Implode-Explode Heavy Industries news feed http://implode-explode.com/ 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 http://implode-explode.com/viewnews/2018-06-22_FederaljudgerulesthatCFPBsstructureisunconstitutionalbutquestion.html 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.

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iehi-feed-64049 Fri, 22 Jun 2018 20:46:49 GMT In Major Privacy Win, Supreme Court Rules Police Need Warrant To Track Your Cellphone http://implode-explode.com/viewnews/2018-06-22_InMajorPrivacyWinSupremeCourtRulesPoliceNeedWarrantToTrackYourCe.html The chief justice said that this sort of tracking information is akin to wearing an electronic ankle-bracelet monitoring device and that the citizens of the country are protected from that kind of monitoring unless police can show a judge that there is probable cause of a crime that justifies it.

He stressed, however, that this is a narrowly focused opinion that leaves intact other precedents when it comes to dealing with financial information, banking and office records.

Roberts noted that the decision also allows for warrantless cell-tower location information searches in emergencies and for national security purposes.

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At oral arguments in November, the justices seemed torn about whether to break with the so-called third party doctrine. Adopted decades ago, that doctrine says that there is no reasonable expectation of privacy when an individual shares information with a third party -- for example, the phone company, which knows what telephone numbers the individual calls and receives. Therefore, police do not have to get a search warrant to gain access to those numbers.

But in recent years, the justices have expressed discomfort with that rule of law as applied to the modern digital age, when cellphones carried in a person's pocket can track locations day and night, and when email and text addresses tell a huge amount about an individual's contacts and lifestyle.

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iehi-feed-64046 Fri, 22 Jun 2018 04:37:37 GMT Supreme Court decision to allow more online sales tax worries Main Street http://implode-explode.com/viewnews/2018-06-22_SupremeCourtdecisiontoallowmoreonlinesalestaxworriesMainStreet.html The Supreme Court ruled Thursday that states now have the power to force online retailers to collect sales tax in states where they do not have a physical presence, reversing a ruling from 1992 in a 5-4 decision. The move also revives a 2016 South Dakota law that required large, out-of-state e-commerce companies to collect sales tax, one that big e-commerce players fought. Some online retailers, such as Amazon.com, currently collect state sales tax on products they directly sell but do not collect taxes from many of the independent sellers on the site.

The decision removes the sales-tax savings that consumers could reap by making purchases online instead of buying from local brick-and-mortar shops. Although the move does help to level the playing field for physical small businesses, it also places new burdens on small online retailers.

Some small business groups argue the decision will be burdensome and add to an already confusing tax structure. The nonpartisan Small Business & Entrepreneurship Council said the ruling will add stress for small businesses, the marketplace and internet entrepreneurs.

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"The fact that small businesses must now act as tax collectors for thousands of separate state and local [jurisdictions] is outrageous."... "Unfortunately, this ruling makes sweeping changes to sales tax law, but provides nothing in the form of easing complexity and/or streamlining each states' processes."

The Supreme Court should have required some mitigating factor (such as the tax-collecting ability being based on having a certain amount of business in the state) to mitigate the Dormant Commerce Clause concerns. Now they've gone completely in the other direction purely out of apparent concerns for the big guys "getting away with it".

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iehi-feed-64044 Wed, 20 Jun 2018 00:48:06 GMT Combined wealth of the world's millionaires tops $70 trillion http://implode-explode.com/viewnews/2018-06-19_Combinedwealthoftheworldsmillionairestops70trillion.html 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...

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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 http://implode-explode.com/viewnews/2018-06-19_BeijinghastacticsbesidesjusttariffstohurttheUSinatradewar.html "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."

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iehi-feed-64042 Tue, 19 Jun 2018 19:58:52 GMT Warren Threatens Hold on CFPB Director Nomination http://implode-explode.com/viewnews/2018-06-19_WarrenThreatensHoldonCFPBDirectorNomination.html iehi-feed-64040 Tue, 19 Jun 2018 13:58:56 GMT Paul Tudor Jones warns the next recession will be 'really frightening' http://implode-explode.com/viewnews/2018-06-19_PaulTudorJoneswarnsthenextrecessionwillbereallyfrightening.html iehi-feed-64039 Mon, 18 Jun 2018 23:16:55 GMT Senate rejects Trump's rescue of Chinese firm ZTE http://implode-explode.com/viewnews/2018-06-18_SenaterejectsTrumpsrescueofChinesefirmZTE.html The Senate voted Monday to reimpose the U.S. ban on Chinese telecom giant ZTE, in a rebuke to President Donald Trump and his efforts to keep the company in business.

The provision targeting ZTE was part of the National Defense Authorization Act, a must-pass defense spending bill that cleared the Senate by a vote of 85-10. It must now be reconciled with the House version of the measure, which takes a narrower approach to ZTE.

The vote raises the stakes in Congress' brewing confrontation with Trump over the Chinese company, which lawmakers of both parties consider a national security threat to U.S. networks.

In a sign of the broad backing for the effort, Republican Sens. Tom Cotton of Arkansas and Marco Rubio of Florida as well as Democrats like Minority Leader Chuck Schumer of New York and Elizabeth Warren of Massachusetts pushed for the ZTE ban to be included in the defense bill.

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The Senate's ZTE provision would force Trump to certify that Chinese telecoms have not violated U.S. law for a full year and are cooperating with U.S. investigators before any lifting of civil penalties. It would also prevent the U.S. government from purchasing or subsidizing equipment from ZTE and Huawei.

Despite Monday's overwhelming Senate passage, the ZTE ban could still be stripped from the defense bill or modified during the conference process between the Senate and House, which did not push back as aggressively in its own version of the legislation. House lawmakers did include a provision that would bar ZTE and Huawei from entering into U.S. government contracts.

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iehi-feed-64038 Mon, 18 Jun 2018 19:00:38 GMT Debt Clock Ticking | Mauldin http://implode-explode.com/viewnews/2018-06-18_DebtClockTickingMauldin.html 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.

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iehi-feed-64035 Sun, 17 Jun 2018 18:34:06 GMT Trade Acrimony With Canada -- Yes, It Can Flare Up Into Full-Scale Trade War http://implode-explode.com/viewnews/2018-06-17_TradeAcrimonyWithCanadaYesItCanFlareUpIntoFullScaleTradeWar.html iehi-feed-64034 Sun, 17 Jun 2018 18:30:57 GMT Venezuela Orders Government Services to Accept Any Cryptocurrency http://implode-explode.com/viewnews/2018-06-17_VenezuelaOrdersGovernmentServicestoAcceptAnyCryptocurrency.html 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 http://implode-explode.com/viewnews/2018-06-16_HereshowtheECBjustbreathednewlifeintothedollarrallyanalystssay.html 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.

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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.

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iehi-feed-64030 Fri, 15 Jun 2018 23:18:43 GMT Why the Fed Tweaked an Obscure Interest Rate This Week http://implode-explode.com/viewnews/2018-06-15_WhytheFedTweakedanObscureInterestRateThisWeek.html 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.

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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...

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iehi-feed-64029 Fri, 15 Jun 2018 23:05:55 GMT The court's decision to let AT&T and Time Warner merge is ridiculously bad http://implode-explode.com/viewnews/2018-06-15_ThecourtsdecisiontoletATTandTimeWarnermergeisridiculouslybad.html The decision surprised almost everyone -- not necessarily that AT&T and Time Warner had won, but that Judge Leon allowed the merger to go through with no conditions or prohibitions on their behavior at all. In fact, Judge Leon's opinion seems downright excited for the two companies, while systematically discounting the government's case at every turn. Honestly, it's a little strange.

... from the jump, it's pretty clear Judge Leon thinks AT&T's ideas about the future of content are pretty good, while the DOJ's complaints about antitrust are pretty boring...

In a country where net neutrality has just been repealed, owning the internet connection is a huge advantage, just like owning the cable network would be. All of this is, of course, extremely obvious to anyone who has used a phone to watch anything in the past decade. It's not clear how Judge Leon thinks any of this actually works, or if he realizes AT&T is the country's largest wireless internet provider...

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iehi-feed-64025 Fri, 15 Jun 2018 22:43:58 GMT Wall St ends high-volume session lower on trade jitters http://implode-explode.com/viewnews/2018-06-15_WallStendshighvolumesessionlowerontradejitters.html iehi-feed-64023 Fri, 15 Jun 2018 14:10:12 GMT Trump Hits China With Tariffs On $50 Billion Of Goods; China Says It Will Retaliate http://implode-explode.com/viewnews/2018-06-15_TrumpHitsChinaWithTariffsOn50BillionOfGoodsChinaSaysItWillRetali.html iehi-feed-64021 Fri, 15 Jun 2018 00:44:25 GMT SEC Official Claims Ether Is Not a Security http://implode-explode.com/viewnews/2018-06-14_SECOfficialClaimsEtherIsNotaSecurity.html iehi-feed-64015 Mon, 11 Jun 2018 19:27:19 GMT The real opportunities in cryptocurrency... aren't cryptocurrencies http://implode-explode.com/viewnews/2018-06-11_Therealopportunitiesincryptocurrencyarentcryptocurrencies.html ... in all likellihood, reports of cryptocurrencies' death have been greatly exaggerated. Governments almost always regulate technology-- automobiles, radio, television, the Internet. And while regulations often create unnecessary costs and inconveniences, they haven't stopped the overall rise of these important technologies.

Crypto will likely be the same. It's too mainstream to kill off, and the SEC needs to show the world that they embrace innovation. Plus, there are too many mega-corporations that have been investing heavily in their own blockchains and distributed ledger technology (DLT), and those companies have far too much political clout to be shut down by the SEC.

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If anything, that's the real threat to most of the tokens and cryptocurrencies that exist today-- the rapid advancement of the technology itself.

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iehi-feed-64012 Sun, 10 Jun 2018 17:32:59 GMT The "Trump Tax Cut" Numbers Are Starting to Trickle In -- and They're Not Good... http://implode-explode.com/viewnews/2018-06-10_TheTrumpTaxCutNumbersAreStartingtoTrickleInandTheyreNotGood.html While we cannot accurately adjust for the impact of the tax change in year to year comparisons, it is clear that, so far, the tax cuts apparently are not acting as stimulus. Year to year revenue growth is running well below pre-tax cut levels. The growth rate is fluctuating between -4% and +2%, whereas prior to the tax cut the growth rate was +2% to +10%.

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[While the drop in tax collections is also] economic stimulus and it means that the top line economic data numbers will continue to run hot... the drop in revenue also means that the deficit has increased. That translates to more government borrowing. More borrowing means more Treasury supply. That must come out of the accounts of dealers and investors. The Fed is no longer a buyer. It's pulling money out of the markets.

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While the effects haven't been clear yet in terms of lower stock prices, the time is coming. This is no time to be chasing stocks.

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iehi-feed-64011 Sun, 10 Jun 2018 17:30:34 GMT Trump Dynamites G7 Meeting in 11th Hour (SO MUCH FOR TARIFF-FREE G7!!) http://implode-explode.com/viewnews/2018-06-10_TrumpDynamitesG7Meetingin11thHourSOMUCHFORTARIFFFREEG7.html The president's outburst had been foreshadowed for days leading up to the Canada summit, with Mr. Trump and his counterparts trading sharp-edged barbs that included threats of punches and counterpunches on tariffs. President Emmanuel Macron of France accused Mr. Trump of being willing to remain isolated from the world.

That was followed by 48 hours of tense and often confrontational closed-door discussions between Mr. Trump and the leaders of America's closest allies -- France, Britain, Canada, Japan, Italy and Germany -- in the hopes of resolving a brewing trade war among friends.

Instead, the gathering apparently served to further inflame Mr. Trump's belief that the United States is being treated unfairly by countries with which prior presidents had long ago negotiated trade agreements for the flow of goods and services.

The result was a slow-rolling collapse of the fragile alliances that officials at the summit -- and even Mr. Tump's own White House advisers -- insisted throughout the day could be maintained in the face of fundamental disagreements.

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Earlier in the day, before Mr. Trump left the summit, he brought up the dramatic prospect of completely eliminating tariffs on goods and services, even as he threatened to end all trade with them if they didn't stop what he said were unfair trade practices.

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