Feb 07

Debt, defaults, and devaluations: why this market crash is like nothing we’ve seen before


For many market watchers, a confluence of factors – led by oil, but encompassing China, the emerging world, and financial markets – are all brewing to create a perfect storm in a global economy that has barely come to terms with the Great Recession… Unlike previous pre-recessionary eras, the current sell-off has seen commodity prices, equities and credit conditions all move in dangerous lockstep.

… a tipping point may well be approaching. According to [Oliver] Blanchard’s calculations, a 20pc decline in stock markets that persists for more than six months, will translate into a decline in consumption of between 0.5pc to 1.0pc.

Spreads on high yield US energy corporates have soared to unprecedented highs. “They make Lehman look like a walk in the park” says Thygesen.

More than a third of the entire US high yield bond index is now vulnerable to crude prices remaining low or falling even further, according to calculations from Oxford Economics.

The question exercising the minds of economists and investors is the extent to which this contagion could metastasize beyond the energy sector, as banks cut off credit access, loans turn bad, and financial conditions enter a critical tightening phase.

Over the last 45 years, the S&P500 has suffered a loss of more than 12.5pc on 13 occasions. Six of these have given way to a recession in the US, providing a near 50pc probability that a global downturn is just around the corner.

What, if anything, could halt this pernicious cycle of events from unfolding?

In the short-term, analysts are unanimous: all eyes are on the US Federal Reserve. The central bank’s first rate hike in seven years last December has come to look frighteningly premature in the space of just eight weeks.

Feb 07

PBOC Has Only A Few Months Left "To Stop Collapse": Edwards

“China’s FX reserves could fall to $2.8 trillion, the lower end of the IMF’s recommended range within a few months, which could spark a tidal wave of speculative selling, forcing the People’s Bank of China (PBoC) to throw in the towel and let the market decide the level of the renminbi exchange rate…” — See also China’s Foreign-Exchange Reserves Decline to $3.23 Trillion.

Feb 03

HUD Secretary Castro and Google Fiber Announce First Public Housing Units to be Connected to Ultra High Speed Internet Through ConnectHome Initiative

WASHINGTON – Building on the Obama Administration’s goal to expand high speed broadband to all Americans, today, U.S. Department of Housing and Urban Development (HUD) Secretary Julián Castro and Google Fiber Vice President, Dennis Kish, announced that the West Bluff Townhomes in Kansas City, Missouri will be the first public housing development to be connected to Google Fiber’s ultra-high speed (gigabit speed, or up to 1000 mbps) internet through the ConnectHome Initiative.

Feb 02

Connecticut Landlords Agree to Settle HUD Fair Housing Complaint Alleging They Discriminated Against Families with Children

WASHINGTON – The U.S. Department of Housing and Urban Development (HUD) today announced an agreement with a group of Connecticut landlords to resolve allegations they discriminated against families with children. HUD reached the agreement with New Britain-based Green New Britain, LLC, and PBJ Management, and their on-site property manager for allegedly refusing to rent a two-bedroom apartment to a single mother and her two young children.

Jan 22

JPMorgan CEO gets 35% pay raise to $27M amid cutbacks

NEW YORK –Even as Wall Street braces for more cuts to jobs and bonuses, JPMorgan Chase CEOJamie Dimon was paid $27 million in 2015, up from $20 million the year before, the company said Thursday.

The pay raise comes after JPMorgan announced record annual profits last week, thanks to cost-cutting that helped to offset stagnating revenue growth.

JPMorgan’s board paid Dimon a $1.5 million salary, a $5 million cash bonus and $20.5 million in performance-based stock grants, the company said in a regulatory filing.

Last year, Dimon was paid a $7.4 million cash bonus and $11.1 million in stock awards. His $1.5 million salary has remained unchanged.

This year’s stock grants are tied to new, three-year performance metrics. This could could help alleviate criticisms, which bubbled up last year, that Dimon’s pay is not properly tied to performance.

JPMorgan “is now one of the few, if not the only, large financial institution that does not tie any element of CEO pay to achievement of goals for a specific metric or metrics,” proxy advisory firm ISS said last year ahead of a controversial shareholder vote on the bank’s pay.

Banks emerged from a tough 2015 only to face worsening conditions this year, including rising costs tied to souring energy loans.

As a result, bank CEOs are expected to take the ax to personnel costs — their single largest expense — as they scout for new ways to boost profits.

Morgan Stanley and Bank of America have already said they are planing to slash expenses this year through either layoffs or by moving jobs to cheaper cities.

In 2015, JPMorgan cut staff by 3%, or 6,761 jobs. Compensation costs at the New York bank fell by 1% last year.

Jan 22

DEA Hired A TSA Informant To Help Take Cash From People’s Luggage

“A Department of Justice watchdog officially condemned the U.S. Drug Enforcement Administration this month, following a report that the agency had recruited a Transportation Security Administration security screener to search bags for cash that the DEA could confiscate… the same criticism could be made about the entire practice of civil asset forfeiture, which allows law enforcement officials to seize a person’s property — including cash, cars, jewelry and houses — without obtaining a conviction or even charging the owner with a crime.”