http://www.zerohedge.com/fullrss2.xml/sites/default/files/images/user3303/imageroot/2011/09/20110926 en $350 Trillion In Securities In Limbo: LIBOR To Be Phased Out By 2021 http://www.zerohedge.com/news/2017-07-27/350-trillion-securities-limbo-libor-be-phased-out-2021 <p>Unofficially, Libor died some time in 2012 when what until then was a giant conspiracy theory, namely that the world's most important reference index, setting the price for $350 trillion in loans, credit and derivative securities, had been rigged for years, was confirmed. Officially, Libor died earlier today when the top U.K. regulator, the Financial Conduct Authority which regulates Libor, said the scandal-plagued index would be phased out and that work would begin for a transition to alternate, and still undetermined, benchmarks by the end of 2021. </p> <p><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/07/20/20170727_libor_0.jpg" width="500" height="264" /></p> <p>As Andrew Bailey, <a href="https://www.wsj.com/articles/u-k-calls-time-on-scandal-hit-libor-1501148216?mod=djemalertEuropenews">chief executive of the FCA, explained</a> the decision to eliminate Libor was made as the amount of interbank lending has hugely diminished and as a result “we do not think markets can rely on Libor continuing to be available indefinitely."</p> <p>He is right: whether as a result of central banks effectively subsuming unsecured funding needs, or simply due to trader fears of being caught "red-handed" for simply trading it, the number of transactions directly involving Libor have virtually ground to a halt. <a href="https://www.wsj.com/articles/u-k-calls-time-on-scandal-hit-libor-1501148216?mod=djemalertEuropenews">According to the WSJ</a>, "in one case banks setting the Libor rate for one version of the benchmark executed just 15 transactions in that currency and duration for the whole of 2016." </p> <p>As the WSJ adds, the U.K. regulator has the power to compel banks to submit data to calculate the benchmark. “<strong>But we do not think it right to ask, or to require, that panel banks continue to submit expert judgments indefinitely,” </strong>he said, adding that many banks felt “discomfort” at the current set up. The FCA recently launched an exercise to gather data from 49 banks to see which institutions are most active in the interbank lending market.</p> <p>And so the inevitable decision which many had anticipated, was finally made: after 2021 Libor will be no more. </p> <p>Below is a brief history of what to many was and still remains the most important rate:</p> <ul> <li>1986: First Libor rates published.</li> <li>2008: WSJ articles show concerns with Libor. Regulators begin probes.</li> <li>2012: Barclays becomes first bank to settle Libor-rigging allegations. U.K. regulator pledges to reform the benchmark.</li> <li>2014: Intercontinental Exchange takes control of administering Libor.</li> <li>2015: Trader Tom Hayes gets 14-year prison sentence after Libor trial.</li> <li>2017: U.K. regulator plans to phase in Libor alternatives over five years.</li> </ul> <p>Yet while anticipated, the surprising announcement of Libor's upcoming death has taken many traders by surprise, not least because so many egacy trades still exist. As BLoomberg's Cameron Crise writes, "There is currently an open interest of 170,000 eurodollar futures contracts expiring in 2022 and beyond - <strong>contracts that settle into a benchmark that will no longer exist. What are existing contract holders and market makers supposed to do?</strong>"</p> <p>Then there is the question of succession: with over $300 trillion in derivative trades, and countless billion in floating debt contracts, currently referening Libor, the pressing question is what will replace it, and how will the transition be implemented seamlessly? </p> <p>The FCA's CEO didn’t set out exactly what a potential replacement for Libor might look like but a group within the Bank of England is already working on potential replacements. "However, any shift will have to be phased in slowly."</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>Bailey said it was up to the IBA and banks to decide how to move Libor-based contracts to new benchmarks. After 2021 IBA could choose to keep Libor running, but the U.K. regulator would no longer compel banks to submit data for the benchmark. </p> </blockquote> <p>The Fed has already been gearing up for the replacement: last month the Alternative Reference Rates Committee, a group made up of the largest US banks, <strong>voted to use a benchmark based on short-term loans known as repurchase agreements or “repo” trades, backed by Treasury securities, to replace U.S. dollar Libor. </strong>The new rate is expected to be phased in starting next year, <a href="https://www.newyorkfed.org/medialibrary/microsites/arrc/files/2017/ARRC-agenda-Aug-1-2017.pdf">and the group will hold its inaugural meeting in just days, on August 1.</a></p> <p>The problem with a repo-based replacement, however, is that it will take the placidity of the existing reference rate, and replace it with a far more volatile equivalent. As Crise points, out, "since 2010 the average daily standard deviation of three month dollar Libor is 0.7 basis points. The equivalent measure for GC repo is 4.25 bps. That’s a completely different kettle of fish."</p> <p>So as the countdown to 2021 begins, what replaces Libor is not the only question: a bigger problem, and perhaps the reason why Libor was so irrelevant since the financial crisis, is that short-term funding costs since the financial crisis were virtually non-existent due to ZIRP and NIRP. Now that rates are once again rising, the concern will be that not does a replacement index have to be launched that has all the functionality of Libor (ex rigging of course), but that short-term interest rates linked to the Libor replacement will be inevitably rising. And, for all those who follow funding costs and the upcoming reduction in liqiduity in a world of hawkish central banks, this means that volatility is guaranteed. In other words, this forced transition is coming in the worst possible time. </p> <p>Then again, as many have speculated, with the next recession virtually assured to hit well before 2021, it is much more likely that this particular plan, like so many others, will be indefinitely postponed long before the actual deadline. </p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="512" height="270" alt="" src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/20170727_libor.jpg?1501166296" /> </div> </div> </div> http://www.zerohedge.com/news/2017-07-27/350-trillion-securities-limbo-libor-be-phased-out-2021#comments Alternative Reference Rates Committee Bank of England Bank of England Banking Barclays Business Central Banks Economy EuroDollar Finance Financial Conduct Authority Interbank lending market Interest rates International finance LIBOR Libor Money Recession Reference rate Systemic risk UBS United States housing bubble US Federal Reserve Volatility Thu, 27 Jul 2017 14:44:28 +0000 Tyler Durden 600600 at http://www.zerohedge.com Greece Arrests Russian "Mastermind" Behind $4 Billion Bitcoin Laundering Scheme http://www.zerohedge.com/news/2017-07-27/greece-arrests-russian-mastermind-behind-4-billion-bitcoin-laundering-scheme <p>Greek authorities have arrested a <strong>38-year-old Russian man</strong> wanted in the United States on suspicion of<strong> masterminding a money laundering operation involving at least $4 billion through transactions in bitcoins</strong>. <a href="http://www.reuters.com/article/us-greece-russia-arrest-idUSKBN1AB1OP?il=0">Reuters reports</a>, a US jury indicted the man on Wednesday over the scheme which involved crimes ranging from computer hacking to drug trafficking.</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/07/26/20170727_btc11.jpg"><img height="357" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/07/26/20170727_btc11.jpg" width="600" /></a></p> <p><a href="http://www.keeptalkinggreece.com/2017/07/26/russian-bitcoins-arrested-greece/">KeepTalkingGreece reports</a> that <strong>Alexander Vinnik was arrested in a small beachside village in northern Greece on Tuesday,</strong> according to local authorities, following an investigation led by the U.S. Justice Department along with several other federal agencies and task forces.</p> <p>The following were found in his hotel room and seized by police:</p> <ul> <li>two laptops</li> <li>two tablets</li> <li>five mobile phones</li> <li>one router</li> <li>one camera</li> <li>four credit cards.</li> </ul> <p>The arrest was conducted in cooperation with US authorities.</p> <p><a href="http://www.reuters.com/article/us-greece-russia-arrest-idUSKBN1AB1OP?il=0">Reuters notes</a> that <strong>U.S. officials described Vinnik in a Justice Department statement as the operator of BTC-e</strong>, an exchange used to trade the digital currency bitcoin since 2011.</p> <p>They alleged <strong>Vinnik and his firm &quot;received&quot; more than $4 billion in bitcoin and did substantial business in the United States without following appropriate protocols</strong> to protect against money laundering and other crimes.</p> <p>U.S. authorities also linked him to the failure of Mt. Gox, a Japan-based bitcoin exchange that collapsed in 2014 after being hacked. <strong>Vinnik &quot;obtained&quot; funds from the hack of Mt. Gox and laundered them through BTC-e and Tradehill, another San Francisco-based exchange he owned</strong>, they said in the statement.</p> <p>US prosecutors working with the Financial Crimes Enforcement Network unsealed a 21-count indictment against Vinnik and BTC-e late Wednesday, alleging that he used the exchange to help launder money for some of the most notorious criminals in bitcoin history, including the Mt. Gox hackers.</p> <p>Vinnik is facing 17 counts of money laundering and two counts of engaging in unlawful monetary transactions, <strong>while he and BTC-e, through a holding company called Canton Business Corp., are each facing one count of operating an illegal money transfer service.&nbsp;</strong> <strong>The site is facing a $110 million fine from FinCEN, while Vinnik is being fined $12 million. </strong></p> <p>If convicted on all counts, the Russian-born Vinnik <strong>could serve up to 55 years in a US prison,</strong> according to <a href="https://www.coindesk.com/110-million-btc-e-fined-us-vows-crackdown-unregulated-exchanges/">CoinDesk.</a></p> <p>Until now, little has been known about BTC-E, which <a href="https://www.coindesk.com/110-million-btc-e-fined-us-vows-crackdown-unregulated-exchanges/">CoinDesk</a> described as the digital-currency market&rsquo;s <strong>&ldquo;murkiest exchange long suspected of enabling criminal activity.&rdquo;</strong></p> <p>In the indictment, prosecutors for the Northern District of California claim that BTC-e <strong>&ldquo;functioned as the exchange of choice to convert digital currencies like bitcoin to fiat money for the criminal world, especially by those who committed their crimes online.&rdquo;</strong></p> <p>Founded in 2011, BTC-E was one of the most popular exchanges in the early days of bitcoin.</p> <p>A FinCEN <a href="https://www.fincen.gov/news/news-releases/fincen-fines-btc-e-virtual-currency-exchange-110-million-facilitating-ransomware">press release</a> announcing the indictments described a criminal organization that knowingy and recklessly violated US anti-money laundering laws. For example, prosecutors claimed that BTC-e&rsquo;s customer-service reps would knowingly advise users about how to launder money from illegal drug sales made on the dark web.</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>&ldquo;Among other violations, BTC-e failed to obtain required information from customers beyond a username, a password, and an e-mail address.&nbsp; Instead of acting to prevent money laundering, BTC-e and its operators embraced the pervasive criminal activity conducted at the exchange.&nbsp; <strong>Users openly and explicitly discussed criminal activity on BTC-e&rsquo;s user chat.&nbsp; BTC-e&rsquo;s customer service representatives offered advice on how to process and access money obtained from illegal drug sales on dark net markets like Silk Road, Hansa Market, and AlphaBay.&rdquo;</strong></p> </blockquote> <p>It&#39;s unclear whether US authorities will shut BTC-e down. In a tweet published last night, the exchanged said it&#39;s working to restore service, and apologized for the inconvenience.</p> <blockquote class="twitter-tweet" data-lang="en"><p dir="ltr" lang="ru">Update2: ?? ?????? ?????? ??????? ?????? ?? ?????????????? ?????? ???????. ????????? ????? ?? 5 ?? 10 ????. ??????? ?? ????????? <a href="https://twitter.com/hashtag/btce?src=hash">#btce</a></p> <p>&mdash; BTC-E (@btcecom) <a href="https://twitter.com/btcecom/status/890281223632764928">July 26, 2017</a></p></blockquote> <script async src="//platform.twitter.com/widgets.js" charset="utf-8"></script><p>However, some are already bracing for a Mt. Gox style collapse that will wipe out customer deposits.</p> <blockquote class="twitter-tweet" data-lang="en"><p dir="ltr" lang="en">Too soon? <a href="https://twitter.com/hashtag/BTCe?src=hash">#BTCe</a> <a href="https://t.co/g0XeycGyZT">pic.twitter.com/g0XeycGyZT</a></p> <p>&mdash; SirMeow UASF BIP148 (@OneSirMeow) <a href="https://javascript:void(0);twitter.com/OneSirMeow/status/890515225270726656">July 27, 2017</a></p></blockquote> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="613" height="365" alt="" src="http://www.zerohedge.com/sites/default/files/images/user245717/imageroot/20170727_btc11.jpg?1501163906" /> </div> </div> </div> http://www.zerohedge.com/news/2017-07-27/greece-arrests-russian-mastermind-behind-4-billion-bitcoin-laundering-scheme#comments Bitcoin Bitcoin BTC-e CoinDesk Cryptocurrencies Digital currency exchange Economy Finance Financial Crimes Enforcement Network Greece Law mobile phones Money Money laundering Mt. Gox Northern Greece one router Reuters Silk Road Twitter Twitter U.S. Justice Department Thu, 27 Jul 2017 14:25:45 +0000 Tyler Durden 600594 at http://www.zerohedge.com Gold- breaking above 6-year falling resistance http://www.zerohedge.com/news/2017-07-27/gold-breaking-above-6-year-falling-resistance <p><img src="https://www.kimblechartingsolutions.com/wp-content/uploads/2017/07/boy-megaphone.jpg" alt="boy on a bull horn for kimble charting solutions post Gold- breaking above 6-year falling resistance" title="Gold- breaking above 6-year falling resistance" width="400" style="user-select: none; background-position: 0px 0px, 10px 10px; background-size: 20px 20px; background-image: linear-gradient(45deg, #eeeeee 25%, transparent 25%, transparent 75%, #eeeeee 75%, #eeeeee 100%), linear-gradient(45deg, #eeeeee 25%, white 25%, white 75%, #eeeeee 75%, #eeeeee 100%); display: block; margin-left: auto; margin-right: auto;" /></p> <p>&nbsp;</p> <p><span style="color: #303030; font-family: &quot;Open Sans&quot;, Arial, sans-serif; font-size: 14px;">Below looks at the ratio of Gold compared to the US Dollar over the past 20-years. The ratio reflects that some long-term trends have taken place and the ratio is making an attempt to do something it hasn’t been able to accomplish in 6-years.</span></p> <p>&nbsp;</p> <p><a href="https://www.kimblechartingsolutions.com/wp-content/uploads/2017/07/gold-dollar-ratio-breaking-above-6-year-resistance-july-27-2.jpg" target="_blank" title="Gold- breaking above 6-year falling resistance"><img src="https://www.kimblechartingsolutions.com/wp-content/uploads/2017/07/gold-dollar-ratio-breaking-above-6-year-resistance-july-27-2.jpg" alt="gold and us dollar ratio monthly kimble charting solutions" title="Gold- breaking above 6-year falling resistance kimble charting solutions" width="1000" style="font-size: 13.008px; user-select: none; background-position: 0px 0px, 10px 10px; background-size: 20px 20px; background-image: linear-gradient(45deg, #eeeeee 25%, transparent 25%, transparent 75%, #eeeeee 75%, #eeeeee 100%), linear-gradient(45deg, #eeeeee 25%, white 25%, white 75%, #eeeeee 75%, #eeeeee 100%); display: block; margin-left: auto; margin-right: auto;" /></a></p> <p style="box-sizing: border-box; margin-top: 0px; margin-bottom: 0px; padding-bottom: 1em; outline: 0px; background-image: initial; background-position: initial; background-size: initial; background-repeat: initial; background-attachment: initial; background-origin: initial; background-clip: initial; font-size: 14px; color: #303030; font-family: &quot;Open Sans&quot;, Arial, sans-serif; text-align: center;"><span style="box-sizing: border-box; outline: 0px; background: transparent; color: #0000ff;"><strong style="box-sizing: border-box; outline: 0px; background: transparent;">CLICK ON CHART TO ENLARGE</strong></span></p> <p style="box-sizing: border-box; margin-top: 0px; margin-bottom: 0px; padding-bottom: 1em; outline: 0px; background-image: initial; background-position: initial; background-size: initial; background-repeat: initial; background-attachment: initial; background-origin: initial; background-clip: initial; font-size: 14px; color: #303030; font-family: &quot;Open Sans&quot;, Arial, sans-serif;">The ratio broke above 6-year falling channel back in 2001 at (1) and then it proceeded to rally for the next 10-years.</p> <p style="box-sizing: border-box; margin-top: 0px; margin-bottom: 0px; padding-bottom: 1em; outline: 0px; background-image: initial; background-position: initial; background-size: initial; background-repeat: initial; background-attachment: initial; background-origin: initial; background-clip: initial; font-size: 14px; color: #303030; font-family: &quot;Open Sans&quot;, Arial, sans-serif;">For the past 6-years, the ratio has continued to create a series of lower highs and lower lows inside of falling channel (2).</p> <p style="box-sizing: border-box; margin-top: 0px; margin-bottom: 0px; padding-bottom: 1em; outline: 0px; background-image: initial; background-position: initial; background-size: initial; background-repeat: initial; background-attachment: initial; background-origin: initial; background-clip: initial; font-size: 14px; color: #303030; font-family: &quot;Open Sans&quot;, Arial, sans-serif;">Currently the ratio is attempting to do something that it has not done in 6-years, which is a breakout above falling channel (2) at (3).</p> <p style="box-sizing: border-box; margin-top: 0px; margin-bottom: 0px; padding-bottom: 1em; outline: 0px; background-image: initial; background-position: initial; background-size: initial; background-repeat: initial; background-attachment: initial; background-origin: initial; background-clip: initial; font-size: 14px; color: #303030; font-family: &quot;Open Sans&quot;, Arial, sans-serif;">If you would like to stay on top of the Power of the Pattern thoughts in the Gold, Silver, Copper and Mining sector, we would be honored if you were a&nbsp;<a href="https://www.kimblechartingsolutions.com/premium-bundle/" style="box-sizing: border-box; background: transparent; color: #2ea3f2; outline: 0px;"><strong style="box-sizing: border-box; outline: 0px; 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margin: 0in 0in 0.0001pt; font-variant-numeric: inherit; font-stretch: inherit; font-size: 13px; line-height: 1.3; font-family: lucida_granderegular, Verdana, sans-serif;">&nbsp;</p> <p style="box-sizing: border-box; margin: 0in 0in 0.0001pt; font-variant-numeric: inherit; font-stretch: inherit; font-size: 13px; line-height: 1.3; font-family: lucida_granderegular, Verdana, sans-serif;">&nbsp;</p> <p style="box-sizing: border-box; margin: 0in 0in 0.0001pt; font-variant-numeric: inherit; font-stretch: inherit; font-size: 13px; line-height: 1.3; font-family: lucida_granderegular, Verdana, sans-serif;">&nbsp;</p> <p style="box-sizing: border-box; margin: 0in 0in 0.0001pt; font-variant-numeric: inherit; font-stretch: inherit; font-size: 13px; line-height: 1.3; font-family: lucida_granderegular, Verdana, sans-serif;">&nbsp;</p> <p style="box-sizing: border-box; margin: 0in 0in 0.0001pt; font-variant-numeric: inherit; font-stretch: inherit; font-size: 13px; line-height: 1.3; font-family: lucida_granderegular, Verdana, sans-serif;">&nbsp;</p> <p style="box-sizing: border-box; margin: 0in 0in 0.0001pt; font-variant-numeric: inherit; font-stretch: inherit; font-size: 13px; line-height: 1.3; font-family: lucida_granderegular, Verdana, sans-serif;">&nbsp;</p> <p style="box-sizing: border-box; margin: 0in 0in 0.0001pt; font-variant-numeric: inherit; font-stretch: inherit; font-size: 13px; line-height: 1.3; font-family: lucida_granderegular, Verdana, sans-serif;">&nbsp;</p> <p style="box-sizing: border-box; margin: 0in 0in 0.0001pt; font-variant-numeric: inherit; font-stretch: inherit; font-size: 13px; line-height: 1.3; font-family: lucida_granderegular, Verdana, sans-serif;">&nbsp;</p> <p style="box-sizing: border-box; margin: 0in 0in 0.0001pt; font-variant-numeric: inherit; font-stretch: inherit; font-size: 13px; line-height: 1.3; font-family: lucida_granderegular, Verdana, sans-serif;">&nbsp;</p> <p style="box-sizing: border-box; margin: 0in 0in 0.0001pt; font-variant-numeric: inherit; font-stretch: inherit; font-size: 13px; line-height: 1.3; font-family: lucida_granderegular, Verdana, sans-serif;">&nbsp;</p> <p style="box-sizing: border-box; margin: 0in 0in 0.0001pt; font-variant-numeric: inherit; font-stretch: inherit; font-size: 13px; line-height: 1.3; font-family: lucida_granderegular, Verdana, sans-serif;">&nbsp;</p> <p style="box-sizing: border-box; margin: 0in 0in 0.0001pt; font-variant-numeric: inherit; font-stretch: inherit; font-size: 13px; line-height: 1.3; font-family: lucida_granderegular, Verdana, sans-serif;">&nbsp;</p> <p style="box-sizing: border-box; margin: 0in 0in 0.0001pt; font-variant-numeric: inherit; font-stretch: inherit; font-size: 13px; line-height: 1.3; font-family: lucida_granderegular, Verdana, sans-serif;">&nbsp;</p> <p style="box-sizing: border-box; margin: 0in 0in 0.0001pt; font-variant-numeric: inherit; font-stretch: inherit; font-size: 13px; line-height: 1.3; font-family: lucida_granderegular, Verdana, sans-serif;">&nbsp;</p> <p style="box-sizing: border-box; margin: 0in 0in 0.0001pt; font-variant-numeric: inherit; font-stretch: inherit; font-size: 13px; line-height: 1.3; font-family: lucida_granderegular, Verdana, sans-serif;">&nbsp;</p> <p style="box-sizing: border-box; margin: 0in 0in 0.0001pt; font-variant-numeric: inherit; font-stretch: inherit; font-size: 13px; line-height: 1.3; font-family: lucida_granderegular, Verdana, sans-serif;">&nbsp;</p> <p style="box-sizing: border-box; margin: 0in 0in 0.0001pt; font-variant-numeric: inherit; font-stretch: inherit; font-size: 13px; line-height: 1.3; font-family: lucida_granderegular, Verdana, sans-serif;">&nbsp;</p> <p style="box-sizing: border-box; margin: 0in 0in 0.0001pt; font-variant-numeric: inherit; font-stretch: inherit; font-size: 13px; line-height: 1.3; font-family: lucida_granderegular, Verdana, sans-serif;">&nbsp;</p> <p style="box-sizing: border-box; margin: 0in 0in 0.0001pt; font-variant-numeric: inherit; font-stretch: inherit; font-size: 13px; line-height: 1.3; font-family: lucida_granderegular, Verdana, sans-serif;">&nbsp;</p> <p style="box-sizing: border-box; margin: 0in 0in 0.0001pt; font-variant-numeric: inherit; font-stretch: inherit; font-size: 13px; line-height: 1.3; font-family: lucida_granderegular, Verdana, sans-serif;">&nbsp;</p> <p style="box-sizing: border-box; margin: 0in 0in 0.0001pt; font-variant-numeric: inherit; font-stretch: inherit; font-size: 13px; line-height: 1.3; font-family: lucida_granderegular, Verdana, sans-serif;">&nbsp;</p> <p style="box-sizing: border-box; margin: 0in 0in 0.0001pt; font-variant-numeric: inherit; font-stretch: inherit; font-size: 13px; line-height: 1.3; font-family: lucida_granderegular, Verdana, sans-serif;">&nbsp;</p> <p style="box-sizing: border-box; margin: 0in 0in 0.0001pt; font-variant-numeric: inherit; font-stretch: inherit; font-size: 13px; line-height: 1.3; font-family: lucida_granderegular, Verdana, sans-serif;">&nbsp;</p> <p style="box-sizing: border-box; margin: 0in 0in 0.0001pt; font-variant-numeric: inherit; font-stretch: inherit; font-size: 13px; line-height: 1.3; font-family: lucida_granderegular, Verdana, sans-serif;"><span style="box-sizing: border-box; font-style: inherit; font-variant: inherit; font-weight: inherit; font-stretch: inherit; font-size: inherit; line-height: inherit; font-family: inherit; color: #303030;"><strong style="box-sizing: border-box; font-style: inherit; font-variant: inherit; font-stretch: inherit; font-size: inherit; line-height: inherit; font-family: inherit;"><br /></strong></span></p> <div class="field field-type-filefield field-field-image-blog"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_blog" width="1295" height="673" alt="" src="http://www.zerohedge.com/sites/default/files/images/user182769/imageroot/gold-dollar-ratio-breaking-above-6-year-resistance-july-27-2.jpg?1501165017" /> </div> </div> </div> http://www.zerohedge.com/news/2017-07-27/gold-breaking-above-6-year-falling-resistance#comments Business Copper Metals Thu, 27 Jul 2017 14:17:01 +0000 kimblecharting 600598 at http://www.zerohedge.com North Korea Threatens "Nuclear Hammer" After CIA Proposes 'Regime Change' http://www.zerohedge.com/news/2017-07-27/north-korea-threatens-nuclear-hammer-after-cia-proposes-regime-change <p><a href="http://theantimedia.org/cia-regime-change-north-korea-nuclear/"><em>Via TheAntiMedia.org,</em></a></p> <p><em><img height="305" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/07/26/20170727_NK.jpg" width="600" /></em></p> <p>Less than a week after C.I.A. chief Mike Pompeo<a href="http://www.cnn.com/2017/07/20/politics/cia-mike-pompeo-north-korea/index.html" rel="noopener" target="_blank">&nbsp;suggested</a>&nbsp;that regime change in North Korea would be a good thing for the Trump administration, the East Asian country said Tuesday it was ready and willing to strike the U.S. with a&nbsp;<em>&ldquo;nuclear hammer&rdquo;</em>&nbsp;if that proves to be the Trump team&rsquo;s agenda.</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><strong><em>&ldquo;Should the U.S. dare to show even the slightest sign of attempt to remove our supreme leadership, we will strike a merciless blow at the heart of the U.S. with our powerful nuclear hammer, honed and hardened over time,&rdquo;</em></strong><a href="http://www.japantimes.co.jp/news/2017/07/25/asia-pacific/north-korea-threatens-u-s-nuclear-hammer-cia-chief-appears-hint-regime-change/#.WXi-IIjyvIW" rel="noopener" target="_blank">&nbsp;writes</a>&nbsp;state-run&nbsp;<em>Korean Central News Agency (KCNA)</em>, quoting a spokesman for the Foreign Ministry.</p> </blockquote> <p>Speaking at the Aspen Security Forum in Colorado on July 20, C.I.A. director<strong> Pompeo<a href="http://thehill.com/policy/national-security/343077-cia-chief-hopeful-that-us-will-separate-north-korean-regime-from" rel="noopener" target="_blank">&nbsp;said</a>&nbsp;it would be&nbsp;<em>&ldquo;a great thing to denuclearize the peninsula, to get those weapons off of that, but the thing that is most dangerous about it is the character who holds the control over them today.&rdquo;</em></strong></p> <p>Continuing, Pompeo appeared to hint that there&rsquo;s a consensus within Washington, D.C. that ousting Kim Jong-un is something that&nbsp;<em>&ldquo;ultimately needs to be achieved&rdquo;</em>&nbsp;in order to combat the North Korean nuclear threat:</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><em>&ldquo;So from the administration&rsquo;s perspective, the most important thing we can do is separate those two. Right? Separate capacity and someone who might well have intent and break those two apart.&rdquo;</em></p> </blockquote> <p>The C.I.A. director further stated that citizens of North Korea would be appreciative if Kim&rsquo;s finger was off the nuclear button:</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><em>&ldquo;<u><strong>As for the regime, I am hopeful we will find a way to separate that regime from this system. </strong></u>The North Korean people I&rsquo;m sure are lovely people and would love to see him go.&rdquo;</em></p> </blockquote> <p>On that subject,&nbsp;<em>KCNA</em><a href="http://www.japantimes.co.jp/news/2017/07/25/asia-pacific/north-korea-threatens-u-s-nuclear-hammer-cia-chief-appears-hint-regime-change/#.WXi-IIjyvIW" rel="noopener" target="_blank">&nbsp;wrote</a>&nbsp;Tuesday that North Korea&rsquo;s&nbsp;<em>&ldquo;army and people have never thought about their destiny and future separated from their supreme leadership&rdquo;</em>&nbsp;and that the&nbsp;<em>&ldquo;first and foremost mission of our revolutionary armed forces with the nuclear force as their backbone is to defend the leader at the cost of their lives.&rdquo;</em></p> <p>The comments come at a time when the mainstream media is<a href="http://time.com/4873980/north-korea-nuclear-missile-program/" rel="noopener" target="_blank">&nbsp;reporting</a>&nbsp;that North Korea could produce a nuclear-capable missile in far less time than previously estimated.</p> <p>As&nbsp;<em>Anti-Media</em>&nbsp;<a href="http://theantimedia.org/north-korean-missiles-america/" rel="noopener" target="_blank">highlighted</a>&nbsp;last week, however, the second-highest ranking U.S. military official, vice chairman of the Joint Chiefs of Staff General Paul Selva,&nbsp;<a href="http://www.reuters.com/article/us-usa-northkorea-missiles-idUSKBN1A31JK" rel="noopener" target="_blank">stated</a>&nbsp;recently that <strong>North Korea lacks&nbsp;<em>&ldquo;the capacity to strike the United States with any degree of accuracy or reasonable confidence of success.&rdquo;</em></strong></p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="717" height="365" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20170727_NK.jpg?1501154860" /> </div> </div> </div> http://www.zerohedge.com/news/2017-07-27/north-korea-threatens-nuclear-hammer-after-cia-proposes-regime-change#comments C.I.A. Foreign Ministry International relations KIM Korea Korean Central News Agency Korean Central News Agency Mike Pompeo Military of North Korea North Korea North Korea–South Korea relations Nuclear program of North Korea Politics Trump Administration Washington D.C. Thu, 27 Jul 2017 14:07:14 +0000 Tyler Durden 600578 at http://www.zerohedge.com Jeff Bezos Surpasses Bill Gates - Becomes World's Richest Man http://www.zerohedge.com/news/2017-07-27/jeff-bezos-surpasses-bill-gates-becomes-worlds-richest-man <p>A surge in&nbsp;Amazon shares this morning (ahead of earnings) has propelled founder&nbsp;Jeff Bezos&nbsp;past Microsoft founder Bill Gates&nbsp;as the<strong> world’s richest person</strong>...</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/07/26/20170727_bezos.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/07/26/20170727_bezos_0.jpg" width="600" height="285" /></a></p> <p>As Bloomberg reports, shares of the online retailer rose 1.8 percent to $1,071.31 as of 9:30 a.m. in New York. If the gains hold through the close, Bezos, 53, could leapfrog Gates on the&nbsp;Bloomberg Billionaires Index. <strong>The 61-year-old&nbsp;Microsoft Corp.&nbsp;co-founder has held the top spot since May 2013</strong>.</p> <p><strong>Bezos owns about 17 percent of Seattle-based Amazon, which has surged 40 percent this year through Wednesday, helping to add $24.5 billion to his net worth.</strong> He started 2017 as the world’s fourth-wealthiest person and has since leapfrogged Inditex SA founder&nbsp;Amancio Ortega, who ranks third with $82.7 billion, and Berkshire Hathaway Inc.’s&nbsp;Warren Buffett, No. 4, at $74.5 billion.</p> <p>Notably, <strong>Amazon and Facebook are now both worth over $500 billion market cap.</strong></p> <p><strong><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/07/26/20170727_bezos1.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/07/26/20170727_bezos1_0.jpg" width="600" height="315" /></a></strong></p> <p><strong>And as far as what (or who) is behind the success of Bezos, it's simple...</strong></p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/07/26/20170727_bezos2.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/07/26/20170727_bezos2_0.jpg" width="600" height="325" /></a></p> <p><strong>Central Bank policy truly means the rich get richest!<br /></strong></p> <p>So this means that "the leader of the free world" is now in a feud with "the world's richest man" - should be fun to see who wins that.</p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="1148" height="545" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20170727_bezos.jpg?1501163024" /> </div> </div> </div> http://www.zerohedge.com/news/2017-07-27/jeff-bezos-surpasses-bill-gates-becomes-worlds-richest-man#comments Amancio Ortega Amazon.com Berkshire Hathaway Berkshire Hathaway Bill Gates Bill Gates Bloomberg Billionaires Blue Origin Business Business Computing Economy Economy of the United States Inditex Jeff Bezos Life extensionists Nerd culture Tau Beta Pi The World's Billionaires Universal Windows Platform apps Warren Buffett Warren Buffett Thu, 27 Jul 2017 13:44:45 +0000 Tyler Durden 600593 at http://www.zerohedge.com Senate GOP Leader Says "Skinny" Obamacare Repeal Has "Best Chance At Getting Us To Conference" http://www.zerohedge.com/news/2017-07-27/senate-gop-leader-says-skinny-obamacare-repeal-has-best-chance-getting-us-conference <p>Right on schedule, President Donald Trump is out with his latest tweet urging Republicans to pass health-care reform: &quot;Come on Republican Senators, you can do it on Healthcare. After 7 years, this is your chance to shine! Don&#39;t let the American people down!&quot;</p> <blockquote class="twitter-tweet" data-lang="en"><p dir="ltr" lang="en">Come on Republican Senators, you can do it on Healthcare. After 7 years, this is your chance to shine! Don&#39;t let the American people down!</p> <p>&mdash; Donald J. Trump (@realDonaldTrump) <a href="https://twitter.com/realDonaldTrump/status/890533442135502849">July 27, 2017</a></p></blockquote> <script async src="//platform.twitter.com/widgets.js" charset="utf-8"></script><p><strong><em>* * *</em></strong></p> <p>Like they say, third time&#39;s the charm.</p> <p>President Donald Trump may have spoken too soon when he praised Senate Republicans as &ldquo;patriots&rdquo; who would swiftly put an end to the &ldquo;tyranny&rdquo; of Obamacare earlier this week after the chamber passed a crucial motion to proceed with a plan to repeal the controversial health-care law.</p> <p>But that plan, as well as the Senate&#39;s repeal-and-replace alternative, have now been rejected. So, with few options remaining, the Senate Republican leadership <strong>now believes its best chance of passing health-care reform by the end of the week lies with a so-called <a href="http://www.zerohedge.com/news/2017-07-26/whats-next-obamacare-repeal-primer-goldman-and-citi">&ldquo;skinny repeal&rdquo;</a> bill that was drafted last week.</strong></p> <p>Pundits seem to agree. <a href="http://www.zerohedge.com/news/2017-07-26/whats-next-obamacare-repeal-primer-goldman-and-citi">Goldman&rsquo;s Alec Phillips</a> believes there&rsquo;s a <strong>&ldquo;somewhat greater probability&rdquo;</strong> of skinny repeal passing, though he still thinks the most likely scenario would be a Republican surrender: &quot;We believe the status quo is more likely to be maintained,&quot; he said in a research note.</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user245717/imageroot/2017/07/27/2017.07.27mcconnell.JPG"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user245717/imageroot/2017/07/27/2017.07.27mcconnell_0.JPG" style="width: 500px; height: 350px;" /></a></p> <p>The skinny repeal bill would eliminate three of Obamacare&rsquo;s most controversial features: The individual and employee mandates, and the tax on medical devices. But its biggest advantage over the other two Republican options was unwittingly revealed by Democrats, who asked the CBO to score the bill.</p> <p>Turns out, a &ldquo;skinny&rdquo; Obamacare repeal <strong>would result in only 16 million people losing their insurance, compared with 22 million for the second draft of the Senate plan, and 32 million for full repeal,</strong> according to <a href="http://thehill.com/homenews/senate/344013-bare-bones-repeal-plan-gains-steam-in-senate">the Hill.</a></p> <p>Majority whip John Cornyn, the No. 2 Republican in Senate leadership, told <a href="http://thehill.com/homenews/senate/344013-bare-bones-repeal-plan-gains-steam-in-senate">the Hill</a> that skinny repeal could be Republicans&rsquo; best, and last, hope to unravel Obamacare. &nbsp;</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><strong>&ldquo; Cornyn&hellip;told reporters Wednesday that a scaled-down bill might be the best way to move forward on the issue, possibly by holding a conference committee with the House, which approved a broader repeal-and-replace bill.&rdquo;</strong></p> <p>&nbsp;</p> <p>It <strong>&ldquo;seems to have a lot of benefits, getting us to conference,&rdquo;</strong> Cornyn said.</p> </blockquote> <p>According to <a href="http://www.reuters.com/article/us-usa-healthcare-idUSKBN1AC1G0?il=0">Reuters,</a> a draft of the skinny bill will be released at some point on Thursday, before the Senate &ldquo;embarks on a marathon voting session&rdquo; that could continue into Friday morning.</p> <p>The irony of this whole process is that, once Republicans muster the votes to pass a health-care bill, its contents, whether it&rsquo;s repeal and replace, or some variation of a repeal bill, won&rsquo;t matter all that much. Once the legislation clears the upper chamber, the Senate will form a conference committee with the House to draft an entirely new &ldquo;compromise&rdquo; bill. <strong>Then lawmakers will need to repeat the whole process, passing the final version of the legislation in the House, and then again in the Senate, before it lands on President Donald Trump&rsquo;s desk.</strong></p> <p>To be sure, the skinny bill might not be Republicans&rsquo; only alternative. According to <a href="http://www.reuters.com/article/us-usa-healthcare-idUSKBN1AC1G0?il=0">Reuters,</a> Democrats are accusing Majority Leader Mitch McConnell are drafting a fourth health-care reform plan in secret. Facing united opposition from Democrats, Republicans have failed to secure the minimum 50 votes needed to pass a bill (a 50-50 split would presumably lead to a tie-breaking vote by Vice President Mike Pence). <strong>With only a slim majority of 52-48, the leadership has struggled to placate both moderates, who oppose cuts to Medicaid, and conservatives, who criticized a senate plan they believed to be &ldquo;Obamacare-lite.&rdquo;</strong><br />&nbsp;</p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="915" height="640" alt="" src="http://www.zerohedge.com/sites/default/files/images/user245717/imageroot/2017.07.27mcconnell.JPG?1501153955" /> </div> </div> </div> http://www.zerohedge.com/news/2017-07-27/senate-gop-leader-says-skinny-obamacare-repeal-has-best-chance-getting-us-conference#comments 115th United States Congress American Health Care Act American people of German descent American Presbyterians Barack Obama Continuing Appropriations Resolution Donald Trump Donald Trump Efforts to repeal the Patient Protection and Affordable Care Act Health Internal Revenue Code John Cornyn John Cornyn Mitch McConnell Obamacare Patient Protection and Affordable Care Act Patient Protection and Affordable Care Act replacement proposals Politics Politics Reuters Senate Social Issues Statutory law United States Thu, 27 Jul 2017 13:26:48 +0000 Tyler Durden 600576 at http://www.zerohedge.com Are We There Yet? Here Is Howard Marks' "Bubble Checklist" http://www.zerohedge.com/news/2017-07-27/are-we-there-yet-here-howard-marks-bubble-checklist <p>As first <a href="http://www.zerohedge.com/news/2017-07-26/howard-marks-sounds-alarm-etfs-and-passive-investing-again">reported yesterday</a>, in his latest nearly-30 page memo, a distinctly less optimistic Howard Marks - hardly known for his extreme positions - "sounded the alarm" on markets by laying out a plethora of reasons why investors should be turning far more cautious on the risk, and summarizing his current view on the investing environment with the following 4 bullet points:</p> <ul> <li>The uncertainties are unusual in terms of number, scale and insolubility in areas including secular economic growth; the impact of central banks; interest rates and inflation; political dysfunction; geopolitical trouble spots; and the long-term impact of technology.</li> <li>In the vast majority of asset classes, prospective returns are just about the lowest they’ve ever been.</li> <li>Asset prices are high across the board.&nbsp; Almost nothing can be bought below its intrinsic value, and there are few bargains.In general the best we can do is look for things that are less over-priced than others.</li> <li>Pro-risk behavior is commonplace, as the majority of investors embrace increased risk as the route to the returns they want or need.</li> </ul> <p>Among the items on Marks' of the items, the one we focused on yesterday, had to do with Marks recurring warnings on ETFs and passive investing. To be sure, he also covered pretty much everything else from equities, to the record low VIX, to FAANG stocks, to record tight credit spreads, to EM debt, to PE and even Bitcoin. </p> <p>To those who haven't read it yet, it <a href="https://www.oaktreecapital.com/insights/howard-marks-memos">can be found here</a>. However we wanted to bring attention to one particular section, which lays out the necessary conditions which if met "will deliver a boom or bubble." In other words, Howard Marks' bubble checklist. The issue is that if these conditions (all of them) have to be present to validate a bubble, at least in the eyes of one of the world's most respected investors, then we may have a problem because at least according to the more skeptical market participants, most of these are currently present. </p> <p>Here is Marks:</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>My son Andrew worked extensively with me in preparing this memo.&nbsp; We particularly enjoyed making a list of the elements that typically form the foundation for a bull market, boom or bubble.&nbsp; We concluded that some or all of the following are necessary conditions.&nbsp; A few will give us a bull market.&nbsp; All of them together will deliver a boom or bubble:</p> <ul> <li><strong>A benign environment </strong>– good results lull investors into complacency, as they get used to having their positive expectations rewarded.Gains in the recent past encourage the heated pursuit of further gains in the future (rather than suggest that past gains might have borrowed from future gains).</li> <li><strong>A grain of truth </strong>– the story supporting a boom isn’t created out of whole cloth; it generally coalesces around something real.The seed usually isn’t imaginary, just eventually overblown.</li> <li><strong>Early success</strong> – the gains enjoyed by the “wise man in the beginning” – the first to seize upon the grain of truth – tends to attract “the fool in the end” who jumps in too late.</li> <li><strong>More money than ideas</strong> – when capital is in oversupply, it is inevitable that risk aversion dries up, gullibility expands, and investment standards are relaxed.</li> <li><strong>Willing suspension of disbelief</strong> – the quest for gain overcomes prudence and deference to history.Everyone concludes “this time it’s different.”No story is too good to be true.</li> <li><strong>Rejection of valuation norms </strong>– all we hear is, “the asset is so great: there’s no price too high.”Buying into a fad regardless of price is the absolute hallmark of a bubble.</li> <li><strong>The pursuit of the new </strong>– old timers fare worst in a boom, with the gains going disproportionately to those who are untrammeled by knowledge of the past and thus able to buy into an entirely new future.</li> <li><strong>The virtuous circle </strong>– no one can see any end to the potential of the underlying truth or how high it can push the prices of related assets.It’s broadly accepted that trees can grow to the sky: “It can only go up.Nothing can stop it.”Certainly no one can picture things taking a turn for the worse.</li> <li><strong>Fear of missing out </strong>– when all the above becomes widespread, optimism prevails and no one can imagine a glitch.That causes most people to conclude that the greatest potential error lies in failing to participate in the current market darling.</li> </ul> </blockquote> <p>So where are we on this list according to Marks? The answer: almost there.</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p><strong>Certainly many of the things listed above are in play today.&nbsp; </strong>Performance has been good – with minor exceptions, quickly rectified – since the beginning of 2009 (that’s more than eight years).&nbsp; There’s certainly more money around these days than high-return possibilities.&nbsp; “<strong>New ideas” are readily accepted, and some things are viewed as representing virtuous circles</strong>.&nbsp; </p> <p>&nbsp;</p> <p>On the other hand, some of the usual ingredients are missing.&nbsp; <strong>Most people (a) are conscious of the uncertainties listed above, (b) recognize that prospective returns are quite skimpy, and (c) accept that things are unlikely to go well foreve</strong>r.&nbsp; That’s all healthy. </p> <p>&nbsp;</p> <p>But on the third hand, most people can’t think of what might cause trouble anytime soon.&nbsp; But it’s precisely when people can’t see what it is that could make things turn down that risk is highest, since they tend not to price in risks they can’t see.&nbsp; <strong>With the negative catalyst so elusive and the return on cash at punitive levels, people worry more about being underinvested or bearing too little risk (and thus earning too low a return in good markets) than they do about losing money</strong>.&nbsp; </p> <p>&nbsp;</p> <p>This combination of elements presents today’s investors with a highly challenging environment.&nbsp;<strong> The result is a world in which assets have appreciated significantly, risk aversion is low, and propositions are accepted that would be questioned if investors were more wary.&nbsp; </strong></p> </blockquote> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="640" height="360" alt="" src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/howard%20marks%20teaser_0.jpg?1501160467" /> </div> </div> </div> http://www.zerohedge.com/news/2017-07-27/are-we-there-yet-here-howard-marks-bubble-checklist#comments Actuarial science B+ Behavioral finance Bitcoin Business cycle Central Banks Economic bubble Economic history of the Netherlands Economy Finance Financial crises Howard Marks Investment Investor Money Risk Thu, 27 Jul 2017 13:02:01 +0000 Tyler Durden 600590 at http://www.zerohedge.com Investment Legend Warns of a 1987-Type Market Crash http://www.zerohedge.com/news/2017-07-27/investment-legend-warns-1987-type-market-crash <p>Do you know Seth Klarman?</p> <p>Klarman is founder of Baupost Group and is widely considered to be one of the greatest value investors in history. In 30+ years from 1982 to 2015, he only had <strong><u>three losing years,</u></strong> and is believed to have averaged returns of 16%.</p> <p><u><b>Bear in mind, he did this</b> </u>while keeping 30%-50% in cash at all times.</p> <p>Put simply, Klarmen&#39;s returns on invested capital are simply astonishing. To be able to churn out those types of returns while being that risk-averse borders on the impossible.</p> <p>Which is why when Seth Klarmen and his team warns of a potential Crash, you need to listen.</p> <p>On that note, Klarmen&rsquo;s top advisor for publicly traded investments recently noted precisely what we&rsquo;ve been warning about for weeks: that automated trading in risk-parity funds is going to cause a potential 1987-type Crash.</p> <p data-mce-style="padding-left: 30px;" style="padding-left: 30px;"><em>In the Baupost Q2 Letter, Mooney estimates that investments linked to volatility &ldquo;</em><strong><em>likely runs in the hundreds of billions of dollars,&rdquo; a fact that could propel a market crash once the snowball starts running down the hill. &ldquo;Any spike in equity markets realized volatility, even to historical average levels, has the potential to drive a significant amount of equity selling (much of it automated),&rdquo; which would create a self-fulfilling feedback loop that only builds upon itself.</em></strong></p> <p data-mce-style="padding-left: 30px;" style="padding-left: 30px;">Source: ValueWalk</p> <p>We&rsquo;ve been noting for weeks that the markets are being rigged by risk-parity funds. All told these funds manage some $500 billion in assets. And they are mindlessly buying stocks based on automated triggers, NOT sound judgment.</p> <p>This works great when the market is rallying. But what happens when those same automated systems get hit with &ldquo;sell orders&rdquo; and some $500 billion in capital (the real amount is even larger as many of these funds are leveraged) hits &ldquo;SELL&rdquo;?</p> <p>The markets had a similar experience with automated trading programs in 1987. It wasn&rsquo;t pretty.</p> <p><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user20289/imageroot/2017/07/24/GPC72717.png" style="width: 460px; height: 284px;" /></p> <p><strong>A Crash is coming...</strong></p> <p>And smart investors will use it to make literal fortunes.</p> <p>We offer a FREE investment report outlining when the market will collapse as well as what investments will pay out massive returns to investors when this happens. It&#39;s called <strong><u>Stock Market Crash Survival Guide</u></strong>.</p> <p>To pick up one of the last remaining copies&hellip;</p> <p><a data-mce-="" href="http://phoenixcapitalmarketing.com/stockmarketcrash1.html">CLICK HERE!</a></p> <p>Best Regards</p> <p>Graham Summers</p> <p>Chief Market Strategist</p> <p>Phoenix Capital Research</p> http://www.zerohedge.com/news/2017-07-27/investment-legend-warns-1987-type-market-crash#comments Baupost Group Business Economic history of the Netherlands Economy Equity Markets Finance Financial markets Investment Market Crash Mathematical finance Money Seth Klarman Seth Klarman Stock market Value investing Volatility Volatility Thu, 27 Jul 2017 12:57:23 +0000 Phoenix Capital Research 600589 at http://www.zerohedge.com Core Durable Goods Orders Disappoint But Aircraft Orders Surge 131% http://www.zerohedge.com/news/2017-07-27/core-durable-goods-orders-disappoint-aircraft-orders-surge-131 <p>A huge upside surprise for durable goods orders (+6.5% MoM vs +3.9% MoM)... This was the<strong> biggest surge in DurGoods since July 2014&#39;s record Boeing order </strong>also screwed with the data...</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/07/26/20170727_dur4.jpg"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/07/26/20170727_dur4_0.jpg" style="width: 600px; height: 309px;" /></a></p> <p>Dominated by a 19% spike in transportation (with <strong>non-defense aircraft orders up 131.2% MoM</strong>)</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/07/26/20170727_dur2.jpg"><img height="344" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/07/26/20170727_dur2_0.jpg" width="600" /></a></p> <p>&nbsp;</p> <p>Up from $11bn to $25.3bn...</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/07/26/20170727_dur3.jpg"><img height="382" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/07/26/20170727_dur3_0.jpg" width="600" /></a></p> <p>New orders for manufactured durable goods in June increased $14.9 billion or 6.5 percent to $245.6 billion, the U.S. Census Bureau announced today.<strong> This increase, up following two consecutive monthly decreases, followed a 0.1 percent May decrease</strong>.</p> <p><strong>Excluding transportation, new orders increased 0.2 percent.</strong> Excluding defense, new orders increased 6.7 percent. Transportation equipment, also up following two consecutive monthly decreases, led the increase, $14.6 billion or 19.0 percent to $91.6 billion.</p> <p>However, away from this unsustainable surge in orders,<strong> Core Durable Goods Orders disappointed (+0.2% vs +0.4% exp) and Capital Goods New Orders Nondefense Ex Aircraft &amp; Parts fell 0.1% - the biggest drop since Dec 2016</strong>.</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/07/26/20170727_dur1.jpg"><img height="308" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/07/26/20170727_dur1_0.jpg" width="600" /></a></p> <p>Let&#39;s just hope Boeing can sell a few more planes in July or this picture won&#39;t look so rosy. One glimpse at the top chart above tells you what happens next month... we&#39;re gonna need another airshow!</p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="1191" height="612" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20170727_dur1.jpg?1501159236" /> </div> </div> </div> http://www.zerohedge.com/news/2017-07-27/core-durable-goods-orders-disappoint-aircraft-orders-surge-131#comments Boeing Boeing Business Business Census Bureau Economy of the United States Manufacturing U.S. Census Bureau Thu, 27 Jul 2017 12:44:55 +0000 Tyler Durden 600588 at http://www.zerohedge.com Bill Blain: "Are We In A Bubble About To Burst, Or Are We Facing Massive Equity Upside?" http://www.zerohedge.com/news/2017-07-27/bill-blain-are-we-bubble-about-burst-or-are-we-facing-massive-equity-upside <p><em>Submitted by Bill Blain of <a href="http://www.mintpartners.com">Mint Partners</a></em></p> <p><strong>Are We In A Bubble About To Burst, Or Are We Facing Massive Equity Upside?</strong></p> <p>“A liberal is a conservative who has been arrested.”</p> <p>No surprises from the Fed last night. Unchanged rate talk and hints about reducing the balance sheet “relatively soon”. We can go figure what “relatively” means when inflation picks up. The stock market soared and VIX tumbled to a record low. Was that a warning about complacency? Since the 2008 crisis we’ve been here many times before – worrying about signals the economy is strengthening when suddenly its dived weaker. </p> <p>But, those us with longer memories can recall when the US economy has turned dramatically stronger – and in 1994, (yes, I remember it well), when the Fed acted prematurely, spiked the recovery and triggered what we’d now call a massive Treasury market TanTrum. This time it feels very different. I suspect we are very much still on course towards normalisation – a new kind of new normal: low rates, low inflation and steady state low growth. </p> <ul> <li>Stuff to watch today: Dovish Fed boosts stocks (record Dow) and dollar crashes. Lots of corporate results to wonder and worry about! </li> <li>Stuff the think about: Deutsche Bank results show it’s taken yet another thumping – difficult to see how it plays catch up and regains market relevance when it’s still swinging the headcount axe. Where is the US economy when inflation remains so low? What are the risks to Europe of the low dollar?</li> </ul> <p>Listening to the flow from our trading desks, clients and what I read on blogs and research, there are two distinct views on current markets:</p> <ol> <li><strong>Everything is a bubble about to burst</strong>. Financial asset prices are massively vulnerable to correction as Central Banks normalise and cut the market distortions of QE policies. Yada yada yada, been singing this song since QE began… (doesn’t mean its not right!)</li> <li><strong>The Global Economy is in the Goldilocks zone</strong>. We have an unbeatable combination of low interest rates, positive fiscal policy statements, strong political will, pent up demand, plus technical factors suggesting markets can go higher. All in all, its unbeatable, so pile into further stock market upside. </li> </ol> <p>So where are we really? What do central banks know that we don’t. (That is a rhetorical question – they are guessing as well.) Me? I’m waiting for a correction and then I’m putting my buying boots on… <br />My Macro Economist – Martin Malone – is a massive fan of further upside. (Happy to arrange for anyone to speak with him.) </p> <p>He reckons global markets will drive higher – and he’s been absolutely spot on so far this year! He’s looking at central bank balance sheets, zero interest rates, forward guidance, positive output gaps, a shift from low inflation, low investment and low productivity towards far stronger political initiatives, policy action and private sector investment. We’re also seeing record corporate profits and massive savings from low energy costs. He’s looking at a series of fundamental shifts across the economic factors that drive economies – and he discerns positives across the board. </p> <p>He says: “the bottom line is economic efficiencies or run-rate is much improved compared to any period of the past decade. Economists talk about growth broadening, but it’s not just the economy. All public and private sector balance sheets are aligned with the current step up in economic efficiency.” </p> <p>I can’t help be somewhat persauded by Martin’s obvious enthusiasm for the global recovery to finally break out of the last 8–years of post-crisis lethargy. But, I’m nervous – too worried perhaps about the reality of the current political incompetency in the UK, US and elsewhere. I’m nervous the positive energy won’t be sustained, and I’m particularly concerned about the pernicious effects of inequality across economies where under-employment and travesties like zero hours contracts are inflating corporate profits. These might fill executive wallets but they don’t create growth but resentment and potential social instability.&nbsp; </p> <p>But, hey-ho, get over it… </p> <p>Are we still in a bull market in Credit? Martin has aslo been looking at investment grade credits and concludes that even though IG credit has tightened back to 185bp, that’s the exact average of the past six decades! With the global economy in “Goldilocks”, he sees that as a clear bull signal and predicts 100 in 2018. I’ve attached Martin’s chart for your perusal. </p> <p>Again, I’m not so certain myself – the distorting effects of QE buying corporate paper isn’t just what central banks have absorbed. It’s the effect on market mindset that matters. Credit funds have been buying IG debt secure in the expectation central banks will buy it even as it tightens – it’s been a no brainer of a credit trade. </p> <p>Fascinating article in FT yesterday pointing out the real beneficiaries of QE have been a limited number of global large corporate borrowers who’ve been filling their boots with cheap debt to meet QE appetite. How that promotes SME growth by flowing money into the real economy beats me, but, hey, why worry, it's kept interest rates low.&nbsp; </p> <p>So, what can we conclude – the Fed is on hold, normalisation is in the air, and the stock markets love the current market. Hm.. thin summer markets and thin volumes… </p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="304" height="166" alt="" src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/confused%20trader_0.jpg?1501157847" /> </div> </div> </div> http://www.zerohedge.com/news/2017-07-27/bill-blain-are-we-bubble-about-burst-or-are-we-facing-massive-equity-upside#comments Business Business cycle Central bank Central Banks Deutsche Bank Economic history of the Netherlands Economy Financial crises Financial market Global Economy Goldilocks Interest rate Investment Grade Macroeconomics Monetary policy Money Mortgage-backed security New Normal Reality recovery Subprime mortgage crisis US Federal Reserve Thu, 27 Jul 2017 12:17:31 +0000 Tyler Durden 600586 at http://www.zerohedge.com