investmentwatchblog--2020-05-06--Retail Landlords Reel as Big Luxury Brands Threaten to Close Stores if Rents Aren’t Slashed

Luxury retail isn ’ t what it used to be , from Barcelona to Hong Kong .
In Barcelona , frantic backroom haggling is taking place between some of the world ’ s biggest luxury retailers and the owners of some of the city ’ s most expensive commercial real estate .
That real estate is on Passeig de Gracia , a ten-block avenue that is home to two of Antoni Gaudi ’ s most emblematic buildings , La Pedrera and Casa Batllo .
It is currently Spain ’ s third most expensive shopping street , having lost the top @ @ @ @ @ @ @ ’ Angel ( also in Barcelona ) and Av .
Preciados ( Madrid ) .
Two months ago , renting a street-level store on Paseo de Gracia would have probably set you back around €3,000 per square meter .
But that was before the arrival of Covid-19 , when the street was teeming with international tourists , including deep-pocketed , big-spending visitors from China , Japan , South Korea , Russia and the Middle East .
Today , after more than seven weeks of draconian lockdown that is only now beginning to be @ @ @ @ @ @ @ the street is half empty and almost all the shops are closed .
Even when the shops are finally allowed to reopen , their biggest customers — those big-spending , deep-pocketed tourists — will be nowhere to be seen .
Hence the frantic behind-the-scenes haggling .
A source who is familiar with the situation told me that some of the luxury brands have made their respective landlords a brutal ultimatum : either reduce the rent by 75 % or tie it intrinsically to the sales generated by the store , which right now @ @ @ @ @ @ @ will shut the shop .
The property owners , who predominantly consist of descendants of late 19th or early 20th century Catalan industrialists — what remains of the so-called alta burguesia Catalana — may have little choice but to accept the offer , or some slightly improved version of it .
Retail landlords all over Europe are already seeing their rents plunge , albeit not by as much as 75 % .
Some landlords have voluntarily allowed their tenants to skip rent payments if the lockdown prevents them from operating .
Others are @ @ @ @ @ @ @ with legal action .
They include UK mall giant Intu which was already in dire enough straits before the virus crisis began , forcing most of its tenants in the UK and Spain to temporarily close their stores .
As of four days ago , it had only managed to recover 40 % of its rents due on April 1 .
Among the retailers that are refusing to even engage with Intu “ to find a consensual solution ” are “ a number of large , well-capitalized brands who have the ability to @ @ @ @ @ @ @ ” the company said in a statement .
In Hong Kong , which is famous for its luxury retail , some luxury retailers have given up trying to renegotiate their rents altogether and are now staging a gradual retreat .
Even before Covid arrived , the pro-democracy movement had scared away many mainland Chinese tourists , who were the mainstay of Hong Kong ’ s huge luxury goods sector .
Covid did the rest .
By late January , with most of the city ’ s borders with the mainland closed , visitor @ @ @ @ @ @ @ year to just a few thousand a day .
As in Barcelona , without the guaranteed influx of huge numbers of well-heeled foreign tourists , the luxury retail sector now has a significantly shrunken market .
By February , the sales of luxury goods ( jewelry , watches , valuable gifts , etc . )
in Hong Kong had slumped by 78 % compared to the same month of 2019 .
Many luxury brands are reducing the number of stores they operate in the city .
In January , Louis Vuitton announced plans @ @ @ @ @ @ @ Kong ’ s Times Square .
Days later , Prada brought forward its planned shutdown of a nearby store to February from June .
Valentino has also slashed the number of its stores in the city , as have Swatch Group brands Omega and Longines .
Two home grown companies , Chow Tai Fook Jewellery Group and cosmetics maker Sa Sa International Holdings , each plan to close down 15 to 30 stores .
Whether in Hong Kong , the UK , Barcelona or just about anywhere , owners of many types of @ @ @ @ @ @ @ rents plunge or dry up completely .
The fact that some of the world ’ s richest retail brands are closing up many of their shops in some of their formerly most lucrative markets , or at least threatening to do so if the rents they pay are not sharply reduced , shows just how significantly things have changed in the last couple of months .
In Spain and the UK , temporary moratoriums on evictions prevent landlords from pushing out tenants that don ’ t pay .
But in this environment , @ @ @ @ @ @ @ to find another tenant anyway , and the property would not produce revenues for the landlord .
The financial stress is now spreading from retailers via landlords to their lenders .
Many of these commercial property owners will apply for mortgage holidays from their banks , many of which will be approved , for the simple reason that the last thing the banks need right now is cascading defaults on commercial property loans .
By Nick Corbishley , for WOLF STREET .

Luxury retail isn’t what it used to be, from Barcelona to Hong Kong.
In Barcelona, frantic backroom haggling is taking place between some of the world’s biggest luxury retailers and the owners of some of the city’s most expensive commercial real estate. That real estate is on Passeig de Gracia, a ten-block avenue that is home to two of Antoni Gaudi’s most emblematic buildings, La Pedrera and Casa Batllo. It is currently Spain’s third most expensive shopping street, having lost the top spot to Av. Porta de l’Angel (also in Barcelona) and Av. Preciados (Madrid).
Two months ago, renting a street-level store on Paseo de Gracia would have probably set you back around €3,000 per square meter. But that was before the arrival of Covid-19, when the street was teeming with international tourists, including deep-pocketed, big-spending visitors from China, Japan, South Korea, Russia and the Middle East. Today, after more than seven weeks of draconian lockdown that is only now beginning to be relaxed, there are no tourists, the street is half empty and almost all the shops are closed.
Even when the shops are finally allowed to reopen, their biggest customers — those big-spending, deep-pocketed tourists — will be nowhere to be seen. Hence the frantic behind-the-scenes haggling.
A source who is familiar with the situation told me that some of the luxury brands have made their respective landlords a brutal ultimatum: either reduce the rent by 75% or tie it intrinsically to the sales generated by the store, which right now is essentially zero. Otherwise, they will shut the shop.
The property owners, who predominantly consist of descendants of late 19th or early 20th century Catalan industrialists — what remains of the so-called alta burguesia Catalana — may have little choice but to accept the offer, or some slightly improved version of it. Retail landlords all over Europe are already seeing their rents plunge, albeit not by as much as 75%. Some landlords have voluntarily allowed their tenants to skip rent payments if the lockdown prevents them from operating. Others are desperately chasing payments and threatening their tenants with legal action.
They include UK mall giant Intu which was already in dire enough straits before the virus crisis began, forcing most of its tenants in the UK and Spain to temporarily close their stores. As of four days ago, it had only managed to recover 40% of its rents due on April 1. Among the retailers that are refusing to even engage with Intu “to find a consensual solution” are “a number of large, well-capitalized brands who have the ability to pay but have chosen not to,” the company said in a statement.
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In Hong Kong, which is famous for its luxury retail, some luxury retailers have given up trying to renegotiate their rents altogether and are now staging a gradual retreat. Even before Covid arrived, the pro-democracy movement had scared away many mainland Chinese tourists, who were the mainstay of Hong Kong’s huge luxury goods sector. Covid did the rest. By late January, with most of the city’s borders with the mainland closed, visitor arrivals had slumped 97% year over year to just a few thousand a day.
As in Barcelona, without the guaranteed influx of huge numbers of well-heeled foreign tourists, the luxury retail sector now has a significantly shrunken market. By February, the sales of luxury goods (jewelry, watches, valuable gifts, etc.) in Hong Kong had slumped by 78% compared to the same month of 2019.
Many luxury brands are reducing the number of stores they operate in the city. In January, Louis Vuitton announced plans to shutter its flagship store at Hong Kong’s Times Square. Days later, Prada brought forward its planned shutdown of a nearby store to February from June. Valentino has also slashed the number of its stores in the city, as have Swatch Group brands Omega and Longines. Two home grown companies, Chow Tai Fook Jewellery Group and cosmetics maker Sa Sa International Holdings, each plan to close down 15 to 30 stores.
Whether in Hong Kong, the UK, Barcelona or just about anywhere, owners of many types of retail properties are feeling the pinch as rents plunge or dry up completely. The fact that some of the world’s richest retail brands are closing up many of their shops in some of their formerly most lucrative markets, or at least threatening to do so if the rents they pay are not sharply reduced, shows just how significantly things have changed in the last couple of months.
In Spain and the UK, temporary moratoriums on evictions prevent landlords from pushing out tenants that don’t pay. But in this environment, these landlords wouldn’t be able to find another tenant anyway, and the property would not produce revenues for the landlord. The financial stress is now spreading from retailers via landlords to their lenders. Many of these commercial property owners will apply for mortgage holidays from their banks, many of which will be approved, for the simple reason that the last thing the banks need right now is cascading defaults on commercial property loans. By Nick Corbishley, for WOLF STREET.


investmentwatchblog--2020-05-06--The Bible Says That There Will Be Famines In The Last Days

Could it be possible that the stage is being set for horrific famines that the Bible has been warning us about for nearly 2,000 years ?
A few years ago , any talk of “ coming famines ” would have seemed absolutely ludicrous to most people in the western world , but the events of the last several months have changed everything .
Now , the UN is openly warning that famines of “ biblical proportions ” could be on the way , and the head of the UN World Food Program is telling us that we could soon see @ @ @ @ @ @ @ single day .
Nightmarish droughts , African Swine Fever , COVID-19 and armies of locusts in Africa the size of major cities have combined to create a “ perfect storm ” , and global food supplies are becoming tighter with each passing month .
As conditions continue to deteriorate , many are starting to wonder if certain prophetic passages in the Bible are starting to come to fruition .
For example , in Matthew 24:7 Jesus specifically warned us that there would be “ famines ” in the days immediately preceding His return… @ @ @ @ @ @ @ from Jesus in Mark chapter 13 and Luke chapter 21 .
So if we actually are living during the time just before the return of Jesus , we should expect to see horrifying global famines start to emerge , and that is precisely what we are witnessing at this moment .
In Revelation 6:8 , we are told that “ hunger ” will eventually be a major factor in the deaths of a large portion of the global population… Of course we aren ’ t at that point yet .
But are we @ @ @ @ @ @ @ David Beasley is the executive director of the UN World Food Program , and he recently stated that we are heading directly into “ the worst humanitarian crisis since World War Two ” .
Hunger is rapidly rising all over the globe , and he believes that if dramatic intervention does not happen quickly we could see an astounding death toll .
According to Beasley , we could soon see 300,000 people around the world starve to death every single day , and that figure doesn ’ t even factor in the effect @ @ @ @ @ @ @ COVID-19 pushes us into an unprecedented global economic downturn , how much worse will that make our rapidly growing global food crisis ?
Of course in the western world we are much better off than most of the rest of the planet for now .
Famine is definitely not an immediate concern for us , but thanks to COVID-19 we are now wrestling with significant food shortages .
Because meat supplies are so tight , approximately one-fifth of all Wendy ’ s restaurants have taken burgers off their menus .
When I first @ @ @ @ @ @ @ .
Of course Wendy ’ s is not the only one dealing with strained supply chains .
Costco has started limiting the amount of meat that each customer can purchase , and Tyson Foods has announced that their capacity to slaughter hogs has fallen “ by about 50 percent ” .
Time Magazine is warning us that the meat shortages “ could last for months ” , and they could stretch even longer than that if this coronavirus pandemic doesn ’ t start to subside .
Meanwhile , farmers all over America are @ @ @ @ @ @ @ because broken supply chains have made it impossible to sell what they have produced .
One industry expert is actually claiming that “ billions ” of dollars worth of crops have gone to waste as a result of this crisis… I have a feeling that eventually we will greatly regret allowing so much good food to go to waste .
Sadly , most of the rest of the world is actually in much worse shape than we are right now .
Long before COVID-19 came along , crazy weather patterns were playing havoc @ @ @ @ @ @ @ For instance , Australia is traditionally a major exporter of wheat to the rest of the world , but unprecedented droughts have forced Australia to actually start importing wheat… In addition , another plague of “ biblical proportions ” has been killing off pigs in unprecedented numbers .
When I tell people that African Swine Fever has already killed off half the pigs in China and one-fourth of all the pigs in the entire world , a lot of people don ’ t believe me .
So let me give you a quote @ @ @ @ @ @ @ if you don ’ t believe them , just do a Google search and you will find countless mainstream news sources telling you the exact same facts .
This is actually happening , and the death toll is rising with each passing day .
Meanwhile , a new generation of locust armies that is being described as “ 20 times bigger ” than the last generation is destroying countless farms all across Africa , the Middle East and parts of Asia .
The following comes from one of my previous articles… Even before @ @ @ @ @ @ @ to hit the globe in decades , enormous swarms of locusts the size of major cities were devouring crops throughout eastern Africa , across the Middle East and even in some parts of Asia .
Now a new generation that officials are describing as “ 20 times bigger ” has emerged , and the devastation that this new generation of locusts is causing is extremely alarming .
These colossal locust swarms can travel up to 90 miles a day , and as you will see below , when they descend upon a field @ @ @ @ @ @ @ as little as 30 seconds .
This new generation of locusts has been spotted as far south as Congo , as far north as Iran and as far east as India .
In other words , the food supplies of billions of people are at risk .
Never before have we seen so many catastrophic threats to the global food supply emerge at the same time .
It appears that “ the perfect storm ” is now upon us , and I anticipate that global events will continue to accelerate in the months @ @ @ @ @ @ @ quite a way to go before we get to the type of famines described in the Scriptures , but it certainly looks like the stage is being set for severe hunger on a global scale .
But Jesus didn ’ t warn us about these things so that we would live in fear .
God knew about all of this in advance , He is in control , and He has a plan .
Unfortunately , most of the world doesn ’ t want anything to do with the God of the Bible @ @ @ @ @ @ @ will be facing what is to come all by themselves .

by Michael Snyder
Could it be possible that the stage is being set for horrific famines that the Bible has been warning us about for nearly 2,000 years? A few years ago, any talk of “coming famines” would have seemed absolutely ludicrous to most people in the western world, but the events of the last several months have changed everything. Now, the UN is openly warning that famines of “biblical proportions” could be on the way, and the head of the UN World Food Program is telling us that we could soon see 300,000 people literally starve to death every single day. Nightmarish droughts, African Swine Fever, COVID-19 and armies of locusts in Africa the size of major cities have combined to create a “perfect storm”, and global food supplies are becoming tighter with each passing month.
As conditions continue to deteriorate, many are starting to wonder if certain prophetic passages in the Bible are starting to come to fruition. For example, in Matthew 24:7 Jesus specifically warned us that there would be “famines” in the days immediately preceding His return…
For nation shall rise against nation, and kingdom against kingdom: and there shall be famines, and pestilences, and earthquakes, in divers places.
We can also find very similar warnings from Jesus in Mark chapter 13 and Luke chapter 21.
So if we actually are living during the time just before the return of Jesus, we should expect to see horrifying global famines start to emerge, and that is precisely what we are witnessing at this moment.
In Revelation 6:8, we are told that “hunger” will eventually be a major factor in the deaths of a large portion of the global population…
And I looked, and behold a pale horse: and his name that sat on him was Death, and Hell followed with him. And power was given unto them over the fourth part of the earth, to kill with sword, and with hunger, and with death, and with the beasts of the earth.
Of course we aren’t at that point yet.
But are we starting to move in that direction?
David Beasley is the executive director of the UN World Food Program, and he recently stated that we are heading directly into “the worst humanitarian crisis since World War Two”. Hunger is rapidly rising all over the globe, and he believes that if dramatic intervention does not happen quickly we could see an astounding death toll.
According to Beasley, we could soon see 300,000 people around the world starve to death every single day, and that figure doesn’t even factor in the effect of this coronavirus pandemic…
“If we can’t reach these people with the life-saving assistance they need, our analysis shows that 300,000 people could starve to death every single day over a three-month period”, he upheld. “This does not include the increase of starvation due to COVID-19”.
As fear of COVID-19 pushes us into an unprecedented global economic downturn, how much worse will that make our rapidly growing global food crisis?
Of course in the western world we are much better off than most of the rest of the planet for now. Famine is definitely not an immediate concern for us, but thanks to COVID-19 we are now wrestling with significant food shortages. Because meat supplies are so tight, approximately one-fifth of all Wendy’s restaurants have taken burgers off their menus. When I first read that, I was absolutely stunned.
Of course Wendy’s is not the only one dealing with strained supply chains. Costco has started limiting the amount of meat that each customer can purchase, and Tyson Foods has announced that their capacity to slaughter hogs has fallen “by about 50 percent”. Time Magazine is warning us that the meat shortages “could last for months”, and they could stretch even longer than that if this coronavirus pandemic doesn’t start to subside.
Meanwhile, farmers all over America are seeing their hard work go to waste because broken supply chains have made it impossible to sell what they have produced. One industry expert is actually claiming that “billions” of dollars worth of crops have gone to waste as a result of this crisis…
We are primarily funded by readers. Please subscribe and donate to support us!
Crops planted months before based on pre-pandemic demand spoiled without buyers. Billions of dollars’ worth of produce went to waste, much of it tilled back into the soil, said Cathy Burns, CEO of the Produce Marketing Assn., which represents produce companies.
I have a feeling that eventually we will greatly regret allowing so much good food to go to waste.
Sadly, most of the rest of the world is actually in much worse shape than we are right now.
Long before COVID-19 came along, crazy weather patterns were playing havoc with harvests all over the world. For instance, Australia is traditionally a major exporter of wheat to the rest of the world, but unprecedented droughts have forced Australia to actually start importing wheat…
Australia, which made a rare purchase of Canadian wheat in the current marketing year, is expected to continue buying more wheat in the 2019-20 marketing year (October-September), as weather conditions remain difficult in key states, market analysts say. Australia’s wheat output dropped 45.6% to 17.3 million mt in the 2018-19 marketing year from a record high of 31.8 million mt in 2016-17, owing to prolonged drought conditions, data from the Australian Bureau of Agricultural and Resource Economics shows. This forced the country to import wheat for the first time in 12 years.
In addition, another plague of “biblical proportions” has been killing off pigs in unprecedented numbers.
When I tell people that African Swine Fever has already killed off half the pigs in China and one-fourth of all the pigs in the entire world, a lot of people don’t believe me.
So let me give you a quote that comes directly from New Scientist…
A quarter of the world’s domestic pigs have died this year as a virus rampages across Eurasia, and that may be just the start. Half the pigs in China – which last year numbered 440 million, some 50 percent of the world’s pigs – have either died of African swine fever (ASF) or been killed to stamp out the virus. ASF comes from East Africa. In 2007, it reached Georgia in the Caucasus in contaminated meat, and in infected wild boar. Now, it is all over Russia and eastern Europe and infected wild boar have turned up as far west as Belgium. It is also spreading in east Asia, killing many pigs in Vietnam and elsewhere.
And if you don’t believe them, just do a Google search and you will find countless mainstream news sources telling you the exact same facts.
This is actually happening, and the death toll is rising with each passing day.
Meanwhile, a new generation of locust armies that is being described as “20 times bigger” than the last generation is destroying countless farms all across Africa, the Middle East and parts of Asia. The following comes from one of my previous articles…
Even before COVID-19 became the biggest public health crisis to hit the globe in decades, enormous swarms of locusts the size of major cities were devouring crops throughout eastern Africa, across the Middle East and even in some parts of Asia. Now a new generation that officials are describing as “20 times bigger” has emerged, and the devastation that this new generation of locusts is causing is extremely alarming. These colossal locust swarms can travel up to 90 miles a day, and as you will see below, when they descend upon a field they can literally eat everything there in as little as 30 seconds. This new generation of locusts has been spotted as far south as Congo, as far north as Iran and as far east as India. In other words, the food supplies of billions of people are at risk.
Never before have we seen so many catastrophic threats to the global food supply emerge at the same time.
It appears that “the perfect storm” is now upon us, and I anticipate that global events will continue to accelerate in the months ahead.
Of course we still have quite a way to go before we get to the type of famines described in the Scriptures, but it certainly looks like the stage is being set for severe hunger on a global scale.
But Jesus didn’t warn us about these things so that we would live in fear. God knew about all of this in advance, He is in control, and He has a plan.
Unfortunately, most of the world doesn’t want anything to do with the God of the Bible or His plan, and so they will be facing what is to come all by themselves.


investmentwatchblog--2020-05-06--Subprime Auto Loans Blow Up, With 30 Million Unemployed, Even Prime Loans Will Get Messy.

“ Because consumer debt servicing statements are typically furnished to credit bureaus only once during every statement period , our snapshot of consumer credit reports as of March 31 , 2020 is , in effect , largely a pre‑COVID‑19 view of the consumer balance sheet , ” the New York Fed said today when it released its Report on Household Debt and Credit for Q1 .
So the credit-upheaval caused by the biggest and most sudden unemployment crisis in our lifetime is not yet included in the New York Fed ’ s delinquency data .
But even in the pre-Virus @ @ @ @ @ @ @ .
Serious delinquencies in auto loans and leases – those that are at least 90 days past due – surged by 13 % in Q1 from a year ago to a historic high of $ 68 billion : Delinquencies of auto loans to borrowers with prime credit ratings were near historic lows ( 0.27 % in March ) , according to Fitch data .
In the pre-Virus Good Times , it was the subprime loans – with credit scores below 620 – that were blowing up .
Seriously delinquent auto loans , at @ @ @ @ @ @ @ % of the $ 1.35 trillion in total auto loans and leases .
This is only a notch below the peak of Financial Crisis 1 in Q4 of 2010 ( when it was 5.27 % ) , after General Motors and Chrysler had filed for bankruptcy as the industry was collapsing .
But in Q1 2020 , those were still the Good Times : Delinquencies will now explode through the ceiling In April , specialized subprime lenders started reporting surging delinquencies and plunging new business .
Among the first was Credit Acceptance Corp @ @ @ @ @ @ @ an SEC filing on April 20 that it was getting hit due to the sudden job losses , as consumers were “ delaying payments or re-allocating resources , leading to a significant decrease in our realized collections.
” It complained of a sudden drop in new business as consumer demand for vehicles fizzled .
And this toxic mix of the surging delinquencies and dropping new business , it warned , “ could cause a material adverse effect on our financial position , liquidity , and results of operations.
” Ally Financial [ ALLY @ @ @ @ @ @ @ its Q1 earnings report that it had increased its provisions for loan losses by $ 504 million year-over-year “ due to reserve build primarily driven by COVID-19 forecasted macroeconomic changes.
” During the analyst meeting , Ally CFO Jennifer LaClair said that about 25 % of auto-loan borrowers had asked for a deferral of payment , and 18 % had already enrolled in the program by the end of March 31 .
Ally allows auto-loan customers to defer payments for up to 120 days without late fee , but with finance charges accruing @ @ @ @ @ @ @ loans as current , rather than delinquent .
“ We believe participation in this program will lower loss content , ” LaClair told the analysts .
“ We will be able to track leading indicators of default and intervene early.
” Ally now also provides new auto loan borrowers who haven ’ t even made their first payment “ the option to defer their first payment for 90 days without late fees being incurred but with finance charges accruing.
” These deferrals are not considered delinquencies .
And it ’ s going to @ @ @ @ @ @ @ as to who will still be making payments on their auto loans .
In mid-March , the world changed for subprime lenders .
Delinquencies were already exploding in the Good Times , and now they ’ re in utter turmoil .
In addition , it is likely that are becoming delinquent as well , as many of these people too have lost their jobs – this includes dentists and other professionals with high incomes and big debts and lots of expenses and no savings , who ’ d suddenly had to close their @ @ @ @ @ @ @ .
If they fall behind on their debts , they ’ ll be subprime in a hurry .
In good times , subprime auto-loans are an immensely profitable business , with very high interest rates – often in the double digits – in a near-zero interest-rate environment .
The technologies for tracking the vehicles when it comes time to repossess them are effective ; and a normally very liquid used-vehicle market via auctions around the country ensures that , normally , those repossessed vehicles are easy and quick to sell .
There are @ @ @ @ @ @ @ good times , they ’ re more than compensated for by the big-fat interest rate margins the lenders make on all loans combined .
And so the subprime lenders have gotten very aggressive since 2014 .
And for a while it worked .
Lenders have been able to securitize these loans and sell the asset-backed securities ( ABS ) into blistering demand from yield-chasing investors who have been bludgeoned by negative-interest-rate and low-interest-rate central-bank policies .
Demand from those ABS investors fueled the subprime-auto-loan boom .
The Fed will try to force investors @ @ @ @ @ @ @ have to chase yield , and the Fed will try to create demand for these subprime auto loan ABS so that they don ’ t collapse .
But the normally liquid used-vehicle market isn ’ t that liquid anymore , as auction volume has plunged , and there is a flood of used-vehicle supply on the horizon from rental car companies trying to unload a big part of their now useless fleets , or creditors of rental-car companies taking possession of their collateral – the vehicles – and unloading them at the auctions @ @ @ @ @ @ @ is a form of forced selling , and the whole industry is now afraid of it , and what it might do to wholesale prices .
It will make it much harder for subprime auto lenders to dispose of their repos , and the losses will be greater , and there will be many more repos they ’ ll have to dispose of after all the deferrals run out and people can not make their payments , and there won ’ t be enough new subprime lending business to cover up those losses @

By Wolf Richter for WOLF STREET.
“Because consumer debt servicing statements are typically furnished to credit bureaus only once during every statement period, our snapshot of consumer credit reports as of March 31, 2020 is, in effect, largely a pre‑COVID‑19 view of the consumer balance sheet,” the New York Fed said today when it released its Report on Household Debt and Credit for Q1. So the credit-upheaval caused by the biggest and most sudden unemployment crisis in our lifetime is not yet included in the New York Fed’s delinquency data. But even in the pre-Virus Good Times, auto loans already exploded.
Serious delinquencies in auto loans and leases – those that are at least 90 days past due – surged by 13% in Q1 from a year ago to a historic high of $68 billion:
Delinquencies of auto loans to borrowers with prime credit ratings were near historic lows (0.27% in March), according to Fitch data. In the pre-Virus Good Times, it was the subprime loans – with credit scores below 620 – that were blowing up.
Seriously delinquent auto loans, at $68 billion, jumped to 5.05% of the $1.35 trillion in total auto loans and leases. This is only a notch below the peak of Financial Crisis 1 in Q4 of 2010 (when it was 5.27%), after General Motors and Chrysler had filed for bankruptcy as the industry was collapsing. But in Q1 2020, those were still the Good Times:
Delinquencies will now explode through the ceiling
In April, specialized subprime lenders started reporting surging delinquencies and plunging new business. Among the first was Credit Acceptance Corp [CACC] when it disclosed in an SEC filing on April 20 that it was getting hit due to the sudden job losses, as consumers were “delaying payments or re-allocating resources, leading to a significant decrease in our realized collections.”
It complained of a sudden drop in new business as consumer demand for vehicles fizzled. And this toxic mix of the surging delinquencies and dropping new business, it warned, “could cause a material adverse effect on our financial position, liquidity, and results of operations.”
Ally Financial [ALLY] disclosed on the same day in its Q1 earnings report that it had increased its provisions for loan losses by $504 million year-over-year “due to reserve build primarily driven by COVID-19 forecasted macroeconomic changes.”
During the analyst meeting, Ally CFO Jennifer LaClair said that about 25% of auto-loan borrowers had asked for a deferral of payment, and 18% had already enrolled in the program by the end of March 31. Ally allows auto-loan customers to defer payments for up to 120 days without late fee, but with finance charges accruing. This allows Ally to show the loans as current, rather than delinquent.
“We believe participation in this program will lower loss content,” LaClair told the analysts. “We will be able to track leading indicators of default and intervene early.”
We are primarily funded by readers. Please subscribe and donate to support us!
Ally now also provides new auto loan borrowers who haven’t even made their first payment “the option to defer their first payment for 90 days without late fees being incurred but with finance charges accruing.”
These deferrals are not considered delinquencies. And it’s going to be tough to get a true sense as to who will still be making payments on their auto loans.
In mid-March, the world changed for subprime lenders. Delinquencies were already exploding in the Good Times, and now they’re in utter turmoil.
In addition, it is likely that prime loans are becoming delinquent as well, as many of these people too have lost their jobs – this includes dentists and other professionals with high incomes and big debts and lots of expenses and no savings, who’d suddenly had to close their operations, and their cash flow disappeared. If they fall behind on their debts, they’ll be subprime in a hurry.
In good times, subprime auto-loans are an immensely profitable business, with very high interest rates – often in the double digits – in a near-zero interest-rate environment.
The technologies for tracking the vehicles when it comes time to repossess them are effective; and a normally very liquid used-vehicle market via auctions around the country ensures that, normally, those repossessed vehicles are easy and quick to sell. There are losses and costs involved, but in good times, they’re more than compensated for by the big-fat interest rate margins the lenders make on all loans combined. And so the subprime lenders have gotten very aggressive since 2014. And for a while it worked.
Lenders have been able to securitize these loans and sell the asset-backed securities (ABS) into blistering demand from yield-chasing investors who have been bludgeoned by negative-interest-rate and low-interest-rate central-bank policies. Demand from those ABS investors fueled the subprime-auto-loan boom.
The Fed will try to force investors into a position where they feel they have to chase yield, and the Fed will try to create demand for these subprime auto loan ABS so that they don’t collapse.
But the normally liquid used-vehicle market isn’t that liquid anymore, as auction volume has plunged, and there is a flood of used-vehicle supply on the horizon from rental car companies trying to unload a big part of their now useless fleets, or creditors of rental-car companies taking possession of their collateral – the vehicles – and unloading them at the auctions, into very low demand.
This is a form of forced selling, and the whole industry is now afraid of it, and what it might do to wholesale prices. It will make it much harder for subprime auto lenders to dispose of their repos, and the losses will be greater, and there will be many more repos they’ll have to dispose of after all the deferrals run out and people cannot make their payments, and there won’t be enough new subprime lending business to cover up those losses.


investmentwatchblog--2020-05-06--FORCED MISALLOCATION: The Fed is propping up companies it had warned banks not to touch

FORCED MISALLOCATION The Fed is propping up companies it had warned banks not to touch t.co/ldmmIBMCiP But now , in its latest effort to keep credit flowing , the Fed has done a remarkable about-face .
It essentially endorsed the dubious practice with a program that may serve to bail out some of America ’ s most leveraged companies .
For years , the Federal Reserve warned that too many highly risky companies were engaging in fuzzy accounting that bumped up their earnings — making it easier for them to obtain loans .
The practice was driving up corporate debt @ @ @ @ @ @ @ chastised .
No , the Fed can ’ t save the junk bond market , Goldman warns Exchange-traded funds offering exposure to junk bonds may lack the full Federal Reserve safety-net that investors are betting on , warn analysts at Goldman Sachs .
The central bank announced in early April that it would buy ETFs that contained bonds with speculative , or “ junk , ” ratings in an effort to keep credit flowing through financial markets .
An update Monday indicated that Fed purchases could start any day .
Investors responded to @ @ @ @ @ @ @ biggest junk bond ETFs , SPDR Bloomberg Barclays High Yield Bond ETF JNK , +0.79 % and iShares iBoxx $ High Yield Corporate Bond ETF HYG , +0.78 % , hoping to get ahead of the Fed ’ s purchases .
From April 9 , the day of the Fed ’ s announcement , through May 4 , JNK took in $ 1.6 billion , while HYG has seen inflows of $ 4.71 billion , according to Refinitiv .
But a bigger tsunami of downgrades may lie ahead , Goldman cautions , and @ @ @ @ @ @ @ marked down make up an outsize segment of those funds .
So far in the second quarter , downgrades of bonds rated “ BB , ” the highest rating on the below-investment-grade spectrum , has matched the number of downgrades in the first quarter , which was already an “ elevated ” level , Goldman analysts wrote .
And ratings agencies have signaled more downgrades may lie ahead , through the use of “ Negative Outlook ” or “ Negative Watch ” designations .

FORCED MISALLOCATION The Fed is propping up companies it had warned banks not to touch t.co/ldmmIBMCiP
But now, in its latest effort to keep credit flowing, the Fed has done a remarkable about-face. It essentially endorsed the dubious practice with a program that may serve to bail out some of America’s most leveraged companies.
For years, the Federal Reserve warned that too many highly risky companies were engaging in fuzzy accounting that bumped up their earnings — making it easier for them to obtain loans. The practice was driving up corporate debt to excessive and worrisome levels, regulators chastised.
No, the Fed can’t save the junk bond market, Goldman warns
Exchange-traded funds offering exposure to junk bonds may lack the full Federal Reserve safety-net that investors are betting on, warn analysts at Goldman Sachs.
The central bank announced in early April that it would buy ETFs that contained bonds with speculative, or “junk,” ratings in an effort to keep credit flowing through financial markets. An update Monday indicated that Fed purchases could start any day.


Bankruptcy bonanza….

U..S. AIRLINES AT RISK OF BANKRUPTCY IF FORCED TO REFUND NON-REFUNDABLE TICKETS OR THOSE CANCELED BY PASSENGERS -A4A TESTIMONY Norwegian @ @ @ @ @ s ‘ substantial doubt ’ about its ability to continue as a ‘ going concern @ @ @ @ @ Inc. filed for bankruptcy with plans to hand control to its lenders , unable to @ @ @ @ @ amid the pandemic and crushed by debt rooted in a long-ago leveraged buyout .
While @ @ @ @ @ pre-dated the coronavirus outbreak , it ’ s the first major retailer to go bankrupt @ @ @ @ @ , which has pushed dozens of chains to the brink of failure .
Neiman Marcus @ @ @ @ @ Co. are among merchants that could be days away from default .

[AAL] American Airlines’ risk of bankruptcy.
U..S. AIRLINES AT RISK OF BANKRUPTCY IF FORCED TO REFUND NON-REFUNDABLE TICKETS OR THOSE CANCELED BY PASSENGERS -A4A TESTIMONY
Norwegian Cruise Line says there’s ‘substantial doubt’ about its ability to continue as a ‘going concern’
J. Crew Files for Bankruptcy Protection
J. Crew Group Inc. filed for bankruptcy with plans to hand control to its lenders, unable to revive its preppy clothing line amid the pandemic and crushed by debt rooted in a long-ago leveraged buyout.
While J. Crew’s struggles pre-dated the coronavirus outbreak, it’s the first major retailer to go bankrupt during the ensuing economic shutdown, which has pushed dozens of chains to the brink of failure. Neiman Marcus Group Inc. and J.C. Penney Co. are among merchants that could be days away from default.


investmentwatchblog--2020-05-06--Fed’s Clarida Says We’re Living Through The Most Severe Contraction In Activity And Surge In Unemplo

Fed’s Clarida Says We’re Living Through The Most Severe Contraction In Activity And Surge In Unemployment We’ve Seen In Our Lifetimes  – CNBC

FED'S CLARIDA SAYS WE’RE LIVING THROUGH THE MOST SEVERE CONTRACTION IN ACTIVITY AND SURGE IN UNEMPLOYMENT WE’VE SEEN IN OUR LIFETIMES – CNBC — *Walter Bloomberg (@DeItaOne) May 5, 2020
"Stocks rally on hopes of the economy reopening" is the new "stocks rally on hopes of a trade deal with China" — Hipster (@Hipster_Trader) May 5, 2020
Tomorrow ADP will tell us that 20mm people lost their jobs last month and as the same time the NASDAQ is flat on the year. Truly stunning how fundamentals are meaningless (at least for now). — Michael Lebowitz, CFA (@michaellebowitz) May 5, 2020
These people are lunatics. Rogoff proposes deep negative rates of -3% enforced upon savers. t.co/x2pWhdzr7i — Steve Saretsky (@SteveSaretsky) May 5, 2020
Consumer is fine guys. Shattered the record in the biggest consumer spending drop in history during April and now at record debt levels. All good!t.co/nZhZ5SQadA — Brad Huston (@BradHuston) May 5, 2020
Borrowers with mortgages representing nearly $150 billion in CMBS, 26% of the outstanding debt, have asked about suspending payments in recent weeks: Fitch Ratings. That compares with a peak of 9% in delinquencies & foreclosures following the last crisis. t.co/tZZOM2y3HZ — Lisa Abramowicz (@lisaabramowicz1) May 5, 2020


investmentwatchblog--2020-05-06--Canadian Police Arrest and Assault GIRL dressed up as a STORMTROOPER on Star Wars Day

Horrible footage has been released regarding a girl dressed up as a storm trooper during May the 4th being arrested @ @ @ @ @ gun… WTF Worse thing is she was working at the time , her boss even @ @ @ @ @ explain to the the police state like cops… Insane… no common sense at all , @ @ @ @ @

Horrible footage has been released regarding a girl dressed up as a storm trooper during May the 4th being arrested for holding a toy plastic gun… WTF
Worse thing is she was working at the time, her boss even came out and tried to explain to the the police state like cops…
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Insane… no common sense at all, what are your thoughts?
h/t TL


investmentwatchblog--2020-05-06--Food bank leaders warn of dwindling supplies. FAMINE LOOMING. Got no money…

30-40 million one pointed on getting food—whatever means necessary… .
1 they go for known hoarders 2 undefended grocery shops @ @ @ @ @ in the backyard 4 hijacking food trucks 5 preppers 6 the farms–take anything thats edible @ @ @ @ @ growth 7 wintertime nothing is growing

Food bank leaders warn of dwindling supplies
Largest food bank in U.S. stretched thin amid coronavirus pandemic
s africa 2 and half mile queue (no social distancing)
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30-40 million one pointed on getting food—whatever means necessary….
1 they go for known hoarders
2 undefended grocery shops
3 homes with food growing in the backyard
4 hijacking food trucks
5 preppers
6 the farms–take anything thats edible no matter what stage of growth
7 wintertime nothing is growing
h/t jikwan


investmentwatchblog--2020-05-06--Deadly Asian Murder Hornet Massacres Mouse … Huge AND Dangerous!!

It says breaking , but this is from last year .

It says breaking, but this is from last year.
www.tmz.com/2020/05/04/asian-murder-hornet-kills-mouse-video-huge-size-dead/
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www.thesun.co.uk/news/11551854/massive-asian-murder-hornet-kills-mouse/
AC


investmentwatchblog--2020-05-06--Californians Refuse To Comply – Reopen Laguna Beach Themselves

Another beautiful act of civil disobedience by the residents of California .
Crazed Governor Gavin Newsom recently closed the beaches @ @ @ @ @ for the citizens daring to exercise their God-given inalienable Constitutional Rights .
Their response was @ @ @ @ @ open up the beaches themselves .
This is one of the most effective ways to @ @ @ @ @ mass noncompliance .
The emperor is now naked for all to see .
The consent @ @ @ @ @ effectively lost .
Governor Newsom is finished .

by Facts-Over-Opinion
We are primarily funded by readers. Please subscribe and donate to support us!
Another beautiful act of civil disobedience by the residents of California. Crazed Governor Gavin Newsom recently closed the beaches of Orange County in retaliation for the citizens daring to exercise their God-given inalienable Constitutional Rights. Their response was to simply ignore him and open up the beaches themselves. This is one of the most effective ways to render a tyrant impotent – mass noncompliance. The emperor is now naked for all to see. The consent of the governed has been effectively lost. Governor Newsom is finished.


investmentwatchblog--2020-05-06--Service Industry Workers Making MORE While On Unemployment; ‘Why Come Back?’

BALTIMORE ( WJZ ) — For some workers in the service industry , it can make more sense for them @ @ @ @ @ the coronavirus pandemic rather than go back to work since they are making more money @ @ @ @ @ Americans welcomed the financial relief brought on by the Paycheck Protection Program when President Trump @ @ @ @ @ law in late March , but now they ’ re running into a tricky decision @ @ @ @ @ and make less money or stay at home and make more on unemployment .

BALTIMORE (WJZ) — For some workers in the service industry, it can make more sense for them to stay at home amid the coronavirus pandemic rather than go back to work since they are making more money now on unemployment.
Out-of-work Americans welcomed the financial relief brought on by the Paycheck Protection Program when President Trump signed the CARES Act into law in late March, but now they’re running into a tricky decision: go back to work and make less money or stay at home and make more on unemployment.
We are primarily funded by readers. Please subscribe and donate to support us!
baltimore.cbslocal.com/2020/05/04/coronavirus-latest-unemployment-service-industry-maryland/


investmentwatchblog--2020-05-06--Airline Will Guarantee Middle Seat Next To You Is Empty — For Extra $39!

DENVER ( CBS4 ) – Now that the federal government ’ s social distancing guidelines have expired , Frontier Airlines @ @ @ @ @ for people who want a little more personal space .
For an extra $ 39 @ @ @ @ @ sure the seat next to you is empty .
“ Frontier Airlines passengers can now @ @ @ @ @ ’ seat assignment – with a confirmed empty middle seat next to them , ” @ @ @ @ @ Frontier officials say its an option for travelers who want “ an empty seat next @ @ @ @ @ of mind or simply additional comfort.
” “ The bottom line is you don ’ @ @ @ @ @ more than that to be safe on Frontier , we just recognize that some people @ @ @ @ @ and convenience , ” Frontier CEO Barry Biffle told CBS4 .

DENVER (CBS4) – Now that the federal government’s social distancing guidelines have expired, Frontier Airlines is offering a new option for people who want a little more personal space. For an extra $39, the airline will make sure the seat next to you is empty.
“Frontier Airlines passengers can now reserve a ‘More Room’ seat assignment – with a confirmed empty middle seat next to them,” airline officials announced Monday.
Frontier officials say its an option for travelers who want “an empty seat next to them for extra peace of mind or simply additional comfort.”
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“The bottom line is you don’t have to have anything more than that to be safe on Frontier, we just recognize that some people want a little more comfort and convenience,” Frontier CEO Barry Biffle told CBS4.
denver.cbslocal.com/2020/05/04/frontier-airlines-guarantee-empty-middle-seat/


investmentwatchblog--2020-05-06--RUSH: They’re really trying to load the number of COVID-19 deaths way higher than reality. Now, why

RUSH: They’re really trying to load the number of COVID-19 deaths way higher than reality. Now, why would they be doing that?

RUSH : This is Martin in Cadillac , Michigan .
Martin , I ’ m glad you called .
It ’ s great to have you here with us , sir .
Hello .
CALLER : Rush , dittos and prayers to you for a full recovery .
Thank you for having me on the show .
RUSH : You bet , sir .
Thank you .
CALLER : And thank you for speaking the truth on this issue of coronavirus .
You know , on April 2 , the National Center for Health Statistics put out a communique , @ @ @ @ @ @ @ gon na count all pneumonia deaths in the United States as coronavirus deaths .
And , you know , as an allergist and a clinical immunologist , I really want clean data when we ’ re looking at this virus .
RUSH : You know , I ’ m looking for a story here that there are… I wish I could remember this .
Maybe it ’ s New York .
But they ’ re calculating practically every death as COVID-19 if it has any — just one strain of — relationship to @ @ @ @ @ @ @ many deaths as they can .
I think it ’ s New York , but it may be some other state .
But they ’ re really trying to load the number of COVID-19 deaths way higher than reality .
Now , why would they be doing that ?
Why would any Department of Health , government — why would anybody — want to do that ?
What ’ s the point ?
CALLER : Well , you know , they state that COVID-19 may be misclassified as pneumonia deaths in the absence @ @ @ @ @ @ @ s what they claim on their communique .
But I think , you know , we have testing , and we have that testing for a reason : To determine who does and who does not have it .
And , you know , maybe it ’ s to inflate the numbers to create fear or panic , you know ?
I mean I try to be a physician and look at this objectively , but it ’ s very concerning to me .
RUSH : Well , obviously money is a factor @ @ @ @ @ @ @ sure exactly how .
But… I ’ m looking for the story here , and I can ’ t find it , and I had it here in the Stack ready to go , and it ’ s not just that they ’ re counting a bunch of unrelated deaths as COVID-19 .
It ’ s worse than that , but I can ’ t remember the specifics of it .
So hopefully I ’ ll run into it when I don ’ t expect to .
I ’ m glad you called @ @ @ @ @ @ @ RUSH : Here ’ s what I was looking for .
( crumbling up paper ) Got ta slow down .
It was a Project Veritas story .
( crumbling up paper ) No , that ’ s wrong one .
It involves funeral directors .
James O ’ Keefe of Project Veritas called funeral directors in New York City , and all of the funeral directors said that the numbers are being padded , that every death — all deaths — are being called coronavirus deaths without any tests being administered .
@ @ @ @ @ @ @ the story .
There ’ s no… I mean , you have to guess as to why — and of course , one of the most logical first guesses would be money somehow , some way .
But there are a lot of people in government who want many people to believe that coronavirus is far more deadly than it is — and it ’ s deadly enough .
But there are people really invested in people having an exaggerated idea of how deadly it is , and that ought to send a @ @ @ @ @ @ @ ought to be suspicious over that .
RUSH : You know what they ’ re doing in Virginia ?
Every time a person tests positive , they ’ re counting it as a new case .
You can test positive two or three times , but you will be counted as two or three new cases to pad the numbers of infection to keep the lockdown in place .

via rushlimbaugh
RUSH: This is Martin in Cadillac, Michigan. Martin, I’m glad you called. It’s great to have you here with us, sir. Hello.
CALLER: Rush, dittos and prayers to you for a full recovery. Thank you for having me on the show.
RUSH: You bet, sir. Thank you.
CALLER: And thank you for speaking the truth on this issue of coronavirus. You know, on April 2, the National Center for Health Statistics put out a communique, a guideline stating that they’re gonna count all pneumonia deaths in the United States as coronavirus deaths. And, you know, as an allergist and a clinical immunologist, I really want clean data when we’re looking at this virus.
RUSH: You know, I’m looking for a story here that there are… I wish I could remember this. Maybe it’s New York. But they’re calculating practically every death as COVID-19 if it has any — just one strain of — relationship to it. They’re counting as many deaths as they can.
I think it’s New York, but it may be some other state. But they’re really trying to load the number of COVID-19 deaths way higher than reality. Now, why would they be doing that? Why would any Department of Health, government — why would anybody — want to do that? What’s the point?
CALLER: Well, you know, they state that COVID-19 may be misclassified as pneumonia deaths in the absence of positive test results. That’s what they claim on their communique. But I think, you know, we have testing, and we have that testing for a reason: To determine who does and who does not have it. And, you know, maybe it’s to inflate the numbers to create fear or panic, you know? I mean I try to be a physician and look at this objectively, but it’s very concerning to me.
We are primarily funded by readers. Please subscribe and donate to support us!
RUSH: Well, obviously money is a factor in it. I’m not sure exactly how. But… I’m looking for the story here, and I can’t find it, and I had it here in the Stack ready to go, and it’s not just that they’re counting a bunch of unrelated deaths as COVID-19. It’s worse than that, but I can’t remember the specifics of it.
So hopefully I’ll run into it when I don’t expect to. I’m glad you called, Martin. Thanks very much.
BREAK TRANSCRIPT
RUSH: Here’s what I was looking for. (crumbling up paper) Gotta slow down. It was a Project Veritas story. (crumbling up paper) No, that’s wrong one. It involves funeral directors. James O’Keefe of Project Veritas called funeral directors in New York City, and all of the funeral directors said that the numbers are being padded, that every death — all deaths — are being called coronavirus deaths without any tests being administered.
That’s all there was to the story. There’s no… I mean, you have to guess as to why — and of course, one of the most logical first guesses would be money somehow, some way. But there are a lot of people in government who want many people to believe that coronavirus is far more deadly than it is — and it’s deadly enough. But there are people really invested in people having an exaggerated idea of how deadly it is, and that ought to send a bunch of red flags up.
Everybody ought to be suspicious over that.
BREAK TRANSCRIPT
RUSH: You know what they’re doing in Virginia? Every time a person tests positive, they’re counting it as a new case. You can test positive two or three times, but you will be counted as two or three new cases to pad the numbers of infection to keep the lockdown in place.


investmentwatchblog--2020-05-06--It’s Time to Get Excited About Gold

It’s Time to Get Excited About Gold

The average Wall Street trader believes all kinds of crazy stuff .
One long-running theory claims that the federal government has something called the Plunge Protection Team , or the PPT .
If the market drops toward the end of the day , the PPT swoops in and rallies the market before it closes .
Or , so the story goes .
I ’ ve never believed a word of it .
There ’ s a similarly crazy conspiracy theory element among gold investors .
But you don ’ t have to believe a bunch of crazy stuff to own @ @ @ @ @ @ @ to own some gold , especially right now… The Gold Standard Is Never Coming Back Long ago , the US had a gold standard .
This meant people could exchange their dollars for a fixed amount of gold .
The US dropped away from a strict gold standard in the 1930s , and President Nixon abandoned it altogether in 1971 .
Since then , the dollar has been a “ fiat currency.
” Meaning its value isn ’ t tied to anything tangible like gold .
Those little green pieces of paper , @ @ @ @ @ @ @ , are only “ money ” because the US government says they are .
A gold standard is inflexible .
So it stops the government from doing things like quantitative easing ( money printing ) , which increases the number of dollars in circulation , and could potentially lay the ground for high inflation .
Or so the theory goes .
I ’ ll be frank : I would like the US to return to a gold standard , but that is NEVER going to happen .
So we ’ re stuck in @ @ @ @ @ @ @ QE ) and other Fed funny business .
Which means this is a world where you want to own gold .
Something You Can Rely On Yes , I think it ’ s a little weird that people invest in shiny rocks .
However , this has been going on for 4 or 5 thousand years .
Some people say technology will change that .
Yet it keeps happening .
The fact is , gold has maintained its purchasing power over a huge span of history , and that isn ’ t likely @ @ @ @ @ @ @ years , for example , gold ’ s inflation-adjusted annual return was 2.1 % .
In other words , gold has held its purchasing power .
And that ’ s what it ’ s supposed to do .
Many investors argue that gold performed poorly at the beginning of the current crisis .
Initially , yes , it slipped from around $ 1,700 per ounce to $ 1,470 in mid-March .
Now it ’ s back up around $ 1,700 .
And it ’ s likely going higher .
So really , gold @ @ @ @ @ @ @ s supposed to do .
It ’ s performed pretty well .
And , given the government ’ s reckless monetary actions—including its foray into MMT—it ’ s going to perform well long after the acute phase of this crisis passes .
One of the big reasons people buy gold and drive up the price is the fear of inflation .
This is why gold shot from roughly $ 800 per ounce in 2009 to $ 1,900 in 2011 .
The Fed started its very first round of quantitative easing , called QE1 @ @ @ @ @ @ @ it would cause a lot of inflation , so they bought a lot of gold .
The inflation never happened , but gold still climbed higher because people feared it was lurking around the corner .
Something similar is happening now .
But this time , the Fed isn ’ t doing a finite amount of quantitative easing like it did with QE1 .
This time , it ’ s going to do an infinite amount of quantitative easing .
Once again , people fear this will result in inflation , and reasonably @ @ @ @ @ @ @ myself .
Gold is bound to keep rising in this environment .
Because the Fed can print an infinite number of dollars , but it can ’ t print gold .
The price of gold also goes up when the federal deficits grows , as it ’ s doing now .
This was the other reason gold more than doubled between 2009 and 2011 : The government ’ s annual budget deficit soared into the $ 1.8 trillion neighborhood .
Now the government is talking about running the biggest deficit in the history @ @ @ @ @ @ @ than we had in World War II .
And that bodes well for gold .
The Biggest Reason to Own Gold Gold has a lot going for it : QE , inflation fears , and a giant budget deficit , to name a few .
However , the biggest reason to own gold is that it smooths out the volatility in your investment portfolio .
Add a little bit of gold , and you ’ ll pretty much get the same overall returns .
But you ’ ll cut your volatility in half @ @ @ @ @ @ @ readers to allocate 20 % of their investment portfolios to gold .
It ’ s not about conspiracy theories or other nutty stuff .
It ’ s about better risk-adjusted returns .
And that is something to get excited about .
Jared Dillian is an investment strategist at Mauldin Economics and a former head of ETF trading at Lehman Brothers .
Subscribe to his weekly investment newsletter , The 10th Man , and listen to his daily radio program , “ The Jared Dillian Show.
” And follow Jared on Twitter @ dailydirtnap @ @ @ @ @ @ @ thought leaders ’ take on the post-coronavirus economy and markets at Mauldin Economics ’ first-ever live virtual conference May 11-21 .
Details here .

by John Mauldin
The average Wall Street trader believes all kinds of crazy stuff.
One long-running theory claims that the federal government has something called the Plunge Protection Team, or the PPT. If the market drops toward the end of the day, the PPT swoops in and rallies the market before it closes.
Or, so the story goes. I’ve never believed a word of it.
There’s a similarly crazy conspiracy theory element among gold investors. But you don’t have to believe a bunch of crazy stuff to own gold.
And you absolutely do want to own some gold, especially right now…
The Gold Standard Is Never Coming Back
Long ago, the US had a gold standard. This meant people could exchange their dollars for a fixed amount of gold.
The US dropped away from a strict gold standard in the 1930s, and President Nixon abandoned it altogether in 1971. Since then, the dollar has been a “fiat currency.” Meaning its value isn’t tied to anything tangible like gold. Those little green pieces of paper, and the digits in your bank account, are only “money” because the US government says they are.
A gold standard is inflexible. So it stops the government from doing things like quantitative easing (money printing), which increases the number of dollars in circulation, and could potentially lay the ground for high inflation. Or so the theory goes.
I’ll be frank: I would like the US to return to a gold standard, but that is NEVER going to happen. So we’re stuck in a world of unlimited quantitative easing (QE) and other Fed funny business.
Which means this is a world where you want to own gold.
Something You Can Rely On
Yes, I think it’s a little weird that people invest in shiny rocks. However, this has been going on for 4 or 5 thousand years. Some people say technology will change that. Yet it keeps happening.
The fact is, gold has maintained its purchasing power over a huge span of history, and that isn’t likely to change.
Over the last 70 years, for example, gold’s inflation-adjusted annual return was 2.1%. In other words, gold has held its purchasing power. And that’s what it’s supposed to do.
Many investors argue that gold performed poorly at the beginning of the current crisis. Initially, yes, it slipped from around $1,700 per ounce to $1,470 in mid-March. Now it’s back up around $1,700. And it’s likely going higher.
Source: @dailydirtnap
We are primarily funded by readers. Please subscribe and donate to support us!
So really, gold has continued to do what it’s supposed to do. It’s performed pretty well. And, given the government’s reckless monetary actions—including its foray into MMT—it’s going to perform well long after the acute phase of this crisis passes.
Inflation Fears Boost Gold
One of the big reasons people buy gold and drive up the price is the fear of inflation. This is why gold shot from roughly $800 per ounce in 2009 to $1,900 in 2011.
The Fed started its very first round of quantitative easing, called QE1, during this period. People thought it would cause a lot of inflation, so they bought a lot of gold.
The inflation never happened, but gold still climbed higher because people feared it was lurking around the corner.
Something similar is happening now. But this time, the Fed isn’t doing a finite amount of quantitative easing like it did with QE1. This time, it’s going to do an infinite amount of quantitative easing.
Once again, people fear this will result in inflation, and reasonably so. I have the same concerns myself.
Gold is bound to keep rising in this environment. Because the Fed can print an infinite number of dollars, but it can’t print gold.
Gold Also Rises During Budget Deficits
The price of gold also goes up when the federal deficits grows, as it’s doing now. This was the other reason gold more than doubled between 2009 and 2011: The government’s annual budget deficit soared into the $1.8 trillion neighborhood.
Now the government is talking about running the biggest deficit in the history of the United States. Even bigger than we had in World War II.
And that bodes well for gold.
The Biggest Reason to Own Gold
Gold has a lot going for it: QE, inflation fears, and a giant budget deficit, to name a few.
However, the biggest reason to own gold is that it smooths out the volatility in your investment portfolio. Add a little bit of gold, and you’ll pretty much get the same overall returns. But you’ll cut your volatility in half.
This is why I encourage my readers to allocate 20% of their investment portfolios to gold.
It’s not about conspiracy theories or other nutty stuff. It’s about better risk-adjusted returns. And that is something to get excited about.
Jared Dillian is an investment strategist at Mauldin Economics and a former head of ETF trading at Lehman Brothers. Subscribe to his weekly investment newsletter, The 10th Man, and listen to his daily radio program, “The Jared Dillian Show.” And follow Jared on Twitter @dailydirtnap. Get Jared’s and other thought leaders’ take on the post-coronavirus economy and markets at Mauldin Economics’ first-ever live virtual conference May 11-21. Details here.


investmentwatchblog--2020-05-06--Conspiring Together: Freudian slip by Trump appointee Dr. Birx during CNN interview reveals they are

Conspiring Together: Freudian slip by Trump appointee Dr. Birx during CNN interview reveals they are acting under the recommendations of Bill Gates

Trump appointee Dr. Birx lets it slip on air that she takes direction from the Gates Foundation .
Disclaimer : @ @ @ @ @ and it doesn ’ t necessarily represent the views of IWB .

by ClarityofSignal
Trump appointee Dr. Birx lets it slip on air that she takes direction from the Gates Foundation.
We are primarily funded by readers. Please subscribe and donate to support us!
www.youtube.com/watch?v=AH6ou7ul7FI&app=desktop&fbclid=IwAR2ajIBNX-fNl0pq_I6YKadngcTtU9TzSBDq1LdcboPVR0Ff6wk2B3FlYyg
Disclaimer: This is a guest post and it doesn’t necessarily represent the views of IWB.


investmentwatchblog--2020-05-06--America is BOILING – SEPARATION or War

America is BOILING – SEPARATION or War

This is a video that should be viewed , if it hasn ’ t been done so already…

This is a video that should be viewed, if it hasn’t been done so already…
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h/t COVID19


investmentwatchblog--2020-05-06--USA’s DEBT CRISIS: Is This The End Of The System? Mike Maloney

Join Mike Maloney as he takes an x-ray machine and a scalpel to the budget books of the US Government @ @ @ @ @ you ’ ll get an in-depth look at why Mike believes the USA has painted @ @ @ @ @ any thought of how to get out .
What are the ramifications ?
As Mike @ @ @ @ @ well be witnessing the end of the current fiat system .
This is a very @ @ @ @ @ comfortable and make sure you watch to the end for the conclusion .
If you @ @ @ @ @ revealing here – you ’ ll be well-placed to make plans for your immediate future @ @ @ @ @

Join Mike Maloney as he takes an x-ray machine and a scalpel to the budget books of the US Government. In this Special Report you’ll get an in-depth look at why Mike believes the USA has painted itself into a corner without any thought of how to get out. What are the ramifications? As Mike says, we may very well be witnessing the end of the current fiat system. This is a very detailed video, so get comfortable and make sure you watch to the end for the conclusion. If you can understand what Mike is revealing here – you’ll be well-placed to make plans for your immediate future. Best of luck.
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investmentwatchblog--2020-05-06--Should fund managers hedge against another crash? The black swan debate is on…

The biggest shock in modern market history made black swan insurance the hottest trade of the year .
It was @ @ @ @ @ before the naysayers showed up .
As stock turmoil recedes and fund managers the world @ @ @ @ @ next big crash , options-based defensive strategies have been dominating the headlines for making a @ @ @ @ @

Should fund managers hedge against another crash? The black swan debate is on… t.co/uFMljU2Dxp via @markets — Sam Potter (@SamJPotter) May 6, 2020
The biggest shock in modern market history made black swan insurance the hottest trade of the year. It was only a matter of time before the naysayers showed up. As stock turmoil recedes and fund managers the world over contemplate hedging against the next big crash, options-based defensive strategies have been dominating the headlines for making a killing in the sell-off.
The corporate debt crisis, caused by too much debt, led to the Fed stepping in so that corporations can issue $600 billion more debt since March. 👍🏻 — GreekFire23 (@GreekFire23) May 6, 2020
THE ANGELS ARE FALLING 23 U.S. companies have been cut to junk in 2020 >3x 2019’s first 6 months. Meanwhile GM, Marriott, Hyatt, Expedia, Nordstrom & Kohl’s are clinging to lowest rung of investment grade w/at least one negative outlook/downgrade review pending @markets pic.twitter.com/lhhNqlJdL9 — Danielle DiMartino Booth (@DiMartinoBooth) May 6, 2020
Consumers will cut back on non essential spending and since our economy is 70% the consumer, spending will get worse by the end of summer.
The Fed pumping doesn’t help the everyday consumer giving another round of and bigger stimulus checks would. — Will Meade (@realwillmeade) May 6, 2020
twitter.com/hks55/status/1258082206599327746
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This market has an appointment with sanity. — Sven Henrich (@NorthmanTrader) May 6, 2020
This is how fucked up everything is. The fed is loaning money to hedge funds at 0% through the repo market. Those funds are using that money to buy up high yield debt so they can sell it back to the fed at higher prices when fed starts the etf buying program. Shit is so fucked up — hks55 (@hks55) May 6, 2020
Trust me, this is a lot worse than 2008 in economic activity and cash-flow-depression terms: t.co/eBzGcR5pHk via @markets — Darius Dale (@HedgeyeDDale) May 6, 2020
Important chart. Lots of concentration in the "Big 5" mega cap stocks. t.co/jUiqC97gSy — Lyn Alden (@LynAldenContact) May 6, 2020


investmentwatchblog--2020-05-06--It’s definitely losing steam. The declining volume is usually an indication that we are slowly runni

It’s definitely losing steam. The declining volume is usually an indication that we are slowly running out of buyers.

Though I wouldn ’ t discount the possibility that it will break out on some gay fake news pump and @ @ @ @ @ bullish .
Honestly not sure why the market hasn ’ t really reacted to what @ @ @ @ @ flare up .
There is absolutely no reason whatsoever to be buying here and it @ @ @ @ @ to not simply spend my days spewing insults at anyone making bullish remarks .
We @ @ @ @ @ going into the pandemic – if we make new all time highs it wouldn ’ @ @ @ @ @ It would indicate early phase hyperinflation starting with financial assets .

by mfunkman
Though I wouldn’t discount the possibility that it will break out on some gay fake news pump and suddenly the technicals will look bullish.
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Honestly not sure why the market hasn’t really reacted to what looks like another trade war flare up. There is absolutely no reason whatsoever to be buying here and it takes a lot of willpower to not simply spend my days spewing insults at anyone making bullish remarks.
We were in a market bubble going into the pandemic – if we make new all time highs it wouldn’t be bullish IMO: It would indicate early phase hyperinflation starting with financial assets.


investmentwatchblog--2020-05-06--Norwegian Air to Sell New Shares at Close to 80% Discount

Norwegian Air will sell new shares at a 79 % discount to the latest traded price on the Oslo Bourse , the budget carrier said on Tuesday as it seeks to boost its equity in order to qualify for Norway ’ s government aid package .
Shareholders on Monday approved a plan to convert nearly $ 1 billion of debt into equity and raise up to 400 million crowns ( $ 39 million ) from the sale of new shares to help the airline survive the coronavirus pandemic .
Norwegian aims to sell new shares at 1.0 crown each , @ @ @ @ @ @ @ ’ s closing price of 4.80 crowns as it seeks to attract investors even while the debt conversion leads to a massive dilution of ownership stakes .
If the process fails however , Norwegian Air is at risk of running out of money by mid-May even though it only pays invoices vital to maintaining minimum operations , it said on April 27 .
The debt conversion will hand majority ownership to the airline ’ s creditors and could leave current shareholders with just 5.2 % , and with further dilution for owners who @ @ @ @ @ @ @ issue .

Norwegian Air will sell new shares at a 79% discount to the latest traded price on the Oslo Bourse, the budget carrier said on Tuesday as it seeks to boost its equity in order to qualify for Norway’s government aid package.
Shareholders on Monday approved a plan to convert nearly $1 billion of debt into equity and raise up to 400 million crowns ($39 million) from the sale of new shares to help the airline survive the coronavirus pandemic.
Norwegian aims to sell new shares at 1.0 crown each, it said, far less than Tuesday’s closing price of 4.80 crowns as it seeks to attract investors even while the debt conversion leads to a massive dilution of ownership stakes.
If the process fails however, Norwegian Air is at risk of running out of money by mid-May even though it only pays invoices vital to maintaining minimum operations, it said on April 27.
The debt conversion will hand majority ownership to the airline’s creditors and could leave current shareholders with just 5.2%, and with further dilution for owners who do not take part in the share issue.


investmentwatchblog--2020-05-06--OMG. Can no one help this poor guy? Word choice is important during interviews.

OMG .
Can no one help this poor guy ?
Word choice is important during interviews .
t.co/GNHw5xLpqk

OMG. Can no one help this poor guy? Word choice is important during interviews. t.co/GNHw5xLpqk
— Lance Roberts (@LanceRoberts) May 6, 2020


investmentwatchblog--2020-05-06--Are Stocks Pricing In The Recession?

Are Stocks Pricing In The Recession?

We asked on Twitter whether the stock market was properly pricing in the current recession .
72.8 % said ‘ no ’ and 27.2 % said ‘ yes ’ .
That was out of 353 voters .
The people who said ‘ no ’ were likely looking at the overall index from a top down perspective .
They should recognize the position sizing of the market cap weighted index .
The top 5 tech firms which are Amazon , Apple , Facebook , Microsoft , and Alphabet control over 20 % of the index .
They have done well or @ @ @ @ @ @ @ this recession .
Plus , they have no liquidity needs .
As the chart below shows , they have dramatically outperformed the bottom 495 firms in the index .
The S & P retail ETF is down 22.23 % from its February high which shows the market is worried about the shutdowns for the companies most effected by it .
The companies that are both directly impacted by the shutdown and have financing problems are down at least 70 % .
An example of this is AMC .
With this concept in mind @ @ @ @ @ @ @ current market compared to 2008 and 2009 .
This market is arguably in better shape .
Since then , the S & P 500 has lost $ 49 billion in earnings power from two energy companies which are Chevron and Exxon Mobile .
Energy has the lowest weighting in the index in decades .
That ’ s probably a good thing because energy is highly cyclical .
Some are arguing that also means energy is a buy .
The situation is certainly close to as bad as it can get for the sector @ @ @ @ @ @ @ first time since the 1940s and oil prices hit a record low ( negatives for a short time ) .
On the other hand , the S & P 500 has gained $ 106 billion in earnings power from 4 tech stocks that have secular growth trends in their favor .
They are Alphabet , Apple , Microsoft , and Facebook .
Alphabet and Facebook are reliant on ad spending , but digital spending took share from other mediums like TV in this recession as advertisers wanted the most bang for their buck @ @ @ @ @ @ @ sales did the best .
Online companies are more likely to advertise on Facebook and Google than TV .
Because of this shift away from energy and towards big tech , the S & P 500 has higher quality .
It ’ s becoming similar to the Nasdaq .
Instead of looking at the chart that shows the size of the largest companies and unilaterally deciding these companies are too big , look at their wide competitive advantages .
They won ’ t be easy to beat unless the government gets involved and @ @ @ @ @ @ @ below indicates the stock market is too expensive on its surface , but let ’ s take a deeper dive .
As you can see , all sectors but two have a higher PE ratio than their 25 year average .
The first thing to keep in mind is energy isn ’ t included because it probably will have terrible earnings because of the decline in oil prices .
This sector is extremely cheap when compared to peak cycle earnings .
You can ’ t look at trough earnings because those are unsustainable @ @ @ @ @ @ @ and cheap at tops .
That ’ s why you need to model out a cycle .
For example , you can suppose WTI oil hits $ 55 at the peak of the next cycle and work from there .
Companies with huge debt positions won ’ t benefit as much from the cyclical upturn as those without debt .
On the other hand , those with financing risk will see their stocks rise the most if oil prices rise allowing them to avoid bankruptcy by the skin of their teeth .
It @ @ @ @ @ @ @ are lower now than at any point in the past 25 years .
Furthermore , the Fed is buying corporate debt .
The stock market does the best when the unemployment rate is high and falling which is likely what we will see over the next few months .
High unemployment means lower pay for workers and higher margins .
Falling unemployment means increasing demand which means higher sales .
Remember , the healthcare sector is bifurcated .
You have health insurance companies benefiting from the decline in elective surgeries and biotech firms @ @ @ @ @ @ @ It ’ s notable that in this table , the consumer discretionary sector has an 8 point higher PE than normal .
That ’ s because of Amazon which really isn ’ t a consumer discretionary name .
It ’ s really a tech stock because it derives most of its profits from Amazon Web Services which is its Infrastructure As A Service ( IAAS ) cloud offering .
As we mentioned , low rates may be helping valuations .
Let ’ s look at low rates as a catalyst for stocks .
@ @ @ @ @ @ @ table below , when the S & P 500 ’ s dividend yield initially breaches 0.25 % or more above the 10 year treasury yield , the median return in the next year is 24 % and the median return in the next 2 years is 45 % .
Only in 2015 did stocks fall in the next year .
The returns are even better for dividend aristocrats .
The median gain is 28.2 % in the next year and 53.4 % in the next 2 years .
On the other hand , @ @ @ @ @ @ @ The ICE US Treasury 20+ year index falls 3.3 % in the following year .
Treasuries are only a good investment now if you foresee negative rates .
They need to fall significantly negative for them to be a good investment over the long term which is unlikely .
Because yields are so low , instead of bonds , people are using cash to diversify from stocks .
Stocks are pricing in the recession even though the index has done very well .
It ’ s up because the major tech stocks have @ @ @ @ @ @ @ probably safer because they are so important since they have wide moats and aren ’ t as cyclical as energy stocks .
Most sectors are more expensive than average , but rates are low and the Fed is very dovish .
The high unemployment rate and the fact that the S & P 500 now yields significantly more than the 10 year yield are great for stock market performance .
Some investors are eschewing treasuries completely because their yields are so low .

by UPFINA
We asked on Twitter whether the stock market was properly pricing in the current recession. 72.8% said ‘no’ and 27.2% said ‘yes’. That was out of 353 voters. The people who said ‘no’ were likely looking at the overall index from a top down perspective. They should recognize the position sizing of the market cap weighted index. The top 5 tech firms which are Amazon, Apple, Facebook, Microsoft, and Alphabet control over 20% of the index. They have done well or at least better than most firms during this recession. Plus, they have no liquidity needs. As the chart below shows, they have dramatically outperformed the bottom 495 firms in the index.
FB, AMZN, AAPL, FB, GOOGL up 10% S&P495ish down 13% pic.twitter.com/NyqsMdXajK — Sam Ro 📉 (@SamRo) May 3, 2020
The S&P retail ETF is down 22.23% from its February high which shows the market is worried about the shutdowns for the companies most effected by it. The companies that are both directly impacted by the shutdown and have financing problems are down at least 70%. An example of this is AMC.
With this concept in mind, let’s look at the current market compared to 2008 and 2009. This market is arguably in better shape. Since then, the S&P 500 has lost $49 billion in earnings power from two energy companies which are Chevron and Exxon Mobile. Energy has the lowest weighting in the index in decades. That’s probably a good thing because energy is highly cyclical. Some are arguing that also means energy is a buy. The situation is certainly close to as bad as it can get for the sector as Shell cut its dividend for the first time since the 1940s and oil prices hit a record low (negatives for a short time).
On the other hand, the S&P 500 has gained $106 billion in earnings power from 4 tech stocks that have secular growth trends in their favor. They are Alphabet, Apple, Microsoft, and Facebook. Alphabet and Facebook are reliant on ad spending, but digital spending took share from other mediums like TV in this recession as advertisers wanted the most bang for their buck. Also keep in mind, online sales did the best. Online companies are more likely to advertise on Facebook and Google than TV. Because of this shift away from energy and towards big tech, the S&P 500 has higher quality. It’s becoming similar to the Nasdaq. Instead of looking at the chart that shows the size of the largest companies and unilaterally deciding these companies are too big, look at their wide competitive advantages. They won’t be easy to beat unless the government gets involved and decides they are monopolies.
Sector By Sector Relative PE Multiple
The table below indicates the stock market is too expensive on its surface, but let’s take a deeper dive. As you can see, all sectors but two have a higher PE ratio than their 25 year average.
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Almost every single sector in the #SPY is trading at a premium to its 25 year average multiple ahead of the largest drawdown in economic growth in a century (give or take). pic.twitter.com/9KlkdCFvrD — Chris Pavese (@ChrisPavese) May 4, 2020
The first thing to keep in mind is energy isn’t included because it probably will have terrible earnings because of the decline in oil prices. This sector is extremely cheap when compared to peak cycle earnings. You can’t look at trough earnings because those are unsustainable. Cyclical stocks look expensive at bottoms and cheap at tops. That’s why you need to model out a cycle. For example, you can suppose WTI oil hits $55 at the peak of the next cycle and work from there. Companies with huge debt positions won’t benefit as much from the cyclical upturn as those without debt. On the other hand, those with financing risk will see their stocks rise the most if oil prices rise allowing them to avoid bankruptcy by the skin of their teeth.
It’s also notable that interest rates are lower now than at any point in the past 25 years. Furthermore, the Fed is buying corporate debt. The stock market does the best when the unemployment rate is high and falling which is likely what we will see over the next few months. High unemployment means lower pay for workers and higher margins. Falling unemployment means increasing demand which means higher sales.
Remember, the healthcare sector is bifurcated. You have health insurance companies benefiting from the decline in elective surgeries and biotech firms searching for a cure for COVID-19. It’s notable that in this table, the consumer discretionary sector has an 8 point higher PE than normal. That’s because of Amazon which really isn’t a consumer discretionary name. It’s really a tech stock because it derives most of its profits from Amazon Web Services which is its Infrastructure As A Service (IAAS) cloud offering.
Future Returns Look Good
As we mentioned, low rates may be helping valuations. Let’s look at low rates as a catalyst for stocks. As you can see from the top table below, when the S&P 500’s dividend yield initially breaches 0.25% or more above the 10 year treasury yield, the median return in the next year is 24% and the median return in the next 2 years is 45%. Only in 2015 did stocks fall in the next year.
The returns are even better for dividend aristocrats. The median gain is 28.2% in the next year and 53.4% in the next 2 years. On the other hand, treasuries don’t do well. The ICE US Treasury 20+ year index falls 3.3% in the following year. Treasuries are only a good investment now if you foresee negative rates. They need to fall significantly negative for them to be a good investment over the long term which is unlikely. Because yields are so low, instead of bonds, people are using cash to diversify from stocks.
Conclusion
Stocks are pricing in the recession even though the index has done very well. It’s up because the major tech stocks have driven it higher. The market is probably safer because they are so important since they have wide moats and aren’t as cyclical as energy stocks. Most sectors are more expensive than average, but rates are low and the Fed is very dovish. The high unemployment rate and the fact that the S&P 500 now yields significantly more than the 10 year yield are great for stock market performance. Some investors are eschewing treasuries completely because their yields are so low.


investmentwatchblog--2020-05-06--Fed Chair Jay Powell Has Upwards of $11.6 Million Invested with BlackRock, the Firm that Will Manage

Fed Chair Jay Powell Has Upwards of $11.6 Million Invested with BlackRock, the Firm that Will Manage a $750 Billion Corporate Bond Bailout Program for the Fed

Most Americans likely assume that Jerome Powell , the Chairman of the Federal Reserve , is an economist , like the prior chairs of the Fed over the past 40 years .
He ’ s not .
Powell is a former investment banker at the Wall Street firm , Dillon Read ; a former partner at the controversial private equity and leveraged buyout firm , the Carlyle Group , which has spent over $ 1 billion over the past decade lobbying the federal government ; and a former lawyer at Davis Polk , a Big Law firm that played a @ @ @ @ @ @ @ in the 2008 Wall Street bailout .
Powell ’ s background would be strange enough but now consider this .
The Vice Chairman for Supervision at the Fed , Randal Quarles , who is in charge of supervising the largest and most dangerous Wall Street bank holding companies in the U.S. , has an uncannily similar background to Powell .
Quarles also worked previously at Davis Polk and the Carlyle Group .
( Powell and Quarles are also good friends , according to Senator Elizabeth Warren . )
Both men were well schooled @ @ @ @ @ @ @ Fed .
Both men are now involved in what is effectively levering up $ 454 billion of taxpayers ’ money provided to the Fed under the recently passed CARES Act into a $ 4.5 trillion leveraged buyout fund of toxic debt from Wall Street banks .
After taxpayers ’ take the first $ 454 billion in losses on those purchases , the remainder may be sold off to private investors .
If this sounds to you like a set-up on behalf of the one percent , it should .
Powell is a member @ @ @ @ @ @ @ to his 2019 financial disclosure , his net worth could run as high as $ 55 million .
Much of his investments are with Goldman Sachs ( a Wall Street bank that is supervised by the Fed ) or with BlackRock and its iShares Exchange Traded Funds ( ETFs ) .
The government mandated financial disclosures report investment values in a range .
The upper value of Powell ’ s holdings with BlackRock is $ 11.6 million .
The upper range of Powell ’ s holdings with Goldman Sachs is $ 16.55 million @ @ @ @ @ @ @ shortened to “ GS ” in the disclosure document .
These would appear to be large conflicts of interest .
BlackRock has been selected to manage the unprecedented buying of both investment grade and junk bonds on behalf of the Fed to the tune of approximately $ 750 billion according to the most recent term sheet from the Fed .
Even more conflicted , the Fed will allow BlackRock to buy up its own sinking junk bond ETFs using taxpayer and Fed money .
( See here and here . )
Here ’ @ @ @ @ @ @ @ t know about Fed Chairman Jerome Powell .
Some of the smartest , most respected Senate Democrats did not vote in favor of confirming Powell for the job of Fed Chairman .
Those included Senator Richard Blumenthal of Connecticut ; Senator Cory Booker of New Jersey ; Senator Kirsten Gillibrand of New York ; Senator Kamala Harris of California ; Senator Ed Markey of Massachusetts ; Senator Jeff Merkley of Oregon ; Senator Bernie Sanders of Vermont ; and Senator Elizabeth Warren of Massachusetts .
From the Senate floor on January 23 , @ @ @ @ @ @ @ about why she would not vote in favor of Powell for Fed Chairman : “ I am deeply concerned that as soon as Governor Powell unpacks his boxes in the Chairman ’ s office , he will begin weakening the new rules Congress and the Fed put in place after the 2008 financial crisis .
And he will have help : right down the hall will be his ‘ close friend , ’ Randal Quarles , the Fed ’ s new Vice Chair for Supervision .
Governor Powell told me when we met @ @ @ @ @ @ @ on Vice Chair Quarles on regulatory issues .
“ That is a really dangerous prospect .
Before coming to the Fed , Vice Chair Quarles spent more than a decade in private equity , where he made his mark arguing for weaker rules on big banks .
And he ’ s gotten a running start now that he ’ s at the Fed .
In a speech a few weeks ago at his old private equity firm , Quarles announced that he was working on reducing capital standards for Wall Street banks , @ @ @ @ @ @ @ stress tests easier for big banks to pass — in other words , he ’ s already set up his to-do list to gut measures put in place after the financial crisis that are there to try to keep our economy safer .
“ So Governor Powell says he will take his cues from a guy who wants to get rid of as many rules as he can and take the teeth out of the rules that he can ’ t .
No thank you .
That will make American families less safe @ @ @ @ @ @ @ less safe .
“ And to make matters worse , Powell ’ s gifts to the giant banks will come at a time when banks of all sizes made gigantic profits last year and got giant tax giveaways in the bill that was passed in December .
Good grief — when will enough be enough for these guys ?
But even with banks rolling in money , the army of lobbyists and executives have come back , storming Capitol Hill and the halls of the Fed , spinning this story that financial rules @ @ @ @ @ @ @ cut back .
”

via wallstreetonparade
Most Americans likely assume that Jerome Powell, the Chairman of the Federal Reserve, is an economist, like the prior chairs of the Fed over the past 40 years. He’s not. Powell is a former investment banker at the Wall Street firm, Dillon Read; a former partner at the controversial private equity and leveraged buyout firm, the Carlyle Group, which has spent over $1 billion over the past decade lobbying the federal government; and a former lawyer at Davis Polk, a Big Law firm that played a key role advising the government and Treasury in the 2008 Wall Street bailout.
Powell’s background would be strange enough but now consider this. The Vice Chairman for Supervision at the Fed, Randal Quarles, who is in charge of supervising the largest and most dangerous Wall Street bank holding companies in the U.S., has an uncannily similar background to Powell. Quarles also worked previously at Davis Polk and the Carlyle Group. (Powell and Quarles are also good friends, according to Senator Elizabeth Warren.)
Both men were well schooled in leveraged buyouts before coming to the Fed. Both men are now involved in what is effectively levering up $454 billion of taxpayers’ money provided to the Fed under the recently passed CARES Act into a $4.5 trillion leveraged buyout fund of toxic debt from Wall Street banks. After taxpayers’ take the first $454 billion in losses on those purchases, the remainder may be sold off to private investors. If this sounds to you like a set-up on behalf of the one percent, it should.
Powell is a member of that one percent class. According to his 2019 financial disclosure, his net worth could run as high as $55 million. Much of his investments are with Goldman Sachs (a Wall Street bank that is supervised by the Fed) or with BlackRock and its iShares Exchange Traded Funds (ETFs). The government mandated financial disclosures report investment values in a range. The upper value of Powell’s holdings with BlackRock is $11.6 million. The upper range of Powell’s holdings with Goldman Sachs is $16.55 million. The name Goldman Sachs has been shortened to “GS” in the disclosure document.
These would appear to be large conflicts of interest. BlackRock has been selected to manage the unprecedented buying of both investment grade and junk bonds on behalf of the Fed to the tune of approximately $750 billion according to the most recent term sheet from the Fed. Even more conflicted, the Fed will allow BlackRock to buy up its own sinking junk bond ETFs using taxpayer and Fed money. (See here and here.)
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Here’s another thing you likely don’t know about Fed Chairman Jerome Powell. Some of the smartest, most respected Senate Democrats did not vote in favor of confirming Powell for the job of Fed Chairman. Those included Senator Richard Blumenthal of Connecticut; Senator Cory Booker of New Jersey; Senator Kirsten Gillibrand of New York; Senator Kamala Harris of California; Senator Ed Markey of Massachusetts; Senator Jeff Merkley of Oregon; Senator Bernie Sanders of Vermont; and Senator Elizabeth Warren of Massachusetts.
From the Senate floor on January 23, 2018, Senator Elizabeth Warren said this about why she would not vote in favor of Powell for Fed Chairman:
“I am deeply concerned that as soon as Governor Powell unpacks his boxes in the Chairman’s office, he will begin weakening the new rules Congress and the Fed put in place after the 2008 financial crisis. And he will have help: right down the hall will be his ‘close friend,’ Randal Quarles, the Fed’s new Vice Chair for Supervision. Governor Powell told me when we met that he intended to rely a lot on Vice Chair Quarles on regulatory issues.
“That is a really dangerous prospect. Before coming to the Fed, Vice Chair Quarles spent more than a decade in private equity, where he made his mark arguing for weaker rules on big banks. And he’s gotten a running start now that he’s at the Fed. In a speech a few weeks ago at his old private equity firm, Quarles announced that he was working on reducing capital standards for Wall Street banks, weakening the Volcker rule, and making stress tests easier for big banks to pass — in other words, he’s already set up his to-do list to gut measures put in place after the financial crisis that are there to try to keep our economy safer.
“So Governor Powell says he will take his cues from a guy who wants to get rid of as many rules as he can and take the teeth out of the rules that he can’t. No thank you. That will make American families less safe. It will make the American economy less safe.
“And to make matters worse, Powell’s gifts to the giant banks will come at a time when banks of all sizes made gigantic profits last year and got giant tax giveaways in the bill that was passed in December. Good grief — when will enough be enough for these guys? But even with banks rolling in money, the army of lobbyists and executives have come back, storming Capitol Hill and the halls of the Fed, spinning this story that financial rules are throttling them and need to be cut back.”