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Late-Day Buying Panic Keeps Stocks Green For 2016 After Fed Shock

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By Tyler Durden

Another roller-coaster day… “you're a crook, and a cheat, and a swindler…”

Today's melt-ups (pre-FOMC Minutes) were all thanks to broken markets

But after FOMC, things went south in everything (except the Dollar)…

Post-fed, bonds win (but they all lose)…

Obviously we were panic bid into the FOMC minutes but that all changed when The Fed hawks appeared…

The machines were in full rescue mode eying VWAP twice after the minustes smashed stocks lower...perfect VWAP close!

Chaos reigned in VIX… With desperation to keep the S&P green for 2016…

With some huge Open Interests in 205 and 210 SPYs…

h/t @DamonSharkey

Treasury yields all spiked on the Fed minutes (but note the short-end notably underperforming)…

with 2s30s collapsing to fresh lows since Dec 2008…

The USD Index spiked to its highest since March…

But Cable bucked the day's trend, rallying after positive BREXIT (remain 55%) polls…

We suspect tonight will see a major China devaluation…to send a message, and increase turmoil – in order to scare The Fed off again…

The strong USD weighed heavy on commodities…

Charts: Bloomberg

…read more

Source: Late-Day Buying Panic Keeps Stocks Green For 2016 After Fed Shock

    

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Venezuelan Police Unleash Tear-Gas, Rubber Bullets Amid Violent Anti-Government Protests

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By Tyler Durden

The conflagration that is the collapse of a socilaist utopia continues to escalate in Venezuela today. With morgues overflowing, medicines running out, and apocalyptic scenes playing out across the nation, Venezuelans took to the streets of Caracas today – at the behest of the opposition – demanding a recall referendum to end Venezuelan President Nicolas Maduro's socialist rule. The troubled nations leader was not happy and security forces fired tear gas and shut subway stations to block the thousands of protesters.

Over the last two weeks, several provinces have hosted scenes of looting in pharmacies, shopping malls, supermarkets, and food delivery trucks. In several markets, shouts of “we are hungry!” echoed. On April 27, the Venezuelan Chamber of Food (Cavidea) reported that the country’s food producers only had 15 days left of inventory.

PanamPost adds that lootings are becoming an increasingly common occurrence in Venezuela, as the country’s food shortage resulted in yet another reported incident of violence in a supermarket — this time in the Luvebras Automarket located in the La Florida Province of Caracas.

Venezuelans lost control this week when offered small portions

Videos posted to social media showed desperate people falling over each other trying to get bags of rice. One user claimed the looting occurred because it is difficult to get cereal, and so people “broke down the doors and damaged infrastructure.”

And now, as Reuters reports, in the third opposition rally in a week, several thousand protesters descended on downtown Caracas, witnesses said, planning to march to the national election board's headquarters

But National Guard soldiers and police cordoned off the square where they planned to meet, so protesters milled instead in nearby streets waving flags and chanting anti-Maduro slogans.

Adultos mayores rompieron cordón policial en la Av.Libertador.pic.twitter.com/qIdiBO5GtW

— RCTV.net (@RCTVenlinea) May 18, 2016

Security forces used tear gas to control about 100 protesters in one street, witnesses said.

“They're scared. Venezuelans are tired, hungry,” said demonstrator Alfredo Gonzalez, 76, who wore a scarf over his mouth and said he had been sprayed with pepper gas.

An anti-Maduro demonstration Wednesday also turned violent, with troops using tear gas to quell stone-throwing protesters and an officer pepper-spraying opposition leader Henrique Capriles.

Beyond the opposition's formal protest campaign, spontaneous street protests and looting are becoming more common around Venezuela amid worsening food shortages, frequent power and water cuts, and inflation that is the highest in the world.

During the weekend, Maduro declared a 60-day state of emergency, widening his powers to sidestep the legislature, intervene in the economy and control the streets, because of what he called U.S. and domestic plots against him.

Protester Jose Alirio, 48, said he had been a supporter of Chavez but was angry at Maduro. “The bread shops are empty,” said Alirio, a bus conductor. “I'm close to robbing. This man has to fix things or he should …read more

Source: Venezuelan Police Unleash Tear-Gas, Rubber Bullets Amid Violent Anti-Government Protests

    

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Google takes on Echo and Siri with ‘Home’ & ‘Assistant’

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At Google’s annual developer conference, it announced competitors to Amazon’s Echo and Siri with Google Home and Google Assistant.

…read more

Source: Google takes on Echo and Siri with ‘Home’ & ‘Assistant’

    

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Buy Gold and Silver Coins and Bars Now Warns Leading Financial Adviser in Ireland

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By GoldCore

eddiehobbs

Buy Gold and Silver Coins and Bars Now Warns Leading Financial Adviser in Ireland

Buy gold and silver coins and bars for delivery and storage has advocated a leading Irish financial adviser. Eddie Hobbs has given advice to clients and the wider public and says that they should buy silver and gold bullion in order to protect from the coming global financial crisis.

In his most recent research report, ‘Outlook, May 2016’ he said that

“Not holding gold is now, in my opinion, high risk. Gold is the single asset class that protects both against deflation and especially against inflation. The case for gold against this backdrop has strengthened and not weakened.”

Below are the key excerpts from the excellent report regarding gold and silver:

OWN SOME GOLD

As a financial practice we have been recommending gold to our clients since 2005. Gold prices peaked to $1,900 an ounce before declining to the current trading range of between $1,000 and $1,300, i.e. approximately €1,100 at current prices.

The nominal value for gold, if there was a gold standard implemented, would be between $7,000 and $9,000 an ounce, it has been calculated.

This does not mean that gold could go to these prices, but what it does tell us is that it has the potential to go to these values in the event of a loss of confidence in global currencies, especially the US Dollar.

Gold is not an investment, but rather a hedge, and insurance against the potential for substantial falls in other parts of your balance sheet. As a general rule we recommend that between 5% and 10% of liquid assets are held in gold.

We had discontinued recommending clients holding gold from 2012 to 2016 and, once again, it forms the mainstay on all client recommendations for good reason: Gold should be considered a form of money, a The value of gold as against the Euro is outlined in the tables below: 2005 + 36.7% 2011 +14.2% 2006 + 10.6% 2012 + 4.9% 2007 + 18.4% 2013 – 31.2% 2008 + 10.5% 2014 +12.1% 2009 + 20.7% 2015 – 0.3% 2010 + 37.1%

We first started adding gold to client portfolio recommendations in 2005, when gold was about €300 per ounce, and stopped about three years ago. Gold, having spiked up to €1,370, is now hovering around €1,100 per ounce and once again looks like reasonable value set against the above backdrop risk.

HOLD SOME SILVER COINS

Holding a small amount of cash or gold and silver coins at home makes sense provided you’ve allowed for the security risks. This is on the basis that the existing banking system may be closed and that access to cash may be limited as it has been for periods in Greece and in Cyprus after their financial crisis. Although this was not a feature of the financial crisis in Ireland, it did come close to it.

In the event of a general loss of confidence in major currencies, especially the Dollar and secondarily the Euro, holding physical silver coins …read more

Source: Buy Gold and Silver Coins and Bars Now Warns Leading Financial Adviser in Ireland

    

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US Senate Passes Legislation Allowing 9/11 Victims To Sue Saudi Arabia As ’28-Pages’ Leaks Appear

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By Tyler Durden

On Tuesday, the US Senate passed the Justice Against Sponsors of Terrorism Act. The bill allows victims of terror attacks on U.S. soil or surviving family members to bring lawsuits against nation-states for activities supporting terrorism. Senator Charles Schumer (D-NY) explained that the bill is very near and dear to his heart, and would “allow the victims of 9/11 to pursue some small measure of justice.”

Everyone understands that the purpose of the bill, at least in the immediate term, is to enable victims of 9/11 and remaining family members to sue Saudi Arabia. A 60-minutes special on the now infamous “28 pages” renewed interest in the role the Saudi's may or may not have played in the attacks. The segment implied that there are pages of an investigation into the 9/11 attacks that are being hidden from from the public in order to cover up evidence that links the Saudi government to the attacks.

Pushing back on the criticisms that the bill was only passed to specifically target Saudi Arabia (which it was of course), Schumer stated “Look, if the Saudis did not participate in this terrorism, they have nothing to fear about going to court.

President Obama has already said he intends to veto any such bill, and as the bill heads over to the House, it may encounter resistance as well. Speaker Paul Ryan has voiced skepticism about the legislation, saying “I think we need to look at it. I think we need to review it to make sure we are not making mistakes with our allies and we're not catching people in this that shouldn't be caught up in it.”

Saudi Arabia has come out strongly against such legislation, and have threatened to sell $750 billion in US treasury securities and other assets if such a bill is ever passed. While we're not certain if Saudi Arabia has $750 billion to sell, we are certain that as we warned previously, if such legislation does pass, it will open up the US to reciprocal lawsuits which will undoubtedly open many people's eyes to the role the US has played in what others may perceive as terrorism around the world. Something tells us that the bill miraculously won't end up getting enough support to pass the House, and if it does, it certainly will not get enough support to override an Obama Veto once these types of messages have been clearly conveyed to lawmakers.

While that may disappoint many hoping get a glimpse of the 28-pages, as TheAntiMedia's Claire Bernish notes, they may have found a preview of the redcated pages

On Tuesday, the New York Times revealed a document published by the National Archives that appears to offer a glimpse into potentially damning information contained in the so-called ‘missing’ 28 pages concerning the attacks on September 11, 2001.

Those 28 pages are “an entire section within the official report of the Joint Inquiry into Intelligence Community Activities Before and After the Terrorist …read more

Source: US Senate Passes Legislation Allowing 9/11 Victims To Sue Saudi Arabia As ’28-Pages’ Leaks Appear

    

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Saudi Arabia Admits To A Full-Blown Liquidity Crisis; Will Pay Government Contractors With IOUs, Debt

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By Tyler Durden

Previously we documented that as a result of the still low oil prices, largely a result of Saudi Arabian strategy to put high cost producers out of business and to remove excess supply, none other than Saudi Arabia has been substantially impacted, with the result being dramatic state budget, a sharp economic slowdown and mass worker layoffs.

Just three weeks ago we reported that the biggest construction conglomerate in the middle east, the Saudi Binladin Group had announced it would layoff 50,000 workers ot a quarter of its workforce, slammed by the weak economy.

Now, Saudi Arabia has admitted that in addition to acute economic problems, which will manifest themselves most directly in a soaring Saudi debt load…

… and rising default risk…

… Saudi Arabia can also add liquidity worries which just spilled out into the open, because Bloomberg reported moments ago, Saudi Arabia has told banks it is considering paying some outstanding bills to contractors with government-issued bonds, citing people with knowledge of matter say.

Contractors would be able to hold bond-like instruments until maturity.

Bloomberg adds that issuing bonds is one of several options being considered.

Contractors so far received some payments of outstanding bills from government in cash.

Saudi Arabia’s finance ministry declines to comment, while central bank didn’t immediately return calls seeking comment

What this means is simple: as a result of the budget imbalance driven by low oil prices, largely a Saudi doing, the kingdom is forced to give workers an implicit pay cut. It also means that since the government has to “pay” through the issuance of debt, that the liquidity crisis in the kingdom is far worse than many had anticipated.

Which brings up the question of devaluation: how long until the SAR has to follow the Yuan and see a substantial haircut. According to the market, 12 month SAR forward are now trading at a price which implies a 12% devaluation in the coming months.

When that happens is, of course, up to the King Salman.

What it also means is that as Saudi Arabia is now scrambling to generate any incremental cash, it too wil be caught in the deflationary spiral of excess production as it will have no choice but to outsell its competitors, especially those rushing to grab Chinese market share such as Russia, as it seeks to make up with volume what it has lost due to lower prices. It also means that any hopes of a production freeze by Saudi Arabia – and thus OPEC – are hereby snuffed for the indefinite future.

…read more

Source: Saudi Arabia Admits To A Full-Blown Liquidity Crisis; Will Pay Government Contractors With IOUs, Debt

    

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Citi Warns "Something Seems To Be Going On Here" As Rate Hike Fears Storm Back

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By Tyler Durden

It all started with a speech by the Atlanta Fed’s Dennis Lockhart and San Francisco Fed’s John Williams yesterday who said that two rate hikes may be warranted this year. Both Fed presidents suggested that they continue to see two to three rate hikes this year. Lockhart also added that markets are currently more pessimistic than he is, while Williams made mention of June being a live meeting and even went as far as to say that his view of gradual hikes also means 3-4 hikes in 2017.

That promptly led a notable repricing in the implied probability of a June and July rate hike, as well as a steep drop in both stocks and equities, bust most importantly Eurodollar futures which were quick spooked by the sudden shift in Fed rhetoric.

And with the (already quite stale) Fed minutes due later today, as well as all important speeches by Yellen’s right hand men, Fischer and Dudlely tomorrow, the market is clearly on edge. But is there really a risk of Yellen slamming the breaks on the Fed’s relent so soon after the Fed’s April announcement which once again reiterated “global” issues as a stumbling block for further tightening?

Here is the take of CitiFX’ Brent Donnelly who, while skeptical of a surprising U-turn by the Fed admits he has “squared up” all his trades, and is waiting for guidance from both the minutes, but especiall Fischer.

Fool me n times

There is decent downside momentum in the US front end, equities and EM as various advisers, CNBC and the market in general pile on the belief that the Fed has begun a coordinated effort to get June or July priced in so they can hike. There is particular focus on the following events:

Today 14:00 FOMC Minutes
5/19 09:15 Fischer delivers remarks at an event in NYC
5/19 10:30 Dudley remarks on macroeconomic trends at press briefing
6/3 03:45 Evans speaks on Economy and Policy in London
6/6 12:30 Yellen to address World Affairs Council at a luncheon

As ridiculous as I feel getting dragged into yet another round of Fed hype …read more

Source: Citi Warns "Something Seems To Be Going On Here" As Rate Hike Fears Storm Back

    

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Shocking Images Of Record Long Lines At US Airports

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By Tyler Durden

“I always tell people I won’t apologize for doing our job well,
but I do apologize to the people who found themselves stranded in
Chicago yesterday”

– TSA Administrator Peter Neffenger

Two days ago we showed a video that promptly became viral of what was a line at Midway Airport that, somewhat hyperbolically, stretched for miles.

As the WaPo reported, when Sean Hoffman arrived at Midway Airport last week for his flight home to Oregon, he said he was taken aback by the comically long line to get through security. “I got to the end, (and) I was like, holy (expletive), people would probably like to see this.”

It wasn’t just Midway: the carnage continuesd at Chicago’s O’Hare, where as CBS reported, with increasingly long lines to get through security at the city’s airports, many travelers have been missing their flights, and some ended up sleeping at O’Hare International Airport on Sunday. To “help” furious travelers, American Airlines put out cots for fewer than 100 travelers who missed their flights Sunday night due to the long lines at TSA security checkpoints. Adrian Petra said he missed his flight after standing in line for 2 hours and 20 minutes. American Airlines said some 4,000 passengers have missed flights at O’Hare since February because of the long wait times.

The TSA has been urging passengers to get to the airport at least two hours early for domestic flights, and three hours early for international flights. However, some passengers have said that is not enough time to get through security and still make their flight.

One alleged reason behind these lines was that Homeland Security wanted to force more travelers to become “known” to the government via PreCheck programs. Another reason was the TSA’s revolt at the government cutting its funding. According to AP, “in the past three years, the TSA and Congress cut the number of front-line screeners by 4,622 — or about 10 percent — on expectations that an expedited screening program called PreCheck would speed up the lines. However, not enough people enrolled for TSA to realize the anticipated efficiencies.”

In other words, PreCheck has been in a failure. Not enough Americans have been willing to make themselves “known” to FedGov and Homeland Security, and now the epic inefficiency of the TSA – and the government – has been fully exposed.

Meanwhile, the nightmare lines continue, perhaps nowhere more so than at America’s already busiest airport, Chicago’s O’Hare.


As NBC writes, the Transportation Security Administration is flooding Chicago’s O’Hare International Airport with more staff and resources after hundreds of passengers were stranded as their planes took off while they waited in line, local and federal authorities said Tuesday.

TSA Administrator Peter Neffenger apologized at a travel conference Tuesday in Houston to the more than 450 passengers who didn’t make it onto their flights overnight Sunday and Monday as the security screening lines crept along at O’Hare.

“We had a significant challenge in Chicago yesterday,” Neffenger said. “I don’t know what that …read more

Source: Shocking Images Of Record Long Lines At US Airports

    

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China’s Housing Bubble Is So Big, Goldman Will "Need A Bigger Chart"

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By Tyler Durden

One of the stated reasons for the Shanghai Composite’s 1.3% drop (and it would have been worse had the PPT not launched its infamous last minute buying blitz) was also the most amusing one: the stock market bubble is in danger of popping even more as a result of a housing bubble that is now raging at a pace not seen since the last Chinese housing bubble, and thus threatens to soak up even more cash from China’s chronic gamblers-cum-speculators.

So just how high of a housing number did the NBS report that spooked stocks so much? Well, as Goldman summarizes, housing prices in the primary market increased 1.1% month-over-month after seasonal adjustment in April, higher than the growth rate in March. Out of 70 cities monitored by China’s National Bureau of Statistics (NBS), 63 saw housing prices increase from the previous month. On a year-over-year, population-weighted basis, housing prices in the 70 cities were up 6.9% (vs. 5.5% yoy in March). According to an alterantive set of calculations by MarketNews, aggregate home prices rose 12.4% Y/Y in April after rising 10.4% in March. Since both numbers are ridiculously high, we’ll just leave them at that.

However, it was not the overall market bubble that is troubling, but that focused on the most desired, top – or Tier 1 – cities. Here, April price growth was 2.6% month-over-month after seasonal adjustment, vs. 3.0% in March.

But the real shocker was that on a year-over-year price growth in tier-1 cities continue to rise however, reaching 28.3% vs. 26.0% yoy in March. Total property sales in tier-1 cities accounted for around 5% of nationwide property sales in volume terms, and around 15% in value terms (2015 data).

It wasn’t just the top: average property prices also increased in lower tier cities: In tier-2 cities (our own definition; 11 cities), property price growth was 1.3% month-over-month after seasonal adjustment, up from 1.0% in March. Price growth in tier-3 cities was 0.7% month-over-month after seasonal adjustment in April, higher than 0.5% in March, and month-over-month price growth in tier-4 cities was +0.4% month-over-month after seasonal adjustment, vs. +0.3% in March.

Today’s data is consistent with the Soufun property price data for April released earlier. The continued acceleration in prices contributed to the strong growth in investment and construction activities in the property sector.

This repeat housing bubble also explains why China is citing “authoritative figures” in People’s Daily front page stories to warn the population that China is about to crack down on said bubble… just not quite yet.

And the stunning charts:

Home price inflation month over month

And year over year: to show the Tier 1 housing bubble, Goldman will need a bigger chart.

Goldman Compares Tesla To Ford Model T, Upgrades Company To "Buy" With $250 Price Target

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By Tyler Durden

Just hours after Goldman unexpectedly weighed in bearishly on stocks, tactically downgrading global equities to Neutral over the next 12 months “on growth and valuation concerns” adding that “until we see sustained earnings growth, equities do not look attractive, especially on a risk-adjusted basis” in what some see as a potential upward inflection point in the market now that the biggest taxpayer backed hedge fund is buying what its clients have to sell, Goldman decided to unveil another surprise this time upgrading one of the biggest momentum/growth stocks, Tesla, to a buy with a $250 price target.

From Goldman:

Putting in our reservation for the Model 3; upgrading TSLA to Buy

Source of opportunity

We upgrade shares of Tesla to Buy from Neutral with 22% upside to our 6-month price target of $250. While we believe the volume targets are ambitious, Street and investor expectations seem more grounded and following a 23% decline in the share price post the Model 3 unveil, we do not believe Tesla shares are fully capturing the company’s disruptive potential. This combined with a more stable macro backdrop (relative to January/February) and increased confidence in Model 3 demand (from orders and our competitive benchmarking) drives attractive risk/reward. The company has publicly stated it might look to raise capital, and our detailed capex analysis points to capital needs of $1bn.

Catalyst

There are admittedly fewer visible catalysts than before, with the next Model 3 update potentially not until next year. We think the introduction of a mobility service is a possibility, though timing is uncertain as management comments on this have been limited. Ultimately we think the biggest fundamental near-term catalyst will be the ramp of the Model X. While progress appears to have been limited since the 1Q16 update (based on the cadence of April/May deliveries), expectations are low in our view with many on the Sell/Buy sides expecting a cut to Tesla’s 80-90k delivery target. While we acknowledge this risk we view it as discounted and think any positive news on X production would strongly support the shares.

Valuation

Our unchanged 6-month price target of $250 is derived from five probability weighted automotive scenarios plus stationary storage optionality, all of which embed a 20% cost of capital.

As part of its upside justifiction Goldman says the stock has typically seen support below $200.

Curiously, Goldman compares the potential growth rate for Tesla as comparable to that of auto industry monopolist Ford Model T:

It does however, admit that Tesla will see substantial competition from comparable offerings from Audi and other carmakers.

The stock is 3% higher on the upgrade in the premarket. It remains to be seen if Goldman is offloading its existing Tesla exposure.



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