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"America's Demographic Situation Is A Ticking Time Bomb"

When America's social security, health care, and entitlement systems were first conceived, the country had a very different age distribution. There were roughly 7 active workers per retiree, and the ability to transfer some of that employee wealth to support older citizens was supportable. However, by 2030, just 15 short years away, there will be less than 3. Our national demographic architecture no longer can afford the entitlement system we have. And that's even assuming entitlements were currently sufficiently funded. Simp0ly put, America's demographic situation is a ticking time bomb.



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Summarizing The "Long Dollar Trade" In One Chart

With the USD experiencing its longest stretch of weekly gains since Bretton Woods, it appears, as SocGen notes, that recent currency movements have triggered nostalgia of the pre-crisis world when dollar strength was synonymous with a prosperous global economy. However, given the extreme positioning and potential for policy-maker complacency, SocGen warns the paradox is thus that a strong dollar tantrum could be a more worrying scenario than a Fed tightening tantrum.



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Study Finds Treated Fracking Wastewater Still Too Toxic

One of the biggest concerns about hydraulic fracturing, or fracking, is that the vast amount of wastewater produced by the process of extracting oil and gas from shale rock deep underground is incredibly toxic.  Most often, the wastewater is injected into disposal wells deep underground. But a process does exist to convert contaminated water into drinking water that involves running it through wastewater treatment plants and into rivers. Now a new report says that treated wastewater could be fouling drinking water supplies.



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"We'll Become ISIS" - The Devaluation Of America's Young Men

The most dangerous thing that any society can do is invalidate young men. When the explosion of youthful male wrath occurs in the USA, it will come along at exactly the same time as all the other benchmarks of order become unmoored — especially the ones in money and politics — which will shatter the faith of the non-young and the non-male, too. The re-set from that will be an economy and a society that few now yammering will recognize.



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The US Is Now 50% More Unequal Than Ancient Rome (And That Includes Slaves)

As we previously noted, only the highest income earners have seen any gains in compensation since the crisis began around 2007 to the current 'recovery' tops. It is perhaps not entirely surprising then that, the total income controlled by the Top 1% is drastically above that of the slave-included times of Ancient Rome and as high as the peak in the roaring 20s. "The greatest irony is that the President is railing against inequality as one of the most important problems of the day, despite the fact that his policies are squeezing the middle class and causing the Fed – with the President’s encouragement – to engage in the radical monetary policy, which is exacerbating inequality. This simple truth cannot be repeated often enough."



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The Goldman Tapes And Why The Delusion Of Macro-Prudential Regulation Means The Next Crash Is Nigh

There is nothing like the release of secret tape recordings to clarify an inconclusive debate. Actually, what the tapes really show is that the Fed’s latest policy contraption - macro-prudential regulation through a financial stability committee - is just a useless exercise in CYA. Macro-pru is an impossible delusion that should not be taken seriously be sensible adults. It is not, as Janet Yellen insists, a supplementary tool to contain and remediate the unintended consequence - that is, excessive financial speculation - of the Fed’s primary drive to achieve full employment and fill the GDP bathtub to the very brim of its potential. Instead,  rampant speculation, excessive leverage, phony liquidity and massive financial instability are the only real result of current Fed policy.



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PIMCO Liquidations Begin; And So Does The Retaliation: All Bill Gross Tweets Deleted

The last few days have been hectic for PIMCO executives. As we already noted, expectations of outflows persist and today's open in CDS markets suggested major concerns among market participants that PIMCO redemptions would force selling through an illiquid market. Sure enough, Bloomberg reports that PIMCO's Total Return Fund ETF was behind the auction of more than $170m of Fannie Mae CMBS on Friday (and more BWICs were seen today). As one trader noted, "you're going to sell your most liquid stuff first." Additionally, PIMCO has seen fit to delete all Bill Gross' tweets... so here are the last six months for the record.



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Despite Late-Day Buying Panic, Stocks Close Red

Heavy volume and volatile price action early in stocks and high-yield credit markets subsided later in the day as despite several big stocks in the red, the indices jammed higher in the last hour desparate to get positive (on terrible volume) but failed. Treasury yields fell 3-4bps early on and stuck near the lows of the day (ignoring equity's exuberance). High-yield credit rallied back off early spike wides at 380bps (with desks noting heavy demand for protection) but remains worse than stocks. VIX tested above 17 and crashed back below 15.5. The USD ended the day unchanged (AUD weakness notable) but gold and silver slipped lower with oil (back over $93) and copper up on the day. Camera-on-a-stick smashed over 11% higher to $91.50 as the 41% float short continues to get squeezed out.



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China Housing Bubble Bursts: Q3 Land Sales Crater 50%

China may be doing everything in its power to divert attention from the simple fact that its housing bubble, the largest in the world in terms of both assets comprising it as well as divergence from fair value, has burst. But while there is no clear threshold of what constitutes a bursting bubble when it comes to housing, the latest data out of Soufun, China's largest real-estate website, which said that land sales have dropped a massive 22% to 1.7 trillion Yuan in 2014 so far, is likely as clear an indication as any that Beijing is about to panic. And if that was not enough Bloomberg adds that land sales in 300 cites followed by Soufun fell almost 50% Y/Y to 415.9 billion yuan in 3Q, while residential land sales declined more than 50% to 265.3b yuan in 3Q.



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Gross To Have Final Laugh? Whopping Two-Thirds Of PIMCO's Flagship Fund May Be Withdrawn

The reason why the first article we wrote on Friday after news hit that PIMCO co-founder was shockingly leaving the firm on Friday, was listing the massive bond fund's biggest holdings, was because it was only a matter of time: it, being of course, the massive redemptions that would follow Gross' departure by people that his 30+ tenure at the bond fund made very rich, and who couldn't care less about a brief central planning-inspired flame out. After all Gross isn't the first person who has lost the plotline due to the Fed's manipulation of every market. So just how bad is it? Not for Gross of course: he has made his billions and is simply doing what he and Icahn do in their age: what they love. No, for Pimco, where the redemptions requests are already flooding in. According to the WSJ, just two days after the Gross announcement (both of which non-workdays), already some $10 billion has been withdrawn. And that is just the beginning.



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The Last Time Traders Were This Short 2Y Notes, Rates Collapsed

As rates fell last week, speculators in 2Y Treasury Notes added aggressively to their short positions. Positioning in 2Y Notes is now at its most short since mid-2007 (as 10Y Bond positioning surged to its most long in over a year), and if history is any guide to what happens next, rates are set to tumble.



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The Oil Head-Fake: The Illusion that Lower Oil Prices Are Positive

The essence of the Oil Head-Fake Dynamic is the inevitable drop in oil price resulting from a sharp decline in demand (i.e. global recession) will trigger disruption of the global oil supply chain that will eventually push prices higher than most currently think possible.



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"Hong Kong Risks Losing Its Role As A Financial Capital," Deutsche Bank Chief Economist Warns

"Hong Kong clearly has its work cut out holding on to its role as the entry way to [investing in] mainland China," warns Deutsche Bank's Chief Economist Taimur Baig as he reflects on the civil disobedience this weekend. Even before this weekend's riots, Baig believes "Hong Kong will have to shape up," and while his base case suggests the unrest will not have a major detrimental effect on the economy per se, he fears it will add to investor angst - and along with macro uncertainty - leaves Hong Kong more precariously positioned than Singapore as Asia's major financial capital.



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Spot The Total Logic Fail

It appears the leadership in Spain has reached its panic-point. Following Catalonia's President Artur Mas signing of a decree calling for an ultimately democratic referendum on independence for the region, Spanish Prime Minister Rajoy uttered this mind-numbing phrase:

CATALAN VOTE PROFOUNDLY ANTI-DEMOCRATIC, RAJOY SAYS

It appears Rajoy's perspective on democracy and the will of the people is a little different as the situation has become serious enough that he has gone full-Juncker.



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Martin Armstrong Warns The West "Sanctioning Russia Is A Big Mistake"

Judging from the plunge in stocks and the Ruble and along with proclamations that Russia is "isolated" (when it is clearly not), The West's sanctions appear to be achieving their goals (propaganda-wise). However, Martin Armstrong warns "politicians just keep making the same mistakes over and over again," as he explains, to the people of Russia, "sanctions only make Putin stronger for they allow him to point to the West as the evil empire."



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