en Larry Ellison Steps Down As CEO Of Oracle <p>Unlike Steve Jobs, who almost literally passed away engrossed by his lifetime legacy, <em>his work, </em>that "other" billionaire, Oracle's Larry Ellison, 70 years young, has decided to step aside and focus on the more enjoyable things in life, such as buying Hawaiian islands. </p> <p>In his departure, he will be appointed to the title of Executive Chairman, and is replaced by Mark Hurd and Safra Catz as joint CEOs of the company. </p> <p><em>Just out from the company:</em></p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>The Oracle Board of Directors today announced that it has elected Larry Ellison to the position of Executive Chairman of Oracle's Board and appointed him the company's Chief Technology Officer. Jeff Henley, who has served as Oracle's Chairman for the last 10 years, was appointed Oracle's Vice Chairman of the Board.</p> <p>&nbsp;</p> <p>The Oracle Board also promoted both Safra Catz and Mark Hurd to the position of CEO, Oracle Corporation. All manufacturing, finance, and legal functions will continue to report to Oracle CEO, Safra Catz. All sales, service and vertical industry global business units will continue to report to Oracle CEO, Mark Hurd. All software and hardware engineering functions will continue to report to Oracle Chairman and CTO, Larry Ellison. </p> <p>&nbsp;</p> <p>"Safra and Mark will now report to the Oracle Board rather than to me," said Larry Ellison. "All the other reporting relationships will remain unchanged. The three of us have been working well together for the last several years, and we plan to continue working together for the foreseeable future. Keeping this management team in place has always been a top priority of mine." </p> <p>&nbsp;</p> <p>"Larry has made it very clear that he wants to keep working full time and focus his energy on product engineering, technology development and strategy," said the Oracle Board's Presiding Director, Dr. Michael Boskin. "Safra and Mark are exceptional executives who have repeatedly demonstrated their ability to lead, manage and grow the company. The Directors are thrilled that the best senior executive team in the industry will continue to move the company forward into a bright future."<br />&nbsp;</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="156" height="104" alt="" src="" /> </div> </div> </div> Steve Jobs Thu, 18 Sep 2014 20:08:07 +0000 Tyler Durden 494543 at S&P Hits All-Time Record High As Russell "Death Cross" Looms <p>For the first time since July 2011&#39;s plunge, and with almost half its components already in bear market, the <strong>Russell 2000 looks set to experience a &#39;death cross&#39; in the next few days</strong> (50-day moving average crossing below the 200-day). But don&#39;t look at that - the<strong> S&amp;P 500 and Dow hit new record highs (despite market internals slumping)</strong> today ahead of the BABA IPO to keep the dream alive just a little longer ahead of tomorrow&#39;s quad-witching malarkey. Today&#39;s action was dominated by dismal housing data (<strong>demolishing yesterday&#39;s exuberance in homebuilders</strong>), Poroshenko&#39;s &quot;Ukraine invasion&quot; headlines, and hopes ahead of BABA and Scottish votes. <strong>USD down on the day, commodities down, bonds unch, stocks... UP.</strong></p> <p>&nbsp;</p> <p>Russell 2000 Nears Death Cross...</p> <p><a href=""><img alt="" src="" style="width: 600px; height: 533px;" /></a></p> <p>As market internals collapse...</p> <blockquote class="twitter-tweet" lang="en"><p>ALL ABOARD??? Uhm, no <a href=""></a></p> <p>&mdash; Not Jim Cramer (@Not_Jim_Cramer) <a href="">September 17, 2014</a></p></blockquote> <script async src="//" charset="utf-8"></script><p><span id="cke_bm_452S" style="display: none;">&nbsp;</span>With &quot;Most Shorted&quot; stocks dumped into the afternoon<span id="cke_bm_452E" style="display: none;">&nbsp;</span>...after the big squeeze open...</p> <p><a href=""><img alt="" src="" style="width: 600px; height: 313px;" /></a></p> <p>&nbsp;</p> <p>Since the FOMC statement, things changed quickly for homebuilders...</p> <p><a href=""><img alt="" src="" style="width: 600px; height: 595px;" /></a></p> <p>&nbsp;</p> <p>And financials were the post-FOMC big winners - but credit continues to ignore that relative exuberance...</p> <p><a href=""><img alt="" src="" style="width: 600px; height: 316px;" /></a></p> <p>&nbsp;</p> <p>Gold ansd silver were smashed early on but bounced back after Poroshenko&#39;s &quot;Russia has invaded Ukraine&quot; statement to The US Congress...</p> <p><a href=""><img alt="" src="" style="width: 600px; height: 593px;" /></a></p> <p>&nbsp;</p> <p>And while stocks bounced back from the initial plunge, they struggled to hold post-Poroshenko gains... before the utter buying panic that happened in the last hour</p> <p><a href=""><img alt="" src="" style="width: 600px; height: 381px;" /></a></p> <p>&nbsp;</p> <p>And on the week, while The Dow surges, Russell 2000 managed to get to unch after the usual late-day buying panic saved the day...</p> <p><a href=""><img alt="" src="" style="width: 600px; height: 680px;" /></a></p> <p>&nbsp;</p> <p>Treasury Yields stabilized today after the post FOMC kneejerk&nbsp; - unchanged...</p> <p><a href=""><img alt="" src="" style="width: 600px; height: 317px;" /></a></p> <p>&nbsp;</p> <p>Credit weakened into the close...</p> <p><a href=""><img alt="" src="" style="width: 600px; height: 312px;" /></a></p> <p>&nbsp;</p> <p>FX markets saw USD weakness on the day, giving back most of the post-FOMC gains.. on EUR/GBP strength outweighing JPY weakness...</p> <p><a href=""><img alt="" src="" style="width: 600px; height: 315px;" /></a></p> <p>&nbsp;</p> <p>Commodities dropped on the day - despite USD weakness...</p> <p><a href=""><img alt="" src="" style="width: 600px; height: 312px;" /></a></p> <p>&nbsp;</p> <p>Stocks caught up to USDJPY&#39;s overnight ramp... led by AUDJPY all day again...</p> <p><a href=""><img alt="" src="" style="width: 600px; height: 314px;" /></a></p> <p>&nbsp;</p> <p>As both WTI and Brent slipped...</p> <p><a href=""><img alt="" src="" style="width: 600px; height: 318px;" /></a></p> <p>&nbsp;</p> <p><em>Charts: Bloomberg</em></p> <p><strong>Bonus Chart: While GBP vol is heavily bid, the modest recovery in cable today suggest traders think a &quot;no&quot; vote is coming - but don&#39;t seem convinced relative to the decline...</strong></p> <p><a href=""><img alt="" src="" style="width: 600px; height: 317px;" /></a></p> <p>And here&#39;s how undecideds made up their minds...</p> <p>&nbsp;</p> <blockquote class="twitter-tweet" lang="en"><p><a href="">#indyref</a> Might help the undecided ? <a href=""></a></p> <p>&mdash; Jon Tait (@jon_tait) <a href="">September 18, 2014</a></p></blockquote> <script async src="//" charset="utf-8"></script> <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="943" height="492" alt="" src="" /> </div> </div> </div> Bear Market headlines Jim Cramer Market Internals Russell 2000 Twitter Twitter Ukraine Thu, 18 Sep 2014 20:06:30 +0000 Tyler Durden 494542 at "Stocks Are More Crash-Prone Than Ever," Fleckenstein Slams "Fed's Idiot Policies" <p>Infamous short-seller Bill Fleckenstein left a CNBC anchor questioning her faith in the status quo in this brief interview. As she pestered him with questions about 'missing out on the rally', Fleckenstein snapped back "so what? I don't care, it doesn't matter" asking rhetorically "when the market declines, how fast will it all be taken away from you?" Fleckenstein warned "I don't think we will get through October without some accident," adding that "the <strong>stock market is more crash-prone than ever</strong>." When pressed again about sitting on the sidelines, Fleckenstein rebukes, "<strong>if you want to pursue idiots like the Fed doing crazy policies, and if you think you can get out in time, go for it. I don't want to try to do that</strong>."</p> <p>&nbsp;</p> <p><iframe src=";size=530_298" width="530" height="298"></iframe></p> <p>&nbsp;</p> <p>As CNBC notes, some traders might regret missing out on what may go down in history books as the bull market of a lifetime, but <strong>"I'm not kicking myself," he said. "I don't care, it doesn't matter."</strong></p> <p><strong>"I don't have to play every day," he added.</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="202" height="174" alt="" src="" /> </div> </div> </div> Thu, 18 Sep 2014 19:56:47 +0000 Tyler Durden 494541 at Yesterday's Late-Day Buying Panic In Stocks Was The Biggest In 3 Years <p>Judging by the most liquid US equity market instrument - e-Mini S&amp;P 500 futures - market participants have not been as exuberant buyers of stocks in three years. With AAII bulls at extremes vs bears, it seems this is <strong>anything but the most-hated rally of all time</strong>!</p> <p>&nbsp;</p> <p>In the last 15 minutes yesterday, the liquidity imbalance in the S&amp;P 500 futures was the largest in over 3 years...</p> <p><a href=""><img src="" width="600" height="274" /></a></p> <p><em>Source: Nanex</em></p> <p><span style="text-decoration: underline;"><strong>Furthermore, JPMorgan's Spec Risk Indicator just hit its extremes...</strong></span></p> <p><em><a href=""><img src="" width="600" height="425" /></a></em></p> <p><em>Difference between net spec positions on US equities &amp; rates - this indicator is derived by the difference between total CFTC spec positions in US equity futures (in $bn) scaled by open interest (in $bn) minus a duration weighted composite of UST futures and scaled by open interest. The US equity is an aggregate of the S&amp;P500, Dow Jones, NASDAQ and their Mini index. The US rates series is duration weighted aggregate of the UST2YR, UST5YR, UST10YR, UST long bond &amp; the UST Ultra long bond futures.<br /></em></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="1015" height="463" alt="" src="" /> </div> </div> </div> Bond NASDAQ Thu, 18 Sep 2014 19:39:00 +0000 Tyler Durden 494540 at When It Comes To Net Worth, This Is The Main Difference Between China And The US <p>Ever wonder why for the US, it is <strong><em>all about </em></strong>reflating the stock market bubble in order to boost the "wealth effect", if only for a small portion of the population? </p> <p>Or, for that matter, why in China where the Shanghai Composite has gone absolutely nowhere since the Lehman crash (and certainly isn't up some 200% unlike the liquidity-supercharged S&amp;P 500), it is all about preserving the sanctity of the housing bubble?</p> <p>Then the following chart should make it all clear. </p> <p>As we reported <a href="">earlier today</a>, in the US it is all about (record) financial assets. So much so, in fact, that <strong>financial assets as a percentage of total household assets have never been higher at 70.3%, </strong>which also means that real estate as a percentage of total is as low as it has ever been. </p> <p>Meanwhile, in China few households care as much about financial assets (the ones that do are largely a part of the Politburo or the ultra-rich oligrachy). Instead, <strong>the largest Chinese household asset is Real Estate, <a href="">which at 74.7% of total household assets</a>, </strong>is by far the most valuable asset that China's population has.</p> <p><a href=""><img src="" width="600" height="453" /></a></p> <p>Said otherwise, while the US, the Fed, and in general the Western world, will happily keep reflating the financial system until it all bursts again, in China it will be all about reflating the housing bubble. And while so far the Fed appears in control of the S&amp;P 500, trading well over 2000, in China - as <a href="">reported earlier today </a>- the housing market is in clear freefall, despite Beijing and the PBOC's best interests to levitate it. Keep a close eye on this bifurcation, because as the Chinese housing bubble goes, so goes the US financial bubble. </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="855" height="645" alt="" src="" /> </div> </div> </div> China Housing Bubble Housing Market Lehman Real estate Thu, 18 Sep 2014 19:22:41 +0000 Tyler Durden 494539 at White House Explains Where Your $1.3 Billion Went In Ukraine <p>Just minutes after <a href="">Poroshenko&#39;s fearmongering speech to US Congress</a> (<a href="">and in the face of a collapsing Ukraine economy</a>), The White House has released its &quot;fact sheet&quot; to explain exactly how committed (<a href="">aside from the lethal aid demands - which may or may not be happening as we noted here</a>) to supprting Ukraine the US taxpayer is... <strong>On top of guaranteeing $1 billion of Ukraine&#39;s debt, a further $291 million in &#39;assistance&#39; has been flooded in... here&#39;s what for...</strong></p> <h1><a href="">FACT SHEET: U.S. Support for Ukraine</a></h1> <p>The United States is firmly committed to supporting Ukraine as it works to establish security and stability, respond to humanitarian and reconstruction needs, conduct democratic elections and carry out constitutional reforms, restore its economy, and combat corruption.&nbsp; Along with our international partners, including the IMF, the United States is committed to supporting Ukraine&rsquo;s reform agenda while also ensuring that Ukrainians are able to determine their future without intimidation or outside coercion.&nbsp;</p> <p>In pursuit of these objectives, the U.S. government has provided approximately <strong>$291 million</strong> in <strong>assistance to Ukraine this year as well as a $1 billion loan guarantee.&nbsp;&nbsp; This includes the</strong> President&rsquo;s announcement <span style="text-decoration: underline;">today</span> of a new package of assistance totaling <strong>$53 million</strong>, of which:</p> <ul> <li>More than <strong>$7 million</strong> will be directed to international relief organizations to provide humanitarian aid to those affected by the conflict in Ukraine&rsquo;s east.</li> <li><strong>$46 million</strong> in security assistance will support Ukraine&rsquo;s military and border guards. This is in addition to the $70 million in security assistance we have previously announced.</li> </ul> <p>The President has also asked U.S. Commerce Secretary Penny Pritzker to lead a U.S. Government delegation to Ukraine September 26-27 to meet with senior Ukrainian government and business leaders and discuss Ukrainian economic reform efforts and the steps that the government needs to take in the short- and medium-term to strengthen its business climate and build an economy that attracts private capital.&nbsp;</p> <p>The U.S. government will continue to work with Congress to identify additional opportunities for U.S. assistance to Ukraine.&nbsp; For example, the Administration has requested from Congress an additional $45 million in FY 2015 as part of the President&rsquo;s European Reassurance Initiative that would help build Ukraine&rsquo;s capacity to provide for its own defense and increase interoperability with U.S. and Western forces.</p> <p>Examples of U.S. assistance to Ukraine in response to the crisis include the following:</p> <p><strong><span style="text-decoration: underline;">Humanitarian Assistance and Reconstruction</span></strong></p> <ul> <li>The U.S. government is contributing to the work in Ukraine of the UN High Commissioner for Refugees (UNHCR), the International Organization for Migration (IOM), the International Committee of the Red Cross (ICRC), the United Nations Population Fund (UNFPA), and the UN Office of the Coordination of Humanitarian Affairs (UNOCHA).</li> <li>These contributions are supporting Ukrainian efforts to ensure adequate reception of internally displaced persons (IDP) as well as to facilitate IDP returns when security conditions allow, including through the provision of food, cash, hygiene kits, medicines, and domestic and winter items.&nbsp; We are also supporting efforts to address the humanitarian needs of vulnerable populations in Luhansk and Donetsk through support for emergency activities including the procurement and distribution of safe drinking water and relief commodities.</li> <li>The U.S. government is also providing immediate support for economic recovery, small infrastructure repair, and restoration of public services in conflict-affected areas in the east.&nbsp;</li> </ul> <p><strong><span style="text-decoration: underline;">Security Sector Capacity Building and Reform</span></strong></p> <ul> <li>With today&rsquo;s announcement, the U.S. government has committed to providing $116 million in equipment and training to Ukraine&rsquo;s security forces to help Ukraine better monitor and secure its border, operate more safely and effectively, and preserve and enforce its territorial integrity.&nbsp; Ukraine&rsquo;s security forces include their Armed Forces, National Guard, and State Border Guard Service.</li> <li>This assistance includes the provision of body armor, helmets, vehicles, night and thermal vision devices, heavy engineering equipment, advanced radios, patrol boats, rations, tents, counter-mortar radars, uniforms, and other related items.&nbsp;</li> <li>The United States has also begun a process led by U.S. European Command and Department of Defense civilian and military experts to work with Ukraine to improve its capacity to provide for its own defense and set the stage for longer-term defense cooperation.&nbsp; This includes medical advisory and security assistance advisory teams.</li> </ul> <p><strong><span style="text-decoration: underline;">National Unity, Democracy, Human Rights, and Media</span></strong></p> <ul> <li>The United States has contributed funding and personnel to the Organization for Security and Cooperation in Europe&rsquo;s (OSCE) Special Monitoring Mission (SMM) that is monitoring and providing daily reporting, particularly in the conflict regions in the east.</li> <li>During Ukraine&rsquo;s May presidential election, U.S. assistance supported the work of international and domestic election observers as well as efforts to strengthen election administration, voter education, election security, and independent media.&nbsp; The United States is providing similar assistance for pre-term parliamentary elections scheduled for October 26.</li> <li>U.S. assistance is also supporting Ukrainian efforts to promote an inclusive process of constitutional reform that will help Ukraine meet European standards and drive the process of decentralization.&nbsp;</li> <li>The U.S. government is supporting civil society organizations to engage in public outreach, participate in the government reform process, and monitor and defend human rights.</li> <li>We are also providing assistance to boost the capacity of independent media outlets to provide unbiased information and to increase access to information in all parts of Ukraine.&nbsp; In mid-October, the Broadcasting Board of Governors (BBG) will launch a daily, 30-minute Russian language television news program that will be a joint production of Radio Free Europe/Radio Liberty and the Voice of America. The program will be shown on television affiliates in Ukraine, as well as in Lithuania, Latvia, Estonia, Moldova, Georgia, and possibly other countries. BBG will seek to make the program available to Russian-speaking news-seekers worldwide via digital platforms.</li> </ul> <p><strong><span style="text-decoration: underline;">Economic Stabilization, Reform, and Growth</span></strong></p> <ul> <li>In May, Ukraine closed on its offering of a $1 billion sovereign bond, guaranteed by the United States.&nbsp; With the support of the proceeds raised by the loan guarantee, Ukraine is implementing a new social protection program to compensate vulnerable households for increases in gas and heating tariffs, which will reach 30 percent of the population. The U.S. loan guarantee was part of a coordinated international effort to ensure Ukraine has the resources it needs, which will provide $27 billion to Ukraine as it implements its IMF program.&nbsp;</li> <li>Immediately following Ukraine&rsquo;s change in government in March, the U.S. government deployed advisors to help stabilize the financial sector and implement key reforms in partnership with the Ukrainian Finance Ministry and National Bank.&nbsp; These advisors are supporting a range of reforms related to issues such as banking supervision, public sector debt management, infrastructure finance, and taxation.</li> <li>U.S. assistance also is supporting policy changes that will lay the groundwork for growth in important sectors of the Ukrainian economy.&nbsp; For example, we are helping Ukrainian authorities to carry out reforms that will boost private sector investment in agriculture, improve access to credit and capital investment for farmers, and streamline agricultural sector regulation.</li> <li>The United States is also contributing to international programs, including through the European Bank for Reconstruction and Development (EBRD) and the Organization for Economic Cooperation and Development (OECD), to support increased access to finance for small- and medium-sized enterprises (SMEs) and to help Ukraine implement the reforms it needs to attract international investment.</li> </ul> <p><strong><span style="text-decoration: underline;">Energy Security</span></strong></p> <ul> <li>We are sending a team of experts to help the Ukrainian government to meet its energy needs this winter.&nbsp;</li> <li>The U.S. government also is working with other international donors to help Ukraine develop strategies to ensure that energy subsidy programs are targeting the most vulnerable Ukrainians and to increase end-use energy efficiency, including among households and in the industrial sector.</li> <li>We also are supporting Ukrainian efforts to enhance its own energy production, including through technical assistance to help restructure Ukraine&rsquo;s national oil and gas company, Naftogaz, and through the introduction of new technologies to boost yields at existing and new conventional and unconventional oil and gas fields in Ukraine.&nbsp;</li> </ul> <p><strong><span style="text-decoration: underline;">Trade Diversification and Promotion</span></strong></p> <ul> <li>The U.S. government is providing training and technical assistance to build Ukraine&rsquo;s expertise on World Trade Organization (WTO) obligations and rights and how to meet WTO food safety standards.</li> <li>The Office of the U.S. Trade Representative is convening the U.S.-Ukraine Trade and Investment Council to support Ukraine&rsquo;s efforts to boost bilateral trade and investment and combat intellectual property theft.</li> <li>U.S. assistance is supporting efforts to help SMEs access new international markets.&nbsp; This includes plans for a U.S.-Ukraine agribusiness trade mission to promote two-way trade between our countries.</li> </ul> <p><strong><span style="text-decoration: underline;">Anti-Corruption</span></strong></p> <ul> <li>The United States is working closely with Ukrainian authorities and others in the international community to help recover stolen assets, including through joint investigative activities as well as support for evidence collection and processing activities.&nbsp;</li> <li>We are also helping Ukrainian officials develop laws and regulations that will establish anti-corruption institutions within the government and enable authorities to combat corruption more effectively.&nbsp; Through support for expanded e-governance and procurement reform we are also working with Ukrainian authorities to limit opportunities for corruption.</li> <li>We are also contributing to international efforts, including through the OECD and the EBRD, to deter foreign bribery and improve Ukraine&rsquo;s business climate.</li> </ul> <p>*&nbsp; *&nbsp; *</p> <p>Feel better now?</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="239" height="196" alt="" src="" /> </div> </div> </div> Bond Corruption Estonia Latvia Lithuania recovery Ukraine White House World Trade Thu, 18 Sep 2014 19:00:33 +0000 Tyler Durden 494538 at 238 Years Of The (Dis)United Kingdom <p>As the World anxiously awaits the results of today's Scottish Referendum for independence from The United Kingdom, we thought a little context on just <strong>how many 'nations' have left over the last 238 years...</strong></p> <p>&nbsp;</p> <p><a href=""><img src="" width="600" height="385" /></a></p> <p>&nbsp;</p> <p><a href=""><em>Source: GlobalPost</em></a></p> <p>*&nbsp; *&nbsp; *</p> <p><a href=",36962/?utm_source=Twitter&amp;utm_medium=SocialMarketing&amp;utm_campaign=Pic:1:Default"><em>And As The Onion reports,</em></a></p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p><strong>Projecting from the rate of territorial decline over the last two centuries, experts predicted Thursday that the British Empire will be reduced to an area of eight acres surrounding Buckingham Palace by as early as 2050. </strong></p> <p>&nbsp;</p> <p>“Considering the loss of its colonial possessions around the world over the years, as well as Scotland’s current independence campaign, we project that the once vast and mighty British Empire will soon reach only a few hundred feet beyond the property lines of the royal palace,” said Oxford University political science professor Patrick Withers, adding that within 35 years, the sum total of British-held territory will likely extend from Upper Belgrave St. a few blocks west of Buckingham Palace to just a small fraction of St. James’s Park to the east.</p> <p>&nbsp;</p> <p><strong>“According to even the most generous estimates, the England of 2050 will no longer include the British Museum, most of the River Thames, or the Houses of Parliament, which will present extraordinary difficulties in governance and sustaining British identity at all.” </strong></p> <p>&nbsp;</p> <p>Withers went on to say that within 100 years, the British Empire may be reduced to the Queen’s throne room and part of the hallway outside.</p> </blockquote> <p>*&nbsp; *&nbsp; *</p> <p>It's funny coz it's true.</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="1027" height="659" alt="" src="" /> </div> </div> </div> The Onion United Kingdom Thu, 18 Sep 2014 18:36:49 +0000 Tyler Durden 494537 at Lurking Beneath The Taper: More Trouble In Repo Land <p><em>Submitted by <a href="">Alhambra&#39;s Jeffrey Snider</a> via <a href="">Contra Corner blog</a>,</em></p> <p><strong>Since we are now in the middle of the final month of a quarter, checking repo stats shows what we have come to expect of a fragile liquidity system.</strong> Once again, repo fails spiked sharply in the latest weekly statistics from FRBNY as primary dealers and the Fed&rsquo;s own repo &ldquo;fix&rdquo; fail to affect the &ldquo;resiliency&rdquo; that FOMC members appear desperate to attach.&nbsp; However, since the repo market is far, far away from the everyday nobody pays much attention.</p> <p><strong>The problem with liquidity is always that it&rsquo;s not what you see today when all seems well and abundance is seemingly effective, it is actually what to expect when you need it most.</strong>&nbsp; From the standpoint of central banks, that has been their operating assumption (at least as portrayed publicly) since the nineteenth century.&nbsp; The Federal Reserve itself was dedicated on the principle of currency elasticity, which is exactly this point &ndash; to be that liquidity when it is most needed as private markets shy away.</p> <p>Unfortunately, <strong>modern incarnations of these central banks still mostly apply nineteenth century rules, policies and even understanding to a 21<sup>st</sup> century banking system that does not so easily follow generic incantations of simplistic theory</strong>. &nbsp;The &ldquo;money supply&rdquo; right now <a href="" target="_blank">is no such thing</a>, as money has vanished from banking.&nbsp; Liquidity itself is not dependent on &ldquo;money supply&rdquo; so much as the means and channels for flow.&nbsp; That was a lesson learned the hard way by those that assured everyone in 2007 that all was &ldquo;contained.&rdquo;</p> <p>The message of resiliency is then a main part about incorporating those shortcomings into the current framework. When Janet Yellen proclaims that markets are so &ldquo;resilient&rdquo; that she would prefer they n<a href="" target="_blank">ot even bother about such negativity</a> she means to say that the Fed is more than aware of flow and liquidity and has taken that to heart.&nbsp; Indeed, they instituted the reverse repo program (actually it was just an expansion of existing lines) last year to live up to elasticity doctrine in the real &ldquo;currency&rdquo; of the modern bank: collateral.</p> <p>There has been a noticeable uptick in reverse repo usage in the past few months, but nothing that would suggest anything awry.</p> <p><a class="image-anchor" href="" target="_blank"><img alt="ABOOK Sept 2014 RepoQE RREPT" class="aligncenter size-full wp-image-26005" src="" style="width: 601px; height: 355px;" /></a></p> <p>Outside of the surge in May, there is a seeming straight line upward trend that was established all the way back when the Fed first tapered in December.&nbsp; In that important respect, there does seem to be some correlation with reverse repo usage and the repo market.&nbsp; That includes the very important changes that have taken hold of repo volumes in US$ terms.</p> <p><a class="image-anchor" href="" target="_blank"><img alt="ABOOK Sept 2014 RepoQE MBS Volume" class="aligncenter size-full wp-image-26004" src="" style="width: 600px; height: 334px;" /></a></p> <p>While focus is often placed on UST collateral, MBS repo was at least astride UST in terms of size and volume.&nbsp; That changed quite a bit after QE3 began as you would expect given how QE strips the &ldquo;market&rdquo; of needed and usable securities.&nbsp; However, we can also see this same imprint in the UST repo market as well.</p> <p><a class="image-anchor" href="" target="_blank"><img alt="ABOOK Sept 2014 RepoQE Total Volume" class="aligncenter size-full wp-image-26003" src="" style="width: 599px; height: 330px;" /></a></p> <p>Again, that makes sense given that QE4 was instituted to take UST collateral, a topic that has gained actual attention in the past eighteen months (including a very needed adjustment to the Open Market Desk policy <a href="" target="_blank">almost from the start</a>).&nbsp; From these figures we can reasonably assume that where QE was impactful in turning repo volumes lower, its taper has accomplished the opposite.</p> <p><strong>In addition to the very real concerns of <a href="" target="_blank">secular stagnation and asset bubbles</a>, rather than how the economy actually exists right now, these repo &ldquo;costs&rdquo; are a major factor in the impetus toward the monetary exit.&nbsp; However, like everything else with monetary intrusion, simply ending the manipulation is not the same as never having undertaken it.</strong>&nbsp; In another example erasing the figment of monetary neutrality, there is a clear diminishment in repo capacity and thus &ldquo;resiliency&rdquo; on this side of the QE taper.</p> <p><a class="image-anchor" href="" target="_blank"><img alt="ABOOK Sept 2014 RepoQE Volume" class="aligncenter size-full wp-image-26007" src="" style="width: 600px; height: 370px;" /></a></p> <p>The change in repo volume since the middle of 2014 has been significant, but only just now <em>approaching</em> levels that would be considered &ldquo;normal&rdquo; last year (and before).&nbsp; Yet, for all that additional volume there has been a repeated signal of distress through fails.&nbsp; There was the major episode in June just as repo volume had turned upward, and then again in July as the same occurred.&nbsp; And, as I noted at the beginning, we are now in the third major instance of a fails problem (without any corresponding surge in reverse repo usage that was &ldquo;supposed&rdquo; to occur if the Fed&rsquo;s &ldquo;fix&rdquo; were anything like one).</p> <p><a class="image-anchor" href="" target="_blank"><img alt="ABOOK Sept 2014 RepoQE Volume plus fails" class="aligncenter size-full wp-image-26006" src="" style="width: 600px; height: 525px;" /></a></p> <p><u><strong>What we are left with is much worse than when this all started.</strong></u>&nbsp; The problem of QE in repo terms was that it not only stripped usable collateral from dealer inventories and from other holders where it might be used as supply, it has seemingly diminished the entire repo market&rsquo;s capacity to withstand even a relatively minor increase in volume.&nbsp; What was normal in 2013 seems to create something of a stir in function in 2014. That these are mostly clustered around quarter ends continues the systemic weakness that has been apparent in every major market &ldquo;event&rdquo; of this period, adding to the judgment that &ldquo;resilience&rdquo; is nothing but PR and wishful thinking.</p> <p><u><strong>The problem for &ldquo;markets&rdquo; is that this is a primary liquidity conduit indicating significant and persistent degradation under, again, very benign conditions.&nbsp; In my analysis, there is no doubt that QE is the primary culprit here and that its removal is not &ldquo;allowing&rdquo; a healing process to begin but instead <em>revealing the damage</em>. &nbsp;With the Fed&rsquo;s reverse repo program having no input whatsoever, it just adds to the weight of evidence that policymakers don&rsquo;t really know what they are doing and are just making it up as they go.</strong></u></p> <p><a class="image-anchor" href="" target="_blank"><img alt="ABOOK Sept 2014 RepoQE Fails" class="aligncenter size-full wp-image-26008" src="" style="width: 600px; height: 331px;" /></a></p> <p>With compliant media that gives total deference to orthodox economics, the speeches and soundbites are enough reassurance to stave off much needed inquisition.&nbsp; <strong><u>For now.</u></strong></p> <p>&nbsp;</p> <p>*&nbsp; *&nbsp; *</p> <p><em>For information on Alhambra Investment Partners&rsquo; money management services and global portfolio approach to capital preservation, contact us at:&nbsp;<a href=""></a> </em></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="506" height="506" alt="" src="" /> </div> </div> </div> Central Banks Fail Federal Reserve Janet Yellen Money Supply Repo Market Reverse Repo Thu, 18 Sep 2014 18:09:52 +0000 Tyler Durden 494536 at Household Net Worth Hits Record $81.5 Trillion In Q2 Driven By Stock Market Surge <p>When earlier today, the Fed released its latest Z.1 (<a href="">Flow of Funds report) </a>for the second quarter, there were no surprises: thanks to the relentless liquidity injections by global central banks (<a href="">charted here</a>) resulting in record stock market levels, total household net worth rose once more, increasing by $1.4 billion in the quarter (up from a downward revised $1.2 billion in the previous quarter) to a new record high $81.5 billion. This was the result of a $95.4 trillion in total assets, offset by $13.9 trillion in liabilities, mostly mortgage debt of $9.4 trillion, as well as some $3.2 trillion in consumer credit, which may or may not account entirely for the student debt bubble. </p> <p><a href=""><img src="" width="600" height="524" /></a></p> <p>&nbsp;</p> <p>The historical chart, net of various extensive revisions to the data, is shown below: on it the impact of the Great Financial Crisis is clearly shown when net worth dipped from $68 trillion to $55 trillion only to ramp in a straight line to the most recent print of $81.5 trillion. Thank you Fed.</p> <p><a href=""><img src="" width="600" height="390" /></a></p> <p>&nbsp;</p> <p><strong>But perhaps most importantly, the percentage of financial assets as a percentage of total, just rose to the record high level it has never in the past surpassed: 70.3%. </strong>As the chart below shows, this is the highest proportion that financial assets have ever hit in the entire history of modern US society. Every time financial assets hit 70.3% of total, either housing values finally pick up and offset the disproportional increase in financial assets, or there has been a crash in financial asset values themselves.</p> <p><a href=""><img src="" width="600" height="365" /></a></p> <p>Why is this important? </p> <p>Because it means that while in previous wholesale bubbles, at least the general public would also participate in the "wealth effect", when housing assets - spread far more broadly among the US population than equities - rose in value alongside financial assets, which on a discretionary basis are mostly held by some 10% or less of the population. Indeed, real estate assets in Q2 2014 were $22.9 trillion, barely changed from the previous quarter, and well below the all time bubble high of $24.9 trillion as of 2006. </p> <p>Which means that yet another quarter has passed in which the bulk of "wealth creation" has benefited only the richest component of US society, something that even French economists have finally noticed. As for the non-rich... well, recall: "<a href="">America's Poor Have Never Been Deeper In Debt</a>."</p> <p>How much longer can the stealthy wealth transfer of the Fed and its central bank peers, in which <em>only the super rich benefit, </em>continue? The answer is unknown, but if nobody has noticed yet, after some $26 trillion in net worth increases benefiting only the wealthiest Americans, then we doubt anyone will ever notice.</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="1048" height="916" alt="" src="" /> </div> </div> </div> Central Banks Consumer Credit Real estate Z.1 Thu, 18 Sep 2014 17:46:07 +0000 Tyler Durden 494535 at Janet Yellen Believes You Can Get Rich By Going Into Debt <p>Janet Yellen&rsquo;s latest talk was very telling.</p> <p>&nbsp;</p> <p>The title of her talk was:</p> <p>&nbsp;</p> <p><strong><em>The Importance of Asset Building for Low and Middle Income Households</em></strong></p> <p>&nbsp;</p> <p>The title alone is very telling. Fed policies under Bernanke and Yellen have proven absymal at creating jobs or boosting incomes. The only thing the Fed <em>has</em> done is push housing and stock (asset) prices higher.</p> <p>&nbsp;</p> <p>Thus, for Yellen, the means of improving one&rsquo;s lot in life has nothing to do with obtaining a higher paying job. The best way to move up in life is to own stocks&hellip; or a house&hellip; or preferably both.</p> <p>&nbsp;</p> <p>This is how the Fed thinks: in terms of asset prices and leverage. These are items that only the top 0.1% of Americans really benefit from. Indeed, the Fed&rsquo;s very policies (low interest rates, plenty of liquidity) benefit the wealthiest the most because these individuals can use their wealth as collateral in order to leverage up and benefit from rising asset prices.</p> <p>&nbsp;</p> <p>This is the very strategy Larry Ellison has been using for years to live beyond his even ample means:</p> <p>&nbsp;</p> <p style="margin-left:.5in;"><strong>How Larry Ellison Actually Funds His Lavish Lifestyle</strong></p> <p style="margin-left:.5in;">&nbsp;</p> <p style="margin-left:.5in;">One of the mysteries surrounding Larry Ellison is how he can afford so many mansions, islands, yachts and planes, all while retaining his shares in his company.</p> <p style="margin-left:.5in;">&nbsp;</p> <p style="margin-left:.5in;">Yes, the Oracle CEO is one of the richest men in the world, worth over $30 billion. <strong>Yet he sells only small amounts of stock under a schedule stock-sale plan.</strong> And last I checked, yacht builders don&rsquo;t take Oracle stock for payment.</p> <p style="margin-left:.5in;">&nbsp;</p> <p style="margin-left:.5in;">Now we have some clues as to how Ellison funds his acquisitive lifestyle.</p> <p style="margin-left:.5in;">&nbsp;</p> <p style="margin-left:.5in;">According to Oracle&rsquo;s proxy, filed this month, <strong>Ellison has pledged 139 million shares &ldquo;as collateral to secure certain personal indebtedness, including various lines of credit.&rdquo; In other words, he&rsquo;s got over $4.2 billion worth of stock pledged for personal loans.</strong></p> <p style="margin-left:.5in;">&nbsp;</p> <p style="margin-left:.5in;"><a href=""></a></p> <p style="margin-left:.5in;">&nbsp;</p> <p>The multi-millionaire or billionaire can leverage up to invest in real estate or stocks&hellip; the average american cannot. Indeed, over 95% of Americans cannot buy a home in cash. So buying a home means going deeply in to debt, <em>not</em> generating wealth.</p> <p>&nbsp;</p> <p>Indeed, the only way of building wealth through real estate for most Americans would be if you bought a home and the home&rsquo;s price increased substantially to the point that selling would actually turn a profit beyond closing costs, taxes (both capital gains and property taxes for the duration of your inhabiting the home), and moving.</p> <p>&nbsp;</p> <p>This means:</p> <p>&nbsp;</p> <p>1)&nbsp;&nbsp; home prices have to increase dramatically</p> <p>2)&nbsp;&nbsp; you have to a <em>LOT</em> of variables work out in your favor.</p> <p>&nbsp;</p> <p>The fact Yellen believes in this stuff is telling. You won&rsquo;t hear the Fed talk about incomes or jobs because the Fed has no clue how to create either. But asset prices are easy to boost&hellip; just spent $3 trillion and you&rsquo;ll get a roaring stock market.</p> <p>&nbsp;</p> <p>This concludes this article. If you&rsquo;re looking for the means of protecting your portfolio from the coming collapse, you can pick up a FREE investment report titled <strong><em>Protect Your Portfolio</em></strong> at <a href=""></a>.</p> <p>&nbsp;</p> <p>This report outlines a number of strategies you can implement to prepare yourself and your loved ones from the coming market carnage.</p> <p>&nbsp;</p> <p>Best Regards</p> <p>&nbsp;</p> <p>Phoenix Capital Research</p> <p>&nbsp;</p> <p>&nbsp;</p> <p>&nbsp;</p> <p>&nbsp;</p> Janet Yellen Real estate Thu, 18 Sep 2014 17:29:20 +0000 Phoenix Capital Research 494534 at