Implode-Explode Heavy Industries news feed http://implode-explode.com/ Tracking the many faces of the global credit implosion. en-us iehi-feed-64822 Fri, 19 Jul 2019 17:53:46 GMT This gold-related ETF is crushing the stock market's gains in 2019 -- and analysts say the metal has room to run http://implode-explode.com/viewnews/2019-07-19_ThisgoldrelatedETFiscrushingthestockmarketsgainsin2019andanalyst.html The VanEck Vectors Gold Miners ETF GDX, -1.19% boasts a roughly 33% year-to-date gain, far surpassing gains of the underlying metal. Gold futures are up nearly 13% so far this year, by comparison, based on the most-active August contract trading on Comex GCQ19, -0.13% according to FactSet data. Prices of the yellow metal carved out a fresh six-year high at $1,428.10 an ounce, and gold miners have apparently been big beneficiaries.

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o put the gains for the GDX, referring to the ETFs ticker symbol trading on the NYSE Arca, into perspective, the Dow Jones Industrial Average DJIA, +0.25% is up nearly 17% in 2019 so far, the S&P 500 SPX, +0.02% has gained more than 19%, while the Nasdaq Composite Index COMP, +0.06% boasts a rich 24% climb over the past seven months.

Fawad Razaqzada, market analyst at Forex.com, said that gold has more room to run: "The bulls' next target could be the underside of the rising trend capping the prior highs, which comes in around $1460, with the psychologically-important $1500 hurdle being the subsequent objective," he wrote in a Thursday report.

Gold has benefited from a number of factors but popped in electronic trading late Thursday after New York Fed President John Williams made comments that the market implied as raising the likelihood that the Federal Reserve may take more aggressive action at the end of this month to stave off a tariff-induced slowdown in the economy. "When you only have so much stimulus at your disposal, it pays to act quickly to lower rates at the first sign of economic distress," Williams said at a research conference.

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iehi-feed-64821 Fri, 19 Jul 2019 17:51:25 GMT Fed Vacillates As It Toys With Kind-of Promising A Rate Cut But Not Really http://implode-explode.com/viewnews/2019-07-19_FedVacillatesAsItToysWithKindofPromisingARateCutButNotReally.html On Thursday, investors got excited about the possibility of a bigger-than-expected interest rate cut. New York Fed President John Williams on Thursday said policy makers should take preventative measures at the first signs of economic slowdowns. The market took this to mean that a bigger interest rate cut was on the way.

Expectations of a half-percentage-point cut at the Fed's next meeting in two weeks more than doubled to 60% in response. Treasury yields and the US dollar slipped. But then a spokesperson clarified that Williams wasn't making any predictions about the Fed's monetary policy update due in two weeks. Expectations for a half-point cut retreated to 41% on Friday, although that was still more elevated than just two days ago.

In the latest attack on Fed policy, President Donald Trump tweeted that he preferred Williams first statement, calling it "100% correct that the Fed 'raised' far too fast and too early."

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iehi-feed-64820 Fri, 19 Jul 2019 17:48:28 GMT BlackRock: CEOs pulling supply chains out of China http://implode-explode.com/viewnews/2019-07-19_BlackRockCEOspullingsupplychainsoutofChina.html "We're hearing from CEOs that more and more supply chains are moving out of China right now, " Fink said on "Squawk Box." "People are not waiting, companies are not waiting to see what the outcome is."

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``More than 50 multinational companies are moving production out of China, including Apple, Nintendo and Dell, CNBC previously reported. Companies began announcing in May that they would move from China to Vietnam, as China and the U.S. stepped up tit-for-tat duties.

Brooks Running -- which is part of Warren Buffett's Berkshire Hathaway -- said in May it would be "predominantly in Vietnam by the end of the year," adding that about 8,000 jobs will move there from China.

Vietnam! So much better.

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iehi-feed-64808 Fri, 12 Jul 2019 15:28:42 GMT Trump Reveals Himself Banksters' Water-Carrier On Cryptos http://implode-explode.com/viewnews/2019-07-12_TrumpRevealsHimselfBankstersWaterCarrierOnCryptos.html iehi-feed-64807 Fri, 12 Jul 2019 12:33:32 GMT Facebook's Libra cryptocurrency project branded of ‘serious concern' by Federal Reserve http://implode-explode.com/viewnews/2019-07-12_FacebooksLibracryptocurrencyprojectbrandedofseriousconcernbyFede.html The social networking giant wants to debut the coin in 2020 once financial partnerships are cemented in place and the proposed wallets used to store Libra are established with the same security measures as today's traditional bank accounts.

However, the US Federal Reserve wants Facebook to put its foot on the brake until a number of concerns have been addressed.

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"Facebook has a couple billion-plus users, so I think you have for the first time the possibility of very broad adoption," Powell said. "It needs a careful look, so I strongly believe we all need to be taking our time with this."

Singapore, too, has concerns over the Libra project. Earlier this week, officials demanded that Facebook provide a more thorough explanation of Libra in order for the country to decide whether regulators need to investigate the proposal. 

However, Singapore's Monetary Authority of Singapore (MAS) said it is "open" to financial innovation, on the proviso that Facebook does not pose a threat to the local financial ecosystem.

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iehi-feed-64797 Tue, 09 Jul 2019 21:14:17 GMT This journalist has seen Trump's tax returns and says he's not as rich as he claims http://implode-explode.com/viewnews/2019-07-09_ThisjournalisthasseenTrumpstaxreturnsandsayshesnotasrichasheclai.html So in the context of a lawsuit that was specifically about the question of whether Trump was as rich as he said he was, the lawyers arguing that he wasn't as rich as he said he was wanted to see the tax returns and Trump did not want to hand them over.

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[In a deposition related to the lawsuit, Trump was asked] "Have you always been completely truthful in your public statements about your net worth," my attorneys asked Donald. "I try," was his reply. When they asked him about how he calculated his net worth, he noted that the figure "goes up and down with markets and with attitudes and with feelings, even my own feelings." Later he added that "even my own feelings affect my value to myself."

Boy, that final quote sounds a lot like some kind of snowflake!

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iehi-feed-64793 Sun, 07 Jul 2019 00:44:51 GMT What You Need to Earn to Be in the Top 1% http://implode-explode.com/viewnews/2019-07-06_WhatYouNeedtoEarntoBeintheTop1.html iehi-feed-64785 Mon, 01 Jul 2019 21:29:11 GMT Why Wall Street Owes Every U.S. Taxpayer $35,460 http://implode-explode.com/viewnews/2019-07-01_WhyWallStreetOwesEveryUSTaxpayer35460.html ... the average U.S. household has lost an estimated $4,236 in interest income due to the Fed's low interest rates (as opposed to a "normal" rate environment). In total, this has funneled $51.8 billion from the pockets of American savers into the coffers of Wall Street banks.

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According to a report from the People's Policy Project think tank, the wealth of the bottom 50% is down $900 billion over the past 30 years.

Meanwhile, the wealth of the top 1% has increased by $21 trillion. Digging deeper, we found that at least $5 trillion of this was taken away from average investors, like you and your fellow readers.

Without getting too deep into how this "theft" occurred, I can tell you that the financial elites created a private investment market. Then they restricted access to this massive market to only themselves... cutting the rest of America out of the deal.

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iehi-feed-64781 Sun, 30 Jun 2019 17:27:25 GMT Central bank plans to create digital currencies receive BIS endorsement http://implode-explode.com/viewnews/2019-06-30_CentralbankplanstocreatedigitalcurrenciesreceiveBISendorsement.html Global central banks may have to issue their own digital currencies sooner than expected, the general manager of the Bank for International Settlements has said, after Facebook recently unveiled plans to create its own stablecoin.

Agustín Carstens, who heads the BIS, known as the central bankers' bank, told the Financial Times that the organisation supported the efforts of the world's central banks in creating digital versions of state currencies.

"Many central banks are working on it; we are working on it, supporting them," Mr Carstens told the Financial Times. "And it might be that it is sooner than we think that there is a market and we need to be able to provide central bank digital currencies."

A number of central banks, including Sweden's Riksbank, are working on their own versions of digital currencies, which would work by offering the public direct access to central bank money. At present, only private sector lenders can borrow directly from monetary authorities.

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Facebook's plans to create Libra -- a stablecoin with its value pegged to a basket of as yet unspecified currencies backed by as yet unspecified assets -- have attracted attention from officials, including at the Basel-based BIS.

The BIS said in an extract on digital currencies, taken from its annual report, that coins backed by tech giants could "rapidly establish a dominant position" in global finance and pose a potential threat to competition, stability and social welfare.

"The issue is how will the currency be used? Will there be discovery of information, or data that can be used in credit provision and how will data privacy be protected?" Mr Carstens said. "A very simple way to regulate this is to start with anti-money laundering rules. That is a very immediate and very obvious concern."

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iehi-feed-64780 Fri, 28 Jun 2019 19:02:01 GMT Zimbabwe Bans All Foreign Currency, De-Dollarizes, Returns To Dreaded Zim http://implode-explode.com/viewnews/2019-06-28_ZimbabweBansAllForeignCurrencyDeDollarizesReturnsToDreadedZim.html Zimbabwe's government has taken the controversial decision to ban local trading in foreign currencies, including the US dollar, with immediate effect.

It has also reintroduced the Zimbabwe dollar, which was abandoned because of hyperinflation in 2009 when the country mainly adopted the US dollar and the South African rand.

The move has shocked Zimbabweans, who have little faith in a local currency - the exchange rate when the Zimbabwe dollar was scrapped was Z$35 quadrillion to $1.

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iehi-feed-64778 Wed, 19 Jun 2019 22:40:51 GMT Fed Holds Rates, But Signals Readiness To Cut (UNDER RELENTLESS TRUMP INTERFERENCE) http://implode-explode.com/viewnews/2019-06-19_FedHoldsRatesButSignalsReadinessToCutUNDERRELENTLESSTRUMPINTERFE.html "My colleagues and I have one overarching goal, to sustain the economic expansion," Powell told a press conference following the decision. He noted that apparent progress on trade talks had "turned to greater uncertainty" and many Fed officials "now see that the case for somewhat more accommodative policy has strengthened."

The shift followed attacks on the Fed by President Donald Trump for not doing more to bolster the economy and Tuesday's report by Bloomberg News that the president asked White House lawyers earlier this year to explore options for demoting Powell from the chairmanship.

Asked about the criticism, Powell said he thinks "the law is clear that I have a four-year term and I fully intend to serve it."

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iehi-feed-64769 Thu, 13 Jun 2019 16:11:29 GMT Japan Un-Publishes Government Report That Admitted Demographic and Pension Disaster http://implode-explode.com/viewnews/2019-06-13_JapanUnPublishesGovernmentReportThatAdmittedDemographicandPensio.html This year's ‘Annual Report on Ageing Society' plainly stated this reality; it was a brutally honest assessment of Japan's underfunded pension program.

The report went on to tell people that they needed to save their own money for retirement because the pension fund wouldn't be able to make ends meet.

This terrified a lot of Japanese workers and pensioners.

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Prime Minister Shinzo Abe apologized for the report, calling it "inaccurate and misleading."

And Finance Minister Taro Aso-- himself a pensioner at age 78 (though in typical Japanese form he looks like he's 45)-- simply un-published the report.

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iehi-feed-64762 Tue, 04 Jun 2019 23:43:21 GMT The shadow banks are back with another big bad credit bubble http://implode-explode.com/viewnews/2019-06-04_Theshadowbanksarebackwithanotherbigbadcreditbubble.html Middle-market lending, of course, is just part of the biggest expansion in corporate borrowing the U.S. economy has ever seen, a result of eight years of cheap and easy money engineered by the Fed and other central banks after the 2008 financial crisis.

The ratio of corporate borrowing to a variety of metrics -- profits and assets, book value or the size of the overall economy -- is at or near an all-time high. So is the riskiness of the loans, reflecting the amount of debt companies have taken on, the absence of covenants and the rosy assumptions made about the amount of cash flow companies will have to cover debt service.

Meanwhile, the difference in interest rates between the safest loans and the riskiest -- in financial jargon, the "spread" -- is at historically low levels, a reliable indication of too much money chasing too few good lending opportunities. According to the latest "financial stability" reports from the Federal Reserve and the International Monetary Fund, all of these measures have gotten worse in the last two years, with many flashing yellow and red on their dashboards of systemic financial risk.

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If all this newly borrowed money were being used to create new technology or enhance productivity, piling up all this debt might be a risk worth taking. But the evidence suggests that what it is mostly doing is artificially stimulating the economy. Companies have used much of this newly borrowed money to buy back their own shares, pay special dividends to private equity investors and acquire other companies, all of which have the effect of inflating stock prices. The recent wave of richly priced mergers and overpriced stock offerings, and the declining returns offered by recent commercial real estate deals, are all good indications of a credit bubble waiting to burst.

So, is this a replay of 2008?

... as before, this excess of supply relative to demand has led to a deterioration of lending standards that started in the shadow banking system and has now spread to regulated banks anxious about a further reduction in their market share. (My favorite stat: During the first three months of this year, according to Trepp, a data company, interest-only loans -- loans requiring no payback of principal until the loan is due -- accounted for three-quarters of all new commercial real estate loans.)

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Perhaps the biggest similarity between the previous credit bubble and this one, however, is the stubborn reluctance of regulators to let some of the air out of the credit bubble before it bursts.

... The [Financial Stability Oversight] Council is headed by Treasury Secretary Stephen Mnuchin, a former Goldman Sachs investment banker who eventually made more than $10 million buying and selling -- with partners -- a California bank that, after engaging in aggressive mortgage lending, failed during the last housing crisis.

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Powell, Quarles and Mnuchin are overconfident for the same reason Fed chairmen Alan Greenspan and Ben Bernanke and Treasury Secretary Henry Paulson were overconfident during the Bush years.

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iehi-feed-64761 Tue, 04 Jun 2019 21:30:13 GMT GOP lawmakers discuss vote to block Trump's new tariffs on Mexico, in what would be its first real act of defiance http://implode-explode.com/viewnews/2019-06-04_GOPlawmakersdiscussvotetoblockTrumpsnewtariffsonMexicoinwhatwoul.html ``Congressional Republicans have begun discussing whether they may have to vote to block President Trump's planned new tariffs on Mexico, potentially igniting a second standoff this year over Trump's use of executive powers to circumvent Congress, people familiar with the talks said.

The vote, which would be the GOP's most dramatic act of defiance since Trump took office, could also have the effect of blocking billions of dollars in border wall funding that the president had announced in February when he declared a national emergency at the southern border, said the people, who spoke on the condition of anonymity because the talks are private.

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Trump's plans to impose tariffs on Mexico -- with which the United States has a free-trade agreement -- rely on the president's declaration of a national emergency at the border... Congress passed [a blocking] resolution in March after Trump reallocated the border wall funds, but he vetoed it. Now, as frustration on Capitol Hill grows over Trump's latest tariff threat, a second vote could potentially command a veto-proof majority to nullify the national emergency, which in turn could undercut both the border-wall effort and the new tariffs.

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iehi-feed-64756 Sun, 02 Jun 2019 20:39:47 GMT Why the tariffs are bad news for America and for Donald Trump http://implode-explode.com/viewnews/2019-06-02_WhythetariffsarebadnewsforAmericaandforDonaldTrump.html iehi-feed-64752 Fri, 31 May 2019 14:06:11 GMT Tariffs, Mr. Trump's Miracle Cure http://implode-explode.com/viewnews/2019-05-31_TariffsMrTrumpsMiracleCure.html iehi-feed-64750 Thu, 30 May 2019 17:29:24 GMT Markets Have Gone Nuts: Junk-Bonds Are in Party Mood, Treasuries Clamor for Doom & Rate Cuts | Wolf Street http://implode-explode.com/viewnews/2019-05-30_MarketsHaveGoneNutsJunkBondsAreinPartyMoodTreasuriesClamorforDoo.html So now, the Treasury market with its inverted yield curve and declining yields on the long end is clamoring for rate cuts, and it's acting as if a recession were imminent or has already started. But the junk bond market is acting as if it were a big boom party, and risks are just minor company-specific issues, rather than overall economic issues.

But they cannot both be right. So what gives? ... if bond markets are seen as a predictor of the next downturn, then either the junk bond market or the Treasury market is wrong.

If the junk bond market is wrong, it would be set up for a painful reckoning.

But if the Treasury market -- and the Treasury yield curve -- is wrong, there could be an ugly snap-back in longer-term Treasury yields, and related interest rates, such as mortgage rates.

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iehi-feed-64748 Thu, 30 May 2019 17:24:16 GMT The Bond Market Is Trying to Tell Us Something (Worry) http://implode-explode.com/viewnews/2019-05-30_TheBondMarketIsTryingtoTellUsSomethingWorry.html ...falling yields are to the economy what barometric pressure is to the weather: When they drop it's often a sign that some kind of storm is coming.

And lately, they've been falling fast. Everywhere. In Japan, Britain, Australia, Germany and the United States. Long-term yields on government bonds around the world are hitting some of their lowest levels in recent years.

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Today, in the United States, a government bond that's due in three months will pay a higher rate than a government bond that is due in 10 years. These occurrences, called inversions, are rare, and they have grabbed Wall Street's attention for one simple reason: They have preceded every recession over the last 60 years (although some of those downturns took up to two years to materialize).

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Since the Fed did an abrupt about-face on raising interest rates, investors have been slowly increasing the odds they put on the Fed actually starting to cut rates. And according to the bond market, those cuts are almost a done deal.

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iehi-feed-64745 Wed, 29 May 2019 20:22:22 GMT Trump is so abhorrent, even a stellar economy can't save him http://implode-explode.com/viewnews/2019-05-29_Trumpissoabhorrentevenastellareconomycantsavehim.html iehi-feed-64740 Sat, 25 May 2019 14:10:55 GMT Judge blocks $1B in funding diverted under emergency order from being used to build border wall http://implode-explode.com/viewnews/2019-05-25_Judgeblocks1Binfundingdivertedunderemergencyorderfrombeingusedto.html