Implode-Explode Heavy Industries news feed Tracking the many faces of the global credit implosion. en-us iehi-feed-64050 Fri, 22 Jun 2018 22:29:06 GMT Federal judge rules that CFPB's structure is unconstitutional, but question remains clouded The immediate effect of the ruling appears to be limited. It means the CFPB can't be party to a lawsuit about a company accused of scamming 9/11 first responders. The New York attorney general, who was also a plaintiff, can move forward with the case.

But the judge's decision adds fodder to the political fight over the independence of the CFPB, which was established after the financial crisis to safeguard Americans against predatory financial institutions.

The CFPB declined to comment.

The American Bankers Association, which has advocated for reining in the CFPB, said the implications of the decision "remain unclear," because other federal courts have ruled differently.

iehi-feed-64048 Fri, 22 Jun 2018 17:19:11 GMT Fed Rate Cuts and QE Will Resume Soon Those who have openly subscribed in recent months to the robust-growth and higher-rates view include JPMorgan Chase CEO Jamie Dimon[] and Morgan Stanley CEO James Gorman, and investors Paul Tudor Jones and Jeffrey Gundlach. There are many others.

In my view, this widely held wisdom is based on a profound misreading of economic and political reality and trends in the U.S. and around the world. I believe that a looming global recession and fear of deflation will lead the Fed to cut rates instead and reinstate quantitative easing, or QE, causing U.S. bond yields to fall.

First, it is important to understand that the 2008 financial crisis was never resolved. Aggressive fiscal- and monetary-policy tools--extremely low rates and multitrillion-dollar bond-buying programs--helped contain the crisis. But they didn't fix the problem. The global economy has been stabilized, but fundamental weaknesses remain.

An economic reckoning may surface as soon as the next few months.

In the U.S., second-quarter economic data look strong. But that is misleading. There are plenty of indications of weakness, including slowing sales of cars and houses, and a decline in mortgage refinancing. The cumulative effect of interest-rate hikes, frozen levels of real income, and rising oil prices will also weigh on the public's buying power.

In the corporate sphere, the boom in stock buybacks, which in May reached an astounding $174 billion, comes directly at the expense of capital investment that would boost economic growth. A potential global trade war is also detrimental; the U.S. dollar's weakness in 2017, combined with reinvigorated economies throughout the world, contributed immensely to U.S. exports...

June's interest-rate hike was most likely the last in the current cycle. The next major move by the Fed could be to lower rates, followed by more QE. The realization that this is happening will bring about a dramatic change in investors' views and will return U.S. bond yields to the 1.5%-2% level. The development, I believe, will be rapid and surprise a financial system dramatically underweight long-term bonds.

As we say, "happy times are here again" -- almost nonstop since 2009. So this editorial is bold call -- but it has really been a "bipolar" economy since the 2008 crisis; with every person able to see whatever they want to see in the mixed data... at some point, a clear trend will likely manifest...

iehi-feed-64047 Fri, 22 Jun 2018 16:24:33 GMT Blue Cross Blue Shield Swindled By Michigan Psychologist iehi-feed-64045 Thu, 21 Jun 2018 02:03:37 GMT Wannabe Wiseguy James Sabatino's Prison Guard Buddy Gets 5 Years iehi-feed-64044 Wed, 20 Jun 2018 00:48:06 GMT Combined wealth of the world's millionaires tops $70 trillion The world's millionaires saw their wealth grow 10.6 percent to a record $70.2 trillion, the global consulting firm Capgemini reports in its annual World Wealth Report 2018.

The number of high net worth individuals (HNWI) -- which Capgemini defines as those having investable assets of $1 million or more (excluding primary residence, collectibles, consumables and consumer durables) --  grew almost 10 percent, or 1.6 million, to 18.1 million in 2017.  

"High net worth individuals around the world enjoyed investment returns above 20 percent for the second year in a row," Anirban Bose, head of Capgemini's financial services global strategic business unit, said in a statement. The report's analysis confirms that "global HNWI wealth would exceed $100 trillion by 2025," Bose wrote

Sounds reaaaal sustainable...

iehi-feed-64043 Wed, 20 Jun 2018 00:43:37 GMT Beijing has tactics besides just tariffs to hurt the U.S. in a trade war "It's true that the base on which they can put on additional tariffs is much narrow than the U.S.," said Ludovic Subran, global head of macroeconomic research at Allianz and chief economist at Euler Hermes.

But Subran and other international trade experts warn not to count China out too quickly.

"The first thing to observe here is that China is not a country of laws -- it's an authoritarian dictatorship... so from that opening point, China is potentially able to play much, much dirtier than the United States," said Jacob Kirkegaard, a senior fellow at the Peterson Institute for International Economics, who warned that American businesses could take the punishment for Trump's antagonism.

"He will essentially force the Chinese government to retaliate in other ways -- and those other ways can be much more costly to American firms," he said. "That belief is premised on a fundamentally erroneous assumption about how the modern economy works... and a lack of concern with how engaged American businesses are involved already in China."

iehi-feed-64042 Tue, 19 Jun 2018 19:58:52 GMT Warren Threatens Hold on CFPB Director Nomination iehi-feed-64041 Tue, 19 Jun 2018 14:37:38 GMT Queens Rabbi Busted In 7 Million Dollar Extortion Plot iehi-feed-64040 Tue, 19 Jun 2018 13:58:56 GMT Paul Tudor Jones warns the next recession will be 'really frightening' iehi-feed-64038 Mon, 18 Jun 2018 19:00:38 GMT Debt Clock Ticking | Mauldin Moody's has issued a statement that CMBS loans are now almost as risky as in 2007 because 75% of them are interest only, and the interest only period is now 6 years, up from 2.2 years just a few years ago. In addition, they are becoming much more covenant light, and are at higher leverage. All of this is a red flag since these things create much more risk of serious problems when the recession hits. There is also a bigger concentration of single tenant properties, which, as we have seen in retail, can be deadly in a recession. Asset and sponsor quality is also deteriorating. There is now so much competition to put out loans by so many non-bank sources, that borrowers can get lenders to compete, which always means lower quality underwriting. Far too much capital chasing too few good deals.

Underwriting is not nearly as bad as in 2006--2007 yet, but it appears the trend is what it always has been, when the economy is strong and there is too much capital, underwriting standards fall down, and then the stage is set for a bad outcome when the economy goes bad. It is typically 10--12 years between collapse of the last crash and then credit quality deterioration and the next credit collapse. We are at 10 years. Dodd Frank had rules to try to avoid a replay of 2008 in CMBS, but a lot of loans now are made by private equity funds that are not subject to these regulations.

One thing that is immutable is that as each generation comes into Wall Street, they think they know better how to do it, and they eventually do the same dumb loans in pursuit of profits and bonuses. It has never been different. We are not about to have a major crash again, but CMBS loan quality is deteriorating now, and one day in the next 2--3 years, it will be a bad problem. When they start doing a lot of CDOs and virtual CMBS pools with derivatives, then that is a sure sign the end is near.

iehi-feed-64037 Mon, 18 Jun 2018 17:23:07 GMT Over 800 Clueless New York Lawyers Become Victims In Toner Cartridge Scam iehi-feed-64036 Mon, 18 Jun 2018 14:13:20 GMT Mulvaney Minion Kathy Kraninger Nominated As New Head Of CFPB iehi-feed-64034 Sun, 17 Jun 2018 18:30:57 GMT Venezuela Orders Government Services to Accept Any Cryptocurrency iehi-feed-64033 Sun, 17 Jun 2018 13:18:56 GMT Catty Wells Fargo Retaliation Against Critics Has A Long History iehi-feed-64032 Sat, 16 Jun 2018 15:22:11 GMT Wells Fargo Was The Willy Wonka Of Booze, Drugs & Sex iehi-feed-64031 Sat, 16 Jun 2018 14:51:46 GMT Here's how the ECB just breathed new life into the dollar rally, analysts say By guaranteeing that it will sit on its hands for at least a year when it comes to raising interest rates, the European Central Bank sank the euro Thursday and potentially gave the dollar fuel for a long-running rally, analysts said.


And this might just be the opening act for a theme that could endure for at least 12 months. While the Fed is expected to deliver up to two more rate increases in 2018 and further hikes next year, the ECB just ensured it won't move until the latter half of next year at the earliest.

iehi-feed-64030 Fri, 15 Jun 2018 23:18:43 GMT Why the Fed Tweaked an Obscure Interest Rate This Week The interest rate on excess reserves plays a supporting role to the fed funds rate in monetary policy. Previously, the Fed set the interest rate on excess reserves at the same level as the top of the- fed funds rate. But on Wednesday the Fed said the interest rate on excess reserves would now be set 0.05 percentage point below the top of the range. As a result, the interest rate on excess reserves is now 1.95 percent... recent developments in the fed funds market prompted the Fed to make its change.


The government has recently been issuing a lot more debt to finance its deficit, much of it in the form of Treasury bills that are sold to investors. But to find sufficient buyers, the Treasury has had to pay higher rates on Treasury bills. This helped attract money out of the federal funds market into Treasury bills, and in turn that caused the fed funds rate to move higher and closer to the top of its range.

This caught the Fed's eye. The central bank, according to analysts, wants to avoid a situation in which the fed funds rate moves above the Fed's target range. "The Fed doesn't want anyone in the market to think it's not in control of overnight rates," Lou Crandall, chief economist at Wrightson ICAP, said. "It might worry some people if it went above the upper band''

Seems like the Fed doesn't have a clue how this post-2008 jalopy of a monetary system works...

iehi-feed-64028 Fri, 15 Jun 2018 22:56:54 GMT Cryptocurrency Manipulation Study Is Underwhelming iehi-feed-64027 Fri, 15 Jun 2018 22:50:24 GMT Citibank fined $100 million for LIBOR manipulation The bank settled with attorneys general in 42 states for $100 million. Following an investigation, the states said Citibank manipulated Libor, a benchmark interest rate that helps set lending rates across the world.


This is the third bank that settled with state attorneys general for illegally influencing the Libor. Barclays, Deutsche Bank and now Citibank have been fined $420 million collectively.

Citibank agreed to comply with ongoing investigations into other banks' Libor cases.

iehi-feed-64026 Fri, 15 Jun 2018 22:49:11 GMT Tesla short-sellers have been getting creamed; why they're still betting against Elon Musk anyway Musk has maintained that Tesla does not need to raise equity or new lines of credit this year. But Goldman Sachs predicted Tesla will need to raise $10 billion by 2020 to keep going.

Darius Brawn, a hedge fund veteran who previously worked as a portfolio manager for SAC and Citadel, told CNBC he thinks $10 billion is a conservative estimate. He cites Tesla's plans to ramp up its Model 3 production, build new factories, make a new Roadster, Semi trucks and a Model Y vehicle, and to embark on large-scale production of its glass solar roof tiles.


Brawn, who has shorted Tesla personally, points out that it's highly unusual for a growth company to cut its planned investment spending, as Tesla did last quarter from $3.4 billion to under $3 billion... Without raising additional capital, Brawn said, the electric vehicle maker has enough cash to last for only a few quarters.


"I do not believe Wall Street investment banks are willing take the massive reputational, legal and financial risks associated with underwriting billions of dollars of new securities for [Tesla]" [Said Gabe Hoffman].

He and other bears also believe Tesla may not even be able to conduct an equity offering because of the existence of an undisclosed, and ongoing, enforcement action by the SEC. This action was discovered through FOIA research