They say they don’t want ‘no-deal’, but by appearing to reject a temporary backstop they are effectively advocating no-deal, because without a backstop there is no deal.” So, she is accusing Labour of ushering in the kind of economic no-deal calamity – a devastating recession that would see the income of the UK slashed by a tenth – that was painted on Wednesday by the governor of the Bank of England.

Which is a critique Labour will have to answer. But in understanding the true import of what she said, Labour is arguably a sideshow. In couching her attack on Labour in that way she – presumably inadvertently – also accused her estranged allies, Northern Ireland’s DUP, and her own Brexiter MPs of the same crime, because they too hate the backstop that is designed to keep open the border on the island of Ireland (and is seen by critics as driving a wedge between GB and Northern Ireland, and sacrificing the whole UK’s right of self determination).

By advancing the argument that there is no deal without the backstop, she is telling the DUP and her Brexiters that there is no Plan B – that if they vote down her deal on 11 December, it’s off to no-deal hell in a handcart of their own design. But, rightly or not, they do not believe the choice is her backstopped deal or no deal. Which is why they will reject her plan. And what is potentially lethal for her is that they will on Friday feel more obliged to reject and oust her pronto, if as expected they throw out her deal – because how could they support a PM so fatalistic and negative about finding a negotiated backstop-free Brexit? [..] If she truly means what she says, that she has no plan B, she will be gone as PM within hours of losing the vote [..]

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Ukraine withdrew from treaty in September. That opened the way for…

Ukraine’s Pinochet Scenario (Nation)

At first glance, Russia’s seizure of three Ukrainian warships that attempted to enter the Sea of Azov seems to follow a familiar pattern of aggression aimed at solidifying control over the annexed Crimean peninsula. Upon closer inspection, however, there is much more going on here than a dispute over transit rights. By firing upon the Ukrainian vessels, Russia violated the December 2003 agreement on cooperative use of the Sea of Azov, which clearly provides for the unimpeded transit of both military and commercial ships of either country. This was immediately condemned by Washington and other Western capitals.

But it is worth noting that this agreement is explicitly tied to the 1997 Treaty of Friendship between the two countries. Indeed, when Ukraine withdrew from this treaty this past September, many Ukrainian legal experts warned that it would actually undermine Ukraine’s legal standing in the event of a border dispute. In October, therefore, Ukrainian President Petro Poroshenko unilaterally issued a set of directives delimiting Ukraine’s new border in the Azov and Black seas. Little noted at the time, these also apparently contained “an extensive secret section in the form of directives to the Council for National Security and Defense” to be carried out within the next 30 days.

This is where the president’s response to the latest incident becomes interesting. Within hours of the Russian military action, Poroshenko managed to convene his war cabinet, got it to propose martial law nationwide, and demanded that the Rada (Ukraine’s parliament) approve it. No other crisis—not even the presence of Russian troops in Donbass and Crimea—has ever evoked such a draconian response. The decision to do so now, at the onset of the presidential campaign, therefore raised enormous suspicions.

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Really? That’s what the IMF is for? Keep your eyes open for Nordstream 2 news bits. Willy Wonka has steered the country towards finacial disaster.

Poroshenko: IMF Endorses Key Indicators Of 2019 Ukraine Budget (UNIA)

Ukrainian President Petro Poroshenko says that the IMF has endorsed the key indicators of the country’s national budget for 2019 to facilitate further cooperation. “The Head of State informed Madame Lagarde about the adoption and the key parameters of the state budget of Ukraine for the year 2019. Madame Lagarde noted that, according to the IMF’s preliminary estimates, the key indicators of the state budget of Ukraine are in line with the parameters agreed with the Fund,” Poroshenko’s press service said in a follow-up of a telephone conversation between the Ukrainian President and IMF Managing Director Christine Lagarde.

Lagarde also confirmed the IMF’s readiness to continue the good cooperation with Ukraine and to support the country in the implementation of its reforms. It was noted that the IMF stands ready to provide Ukraine with appropriate technical assistance to help improve Ukraine’s fiscal policies and tax administration. During the conversation, it was particularly underlined that the introduction of the martial law does not influence the interaction with the IMF. They also highlighted further steps to be taken in the context of a meeting of the IMF Executive Board in December to discuss the Stand-By Arrangement (SBA) for Ukraine.

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Not the Onion.

Ukraine Bars Entry To Russian Men Of Combat Age Citing Invasion Fears (R.)

Ukraine announced it was barring entry to Russian men between 16-60 years and a senior state security official said Kiev was considering whether to respond in kind with “mirror actions” to the Black Sea incident. Earlier, in a move applauded in Kiev, U.S. President Donald Trump called off a meeting with Russia’s Vladimir Putin in Argentina to signal Washington’s disapproval of Russian behavior in the naval clash with Ukraine. News of the canceled meeting pushed down the Russian rouble, which is sensitive to events that might lead to new sanctions being imposed on Russia.

Announcing the move, President Petro Poroshenko, referring back to Russia’s seizure and subsequent annexation of Crimea in 2014 and its support for separatist uprisings in eastern Ukraine, said it was important to stop full-scale invasion. “These are measures to block the Russian Federation to form detachments of private armies here, which in fact are representatives of the Armed Forces of the Russian Federation,” Poroshenko said. “And not allow them to carry out the operations that they tried to conduct in 2014,” he added. [..] In Moscow, a Russian lawmaker was quoted by RIA news agency as saying Russia had no plans for a reciprocal move to bar Ukrainian men.

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Home Forums Debt Rattle November 30 2018

This topic contains 3 replies, has 3 voices, and was last updated by  Dr. D 1 week, 6 days ago.

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  • #44132

    Emil Nolde Zwei Schwimmer1914   • Rising Rates Are Killing The Housing Market (Roberts) • Libor Surges Most In 8 Months, Squeezing $200 Trillion
    [See the full post at: Debt Rattle November 30 2018]

    #44133

    V. Arnold
    Participant

    Hard to do a relevant news aggregator today. News has largely been replaced by opinion and unproven allegations. Whether it’s Assange, or Trump, or Russia, or any combination of the three, any tidbit of ‘news’ is greeted with the re-submission of all those tidbits entered earlier that died off because there was no proof for them (either).

    LOL, just today? I should think every day.

    Your featured artist, Emil Nolde, is an interesting character with quite a “varied” history.
    Clicking on the picture reveals a not small body of work. Of note to this one was The Skater.

    On another note; the U.S. is milking the Khashoggi murder for everything it’s worth; another $15 billion for an inferior missile defense system (THADD) from the U.S.
    Hahahahahahahahahahahahahahahaha………………………

    #44134

    V. Arnold
    Participant

    At the above; I probably should have named the recipient of the THADD anti-missile system; it’s Saudi Arabia.
    What’s interesting about this is; MBS was negotiating with Russia for their S-400 AA system.
    Things change; especially when a gun is held to your head during the “art of the deal”.
    Still sliming its way forward; Trump(?) and the deep state…

    #44137

    Dr. D
    Participant

    Trouble? Post 3?

    Since we’re pretty sure LIBOR is rigged – even publicly they’ve paid fines 3-4 times – then why is it rising? Are the riggers losing control as price discovery reasserts itself? Do the riggers want it rising? And who would those riggers be? What would be their motives?

    I can only guess Trump-Powell tag-teaming, either actually spoken, or where each knows what the other guy is up to. Trump wants a Fed that blows things up, so he can blame them, (along with a obstructing/investigating Democratic House) which he’s set the groundwork for since the beginning. Then he say “Oh heavens! They said everything was great, however could this have happened???” Then audit them for the first time in 105 years, find out worse than the last audit where $23T was shoveled out to NON-critical, NON-bank, NON-American companies like Toyota, McDonalds, and UBS, along with “small” free loans for wives of NY bankers to buy a few mansions on Long Island. If it’s anything like the 2nd American bank under Jackson, he’ll find all of Congress on the take, payments for P.I.s to blackmail Senators, coordination with foreign secret service agencies, and the like. Then, as the Fed’s “debt” was created illegally and fraudulently — legally called “onerous” debt – the U.S. will discard and repudiate it. Kyle Bass and some other high profile core hedge fund traders are already openly discussing this, but in their case, to default on China as a way to make China pay for 40 years of stolen intellectual property. Point’s the same: we can’t pay, we won’t pay, we never intended to pay. So about that money we owe, take a page from the Greeks: ΜΟΛΩΝ ΛΑΒΕ. We have 300 Million guns and 5,000 nuclear weapons, come and get it. Adam Smith told you in 1775 Anglo governments never pay, were you not listening?

    I’m not saying that’s right, I’m just saying that’s the fact, and was their plan going back as far as 1971. Powell-Trump tag team just makes the Fed go under, instead of the U.S. going under to serve the Fed or the BIS and the Carbon Credit/SDR-dollar, as planned in the 1987 Economist.

    DeutscheBank’s line is probably €10.00, which is where Coco bonds and derivative insurance kicks in. €8.00 is probably the detonator line, over the event horizon if it persists +30 days. Note the stock, the financial, the currency markets didn’t care a bit that the €1.5 Trillion bank, with €40 Trillion derivative book, 10x the size of German GDP, was invaded by 150 police warrants. Nope, everybody’s just keeping their money safe in a bank investigated for massive, trillion-dollar frauds, who has paid more in criminal penalties last year than they made in income. Looks good to me!

    …And THAT’S how rigged the prices are. But that isn’t for nothing. It take massive ammunition to defend DB and keep them from going under, being exposed. So what is being chopped up, killed, and sacrificed instead? I mean besides the Greek (and the British) people?

    Mueller looks desperate now, suborning perjury (4? times) to avoid being held in 1 year solitary confinement for what are essentially minor charges no one else gets investigated for—but I guess we’ll find out shortly. For the Trump thing, so, if what Mueller says is true, we would have had a situation where Putin, the President of Russia, would be a tenant of Trump, the President of America, in Jan 2017. And to have the Russian President be the sub beggar/borrower of the U.S. would somehow be a BAD thing? Optics and leverage for controlling Putin/Russia in the spring of 2017 would have been AWESOME. We need to find who stopped this from happening, because they need to be slapped. If Mueller thinks that would have been bad for American interests, he’s a moron.

    …Most probably nothing, though, since Putin’s not a fool to get himself in that position and nothing happened. Which is why we’re investigating and prosecuting it? Because it never happened? <sigh>

    Are we seeing the real Brexit plan finally? I just read that although Brexit will be bad for Britain, a failed Brexit will be fatal to Brussels, especially the money, as like all soviet socialist bureaucracies, they sucked up virtually the whole economy and they’re still broke at the same time Italy rebels. Now Britain can say “Ooops! See how incompetent we are? You know we never, ever wanted to leave either: can’t you see it in our eyes?” And maybe so, but if all Europe goes down, all that money and even industry will flee BACK to the UK, having no choice as the continent resets, and Britain will dominate again. And normally this would be Britain’s fault, but not when it’s just so clear May wanted to scuttle Brexit and have Britain help their poor European brothers. …Anglo diplomacy at its finest, going back +500 years. Ask the Native Americans how the Anglos act. Always the same. We’ll see.

    How do we know Trump is a Putin puppet? He sanctioned Russia, bombed their allies, kicked out their diplomats, pulled out of the space and nuclear treaties, and put nukes on the border, armed the Ukranians and cancelled the G20 meeting with Putin where he could get further orders. Tricky-tricky that Putin. When Putin uses Trump to nuke Moscow, no one will see it coming. And honestly, if you’re not in America, this is literally what Americans believe.

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