http://www.zerohedge.com/fullrss2.xml/news/news/How en North Korea Threatens To Sink "Doomed" US Nuclear Submarine http://www.zerohedge.com/news/2017-04-30/north-korea-threatens-sink-doomed-us-nuclear-submarine <p>North Korea threatened to sink a US nuclear sub currently deployed in South Korean waters if the US take provocative action, responding to a statement from Donald Trump that the president won’t be “happy” if Pyongyang conducts another nuclear test. </p> <p><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/04/19/michigan%20sub%202.jpg" width="500" height="324" /></p> <p>After the US deployed a nuclear-powered submarine and an aircraft carrier to South Korean waters amid high Korean tensions, <a href="http://english.yonhapnews.co.kr/northkorea/2017/04/30/0401000000AEN20170430001900315.html">Yonhap reported </a>that North Korea on Sunday threatened to sink the submarine, accusing America of stepping up military intimidation.</p> <p><strong>"The moment the USS Michigan tries to budge even a little, it will be doomed to face the miserable fate of becoming a underwater ghost without being able to come to the surface,"</strong> the North's propaganda website Uriminzokkiri wrote in a vivid article. North Korea’s nuclear deterrent will assure that American aircraft carriers, nuclear submarines, and other military hardware will be “<strong>shattered into pieces of molten metal</strong>” if they threaten Pyongyang, the article read.</p> <p>The North warned - once again using its dramatically vivid jingoist language - that "whether it's a nuclear aircraft carrier or a nuclear submarine, they will be turned into a mass of scrap metal in front of our invincible military power centered on the self-defense nuclear deterrence."</p> <p>"The urgent fielding of the nuclear submarine in the waters off the Korean Peninsula, timed to coincide with the deployment of the super aircraft carrier strike group, is intended to further intensify military threats toward our republic," the website further claimed. According to the article, recent statements from the Trump administration indicate that Washington is close to implementing a strategic scenario in which an actual military confrontation is a real possibility.</p> <p>Earlier on Sunday, Donald Trump told CBS that he “will not be happy” if North Korea conducts another nuclear test. When asked to clarify, the US president said: “I would not be happy. If he (North Korean supreme leader, Kim Jong-un) does a nuclear test, I will not be happy.” </p> <p>“And I can tell you also, I don’t believe that the president of China, who is a very respected man, will be happy either,” Trump said, adding that he believes Xi Jinping was also “putting pressure” on North Korea to bring a halt to its nuclear tests.</p> <p>CBS host John Dickerson then directly asked Trump whether US military action was possible, the US president replied: “I don’t know. I mean, we’ll see.”</p> <p>The guided-missile submarine USS Michigan sailed into the South Korean port of Busan on April 25 before heading out to sea four days later. The Ohio-class submarine is reportedly conducting various drills. At the same time, the U.S. has also directed the nuclear-powered aircraft carrier USS Carl Vinson to the waters near South Korea. The supercarrier is currently engaged in a joint exercise with South Korean naval forces of the Korean peninsula.</p> <p>The threat followed North Korea's failed missile launch. On early Saturday, North Korea fired off a ballistic missile which the South Korean military said exploded after flying only 71 kilometers. The launch marks the third missile test in April. </p> <p>Trump told CBS that the failed test wasn’t significant enough to warrant action against North Korea. “This was a small missile. This was not a big missile. This was not a nuclear test, which he was expected to do three days ago. We’ll see what happens,” the president said. </p> <p>Joint US-South Korean naval wargames, Foal Eagle, involving 20,000 Korean and nearly 10,000 American troops kicked off in the region on Sunday.</p> <p>Washington has said that the USS Carl Vinson aircraft carrier and USS Michigan nuclear sub will remain in the area due to the spike in tensions between Washington and Pyongyang.</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="500" height="324" alt="" src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/michigan%20sub%202.jpg?1493583450" /> </div> </div> </div> http://www.zerohedge.com/news/2017-04-30/north-korea-threatens-sink-doomed-us-nuclear-submarine#comments China Donald Trump Foreign relations of North Korea Foreign relations of South Korea International relations KIM Korea Korean conflict Korean Crisis Korea–United States relations Michigan military hardware Military of North Korea North Korea North Korea Nuclear power Nuclear program of North Korea Politics South Korean military Trump Administration USS Carl Vinson War Sun, 30 Apr 2017 20:20:23 +0000 Tyler Durden 594963 at http://www.zerohedge.com Trump On Election Hacking: "Could Have Been China" http://www.zerohedge.com/news/2017-04-30/trump-election-hacking-could-have-been-china <p>One day after his "<a href="http://www.zerohedge.com/news/2017-04-30/trump-touts-achievements-ignores-disappointments-blasts-media-100-day-rally">100 Day" rally </a>in Harrisburg, president Trump "Faced the nation" on CBS, and suggested that China may have hacked the emails of prominent Democrats to meddle with the 2016 presidential election, countering the view of U.S. intelligence officials who have said Moscow is behind the hacks (that said, there have hardly been any new WaPo and NYT reports on the issue since Trump launched his Syrian attack). </p> <p>Trump first made the allegation on the eve of the Nov. 8 presidential election, when he said that China could have hacked the emails of his rivals. </p> <p>"If you don't catch a hacker, okay, in the act, it's very hard to say who did the hacking," the president said in an interview with CBS "Face the Nation." "(It) could have been China, could have been a lot of different groups."</p> <blockquote class="twitter-video"><p dir="ltr" lang="en">Trump on election hacking: “It’s very hard to say who did the hacking. With that being said, I’ll go along with Russia. Could’ve been China” <a href="https://t.co/Yitp5YqdTs">pic.twitter.com/Yitp5YqdTs</a></p> <p>— Face The Nation (@FaceTheNation) <a href="https://twitter.com/FaceTheNation/status/858698564754698240">April 30, 2017</a></p></blockquote> <script src="//platform.twitter.com/widgets.js"></script><p>Over the past 6 months, Trump has been dismissive of Intel Community allegations that Moscow hacked the emails to help Trump win the election. During the Sept 26 presidential debate with Clinton, Trump said China was one of many actors that could have been behind the hack, including "somebody sitting on their bed that weighs 400 pounds." Like Russia, China is a longstanding cybersecurity adversary of the United States. </p> <p>Curiously, Trump's refocusing on China as a potential hacker comes as a time when the White House has pivoted away from improving relations with Russia, which according to Putin spokesman Peskov have "never been worse" and has instead moved to mending and improving ties with Beijing, having softened its criticism of Chinese trade policies as Washington seeks Beijing's support in diffusing military tensions with North Korea. </p> <p>As a reminder, before Trump was elected, he pledged to improve relations with Moscow. As <a href="http://www.reuters.com/article/us-usa-trump-russia-china-idUSKBN17W0N4">Reuters notes</a>, Russia has denied any involvement in the hacks. Lawmakers are currently investigating whether Trump's campaign team had ties with Russia. </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="581" height="348" alt="" src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/trump%20china%20hack.jpg?1493582472" /> </div> </div> </div> http://www.zerohedge.com/news/2017-04-30/trump-election-hacking-could-have-been-china#comments China Climate change skepticism and denial Donald Trump Donald Trump presidential campaign Draft:Timeline of the Trump-Russia Scandal Hillary Clinton presidential campaign Mike Pence North Korea Politics Politics Politics of the United States Reuters Russian interference in the 2016 United States elections Twitter Twitter U.S. intelligence United States United States presidential election White House White House WWE Hall of Fame Sun, 30 Apr 2017 20:01:29 +0000 Tyler Durden 594962 at http://www.zerohedge.com Hedge Fund CIO: What Central Banks Have Done Is "Stunning, Unprecedented" http://www.zerohedge.com/news/2017-04-30/hedge-fund-cio-what-central-banks-have-done-stunning-unprecedented <p>We start a quiet Sunday with a big picture anecdote from Eric Peters' latest weekend note explaining why what central banks are trying to do is impossible, why the trend of inflation over the past 70 years is "stunning and unprecedented" and why "volatility suppression" always eventually fails.</p> <p><strong><span style="text-decoration: underline;">"Anecdote</span>", </strong><em>by Eric Peters of One River Asset Management</em></p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>“For all of history - prior to 1955 - there was roughly equal probability of inflation or deflation in any given year,” said the economic historian. </p> <p>&nbsp;</p> <p><strong>“But since 1955 we’ve experienced uninterrupted annual inflation. It’s a stunning fact, unprecedented. To an economist in 1955, the coming 60yr inflation would have appeared less probable than a catastrophic meteor impact.” </strong></p> <p>&nbsp;</p> <p>After enduring a series of world wars, and social upheavals, <strong>policy makers conducted an experiment, removing the deflationary left-tail of our economic cycles. </strong></p> <p>&nbsp;</p> <p><strong>“We created history’s greatest volatility-suppressing machine, and it delivered breathtaking stability</strong>.” Of course, we endured volatile periods since 1955. But life is short. And we thus lack the reference points to compare our minor wobbles to the wild booms and busts of our great grandparents. </p> <p>&nbsp;</p> <p><strong>“Minsky taught us that stability begets instability. And it stands to reason that our volatility-selling machine will break one day</strong>. We saw a glimpse of this in 2008-09.” </p> <p>&nbsp;</p> <p>Perhaps the only thing more surprising than the severity of that crisis was the response of our body politic. “In 2007 if you had shown the top 100 economists a list of the extraordinary measures that central banking and economic elites would unleash in the coming decade, not a single one would have believed you.” </p> <p>&nbsp;</p> <p>Politicians hate change. With very few exceptions, t<strong>hey stand for stasis</strong>. <strong>Our central bankers seek stability. And investors have learned to front-run them all, selling volatility into every spike using ever more complex strategies. </strong></p> <p>&nbsp;</p> <p><strong>“</strong>But volatility suppression at the lows is much easier in many ways than at the highs. In a crisis, our central banks simply go full-throttle<strong>. At the highs though, they seek the unattainable, which is perfect economic balance in a world that is inherently unstable - they attempt to crystallize the entire ecosystem. Which is as arrogant as it is impossible</strong>.” </p> </blockquote> <p><em>And this is what central planning looks like visually:</em></p> <p><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/04/19/more%20and%20more_1_0.jpg" width="500" height="531" /></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="3516" height="2251" alt="" src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/central%20bankers%20teaser.jpg?1493559440" /> </div> </div> </div> http://www.zerohedge.com/news/2017-04-30/hedge-fund-cio-what-central-banks-have-done-stunning-unprecedented#comments Central Banks Deflation Economy Inflation Macroeconomics Mathematical finance Monetary economics Money Technical analysis Volatility Volatility Sun, 30 Apr 2017 19:47:59 +0000 Tyler Durden 594936 at http://www.zerohedge.com Italy Warns Sudden Collapse Of Alitalia Would Lead To "Great Shock" For The Economy http://www.zerohedge.com/news/2017-04-30/italy-warns-alitalia-bankruptcy-would-be-great-shock-economy <p>That Italy has a bank solvency problem will not come as a surprise to anyone who has been following events in Europe for the past 7 years. </p> <p>Just yesterday, <a href="http://www.lastampa.it/2017/04/29/economia/salvataggio-mps-il-conto-per-lo-stato-aumenta-ancora-tFb9PjcboPtZtjmifRfWnO/pagina.html">Italian daily La Stampa reported </a>that four months after the <a href="http://www.zerohedge.com/news/2016-12-21/italy-nationalize-monte-paschi-after-private-sector-rescue-fails">third government bailout of Italy's third largest bank in as many years</a>, the Italian government may have to inject even more cash than planned into Monte Paschi, the world's oldest and apparently always insolvent bank. </p> <p>Stampa cited the outcome of an ECB inspection, focusing on uncertainties from the bank's planned bad loan reduction. The Italian daily noted that the ECB had communicated results of its inspection to the bank last week, noting that losses are now expected to be well above those calculated until now. Specifically, while the proposed €8.8BN recapitalization would be sufficient to take the bank's CET1 above the required regulatory level, it would not be sufficient to meet the ECB SREP requirements, raising the risk the government will have to contribute more than the €6.6BN currently envisaged.</p> <p>But while Monte Paschi continues to be a perpetual drain of taxpayer funds, the most imminent threat facing the Italian economy comes not from the banking sector, but from its just as troubled national airline carrier. Last week, Alitalia said it had exhausted all options after workers voted against job cuts aimed at salvaging the cash-strapped Italian airline, pushing it toward administration for the second time in a decade.</p> <p>According to <a href="https://www.bloomberg.com/news/articles/2017-04-24/alitalia-risks-collapse-after-unions-reject-restructuring-plan">Bloomberg</a>, a €2 billion recapitalization tied to the savings plan is effectively dead and <strong>Alitalia would start appropriate “legal procedures” as funds run out, the Rome-based airline said</strong>. Chairman Luca Cordero Di Montezemolo “formally” communicated to the Italy aviation authority that the carrier decided to start the process of naming a administrator, the authority said on its website last Tuesday.</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>The decision to appoint an administrator is the first step for being placed in a legal reorganization process, making it almost impossible a last-minute rescue of the carrier as it exists today. </p> </blockquote> <p>Meanwhile, unlike Italian banks which get bailed out any time there is even a modest threat of a bank run, typically with ECB assistance, <strong>Italy has said it won’t nationalize Alitalia whatever the circumstances. </strong>Abu Dhabi-based Etihad, the carrier’s main backer, said the employees’ rejection means “all parties lose,” and that it supports the board’s move to hold a shareholders’ meeting Thursday “to start preparing the procedures provided by law.”</p> <p>“The most likely scenario is that we will go towards a short period of special administration that may be concluded within six months with a partial or total sale of Alitalia’s assets or with liquidation,” Economic Development Minister Carlo Calenda told TG3 in a television interview late Tuesday.</p> <p>An Alitalia bankruptcy would be its second in under a decade: the company was last put into bankruptcy in 2008 after political and labor opposition thwarted sale plans, and has stumbled on since, with ties to Air France-KLM Group and Etihad Airways PJSC failing to end losses.</p> <p>While Bloomberg's take was relatively benign, saying that while a complete collapse would have an inevitable impact, the carrier is less central to Italy’s economy than before, after shrinking its long-haul network and losing market share to low-cost rivals on European routes, today Italian officials disagreed, and warned of dire consequences for the economy should Alitalia be allowed to collapse.</p> <p>Cited by <a href="http://www.reuters.com/article/us-alitalia-minister-idUSKBN17W0I7?feedType=RSS&amp;feedName=businessNews&amp;utm_source=Twitter&amp;utm_medium=Social&amp;utm_campaign=Feed%3A+reuters%2FbusinessNews+%28Business+News%29">Reuters</a>, Calenda said on Sunday that a sudden collapse of the loss-making national carrier "<strong>would be a great shock for Italy's economy.</strong>" Rome has given the crisis-hit airline a short-term lifeline, a bridge loan of up to €400 million to see it through a process whereby an administrator will decide if it can be sold as a going concern or should be liquidated. </p> <p>However, it is the worst case outcome that has Italian government officials spooked. <strong>"A [sudden closure] would be a shock for GDP much greater than the scenario that we are looking at: </strong>a brief period of six months covered by a bridging loan from the government so as to find a buyer who could provide services that Italians need as travelers," he said in an interview with Sky TG24 television.</p> <p>Making matters worse, rival airlines have shown little interest in buying Alitalia and creditors have refused to lend more money after workers last Monday rejected the abovementioned rescue plan that would have reduced pay and cut 1,700 jobs. It is unclear how yet another "shock" to Italy's GDP would reverberate across Europe, which as we showed last week, has just hit its latest downward inflection point, with upcoming economic data set to disappoint <a href="http://www.zerohedge.com/news/2017-04-28/biggest-inflows-european-stocks-2015-just-economic-pullback-begins">according to Deutsche Bank</a>.&nbsp; </p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/04/19/europe%20eco%20charts.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/04/19/europe%20eco%20charts_0.jpg" width="500" height="314" /></a></p> <p>Europe's "economic peak" also comes as the dynamo of the global reflation trade, China, just reported its worst PMI survey data in 6 months, despite a record credit injection in the first quarter, suggesting China's unprecedented <a href="http://www.zerohedge.com/news/2017-04-29/global-reflation-trade-trouble-chinese-economic-data-plunges-6-month-lows-new-orders">credit impulse is wearing </a>off not only domestically, but also internationally.</p> <p>&nbsp;</p> <p><img src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/04/27/20170429_china_0.jpg" width="507" height="260" /></p> <p>Which means that for watchers of European deflationary inflection points, in addition to monitoring the perennially troubled Italian banking sector, one should also pay attention to legacy companies such as the national carrier, and how its bankruptcy would ripple through the country, especially if Carlo Calenda is right, and the outcome is nothing short of a "shock" for the domestic economy. </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="728" height="364" alt="" src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/alitalia.jpg?1493579495" /> </div> </div> </div> http://www.zerohedge.com/news/2017-04-30/italy-warns-alitalia-bankruptcy-would-be-great-shock-economy#comments Alitalia-Linee Aeree Italiane Bank Run Business Business China Creditors Deutsche Bank Economy European Central Bank Financial situation of Alitalia Italy Market Share Monte Paschi Reuters Sun, 30 Apr 2017 19:39:43 +0000 Tyler Durden 594958 at http://www.zerohedge.com Russian Oligarch Suffers 50% Loss On Singapore Real Estate Sale http://www.zerohedge.com/news/2017-04-30/russian-oligarch-suffers-50-loss-singapore-real-estate-sale <p>While the Canadian housing bubble - driven by Chinese hot money - continues to grow (although its latest near-death experience courtesy of Home (Lack of) Capital Group may have finally pierced a stake through its heart), housing markets elsewhere are suffering from some serious wobbles. Take Singapore, for example, where recently a 4,069 sq ft at <a href="https://bit.ly/SeascapeEdge">Seascape in Sentosa Cove </a><strong>was sold at a $6.6 million loss.</strong> The loss works out to 52% or 10% annualised over a holding period of 6.6 years.</p> <p>The unlucky seller: a Russian oligarch. According <a href="https://www.theedgeproperty.com.sg/content/five-losses-above-5-million">to The Edge Property</a>, the previous owner, a Russian national bought the unit from the developer at $12.8 million or $3,146 psf in June 2010. <strong>The unit was put up for mortgagee sale at an auction conducted by JLL in January 2017 at an opening price of $6.8 million but did not find a buyer. It was subsequently sold at $6.2 million or $1,524 psf by private treaty. </strong>According to JLL head of auctions Mok Sze Sze, the buyer is an investor.</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/04/19/seascape.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/04/19/seascape_0.jpg" width="500" height="333" /></a></p> <p>It's not the first dramatic repricing of Singapore real estate. So far, four other private non-landed homes have been sold at losses above $5 million, based on the matching of URA caveat data as at Feb 17.</p> <p>Previously, <strong>a 4,133 sq ft unit at <a href="https://bit.ly/SeascapeEdge">Seascape </a>was sold at a $5.2 million loss. </strong>The unit was bought at $11 million or $2,661 psf in December 2011 and sold at $5.8 million or $1,403 psf. The loss works out to 47% or 17% annualised over a three-year holding period. The seller was also liable for a 4% or $232,000 Seller’s Stamp Duty. </p> <p>Before that, a 3,757 sq ft unit at <a href="https://bit.ly/StRegisEdge">St Regis Residences </a><strong>Singapore in prime District 10 was sold at a $5.02 million loss</strong>. The unit was bought at $13 million or $3,461 psf in July 2007 and sold at $7.98 million or $2,124 psf. The loss works out to 39% or 24% annualised over a 1.8 year holding period.</p> <p>In September 2001, two separate 8,740 sq ft units at Ardmore Park in prime District 10 were sold at losses of $8 million and $5.5 million. The larger loss accrued to the unit bought at $18.5 million or $2,117 psf in Feb 2000 and sold at $10.5 million or $1,201 psf. The smaller loss accrued to the unit bought at $16 million or $1,831 psf in December 1999 and sold at $10.5 million or $1,201 psf.</p> <p>* * * </p> <p>While it remains unclear who the "motivated" Russian seller was, or what prompted him to rush with the firesale, it is notable that in at least some occasions, price discovery under liquidity durress results in market clearance as much as 50% below suggested "fair values." It may also explain why in its rescue loan to Canada's biggest alternative lender, HCG, the provider of $2 billion in rescue financing, Canada'the Healthcare Of Ontario Pension Plan, <a href="http://www.zerohedge.com/news/2017-04-29/furious-bank-run-leaves-canadas-largest-alternative-mortgage-lender-verge-collapse">demanded $2 worth of collateral coverage for every $1 it lends</a>, a hint that losses as great as 50 cents on the dollar may be imminent if and when the Canadian housing bubble finally bursts. </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="675" height="372" alt="" src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/singapore%20real%20estate.jpg?1493580548" /> </div> </div> </div> http://www.zerohedge.com/news/2017-04-30/russian-oligarch-suffers-50-loss-singapore-real-estate-sale#comments Business Economy Financial markets Financial regulation Housing Bubble Real estate Real estate bubble Short St. Regis Sun, 30 Apr 2017 19:30:44 +0000 Tyler Durden 594961 at http://www.zerohedge.com Why Bubbles Are Like Porn http://www.zerohedge.com/news/2017-04-30/why-bubbles-are-porn <p><a href="https://anthonybsanders.wordpress.com/2017/04/28/bubbles-shiller-pe-ratio-nears-roaring-20s-bubble-high-as-home-prices-increased-43-6-since-feb-16/"><em>Authored by Anthony Saunders via Confounded Interest blog,</em></a></p> <p>Supreme Court Justice Potter Steward said in 1964 in&nbsp;the <em>Jacobellis v. Ohio </em>case,<em>&nbsp;</em></p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><em>&ldquo;I shall not today attempt further to define the kinds of material I understand to be embraced within that shorthand description [hard-core pornography]; and perhaps I could never succeed in intelligibly doing so. <strong>But I know it when I see it</strong>, and the motion picture involved in this case is not that.&rdquo;</em></p> </blockquote> <p>Asset bubbles too are difficult to define, <strong>but I know it when I see it.</strong></p> <p><strong>Take Robert Shiller&rsquo;s P/E Ratio measure for stocks. </strong>There was a Roaring &rsquo;20s bubble which burst in 1929 (Black Tuesday), there was the infamous <span class="skimlinks-unlinked">Dot.com</span> bubble. On March 10, 2000, the NASDAQ Composite peaked at 5,132.52, but fell 78% in the following 30 months.</p> <p>Now we are seemingly in yet another stock market bubble and almost at the P/E Ratio level of the Roaring &rsquo;20s bubble (but not near the dizzying heights of the <span class="skimlinks-unlinked">Dot.com</span> bubble &hellip; yet).</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/04/27/20170430_bubble1.png"><img height="280" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/04/27/20170430_bubble1.png" width="600" /></a></p> <p><strong>Stocks do seem awfully &ldquo;frothy.&rdquo; But what about home prices? </strong>The Case-Shiller 20 composite home price index has grown 43.6% since February 2012. &nbsp;While home prices are not growing as fast as they did during the home price bubble of the last decade, they are going at a rate that is twice as fast as earnings (wage) growth.</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/04/27/20170430_bubble2.png"><img height="341" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/04/27/20170430_bubble2.png" width="600" /></a></p> <p>These certainly look like asset bubbles. If it looks like a bubble and acts like a bubble, <em><strong>it probably is a bubble.</strong></em></p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/04/27/20170430_bubble3.jpg"><img height="389" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/04/27/20170430_bubble3.jpg" width="600" /></a></p> <p><strong><em>&ldquo;Shhh. Don&rsquo;t say the word &ldquo;bubble!&rdquo;</em></strong></p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="585" height="379" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20170430_bubble3.jpg?1493570173" /> </div> </div> </div> http://www.zerohedge.com/news/2017-04-30/why-bubbles-are-porn#comments Business Case law Case-Shiller Cleveland Heights, Ohio Epistemology Hardcore pornography Human sexuality I know it when I see it Jacobellis Jacobellis v. Ohio Law NASDAQ NASDAQ Composite NASDAQ Composite Ohio Pornography Pornography law Robert Shiller Shorthand Supreme Court Sun, 30 Apr 2017 19:00:00 +0000 Tyler Durden 594946 at http://www.zerohedge.com Eric Peters: If Rates Ever Rise Above 3.5% "It Would Spark Massive Defaults" http://www.zerohedge.com/news/2017-04-30/eric-peters-if-rates-ever-rise-above-35-it-would-spark-massive-defaults <p>Earlier today in his weekly note, One River CIO Eric Peters <a href="http://www.zerohedge.com/news/2017-04-30/hedge-fund-cio-what-central-banks-have-done-stunning-unprecedented">explained </a>that in their attempt to overturn the natural order of the global economic "ecosystem", what central banks have done is<em> "stunning, unprecedented... and arrogant"</em>, and as a result it is only a matter of time before another "peak instability" moment emerges as "it stands to reason that our volatility-selling machine will break one day. We saw a glimpse of this in 2008-09." </p> <p>And yet, as Peters concedes in a follow up note, those same central bankers don't have any other option but to kick the can because as the CIO notes, any attempt to break the current ultra-low rate regime would "<em><strong>spark massive defaults." </strong></em></p> <p>Incidentally, those are the same defaults that <strong>should </strong>have happened during the "near systemic reset" of 2008/2009 but the Fed, in all its wisdom, decided to kick the can at the cost of trillions in global excess liquidity, and while it bought itself some time - in the process unleashing a global deflation wave thanks to zombie companies that should not exist yet do, and every day try to undercut each other on pricing - nearly ten years later it has discovered that it has no way out, for one simple reason: there is now too accumulated debt. </p> <p><em>Here is Peters "modelling" out why the Fed is stuck with no way out:</em></p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>“<strong>When debt expands constantly relative to GDP, there’s a limit to how high interest rates can rise without causing massive defaults</strong>,” said the Model. <strong>“There’s nothing inherently wrong with defaults, they can cleanse a system, but a rise in US defaults from today’s 2.5% to 6.0% would boost unemployment by 3%.</strong>”</p> <p>&nbsp;</p> <p>America’s economy is leveraged to the financial system, which includes non-capitalized liabilities; entitlements, pensions, healthcare. <strong>“US total debt/GDP is 300%, but if you include these non-capitalized liabilities, it’s more like 800%.”</strong></p> <p>&nbsp;</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/03/06/debt%20to%20gdp%20q4%202016.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/03/06/debt%20to%20gdp%20q4%202016_0.jpg" style="width: 500px; height: 277px;" /></a></p> <p>&nbsp;</p> <p>“These non-capitalized liabilities rise as both interest rates and economic growth decline,” continued the same Model.</p> <p>&nbsp;</p> <p>“Low growth produces less income, and low rates supply less investment returns on pensions. Which means companies need to set aside more money to pay the liabilities.” It’s a slow-moving economic death spiral.</p> <p>&nbsp;</p> <p>“The Neo-Fisher Model posits that we can escape this trap by increasing interest rates. Which will raise investment returns, while simultaneously lifting growth. <strong>Fisher’s Model may be right, but it will never be tested in reality.”</strong></p> <p>&nbsp;</p> <p>“<strong>In reality the world operates on monthly payments</strong>,” explained the same Model. “<strong>So if we tested the Fisher Model by raising interest rates meaningfully, we’d spark massive defaults</strong>.” <strong>Unemployment would jump dramatically.</strong></p> <p>&nbsp;</p> <p>“Our central banking and political reaction function ensures that each rise in unemployment is followed by monetary stimulus<strong>.” In the 30yrs since Greenspan became Fed Chairman, borrowers have learned this lesson and responded by leveraging up</strong>.<strong> </strong></p> <p>&nbsp;</p> <p><strong>“And that’s why US interest rates will never rise sustainably above 3.5%.” </strong></p> </blockquote> <p>Q.E.D.</p> <p>* * * </p> <p><em>As a bonus, here is Peters on the several consensus themes in the market right now, and why it may be time to fade at least one of them:</em></p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>“I have no ideas and no positions,” said the portfolio manager. “So I wrote down the things that everyone else believes,” he continued.</p> <ul> <li>“Developed world economies are slowing;</li> <li>Trump agenda has stalled;</li> <li>US equities are too expensive;</li> <li>Interest rates are artificially low and must rise;</li> <li>Central banks are out of ammo;</li> <li>China is racing toward disaster;</li> <li>China can and will maintain stability through its autumn party congress;</li> <li>Europe can’t continue down its current path;</li> <li>Brexit is bad for the UK;</li> <li>The EU has the upper hand in the Brexit negotiations.</li> </ul> <p>&nbsp;</p> <p>“I sat back and considered the arguments people use to justify these views,” continued the same portfolio manager. “Sometimes things are clearer when you have nothing on,” he said, the ink drying. “It appears we’ve hit peak skepticism on Trump. He may fail completely, but people’s certainty seems misplaced. It’s priced.” He dropped his pen.</p> <p>&nbsp;</p> <p>“And I know this sounds crazy, but of all the things that people believe, the two that are supported by the weakest arguments are that rates are artificially low and equities are too expensive.”</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="780" height="439" alt="" src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/yellen%20thinking%202_0.jpg?1493575598" /> </div> </div> </div> http://www.zerohedge.com/news/2017-04-30/eric-peters-if-rates-ever-rise-above-35-it-would-spark-massive-defaults#comments Business Central Banks China Deflation Economy European Union Fail Fisher Inflation Interest rate Macroeconomics Mathematical finance Monetary policy Money Reality Structure Unemployment Unemployment US Federal Reserve Sun, 30 Apr 2017 18:29:34 +0000 Tyler Durden 594951 at http://www.zerohedge.com Lender Loan Crash: Nearly Every Major Regional Bank Missed Lending Estimate http://www.zerohedge.com/news/2017-04-30/lender-loan-crash-nearly-every-major-regional-bank-missed-lending-estimate <p><a href="https://mishtalk.com/2017/04/29/regional-lender-loan-crash-nearly-every-major-regional-bank-missed-lending-estimate/"><em>Authored by Mike Shedlock via MishTalk.com,</em></a></p> <p><strong>In addition to a miserable performance in the auto sector and a very poor GDP report,&nbsp;the <a href="https://www.bloomberg.com/news/articles/2017-04-27/trump-era-brings-rare-drop-in-loans-at-america-s-regional-banks" rel="noopener noreferrer" target="_blank">Trump Era Brings Rare Drop in Loans at America&rsquo;s Regional Banks</a>.</strong></p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/04/27/20170430_lend.jpg"><img height="290" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/04/27/20170430_lend_0.jpg" width="600" /></a></p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>Bank stocks have climbed since Donald Trump was elected president as investors bet his pro-growth agenda and rising interest rates would help lenders generate huge profits. But this month, executives at some of the country&rsquo;s largest regional banks said customers, especially corporations and small businesses, are instead waiting for details on the new administration&rsquo;s proposals and results before seeking financing for expansion.</p> <p>&nbsp;</p> <p>Total loans at the 15 largest U.S. regional banks declined by about $10 billion to $1.73 trillion in the first quarter, compared with the previous three-month period, the first such drop in four years, according to data compiled by Bloomberg. All but two of those banks missed analysts&rsquo; estimates for total loans, as a slump in commercial and industrial lending sapped growth.</p> <p>&nbsp;</p> <p>&ldquo;The optimism and the willingness is there, but it has not yet translated into actions or behaviors,&rdquo; Beth Mooney, chief executive officer of KeyCorp, said of the Cleveland-based bank&rsquo;s small and middle-market business clients. &ldquo;We did not see &lsquo;flip the switch&rsquo; sort of behavior that led to loan demand or making different capital decisions or investment decisions.&rdquo;</p> </blockquote> <p><u><strong>Nonsensical Statement of the Day</strong></u></p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>&ldquo;<em>The optimism and the willingness </em>is<em> there, but it has not yet translated into actions or behaviors,</em>&rdquo; said Beth Mooney, chief executive officer of KeyCorp.</p> </blockquote> <p><strong>Excuse me for pointing out the obvious, but if willingness was present, there would have been more loans.</strong></p> <p>Mainstream media and most economists are banking on consumer confidence sentiment, regional manufacturing sentiment, ISM sentiment, and now small business loan sentiment.</p> <p><u><strong>Sentiment Indicators</strong></u></p> <p>It&rsquo;s time to throw the sentiment idea in the ash can where it belongs.</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="728" height="352" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20170430_lend.jpg?1493569794" /> </div> </div> </div> http://www.zerohedge.com/news/2017-04-30/lender-loan-crash-nearly-every-major-regional-bank-missed-lending-estimate#comments Bank Beth E. Mooney Business Consumer Consumer Confidence Consumer confidence Donald Trump Economy Financial services KeyBank Keycorp Regional Banks Sun, 30 Apr 2017 18:02:00 +0000 Tyler Durden 594945 at http://www.zerohedge.com And The Worst-Performing Currency Since Trump's Election Is... http://www.zerohedge.com/news/2017-04-30/and-worst-performing-currency-trumps-election <p>Putting aside the hyperinflationary collapse of Venezuela's black market Bolivar, the <strong>Mexican Peso continues to languish </strong>since Donald Trump was elected President in Nov 2016 as trade wars and border wall discussion weigh the currency down. </p> <p>As Bloomberg notes, the Mexican peso’s more than 15% rally&nbsp;since Donald Trump took his oath of office and softened his trade talk hasn’t been enough to repair the battering it took after the election. <strong>The currency is still down around 4% since the vote, lagging peers that are also sensitive to trade with the U.S.</strong>: the Canadian dollar, the Chinese yuan and the Korean won. Lingering uneasiness about Trump’s trade policies should continue to haunt the peso, as was seen in this week’s wide swings after the president made&nbsp;opposing comments&nbsp;about Nafta.</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/04/27/20170430_FX.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/04/27/20170430_FX_0.jpg" width="600" height="315" /></a></p> <p>&nbsp;</p> <p>But, on the other hand, <strong>amid economic stumbles and nuclear armageddon on its doorstep, the Korean Won (and KOSPI) is outperforming</strong>...</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/04/27/20170429_WTF_1.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/04/27/20170429_WTF_1_0.jpg" width="600" height="313" /></a></p> <p>As it seems World War III threats is good for South Korean stocks??!!</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="962" height="505" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20170430_FX.jpg?1493569607" /> </div> </div> </div> http://www.zerohedge.com/news/2017-04-30/and-worst-performing-currency-trumps-election#comments Business Canadian Dollar Donald Trump Donald Trump Economy Korea Exchange KOSPI Mexican peso North American Free Trade Agreement Peso Politics Politics of the United States Trade Wars Yuan Sun, 30 Apr 2017 17:30:15 +0000 Tyler Durden 594944 at http://www.zerohedge.com Why "Disgusting" Rome Sends Trains Filled With Trash To Austria http://www.zerohedge.com/news/2017-04-30/why-disgusting-rome-sends-trains-filled-trash-austria <p><a href="http://www.bbc.com/news/world-europe-39641761"><em>Authored by Bethany Bell</em></a></p> <p><em><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/04/27/20170430_rome.jpg"><img height="257" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/04/27/20170430_rome.jpg" width="600" /></a></em></p> <p><strong>Rome has been struggling to cope with a rubbish crisis and Austria has spare capacity at a waste-to-energy plant near Vienna.</strong></p> <p>So a deal has been struck. <u><strong>The Italians are paying Austrian company EVN to dispose of up to 70,000 tonnes of Roman household refuse this year.</strong></u></p> <p>The waste is transported by train through northern Italy, over the Alps and ends up at the EVN thermal waste utilisation plant at Zwentendorf on the Danube.</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/04/27/20170430_rome1.png"><img height="769" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/04/27/20170430_rome1.png" width="600" /></a></p> <p><strong>Up to three trains a week arrive at the Zwentendorf plant</strong>. Each carries airtight containers loaded with around 700 tonnes of Roman household waste.</p> <p>The refuse is incinerated and converted into hot flue gas, which generates steam. The steam is delivered to a neighbouring power station, where it is converted into electricity, which is used to power 170,000 houses in the province of Lower Austria.</p> <p>It may seem counter-intuitive to carry rubbish over 1,000km (620 miles) before disposing of it, but it is part of efforts in the European Union to make cities reduce the amount of waste that goes into landfills.</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><strong>&quot;It is not crazy,&quot;</strong> insists Gernot Alfons, head of the EVN thermal waste plant. For him it is an environmentally friendly solution and the rubbish trains are key.</p> <p>&nbsp;</p> <p>&quot;The other alternative would be to put this rubbish into landfill, which creates a lot of methane emissions that create a lot of impact in terms of CO2 emissions.</p> <p>&nbsp;</p> <p><strong>&quot;It is much better to transport this waste to a plant which has a high energy efficiency like ours.&quot;</strong></p> </blockquote> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/04/27/20170430_rome2.jpg"><strong><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/04/27/20170430_rome2.jpg" style="width: 601px; height: 288px;" /></strong></a></p> <h2 class="story-body__crosshead"><u>So what has gone wrong with Rome&#39;s waste disposal?</u></h2> <p>Even in elegant districts like Prati, near the Vatican, it is not hard to see that the city has a rubbish problem.</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/04/27/20170430_rome3.jpg"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/04/27/20170430_rome3.jpg" style="width: 599px; height: 263px;" /></a></p> <p>Overflowing communal bins for both household waste and recycling are a common sight, and a lot of Romans are very unhappy.</p> <p><strong><em>&quot;I think it is outrageous,&quot; Claudia Grassi, a resident of Rome told me. &quot;The beautiful town of Rome is being insulted. It is like a beautiful woman that has been wounded again and again.&quot;</em></strong></p> <p>Antonio La Spina, professor of sociology and public policy at Rome&#39;s LUISS University, says the city produces more waste than it can cope with.</p> <p><strong><em>&quot;One factor is the remarkable amount of waste that is produced per capita in Rome. Another is that the share of (separated) waste is increasing.</em></strong></p> <p>&quot;That&#39;s a good thing in general, but not if the authorities aren&#39;t ready to deal with it all - which they aren&#39;t.</p> <p><strong><em>&quot;Another problem is the fact that the landfills are full - and some are already a big environmental problem, and need to be closed.&quot;</em></strong></p> <p>Rome&#39;s landfill sites are so full, he says, that the authorities have not only had to look beyond the region, but beyond Italy, to dispose of their waste.</p> <h2 class="story-body__crosshead"><u>Where there&#39;s muck, there&#39;s brass</u></h2> <p>But it is not just the lack of space. The rubbish problem is also political.</p> <p><strong>Waste disposal and other public services in Rome have been plagued by more than mismanagement.</strong></p> <p>In 2014, an investigation known as Mafia Capitale laid bare corruption and tainted bidding in city services, including rubbish collection.</p> <p>Rome&#39;s new Mayor Virginia Raggi, from the populist Five Star Movement, came to power last year promising to clean up the city.</p> <p>But she ran into trouble almost immediately.</p> <p>The person she appointed as the city&#39;s rubbish tsar, Paola Muraro, was forced to resign after it emerged she was under investigation for alleged wrongdoing during her 12-year stint as a consultant to Rome&#39;s rubbish collection agency, AMA.</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/04/27/20170430_rome4.jpg"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/04/27/20170430_rome4.jpg" style="width: 599px; height: 214px;" /></a></p> <p><strong>Ms Muraro has denied allegations of impropriety. But Mayor Raggi is under pressure.</strong></p> <p>In Campo de&#39; Fiori, one of Rome&#39;s most attractive markets, rubbish piles up on the cobblestones almost every afternoon, amid the flower and vegetable stalls.</p> <p>Rubbish collectors eventually arrive to clean it up, but Vladimir, who works at a local restaurant on the square, shakes his head.</p> <p><strong><em>&quot;It is disgusting here for two or three hours a day, until they clear it up. Tourists who come here are in shock. In the centre of a European capital, this is not normal.&quot;</em></strong></p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="624" height="274" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20170430_rome3.jpg?1493568907" /> </div> </div> </div> http://www.zerohedge.com/news/2017-04-30/why-disgusting-rome-sends-trains-filled-trash-austria#comments AMA Corruption Electronic waste Environment European Union European Union Incineration Italy Landfill Municipal solid waste Natural environment Northern Italy Recycling Rome's LUISS University Star Movement Sustainability and environmental management Waste Waste management Waste-to-energy plant Sun, 30 Apr 2017 17:00:20 +0000 Tyler Durden 594943 at http://www.zerohedge.com