Wednesday, March 4, 2015

Strong Recovery?

(Video, 3:17 min.) What the Nosedive in U.S. Manufacturing Jobs Means

Elliott Wave International: Expert Market Forecasting Using the Elliott ... by Bob Stokes  /  

Also saved in OneNote

Manufacturing jobs were the foundation of the U.S. economy. But since 1979, manufacturing jobs have been disappearing. We've gone from "making things" to "financing things." Learn why this is a harbinger of economic deterioration. 

From Daneric

$INDU--One more ATH

I still think $INDU and others have one more all time high in them--and if they don't, well, let's not fantasize.  Let's see what the utterly complacent Bulls can do--a toi taureau!  GL

Visit StockCharts.com to see more great charts.

More on Dry Bulk

Maritime Executive Logo

submit to reddit

Tough Times for Private Equity Investors

ships

By MarEx 2015-03-03 18:03:32

As global shipping grapples with its worst downturn in 30 years, private equity firms are unwinding massive bets made on the sector in a move set to accelerate a restructuring of the shipping industry.

Private equity invested tens of billions in global shipping after the 2008 financial crisis, but weaker Chinese demand and an oversupply of ships has driven down freight rates and caused firms to idle vessels and in some cases file for bankruptcy.

At least five private-equity backed shipping firms are seeking share listings, though it's unclear whether they will be able to price them to make a profit.

Industry sources also expect mergers and acquisitions to drive more consolidation in one of the world's most fragmented industries. According to shipping services firm Clarkson, 70 percent of the sector's thousands of firms own fewer than 51 vessels.

"People who invested in dry bulk are likely losing their shirts. Those that invested in container ships probably feel disappointed," said Jim Furnivall, managing partner of Alterna Capital Partners.

The New York-based private equity firm had generated "great but not spectacular" gains in its investments in clean tankers, vessels that carry refined products, he said.

Private equity invested $32 billion in shipping from January 2012 to January 2014, maritime fund management firm Tufton Oceanic estimates. This is equivalent to 22 percent of the total value of the world merchant fleet, including ships on order.

Harold Malone, managing director of maritime investment banking at investment bank Jefferies, said private equity exits were likely to "accelerate into 2015 and 2016" after it appeared a number of "potentially terrible" investments had been made, though he said crude tanker investments may turn out better due to a revival in rates last year.

Principal Maritime Tankers Corp, backed by Apollo Global Management, is seeking to raise up to $100 million and container ship operator Costamare Partners LP , supported by York Capital Management, is also hoping to raise $100 million.

Singapore's Miclyn Express Offshore, owned by Australia's Champ Private Equity and Hong Kong's Headland Capital Partners, is eyeing an initial public offering in the next three years.

Asked about their investments, Champ and Apollo declined to comment, while Headland Capital Partners and York Capital did not immediately respond to requests.

ICON Capital, another private equity house, said it was planning to list one of its shipping funds in coming months.

New York, as well as Oslo and Singapore, both important shipping centers, would be among the favored listing locations, financiers said.

MERGERS

Underlining the pressure the global industry is under, China's Winland Ocean Shipping Corp filed for Chapter 11 bankruptcy protection in the United States on February 12, the third known bulk shipping company bankruptcy this month.

"Private equity is forcing and supporting mergers and acquisition deals to do (fleet) roll-ups or listing as a way to exit their positions," said Randee Day, president and chief executive of Day and Partners, a maritime consulting and advisory firm, adding that many investors would sell at a loss.

Day is also interim president of private equity-backed Eagle Bulk Shipping.

Recent mergers have included Excel Maritime Carriers selling a fleet of 34 ships to Star Bulk Carriers. Oaktree Capital Management was the major shareholder in both companies.

Supertanker owner DHT Holdings, whose major shareholders are private equity funds, also acquired Singapore tanker owner Samco Shipholding last September.

SHIP ORDERING SPREE

Shipowners embarked on a massive ordering spree, partly fuelled by private equity, from 2008 which created a glut of tanker, container ship and dry bulk shipping capacity.

A balance between the fleet and cargo demand growth in the dry bulk sector expected last year failed to materialize, amid an uncertain global economic outlook and slower growth in China, the world's biggest dry bulk market.

This has put more pressure on cargo and ship prices.

The Baltic dry index - the industry benchmark for freight rates - has plunged to an all-time low.

The value of a new tanker or dry cargo vessel is 13 percent lower than 10 years ago, said Ralph Leszczynski, head of research at ship broker Banchero Costa.

Five-year old secondhand ships are around 35 percent cheaper, and average daily freight rates for tankers and dry cargo ships are also below 2010 levels, he said.

Tuesday, March 3, 2015

$INDU--One more ATH

I think this price pattern requires one more all time high to make the long, long in coming TOP.  This should happen soon--days, not weeks.  GL

Visit StockCharts.com to see more great charts.

Natgas (from friend)

 
 

Ron Morin @MorinRon

     

Trading ETFs: $NATGAS--Patience http://t.co/DOnJ14hmEI - Mar 03

randall millard @randadtrade

 

@MorinRon 1.80 to 4.00ish this year, difficult long with winter on downslope of bell curve. supply still up with demand flat to down.

   
 

01:24 PM - 03 Mar 15

   
 
 

 

 

Reply to @randadtrade

Retweet

Favorite

 
 

Stock Market Bubble: Wall Street Is Ecstatic As The NASDAQ Closes Above 5000

Stock Market Bubble: Wall Street Is Ecstatic As The NASDAQ Closes Above 5000

When to exit stocks?

John Hussman, Hussman Funds 

Profile|

John Hussman: Plan To Exit Stocks Within The Next 8 Years? Exit Now

Mar. 2, 2015 8:36 AM ET  

Excerpt from the Hussman Funds' Weekly Market Comment (3/2/15):

Unless we observe a rather swift improvement in market internals and a further, material easing in credit spreads – neither which would relieve the present overvaluation of the market, but both which would defer our immediate concerns about downside risk – the present moment likely represents the best opportunity to reduce exposure to stock market risk that investors are likely to encounter in the coming 8 years.

Last week, the cyclically-adjusted P/E of the S&P 500 Index surpassed 27, versus a historical norm of just 15 prior to the late-1990’s market bubble. The S&P 500 price/revenue ratio surpassed 1.8, versus a pre-bubble norm of just 0.8. On a wide range of historically reliable measures (having a nearly 90% correlation with actual subsequent S&P 500 total returns), we estimate current valuations to be fully 118% above levels associated with historically normal subsequent returns in stocks. Advisory bullishness (Investors Intelligence) shot to 59.5%, compared with only 14.1% bears – one of the most lopsided sentiment extremes on record. The S&P 500 registered a record high after an advancing half-cycle since 2009 that is historically long-in-the-tooth and already exceeds the valuation peaks set at every cyclical extreme in history but 2000 on the S&P 500 (across all stocks, current median price/earnings, price/revenue and enterprise value/EBITDA multiples already exceed the 2000 extreme). Equally important, our measures of market internals and credit spreads, despite moderate improvement in recent weeks, continue to suggest a shift toward risk-aversion among investors. An environment of compressed risk premiums coupled with increasing risk-aversion is without question the most hostile set of features one can identify in the historical record.

Short term interest rates remain near zero, 10-year bond yields have declined below 2%, and our estimate of 10-year S&P 500 total returns has declined to just 1.4% (see Ockham’s Razor and the Market Cycle for the arithmetic behind these historically-reliable estimates). Recent weeks mark the first time in history that our estimates of prospective 10-year returns on all conventional asset classes have simultaneously declined below 2% annually. We don’t expect a portfolio mix of stocks, bonds and cash to achieve any meaningful return over the coming 8-year period.The fact that the financial markets feel wonderful right now isprecisely because yield-seeking speculation and monetary distortions have raised security prices today to levels where they are likely to stand years from today – with steep roller-coaster rides in the interim.

...

A Who’s Who of Awful Times to Invest (at record highs, with overlays negative)

The chart below shows historical instances where overvalued, overbought, overbullish conditions matched current extremes, and where bubble-tolerant overlays (based on measures of market internals and credit spreads) were also unfavorable, and where the S&P 500 had established an all-time high. On less stringent criteria, there would also be additional instances shown in 2010 and 2011.

As I’ve noted before, if one thing was truly different about the yield-seeking speculation induced by QE in the recent half cycle, it is that QEreduced the overlap between overvalued, overbought, overbullish conditions and periods of deteriorating market internals. The current set of overextended conditions is the most severe variant that we define, and unlike several instances in the half-cycle since 2009, we do not have indications from market action and credit spreads that these extremes are likely to be tolerated for long. A material improvement in the uniformity of market internals would change that assessment, which is why our present concerns are conditional on the evidence as it stands.

(click to enlarge)

Extremes in observable conditions that we associate with some of the worst moments in history to invest include: Aug 1929 (with the October crash within 10 weeks of that instance), Aug-Oct 1972 (with an immediate retreat of less than 4%, followed a few months later by the start of a 50% bear market collapse), Aug 1987 (with the October crash within 10 weeks), July 1999 (associated with a quick 10% market plunge within 10 weeks), another signal in March 2000 (with a 10% loss within 10 weeks, a recovery into September of that year, and then a 50% market collapse), July-Oct 2007 (followed by an immediate plunge of about 10% in July, a recovery into October, and another signal that marked the market peak and the beginning of a 55% market loss), two earlier signals in the recent half-cycle, one in July-early Oct of 2013 and another in Nov 2013-Mar 2014, both associated with sideways market consolidations, and the present extreme.

It’s notable that while these extremes sometimes occurred at the exact market high, other instances were only proximal to those highs, resulting in brief retreats and a final push higher. We don’t know whether the current instance will have consequences similar to the 1929, 1972, 1987, 2000 and 2007 ones, but suffice it to say that these conditions were more notable for their outcomes over the completion of the full market cycle than they were for their immediate outcomes.

...

We’re quite aware, and slightly entertained, by critics who offer me as a poster-child against evidence-based market analysis or markedly unconventional views – half-way into a market cycle, with prices at record highs, and with reliable valuation measures at obscene levels. These will be great fun to save for later, as they were in 2000 and 2007. It should be obvious that our challenges in this half-cycle began with my 2009 decision to stress-test our methods against Depression-era data, having correctly anticipated the tech crash, the financial crisis, both of the associated recessions, having moved to a constructive outlook early in the intervening bull market, and when the long-term benefits our discipline were rather indisputable. Given an incomplete half-cycle at speculative extremes, my sense is that assessments of our discipline will change considerably by the completion of this cycle. I suspect it will still somehow surprise investors how strongly I am inclined to encourage an aggressive or leveraged stance when market conditions justify it (as I did for years in the early 1990’s). Meanwhile, I’ve been my own harshest critic – particularly with regard to the unfortunate timing of my stress-testing decision in 2009 – and have been very open about the challenges that QE and yield-seeking speculation have posed for the methods that resulted: deferring market losses that resulted much more quickly following extremely overextended market conditions in prior historical cycles. Having completed our adaptation to those challenges in mid-2014, and extensively detailing the central lessons, we’re simply focused on executing that discipline.

Our investment horizon is decidedly focused on the complete market cycle. If you are a committed, disciplined buy-and-hold investor with no sensitivity to cyclical market fluctuations (even those as large as the 50% losses of 2000-2002 and 2007-2009), and you fully recognize the depth of cyclical risks that regularly accompanies that strategy, I don’t encourage a deviation from that discipline based on my analysis of market risk. Rather, my only advice is to ensure that the duration of your portfolio is well-aligned with the horizon over which the funds will be spent. The effective duration of the S&P 500 is presently about 50 years, with average bond market duration closer to 6 years, and of course zero duration for cash holdings. So we would estimate a 40-30-30% mix of stocks, bonds, and cash to have an overall portfolio duration of about 22 years here. In our view, an investor with a 20 year spending horizon should presently have no more than 40% of assets invested in the stock market. In any event, our view is that the 10-year nominal total return on such conventional asset allocations is likely to be less than 2% annually.

...

The fact is that since 2000, the S&P 500 has achieved an annual total return of 4.1% annually, and doing so has required a speculative push to valuations exceeding those of every other market cycle in history, including 1929. In the interim, we’ve seen two separate market collapses of 50% and 55%, and I suspect that a third is in the offing. But again, the financial markets feel wonderful here precisely because security prices today already stand at the same levels that are likely to be seen 8-10 years from today, with one or two exciting roller-coaster rides in-between.

Groucho Marx once said “I wouldn’t join any club that would accept me as a member.” I sometimes feel that way about investment analysts and even economists, who often seem to base their arguments (whether bullish or bearish) on relationships that can’t actually be established in the data. I'm always dismayed, for example, by how confidently analyts and economists talk about the relationship between monetary policy and economic outcomes, when the fact is that the level of interest rates, changes in interest rates, and changes in the monetary base provide very little additional forecasting power for GDP, over and above forecasts based on lagged changes in GDP itself. Non-monetary variables such as purchasing manager's indices provide far more information than monetary variables do.

Within the more desirable club of analysts that actually are historically informed, my friend Albert Edwards at SocGen surveys the landscape of valuations, global economic deterioration, weakening profit growth and accelerating earnings downgrades, and writes:

“We are at that stage in the cycle where I begin to doubt my own sanity. I’ve been here before though and know full well how this story ends and it doesn’t involve me being detained in a mental health establishment (usually). The downturn in US profits is accelerating and it is not just an energy or US dollar phenomenon – a broad swathe of US economic data has disappointed in February. One of the positive surprises, payrolls, is a lagging indicator. The $64,000 question is not if, but rather when will investors realise what is going on?”

Albert is exactly right on the sequence here. Generally speaking, joint market action in Treasury yields, credit spreads, commodities, and market internals provide the earliest signal of potential economic strains, followed by the new orders and production components of regional purchasing managers indices and Fed surveys, followed by real sales, followed by real production, followed by real income, followed by new claims for unemployment, and confirmed much later by payroll employment.

...

So how should changes in Fed policy be interpreted? From our perspective, if we were to see an improvement in market internals and credit spreads suggesting a shift back to risk-seeking investor preferences, then yes – an extension of loose Fed policy could amplify that speculation. What we should all remember, however, is what happens when the Fed eases in an environment of risk-averse investor preferences: nothing. Recall that the Fed did not tighten in 1929, but instead began cutting interest rates on February 11, 1930 – nearly two and a half years before the market bottomed. The Fed cut rates on January 3, 2001 just as a two-year bear market collapse was starting, and kept cutting all the way down. The Fed cut the federal funds rate on September 18, 2007 – several weeks before the top of the market, and kept cutting all the way down. Understand that dynamic. The conflicting responses of the stock market to Fed easing can be resolved by remembering that monetary policy should always be examined through the lens of market internals.

$NATGAS--Patience

$NATGAS is either bottoming or going lower--it certainly is not acting impulsive here.  Be patient, let it work out.  GL

Visit StockCharts.com to see more great charts.

2 trillion at negative yield

STOCKMAN'S CORNER

The Draghi Derangement: $2 Trillion Euro Government Bonds Trading At Negative Yield

by David Stockman • March 2, 2015

Tweet about this on TwitterShare on FacebookShare on LinkedInPrint this pageEmail this to someone

That investors anywhere in this age of fiscal profligacy would pay to own the notes and bonds of sovereign states is a testament to the financial deformations of modern central banking. But the fact that nearly $2 trillion of debt issued by European governments is currently trading at negative yields——now that’s a flat-out derangement.  After all, the aging, sclerotic economies of the EU have been making a bee line toward fiscal insolvency for most of the last decade.

Historical Data Chart

So it goes without saying that this giant agglomeration of pay-to-own government debt is not reflective of an outbreak of fiscal rectitude or any other rational economic development. It’s purely an artificial trading result stemming from central bank destruction of every semblance of honest price discovery. In this case, the impending ECB purchase of $70 billion of government debt and other securities per month for the next two years has transformed the financial casinos of Europe and elsewhere into a front runner’s paradise.

As today’s Bloomberg piece tracking Europe’s $2 trillion of exuberant irrationality makes clear, sovereign bond prices are soaring because traders are accumulating, not selling, in anticipation of the ECB’s big fat bid hitting the market in the weeks ahead:

“It is something that many would not have pictured a year ago,” said Jan von Gerich, chief strategist at Nordea Bank AB in Helsinki. “It sounds very awkward in a sense, but if you look at it more, the central bank has a deposit rate in negative territory, and there’s a huge bond-buying program coming. People are holding on to these bonds and so you don’t have many willing sellers.”

Needless to say, this is the opposite of at-risk price discovery; it amounts to shooting fish in a barrel. Never before have speculators been gifted with such stupendous, easily harvested windfalls. And these adjectives are not excessive. The hedge fund buyers who came to the game early after Draghi’s “anything it takes”ukase have enjoyed massive price appreciation, but have needed to post only tiny slivers of their own capital, financing the balance at essentially zero cost in the repo and other wholesale funding venues.

Indeed, the more risk, the bigger the windfall. German yields have now been driven below the zero bound on all maturities through seven years, emboldening speculators to move out on the risk curve. So doing, they have gorged on peripheral nation debt and have been generously rewarded. In the case of the 10-year bond of Ireland—-a state which was on the edge of bankruptcy only a few years ago—-leveraged speculator gains are now deep into three figures.

And there is nothing mysterious about the bond math which caused such munificent returns. After peaking above 12% at the time of the crisis, the Irish bond has rallied with nearly maniacal energy and has now broken under 1%.

Historical Data Chart

And, no, there has not been an Irish miracle since the dark days of 2009-2011. The suggestion to that effect, in fact, is just one more manifestation of the corrupted Keynesian narrative promulgated by the central banks, their accomplices in the finance ministries and the EU and IMF—along with the Cool Aid purveyors in the MSM.

In fact, Ireland’s real GDP is still 4.5% below its 2008 peak level. All the current MSM cheerleading is about last year’s 3.5% rebound, but that’s just context-free Keynesian jabberwocky. Ireland was so deep in the hole that it needed double digit gains to get back on track and have any prospect of growing out from under its gargantuan debt. But the fact of the matter is that as of Q3 2014, Ireland still had recovered only about 55% of the GDP lost during its financial crisis plunge.

Historical Data ChartIt does not take much reflection to recognize that neither the ECB nor the apparatchiks in Brussels have repealed the business cycle. Nor have they built a moat around Europe to shield the eurozone economies from the gale-force deflationary headwinds now emanating from China and the EM generally. So why is it reasonable to think that Ireland’s GDP will grow at 3.5% forever, world without end?

In fact, there will be another macroeconomic dislocation one of these quarters. There always is, and most especially in a global economy that has been artificially bloated and distended by the greatest spree of central bank monetary stimulus in human history. Yet none of these palpable risks are visible to Europe’s financial suzerains because the rosy future they continuously posit beyond the next quarter is based on pure hopium.

By contrast, what will actually happens around the bend does not take too much imagination.  For all the excitement about Ireland’s so-called “recovery”, its debt-to-GDP ratio has not even budged since its crisis era eruption.

Historical Data ChartIt is to be wondered. Can these Keynesian dream walkers say interest rate normalization? In a normalized world, Ireland’s public debt will generate a 5-7% of GDP interest burden.

Any effort to off-set that through steep tax increases or deep welfare state retrenchment will unleash a Syriza style political upheaval focused on the devastating truth behind Ireland’s phony turnaround. Namely, that the Irish debt has no sustainable political legitimacy because it was forced on the Irish government at gunpoint by Brussels in order to save Ireland’s insolvent banks—along with the British, German, French and other Eurozone institutions which had gorged on Irish paper during the earlier “Irish miracle”.

In short, the sub-1% yield on the Irish 10-year note is an economic travesty. It fails to encompass the outright certainty that Ireland cannot grow out from under its debt at any time soon; and that it will eventually—likely sooner than later—-experience another macro-economically driven fiscal crisis that will bring default risk to the doorstep of its privately traded debt.

Let’s see. What sentient “investor” in Ireland’s privately held government debt, who might be alert enough to notice Tsipras and Varoufakis twisting in the wind, wants to be “primed” by Herr Schaueble and his assigns and successors? That possibility alone is enough to justify several hundred basis points of “risk” margin in Ireland’s bond yield.

And that’s not the half of it. How is it possible to believe that the risk the euro will experience a disorderly break-up has been reduced to zero? Yet that’s exactly what is priced into eurozone debt.

As Bloomberg further noted, 88 of 346 European sovereign debt issues tracked in its index are now trading a negative yields. Throughout the periphery—-government debt trades at zero risk of a euro break-up in the midst of a Greek debt crisis that manifestly will end-up in “grexit”. There is positively no sustainable solution—beyond a few more rounds of kick the can for two weeks— that can bridge the yawning gap between Greece and its German paymaster.

Even when investors extend maturities, and move away from the region’s core markets, returns are becoming increasingly meager. Ireland’s 10-year yield slid below 1 percent for the first time this week, Portugal’s dropped below 2 percent, while Spanish and Italian rates also tumbled to records.

In fact, the political foundation of the eurozone is already on its last leg—–as is evident in the utterly obsequious posture of the quasi-bankrupt governments of Portugal and Spain with respect to Greece’s pleas for relief. The latter were the most vociferous opponents of relief at the EC meeting— remonstrating even more Germanically than the Germans—–owing to the transparent fear that even a tidbit of justice for Greece would mean a swift ejection from the seats of power by their voters in favor of Syriza-style insurgents.

And now comes word that a third Greek bailout in the range of $50 billion is being cooked up in Brussels. And within this absurd new mountain of debt, approximately $17 billion of the subscription would be on the accounts of Portugal, Spain, Italy and Ireland.

C’mon!  What remains of democracy in the EU will bring about a euro shattering crisis long before the deflation-bashing Keynesians and statists in Brussels and Frankfurt can figure out what is hitting them.

Needless to say, when the eurozone does crack-up, today’s $2 trillion of negative yielding government bonds will undergo a spectacular collapse. It will become known as the bonfires of the subprime sovereigns.

Nor will the German issues among the 88 negative yielders escape the day of reckoning.  German business—especially its independent mid-sized firms—is self-evidently a force to be reckoned with. But the German economy was only recently the sick man of Europe and its statist interventions and taxes are less onerous only compared to France and the rest of the enterprise-killing European social democracies.

At the end of the day, Germany has enjoyed a modest economic expansion since 2008 only because it has been able to export its high value industrial engineering and consumer performance products to the credit driven booms in China and southern Europe. As these egregious bubbles deflate—-so will Germany’s red hot exports and temporarily superior economic growth trend.

The prospect that German’s export machine will stumble badly in the coming years in itself makes a mockery of the ludicrously low 35 bps yield on its 10-year bond.  But the speculators who are piling into it anyway on the basis of Draghi’s impending big fat bid need to riddle us this.

Who will get stuck with the multi-hundred billion eurozone bailout guarantees when the rest of the EU walks?  To save its credit, the one word Berlin will not be declaiming is nein!

Mario Draghi will surely prove to by one of history’s greatest monetary villains and cranks. Back in July 2012, the euro was already well beyond rescue, and the PIIGS needed an exit—-orderly or otherwise—from the debt chains they had undertaken during the original euro boom.

But in three destructive words, Draghi crushed price discovery for the duration. So doing, he led the eurozone into the insanity summarized in today’s Bloomberg post:

by David Goodman and Lukanyo Mnyanda at Bloomberg

The European Central Bank’s imminent bond-buying plan has left $1.9 trillion of the euro region’s government securities with negative yields.

Germany sold five-year notes at an average yield of minus 0.08 percent on Wednesday, a euro-area record, meaning investors buying the securities will get less back than they paid when the debt matures in April 2020.

By the next day, German notes with a maturity out to seven years had sub-zero yields, while rates on seven other euro-area nations’ debt were also negative. While some bonds had such yields as far back as 2012, the phenomenon has gathered pace since the ECB’s decision to cut its deposit rate to below zero last year.

Even when investors extend maturities, and move away from the region’s core markets, returns are becoming increasingly meager. Ireland’s 10-year yield slid below 1 percent for the first time this week, Portugal’s dropped below 2 percent, while Spanish and Italian rates also tumbled to records.

“It is something that many would not have pictured a year ago,” said Jan von Gerich, chief strategist at Nordea Bank AB in Helsinki. “It sounds very awkward in a sense, but if you look at it more, the central bank has a deposit rate in negative territory, and there’s a huge bond-buying program coming. People are holding on to these bonds and so you don’t have many willing sellers.”

Bond Indexes

Eighty-eight of the 346 securities in the Bloomberg Eurozone Sovereign Bond Index have negative yields, data compiled by Bloomberg show. Euro-area bonds make up about 80 percent of the $2.35 trillion of negative-yielding assets in the Bloomberg Global Developed Sovereign Bond Index, the data show.

Germany’s seven-year yield declined three basis points, or 0.03 percentage point, this week to 0.019 percent as of 5 p.m. London on Friday. The rate reached minus 0.017 percent on Feb. 26, the lowest on record. The 2 percent note due in January 2022 rose 0.175, or 1.75 euros per 1,000-euro ($1,120) face amount, to 113.545. The nation’s 10-year rate fell four basis points from Feb. 20 to 0.33 percent and touched a record-low 0.283 percent on Thursday.

As part of the ECB’s 1.1 trillion-euro quantitative easing plan, the central bank will buy government bonds due between two- and 30-years, including those with negative yields, President Mario Draghi said in January. Policy makers may flesh out more details when they meet in Cyprus on March 5.

The ECB is trying to avert a deflationary spiral in a region that’s been hobbled by a sovereign debt crisis and two recessions since 2008. Investors have accepted having to pay euro-area governments to lend to them as the Frankfurt-based central bank lowered its deposit rate, the charge levied on lenders to park excess cash at the ECB overnight, to minus 0.2 percent in September.

The region’s bonds were further boosted this week as euro-area finance chiefs approved an extension of financial aid for Greece. The nation’s three-year yields, which reached 21.91 percent on Feb. 10, the highest since Greece restructured its debt in 2012, fell 224 basis points this week, to 14.39 percent.

Euro-Area Negative-Yield Bond Universe Expands to $1.9 Trillion – Bloomberg Business.

Monday, March 2, 2015

Bad Bank (brought to my attention by friend, aaajoker)

"Spectacular Developments" In Austria: Bail-In Arrives After €7.6 Billion Bad Bank Capital Hole "Discovered"

Tyler Durden's picture

Submitted by Tyler Durden on 03/01/2015 19:59 -0500

Slowly, all the lies of the "recovery", all the skeletons in the closet, and all the bodies swept under the rug are emerging.

Moments ago, Austrian ORF reported that there have been "spectacular developments" in the case of the Hypo Alpe Adria bad bank, also known as the Heta Asset Resolution, where an outside audit of Heta's balance sheet exposed a capital hole of up to 7.6 billion euros ($8.51 billion) which the government was not prepared to fill, the Austrian Financial Market Authority said.

As a result, according to Reuters, the bad bank that was created in the aftermath of the Hypo collapse, is itself about to be unwound, as the bad bank itself goes bad!

"Austria's Financial Market Authority stepped in on Sunday to wind down "bad bank" Heta Asset Resolution and imposed a moratorium on debt repayments by the vehicle set up last year from the remnants of defunct lender Hypo Alpe Adria."

In short: Austria just cut off state support of what was until this moment a state-backed, wind-down vehicle and a key pillar of trust in what was already a shaky financial system.

Not surprisingly, today's shock announcement comes a week after Austria's Standard reported that up to a five billion euro impairment at Heta would take place, a report which the Finance Ministry called "pure speculation" and noted that the Bank was in good health.According to Standard, among the reasons for the massive capital shortfall was the plunge in collateral as a result of the continuing crisis in South East Europe which meant that the value of "real estate in South East Europe, shopping centers and tourism projects, deteriorated massively" driven largely by the appreciation of the Swiss Franc. "As a result, the volume of bad loans has increased significantly."

Everyone was wondering who the first big casualty of the SNB's currency peg failure would be. We now know the answer.

Further from Reuters, the finance ministry confirmed this in a statement, adding Heta was not insolvent and that debt guarantees by Hypo's home province of Carinthia and the federal government were unaffected by the move.

The problem is that going forward that nobody knows who insures what, what various other state and quasi-state guarantors suddenly unclear as to who is responsible for what: the province of Carinthia guarantees back €10.7 billion worth of Heta debt. The federal government backs a 1 billion euro bond issued in 2012 that the ministry said would be honored in full.

As a result of the "sudden" capital deficiency, there will be a moratorium on repayment of principal and capital lasts until May 31, 2016, giving the FMA time to work out a detailed plan to ensure equal treatment of all creditors, the FMA said in a decree published on its website.

Perhaps a badder bank to rescue the bad bank?

According to Reuters calculations, More than 9.8 billion euros worth of debt is affected, including senior notes worth 450 million due on March 6 and 500 million on March 20.

But the punchline, is that while the world was waiting for Greece to announce capital controls, or a bail-in over the past week, it was none other than one of the Europe's most pristeen credits (one which until recently was rated AAA/Aaa) that informed creditors a bail-in is imminent: "The finance ministry noted that creditors can be forced to contribute to the costs of winding down Heta - or "bailed in" - under new European legislation that Austria adopted this year so that taxpayers do not have to shoulder the entire burden."

Bloomberg confirms that the ministry announced that under new EU rules means creditors can be forced to share losses.

Of course, this being Austria, and the Creditanstalt, aka the bank which failed in 1931 under almost identical circumstances and set off the dominos that led to a global financial crisis which in turn bank fanned the flames of the Great Depression, also being Austrian, suddenly everyone is asking: "what just happened and what happens next?"

Sunday, March 1, 2015

Flat Broke

InvestmentWatch

Alternative News Covering Finance, Economy, Politics, World News, Current Events and More

image: http://s3.feedly.com/img/follows/feedly-follow-rectangle-volume-big_2x.png

follow us in feedly

AMERICANS Are Flat BROKE And Totally UNPREPARED For The COMING Economic COLLAPSE

Submitted by IWB, on March 1st, 2015

When the coming economic crisis strikes, more than half the country is going to be financially wiped out within weeks. At this point, more than 60 percent of all Americans are living paycheck to paycheck, and a whopping 24 percent of the country has more credit card debt

image: http://images.intellitxt.com/ast/adTypes/icon1.png

than emergency savings. One of the primary principles that any of these “financial experts” that you see on television will teach you is to have a cushion to fall back on. At the very least, you never know when unexpected expenses like major car repairs or medical bills will come along. And in the event of a major economic collapse, if you do not have any financial cushion at all you will be a sitting duck. Yes, I know that there are millions upon millions of families out there that are just trying to scrape by from month to month at this point. I hear from people that are deeply struggling in this economy all the time. So I don’t blame them for not being able to save lots of money. But if you are in a position to build up an emergency fund, you need to do so. We have been experiencing an extended period of relative economic stability, but it will not last. In fact, the time for getting prepared for the next great economic downturn is rapidly running out, and most Americans are not ready for it at all. The following are 14 signs that most Americans are flat broke and totally unprepared for the coming economic crisis… In private conversation I asked him about the outstanding debts… and that the debt load in the U.S. had gotten so great that there has to be some monetary depreciation. Specially he said that the era of quantitative easing and zero-interest rate policies by the Fed… we really cannot exit this without some significant market event… By that I interpret it being either a stock market crash or a prolonged recession, which would then engender another round of monetary reflation by the Fed.

For example, the Baltic Dry Index has just plunged to a fresh record low, and things have already gotten so bad that some global shippers are now filing for bankrupt economy crisis u.s. american “american dream” americans salary paycheck “payday loan” debt “credit card

image: http://images.intellitxt.com/ast/adTypes/icon1.png

” finance savings “savings account” health healthcare “health insurance” family collapse job employment money cash usd dollar emergency funds funding 2015 2016 crash bubble “real estate” prepare prepared broke poverty poor “bank account” banking survey trending trending entertainment gold silver “gold bullion” “silver coin” bullion student loan “student loan” “elite nwo agenda” mortgage “stock market” trading jim rogers marc faber max keiser lindsey williams jsnip4 rawdogletard daboo77 montagraph demcad prepper water bugout g4t alex jones infowars gerald celente nyc prediction david icke louis farrakhan The unintended consequences of a money-printed, credit-fueled, mal-investment-boom in commodities (prices – as opposed to physical demand per se) and the downstream signals that sent to any and all industries are starting to bite. The Baltic Dry Index has plunged once again to new record lows and the collapse of the non-financialized ‘clean’ indicator of the imbalances between global trade demand and freight transport supply has the real-world effects are starting to be felt, as Reuters reports the third dry-bulk shipper this month has filed for bankruptcy… in what shippers call “the worst market conditions since the ’80s.”

If at all possible, you have got to have an emergency fund

image: http://images.intellitxt.com/ast/adTypes/icon1.png

. When the coming economic storm strikes family

There are 35 states in this country in which it is better to accept welfare than work at an entry level job. Much like crack cocaine or heroin addicts, much of our nation is hopelessly addicted to living in the welfare state or on unsustainable levels of credit. Fed Chairman

image: http://images.intellitxt.com/ast/adTypes/icon1.png

Janet Yellen is playing footsie with our interest rates.

As the looming derivatives bubble expands, we take a look back at the real message quietly given to the U.S. economy by the privately owned Federal Reserve. The neoconservatives, a small group of warmongers strongly allied with the military/industrial complex and Israel, gave us Granada and the Contras affair in Nicaragua. President Reagan fired them, and they were prosecuted, but subsequently pardoned by Reagan’s successor, George H.W. Bush. Credit swap derivatives trading is not too different from betting on baseball or football games. It is gambling, it is a Ponzi scheme and Wall Street bankers

image: http://images.intellitxt.com/ast/adTypes/icon1.png

should be in jail. However, this is the new economic landscape of America. The name of the game is the “Last American Garage Sale” where these bankers are positioning to steal all the assets possible before the collapse.

Read more at http://investmentwatchblog.com/americans-are-flat-broke-and-totally-unprepared-for-the-coming-economic-collapse/#zyA5U3EXgAVikzyZ.99

Saturday, February 28, 2015

Breaking Bad

InvestmentWatch

Alternative News Covering Finance, Economy, Politics, World News, Current Events and More

image: http://s3.feedly.com/img/follows/feedly-follow-rectangle-volume-big_2x.png

follow us in feedly

« US companies are buying back their own stock at the fastest pace on record.

The corporate media talking heads cheer every increase in consumer debt as proof of economic recovery. In reality every increase in consumer debt is just another step towards another far worse economic breakdown.

Submitted by IWB, on February 28th, 2015

by James Quinn

“At this juncture, the impact on the broader economy and financial markets of the problems in the subprime market seems likely to be contained.”Fed chairman, Ben Bernanke, Congressional testimony, March, 2007

image: http://cdn.gobankingrates.com/wp-content/uploads/breaking-bad.jpg

“Capitalism without financial failure is not capitalism at all, but a kind of socialism for the rich.”James Grant, Grant’s Interest Rate Observer

The Federal Reserve issued their fourth quarter Report on Household Debt and Credit last week to the sounds of silence in the mainstream media. There were minor press releases issued by the “professional” financial journalists regurgitating the Federal Reserve’s storyline. Actual analysis, connecting the dots, describing how the massive issuance of student loan and auto loan debt has produced a fake economic recovery, and how the accelerating default rates in auto loans and student loans will produce the next subprime debt implosion, were nowhere to be seen on CNBC, Bloomberg, the WSJ, or any other status quo propaganda media outlet. Their job is not to analyze or seek truth. Their job is to keep their government patrons and Wall Street advertisers happy, while keeping the masses sedated, misinformed, and pliable.

Luckily, the government hasn’t gained complete control over the internet yet, so dozens of truth telling blogs have done a phenomenal job zeroing in on the surge in defaults. The data in the report tells a multitude of tales conflicting with the “official story” sold to the public. The austerity storyline, economic recovery storyline, housing recovery storyline, and strong auto market storyline are all revealed to be fraudulent by the data in the report. Total household debt grew by $117 billion in the fourth quarter and $306 billion for the all of 2014. Non-housing debt in the 4th quarter of 2008, just as the last subprime debt created financial implosion began, was $2.71 trillion. After six years of supposed consumer austerity, total non-housing debt stands at a record $3.15 trillion. This is after hundreds of billions of the $2.71 trillion were written off and foisted upon the backs of taxpayers, by the Wall Street banks and their puppets at the Federal Reserve.

image: http://pbs.twimg.com/media/B-DypR9CYAA-oED.jpg:large

The corporate media talking heads cheer every increase in consumer debt as proof of economic recovery. In reality every increase in consumer debt is just another step towards another far worse economic breakdown. And the reason is simple. Real median household income is still below 1989 levels. The average American family hasn’t seen their income go up in 25 years. What they did see was their chains of debt get unbearably heavy. Non-housing consumer debt (credit card, auto, student loan, other) was $800 billion in 1989.

The 300% increase in consumer debt, while incomes stagnated, has created a zombie nation of debt slaves. And this doesn’t even take into account the quadrupling of mortgage debt from $2.2 trillion in 1989 to $8.7 trillion today. This isn’t Twelve Years a Slave; it’s Debt Slaves for Eternity. And who benefits? The Wall Street bankers, .1% oligarchs, and corporate fascists pulling the levers of government and society benefit. An economic and jobs recovery for working Americans is nowhere to be seen in the chart below.

image: http://confoundedinterest.files.wordpress.com/2015/01/fgainc.png?w=792&h=531

Total debt on the balance sheet of American consumers (formerly known as citizens) now tops $11.8 trillion, up from the $11.1 trillion trough in 2013. The peak was “achieved” in a frenzy of $0 down McMansion buying, Lexus leasing, and Home Equity ATM extraction in 2008, when the total reached $12.7 trillion. The $1.6 trillion decline from peak insanity had nothing to do with austerity or Americans reigning in their debt financed lifestyles.

The Wall Street banks took the $700 billion of taxpayer funded TARP, sold their worthless mortgage paper to the Fed, suckled on the Fed’s QE and ZIRP, and wrote off the $1.6 trillion. Wall Street didn’t miss a beat, while Main Street got treated like skeet during a shooting competition. Every solution proposed and implemented since September 2008 had the sole purpose of benefitting the criminals on Wall Street who perpetrated the largest financial heist in world history. The slogan should have been Bankers Saving Bankers Since 1913.

image: http://confoundedinterest.files.wordpress.com/2015/02/fedcinsdebt.png?w=801&h=566

fedcinsdebt

The average American benefited in no way from the government/banker bailout. Their wages have deteriorated, their daily living expenses have risen, Obamacare has resulted in higher healthcare premiums, higher co-pays, more part-time jobs, less full-time jobs, and less healthcare choices for the working class, while Wall Street generates billions in risk free profits, bankers and corporate executives reap massive million dollar bonuses, and the .1% parties like its 1999. Rising wealth inequality has been systematically programmed into our economic system by bankers and their bought off puppet politicians in Washington D.C. – Corporate fascism at its finest.

The lack of real economic recovery for the average American has been purposely masked through the issuance of $500 billion of subprime student loan debt and $200 billion of auto loan debt (much of it subprime) since 2010 by the Federal government and their co-conspirators on Wall Street.

image: http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2015/02/consumer%20credit%20since%20Lehman_0.jpg

The issuance of debt by the government to people not financially able to repay that debt, in order to generate economic activity and boost GDP is nothing more than fraudulent inducement using taxpayer funds. Debt financed purchases is not wealth. Debt financed consumption does not boost the wealth of the nation. If adding debt produced economic advancement, why has the number of Americans on food stamps escalated from 33 million in 2009 to 46 million today during a five year economic recovery? Why have 10 million Americans left the labor force since 2009, pushing the labor participation rate to 30 year lows, during a jobs recovery?

Why have social benefits distributed by the Federal government surged by $2.5 trillion since 2012, reaching a record high of 20.8% of real disposable income? It resides 33% above 2007 levels and still above levels during the depths of the recession in 2009. But at least the stock market hits record highs on a daily basis, creating joy in NYC penthouse suites and Hamptons ocean front estates. American dream for the .1% achieved.

image: http://streettalklive.com/images/1dailyxchange/2015/Social-Benefits-Percent-DPI-022315.PNG

Social-Benefits-Percent-DPI-022315

Does this look like Recovery?

When you actually dig into the 31 page Federal Reserve produced report, anyone with a few functioning brain cells (this eliminates all CNBC bimbos, shills, and cheerleaders), can see our current economic paradigm is far from normal and an economic recovery has not materialized. Record stock market prices and corporate profits have not trickled down to Main Street. Janet, don’t piss down my back and tell me it’s raining (credit to Fletcher in Outlaw Josey Wales). The mainstream media spin fails to mention that $706 billion of consumer debt is currently delinquent. That is 6% of all consumer debt.

Could the Wall Street banks withstand that level of losses with their highly leveraged insolvent balance sheets? The number of foreclosures and consumer bankruptcies rose in the fourth quarter versus the third quarter. Does this happen during an economic recovery? Donghoon Lee, research officer at the Federal Reserve Bank of New York, may be looking for a new job soon. When a Federal Reserve lackey actually admits to being worried, you know things are about to get very bad very fast.

“Although we’ve seen an overall improvement in delinquency rates since the Great Recession, the increasing trend in student loan balances and delinquencies is concerning. Student loan delinquencies and repayment problems appear to be reducing borrowers’ ability to form their own households.”

And he didn’t even mention the increase in auto loan delinquencies which will eventually morph into a landslide of bad debt write-offs, repossessions, and Wall Street bankers demanding another bailout. The pure data in the Fed report doesn’t tell the true story. The $306 billion increase in outstanding debt only represents a 2.7% annual increase. And even though mortgage debt increased by $121 billion, it was on a base of $8.17 trillion. That is a miniscule 1.5% increase. A critical thinking individual might wonder how national home prices could rise by 25% since the beginning of 2012, while mortgage debt outstanding has fallen by $220 billion over this same time frame, and mortgage originations are hovering at 1997 levels.

image: http://confoundedinterest.files.wordpress.com/2015/01/mortorigsq42014.png?w=819&h=587

mortorigsq42014

It couldn’t have been the Wall Street/Fed/Treasury Dept. withhold foreclosures from the market, sell to hedge funds and convert to rental units, and screw the first time home buyer scheme to super charge Wall Street profits and artificially boost home prices. Could it? New home sales prices and new home sales were tightly correlated from 1990 through 2006. Then the bottom fell out in 2006 and new homes sales crashed. Nine years later new home sales still linger at 1991 recession levels. New home sales are 65% lower than they were in 2005, but median prices are 20% higher. This is utterly ridiculous.

If prices had fallen to the $100,000 to $150,000 level, based on the historical correlation, first time home buyers would be buying hand over foot. But the Federal Reserve, their Wall Street owners, connected hedge funds, and the Federal government has created an artificial price bubble with 0% interest rates and trillions of QE heroin. The 1% can still afford to buy overpriced McMansions, but the young are left saddled with student loan debt, low paying service jobs, and no chance at ever owning a home.

image: http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2015/02/new%20home%20sales%20vs%20median%20home%20price.jpg

The chart that puts this economic recovery in perspective is their 90+ days delinquent by loan type. If you haven’t made a payment in 90 days or more, the odds are you aren’t going to pay. The Fed and the ever positive corporate media, who rely on advertising revenue from Wall Street, the auto industry, and the government, go to any lengths to spin awful data into gold. Their current storyline is to compare delinquency levels to the levels in 2009 at the height of the worst recession since the 1930s. Mortgage delinquencies have fallen from 8.9% in 2010 to 3.2% today (amazing what writing off $1 trillion of bad mortgages can achieve), but they are three times higher than the 1% average before the financial meltdown. Is that a return to normalcy? Home equity lines of credit had delinquency rates of 0.2% prior to the 2008 meltdown. Today they sit at 3.2%, only sixteen times higher than before the crisis. Is that a return to normalcy? Do these facts scream “housing recovery”?

image: http://libertystreeteconomics.typepad.com/.a/6a01348793456c970c01bb07efa3cf970d-450wi

The outlier on the chart is credit card delinquencies. The normal, pre-crisis level hovered between 9% and 10%. Banks can handle that level when they are charging 18% interest while borrowing at .25% interest. During the Wall Street created recession, delinquencies spiked to 13.7%, but after writing off about $150 billion of bad debt and closing 100 million credit card accounts, delinquencies miraculously began to plunge. Delinquencies have plunged to 7.3% as credit card debt still sits $170 billion below the 2008 peak. This is a reflection of Americans depending on their credit cards to survive their everyday existence.

With stagnant real wages and household income 7% below 2008 levels, the average family is using their credit cards to pay for food, energy, clothing, utilities, taxes, and medical expenses. They are making the minimum payments and staying current on their payment obligations because their credit cards are the only thing keeping them from having to live in a cardboard box. A Bankrate.com survey this week revealed 37% of Americans have credit card debt that equals or is greater than their emergency savings, leaving them “teetering on the edge of financial disaster.” Greg McBride, Bankrate.com’s chief financial analyst sums up the situation:

“Not only do most of them not have enough savings, they’ve all used up some portion of their available credit — they are running out of options. People don’t have enough money for unplanned expenses, and if they have more credit card debt than emergency savings, it’s a double whammy. In the event of unplanned expenses, their options are limited.”

Who doesn’t have an unplanned expense multiple times in a year? A major car repair, appliance repair, hot water heater failure, or a medical issue is utterly predictable and most people are unprepared to financially deal with them. As many people found in 2009, credit card lines can be reduced in the blink of an eye by the Wall Street banks. This potential for financial disaster is why Americans are doing everything they can to stay current on their credit card payments. That brings us to the Federal Reserve/Federal Government created mal-investment subprime boom 2.0, which is in the early stages of going bust.

I’ll address the Subprime bust 2.0 in part two of this article.

Read more at http://investmentwatchblog.com/the-corporate-media-talking-heads-cheer-every-increase-in-consumer-debt-as-proof-of-economic-recovery-in-reality-every-increase-in-consumer-debt-is-just-another-step-towards-another-far-worse-economi/#UooZ4i1pe1xpHjFM.99

Natural Gas Alert

We should be at or near a significant bottom. Look for impulsive moves up. If we get that, a move above 4 should confirm the trend. If the advance is choppy and hesitant that would be corrective and lead to further selling. Commercial traders are two times long NG than Hedge funds. This is a critical juncture. Hedge funds tend to be momentum players. Commercials tend to get it right ultimately. GL

NG.png (900×620)