What every Biotech bubble-owner, Greek FinMin, and Chinese housewife is asking right now... it seems everybody is shaking down everybody, creditors shaking down Greece, Greece shaking down local governments; and "markets" shaking down their central planners with these brief reminders of what happens if they don't get their money...
It all started early...with a pump off the China QE news and a dump seemingly triggered on USD weakness post-Greek FinMin Varoufakis "containement"...
The cash indices just could not hold any BTFD ramps... 7 Dips bought and failed... Dow outperformed (AAPL), Small Caps underperformed...
Nasdaq was Knackered by a breakdown in Biotechs... down 7.5% from Friday highs and back below its 50DMA...
This is the first close below the 50DMA since October...and worst day in over a year... when Janet Yellen warned! (not we mnade a lower hig ...
(Reuters) - Time Warner Cable Inc and Cox Communications Inc [COXC.UL] denied a Wall Street Journal report on Monday that Time Warner Cable had approached Cox Communications to discuss a potential merger.
The cynicism among the informed classes has never been so deep. Even the pompom boys in the cheerleading clubs like CNBC and The Wall Street Journal express wonderment at the levitation of stock indexes and bond values. They chatter about a "correction" of 20 percent being a healthful tonic that would clear away some dross and quickly usher in a new episode of "growth" — or growthiness, which, like truthiness, became an acceptable approximation of the real thing. The truth, as opposed to truthiness, is they no longer believe their own bullshit about growthiness.
The suppression of interest rates and pervasive accounting fraud has thundered through the financial system, and the deformities caused by it have emerged in currency war, currency instability, trade collapse, and political crisis. Years of central bank intervention have stolen the capital of the future to construct a Potemkin economy meant to conceal the sickening gyre of diminishing returns strangling business as usual.
Until it collapses by a great deal more than the wished-for mere 20 percent, more perversities will be piled onto the already existing burden. Is it not a wonder that professionalized interest groups like AARP have not screamed bloody murder over the suppression of interest rates which deprives its members of bank account and bond interest on savings? Instead AARP, like virtually every enterprise in America, has turned to racketeering. Don't worry, they'll be gone from the scene soon enough.
The next shoe to drop will be various forms of bail-ins and attempts to prevent bank account and money market holders from getting access to their cash. A withdrawal abov ...
When last we checked in on the subprime auto ABS market Santander Consumer was busy paying the US government $9 million to settle charges that the subprime auto lender had illegally repossessed some 800 vehicles from active duty service members and had attempted to extract fees from another 350 soldiers in connection with repossessions the bank didn't even execute. As we noted at the time, Santander wasn't about to let a few disgruntled soldiers and a measly $9.35 million fine slow down the securitization machine which is why the lender was launching the DRIVE-2015 A deal, a $700 million securitization backed by car loans to borrowers with an average FICO of 552 although, as we pointed out, 13% of those whose loans wound up in the collateral pool had no FICO at all. That is what is known as "deep subprime."
Well, things just got a lot "deeper," because as Bloomberg reports, Texas-based Skopos Financial has both raised and lowered the bar at the same time by setting a new standard for what counts as questionable collateral while simultaneously proving that in a NIRP world, investors are willing to plumb the FICO depths for yield:
Skopos Financial, a four-year-old auto finance company based in Irving, Tex., sold a $149 million bond deal consisting of car loans made to borrowers considered so subprime you might call themâ€"we dunnoâ€"sub-subprime?
Details from the prospectus show a whopping 20 percent of the loans bundled into the bond deal were made to borrowers with a credit score ranging from 351 to 500â€"the bottom 6 percent of U.S. borrowers, according to FICO. As a reminder, the cut-off for "prime" borrowers is generally considered to b ...
Submitted by Charles Hugh-Smith of OfTwoMinds blog,
Those who lived through the last two speculative blow-off tops know the impossibility of predicting the final top.
How can we tell if stocks are in the final blow-off stage of a bubble? There are four basic give-aways:
1. Parabolic rises in stocks and speculative debt.
2. The mainstream financial media claims the clearly visible bubbles are justified by fundamentals.
3. Conventional financial authorities insist this is not a blow-off top.
4. The expressions of regret of those who sat out the latest rally become ubiquitous.
In the past few days, I have read two laughably baseless justifications of the bubble in Chinese stocks by conventional financial analysts:
A) China is a "black box," i.e. unfathomable, so go with what we know, which is that China is a nation of entrepreneurs: this is the green light to buy the bubble here if you want to reap easy profits.
B) The stock market bubble in China is positive evidence of a healthy re-adjustment of China's financial system.
That neither thesis has the slightest foundation in reality doesn't matter, as the real agenda of the analysts is to justify their own attempts to join the crowd reaping vast profits in the bubble.
This denial that a speculative blow-off is clearly occurring is a key indicator that a blow-off top is in its final stages.
Consider the Shanghai stock index (SSEC). Is it truly normal for the stock markets of nations with economies approaching stall-speed to double in less than a year?
Amazon is a large, well-run corporation, but its core businesses are low-margin (as for the cloud business--everybody and their brother is rampi ...
A week ago the world and Greece alike were stunned to learn that the financial situation in Athens is so atrocious, the government, through an emergency decree, was forced to not only "borrow" funds from pensioners, but would also confiscate any available cash held by municipal entities such as mayor's offices, the national opera, the art gallery and even hospitals and kindergartens, in order to make its upcoming payments to the Troika, as well as to help with rolling over debt maturities, of which as a reminder there are many.
The government had hoped this act of desperation would raise up to â‚¬2.5 billion in funding, carrying Greece though the end of May, however according to initial media reports the practical limits of this action would lead to at most â‚¬500-600 million in new funds raised, not nearly enough to cover the â‚¬1 billion in Greek payments due to the IMF in May alone.
Earlier today, while the European markets were caught in the latest myopic buying frenzy resulting from the hope that an imminent termination of Yanis Varoufakis may mean a Greek debt deal is imminent, the Central Union of Municipalities and Communities of Greece ("KEDE") held a meeting in which it said that while it "declares it support for the national negotiating effort", it would not transfer any funds to the Bank of Greece.
(Reuters) - Mylan NV rejected Teva Pharmaceutical Industries Ltd's $40 billion takeover offer on Monday, saying in a scathing letter that it grossly undervalued the company and that Mylan has no interest in payment in what it termed "high-risk" Teva stock.
The past week we have made markets safer by arresting the dangerous flash crash villain who was a threat to national security and the health of the entire financial market system. Like I always say when in doubt follow the money trail in identifying motives and what is really going on here in this Flash Crash arrest.
In this case there is this whistleblower who is trying to cash in on the U.S. Commodity Futures Trading Commission's (CFTC) whistleblower program, created after the 2010 Dodd-Frank Wall Street regulatory reform bill which awards tipsters between 10 percent and 30 percent of the total sanctions collected if the government collects $1 million or more.
For 6 months, investors have been buying the idea - pitched by any and every status-quo-sustaining talking head, politician, and central banker - that low oil prices are unequivocally good for America. This has manifested itself in retail stocks handily outperforming the S&P. However, as Bloomberg notes, the last few weeks has seen that reverse dramatically as it appears investors, losing faith in the big-takers, have realized that "consumers aren't spending as much of the money saved from lower gasoline prices."
As Bloomberg adds,
In the past year, there's been an inverse relationship between the price of crude oil and the relative performance of retail stocks. An almost 60 percent decline in oil between June 2014 and mid-March contributed partly to the rally in shares of these companies as "investors anticipated a boost to consumption that would benefit retailers' profitability," Maley said. "The retail fund's recent underperformance reflects a partial reversal of this bet," which could be more pronounced if oil trades above $60 a barrel.
It's no secret that biotech has been on an incredible run over the past several years. In fact, as we pointed out late last month, it's been the top performing sector for five years running, has outperformed the S&P by a count of 3.5:1, and is up four-fold since the dot-com bubble. Additionally, there were a record 82 IPOs in the space in 2014, eclipsing the previous record of 67 and the number of companies with valuations greater than $2 billion has tripled in just four years.
One of the drivers behind the sector's strength has been M&A. For instance, there were $17 billion worth of deals on March 30 alone, a record for the healthcare industry and an indication that 2015 may well top 2014 to become the best year ever for healthcare takeouts as buyers, anxious to plug holes in their pipelines and snap up new drugs that treat rare diseases, have paid an average of more than 30 times revenue for billion-plus deals over the past three years, Bloomberg noted last month. The following chart is quite telling:
The same dynamic appears to be driving the M&A binge that often drives speculative manias: everyone fears missing the boat. "Health care is obviously dominating the M&A scene. There seems to be a self-imposed pressure that if they identify a target they like, then they have to move quickly because somebody else might come along and pick it off," one analyst who spok ...
Submitted by Lance Roberts via STA Wealth Management,
Last week, I stated the market was approaching a fairly important decision point. To wit:
"As shown in the chart below, the market has been remained trapped in a tightening pattern of higher lows and lower highers. This type of action is like the compression of spring. In the next few days, the markets will make an important decision. A breakout to the upside of this consolidation will confirm the current bullish trend, and portfolio actions should remain allocated and tilted more heavily towards equity related risk. However, a break to the downside will likely suggest a more significant correction in the near term. It is worth noting that this consolidation in the market is happening during a decline of relative strength. This is a warning sign that generally bodes poorly for the bulls."
(Note: The chart has been updated to Friday's close to show the breakout of that consolidation.)
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