Wednesday, January 18, 2017
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Dr. Fly

18 years in Wall Street, left after finding out it was all horseshit. Founder/ Master and Commander: iBankCoin, finance news and commentary from the future.

Chinese New Home Prices Soar by 12.4% in December — Higher by 25% in Tier One Cities

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What can go wrong, after all? The Chinese government has already informed us their real estate market, which is being driven by records amount of debt, is NOT in a bubble, so relax, chill and enjoy a large overflowing bowl of wanton soup.

Take Larry Hu, for example, economist from Macquarie. He posited, back in October, that the +25% year over year price jumps for Chinese property wasn’t indicative of a bubble…because MUH lack of supply. Perfectly normal stuff.

Source: BBG

Big cities like Shanghai are experiencing net immigration with only limited blocks of land coming on the market. “If Shanghai sells only one parcel of land in a year, the price of the land must be extremely high – this is not a bubble; this is a shortage of supply,” Hu said.

We can revisit a litany of smug remarks by any number of US economists before the US housing market collapsed — almost mocking those who warned against unchecked gains in property prices.

Take, for example, the missives of Jonathan McCarthy and Richard W. Peach — senior economists at the NY Fed.

“Home prices have been rising strongly since the mid-1990s, prompting concerns that a bubble exists in this asset class and that home prices are vulnerable to a collapse that could harm the U.S. economy.

“A close analysis of the U.S. housing market in recent years, however, finds little basis for such concerns. The marked upturn in home prices is largely attributable to strong market fundamentals: Home prices have essentially moved in line with increases in family income and declines in nominal mortgage interest rates.”

Or, we can look back at the advice of Chris Flanagan, head of ABS Research, JP Morgan — and laugh at how stupid he was.

“Based on what we know and see in terms of employment and interest rates, it is extremely difficult to see how five years from now we could be looking back and observing a historical 5-year growth rate of, say, less than 5%. That should be more than adequate to support the continued good credit performance of sub-prime mortgage pools.

“It is important to understand — we can contemplate home price growth rates declining, albeit modestly, but we do NOT envision home prices declining!”

This out of China tonight — record home prices.

Source: Beijing Monitoring Desk
Average new home prices in China’s 70 major cities rose 12.4 percent in December from a year earlier, slowing slightly from a 12.6 percent increase in November, an official survey showed on Wednesday.

Compared with a month earlier, home prices rose 0.3 percent nationwide, slowing from November’s 0.6 percent, according to Reuters calculations from data issued by the National Bureau of Statistics (NBS). Shenzhen, Shanghai and Beijing prices rose 23.5 percent, 26.5 percent and 25.9 percent, respectively, from a year earlier.

Monthly growth in Shanghai and Shenzhen slowed but was unchanged in Beijing as local governments’ tightening measures took effect. China relied heavily on a surging real estate market and government stimulus to help drive economic growth in 2016, but policymakers have grown concerned that the property frenzy will fuel price bubbles and risk a market crash, with serious consequences for the broader economy. Soaring home prices have prompted more than 20 Chinese cities to tighten lending requirements on house purchases, while regulators have told banks to strengthen their risk management on property loans.

Hindsight is 20/20 and it’s never easy to time tops or bottoms. But this is child’s play. None of these gains are due to some grass roots renaissance, thanks to some technological breakthrough or keystone event that caused prices to jump. The price jumps in China are due to record levels of debt, leverage, greed, avarice, and wanton chicanery.

It’s most definitely a bubble — whether it cracks this year or not is anyone’s guess.

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In Light of Chelsea Manning’s Commuted Sentence, It Appears Assange is Willing to Stand Trial in the US

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Just a short while ago, Wikileaks tweeted that Julian Assange would gladly take Chelsea’s place in prison — undergoing extradition to the US — should Obama grant her/him clemency.
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It appears the Ecuadorian embassy in London will soon have one less resident — as the groundwork for a defense appears to be taking shape, at least via statements from Wikileaks and his lawyer.

For the globalist elite, this is a great trade off — and a fucking stupid one for Wikileaks. Mr. Manning had known the risks associated with leaking intel. With Assange locked up in the American prison system, one could expect a sizeable drop in Podesta styled leaks. Alas, all good things must come to an end and I’m sure Assange is sick and tired of living in that god foresaken embassy. Perhaps a little finality and closure is what’s more important to him now, in favor of the movement.

Here is his official statement.

I welcome President Obama’s decision to commute the sentence of Ms. Chelsea Manning from 35 years to time served, but Ms. Manning should never have been convicted in the first place. Ms. Manning is a hero, whose bravery should have been applauded not condemned. Journalists, publishers, and their sources serve the public interest and promote democracy by distributing authentic information on key matters such as human rights abuses, and illegal acts by government officials. They should not be prosecuted. In order for democracy and the rule of law to thrive, the Government should immediately end its war on whistleblowers and publishers, such as Wikileaks and myself.
Mr. Assange’s lawyers also made a statement

Mr. Assange welcomes President Obama’s decision to commute Chelsea Manning’s sentence. Whistleblowers like Chelsea Manning serve the public interest. She should never have been prosecuted and sentenced to decades in prison. She should be released immediately. Likewise, publishers of truthful information serve the public interest, promote democracy, and should not be prosecuted. The war on whistleblowers should end now and should not be continued in the new Administration. For many months, I have asked the DOJ to clarify Mr. Assange’s status. I hope it will soon. The Department of Justice should not pursue any charges against Mr. Assange based on his publication of truthful information and should close its criminal investigation of him immediately.”

According to Assange’s attorney, the US has not made an official extradition request as of now.

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Obama Frees Chelsea Manning: Will Assange Turn Himself Over to U.S. Authorities?

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Well this is interesting.

When I read that Obama commuted the sentence of Chelsea Manning, several things came to mind — mainly because I like to believe in people.

Maybe Obama was a ‘good guy’ after all, and was just kept hostage by CIA fuckers the whole time, the deep state and their pizza parties?

Or, he’s just really sympathetic towards transgenders, mainly because he’s married to one.

Or, Wikileaks has dirt on him or someone in power and a deal was struck.

Or, and this is the final or, he’s taking Assange up on his bargain — exchanging Assange’s freedom for Manning.

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Via NY Times:

Ms. Manning was still known as Bradley Manning when she deployed with her unit to Iraq in late 2009. There, she worked as a low-level intelligence analyst helping her unit assess insurgent activity in the area it was patrolling, a role that gave her access to a classified computer network.

She copied hundreds of thousands of military incident logs from the Afghanistan and Iraq wars, which, among other things, exposed abuses of detainees by Iraqi military officers working with American forces and showed that civilian deaths in the Iraq war were likely much higher than official estimates.

The files she copied also included about 250,000 diplomatic cables from American embassies around the world showing sensitive deals and conversations, dossiers detailing intelligence assessments of Guantánamo detainees held without trial, and a video of an American helicopter attack in Baghdad in two Reuters journalists were killed, among others.

She decided to make all these files public, as she wrote at the time, in the hope that they would incite “worldwide discussion, debates, and reforms.” WikiLeaks’ disclosed them — working with traditional news organizations including The New York Times — bringing notoriety to the group and its founder, Julian Assange.

The disclosures set off a frantic scramble as Obama administration officials sought to minimize any potential harm, including getting to safety some foreigners in dangerous countries who were identified as having helped American troops or diplomats. Prosecutors, however, presented no evidence that anyone was killed because of the leaks.

At her court-martial, Ms. Manning confessed in detail to her actions and apologized, saying she did not intend to put anyone at risk and noting that she was “dealing with a lot of issues” at the time she made her decision.

Testimony at the trial showed that she had been in a mental and emotional crisis as she came to grips, amid the stress of a war zone, with the fact that she was not merely gay but had gender dysphoria. She had been behaving erratically, including angry outbursts and lapsing into catatonia midsentence. At one point she had emailed a photograph of herself in a woman’s wig to her supervisor.

Prosecutors said that by making secret material available for publication on the internet, anyone — including Al Qaeda — could read it. And they accused Ms. Manning of treason, charging her with multiple counts of the Espionage Act as well as with “aiding the enemy,” a potential capital offense, although they said they would not seek her execution.

Ms. Manning confessed and pleaded guilty to a lesser version of those charges without any deal to cap her sentence. But prosecutors pressed forward with a trial and won convictions on the more serious versions of those charges; a military judge acquitted her of “aiding the enemy.”

In her commutation application, Ms. Manning said she had not imagined that she would be sentenced to the “extreme” term of 35 years, a term for which there was “no historical precedent.” (There have only been a handful of leak cases, and most sentence are in the range of one to three years.)

“I take full and complete responsibility for my decision to disclose these materials to the public,” she wrote. “I have never made any excuses for what I did. I pleaded guilty without the protection of a plea agreement because I believed the military justice system would understand my motivation for the disclosure and sentence me fairly. I was wrong.”

What do you think?

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I’M BACK IN TREASURIES, ZERO FUCKS STYLE

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Several of my stocks are getting “TNT’d” today, as the establishment devils prepare to annihilate the stock market when Trump takes power. Like I’ve said to you lads a thousand times heretofore, the post election rally all counted for Obama. Everything past 1/21 will be Trump’s and it will most likely be red hell.

Nevertheless, I’ve dedicated myself towards the purposes of ‘extreme investing’ this year, with very little regards for personal safety or well being. As such, I’ve been buying all of the very worst stocks mankind has to offer — from bulkers to deathly hallowed biotech stocks, to Chinese electric car makers to nuclear energy plays.

Everything I do today shall determine my future. Henceforth, I will either die under the weight of my own stupidity, or ascend to levels unseen before — floating through the air like a winter mist in a long, dark, cavernous, landscape — home of the owls and other predators.

I purchased treasuries today, placing my cash reserves at precisely zero. Incidentally, I bought zeroes too (how lovely!). Zero coupon bonds pay out zero dividends and only give the buyers exposure to price action. It’s pure beta, with zero fucks.

The ticker is $ZROZ and I don’t give a shit what it does tomorrow — so fuck off.

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Here’s How Einhorn is Playing the Trump Presidency

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For the three people who are still interested in what a professional hedge fund manager is buying and selling, I grabbed excepts of Einhorn’s letter which outlined his plans.

Bear in mind, David has a wretched 2015 and made just 8% or so last year. Nevertheless, he’s representative of the establishment fund in the professionally managed space and is always transparent enough to earn my interest.

“While it’s hard to know exactly where President-elect Donald Trump stands from day to day, his main economic policy objective appears to be employment. To that end, he has proposed corporate tax cuts, infrastructure investment and military buildup, combined with anti-immigration policies and trade protectionism,” he added.

To take advantage of Trump’s agenda the hedge fund manager is “long a variety of low multiple, tax-paying, U.S. value stocks.” He noted any corporate tax reduction would benefit companies that pay large amounts of taxes. Einhorn said Amerco, Chemours, Dillard’s and DSW will benefit as examples of “full federal taxpayers with healthy profits.”

The hedge fund manager also discussed these other Trump trades:
Long Apple: “AAPL stands to benefit from repatriation of foreign cash and tax reform.”

Long General Motors: “More jobs, higher income for savers, and higher wages should drive demand for consumer durables, and there is no better consumer durable than an automobile.” The letter noted Greenlight Capital increased its position in GM.

Long gold: “Our sense is that Mr. Trump doesn’t hold any core policy beliefs and is apt to change his mind as he sees fit. This will lead to more political and economy uncertainty,” which is positive for gold, according to Einhorn.

Short “bubble basket”: “Bubble basket stocks mostly don’t have profits, which makes them unlikely to benefit from corporate tax cuts.” Einhorn is short a basket of high-valuation stocks he calls the “bubble basket.” He cited Netflix as a member.

Short oil fracker companies: “Despite repeated claims in their slick presentations, the economics still don’t work when all investment and corporate costs are taken into account.”

Short Caterpillar: “Even in a U.S. infrastructure boom, CAT is overpriced.”

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Trumpflation on Pause Following Trump’s Remarks Complaining Over the Strong Dollar

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Well, well, well. What do we have here?

Didn’t I say a strong dollar was fucking retarded and that rising bond yields would serve as a roadblock for his fiscal stimulus plans?

Good thing Trump has surrounded himself with business savvy Wall Streeters and not a bunch of no nothing rednecks from Alaska.

In a WSJ interview published last night, Trump complained over the strong dollar and then his advisor, Anthony Scaramucci, said we needed an independent Fed — firing warning salvos across our outrageously stupid hawkish Fed.

“Our companies can’t compete with them now because our currency is too strong. And it’s killing us,” Trump told The Journal, referring to competition from China.

His comments have put an end to this stupid Trumpflation trade, at least for today.
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Dollar Plunges, Commodities Soar, Greatness Awaits

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The mood in the peanut gallery of iBankcoin, aka the comments section, has taken on a forlorn quality. I suppose the heightened political commentary, coupled with the frantic nature of those who oppose Trump, has led them to this Morton’s Fork.

I give you fuckers a lot of acrimonious banter and certainly know how to trigger you to the point of cracking. But just know, you’re going to be okay.

If the conservatards survived 8 years with a community organizering, pot smoking, non birth certificate having, person of questionable origins in the White House, you libtards will live through, and flourish, the organge pussy grabbing SNL hating wall builder.

Steaks will be cooked to perfection. Large vats of wine will be consumed. Grandiose market schemes will be plotted at Fly’s blog and we’ll all live happily ever after.

Regarding markets.

I realize Britain just signaled they’d opt out of the single market, but the FX markets are calling bullshit on May’s speech. I viewed it as too conciliatory and pragmatic. Then again, I’m probably too fire and brimstone. Nevertheless, the pound is soaring by 2.7%, leading the way in a dollar rout.

This is having a ripple effect across commodity markets, sans copper. Gold, silver and oil are sharply higher, creating a safe haven for an otherwise weak tape.

I do not expect this weakness to continue, especially with crude up by so much.

Most of my stocks are lower, helped by the fact that I’ve dedicated myself to buying huge pieces of shit gambles. I do, however, like the constructive nature of the $UEC decline, following their share offering.   My latest buy, $DRYS, has gone afoot this morning. No idea what’s going on there.

And lastly, the Charles Manson of biotech, directly responsible for the deaths of 18 people, $ALNY, is bleeding out.

All of this is to be expected, as I’m now playing a game of high stakes Russian roulette.

Pun intended.

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Putin: A ‘Maidan’ Being Organized Against Trump; Creators of Fake Dossier ‘Worse Than Prostitutes’

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The term ‘Maidan’ was used to describe the events that took place in the Ukraine in 2014, where mass demonstrations took place that were of the anti Russian varietal, which led to the fall of the Ukraine government and eventual war with Russia. The term is synonymous with a coup, which is an interesting choice of words when describing the actions of the wild eyed, anti Trump, left here in America — seemingly hell bent to oppose Trump’s rise to power.

In his first remarks to the press since the MI6 dossier on Trump was released, describing Trump as a man who rather enjoys being urinated on by hookers, Putin laid into those who faked the report, calling them worse than prostitutes.

Moreover, he mocked the idea that people think he ordered Russian intelligence to track and monitor Trump, saying they’re not in the business of monitoring every American billionaire.

Lastly, he dropped a mic on Obama, comparing him to the type of person who says goodbye often, but never actually leaves.

Source: Sputnik

“In my opinion, there are several goals, some are obvious. The first is to undermine the legitimacy of the elected president of the United States. Incidentally, in this connection I would like to note that — whether people who do it want it or don’t want — they greatly damage US interests.”

“It seems that they trained this in Kiev and now are ready to organize a ‘Maidan’ in Washington not to let Trump assume office,” Putin said.

“The second goal is to tie the hands of legs of the newly-elect president related to the implementation of his pre-election campaign’s promises to the American people and the international community,” he added.

He also said that reports of alleged Russian dossier on Trump are fake as “our security services do not chase every US billionaire.” “These claims are an obvious fake. Trump, when he came to Moscow a few years ago was not a politician. We did not even know about his political ambitions, he was just a businessman, one of the richest men in America. Is someone really thinking that our intelligence agencies are chasing every American billionaire, or what? Of course not! It’s just a complete nonsense.”

Those who ordered the dossier on the US president-elect are “worse than prostitutes,” Putin said. “Prostitution is an ugly social phenomenon… But people who order such fakes which are now used against the elected president of the United States, fabricate information and use it in the political struggle, they are worse than prostitutes, they have no moral limits,” Putin said.

Putin said that such a situation shows a “significant degradation of political elites in the West, including in the US.”

He said that he didn’t meet Trump and he has no reasons to “attack or defend him.” “I don’t know Mr. Trump, I have never met him, I don’t know what he will do in the international arena, so I have no reason either to attack him, criticize him or defend him.”

Putin noted that there is a category of people who leave without saying goodbye, “out of respect for the present situation,” while others say goodbye all the time, but do not go away. “The outgoing administration, in my opinion, belongs to the second category,” he said.

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Russia Invites Trump to Syrian Peace Talks, Suggests Obama Sat By Watching Terrorists Try to Turn Syria into an Islamist State

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In a departing slap to both John Kerry and President Obama, Russia’s Foreign Minister Lavrov graciously invited the Trump administration to peace talks to be held on 1/23/17.

Moreover, he defended Russia’s actions in Syria, strongly stating that without Russian help Syria would have fell into terrorist hands.

He also said that others sat idle for over a year and a half, as ISIS and other terror groups attempted to overthrow the Assad regime, suggesting they in fact might’ve committed a crime, according to the UN resolution.

Source: RT

“We’re now preparing the Astana meeting. We think it would be the right thing to invite the representatives of the UN and the new US administration to the meeting, taking into account that the meeting will take place on January 23, as planned,” Lavrov said at a press conference summing the results of the Russian diplomacy in 2016.

Russia hopes the incoming Trump administration will accept the invitation.

“We’re counting on the new [US] administration accepting this invitation and being represented by experts on any level they consider possible. It will be the first official contact during which we could begin discussing stepping up the efficiency of fighting terrorism in Syria,” Lavrov added.

“We’re convinced that we did what was right, when we said yes to the lawful request of the government of Syria – a UN member country whose capital was in two to three weeks from falling into the hands of terrorists. And the fact that we managed to throw the terrorists back from Damascus and help the Syrian army liberate Aleppo, I think it’s very important,” Lavrov said.

He noted that Russia’s help was essential “to keep Syria a multinational, multi-confessional, secular state, as the UN Security Council states.”

“All those who spent a year and a half silently watching IS and other militants surround Aleppo maybe committed a crime, as they breached the UN resolution, which stated that Syria should be prevented from turning into an Islamist state,” he concluded.

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