Friday, September 11, 2015

Today's Links

1---Credit tightening on the horizon, but not just yet

What will happen when the Fed finally begins to tighten? Corporations know. They’ve been through this before. Credit will normalize. Credit gets tighter and more expensive, and for some companies elusive. And they’re selling new bonds while they still can.
The prior three weeks have been tough for bond issuers and very little was sold, given the financial turmoil in August and the seasonal slowdown just before Labor Day. The week ending September 4, no investment-grade corporate bonds were issued at all. And the week before, less than $1 billion in bonds were issued. But now the floodgates have opened.

On Wednesday, $28 billion in investment-grade bonds were issued in the US, the Wall Street Journal reported, the second-busiest day this year, and the fourth-busiest day ever. A record 19 issuers piled in, including home-improvement retailer Lowe’s and hotel operator Marriott International. Drugmaker Gilead topped the list with a hefty $10 billion offering.

This doesn’t include Apple which sold €2 billion of bonds in Euroland because money is even cheaper there, in order to fund share-buybacks and dividends, bringing its total bond sales since 2013 to $55 billion.
Investment-grade bond sales have been white-hot this year, while junk-bond sales have been struggling since June. Despite the weakness in junk-bonds, total corporate bond sales in the US have reached $1.2 trillion so far this year, according to Dealogic. At this rate, it’ll be another record year, the fourth in a row, for bond issuers

2--Bill Black: Now the Justice Department Admits They Got it Wrong
3--UMich Consumer Confidence Tumbles To 12-Month Lows With Biggest Miss On Record
4--Surveys of consumers

Preliminary Results for September 2015
Sep Aug Sep M-M Y-Y
2015 2015 2014 Change Change
Index of Consumer Sentiment 85.7 91.9 84.6 -6.7% +1.3%
Current Economic Conditions 100.3 105.1 98.9 -4.6% +1.4%
Index of Consumer Expectations 76.4 83.4 75.4 -8.4% +1.3%

Next data release: September 25, 2015 for Final September data at 10am ET

Surveys of Consumers chief economist, Richard Curtin
The decline in optimism narrowed in early September from late August as consumers grew somewhat more confident that the underlying strength in the domestic economy would insure a continued expansion. The twin strengths of higher employment and lower prices softened the impact from the losses in household wealth. To be sure, consumers still anticipate a weaker domestic economy due to the global slowdown and are less optimistic about future growth in jobs and wages than they were a few months ago. While the current strength in consumer spending is still likely to persist in the year ahead, the more lasting impact of recent events may be a heightened attentiveness by consumers to potential negative developments. Without this recent shift in focus, consumers would have been more likely to view the Fed's interest rate hike as confirming their prevailing optimism, but with the shift, it could be taken as a signal for a slower pace of future economic growth.

Depreciating currencies hurt emerging nations by reducing purchasing power, pushing up inflation and creating asset-liability mismatches at companies that tapped the large market for dollar-denominated debt. A falling currency can hit revenue while increasing the local-currency value of debt payments.
Weakening currencies also can trigger capital flight, seen most notably this year in China, putting further downward pressure on exchange rates. Central banks often tap into foreign reserves to help stabilize the currency

6--Holding a mirror to the US - on exceptionalism, double standards & global police supra-state

As the Middle East continues to descend into madness, wrecked by wars and convulsed by human tragedies, America stands at the center of it all - the grand engineer of instability, the architect of a world system which cornerstone is profoundly ademocratic. ...

Since 9/11 America has moved in a higher plane of morality, on account of its political, economic and military might.
But let's turn the mirror around for a second and see what reflects back.
Wasn't it America which gifted the world with such things as renditions, institutionalized surveillance, black sites, systematic tortures, ethno-religious profiling and other niceties?
Wasn't it America again which opened an illegal black hole when its leaders decided that unmanned drones should enter the military fray as murdering weapons of choice?

America has no lesson to give when it comes to democracy building and legitimacy … and it certainly cannot claim to any form of exceptionalism; not when it has so much blood on its hands and not when it has committed so very few funds to humanitarian aid.

If anything Washington officials have mastered the art of terror-propping and radical-funding - from Ukraine to Syria, America has some of the world most despicable characters on its payroll … All for the greater good of course

7--Turkey, Russia ‘freeze Turkish Stream talks’
8--A full 60 percent of people in Turkey are opposed to Recep Tayyip Erdoğan and agree he must go. The dissidents also seem to favor the Justice and Development Party (AKP) going as well but are less angry with the AKP, particularly Ahmet Davutoğlu.
His opponents want to make sure Erdoğan goes but there is something that has not been discussed. Who will fill the void after Erdoğan? In other words, what will happen in Turkey after Erdoğan

9---Russian Foreign Minister Sergei Lavrov says Moscow will continue arming the Syrian government in its fight against the Takfiri Daesh terrorists, urging other countries to take a similar measure and help Damascus in the battle..

Lavrov said Thursday that there is nothing secret about the presence of the Russian forces in Syria, where Moscow also runs a military base west of the country.
“There are Russian military personnel in Syria; they have been there for several years,” said Lavrov.
The US has actively sought the ouster of Assad by supporting the militants operating in Syria since a conflict broke out there in March 2011

10--Market turbulence linked to conflicts over ruling class policy

Writing in the same newspaper, former US Treasury Secretary Lawrence Summers warned that what he called conventional wisdom “underestimates the risks in the current moment.” Pointing to the fallout from the Russian default of 1998, the Asian financial crisis of 1997–98 and US subprime lending, he said history taught that “financial interconnections are pervasive and not apparent until it’s too late.”
He pointed to a number of risks, including capital flight from China which could be larger than experienced by “any economy in history,” decelerating productivity growth in the US, tightening liquidity conditions in a number of markets, and the growing importance of what he called “positive feedback” trading strategies where investors sell when prices go down.

If “some portion of these fears are warranted,” he continued, “and the Fed tips toward tightening, its risks a catastrophic error.”

While the US economy has been referred to as a “bright spot” in the global economy, it is here that some of the biggest risks may be concentrated.
With investment returns in the real economy having failed to recover after the financial crisis, profits are being accumulated by borrowing money at ultra-low rates in order to finance mergers and acquisitions and share buybacks. Leveraging—the use of debt—facilitates high returns on equity so long as interest rates do not rise. But even a small increase can throw the whole process in reverse....

These developments make clear that, seven years since the collapse of Lehman Brothers, none of the measures taken by governments and central banks in response to the crisis have restored any degree of stability to the global economy. Instead, they have vastly enriched the financial oligarchy at the expense of the population, while setting the stage for a financial panic on the scale of, or even greater than, that of 2008.

11--Drumbeat grows for escalating war against Syria
11 September 2015
Politicians and the media in both the US and Western Europe have cynically seized upon the plight of refugees fleeing violence in Syria as the pretext for intensifying the war for regime change in that country.
French President Francois Hollande and British Prime Minister David Cameron, both of whom are feverishly working to keep all but a handful of refugees out of their respective countries, have announced bombing campaigns in Syria based on the apparent logic that the more high explosives are dropped over their heads, the more likely Syrians will decide to stay home...

The real forces driving Western intervention are naked geo-strategic interests in establishing hegemony over the world’s key sources of energy and pipeline routes linking them to the world market. Under conditions of deepening economic crisis, the ruling class—first and foremost, the US financial aristocracy—is planning an intensification of militarist violence....

Thomas Friedman, who led the propaganda charge for the war on Iraq. He argued in a column Wednesday that the only way to halt the flow of refugees was to either wall off the countries from which they are fleeing, or “occupy them with boots on the ground, crush the bad guys and build a new order based on real citizenship, a vast project that would take two generations.” In other words, a military recolonization of the entire Middle East.

12--Russia Is Not Fighting in Syria: There Is a Disinformation Campaign Underway
13--Dollar looks vulnerable ahead of Fed: Trader
14--If mortgage rates go to 6%, here's what happens to housing
15--Why the Market Could Soar From Here

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