Implode-Explode Heavy Industries news feed http://implode-explode.com/ Tracking the many faces of the global credit implosion. en-us iehi-feed-63647 Mon, 19 Feb 2018 18:00:13 GMT Goldman Sachs raises a red flag over U.S. government spending http://implode-explode.com/viewnews/2018-02-19_GoldmanSachsraisesaredflagoverUSgovernmentspending.html U.S. fiscal policy is headed for "uncharted territory."That's how a team of economists at Goldman Sachs, led by Jan Hatzius, have described the government's current spending and tax plans, as they also warned that the growth kick for the economy from those strategies will eventually fade.

"Congress has voted twice in the last two months to substantially expand the budget deficit despite an already elevated debt level and an economy that shows no need for additional fiscal stimulus," said the Goldman economists. Tax cuts signed into law by U.S. President Donald Trump in December will add $1.5 trillion to the deficit over a 10-year period.

Goldman economists expect the U.S. [deficit] level to hit 5.2% of gross domestic product by 2019, and keep climbing gradually from there. In the past, a strengthening economy and rising debt burden has prompted Congress to raise taxes and cut spending. But this time, the opposite has occurred, which will leave revenues low for a few years and push spending to its "highest point in decades," they said.

]]>
iehi-feed-63646 Mon, 19 Feb 2018 17:44:48 GMT Gibraltar To Introduce ‘World's First' ICO Regulations http://implode-explode.com/viewnews/2018-02-19_GibraltarToIntroduceWorldsFirstICORegulations.html The draft law, aiming to regulate the promotion, sale and distribution of digital tokens on the territory of Gibraltar, will be the first ever set of regulations developed specifically for ICOs, the lawmakers claim.

One of the principal aspects of Gibraltar's ICO regulations will be the introduction of the concept of "authorized sponsors," who are supposed to be "responsible for assuring compliance with disclosure and financial crime rules," said Sian Jones, one of GFSC's senior advisors.

The draft law will also establish disclosure rules that will require ICO projects to provide "adequate, accurate and balanced information to anyone buying tokens", the government and Financial Services Commission said to Reuters.

]]>
iehi-feed-63645 Mon, 19 Feb 2018 17:43:02 GMT Bitcoin price hits $11,000 for the first time since January http://implode-explode.com/viewnews/2018-02-19_Bitcoinpricehits11000forthefirsttimesinceJanuary.html The price of the cryptocurrency went as high as $11,279.18 on Sunday, its most elevated level since January 30, according to CoinDesk's bitcoin price index, which tracks prices from four major cryptocurrency exchanges... Bitcoin is up over 80 percent since it bottomed at $5.947.40 on February 6.

In South Korea, a key market for bitcoin, there were fears that an outright ban on cryptocurrency trading could come into effect. But as new measures were implemented, they were less strict than investors thought, and many sounded a positive note.

]]>
iehi-feed-63641 Sun, 18 Feb 2018 18:25:37 GMT Wall Street's Regulators Move Deeper Into Darkness Under Trump http://implode-explode.com/viewnews/2018-02-18_WallStreetsRegulatorsMoveDeeperIntoDarknessUnderTrump.html ... All of the above [failures of transparency in the wake of the 2008 Financial Crisis] occurred under the Obama administration. It's getting worse under President Trump. Yesterday Bloomberg News reported that the SEC is now settling cases against banks and hedge funds without issuing press releases as it has historically done, ostensibly to save the firms embarrassment and deny the public the ability to see that wrongdoing continues unabated on Wall Street despite the huge fines following the financial crash. Last month, Susan Antilla and Gary Rivlin wrote an in-depth report for The Intercept showing how Trump's SEC is allowing more secrecy in what Wall Street itself has to report to the public.

Now the U.S. Treasury, headed by the former foreclosure king, Steve Mnuchin, has announced it plans to hold a secret meeting of the Financial Stability Oversight Council (F-SOC) next Wednesday, February 21. F-SOC was created under the Dodd-Frank financial reform legislation of 2010 to make sure the financial collapse of 2008 would never happen again. That collapse was the worst economic event for the United States since the Great Depression of the 1930s. Given the financial devastation to citizens from that collapse, the public has every right to know about any new financial stability threats facing the nation.

...

[Meanwhile,] the 24/7 cable news programs are consumed with investigating Russia. We're not saying that's not important but it's happening while nothing is being reported about the growing dangers on Wall Street. The Republican-led Congress is consumed with funding wars against foreign terrorists. But it was neither Russia nor foreign terrorists that dealt America the two worst financial and economic crises in its history: the 1929-1932 and 2008-2010 Wall Street collapses and ensuing economic calamities. These occurred from well-documented illegal acts by Wall Street firms as their Federal regulators wore blindfolds.

]]>
iehi-feed-63640 Sun, 18 Feb 2018 14:07:09 GMT The WeWork Manifesto: First, Office Space. Next, the World http://implode-explode.com/viewnews/2018-02-18_TheWeWorkManifestoFirstOfficeSpaceNexttheWorld.html When Dock 72 [in Brooklyn] is completed this year, if the aggressive timeline holds, it will represent the fullest expression of Mr. Neumann's expansive vision to date. There will be an enormous co-working space, a luxury spa and large offices, for other companies like IBM and Verizon, that are designed and run by WeWork. There will be a juice bar, a real bar, a gym with a boxing studio, an outdoor basketball court and panoramic vistas of Manhattan. There will be restaurants and maybe even dry cleaning services and a barbershop.

...

It may sound simplistic, but around the globe, companies are buying whatever it is that Mr. Neumann and his co-founder, Miguel McKelvey, are selling. WeWork has rapidly expanded to 20 countries, assembled a formidable executive team and attracted some 200,000 members. Big companies like JPMorgan Chase and Siemens are signing on as tenants, and revenues are growing fast, expected to top $2.3 billion this year.

WeWork last year bought the iconic Lord & Taylor building on Fifth Avenue in Manhattan, which is being transformed into the company's new headquarters. That deal was made possible in part by a recent $4.4 billion investment from SoftBank, the Japanese technology group led by the enigmatic billionaire Masayoshi Son.

Already the company has started WeLive, its residential offering, and Rise, its gym. It acquired Meetup, the social network that facilitates in-person gatherings, and the Flatiron School, a coding academy. Still to come: WeGrow, the company's for-profit elementary school, set to open in September. WeWork has even invested in plans to create giant wave pools for inland surfing.

...

As WeWork expands in all directions, it faces persistent questions about its rich valuation and the durability of its business model. Critics argue that the company does little more than corporate real estate arbitrage -- leasing a space, spiffing it up, then subleasing it out to other tenants. The company owns hardly any properties, giving it precious few hard assets. Its growth projections strike many as unattainable, and it has missed expectations before. A number of upstarts loom as potential competitors, seeking to replicate WeWork's success. And many WeWork tenants are unproven start-ups that could quickly fold.

...

IWG, a publicly traded co-working company that has more members and more real estate than WeWork, is valued at just $2 billion. Yet Mr. Neumann has convinced investors that WeWork is worth 10 times that figure.

...

Indeed, to assess WeWork by conventional metrics is to miss the point, according to Mr. Neumann. WeWork isn't really a real estate company. It's a state of consciousness, he argues, a generation of interconnected emotionally intelligent entrepreneurs. And Mr. Neumann, with his combination of inspiration and chutzpah, wants to transform not just the way we work and live, but the very world we live in.

]]>
iehi-feed-63639 Sun, 18 Feb 2018 02:28:35 GMT Winn-Dixie and Tops Owners Are Said to Prepare for Bankruptcy http://implode-explode.com/viewnews/2018-02-17_WinnDixieandTopsOwnersAreSaidtoPrepareforBankruptcy.html As part of the upheaval, Bi-Lo is planning to shut almost 200 stores -- either before or after its filing -- one person said. The business, which went bankrupt in previous incarnations in 2005 and 2009, may still find a way to restructure its debt out of court.

Bi-Lo is laboring under more than $1 billion in debt following its 2005 buyout by Lone Star Funds. The company and its creditors have held talks to discuss a possible debt-to-equity swap, as well as alternatives such as asset sales, Bloomberg reported last year.

...

Tops was founded by Italian immigrant Ferrante Castellani, who opened its first store almost a century ago in Niagara Falls. The Williamsville, New York-based chain runs about 170 grocery stores with more than 14,000 employees in the Northeast, according to regulatory filings last year.

Buyouts by Morgan Stanley -- and later by the company's own managers -- left Tops straining to keep up with debt payments. And the industry's intense competition made it hard to offset the burden by raising prices.

Another blow to sales came when the U.S. government cut food-stamp subsidies, whose users contribute about 10 percent of annual revenue. Since then, the Trump administration has contemplated even more reductions.

Morgan Stanley Private Equity bought Tops from Dutch retailer Koninklijke Ahold NV in 2007 for $310 million. Tops expanded quickly under its new owner, from 71 outlets in 2007 to more than 150 by 2013, and operating results initially improved.

But same-store sales began to stall, and debt was used to help finance at least $375 million in dividends for its private-equity owners. Management bought out Morgan Stanley in 2013 through another leveraged transaction.

At Bi-Lo, Lone Star piped in $150 million when the grocer exited Chapter 11 the first time, and invested $275 million to help fund the purchase of Winn-Dixie in 2012. But it probably will still come out ahead, having paid itself at least $800 million since 2012, along with management fees it's collected, according to regulatory filings.

]]>
iehi-feed-63637 Sat, 17 Feb 2018 16:32:37 GMT Telegram has raised an initial $850M for its billion-dollar ICO... Before the ICO http://implode-explode.com/viewnews/2018-02-17_Telegramhasraisedaninitial850MforitsbilliondollarICOBeforetheICO.html This initial sum is most likely the pre-sale stage of the ICO which, as TechCrunch reported on extensively and in detail last month, was targeted at venture capital firms and top figures in the investment community who were given deep discounts to buy Telegram's Gram token. The pre-sale was originally targeted at raising $600 million, but demand pushed the figure up to $850 million, according to a Bloomberg report.

Telegram initially planned to raise a further $600 million to develop its TON project via a public sale that starts in March, according to documents seen by TechCrunch, but it remains to be seen whether that figure will be adjusted. Bloomberg previously suggested the public sale component would expand to $1.15 billion, bringing the total raised to nearly $2 billion if successful.

]]>
iehi-feed-63634 Thu, 15 Feb 2018 22:15:06 GMT Donald Trump 'Strongly' Favors Imposing Online Sales Tax, Mnuchin Says http://implode-explode.com/viewnews/2018-02-15_DonaldTrumpStronglyFavorsImposingOnlineSalesTaxMnuchinSays.html President Donald Trump "feels strongly" that the U.S. should impose a sales tax on purchases made over the Internet, Treasury Secretary Steven Mnuchin said Thursday.

Mnuchin, speaking at a hearing before the House Ways and Means Committee, said he has spoken personally with Trump about the issue, and that the president "does feel strongly" that the tax should be applied.

...

Amazon began collecting sales taxes on purchases in all states that levy them earlier last year, despite an exemption that allows online retailers to avoid collecting them in places where they don't have a physical presence. But Amazon still avoids charging shoppers sales taxes when they buy from one of its third-party vendors -- sales that make up about half the company's volume... The Supreme Court [has] said states couldn't require out-of-state retailers to collect sales taxes from consumers unless those retailers had a physical presence -- through branches, warehouses or employees -- where the consumers were located.

Kind of ironic that just to "get" Jeff Bezos, Trump would essentially negate the meagre value of the tax cuts he endorsed on the non-wealthy...

]]>
iehi-feed-63633 Wed, 14 Feb 2018 23:10:24 GMT Terrified of Bitcoin, banks forced to innovate for the first time in 40+ years http://implode-explode.com/viewnews/2018-02-14_TerrifiedofBitcoinbanksforcedtoinnovateforthefirsttimein40years.html The rapid rise of Bitcoin and other cryptocurrencies proved to the banking system that it's possible to conduct real-time [or near-real-time] transactions, and not have to wait 2-5 days for a payment to clear.

...

When the CEO of the company launching RTP in the US announced the platform, he admitted that the "RTP system will be the first new payments system in the U.S. in more than 40 years."

That's utterly pathetic. The Internet has been around for 25 years. Even PayPal is nearly 20 years old.

]]>
iehi-feed-63632 Wed, 14 Feb 2018 23:09:12 GMT Rumored-Struggling HNA Group of China sells Upper East Side NYC mansion for $90M http://implode-explode.com/viewnews/2018-02-14_RumoredStrugglingHNAGroupofChinasellsUpperEastSideNYCmansionfor9.html HNA bought the 18,860-square-foot mansion at 19 East 64th Street from art heir David Wildenstein in April 2017 for $79.5 million and planned to use it as an office. The company funded the deal with a $50 million mortgage from Ullico.

Bloomberg recently reported that HNA plans to sell $4 billion worth of U.S. properties to help pay off its mounting debt. That includes office tower 245 Park Avenue, which the company bought for $2.2 billion in May.

]]>
iehi-feed-63630 Wed, 14 Feb 2018 21:12:21 GMT Rumors Grow that the U.S. Fed is Propping Up the Stock Market http://implode-explode.com/viewnews/2018-02-14_RumorsGrowthattheUSFedisProppingUptheStockMarket.html According to a research report released last week by BNY Mellon in collaboration with the University of Cambridge's Judge Business School, 39 percent of central banks surveyed are now investing in stocks and 72 percent "reported use of derivatives as part of their investment management activities." It is likely that interest rate swaps are the more common derivatives being used by central banks. However, S&P 500 futures contracts are also derivatives and would be the most efficient means of propping up stock prices and/or leveraging a directional bet in stocks.

...

There are many fundamental reasons to distrust central banks meddling in what are supposed to be free markets. For one thing, U.S. securities laws and regulators are not set up to police central banks. But more importantly, with the power to create money out of thin air, what is to stop central banks from effectively becoming the stock market, killing off its very reason for existing: as a reliable pricing mechanism. Just as the central bank of Japan has boosted its stock market with a $50 billion a year stock purchase program and Switzerland and Israel keep ratcheting up the percentage of reserves they are committing to stocks, the central banks may have doomed themselves and the stock market by failing to address the most crucial part of this strategy: an exit plan.

]]>
iehi-feed-63626 Tue, 13 Feb 2018 23:13:42 GMT VIX, a gauge of volatility, is being manipulated, whistleblower claims http://implode-explode.com/viewnews/2018-02-13_VIXagaugeofvolatilityisbeingmanipulatedwhistleblowerclaims.html The whistleblower, who has held senior investment positions at many of the world's largest investment firms, through a letter sent by a Washington-based law firm, urged the Securities and Exchange Commission and Commodity Futures Trading Commission "to promptly investigate the matter before investors suffer additional losses due to this fraud." 

In the letter, the whistleblower alleges that market manipulators are costing investors hundreds of millions of dollars each month by taking advantage of a "pervasive flaw" in options exchange trading at Cboe Global Markets in Chicago. The flaw "allows trading firms with sophisticated algorithms to move the VIX up or down by simply posting quotes on S&P options and without needing to physically engage in any trading or deploying any capital," the whistleblower claims.

The whistleblower alleged that the recent market turmoil was partly driven by the scheme and "confirms the fraud and exposes the systemic risk to the entire equity market."

]]>
iehi-feed-63625 Tue, 13 Feb 2018 12:26:52 GMT Trump's Infrastructure Plan Puts Burden on State and Private Money http://implode-explode.com/viewnews/2018-02-13_TrumpsInfrastructurePlanPutsBurdenonStateandPrivateMoney.html President Trump's $200 billion plan to rebuild America upends the criteria that have long been used to pick ambitious federal projects, putting little emphasis on how much an infrastructure proposal benefits the public and more on finding private investors and other outside sources of money.

Unveiled on Monday, the infrastructure program that Mr. Trump has championed since the campaign is intended to attract a huge amount of additional money from states, localities and private investors. The goal is to generate a total pot of $1.5 trillion to upgrade the country's highways, airports and railroads.

Those financial priorities are crystallized in the new guidelines established by the White House. The ability to find sources of funding outside the federal government will be the most important yardstick, accounting for 70 percent of the formula for choosing infrastructure projects. How "the project will spur economic and social returns on investment" ranks at the bottom, at just 5 percent.

...

The president's plan recasts the federal government as a minority stakeholder in the nation's new infrastructure projects. Half of the $200 billion promised over 10 years will be used for incentives to spur even greater contributions from states, localities and the private sector. Mr. Trump also wants to speed up the approval process.

The White House budget, separately released on Monday, also gives federal agencies the authority to sell assets that would be better managed by state, local or private entities in cases where a sale would "optimize taxpayer value." The budget suggests that Ronald Reagan Washington National and Dulles International Airports could be among the assets ripe for new owners.

Coming up with the $200 billion in federal funding will not be easy. Republicans have already ballooned the deficit in last week's spending agreement and with their tax cuts. Democrats are unlikely to go along with cuts that would offset the cost of Mr. Trump's plan.

...

"... they're putting out incentive programs that don't have to generate national or regional economic developments," said Ms. Knopman, the lead author of a new 110-page RAND report on transportation and water infrastructure in the United States. "It may happen, but that's not what they're interested in and that's not the way they're screening these projects."

...

One analysis by the Penn-Wharton Budget Model at the University of Pennsylvania said that other pieces of the White House budget could end up reducing federal infrastructure spending by $55 billion over 10 years -- despite the president's new plan.

Douglas Holtz-Eakin, former director of the Congressional Budget Office and the president of the conservative American Action Forum, complimented aspects of the president's initiative that dealt with streamlining regulations and using federal credit guarantees. But he doubted the promised total could be reached.

"It's hard to get the $200 billion to $1.5 trillion, if you do the arithmetic," he said.

More pretend, fantasy stuff from Trump.

]]>
iehi-feed-63623 Mon, 12 Feb 2018 08:36:54 GMT What Crushed Stocks? | Wolf Street http://implode-explode.com/viewnews/2018-02-12_WhatCrushedStocksWolfStreet.html The 40-basis point move by the 30-year yield and the 43-basis point move by the 10-year yield since the beginning of this year have some consequences for the real economy -- and it added to the nervousness in the stock market when investors finally took note of it.

...

These higher borrowing costs also mean that investors are now seeing more attractive yields in bonds, and there is less pressure to chase risk. The stock market last week reacted fairly suddenly to what has been in the works for months. As they say, Treasury yields don't matter to stocks -- until they do.

]]>
iehi-feed-63622 Sat, 10 Feb 2018 08:17:13 GMT Doug Noland: Subprime and Short Vol http://implode-explode.com/viewnews/2018-02-10_DougNolandSubprimeandShortVol.html For nine long years now, CBB analysis has posited "the global government finance Bubble," "The Moneyness of Risk Assets" and the "Granddaddy of all Bubbles" theses. I believe the Bubble has likely been pierced. The spectacular blowup of all these "short vol" products is a replay of subprime in the summer of 2007 - just so much bigger and consequential. The "insurance" marketplace has badly dislocated, concluding for now the environment of readily available cheap market protection.

...

A Paradox of Dysfunctional Contemporary Finance: The higher home prices inflated (and the greater systemic risk) the cheaper it became to "insure" mortgage Credit risk. More recently, the higher stock prices have inflated (and the greater systemic risk), the cheaper it has been to "insure" equities market risk. These highly distorted "insurance" markets became instrumental in attracting the marginal source of finance fueling late-stage "Terminal Excess" throughout the risk markets.

Variations of these "short vol" strategies have essentially been writing flood insurance during a prolonged drought. Key to it all, global central bankers for the past nine years have been intently controlling the weather.

]]>
iehi-feed-63618 Wed, 07 Feb 2018 16:20:34 GMT House passes stopgap spending bill as leaders try to resolve budget stalemate ahead of Thursday deadline http://implode-explode.com/viewnews/2018-02-07_Housepassesstopgapspendingbillasleaderstrytoresolvebudgetstalema.html The House on Tuesday passed another stop-gap spending bill that would fund domestic programs through March 23 but give the Pentagon a full-year budget of $659 billion.

The measure, which cleared the House in a 245-to-182 vote that split mostly along party lines, now goes to the Senate, where Democrats are likely to amend the legislation and send it back to the House for another round of voting.

The legislative ping-pong comes as Senate leaders said they were nearing a sweeping two-year budget agreement that could break the spending stalemate that has gripped Washington for four months. But that broader deal was not final, and lawmakers were running up against a midnight Thursday deadline, when current government funding runs out.

]]>
iehi-feed-63617 Wed, 07 Feb 2018 16:19:13 GMT How Much of Trump's "Saved" Government Bloat Money Will He Now Waste On a Military Parade? http://implode-explode.com/viewnews/2018-02-07_HowMuchofTrumpsSavedGovernmentBloatMoneyWillHeNowWasteOnaMilitar.html "The marching orders were: I want a parade like the one in France," said a military official who spoke on the condition of anonymity because the planning discussions are supposed to remain confidential. "This is being worked at the highest levels of the military."

Shows of military strength are not typical in the United States -- and they don't come cheap. The cost of shipping Abrams tanks and high-tech hardware to Washington could run in the millions, and military officials said it was unclear how they would pay for it.

]]>
iehi-feed-63616 Tue, 06 Feb 2018 21:22:54 GMT "The Vol Market Finally Broke": A Quant Explains What Happened To The Market http://implode-explode.com/viewnews/2018-02-06_TheVolMarketFinallyBrokeAQuantExplainsWhatHappenedToTheMarket.html iehi-feed-63615 Tue, 06 Feb 2018 19:14:12 GMT Mnuchin says he wants answers from CFPB Stooge Mulvaney on Equifax investigation http://implode-explode.com/viewnews/2018-02-06_MnuchinsayshewantsanswersfromCFPBStoogeMulvaneyonEquifaxinvestig.html U.S. Treasury Secretary Steven Mnuchin on Tuesday said he wants to know how the Consumer Financial Protection Bureau is handling a probe into a hack of credit bureau Equifax Inc (EFX.N) after a report that the agency's acting director had pulled back from investigating the matter.

...

Reuters, citing people familiar with the matter, reported on Monday that while CFPB does have an open investigation into Equifax, Mulvaney has reined in the work begun by his predecessor, Richard Cordray.

Mulvaney has not ordered subpoenas against Equifax or sought sworn testimony from executives, routine steps in a full-scale probe, the sources said. Meanwhile, they added, the CFPB has shelved plans for on-the-ground tests of how Equifax protects data, an idea backed by Cordray.

The CFPB also recently rebuffed bank regulators at the Federal Reserve, Federal Deposit Insurance Corp and Office of the Comptroller of the Currency when they offered to help with on-site exams of credit bureaus, the sources said.

Maybe this finally registered as "too blatantly outside of Trump's populist promises" to let slide...

]]>
iehi-feed-63614 Tue, 06 Feb 2018 19:11:41 GMT An Inventor of the VIX: ‘I Don't Know Why These Products Exist' http://implode-explode.com/viewnews/2018-02-06_AnInventoroftheVIXIDontKnowWhyTheseProductsExist.html