"I think this is where the academics are kind of clashing with the practitioners. I think on paper negative rates make a lot of sense if you're running academic models, but in reality they make no sense... If they told you and I that they're going to tax your deposits by a hundred basis points, well it's better to put it in a safe or under your mattress. And that's why you see a resurgence in gold. The more they move to negative rates, the more gold is gonna take off because there's no carrying cost."
"Tomorrow we wake up and China has devalued 20%, the world is over. The world is over. Euro breaks up. The world is over. The euro breaks up. Everything hits a wall. There's no euro in that scenario. The US economy, I mean everything hits a wall! Everything hits a wall! It's a 'Mad Max' movie, right. OK, China gets to be the king in 'Mad Max' world. How appealing is that?"
After making a strong case over the past 3 months that Texas-based REIT United Development Funding IV is nothing but a Ponzi scheme - a name he has been short - the stock tumbled, jumped, and then tumbled again. However, after its most recent plunge moments ago which led to its being halted, we doubt it will rebound again. The reason for today's most recent, and surely final crash: an FBI raid of UDF's Texas office.
As the eyes of the financial world shift towards what may be some very serious problems in China's mammoth banking system, one analysts says fears about an imminent meltdown are overblown. Meanwhile, NPLs just hit their highest level since Q3 of 2006.
"We believe the epicenter of the problem is the Chinese banking system and its coming losses. Once analysts, politicians, and investors alike realize the sheer size of the impending losses and how they compare to the current levels of reserves, all focus will swing to the banking system."
"This Is Much Larger Than Subprime" - Here Are The Legendary Hedge Funds Fighting The Chinese Central BankSubmitted by Tyler Durden on 01/31/2016 21:57 -0400
Who are the brave souls who have decided to very openly fight the People's Bank of China? Here is a sample: Soros, Bass, Ackman, Druckenmiller, Tepper, Schreiber, Einhorn, Scogging, and Carlyle, Nexus and many more.
"Given our views on credit contraction in Asia, and in China in particular, let's say they are going to go through a banking loss cycle like we went through during the Great Financial Crisis, there's one thing that is going to happen: China is going to have to dramatically devalue its currency."
“To the intelligent man or woman, life appears infinitely mysterious, but the stupid have an answer for everything.” ~Edward Abbey
The just concluded 13-F bonanza shows that "some of the world’s top hedge fund managers scaled back their U.S. stock investments last quarter as markets tumbled." Below, courtesy of Bloomberg, is the full summary of what the most prominent hedge fund names did in Q3...
China Margin Debt Hits 8-Week High, Japan Pumps'n'Dumps As Kyle Bass Fears Looming EM Banking CrisisSubmitted by Tyler Durden on 10/27/2015 21:21 -0400
Following Marc Faber's reality check on China recently, Hayman Capital's Kyle Bass took a swing tonight noting that "China's 7% GDP growth is a farce," and adding that, just as we detailed previously, China's credit cycle has begun and non-performing loans will rise rapidly leading to an emerging Asia banking crisis ahead. Japanese markets continue to entertain with "someone" insta-ramping NKY Futs 100 points at the open only to give it all back as USDJPY slides back towards 120.00 (and 10Y JGB yields drop below 30bps for the first time in 6 months).
Kyle Bass shared his macro views during the “Squawk on the Street”
Every year, David Collum writes a detailed "Year in Review" synopsis full of keen perspective and plenty of wit. This year's is no exception. "I have not seen a year in which so many risks - some truly existential - piled up so quickly. Each risk has its own, often unknown, probability of morphing into a destructive force. It feels like we’re in the final throes of a geopolitical Game of Tetris as financial and political authorities race to place the pieces correctly. But the acceleration is palpable. The proximate trigger for pain and ultimately a collapse can be small, as anyone who’s ever stepped barefoot on a Lego knows..."
- That will teach the UAE who's boss: U.S. Won’t Consult Syria on Militant Strikes: White House (BBG)
- Putin Set to Meet Poroshenko as Ukraine Tensions Escalate (BBG)... but the de-escalation algo?
- Tim Hortons’ Canadian Fans Squeamish of American Hookup (BBG)
- Israeli air strikes target more Gaza high-rises (Reuters)
- How Steve Ballmer Became a Rookie Basketball Mogul (WSJ)
- Buffett to Help Finance Burger King Tax-Saving Deal (BBG)
- U.S. Factories Keep Losing Ground to Global Rivals (WSJ)
- Boehner, Camp Profit From Corporate Bid to Avoid U.S. Tax (BBG)
- Experimental U.S. hypersonic weapon destroyed seconds after launch (Reuters)
- The Neo-Neocons (WSJ)
With the Fed tapering and both China “I don't think the markets are discounting what’s really happening in China,” and Japan’s currencies likely to weaken, the net impact on the U.S. will be deflationary, Kyle Bass warned in a recent presentation. That trend will be accelerated by the improvement in the balance of trade for the U.S., which had its current account deficit shrink due to increased hydrocarbon production. Bass warns, the crucial moment will come when the U.S. reports a sub-6% unemployment rate, meeting the target it has set for normalizing its monetary policy by ending QE and raising rates. He predicted that will come in July. That will be the Fed’s “worst nightmare,” he said. Raising rates would stifle growth and recreate unemployment problems, which would be disastrous politically, according to Bass.