"The catalyst for a balance sheet crisis is rarely the affordability of interest rates, so a 25bp rise in Fed rates is neither here nor there. Credit market risk is about assessing the likelihood of getting your money back. As such asset prices (i.e. equity markets) and asset price risk (i.e. equity volatility) are far bigger concerns. So all you need for a balance sheet crisis is declining equity markets, a phenomenon the Fed appears desperate to avoid. Now we know why."
Meet Andy Guo, an 18-year-old Chinese immigrant, who loves driving his red Lamborghini Huracán. He does not love having to share the car with his twin brother, Anky. "There’s a lot of conflict," Mr. Guo said, as a crowd of admirers gazed at the vehicle and its vanity license plate, “CTGRY 5,” short for the most catastrophic type of hurricane. Or Diana Wang, 23, who thinks a supercar is a poor investment, because its value decreases over time. "Better to spend half a million dollars on two expensive watches or some diamonds."
As the trumpets sound to signal the start of earnings season, the battle between fundamentals and “hope” begins.
In the second massive short-squeeze of the year for Chesapeake 'speculators', the company of the verge of bankruptcy has exploded 35% higher today, perfectly tagging (to the penny) the 200-day-moving-average. Breaking above the McClendon probe/suicide "squeeze" rally highs, at $6.13, CHK is at 5-month highs... as 'modeled' CDS spreads collapse after the management was forced to pledge the entire company to maintain existing credit lines.
It's not just the shale drillers who are in danger as they see their liquidity evaporate. As the WSJ writes today, and as covered here since January, it is the lenders themselves whose unfunded revolver exposure may suddenly become funded and expose them to even greater risks from the energy sector should oil not rebound far more forcefully and put US oil and gas companies back in the black. How big is the exposure? Very big: $147 billion.
"...And that is how Kim Kardashian gets elected president."
"Money-financed fiscal programs (MFFPs), known colloquially as helicopter drops, are very unlikely to be needed in the United States in the foreseeable future. They also present a number of practical challenges of implementation, including integrating them into operational monetary frameworks and assuring appropriate governance and coordination between the legislature and the central bank. However, under certain extreme circumstances—sharply deficient aggregate demand, exhausted monetary policy, and unwillingness of the legislature to use debt-financed fiscal policies—such programs may be the best available alternative."
Today the stock of CHK is surging following the good news that contrary to some expectations, it did not lose access to its $4 billion line of credit. However, that came at a cost: to preserve its full $4 billion availability, Chesapeake was forced to pledge almost all of its natural gas fields, real estate and derivatives contracts. In addition to most of its gas and oil reserves, Chesapeake pledged as collateral all hedge contracts, property, deposit accounts and securities, subject to certain undisclosed carve-outs, according to the regulatory filing. In other words, the entire company.
The problem with forward earnings estimates is that they consistently overestimate reality by roughly 33% historically. The illusion of“permanent liquidity,” and the belief of sustained economic growth, despite slowing in China, Japan, and the Eurozone, has emboldened analysts to continue push estimates of corporate profit growth higher. Even now, as the earnings recession deepens, hopes of a sharp rebound in profitability remains ebullient despite the lack of any signs of economic re-acceleration.
... consider mom and pop and other people who read Barron’s. They are saving for retirement and to put their kids through college. They might have depended on a historic 8%-like return from stocks and bonds. Well, sorry. When interest rates get to zero—and that isn’t the endpoint; they could go negative—savers are destroyed. And savers are the bedrock of capitalism. Savers allow investment, and investment produces growth.
"Now things are worse than ever," says Yuli Sánchez. "They kill people and no one is punished while families have to keep their pain to themselves."... "This is now wilder than the wild west."... “Venezuela is pure chaos now. It seems to me there is no way back,” the former policeman says.
The mainstream loves to hate gold, but then again, these are the same people who were bearish on gold all the way up from $250 to $1,900 (some turned bullish shortly before it topped, but that’s another story). What actually explains all this contempt for gold is the fact that it remains the main antagonist of the current statist centrally planned fiat money system. It’s as simple as that.
Through all the progressive's rhetoric about "democracy" and "equality" and "social justice" and "diversity," theirs is a political philosophy and public policy ideology of elitism, hubris, and authoritarianism dominated by the idea and ideal of remaking human beings, human relationships and the structure and order of society into redesigned patterns and shapes that reflect their notion of how people should live, work, associate and earn a living. That is why the modern liberal or progressive represents the face of a contemporary political, economic and cultural "soft" tyranny.
"It's Just An Illusion" Santelli & Schiff Slam Fed-Watchers' "Blind-Eye" To Yellen's "Phony Recovery"Submitted by Tyler Durden on 04/09/2016 21:17 -0400
"This economy would have to improve dramatically to get to mediocre," warns Schiff, otherwise, as Santelli rages they would be hiking rates and talking confidently, adding that either Fed-watchers are "going along with it to earn a paycheck" - just as they did in 2008 - or "they are ignorant." After just over 3 minutes of painful reality checks, Schiff sums up it all up perfectly, reflecting on the Sanders-Trump phenomena, "behind all those phony jobs numbers are a lot of angry Americans as everyone pretends this is a legitimate recovery."