http://www.zerohedge.com/fullrss2.xml/news/david-rosenberg-best-currency-may-be-physical-gold en Matt Drudge: "Rand Paul Is America's Best Senator" http://www.zerohedge.com/news/2017-03-30/matt-drudge-rand-paul-americas-best-senator <p>Drudge Report founder Matt Drudge does not personally tweet too often, so when he does, it is either when something has infuriated him or, more rarely, when he has words of affirmation.&nbsp; Today it was the latter, when Drudge praised Senator Rand Paul, tweeting that he had an "Intriguing lunch in hill office of America's best senator, Rand Paul. He's bold, brave and has somehow kept his heart in such a corrupt city."</p> <blockquote class="twitter-tweet"><p dir="ltr" lang="en">Intriguing lunch in hill office of America's best senator, Rand Paul. He's bold, brave and has somehow kept his heart in such a corrupt city</p> <p>— MATT DRUDGE (@DRUDGE) <a href="https://twitter.com/DRUDGE/status/847462462299398144">March 30, 2017</a></p></blockquote> <script src="//platform.twitter.com/widgets.js"></script><p>While according to many, Drudge was a driving force behind the Trump election, Drudge has been very outspoken recently about his displeasure with the GOP. </p> <p>In <a href="http://www.zerohedge.com/news/2017-02-08/danger-matt-drudge-warns-republicans-only-know-how-be-opposition-not-lead">early February</a>, Drudge tweeted that the "Republican party should be sued for fraud. NO discussion of tax cuts now. Just lots of crazy. Back to basics, guys!" and "No Obamacare repeal, tax cuts! But Republicans vote to shut Warren? Only know how to be opposition not lead! DANGER "</p> <p>One month later, Drudge was <a href="http://www.zerohedge.com/news/2017-03-14/drudge-republicans-lied-about-tax-cuts-wants-his-vote-back">even more direct</a>, saying "Republicans lied about wanting tax cuts. Can we get our votes back?"</p> <p>Then, last Thursday, amid the struggle to rally enough Republican votes to pass an ObamaCare repeal-and-replace plan, he tweeted, "The swamp drains you," which many saw as a jab at President Trump's campaign pledge to "drain the swamp." </p> <p>As <a href="http://thehill.com/blogs/ballot-box/326495-drudge-praises-americas-best-senator-rand-paul-after-lunch-at-the-capitol">The Hill notes</a>, this was not the first time he's singled Paul in a favorable light: earlier this month the Drudge Report featured a headline touting, "The return of Rand Paul," which was viewed as a warning to moderate Republicans. The headline linked to a Washington Examiner story that outlined Paul's problems with the GOP's healthcare bill. </p> <p>Rand Paul has consistently called for repeaking Obamacare first, and worrying how to replace it later. So far this strategy has proven unsuccessful. </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="640" height="360" alt="" src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/drudge%20teaser.jpg?1490889288" /> </div> </div> </div> http://www.zerohedge.com/news/2017-03-30/matt-drudge-rand-paul-americas-best-senator#comments Alternative media Conservatism in the United States Drudge Drudge Report Lewinsky scandal Matt Drudge Obamacare Patient Protection and Affordable Care Act Politics Politics Politics of the United States Rand Paul Republican Party United States Thu, 30 Mar 2017 15:56:41 +0000 Tyler Durden 592056 at http://www.zerohedge.com How The "Trump Trades" Have Mutated Over Time, In Pictures http://www.zerohedge.com/news/2017-03-30/how-trump-trades-have-mutated-over-time-pictures <p>Is the Trump trade alive or dead: that is the question Bank of America analyst Savita Subramanian tries to answer in a report overnight, in which she notes that it is not one Trump trade but several, and they tend to be "harder to isolate."&nbsp; </p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/03/27/winners%20losers.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/03/27/winners%20losers.jpg" width="241" height="318" style="float: left; margin-right: 10px;" /></a>She notes that while stocks continued to make new highs through February, market leadership has shifted dramatically compared to what we saw immediately following the election. <strong>In the initial month after the election, the rally was led by small caps, cyclicals, Value, low quality and beta. But since early December, those leaders have turned into laggards</strong>. An examination of the performance of the potential beneficiaries of the new administration’s policy proposals paints a similar story, with the performance of most of the initial policy winners peaking in early December and subsequently underperforming.</p> <p><strong>In short, it is not one Trump Trade, but many, and in the span of the past 5 month, they have mutated. </strong></p> <p>What have been the main changes? </p> <p>As shown in the charts below, the market still believes in infrastructure reform, less so in tax reform. While stock beneficiaries of various aspects of Trump’s proposed policies mostly peaked in December, some groups have held onto their initial gains better than others. In particular, beneficiaries of domestic infrastructure spending have outperformed by 7ppt since the election, while beneficiaries of lower tax rates have outperformed the average Russell 1000 stock by 4ppt. <strong>This suggests that the market still holds onto the belief that we will ultimately see the passage of an infrastructure spending bill and corporate tax reform, </strong>despite the recent failure of health care reform in Congress.</p> <p>Additionally, since the election, stocks in industries most hurt from border-adjustment taxes (retailers, autos, etc.) have underperformed the market by 6ppt, BofA finds. Whereas some of the underperformance may be attributable to weak industry fundamentals, the magnitude of underperformance suggests that <strong>the market is discounting a reasonable probability of import taxes.</strong></p> <p>Away from taxes, Subramanian notes that while it may not be surprising that Health Care Providers have rallied since last week after the failed repeal of Obamacare, the group actually began to outperform in early December. On the other hand, Biotech and Pharma stock moves suggest that the market initially viewed a Trump win / Republican sweep as a positive, but <strong>Trump’s subsequent comments on drug pricing have reversed the initial stock price jump.</strong></p> <p>Finally, when it comes to all the "other" Trump trades, BofA notes that they are "harder to isolate." </p> <ul> <li>On repatriation likelihood, stocks with high overseas cash balances have outperformed by an average of 2ppt, but this could also be a reflection of improving Tech and global growth trends over the same period. </li> <li>On capex deductions, a disproportionate number of the companies that would benefit from immediate capex expensing rules are Energy companies whose performance has been roiled by big moves in oil prices. </li> <li>Energy companies also have a high representation within leveraged companies that would be hurt by the ending of interest deductibility. Even after excluding Energy from an analysis of leveraged companies, the bank still ends up with a group of credit-sensitive stocks whose performance is not just a reflection of policy expectations, but also represents the market’s appetite for credit. </li> <li>Capex expensing beneficiaries have underperformed by an average of 6ppt since the election (5ppt ex-Energy), while companies most likely to be hurt from ending interest deductibility have outperformed by less than a percent (both with and without Energy).</li> </ul> <p>And charted:</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/03/27/trump%20trades%201.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/03/27/trump%20trades%201_0.jpg" width="500" height="266" /></a></p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/03/27/trump%20trades%202.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/03/27/trump%20trades%202_0.jpg" width="500" height="275" /></a></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="1117" height="595" alt="" src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/trump%20trades%201.jpg?1490888381" /> </div> </div> </div> http://www.zerohedge.com/news/2017-03-30/how-trump-trades-have-mutated-over-time-pictures#comments American people of German descent Bank of America Bank of America Business Business Climate change skepticism and denial Congress Donald Trump ETC Obamacare Politics of the United States Russell 1000 The Apprentice United States WWE Hall of Fame Thu, 30 Mar 2017 15:41:49 +0000 Tyler Durden 592055 at http://www.zerohedge.com An Angry Freedom Caucus Responds To Trump's 2018 Threat http://www.zerohedge.com/news/2017-03-30/freedom-caucus-responds-trumps-2018-threat-swampcare-polls-17-sad <p>After Trump drew 'first blood' this morning with a tweet threatening to fight Freedom Caucus members in the 2018 mid-term elections, a pair of House representatives have fired back with aggressive tweets of their own implying that Trump's healthcare plan was evidence that he had "succumb to the D.C. Establishment."</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p><strong>"It didn't take long for the swamp to drain <a href="https://twitter.com/realDonaldTrump">@realDonaldTrump</a>. No shame, Mr. President. Almost everyone succumbs to the D.C. Establishment."</strong></p> <p>&nbsp;</p> <p><strong>".<a href="https://twitter.com/realDonaldTrump">@realDonaldTrump</a> it's a swamp not a hot tub. We both came here to drain it. <a href="https://twitter.com/hashtag/SwampCare?src=hash">#SwampCare</a> polls 17%. Sad!"</strong></p> </blockquote> <blockquote class="twitter-tweet"><p dir="ltr" lang="en">It didn't take long for the swamp to drain <a href="https://twitter.com/realDonaldTrump">@realDonaldTrump</a>. No shame, Mr. President. Almost everyone succumbs to the D.C. Establishment. <a href="https://t.co/9bDo8yzH7I">https://t.co/9bDo8yzH7I</a></p> <p>— Justin Amash (@justinamash) <a href="https://twitter.com/justinamash/status/847448570081005568">March 30, 2017</a></p></blockquote> <script src="//platform.twitter.com/widgets.js"></script><blockquote class="twitter-tweet"> <p dir="ltr" lang="en">.<a href="https://twitter.com/realDonaldTrump">@realDonaldTrump</a> it's a swamp not a hot tub. We both came here to drain it. <a href="https://twitter.com/hashtag/SwampCare?src=hash">#SwampCare</a> polls 17%. Sad! <a href="https://t.co/4kjygV2tdS">https://t.co/4kjygV2tdS</a></p> <p>— Thomas Massie (@RepThomasMassie) <a href="https://twitter.com/RepThomasMassie/status/847448896708108290">March 30, 2017</a></p></blockquote> <script src="//platform.twitter.com/widgets.js"></script><p>&nbsp;</p> <p>Ohio Representative Jim Jordan, the former chairman of the House Freedom Caucus, also defended conservative lawmakers earlier today on Fox News.&nbsp; Per<a href="http://thehill.com/homenews/house/326487-former-chairman-defends-freedom-caucus"> The Hill</a>:</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p><strong>"The Freedom Caucus is trying to change Washington, this bill keeps Washington the same, plain and simple,"</strong> Jordan said Thursday on Fox News' "America's Newsroom."</p> <p>&nbsp;</p> <p><strong>"We appreciate the president, we are trying to help the president. But the fact is, you have to look at the legislation. It doesn't do what we told the voters we were going to do, and the American people understand that. That's why only 17 percent of the population supports this legislation."</strong></p> <p>&nbsp;</p> <p>Jordan wouldn't comment on the threat regarding the 2018 midterms, instead characterizing the scuttled healthcare vote as just a "postponement" and arguing that Republicans will succeed if they deliver on their promises to voters. </p><p>&nbsp;</p> <p><strong>"Lets forget the blame and what may happen in the future, lets just do what we said. That's what the Freedom Caucus and what Republicans are committed to," </strong>he said. </p> </blockquote> <p>Of course these latest tweets come after Trump took to twitter earlier this morning, saying "<strong>The Freedom Caucus will hurt the entire Republican agenda if they don't get on the team, &amp; fast. We must fight them, &amp; Dems, in 2018!</strong>"</p> <blockquote class="twitter-tweet"><p dir="ltr" lang="en">The Freedom Caucus will hurt the entire Republican agenda if they don't get on the team, &amp; fast. We must fight them, &amp; Dems, in 2018!</p> <p>— Donald J. Trump (@realDonaldTrump) <a href="https://twitter.com/realDonaldTrump/status/847435163143454723">March 30, 2017</a></p></blockquote> <script src="//platform.twitter.com/widgets.js"></script><p>&nbsp;</p> <p>So, Republican civil war it is...Ultimate winner:&nbsp; Democrats.</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="595" height="355" alt="" src="http://www.zerohedge.com/sites/default/files/images/user230519/imageroot/Trump3_8.JPG?1490886026" /> </div> </div> </div> http://www.zerohedge.com/news/2017-03-30/freedom-caucus-responds-trumps-2018-threat-swampcare-polls-17-sad#comments Conservatism in the United States Fox News Freedom Caucus Ohio Politics Politics Republican Party Republican Party (United States) organizations Tea Party movement Twitter Twitter United States Thu, 30 Mar 2017 15:16:48 +0000 Tyler Durden 592053 at http://www.zerohedge.com Energy Sector; Two Thirds chance they rally here http://www.zerohedge.com/news/2017-03-30/energy-sector-two-thirds-chance-they-rally-here <p><img src="https://www.kimblechartingsolutions.com/wp-content/uploads/2017/03/fib-clock-pic-300x173.jpg" width="300" height="173" style="display: block; margin-left: auto; margin-right: auto;" class="aligncenter size-medium wp-image-35302" /></p> <p><span style="color: #303030; font-family: &quot;Open Sans&quot;, Arial, sans-serif; font-size: 14px;">Below looks at the performance of the S&amp;P 500 Sectors, looking back 5-years. The winner for the lowest performance is the Energy Sector (-1.42%). XLE is lagging the S&amp;P 500 by almost 70%, in just 5-years.&nbsp;</span><strong style="box-sizing: border-box; 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;">“Time for them to rally?</strong></p> <p><strong style="box-sizing: border-box; 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;"><a href="https://www.kimblechartingsolutions.com/wp-content/uploads/2017/03/sectors-5-year-returns-energy-lagging.jpg" target="_blank" title="Energy Sector; Two Thirds chance they rally here"><img src="https://www.kimblechartingsolutions.com/wp-content/uploads/2017/03/sectors-5-year-returns-energy-lagging.jpg" 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;" /></a></strong></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><strong style="box-sizing: border-box; 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;">&nbsp;</strong></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;"><strong>Below looks at the Energy ETF (XLE)/S&amp;P 500 ratio over the past 17-years and why we find this pattern worth looking closer into.</strong></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;">&nbsp;</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;"><a href="https://www.kimblechartingsolutions.com/wp-content/uploads/2017/03/xle-spy-ratio-testing-dual-support-march-30.jpg" target="_blank" title="Energy Sector; Two Thirds chance they rally here"><img src="https://www.kimblechartingsolutions.com/wp-content/uploads/2017/03/xle-spy-ratio-testing-dual-support-march-30.jpg" alt="XLE chart" title="Energy Sector; Two Thirds chance they rally here" width="700" 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;" /></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;">&nbsp;</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;"><strong>The pattern above presents a nice entry point, with a stop below the support test at (2). &nbsp;Another test of support in this space is taking place in the&nbsp;<a href="https://finance.yahoo.com/quote/UGA?ltr=1" style="box-sizing: border-box; background: transparent; color: #2ea3f2; outline: 0px;"><strong style="box-sizing: border-box; outline: 0px; background: transparent;">UGA</strong></a>&nbsp;chart below.</strong></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;"><strong><br /></strong></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;"><a href="https://www.kimblechartingsolutions.com/wp-content/uploads/2017/03/gasoline-etf-uga-testing-rising-support-march-30.jpg" target="_blank" title="Energy Sector; Two Thirds chance they rally here"><img src="https://www.kimblechartingsolutions.com/wp-content/uploads/2017/03/gasoline-etf-uga-testing-rising-support-march-30.jpg" alt="UGA Gasoline chart" title="Energy Sector; Two Thirds chance they rally here" width="700" 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;" /></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;">From a long-term trend perspective, no doubt the trend in both of the charts above is down (lower highs and lower lows and below long-term moving averages). If one is a trend follower, we doubt these ideas are of interest to you.</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 one likes to buy low in hard hit sectors with tight stop loss parameters, we find both of these charts very interesting at this time, due to being out of favor and testing key support levels.</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;">&nbsp;</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;"><span style="color: #339966;"><strong>If you would like to test drive all of our research for 30 days, send us an email and we'll get you the details.</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;"><strong><br /></strong></p> <p style="box-sizing: border-box; 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font-style: inherit; font-variant: inherit; font-stretch: inherit; font-size: inherit; line-height: inherit; font-family: inherit;">Questions:</strong><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;">&nbsp;Email&nbsp;</span><a href="mailto:services@kimblechartingsolutions.com" title="services@kimblechartingsolutions.com" style="box-sizing: border-box; font-style: inherit; font-variant: inherit; font-weight: inherit; font-stretch: inherit; font-size: inherit; line-height: 1.2; font-family: inherit; word-wrap: break-word; color: #222222; outline-style: none; outline-width: 0px;">services@kimblechartingsolutions.com</a><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;">&nbsp;or call us toll free 877-721-7217 international 714-941-9381</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="1296" height="678" alt="" src="http://www.zerohedge.com/sites/default/files/images/user182769/imageroot/gasoline-etf-uga-testing-rising-support-march-30.jpg?1490886522" /> </div> </div> </div> http://www.zerohedge.com/news/2017-03-30/energy-sector-two-thirds-chance-they-rally-here#comments Business Commodity markets Economic history of the Dutch Republic Economy Financial history of the Dutch Republic Foreign exchange market Moving Averages S&P 500 Stock market Technical analysis Thu, 30 Mar 2017 15:14:55 +0000 kimblecharting 592054 at http://www.zerohedge.com Did The EPA Just Go Rogue Again http://www.zerohedge.com/news/2017-03-30/did-epa-just-go-rogue-again <p>In late January, days after Donald Trump became president, various government workers employed by the EPA "defied" the president with what at the time appeared to be rogue twitter accounts emerging from the environemntal agency, most notably the Badlands National Park which <a href="http://www.zerohedge.com/news/2017-01-24/rogue-national-park-deletes-tweets-after-defying-trump?page=4">slammed Trump's climate change proposal.</a></p> <ul> <li>“Today, the amount of carbon dioxide in the atmosphere is higher than at any time in the last 650,000 years. #climate”</li> <li>“Flipside of the atmosphere; ocean acidity has increased 30% since the Industrial&nbsp; Revolution. ‘Ocean Acidification" #climate #carboncycle’”</li> <li>"Burning one gallon of gasoline puts nearly 20lbs of carbon dioxide into our atmosphere. #climate"</li> </ul> <p>It now appears that a new "rogue" employee may have emerged at the EPA's pres office. </p> <p>This morning, in a press release summarizing "What They Are Saying About President Trump's Executive Order On Energy Independence", as the first quote picked by an unknown staffer at the agency, the EPA decided to showcase the thoughts of Dem. Senator Shelly Moore Capito whose quote was not exactly on message, as <a href="https://twitter.com/Pat_Ambrosio/status/847450758198870017">Bloomberg's Patrick Ambrosio pointed out</a>. </p> <p>This is what she said:</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>With this Executive Order, President Trump has chosen to recklessly bury his head in the sand. Walking away from the Clean Power Plan and other climate initiatives, including critical resiliency projects is not just irresponsible — it's irrational. Today's executive order calls into question America's credibility and our commitment to tackling the greatest environmental challenge of our lifetime. With the world watching, President Trump and Administrator Pruitt have chosen to shirk our responsibility, disregard clear science and undo the significant progress our country has made to ensure we leave a better, more sustainable planet for generations to come.</p> </blockquote> <blockquote class="twitter-tweet"><p dir="ltr" lang="en">This morning <a href="https://twitter.com/EPA">@EPA</a> sent out a press release highlighting reaction to Trump's climate Executive Order...this first quote seems off message: <a href="https://t.co/Na2EWCrBzj">pic.twitter.com/Na2EWCrBzj</a></p> <p>— Patrick Ambrosio (@Pat_Ambrosio) <a href="https://twitter.com/Pat_Ambrosio/status/847450758198870017">March 30, 2017</a></p></blockquote> <script src="//platform.twitter.com/widgets.js"></script><p>Today's release comes after The House voted Wednesday to restrict the kind of scientific studies and data that the Environmental Protection Agency (EPA) can use to justify new regulations.The Honest and Open New EPA Science Treatment Act, or HONEST Act, passed 228-194. <strong>It would prohibit the EPA from writing any regulation that uses science that is not publicly available. </strong></p> <p>The bill would also require that any scientific studies be replicable, and allow anyone who signs a confidentiality agreement to view redacted personal or trade information in data.</p> <p>It’s the latest push by House Republicans to clamp down on what they say has turned into an out-of-control administrative state that enforces expensive, unworkable regulations that are not scientifically sound. </p> <p>But Democrats, environmentalists and health advocates say the HONEST Act is intended to handcuff the EPA. They say it would irresponsibly leave the EPA unable to write important regulatory protections, since the agency might not have the ability to release some parts of the scientific data underpinning them. </p> <p>The HONEST Act is similar to the Secret Science Act, which leaders in the House Science Committee sponsored in previous congresses and got passed. “This legislation ensures that sound science is the basis for EPA decisions and regulatory actions,” Rep. Lamar Smith (R-Texas), chairman of the Science Committee, said on the House floor Wednesday. </p> <p>“The days of ‘trust-me’ science are over. In our modern information age, federal regulations should be based only on data that is available for every American to see and that can be subjected to independent review,” he said. “That’s called the scientific method.”</p> <p>Rep. Eddie Bernice Johnson (D-Texas), the Science Committee’s top Democrat, slammed her GOP colleagues for what she called a “misguided” effort to stop sensible EPA regulations. She denied that the EPA is overly secretive with its science, saying it often doesn’t own the information and has no right to release it.</p> <p>At least one EPA employee this morning seems to agree. </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="299" height="168" alt="" src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/epa%20teaser.jpg?1490886073" /> </div> </div> </div> http://www.zerohedge.com/news/2017-03-30/did-epa-just-go-rogue-again#comments Clean Power Plan Climate change policy in the United States Climate change skepticism and denial Donald Trump Donald Trump Environment Environment Environmental policy in the United States Environmental Protection Agency Environmental Protection Agency Natural environment Republican Party Twitter Twitter United States United States Environmental Protection Agency Thu, 30 Mar 2017 15:03:08 +0000 Tyler Durden 592052 at http://www.zerohedge.com Are Markets Overlooking A Clear & Present Danger? http://www.zerohedge.com/news/2017-03-30/are-markets-overlooking-clear-present-danger <p><em><a href="https://realinvestmentadvice.com/markets-overlooking-a-clear-present-danger/">Authored by Lance Roberts via Real Investment Advice,</a></em></p> <p>There is in interesting dichotomy currently occurring within the economy. While consumer confidence, as reported by the Census Bureau, soared to some of the highest levels seen since the turn of the century, the hard economic data continues to remain quite weak. As noted by <a href="http://www.zerohedge.com/news/2017-03-28/morgan-stanley-finds-stunning-divergence-economic-data" target="_blank">Morgan Stanley just recently</a>:</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>“Compare the New York Federal Reserve Bank’s current 1Q GDP tracking vs ours – FRBNY is currently tracking 1Q GDP at 3.0% versus us around 1%. The difference is larger than usual and is being driven by the fact that the New York Fed incorporates soft data into its tracking (attempting to tie it econometrically to GDP, a very hard thing to do especially in real-time). Our method translates the incoming hard data into its GDP equivalent. Note that the Atlanta Fed’s GDPNow tracking also focuses on hard data and is currently tracking 1% for 1Q GDP.”</p> </blockquote> <p><a href="http://www.zerohedge.com/sites/default/files/images/user230519/imageroot/2017/03/30/2017.03.29%20-%20CPD%202.JPG"><img src="http://www.zerohedge.com/sites/default/files/images/user230519/imageroot/2017/03/30/2017.03.29%20-%20CPD%202_0.JPG" alt="CPD" width="600" height="338" /></a></p> <p>&nbsp;</p> <p>The stunning divergence can be seen in the chart attached to that same article which shows the difference between the<em> “hard”</em> and<em> “soft”</em> data specifically.</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user230519/imageroot/2017/03/30/2017.03.29%20-%20CPD%203.JPG"><img src="http://www.zerohedge.com/sites/default/files/images/user230519/imageroot/2017/03/30/2017.03.29%20-%20CPD%203_0.JPG" alt="CPD" width="600" height="323" /></a></p> <p>&nbsp;</p> <p>What is currently expected by those with a more <em>“bullish bias”</em> is the hard data will soon play catch up with the soft data. Importantly, as I discussed in <em><a href="https://realinvestmentadvice.com/fade-to-black-03-24-17/" target="_blank">“Fade To Black”</a></em>, this is the basis of the markets continued optimism that tax reforms, repatriations and infrastructure spending create the <em>“reflationary”</em> dynamics necessary to spur economic growth of 3-4%.</p> <p>However, there may be a problem.</p> <p><strong>Economic cycles do not last indefinitely.</strong> While fiscal and monetary policies can extend cycles by <em>“pulling forward”</em> future consumption, such actions create an eventual <em>“void”</em> that cannot be filled.&nbsp;In fact, there is mounting evidence the <em>“event horizon”</em>&nbsp;may have been reached as seen through the lens of auto sales.</p> <p>Following the financial crisis the average age of vehicles on the road had gotten fairly extended so a replacement cycle became more likely. This replacement cycle was accelerated when the Obama Administration launched the <em>“cash for clunkers”</em> program which reduced the number of <em>“used”</em> vehicles for sale pushing individuals into new cars. <strong>Combine replacement needs with low interest rates, easy financing, and extended terms and you get a sales cycle as shown below. </strong></p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user230519/imageroot/2017/03/30/2017.03.29%20-%20CPD%204.JPG"><img src="http://www.zerohedge.com/sites/default/files/images/user230519/imageroot/2017/03/30/2017.03.29%20-%20CPD%204_0.JPG" alt="CPD" width="600" height="338" /></a></p> <p>&nbsp;</p> <p>The issue is, of course, there are only&nbsp;a finite number of people to sell new cars too.</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user230519/imageroot/2017/03/30/2017.03.29%20-%20CPD%205.JPG"><img src="http://www.zerohedge.com/sites/default/files/images/user230519/imageroot/2017/03/30/2017.03.29%20-%20CPD%205_0.JPG" style="width: 600px; height: 315px;" /></a></p> <p>&nbsp;</p> <p><strong>What the chart above shows is the number of cars sold currently now exceeds both the total increase in population and replacement needs of the existing population. </strong>In other words, the pool of available buyers is rapidly being depleted.</p> <p><strong>But more importantly, while the media touts “record auto sales,” it is a far different story when compared to the increase in the population.</strong> With total sales only slightly eclipsing the previous record, given the increase in the population this is not the victory the media wishes to make it sound. <strong>In fact, the current level of auto sales on a per capita basis is only back to where near the bottom of recessions with the exception of the “financial crisis.”</strong></p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user230519/imageroot/2017/03/30/2017.03.29%20-%20CPD%206.JPG"><img src="http://www.zerohedge.com/sites/default/files/images/user230519/imageroot/2017/03/30/2017.03.29%20-%20CPD%206_0.JPG" style="width: 600px; height: 385px;" /></a></p> <p>&nbsp;</p> <p>Furthermore, the annual rate of auto sales has slowed dramatically and is approaching levels normally associated with more severe economic weakness.</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user230519/imageroot/2017/03/30/2017.03.29%20-%20CPD%207.JPG"><img src="http://www.zerohedge.com/sites/default/files/images/user230519/imageroot/2017/03/30/2017.03.29%20-%20CPD%207_0.JPG" style="width: 600px; height: 391px;" /></a></p> <p>&nbsp;</p> <p>But slowing auto sales is only one-half of the problem. <strong>The problem for automakers is, as always, they continue to produce inventory even though demand is slowing. The cars are then shifted to dealers which have to resort to increasing levels of incentives to get the inventory sold.</strong> However, eventually, this is a losing game. The chart below shows the current level of swelling inventories relative to sales.</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user230519/imageroot/2017/03/30/2017.03.29%20-%20CPD%208.JPG"><img src="http://www.zerohedge.com/sites/default/files/images/user230519/imageroot/2017/03/30/2017.03.29%20-%20CPD%208_0.JPG" style="width: 600px; height: 335px;" /></a></p> <p>&nbsp;</p> <p>There is a limit to the level of incentives that dealers can provide to move inventory. <a href="http://wolfstreet.com/2017/03/26/automakers-record-incentives-to-slow-decline-in-sales/">Wolf Richter</a>&nbsp;recently penned a really good report on this issue:</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>“J.D. Power and LMC Automotive pegged incentives at $3,768 per new vehicle sold – the highest ever for any March. The prior record for March was achieved in 2009 as the industry was collapsing. In June 2009, GM filed for bankruptcy.”</p> </blockquote> <p><span style="text-decoration: underline;"><strong>The Subprime Problem Resurfaces</strong></span></p> <p>Given the lack of wage growth, consumers are needing to get payments down to levels where they can afford them. Furthermore,<strong> about 1/3rd of the loans are going to individuals with credit scores averaging 550 which carry much higher rates up to 20%.&nbsp;</strong>In fact, since 2010, the share of sub-prime Auto ABS origination has come from <strong>deep subprime</strong> deals which have increased from just 5.1% in 2010 to 32.5% currently. That growth has been augmented by the emergence of new deep sub-prime lenders&nbsp;which are lenders who did not issue loans prior to 2012.</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user230519/imageroot/2017/03/30/2017.03.29%20-%20CPD%209.JPG"><img src="http://www.zerohedge.com/sites/default/files/images/user230519/imageroot/2017/03/30/2017.03.29%20-%20CPD%209_0.JPG" style="width: 600px; height: 296px;" /></a></p> <p>&nbsp;</p> <p><strong>While there has been much touting of the strength of the consumer in recent years, it has been a credit driven mirage.</strong>&nbsp;With income growth weak, debt levels elevated and rent and health care costs chipping away at disposable incomes, <strong>in&nbsp;order to make payments even remotely possible, terms are often stretched to 84 months. </strong></p> <p>The eventual issue is that since cars are typically turned over every 3-5 years on average, <strong>borrowers are typically upside down in their vehicle when it comes time to trade it in. Between the negative equity of their trade-in, along with title, taxes, and license fees, and a hefty dealer profit rolled into the original loan, </strong>there is going to be a substantial&nbsp;problem down the road. As noted&nbsp;by&nbsp;<a href="http://www.reuters.com/article/us-usa-autos-moody-s-idUSKBN16Y1C0?feedType=RSS&amp;feedName=businessNews&amp;utm_source=Twitter&amp;utm_medium=Social&amp;utm_campaign=Feed%3A+reuters%2FbusinessNews+%28Business+News%29" target="_blank">Reuters</a>:</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>“Typically, car dealers tack on an amount equal to the negative equity to a loan for the consumers’ next vehicle. To keep the monthly payments stable, the new credit is for a greater length of time.</p> <p>&nbsp;</p> <p>Over the course of multiple trade-ins, negative equity accumulates. Moody’s calls this the ‘trade-in treadmill,’ the result of which is ‘increasing lender risk, with larger and larger loss-severity exposure.’</p> <p>&nbsp;</p> <p>To ease consumers’ monthly payments, auto manufacturers could subsidize lenders or increase incentives to reduce purchase prices, though either action would reduce their profits, the report said.”</p> </blockquote> <p>Auto loans, in general, have been in a huge boom that reached $1.11 trillion in the fourth quarter 2016. <strong>As noted above, 33.5% of those loans are sub-prime, or $371.85 billion.</strong></p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user230519/imageroot/2017/03/30/2017.03.29%20-%20CPD%2010.JPG"><img src="http://www.zerohedge.com/sites/default/files/images/user230519/imageroot/2017/03/30/2017.03.29%20-%20CPD%2010_0.JPG" style="width: 600px; height: 394px;" /></a></p> <p>&nbsp;</p> <p>With more sub-prime auto loans outstanding currently than prior to the financial crisis, defaults rising rapidly and a large majority with negative equity in their vehicles, <strong>swapping out to a new car is becoming a near impossible option</strong>. Recently, <a href="http://www.businessinsider.com/wall-street-is-worried-about-car-loans-2017-3/#fitch-deteriorating-credit-performance-will-be-more-acute-in-the-subprime-segment-1" target="_blank">Matt Turner cobbled together</a> some interesting data from several sources on this issue.</p> <p>The 60-day delinquency rate for subprime auto loans is at the highest level in at least seven years according to Fitch. The jump in losses on sub-prime auto loans moved to 9.1% in January, up from 7.9% a year earlier.<strong> The data suggests there is notable deterioration in the performance of these loans and given there are roughly 6-million individuals at least 90-days late on payments suggests rising stress levels of the consumer. </strong></p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user230519/imageroot/2017/03/30/2017.03.29%20-%20CPD%2011.JPG"><img src="http://www.zerohedge.com/sites/default/files/images/user230519/imageroot/2017/03/30/2017.03.29%20-%20CPD%2011_0.JPG" style="width: 600px; height: 313px;" /></a></p> <p>&nbsp;</p> <p>While the <em>“cash for clunkers”</em> program by the Obama Administration caused a massive surge in used vehicle prices due to the rapid depletion of inventory at the time, much of that inventory has now been rebuilt. <strong>Now, used vehicle prices are dropping sharply, as the market is flooded with off-lease vehicles and consumer demand is weakening.</strong></p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user230519/imageroot/2017/03/30/2017.03.29%20-%20CPD%2012.JPG"><img src="http://www.zerohedge.com/sites/default/files/images/user230519/imageroot/2017/03/30/2017.03.29%20-%20CPD%2012_0.JPG" style="width: 600px; height: 282px;" /></a></p> <p>&nbsp;</p> <p><span style="color: #993300;"><span style="color: #000000;">As noted above, the issue of the <em><strong>“</strong><strong>trade-in treadmill”</strong></em> is a major issue for auto lenders as default risk continues to increase. Per Moody’s:</span></span></p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>“The percentage of trade-ins with negative equity is at an all-time high, as is the average dollar amount of that negative equity. Lenders are increasingly faced with the choice of taking on greater risk by rolling negative equity at trade-in into the next vehicle loan. We believe they are increasingly taking this choice, resulting in mounting negative equity with successive new-car purchases.”</p> </blockquote> <p><a href="http://www.zerohedge.com/sites/default/files/images/user230519/imageroot/2017/03/30/2017.03.29%20-%20CPD%2013.JPG"><img src="http://www.zerohedge.com/sites/default/files/images/user230519/imageroot/2017/03/30/2017.03.29%20-%20CPD%2013_0.JPG" style="width: 600px; height: 240px;" /></a></p> <p>&nbsp;</p> <p>Asset-backed securities based on auto loans are showing signs of stress, with the subprime auto ABS delinquency rate closing in on crisis-era peak levels. Per Morgan Stanley:</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>“Across prime and subprime ABS, 60+ delinquencies are currently printing at 0.54% and 4.51%, respectively, with the latter approaching crisis-era peak levels (4.69%). Default rates are also picking up in similar fashion (prime: 1.52%; subprime: 11.96%), printing close to crisis levels. While prime severities slowly crept past 50% recently, subprime severities have breached 60%, a level we haven’t seen since late 2009. With both default rates and loss severities trending up, it is no surprise to see annualized net loss rates moving in the same direction.”</p> </blockquote> <p><a href="http://www.zerohedge.com/sites/default/files/images/user230519/imageroot/2017/03/30/2017.03.29%20-%20CPD%2014.JPG"><img src="http://www.zerohedge.com/sites/default/files/images/user230519/imageroot/2017/03/30/2017.03.29%20-%20CPD%2014_0.JPG" style="width: 600px; height: 335px;" /></a></p> <p>&nbsp;</p> <p>Given the importance of automobiles to the domestic manufacturing sector of the economy, the extent to which the sale of autos to consumers has likely reached an important inflection point. <strong>As shown in the last chart below, the previous recessionary warnings from autos was dismissed until far too late, it is likely not a good idea to dismiss it this time. </strong></p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user230519/imageroot/2017/03/30/2017.03.29%20-%20CPD%2015.JPG"><img src="http://www.zerohedge.com/sites/default/files/images/user230519/imageroot/2017/03/30/2017.03.29%20-%20CPD%2015_0.JPG" style="width: 600px; height: 345px;" /></a></p> <p>&nbsp;</p> <p>Why does this matter? Because it isn’t just auto loans. As&nbsp;<a href="https://pro.creditwritedowns.com/2017/03/subprime-auto-delinquency-rate-at-highest-level-since-financial-crisis.html" target="_blank">Edward Harrison at Credit Writedowns</a>&nbsp;noted:</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>“The big three areas of credit expansion this cycle – energy, auto and student loans.”</p> </blockquote> <p><strong>In the fall 2016 <a href="http://www.haynesboone.com/%7E/media/files/attorney%20publications/2016/bbsurvey.ashx">survey</a> ahead of the latest borrowing reassessment this past October, Haynes and Boone said that respondents on average expected 41 percent of the borrowers to see a decrease. </strong>This decrease was expected at an average of 20 percent, in which lenders were expecting a 16-percent decrease and borrowers a 29-percent decrease.</p> <p>While energy prices recovered enough to allow drillers to start back operations, primarily in the Permian Basin, the surge in supply is leading to another potential glut by 2018 and another downturn in oil prices. <strong>Such an event will put further strain on lenders as default risk rise in the sector.&nbsp;</strong></p> <p><strong>Currently, 42.4 million Americans owe $1.3 trillion in federal student loans.</strong> More than 4.2 million borrowers were in default as of the end of 2016, up from 3.6 million in 2015. I<strong>n all, 1.1 million more borrowers went into or re-entered default last year.</strong></p> <p>And then there is also the problem of commercial real estate <strong>(CRE) where rapid loan growth over the past year, combined with recent underwriting reviews, raise many concerns over the&nbsp;quality of CRE risk management, particularly managing concentrations</strong>. Add to that weak underwriting and erosion of covenant protections in leveraged lending and you have real problems.</p> <p>So, if you are wondering where the next <em>“economic shock”</em>&nbsp;may come from..<strong>.there is a <em>“clear and present danger”</em> lurking below the headlines.</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="714" height="393" alt="" src="http://www.zerohedge.com/sites/default/files/images/user230519/imageroot/2017.03.29%20-%20CPD%201.JPG?1490873990" /> </div> </div> </div> http://www.zerohedge.com/news/2017-03-30/are-markets-overlooking-clear-present-danger#comments Asset-Backed Securities Asset-backed security Atlanta Fed Auto Sales Bureau of the Census Business Car Allowance Rebate System Census Bureau Commercial Real Estate Consumer Confidence CRE CRE default Economics Economy Federal Reserve Finance Financial crisis of 2007–2008 Fitch Fixed income securities Great Recession headlines Money Morgan Stanley New York Fed New York Fed New York Federal Reserve Bank Obama Administration Real estate Reuters Risk Management Structured finance Student Loans Subprime lending Subprime mortgage crisis Thu, 30 Mar 2017 15:00:00 +0000 Tyler Durden 592032 at http://www.zerohedge.com CBO Warns Of Fiscal Catastrophe As A Result Of Exponential Debt Growth In The U.S. http://www.zerohedge.com/news/2017-03-30/cbo-warns-coming-fiscal-crisis-result-exponential-us-debt-growth <p>In a just <a href="https://www.cbo.gov/system/files/115th-congress-2017-2018/reports/52480-ltbo.pdf">released report from the CBO </a>looking at the long-term US budget outlook, the budget office forecasts that both government debt and deficits are expected to soar in the coming 30 years, with debt/GDP expected to hit 150% by 2047 if the current government spending picture remains unchanged.</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/03/27/CBO%20forecast.jpg"><img height="251" src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/03/27/CBO%20forecast_0.jpg" width="500" /></a></p> <p>The CBO&#39;s revision from the last, 2016 projection, shows a marked deterioration in both total debt and budget deficits, with the former increasing by 5% to 146%, while the latter rising by almost 1% from 8.8% of GDP to 9.6% by 2017.</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/03/27/CBO%20comp.jpg"><img height="430" src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/03/27/CBO%20comp_0.jpg" width="500" /></a></p> <p>According to the CBO, &quot;<em>at 77 percent of gross domestic product (GDP), federal debt held by the public is now at its highest level since shortly after World War II. If current laws generally remained unchanged, the Congressional Budget Office projects, growing budget deficits would boost that debt sharply over the next 30 years; <strong>it would reach 150 percent of GDP in 2047.</strong>&quot;</em></p> <p>In addition to the booming debts, the office expects the deficit to more than triple from the projected 2.9% of GDP in 2017 to 9.8% in 2047. The deficit at the end of fiscal year 2016 stood at $587 billion.</p> <p>A comaprison of government spending and revenues in 2017 vs 2047 shows the following picture:</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/03/27/cbo%20deficit.jpg"><img height="367" src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/03/27/cbo%20deficit_0.jpg" width="500" /></a></p> <p>The CBO also mentions rising rates as another key reason for the increasing debt burden. The Federal Reserve has kept rates low since the financial crisis but is on track to gradually hike rates in the coming year.</p> <p>On the growth side, the CBO expects 2% or less GDP growth over the next three decades, far below the number proposed by the Trump administration.</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/03/27/GDP%20growth%20CBO.jpg"><img height="306" src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/03/27/GDP%20growth%20CBO_0.jpg" width="500" /></a></p> <p>The budget office breaks down the primary causes of projected growth in US spending as follows: not surprisingly, it is all about unsustainable social security and health care program outlays.</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/03/27/causes%20of%20spending.jpg"><img height="331" src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/03/27/causes%20of%20spending_0.jpg" width="500" /></a></p> <p>The CBO&#39;s troubling conclusion:</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><strong>Greater Chance of a Fiscal Crisis. </strong>A large and continuously growing federal debt would increase the chance of a fiscal crisis in the United States. Specifically, investors might become less willing to finance federal borrowing unless they were compensated with high returns. <strong>If so, interest rates on federal debt would rise abruptly, dramatically increasing the cost of government borrowing.</strong> That increase would reduce the market value of outstanding government securities, and investors could lose money. <span style="text-decoration: underline;"><strong>The resulting losses for mutual funds, pension funds, insurance companies, banks, and other holders of government debt might be large enough to cause some financial institutions to fail, creating a fiscal crisis</strong></span>. An additional result would be a higher cost for private-sector borrowing because uncertainty about the government&rsquo;s responses could reduce confidence in the viability of private-sector enterprises.</p> <p>&nbsp;</p> <p><strong>It is impossible for anyone to accurately predict whether or when such a fiscal crisis might occur in the United States. </strong>In particular, the debt-to-GDP ratio has no identifiable tipping point to indicate that a crisis is likely or imminent. All else being equal, however, the larger a government&rsquo;s debt, the greater the risk of a fiscal crisis.</p> <p>&nbsp;</p> <p><strong>The likelihood of such a crisis also depends on conditions in the economy. </strong>If investors expect continued growth, they are generally less concerned about the government&rsquo;s debt burden. Conversely, substantial debt can reinforce more generalized concern about an economy. Thus, fiscal crises around the world often have begun during recessions and, in turn, have exacerbated them.</p> <p>&nbsp;</p> <p><strong>If a fiscal crisis occurred in the United States, policymakers would have only limited&mdash;and unattractive&mdash;options for responding. </strong>The government would need to undertake some combination of three approaches: <strong>restructure the debt (that is, seek to modify the contractual terms of existing obligations), use monetary policy to raise inflation above expectations, or adopt large and abrupt spending cuts or tax increases.</strong></p> </blockquote> <p>Then again, as the past 8 years have shown, only debt cures more debt, so expect nothing to change.</p> <p>Also, we find it just a little confusing why the CBO never warned of an imminent &quot;fiscal crisis&quot; over the past 8 years when total US debt doubled, increasing by $10 trillion under the previous administration.</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="794" height="399" alt="" src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/CBO%20forecast.jpg?1490883949" /> </div> </div> </div> http://www.zerohedge.com/news/2017-03-30/cbo-warns-coming-fiscal-crisis-result-exponential-us-debt-growth#comments Business Congressional Budget Office Congressional Budget Office Deficit reduction in the United States Economy Fail Federal Reserve Fiscal policy Government budget balance Government debt Gross Domestic Product Insurance Companies Macroeconomics Monetary Policy National debt of the United States Political debates about the United States federal budget Politics Presidency of Barack Obama Trump Administration United States United States federal budget United States fiscal cliff US Federal Reserve Thu, 30 Mar 2017 14:30:34 +0000 Tyler Durden 592050 at http://www.zerohedge.com Watch Live: Senate Holds First Open Hearing On Russian Election Interference http://www.zerohedge.com/news/2017-03-30/watch-live-senate-holds-first-open-hearing-russian-election-interference <p>Today the Senate Intelligence Committee is holding its first open hearing in its investigation into Russian interference in the election.&nbsp; The two-part panel, held at 10 a.m. and 2 p.m., will first question academics on Russian influence operations, then turn to a cybersecurity company that confirmed the original hack of the Democratic National Committee (DNC) last summer.</p> <p>As <a href="http://thehill.com/policy/national-security/326467-live-coverage-senate-intel-committee-probes-russian-intelligence">The Hill notes</a>, committee leaders have sought to distance themselves from the partisan furor in the House Intelligence Committee's concurrent investigation, publicly vowing cooperation and bipartisanship.&nbsp; Chair and ranking member Richard Burr (R-N.C.) and Mark Warner (D-Va.) gave a joint press conference to that effect Thursday, and rank-and-file members made the rounds on the morning shows Thursday to tout the same message: "We've got this. "</p> <p><em>On the witness docket for today's first hearing are:</em></p> <p><strong>Eugene Rumer</strong><br />Director of Russia and Eurasia Program<br />Carnegie Endowment for International Peace</p> <p><strong>Roy Godson</strong><br />Professor of Government Emeritus<br />Georgetown University</p> <p><strong>Clint Watts</strong><br />Senior Fellow<br />Foreign Policy Research Institute Program on National Security</p> <p><em>Watch the hearing live below:</em></p> <p><iframe src="https://www.youtube.com/embed/ypE4Sc4glZQ" width="560" height="315" frameborder="0"></iframe></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="1258" height="699" alt="" src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/russia%20hearing.jpg?1490882689" /> </div> </div> </div> http://www.zerohedge.com/news/2017-03-30/watch-live-senate-holds-first-open-hearing-russian-election-interference#comments Democratic National Committee Democratic National Committee Eurasia ProgramCarnegie Endowment Government House Intelligence Committee national security Politics Senate Intelligence Committee United States House Permanent Select Committee on Intelligence Thu, 30 Mar 2017 14:07:13 +0000 Tyler Durden 592049 at http://www.zerohedge.com Nunes 'Source' Was A "Whistleblower-Type", Ryan Says http://www.zerohedge.com/news/2017-03-30/speaker-ryan-says-nunes-source-was-whistleblower-type <p>As the imbroglio within the House Intel Committee continues with Democrats refusing the listen to the &#39;<em><strong>message</strong></em>&#39; without knowing who the &#39;<em><strong>messenger</strong></em>&#39; was, Speaker <strong>Ryan provided a little more color on the source of Devin Nunes&#39; information </strong>about incidental surveillance of President Trump&rsquo;s team.</p> <blockquote class="twitter-video" data-lang="en"><p dir="ltr" lang="en">.<a href="https://twitter.com/SpeakerRyan">@SpeakerRyan</a> says Nunes told him that &quot;like a whistleblower-type person had given him some info that was new.&quot; <a href="https://t.co/dVqkkpkv2d">https://t.co/dVqkkpkv2d</a> <a href="https://t.co/kYqIyUEZRG">pic.twitter.com/kYqIyUEZRG</a></p> <p>&mdash; CBS This Morning (@CBSThisMorning) <a href="https://twitter.com/CBSThisMorning/status/847408214496886786">March 30, 2017</a></p></blockquote> <script async src="//platform.twitter.com/widgets.js" charset="utf-8"></script><p><a href="http://thehill.com/homenews/house/326458-ryan-nunes-source-a-whistleblower-type">As The Hill reports</a>, Ryan said Thursday on &ldquo;CBS This Morning&quot; that:</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>&quot;<strong>[Nunes] had told me that a whistleblower type person had given him some information that was new,</strong> that spoke to the last administration and part of this investigation,&rdquo;</p> <p>&nbsp;</p> <p>&ldquo;What Chairman<strong> Nunes said was he came into possession of new information he thought was valuable to this investigation and he was going to go and inform people about it</strong>.&rdquo;</p> </blockquote> <p>We wonder what Ryan&#39;s definition of a &quot;whistleblower-type&quot; is?</p> <p>Ryan also said he <strong>did not urge Nunes to inform Trump of his findings</strong>, saying he told him to include it in his committee&#39;s probe of Russia&rsquo;s election interference.</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><strong>&ldquo;He didn&rsquo;t have the documents, so I didn&rsquo;t,&rdquo; </strong>Ryan said when asked if he saw Nunes&#39;s physical evidence. &quot;He was going to brief everybody.&rdquo;</p> </blockquote> <p>Of course, &#39;whistleblower&#39; or not, Democrats will refuse to accept the facts in the new information because it just does not fit their narrative. <strong><em>Is anyone surprised that multiple Democrats (and one Republican) have demanded that Nunes recuse himself (or resign) and are even beginning a probe into Nunes&#39; connections?</em></strong> Govern the bloody country already!!</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="263" height="170" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20170329_nunes.jpg?1490879708" /> </div> </div> </div> http://www.zerohedge.com/news/2017-03-30/speaker-ryan-says-nunes-source-was-whistleblower-type#comments CBS Devin Nunes House Intel Committee Nunes Politics Series Surveillance Television Television in the United States Twitter Twitter Thu, 30 Mar 2017 13:55:29 +0000 Tyler Durden 592045 at http://www.zerohedge.com Dollar Tumbles On Report Trump Studying Ways To "Penalize Currency Manipulators" http://www.zerohedge.com/news/2017-03-30/dollar-tumbles-report-trump-studying-ways-penalize-currency-manipulators <p>Moments ago, all three main US FX pairs, the yen, euro and yuan snapped higher, following a CNBC report according to which the Trump administration is studying ways to penalize countries whose currencies it believes are undervalued. CNBC cited two unidentified people with direct knowledge of the review who work within the administration.</p> <p>Trump's econ team is studying alternative strategies to labeling China a currency manipulator, the people say and add that the "effort" includes Treasury, Commerce Dept, National Economic Council, National Trade Council and the office of the U.S. Trade Representative One law that has generated particular attention is the Trade Enforcement and Trade Facilitation Act.</p> <p>The result: an immediate plunge in the USD as follows:</p> <p><strong>USDJPY</strong></p> <p><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/03/27/USDJPY%20currency%20manipulatios_0.jpg" width="500" height="208" /></p> <p><strong>USDCNH:</strong></p> <p><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/03/27/USDCNH%20manip_0.jpg" width="500" height="212" /></p> <p>In the report, <a href="http://www.cnbc.com/2017/03/30/trump-looks-at-new-ways-to-go-after-countries-that-game-currencies.html">CNBC notes </a>that the Trump administration is assessing the scope of its power to penalize countries whose currencies it believes are undervalued, according to two people with direct knowledge of the review, "an effort to fulfill the president's campaign pledge to crack down on what he frequently called unfair trade."</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>President Donald Trump promised to label China as a currency manipulator on day one of his presidency, but has not done so. That process is actually directed by the Treasury Department, which is not slated to release its official analysis of international currency until later this spring. Even then, many analysts are skeptical that the administration would take the aggressive step of slapping China with such a label. </p> <p>&nbsp;</p> <p>In the meantime, <strong>the administration's economic team is looking at alternative strategies, said the two people</strong>, both of whom work within the administration. The effort includes not only Treasury, but also the Commerce Department, National Economic Council, National Trade Council and the office of the U.S. Trade Representative, one of the officials said.</p> </blockquote> <p>According to CNBC one approach that has garnered particular attention is the Trade Enforcement and Trade Facilitation Act, which was enacted during the final months of President Barack Obama's administration. "It was intended to act as a check on separate legislation that gave Obama broad latitude to negotiate the Asian trade deal known as the Trans-Pacific Partnership, or TPP. Critics of that agreement argued that it did not sufficiently protect against currency manipulation."</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>The Trade Enforcement and Trade Facilitation Act details several consequences for nations that have devalued their currency and also have large current account surpluses.<strong> It allows the president to block future federal contracts with those countries and to choke off government financing for U.S. businesses seeking to invest there. The law also calls for pressuring the International Monetary Fund for heightened surveillance and for currency valuation to be considered in trade negotiations</strong>.</p> </blockquote> <p>"China is likely to take overt as well as covert retaliatory actions, that could include restricting American companies' access to markets and investment opportunities in China, as well as disrupting the supply chains of U.S. businesses that rely on Chinese intermediaries," said Eswar Prasad, a trade professor at Cornell University. "The U.S. economy, especially U.S. multinational corporations that operate in China in one form or another, could suffer significant collateral damage if an open trade war were to break out."</p> <p>That said, it is unlikely that China, or any other nation will be branded a currency manipulator outright: as CNBC notes, "to be labeled a currency manipulator, China would need to meet three rigorous requirements: a U.S. trade surplus of more than $20 billion, a current-account surplus of more than 3 percent of its economy and purchases of foreign assets totaling more than 2 percent of GDP. The last analysis by the Obama administration found that China met only the standard on bilateral trade."</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="811" height="337" alt="" src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/USDJPY%20currency%20manipulatios.jpg?1490881039" /> </div> </div> </div> http://www.zerohedge.com/news/2017-03-30/dollar-tumbles-report-trump-studying-ways-penalize-currency-manipulators#comments 114th United States Congress Balance of trade Barack Obama's administration Business China CNBC Cornell University Currency Currency intervention Department of Commerce Department of the Treasury Donald Trump Donald Trump Economy Euro Foreign exchange market International business International Monetary Fund International Monetary Fund International trade Monetary hegemony National accounts National Economic Council National Trade Council Obama Administration Obama administration Politics Presidency of Donald Trump Trade War Trans-Pacific Partnership Treasury Department Trump Administration World currency Yen Yuan Thu, 30 Mar 2017 13:39:11 +0000 Tyler Durden 592046 at http://www.zerohedge.com