iBankCoin
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.
Joined Nov 10, 2007
16,222 Blog Posts

Fed’s Kashkari Publishes Essay Explaining His Dissent, Chalking Up Yellen’s Decision Making to ‘Faith’

Serious question, how long until Neel is out at the Fed? Clearly, he’s an independent thinker, espousing views that are very popular on Wall Street. His outward resistance against the Yellen hegemony is both entertaining and refreshing. However, I am skeptical he’ll be able to keep it up without suffering heinous consequences.

In an essay published on Friday, Fed’s Kashkari explained why he dissented against another rate hike, basically calling Yellen a pavement ape thinker.

He categorized the Fed’s decision to raise rates as being ‘faith’ based, saying, “For me, deciding whether to raise rates or hold steady came down to a tension between faith and data. On one hand, intuitively, I am inclined to believe in the logic of the Phillips curve: A tight labor market should lead to competition for workers, which should lead to higher wages. Eventually, firms will have to pass some of those costs on to their customers, which should lead to higher inflation. That makes intuitive sense. That’s the faith part.”

Kashkari added, “Unfortunately, the data aren’t supporting this story, with the FOMC coming up short on its inflation target for many years in a row, and now with core inflation actually falling even as the labor market is tightening. If we base our outlook for inflation on these actual data, we shouldn’t have raised rates this week. Instead, we should have waited to see if the recent drop in inflation is transitory to ensure that we are fulfilling our inflation mandate.”

HAHAHAHAHAHA

Bug eyes tried to describe the downside of being patient, which of course is a scenario forged in fantasy land.

“So what’s the downside risk of waiting to see if the recent inflation moves are transitory? I can only think of one really concerning downside risk: a sudden, rapid unanchoring of inflation expectations. A slow drift upward of inflation expectations doesn’t concern me too much, because I believe the FOMC will respond and keep them in check.

The scenario to worry about is that somehow we break inflation expectations: We wake up one morning and instead of 2 percent, they jump to 4 percent. The FOMC would have to respond very powerfully to re-anchor them at 2 percent. I believe we would do what was necessary, but the short-term economic costs might be large.

Policymakers are concerned about this risk, but it is a risk based on faith in a sudden return of the Phillips curve and not a risk that we can detect in economic, financial or survey data. Because it is based on faith and not on data, it is a difficult risk to quantify.

The outcome that the current FOMC is so focused on avoiding, high inflation of the 1970s, may actually be leading us to repeat some of the same mistakes the FOMC made in the 1970s: a faith-based belief in the Phillips curve and an underappreciation of the role of expectations.”

In the 1970s, that faith led the Fed to keep rates too low, leading to very high inflation. Today, that same faith may be leading the committee to repeatedly (and erroneously) forecast increasing inflation, resulting in us raising rates too quickly and continuing to undershoot our inflation target.”

In all, Neel Kashkari mentioned ‘faith’ 8 times in his explanation for not going along with Yellen’s ruinous plan. Yellen’s Fed eternally BTFO.

Happy Father’s Day.

 

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Hillary Clinton Compares Herself to Wonder Woman

Queen, slay. Get out your fidget spinners faggots, Madam President is Wonderwoman now.

At an award ceremony for Women in Film, Hillary made a nice video presentation for her friend, Elizabeth Banks, comparing herself to Wonder Woman trying to save the world. In a sense, she’s correct, only that she’s working on behalf of foreign interests trying to unseat a democratically elected American President, in order to preserve globalist treaties and economic agreements.

“Something tells me that a movie about a strong, powerful woman fighting to save the world from a massive international disaster is right up my alley.”

Wonder Woman

Wonder Woman

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Reddit to Raise Capital, Valuing Company at $1.7 Billion or 85 Times Sales

Bloomberg is reporting that Reddit was seeking to raise $150m in new funds, placing the company’s valuation at a staggering $1.7b. This sounds like a fucking bargain, especially when considering the immense traffic on the site — which is now ranked #4 in America and #8 worldwide.

However, according to ReCode, the company barely made $20m in revenues in 2016 — which is an utter and complete disgrace.

The last time Reddit raised capital was in 2014, $50m at a $500m market cap.

At $1.7b, private markets, led by Peter Thiel, Y Combinator, Marc Andreesen and the rest of the usual fuckheads, Reddit is valued at 85x sales, or twice that of Snapchat’s.

I can’t wait to buy the IPO.

From a publisher’s standpoint, I have fixed feelings with the platform. On one hand, there isn’t a better place to find news and information than on Reddit these days. It’s even better than Twitter. However, they have super strict anti-spam rules, run by draconian moderators, who’ll ban your site in a blink of an eye if they get to thinking you’re trying to spam them. I get it. Who wants to get bombarded with bullshit content by publishers shilling for clicks? On the other hand, and unlike Twitter, it’s hard to get content shared on the platform, without using cloaking methods that feel nefarious and unbecoming of a gentleman of extreme honor.

In short, I hope the cannibals who run Reddit get maimed in a fire.

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LiteCoin is the Latest Craze in the Cryptocurrency Bubble: CRYPTOFAGS MUST BE STOPPED

Litecoin is higher by 35% over the past 24hrs, pushing its market cap over $2.4b. The entirety of the cryptocurrency space is now worth upwards of $110 billion, which makes it a true systemic risk whenever it implodes.

Here are all the cryptocurrencies valued at more than $1b.

Litecoin enthusiasts attribute the rise thanks to mysterious Chinese and Korean buyers — saying it’s the next Ethereum. Truth is, the reason why the valueless currency is increasing is irrelevant — because when the party ends 90% of these faux stores of value will disappear from the planet.

How do I know this is a bubble? Because assholes like this exist.

Cryptofags need to be stopped. The degeneracy is a bit too much to bear; but I’ll keep an eye on this FUCKERY so that you don’t have to. For this, you owe me both greetings and salutations.

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New Democratic Bill to Establish a ‘National Russian Threat Response Center’, Thrusting America Deeper into Russophobia

Rep. Joe Kennedy introduced a bill to fight back against ‘russian meddling’ that will establish a ‘National Russian Threat Response Center’, whose goal will be to fuck with Russia on a regular basis. What is the point of such an idiotic layer of expensive bureaucracy? After all, isn’t it the job of the lauded ’17 intelligence agencies’ to already do this job? I suppose this is the reward for all of this Russian bullshit, a great big payoff that will employee more deep staters, lavishing them with salaries, pensions, and healthcare benefits. They’ll stop the Russian hackers, once and for all.

“Russia’s attack on our election was not guided by party affiliation but instead by a deep desire to weaken trust in our institutions and shake the very foundation of our democracy,” Rep. Joseph Kennedy of Massachusetts, the bill’s author, said Thursday. “Without a strong, coordinated response from our government, adversarial assaults on our electoral system, economy and national security will only become more sophisticated and sustained in the coming years.”

The bill is designed to amend the National Security Act of 1947, which would be dedicated to Russian and under the auspices of the DNI. It will commingle officers from the State Department, HLS, Treasury, the CIA, and the Pentagon.

“The Center will be responsible for synchronizing and analyzing information pertaining to Russia from across the intelligence community, diplomatic channels and law enforcement agencies,” Mr. Kennedy’s office said. “Using its broad view across the U.S. Government, the Center will develop policy recommendations and identify gaps in the current collection and collation of intelligence pertaining to Russia.”

The bill’s aim, heralded by Kennedy and seven other democratic sponsors, is to disrupt Russian hackers before the elections happen. We must preserve our democracy and its intoxicating hue of abject corruptness, so that future generation of Americans can enjoy it as we have done.

“They do not target Democrats per se, they do not target Republicans per se — they target who they believe will stand up for American interests at the expense of Russian interests,” Mr. Kennedy told the Boston Herald. “We need to make sure that systems are put in place to safeguard our voting systems and our electoral process.

“By uniting our agencies and our allies against this common threat, our Response Center will ensure our government is ready and willing to respond to any future meddling before it takes root,” he said.

Separately, the Senate just passed a bill that would add new sanctions to Russia and strip away the President’s power to remove them. Aside from adding new sanctions, the bill will codify old sanctions into law — making them permanent.

“It’s particularly significant that a bipartisan coalition is seeking to reestablish Congress, not the president, as the final arbiter of sanctions relief, considering that this administration has been too eager — far too eager, in my mind — to put sanctions relief on the table,” Minority Leader Chuck Schumer (D-N.Y.), who pressed hard for the strongest possible anti-Russia bill, said in a floor speech. “These additional sanctions will also send a powerful, bipartisan statement that Russia and any other nation who might try to interfere with our elections will be punished.”

The rationale for the bill, aside from hacking into John Podesta’s email box and stirring up a pizzagate controversy, is in response to their engagement in Syria, helping to defeat ISIS and America’s other terrorist allies in the region, the invasion of Crimea, and of course helping elect Donald Trump.

Rand Paul and Bernie Sanders were the only two who voted against the measure.

Here are the details of the sanctions, which are widespread and significant.

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Barclay’s Upgrades Whole Foods, Says Food Retailers Have ‘Too Much to Lose’ By Not Offering a Competing Bid

Karen Short at Barclay’s took WFM to an overweight today, assigning a $48 price target, thinking that Whole Foods is going to receive a competing offer from WMT, TGT or KR. She blames KR for not acting sooner on Whole Foods as the reason why Amazon jumped into the mix, acquiring the organic food giant. Additionally, she thinks that one of the big three grocers must find a way to steal Whole Foods away from Amazon, or at least make it much more expensive for them to acquire.

In the case of WMT, 50% of their revenues derive from food sales, leaving them exposed in a big way to the Amazon threat.

Source: CNBC

“We assigned a 40 percent probability to this scenario. Our downside scenario is $42, which is equal to Amazon’s current bid…We believe there is little regulatory risk that would prevent an Amazon/Whole Foods deal from being consummated. We assign a 60% probability to this scenario,” the Barclays analysts wrote.

The Barclays analysts noted that very few entities could outbid Amazon, but “many will do anything to either make this acquisition more costly for [Amazon] or prevent the asset from landing in [Amazon’s] lap–because remember –retail strategic bidders would eliminate overhead at [Whole Foods] in the event of an acquisition, Amazon intends to let Whole Foods operate as is,” they wrote. They said a strategic buyer could see synergies of up to $600 million.

Oppenheimer agrees with Barclay’s and the analyst was interviewed today on CNBC to discuss.

The vanguard of the Amazon threat lies in the already razor thin margins in the food space. Whole Foods enjoys the highest EBIT margins in the industry at 8-9%, compared to Kroger’s 5%. It’s very likely that once assimilated into the Amazon matrix, Bezos will slash prices, perhaps down to 2-3% margins, in order to render Kroger entirely helpless to his deflationary vortex — sending them towards an expeditious bankruptcy.

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The Amazon-Whole Foods Deal is Causing a Number of Sectors to Collapse

Now that Amazon is officially hell-bent on crushing its enemies by acquiring WFM for $13.7 billion, the food industry is in flux now — as Wall Street tries to sort out who will be eliminated from the game of play inside of the next two years. In a way, this is the ultimate revenge and ‘fuck you’ from Whole Foods to its competitors. They were the first to commercialize the organic food market, only to see their wonderful margins erode over time, as assholes like WMT/TGT/KR moved in to pick off their customers.

For some reason, Wall Street is construing this deal to be deleterious to overall food sales in general. To be honest, I have to agree. When you’re in the store, you get sold on buying shit, by the smells, the pageantry, the allure of aspiration, the sheer euphoria of being surrounded by a bunch of delicious food — especially near Thanksgiving. While online, people seem to think things through more — which might lead to an overall reduction in volume. Hence, suppliers of food might suffer — especially young start up brands.

Processed and packaged foods
BGS -5.2%
JBSS -5.1%
SNAK -5%
POST -4.5%
HAIN -4.3%
CAG -3.5%
FLO -3.2%

Meat Products
SAFM -3.7%
PPC -2.9%
HRL -2.4%

Food Major – Diversified
LANC -3.5%
CENT -2.9%
ANFI -2.6%

Drug Stores (they sell food too)
WBA -5.4%
CVS -4.3%

Aluminum (less cans, less demand for aluminum, fucked)
CENX -5.5%
AA -3.45%

Grocers (LOLz)
SFS -17%
SVU -12.6%
KR -11.3%
WMK -5.5%
SFM -5.2%

Discount Stores
TGT -7.4%
COST -5.9%
WMT -5%
PSMT -4.4%
DLTR -4%
DG -2.7%

Food Wholesale
UNFI -6.7%
SPTN -4.9%
CORE -3.9%
SYY -3.6%

REKT. The deflationary vortex that is Amazon strikes again.

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Auto Dealership Stocks Plunge on Bank of America Warning of ‘Looming Tsunami’

The grocers aren’t the only ones having a bad day. Take a look at the auto dealerships getting hammered on an analyst downgrade at Bank of America/Merrill — who is warning of a ‘looming tsunami’, lowering expectations and price target.

BofA/Merrill analyst John Murphy downgraded Lithia Motors to Underperform from Neutral and cut its price target to $92 from $106. The analyst lowered US sales and North American production forecasts saying year-to-date sales tracking down 2%, following a likely peak in 2016, and there is a “looming tsunami” of off-lease volumes that will hit the industry in 2018, further pressuring vehicle pricing. As a result, Murphy expects a quick and material downturn in the US auto cycle and lowered estimates across the industry. For Lithia Motors, the analyst said benefits from diversification efforts and leverage is reflected in valuation.

The sector is down 6% for the day.

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Amazon Seeks to Destroy the Grocery Stores — Acquires $WFM For $13.7b

It was a nice business while it lasted, grocery storefags. Now Amazon is going to do to you what he did for the mall: destroy it.

Shares of WFM are set to leap by 30% on news that Amazon will acquire it for $13.7b. As a result, KR, TGT, WMT, SFM and other peers are plunging.

Cramer offers his 2 cents.

“This is such a gamechanger. … They will now dominate food within the next two years,” the “Mad Money” host said on CNBC’s “Squawk on the Street.”

“I’m taking down numbers for everybody who sells food. Everybody. Because you can’t compete [with] Amazon. They will not let you compete,” Cramer said, noting Amazon can now “change the whole paradigm.”

While I love this deal for the convenience of having Whole Foods delivered to my door by a fucking drone, I do worry about what the country will look like in a decade when all of its grocery stores ate shut down thanks to Amazon.

I would not be surprised if WMT, TGT or KR entered a competing bid.

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GE’s Immelt is a Loser, Who Wasted $45 Billion in Buybacks, And Left the Company With a $31 Billion Hole

This article is a corollary that describes everything that is wrong with corporate America — caitiffs basing decisions on share prices gains instead of the safety and security of its employees. In a way, it’s indicative of a larger civilizational struggle, one that juxtaposes the people against the elite.

For years, the CEO of GE had been ignoring GE’s ballooning pension deficit. When the financial crisis hit in 2008, there was little Immelt could do, other than right the ship. But in the years following, he should’ve deleveraged the company. Unlike all of his peers, GE’s balance sheet is fucking screwed, sporting a pension hole of $31 billion — blown out by an astounding $45 billion in buybacks in order to fend off hedge fund activist Nelson Peltz.

What loser looks like

Over the past 5 years, GE’s stock price rose by 70%, which sounds great until you realize it underperformed the S&P by 30% over the same time period.

Due to the low interest rate environment, GE’s pension fund, similar to other funds, only measurably worse, performed dreadfully.

The $31 billion shortfall is the largest in the S&P 500, and 50% more than any other company in the country.

Why would Immelt do such a stupid thing? Because his compensation was tethered to how well the share price performed. He’s walking away with a retirement package upwards of $200m. During his tenure at the company, Immelt made upwards of $30m per annum and upwards of $300m during his time at the company — based upon three criteria.

Operating cash flow
Return on capital compared to peers
Money returns to Investors via Dividends and Buybacks

Stock price performance was also a key factor in triggering stock options. In other words, Immelt’s decision to waste $45 billion in company share buybacks directly correlated with the amount of money he’d receive in compensation. He had a vested interest in doing this, as opposed to ensuring that the pensions of the 300,000 employees of GE were secure. No one on the GE board challenged him; and as a result, the company is on track for their pension hole to swell to $50 billion over the next decade. If the market should ever go down, that pension hole will grow in an exponential manner.

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