Remember me

Register  |   Lost password?










All site blogs

These Cabinet Picks Illustrate that Trump is Way Over His Head as President (Video)

December 10, 2016 by EconMatters   Comments (0)

By EconMatters


We discuss the fact that Donald Trump is too incompetent to realize that he has no business picking his own cabinet, you won the lottery, now outsource the job of picking a cabinet to Paul Ryan or someone in the Republican Party who understands basic qualifications for these important positions in the United States Government. Was Pee-wee Herman unavailable for Secretary of State?

© EconMatters All Rights Reserved | Facebook | Twitter | YouTube | Email Digest | Kindle

The Stock Market is Officially in BUBBLE Territory (Video)

December 10, 2016 by EconMatters   Comments (0)

By EconMatters


We delve into the market internals and the P/E Ratios of most stocks when taken as a whole are in never before seen valuation levels. We are not talking about just the high growth flyers but industrial companies with stagnant or declining growth like Caterpillar, Coca-Cola and Exxon Mobil in areas facing longer term structural headwinds.

In short, the Federal Reserve should have stuck to their scheduled 3 rate hikes for 2016, and now they are way behind the Rate Hiking curve, and the stock market bubble is clearly screaming that the Fed has already lost control of "Running a Hot Economy".

The Fed is going to have to play catch up in 2017 and raise the Fed Funds Rate at least 4 times and maybe more to curb some of the excessive valuations in the stock market otherwise risk a higher likelihood of an outright Market Crash Scenario.

If we look back to the 2000 Market Crash, and the 2008 Market Crash and compare the current overall Stock Market valuations to these recent time periods, it is obvious that as the cheap money punchbowl is taken away, and interest rates are raised back to more normalized levels of 3 to 5%, which an aggressive infrastructure, deregulation and tax friendly regime initiative which the market is pricing in is implemented and corresponds to.

Then inevitably the stock market which has been juiced on the back of ZIRP financing is going to crash as the Fed plays catch up in hiking the Fed Funds Rate and borrowing costs normalize across the financial spectrum. Unfortunately for Donald Trump the Federal Reserve is going to leave his administration with holding the bag on the normalization of interest rates after 8 plus years of ZIRP back to more historical norms, and the resultant market crash will be laid at his feet as well.

© EconMatters All Rights Reserved | Facebook | Twitter | YouTube | Email Digest | Kindle

Baker-Hughes December 9th Rig Count Preview

December 9, 2016 by CalConfidence   Comments (0)

Once again we reach Friday and the amateur oil traders like to pretend to play with the big boys by talking about rig counts as if they are purposefully unaware of how to account for marginal utility improvements in a given rig over the past 50 years, but I'll digress.

Read more »

It Is Always About Money (Video)

December 9, 2016 by EconMatters   Comments (0)

By EconMatters


We discuss the massive drop in ESPN subscribers this year, and how this relates to those massive NBA Television Broadcasting Deals that were based upon much higher subscriber bases going forward, and how this filters down into larger salary caps for NBA Franchises leading to $20 Million Dollar annual player contracts guaranteed for 5 years.

The math doesn`t add up for this vertically integrated supply chain. Somebody is going to be left holding the bag here and losing a bunch of money over the next decade. These player salaries seem out of whack with the changing dynamics of the skinny bundle, streaming media habits and shrinking subscriber bases.

Many of these television deals may have to be renegotiated on the fly by necessity as the media landscape is changing dramatically underneath the feat of the NBA, Network and Cable television, the Advertising Industry, and NBA Franchises half of which are already losing money under the current NBA structured finance model.

Donatas Motiejunas contract fiasco serves as another example of how in the NBA when it comes to money nobody has a clue what they are doing from a negotiations standpoint. The NBA is one of the poorest run and managed organizations in all of sports, and as we noted before it wouldn`t surprise us if the NBA is bankrupt in 5 to 10 years.

© EconMatters All Rights Reserved | Facebook | Twitter | YouTube | Email Digest | Kindle

Equities Look Like A Good Short Here (Video)

December 8, 2016 by EconMatters   Comments (0)

By EconMatters


We discuss some of the structural issues aside from the valuation issues why we think this is a good place to short equities over the next week. I like the price and setup considerations for this short play in equities!

© EconMatters All Rights Reserved | Facebook | Twitter | YouTube | Email Digest | Kindle

Ukraine holds rate, expects to cut in 2017 if risks ease

December 8, 2016 by CentralBankNews   Comments (0)

    Ukraine's central bank paused in its easing cycle by leaving its benchmark discount unchanged at 14.0 percent, saying this was "prompted by the need to mitigate inflation risks to enable the NBU to meet the inflation targets for 2017-18."
     But the National Bank of Ukraine (NBU), which has cut its rate by 800 basis points this year and 1,600 points since embarking on an easing cycle in August 2015, also said that if the risks to price stability abate, "the NBU will continue easing monetary policy next year as this move will help reduce borrowing costs and support economic growth."
    Today's decision by the NBU follows its guidance in October that it was going to continue to ease its policy as long as inflation continued to decelerate.
    Ukraine's inflation rate eased to 12.1 percent in November from 12.4 percent in October but was up from 7.9 percent in September and a 2016-low of 6.9 percent in June, a rise the central bank had expected due to an increase in administered prices and base effects.
    While the NBU said inflation was bound to reach its target of 12 percent by the end of the year and the targets for 2017 and 2018 were "within reach,"  it cautioned that the risks of a continued decline in inflation had risen, prompting its decision to "adopt a cautious approach to easing."
    The first risk stems from the government's decision to raise the minimum wage, which  in itself will only have limited impact on inflation. However, higher household income will fuel consumption and this could add an additional 1 percentage point to headline inflation, the bank said.
    "Accordingly, to buffer the effects from a rise in the minimum wage, NBU has decided to pursue a more restrained monetary policy," it said.
    In addition, the central bank said there was further uncertainty due to "heightened political tensions" and a slower pace of the implantation  of reform measures, which means there is a high probability of further delays to international financing payments.
    The NBU targets inflation of 12 percent this year and then 8 percent, plus/minus 2 percentage points in 2017, and 6.0 percent, plus/minus 2 points, for 2018.
    After plunging in 2014 and 2015, Ukraine's hryvnia has been more stable since April this year, trading at 25.6 to the U.S. dollar today, down 6.1 percent this year.
    Ukraine's economy grew by an annual rate of 1.8 percent in the third quarter, up from 1.4 percent in the second quarter as it continues to pull out of the recession in 2014 and 2015.
    In October the central bank lowered its forecast for growth in 2017 to 2.5 percent from 3.0 percent and the 2018 forecast to 3.5 percent from 4.0 percent. The 2016 forecast was left at 1.1 percent compared with a contraction of 9.9 percent in 2015.
    As part of its third review of Ukraine's economic reform program, the International Monetary Fund (IMF) on Nov. 18 said the country needed more time to implement policies, including an adoption of its 2017 budget that is consistent with targets, along with policies to safeguard financial stability and tackle corruption.

    The National Bank of Ukraine issued the following statement:

"The Board of the National Bank of Ukraine has decided to leave the discount rate unchanged at 14% per annum. This decision was prompted by the need to mitigate inflation risks to enable the NBU to meet the inflation targets for 2017-2018.
In October 2016, annual headline inflation stood at 12.4%, which was broadly in line with the NBU forecast. The acceleration of headline inflation was mainly attributed to upward adjustments in administered prices and base effects.
At the same time, the fundamental factors did not exert any inflationary pressure. In October, core inflation remained flat compared to previous month, standing at 6.5% y-o-y. Inflation remained on the projected path, reflecting moderate consumer demand, high supply of food products due to a high harvest and prudent monetary policy.
In November 2016, according to the NBU estimates, inflation moderated slightly in line with the projected disinflation path. The further slowdown in annual core inflation contributed to the deceleration of inflation. In addition, price increases for unprocessed foods were moderate due to a higher supply of these food products. Moderate price increases for unprocessed foods offset inflationary pressure from higher fuel prices driven largely by global price developments and the reflection of upward adjustments in administered prices in price statistics.
At the same time, the impact of higher hryvnia exchange rate volatility on inflation was limited in November. The impact of fundamental factors, including more favorable external price environment for Ukrainian exporters and strong grain exports, was partially offset by heightened political tensions. However, overall, the supply of foreign currency in the interbank market exceeded the demand for it. As a result, the NBU mainly purchased foreign currency to replenish international reserves.
Headline inflation is bound to reach the target level of 12% by the end of the year. Also, the inflation targets for 2017 and 2018 (8%+/-2 pptsand 6%+/-2 ppts respectively) remain within reach.
However, the risks to further inflation developments have increased since the previous monetary policy meeting, prompting the NBU to adopt a cautious approach to easing monetary policy to meet the declared targets.
First, the NBU has taken into account the need to buffer the effects from a sharp rise in the minimum wage in 2017. According to the NBU’s estimates, the government’s initiative to raise the minimum wage will have a limited impact on inflation. However, higher households' income will fuel consumption growth, which could add an additional 1 percentage point to headline inflation.
Accordingly, to buffer the effects from a rise in the minimum wage, NBU has decided to pursue a more restrained monetary policy.
Also, the NBU has taken into account other risks.
First, uncertainty has increased due to heightened political tensions.
Second, there is a high probability that there will be further delays to disbursements of official financing due to the slow pace of implementation of program measures.
Should the risks for price stability abate, the NBU will continue easing monetary policy next year as this move will help reduce borrowing costs and support economic growth.
The decision to keep the key policy rate unchanged at 14% is approved by NBU Board Decision No. 475-рш, dated 8 December 2016, On the Key Policy Rate.
The next meeting of the NBU Board on monetary policy issues will be held on 26 January 2017 according to the schedule approved and published on the NBU’s website."


    www.CentralBankNews.info

Serbia keeps key rate, sees inflation in target range

December 8, 2016 by CentralBankNews   Comments (0)

    Serbia's central bank left its key policy rate at 4.0 percent, saying it expects inflation to enter its tolerance range early next year due to rising domestic demand, helped by its past rate cuts, and a gradual rise in global oil prices and inflation.
     However, low food prices will continue to exert disinflationary pressures, said the Bank of Serbia (NBS), which has cut its rate by 50 basis points this year.
    As in the past, the NBS also underlined that "persistent uncertainties in the international financial and commodity markets also mandate caution in monetary policy conduct."
    Serbia's inflation rate rose to 1.5 percent in October from 0.6 percent in September, hitting the lower limit of its 2017 target range of 3.0 percent, plus/minus 1.5 percentage points.
    Last month the central bank lowered the inflation mid-point target to 3.0 percent from 4.0 percent.
    Serbia's economy grew by an annual rate of 2.6 percent in the third quarter, up from 1.9 percent in the secondquarter while the unemployment rate eased to 13.8 percent from 16.6 percent.
    Last month the central bank's vice-governor, Veselin Pjescic, was quoted as saying the central bank had room to lower its key rate.

    The National Bank of Serbia issued the following statement:

"At its meeting today, the NBS Executive Board decided to keep the key policy rate at 4.0%.
The Executive Board expects inflation to remain low and stable, moving within the target tolerance band as of early 2017 (3.0%±1.5 pp). Inflation will enter the target tolerance band owing to the effects of past monetary policy easing, rising domestic demand, and the gradual recovery of global oil prices and inflation in the international environment, notably the euro area as Serbia’s most important foreign trade partner. In contrast, relatively low food production costs will continue to generate disinflationary pressures for some time yet. 
Persisting uncertainties in the international financial and commodity markets also mandate caution in monetary policy conduct. As for the international financial market, the uncertainties pertain to the pace of the Fed’s monetary policy normalisation and the continuation of the ECB’s quantitative easing programme, as well as their impact on global flows of capital. However, the Executive Board underlined that successful implementation of fiscal consolidation and structural reforms, as well as the narrowing of external imbalances, are helping to improve the Serbian economy’s macroeconomic prospects and boost its resilience to negative shocks from abroad. 
The next rate-setting meeting will be held on 12 January 2017."

    www.CentralBankNews.info

ECB holds rates, extends but tapers asset purchases

December 8, 2016 by CentralBankNews   Comments (0)

    The European Central Bank (ECB) left its key interest rates steady but tapered and extended its asset purchases by another nine months "or beyond, if necessary, and in any case until the Governing Council sees a sustained adjustment in the path of inflation consistent with its inflation aim."
    The ECB's current asset purchase program of 80 billion euros was set to expire at the end of March  2017 and the ECB will now lower the monthly purchases of bonds to 60 billion euros but continue with these purchases until the end of December 2017.
    But the ECB, which in March cut its benchmark refinancing rate to zero, added that if the economic outlook becomes unfavorable, "the Governing Council intends to increase the programme in terms of size and/or duration."
    To tackle the issue of a paucity of bonds available for purchase, the ECB broadened the maturity range of public sector bonds that it will buy by lowering the remaining maturity to one year from two years, and will buy bonds that have a yield below the ECB's deposit rate of minus 0.40 percent.
    ECB President Mario Draghi also confirmed the guidance that the central bank for 19 countries expects to keep its interest rates "at present or lower levels for an extended period of time, and well past the horizon of our net purchases."
    In addition to a refi rate of 0.0 percent and the deposit rate of minus 0.40 percent, the ECB's rate on its marginal lending facility was maintained at 0.25 percent.
    Draghi said the extension of the asset purchases was aimed at preserving the "very substantial degree of monetary accommodation" to ensure that inflation in the euro area reaches the ECB's target of below, but close to 2.0 percent.
    "This calibration reflects the moderate but firming recovery of the euro area economy and still subdued underlying inflationary pressures," Draghi said, confirming that the ECB "will act by using all the instruments available within its mandate" to achieve its inflation objective.
    Inflation in  the euro area rose to 0.6 percent in November from 0.5 percent in October but Draghi said this was largely due to higher energy prices and there "are no signs yet of a convincing upward trend in underlying inflation."
    Inflation is expected to pick up "significantly" at the turn of the year due to the comparison  with last year and then rise further in the next two years, Draghi said.
    In an update to its staff forecast, the ECB forecast annual inflation rate of 0.2 percent this year, rising to 1.3 percent in 2017, 1.5 percent in 2018 and 1.7 percent in 2019.
    This compares with its previous forecast from September of 0.2 recent this year, 1.2 percent in 2017 and 1.6 percent in 2018.
    Draghi said he expected the economic recovery in the euro area to "proceed at a moderate but firming pace," helped by improved corporate profitability, a recovery in investment, sustained gains in employment that is supporting private consumption, and a "somewhat stronger global recovery."
    "However, economic growth in the euro area is expected to be dampened by a sluggish pace of implantation of structural reforms and remaining balance sheet adjustments in a number of sectors," he added.
    Gross Domestic Product in the euro area grew by an annual rate of 1.7 percent in the third quarter of this year, the same rate as in the two previous quarters, and ECB largely maintained its outlook.
    For this year GDP is seen rising by 1.7 percent, unchanged from September, while the forecast for 2017 was raised to 1.7 percent from 1.6 percent. For 2018 the ECB expects unchanged growth of 1.6 percent and the same rate for 2019.
    "The risks surrounding the euro area growth outlook remain tilted to the downside," Draghi said.
    The euro, which fell sharply from May 2014 to March 2015, has been relatively stable since then though it has dropped in the  last month and fell further in response to the ECB's decision.
    The euro was trading at 1.065 to the U.S. dollar today, down from 1.08 yesterday, little changed since the start of this year.

    The European Central Bank issued the following statement:

"At today’s meeting the Governing Council of the ECB decided that the interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility will remain unchanged at 0.00%, 0.25% and -0.40% respectively. The Governing Council continues to expect the key ECB interest rates to remain at present or lower levels for an extended period of time, and well past the horizon of the net asset purchases.

Regarding non-standard monetary policy measures, the Governing Council decided to continue its purchases under the asset purchase programme (APP) at the current monthly pace of €80 billion until the end of March 2017. From April 2017, the net asset purchases are intended to continue at a monthly pace of €60 billion until the end of December 2017, or beyond, if necessary, and in any case until the Governing Council sees a sustained adjustment in the path of inflation consistent with its inflation aim. If, in the meantime, the outlook becomes less favourable or if financial conditions become inconsistent with further progress towards a sustained adjustment of the path of inflation, the Governing Council intends to increase the programme in terms of size and/or duration. The net purchases will be made alongside reinvestments of the principal payments from maturing securities purchased under the APP.

To ensure the continued smooth implementation of the Eurosystem’s asset purchases, the Governing Council decided to change some of the parameters of the APP, which will be communicated at today’s press conference and in a separate press release."
In addition, ECB President Mario Draghi issued the following statement to a press conference:

"Ladies and gentlemen, the Vice-President and I are very pleased to welcome you to our press conference. We will now report on the outcome of today’s meeting of the Governing Council, which was also attended by the Commission Vice-President, Mr Dombrovskis.
Based on our regular economic and monetary analyses, we today conducted a comprehensive assessment of the economic and inflation outlook and our monetary policy stance. As a result, the Governing Council took the following decisions in the pursuit of its price stability objective:
As regards non-standard monetary policy measures, we will continue to make purchases under the asset purchase programme (APP) at the current monthly pace of €80 billion until the end of March 2017. From April 2017, our net asset purchases are intended to continue at a monthly pace of €60 billion until the end of December 2017, or beyond, if necessary, and in any case until the Governing Council sees a sustained adjustment in the path of inflation consistent with its inflation aim. If, in the meantime, the outlook becomes less favourable, or if financial conditions become inconsistent with further progress towards a sustained adjustment of the path of inflation, the Governing Council intends to increase the programme in terms of size and/or duration. The net purchases will be made alongside reinvestments of the principal payments from maturing securities purchased under the APP. 
To ensure the continued smooth implementation of the Eurosystem’s asset purchases, the Governing Council decided to adjust the parameters of the APP as of January 2017 as follows. First, the maturity range of the public sector purchase programme will be broadened by decreasing the minimum remaining maturity for eligible securities from two years to one year. Second, purchases of securities under the APP with a yield to maturity below the interest rate on the ECB’s deposit facility will be permitted to the extent necessary.
The key ECB interest rates were kept unchanged and we continue to expect them to remain at present or lower levels for an extended period of time, and well past the horizon of our net asset purchases. 
Today’s extension of the asset purchase programme has been calibrated to preserve the very substantial degree of monetary accommodation necessary to secure a sustained convergence of inflation rates towards levels below, but close to, 2% over the medium term. Together with the sizeable volume of past purchases and forthcoming reinvestments, it ensures that financial conditions in the euro area will remain very favourable, which continues to be crucial to achieve our objective. In particular, the extension of our purchases over a longer horizon allows for a more sustained market presence and, therefore, a more lasting transmission of our stimulus measures. This calibration reflects the moderate but firming recovery of the euro area economy and still subdued underlying inflationary pressures. The Governing Council will closely monitor the evolution of the outlook for price stability and, if warranted to achieve its objective, will act by using all the instruments available within its mandate.
Let me now explain our assessment in greater detail, starting with the economic analysis. Real GDP in the euro area increased by 0.3%, quarter on quarter, in the third quarter of 2016, following similar growth in the second quarter. Incoming data, notably survey results, point to a continuation of the growth trend in the fourth quarter of 2016. Looking further ahead, we expect the economic expansion to proceed at a moderate but firming pace. The pass-through of our monetary policy measures to the real economy is supporting domestic demand and has facilitated deleveraging. Improvements in corporate profitability and very favourable financing conditions continue to promote a recovery in investment. Moreover, sustained employment gains, which are also benefiting from past structural reforms, provide support for households’ real disposable income and private consumption. At the same time, there are indications of a somewhat stronger global recovery. However, economic growth in the euro area is expected to be dampened by a sluggish pace of implementation of structural reforms and remaining balance sheet adjustments in a number of sectors.
This assessment is broadly reflected in the December 2016 Eurosystem staff macroeconomic projections for the euro area, which foresee annual real GDP increasing by 1.7% in 2016 and 2017, and by 1.6% in 2018 and 2019. Compared with the September 2016 ECB staff macroeconomic projections, the outlook for real GDP growth is broadly unchanged. The risks surrounding the euro area growth outlook remain tilted to the downside.
According to Eurostat’s flash estimate, euro area annual HICP inflation in November 2016 was 0.6%, up further from 0.5% in October and 0.4% in September. This reflected to a large extent an increase in annual energy inflation, while there are no signs yet of a convincing upward trend in underlying inflation. Looking ahead, on the basis of current oil futures prices, headline inflation rates are likely to pick up significantly further at the turn of the year, mainly owing to base effects in the annual rate of change of energy prices. Supported by our monetary policy measures, the expected economic recovery and the corresponding gradual absorption of slack, inflation rates should increase further in 2018 and 2019.
This pattern is also reflected in the December 2016 Eurosystem staff macroeconomic projections for the euro area, which foresee annual HICP inflation at 0.2% in 2016, 1.3% in 2017, 1.5% in 2018 and 1.7% in 2019. By comparison with the September 2016 ECB staff macroeconomic projections, the outlook for headline HICP inflation is broadly unchanged. 
Turning to the monetary analysis, broad money (M3) growth moderated in October 2016, with its annual rate of growth decreasing to 4.4%, after 5.1% in September. As in previous months, annual growth in M3 was mainly supported by its most liquid components, with the narrow monetary aggregate M1 expanding at an annual rate of 7.9% in October, after 8.4% in September.
Loan dynamics followed the path of gradual recovery observed since the beginning of 2014. The annual rate of change of loans to non-financial corporations increased to 2.1% in October 2016, from 2.0% in the previous month. The annual growth rate of loans to households remained at 1.8%. Although developments in bank credit continue to reflect the lagged relationship with the business cycle, credit risk and the ongoing adjustment of financial and non-financial sector balance sheets, the monetary policy measures put in place since June 2014 are significantly supporting borrowing conditions for firms and households and thereby credit flows across the euro area. 
To sum up, a cross-check of the outcome of the economic analysis with the signals coming from the monetary analysis confirmed the need to take today’s monetary policy decisions so as to preserve the very substantial amount of monetary support that is necessary in order to secure a return of inflation rates towards levels that are below, but close to, 2% without undue delay.
Monetary policy is focused on maintaining price stability over the medium term and its accommodative stance supports economic activity. As emphasised repeatedly by the Governing Council, in order to reap the full benefits from our monetary policy measures, other policy areas must contribute much more decisively, both at the national and at the European level. The implementation of structural reforms in particular needs to be substantially stepped up to reduce structural unemployment and boost potential output growth in the euro area. Structural reforms are necessary in all euro area countries. The focus should be on actions to raise productivity and improve the business environment, including the provision of an adequate public infrastructure, which are vital to increase investment and boost job creation. The enhancement of current investment initiatives, progress on the capital markets union and reforms that will improve the resolution of non-performing loans will also contribute positively to this objective. In an environment of accommodative monetary policy, the swift and effective implementation of structural reforms will also make the euro area more resilient to global shocks. Fiscal policies should also support the economic recovery, while remaining in compliance with the fiscal rules of the European Union. Full and consistent implementation of the Stability and Growth Pact over time and across countries remains crucial to ensure confidence in the fiscal framework. At the same time, it is essential that all countries intensify efforts towards achieving a more growth-friendly composition of fiscal policies.
We are now at your disposal for questions."

The Future Of Oil: F--K All

December 8, 2016 by CalConfidence   Comments (0)

The oil market is a mess. OPEC headlines have jolted the algorithms trading predictive order flow away from fundamentals and into the Twittersphere but rest assured because WaPo hasn't labelled OPEC headlines "fake news" yet then what we've seen must be real news (except it is not, though at times it is....get it?)

Read more »