Even though homelessness in America’s cities continues to decline, food banks and pantries are still being stretched thin as the number of people seeking emergency food assistance climbs, according to a survey of mayors from 38 of the nation’s cities. …read more
Source: Homelessness declining as hunger is on the rise
Facebook wants people watching TV-style shows right inside the social network. So the company is talking with Hollywood studios and other producers about licensing “scripted, unscripted and sports content.” …read more
Source: TV-style programming could be coming to Facebook
The Federal Reserve raised its key interest rate by 0.25% Wednesday to signify that the U.S. economy had improved this year. …read more
Source: Finally: Fed raises rates for first time in 2016
By Tyler Durden
When the ECB announced last week that it would expand the universe of eligible collateral for use by Eurozone institutions to include up to €50 billion in cash cash, it – and the market – hoped that the severe collateral shortage manifesting itself in an unprecedented squeeze in the repo market would be alleviated. As a reminder, last Thursday the ECB Governing Council decided that Eurosystem central banks will have the possibility to also accept cash as collateral in their PSPP securities lending (SL) facilities without having to reinvest it in a cash-neutral manner.
The ECB added that “the introduction of cash as collateral in the context of PSPP securities lending is intended to enhance the effectiveness of the SL framework, thereby supporting the smooth implementation of the PSPP as well as the euro area repo market liquidity and functioning. “
Following the news, 2Year Bunds quickly sold off last Thursday, with the yield rising by 6 bps to start, as suddenly it makes more sense to park cash with the ECB than to be penalized by -0.7% to hold German short-term debt.
However, it was not meant to last, and less than a week later, even with overall Eurogroup liquidity hitting new all time highs earlier this week, German 2Y yields fell as much as 2.9bps to all time low of -0.773% as repo pressures continue to support the front-end, Bloomberg reported citing two traders.
The traders added that the €50 billion in securities lending put forward by the ECB are seen as not enough, with structural issues remaining, exacerbated by year-end window dressing.
Additionally, a second trader added that some dealers prefer not to trade with the Bundesbank, due to higher failure fees.
Curiously, while Schatz futures rise to all time high of 112.275, downside continues to be bought in options, says a third trader based in London with a buyer again emerging in Feb. Schatz 112.00/111.90 put spread, 17k trades at 1 tick.
Should the collateral squeeze continue, the ECB may be forced to unveil further intervention mechanisms, as well as additional jawboning by Mario Draghi, potentially before the next scheduled ECB council meeting, especially if the year-end repo shortage drives 2Y yields meaningfully lower.
Source: German 2Y Yields Hit All-Time Lows As ECB Fails To Fix Record Collateral Shortage
The big day has finally arrived.
The Fed adjourns its two day FOMC meeting today. At 2PM Fed Chair Janet Yellen is expected to announce that the Fed is raising rates again.
If the Fed does hike as 100% of analysts expect, it will be the first hike in 12 months and only the second in this tightening cycle.
By way of review let’s take a look at what happened the last time the Fed raised rates. At that time we had a VERY similar situation unfolding: the Bank of Japan was aggressively devaluing the Yen against the $USD, having pushed it down 10% in the preceding four months.
As a result of this, the $USD had skyrocketed, rallying nearly 8% into the Fed meeting.
The Fed raised rates… and stocks fell off a cliff as deflation took hold. Within the span of a few weeks, the market had plunged 12%.
The exact same situation is playing out again this year, only on steroids. The Yen has collapsed 19% in the last few months, the $USD is now at a 13-year high… and stocks are at one of their most overbought levels in 100 years.
The stage is set for a market collapse.
THIS WILL HIT BEFORE THE END OF JANUARY.
If you've yet to take action to prepare for this, we offer a FREE investment report called the Prepare and Profit From the Next Financial Crisis that outlines simple, easy to follow strategies you can use to not only protect your portfolio from it, but actually produce profits.
We made 1,000 copies available for FREE the general public.
As we write this, there are fewer than 19 left.
To pick up yours, swing by….
http://phoenixcapitalmarketing.com/Prepare1.html
Best Regards
Graham Summers
Chief Market Strategist
Phoenix Capital Research
Source: Warning: the Fed Rate Hike Could Trigger a Market Meltdown
By Tyler Durden
Having previously noted the 10Y yield bogeys by SocGen, Goldman and JPM, above which the S&P would start to groan, which are at 2.60%, 2.75% and 2.75%, respectively, overnight we got yet another datapoint to add to this series: that of Jeffrey Gundlach, who during yesterday’s webcast to DoubleLine investors said 10Y rates may climb to 3% by next year as deficits and inflation rise under the Trump presidency, “a move that would hurt markets.” The 10Y is currently trading just below 2.50%
“We’re getting to the point where further rises in Treasuries, certainly above 3 percent, would start to have a real impact on market liquidity in corporate bonds and junk bonds,” Gundlach said on Tuesday as reported by Bloomberg. “Also, a 10-year Treasury above 3 percent in my view starts to bring into question some of the aspects of the stock market and of the housing market in particular.”
In just under 5 hours, the Fed is expected to raise its Fed Funds rate by 0.25% ofor the first time this year and only the second time since the 2008 financial crisis.
Gundlach said on the webcast that he will be looking after the meeting for signs that Fed members are growing inclined to raise rates more aggressively in the next couple of years as the economy heats up.
Gundlach also said that he has increased the average duration of holdings in his fund as rates have risen since July, while still holding debt with a shorter duration, and lower risk, than the benchmark Bloomberg Barclays U.S. Aggregate bond index.
In a follow up call with Reuters, Gundlach repeated that “3 percent is a problem. If the 10-year goes above 3 percent, you would also have to say unequivocally you have seen the end of the bond bull market.”
Gundlach also said it is reasonable to be nimble and do some purchasing of Treasuries. “I think it is an okay buy right now,” he said. “We hate the market less. We are a little bit less defensive,” Gundlach said. When bond prices are down, DoubleLine likes it more, he said.
If the 10-year yield exceeds 3 percent next year, high-yield “junk” bonds will drop into a “black hole of illiquidity,” Gundlach said.
Gundlach said the Standard & Poor’s 500 Index, which is up 6.5 percent since the election, could reverse their solid momentum at the latest by Trump’s Jan. 20 inauguration. Gundlach said he thinks the dollar is going to soften in the weeks ahead as “bullishness in the dollar is pretty entrenched.”
For those who missed it, Gundlach’s full presentation from yesterday’s webcast is below.
Source: Jeff Gundlach Warns 10Y Yields Above 3% Will "Punish Markets", Would Mark End Of Bond Bull Market
By Tyler Durden
Overnight Media Digest
WSJ
– U.S. President-elect Donald Trump pushed ahead with his controversial pick for secretary of state, Exxon Mobil Corp chief Rex Tillerson, setting up a likely battle with senators – including some Republicans – who have raised questions about his closeness to Russian leader. http://on.wsj.com/2hv13pY
– Goldman Sachs plans to elevate David Solomon and Harvey Schwartz to be top lieutenants to CEO Lloyd Blankfein, filling a void left by Gary Cohn, who is leaving the bank to join the Trump administration. http://on.wsj.com/2hv2TqQ
– U.S. regulators slapped Wells Fargo with new regulatory sanctions, saying the firm failed to address alleged “deficiencies” in a plan to manage its own bankruptcy without a taxpayer bailout. http://on.wsj.com/2hv6ENf
– Tens of thousands of civilians and the remaining rebels are preparing to evacuate opposition-held parts of the decimated city, sealing a major victory for Syrian President Bashar al-Assad. http://on.wsj.com/2hv62ao
– An on-air reporter at a 21st Century Fox-owned local television station in New York is suing the company for hostile work environment and age and pregnancy discrimination. http://on.wsj.com/2hv6CVy
– Inspectors from the U.S., China and four other nations visited Areva SA ‘s Le Creusot Forge in central France earlier this month to examine the plant’s quality controls and comb through …read more
Source: Frontrunning: December 14
By Tyler Durden
Drone footage has revealed extreme devastation in eastern Aleppo, once Syria’s largest city and thriving economic center with its renowned ancient sites, with crumbling homes and deserted streets replacing a once-lively area of the city.
The video from Ruptly provides an up-close look at the destruction left behind by the militants in Aleppo neighborhoods after they were pushed out by the Syrian Army in heavy clashes. Collapsed buildings and piles of rubble dominate the landscape, with just a few lone vehicles cruising the empty streets. Buildings that were once home to dozens of apartments have been left windowless and deserted.
Meanwhile, air strikes and shelling returned to Aleppo following yesterday’s apparent victory of the Syrian regime over the rebel-held territory, stalling the planned evacuation of rebel districts in Aleppo, according to Reuters adds.
A ceasefire brokered on Tuesday by Russia, Assad’s most powerful ally, and Turkey was intended to end years of fighting in the city, giving the Syrian leader his biggest victory in more than five years of war. But air strikes, shelling and gunfire erupted on Wednesday morning and a monitoring group said the truce appeared to have collapsed.
Syrian state television said rebel shelling of the Bustan al-Qasr district, recently recaptured by the army, had killed six people. Russia said government forces were responding to rebel attacks. Russian Foreign Minister Sergei Lavrov said rebel resistance was likely to end in the next two or three days.
Nobody had left by dawn, according to a Reuters witness waiting at the agreed departure point. Twenty buses waited with engines running but showed no sign of moving into rebel districts. People in eastern Aleppo packed their bags and burned personal belongings, fearing looting by the Syrian army and its Iranian-backed militia allies.
Iran, one of Syrian President Bashar al-Assad’s main backers in the battle for Aleppo, wanted a simultaneous evacuation of wounded from the villages of Foua and Kefraya that are besieged by rebels, according to rebel and U.N. sources. Rebel groups said that was just an excuse to hold up the evacuation, which a pro-opposition TV station said could now be delayed until Thursday.
As Reuters adds, the evacuation plan was the culmination of two weeks of rapid advances by the Syrian army and its allies that drove insurgents back into an ever-smaller pocket of the city under intense air strikes and artillery fire. By taking full control of Aleppo, Assad has proved the power of his military coalition, aided by Russia’s air force and an array of Shi’ite militias from across the region.
Rebels groups have been supported by the United States, Turkey and Gulf monarchies, but the support they have enjoyed has fallen far short of the direct military backing given to Assad by Russia and Iran.
Russia regards the fall of Aleppo as a major victory against terrorists, as it and Assad characterize all the rebel groups, both Islamist and nationalist, fighting to oust him. But at the United Nations, the United States said the violence …read more
Source: Dramatic Drone Footage Shows East Aleppo Devastation As Air Strikes, Shelling Return
Welcome to Esh Carmel Blog.
