Friday, June 10, 2016

1--Rich Santelli "mad as hell" about negative rate (video)


2--The downside of negative rates (Santelli with Lacy Hunt, important)


3--Stocks Near Records Despite Decline as Yields Fall



(Did the Fed engineer a coup to get capital flowing into USTs?)
Major U.S. stock indexes fell slightly Thursday but remained near all-time highs even as government-bond yields plumbed their lows, a shift from earlier this year when fears of a U.S. recession dragged them down together.
Demand from overseas buyers and moves by central banks elsewhere in the world to push interest rates into negative territory have weighed down yields in the U.S. Low yields also have made returns look more attractive in the stock market, where a weakening dollar and rising oil prices have helped boost shares....

Recently, Treasury yields have been predominantly dragged down by the drop in government-bond yields around the globe, rather than by demand for haven assets spurred by concerns about the economy, said Michael Purves, chief global strategist at Weeden & Co. That is why major U.S. indexes aren’t sitting near their lows for the year, he said.
Yields in Germany, the U.K. and Switzerland hit record lows this week, with the 10-year German bund touching 0.025% Thursday, according to Tradeweb. Eurozone-bond yields dropped sharply amid weak economic growth, low inflation and bond purchases by the European Central Bank.

As foreign bonds get bid and those yields go down, that falls right into our laps over here in Treasurys,” Mr. Purves said. “I’m not reading the fact that the 10-year yield is so low as an indictment of the U.S. economy,” he added. “It’s more a function of aggressive monetary policies overseas.”

4--U.S. Government Bonds 10-Year Yield Lowest Since February


Investors’ hunt for income has been intensifying amid a broad decline in global bond yields in June. The U.S. Treasury debt market is one of the few places left in the developed world offering relatively higher income. ....

The latest round of lower bond yields reflects investor skepticism that the global economy would gain traction. The World Bank earlier this week lowered its projections for the world economy this year and next.
Meanwhile, concerns have been growing over major central banks’ ability to lift growth and battle a low level of inflation. Analysts say negative-interest-rate policies have distorted market signals and hurt the earnings prospects of the banking industry....

The world is awash with negative-yielding bonds,’’ said Mr. Evans. “The Treasury bond market is the tallest pygmy. That is the world we are living in now.’’
He said the U.S. 10-year yield could fall to 1.5% in coming months. On Thursday, the 10-year yield dropped to 1.678%, the lowest since its 2016 nadir of 1.642% on Feb. 11.

Back then, the Dow Jones Industrial Average closed at 15660.18. On Thursday, the blue-chip index finished at 17985.19, about 325 points from its all-time high....

But with central banks continuing to mop up government debt, the fight to obtain high-quality government bonds will only get more intense. Many investors need to hold high-grade government bonds due to their mandate, so they have to buy bonds from a shrinking pool of positive yields. U.S. Treasury bonds become a bargain in this context


5--TSA as Example of Privatization Playbook: Make an Agency Perform Badly By Underfunding It….


Yves here. The TSA is a perfect target for privatization, since even at the best of times, it is not well liked. Who wants to be subjected to security theater like taking your shoes off? But this article provides an important overview of how various government functions are made incompetent by cutting their budgets without reducing their duties. That plays into the popular narrative that of course the private sector would be more “efficient” when the evidence is strongly supports the view that private sector contractors treat privatization as an opportunity for looting (contracting in the Iraq War was an extreme case, but there are plent of others, such as privatization of parking meters in Chicago and toll roads).

6--U.S. elections ranked worst among Western democracies. Here’s why.

7--Sanders Supporters Claim Clinton Campaign and AP Engaged in a Conspiracy – Complete With a “Secret Win” Code Name

8--A growing number of Europeans believe the EU is a thinly disguised front for multinational corporations


A growing number of Europeans believe the EU is a thinly disguised front for multinational corporations just as Americans believe that Wall Street and corporate cartels are the puppet master of the U.S. President and Congress.

A watchdog group, Corporate Europe Observatory, has played a key role in exposing how multinational corporations and their lobbyists control the agenda at the European Union. Based on their research, a film was released across Europe in 2012 titled “The Brussels Business.” The film documents how the European Round Table of Industrialists (ERT) sits in the wings, controlling the agenda of the EU. See the movie trailer here and the full movie here.

The Corporate Europe Observatory has also released a broad range of studies to back up its premise that corporate influence is out of control and sapping democracy across Europe, under the same yoke of bankers, corporate lobbyists and revolving doors that is sapping democracy in America. In a report released in February 2009 titled “Would You Bank On Them: Why We Shouldn’t Trust the EU’s Financial ‘Wise Men,’” the organization and other researchers looked at the group of eight experts that had been set up by the EU to advise it on how to reform the financial system. The body of experts was called the de Larosière Group after its Chairman, Jacques de Larosière, who had been the co-chair of the financial sector lobby organization, Eurofi, as well as an “adviser to the French bank BNP Paribas for a decade.”

The study’s findings echoed what happened in the U.S. where the Federal Reserve, which had failed to spot the impending 2008 crisis or strengthen regulations to prevent it, while Bank executives sat on its regional Boards of Directors, was given sweeping new powers under the Dodd-Frank financial reform legislation to supervise every major bank holding company in the United States, while simultaneously buying up their toxic waste and secretly funneling below-market-rate loans to the banks to prop them up.

...This week, the Pew Research Center released a survey which found that 61 percent of the French hold an unfavorable view of the EU

9--And they wonder why productivity is down???


Executives forgo long-term investments such as investing in human capital to pay dividends and make share buybacks, according to the report from the Center for American Progress. Research cited in the report shows the share of employees who received training fell 28% between 2001 and 2009, with much of this decrease resulting from a declining share of large-firm employees receiving training. Most industries joined the decline, and the pattern persisted across occupation, education, age, job-tenure, and demographic groups....

Back in 2012, the Society for Human Resource Management proposed a requirement for public companies to prepare a “Human Capital Discussion & Analysis” for the proxy, similar to the required management and compensation discussions and analyses. The focus, said Broc Romanek of the CorporateCounsel.net at the time, was supposed to be “almost every corporate cost associated with the hiring, retention, and training of employees and contingent workers, plus detailed information regarding how the company is organized and staffed.” The proposal was abandoned shortly after.

10--Global Investors Are Fleeing U.S. Stocks at a Record Pace: Chart

The most determined seller of U.S. stocks may not be in the U.S. at all. Investors outside the country dumped $128 billion in American shares over the past year, data from the U.S. Treasury International Capital System show. Despite the higher quality of companies in the U.S., long-term investors may be drawn to the faster pace of growth in other economies, said Stewart Warther, an equity strategist at BNP Paribas SA.


11--UN's Ban Ki-moon admits threats resulted in Saudi-led coalition being removed from blacklist


UN Secretary-General Ban Ki-moon has admitted that his decision to remove the Saudi-led coalition in Yemen from the organization's blacklist came after threats from a number of countries. Human rights groups are urging him to backtrack on the decision.
Ban said on Thursday that temporarily removing the coalition from the blacklist was "one of the most painful and difficult decisions I have had to make," and that it raised “the very real prospect that millions of other children would suffer grievously."
"Children already at risk in Palestine, South Sudan, Syria, Yemen and so many other places would fall further into despair," he told reporters.
The UN secretary-general added that "it is unacceptable for member states to exert undue pressure...scrutiny is a natural and necessary part of the work of the United Nations."

(Wimp.)

12--Santelli loses cool over negative rates

13--Keynes on spending (video)

Background on 10-year UST and rates  14--Archive--June 2012--(CNNMoney) -- Extreme fear gripped investors around the world Friday, sending them fleeing for the safety of U.S., German and U.K. bonds.
Investors have already been spooked by Europe's deepening debt crisis, causing yields to plumb new lows throughout the week. The yield on the 10-year U.S. note slid as low as 1.46% Friday, falling below 1.5% for the first time ever.



From 1900 through 1959, interest rates ranged from the all-time low of a little less than 2.0% in 1941 to a high of 5.1% in 1921 -- a range from low to high of only 3.1%; the average rate was 3.3%. Since then, the range has been from the December 2008 financial panic low of 2.4% to the September 1981 "all-time" high of 15.3% -- a range of almost 13%; the average rate during that period was 6.7%.

Is There a Bond Bubble? The Hidden Risk in Bond FundsIn October 2010, the yield on 10-year Treasury Notes was 2.54%, not far off the 2.4% low set during the financial panic near the end of 2008. These are historically low rates. To find comparable rates, you have to go back more than 50 years, to 1954. Even in the pre-1960 world, these would be below average interest rates.

Because of the relationship between yield and bond price, near all-time low interest rates mean near all-time high bond prices. It's a near certainty that bond prices can only go down from here -- though it won't necessarily happen immediately. As a result, not only are investors in intermediate and long-term treasury bond funds less likely to continue to benefit from falling rates, they are likely to see price decreases when rates increase.

How much impact could that have? Just to make the point (i.e., this is a completely hypothetical example), consider if 10-year interest rates were to immediately increase from 2.5% to the "100-year" average rate of 4.9%; holders of new bonds would see a price decrease of almost 20%. An increase to the more recent average of 6.7% would translate into a price decrease of closer to 30%.

July 25, 2012 Update: Treasury Interest Rates at All-Time Record Lows We are experiencing the lowest interest rates in U. S. history -- even lower than they were during the Great Depression.  On July 25, the U.S. Department of the Treasury 10-year constant maturity series closed at a new all-time low yield of 1.43%
http://observationsandnotes.blogspot.com/2010/11/100-years-of-bond-interest-rate-history.html

14--Rigged for the rich: Top ‘1 percent’ in US blooms as income inequality grows, despite Obama’s efforts – report

Despite President Obama’s efforts to fight income inequality, the gap is widening. The wealthiest “one percent” take in most of the growth, a new study shows. The last 35 years saw the richest Americans’ income jump 10 times higher than the other 99 percent.
   
“Market income in 2013 for households in the top 1 percent was 188 percent higher than it was in 1979,” the Congressional Budget Office said in the report released Wednesday. “For households in the bottom four income quintiles, market income was 18 percent higher in 2013 than it was in 1979.”
According the new federal data, a typical American household earned market income of $86,000 in 2013. After adding another $14,000 in government benefits per household, their pretax income reached $100,000. In that scenario, consumers kept $80,000 annually after paying 20 percent in taxes

15--By Retaking Raqqa Syrian Army May Upset 'Federalization' Plan

"Is the primary objective of the war on Syria to establish a new federal system? My answer is no. I think the primary objective is the destruction of Syria, the disintegration of its army and the tearing up of its social fabric. Should this succeed, then the outcome might reflect this success and a federal system or worse might ensue," the scholar underscored

16--New data exposes widespread lead poisoning of Michigan children

If you map where lead is piled up in superabundance, if you map where decent housing is in short supply and if you map where jobs are in short supply, the three maps are virtually identical. So what would a rational, unbound person do with this disequilibrium? Well, you might say ‘why don’t we take the unemployed and train them in safe de-leading and pay them?’ And for the same health dollar we could get a decrease in unemployment—a very dangerous factor in our nation at this point—put more housing back into decent circumstances and wipe the disease out. This is perhaps utopianism, but I think its practical utopianism.”

Cuts in water infrastructure spending were being made as Needleman spoke. Urban blight, in which old houses still had peeling lead-based paint had become a permanent, worsening feature of life in inner cities. The eradication of toxic lead would require huge social investments which federal governments run by both Democrats and Republicans, weren’t willing to make. Rather, spending cuts were deepened and continue to be.

The disaster that was inflicted on Flint was part of this process. In the aftermath of the financial collapse of 2008, the financial oligarchy and its political representatives in both the Democratic and Republican parties have pursued a ruthless agenda of looting pensions and privatizing schools, water systems and other critical services. In addition, 634,000 federal, state and municipal jobs have been wiped out since Obama took office in January 2009.

There are still huge unresolved issues over Flint’s water. The forced removal of the city from a relatively safe water supply was carried out to benefit a handful of well-placed businessmen and their political front men. Those who drove this process were not in the least interested in protecting public health.











leo@christiesdesignframing.com

http://www.christiesdesignframing.com/contact.html


https://www.rt.com/news/346010-saudi-coalition-blacklist-un/

http://video.cnbc.com/gallery/?video=3000524321&play=1

https://mishtalk.com/2016/06/09/us-tax-receipts-signaling-recession/

https://www.youtube.com/watch?v=ZRvaxUNDTKY


US federal personal tax receipts receipts are falling fast. So is the Evercore ISI State Tax Survey

NEW YORK (CNNMoney) -- Extreme fear gripped investors around the world Friday, sending them fleeing for the safety of U.S., German and U.K. bonds.
Investors have already been spooked by Europe's deepening debt crisis, causing yields to plumb new lows throughout the week. The yield on the 10-year U.S. note slid as low as 1.46% Friday, falling below 1.5% for the first time ever.

http://money.cnn.com/2012/06/01/investing/treasuries-yield-record/

From 1900 through 1959, interest rates ranged from the all-time low of a little less than 2.0% in 1941 to a high of 5.1% in 1921 -- a range from low to high of only 3.1%; the average rate was 3.3%. Since then, the range has been from the December 2008 financial panic low of 2.4% to the September 1981 "all-time" high of 15.3% -- a range of almost 13%; the average rate during that period was 6.7%.

Is There a Bond Bubble? The Hidden Risk in Bond FundsIn October 2010, the yield on 10-year Treasury Notes was 2.54%, not far off the 2.4% low set during the financial panic near the end of 2008. These are historically low rates. To find comparable rates, you have to go back more than 50 years, to 1954. Even in the pre-1960 world, these would be below average interest rates.

Because of the relationship between yield and bond price, near all-time low interest rates mean near all-time high bond prices. It's a near certainty that bond prices can only go down from here -- though it won't necessarily happen immediately. As a result, not only are investors in intermediate and long-term treasury bond funds less likely to continue to benefit from falling rates, they are likely to see price decreases when rates increase.

How much impact could that have? Just to make the point (i.e., this is a completely hypothetical example), consider if 10-year interest rates were to immediately increase from 2.5% to the "100-year" average rate of 4.9%; holders of new bonds would see a price decrease of almost 20%. An increase to the more recent average of 6.7% would translate into a price decrease of closer to 30%.

July 25, 2012 Update: Treasury Interest Rates at All-Time Record LowsWe are experiencing the lowest interest rates in U. S. history -- even lower than they were during the Great Depression.  On July 25, the U.S. Department of the Treasury 10-year constant maturity series closed at a new all-time low yield of 1.43%
http://observationsandnotes.blogspot.com/2010/11/100-years-of-bond-interest-rate-history.html

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