The former New York City mayor can be heard yelling back at the heckler, "I reduced crime, you jackass!" Rudy Giuliani, former lawyer for President Donald TrumpWilliam B. Plowman/NBC/NBC Newswire/NBCUniversal via Getty Images Rudy Giuliani yelled at a heckler during a pro-Israel parade Sunday in New York City. "I am a class act, and you're probably as demented as Biden," Giuliani said to the heckler.  On Friday, Giuliani reportedly met with the House committee investigating the January 6 insurrection.  Rudy Giuliani took the time to exchange a few choice words with a heckler as he walked down the street during a pro-Israel parade. The former New York City Mayor and Trump attorney was confronted as he marched in the JCRC-NY Celebrate Israel Parade in New York on Sunday.—Jacob Kornbluh (@jacobkornbluh) May 22, 2022 "I reduced crime, you jackass!" Giuliani can be heard saying in a video after he turns around to confront the person shouting at him. Giuliani also calls the person yelling at him a "brainwashed asshole." The heckler, seen wearing a yellow shirt, calls Giuliani a "class act.""I am a class act, Giuliani replies, "and you're probably as demented as Biden." Giuliani then walked away smiling and waving a tiny Israeli flag.On Friday, Giuliani reportedly met with the January 6 committee for nine hours after previously backing out of a scheduled appearance in early May.The former politician was subpoenaed in January for promoting "claims of election fraud" after the 2020 election and "sought to convince state legislators to take steps to overturn the election results." according to a statement from the committee.Read the original article on Business Insider.....»»

Record Rate Cut Shows Beijing Pursues Shock-and-Awe By Ye Xie, Bloomberg markets live commentator and analyst The record reduction in China’s key interest rate on Friday was a rare positive policy surprise from Beijing since the Omicron variant of Covid began to wreak havoc on the economy in the past two months. It’s a clear policy U-turn that aims to offset some of the self-imposed constraints, such as housing restrictions, to boost business and household confidence. If so, more policy easing for the housing market and more fiscal spending are likely to come. China’s banks lowered the five-year loan prime rate (LPR), which is tied to the mortgage rate, by a record 15 bps on Friday, triple the amount that economists had forecast. It was the second policy move in a week that was aimed at propping up the ailing property market, after the People’s Bank of China cut the floor of the mortgage rate a week earlier. Until now, Beijing’s plan to save the economy had been conservative, focusing on liquidity injections and tax reductions. That had fallen short of what’s required to offset the destruction caused by Covid restrictions and the property slump. Take the housing sector: New home sales for the top 100 developers tumbled 59% in April from a year earlier. Goldman Sachs on Friday raised the default forecast for high-yield property developers’ bonds to 32% from 19%. The efforts to lower mortgage rates show a clear sense of urgency to turn around the housing market. As Zhaopeng Xing, senior China strategist at ANZ Bank, said: “The cut signals that the leadership has ended discussion over the property sector and decided to rescue it as soon as possible.” Source: Huatai Securities There are a few reasons to believe that the impact of the LPR cut alone will be limited. As Nomura’s Lu Ting pointed out, mortgage rates had already started to decline, even before recent policy moves. That did little to arrest the sales decline, in part because Covid restrictions limited mobility, jobs, income and confidence of residents. In addition, when consumer leverage is already high, the willingness and ability to borrow remains in question. In fact, property stocks fell Friday, even as the benchmark CSI 300 rallied. What’s clear, then, is more policy follow-ups are likely needed to boost income, save jobs and lift confidence. Here’s is a laundry list from Citigroup on what Beijing could do to revive the housing and the broader economy: Ease restrictions on presale deposits, maybe even tinker with the “three red lines” on funding curbs to improve cash flow for developers Advance part of the 2023 special local-government bond quota to support investment Consumer subsidies or vouchers funded by the central government Special Treasuries to cover Covid expenses, as was done in 2020 (1 trillion yuan) General budget revision to expand stimulus as in 2016 (for tax reform), 2008 (Sichuan earthquake) and 1998 (Asian financial crisis) Bloomberg Economics now forecasts China’s growth will trail the U.S. for the first time since 1976, when Chairman Mao died.  President Xi reportedly aims to avoid such a scenario in a year when he is expected to retain power for a third term. The rate cut on Friday may be the beginning of a shock-and-awe attack to get ahead of sagging expectations. Tyler Durden Sun, 05/22/2022 - 23:25.....»»

Marcus & Millichap Capital Corporation (MMCC), a leading provider of commercial real estate capital markets financing solutions, has arranged $3 million in financing for two properties a mixed-use property at 3 Pearl Street in Mystic, Connecticut, and a daycare center at 1501 North Nova Road in Holly Hill, Florida. The... The post Marcus & Millichap Capital Corporation Arranges $3 Million Financing for Two Properties in Connecticut and Florida appeared first on Real Estate Weekly. Marcus & Millichap Capital Corporation (MMCC), a leading provider of commercial real estate capital markets financing solutions, has arranged $3 million in financing for two properties a mixed-use property at 3 Pearl Street in Mystic, Connecticut, and a daycare center at 1501 North Nova Road in Holly Hill, Florida. The financings were exclusively secured by MMCC’s Robert Noeldechen, vice president, based inNew Haven, Connecticut. “We were able to secure competitive financing terms for properties in high-growth suburban markets that offer consistent tenant bases,” said Noeldechen. “Residential and Day Care Centers continue to be in demand from Clients. As schools and businesses return to their campuses and occupancy rates return to normal levels parents are placing children in back in daycare as they no longer work from home.” The $1.54 million loan for the mixed-use property has an interest rate of 4 percent and an LTV of 80 percent. The two-story, 5,284 square foot property has seven multifamily units and two commercial spaces. It was built in 1843 and has been renovated throughout the past 10 years. The property is located in the historic Seaport Village and has upscale residential units within walking distance of local attractions, including the Mystic Seaport & Museum. The $1.4 million loan has a 10-year term and a 5-year loan with an additional 5-year term and has an interest rate of 3.8 percent and an LTV of 75 percent. Kid City USA Enterprises, a national provider of early childhood education, occupies the 8,150 square foot space. The property is located in the Holly Hill suburb of Dayton Beach. The post Marcus & Millichap Capital Corporation Arranges $3 Million Financing for Two Properties in Connecticut and Florida appeared first on Real Estate Weekly......»»

"The Fed Has No Idea How Bad It Is Out There" So Here's Some Context... To quote Jim Cramer circa August 2007, "the Fed has no idea how bad it is out there" and 15 years later his rant is just as applicable, in a market that has rarely been uglier. So to help the Fed - and all those other traders who still refuse to panic even though they probably should (according to Goldman, over the past 15 years, there have been 36 daily selloffs of 4% or more, and the VIX was never as low as it was on Wednesday), here's some context courtesy of DB's Jim Reid to show just how bad it is. Quoting DB's chief equity strategist, Binky Chadha, Reid notes that the current -18.7% correction is actually the 6th largest non-recession (so far) correction in post WWII history, only behind > July-98 (around LTCM and Russia default), > Sept-18 (QT and Fed hikes finally bite), > May-46 (post WWII), > Dec-61 (so called Kennedy slide) and finally > Aug-87 (including the Oct-87 crash). Of course, if one includes recessions, there are fifteen larger post WWII sell-offs with the median recession sell-off at -23.9%. From here, the Deutsche Banker - who alone among his Wall Street peers has forecast a US recession in 2023 - expects the US to move towards the average recession decline in the near term which would put the S&P 500 at 3650 (current 3900), a similar near-term view to that of Morgan Stanley's Michael Wilson. At this point, markets become remarkably binary. In the event we do slide into recession, the Deutsche Bank strategists see the sell-off going well above average, i.e., into the upper half of the historical range given elevated initial overvaluation. This means -35% to -40% or S&P 500 at 3000. However, in the event we do not and growth and the labor market hold up in 2022 - which they won't -  they expect the market to rally back to 4700-4800 by year-end as equity positioning rebounds from very low levels. And just to add another twist, while Binky’s baseline view is that the economy doesn’t slide into recession this year and the S&P 500 ends the year at 4750. However, that's before the economy does slide into a recession next year. So clearly, Jim writes, "if the recession then comes in 2023 markets can again price in a recession and see dramatic falls", meaning non-stop market rollercoasters for the next two years. Indeed, as Reid concludes, "one thing is clear. This is not a market for the faint hearted!" There is more in the full piece from Binky Chadha for valuations, sell-offs in historical context, signs of late (but not yet end) cycle, sector analysis and positioning, available to professional subs in the usual place. Tyler Durden Sun, 05/22/2022 - 18:25.....»»

Calamos Investments CEO John Koudounis warned that market volatility will continue for “a long time,” but noted that the current situation presents buying opportunities......»»

MarketsThe worst years in the U.S. stock market have historically led to good future returns. (awealthofcommonsense.com)Why the bond bear market may already be over. (pragcap.com)StrategyAn eight-step plan for dealing with a bear market including 'Check your expectations.' (morningstar.com)Seven questions about the economy and stock market including 'How will rapidly rising mortgage rates impact housing prices?' (awealthofcommonsense.com)CryptoWhy this cryptocurrency crash is different. (theatlantic.com)The Ethereum network is getting closer to a big overhaul. (fortune.com)It looks like crypto has its own insider selling problem. (investmentnews.com)CompaniesWhy the downturn could enhance the power of Big Tech. (nytimes.com)How inflation affects companies differently. (aswathdamodaran.blogspot.com)Where Peloton ($PTON) went wrong: assuming the good times would last. (wsj.com)Tesla ($TSLA) has more problems than just a an unhinged CEO. (nytimes.com)StartupsM.G. Siegler, "Timing can make great companies look dumb and dumb companies look great." (500ish.com)Not every startup is in the same boat. (crossstack.substack.com)The private markets are filled with overpriced companies. (howardlindzon.com)It's going to take a while to work through the problems in VC land. (avc.com)GlobalThe case for a global recession is growing. (ft.com)Who won the China-U.S. trade war? Probably Vietnam... (wsj.com)Mum's the word. The NBA is back on in China. (espn.com)PolicyWhat lessons can we take away from the fiscal response to Covid? (stayathomemacro.substack.com)Pandemic relief programs were beset with fraud. (washingtonpost.com)Why so many public health officials left in the wake of the pandemic. (scientificamerican.com)Why does the U.S. Supreme Court still not have a formal ethics code? (theatlantic.com)Mass shooters, by and large, get their guns legally. (nytimes.com)EconomyWhy inflation is likely set to cool, including improving supply chains. (tker.co)The economic schedule for the coming week. (calculatedriskblog.com)Earlier on Abnormal ReturnsTop clicks last week on the site. (abnormalreturns.com)What you missed in our Saturday linkfest. (abnormalreturns.com)Podcast links: identifying talent. (abnormalreturns.com)Things are tough out there. Here is some required bear market reading. (abnormalreturns.com)A Q&A with Brian Feroldi author of “Why Does the Stock Market Go Up.” (abnormalreturns.com)Writing IS thinking. (abnormalreturns.com)Are you a financial adviser looking for some out-of-the-box thinking? Then check out our weekly e-mail newsletter. (newsletter.abnormalreturns.com)Mixed mediaA review of "Talent: How to Identify Energizers, Creatives, and Winners Around the World," by Tyler Cowen and Daniel Gross. (city-journal.org)Why working through a Covid infection is a bad idea for everyone involved. (annehelen.substack.com)When it comes to hybrid work everyone is just winging it. (nytimes.com).....»»

Goldman Trader: After A Brutal Week, Here Is The "Cat And Mouse" Question That Needs To Be Answered From Tony Pasquariello, Goldman head of hedge fund coverage Cat and Mouse A brutal week in the markets, with no shortage of blame to go around: the persistence of global central bank hawkishness, gathering recession concerns, ongoing retail liquidation (and, an element of reflexivity). Here’s the central question that I’m trying to work out: if the interest rate market is correct, and terminal Fed Funds rate is going to be somewhere around 3%, at what point is that fully priced into the broader markets? On one hand, there’s already been a very significant tightening of US financial conditions, so you could argue that we’re getting close.   Said another way: you know that financial markets live in the future ... so, when the day comes where everyone can clearly see the end of the tightening cycle, the trading community will be ahead of it and assets will already be on the move. On the other hand, the target rate is still south of 1% and core PCE is still north of 5%, so you could also argue that we’re still much closer to the start of this tightening cycle than to the end of it [for a more detailed discussion, see "The Fed Has Crossed The "Hard Landing" Rubicon So How High Will It Hike? One Bank Crunches The Numbers"]. Said yet another way: as long as inflation is running hot and the labor market is too tight ... again, the inconvenient truth is the Fed has more wood to chop and the markets have more risk to sort out. In a related vein: at what point does the FOMC view an easing of financial conditions and decide that they DON’T need to beat it back? In that spirit, cue Bill Dudley (link): “the Fed has to be happy with the fact that financial conditions have tightened ... they’re getting traction ... they still have to do what they said they’re going to do.” With apologies for thinking out loud here, it’s these type of cat-and-mouse questions that illustrate the difficulty of assessing the current interplay between the Fed and the asset markets.   To be sure, the task of culling jobs is hugely unenviable, but the Fed is still so far off the inflation mark; at the very least, they need to demonstrate the trajectory of core inflation is clearly headed lower, even if they ultimately lose their nerve before reaching 2.0% [maybe the Fed is not so far off: see "Fed Mission Accomplished: Real-Time Indicators Show The Labor Market Just Cratered"]. On that last point, as Joe Briggs in GIR pointed out to me, the FOMC actually sent a similar signal with their March SEP dots, which showed 3½ hikes in 2023 and 0 hikes in 2024 ... despite median inflation forecasts of 2.6% in 2023 and 2.3% in 2024. Here’s where I’m going with all of this: even though financial conditions have tightened considerably ... and, even though this Fed will likely back off once the jobs losses begin to mount (they’re the same folks who ran the AIT play, after all) ... the fact is there’s still a lot of ground to cover before they can declare victory over inflation ... which should keep some pressure on risk assets a bit longer. To add another layer of complexity: as Dominic Wilson in GIR pointed out to me, the stock market usually bottoms when the Fed flinches (see early ’16, early ’19) ... or, if there’s a real growth problem, when the second derivative of economic activity turns (see Mar ’09, Apr ’20).    In that context, again my instinct is we’re just not there yet -- not only does the Fed put feel both smaller and farther out of the money than we’ve been accustomed to for a long time (arguably since the post-1994 era began), but the longer the tightening cycle rolls along, and the higher the unemployment rate goes, the more the markets will rightly worry about a recession (even if you believe, as I do, that the US economy is durable with plenty of nominal GDP still sloshing around). I’ll conclude this narrative with a chart, to followed by quick points and more charts ... I can find no better illustration of what’s currently challenging the stock market than this (link): 1-a. on the positioning front, the glaring wedge between hedge funds and households persists: i. GS Prime Brokerage data reflects some of the largest reduction of leverage on record (link).  n/b: I suspect the huge underperformance of implied volatility traces back to this point (which, for those watching, has been an immense oddity -- over the past 15 years, there have been 36 daily selloffs of 4% or more, and the VIX was never as low as it was on Wednesday). ii. that said, I continue to worry about the impact of US households de-risking.   here’s one way to frame it: total fund inflows from November of 2020 through March of 2022 were $1.34tr ... since the tide turned seven weeks ago, we’ve only unwound $47bn.   iii. given immense ownership differentials -- see chart 11 below for an illustration of how huge households are -- to my eye this nets out in favor of the bears.   now, if there’s a group who can help diffuse the supply/demand problem, it’s US corporates (yes, buyback activity through our franchise has picked up meaningfully over recent weeks).  1-b. A related point: as detailed by the WSJ (link) and our own team (link), the retail investor is quickly exiting the call option party.  to make the point: in the pre-COVID era, average daily notional in call options on US single stocks was around $100bn. At the peak in November of 2021 -- which is when a number of high velocity stocks put in their highs -- it was around $500bn. Fast forward to today, and we’re back down to $185bn/day. 2. The recent period has been a textbook illustration of the stark difference between volume and liquidity: volume in cash equities has never been higher (e.g. an average of 12.7bn shares per day in 2021, which is nearly 2x the run rate of 2019) ... yet, top-of-book liquidity in S&P futures registers in just the 3rd percentile of the past six years.   3. despite the ongoing selloff, the past few weeks have also brought moments that illustrate the difficulty of trading stocks from the short side, even if this is a bear market.  see chart 12 below, or witness daily price action in a custom basket of popular shorts, ticker GSCBMSAL. For the most short-term macro traders amongst you, if you want to play S&P from the short side, my sincere advice is to go home flat each night and reassess tomorrow morning -- this is a market to be traded, aggressively, but with extreme discipline. An alternative to this ultra-tactical approach is to utilize put spreads or 1-day gamma (ideas available). 4. I’m no expert in crude oil, but I’ve probably spent 10,000 hours with those who are, so here’s a bullish take: despite a record SPR release, a very strong dollar, shutdowns in the second largest economy on the planet and a break lower in most all risky assets, crude oil has largely stood its ground ... you can probably see where I’m going with this.  For the take of an expert, this note is worth a glance, the (surprising) punch line as I read it: “own commodities as financial conditions tighten.  in the past, spot and roll returns performed well when real rates rose, and particularly when financial conditions additionally tightened” (link). 5. US consumption: again, I worry a lot about building pressures on the low end consumer. While parts of this week’s data set were encouraging -- namely HD and government retail sales data -- what we heard from WMT and TGT was brutally clear: in addition to shipping and inventory issues, the cost of food and fuel is impinging on the US consumer.  This, as much as anything, was THE story of the week. On the other end of the spectrum, high end consumption is still off the charts (witness recent news stories on Manhattan real estate, art or fine wines).  I continue to think the medium-term reckoning of this wedge takes the form of ... higher taxes. 6. on US housing, I admit that a profoundly positive story has gotten a lot more complicated. On one hand, supply/demand favors ongoing strength. On the other hand, affordability seems to be a serious issue, and the move in mortgage rates is very significant.  Where do we come out? As Jan Hatzius in GIR put it to me, informally, there’s not necessarily a clear conclusion: “We cut our forecasts on homebuilding activity and house prices modestly, but the shortage of houses and overall tightness of the market should substantially dampen pressure on the sector.” If you’re interested, we have some interesting charts on this topic.  7. China: the data is so bad, it’s simply eye-popping (witness the worst IP print on record). In fact, GIR has cut our expectation of 2022 Chinese GDP growth to just 4%, which ex-2020 would be the slowest growth rate since ... 1990 (link).  for the sake of balance, Shanghai is set to reopen on June 1st and I suspect foreign trading length is approaching rock bottom.  For a balanced and comprehensive assessment of the regional economic outlook, this is worth a glance: link.   8. This is, if nothing else, some interesting brain food.  I asked Daniel Chavez in GIR to mark the moves in the COVID era in some popular assets. There are a lot of ways to approach this choose-your-own-adventure; the way we cut it was total returns from the lows of March 2020 to the highs (in NDX) of November of 2021 ... then from the November highs to today ... and then from the pre-COVID highs to today. A few things stick out to me, here’s one: point-to-point across the full COVID era, US energy stocks have far outperformed the stay-at-home stocks: 9. In a related spirit, and with credit to sales & trading colleague Brian Friedman, if you look the overlay of NDX P/E (white) with inverted 30-year US real yields (yellow), equities are doing what the move in real rates would suggest they should be doing: 10. With credit to David Kostin in GIR, here’s a bigger picture on tech.  For all of the recent troubles, you still have to marvel at the sustained growth of US mega cap names.  now I suppose the mega question is ... would you be willing to fade the broad pattern of this chart: 11. Another level set from GIR ... which, again, illustrates the size of households vs hedge funds (** 2% **) in the domestic equity market:  12. with credit to a client, an analog from the aftermath of the immediate aftermath in the LEH period, which again illustrates the difficulty of being short in the middle or late stages of a bear market: 13. Finally, and to continue the recent thread, this is a powerful chart of de-globalization ... If this were a chart of a security, I’d be inclined to sell it (link) Tyler Durden Sun, 05/22/2022 - 13:50.....»»

Morgan Stanley: We Are About To Find Out The Cost Of Remodeling A Global Economy By Michael Zezas, Head of Public Policy Research at Morgan Stanley What’s the cost of remodeling a global economy? What’s the benefit? Ready or not, we’re about to find out. Why? Because geopolitical events are accelerating important secular trends: The “slowbalization” of economic and national interests eating away at globalization; and The shift from a single economic power base and set of rules to a “multipolar world.” While the sell-off in risk markets is getting attention now, our conversations with corporate decision-makers and policy-makers are increasingly taken up with how to deal with these two important and overlapping transitions. These decisions have long-term consequences, so investors need to understand how their choices may play out. Our latest Blue Paper is a guide to navigating these secular trends, with frameworks we developed in 2019 ("The Slowbalization Playbook") and 2020 ("Investing for a Multipolar World", both reports are available to zerohedge professional subscribers). For the sake of your Sunday, here’s what you need to know, in brief: Geopolitics are accelerating slowbalization and the multipolar world, providing more incentives to near-shore or “friend-shore” supply chains: To be clear, these trends didn’t start with Russia invading Ukraine or even US/China trade tensions. Services trade was already outpacing goods trade, and automation has been reducing the primacy of low-cost labor. But the incentives for companies and policy-makers to rethink globalization have been amplified by recent geopolitical developments. A bipartisan consensus emerged in the US around an existential need to outcompete China. The result in 2018 was tariff and non-tariff barriers (i.e., export restrictions), the latter meant to protect the US advantage in key technologies. We expect these barriers to endure and boost costs beyond the directly taxed sectors, like semis, to industries like auto batteries and AI that are adopting these new technologies. The pandemic served painful notice for some sectors that paying up for ”just in case” instead of “just in time” inventories might be the only way to avoid the supply chain bottlenecks caused by lockdowns, mask mandates, or other restrictions. And Russia’s invasion of Ukraine and the subsequent sanctions cut off exports of energy and agricultural products to Europe and other parts of the globe. Relying on allies rather than rivals yields supply chain security. With transitions come costs and lingering inflation… Consider that Europe now is eager to build infrastructure to import natural gas from the US to avoid reliance on Russia. Or consider a hypothetical American multinational moving some of its production out of China to avoid new US export controls. This shift comes not only with a cost but also fresh uncertainties around labor and infrastructure in the new locale. Our equity research colleagues believe that profit margins could face headwinds in sectors like European chemicals, European and Asian midstream and downstream natural gas utilities, auto OEMs, consumer staples, portions of leisure, and transportation. ...but transitions also drive opportunity. All this "geopolitical capex" has to drive capital somewhere. Some geographies and sectors are likely beneficiaries: For US and European companies, friend-shoring is more attractive in countries with larger labor pools, competitive wage costs, and trade agreements with key end markets. In varying ways and to varying degrees, Mexico, India, and Turkey are recipient candidates. And regardless of the location, building these new supply chains will almost surely drive a pick-up in demand – and profits – in sectors like semiconductor capital equipment, automation, clean tech, defense/cybersecurity, industrial gases, cap goods, and metals/mining. Of course, this transition is a multi-year project. And as in any remodel, we expect many hidden costs and benefits to emerge along the way. We’ll keep updating our playbook, and you, as we move through the process. Tyler Durden Sun, 05/22/2022 - 14:40.....»»

FOX Business takes a look at the upcoming events that are likely to move financial markets in the coming days......»»

What's Up With Gold? Authored by MN Gordon via EconomicPrism.com, Amidst a backdrop of raging consumer price inflation something strange and unexpected is going on.  The U.S. dollar has become more valuable.  Not against goods and services.  But against foreign currencies. For example, the U.S. dollar index, which is a measure of the value of the dollar relative to a basket of foreign currencies, recently crossed the 105 level.  This marks its highest level since December 2002.  Not since tech stocks were in full meltdown in 2002 has the dollar been so strong. Without questions, the dollar’s had quite a run.  The dollar index increased over 6 percent in 2021.  So far in 2022, it has already gained over 7 percent.  And, for the time being, and despite shortsighted dollar weaponization policies, the dollar is preserving its reserve currency status. This week, the dollar index did retreat slightly…at market close Thursday (May 19) it stood at 102.91.  Maybe the dollar has peaked.  Or maybe this is just a period of consolidation before its springs upward. From a historical perspective the dollar could go much, much higher.  In the mid-1980s, for instance, the dollar index hit 164.  Of course, the world was much different back then.  The euro didn’t even exist. From our perspective, it seems unlikely the dollar index could hit its old high from nearly 40 years ago.  But it does seem likely the dollar could hit parity with the euro for the first time in 20 years. Slow growth and high inflation in Europe could continue to be a drag on the euro.  In addition, the Russia-Ukraine war, and the resulting supply chain disruptions to natural gas imports in Europe, points to a weaker euro ahead. So what are we left with? Somehow, with all its faults and foibles, the dollar is perceived to be an interim safe haven asset.  Somehow, with its 75 basis points in rate hikes this year, the Federal Reserve is perceived as being hawkish on inflation.  Somehow the dollar, and dollar based investments, have become attractive to foreign investors. What’s going on… Insufficient Explanation You’ve likely heard the well-worn metaphors.  The dollar’s the cleanest shirt in the dirty laundry basket of fiat money.  The dollar’s the best house in a bad neighborhood. Does this really explain what’s going on? Maybe.  At least for now, it offers a partial and insufficient explanation. As noted above, the euro is haggard.  But it’s not just the euro… In Japan, the situation is quite different.  Inflation is just 1.2 percent – compared to 8.3 percent in the U.S.  Following the simultaneous meltdown of the Japanese NIKKEI and the Japanese real estate market in 1989 the Bank of Japan (BOJ) has tried just about everything to compel inflation higher. The BOJ has tried policies of unlimited bond buying.  It has also pumped massive amounts of printing press money into Japanese stocks via exchange traded funds.  It has splattered the countryside with concrete under the guise of public works spending. For its efforts, the central bank has driven Japan’s debt to GDP ratio to over 250 percent.  Still, inflation has remained elusive.  Thus since the BOJ wants higher inflation, and is unlikely to hike interest rates like its cohorts at the Fed, the Japanese yen is staying comparatively weak against the dollar. That’s the popular story, at least.  The rationale, no doubt, is rather suspect. At the same time, Beijing’s control freak zero-COVID policies have transformed the Chinese yuan into panda turds.  For these reasons, and many more, the U.S. dollar is in high demand. The whole thing seems rather farcical.  On a relative basis the dollar may be strong.  But it’s still doomed…just like all fiat currencies. So, what’s up with gold? What’s Up With Gold? U.S. based gold investors may be frustrated by the dollar’s strength.  With consumer price inflation raging at a 40 year high, shouldn’t the price of gold be shooting to the moon? Simple logic says yes.  Gold is a venerable hedge against inflation.  Consumer price inflation is raging out of control.  Therefore, gold, as priced in dollars, should be adjusting upward. But that’s not what’s happening.  At least not yet. After hitting $2,039 per ounce in early March, the price of gold, in dollar terms, is down 9.7 percent.  If you’re sitting on a pile of cash, now’s certainly a good time to trade some of it in for gold bullion coins – and silver too. Remember, gold is for long term wealth preservation and not for short term speculation.  Owning gold sets you free from the destructive money debasement policies of central bankers and centrally planned governments.  And owning gold will be especially important when the dollar turns later this year – if it didn’t already turn this week. You see, the U.S. economy is entering a recession.  In fact, it may already be in one.  U.S. GDP shrank by 1.4 percent during the first-quarter of 2022.  The stock market, sensing the weakness, is in full meltdown. With this backdrop, Fed Chair Jay Powell is staring down a difficult choice.  Continue to hike interest rates in the face of a recession?  Or reverse course, support financial markets, and let inflation run? What will he do?  We anticipate he’ll do both… The Fed will likely hike rates another 50 basis points following the June FOMC meeting.  It needs to put on a show of strength to restore any semblance of credibility after boofing it so hard with its “inflation is transitory” shtick. By mid-summer, however, it will be clear the U.S. economy is in a recession.  The Fed will then pause its rate hikes, and then start cutting rates. Under this scenario, the dollar will turn from sirloin to bottom round.  This is when gold will really shine. If you recall, the last time the dollar was this strong – back in 2002 – an ounce of gold cost about $320.  Over the next nine years, an ounce of gold, priced in dollars, increased by 490 percent to about $1,900. Given the monetary shenanigans and outright policies of extreme dollar destruction that have occurred over the last 14 years, the relative increase in gold’s price in dollar terms should dwarf the move that occurred during the first decade of the 21st century. Tyler Durden Sun, 05/22/2022 - 13:00.....»»

Profits And Margins Plunge In Q1: Expect More Margin Contraction As Fed Squeezes Inflation By Joseph Carson, former chief economist AllianceBernstein Based on the preliminary data from the GDP report, operating profits fell roughly 10% in Q1 relative to Q4. A decline of that magnitude would drop aggregate company profits back to the Q1 2021 level, or nearly $300 billion below the record level of Q4 2021. The plunge in operating profits reflects a sharp drop in margins. Real operating profit margins for Non-Financial Companies hit a record high of 15.9% in Q2 2021, dropped to 15.2% in Q4, and probably fell 100 to 150 basis points in Q1 2022. To be sure, Q1 earnings reports from large companies such as Amazon, Wal-Mart, and Target confirm a sharp contraction in operating margins due to rising input costs. More margin contraction lies ahead, especially if the Fed successfully squeezes inflation to 2%, down from 8%, and limits any significant fallout in the labor markets. For reported consumer price inflation to drop 600 basis points over the next year or so, producer prices for many companies involved in production and distribution would drop twice as much, if not more. And if overall labor costs are unchanged, the hit to profit margins, or the ratio of profits from sales after all expenses, will be significant. Past cyclical slowdowns offer some perspective on significant margin contraction when monetary policy simultaneously slows demand and price inflation. For example, in 2000, consumer price inflation dropped 200 basis points, but producer prices for finished goods and intermediae materials fell between 600 and 1000 basis points. That dropped triggered the most significant cyclical contraction in real profit margins (700 basis points). The potential disruption to business operations in 2022 is more significant than in 2000 because the Fed faces a bigger inflation problem. That means a substantial decline in operating margins is the most considerable risk to the equity market. Investors forewarned. Tyler Durden Sun, 05/22/2022 - 12:10.....»»

"Other central banks are not nearly as hawkish as the Federal Reserve," one currency expert said about what's driving dollar strength. Dollar bills on display at a money exchange office in Istanbul, Turkey.YASIN AKGUL/AFP via Getty Images The US dollar has been sharply advancing this year, with the widely watched US Dollar Index hitting a 20-year high.  Multinational companies including Apple and Pfizer have noted dollar strength could dent financial results.  The DXY has jumped 10% during 2022 and it's likely to stick around high levels in the coming months, experts say.  What's shaping up as a banner year for US dollar strength is being flagged as a pain point by multinational companies   – and it may take months before a sustainable pullback in the greenback takes hold, analysts say. Apple, Pfizer, and other large corporations have told investors their financial results may be dented by foreign exchange fluctuations which this year features the dollar shooting up to a two-decade high against a widely watched basket of currencies. Scorching inflation and the Federal Reserve's response are at the center of the dollar's ascent in relative value. The US Dollar Index recently marked a 10% increase for 2022 when it reached above 104. The index was at 103 on Friday - but it may not travel significantly lower over the next few months. "In the next three to six months, I would say 100 to 105 is probably where the dollar [index] might be trading around," Fawad Razaqzada, market analyst at Forex.com, told Insider. "I don't think the dollar is going to slump really sharply simply because other central banks are not nearly as hawkish as the Federal Reserve," he said in an interview from London. The US Dollar Index gauges the greenback's performance against the euro, the Japanese yen, the British pound, the Canadian dollar, the Swedish krona, and the Swiss franc.  The greenback this year was up 11% against the yen. The DXY is "overbought" and is showing the start of a correction, Bank of America said in a Friday note. "However across time frames we see a bullish breakout, uptrend conditions and no top pattern which means we should buy the dip. With no visible DXY top, it's possible the DXY trends to 110 this summer," wrote BofA technical strategist Paul Ciana. Dollar demand  For US companies conducting business overseas, dollar strength can make their products more expensive for holders of other currencies to purchase. Also, the value of their international sales is lowered when converted back to dollars. S&P 500 companies generate 41% of revenues outside the US, according to FactSet. Foreign exchange "is an issue with the dollar being strong at this point," Apple said about factors that could lead to lower sales growth in its current fiscal third quarter compared with the second quarter. "With respect to foreign exchange, we expect it to be a nearly 300 basis points headwind," or to hurt revenue by about 3%, Apple's CFO Luca Maestri said in an earnings call in April. Meta Platforms, formerly Facebook, foresees a nearly 3% dent from foreign currency on second-quarter revenue growth. Pfizer said its anticipated negative impact from exchange rate changes had increased to $2 billion from $1.1 billion guided in February but the COVID vaccine maker held its 2022 revenue projection at $98 billion to $102 billion. "We've seen another step in cost pressures, and foreign exchange rates have moved further against us," Andre Schulten, chief financial officer at Procter & Gamble, said in its third-quarter earnings call. "We now expect FX to be a $300 million after-tax headwind to earnings for the fiscal year," he said.The Fed last year signaled it would undertake an aggressive cycle of interest-rate hikes to cool inflation. Headline US consumer price inflation was 8.3% in April. Rate-hike expectations have pushed US Treasury bond yields in 2022 to multi-year highs, making them attractive to foreign investors comparing debt from other countries, such as Japan, that offer relatively lower return rates. Investors will sell foreign currencies and buy dollars to purchase higher-yielding US bonds, driving up demand for the greenback and its value. The 10-year Treasury note yield has risen above 3% and was at 2.8% on Friday. Japan's 10-year yield was 0.24% on Friday.The Fed has raised interest rates by 75 basis points since March and a hefty hike of 50 basis points is expected at the June 14-15 meeting. Rate hikes are aimed at lowering inflation by slowing the pace of economic activity. Growth wobbles A significant shift to fears about a US recession from inflation concerns could pose somewhat of a challenge to the dollar's run-up, Huw Roberts, director of analytics at Quant Insight, told Insider. One flick at that idea came when the 10-year yield fell from 3% after the April inflation report showed prices eased from March's 41-year high of 8.5%. "[If] bond yields keep coming lower and copper keeps coming in lower, then that's telling you the markets are worried about growth," said Roberts. "Is that necessarily dollar bearish? Well, it certainly takes the wind out of the dollar upside but it won't necessarily be an outright dollar-bear call because if the US economy is struggling, the rest of the world is going to be struggling," he said."I would frame it as it might mean an end to the one-way traffic that is dollar upside. Does it necessarily open up dollar downside? That's much more debatable," Roberts said.Read the original article on Business Insider.....»»

The average decline during a bear market is 30%, and the downturn lasts an average of 11.4 months, according to data from LPL Research. A trader works at the New York Stock Exchange NYSE in New York, the United States, on March 9, 2022.Michael Nagle/Xinhua via GettyThe S&P 500 briefly entered bear market territory on Friday for the first time since March 2020. A bear market is technically defined as a decline of at least 20% in the stock market from its peak.Here's everything you need to know about this vicious part of the stock market cycle.The S&P 500 briefly entered bear market territory on Friday for the first time since March 2020 as investors continue to assess record inflation, surging interest rates, and its impact on consumers and corporate profits.The S&P 500 is now down more than 20% from its peak reached at the start of the year, catching up with the Nasdaq 100 which officially entered bear market territory earlier this month. The stock market's sell-off was solidified this week following the poor earnings from big-box retailers like Target and Walmart.Given the volatile regime the stock market has entered, it's good to know how stocks might act during this period, based on previous bear market data compiled by LPL Research. Here's everything you need to know about this vicious part of the stock market cycle.1. The average decline during a bear market is 30%, and the downturn lasts an average of 11.4 months, or almost a full year. That's based on the 17 bear markets since World War II, according to LPL Chief Market Strategist Ryan Detrick.2. There are bad bear markets, and then there are less bad bear markets. What distinguishes the two is whether or not the economy enters a recession."Should the economy avoid a recession, the bear market bottoms at 23.8% and lasts just over seven months on average," Detrick said. But bear markets get worse during recessions, with an average decline of 34.8%, and lasting for an average of nearly 15 months."Going back more than 50 years shows that only once was there a bear market without a recession that lost more than 20% and that was during the crash of 1987," he said.Detrick told CNBC on Friday that he ultimately doesn't see a recession materializing this year, and rather sees a mid-cycle growth slowdown akin to 1994 before the stock market resumes its long-term uptrend.LPL Research3. "Midterm [election] years can be quite volatile with the average year down 17.1% peak to trough, so a bear market during this year isn't out of the ordinary," LPL said. And returns tend to get strong a year off those lows, with an average gain of 32%. Additionally, the first and second quarter of a midterm election year represent the two worst quarters for stock market performance of the entire four-year presidential cycle.4. There have been fast bear markets. The March 2020 pandemic-induced bear market was the fastest on record, as it went from a new high to down 20% in just 16 trading days.LPL Research5. "This is the third year of the current bull market and the third year tends to see muted returns, up barely 5% on average. There have been 11 bull markets since World War II and three of them ended during their third year," Detrick said. LPL ResearchRead the original article on Business Insider.....»»

Central Bankers' Narratives Are Falling Apart Authored by Alasdair Macleod via GoldMoney.com, Central bankers’ narratives are falling apart. And faced with unpopularity over rising prices, politicians are beginning to question central bank independence. Driven by the groupthink coordinated in the regular meetings at the Bank for International Settlements, they became collectively blind to the policy errors of their own making. On several occasions I have written about the fallacies behind interest rate policies. I have written about the lost link between the quantity of currency and credit in circulation and the general level of prices. I have written about the effect of changing preferences between money and goods and the effect on prices. This article gets to the heart of why central banks’ monetary policy was originally flawed. The fundamental error is to regard economic cycles as originating in the private sector when they are the consequence of fluctuations in credit, to which we can add the supposed benefits of continual price inflation. Introduction Many investors swear by cycles. Unfortunately, there is little to link these supposed cycles to economic theory, other than the link between the business cycle and the cycle of bank credit. The American economist Irving Fisher got close to it with his debt-deflation theory by attributing the collapse of bank credit to the 1930s’ depression. Fisher’s was a well-argued case by the father of modern monetarism. But any further research by mainstream economists was brushed aside by the Keynesian revolution which simply argued that recessions, depressions, or slumps were evidence of the failings of free markets requiring state intervention. Neither Fisher nor Keynes appeared to be aware of the work being done by economists of the Austrian school, principally that of von Mises and Hayek. Fisher was on the American scene probably too early to have benefited from their findings, and Keynes was, well, Keynes the statist who in common with other statists in general placed little premium on the importance of time and its effects on human behaviour. It makes sense, therefore, to build on the Austrian case, and to make the following points at the outset: It is incorrectly assumed that business cycles arise out of free markets. Instead, they are the consequence of the expansion and contraction of unsound money and credit created by the banks and the banking system. The inflation of bank credit transfers wealth from savers and those on fixed incomes to the banking sector’s favoured customers. It has become a major cause of increasing disparities between the wealthy and the poor. The credit cycle is a repetitive boom-and-bust phenomenon, which historically has been roughly ten years in duration. The bust phase is the market’s way of eliminating unsustainable debt, created through credit expansion. If the bust is not allowed to proceed, trouble accumulates for the next credit cycle. Today, economic distortions from previous credit cycles have accumulated to the point where only a small rise in interest rates will be enough to trigger the next crisis. Consequently, central banks have very little room for manoeuvre in dealing with current and future price inflation. International coordination of monetary policies has increased the potential scale of the next credit crisis, and not contained it as the central banks mistakenly believe. The unwinding of the massive credit expansion in the Eurozone following the creation of the euro is an additional risk to the global economy. Comparable excesses in the Japanese monetary system pose a similar threat. Central banks will always fail in using monetary policy as a management tool for the economy. They act for the state, and not for the productive, non-financial private sector. Modern monetary assumptions The original Keynesian policy behind monetary and fiscal stimulation was to help an economy recover from a recession by encouraging extra consumption through bank credit expansion and government deficits funded by inflationary means. Originally, Keynes did not recommend a policy of continual monetary expansion, because he presumed that a recession was the result of a temporary failure of markets which could be remedied by the application of deficit spending by the state. The error was to fail to understand that the cycle is of credit itself, the consequence being the imposition of boom and bust on what would otherwise be a non-cyclical economy, where the random action by businesses in a sound money environment allowed for an evolutionary process delivering economic progress. It was this environment which Schumpeter described as creative destruction. In a sound money regime, businesses deploy the various forms of capital at their disposal in the most productive, profitable way in a competitive environment. Competition and failure of malinvestment provide the best returns for consumers, delivering on their desires and demands. Any business not understanding that the customer is king deserves to fail. The belief in monetary and fiscal stimulation wrongly assumes, among other things, that there are no intertemporal effects. As long ago as 1730, Richard Cantillon described how the introduction of new money into an economy affected prices. He noted that when new money entered circulation, it raised the prices of the goods first purchased. Subsequent acquirers of the new money raised the prices of the goods they demanded, and so on. In this manner, the new money is gradually distributed, raising prices as it is spent, until it is fully absorbed in the economy. Consequently, maximum benefit of the purchasing power of the new money accrues to the first receivers of it, in his time being the gold and silver imported by Spain from the Americas. But today it is principally the banks that create unbacked credit out of thin air, and their preferred customers who benefit most from the expansion of bank credit. The losers are those last to receive it, typically the low-paid, the retired, the unbanked and the poor, who find that their earnings and savings buy less in consequence. There is, in effect, a wealth transfer from the poorest in society to the banks and their favoured customers. Modern central banks seem totally oblivious of this effect, and the Bank of England has even gone to some trouble to dissuade us of it, by quoting marginal changes in the Gini coefficient, which as an average tells us nothing about how individuals, or groups of individuals are affected by monetary debasement. At the very least, we should question central banking’s monetary policies on grounds of both efficacy and the morality, which by debauching the currency, transfers wealth from savers to profligate borrowers —including the government. By pursuing the same monetary policies, all the major central banks are tarred with this bush of ignorance, and they are all trapped in the firm clutch of groupthink gobbledegook. The workings of a credit cycle To understand the relationship between the cycle of credit and the consequences for economic activity, A description of a typical credit cycle is necessary, though it should be noted that individual cycles can vary significantly in the detail. We shall take the credit crisis as our starting point in this repeating cycle. Typically, a credit crisis occurs after the central bank has raised interest rates and tightened lending conditions to curb price inflation, always the predictable result of earlier monetary expansion. This is graphically illustrated in Figure 1. The severity of the crisis is set by the amount of excessive private sector debt financed by bank credit relative to the overall economy. Furthermore, the severity is increasingly exacerbated by the international integration of monetary policies. While the 2007-2008 crises in the UK, the Eurozone and Japan were to varying degrees home-grown, the excessive speculation in the American residential property market, facilitated additionally by off-balance sheet securitisation invested in by the global banking network led to the crisis in each of the other major jurisdictions being more severe than it might otherwise have been. By acting as lender of last resort to the commercial banks, the central bank tries post-crisis to stabilise the economy. By encouraging a revival in bank lending, it seeks to stimulate the economy into recovery by reducing interest rates. However, it inevitably takes some time before businesses, mindful of the crisis just past, have the confidence to invest in production. They will only respond to signals from consumers when they in turn become less cautious in their spending. Banks, who at this stage will be equally cautious over their lending, will prefer to invest in short-maturity government bonds to minimise balance sheet risk. A period then follows during which interest rates remain suppressed by the central bank below their natural rate. During this period, the central bank will monitor unemployment, surveys of business confidence, and measures of price inflation for signs of economic recovery. In the absence of bank credit expansion, the central bank is trying to stimulate the economy, principally by suppressing interest rates and more recently by quantitative easing. Eventually, suppressed interest rates begin to stimulate corporate activity, as entrepreneurs utilise a low cost of capital to acquire weaker rivals, and redeploy underutilised assets in target companies. They improve their earnings by buying in their own shares, often funded by cheapened bank credit, as well as by undertaking other financial engineering actions. Larger businesses, in which the banks have confidence, are favoured in these activities compared with SMEs, who find it generally difficult to obtain finance in the early stages of the recovery phase. To that extent, the manipulation of money and credit by central banks ends up discriminating against entrepreneurial smaller companies, delaying the recovery in employment. Consumption eventually picks up, fuelled by credit from banks and other lending institutions, which will be gradually regaining their appetite for risk. The interest cost on consumer loans for big-ticket items, such as cars and household goods, is often lowered under competitive pressures, stimulating credit-fuelled consumer demand. The first to benefit from this credit expansion tend to be the better-off creditworthy consumers, and large corporations, which are the early receivers of expanding bank credit. The central bank could be expected to raise interest rates to slow credit growth if it was effectively managing credit. However, the fall in unemployment always lags in the cycle and is likely to be above the desired target level. And price inflation will almost certainly be below target, encouraging the central bank to continue suppressing interest rates. Bear in mind the Cantillon effect: it takes time for expanding bank credit to raise prices throughout the country, time which contributes to the cyclical effect. Even if the central bank has raised interest rates by this stage, it is inevitably by too little. By now, commercial banks will begin competing for loan business from large credit-worthy corporations, cutting their margins to gain market share. So, even if the central bank has increased interest rates modestly, at first the higher cost of borrowing fails to be passed on by commercial banks. With non-financial business confidence spreading outwards from financial centres, bank lending increases further, and more and more businesses start to expand their production, based upon their return-on-equity calculations prevailing at artificially low interest rates and input prices, which are yet to reflect the increase in credit. There’s a gathering momentum to benefit from the new mood. But future price inflation for business inputs is usually underestimated. Business plans based on false information begin to be implemented, growing financial speculation is supported by freely available credit, and the conditions are in place for another crisis to develop. Since tax revenues lag in any economic recovery, government finances have yet to benefit suvstantially from an increase in tax revenues. Budget deficits not wholly financed by bond issues subscribed to by the domestic public and by non-bank corporations represents an additional monetary stimulus, fuelling the credit cycle even more at a time when credit expansion should be at least moderated. For the planners at the central banks, the economy has now stabilised, and closely followed statistics begin to show signs of recovery. At this stage of the credit cycle, the effects of earlier monetary inflation start to be reflected more widely in rising prices. This delay between credit expansion and the effect on prices is due to the Cantillon effect, and only now it is beginning to be reflected in the calculation of the broad-based consumer price indices. Therefore, prices begin to rise persistently at a higher rate than that targeted by monetary policy, and the central bank has no option but to raise interest rates and restrain demand for credit. But with prices still rising from credit expansion still in the pipeline, moderate interest rate increases have little or no effect. Consequently, they continue to be raised to the point where earlier borrowing, encouraged by cheap and easy money, begins to become uneconomic. A rise in unemployment, and potentially falling prices then becomes a growing threat. As financial intermediaries in a developing debt crisis, the banks are suddenly exposed to extensive losses of their own capital. Bankers’ greed turns to a fear of being over-leveraged for the developing business conditions. They are quick to reduce their risk-exposure by liquidating loans where they can, irrespective of their soundness, putting increasing quantities of loan collateral up for sale. Asset inflation quickly reverses, with all marketable securities falling sharply in value. The onset of the financial crisis is always swift and catches the central bank unawares. When the crisis occurs, banks with too little capital for the size of their balance sheets risk collapsing. Businesses with unproductive debt and reliant on further credit go to the wall. The crisis is cathartic and a necessary cleaning of the excesses entirely due to the human desire of bankers and their shareholders to maximise profits through balance sheet leverage. At least, that’s what should happen. Instead, a modern central bank moves to contain the crisis by committing to underwrite the banking system to stem a potential downward spiral of collateral sales, and to ensure an increase in unemployment is contained. Consequently, many earlier malinvestments will survive. Over several cycles, the debt associated with past uncleared malinvestments accumulates, making each successive crisis greater in magnitude. 2007-2008 was worse than the fall-out from the dot-com bubble in 2000, which in turn was worse than previous crises. And for this reason, the current credit crisis promises to be even greater than the last. Credit cycles are increasingly a global affair. Unfortunately, all central banks share the same misconception, that they are managing a business cycle that emanates from private sector business errors and not from their licenced banks and own policy failures. Central banks through the forum of the Bank for International Settlements or G7, G10, and G20 meetings are fully committed to coordinating monetary policies on a global basis. The consequence is credit crises are potentially greater as a result. Remember that G20 was set up after the Lehman crisis to reinforce coordination of monetary and financial policies, promoting destructive groupthink even more. Not only does the onset of a credit crisis in any one country become potentially exogenous to it, but the failure of any one of the major central banks to contain its crisis is certain to undermine everyone else. Systemic risk, the risk that banking systems will fail, is now truly global and has worsened. The introduction of the new euro distorted credit cycles for Eurozone members, and today has become a significant additional financial and systemic threat to the global banking system. After the euro was introduced, the cost of borrowing dropped substantially for many high-risk member states. Unsurprisingly, governments in these states seized the opportunity to increase their debt-financed spending. The most extreme examples were Greece, followed by Italy, Spain, and Portugal —collectively the PIGS. Consequently, the political pressures to suppress euro interest rates are overwhelming, lest these state actors’ finances collapse. Eurozone commercial banks became exceptionally highly geared with asset to equity leverage more than twenty times on average for the global systemically important banks. Credit cycles for these countries have been made considerably more dangerous by bank leverage, non-performing debt, and the TARGET2 settlement system which has become dangerously unbalanced. The task facing the ECB today to stop the banking system from descending into a credit contraction crisis is almost impossible as a result. The unwinding of malinvestments and associated debt has been successfully deferred so far, but the Eurozone remains a major and increasing source of systemic risk and a credible trigger for the next global crisis. The seeds were sown for the next credit crisis in the last When new money is fully absorbed in an economy, prices can be said to have adjusted to accommodate it. The apparent stimulation from the extra money will have reversed itself, wealth having been transferred from the late receivers to the initial beneficiaries, leaving a higher stock of currency and credit and increased prices. This always assumes there has been no change in the public’s general level of preference for holding money relative to holding goods. Changes in this preference level can have a profound effect on prices. At one extreme, a general dislike of holding any money at all will render it valueless, while a strong preference for it will drive down prices of goods and services in what economists lazily call deflation. This is what happened in 1980-81, when Paul Volcker at the Federal Reserve Board raised the Fed’s fund rate to over 19% to put an end to a developing hyperinflation of prices. It is what happened more recently in 2007/08 when the great financial crisis broke, forcing the Fed to flood financial markets with unlimited credit to stop prices falling, and to rescue the financial system from collapse. The state-induced interest rate cycle, which lags the credit cycle for the reasons described above, always results in interest rates being raised high enough to undermine economic activity. The two examples quoted in the previous paragraph were extremes, but every credit cycle ends with rates being raised by the central bank by enough to trigger a crisis. The chart above of America’s Fed funds rate is repeated from earlier in this article for ease of reference. The interest rate peaks joined by the dotted line marked the turns of the US credit cycle in January 1989, mid-2000, early 2007, and mid-2019 respectively. These points also marked the beginning of the recession in the early nineties, the post-dotcom bubble collapse, the US housing market crisis, and the repo crisis in September 2019. The average period between these peaks was exactly ten years, echoing a similar periodicity observed in Britain’s nineteenth century. The threat to the US economy and its banking system has grown with every crisis. Successive interest peaks marked an increase in severity for succeeding credit crises, and it is notable that the level of interest rates required to trigger a crisis has continually declined. Extending this trend suggests that a Fed Funds Rate of no more than 2% today will be the trigger for a new momentum in the current financial crisis. The reason this must be so is the continuing accumulation of dollar-denominated private-sector debt. And this time, prices are fuelled by record increases in the quantity of outstanding currency and credit. Conclusions The driver behind the boom-and-bust cycle of business activity is credit itself. It therefore stands to reason that the greater the level of monetary intervention, the more uncontrollable the outcome becomes. This is confirmed by both reasoned theory and empirical evidence. It is equally clear that by seeking to manage the credit cycle, central banks themselves have become the primary cause of economic instability. They exhibit institutional groupthink in the implementation of their credit policies. Therefore, the underlying attempt to boost consumption by encouraging continual price inflation to alter the allocation of resources from deferred consumption to current consumption, is overly simplistic, and ignores the negative consequences. Any economist who argues in favour of an inflation target, such as that commonly set by central banks at 2%, fails to appreciate that monetary inflation transfers wealth from most people, who are truly the engine of production and spending. By impoverishing society inflationary policies are counterproductive. Neo-Keynesian economists also fail to understand that prices of goods and services in the main do not act like those of speculative investments. People will buy an asset if the price is rising because they see a bandwagon effect. They do not normally buy goods and services because they see a trend of rising prices. Instead, they seek out value, as any observer of the falling prices of electrical and electronic products can testify. We have seen that for policymakers the room for manoeuvre on interest rates has become increasingly limited over successive credit cycles. Furthermore, the continuing accumulation of private sector debt has reduced the height of interest rates that would trigger a financial and systemic crisis. In any event, a renewed global crisis could be triggered by the Fed if it raises the funds rate to as little as 2%. This can be expected with a high degree of confidence; unless, that is, a systemic crisis originates from elsewhere —the euro system and Japan are already seeing the euro and yen respectively in the early stages of a currency collapse. It is bound to lead to increased interest rates in the euro and yen, destabilising their respective banking systems. The likelihood of their failure appears to be increasing by the day, a situation that becomes obvious when one accepts that the problem is wholly financial, the result of irresponsible credit and currency expansion in the past. An economy that works best is one where sound money permits an increase in purchasing power of that money over time, reflecting the full benefits to consumers of improvements in production and technology. In such an economy, Schumpeter’s process of “creative destruction” takes place on a random basis. Instead, consumers and businesses are corralled into acing herd-like, financed by the cyclical ebb and flow of bank credit. The creation of the credit cycle forces us all into a form of destructive behaviour that otherwise would not occur. Tyler Durden Sun, 05/22/2022 - 08:10.....»»

Daniel Yergin said Russia had overestimated how reliant the West was on its energy exports, adding the Ukraine invasion 'made no sense.' Russian President Vladimir Putin chairs a meeting with members of the Security Council via teleconference call at the Novo-Ogaryovo state residence outside Moscow, Russia, on May 20, 2022.AP Daniel Yergin is a leading energy historian and vice-chairman of S&P Global.  He said Russia's days as an energy superpower were "waning," and called the invasion "irrational." Yergin said he'd once angered Putin by asking about shale energy at a conference in 2013. A leading energy historian, who claims to have enraged Vladimir Putin by asking him about shale energy, has said Russia overestimated the West's reliance on its oil and gas when it invaded Ukraine.In an interview with the New York Times, Daniel Yergin called the invasion "irrational," adding: "One of Putin's many miscalculations was his assumption that, because of Europe's dependence on Russian energy, it would protest but stand aside, as it did with Crimea."It has had just the opposite effect. Europe wants to get out of that dependence as fast as it can."Yergin, who is vice-chairman of S&P Global, told the Times Putin was "like a CEO when he talks about energy markets," and that he had timed the invasion to when those markets were at their tightest, as supply chains unwound after the COVID-19 pandemic.He said the invasion heralded "a new uncertain era," adding: "As we talk, the risks are going up."European countries are trying to reduce its dependence on Russian energy, which makes up 45% of its gas imports. The EU has drafted a plan to wean itself off Russian fossil fuels by 2027, while the US banned imports of Russian oil, gas and coal.In a separate interview on Friday, Yergin told Bloomberg's "What Goes Up" podcast that he asked the first question of Putin after the Russian president had spoken at the St. Petersburg International Economic Forum in 2013.The historian said he asked about shale gas and Putin "started shouting at me saying, 'shale is barbaric!'""He knew that US shale was a threat to him in two ways: one, because US natural gas would compete with natural gas in Europe, and secondly, because this would really augment the US's position in the world and give it a kind of flexibility it didn't have when it was importing 60% of its oil," Yergin told the podcast.He added that growing American shale oil and gas production had reduced the country's dependence on Russian energy, which "had a much bigger impact on geopolitics than people recognize."Yergin said on the podcast that "Russia's door to the West is closed," and that it would be forced to pivot toward China as Europe moves away from Russian energy.Read the original article on Business Insider.....»»

The bank says a "bumpy landing" is more likely from the Fed's interest rate increases, though it expects bigger hikes than what's priced into the market. The cost of living has surgedskynesher/Getty Images Bank of America sees a 1-in-3 chance of a US recession next year, but sees a 'bumpy landing' as more likely. If the US does plunge into recession, it will be mild by historical standards, the bank's economists said. They expect the Federal Reserve to hike interest rates by 30 basis points more than the market is pricing in. Bank of America has warned the US faces a one-in-three chance of tumbling into a recession next year, but said it would likely be mild by historical standards.The bank's economists said that risks of a recession are low for this year, and they foresee a "bumpy landing" rather than an outright recession as the Federal Reserve tightens financial conditions.But they're becoming more worried about prospects for the US economy in 2023, given inflation shows signs of persisting and the labor market looks to be seriously overheating.The US has inflation running at 40-year highs, and the Federal Reserve plans a series of interest rate increases to combat it. But there is concern the central bank could tip the economy into a recession by hiking rates too aggressively."Risks are low this year, as the economy has plenty of momentum and it will take time for Fed hikes to impact growth," BofA economists said in a note Friday. "However, next year the Fed will be facing some tough choices. We see a roughly one-in-three chance that a recession starts sometime next year."In May, the central bank raised interest rates by 50 basis points, the biggest increase at one meeting in 22 years, and signaled that similar hikes would follow. As the Fed lifts interest rates to 3.4% by May next year, there will be an ongoing slowdown in the economy, according to BofA. They see growth falling to 0.4% by the last quarter of 2023."We expect the Fed to hike by about 30 bps more than what is priced into the market, adding a bit further pressure on financial markets," the bank said. "The lag from financial tightening to weaker growth is likely to be a bit longer than normal, causing gradual downward pressure on growth," they added.The US stock market has logged a string of weekly losses as investors fret about the risk of stagflation and recession. Sentiment has dropped to "extreme fear" levels, according to CNN's Fear and Greed index, as business leaders from Tesla CEO Elon Musk to Goldman Sachs CEO David Solomon sound the alarm on growth.Market historian Jeremy Grantham has predicted stocks could fall as much as 80% from their peaks in a coming recession, though JPMorgan's quant guru Marko Kolanovic believes the market is pricing in too much risk."If the economy does tumble into a recession, it will likely be mild by historic standards," BofA said. "The economy has relatively few imbalances, and hence the risk of ugly feedback loops kicking in is lower than normal."It laid out three reasons why the US could avoid an outright recession. The first is that the economy has only one big imbalance — an overheating labor market.In April, the US unemployment rate was 3.6%, and businesses struggled to hire staff, with the number of Americans actively looking for jobs stuck below pre-pandemic levels. BofA expects the rate to fall to 3.2% next year.That labor shortage means employers must pay higher wages to recruit staff — which feeds into inflation.Given that, the Fed will have to push the unemployment rate back up in 2023 and 2024, according to BofA. Their baseline case calls for a 1% rise to do the trick, or 2% in a recession."Second, we don't think the Fed has to do all the work in raising the unemployment rate: workers returning to the job market will help," they said.The third reason is they see the Fed as relatively dovish, and believe it will stop hiking rates once the unemployment rate starts rising and underlying inflation falls to to 3%, rather than to its 2% target.Read more: Goldman Sachs lays out the case for investing more of your money in real assets — and reveals which ones it's most bullish on as the stock market crashesRead the original article on Business Insider.....»»

Some of the original passageways at Piccadilly Circus station have been closed to Londoners since 1929. The abandoned walkways of Piccadilly Circus station, London.Abby Wallace/Insider. Underneath London, there is a network of abandoned stations that used to be part of the metro. The London Transport Museum offers tours of the old stations, featuring the walkways and signs. I took a tour of an old station to find out what usually surrounds me when I take the metro. The tour started at Piccadilly Circus station in central London. The station has seven street entrances, where commuters descend a small flight of stairs to reach the main ticket hall.One of the entrances to Piccadilly Circus station, London.Abby Wallace/Insider.The underground station first opened in 1906. It used to have an entrance at surface level, but now the station is entirely underground.The entrance to Piccadilly Circus underground station.Abby Wallace/Insider.Piccadilly Circus was then the largest underground station in London. It was built with 54 steel columns dotted around the ticket hall just under ground surface level ...Piccadilly Circus ticket hall in 1930.Fox Photos/Getty Images.The pillars are still a prominent part of the ticket hall today.The ticket hall at Piccadilly Circus station today.Abby Wallace/Insider.The ticket hall also features a memorial to London Transport's first chief executive, Frank Pick, who was responsible for commissioning the designs of several London underground stations, including the round logo of the metro.A tribute to Frank Pick on the ticket hall wall at Piccadilly Circus station, London.Abby Wallace/Insider.We descended down a former construction shaft to platform level. The original station was designed with eight lifts, four of which descend 26 meters to one of London's metro lines, the Bakerloo line.A former construction shaft at Piccadilly Circus station, London.Abby Wallace/Insider.The platforms on London's underground metro network are mostly long and dome-shaped, mimicking the shape of the trains which roll past.One of the platforms at Piccadilly Circus station, London.Abby Wallace/Insider.Right at the end of the platform, there are some blue gates. I walk by these gates on my commute every day, but I've never taken much notice of them.The gates on one of the platforms at Piccadilly Circus station London, leading down to the abandoned platforms.Abby Wallace/Insider.But inside, there are steps that lead down to abandoned corridors, walkways, and lift shafts, which would have been used when Piccadilly Circus station was first built.The steps leading down to the abandoned platforms at Piccadilly Circus station, London.Abby Wallace/Insider.The passageways date back to 1906 ...One of the original walkways between platforms at Piccadilly Circus station, London.Abby Wallace/Insider.... and feature the original signage and tiling. Some of the original passageways have been closed to the public since 1929, according to the transport museum.A tiled sign on one of the abandoned platforms at Piccadilly Circus, London.Abby Wallace/Insider.The station was designed by the architect, Leslie Green, who designed more than 40 train stations across London. The authentic stamps from the tile manufacturers were still noticeable on the tiles.The original tiling at Piccadilly Circus station, London.Abby Wallace/Insider.The stations were mostly designed in the same way, but featured their own colored tiling pattern. The green tiles were symbolic of Piccadilly Circus.A tiled sign at one of the abandoned corridors at Piccadilly Circus station, London.Abby Wallace/Insider.Inspiration was also drawn from the colorful mosaic tiling of the New York subway.One of the original walkways between platforms at Piccadilly Circus station, London.Abby Wallace/Insider.The abandoned passageways also led to two former lift shafts.A former lift shaft at Piccadilly Circus station, London.Abby Wallace/Insider.London's metro stations see millions of commuters every year. Piccadilly Circus sees more than 40 million passengers per year, according to the London Transport Museum.One of the former underground corridors at Piccadilly Circus station, London.Abby Wallace/Insider.... But the station was also once a temporary shelter for Londoners. During the second world war, around 5,000-7,000 people sheltered at Piccadilly Circus every night.People sheltering at Piccadilly Circus station in 1940.George Dallison/Keystone/Hulton Archive/Getty Images.In South London, you can also tour a disused deep level shelter which runs under one of London's tube lines, the Northern Line. The line runs around 58 meters below the surface, and the deep level shelter is situated between 15 and 20 meters below that.Inside the deep level shelter underneath Clapham South station, London.Abby Wallace/Insider.Constructed by London Transport, the Clapham South shelter could accommodate around 8,000 people per night during the Second World War.Inside the deep-level shelter underneath Clapham South station, London.Abby Wallace/Insider.The tunnels are 16.6 feet wide and stretch for over a mile underground. The shelter was later sold to the body responsible for London's transport network, Transport for London, for £1 and leased to the transport museum for tours.Inside the deep level shelter at Clapham South station, London.Abby Wallace/Insider.Read the original article on Business Insider.....»»

Denholtz Properties, a leading real estate development and investment company, announces the acquisition of a 53,811-square-foot industrial building at 9201 Forsyth Park Drive in Charlotte, N.C. The transaction is the first acquisition for Denholtz Properties’ recently launched joint venture which plans to acquire and develop multi-tenant industrial properties with a... The post Denholtz Properties Acquires 53,811-Square-Foot Charlotte, N.C. Industrial Building appeared first on Real Estate Weekly. Denholtz Properties, a leading real estate development and investment company, announces the acquisition of a 53,811-square-foot industrial building at 9201 Forsyth Park Drive in Charlotte, N.C. The transaction is the first acquisition for Denholtz Properties’ recently launched joint venture which plans to acquire and develop multi-tenant industrial properties with a total value of over $1 billion. 9201 Forsyth Park Drive is strategically positioned in the Charlotte Southwest area, the largest industrial submarket in Charlotte. The property boasts superb access to major transportation arteries including SR-Westinghouse Boulevard and Interstates 77 and 485 as well as Interstate 85 – the industrial backbone of the Southeast that connects Charlotte to Atlanta and Raleigh-Durham. The single-story building also features full-building air-conditioning, heavy power, seven loading docks, four grade-level rollup doors and 18’ clear ceilings. Currently, the building is fully occupied by three tenants spanning a diverse mix of industries. “With a strong location in one of the nation’s hottest industrial markets, endless flexibility and a quality tenant base, 9201 Forsyth Park Drive fits the asset type we sought to acquire with the launch of our joint venture earlier this year,” said Stephen Cassidy, President of Denholtz Properties. “We are excited to expand our industrial portfolio in the Charlotte market and look forward to adding similar assets in the months to come.” The Charlotte MSA continues to be among the nation’s premier real estate markets seeing a 50.8 percent increase in population since 2000 and a projected four percent growth rate over the next three years. In addition to robust population growth, the regional economy is characterized by a talented labor pool, a strong manufacturing and distribution market and a rapidly emerging presence in the energy industry. It is also currently home to several large corporate headquarters for companies such as Bank of America, Lowe’s, Honeywell, Duke Energy, Nucor, Truist, Sonic Automotive and Brighthouse Financial. To stay connected with Denholtz Properties and for updates on the latest transactions and news follow Denholtz on Facebook, Twitter, Instagram and LinkedIn. The post Denholtz Properties Acquires 53,811-Square-Foot Charlotte, N.C. Industrial Building appeared first on Real Estate Weekly......»»

On Thursday, May 19th, Onyx Equities was joined by Newark Mayor Ras Baraka and other Newark elected and civic leaders to unveil the new two-story “Jewel Box” entryway into Gateway Center, downtown Newark’s cornerstone redevelopment project that links three newly reimagined Class A office towers through a massive 100,000 square... The post Onyx Equities Debuts Head-Turning Renovation at Gateway Center’s Grand Opening in Downtown Newark appeared first on Real Estate Weekly. Newark Mayor Ras Baraka joined John Saraceno and Jon Schultz, Co-Founders and Managing Partners for Onyx Equities to reveal the Jewel Box entrance to Gateway Center.  The new two-story, glass enclosed entrance is part of a $60 million renovation that will change the way that commuters, visitors and residents interact with the building and the surrounding neighborhood.From Left to Right: John Saraceno, Mayor Ras Baraka, Jon Schultz. On Thursday, May 19th, Onyx Equities was joined by Newark Mayor Ras Baraka and other Newark elected and civic leaders to unveil the new two-story “Jewel Box” entryway into Gateway Center, downtown Newark’s cornerstone redevelopment project that links three newly reimagined Class A office towers through a massive 100,000 square foot retail/dining concourse known as The Junction, opening later this year. The event celebrates a pinnacle moment in Gateway’s transformation – one of the largest in New Jersey’s history, and Newark’s revitalization as an international center for commerce, culture and cuisine. “The new Jewel Box entryway and the larger Gateway redevelopment project are a testament to what New Jerseyans have always known: there is no better place in the world to live, work, and play,” said Governor Phil Murphy. “Visitors, employees, and families will all benefit from this game-changing development, which showcases some of the best dining options and recreational activities the Garden State has to offer. Now more than ever, Newark remains an internationally renowned commercial and cultural hub.” Located along Raymond Plaza West across from Newark Penn Station, the “Jewel Box” was designed as a welcoming beacon for all Newark visitors, employees, and residents, and will soon serve as the main entrance into The Junction, which will deliver an exciting combination of food options from Newark’s local culinary talent and well-known restauranteurs from across the Hudson River in late 2022. Recently announced restaurant tenants include Serafina, Mökbar, Brooklyn Dumpling Shop, Fresh & Co, Greek from Greece Bakery & Café, Farinella, 375˚ Chicken & Fries, Chip City Cookies, The Brookdale, among other notables – many of which were highlighted as part of the Grand Opening celebration. Additional fitness, educational, and wellness retailers will round out a total lifestyle program. “The Jewel Box is a state-of-the-art entrance to the Gateway Center, one of our city’s signature complexes,” Newark Mayor Ras J. Baraka said. “Adjoined with The Junction that opens later this year, it will showcase our excellence, hospitality, and diverse array of food to Newark residents, workforce, and visitors. “We are thankful to Onyx Equities for transforming such an important center in the heart of our downtown.” “We are opening The Jewel Box at a really exciting time when people are coming back to the office,” said Jonathan Schultz, Co-Founder and Principal at Onyx Equities. “This was not just about improving the pedestrian and employee experience within the complex; it is part of a larger overall reinterpretation of what Newark can be for businesses and residents looking for a thriving urban community.” “Our design intent was to activate the streetscape and create a welcoming connection to the community. Designed in the 1970s, Gateway was deliberately inward-facing with little connection to the life of the city, but Onyx’s new vision re-engages the community,” said Roger Smith, Design Director. “With street level local retailers, a landscaped public plaza and the two-story entrance hall across from Newark Penn Station, Gateway will become Newark’s new front door.” Comprised of some of the tallest buildings in the city, the transformation of the 2.3 million square foot, four-building Gateway Center complex is nothing short of spectacular. Inside and out, over $50 Million in capital improvements bring the vision of world-renowned architect Gensler to life, introducing a new exterior façade, modernized lobbies and common areas, tech-forward collaborative spaces, generous and flexible office build-out configurations, state-of-the-art post-COVID sanitation systems, a newly renovated parking garage, and a best-in-class retail experience that anticipates over 75,000 daily visitors once complete thanks to direct skybridge connectivity to Newark Penn Station, a Doubletree by Hilton, One Riverfront Center, Panasonic’s Corporate Headquarters, and several new residential developments under construction. “Gateway is on course to be New Jersey’s premier office and dining destination – the first of its kind in our state,” said Matthew P. Flath, vice president of asset management at Onyx Equities. “We know we’re hitting the right note because we’re attracting world-renowned restaurants like Serafina and celebrity chefs like Esther Choi of Mökbar, as well our top-tier regional and local culinary talent.” Appealing to a wide audience, the development also plays a major day-to-day role in the immediate area where there is a growing population of 300,000, a daytime workforce population of 200,000 and 58,000 riders who board at Newark Penn Station daily. In addition, more than 60,000 vehicles pass The Junction at Gateway Center along McCarter Highway each day. Prudential Center, home of the New Jersey Devils and Seton Hall Pirates Basketball, is directly across the street and four major universities with over 50,000 students are nearby. To learn more about Gateway Center, visit GatewayNJ.com. For retail leasing inquiries at The Junction, contact Jason Pierson and Ryan Starkman of Pierson Commercial Real Estate at (927) 823-4800. For information about Class A office opportunities within 1, 2 & 4 Gateway Center, contact Tim Greiner and Blake Goodman of JLL at (732) 707-6900 x5. The post Onyx Equities Debuts Head-Turning Renovation at Gateway Center’s Grand Opening in Downtown Newark appeared first on Real Estate Weekly......»»

After a few months as New York City's mayor, Eric Adams is said to be eyeing a bid for president in 2024, sources told the New York Post. New York City Mayor Eric Adams (D).TIMOTHY A. CLARY/AFP via Getty Images New York City Mayor Eric Adams is eyeing a 2024 presidential run, sources told the New York Post.  Unnamed sources told the Post that Adams "thinks New York is a national platform."  Mayors Bill de Blasio, Michael Bloomberg, and Rudy Giuliani also launched unsuccessful bids for president. New York City Mayor Eric Adams may be considering a run for president in 2024, according to The New York Post. "Eric has told me repeatedly that he thinks that he has a platform to run for national office, for president in 2024," an unnamed source close to the mayor told The Post."He thinks New York is a national platform. He thinks the national party has gotten too far to the left and he thinks he has a platform to win," the source added.Adams' office did not immediately respond to Insider's request for comment on Saturday. According to The Post, an elected Democrat official from Brooklyn said that Adams is "considering a White House run in 2024 if Biden doesn't seek re-election." President Joe Biden has told aides that he is more likely to run for re-election in 2024 if Donald Trump announces his candidacy as well. Biden said earlier that he expects to run again in 2024 with Vice President Kamala Harris. Adams, an NYPD veteran who ran on a center-left campaign, has only been in office since January 1. Recent polls have him sitting at 43% approval with 37% disapproval, according to Spectrum News NY1. While Adams has portrayed himself as a "tough on crime" mayor, some 54% of respondents disapprove of his handling of crime, compared to a 49% approval in February. He has repeatedly called for a higher police presence to combat subway violence, despite criticism that city residents need better resources, not more police. He also argued that a homeless person made a "conscious decision" to live on the street while defending his decision to clear homeless encampments in the city. The controversial mayor was hit with accusations of nepotism in January after he appointed his brother to a high-paying NYPD role. In April, while touting his first 100 days in office, Adams compared himself to former President Franklin D. Roosevelt during the Great Depression. Former Mayors Bill de Blasio, Michael Bloomberg, and Rudy Giuliani also launched bids for the presidency to no avail. Read the original article on Business Insider.....»»