Implode-Explode Heavy Industries news feed http://implode-explode.com/ Tracking the many faces of the global credit implosion. en-us iehi-feed-60331 Fri, 29 Jul 2016 22:53:16 GMT The USA Debt Time-bomb Tocking, Ticking, Tock, Tick... http://implode-explode.com/viewnews/2016-07-29_TheUSADebtTimebombTockingTickingTockTick.html iehi-feed-60330 Fri, 29 Jul 2016 21:35:33 GMT Monte Paschi Capital Wiped Out in European Bank Stress Test; Will Raise More Capital http://implode-explode.com/viewnews/2016-07-29_MontePaschiCapitalWipedOutinEuropeanBankStressTestWillRaiseMoreC.html Monte Paschi's common equity tier 1 capital ratio, a measure of its resilience, dropped to a negative 2.2 percent in the adverse economic scenario, according to the results of the test, which put lenders through a simulation of a severe recession over three years. UniCredit SpA's ratio fell to 7.1 percent, as measured under fully-loaded capital rules, the second-worst result of the five Italian lenders being examined.

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Monte Paschi Friday approved a plan to tap investors for the third time in two years by selling up to 5 billion euros in stock to replenish capital, more than five times its current market value, contingent on the planned disposal of its entire bad-loan portfolio.

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Italy had sought European approval to inject taxpayer funds into Monte Paschi, but the nation's treasury, also said Friday that there was no need for such an intervention, though it had discussed potential options with the European Commission that would be compatible with state-aid rules.

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iehi-feed-60329 Fri, 29 Jul 2016 15:23:20 GMT Did GLD "Hostile Takeover" by "Non Profit" World Gold Body Cause Execs to Flee? http://implode-explode.com/viewnews/2016-07-29_DidGLDHostileTakeoverbyNonProfitWorldGoldBodyCauseExecstoFlee.html From the World Gold Council 2015 accounts, by 2015, all WGC member dues (from the gold mining company members) had been phased out to zero, and the bulk of revenue, $66.9 million, came from the Sponsor Fees from the SPDR Gold Trust. Total revenue was $68.8 million. This meant that as of 2015, the GLD (a commercial ETF) was basically funding all of the operations of the World Gold Council (a non-profit association)... GLD shareholders are [now] essentially bank-rolling the entire operations of the World Gold Council. I wonder how many GLD shareholders are aware of this.

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as you will see in a future post about the ‘GLD consent solicitation proxy vote campaign', because this was, in my opinion, a very misleading and confusing non-stop campaign that bordered on bullying GLD shareholders, especially the retail shareholders, this could have also taken its toll and resulted in CEO / CFO departures from the SPDR Gold Trust sponsor, i.e. New York based World Gold Trust Services.

Finally, it would be interesting to see what the large institutional shareholders of GLD such as Paulson and Blackrock make of this high turnover rate in GLD Sponsor executives, and what their corporate governance and proxy voting teams think of the WGTS driven GLD proxy solicitation campaign and the rather unusual governance structure of the World Gold Council and World Gold Trust Services.

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iehi-feed-60328 Fri, 29 Jul 2016 00:13:27 GMT Global Central Banks Are All-In: QE Running At Record $180 Billion Per Month (And Rising) http://implode-explode.com/viewnews/2016-07-28_GlobalCentralBanksAreAllInQERunningAtRecord180BillionPerMonthAnd.html iehi-feed-60326 Thu, 28 Jul 2016 21:06:44 GMT Millennials cause homeownership rate to drop to lowest level since 1965 http://implode-explode.com/viewnews/2016-07-28_Millennialscausehomeownershipratetodroptolowestlevelsince1965.html The drop in homeownership is largely due to a delay in homebuying by the millennials, who have the lowest ownership rate of their age group in history. Millennials are not only burdened by student loan debt, but they have also delayed life choices like marriage and parenthood, which are the primary drivers of homeownership.

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"Broadly speaking, the falling homeownership rate is a sign that renting isn't only for those just starting out or making a transition, but is becoming an increasingly viable longer-term option for many households," noted Svenja Gudell, chief economist at Zillow. "It also means incomes are not yet rising quickly enough to broadly support new homeownership, and that inventory remains too tight to allow for meaningful access to affordable housing."

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iehi-feed-60325 Thu, 28 Jul 2016 16:27:05 GMT Homeownership Rate in the U.S. Tumbles to the Lowest Since 1965 http://implode-explode.com/viewnews/2016-07-28_HomeownershipRateintheUSTumblestotheLowestSince1965.html The share of Americans who own their homes was 62.9 percent in the second quarter, the lowest since 1965, according to a Census Bureau report Thursday. It was the second straight quarterly decrease, down from 63.5 percent in the previous three months.

First-time buyers have been struggling to find affordable properties as low mortgage rates and an improving job market spur competition for a tight supply of listings. Home prices rose 5.2 percent in May from a year earlier, according to the S&P CoreLogic Case-Shiller index of values in 20 cities released this week.

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iehi-feed-60323 Thu, 28 Jul 2016 15:09:36 GMT Can the World Deal With a New Bank Crisis? - Satyajit Das http://implode-explode.com/viewnews/2016-07-28_CantheWorldDealWithaNewBankCrisisSatyajitDas.html As Europe braces for the release of its bank stress tests on Friday, the world could be on the verge of another banking crisis. The signs are obvious to all. The World Bank estimates the ratio of non-performing loans to total gross loans in 2015 reached 4.3 percent. Before the 2009 global financial crisis, they stood at 4.2 percent.

If anything, the problem is starker now than then: There are more than $3 trillion in stressed loan assets worldwide, compared to the roughly $1 trillion of U.S. subprime loans that triggered the 2009 crisis. European banks are saddled with $1.3 trillion in non-performing loans, nearly $400 billion of them in Italy. The IMF estimates that risky loans in China also total $1.3 trillion, although private forecasts are higher. India's stressed loans top $150 billion.

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To make matters worse, the world's limp recovery since 2009 is intensifying loan stresses. In advanced economies, low growth and disinflation or deflation is making it harder for companies to pay off what they owe. Many European firms are suffering from a lack of global competitiveness, exacerbated by the effects of the single currency.

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Current monetary policy is partly to blame. Zero or negative rates drive down bank lending rates more than deposit rates, which can't be cut because of the need to maintain deposits and comply with regulatory requirements for stable funding.

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iehi-feed-60322 Thu, 28 Jul 2016 15:04:55 GMT Schäuble "bails out" Spain, Portugal (In attempt to defuse political rebellions) http://implode-explode.com/viewnews/2016-07-28_SchublebailsoutSpainPortugalInattempttodefusepoliticalrebellions.html By the time the so-called College of Commissioners gathered mid-morning on Wednesday, the sentiment in the room had shifted away from coming down on Spain and Portugal. "That is having an impact," a source in the room wrote during the deliberations, referring to Schäuble's intervention.

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Officials pointed to various political reasons for Schäuble's move. Primarily, the de facto number two in Germany's government doesn't want to hurt an ally in Mariano Rajoy, the center-right Spanish leader who is struggling to put together a government after last month's elections. With France and Italy in the hands of the Left, Germany's CDU-led coalition prefers to see a fellow conservative take power in the eurozone's fourth-largest economy. During his conversations at the G20 in China, Schäuble stressed the need for "political stability" in southwestern Europe, according to someone familiar with the conversation. Portugal's leftist government got a free ride on the Schäuble train.

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iehi-feed-60321 Thu, 28 Jul 2016 14:56:24 GMT Insanity In Japan http://implode-explode.com/viewnews/2016-07-28_InsanityInJapan.html iehi-feed-60319 Thu, 28 Jul 2016 14:42:47 GMT San Fran's Lending Standards Put The Last Housing Bubble To Shame http://implode-explode.com/viewnews/2016-07-28_SanFransLendingStandardsPutTheLastHousingBubbleToShame.html iehi-feed-60318 Thu, 28 Jul 2016 01:53:08 GMT Sudden Spike - Trend Reversal and Record Swiss Gold Flow Into The United States http://implode-explode.com/viewnews/2016-07-27_SuddenSpikeTrendReversalandRecordSwissGoldFlowIntoTheUnitedState.html iehi-feed-60317 Thu, 28 Jul 2016 01:26:31 GMT Cameron was right, Britain is broken. But it's businessmen who are to blame http://implode-explode.com/viewnews/2016-07-27_CameronwasrightBritainisbrokenButitsbusinessmenwhoaretoblame.html In Brexit Britain, one of the most important contracts between businesses and the public has been broken. Companies increasingly rely on the public to pay their way: to top up wages with benefits and public services, and billions in subsidies and grants and tax reliefs. What goes with that is another broken contract: the one that says work always pays. From Norman Tebbit to Brown to IDS, that idea has been central to employment and welfare policy. It is now dead. As the Institute for Fiscal Studies said last week: "The new poor tend to live in households where there is someone in work." This is a fact that those at the bottom of the labour market have known for years, but is only now working its way into the minds of policymakers.

Cameron warned of "the slow-motion moral collapse that has taken place in parts of our country these past few generations". He was right. It's just that it's been led by those at the top -- the ones at the boardroom tables, their expensive helpers -- and their mates and supporters in politics using taxpayer money to wave them on.

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iehi-feed-60315 Wed, 27 Jul 2016 19:42:57 GMT Fed Says Risks Have Diminished, Yet Leaves Rate Unchanged http://implode-explode.com/viewnews/2016-07-27_FedSaysRisksHaveDiminishedYetLeavesRateUnchanged.html "Near-term risks to the economic outlook have diminished," the Federal Open Market Committee said in its statement Wednesday after a two-day meeting in Washington, before repeating language from June that the panel "continues to closely monitor" inflation and global developments. Job gains were "strong" in June and indicators "point to some increase in labor utilization in recent months," the Fed said.

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"It's kind of an upbeat statement, although guarded," said Roberto Perli, partner at Cornerstone Macro LLC in Washington and former associate director for monetary affairs at the Fed Board. "It's a sign of a little bit of confidence, if you want, in the outlook going forward."

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Data since the Fed's June meeting indicate "that the labor market strengthened and that economic activity has been expanding at a moderate rate," the Fed said. The statement contained three references to recent improvement in the labor market.

The market seems to be wondering why the Fed didn't hike if the data is looking so good... the read might be that this is confirmation that, "yes, the Fed is constrained by the dollar"...

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iehi-feed-60314 Wed, 27 Jul 2016 18:19:34 GMT Behind The New Home Sales Data: A Darker Backdrop http://implode-explode.com/viewnews/2016-07-27_BehindTheNewHomeSalesDataADarkerBackdrop.html Sales have nearly doubled from the June 2010 and June 2011 lows of 28,000 to this June's 54,000. But this is still down sharply from the June 2005 peak of 115,000 units. At the same time, it barely exceeds the low of 47,000 reached in June 1991 and 53,000 in June 1992 during that recession...

From the 2002 recession until this year, nominal median household income has risen by approximately 32%, using estimated 2% increases for 2015 and this year, which is consistent with the BLS data on nominal wage growth. However, the rate of sales per million people has declined by almost 22% over that period

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iehi-feed-60311 Wed, 27 Jul 2016 13:36:35 GMT Shadow banking understates overall China leverage, Moody's says http://implode-explode.com/viewnews/2016-07-27_ShadowbankingunderstatesoverallChinaleverageMoodyssays.html iehi-feed-60310 Wed, 27 Jul 2016 13:35:07 GMT Deutsche Bank's second-quarter net income plunges nearly 100% year-on-year http://implode-explode.com/viewnews/2016-07-27_DeutscheBankssecondquarternetincomeplungesnearly100yearonyear.html iehi-feed-60309 Wed, 27 Jul 2016 13:33:13 GMT Japan PM unveils $266 bn stimulus plan to boost economy http://implode-explode.com/viewnews/2016-07-27_JapanPMunveils266bnstimulusplantoboosteconomy.html iehi-feed-60308 Tue, 26 Jul 2016 19:58:23 GMT "Low Credibility" Federal Reserve gets ready to talk policy http://implode-explode.com/viewnews/2016-07-26_LowCredibilityFederalReservegetsreadytotalkpolicy.html Despite chatter from central bank leaders and speculation from the financial press about looming hikes, the market is becoming pretty immune to Fed saber-rattling.

Indeed, just seven months ago, the Fed was prepping investors for four rate hikes this year. Now the market is pricing in only a 2.4 percent chance of a move this week and a fairly low likelihood farther down the road.

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Multiple Wall Street pros have been talking up September in recent days, but the market gives just a 19.9 percent probability of a hike then. December is about a coin flip, with traders anticipating a funds rate of 0.47 percent from the current 0.4 percent. The CME says that equates to a 47.8 percent chance.

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Fed officials, however, continue to insist that rate hikes will be appropriate sometime soon.

Maybe it's time to introduce a Fed moniker for the Trump era: "Low-Cred Fed"!!!

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iehi-feed-60307 Tue, 26 Jul 2016 19:50:00 GMT ‘Impending gold production cliff' may deliver a jolt to prices http://implode-explode.com/viewnews/2016-07-26_Impendinggoldproductioncliffmaydeliverajolttoprices.html iehi-feed-60306 Tue, 26 Jul 2016 19:45:47 GMT Wall Street banks "need" to catch a break http://implode-explode.com/viewnews/2016-07-26_WallStreetbanksneedtocatchabreak.html Allowing banks to free up more capital for things like home loans would be a boost for banks, and for the U.S. economy, he added. Many market watchers have expressed concern that big banks are being regulated into utilities -- that is to say, saddled with enough requirements and boxes to check that they would face low margins in virtually any economy.

But regulators, for now, look determined to head in the opposite direction, which would create additional pressure on Wall Street.

... not everyone thinks banks deserve a break. Christopher Whalen, senior managing director at the Kroll Bond Rating Agency, said the banks are in a mess of their own making.

"It's puzzling why banks and nonbanks have positioned for higher interest rates," he said. "The notion you should position for higher rates is downright reckless."

From the looks of it, Wall Street won't have its expectations met in the way of higher rates in 2016. It isn't even clear a rate hike is coming this year at all. If one doesn't happen, that likely would mean big banks will miss projected return-on-capital estimates.

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