Implode-Explode Heavy Industries news feed http://implode-explode.com/ Tracking the many faces of the global credit implosion. en-us iehi-feed-64396 Thu, 15 Nov 2018 02:35:59 GMT So Goes Apple, So Goes The U.S. Market http://implode-explode.com/viewnews/2018-11-14_SoGoesAppleSoGoesTheUSMarket.html There are those who are focused so intently on the recent strength of the domestic economy that they are unable to see the forest for the trees. For example, oil prices do not lose 25% in value in a matter of weeks when global demand is strong. Not ever. Nor is this merely a case of excess supply.

In truth, the world's economy has been slowing to a crawl. The German economy contracted in the third quarter. Meanwhile, China is dealing with a massive debt bubble and a trade war. (Note: China is the world's largest importer of oil.)

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A diversified investor with a helping of large-cap stocks, small-cap stocks, foreign stocks, commodities, bonds, preferreds and/or other income producers had been relying on the influence of mega-caps like Facebook, Amazon and Apple. Bearish price depreciation in one or two of them might have been tolerable. Not all three.

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iehi-feed-64392 Wed, 14 Nov 2018 01:39:11 GMT Britain and E.U. Agree on a draft Plan for Brexit http://implode-explode.com/viewnews/2018-11-13_BritainandEUAgreeonadraftPlanforBrexit.html Britain is scheduled to quit the European Union on March 29. The draft agreement, if approved, would at least avert the prospect of a disorderly and chaotic departure without any deal -- something that could clog ports and lead to shortages of food and some medicines.

If Mrs. May's cabinet signs off on the draft agreement, the next step is for European Union leaders to give it their blessing at a meeting at the end of the month.

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iehi-feed-64385 Sun, 11 Nov 2018 21:08:50 GMT Doug Noland: Back to Fundamentals http://implode-explode.com/viewnews/2018-11-11_DougNolandBacktoFundamentals.html For me, Back to Fundamentals means a return of "Periphery to Core Crisis Dynamics" - rising yields, widening Credit spreads, de-risking/deleveraging, faltering global liquidity and, to be sure, China... Odds are mounting that de-risking/deleveraging dynamics attain destabilizing momentum. Many hedge funds now have losses for the year, which forces managers to take down both risk and leverage in anticipation of year-end outflows. I believe deleveraging is having a growing impact on marketplace liquidity around the world - and across asset classes. Yields are rising and spreads are widening throughout global fixed-income. Unstable equities markets around the globe are indicating a fragile liquidity backdrop. And this week's $2.68 (4.3%) drop in WTI has all the appearances of a major leveraged speculating community panic liquidation (portending challenges for the - to this point - resilient junk bond market).

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At this point, I seriously doubt the Fed has a solid grasp of the (direct and indirect) sources of the Trillions of global liquidity that have flooded into U.S. securities and asset markets over the past decade. I take them at their word that they don't discern the degree of leverage that would typically indicate a Bubble. Yet this has been the most atypical of global Bubbles. I am not convinced the Fed knows where to look for the leverage most germane to today's global Bubble. And, I'm compelled to add, the whole world seems oblivious. Speculative deleveraging is not on the Fed's radar, and this is a problem for the markets.

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iehi-feed-64378 Fri, 09 Nov 2018 22:27:43 GMT Minister Jo Johnson quits over Brexit and calls for new vote http://implode-explode.com/viewnews/2018-11-09_MinisterJoJohnsonquitsoverBrexitandcallsfornewvote.html A well-respected and liked member of the government, he has decided that what was promised to people during the referendum campaign is now so different to what is on the table that he has quit the government instead.

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He added: "This would not be about re-running the 2016 referendum, but about asking people whether they want to go ahead with Brexit now that we know the deal that is actually available to us, whether we should leave without any deal at all or whether people on balance would rather stick with the deal we already have inside the European Union.

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Mr Johnson is the sixth minister in Theresa May's government to resign specifically over Brexit, following David Davis, Boris Johnson, Philip Lee, Steve Baker and Guto Bebb.

For Labour, Shadow Brexit Minister Jenny Chapman said Mrs May had "lost all authority and is incapable of negotiating a Brexit deal within her own party, let alone with the EU".

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iehi-feed-64363 Tue, 06 Nov 2018 20:50:09 GMT Over 30 Goldman Sachs execs, top bosses reviewed 1MDB deals (LEGAL COSTS COULD TOP $1.8B) http://implode-explode.com/viewnews/2018-11-06_Over30GoldmanSachsexecstopbossesreviewed1MDBdealsLEGALCOSTSCOULD.html ``Over 30 Goldman Sachs executives including bank boss David Solomon and his predecessor, Lloyd Blankfein reviewed the 1Malaysia Development Berhad (1MDB) deals, according to sources familiar with the approval process.

The Financial Times reported the Wall Street bank helped 1MDB sovereign wealth fund sell about RM27.06 bil (US$6.5bil) of bonds between 2012 and 2013, two years before Malaysian police raided 1MDB's offices to investigate allegations of massive fraud. 

In a 2016 indictment, the US Department of Justice alleged that much of the money raised with Goldman's help was siphoned off by Low Taek Jho, who funnelled it into everything from Beverly Hills properties to Van Gogh paintings.

The report added that DoJ, which is still exploring what sanctions if any Goldman should face, has brought criminal charges against former Goldman bankers Tim Leissner and Roger Ng in connection with the deal.

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In a filing to the Securities and Exchange Commission on Friday (Nov 2), the Wall Street firm estimated that possible losses related to litigation proceedings could run as high as $1.8bil (RM7.49 bil) above its total reserves for such matters. Previously, Goldman estimated litigation losses to be in an excess of $1.5bil (RM6.24 bil).

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iehi-feed-64362 Tue, 06 Nov 2018 20:15:25 GMT Apple Is Ditching the Mass Market and Focusing on Rich People http://implode-explode.com/viewnews/2018-11-06_AppleIsDitchingtheMassMarketandFocusingonRichPeople.html What really caught investor and analyst attention--and not in a good way--was the company's announcement that it would no longer tell investors how many devices it sold in a quarter, and instead simply present overall revenue for its suite of devices. That did not sit well, and some analysts speculated that Apple was reducing its transparency because it "has something to hide."

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In a world where everyone will soon have a smartphone as surely as electricity, and the middle class will likely have a tablet or some form of computer, Apple has elected to be more like Tiffany or Mercedes rather than Walmart or Hyundai. That means speaking to as an aspirational clientele for whom brand, form, and function are all of a part, and where the higher price point is at times a sotto voce aspect of the appeal.

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iehi-feed-64357 Sun, 04 Nov 2018 16:27:04 GMT The Citizenship Clause Means What It Says http://implode-explode.com/viewnews/2018-11-04_TheCitizenshipClauseMeansWhatItSays.html ``Trump, Anton, and their enablers are relying on phony history and altered documents in an attempt to change the American constitutional order... Those who don't want to take my word for it can consult this essay by James C. Ho, a conservative "originalist" who was recently appointed to the U.S. Court of Appeals for the Fifth Circuit by Donald Trump. Ho and I agree on little except this: The citizenship clause means what it says.''

There's essentially no doubt it would take a constitutional amendment to change "birthright citizenship". A debate on that isn't unreasonable; what is unreasonable is Trump's belief he can change something so fundamental by fiat, illegally, in a way that explicitly end-runs around the core checks and balances of our government. There's definitely a word for that...

Besides, there is little evidence (if any) that "anchor babies" are creating an immigration problem. Immigrants will readily leave their US-born children behind, as US-born babies don't actually provide any "anchor" for the parents. So, what's the anger about? The kids who are born in the US? How are they not Americans?

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iehi-feed-64355 Fri, 02 Nov 2018 22:49:12 GMT Trump administration to reinstate all Iran sanctions http://implode-explode.com/viewnews/2018-11-02_TrumpadministrationtoreinstateallIransanctions.html iehi-feed-64354 Fri, 02 Nov 2018 20:30:25 GMT Stocks fall after wild session as conflicting trade news keeps investors guessing http://implode-explode.com/viewnews/2018-11-02_Stocksfallafterwildsessionasconflictingtradenewskeepsinvestorsgu.html When asked whether the president explicitly requested his top advisors to drum up a trade deal, Kudlow said "no." ... Kudlow's remarks contradicted a Bloomberg report from earlier on Friday that said Trump had asked officials to prepare a draft for a U.S.-China trade deal.

"It's still all about trade," said JJ Kinahan, chief market strategist at TD Ameritrade. "Most of the trading we're seeing is related to earnings or trade."

"The recent moves we're seeing are reflect a return to more historical levels of volatility," said Kinahan. "I don't think this will abate."

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"Today's stronger than expected October employment report was a mixed bag for stocks," said Alec Young, managing director of global markets research at FTSE Russell. "On the positive side, strong job growth will allay fears of slowing economic growth. However, with wages up 3.1 percent year over year ... it will be more difficult for the Fed to slow its rate hiking campaign."

The Fed doesn't care about the economy "overheating" (especially since they know Trump would be pleased as punch about that) -- all the fundamental economic data does is provide them cover for (or an inconvenience with respect to) unwinding their giant post-crisis balance sheet.

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iehi-feed-64341 Mon, 29 Oct 2018 15:09:45 GMT Far-right candidate wins Brazil presidential election http://implode-explode.com/viewnews/2018-10-29_FarrightcandidatewinsBrazilpresidentialelection.html iehi-feed-64340 Sun, 28 Oct 2018 19:34:57 GMT #TrollTracker: Twitter Troll Farm Archives http://implode-explode.com/viewnews/2018-10-28_TrollTrackerTwitterTrollFarmArchives.html On October 17, Twitter released an archive of over ten million tweets posted by accounts from 2013 through 2018. Of the total, over nine million tweets were attributable to 3,800 accounts affiliated with the Internet Research Agency, also known as Russia's infamous St. Petersburg troll factory. Over one million tweets were attributable to 770 accounts, originating from Iran...

The Russian and Iranian troll farm operations show that American society was deeply vulnerable, not to all troll farm operations, but to troll accounts of a particular type. That type hid behind carefully crafted personalities, produced original and engaging content, infiltrated activist and engaged communities, and posted in hyper-partisan, polarizing terms.

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iehi-feed-64339 Sun, 28 Oct 2018 19:20:35 GMT Brazilian elections: Voters choose between Bolsonaro ("Trump of the Tropics") and Haddad http://implode-explode.com/viewnews/2018-10-28_BrazilianelectionsVoterschoosebetweenBolsonaroTrumpoftheTropicsa.html Far-right candidate Jair Bolsonaro faces leftist Fernando Haddad of the Workers' Party in the second and final round of presidential elections... While polls have been narrowing, Mr Bolsonaro remains in the lead... Two final opinion polls released on Saturday showed that support for Mr Haddad had increased, though Mr Bolsonaro was still expected to win about 55% of the vote.

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Brazil has been rocked by an increase in violent crime and a huge political bribery scandal that has tainted the entire political class. The economy shrank by nearly 7% during the country's worst-ever recession in 2015.

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iehi-feed-64338 Sun, 28 Oct 2018 14:41:31 GMT The Market Has Been on a "Sugar High"; With Massive Deficit-Driven Borrowing, Reality is Setting In http://implode-explode.com/viewnews/2018-10-28_TheMarketHasBeenonaSugarHighWithMassiveDeficitDrivenBorrowingRea.html The soaring deficit has been steroids for the US economy, but the government must borrow that money before it can spend it. That means that a trillion dollars a year is now hitting, and will continue to hit the market in massive quarterly waves for years. And the money isn't there to absorb it without prices falling drastically. That means lower stock and bond prices and higher bond yields.

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On October 15, the Trump Regime confirmed all of those warnings when it announced that the fiscal year 2018 budget deficit had blown out to $779 billion, with the tax cut and Budget Busting Agreement impacting only the last 8 months of that period. For the first 4 months of the fiscal year, tax revenues were higher, at the old higher rates, and spending was less than now.

For the first full calendar year after those two laws were went into effect, we can expect the deficit to exceed a trillion dollars. That means an average of $80-90 billion per month in new Treasury supply.

... this month the dam broke as Treasury supply returned to the market in a huge wave in the first two weeks of October. The markets were not able to smoothly absorb that onslaught of supply.  That onslaught will continue as tax collections will be seasonally weak until the next quarterly tax due date in mid-January. Until then, a gargantuan wave of supply is coming that will repeatedly buffet the markets.''

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iehi-feed-64329 Fri, 26 Oct 2018 02:47:13 GMT Deutsche Bank in need of 'radical surgery' as profits plunge http://implode-explode.com/viewnews/2018-10-25_DeutscheBankinneedofradicalsurgeryasprofitsplunge.html Deutsche Bank is need of "radical surgery" after the struggling lender unveiled a 65pc drop in profits for the third-quarter, experts have warned. 

The German lender, which is trying to recover from three consecutive years of losses, posted a net profit of €229m (£200m) for the quarter. That beat analyst expectations but is down significantly on the €649m posted a year ago.

Octavio Marenzi, who runs consultancy Opimas, said it was difficult to see anything positive in the results and argued it made the bank's job cuts look "homeopathic at a time when more radical surgery is needed".

The bank has been trying to revive its fortunes in recent years but has struggled to keep up with peers amid high...

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iehi-feed-64325 Wed, 24 Oct 2018 16:25:59 GMT Saudi PR Implosion Threatens Silicon Valley's "Funding Secured" Nonchalance http://implode-explode.com/viewnews/2018-10-24_SaudiPRImplosionThreatensSiliconValleysFundingSecuredNonchalance.html Softbank's Vision Fund is the largest single private equity fund in the world, with about $100 billion in capital commitments, of which about half comes from Saudi Arabia... The Vision Fund, and more generally the Saudi money behind it, is a classic fin de siecle undertaking. It is The Greatest Fool in a private equity world that must find greater and greater fools for their investment funds to work here at the tail end of a very long and very profitable business cycle. The Vision Fund and its Saudi money isn't just a lucky break for both the financiers and the entrepreneurs of Silicon Valley. It is an answered prayer.

And here's the crazy thing ... the Khashoggi murder could blow this all up. Not just the WeWork deal. Not just the next mega-fund that SoftBank puts together. But this fund. The Vision Fund. And if the Vision Fund is no longer viable as a player in Silicon Valley, then I don't think the unicorn valuations are viable, either.

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iehi-feed-64312 Fri, 19 Oct 2018 19:15:44 GMT Europe Just Screwed over Android (And You, Too) http://implode-explode.com/viewnews/2018-10-19_EuropeJustScrewedoverAndroidAndYouToo.html Accepting these terms is the price to pay for the cost of Google's maintenance of the ecosystem, and it has helped maintain a level of consistency for consumers who expect an Android device to ship with a few basic services, like a web browser and messaging app. Google looks after all that for free, and manufacturers are able to take advantage of it to sell their hardware. Europe has a problem with that because it supposedly suppresses competition--Microsoft's Bing search engine, I guess.

... While all this is happening, Apple is able to sell the iPhone with defaults that can't be changed by the consumer at all, locking them into a particular set of tools. The only reason this isn't a problem for the EU is that Apple built a fully-closed ecosystem, on its own devices, so it isn't dictating decisions for any third-party manufacturer--because no third party can make an iPhone.

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iehi-feed-64298 Wed, 17 Oct 2018 14:00:42 GMT Canada Makes Marijuana Legal, and a National Experiment Begins http://implode-explode.com/viewnews/2018-10-17_CanadaMakesMarijuanaLegalandaNationalExperimentBegins.html Canada on Wednesday became the first major world economy to legalize recreational marijuana use, beginning a national experiment that will alter the country's social, cultural and economic fabric, and present the nation with its biggest public policy challenge in decades... Canada is only the second country in the world, after Uruguay, to legalize it.

...

Under Canada's new federal cannabis act, adults will be allowed to possess, carry and share with other adults up to 30 grams of dried cannabis, enough to roll roughly 60 regular-size joints. They will also be permitted a maximum of four homegrown marijuana plants per household.

Marijuana for medical purposes has been legal in Canada since 2001, and about 330,000 Canadians, including cancer patients, are registered to receive it from licensed producers.

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To ensure that prices remain competitive with the black market, one gram of cannabis can be purchased for as low as about $4, or $5.25 Canadian dollars.

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As with cigarettes, the cannabis is clearly marked with health warnings like "One in eleven people who use cannabis will become addicted."

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The government's stated rationale for legalizing cannabis is to tame an illegal trade estimated at $6.2 billion. But from Toronto to Winnipeg to Vancouver, hundreds of illegal shops have indicated they have no intention of shutting down, and the black market supply chain remains deeply entrenched.

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iehi-feed-64290 Sun, 14 Oct 2018 19:58:57 GMT Gundlach says the global stock market is signaling 'something bad' is happening http://implode-explode.com/viewnews/2018-10-14_Gundlachsaystheglobalstockmarketissignalingsomethingbadishappeni.html iehi-feed-64287 Sun, 14 Oct 2018 18:17:06 GMT Trump-Supported MBS Goes Rogue in Saudi Arabia As Reforms Fail To Materialize http://implode-explode.com/viewnews/2018-10-14_TrumpSupportedMBSGoesRogueinSaudiArabiaAsReformsFailToMaterializ.html ... increasingly it seems that the crown prince, better known as M.B.S., orchestrated the torture, assassination and dismemberment of an American-based journalist using diplomatic premises in a NATO country.

That is monstrous, and it's compounded by the tepid response from Washington. President Trump is already rejecting the idea of responding to such a murder by cutting off weapons sales. Trump sounds as if he believes that the consequence of such an assassination should be a hiccup and then business as usual.

Frankly, it's a disgrace that Trump administration officials and American business tycoons enabled and applauded M.B.S. as he imprisoned business executives, kidnapped Lebanon's prime minister, rashly created a crisis with Qatar, and went to war in Yemen to create what the United Nations calls the world's worst humanitarian crisis there. Some eight million Yemenis on the edge of starvation there don't share this bizarre view that M.B.S. is a magnificent reformer.

Trump has expressed "great confidence" in M.B.S. and said that he and King Salman "know exactly what they are doing." Jared Kushner wooed M.B.S. and built a close relationship with him -- communicating privately without involving State Department experts -- in ways that certainly assisted M.B.S. in his bid to consolidate power for himself.

The bipartisan cheers from Washington, Silicon Valley and Wall Street fed his recklessness. If he could be feted after kidnapping a Lebanese prime minister and slaughtering Yemeni children, why expect a fuss for murdering a mere journalist?

M.B.S. knows how to push Americans' buttons, speaking about reform and playing us like a fiddle. His willingness to sound accepting of Israel may also be one reason Trump and so many Americans were willing to embrace M.B.S. even as he was out of control at home.

In the end, M.B.S. played Kushner, Trump and his other American acolytes for suckers. The White House boasted about $110 billion in arms sales, but nothing close to that came through. Saudi Arabia backed away from Trump's Middle East peace deal. Financiers salivated over an initial public offering for Aramco, the state-owned oil company, but that keeps getting delayed.

The crackdown on corruption is an example of M.B.S.'s manipulation and hypocrisy. It sounded great, but M.B.S. himself has purchased a $300 million castle in France, and a $500 million yacht -- and he didn't buy them by scrimping on his government salary.

... . In the United States, we also must investigate whether Saudis bought influence with spending that benefited the Trump family, such as $270,000 spent as of early 2017 by a lobbying firm for Saudi Arabia at the Trump hotel in Washington. The Washington Post reported that Saudi bookings at Trump Chicago increased 169 percent from the first half of 2016 to the first half of this year, and that the general manager of a Trump hotel in New York told investors that revenues rose partly because of "a last-minute visit to New York by the Crown Prince of Saudi Arabia."

Trump loves teh swaggering "strongmen"; all they need is to pay a little lip service to progressive policies.

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iehi-feed-64276 Wed, 10 Oct 2018 15:05:16 GMT Russian Whistleblower Assassinated After Uncovering $200 Billion Dirty-Money Scandal http://implode-explode.com/viewnews/2018-10-10_RussianWhistleblowerAssassinatedAfterUncovering200BillionDirtyMo.html A crusading Russian official traveled to Estonia in the summer of 2006 to warn the authorities that an unprecedented money-laundering scheme had been established in the tiny Baltic financial sector. The scam he had uncovered would go on to become the biggest dirty-money operation in history: the $200 billion Danske Bank scandal.

Three months after Andrei Kozlov, the first deputy chairman of the Russian Central Bank, tried to raise the alarm, he was dead.

Crooked beneficiaries of the illicit multibillion-dollar scheme to transfer money out of Russia included a member of Vladmir Putin's family and agents from the KGB's successor, the FSB, according to a leaked report drawn up by a bank insider.

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