http://www.zerohedge.com/fullrss2.xml/phonebook en Junk Bonds; Dual upside breakout taking place! http://www.zerohedge.com/news/2017-05-25/junk-bonds-dual-upside-breakout-taking-place <p><img src="https://www.kimblechartingsolutions.com/wp-content/uploads/2017/05/junk-in-the-trunk-pic.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;" /></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;">So Goes Junk, So Goes Stocks? Most of the time this is true. Stocks historically want to see Junk moving higher, not diverging against them.</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;">Below looks at Junk Bond ETF&nbsp;<a href="https://finance.yahoo.com/quote/JNK?p=JNK" style="box-sizing: border-box; background: transparent; color: #2ea3f2; outline: 0px;"><strong style="box-sizing: border-box; outline: 0px; background: transparent;">JNK</strong></a>&nbsp;over the past few years.</p> <p style="box-sizing: border-box; margin-top: 0px; margin-bottom: 0px; padding-bottom: 1em; outline: 0px; background-image: initial; background-position: initial; background-size: initial; background-repeat: initial; background-attachment: initial; background-origin: initial; background-clip: initial; font-size: 14px; color: #303030; font-family: &quot;Open Sans&quot;, Arial, sans-serif;"><a href="https://www.kimblechartingsolutions.com/wp-content/uploads/2017/05/junk-breaking-out-of-dual-resistance-may-25-1.jpg" target="_blank" title="Junk Bonds; Dual upside breakout taking place! kimble charting solutions"><img src="https://www.kimblechartingsolutions.com/wp-content/uploads/2017/05/junk-breaking-out-of-dual-resistance-may-25-1.jpg" alt="barclays high yield bond kimble charting solutions." title="junk bonds;dual upside breakout taking place" width="1000" style="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;">JNK started heading lower back in 2014, diverging against stocks, sending a concerning message to them. JNK hit a low in February of last year and has been heading higher ever since, sending a positive message to stocks.</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;">JNK for the past&nbsp;few months has chopped sideways, just below 2-year falling resistance, which looks to be the top of a narrowing pennant pattern. At the same time it was dealing with pennant pattern resistance, it looks to have formed a bullish ascending triangle (flat top and rising bottoms).</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;">At this time JNK is working on a dual breakout of the pennant and ascending triangle at (1). Even thought Junk Bonds yields are low at this time and a concern to some, historically this type of price action is NOT a concerning message for stocks!</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;">To send a concerning message to stocks, Junk needs to break back below dual support and diverge against stocks, which at this time, is not happening.</p> <p style="box-sizing: border-box; margin-top: 0px; margin-bottom: 0px; padding-bottom: 1em; outline: 0px; background-image: initial; background-position: initial; background-size: initial; background-repeat: initial; background-attachment: initial; background-origin: initial; background-clip: initial; font-size: 14px; color: #303030; font-family: &quot;Open Sans&quot;, Arial, sans-serif;">If you would like to stay informed of the Power of the Patterns thoughts in the Junk bond market or what our “Shoe Box” indicator is suggesting for investors to do, we would be honored if you were a&nbsp;<a href="https://www.kimblechartingsolutions.com/premium-bundle/" style="box-sizing: border-box; background: transparent; color: #2ea3f2; outline: 0px;"><strong style="box-sizing: border-box; outline: 0px; background: transparent;">Premium</strong></a>&nbsp;or&nbsp;<a href="https://www.kimblechartingsolutions.com/global-dashboard/" style="box-sizing: border-box; background: transparent; color: #2ea3f2; outline: 0px;"><strong style="box-sizing: border-box; outline: 0px; background: transparent;">Global Dashboards</strong></a>&nbsp;member. 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margin: 0in 0in 0.0001pt; font-variant-numeric: inherit; font-stretch: inherit; font-size: 13px; line-height: 1.3; font-family: lucida_granderegular, Verdana, sans-serif;">&nbsp;</p> <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="1293" height="674" alt="" src="http://www.zerohedge.com/sites/default/files/images/user182769/imageroot/junk-breaking-out-of-dual-resistance-may-25-1.jpg?1495728549" /> </div> </div> </div> http://www.zerohedge.com/news/2017-05-25/junk-bonds-dual-upside-breakout-taking-place#comments Bond Bond C-Jun N-terminal kinases Chart patterns Economy Finance High-yield debt Junk Money Naval history of China Price Action Technical analysis Triangle Thu, 25 May 2017 16:09:10 +0000 kimblecharting 596641 at http://www.zerohedge.com Bomb Detonates Inside Car Of Former Greek Prime Minister And Central Banker Papademos http://www.zerohedge.com/news/2017-05-25/bomb-detonates-inside-car-former-greek-prime-minister-and-central-banker-papademos <p>Greek <a href="http://www.naftemporiki.gr/story/1239514/bomb-blast-targets-former-greek-pm-papademos-car-one-injury-reported">media reports that </a>an explosion targeting the car of former Greek prime minister and central banker Lucas Papademos was reported on Thursday afternoon, at roughly 6.30 p.m. local time, in central Athens. </p> <p>Reuters confirms:</p> <ul> <li>EXPLOSIVE DEVICE DETONATES INSIDE CAR OF FORMER GREEK CENTRAL BANKER LUCAS PAPADEMOS, INJURING HIM AND HIS DRIVER- GREEK POLICE</li> </ul> <p>One injury was reported, with the first indications pointing to the vehicle's driver. The incident took place in central Athens, a few blocks from the Athens Polytechnic in a central part of the city.</p> <blockquote class="twitter-tweet"><p dir="ltr" lang="en"><a href="https://twitter.com/hashtag/BREAKING?src=hash">#BREAKING</a> - Blast in central <a href="https://twitter.com/hashtag/Athens?src=hash">#Athens</a> reportedly involving a car carrying former Greek Prime Minister Lucas Papademos. <a href="https://twitter.com/hashtag/AthensLive?src=hash">#AthensLive</a> <a href="https://t.co/08n4zWJdfc">pic.twitter.com/08n4zWJdfc</a></p> <p>— AthensLive GR (@AthensLiveGr) <a href="https://twitter.com/AthensLiveGr/status/867771794949902336">May 25, 2017</a></p></blockquote> <script src="//platform.twitter.com/widgets.js"></script><p>Accoridng to Press reports that Papademos opened a letter bomb, injuring himself and his driver. Both rushed to Greece¨s largest hospital Evangelismos<em>.</em><em></em></p> <blockquote class="twitter-tweet"><p dir="ltr" lang="en">Police guard accompanying PAPADEMOS also injured.</p> <p>— George Gilson (@ggathens) <a href="https://twitter.com/ggathens/status/867772950459465729">May 25, 2017</a></p></blockquote> <script src="//platform.twitter.com/widgets.js"></script> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="960" height="520" alt="" src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/papademos.jpg?1495728145" /> </div> </div> </div> http://www.zerohedge.com/news/2017-05-25/bomb-detonates-inside-car-former-greek-prime-minister-and-central-banker-papademos#comments Athens Government of Greece Greece Greek government-debt crisis Lucas Lucas Papademos Reuters Twitter Twitter Thu, 25 May 2017 16:03:31 +0000 Tyler Durden 596639 at http://www.zerohedge.com Fed Trial Balloon: JPM Warns Fed May Start Shrinking Balance Sheet In September http://www.zerohedge.com/news/2017-05-25/fed-trial-balloon-jpm-warns-fed-may-start-shrinking-balance-sheet-september <p>It appears the Fed's balance sheet "trial balloons" using primary dealers as intermediaries have begun. </p> <p>After yesterday's unexpectedly explicit guidance on the future of the Fed's balance sheet, which prompted Goldman, Citi, and various other banks to suggest they may bring forward their estimates for when the Fed will announce the start of "renormalization", moments ago JPM's Michael Feroli, traditionally the analysts "closest" to the Fed, did just that when he issued a report stating that that there is now "<strong>chance of a September start" </strong>to renormalization, with the values for monthly roll-off caps and phase-in period to be "revealed at the June FOMC meeting."</p> <p>According to Feroli, JPM continues to look for normalization to commence at the December FOMC meeting but "<strong>there is some chance of a September start</strong>, though this would not have a material difference for our projections on a multi-year horizon. At the meeting at which normalization starts we expect the Committee to announce a set of monthly roll-off caps for the following year, which increase regularly every three months. </p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>"<strong>Our best guess is that the initial caps are $4 billion a month for MBS and $8 billion a month for US Treasuries. </strong>In the preannounced schedule, these caps would be augmented each quarter by $4 billion and $8 billion, respectively, <strong>until at the end of the year they are $16 billion and $32 billion. </strong>Consistent with yesterday’s minutes, even after the normalization process is fully phased in the monthly caps will still be in place, though in most months after the full phase-in they would cease to bind."</p> </blockquote> <p>And here are the finer details which the Fed may or may not have leaked to select banks, in an attempt to prepare for what is coming, and talking down the equity bubble: </p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p><strong>The Committee has yet to communicate values for the monthly caps or the length of the phase-in period. Presumably they will do this in the minutes to the June FOMC meeting. </strong>It is less clear that the Committee will have decided on a monetary policy implementation framework by the time roll-off begins (i.e. the current ratesetting system vs reverting to the pre-2008 system) and hence whether they will have decided on an ultimate amount of excess reserves available when the balance sheet is fully normalized. <strong>We have assumed a $500 billion target for excess reserves in our projections below. The other key assumption on the liability side of the Fed’s balance sheet is currency growth, which we have penciled in at 4% per year</strong>.</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/05/12/jpm%20balance%20sheet%20rev.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/05/12/jpm%20balance%20sheet%20rev_0.jpg" width="500" height="502" /></a></p> <p>Under these assumptions the balance sheet is fully normalized in late 2021 at a level close to $3.0 trillion, down from about $4.5 trillion now. After normalization the Fed would turn to become a net buyer of&nbsp; Treasuries, at a pace of around $400 billion per year, partly to meet growing demand for currency and partly to replace MBS which will continue to roll off the balance sheet. During the normalization process we see the funds rate as the tool of first resort for adjusting policy to both economic strength and weakness, unless the funds rate returns to the effective lower bound around zero, at which point roll-offs would stop. This latter eventuality is a risk for normalization being completed later than we anticipate.</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/05/12/jpm%20bs%202.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/05/12/jpm%20bs%202_0.jpg" width="500" height="593" /></a></p> </blockquote> <p>Mechanistic questions about the impact of this a Quantitative Tightening on asset prices aside (it will be very bearish as the market will realize soon), we remind reader what former Fed governor Kevin Warsh said about the Fed's normalization "policy" <a href="http://www.zerohedge.com/news/2017-05-05/former-fed-governor-warsh-asks-what-could-possibly-go-wrong-answers">several weeks ago</a>.</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>I am confused by the Fed’s ‘normalization’ strategy in monetary policy. Its preferred sequencing of rate increases and balance sheet reductions differ markedly from what was agreed when we conceived QE in the ’war room’ amid the crisis. There might be good reason. But, the transmission mechanisms of rate changes and balance sheet adjustments are markedly different than projected. So too are the distributional effects. This merits a more robust public explanation.</p> </blockquote> <p>Alas, a public explanation will not be provided.</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="604" height="355" alt="" src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/Fed%20balance%20sheet%20projections%20teaser.jpg?1495727212" /> </div> </div> </div> http://www.zerohedge.com/news/2017-05-25/fed-trial-balloon-jpm-warns-fed-may-start-shrinking-balance-sheet-september#comments Banking Business Database normalization Economy Excess Reserves Excess reserves Fed Governor Kevin Warsh Federal Open Market Committee Federal Reserve System Finance Financial services Monetary Policy Monetary policy Money Normalization US Federal Reserve Warsh Thu, 25 May 2017 15:56:37 +0000 Tyler Durden 596638 at http://www.zerohedge.com "Sell The News" - WTI Tumbles Below $50 After OPEC Disappointment http://www.zerohedge.com/news/2017-05-25/sell-news-wti-tumbles-below-50-after-opec-disappointment <p>Confident anchors across the media have been proudly proclaiming the rise above $50 as proof that the oil market is heading toward equilibrium again and OPEC's production cut deal extension will be awesome... except the market seems to be disappointed as it's<strong> clear no other non-OPEC nations will join the agreement</strong> (cough US shale cough) and "sell the news" has sent crude back below $50...</p> <p>The full details are as follows:</p> <ul> <li>No new countries will join the supply cut</li> <li>Cut remains set at -1.8mmb/d, a continuation of the original deal</li> <li>The next OPEC meeting will be November 30 </li> </ul> <p>And the reaction...</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/05/23/20170525_oil.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/05/23/20170525_oil_0.jpg" width="600" height="303" /></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="2264" height="1142" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20170525_oil.jpg?1495727047" /> </div> </div> </div> http://www.zerohedge.com/news/2017-05-25/sell-news-wti-tumbles-below-50-after-opec-disappointment#comments Business Cartels Crude Economy OPEC OPEC Petroleum Petroleum industry Petroleum politics Thu, 25 May 2017 15:44:20 +0000 Tyler Durden 596637 at http://www.zerohedge.com Obama Praises "Favorite Partner" Angela Merkel During Berlin Visit http://www.zerohedge.com/news/2017-05-25/obama-praises-favorite-partner-angela-merkel-during-berlin-visit <p>Before heading to a NATO summit in Brussels where she would meet with President Donald Trump and a host of other world leaders, <strong>German Chancellor Angela Merkel indulged in an exercise of mutual praise with her &ldquo;dear friend&quot; former U.S. President Barack Obama</strong> as the pair appeared in public during a gathering at Berlin&#39;s Brandenburg Gate meant to celebrate the 500th anniversary of the Protestant Reformation, <a href="http://www.miamiherald.com/news/nation-world/article152541439.html">the Associated Press reports.</a></p> <p>In an apparent attempt to rally support for Merkel ahead of the German federal election this fall, Obama praised Merkel&rsquo;s leadership ability, calling her one of his &ldquo;favorite partners&rdquo; during his presidency.</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user245717/imageroot/2017/05/18/herald.JPG"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user245717/imageroot/2017/05/18/herald_0.JPG" style="width: 500px; height: 331px;" /></a></p> <p>Unsurprisingly, Obama and Merkel couldn&rsquo;t resist throwing some shade at Trump, who famously refused to shake Merkel&rsquo;s hand when they met in Washington for the first time back in March.</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>In a veiled reference to his successor Donald Trump, who has proposed to cut support for diplomacy and international aid by nearly a third, <strong>Obama said those programs are essential aspects of national security policy.</strong></p> <p><strong>&quot;We can&#39;t isolate ourselves. We can&#39;t hide behind a wall,&quot;</strong> he said, to cheers from the audience.</p> </blockquote> <p>The visit was a useful distraction for Merkel, whose continued occupancy of the chancellorship, once seemingly assured, <strong>is increasingly threatened by &ldquo;anti-Trump&rdquo; Martin Schultz and his social democratic party, <strong><a href="http://www.zerohedge.com/news/2017-02-16/german-anti-trump-could-beat-merkel">who appear poised to upset the political status quo in Germany.</a></strong></strong></p> <p>The pair also found time to<strong> crack a few jokes. </strong></p> <p><strong>Here&#39;s more on the visit from the AP:</strong></p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>&nbsp;</p> <p>Referring to the terror attack in England just days ago, Obama said that he and the chancellor were <strong>&quot;heartbroken about the loss of life ... and that it&#39;s a reminder that there is great danger and terrorism and people who want to do great harm to others just because they&#39;re different.&quot;</strong></p> <p>Despite describing the world as &quot;<strong>a very complicated place,&quot;</strong> Obama and Merkel still found time to joke with each other and made the crowd laugh several times. The harmony and ease between the two leaders was a stark contrast to Merkel&#39;s meeting with Trump in Washington in March, when the U.S. president appeared to refuse to shake Merkel&#39;s hand in front of reporters. Trump has said he didn&#39;t hear a reporter calling for a handshake.</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="703" height="465" alt="" src="http://www.zerohedge.com/sites/default/files/images/user245717/imageroot/herald.JPG?1495724891" /> </div> </div> </div> http://www.zerohedge.com/news/2017-05-25/obama-praises-favorite-partner-angela-merkel-during-berlin-visit#comments Angela Merkel Barack Obama Barack Obama Donald Trump Donald Trump Foreign policy of the Angela Merkel government Germany national security North Atlantic Treaty Organization Politics Politics Politics of the United States Social Democratic party United States Thu, 25 May 2017 15:37:20 +0000 Tyler Durden 596635 at http://www.zerohedge.com GM Tumbles After Allegations Of Rigging Truck Emissions Tests http://www.zerohedge.com/news/2017-05-25/gm-tumbles-after-allegations-rigging-truck-emissions-tests <p>General Motors' stock price is tumbling after reports that <strong>the carmaker is accused of putting defeat devices in its trucks to beat emissions tests,</strong> becoming the sixth carmaker accused of diesel cheating since 2015, when Volkswagen AG admitted to installing software to bypass pollution rules.</p> <p>Bloomberg reports that People who own or lease <strong>more than 705,000 GM Duramax diesel trucks filed a class-action lawsuit Thursday,</strong> claiming GM installed multiple such devices in two models of heavy-duty trucks from 2011 to 2016. </p> <p><strong>The 190-page complaint is littered with more than 80 references to VW,</strong> and asserts that the environmental damage caused by each truck could surpass that of the German automaker’s vehicles.</p> <p>And the result is GM down 4%...</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/05/23/20170525_GM.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/05/23/20170525_GM_0.jpg" width="600" height="351" /></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="1860" height="1087" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20170525_GM.jpg?1495725278" /> </div> </div> </div> http://www.zerohedge.com/news/2017-05-25/gm-tumbles-after-allegations-rigging-truck-emissions-tests#comments Automotive industry Business Business Defeat device Disaster Duramax Economy Emission standards Emissions reduction Environment General Motors Technology Volkswagen Volkswagen Volkswagen Group Thu, 25 May 2017 15:14:46 +0000 Tyler Durden 596636 at http://www.zerohedge.com What Keeps Bank of America Up At Night http://www.zerohedge.com/news/2017-05-25/what-keeps-bank-america-night <p>It has been a painful, bruising intellectual exercise for BofA's HY credit strategist Michael Contopoulos, who after starting off 2016 uber-bearish, was - together with every other money manager and advisor - taken to the woodshed, and forced to flip bullish, kicking and screaming, and advising BofA clients to buy the same junk bonds he told them to sell just a few months prior. Now, thanks to Trump, he may be finally seeing a glimmer of the bearish light returning, and in a note published this morning, Contopoulos asks whether the US is looking at a replay of 2014 and 2015, when as a reminder, a false dawn turned out to be an ugly dusk, and forced first the BOJ, then the ECB to intervene aggressively with even more QEasing. </p> <p>As BofA admits, "the last two weeks have further underpinned our belief that <strong>the market has had misplaced optimism in the new administration's reform agenda, while we find more and more evidence that suggests the macro environment echoes that of 2014 and 2015</strong>. Meanwhile, the market environment has closely tracked that of late 2013 and early 2014, when expectations for higher rates, low defaults and strong fundamentals caused a bid for risk that sent yields to sub-5% until geopolitical risks shocked investors (a plane being shot down over Ukraine). <strong>Once cracks were exposed in 2014, and illiquidity concerns replaced a FOMO (fear of missing out) attitude, <span style="text-decoration: underline;">the ensuing collapse in crude left investors woefully unprepared for the troubles of the next year and a half</span></strong>."</p> <p>What will be the catalyst that unleashes the next move lower? Here the answer according to BofA is simple: Trump. "<strong>If the Trump administration and the GOP are ineffectual in their agenda, would the US be looking at a replay of 2014 and 2015? </strong>From a macro perspective, could small business optimism return to pre-election levels or could consumption and capex finally take hold, and drive productivity and growth higher regardless of policy?"</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/05/12/bofa%20bear%20case.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/05/12/bofa%20bear%20case_0.jpg" width="500" height="271" /></a></p> <p>And this is where the negative bid comes into play: because, while not there entirely, BofA says it is "<strong>beginning to become concerned that bigger forces are at work in the US economy and that, without the implementation of tax reform and infrastructure spending, these issues will be exposed as potential problems."</strong></p> <p>In short, when it comes to the economy, this is what is keeping BofA up at night:</p> <p><strong>1. Zombie Companies And Massive, Rising Debt Loads</strong></p> <p>For one, there is evidence that inefficient companies have been incentivized to not invest over the last 7 years as cheap credit has allowed them to survive without the need to improve operations and invest. On the macro front, <strong>student loan debt has weighed on millennial consumption... </strong></p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/05/12/bofa%20bear%20case%202.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/05/12/bofa%20bear%20case%202_0.jpg" width="500" height="214" /></a></p> <p><strong>... retirees are less likely to spend in an environment of meager fixed income returns and prime age workers' real wages are increasing at sub 1</strong>% (Chart 6). </p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/05/12/real%20wage%20growth%20bofa.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/05/12/real%20wage%20growth%20bofa_0.jpg" width="500" height="219" /></a></p> <p>Additionally, as Ally Financial, Synchrony and Capital One have all noted, net credit-card charge-offs and write-downs of auto debt are accelerating at a surprisingly fast clip.</p> <p>* * * </p> <p><strong>2. Sliding Used Car Prices, Rising Delinquencies And Subprime Defaults</strong></p> <p>Falling used car prices have begun to impact suppliers and manufacturers, while banks have reportedly started pulling back on subprime auto debt as delinquencies creep higher. What's more, commercial real estate is arguably at peaks while the Fed hammers on lending standards and the retail sector is in disarray; affecting brick and mortar establishments, mall REITs and CMBS.</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/05/12/used%20car%20prices.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/05/12/used%20car%20prices_0.jpg" width="500" height="232" /></a></p> <p>* * * </p> <p><strong>3. Declining Loan Growth, Lack of commodity rebound and tighter balance sheet<br /></strong></p> <p><em>Loan growth is now negative and has only been at these levels around a recession </em>(Chart 8), while tighter financial policy and a reduction of the balance sheet continues to be the rhetoric at the Fed. Corporate leverage remains high and commodity prices have not really recovered. For example<em>, the average price of WTI for the last year has been $48.6/bbl while in 2015 it was $48.76/bbl; yet in 2015 high yield had a negative return and in 2017 the market is up 4.2% as of May 17th. </em>To be fair, coming down from a high level is much worse than leveling off, and 20% of the market did default; having said that, we once again have first time issuers coming to market in Energy.</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/05/12/bofa%20bear%20case%204.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/05/12/bofa%20bear%20case%204_0.jpg" width="500" height="235" /></a></p> <p>* * * </p> <p><strong>4. Lack of Investment, No Small Business Creation And No EPS Confirmation</strong></p> <p>Finally, small business formation continues to be weak while capex has remained anemic (Chart 10). Yet the S&amp;P 500 is at near record levels despite the fact that EPS hasn't really changed in 3 years (Chart 9).<br /><a href="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/05/12/bofa%20bear%20case%205.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/05/12/bofa%20bear%20case%205_0.jpg" width="500" height="472" /></a></p> <p>* * * </p> <p>Of course, with the vix in the single digits, with stocks at all time highs, and central banks injecting record liquidity even now, BofA had to add some caveats: </p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>One could argue that the size of the auto loan market is not enough to impact growth in a meaningful way, that student debt could get better as the labor market continues to improve and that weak consumer spending was more a function of autos, spending on utilities and the effect of delayed tax returns: not necessarily an indicator of economic weakness. And although total consumer debt is now at record levels, the savings rate has increased so much that balance sheets have still improved. Additionally, non-commodity capex increased relative to trend in Q1, the Fed is unlikely to make a hawkish mistake given how careful they have been throughout the recovery - especially given the political uncertainty - and the global backdrop has arguably improved. Although China remains a concern, and oil has recently shown signs of weakness, neither seems to be as dire a situation as in 2015, in our view.</p> </blockquote> <p>Still, one can feel the urge in Contopoulos' writing to go back to the dark side. Here is his conclusion:</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>So which economy is going to show up later this year and in 2018? We think the jury is still out. Much will depend, in our view, on whether or not the administration can pull together with the GOP to produce tax reform and restore what we think will be eroded confidence. <strong>If they're unable to do this, however, we think a 2014/2015 macro environment is the most likely scenario. Regardless, without a large sector rolling over, like Energy, and absent a recession, high yield likely muddles along, where longer duration and higher quality paper outperforms</strong>.</p> </blockquote> <p>And with that, it's now up to Trump to make or break this market.</p> <p>* * *</p> <p><em>Post-script: we are well on our way. </em>Moments after this report was released, bank of America slashed both its Q1 and Q2 GDP forecasts, from 0.7% to 0.5% and 3.1% to 2.6%, respectively, after today's poor inventory and advance goods trade deficit data. </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="919" height="492" alt="" src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/SPX%20earnings%20teaser.jpg?1495724165" /> </div> </div> </div> http://www.zerohedge.com/news/2017-05-25/what-keeps-bank-america-night#comments Bank of America Bank of America Bank of Japan Business Capital One Central Banks China Commercial Real Estate Corporate Leverage Crude default Economy of the United States European Central Bank fixed Great Recession High Yield Real estate Recession recovery REITs Republican Party S&P 500 Savings Rate Subprime mortgage crisis Trade Deficit Trump Administration Ukraine US Federal Reserve Thu, 25 May 2017 15:03:58 +0000 Tyler Durden 596634 at http://www.zerohedge.com Trump Responds To UK Accusations Of Suicide Bombing Leaks http://www.zerohedge.com/news/2017-05-25/trump-responds-uk-accusations-suicide-bombing-leaks <p>Overnight saw <strong>one of the closest intelligence-sharing partnerships tested as never before</strong> in the fight against global terrorism, as Prime Minister&nbsp;Theresa May&nbsp;confronted President&nbsp;Donald Trump&nbsp;over U.S. media leaks from the Manchester bombing probe.</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/05/23/20170525_may.jpg"><img height="314" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/05/23/20170525_may.jpg" width="521" /></a></p> <p>As Bloomberg reports, <em><strong>police investigating the suicide bombing that killed 22 people at a pop concert in the city in northern England have suspended sharing information with the U.S.</strong></em>, according to a report by the security correspondent of the BBC.</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>&quot;I will make clear to President Trump that the information shared between our law-enforcement agencies must remain secure,&quot; May told reporters.</p> </blockquote> <p><strong>U.K. police said late Wednesday that leaks to American media amounted to a breach of trust and undermined their investigation into the attack,</strong> stepping up criticism earlier from Home Secretary&nbsp;Amber Rudd.</p> <p>The BBC reported that <span style="text-decoration: underline;"><strong>U.K. officials were furious about a story in the New York Times on Wednesday</strong></span> that included photos of the crime scene. The story didn&rsquo;t cite a source, and neither the U.K. government nor police commented on the piece.</p> <p>A senior White House official said that the leaks only underscored the president&rsquo;s assertion that U.S. authorities should investigate the intelligence community to see who is doing the leaking. The source pointed out that the BBC report specified that the<u><strong> U.S. law officials were the source of the leaks -- not the White House.</strong></u></p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><strong>&ldquo;These leaks were reprehensible, deeply distressing, we unequivocally condemn them,&rdquo;&nbsp;</strong>U.S. acting ambassador in London, Lewis Lukens, said on BBC Radio.</p> <p>&nbsp;</p> <p>&ldquo;The U.S. government is launching an investigation into these leaks and will take appropriate action if they are in the U.S.&rdquo;</p> </blockquote> <p>Trump was also clearly angered also and made a statement this morning regarding the leaks..</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><strong>The alleged leaks coming out of government agencies are deeply troubling.</strong> These leaks have been going on for a long time and my Administration will get to the bottom of this.<strong> The leaks of sensitive information pose a grave threat to our national security.</strong></p> <p>&nbsp;</p> <p>I am asking the Department of Justice and other relevant agencies to launch a complete review of this matter, and if appropriate, <strong>the culprit should be prosecuted to the fullest extent of the law.</strong></p> <p>&nbsp;</p> <p>There is <strong>no relationship we cherish more </strong>than the Special Relationship between the United States and the United Kingdom.</p> </blockquote> <p>Is this the final straw that breaks the camel&#39;s back and enables Trump to really clean house? One can only hope...</p> <p>The question is - without their leaker-in-chief, how will NYT, WaPo, CNN et al. actualy cover The White House?</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="521" height="314" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20170525_may.jpg?1495723496" /> </div> </div> </div> http://www.zerohedge.com/news/2017-05-25/trump-responds-uk-accusations-suicide-bombing-leaks#comments Alt-right American people of German descent Central Intelligence Agency Climate change skepticism and denial Department of Justice Department of Justice Donald Trump Donald Trump Leak national security New York Times News leak northern England Politics Politics Politics of the United States Russia–United States relations The Apprentice UK Government UK police United Kingdom United States US government War White House White House WWE Hall of Fame Thu, 25 May 2017 14:46:09 +0000 Tyler Durden 596633 at http://www.zerohedge.com Montana House Candidate Charged With Assault After "Body Slamming" Guardian Reporter http://www.zerohedge.com/news/2017-05-25/montana-house-candidate-charged-assault-after-body-slamming-guardian-reporter <p>Last night we wrote about Montana's Republican congressional candidate Greg Gianforte who reportedly "body slammed" Guardian reporter Ben Jacobs during an interview after being pressed for his opinion on the CBO healthcare score. Gianforte is the Republican candidate in today's special election for Montana's open U.S. House seat...but we're sure it's just a coincidence that this happened one day before the election.</p> <p>Not surprisingly, we learn this morning that <strong>Gianforte has been officially slapped with a "misdemeanor assault" charge by the <a href="http://www.gallatinmedia.org/?p=4732">Gallatin County Sheriff's office</a> </strong>which carries with it a <strong>maximum fine of up to $500 and/or 6 months in jail if convicted.</strong></p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user230519/imageroot/2017/05/25/2017.05.25%20-%20Sheriff.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user230519/imageroot/2017/05/25/2017.05.25%20-%20Sheriff_0.jpg" alt="Sheriff" width="500" height="483" /></a></p> <p>&nbsp;</p> <p>According to <a href="http://thehill.com/homenews/campaign/335072-montana-house-candidate-charged-with-assault">The Hill</a>, Gianforte's campaign offered a slightly different version of Jacob's story which suggests the Guardian reporter encroached on <strong>"a separate interview in a private office"</strong> and <strong>"aggressively shoved a recorder in Greg's face."</strong></p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>After asking Jacobs to lower the recorder, Jacobs declined. Greg then attempted to grab the phone that was pushed in his face. Jacobs grabbed Greg's wrist and spun away from Greg, pushing them both to the ground.</p> <p>&nbsp;</p> <p><strong>It's unfortunate that this aggressive behavior from a liberal journalist created this scene at our campaign volunteer BBQ.</strong></p> </blockquote> <p>That said, eyewitness accounts from local Fox News reporters who were on the scene for their scheduled interview seem to debunk Gianforte's rendition of the altercation.</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p><strong>“Gianforte grabbed Jacobs by the neck with both hands and slammed him into the ground behind him,”</strong> said Fox reporter Alicia Acuna.</p> <p>&nbsp;</p> <p>Acura and others “watched in disbelief as Gianforte then began punching the man, as he moved on top the reporter and began yelling something to the effect of 'I'm sick and tired of this!'" she said.</p> </blockquote> <p>Meanwhile, <strong>Democrats are already demanding that Gianforte withdraw from the race in which voting has already begun.</strong></p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p><strong>“Greg Gianforte must immediately withdraw his candidacy after his alleged violent assault of an innocent journalist,”</strong> said Tyler Law, spokesman for the Democratic Congressional Campaign Committee (DCCC). The group also launched an 11th-hour Facebook ad campaign highlighting the episode in hopes of swaying voters heading to the polls Thursday.</p> </blockquote> <p>For those who missed it, here is audio of the altercation released by Jacobs last night:</p> <p><iframe src="https://www.youtube.com/embed/fhoH4v8xYlU?ecver=2" width="600" height="337" frameborder="0"></iframe></p> <p>&nbsp;</p> <p>Of course, Gianforte was originally expected to win Montana's only house seat by wide margin...<em><strong>we'll know in about 12 hours whether the Jacob's incident will change that outcome.&nbsp; </strong></em></p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="675" height="409" alt="" src="http://www.zerohedge.com/sites/default/files/images/user230519/imageroot/2017.05.25%20-%20Gianforte.JPG?1495720956" /> </div> </div> </div> http://www.zerohedge.com/news/2017-05-25/montana-house-candidate-charged-assault-after-body-slamming-guardian-reporter#comments Democratic Congressional Campaign Committee Democratic Congressional Campaign Committee Fox News Gallatin County Sheriff's Office Gianforte Greg Gianforte Jacobs Politics U.S. House Thu, 25 May 2017 14:25:27 +0000 Tyler Durden 596630 at http://www.zerohedge.com Uneven Inflation: The Protected Are Fine, The Unprotected Are Impoverished Debt-Serfs http://www.zerohedge.com/news/2017-05-25/uneven-inflation-protected-are-fine-unprotected-are-impoverished-debt-serfs <p><a href="http://charleshughsmith.blogspot.com/2017/05/inflation-isnt-evenly-distributed.html"><em>Authored by Charles Hugh Smith via OfTwoMinds blog,</em></a></p> <p><em>Welcome to debt-serfdom, the only possible output of the soaring cost of living for the unprotected many who are ruled by a hubris-soaked, subsidized Protected Elite. </em></p> <p><strong>The Consumer Price Index (CPI) measure of inflation is bogus on a number of fronts</strong>, a reality I&#39;ve covered a number of times: though the heavily gamed official CPI is under 2% for the past four years, the real rate is 7% to 12%, depending on whether you happen to live in locales with soaring rents/housing and healthcare costs.</p> <p><a href="http://www.oftwominds.com/blogaug16/burrito-index8-16.html" target="resource">The Burrito Index: Consumer Prices Have Soared 160% Since 2001</a> (August 1, 2016)</p> <p><a href="http://www.oftwominds.com/blogaug16/inflation-crash8-16.html" target="resource">Revealing the Real Rate of Inflation Would Crash the System</a> (August 3, 2016)</p> <p><a href="http://www.oftwominds.com/blogoct16/disaster-inflation10-16.html" target="resource">The Disaster of Inflation--For the Bottom 95%</a> (October 28, 2016)</p> <p><strong>But the other reality is that inflation is not evenly distributed throughout the economy or populace:</strong> many people have little exposure to the crushing inflation of healthcare and higher education. For these people, inflation is a non-issue or a minor impact on their wealth, income and lifestyle.</p> <p><strong>Those fully exposed to the skyrocketing costs of healthcare insurance and higher education are being reduced to impoverished debt-serfs.</strong></p> <p><strong>The key factor here that is missed in the official CPI is the relative size and impact of each cost input.</strong> Televisions, for example, have plummeted in price as LCD screens have become commoditized.</p> <p>But how often does a household buy a new TV? Every four years? Every five years? And how big a difference does a $50 or $100 drop in the cost of a new TV make in their lifestyle?</p> <p><strong>Items that decline in price are modest slices of household budgets, while items that are soaring higher every year are big-ticket expenses that dominate household budgets.</strong> So a new TV drops in price by $100. If you buy a new TV every four years, that&#39;s $25 savings per year. Big Freakin&#39; Deal: that deflationary price &quot;bonus&quot; means you can buy one extra pizza.</p> <p><strong>Meanwhile, households exposed to the actual cost of healthcare insurance are absorbing increases of $5,000 or more annually.</strong> $5,000 increases every year add up: $5,000 + $10,000 + $15,000 + $20,000 = $50,000 was extracted from the household budget over the four-year period.</p> <p><strong>The household paying the unsubsidized cost of higher education is paying tens of thousands of dollars more for the same marginal-value education.</strong> Where a four-year college degree once cost the equivalent of a new car (i.e. $30,000), now it costs the equivalent of a house in many parts of the U.S. ($120,000 and up).</p> <p><strong>So a retiree with a small fixed-rate mortgage in a state with Prop 13 limits on property tax increases</strong> who qualifies for Medicare may complain about modest increases in co-pays for office visits and medications totaling a few hundred dollars annually, a young self-employed couple might be facing thousands of dollars in rent increaess, healthcare insurance costs, childcare expenses and so on--each a big-ticket item with a crushing impact on household spending and debt.</p> <p><strong>Households protected from actual big-ticket inflation by subsidies or luck (i.e. buying a house 30 years ago when prices were a fraction of today&#39;s prices) have no experience of real inflation.</strong> Only the unprotected, unsubsidized households struggling to pay rising rents, soaring college tuition and fees and skyrocketing healthcare insurance premiums have an unmediated experience of the real inflation ravaging the the U.S. economy.</p> <p><strong>If you&#39;re on Medicaid, Medicare or your premiums are mostly paid by your employer, you have no idea of the system&#39;s actual costs.</strong> The self-employed aren&#39;t subsidized, so we are exposed to the full inflation rate of healthcare, in which the costs of medications are jacked up by 4,000% because, well, Big Pharma has a free hand, thanks to our pay-to-play &quot;democracy&quot;.</p> <p><img align="middle" class="wide" src="http://www.oftwominds.com/photos2016/US-healthcare4.jpg" style="border-width: 0px; border-style: solid; height: 547px; width: 600px;" /></p> <p><strong>Getting that often-worthless diploma now requires debt-serfdom, enforced by your private-profit-are-guaranteed, losses-are-dumped-on-the-taxpayers federal government.</strong> Needless to say, the government is hear to help you--help you become a debt-serf whose serfdom enriches state-cartel cronies.</p> <p><img align="middle" class="wide" src="http://www.oftwominds.com/photos2017/student-loans5-17a.png" style="border-width: 0px; border-style: solid; height: 490px; width: 600px;" /></p> <p><strong>We&#39;re supposed to accept that because TVs are cheaper,the rate of inflation is near-zero.</strong> Meanwhile the unsubsidized costs of big-ticket items are rising by thousands of dollars annually.</p> <p><img align="middle" class="wide" src="http://www.oftwominds.com/photos2017/inflation10-16.jpg" style="border-width: 0px; border-style: solid; height: 852px; width: 600px;" /></p> <p><strong>My insightful colleague Lance Roberts prepared this devastating chart that shows how debt-serfs deal with soaring prices</strong>--they borrow more to fill the widening gap between what they earn (stagnating) amd the cost of living (skyrocketing).</p> <p><img align="middle" class="wide" src="http://www.oftwominds.com/photos2017/Debt-Cost-Of-Living5-17.png" style="border-width: 0px; border-style: solid; height: 347px; width: 600px;" /></p> <p><strong>The inside-the-Beltway crowd that dominates Washington and the overpaid technocrats that dominate our financial skimming machine are both protected from the true ravages of inflation,</strong> so our corporate media never mentions the impact on the unprotected. Our job is to shoulder the higher prices by taking on more debt.</p> <p><strong>Welcome to debt-serfdom, the only possible output of the soaring cost of living for the unprotected many</strong> who are ruled by a hubris-soaked, subsidized Protected Elite.</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="594" height="336" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20170525_CHS.jpg?1495718520" /> </div> </div> </div> http://www.zerohedge.com/news/2017-05-25/uneven-inflation-protected-are-fine-unprotected-are-impoverished-debt-serfs#comments Business Consumer Price Consumer price index Consumer Prices Cost of living CPI Deflation Economy Inflation Insurance Macroeconomics Medicare Medicare Money Real interest rate Real versus nominal value Reality Thu, 25 May 2017 14:11:37 +0000 Tyler Durden 596625 at http://www.zerohedge.com