Bid Shading and Bidder Surplus in the U.S. Treasury Auction System -- by Ali Hortacsu, Jakub Kastl, Allen Zhang
We analyze bidding data from uniform price auctions of U.S. Treasury bills and notes between July 2009-October 2013. Primary dealers consistently bid higher yields compared to direct and indirect bidders. We estimate a structural model of bidding that takes into account informational asymmetries introduced by the bidding system employed by the U.S. Treasury. While primary dealers' estimated willingness-to-pay is higher than direct and indirect bidders', their ability to bid-shade is even higher, leading to higher yield/lower price bids. Total bidder surplus averaged to about 3 basis points across the sample period along with efficiency losses around 2 basis points.
US Treasury yield curve holds near flattest for 10 years
1999-like parties are breaking out everywhere across financial markets... First things first, US Financials Conditions are partying like its way easier than 1999... The Philly Semiconductor index is partying like its 1999... But what happens next? Meltup time? S&P 500 Valuations are partying like its 1999... The spread between German and US bond yields is partying like its 1999... And the US Treasury curve is partying like its 1999... * * * The Fed Minutes spooked markets a bit today - USD down, gold, stocks, and bonds unch On the day, The Dow & S&P were joined late on by Small Caps in the red (but the Dow was worst, Trannies were best) VIX ended modestly higher but still below 10... Another day, another short-squeeze... This is now the biggest short squeeze since the election... And before we leave stockland, remember CHF-Solutions... High yield bond prices ralied once again - almost back to their 200DMA... Treasuries rallies across the curve today (but for a change the short-end outperformed the long-end - 2Y -4.5bps vs 30Y -1.5bps) Quite a significant reversal today in yields after bond weakness overnight suddenly reversed this morning and then extended after the dovish FOMC... Stocks and bonds remain notably decoupled this week... The Dollar Index extended its losses after FOMC Minutes. Today is the worst day for the dollar index since Sept 7th... However, stocks remain decoupled from FX carry... Bitcoin rallied once again today but failed to make a new record high... NOTE the interest patterm starting to develop intraday WTI rallied, bouncing back from disappointing inventory data and RBOB leaked lower... Gold and Silver gained as the dollar drooped - Gold and silver surged back above its 50- and 100DMA
A day after China’s state-run airline closed its last remaining routes to North Korea – a decision the airline’s executives blamed on a sharp decline in business travelers due to restrictive UN Security Council sanctions – Communist Party spokespeople slammed new US sanctions targeting Chinese traders doing business with North Korean businessmen, calling them “wrong” while reminding the US that China has vigorously enforced the UN sanctions. After announcing that the US would once again designate North Korea a state sponsor of terrorism due to its missile and nuclear tests and its trading in illegal arms with terrorist groups and unsavory governments, President Donald Trump revealed that the Treasury Department would be rolling out new sanctions over the next two weeks, the US’s latest volley in a "maximum pressure campaign" against Kim Jong-Un's regime, AFP reported. ABC Breaking News | Latest News Videos As had been expected, the US Treasury Department announced on Tuesday that the list of North Korean and Chinese companies targeted by existing US sanctions has been expanded. It was this decision that angered the Chinese. Only last week, Trump returned to the US from a five-nation tour of Asia with assurances from Chinese President Xi Jinping that China, the North’s primary benefactor which is responsible for 90% of its trade, would do more to economically pressure its restive neighbor. Treasury sanctions trading, labor, and shipping companies and vesselsto further isolate North Korea and disrupt illicit funding of its unlawful nuclear and ballistic missile programs. Targets include one individual, 13 entities, and 20 vessels: https://t.co/CT9hMx3d6p — Treasury Department (@USTreasury) November 21, 2017 The Treasury has added to a list of 10 Chinese companies believed to be doing business with the North in violation of international sanctions. In response, a Chinese spokesman reiterated that China rejects unilateral sanctions against its companies and North Korea, saying these issues should be worked out through the Security Council. "We consistently oppose any country adopting unilateral sanctions based on its own domestic laws and regulations and the wrong method of exercising long-arm jurisdiction," foreign ministry spokesman Lu Kang told a regular news briefing. The sanctions are a sign that, despite Xi’s assurances, many doubts remain about China’s efforts to contain the North’s nuclear ambitions. The spokesman called on Washington to provide "any solid evidence" that Chinese companies have violated the UN sanctions, according to AFP. He added that if any companies or individuals have violated domestic laws, "we will severely deal with that in accordance with our laws and regulations". While China has backed the Security Council sanctions – which it easily could’ve blocked with a veto – the country has been reluctant to take the more drastic step of cutting off oil supplies through a pipeline to North Korea's lone refinery, fearing that regime collapse could lead to a flood of refugees and chaos on the China-North Korea border. Still, US authorities believe some Chinese banks and trading firms continue to do business with the North in defiance of UN sanctions, US threats of unilateral action and warnings from the Chinese government. Since the verbal standoff between Kim Jong Un and President Donald Trump began shortly after the latter’s inauguration, China has pressed for dialogue between the two countries, saying this week that "more should be done" to hold talks to resolve the crisis. Specifically, both Beijing and Moscow have pushed for a "dual track approach" which would see the US freeze its military drills in South Korea while North Korea would halt its weapons programs. Ultimately, the Chinese hope the US will remove its THAAD missile defense systems from South Korea, since the Chinese see the purportedly defensive systems as a potential offensive threat. A Chinese special envoy also wrapped up a four-day trip to the North on Monday, during which the two sides discussed regional concerns but made no direct statements about the nuclear standoff. US Treasury Secretary Steven Mnuchin said the sanctions would not only increase Pyongyang's isolation but also expose "its evasive tactics." "These designations include companies that have engaged in trade with North Korea cumulatively worth hundreds of millions of dollars," Mnuchin said. "We are also sanctioning the shipping and transportation companies, and their vessels, that facilitate North Korea's trade and its deceptive maneuvers." In all, the new measures add one individual, 13 trading entities and 20 ships to US sanctions lists. Any property or assets of the firms involved found to be in areas under US jurisdiction are to be frozen, and Americans are banned from trading with them. Three Chinese firms - Dandong Kehua Economy and Trade, Dandong Xianghe Trading Company and Dandong Hongda Trade - are said to have sold computers, minerals and ore to North Korea. Chinese businessman Sun Sidong and his company Dandong Dongyuan Industrial are accused of exporting vehicles, machinery, radio navigation and "items associated with nuclear reactors.” A woman who answered the phone at the company said it was not doing business with North Korea and suggested that the firm had halted its operations. "We are not operating," she said. Another woman at Dandong Kehua Economy and Trade denied knowing about the sanctions. "We have temporarily suspended (trading)," she said. In a surprise move, in addition to slapping sanctions on firms and North Korean ships, the Treasury added the Korea South-South Cooperation Corporation to its sanctions list. The firm is alleged to have sent North Korean guest workers to China, Russia, Cambodia and Poland. Foreign workers are a major source of income to the regime. Trump has repeatedly exhorted the US’s allies to expel North Korean guest workers, whose remittances provide a vital source of foreign currency to the regime. Ironically, the stringent sanctions are being applied even as North Korea has, at least temporarily, ceased its missile tests. The North hasn’t launched a missile test since Sept. 15 – more than two months ago. Some believe the North’s reticence is due to Chinese pressure. If this is accurate, we imagine Xi’s government might loosen its grip.
Yesterday we presented readers with one of the most pessimistic, if not outright apocalyptic, 2018 year previews, courtesy of BofA's chief investment, Michael Hartnett who warned that in addition to the bursting of the bond bubble in the first half of the year, the stock market could see a 1987-like flash crash, potentially followed by a sharp spike in (violent) social conflict. However, in addition to his forecast, Hartnett also had one of the more informative, and descriptive, reviews of the year that was, or as he put it: 2017 was the perfect encapsulation of an 8-year QE-led bull market. Here are his 15 bullet points that show why in 2017 we may have seen the biggest bubble ever (and why we can't wait to see what 2018 reveals). Da Vinci’s “Salvator Mundi” sold for staggering record $450mn Bitcoin soared 677% from $952 to $7890 BoJ and ECB were bull catalysts, buying $2.0tn of financial assets Number of global interest rate cuts since Lehman hit: 702 Global debt rose to a record $226tn, record 324% of global GDP US corporates issued record $1.75tn of bonds Yield of European HY bonds fell below yield of US Treasuries Argentina (8 debt defaults in past 200 years) issued 100-year bond Global stock market cap jumped1 $15.5tn to $85.6tn, record 113% of GDP S&P500 volatility sank to 50-year low; US Treasury volatility to 30-year low Market cap of FAANG+BAT grew $1.5tn, more than entire German market cap 7855 ETFs accounted for 70% of global daily equity volume The first AI/robot-managed ETF was launched (it’s underperforming) Big performance winners: ACWI, EM equities, China, Tech, European HY, euro Big performance losers: US$, Russia, Telecoms, UST 2-year, Turkish lira As Hartnett summarizes, "2017 was a perfect encapsulation of an 8-year QE-led bull market" Positioning was too bearish for either a bear market or a correction in risk assets. Profits were higher than expected (global EPS jumped 13.4%) this time thanks to a synchronized global PMI recovery. Policy was aggressively easy, as the ECB and BoJ bought a massive $2.0tn of financial assets; fiscal policy also easy (e.g., US federal deficit up $81bn to $666bn). Returns were abnormally high in 2017 (Table 3); corporate bonds and equities soared, but the biggest surprise was stubbornly low government bond yields: thematic leadership of scarce “growth” (e.g. tech stocks), “yield” (e.g., HY, EM and peripheral EU bonds) and “volatility” once again remained the core of the bull.
“Russia Did It” and Other Crimes Posted with permission and written by Rory Hall, The Daily Coin We haven’t had a system of capitalism since the Federal Reserve and Woodrow Wilson hijacked the US Treasury and US economy in 1913. Our financial, monetary and economic system has morphed into fascism, corporatism or something more akin to communism/socialism. The way our economy operates today, in 2017 - it is certainly not capitalism. Since 2008, the ruling and banking class haven’t even tried to hide the FACT that our system is about oligarchs and theft – anything but capitalism. The same could be said for Europe and most any Western “developed” nation. We have a program called Quantitative Easing, which is a fancy, made-up way of saying money printing and bond market manipulation. We also have, proven in a court of law, rigged FOREX markets – the global currency market. The LIBOR market (loan interest rate market) is also rigged as proven, once again in a court of law. Look at Greece, Venezuela and Zimbabwe for the second time in less than 20 years. These three nations have seen their economies completely collapse. Greece has been propped up by the European Central Bank because if Greece’s economy were to rot away in the same way as Venezuela and Zimbabwe, then Germany and Deutsche Bundesbank, Germany’s central bank, would collapse. This would trigger a global economic collapse that would make 2008 look like a rounding error. This will not do. Until what is explained above is understood, capitalism will continue to be made out to be the bad guy of our economic problems. As long as capitalism is made the enemy, the ruling and banking class criminals can and will continue their global crime sprees uncontested. One can not compare our current economic system to capitalism when it has almost nothing to do with capitalism. If one compares it to fascism, then the truth is more easily understood. Fascism is all about inequality – haves and have nots, with nothing in-between. What do we hear from the mainstream media over and over – the one thing they actually get right – is there is an attack on middle class incomes and middle class America. This is 100% correct. Until the middle class is completely wiped out, the oligarchs can not truly dictate what the masses will accept. The US government does not represent the interests of the majority of the country’s citizens, but is instead ruled by those of the rich and powerful, a new study from Princeton and Northwestern Universities has concluded. The report, entitled Testing Theories of American Politics: Elites, Interest Groups, and Average Citizens, used extensive policy data collected from between the years of 1981 and 2002 to empirically determine the state of the US political system. After sifting through nearly 1,800 US policies enacted in that period and comparing them to the expressed preferences of average Americans (50th percentile of income), affluent Americans (90th percentile) and large special interests groups, researchers concluded that the United States is dominated by its economic elite. Source If you combine this information with what is happening today with the “Russia did it” narrative then we see how these oligarchs push the mass of people to accept whatever lie they are pushing. If there is information that will prove Hillary is a treasonous criminal who should be investigated and then imprisoned for high crimes, well, simply ignore that information and never, ever present credible information on any mainstream media TV or radio. TV and radio are for entertainment, not real information. No one who is promoting the Russiagate allegations is trying to debate William Binney’s allegations. Instead, all of the news media are plastered with allegations of ‘Russia’s meddling in American democracy’. William Binney is the mathematician and Russia-specialist, who quit the NSA in 2001 as its global Technical Director for geopolitical analysis, because of the lying about, and manipulations of, intelligence, that he saw — distortions of intelligence by the George W. Bush Administration — in order to ‘justify’ systematic, massive, and all-encompassing, Government snooping into all Americans’ private electronic communications. His, and some colleagues’, efforts to get the Inspector General of the US Department of Defense to investigate the matter, produced FBI raids into their homes, and seizures of their computers, so as to remove incriminating evidence they might have against higher-ups. According to Binney, NSA’s Director, Michael Hayden, had vetoed in August 2001 a far less intrusive and more effective system of signals-intelligence collection and analysis, which might have enabled the 9/11 attacks to be blocked — a more effective system that would have been less expensive, less intrusive, and not violated Americans’ Constitutional rights. Hayden went on to head the CIA, until the end of George W. Bush’s Presidency. Afterward, Hayden joined the Chertoff Group and other military-industrial-complex contractors of the US federal Government. There were no such rewards for any of the whistleblowers. Source All of these issues are interconnected. If the economy were capitalistic, we would have real news on TV and radio. If we had real news on TV and radio, we would hear from people like William Binney and reports like Testing Theories of American Politics: Elites, Interest Groups, and Average Citizens would be reported on as well. This would lead directly to the arrest of people like Prescott Bush, George Bush, Sr, George Bush, Jr, the Clinton Crime Family and Obama. This would then lead to the arrest of every banking president and banking “C” level executive for the past 50+ years. This would then lead to the arrest of the “C” level executives of some of the largest corporations in the world. It all begins, as we have stated time and again, with a corrupt currency. Once a currency becomes corrupt, the entire system is forced into a life of corruption and crime to cover up the lies the currency is telling. The currency we have in our wallets is a criminal, corrupt liar. Until we attack this criminal and correct the lies, we will continue to be slaves to the oligarchs. Questions or comments about this article? Leave your thoughts HERE. “Russia Did It” and Other Crimes Posted with permission and written by Rory Hall, The Daily Coin Check out these other articles by our contributors: John Rubino - Gold vs. Bitcoin: The Pro-Gold Argument Takes Shape Peter Diekmeyer - The 2.4 Trillion Hidden Fed Tax Ed Steer - Gold and Silver Digest Eric Sprott's Weekly Wrap-Up
A 'funny' thing happened a month ago. The Treasury yield curve suddenly started to collapse... despite gains in stocks and positive economi data surprises... the question is, why? Here's one possible reason why.. Originally submitted by GovTrader, TL/DR: Tax reform creates pension fund incentive to buy 30yr bonds NOW. Currently, the top corp tax rate in the US is 35%. It looks most likely that rate will drop to 20% when tax reform passes. If you are a corp with an underfunded pension fund, you get a tax incentive to fund the pension THIS YEAR vs in the future when the corp tax rate drops to 20%. Why? Because contributions to the pension plan are tax deductible. You get a bigger tax deduction in 2017 then you will get in 2018 and onwards (assuming tax reform happens in something close to its current form...which it looks like it will). Multiple primary dealers have reported pension buying in the 30yr sector over the past month, and coincidentally, 30yr bonds have rallied while the front end has sold off for the past month. Pension funds have a favorite bond to buy...STRIPS (30yr zero coupon bonds - higher yield than normal coupon bonds, better asset/liability match..more price sensitive to changes in yield...bigger bang for your buck in a bond rally..and is a flattener to the yield curve). Pension funds don't trade very much....they tend to buy and hold. So these flows will SIGNIFICANTLY flatten the 30yr curve...and that is exactly what we have been seeing. US Treasury yield changes (basis points) since Oct 24, 2017 Mystery Solved.
If we’re going to discuss Asian equities in the context of “awesome”, we should begin with Tencent. Tencent, which has more than doubled this year, drove Asian stocks higher during Tuesday’s trading session. Trading on the main board of the Hong Kong Stock Exchange hit a 28-month high of HK$157 billion with one fifth of it in only two stocks – Tencent (HK$21.7 billion) and Ping An Insurance (HK$9.4 billion). It was hardly surprising that shares in Hong Kong Exchanges & Clearing also had a good day, rising 5.5%, the most in more than a year. Tencent’s 2.4% rise pushed it market cap. above the illustrious $500 billion market, granting it membership of an exclusive tech-only club. Just in case the frenzy in Hong Kong equities in general, and Tencent in particular, is making you a little nervous, Bloomberg reports that one of Asia’s top performing portfolio managers believes that we can expect more of the same in 2018. One of the world’s best-performing equity gauges is set for further gains in 2018 as tech giant Tencent Holdings Ltd. and consumer stocks drive it higher, according to Shanghai-based money manager Wang Menghai. The Hang Seng Index has led the charge among Asia’s biggest markets this year, rising 36 percent. Tencent, which has now overtaken Facebook Inc. in market value, accounts for nearly one-third of that advance. Wang, who works for Fullgoal Fund Management Co., has seen his fund beat 92 percent of peers in 2017. He plans to stay loyal to Tencent and boost exposure to companies that may benefit from quickening inflation. “The Hong Kong benchmark is very likely to perform well in 2018, though the index rally may not be as much as this year,” Wang said in a phone interview. “Some of this year’s best performers are worth holding as long-term bulls.” Wang’s had 9.68% of his Fullgoal SH-SZ-HK Value Selected Flexible Allocation Mixed Fund invested in Tencent at the end of Q3 2017. Speaking to Bloomberg, Wang noted that he was interested in “food and beverage companies and dairy and liquor producers” going forward because they will raise selling prices in the face of higher rates of inflation. This piqued our interest because the highest profile (and largest) Chinese liquor stock right now is unquestionably Kweichow Moutai. Last Friday, we discussed the highly irregular move by China’s Xinhua news agency which stated that Kweichow Moutai’s share price. “should rise at a slower pace…short-term speculation in Kweichow Moutai shares will hurt value investing and long-term investment will deliver best returns. Perhaps investors like Wang don’t want to listen…that’s certainly the case of some mainland investors. After China announced the crackdown last Friday on shadow banking and its $15 trillion asset management products, Bloomberg reports that Chinese citizens don’t believe that guaranteed returns which have underpinned the $4 trillion wealth management products (WMP) Ponzi sector will come to an end. But for Yolanda Yuan and other individual investors who’ve piled into AMPs issued by banks, insurers and securities firms, the government’s announcement was largely a non-event. The reason: they didn’t believe it. “I don’t think any big banks will dare to take the risk of allowing defaults on AMPs, as that will lead to a flood of fund redemptions,” said Yuan, a 29-year-old sales manager at a state-run financial company in Shanghai. She has about 100,000 yuan ($15,069) of personal savings in products covered by the new regulations. “It’s very hard,” said David Loevinger, a former China specialist at the U.S. Treasury Department who now works as an analyst at TCW Group Inc. in Los Angeles. “You have to show people that there are no longer guarantees. The only way to show it is to force investors to take losses. They have to see it to believe it.” Chinese savers have come to depend on the stable returns promised by AMPs, most of which offer fixed rates and mature in less than a year. Bank-issued wealth management products, the biggest slice of the AMP pie, have proven remarkably reliable despite investing in volatile assets from corporate bonds to stocks and real estate. Among the more than 184,400 products that matured in 2016, just 88 suffered a loss, according to the government’s annual WMP report. This is our favourite. Yang Mo, a 30-year-old public relations professional in Beijing, says she has so much faith in implicit guarantees that she doesn’t bother paying attention to who’s managing her WMPs or what they’re investing in. “Backstage support will stay in place,” said Yang, who has about 100,000 yuan in WMPs. “I have never done much research into the WMPs I bought. I don’t think they will default.” Chinese regulators seem to realise that investors are so engaged in the bull market that they won’t listening to warnings…so they’ve just issued another warning. In an article “China Fires New Broadside Against Stock Darling Kweichow Moutai”, Bloomberg reports. A Chinese campaign about the risks of investing in Kweichow Moutai Co. shares intensified on Monday, with Sina.com reporting that the Shanghai exchange criticized a brokerage for being too bullish. Essence Securities Co. failed to conduct “prudent analysis” on Moutai and fully disclose related risks when the brokerage raised its price target on the liquor maker last week, news portal Sina reported late Monday, citing a notice from the bourse. A commentary in the state-run Xinhua News Agency on Thursday said the stock should rise at a slower pace, while the company itself issued a statement saying analysts’ share price targets and valuations in the market are “overly high.” Moutai has doubled this year, with Goldman Sachs Group Inc. raising its price estimate on the company 11 times, amid expectations the company could boost profit margins by increasing direct sales. Which brings us to SocGen, who are very bullish on Asia, even if China is not one of their top picks. In its latest report, “The intersection of growth and returns”, the bank notes that “Asian equities remain a bright spot in equity markets” and Global growth continues to surprise on the upside and has reached its highest level since the Great Financial Crisis”. Within this dizzy level of optimism, the analysts set out to “challenge our bullish bias” on Asian equities. However, they begin with a recap. We previously wrote that Asia equities had been climbing a wall of worries and were a bright spot in equities markets. We listed a strong dollar, the China Congress (would it be the end of the Xi put?) and rising tensions in the Korea Peninsula as the major risks to our bullish scenario. These risks remain, but we do not see any of these factors durably derailing the Asia equity rally. Mistakenly, in our opinion, SocGen remains sanguine about China and “less concerned about regional risk” across Asia in general. On China specifically, the analysts downplay the risk from deleveraging. The 19th China National Congress has consolidated Xi Jinping’s power and further defined his policy agenda. Hence the next five years are likely to be a continuity of the past five. This lends an element of predictability to the markets. The most destabilising economic theme in the wake of the Congress is the pursuit of financial deleveraging mostly through regulatory tightening and further macro-prudential measures. There are some specific country risks, however. We believe investor concerns relative to President Xi’s ascent are that the Communist Party leads the economy. A command economy proved remarkably efficient in averting a currency crisis in 2016 but for equity investors it raises several concerns (including corporate governance and resource allocation issues). Our thesis is that China equities are unlikely to achieve the very strong returns of the last 12 months. But we do not expect the economy’s trajectory to be a destabilising factor for Asia equity markets. What surprised us most is that SocGen believes that a “Minsky moment” in China would be “manageable”, when that is something that "Minsky moments" definitely are not. A Minsky Moment? Excessive debt leading to a Minsky moment is the warning of Zhou Xiaochuan, governor of the PBoC to markets and the second risk that we identify. The financial pain should be manageable in our view. The cut in the Required Reserve Ratio to happen in 2018 signals the PBOC's readiness to mitigate downside risk. For SOEs, lower growth in debt coupled with surging profits has reduced the proportion of debt at risk. So, if we can navigate our way through a “Minsky in the Middle Kingdom”, what are the challenges to SocGen’s bullish bias on Asian equities? The bank states that the biggest risk is US equities and bonds. We think the major risk to our bullish scenario on Asia equities does not lie in fundamentals (improving), liquidity (abundant) or politics (stable compared to other parts of the emerging world) but in a possible correction of US assets. Our equity strategy team’s take on the S&P 500 is a sideways market view. Although the Fed has removed unconventional monetary policy tools over the last four years, growth has not collapsed and financial assets have not deflated. Earnings have been recovering since the last quarter of 2016 and technology firms, unlike the end of the 1990s, are highly profitable. But history of equity market corrections teaches us that at this level of valuation (the Shiller CAPE is at 31.2x), even a not so remarkable event can trigger a sell-off. This is not only a story of expensive share prices, the US Treasury market is also in expensive territory, the Fed is in tightening mode, global growth is improving and the gap between FOMC median projections (seven hikes by 2019) and market expectations (two) remains quite wide. We therefore need to include US asset downside risks in our Asia investment strategy. If the S&P enters a bear market, we believe Asia equities will not be the place to hide as correlation rises in falling markets. Okay, we agree, US equities and bonds are in a bubble, they could correct sharply at some point and Asian equities will likely underperform…but that’s almost always the case. This is nothing new. To its credit, SocGen crunches some numbers for us on what happens when the S&P 500 declines 20% or more during a 12-month period. To get a better sense of how equity markets would react in such an event, we have observed the past 30 years (since the inception of MSCI Asia AC ex Japan index). We look at the daily 1-year rolling returns of the S&P, the Nikkei and MSCI AC Asia-ex Japan. Our observations prompt us to make the following three remarks: A 20% or more decline in the S&P 500 over a 12-month period is rare. Over the last 30 years, it has only occurred 6.4% of the time. When it has happened, the S&P has outperformed Asia (in 55% of the cases) and Japan (55%). Positive returns are rare in Asia (12% of cases) and have never occurred in Japan. There have been wide divergences between countries and sectors. In summary, Asia tends to outperform Japan and South-East Asia markets tend to outperform North East Asia. SocGen notes the wide divergences among the individual Asian markets. There have been wide divergences between countries and sectors. In summary, Asia tends to outperform Japan and South-East Asia markets tend to outperform North East Asia. SocGen’s strongest case for Asian equities is probably valuation, where the CAPE ratio remains below average. However, the bank also pulls out four actionable themes for investors. We see four major themes emerging as a result of the combination of improving fundamentals in Asia and rising concerns over the sustainability of US asset prices. Theme #1: Protect portfolios. A sharp correction in US equities would translate into an increase in correlation and greater vulnerability for Asia assets. Hence, one of the themes of this Asia Equity outlook is to protect against the re-correlation of markets. We are long ASEAN equities and we like defensive sectors such as HK utilities. Theme #2: Asia remains a great consumer story. Recent research from Brookings Institution estimates that of the one billion new middle class entrants, 88% will live in Asia. The problem is that valuations in the consumer sector, notably in China have become very high. We look for more reasonably valued themes exposed to Asia consumers. We find them in Japan, Korea and India. Theme #3: Reduce momentum exposure. Despite global growth recovering, the value style has underperformed momentum. As a result, the valuation gap between momentum and value strategies has widened considerably regardless of upward revisions to the global growth outlook. We reiterate our stance on value themes including China SOEs reforms. Theme #4: Recovering capex. Investment growth remains a topical theme in Japan given increasingly acute labour shortage issues. In the rest of Asia, the technology cycle is not likely to fade, creating further investment opportunities in the equity space. What the SocGen report didn’t focus on was the crucial test which Asian equities are facing as the MSCI Asia Pacific Index is poised to either form a double-top or surpass its previous all-time high in November 2007.
Казначейство США разместило 2-летные FRN (облигации с плавающей ставкой) на сумму 12,997 млрд. долларов Доходность 2-летних облигаций FRN составила 0,035% против 0,048% на предыдущем аукционе. Отношение спроса и предложения составило 3,69 по сравнению с 3,56 за последнее размещение. Непрямые покупатели, в число которых входят иностранные центральные банки, выкупили 49,59% от объёма размещения по сравнению с 60,15% на предыдущем аукционе. Прямые покупатели (в основном национальные банки и инвестиционные фонды) выкупили 6.27% от объёма размещения по сравнению с 0.67% на предыдущем аукционе. Первичные дилеры выкупили 44,14% от объёма размещения по сравнению с 39.18% на предыдущем аукционе. Информационно-аналитический отдел TeleTradeИсточник: FxTeam
Казначейство США разместило 4-недельные векселя на сумму 44,461 млрд. долларов Доходность 4-недельных казначейских векселей составила 1,130% против 1,045% на предыдущем аукционе. Отношение спроса и предложения составило 2,99 по сравнению с 3,13 за последнее размещение. Непрямые покупатели, в число которых входят иностранные центральные банки, выкупили 41,24% от объёма размещения по сравнению с 48,12% на предыдущем аукционе. Прямые покупатели (в основном национальные банки и инвестиционные фонды) выкупили 5,52% от объёма размещения по сравнению с 6,53% на предыдущем аукционе Первичные дилеры выкупили 53,24% от объёма размещения по сравнению с 45.34% на предыдущем аукционе. Информационно-аналитический отдел TeleTradeИсточник: FxTeam
A report says Representative John Conyers settled a complaint in 2015, and his case is unlikely to be the last.
Now We Know Why The US 30yr Treasury Curve Has Been Flattening Like A Pancake - Pension Fund Buying And Tax Reform
TL/DR: Tax reform creates pension fund incentive to buy 30yr bonds NOW. Currently, the top corp tax rate in the US is 35%. It looks most likely that rate will drop to 20% when tax reform passes. If you are a corp with an underfunded pension fund, you get a tax incentive to fund the pension THIS YEAR vs in the future when the corp tax rate drops to 20%. Why? Because contributions to the pension plan are tax deductible. You get a bigger tax deduction in 2017 then you will get in 2018 and onwards (assuming tax reform happens in something close to its current form...which it looks like it will). Multiple primary dealers have reported pension buying in the 30yr sector over the past month, and coincidentally, 30yr bonds have rallied while the front end has sold off for the past month. Pension funds have a favorite bond to buy...STRIPS (30yr zero coupon bonds - higher yield than normal coupon bonds, better asset/liability match..more price sensitive to changes in yield...bigger bang for your buck in a bond rally..and is a flattener to the yield curve). Pension funds don't trade very much....they tend to buy and hold. So these flows will SIGNIFICANTLY flatten the 30yr curve...and that is exactly what we have been seeing. US Treasury yield changes (basis points) since Oct 24, 2017 Mystery Solved.
Небольшая предыстория, чтобы понять, откуда растут ноги у монетарного безумия. Это важно понимать в условиях, когда система на полном ходу несется под откос. Все началось задолго до того, как общественностью принято считать началом острой фазы кризиса. Первые серьезные проблемы появились в еще 2007 году, а не осенью 2008. Но сначала, что такое MBS? Объясню предельно […]
The US Treasury yield curve collapse continued its unending path to inversion overnight with 2s10s plunging to sub-60bps and 5s30s hits a 65bps handle for the first time since Nov 2007. 2s10s has flattened for 3 days straight, 6 of the last 7 days, and 14 of the last 17 days to a 58bps handle... 5s30s has flattened 3 days straight, 6 of the last 7 days, and 16 of the last 19 days to a 65bps handle... As a reminder, it took The Fed hiking rates to 5.25% in the last cycle before investors finally gave in and financial conditions tightened... for now as financial conditions ease towards record levels, despite a hiking and normalizing Fed, so the yield curve collapse accelerates... As a gentle reminder to all those shrugging this off, BofA reminds that in seven out of seven occasions in the last 50 years an inverted yield curve has been the prelude to recession. In fact, the last four times the US yield curve was at these levels, the US economy was already in recession...
Bonds, Futures, Global Stocks All Rise, Boosted By "Germany's Brexit Moment"; TSY Curve Collapse Continues
S&P 500 futures are higher, continuing on yesterday's momentum, after European and Asian shares also rose alongside a rebound in oil, as the year-end performance chase appears to be accelerating. There were several different moving parts in a mixed European session, in which early Euro strength gave way to weakness... ... which in turn pushed the Stoxx 600 and US index futures higher, rising above yesterday's session high on negligible volumes. Global equity futures rallied with Hang Seng futures outperforming and flash smashing to close the session, after a strong finish for Chinese equities following a report out of MNI that Chinese deleveraging may not be as stringent next year. European stocks rose this morning (Stoxx 600 +0.3%) as the Euro sank, helped by positive notes out from Goldman Sachs, who are overweight European automakers. Goldman said in a Europe strategy note that “deep value sectors” (autos, oil, and utilities) will help Stoxx Europe to return 12% in next 12 months. As a result, European automakers outperform led by VW for a second straight day, with the SXAP index advancing as much as 1.9%, best of 19 groups on the Stoxx Europe 600 benchmark (Volkswagen +3.8%, Porsche +2.7%, BMW +2%, Daimler +1.7%). Additionally, Imperial Brand shares rallied after their CEO change, as analysts speculate that this could increase the likelihood that the company will be taken over by Japan Tobacco. Airliner EasyJet is flying high this morning following strong financial results. Bunds are taking another look at 163.00+ levels having faded rallies above the big figure on several occasions recently. Stocks have already moved on from this weekend's German government crisis: German President Frank-Walter Steinmeier said Germany was facing its worst governing crisis in the 68-year history of its post-World War Two democracy and pressed all parties in parliament “to serve our country” and try to form a government. “The events have already been likened to Germany’s Brexit-moment,” said Daniel van Schoot, an economist at Rabobank. “That is perhaps exaggerated, but the German political situation is now very unpredictable, more than in the past three decades.” Bonds across the region followed a rise in Treasuries after the European Central Bank was said to be likely to make only small adjustments to its guidance on monetary policy next year. EGBs rallied led by gilts which are supported ahead of index extension tomorrow, additionally some focus from European traders on dovish ECB sources piece from yesterday. The dollar stayed within relatively tight ranges versus its major peers, with average volumes. The euro and the pound edged higher, backed by leveraged interest, only to be capped by their respective 55-DMAs before shedding gains. The Swedish krona led G-10 losses on the back of record low interbank rate fixings, while the Turkish lira pared a drop to an all-time low after the central bank raised borrowing costs. Meanwhile, sterling was steady and gilts advanced amid reports Prime Minister Theresa May has the backing of ministers to offer the European Union more money to break the Brexit deadlock. The Australian dollar dropped to a five-month low after suggestions from the central bank that interest rates will stay lower for longer; EUR/SEK breache'd 10.00 briefly before fading back. Turkey’s lira hit a new record low against the dollar but pared some of the drop after its central bank tightened liquidity, as the standoff between Erodogan and central bank continues. In overnight central bank announcements, the Bank of England's Deputy Governor Cunliffe said inflation has been a bit lower than BoE forecast in Autumn and that it’s possible to wait before tightening policy until there is clear evidence that pay growth is responding to unemployment level. Elsewhere, RBA minutes from November 7th meeting stated that any further appreciation in AUD would slow expected pick-up in inflation and the economy. The minutes also stated that there is considerable uncertainty on how fast wages might pick up and add to inflation, while it added that a pass through to inflation may be delayed by many factors. RBA's Lowe stated that there is 'not a strong case' for near-term change in interest rates with the bank paying attention to soft wage growth. In the U.S., confirmation that Federal Reserve Chair Janet Yellen will leave the board in February creates a fourth vacancy for President Trump to fill, making it trickier for investors to bet on the central bank’s interest rate trajectory next year. While the Thanksgiving holiday gives traders an excuse to pause, equities are heading into the end of the year near their peaks, with investors optimistic about global growth and company earnings. Meanwhile the collapse in the US Treasury curve continued, with 2s10s moving below 60bps, and screaming inversion as soon as early next year. At the same time, The gap between French and German borrowing costs on Tuesday narrowed to its tightest level since before the euro zone debt crisis of 2010-2012. Germany’s 10-year yield fell two basis points to 0.34%, the lowest in almost two weeks. Britain’s 10-year yield decreased four basis points to 1.257%, the lowest in almost two weeks. Japan’s 10-year yield dipped one basis point to 0.033%, the lowest in more than a week. Oil prices rose on expectations of an extended OPEC-led production cut, although rising output in the United States capped gains. Brent crude futures were up 0.78 percent to $62.72. West Texas Intermediate crude fell 0.6 percent to $56.09 a barrel. Gold increased 0.3 percent to $1,280.39 an ounce. Copper gained 0.3 percent to $3.13 a pound, the highest in more than a week. Expected economic data include Chicago Fed National Activity Index and existing home sales. Companies including Medtronic, Lowe’s, Salesforce, Analog Devices, HP Enterprise and HP Inc. are reporting earnings Bulletin Headline Summary from RanSquawk EU bourses firmer this morning with auto names racing away amid a positive note from Goldman Sachs FX price action fairly tepid thus far. Looking ahead, highlights include US existing home sales, APIs, ECB’s Coeure and Fed’s Yellen Market Snapshot S&P 500 futures up 0.2% at 2,586.75 STOXX Europe 600 up 0.3% at 387.49 MSCI Asia up 0.9% to 171.57 MSCI Asia ex Japan up 1.1% to 565.37 Nikkei up 0.7% to 22,416.48 Topix up 0.7% to 1,771.13 Hang Seng Index up 1.9% to 29,818.07 Shanghai Composite up 0.5% to 3,410.50 Sensex up 0.4% to 33,492.20 Australia S&P/ASX 200 up 0.3% to 5,963.52 Kospi up 0.1% to 2,530.70 German 10Y yield fell 1.7 bps to 0.346% Euro down 0.08% to $1.1724 Italian 10Y yield fell 2.7 bps to 1.543% Spanish 10Y yield fell 2.4 bps to 1.491% Brent futures up 0.8% to $62.69/bbl Gold spot up 0.3% to $1,280.53 U.S. Dollar Index little changed at 94.08 Top Overnight News U.K. Prime Minister Theresa May won the backing of ministers on both sides of her divided cabinet to offer the European Union more money to break the Brexit talks deadlock; Barring some major breakthrough, global banks will implement their relocation plans early next year to guarantee they’re able to have new offices inside the EU running by the time the U.K. exits German Chancellor Angela Merkel said she’s ready to face voters again to break the country’s political stalemate, betting they won’t blame her for failed talks on forming a coalition Germany: FDP chairman reaffirms rejection of four-party talks; SPD reiterates they will not be part of a grand coalition Putin held a surprise meeting with Syria’s Bashar al-Assad, kicking off a diplomatic drive this week to outline the terms of an end to the Middle Eastern country’s civil war; Putin will speak by phone with Trump later Tuesday, the Kremlin said The ECB is likely to make multiple small adjustments to its guidance on monetary policy next year rather than any major change in language as it ends quantitative easing, according to euro-area officials familiar with the thinking of policy makers BOE: Cunliffe says CPI will peak in 4Q 2017, it’s possible to wait before tightening; McCafferty says equilibrium unemployment rate may be below 4.5% RBA’s Lowe: no strong case for a near-term adjustment in policy, more likely that next move in rates will be higher; increasingly likely that inflation will be subdued for some time yet MNI: PBOC deleveraging campaign may ease somewhat in 2018; PBOC will continue to manage currency and capital controls for at least another decade, according to people familiar Turkey Central Bank: has decided to provide all funding from its late liquidity window effective Wednesday, which will raise the weighted average cost of funding by 25bps Nestle Is Said to Be Among Potential Hain Celestial Suitors AT&T, U.S. Prepare to Battle in Court Over Time Warner Merger Cannabis Grower Aurora Plans to Go Hostile With CanniMed Bid ECB Is Said Likely to Take Small Steps in QE Exit Guidance Asian equity markets were higher across the board as the region took the impetus from the positive close on Wall St, with Nikkei 225 (+0.9%) underpinned as exporters benefitted from JPY weakness. The benchmark Japanese index briefly broke above the 22,500 level as stocks coat-tailed on the rebound in USD/JPY, with Toshiba reprieved from yesterday’s slump to sit among the biggest gainers. ASX 200 (+0.3%) also traded with broad-based optimism across its sectors albeit to a lesser extent and Chinese markets completed the upbeat picture following another significant liquidity operation by the PBoC, with the Hang Seng (+1.5%) leading on continued gains in its largest weighted stock Tencent which recently became a member of the exclusive USD 500bln market-cap-club. Finally, 10yr JGBs were relatively flat throughout the session with demand subdued by the broad positive risk tone and a tepid longer-dated enhanced liquidity auction, although a mild uptick was seen in late trade as prices broke above 151.00. PBoC injected CNY 130bln in 7-day reverse repos, CNY 40bln in 14-day reverse repos and CNY 10bln in 63-day reverse repos. Net of maturities, the injection was only CNY 10bn however. PBoC also set the CNY mid-point weaker at 6.6356 vs Prev. 6.6271. Elsewhere, the Japanese Government to cut 30 and 40 year JGB supply in FY 2018/2019. Top Japanese News; Top Fund Backs Tencent to Drive Hong Kong Index Even Higher China H Shares Jump to Two-Year High as Financial Firms Rally Richest Asian Banker Sees Once-in-Lifetime India Opportunity Turkey Lifts Bank-Funding Costs as Lira Weakens to All-Time Low European equities modestly higher this morning (Stoxx 600 +0.2%), with positive notes out from Goldman Sachs, who are overweight European automakers. Goldman said in a Europe strategy note that “deep value sectors” (autos, oil, and utilities) will help Stoxx Europe to return 12% in next 12 months. As a result, European automakers outperform led by VW for a second straight day, with the SXAP index advancing as much as 1.9%, best of 19 groups on the Stoxx Europe 600 benchmark (Volkswagen +3.8%, Porsche +2.7%, BMW +2%, Daimler +1.7%). Additionally, Imperial Brand shares rallied after their CEO change, as analysts speculate that this could increase the likelihood that the company will be taken over by Japan Tobacco. Airliner EasyJet is flying high this morning following strong financial results. Bunds are taking another look at 163.00+ levels having faded rallies above the big figure on several occasions recently. The bullish fundamentals and flow/positioning motives are well known and documented, but chart-wise market contacts note that support around 162.86 (rising trendline and Monday’s late Eurex base) held on the downside, prompting some intraday buying for a bounce to 163.06 resistance initially and then 163.16 (yesterday’s session peak) vs a high so far at 163.15. Beyond that, 163.22 needs to be breached to expose 163.40 and this month’s 163.63 peak. However, another retreat and failure to retain grasp of the 163.00 handle will bring 162.82 back into play as support (Monday’s actual intraday low), and on a break those short term longs not booking profit at 163.06 are expected to bail. Turning to Gilts, more upside also seen and a return to the 125-plus zone, at 125.29 for a 33 tick gain on the day vs 12 tick loss at one stage, before easing back slightly on larger than forecast UK PSNB shortfalls. Top European News Brexit-Hit Banks Said to Start Moving Staff Abroad in Early 2018 Paris, Amsterdam Brexit Winners as Coin Toss Assigns EU Agencies May Prepares New Brexit Offer After Talks With Ministers U.K. Budget Deficit Widens as Inflation Boosts Debt Costs Uniper Tells Shareholders to Reject Fortum’s Takeover Offer EasyJet Reaping Benefit of Ryanair Retreat as Winter Prices Gain In FX markets, price action has been relatively contained thus far. The USD index is firmer around the 94.000 handle in thin holiday-impacted trade, with the USD gaining ground vs most major counterparts on a generally more risk-on mood. EUR has been resilient in the face of Germany’s struggles to form a new Government and the threat of another election. EUR/USD continues to find support ahead of stops around 1.1720 and bids at 1.1700, with reported fixing demand in Asia propping the pair, but the 100 DMA around 1.1745-50 capping recovery gains. Elsewhere, AUD has rebounded from overnight lows post-RBA minutes, as Governor Lowe underlined that the next move in rates will be up, although the lead time to any tightening remains lengthy. Meanwhile, GBP was unreactive to the latest public borrowing data as markets look to see whether or not PM May will get the green-light for an enhanced divorce bill offer to the EU. In commodities, WTI and Brent crude futures have continued to climb through the European session with energy related newsflow on the light-side as prices retrace some of the declines seen in the early stages of yesterday’s session. Energy markets are looking ahead to next week’s OPEC meeting, however, markets are firmly expecting an extension to existing production cuts in lieu of recent rhetoric from the cartel. In metals markets, gold only managed to nurse some of yesterday’s losses overnight as a broad positive risk tone kept safe-haven demand subdued. Copper maintained most of the prior session’s gains with prices supported by the risk appetite and amid gains in Chinese steel and iron ore prices on optimism for increased demand following the winter season. Looking at the day ahead, central bank speakers will likely be the centre of attention again with Fed Chair Yellen due to speak in the evening as part of a series with former BoE governor Mervyn King, while the ECB’s Coeure chairs a panel in Frankfurt in the afternoon. Datawise, UK public sector net borrowing and CBI trends data for October and November are due, while in the US the Chicago Fed national activity index and existing home sales data for October is due. US Event Calendar 8:30am: Chicago Fed Nat Activity Index, est. 0.2, prior 0.2 10am: Existing Home Sales, est. 5.4m, prior 5.39m 10am: Existing Home Sales MoM, est. 0.19%, prior 0.7% 6pm: Fed’s Yellen Speaks at Stern Business School DB's Jim Reid concludes the overnight wrap There wasn't much contagion yesterday after the surprise collapse in German coalition talks late on Sunday night. Over the last couple of years negative market reaction to political shocks has often been over before you can digest it fully. Examples being the Greek and Brexit referendums and the Trump election results. Although the German coalition talks collapsing is much lower key than these events, it was still interesting that the DAX was only negative for 1 hour 16mins and that the Euro had snapped back into positive territory 37 minutes earlier even if it did soften again as the day progressed closing -0.49% against the dollar. The DAX closed +0.50% (high to low had been as much as +1.23%) and the Stoxx 600 +0.67% (range 0.91%). Overall it’s hard to see what the solution is to the gridlock in Germany but it’s also hard to see it being that negative for markets other than at the margin. Mrs Merkel yesterday effectively ruled out a minority government and the SPD continue to rule out a return to a Grand Coalition so unless talks can be reignited, a snap election early next year seems increasingly likely. As an outsider not as familiar with the German election process as many of my readers I can't help wondering how a fresh election will help much with recent polls seemingly not changing that much from the September 24th election. However, perhaps the campaigning would persuade enough voters to change their mind that the coalition math might be easier. Unlikely but possible. The good news from our economists in Germany is that the political system means there's no power vacuum and thus no time pressure to progress things. This probably helped prevent the market reacting too negatively yesterday although it can’t be too positive at the margin for Brexit talks and for fresh Macron/ Merkel European initiatives in the near-term. For more on the technicalities and options open now see the note "Coalition talks collapsed - unchartered territory ahead" from our German economists yesterday. Overnight, the Fed’s Yellen has confirmed that she will be stepping down from the Board of Governors once Mr Powell is sworn into the office. Her vacancy will give President Trump a fourth spot to fill in the new Fed, including the Vice Chairman spot. Elsewhere, Trump has redesignated North Korea as a state sponsor of terrorism and the Treasury department is expected to announce additional sanctions today. Notably, Secretary of State Tillerson “still hopes for diplomacy” with the State. We wonder whether North Korea will retaliate with some form of defiance after this so watch out for that. This morning in Asia, markets have followed the positive lead from the US. The Hang Seng (+1.30%), Nikkei (+0.93%), Kospi (+0.15%) and Shanghai Comp (+0.40%) are all up as we type. Turning to Brexit headlines, it seems that in addition to the stalemate on UK’s financial settlement to the EU, there are other unresolved issues before talks can move onto trade and a transition deal. Chief EU Brexit negotiator Barnier has noted that the Irish border will require a specific solution and it’s up to “those who wanted Brexit” to come up with those solutions. Elsewhere, he has warned “the legal consequence of Brexit is that the UK financial services providers lose their passport (rights to the EU bloc)”. Also press reports last night suggested that PM May has cabinet approval to double the settlement offer from the current EUR20bln. Moving onto central bankers’ commentaries now. The ECB’s Draghi reiterated that despite the sound economic recovery, “underlying inflation pressures are still subdued as labour market slack remains significant….(and that we) still need time to translate into dynamic wage growth”. On non-performing loans in the EU bloc, he cautioned that we need to “…work together to cope with this problem….but at the same time doesn’t create the destabilizing effects that people fear”. On Brexit, he noted it was difficult to properly analyse, mainly because “we don’t have yet a precise or even imprecise view of what the negotiating platform will be”. Notably, he said that the Brexit “transition can be managed in a smooth way…but it should be done without compromising over the integrity of the single market”, although “this is easier to be said than done”. Following on, BOE policy maker Mr Ramsden has warned that Brexit could put the economy in an “unusual” slow down for years. He noted “given the long horizon over which the effects of Brexit could play out, we’re likely to be on the flat part of the saucer for some time”. On his decision to dissent on the recent rate hike, he noted there may be more room for the economy to grow without price gains, noting “…one must pay close attention to any signs that above target inflation is feeding through to second-round effects in domestic costs…so far, that doesn’t seem to be the case”. Now recapping other markets performance from yesterday. US equities all strengthened, with both the S&P and Nasdaq up c0.1% and Dow up 0.31%. Within the S&P, telco (+0.97%) and financials stocks rebounded and led the gains, with partial offsets from health care and utilities names. European markets were all modestly higher despite the German political instability. Across the region, the Stoxx 600 (+0.67%), DAX (+0.50%) and CAC (+0.40%) rose modestly, while the FTSE 100 was the relative underperformer (+0.12%). The modest risk on bias was evident in volatility measures, with the VIX down for the third consecutive day (-6.8% to 10.65) while the VSTOXX also fell -7.05% after spending only 43 minutes higher at the open. Over in government bonds, core bond yields were mixed but little changed (UST 10y: +2.3bp; Bunds +0.2bp; Gilts -0.3bp), while peripherals outperformed with Italy and Spanish yields down 3-4bp. Elsewhere, the flattening across the Treasury curve has continued with the 5s30s curve c3bp flatter to 68.8bp, marking a fresh 10 year low. Turning to currencies, the US dollar index and Sterling gained 0.44% and 0.12% respectively, while Euro fell 0.49% following the aforementioned developments in Germany. In commodities, WTI oil dipped 0.58%, in part as investors await potential confirmation of production cuts in the upcoming OPEC meeting on 30th November. Elsewhere, precious metals weakened (Gold -1.20%;Silver -2.30%), with Gold down the most since late September, while other base metals were mixed (Copper +0.91%; Zinc -0.06%; Aluminium -1.44%). Away from the markets, DB’s China research team have published another note looking at China’s macro risks. They have noticed new signs of a tightening in fiscal and monetary policies over the past week. For example, on the fiscal front, the Ministry of Finance issued a document to tighten control over public private partnership projects. On monetary front, the government released draft guidelines on the asset management sector, which from a macro perspective could structurally constrain financial leverage and further tighten credit growth. Overall, the team believes these new measures are positive for China in the long term, but in the next 6 months they will likely cause the economy to slow. Elsewhere the latest ECB holdings were released yesterday. Net CSPP purchases last week was €2.33bn and Net PSPP purchases €12.27bn. This left the CSPP/PSPP ratio at 19.0% last week (15.4% over the last 4 weeks vs. 11.5% before QE was trimmed in April 2017). Although we don’t think CSPP will be trimmed much after the January taper last week’s buying seemed anomalous in part as issuance was high over the period and the ECB may have taken advantage of this, particularly as the upcoming holiday season might bring liquidity challenges later on. Moving to the limited macro data releases from yesterday. In the US, the October Conference board leading index was above expectations at 1.2% mom (vs. 0.8% expected) and 5.2% yoy - the highest since May 2015. In Germany, the October PPI was in line at 0.3% mom and 2.7% yoy. In Japan, we saw a trade surplus of JPY323bn in October, which was modestly larger than expected. Looking at the day ahead, central bank speakers will likely be the centre of attention again with Fed Chair Yellen due to speak late in the evening as part of a series with former BoE governor Mervyn King, while the ECB’s Coeure chairs a panel in Frankfurt in the afternoon. Datawise, UK public sector net borrowing and CBI trends data for October and November are due, while in the US the Chicago Fed national activity index and existing home sales data for October is due.
Millions Upon Millions of Americans Have “Negative” Wealth Posted with permission and written by Rory Hall, The Daily Coin While 3 Americans possess more wealth than 50% of the combined poorest, we now learn that 20% of ALL Americans have zero or negative wealth. I presume by having “negative wealth” they have lived beyond their means for so long their debt burden is all they have to show for their life – very sad that people allow themselves to be put in that position. The wealth inequality in America is largely the function of the Federal Reserve system that operates through the U.S. Treasury. Without this mechanism of wealth transference the current wealth imbalance would not exist – it would be almost impossible to have the number of “millionaires”, “billionaires” that currently roam the earth. These people would still be wealthy, but their wealth wouldn’t be completely out of balance with the mass of people. Millions of Americans are living on the edge. One in five households has zero or negative wealth, according to a report released this week by the Institute for Policy Studies, a progressive think tank based in Washington, D.C. What’s more, an even greater share of African-American (30%) and Latino (27%) households are “underwater” financially. The combined impact of $1 trillion in credit-card debt, $1.4 trillion in student loan debt, and stagnant wages are taking a toll. U.S. homes have regained value since the Great Recession, but many households have not. “Millions of American families struggle with zero or negative wealth, meaning they owe more than they own,” the report found. “This means that they have nothing to fall back on if an unexpected expense comes up like a broken down car or illness.” And inequality could get worse through new tax cuts for the wealthy. Source The mainstream media, once again, plays their role in keeping people ignorant. Instead telling people the truth about U.S. homes have regained value since the Great Recession and calling it what it is – massive inflation on the edge of hyperinflation – it is played off as some type of benefit for the mass of people – it is not. It is a benefit for the top 0.01% only as they already own, outright, their land, their businesses and our land and businesses. If a person purchased a home 20 years ago for $50k and today that home would sell for $2mm where would that person be able to replace their home, in the same neighborhood, and realize that gain? It wouldn’t happen. This is not an increase in value; it is simply inflation. President Trump’s tax proposals won’t give America’s middle class the reprieve they need to grow their wealth and recover from the financial crash, said Josh Hoxie, who heads up the Project on Opportunity and Taxation at the Institute for Policy Studies. A recent analysis by the Joint Committee on Taxation concluded that taxes would decline for all income groups, with the biggest percentage-point decline for millionaires. Source The current tax proposals, like past tax proposals, are for the wealthy to further strip-mine the poor. Having 3 people with more wealth than 50% of the poorest is not good enough – we need to have 3 people with more wealth than 75% of the poorest – that’s progress!! On the other hand we see the other form of “hidden theft” – Inflation. We are beginning to see the cracks in the economy become cavernous while inflation continues to rise chewing up any hope of savings the poor could possibly amass. It’s like a trifecta of wealth transference. With more pay-day-loan shops (loan sharks) popping up everyday, it seems the system is going to continue to exploit and strip the poor of whatever wealth they currently possess. As I stated at the beginning of this article, it is simply the Federal Reserve system doing exactly what it is was designed to do – shift the wealth of the many to the few and with the Federal Reserve Note past its peak and headed to the dustbin of history. The transfer of wealth, it seems, has adapted a particular sense of urgency. Questions or comments about this article? Leave your thoughts HERE. Millions Upon Millions of Americans Have “Negative” Wealth Posted with permission and written by Rory Hall, The Daily Coin
The US President Donald Trump has designated North Korea a state sponsor of terrorism; he also promised more US Treasury sanctions against Pyongyang. This was reportedly preceded by months of debate within the Trump administration, as some state department officials argued that North Korea did not fit the legal definition of a state sponsor of terrorism. While Trump promised that there would be new sanctions on Pyongyang, his Secretary of State Rex Tillerson said he did not expect there to be significant new sanctions and that Washington was still committed to a diplomatic solution to the crisis on the Korean Peninsula. Al Jazeera's Shihab Rattansi reports from Washington, DC. - Subscribe to our channel: http://aje.io/AJSubscribe - Follow us on Twitter: https://twitter.com/AJEnglish - Find us on Facebook: https://www.facebook.com/aljazeera - Check our website: http://www.aljazeera.com/
Authored by John Mauldin via MauldinEconomics.com, “Vanity of vanities, saith the Preacher, vanity of vanities; all is vanity.”– Ecclesiastes 1:2, King James Version (attributed to King Solomon in his old age) This week’s letter will take a look at the growing number of ridiculous, inane, and otherwise nonsensical absurdities that fill the daily economic headlines. I have gone from the occasional smile to scratching my head now and then to “WTF” moments several times a week. Wondering if it was just me, I recently sent an appeal to a what became a large number of my friends and fellow writers and analysts, asking for their graphic examples of this paranormal economic activity. Suffice to say, it is not just me who sees absurdities. I received so many responses that I may have to extend this letter another week or two. (Note: This letter will print long, as there are lots of graphs.) Some of what you’ll see depicted in the following charts originated a decade ago in the Global Financial Crisis – or was caused by the reactions of central bankers to that crisis. The many shocking, previously unimaginable acts by central banks and governments left us so numb that I think we started to simply accept them without much thought. That was our mistake: We must confront the unthinkable, not just shrug our shoulders at it. Because when we have our next crisis, I will bet you dollars to donuts that central banks and governments will react in ways that are even more unthinkable. Now on to the bonfire. Vanity of Vanities If you work in the financial industry you’ve probably read, or at least know plenty about, the Tom Wolfe novel Bonfire of the Vanities. It’s a great book, but it’s not the source of this letter’s headline. I’m thinking back further to the original “bonfire of the vanities” in fifteenth-century Florence. In 1490 the ruling Medici family brought in Dominican friar Girolamo Savonarola to serve them, but within a few years he was more or less ruling the city. In 1495, during the pre-Lenten carnival, Savonarola began hosting a “bonfire of the vanities,” at which people would burn objects that inspired the deadly sin of vanity: mirrors, cosmetics, musical instruments, and so on. This being Florence, they also destroyed tons of artworks, tapestries, books, furniture, and other priceless treasures. Did doing so make them any less vain? Probably not, but I’m sure the bonfires were quite magnificent. In a similar manner, we in this century routinely “burn” hard-won lessons (or at least expel them from our thoughts) because someone with an ulterior motive convinces us they’re useless or harmful. That’s rarely true, as we often discern too late, and then we have to learn the same lessons again. Think about this. How often do central bankers, regulators, corporate leaders, lawyers, politicians, and ordinary investors make the same mistakes over and over again? All the time. If we would stop burning our memories, we might make better progress. But no, we must have our bonfires. And so the absurdities are perpetuated. To kick off our tour of absurdities, Michael Lebowitz of 720 Global sends this chart of Federal Reserve assets as a percentage of GDP. You might notice a slight trend change along about 2008: Not to put too fine a point on it, but this is bonkers. I understand that we were caught up in an unprecedented crisis back then, and I actually think QE1 was a reasonable and rational response; but QEs 2 and 3 were simply the Fed trying to manipulate the market. The Keynesian Fed economists who were dismissive of Reagan’s trickle-down theory still don’t appear to see the irony in the fact that they applied trickle-down monetary policy in the hope that by giving a boost to asset prices they would create wealth that would trickle down to the bottom 50% of the US population or to Main Street. It didn’t. The Fed has left that bloated balance sheet alone for almost 10 years. And now for some reason they feel it is urgent to reduce the balance sheet even as they also raise rates. This is not model-based monetary policy; it is simply an emotional monetary policy experiment. I can understand raising rates – I wish they had done that four years ago. I can even understand reducing the balance sheet. But at the same time? When you don’t know what you don’t know? I mean really, there is no way to know how the market is going to react to either of these events, let alone to both at the same time. This seems to me the height of monetary policy lunacy. The Fed’s stimulus efforts manifested themselves, among other places, in years of near-zero interest rates, helpfully illustrated here by Peter Boockvar: We all lived through this remarkable set of experiments, but it’s still amazing to think that in 2007–2008 the Fed chopped short-term rates by five full percentage points in just five quarters. Today we agonize over whether they’ll hike rates by half as much, spread over five years or more. Note also that this gargantuan rate cut still couldn’t avert a near meltdown of the banking system. You can argue that it would have been even worse to do nothing, but it’s hard to argue they didn’t do all they could have. But it wasn’t just the Federal Reserve. The European Central Bank and the Bank of Japan have both grown their balance sheets more than the US has. The Bank of Japan’s balance sheet is almost five times larger in proportion to GDP. And it is still growing. The Land of the Rising Sun has become the land of the rising central bank balance sheet. This graph is courtesy of my friend Dr. Ed Yardeni: Those Crazy Swiss Meanwhile, the more sober-minded (hah!) gnomes of the Swiss National Bank expanded their own balance sheet at a much steadier pace, though in percentage terms they blew it up far more than the Fed or the BOJ did theirs. The Swiss National Bank is now the world’s largest hedge fund. My friend Dennis Gartman wrote me yesterday, saying, We have written many times about the fact... and it is a fact... that the Swiss National Bank has effectively become both the nation’s central bank and one of the largest, if not indeed the very largest, hedge funds in the world. The process began several years ago when the SNB swore that it would do what it could and using what methods were available to it to weaken the Swiss franc relative to the EUR and to the US dollar. It has succeeded, until recently, creating Swiss francs out of the thinnest of air, and selling those Francs vs. the EUR and the dollar, and then taking those EURs and dollars to buy European and US equities and debt securities. The SNB’s balance sheet is a CHf 813 billion (and given that the CHf and the US dollar are effectively at parity one with the other that CHf 813 billion is the same as $813 billion) and this is very nearly 125% of the Swiss GDP. By comparison, the Fed’s balance sheet of $4.5 trillion is but 25% of the US GDP. In other words, if the Fed is taken to task for being expansionary, the SNB is truly explosive! Of the CHf 813 billion on the Bank’s balance sheet, 760 billion of it is the form of securities, of which 90 billion are in equities. The other 670 billion are held in EUR and US debt securities. Thus far this has been a huge, stunning, almost unimaginable profit for the SNB and theoretically for the people of Switzerland. However, the problem is that the SNB will have enormous difficulty in liquidating this massive portfolio, for once the news leaks out that the Bank is selling the bids will disappear; the CHf will soar in price while debt and equity markets melt away. What the SNB has done here is stunning; some have even called it nearly “criminal” in nature. We suggest that there is nothing at all criminal in what the SNB’s leaders have done and that they are well within their legal guidelines; however, what they have done is optically and philosophically wrong and very badly so. This is QE gone very badly wrong, rivaled only by the same actions taken by the Bank of Japan that openly deals in the forex, debt and equity markets in Tokyo, buying ETFs on a very regular basis and becoming one of Japan’s largest public shareholders. This is central banking gone very, very badly awry. It will be stopped when equity prices collapse. As I wrote earlier this year: The SNB owns about $80 billion in US stocks today (June, 2017) and a guesstimated $20 billion or so in European stocks (this guess comes from my friend Grant Williams, so I will go with it). They have bought roughly $17 billion worth of US stocks so far this year. And they have no formula; they are just trying to manage their currency. Think about this for a moment: They have about $10,000 in US stocks on their books for every man, woman, and child in Switzerland, not to mention who knows how much in other assorted assets, all in the effort to keep a lid on what is still one of the most expensive currencies in the world. Switzerland is now the eighth-largest public holder of US stocks. And apparently they are concentrating on the largest of the large-cap stocks. The own 19 million shares of Apple (as of March 31). That is roughly 3% of the current market. I’m in Switzerland as you read this, so I am personally experiencing the reality of currency strength. Have you ever paid $12 for a Diet Coke? (Seriously!) No wonder the SNB is worried about the valuation of their currency. I will be speaking at a conference in Lugano on Monday. The conference sponsors have asked me to give them three questions to ask the attendees during my speech. One of those questions is, do you think the Swiss National Bank will eventually hold $1 trillion in assets? And do you agree with that policy? I will be asking some of the larger asset managers what they will do and how they will react. Hedging? How do you do that in that environment? Gartman is right: How can the SNB sell? The Swiss franc would levitate almost instantly, which is the one thing they are desperate to avoid. As long as people keep trying to convert their money into Swiss francs (at -0.75 basis points!), the natural direction for the franc will be up unless the SNB continues to intervene in foreign markets. My bet is that they will do so – and that this will not end well. Or maybe they’ll get lucky and their even more massive bond portfolio will offset their losses. The Absurdities in the Bond Markets Not coincidentally, European yields are at rock bottom, or actually below that, in negative territory. And what is even more absurd, European high-yield bonds, which in theory should carry much higher rates than US Treasury bonds, actually yield below them. Here’s a chart from old friend Tony Sagami: Interest rates are supposed to reflect risk. The greater the risk of default, the higher the rate, right? Yet here we see that European small-cap businesses are borrowing more cheaply than the world’s foremost nuclear-armed government can. That, my friends, is absurd. Understand, the ECB is buying almost every major bond it can justify under its rules, which leaves “smaller” investors fewer choices, so they move to high-yield (junk), driving yields down. Ugh. And can anything be more absurd than negative interest rates in long-term bonds? This 2016 article on the Quartz site, under the subhead “World Gone Mad,” makes clear the level of ridiculousness we’re looking at here: If you were to buy, at random, any government bond, there is a one in three chance you’d lose money if you held onto it until it matured. That is, around a third of all developed-country government debt – or more than $7 trillion [That was last summer. It’s now $9 trillion, so it’s even worse –JM], in terms of market value – is now trading at negative yields, according to Citi. That means that investors are effectively paying borrowers to lend to them – giving away $100 and a few years later getting back $99. In the euro zone, more than half of all outstanding bonds are priced in this upside-down way, according to Tradeweb. (source) All that said, the economists who designed these interventions had their reasons. They thought lower interest rates and liquidity injections would create jobs, spur investment, and eventually produce inflation. The idea was to then reduce the stimulus before inflation got out of control. Their gauge for assessing this tricky process is the unemployment rate. An economy at “full employment” is one in which inflation is right around the corner. The theoretical relationship looks something like this – chart from Gary Shilling. In fact, we now have very low unemployment, accompanied by stubbornly low inflation. Why is that? No one really knows. All sorts of theories are floating around, but none have yet proven helpful in restoring the Phillips Curve. Here’s reality, again via Gary Shilling: The result is a strange economy in which the people who want jobs mostly have them – but remain deeply dissatisfied, stressed, overleveraged, and often angry. Consider this graph of real median household income, from my friend Murat Koprulu. This is median, not average, household income. That means half of households are doing better and half worse. It’s also inflation-adjusted, so the amounts are consistent over time. We see that the median family is roughly back where it was 20 years ago, in the mid-1990s. Worse, it’s still far below where it was ten years ago before the financial crisis. Is it any wonder people are mad? One more absurdity. In the US we often think education is the key to getting ahead. That’s not necessarily the case anymore. Here’s another chart Murat sent me, showing real average hourly wages by education level. From 2007–2014, possessing an advanced degree enabled you to “get ahead” only in a relative sense. Your wages stayed flat while those of the less-educated fell. Notice how having “some college” was actually more negative for wages than having only a high school education. How can that be? Possibly because going to college without obtaining a degree leaves you in debt with less practical experience than your peers who went straight to work after high school. To that point, student debt is quickly becoming a problem for everyone. Look at this chart from Grant Williams on student loan debt held by the federal government. Do we add that to our national debt? Taxpayers are on the hook for over a trillion dollars in student debt. Unlike mortgage or business debt, student debt is backed by no tangible asset you can repossess. It bought knowledge that now hopefully resides in the student’s brain, but it may have just gone in one ear and out the other. That makes this debt uniquely risky. You and I are taking that risk, like it or not. And here’s another chart from Grant Williams, showing stock market capitalization to GDP. We are only another healthy bull market run away from being back to dot-com bubble levels. A run that many of my friends firmly believe awaits us. The US stock market as a percentage of GDP is now far bigger than it was at the housing bubble’s peak, and it’s rapidly approaching the dot-com bubble peak. That ought to make us a little nervous as we watch the Dow hit new all-time highs. And we will close this week’s adventure into absurdities with a note I got from Louis Gave this morning. Rather than just looking for absurdities in the developed world, Louis’ research team at GaveKal scours the entire world in depth every day. So he gives us a few lesser-known absurdities. [My comments will be in brackets.] Usually currency pegs are not a bad place to start when looking for absurdities. What are the odds of Lebanon keeping its peg now that Saudi won’t bankroll it? After all, you have a pegged currency with current account deficit in double digits relative to GDP: And once the Lebanese peg goes, will it be like Thailand in 1997 with Bahrein, Qatar, Oman, Egypt, Pakistan and ultimately Saudi all following suit? If so, you can kiss goodbye to those large defense orders… Incidentally, why pay 7x book to buy defense stocks when it seems pretty obvious that the wars of the future will either be: low-grade terrorist events or cyber warfare Who will need the big destroyers, tanks, and missiles anymore? Increasingly, our wealth is not about building and factories but about zeros and ones in a computer. Yet defense stocks have never been so richly valued: And this at a time when 95 cents out of every dollar collected by the US government goes to either pay a) interest, b) entitlement spending and c) defense. Which do you think goes first? I don’t think it is interest (hard to make them that much lower). And I doubt it will be entitlements. Which leaves you with defense. And so just like European nations before it, the US will slash defense spending to keep the welfare state alive So why pay 7x book for defense stock? There are many other ideas. A lot of them linked to the craziness in the bond market (negative swiss yields, Italian junk below UST, etc…). But how about this one: Okay, John back. Please note the serious level of sarcasm in the right-hand column above: “Good thing there is no common thread in the above names...” It’s all tech and all digital in the top seven. Note, however, that Exxon Mobil keeps hanging in there.
The Trump administration has imposed sanctions on what the Treasury Department describes as a “large-scale” Iranian counterfeiting ring that it says is run by the Islamic Revolutionary Guard Corps and potentially worth hundreds of millions of dollars.
Президент Соединенных Штатов Америки Дональд Трамп 20 ноября заявил, что США признают Северную Корею страной-спонсором терроризма в условиях обострения ядерной напряженности на Корейском полуострове. Об этом сообщает "Радио Свобода". По его словам, внесение КНДР в список стран-спонсоров терроризма должно предусматривать наложения дополнительных санкций...
Желающие могут еще раз полюбопытствовать, как плетется, шьется, орнаментируется... нормативная база нынешнего мирового порядкаМного раз упоминал здесь, что что бюрократическая машина США с нечеловеческой скоростью, усердием и скрупулезностью наращивает “мощь” нормативных документов.Процедура требует, чтобы в основе каждого последующего политического решения был как минимум документ.Изначально документ может быть принят с нарушением формальной логики и правовых норм, искажением фактов, но с соблюдением действующих процедур. В дальнейшем факты теряют своё обосновывающее значение. Основанием каждого нового круга политических действий и решений становится документ, который заменяет факт.Такая схема реализована в блоке “нормативных документов” по санкциям против России (Санкций против России не существует).В её основе свыше 10 законодательных актов США и примерно столько же подзаконников, включая уведомления Казначейства США.Примерно такая же схема формируется по “делу Магнитского”.Нормативный документ часто начиняется всевозможной “желтой требухой” -- как например, в случае, резолюций Конгресса США по "делу Немцова" -- в итоге "обосновывающая" "требуха" остаётся за кадром, а выводы из неё начинают жить самостоятельной жизнью.Общественность и политики начинают оперировать “обоснованными” требованиями Конгресса.Палата представителей Конгресса США единогласно одобрила закон "О поддержке стабильности и демократии на Украине", который предусматривает санкции в отношении России и предоставление Киеву летального оружия.Закон фиксирует сохранение американских санкций против РФ до своевременного, полного и окончательного выполнения ею Минских договоренностей.Согласно закону, который содержит запрет на признание США аннексии Крыма Россией, соответствующие санкции могут быть сняты с РФ только после того, как американский президент предоставит Конгрессу свидетельство о восстановлении суверенитета Украины над полуостровом.Вот этот документЕсть основания прочитать его внимательно, так как выражения и целые абзацы из него "двинутся дальше" в другие документы.Называется документ: ‘‘Stability and Democracy for Ukraine Act’’ [чем же еще как не оружием обеспечивать стабильность и демократию]По части санкций Акт отсылает к Приказу 13685, который отсылает к 13660 (расширенному Приказами 13661 и 13662), в котором (как упоминалось выше) ни слова о России вообще нет).Стратегия реагирования [отпора] на пророссийскую информацию и информацию, направленную на поддержку Российской Федерации, и пропагандистские усилия, направленные на русскоязычные общины в странах, граничащих с Российской Федерацией.in countries bordering the Russian FederationЛНР и ДНР Конгресс США упоминает как countries, а не territories?Дальше в документе много слов про санкции -- основной смысл эти положений можно понять так, что различные структуры администрации США должны придумать, как бы безболезненно сочинить новые санкции...============И еще один потрясающий по силе документ эпохи -- резолюция Конгресса "Признание 25-ой годовщины независимости от Советского Союза"Один из оборотов можно рассмотреть отдельно -- своего рода обоснование легитимности нынешнего режима на Украине.Вот чем он легитимизирован:abdication of President Yanukovychthe will of its people by strengthening rule of lawВполне себе юридическая формулировка abdication -- наверное, предполагает, что произошла какая-то процедура отказа Януковича от должности (по большому счету таким отказом в разные времена могли бы признаваться даже жесты правителя)) -- но в Конституции Украины черным по белому написано:Полномочия Президента Украины прекращаются досрочно в случае:1) отставки;2) невозможности исполнять свои полномочия по состоянию здоровья;3) смещения с поста в порядке импичмента;4) смерти.Отставка Президента Украины вступает в силу с момента оглашения имлично заявления об отставке на заседании Верховной Рады Украины.Невозможность исполнения Президентом Украины своих полномочий посостоянию здоровья должна быть установлена на заседании Верховной Рады Украины иподтверждена решением, принятым большинством от ее конституционного состава наосновании письменного представления Верховного Суда Украины — по обращениюВерховной Рады Украины, и медицинского заключения.Президент Украины может быть смещен с поста Верховной РадойУкраины в порядке импичмента в случае совершения им государственной измены илииного преступления.... Для проведения расследования Верховная Рада Украины создает специальнуювременную следственную комиссию, в состав которой включаются специальный прокурори специальные следователи.Выводы и предложения временной следственной комиссии рассматриваются назаседании Верховной Рады Украины...Вопрос на троечку любому юристу -- может ли считаться abdication это постановление Верховной Рады Украины?Вот, братцы-украинцы, одна из основ уже теперь многолетнего бедлама на вашей территории, которую теперь приправят оружием."постановляет установить, что Президент Украины В. Янукович неконституционным [?] способом [???] самоустранился от осуществления конституционных полномочий таким образом, что не выполняет свои обязанности".ха-ха, конечно, нет -- первое основание неконституционно -- поэтому Конгресс США добавляет второе обстоятельство "воля людей, усиленная законом"Воля людей, усиленная законом, -- тоже самое произошло в Крыму, но только там will of people была выражено непосредственно, а не через Парламент.Вот и вся сказочка, но никто по-прежнему читать её не хочетШестое и седьмое доказательство порочности мировой цивилизации
За последние полтора месяца произошло много интересного. При этом одно довольно странное событие прошло практически незамеченным, а второе происходит прямо сейчас на наших глазах. Начнем по порядку. 23 декабря 2015 года капитал Федерального резерва США внезапно сократился на 65% или на 19,4 миллиардов американских дензнаков, когда дополнительный капитал данной структуры сократился на эту сумму. Капитал Федерального резерва складывается из двух частей. Во-первых, оплаченный капитал, то есть средства, внесенные в капитал Федерального резерва, когда какой-либо банк становится его членом, и, во-вторых, дополнительный капитал, представляющий собой нераспределенную прибыль. Согласно действующим требованиям, дополнительный капитал используется для покрытия убытков и должен быть равен не менее чем оплаченному капиталу, а все, что превышает его, за вычетом расходов должно направляться в казначейство США в виде дивидендов. Поэтому столь резкое падение капитала Федерального резерва США является свидетельством того, что в финансовой системе США имел место серьезный локальный кризис, для предотвращения развития которого потребовалось позволить кому-то из банков-членов забрать часть дополнительного капитала Федерального резерва США в объемах, превышающих допустимую минимально разрешенную величину капитала федрезерва. Возможно, эти средства могли понадобиться, чтобы прикрыть разрастающуюся кредитную «дыру», связанную с американским энергетическим сектором, поскольку известно о серьезных проблемах в этой области у таких банков как Wells Fargo и Citibank. Но это могут и другие представители американского банковского сектора, поскольку вряд ли найдется крупный банк, который не предоставлял кредиты американским нефтяникам в период их недавнего роста. Вне зависимости от того, что именно послужило причиной подобного решения Федерального резерва США, ясно одно, что это уже не большие, а ОЧЕНЬ БОЛЬШИЕ проблемы, которые решить иным путем невозможно. Но это лишь часть гораздо более широкого спектра проблем. Еще большие проблемы могут стоять перед биржей COMEX. Текущий февраль – это месяц, когда продавцам фьючерсов на драгоценные металлы необходимо поставить этот самый металл в его физическом виде покупателям этих самых фьючерсов на него, если те потребуют такую поставку. Обычно ее не требовали, но на этот раз наблюдаются серьезные перемены. Если в последнее время, как предполагают некоторые наблюдатели, могли иметь место не поставки металла, а погашение обязательств в «денежном» выражении с определенной премией, то сейчас покупатели стали выстраиваться в очередь именно за физическим золотом, отказываясь принимать валюту. При 4,5 тоннах «зарегистрированного» на бирже и готового к поставке потребителям желтого металла уже выстроилась очередь желающих получить 13,3 тонны. Ситуация выглядит откровенно опасной, поскольку грозит вполне реальным дефолтом, которого до сих пор так или иначе удавалось избегать. Если бы это касалось только данной конкретной биржи, все не было бы так печально. В реальности же это может означать, что владельцы золота или те, кто декларирует, что оно у них есть, больше не готовы закрывать им текущий дефицит между существующим спросом и предложением. Поскольку крупнейший покупатель золота в мире - это Китай, а в качестве поставщика выступают США, довольно легко увидеть, кто кого «кинул». Именно в этот момент может проявиться та принципиальная разница, которая отличает золото, эти мировые деньги, от мировой резервной валюты. Последствия события могут быть катастрофическими, поскольку могут полностью парализовать всю мировую финансовую систему. Будет достаточно одного – двух дней, чтобы наступил полный паралич, когда невозможно будет ни купить металл, ни продать якобы ценные бумаги, ни сделать что-либо иное. Насколько тяжелыми могут быть последствия подобного развития событий, будет зависеть от того, насколько быстро власти различных стран смогут отреагировать на это. Как показывает исторический опыт, на это им требуется время, и чем больше, тем тяжелее кризис может сказаться на населении. К этому необходимо быть готовым, поскольку это может случиться буквально в любой момент. Кризисные явления нарастают и быстрыми темпами, и если крах не произошел сегодня, то это не значит, что он не может случиться уже этой ночью. И хотя все надеются на лучшее, в настоящее время не просто желательно, но необходимо учитывать такое возможное развитие событий в своих планах и действиях. Мои книжки «Крах «денег» или как защитить сбережения в условиях кризиса», «Золото. Гражданин или государство, свобода или демократия», «Занимательная экономика»,«Деньги смутных времен. Древняя история», «Деньги смутных времен. Московия, Россия и ее соседи в XV – XVIII веках» можно прочитать или скачать по адресу http://www.proza.ru/avtor/mitra396