Today's Headlines
Bloomberg:
- Ukrainian Jets Circle Donetsk as Rebels Regroup After Rout. Ukraine stepped up air patrols over Donetsk as a convoy of
pro-Russian rebels moved through the city with an anti-aircraft gun in
tow, threatening renewed violence after clashes left dozens dead. Mayor
Oleksandr Lukyanchenko urged residents of the central part of the city
of 1 million people to stay indoors and away from their windows after
shots were fired near the local headquarters of the State Security
Service. The train of insurgents included two armored personnel
carriers, the mayor’s spokesman, Maksym Rovinskyi, said by phone from
Donetsk.
- German Unemployment Unexpectedly Rises as Growth to Slow.
German unemployment unexpectedly increased for the first time in six
months amid signs of a slowdown in Europe’s largest economy that could
weigh on the fragile euro-area recovery. The number of people out of
work rose a seasonally adjusted 23,937 to 2.905 million in May, the
Nuremberg-based Federal Labor Agency said today. Economists forecast a
decline of 15,000, according to the median of 31 estimates in a
Bloomberg News survey.
- Fed’s Junk-Loan Caution Spurs Creative Accounting Alchemy. Lenders are increasingly allowing
junk-rated borrowers to adjust their earnings to make them look
more creditworthy as U.S. regulators increase pressure on banks
to refrain from underwriting too-risky deals. Such tweaks, which are permissible under more and more
credit agreements, can help companies stay in compliance with
their loan terms or to raise debt. More than half of loans this
year for issuers backed by private-equity firms allow them to boost
earnings by an unlimited amount through projected cost savings from
acquisitions and “any other action contemplated by the borrower,” said Vince Pisano, an analyst at Xtract Research LLC, citing a sample he’s reviewed. Riskier
borrowers may have more incentive to show better financial metrics
because the Federal Reserve and the Office of the Comptroller of the
Currency are increasing pressure on banks to adhere to underwriting
criteria they laid out last year amid
concern that the market is getting frothy. Issuers such as Thoma
Bravo LLC’s TravelClick Inc. have used adjustments, called add-backs, to raise earnings and decrease leverage when seeking
funding.
- Goldman’s Kostin Sees Hedge Funds Playing in Shrinking Sand Box. Here’s
the problem facing hedge funds investing in the stock market
this year, according to Goldman Sachs Group Inc. chief equity strategist
David Kostin: the sand box they like to play in has gotten a lot
smaller. For example, equity hedge fund managers tend to have about a
quarter of their investments in consumer-discretionary stocks, Kostin
told Erik Schatzker and Stephanie Ruhle on Bloomberg Television’s
“Market Makers” program today. The dispersion
of returns within that group is too small for managers on the prowl for
stocks to buy or short, Kostin said.
Wall Street Journal:
- China Urges Local Governments to Spend. Beijing Will Take Back Any Unspent Money. China's Finance Ministry said on Wednesday
it has asked local governments to speed up spending on infrastructure
and other budgeted investments to give sluggish economic growth a shot
in the arm.
Some spending has been
relatively slow this year and budgeted funds must reach all local
governments by the end of June, the Ministry of Finance said in a
statement on its website. If local
governments fail to spend the funds without a good reason by the end of
September, Beijing will take the unspent money back, the ministry
warned. "Certain difficulties [in the
economy] cannot be underestimated," the ministry said, pledging to give
fiscal spending a larger role in boosting economic growth. "[Local
governments] must speed up spending on infrastructure construction
projects and make spending materialize as soon as possible," said the
statement dated May 21. Over the first
four months of the year, China's fiscal spending was up 9.6% year over
year, down from an increase of 13.6% over the same period last year,
data from the finance ministry showed.
- Japan Lower House Staff: Casino Bill Won't Be Discussed This Month. Lawmakers Believe It Will Be Difficult for Casino Bill To Get Passed During Current Session.
- Iron-Ore Prices Unlikely to Rise Soon, NDRC Says. China's Top Economic Planning Agency Blames Flood of Supply. Iron-ore prices are unlikely to rise over
the next three months from their current trough, the lowest in nearly
two years, China's top economic planning agency said Wednesday. Prices
for the mineral, which is forged into steel, depend almost entirely on
demand from China, the world's second-largest economy, which consumes
two thirds of global ore supply and makes nearly half the world's steel.
- 'Serious Conditions' at Phoenix Veterans Affairs Office, Watchdog Says. The Phoenix VA Health Care System failed to properly schedule care
for its patients, according to an interim report by the inspector
general of the Department of Veterans Affairs. Accusations of delayed or
denied care appointments have led to calls for an investigation of the
department and the resignation of Veterans Affairs Secretary Eric
Shinseki. The interim report cited "substantiated serious conditions" in the Phoenix...
- New Global Accounting Rules to Affect How Companies Book Revenue. Change Affects When Firms Record Sales; Software Makers Could Do So Sooner, Auto Makers Later.
MarketWatch.com:
- 43% call Obamacare ‘mostly negative’ for America. When asked to think about their health insurance situation and their
ability to access quality health care, just 12% of Americans felt better
about this than they did last year, while 20% felt worse, according to a survey released Wednesday by Bankrate.com . And many think that could be due to Obamacare: Almost
two out of three Americans don’t think the Affordable Care Act has had a
positive impact on American lives, with 43% saying they think the ACA
has had a mostly
negative impact and 21% saying they think it hasn’t made much, if any,
impact. Fewer than one-third of Americans (28% to be exact) say that the
ACA has
had a mostly positive impact, according to the survey, which polled a
nationally representative sample of 1,000 adults living in the U.S.,
some of whom had Obamacare and others who didn’t. “The administration is saying it’s a big success, but the negative
feelings are strong still and entrenched,” says Bankrate.com insurance
analyst Doug Whiteman.
- Looming EPA ‘war on coal’ draws business backlash.
CNBC:
ZeroHedge:
Business Insider:
Real Clear Politics:
- Get Ready For the Subprime Mortgage Crack-Up 2.0. Earlier this month the following headline appeared in the Wall Street Journal:
"U.S. Backs Off Tight Mortgage Rules: In Reversal, Administration
[HUD/FHA] and Fannie, Freddie Regulator Push to Make More Credit
Available to Boost Housing Recovery." Clearly memories as to the
causes of the recent housing market collapse are short. Indeed,
political pressures are once again increasing on the private sector to
degrade sound lending practices.
Reuters:
- French jobless total hits new high in April. The number of people without a job in France rose by 14,800 in April to a new record, undermining President Francois Hollande's campaign to bring unemployment
down.
- Russia's Lavrov warns of "fratricidal war" in Ukraine. Russian
Foreign Minister Sergei
Lavrov on Wednesday accused the West of pushing Ukraine into a
"fratricidal war" and repeated Moscow's calls for an end to the interim
Ukrainian government's military action against pro-Russian separatists.
Lavrov's remarks were in line with frequent Russian statements placing
blame on the United States and EU for the turmoil in Ukraine, where
government forces killed dozens of
rebels in the eastern Donetsk province on Monday and Tuesday.
Telegraph:
CCTV:
- China's Li Says Global Economy Recovery Faces Uncertainty. China
Premier Li reiterated China's proactive fiscal policy and prudent
monetary policy.
1 comment:
There was a strong trade higher in Credit Investment, AGG, on May 28, 2014. The chart of the Interest Rate on the US Ten Year Note, ^TNX, shows an awesome trade lower from 2.52% to 2.44%, the lowest rate in 2014. Aggregate Credit, AGG, soared beyond its May 15, 2014, high, being driven parabolically higher by 30 Year US Government Bonds, EDV, US 10 Year Government Notes, TLT, and Mortgage Backed Bonds, MBB, as investors strove to find what they perceive to be “safe haven” investment in US Treasuries. Junk Bonds, JNK, traded higher than their previous high which occurred on May 16, 2014.
The dramatic flattening of the 10 30 US Sovereign Debt Yield Curve, $TNX:$TYX, seen in the Steepner ETF, STPP, flattening, and highlights the investors perceived concept of US Treasuries as “safe assets”.
Ever since Milton Friedman came out with the Free To Choose doctrine of floating currencies, the world has been operating on a debt based money system, and to the dismay of Austrian Economist, not a hard asset money system.
At the end of the age of liberalism, meaning freedom from the state, debt has become money, as the fiat, that is the rule of the Banker Regime is coming to a climax. And as is seen in late May 2014 financial market trading, debt, not equities, has become wealth.
The Distressed Investments, traded by the Fidelity Mutual Fund, FAGIX, have increased in value ever since the US Fed traded out “money good” US Treasuries for the worst of debt in QE1 in 2008, with the aim of restarting financial marketplace investing and regenerating global economic system. The US Fed’s monetary policies and the Banker Regime’s policies of credit choice were stunningly successful, in that they have produced awesome Equity Investment, VT, and Credit Investment, AGG. The world has attained peak wealth, it is an awesome moral hazard based wealth.
As the 10 30 US Sovereign Debt Yield Curve, $TNX:$TYX, has flattened, seen in the Flattner, ETF, FLAT, trading higher in value, Distressed Investments, FAGIX, and Junk Bonds, JNK, have come to be established as the most valued of all investments.
Of note, Leveraged Buyouts, PSP, traded higher, and Dividend Stocks, DTN, traded to a new rally high, with the trade higher in US Government Debt, EDV, and TLT.
Physical possession of gold bullion will emerge as the only “safe asset”, as the fiat of the Banker Regime fails, as investors derisk out of currency carry trade investments and debt trade investments.
Not only is the death of currencies underway, but the failure of trust is underway as well. While there was only a slight follow through from the sale of the Major World Currencies, DBV, and the Emerging Market Currencies, CEW, seen in only a slight trade lower in Equity Investment, VT, there was a sell in Regional Banks, KRE.
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