Implode-Explode Heavy Industries news feed http://implode-explode.com/ Tracking the many faces of the global credit implosion. en-us iehi-feed-64401 Sat, 17 Nov 2018 17:18:13 GMT After the Retail Apocalypse, Prepare for the Property Tax Meltdown http://implode-explode.com/viewnews/2018-11-17_AftertheRetailApocalypsePrepareforthePropertyTaxMeltdown.html iehi-feed-64399 Thu, 15 Nov 2018 21:00:15 GMT "Too Big to Fail" author says WeWork may now be "too big to fail" http://implode-explode.com/viewnews/2018-11-15_TooBigtoFailauthorsaysWeWorkmaynowbetoobigtofail.html Andrew Ross Sorkin -- author of "Too Big to Fail" -- argues in his latest DealBook column for the New York Times that WeWork now has so much space in so many cities, its landlords can't afford to let it go under.

The co-working giant now controls 15.5 million square feet across 335 locations in 24 countries and says it is the largest tenant in Manhattan, Washington D.C. and London. So, when the next economic downturn arrives, WeWork's landlords might not be able to evict it even if it can't pay its rent... a more likely outcome would be for landlords to "swallow hard and renegotiate the lease agreements on more favorable terms to keep WeWork from creating a full-on panic." They could also have the company start acting as a property manager in the vein of Marriott, which manages rather than owns or leases hotels.

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iehi-feed-64397 Thu, 15 Nov 2018 02:37:37 GMT Why Amazon Chose New York and Northern Virginia for New Headquarters http://implode-explode.com/viewnews/2018-11-14_WhyAmazonChoseNewYorkandNorthernVirginiaforNewHeadquarters.html To recap: a company whose profits soared 27 percent to $3.03 billion last year just received an additional $2 billion or more in tax breaks, and may also be in line for $10 billion more in tax money through the JEDI deal.

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No population genuinely worried about abuses of power would even countenance placing a single private company in control of securing the data of both the intelligence community and the armed services. Add putting a major media organ or two under the same umbrella and you're beginning to enter oligarchy territory.

Moving Amazon closer to America's political and financial capitals isn't just about creating a few jobs. It's also a symbolic move that speaks to the unsettling co-mingling of state and corporate power. We might wake up soon and wish we hadn't put so many eggs in one basket.

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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-64394 Wed, 14 Nov 2018 14:56:07 GMT WeWork raises $3bn from SoftBank as losses balloon http://implode-explode.com/viewnews/2018-11-14_WeWorkraises3bnfromSoftBankaslossesballoon.html WeWork has secured an additional $3bn of funding from SoftBank at a $42bn valuation even as the flexible office provider's losses ballooned to $2bn on an annual basis.*SoftBank will inject the funding next year in exchange for a warrant enabling it to buy new WeWork shares by the end of September 2019, at a price that will lift the group's valuation from the $20bn figure reached in its last equity funding round.The fresh multibillion dollar commitment from SoftBank increases WeWork's cash pile and cash commitments to a total of $6.4bn, according to an investor presentation seen by the Financial Times on Tuesday.Artie Minson, chief financial officer, said the funding was "opportunistic". "The way we work with SoftBank emphasises speed and getting it done quickly . . . that speaks to the overall momentum in the business," he said.The fresh funding came as privately owned WeWork said its losses in the nine months to September had nearly quadrupled from a year earlier to $1.2bn.

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"Our view is that there is tremendous wind at our back -- we are the only serious global player out there," he said."Our growth is actually accelerating as our product offering continues to go deeper and reach not just small-sized companies but Fortune 500 companies and everything in between.

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iehi-feed-64393 Wed, 14 Nov 2018 02:30:31 GMT The chances of seeing Donald Trump's tax returns just went WAY up http://implode-explode.com/viewnews/2018-11-13_ThechancesofseeingDonaldTrumpstaxreturnsjustwentWAYup.html The real issue here is a 1924 provision in the Internal Revenue Service tax code that allows the chair of the House Ways and Means Committee and the chair of the Senate Finance Committee can ask for anyone's tax returns -- including the president's! -- from the Internal Revenue Service -- as long as they can demonstrate that the returns are necessary for an ongoing investigation.

That clause, according to this great piece by CNN's Jeanne Sahadi, could well lead to the eventual public disclosure of Trump's returns:

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What seems certain now: House Democrats will make a move to see Trump's taxes. Trump, who, I believe, thinks the release of the returns could do him real political harm, will fight like hell to keep them from doing so.

Who wins? No clue. But there's no question that we are closer to seeing Trump's tax returns today than we have been at any point since he began to run for president in 2015.

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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-64391 Wed, 14 Nov 2018 01:37:42 GMT Sears Didn't 'Die.' Vulture Capitalists Killed It. http://implode-explode.com/viewnews/2018-11-13_SearsDidntDieVultureCapitalistsKilledIt.html ... most of the coverage has failed to stress the deeper story. Namely, Sears is a prime example of how hedge funds and private equity companies take over retailers, encumber them with debt in order to pay themselves massive windfall profits, and then leave the retailer without adequate operating capital to compete.

Part of the strategy is to sell off valuable real estate, the better to enrich the hedge fund, and stick the retail company with costly rental payments to occupy the space that it once owned.

In the case of Sears, the culprit is a hedge-fund operator named Edward Lampert, once a senior merger guy at Goldman Sachs. In 2005, Lampert merged Sears with Kmart, loaded both up with debt, and used some of the debt on stock buybacks to pump up the share price and enrich shareholders, notably himself and his hedge fund.

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iehi-feed-64389 Tue, 13 Nov 2018 17:39:29 GMT Borrowers Flee Empty Malls, and Bond Investors Brace for Fallout http://implode-explode.com/viewnews/2018-11-13_BorrowersFleeEmptyMallsandBondInvestorsBraceforFallout.html Things are getting worse for malls across America. So much worse that their owners are walking away early from struggling properties, a trend that has mortgage bond investors bracing for losses.

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"Experienced borrowers will act in their economic interest and will turn in the keys to malls that don't merit further investment. They don't want to service the loan anymore," Edward Reardon, head of CMBS research at Deutsche Bank, said in a phone interview. "We think the number of malls that don't merit investment will expand."

This is happening because malls are losing anchor stores and as a result would have to significantly cut rents for existing occupants, Reardon said, noting that mall owners fleeing their properties early is a "relatively new phenomenon."

That may mean trouble ahead for investors. While the delinquency rate in the CMBS market is now at post-crisis lows, the mall-related pain may not show up for a couple years, according to analysts. That's because the securities with the highest exposure have loans that won't mature until 2021 or later.

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iehi-feed-64388 Tue, 13 Nov 2018 17:31:49 GMT Anatomy of the Housing Downturn in Vancouver http://implode-explode.com/viewnews/2018-11-13_AnatomyoftheHousingDownturninVancouver.html 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-64379 Fri, 09 Nov 2018 22:57:32 GMT Father of Z-Score Sees Bigger Bankruptcies in Next Downturn http://implode-explode.com/viewnews/2018-11-09_FatherofZScoreSeesBiggerBankruptciesinNextDownturn.html Edward Altman, who developed the Z-score method for predicting bankruptcies 50 years ago, says the next recession will be characterized by many more bankruptcies and defaults than in previous downturns, and the corporate failures will be larger than ever before.

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More firms that look like they are going bankrupt don't. Over the last 50 years, it's clear that the average company in the world is more leveraged using more debt than ever before. There was no leveraged-loan or junk-bond markets 50 years ago. Now, these are big dynamic markets available to many firms. They take advantage of it. Interest rates in the last ten year have been low and firms have been overjoyed to leverage their balance sheet to try to earn returns greater than the cost of capital. And the cost of capital, with the lower costs of interest rates, has come down.

... There is a dramatic increase in leveraged loans, in covenant-lite issuance. The defaults will not take place as quickly as they normally would because there are no easy triggers from these covenants. But when they do take place, the ultimate recovery when the firm emerges from Chapter 11 will be lower because the covenant-lite debt kicked the can down the road.

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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-64377 Fri, 09 Nov 2018 18:13:28 GMT Trump Administration Spares Corporate Wrongdoers Billions in Penalties http://implode-explode.com/viewnews/2018-11-09_TrumpAdministrationSparesCorporateWrongdoersBillionsinPenalties.html In the final months of the Obama administration, Walmart was under pressure from federal officials to pay nearly $1 billion and accept a guilty plea to resolve a foreign bribery investigation. Barclays faced demands that it pay nearly $7 billion to settle civil claims that it had sold toxic mortgage investments that helped fuel the 2008 financial crisis, and the Royal Bank of Scotland was ensnared in a criminal investigation over its role in the crisis.

The three corporate giants complained that the Obama administration was being unreasonable and stood their ground, according to people briefed on the investigations. After President Trump took office, they looked to his administration for a more sympathetic ear -- and got one.

Federal prosecutors and the Securities and Exchange Commission have yet to charge Walmart, and the Justice Department reached a much lower settlement agreement with Barclays in March, for $2 billion. R.B.S. paid a civil penalty, but escaped criminal charges altogether.

Across the corporate landscape, the Trump administration has presided over a sharp decline in financial penalties against banks and big companies accused of malfeasance, according to analyses of government data and interviews with more than 60 former and current federal officials. The approach mirrors the administration's aggressive deregulatory agenda throughout the federal government.

The New York Times and outside experts tallied enforcement activity at the S.E.C. and the Justice Department, the two most powerful agencies policing the corporate and financial sectors. Comparing cases filed during the first 20 months of the Trump presidency with the final 20 months of the Obama administration, the review found:

- A 62 percent drop in penalties imposed and illicit profits ordered returned by the S.E.C., to $1.9 billion under the Trump administration from $5 billion under the Obama administration;

- A 72 percent decline in corporate penalties from the Justice Department's criminal prosecutions, to $3.93 billion from $14.15 billion, and a similar percent drop in civil penalties against financial institutions, to $7.4 billion;

-A lighter touch toward the banking industry, with the S.E.C. ordering banks to pay $1.7 billion during the Obama period, nearly four times as much as in the Trump era, and Mr. Trump's Justice Department bringing 17 such cases, compared with 71.

Cool! This is all obviously helping the middle class and working poor (Trump's base, of course) -- not at all lining the pockets of the already mega-rich and powerful, no doubt.

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iehi-feed-64372 Thu, 08 Nov 2018 21:23:15 GMT Fed leaves rates unchanged, notes slowing in business investment http://implode-explode.com/viewnews/2018-11-08_Fedleavesratesunchangednotesslowinginbusinessinvestment.html The policymaking Federal Open Market Committee, as expected, unanimously approved keeping the federal funds rate in a range of 2 percent to 2.25 percent. Markets figured the central bank would hold the line at this meeting and probably approve a quarter-point hike in December, which would be the fourth of the year.

... the statement noted that the "growth of business fixed investment has moderated from its rapid pace earlier in the year." There was no detail or data given for why officials see investment declining, though companies reported during third-quarter earnings season that some of their investment plans have been curtailed due to the ongoing trade war between the U.S. and China.

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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-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-64351 Wed, 31 Oct 2018 20:47:40 GMT ‘Godfather' of chart analysis says ‘damage done to the stock market' is much, much worse' than anyone is talking about http://implode-explode.com/viewnews/2018-10-31_Godfatherofchartanalysissaysdamagedonetothestockmarketismuchmuch.html Acampora cited a break down of so-called FANG stocks--a quartet of technology and internet-related companies that include Facebook Inc. FB, +0.16% Amazon.com Inc. AMZN, +0.12% Netflix Inc. NFLX, +5.59% and Google-parent Alphabet Inc. GOOGL, -0.05% --as the clearest sign that the worm has turned on the bull market.

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"I've been a bull for a long, long time and like everyone, I was waiting for a correction but this is something different," said Acampora, who many chartists refer to as the "godfather" of technical analysis.

"All the leadership is getting crushed," he said.

Acampora said he believed that the entire stock market itself would go into a bear market and said the current dynamic in the market was eerily similar to the stock-market crash of 1987, when the Dow slide a historic 22.6% in a single day on Oct. 19 of that year.

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Acampora isn't alone in his bearish view. Michael Wilson, Morgan Stanley's chief U.S. equity strategist, said he believes the market is undergoing a "rolling bear market." He was among the first to spot fractures in the market's uptrend.

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iehi-feed-64346 Tue, 30 Oct 2018 13:42:52 GMT The U.S. Secretly Halted JPMorgan's Growth for Years (GETS GREEN-LIGHT UNDER TRUMP) http://implode-explode.com/viewnews/2018-10-30_TheUSSecretlyHaltedJPMorgansGrowthforYearsGETSGREENLIGHTUNDERTRU.html In actions never before made public, Obama administration regulators prevented the bank from opening branches in new states as punishment for violating banking rules, according to people familiar with the matter. JPMorgan's ambitious plan to expand nationally, announced earlier this year, was made possible by the Trump administration's rollback of those restraints, which date from 2012, said the people, who asked not to be identified discussing regulators' impact on the bank's plans.

JPMorgan has racked up more than $30 billion in penalties, legal costs and related obligations since the 2008 financial crisis, some of which stemmed from its acquisitions of Bear Stearns Cos. and Washington Mutual Inc. Missteps include excessive risk taken by the London Whale trader and failing to flag transactions related to Bernard Madoff's Ponzi scheme. Privately, the U.S. Office of the Comptroller of the Currency stopped JPMorgan from expanding into additional states while resolving compliance breakdowns as part of an unwritten regulatory policy, the people said.

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iehi-feed-64344 Mon, 29 Oct 2018 22:38:38 GMT Traders are making a boatload betting against once-beloved FAANG stocks http://implode-explode.com/viewnews/2018-10-29_TradersaremakingaboatloadbettingagainstoncebelovedFAANGstocks.html People betting against once-beloved technology giants made $1.6 billion in paper profit last week, according to data from S3 Partners. So-called FAANG stocks, including Facebook, Amazon, Apple, Netflix and Google's Alphabet, fell 4.7 percent last week. They were down 3.6 percent on Friday, alone and are also among the 10 most shorted U.S. stocks, S3 said. The profit number on those short positions for the week assumes the trades were marked at the market price on Friday

Tech is down again on Monday, with the tech-heavy Nasdaq Composite down more than 1 percent. Amazon, which is down 8 percent in afternoon trading, is now on pace for its worst month since November 2008, when it fell 25.4 percent. Netflix also tumbled more than 6 percent on Monday. The short-sellers are still in the hole for the year, however. Year to date, the mark-to-market losses on FAANG shorts is $7.4 billion.

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