Implode-Explode Heavy Industries news feed http://implode-explode.com/ Tracking the many faces of the global credit implosion. en-us iehi-feed-64222 Wed, 19 Sep 2018 17:13:03 GMT CNBC Just Posted Fake Inflation News. What Are The Implications for Fed Dovishness? | Lee Adler http://implode-explode.com/viewnews/2018-09-20_CNBCJustPostedFakeInflationNewsWhatAreTheImplicationsforFedDovis.html ... is there any evidence of persistence here? Or is there any evidence that this month's headline reading was even material in the first place? A quick answer to the second question requiring no deeper analysis is...

No. There's no evidence that this was even material... In other words, the rally was based on the idea that the Fed might not tighten as fast or as much if inflation is really slowing. It's perfectly obvious to us that it isn't.

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There's simply no reason in the CPI data to believe that the Fed will back off from its tightening regimen. The longer the market stays high and the more it rises, the greater the risk of a severe adjustment.

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iehi-feed-64220 Tue, 18 Sep 2018 23:43:08 GMT For Bitcoin, FOMO Is Being Replaced With FUD (Fear, Uncertainty And Doubt) http://implode-explode.com/viewnews/2018-09-19_ForBitcoinFOMOIsBeingReplacedWithFUDFearUncertaintyAndDoubt.html FUD says Mt. Gox's billion dollars of bitcoin will crash the price. I hope so, I really do, because I'm still waiting for some cheap bitcoins; $2,500 a coin is cheap enough for me.

I'm still waiting, because $1 billion of bitcoin will evaporate in a week or two of selling. $2 or $3 billion of bitcoin gets transacted a day... Already 82% of all bitcoins are mined and around May 2020 new supply will halve. You can love or hate that, but bitcoin is solid deflationary money. We shouldn't hold the ‘digital gold' moniker against it. Bitcoin is a global currency, with increasing acceptance, a huge brand up there with Trump and the NFL, a global audience and a record of appreciation.

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iehi-feed-64215 Sun, 16 Sep 2018 15:05:37 GMT The 2008 crisis really did start off worse than the Great Depression http://implode-explode.com/viewnews/2018-09-16_The2008crisisreallydidstartoffworsethantheGreatDepression.html ``As economists Barry Eichengreen and Kevin O'Rourke have shown, global stocks, trade and output actually all fell faster in 2008 than they had in 1929. Maybe the best example, though, of how quickly things turned was that South Korea, which didn't have any exposure to subprime mortgages but did have banks that depended on borrowing the money they needed from markets, went from growing at a 3.5 percent pace right before the Lehman Bros. collapse to shrinking at a 12.7 percent pace right after.''

This is really fascinating. The debate is between those who believe "policymakers deserve credit for doing enough to stop this from turning into a Second Great Depression", and "those who say policymakers didn't do enough to stop this from being far worse than it needed to be." There is apparently no space for those who think policymakers did too much, or even that they screwed up royally in creating the conditions for the collapse in the first place. Be afraid.

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iehi-feed-64214 Sun, 16 Sep 2018 14:58:57 GMT Polarization in Poland: A Warning From Europe http://implode-explode.com/viewnews/2018-09-16_PolarizationinPolandAWarningFromEurope.html At that moment, when Poland was on the cusp of joining the West, it felt as if we were all on the same team. We agreed about democracy, about the road to prosperity, about the way things were going... That moment has passed. Nearly two decades later, I would now cross the street to avoid some of the people who were at my New Year's Eve party. They, in turn, would not only refuse to enter my house, they would be embarrassed to admit they had ever been there.

...

Some of my New Year's Eve guests continued, as my husband and I did, to support the pro-European, pro-rule-of-law, pro-market center-right--remaining in political parties that aligned, more or less, with European Christian Democrats, with the liberal parties of Germany and the Netherlands, and with the Republican Party of John McCain. Some now consider themselves center-left. But others wound up in a different place, supporting a nativist party called Law and Justice--a party that has moved dramatically away from the positions it held when it first briefly ran the government, from 2005 to 2007, and when it occupied the presidency (not the same thing in Poland), from 2005 to 2010.

Since then, Law and Justice has embraced a new set of ideas, not just xenophobic and deeply suspicious of the rest of Europe but also openly authoritarian. After the party won a slim parliamentary majority in 2015, its leaders violated the constitution by appointing new judges to the constitutional court. Later, it used a similarly unconstitutional playbook to attempt to pack the Polish Supreme Court. It took over the state public broadcaster, Telewizja Polska; fired popular presenters; and began running unabashed propaganda, sprinkled with easily disprovable lies, at taxpayers' expense. The government earned international notoriety when it adopted a law curtailing public debate about the Holocaust. Although the law was eventually changed under American pressure, it enjoyed broad support by Law and Justice's ideological base--the journalists, writers, and thinkers, including some of my party guests, who believe anti-Polish forces seek to blame Poland for Auschwitz.

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iehi-feed-64209 Sat, 15 Sep 2018 14:51:51 GMT JPMorgan Sees Liquidity Wildcard in Gauging Depth of Next Crisis http://implode-explode.com/viewnews/2018-09-15_JPMorganSeesLiquidityWildcardinGaugingDepthofNextCrisis.html ``A decade after the collapse of Lehman Brothers sparked a plunge in markets and a raft of emergency measures, strategists at the bank have created a model aimed at gauging the timing and severity of the next financial crisis. And they reckon investors should pencil it in for 2020.

The good news is, the next one will probably generate a somewhat less painful hit than past episodes, according to their analysis. The bad news? Diminished financial market liquidity since the 2008 implosion is a "wildcard" that's tough to game out...

Assuming an average-length recession, the model came up with the following peak-to-trough performance estimates for different asset classes in the next crisis, according to the note:

U.S. stock slide of about 20 percent.

A jump in U.S. corporate-bond yield premiums of about 1.15 percentage points.

A 35 percent tumble in energy prices and 29 percent slump in base metals.

A 2.79 percentage point widening in spreads on emerging-nation government debt.

A 48 percent slide in emerging-market stocks, and a 14.4 percent drop in emerging currencies.

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[But] JPMorgan's Marko Kolanovic has previously concluded that the big shift away from actively managed investing -- through the rise of index funds, exchange-traded funds and quantitative-based trading strategies -- has escalated the danger of market disruptions. He and his colleagues wrote in a separate note Monday of the potential for a future "Great Liquidity Crisis." ... This change has "eliminated a large pool of assets that would be standing ready to buy cheap public securities and backstop a market disruption," Chang and Loeys warned.

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iehi-feed-64202 Mon, 10 Sep 2018 21:07:23 GMT Elon Musk smoking weed has much more dire consequences than you realize http://implode-explode.com/viewnews/2018-09-11_ElonMusksmokingweedhasmuchmoredireconsequencesthanyourealize.html I want to be clear. This isn't about whether or not Elon puffed weed. Honestly, who cares. It's just a plant. What's important is that this is more demonstrably erratic and manic behavior from the visionary founder. He's just showing A LOT of inconsistencies.

And in addition to Tesla, the government is gunning for Zuckerberg and Facebook. Snapchat is proving to be a disastrous investment (down nearly 65% from its IPO). WeWork bonds just got downgraded to junk... We're starting to see major cracks in tech investors' faith.

This is a MAJOR turn that's taken place over the last couple of months. And if tech stocks go down, the market is going with it. Tech stocks, in particular "FAANG" stocks -- Facebook, Amazon, Apple, Netflix, Google -- have been holding this market up for a long time. Tech stocks have been responsible for around 95% of stock market gains this year.

...

In addition to investor's losing faith, the government is also breathing down the necks of these tech giants... Senator Bernie Sanders introduced the cutely named Stop Bad Employers by Zeroing Out Subsidies Act (aka Stop BEZOS Act) that aims to tax companies for low-wage employees receiving government assistance.

...

And now companies are viewing their visionary founders as liabilities... Apparently investors and boards have woken up to the fact that these guys are fallible (and mortal), so there's more talk of key man risk insurance should anything happen to them.

It's been nothing but buttercups and unicorns for tech stocks these past few years. And these recent developments go to show you, everything moves in cycles. And we may be entering a downcycle in tech.

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iehi-feed-64200 Mon, 10 Sep 2018 18:21:39 GMT Trump's latest boast about the economy isn't even close to accurate http://implode-explode.com/viewnews/2018-09-11_Trumpslatestboastabouttheeconomyisntevenclosetoaccurate.html The overall US economy grew at a 4.2% annual rate in the second quarter. Unemployment was between 3.8% and 4% during the quarter, and it came in at 3.9% in August. That's all good news.

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But Trump got it wrong -- way wrong -- when he said it hasn't happened in a century. In the last 70 years, it's happened in at least 62 quarters, most recently in 2006.

Yes, and this is assuming GDP won't simply get revised down...

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iehi-feed-64198 Mon, 10 Sep 2018 04:05:41 GMT Cryptocurrency Is Not Conducive for Terrorism, Says Defense Expert to U.S. Congress http://implode-explode.com/viewnews/2018-09-10_CryptocurrencyIsNotConduciveforTerrorismSaysDefenseExperttoUSCon.html iehi-feed-64186 Wed, 05 Sep 2018 16:24:37 GMT Doug Noland: Weekly Commentary: "Unassailable" (Market Bubble) http://implode-explode.com/viewnews/2018-09-06_DougNolandWeeklyCommentaryUnassailableMarketBubble.html Here in the U.S., the bullish consensus view holds that a faltering EM doesn't matter. The U.S. economy is strong and largely immune to global factors. Profits are booming. Prospects are unequivocally positive. The mindset is uncomfortably reminiscent of the "subprime doesn't matter" blather heading right into a devastating crisis. It's worth recalling that U.S. GDP exceeded 2% in 2007's 2nd, 3rd and 4th quarters, with Q4's 2.5% expansion the strongest in a year.

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Mr. Buffett, along with virtually everyone, was blindsided by the 2008 crisis. This should matter but doesn't. Amazingly, another crisis is viewed these days as an opportunity rather than a risk. Stocks, as they always do, will come roaring back. The last crisis was only an issue for those that lacked conviction and sold stocks in an irrational panic.

At this point, the bullish view that stocks must be bought and held for the long-term has surpassed rational. It's Unassailable. Your price entry point matters little - the global backdrop even less. Politics little, geopolitics less. Holding cash is stupid, shorting much worse. Indeed, to not bet confidently on the U.S. for the long-term is an act of self-destructive irrationality. A risk-based approach, to be sure, would lead to irrational decisions. It's been proven - repeatedly. Don't sell.

I believe we're nearing the end of an historic multi-decade Bubble. Risk is incredibly high, a view that has by now been thoroughly discredited. A key factor boosting risk is the overwhelming consensus view that risk is virtually nonexistent. In stark contrast, I believe this protracted period of serial boom and bust cycles has led to the accumulation of financial and economic distortions and deep structural impairment.

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iehi-feed-64180 Fri, 31 Aug 2018 21:47:26 GMT Impeachment? Markets Don't Care... http://implode-explode.com/viewnews/2018-09-01_ImpeachmentMarketsDontCare.html iehi-feed-64176 Thu, 30 Aug 2018 16:45:00 GMT Trump's Mexico Trade Deal Looks Like a Lemon http://implode-explode.com/viewnews/2018-08-31_TrumpsMexicoTradeDealLooksLikeaLemon.html Based on the NHTSA's data, there are just three models made in Mexico that are currently exempt but would attract tariffs under the new regime: Nissan Motor Co.'s Versa Sedan, Audi AG's SQ5, and Fiat Chrysler Automobiles NV's Fiat 500. Of these, only the Versa sells more than a handful of models in the U.S., with 106,772 vehicles shipped in 2017.

...

The wage rules are likely to be tougher, though even there the devil is in the detail. Almost all non-Nafta content in Mexican-made cars sold in the U.S. comes from Germany, Japan or South Korea, where total compensation typically takes pay well above $16 an hour. So unless the requirement relates solely to Nafta workers earning at least $16 per hour (full details haven't been released yet), the rules will only really affect vehicles that are at least 55 percent made in Mexico.

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iehi-feed-64166 Fri, 10 Aug 2018 14:52:43 GMT Investors really aren't buying Musk's "plan" for Tesla http://implode-explode.com/viewnews/2018-08-10_InvestorsreallyarentbuyingMusksplanforTesla.html In two days, the stock has erased the 8.6% gain that followed Musk's surprise announcement on Twitter that he had secured funding to take the electric car maker off the public market. That includes a 4.8% drop on Thursday.

"The number one issue is simply that the investment community is uncertain about where this funding" is coming from, said Rebecca Lindland, an industry analyst with Kelley Blue Book.

...

Investors also may have been spooked by reports that the SEC is looking into Tesla.

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iehi-feed-64164 Fri, 10 Aug 2018 02:05:42 GMT Trump's In-Laws Get "Chain Migration" Citizenship http://implode-explode.com/viewnews/2018-08-09_TrumpsInLawsGetChainMigrationCitizenship.html iehi-feed-64158 Sat, 04 Aug 2018 21:26:53 GMT Kushners Unload 666 Fifth Ave. to Brookfield in 99-Year Lease http://implode-explode.com/viewnews/2018-08-04_KushnersUnload666FifthAvetoBrookfieldin99YearLease.html Rather than pay the rent on an annual basis for the so-called leasehold, Brookfield will give Kushner Cos. an upfront sum that will allow the company to pay off outstanding debt on the building, according to people with knowledge of the matter who asked not to be identified because the details are private.

The Toronto-based investor is prepared to inject up to $700 million in equity and will essentially take control of the building unencumbered with a 100 percent leasehold, the people said. A Brookfield representative declined to comment.

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The building lost $25 million last year and has almost always been unprofitable. As a first step in its latest restructuring plan, Kushner Cos. said in June it would buy out Vornado. Vornado continues to own the retail portion of the property.

The cash infusion from Brookfield comes just in time, with a $1.2 billion mortgage on the property coming due in February.

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The company intends to update the aging property with lighter and airier offices that would command higher rents, the people familiar with the matter said. The update would be similar to those Brookfield has made to properties including Manhattan's old Daily News Building, they said, adding that the Kushner Cos. would not participate in gains from the work until Brookfield earns a return on its investment.

Wonder if this results in a softening of the administrations recent "anti-Canadian" stance...

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iehi-feed-64153 Sat, 28 Jul 2018 04:55:39 GMT Trump's 4+% Growth: Yet Another Scam http://implode-explode.com/viewnews/2018-07-28_Trumps4GrowthYetAnotherScam.html there's reason to think the forces driving last quarter's expansion lack staying power. A good chunk of the headline growth in the second quarter was boosted by a confluence of one-off and short-term measures by the US president.

Take trade, for example. Net exports contributed a whopping 1 percentage point to real GDP growth last quarter--the most since 2013. But there's fair reason to suspect that this isn't due to an out-of-the-blue resurgence of US manufacturing, particularly given that the dollar was fairly strong versus other major currencies during the quarter. Much of this could instead be a knock-on effect of Trump's trade war, as importers snapped up US goods before looming tariffs drove up prices. For example, soybean exports have jumped as buyers tried to get out ahead of the retaliatory tariffs on the agriculture product by China.

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overall investment fell versus Q1--meaning it dragged down last quarter's real GDP growth. Growth in equipment investment was feeble, suggesting that tax cuts haven't yet brought forth a US manufacturing revival. More ominously, residential investment--another big engine of US growth--fell by 1.1 percentage points, extending a slump in housing spending that began in Q2 2016.

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iehi-feed-64146 Tue, 24 Jul 2018 23:19:04 GMT How Ivanka Trump's Loyalty to Her Father Killed Her Fashion Label http://implode-explode.com/viewnews/2018-07-24_HowIvankaTrumpsLoyaltytoHerFatherKilledHerFashionLabel.html iehi-feed-64143 Tue, 24 Jul 2018 03:11:42 GMT The Trump Tax Cuts in Full Swing. But These Debts Don't Look Good... http://implode-explode.com/viewnews/2018-07-23_TheTrumpTaxCutsinFullSwingButTheseDebtsDontLookGood.html The Monthly Treasury Statement provides an obvious warning sign of things ahead. Social security tax collections are running soft... If wages rose 2.7% and social security tax collections rose just 2.2%, that would mean only one thing. There must have been fewer jobs.  We know that the BLS doesn't see it that way. Maybe the wage inflation rate is overstated. And maybe there's an explanation I had not thought of. But this data at least raises questions about the reported strength of the jobs data.

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Under its balance sheet "normalization" program, that I liken to a medieval bloodletting, the Fed may be reducing the supply of money into a weakening economy. That supply of money, aka liquidity, is the money that fuels demand for stocks, and supports stock prices. Less money must ultimately result in lower prices, the present margin driven rally notwithstanding.

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iehi-feed-64142 Tue, 24 Jul 2018 02:52:14 GMT Trump's Tax Cut Hasn't Done Anything for Workers http://implode-explode.com/viewnews/2018-07-23_TrumpsTaxCutHasntDoneAnythingforWorkers.html Official data for the second quarter isn't available yet, but private data isn't looking encouraging. PayScale's index of real wages shows a dramatic deterioration [of almost 10%] in the period... growth hasn't really sped up either -- real per capita gross domestic product growth was only 1.34 percent in the first quarter, below 2017's pace, and considerably less than in 2014 and 2015...

This tepid rate of growth means that the tax cut is unlikely to pay for itself. By this point, almost all economists recognize that income tax cuts no longer stimulate the economy enough to reduce deficits, as supply-siders thought they would back in the 1980s. But economists still held out some hope that lowering the corporate tax, which is believed to be more harmful than the personal income tax, would have a more salutary effect on the budget. Unfortunately, that hope appears to be fading, as fiscal deficits increase rapidly.

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iehi-feed-64125 Wed, 18 Jul 2018 15:54:06 GMT Sea-Level Rise Could Knock Out Miami, NYC, Seattle Internet, Study Warns http://implode-explode.com/viewnews/2018-07-18_SeaLevelRiseCouldKnockOutMiamiNYCSeattleInternetStudyWarns.html iehi-feed-64117 Sun, 15 Jul 2018 19:06:19 GMT Of Welfare Queens and Conservative Lies http://implode-explode.com/viewnews/2018-07-15_OfWelfareQueensandConservativeLies.html