LOCKHART: YOUR LOSSES MEAN NOTHING; FOUR RATE HIKES FOR 2016

Tough day in the markets? Fed’s Lockhart doesn’t give a shit. He’s only interested in higher rates, to push back against that tidal wave of inflation that’s beating against our doors.

Federal Reserve Bank of Atlanta President Dennis Lockhart said he favors continued tightening of monetary policy this year, and a global selloff in stock markets is unlikely to affect the U.S. economy.

“When such volatility develops, I think it’s helpful to look at the real economy of the United States as opposed to the financial economy and ask if something is fundamentally wrong,” Lockhart said in prepared remarks in Atlanta. “Are there serious imbalances that make the broad economy vulnerable to foreign shocks? I don’t see that kind of connection in current circumstances. ”

After talking all of that nonsense, he then threw out the boiler plate “we’re soooo data dependent, like OMG.”

“I’d like to be more definitive in predicting future rates, but the degree of uncertainty – particularly as regards global influences on our economy — affirms the wisdom, in my opinion, of letting the economic data do the talking,” Lockhart said.

Markets are soft again, led lower an insane drop in oil of 6%. Biotech is also cremated into skeleton dust, off by 5%.

If you’re looking for a god damned reason why FCX is down 20%, this is probably it.

The mining giant is in trouble again, prompting bond holders to take out insurance, which is causing all sorts of fuckery. It’s almost like a self fulfilling prophecy.

The cost of insuring Glencore Plc’s debt against default rose to a more than six-year high as the price of raw materials such as copper continued to tumble.

The trader and miner’s credit default swaps increased to as much as 946 basis points, the highest since April 2009 on a closing basis, according to data from S&P Capital IQ’s CMA.

Slumping commodity prices have battered Glencore, prompting it to scrap a dividend payment, sell new shares and outline asset sales as it seeks to curb debt to maintain its investment-grade rating. Copper dropped to a six-year low amid a rout in metals as muted Chinese inflation increased concern that demand from the world’s largest buyer of raw materials will slow.

“CDS levels are driven by commodity prices and in the case of Glencore, especially copper,” said Max Mihm, a Frankfurt-based portfolio manager at Union Investment, which holds Glencore bonds among assets totaling about $271 billion. “If prices fall further and stay low Glencore will need to do more to protect its IG ratings.”

No one actually knows how much debt Glencore has, believe it or not. Some say $45 billion, others say $100 billion. Either way, the whole thing is fucked and is spooking stocks.

Equities gave up the rally and have now plunged to extend the nightmare called 2016.

You’re gonna have to make a long list. Lots of filings are coming, most of which are in that darn pesky commodity space that we all loved 5 years ago and went ahead and lent all of that money.

Here is a simple search inside Exodus of companies that Wall Street have declared dead. As you can see, ACI was in there.

By the way, ACI just fucked its bond holders, wiping away $4.5bill in debt.

Arch Coal, Inc. (NYSE: ACI) announced that it has reached an agreement with a majority of the lenders under its $1.9 billion first lien financing facility to significantly restructure the company’s debt load. Arch has entered into a restructuring support agreement with the members of an ad hoc group of lenders that hold more than 50% of the company’s first lien debt. Under the terms of the agreement, the lenders have agreed to support a restructuring transaction that will eliminate more than $4.5 billion in debt from Arch’s balance sheet and position the company for long-term success.

I love how these jackasses are always looking for ‘long term success’, after they lose everyone’s money. Why weren’t they positioning the company for long term success 2,4,6 years ago?

Back to my point. Here’s the list. I always keep a list. The amount of debt to get washed away is on the far right.

It’s the end of an era. Personally, I’m looking forward to PBR’s receivership. It should plunge Brazil into a headlong crisis, reminiscent of the dark ages.

Short and to the point. Copper is at new lows. No one is focused on it because bratty oil is hogging all of the attention. Look at the carnage in FCX–absolutely mesmerizing. I’m sure Carl Icahn would agree; the fuckery taking place in copper is of the black swan varietal.

That being said, there is no decoupling from China at this stage. Wall Street has invested itself, emotionally, to this story line, right or wrong. So, if we’re going to get a rally more than 3 hrs, we’re gonna need to see some China related commodities move higher, namely copper.

Also, we need to see some stability in oil, weakness in the dollar, yen and some leadership out of big tech.

I was once a pretty active investor in a few dry bulk stocks. Some of you might recall my adventures in OSG, FRO and BALT–utter disasters.

One of the CEOs that I’d speak to was a supreme asshole. He used to tell me “if you’re not bullish on China, don’t buy our stock.”

Dry bulk is a China play, especially iron ore. At the moment, China has zero interest in iron ore, with demand staggered to 20 yr lows. Look at the share prices of AKS, CLF and VALE as proof of this theme.

As such, the day rates to ship this stuff to China hit another record low today.

For a while, people ignored the BDI as some sort of oddity, more to do with an oversupply of ships than a China growth concern. However, it appears the BDI was right all along, in predicting a massive Chinese slowdown.

As this Chinese story develops, you should probably keep a closer eye on this, as one of many indicators of how fucked the great walled, dog eating, nation truly is.

Unlike Carl “Permanent Capital, Three Seats on Your Fucking Board” Icahn’s approach to pressuring management to make change, which entails taking a gigantic stake and then making a public mockery of his target, Starboard takes a more docile approach.

They own just 1% of Macy’s shares, yet still believe that stake gives them the right to speak on behalf of other shareholders, to let management know how awful they are and how spinning off the real estate arm could “unlock” secret and hidden shareholder value.

Starboard said spinning off Macy’s real-estate assets could “create meaningful and lasting value for shareholders,” the newspaper reported, citing the letter it reviewed.

The letter suggested two separate joint ventures, one for Macy’s landmark properties like Herald Square and a second for its hundreds of mall locations, the journal said.

Starboard added that Macy’s stock could trade as high as $70, nearly double its Friday closing price of $35.89, the Journal said.

Reuters could not immediately reach Macy’s Inc and Starboard Value for comment outside regular business hours.

Starboard owns a 1.04 percent stake in Macy’s, according to Thomson Reuters data.

In an email reply to the Journal, Macy’s said it is reviewing Starboard’s letter and views expressed by the investment firm are consistent with actions already underway at the company, the paper said.

How many fucking times do I have to see this movie? Shareholder value is never released…ever.

I can’t take any of these clowns seriously anymore. The only point in posting their opinions, which are no better than some random chap on Twitter, is because they tend to make small waves on the day in which they are spouted.

“Given the continued U.S. dollar appreciation, $20-$25 oil price scenarios are possible simply due to currency,” the analysts wrote in the report. “The U.S. dollar and non-fundamental factors continue to drive oil prices.”

All of these analysts were predicting $150 oil forever, just a few years ago. Now they’re all bearish, until they aren’t anymore.

My take is even more severe. I am hoping $15 crude will punch off the faces of every oil man in Saudi Arabia.

China closed their markets down another 5% and Europe grabbed their balls and bought the dip.

It looks like turn around Monday is all but a certainty. The DAX is up nearly 1%, leading the trash from Europe inexorably higher.

Here stateside, SPY futures are tripping over themselves, fixing to force Zerohedge to retire from blogging.

China is getting smoked out, with the Shanghai down 5% and Shenzen off by a mere 6.5%.

The selling worsened after the HIBOR spiked to a new record high, giving the plebeian Chinese farmer one more reason to sell down their overly margined, bullshit, brokerage accounts.

The Hang Seng is off by 2.4%, Brent is off by 2.65% and U.S. futures have reversed lower, now down by 10 on the Spy.

Uwe Parpart (wtf sort of name is that anyway?) tries to weasel his way out of questioning, decrying the U.S. Fed as the sole evil in the world and how China has done nothing wrong, with regard to fucking the entire world over 100x–building ghost cities and wantonly manipulating every aspect of their bullshit economy.

Meanwhile, HIBOR spiked by 939 bps, to 13.4%– new record highs.

HIBOR is like the LIBOR, but without any semblance of dignity. The rate is set by the 20 banks that are authorized by the government to do so. The rate is used for Hong Kong’s absurdly overpriced real estate, valued in the trillions of Hong Kong dollars. The renminbi based HIBOR spread is indicative of CNH illiquidity in Hong Kong, creating an arbitrage. The net net result has been the PBOC intervening to prop up CNH, which is trading at a wide discount to mainland CNY–which has a tightening effect on the economy.

This all sounds really fucked up, like it’s not going to end well. Plus, look at the body language for the China apologist, very sweaty and jittery.