Confirming every Wall Street stereotype that "ethics are all well and good, but money is more important," the ex-Goldman Sachs banker who wrote a book on whether the bank always put "profits above principles" has started a firm charging extremely high rates of interest (above 100% in some cases) for struggling small businesses... oh the irony.
The continuity bias is astounding as many with assets address this as an “extra rough patch” to get through rather than the clear paradigm shift it has been telegraphed to be.
According to just released data by Murray Devine, the Median Ebitda multiple for buyouts has exploded to nosebleed levels, rising by over one full turn of EBITDA since 2013 alone, and at 11.5x in the first half of 2014 is nearly 2x higher than during the last LBO bubble peak in 2008, when the average company was taken private at a conservative 9.6x EV/EBITDA.
Steep curve, lots of Net Interest Margin, buy banks, inflation's coming, rates have to rise... no! The US Treasury curve (specifically the spread between the 5Y yield and 30Y yield) has tumbled to its lowest since February 2009 as the long-end dramatically outperforms the Fed-pressured front-end amid concerns that the next cycle will be anything but exuberant and the new normal rates will be notably lower than consensus believes. On a side note, 5 years ago, US bond markets implied a 10Y yield now of 4.6% - almost double what it is; it seems the future (now) is not as rosy as everyone expected then...
Institutionalizing the speculative excesses that inflated the previous housing bubble has fed magical thinking and fostered illusions of phantom wealth and security.
"US lending to businesses is reaching record levels but banks are privately warning that the activity should not be seen as evidence of an economic recovery." And the stunner: "Much of the corporate lending is going to fund payouts to shareholders, finance acquisitions and fuel the domestic energy boom, bankers say, rather than to support companies’ organic growth."
For all those upwardly mobile middle class Americans (amazing they still exist under the current central planning regime which takes from the middle class and gives to the ultra rich and uber poor) who are eager to buy a better house, and suddenly find themselves priced out due to an ongoing surge in the prices of ultra-luxury segment, here is what you need to know: blame China.
There was some good news in the JOLTS report released earlier today, mostly in the form of the Job Openings category which surged from 4,464K in April to 4.635K in May, well above the 4350K expected and the highest print since 2007 (granted the unadjusted data showed something completely different but that's a different story). And since this is one of Yellen's favorite labor market indicators, it means that the Fed is that much closer to finally turning the liquidity tap off (at least until the market crashes and the market is promptly forced to rush back in and bail everyone out all over again). Alas, there was also bad news. As the following chart shows, the trend that we have pounded the table on for the past year, namely the lack of actual hiring continues to persist. In fact, while job openings may have soared by nearly 300K in May, the actual number of Hired declined by 52K to 4,718K.
It was only two weeks ago when Bed Bath and Beyond reported earnings that missed across the top and bottom line. And while the company has little control over contracting revenues, one reason it may have missed on the EPS (at $0.93 vs $0.95) was the "contraction" in buybacks. A contraction, incidentally, which we use loosely, because it followed a February quarter repurchase amount that blew out all historical buybacks out of the water at over half a billion as shown in the chart below. The bigger problem is that with just $861 million left under its existing buyback authorization, this most popular pathway for New Normal "growth" would have been promptly shut for the company at the current pace of buying up its own stock as soon as two more quarters. So what does Bed Bath and Beyond Buybacks do? Why it promptly authorized just the thing the central-planning doctor ordered: an authorization to buy even more shares back, some $2 billion worth to be precise.
The Arms Race Is Back... With A Twist: US Congressman Urges NATO To Purchase French Warship Destined For RussiaSubmitted by Tyler Durden on 07/03/2014 10:22 -0500
The saga of the French Mistral amphibious assault warship which was ordered by Russia years ago, and whose delivery - at least according to Putin - was the reason behind the US record $9 billion DOJ fine of French BNP (which the Russian president called "blackmail" by the US designed to intimidate France and prevent it from completing the transaction) just took a turn for the bizarre. In a note written in the Atlantic Council's website, Democrat representative for New York's 16th district, Eliot Engel, has proposed that instead of letting France conclude its deal with Russia, now that even the BNP "blackmail" has failed to dent Hollande's intention to see the delivery to its end, that NATO (read the US) should step up and "collectively purchase or lease the warships as a common naval asset."
"Many older workers managed to stay employed during the recession; in fact, the population in age groups 65 and over were the only ones not to see a decline in the employment share from 2005 to 2010 (Figure 3-25)... Remaining employed and delaying retirement was one way of lessening the impact of the stock market decline and subsequent loss in retirement savings."
- BELKA `REJECTS' NOTION TAPED COMMENTS SHOW HIM CUTTING ANY DEAL
- BELKA SAYS POLISH CENTRAL BANK ISN'T COZY WITH GOVT
- BELKA REITERATES HE DOESN'T PLAN TO RESIGN
- BELKA: RESIGNATION FROM C.BANK WOULD CREATE DANGEROUS PRECEDENT
Is the New Normal of ever-higher stock valuations sustainable, or will low volatility lead to higher volatility, and intervention to instability? Though we're constantly reassured by financial pundits and the Federal Reserve that the stock market is not a bubble and that valuations are fair, there is substantial evidence that suggests the contrary.