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Month: May 2020

Hedge Fund CIO: “We Have Reached The Point Where The Entirety Of Future Prosperity Has Been Pulled To The Present”

Hedge Fund CIO: “We Have Reached The Point Where The Entirety Of Future Prosperity Has Been Pulled To The Present” Tyler Durden Mon, 05/25/2020 – 17:40 By Eric Peters, CIO of One River Asset Management The Fed presides over the world’s largest economy. Treasury claims otherwise, but the Fed is also guardian of the world’s reserve currency. From this position of power, global central banks were drawn by force of gravity to adopt Fed policies. Over the past decade, global central banks gravitated to the Fed’s policy mix, lowering rates, expanding liquidity, spurring a historic rise in global debt and leverage. Entering 2020, the world had the most homogeneous policy mix since Roman rule. And, as in all things living, lack of diversity reduces resiliency. Fed policy dominance had complex, unintended consequences, some of which we can observe. For instance, it relieved politicians of the task of governing. Each crisis was easily solved with monetary magic, pulling future demand to the present. This allowed politicians to avoid making tough choices between spending for today versus investing for tomorrow. Without such vital debates, we borrowed from our youth to spend on our ageing. Student debt is one of the many such manifestations. Wildly inflated asset prices are another. Monetary policy dominance taken to its logical conclusion leads to a world where the entirety of future prosperity has been pulled to...

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Goldman: The Default Cycle Has Started

Goldman: The Default Cycle Has Started Tyler Durden Mon, 05/25/2020 – 17:26 Perhaps inspired by our recent articles showing that “Loan Defaults Hit 6 Years High” and “Bankruptcy Tsunami Begins: Thousands Of Default Notices Are “Flying Out The Door“, Goldman writes this morning that with businesses shuttered and job losses mounting rapidly, “there is growing concern over the ability of borrowers to service their debt obligations and the resulting risks to financial stability.” In response, Goldman “assesses the likely scale of economy-wide credit losses, the exposure of creditors to those losses, and the potential risks to financial stability and the banking sector” to conclude that “rising bankruptcies and delinquencies suggest the default cycle has started.” How did Goldman get to that assessment? Looking at corporate credit, the bank first looked at corporate debt, noting that nonfinancial corporate debt grew by over 60% since 2011 and recently rose to an all-time high as a share of GDP (Exhibit 1, left), leading to growing concern even prior to the virus that corporate defaults could rise dramatically in the next downturn. Meanwhile, the sharp decline in revenues across many industries has left a large share of companies with negative cash flow, and rising bankruptcy filings and cases suggest the corporate default cycle has started. Unlike the financial crisis, the bank finds that a unique feature of this downturn “is the wide variation...

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The Bank of Japan Was The Biggest Buyer Of Japanese Corporate Bonds In April

The Bank of Japan Was The Biggest Buyer Of Japanese Corporate Bonds In April Tyler Durden Mon, 05/25/2020 – 17:00 Our observation that as of this moment the Fed owns, via the HYG and JNK ETFs, bonds of bankrupt rental company Hertz sparked inexplicable outrage in the bullish camp. We find this confusing: how is the Fed owning bonds either a bullish or bearish case? It merely confirms that capitalism is now dead, that we have centrally-planned, “fake markets” as Bank of America put it, and which as Deutsche Bank further clarified, “these are administered markets and market outcomes will be dictated by the policy goals of the Fed and Treasury, and the tools they select to implement policy.” That bulls are taking this fact as an affront, simply shows just how vested they too are in perpetuating a myth that markets still exist (as if it is somehow the imploding economy and not the Fed’s $4 trillion in liquidity injections since March that has boosted the stock market) while pretending they have some idea of what happens next based on “fundamentals” or “data” when in reality the only thing that matters is how much liquidity the Fed injects on any given day, making strategists, analysts and “paywalled pundits” irrelevant (an outcome which is devastating to their financial health). In any case, shortly after our article, the Fed apologists...

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“Worse Than The Great Depression” – Peter Schiff Fears ’70s Stagflation “On Steroids” Ahead

“Worse Than The Great Depression” – Peter Schiff Fears ’70s Stagflation “On Steroids” Ahead Tyler Durden Mon, 05/25/2020 – 16:30 Via Greg Hunter’s USAWatchdog.com, Money printing by the Fed and Congress is off the charts. The Federal Reserve doubled its balance sheet in a matter of months, and Congress is pumping out trillions of dollars in spending bills to fight the economic crisis caused by the Covid 19 lockdown. The really scary thing is not the massive money printing, but the fact that absolutely nobody seems to care about the risk to the U.S. dollar. Money manager Peter Schiff thinks he knows why, and explains: “(Back in 2008-2009,) even Larry Kudlow was worried about what the Fed was doing, but nobody is worried about it now.  The reason is they have been lulled into this false sense of complacency in that we got away with it the last time… and there was no negative consequence. We didn’t have runaway inflation and did not have loss of confidence in the dollar. So, there was no price to be paid… Since we got away with it before, they think they will get away with it again, and I think they are completely wrong… All we did was inflate a bigger bubble, but now this bubble has popped, and it found the mother of all pins in the Coronavirus that put a gaping hole...

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CDC Warns Of “Unusual Or Aggressive Rodent Behavior” Due COVID Lockdowns 

CDC Warns Of “Unusual Or Aggressive Rodent Behavior” Due COVID Lockdowns  Tyler Durden Mon, 05/25/2020 – 16:00 In a follow-up piece to “NYC’s Rat Population Hit With Hunger Crisis During Lockdowns,” the Centers for Disease Control and Prevention (CDC) has published a new warning that rats across the country are becoming hangry as they scavenge for food amid the closure of restaurants triggered by COVID-19 lockdowns.  “Community-wide closures have led to a decrease in food available to rodents, especially in dense commercial areas. Some jurisdictions have reported an increase in rodent activity as rodents search for new sources of food. Environmental health and rodent control programs may see an increase in service requests related to rodents and reports of unusual or aggressive rodent behavior,” the CDC warning read.  The CDC said some regions have reported “an increase in rodent activity” and cautioned about their aggressive behavior.  An urban rodentologist recently said NYC rats have become hostile and are resorting to cannibalism as food becomes scarce with restaurants closed.  “All of a sudden New York City to some degree is cleaner than ever before,” said urban rodentologist Bobby Corrigan. “You end up with this group of disoriented, stressed rats foraging about.” And it’s not just NYC rats posing problems amid the virus pandemic, Washington, D.C., saw an explosion of calls to the city about rat problems between March and April. Baltimore saw nearly 11,000 calls or online 311 requests about rats...

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