The Analyst Community Has Spoken and They’re Inexorably Bearish on Japan’s New Yield Curve Scheme

The new moves by the BOJ have been widely dismissed as yet another scheme in an effort to create the illusory inflation they so desperately desire. Because of the litany of failed central bank efforts by the BOJ, markets have punished them with a brutal 19% spike in the yen, effectively front running every single thing they’ve tried to do with a mocking disposition.

As usual, the chardonnay drinking analyst across Wall Street and abroad have offered nothing but acrimonious disapproval to Kuroda’s recent gambit.

Deutsche Bank: New policy equates to the end game for the BOJ. Plan will produce an ‘anchor’ for long end nominal yields and borrowing costs will go up. Moreover, he believes Yen will trade 94 v the dollar by year end. Should inflation expectations fall, credit conditions will tighten and growth will be constrained.

Macquarie: Japan’s current account surplus will ‘bedevil’ the BOJ’s flaccid attempts to create inflation. Deflation is entrenched and these new policies are fucking stupid.

Bank of America: They believe the Yen will weaken next year, but first strengthen this autumn. The retarded bank cites confusion as a contributing factor in their asshatted assessment, stating “The newly introduced 10-year yield target and quantitative target cannot coexist in a clean form.”

Credit Suisse: The Swiss banks eviscerates the BOJ plan, saying “We fear the market has trained itself to be very accepting of the BoJ’s more meager offerings and that is why it still tries to beef up the story around the efficacy of BoJ policy in terms of weakening the JPY.”

Crossborder Capital: Placing faith in the BOJ’s ability to shape the yield curve is woefully misguided and is dangerous. “In short, the new BoJ policy will distort the term structure, could strengthen the Yen and will likely underscore the need for even more fiscal support.”

Moreover, they believe central banks are unable to shape the yield curve and and equates it to “squeezing a balloon full of air in one place [it] simply pushes out the balloon somewhere else.”

As many of you know, I’ve been a big advocate of the twitter platform from day 1, having established by handle there in 2009 and used it to grow the overall traffic of iBankcoin with great success.

It’s worth noting, traffic coming into IBC is up 150% year over year from Twitter. Many of our Exodus members found us through Twitter. Purely from an operational perspective, Twitter is the single best news platform in the world. So, having said all that, how in the world are advertisers not chomping at the bit to reserve ads there?

I can only offer my personal experience there as a testimonial to the fact that the company is being managed by a bearded baboon.

RBC Capital downgraded Twitter, Inc. (NYSE: TWTR) from Sector Perform to Underperform with a price target of $14.00 (from $17.00).

Analyst Mark Mahaney commented, “This change is based on our belief that Twitter’s value proposition to advertisers could be waning, based on our recent advertiser survey data. We note that we still believe Twitter is a unique asset with a strong value proposition to core users.”

The analyst listed the following data points on TWTR from a survey of 1,100 advertising professionals:

26% of respondents plan to “significantly” or “modestly” increase their Twitter ad spend vs. 28% who intend to decrease – this is the weakest result we have seen and the first time we have seen a negative skew towards spending.

30% of our survey respondents do not allocate any budget to the Twitter platform, up from 25% in February. And the % who are committing 1%-10% (an experimental level, perhaps) of their Online market budget with Twitter decreased to 54% from 57% last time. Further, we found response rates to bigger Twitter advertising commitments (11% or greater) to be somewhat low, and decreased slightly to 16% from 17% in February and 18% last year.

Only 24% of respondents believe their ROI has improved on the platform versus 21% who think it declined (a negative move from the 29% vs. 21% split seen earlier this year)

When ranked against its peers, Twitter ranked 5th of 7 in terms of ROI to advertisers, behind Google, Facebook, YouTube and LinkedIn, but ahead of Yahoo and AOL

Mahaney’s broad concerns on TWTR are: 1) It’s not clear when/if product/UI changes can stabilize or reaccelerate User & Usage. 2) Channel checks and our last 4 surveys (and particularly our most recent referenced above) don’t provide convincing evidence that a substantial number of advertisers will commit meaningful $s to TWTR.

Without question, RBC is right. If it weren’t for the specter of an imminent buyout by a number of media conglomerates, Twitter’s share price would be appreciable lower.

This is called obsfucation. This alleged tax hike is tailor made for estates in excess of $1b, otherwise known as estates who employ capable tax attorneys who ensure their clients don’t pay taxes.

Many on the right are falling for this ruse and pointing to Clinton’s very obvious socialist beliefs. This cannot be further from the truth. Hillary is an establishment oligarch, who is supportive of the higher, enlightened, portion of our genteel society.

The revision will put a 65 percent tax rate on estates valued at $1 billion or more per couple, the Clinton campaign said Thursday.

In 2016, estate tax returns must be filed for estates valued at $5.5 million or more, according to the Internal Revenue Service. The top rate currently sits at about 40 percent, while Clinton had previously proposed an increase to 45 percent on inherited property.
Sanders, Clinton’s populist primary opponent, had previously proposed that top rate, which the Republican Party quickly criticized Thursday. Clinton’s GOP opponent Donald Trump has called for an outright elimination of the so-called “death tax,” a proposal Clinton and other critics have contended would help Trump himself.

The pair have offered contradicting visions for taxes, with Clinton promising to put a larger burden on the wealthiest Americans through a surcharge and the elimination of loopholes. Trump has touted across the board tax cuts, which could balloon the national deficit, though he has also pledged to cut some loopholes for wealthy Americans.

That article was written by Washpo, an organization that is wholly controlled by the democrat party. This policy represents a last ditch effort to galvanize her otherwise moribund supporters who don’t even bother showing up to her rallies.

Clinton is not a candidate for the people and her policies will only help defend an already entrenched elite establishment from competition.

Former Fed Chairman, Alan Greenspan, the man who brought us the housing crisis, is warning us now that the bond market is a speculative bubble. Like many in the bond bear camp, he offers very little in terms of actual catalyst to sell, other than the fact that prices have gone up.

“Whenever you have a bull market, it looks as though it is never going to turn,” Greenspan, the second-longest serving Fed chairman, said in an interview on Bloomberg Television. “This is a classic case of a peak in a speculative security.”

On the other end of the spectrum is Bill Gross, former King of Bonds. He’s suggesting it’s nearly impossible to fight central banks, especially since they have an unlimited trove of cash and can print and buy print and buy for as long as they deem fit. There aren’t any checks and balances. They simply make the rules.

“The timing of a bond bear market has certainly been delayed,” Gross said in an interview on Bloomberg Television. The BOJ’s plan “provides what I call a soft cap on Treasuries and on gilts and on bunds,” and signals limited downside in terms of price. “You can’t fight central banks.”

In other words, why sell bonds now when rates aren’t going up and the market doesn’t seem to mind either? There is clearly a flight for yield that will continue tp permeate markets. Like it or not, bonds are the main beneficiary of these orphan dollars.

I’ve never seen such a disconnect with reality. Even bringing this up, at a time when markets are at new record highs makes me feel ashamed, almost embarrassed to mention news that is bad. See, I’m not making up the news, just interpreting it. If some people are beguiled by a bearish tone on my blog, I’d like to entreat you to get rid of all the negative headlines out there so that I can join you in your war against the bears.

New record highs and the economic conditions continue to deteriorate.

Does it even matter anymore?

Via Briefing.com

Leading Economic Index Turns Negative in August
The Conference Board’s Leading Economic Index declined 0.2% in August (Briefing.com consensus +0.1%) on the back of an upwardly revised 0.5% increase (from 0.4%) for July. This was the second time over the last four months that the index has been negative.

The key takeaway from the report is that it reflected the lingering disconnect between Wall Street and Main Street. To wit, positive contributions from the financial components were more than offset by large negative contributions from average weekly manufacturing hours and new orders.

The largest drags on the index in August were average weekly manufacturing hours (-0.13 percentage points) and ISM new orders (-0.13 percentage points) while the largest boosts came from the interest rate spread (+0.13 percentage points) and stock prices (+0.05 percentage points).
Notwithstanding the decline in August, the leading economic index increased 0.9% for the six-month period ending in August versus increasing 0.2% during the previous six months.
The Coincident Economic Index increased 0.1% in August after increasing 0.3% in July.
The Lagging Economic Index increased 0.2% in August after increasing 0.2% in July.

Yes, I know she’s a super evil villain. But every once in a while, even super villains do funny shit to engender the adoration of the plebeian class of people. I do not, however, fall in under the auspices of ordinary social order. But I did find this somewhat amusing. Admittedly, I might’ve chuckled once or twice.

I’m a big fan of Between Two Ferns. I’ve seen them all, as it appeals to my dry humor personality.

I did warn you bears it was a trap.

Traders are cavorting outside the NYSE with just shirts on (extra cock shorts). Their entire genitalia exposed, as they traverse the streets of Wall, rolling into the City Square dick guillotines. Any and all bears will rounded up for sentencing and placed into this arcane device. For posterity purposes, just know that it is I who relished in the idea first of killing short sellers with medieval torture devices.

On days like today, with both European and American markets shooting higher amidst a flurry of energetic buying in commodities and bonds, I am proud to call myself a member of the enlightened cadre of money changers. The wall of worry is built with the bones and the marrow of those who dared to tare it down. If you were to ask me ‘Fly, how did that wall get there to begin with?’ I couldn’t tell you. That’s chicken v egg shit, way above my pay grade.

So how am I doing today? Old man good.

Many of you whipper snappers are making, hell, 10-15% in some of your brainless stocks that keep chugging higher. I’m merely partaking in a small enjoyment of gains, long TLT, GLD, AUY, AU and ABX. Some of my gains are being offset by FCX short, which has melted higher due to a renewed bullishness in China. But my overall thesis has proven to be correct. I’m no longer interested in maximum potential gains. Instead, I favour high percentage returns with the least amount of risk. I emphatically believe both bonds and gold represent that narrative supremely.

As mentioned earlier, debts are assets. Good news is good news. Bad news is good news. Up is up and down is up.

Up, up, up.

Glenn Reynolds, conservative law professor and blogger at Instapundit was suspended on Twitter today for tweeting ‘run them down, referring to rioters in Charlotte who blocking roads and beating the shit out of people.

Instapundit is a legendary blog amongst conservatives. He’s been at it a long time and is generally a thorn in the side of the left. This is a major victory for the left. By removing Glenn from Twitter, his sphere of influence lessons and his audience will shrink.

Naturally, people will make this a freedom of speech thing. But the truth is, there is no such thing on platforms like Twitter or Facebook. They can do as they please. The only way to affect change for their policies is to sell their stock or to buy their stock and become activists for change.

If you’re an online publisher or anyone with influence, just know the mood has changed on Twitter and Facebook. Gone are the days when I could threaten and menace people and offer to kick them down sewer pipes for fucking with my flow. Any of the shit I said back in 2009-2014 would get be tossed the fuck off their platform today.

They’re watching you and waiting for you to slip. Don’t give them an opportunity. If you do, you had it coming.

Update: Glenn responds to his suspension.

I had to read this one a few times to understand what they’re trying to scheme up here. If I’m reading this correctly, Italian banks are going to be able to magically disappear annoying bad debts from their balance sheets by securitizing them and also retaining the senior notes, by using government guarantees.

They’ll be able to use it as collateral for deals, effectively turning a debt into a fucking asset. Lolz. How wonderful.

Banca Popolare di Bari SCpA is set to become the first Italian lender to use a government guarantee meant to help banks securitize bad loans for sale. Instead of selling the whole lot, the small cooperative bank plans to retain the bulk of the notes, which it can use as collateral in other transactions, according to people familiar with the matter. At the same time, it will wipe the full 480 million euros ($539 million) of bad loans from its books, said the people, who asked not to be identified because the information is private.

The deal may provide a template for Prime Minister Matteo Renzi’s plan to help banks reduce a pile of about 360 billion euros of troubled loans, equal to a quarter of Italy’s gross domestic product. As part of a deal reached with the European Union in January, banks can bundle bad loans into securities and buy state guarantees for the least-risky portions, provided those notes have an investment-grade credit rating.

“The Popolare di Bari deal will set the benchmark for other Italian lenders planning to structure securitizations with state guarantees on senior-ranking notes,” said Jacopo Ceccatelli, chief executive officer of Marzotto SIM SpA, a Milan-based broker-dealer. “It may make the structure more appealing if banks are allowed to remove bad debt from books while keeping the senior tranche.”

Popolare di Bari got informal approval from PricewaterhouseCoopers LLP and the Bank of Italy to keep the senior portion of its securitization, while also removing the entire face value of the bad loans from its books, the people said. The bank plans to sell the mezzanine and equity tranches by Sept. 29, one of the people said.

“The derecognition from the books of the whole debt makes sense, because the senior tranche is backed by a guarantee that removes any risks linked to loan recoveries,” said Vincenzo Longo, a strategist for IG Markets Ltd. in Milan. “These deals in any case will force banks to write down loans.”

The bad loans underlying Popolare di Bari’s securitization were priced at 150.5 million euros, or about 31 percent of face value, according to Moody’s Investors Service. The 126.5 million-euro senior portion of the securitization is rated Baa1, three levels above junk, and pays 50 basis points more than the six-month euro interbank offered rate, Moody’s said in a Sept. 2 report.

The retained senior tranche can be used as collateral for interbank lending, though not for European Central Bank financing transactions, the people said. The structure could also allow banks to reduce interest payments on senior notes and increase them on riskier tranches to attract outside investors, said Francesco Castelli, a London-based money manager at Banor Capital, which oversees more than 4.5 billion euros.

Popolare di Bari will pay about 3 percentage points for the securitization and state guarantee, the people said. JPMorgan Chase & Co. is arranging the deal, while Prelios SpA reviewed the portfolio and will manage the recovery of loans sold to investors.

The bank plans to securitize another 400 million euros of bad debt by March, with a senior tranche covering at least 80 percent, the people said.

Banca Monte dei Paschi di Siena SpA, Italy’s third-largest bank, plans to securitize 28 billion euros of bad debt for 33 percent of the gross value and may seek a government guarantee on as much as 6 billion euros of the 9 billion euro package.

“Retaining the senior tranche may help sellers to make riskier tranches more appealing to external investors,” Castelli said. “If the Popolare di Bari securitization works, many other Italian banks will look to replicate it on a larger scale.”

What does this mean for stocks? Well, it means Italy is on the verge of pulling a gigantic accounting trick with PWC to get bad debts off the books of banks by securitizing them and then retaining the senior tranche on the books to serve as a fucking asset, all the while the state guarantees losses.

Why doesn’t the bastard banks simply sell or write down the loans and move on?

Banksters gotta bank.

I told you the main beneficiary of an easy Fed would be bonds. Germany yields have plunged back into negative territory, now off by 6 bps to -0.05%.

Treasuries are rallying too, as investors position for the grande finale.

Gold is rallying again too, now higher by 0.45%. Gold traders are somewhat more bedraggled and capricious than the obstinate bond trader, so my larger bet will be for treasuries to rally, although at the moment both trades are equal in size.