British, German, Japanese and American Sovereign Bond Yields Hit Record Lows

Before you head out and buy a bunch of non sense, lIke 3-D printer stocks, consider the following developments in western sovereign bond yields as a precursor to something so heinous, it has taken George Soros out from his crypt to take action in the market.

Yields are plunging because the negative feedback loop is real and in effect.

The Dow is off by 137 and looking uglier than Rocky at the end of part 2.

Instead of battling out a long proxy fight and other suitors, Axiall ceded to WLK and has agreed to be acquired for $33, in an all cash transaction. Previous to this, WLK was moving to remove the Axiall board and fuck everyone at the company. But now they’re all one big happy, insidious, chemical company, striving to provide the world with carcinogens.

The cos have entered into a definitive agreement under which Westlake will acquire all of the outstanding shares of Axiall for $33.00 per share in an all-cash transaction, representing an enterprise value of approximately $3.8 billion, including debt and certain other Axiall liabilities. The transaction has been unanimously approved by the Boards of Directors of both companies and is expected to be completed by the fourth quarter of 2016. The combined company will be the third-largest chlor-alkali producer and the second-largest PVC producer in North America, with expected combined pro forma revenues of $7.6 billion and EBITDA of $1.5 billion for the last 12 months ended Q1 2016. Westlake expects the transaction to be accretive to its earnings in the first year following close and expects annualized cost synergies of ~$100 million based on its estimates.

The transaction is subject to the approval of Axiall’s stockholders and customary closing conditions, including the expiration or termination of the applicable waiting period under the U.S. Hart-Scott-Rodino Antitrust Improvements Act. In conjunction with the merger agreement, Westlake has agreed to withdraw its nomination of a slate of director nominees at Axiall’s upcoming annual meeting of stockholders on June 17, 2016. Westlake has received commitments from its banks in connection with the financing of the transaction.

Westlake noted that, upon completion of the transaction, it looks forward to working with Lotte Chemical on its current joint venture with Axiall, LACC LLC, which is building an ethane-based ethylene plant in Lake Charles, La.
Westlake will hold a conference call to discuss the transaction at 11am ET today.

This is an especially grim warning. I’m surprised the stock isn’t down a lot more on this news. This is a sell.

The company is citing the disastrous decline in revenues due to a slowing PC market.

Welcome to 2005.

As a result of new independent public accounting and other matters, including the review of the results of the Audit Committee’s independent investigation of certain accounting and internal control matters as disclosed in the Current Report on Form 8-K filed on March 1, 2016, the Company has experienced a delay in the completion of its financial statements, Management’s Discussion and Analysis of Financial Condition and Results of Operations and other related components of the First Quarter Quarterly Report. The Company is working to complete the preparation and facilitate the review of its financial statements for the fiscal quarter ended April 30, 2016 and the other portions of the First Quarter Quarterly Report, as well as its Annual Report on Form 10-K for the fiscal year ended January 30, 2016 and its Quarterly Reports on Form 10-Q for the second and third quarters of fiscal 2016, as soon as practicable.

The Company expects net revenue for the first quarter of fiscal year 2017 to be substantially lower than net revenue for the first quarter of fiscal year 2016 (current est for -14.5%). The decrease in revenue was due primarily to lower sales of its hard disc drive storage products which is related to the overall decrease in market demand for PCs and, to a lesser extent, the restructuring of our mobile platform business, which was announced in September 2015. The Company cannot make a quantitative estimate of the expected change in its results of operations for the period indicated at this time as the Company needs to complete the Company’s annual audit of its financial statements for fiscal year 2016 and its quarterly review of its financial statements for the first quarter of fiscal 2017.

I guess our leaders miss having a cold war to stoke military supply sales. In yet another provocation, the United States sent the USS Porter into the Black Sea a few days ago, much to Russia’s chagrin. Moreover, we’re sending two aircraft carriers into the Mediterranean, because war is peace and peace is war.

Russian state media reported that the USS Porter, a U.S. naval destroyer, entered the Black Sea a few days ago on a routine deployment, a move it said raised hackles in Moscow because it had recently been fitted with a new missile system.
U.S. Navy officials told reporters on Wednesday the U.S. military would also have two aircraft carriers in the Mediterranean this month ahead of a July NATO summit in Warsaw as Washington sought to balance Russian military activities.
“Of course, this does not meet with our approval and will undoubtedly lead to response measures,” RIA cited Andrei Kelin, a senior Foreign Ministry official, as saying about the USS Porter’s movements.
He also said the deployment of U.S. aircraft carriers in the Mediterranean was a show of force which in his view deepened a chill in ties between Moscow and Washington caused by Russia’s actions in Ukraine and Syria.
“As regards the overall situation of course there is a definite increase and stoking of tensions in our relations,” he was quoted as saying.
“It is all being done on the eve of the Warsaw NATO summit. It is a show of force.”

No word yet on what those ‘response measures’ will be. Rumor has it, Putin will halt exports of borscht to Brooklyn’s Brighton Beach.

I did  warn you about my blog’s traffic, didn’t I? Watch those numbers surge next week, coinciding with an Exodus oversold signal.

Over in Europe, based on fears that England will leave the pedophilers in the EU, European markets are plunging lower, led by Germany. Additionally, and more to the point, US markets are pointing towards a lower open.

EU membership costs us billions of pounds each year. Let's Leave and spend that money here instead.https://t.co/UuzNZjoRPe

— Nigel Farage (@Nigel_Farage) June 10, 2016

Vimal Gor is calling for the complete annihilation of the Australian dollar, based on the premise that the Australian central bank will be forced to lower rates. In turn, foreign capital will flee and the currency will halve. I cannot get my head around this line of thinking. It just seems retarded to me.

Is Mr. Gor simply smoking opium in his offices, while writing newsletters?

His basis for this destruction is a resumption of the drop in crude back to the lows, followed by a deleterious economic decline, forcing retardation to afflict all of those in charge at the RBA.

Vimal Gor, who oversees the equivalent of about $11 billion in fixed-income assets at BTIM in Sydney, predicted in a newsletter published Thursday that the Reserve Bank of Australia will be forced to cut its cash rate from 1.75 percent to 1 percent or lower. He pointed to what he described as the “weakness” in the composition of Australia’s most recent economic growth figures and the risks posed by the country’s reliance on foreign capital.

“The Australian dollar is at far more risk than most people think,” wrote Gor, the fund manager’s head of income and fixed interest. “A shock downside could easily see it move to 40 cents against the U.S. dollar if current trends continue, commodities fall to lows again and economic growth deteriorates.”

Gor, who said last month that it was a “distinct possibility” the RBA would follow its peers in Europe and Japan in taking rates below zero, has views that are at odds with a majority of analysts. The swaps market is currently pricing in just one quarter-point reduction in the cash rate over the coming 12 months, according to data compiled by Bloomberg.

Gor underscores the risks posed by the twin deficits in Australia’s current account and its budget as the RBA lowers rates and said that the country’s top credit rating is likely to be put on review within the next few months.

“The move towards zero for the RBA will be the first for a country so reliant on foreign capital,” he said. “Low rates in an economy like Australia will genuinely be a test of the stability of an economy that has a very specific relationship with the rest of the world.”

I’m done for the night. I can’t deal with these people any longer.

Oh my, this is the biggest crock of shit since Dennis Gartman said he’d be dead before crude saw $44 again.

Francisco Blanch, head of horseshit at BofA/Merrill, wasted everyone’s time with some capricious headline of a ‘black swan’ event occurring in crude–with his main thesis being Saudi Arabia depegging from the U.S. dollar.

That’s like saying House DuPont would stop trying to control the world or Monsanto the food supply. Outrageously naive analysis by BofA’s chief.

He thinks crude can trade up to $75, but offered no price target for his black swan event–because even he doesn’t take it seriously.

This is some blasphemous shit. Julian Emanuel, clown from UBS, is bullish on gold and stocks–but thinks yields will rise because the economy is getting better. Hello, the economy has been ‘getting better’ since February and TLT is hitting new highs.

Why is TLT hitting new highs? It has nothing to do with economic conditions. Instead, it’s the perversion being purported in Japan and in the ECB with negative rates and ultra-low long dated yields. Have a look.

German 30 yr, yielding 0.62%

Japanese 30 year, yielding 0.30%

U.S. 30 year, yielding 2.48%

Get the picture? Tell me, who in their right minds is gonna take a JGB or a Bund over a Treasury, unless of course you’re a Japanese or German institution or bank mandated to buy them? This arb is live and the US 30 is the only game in town.

Having said that, Julian makes his argument, suggesting stocks will rise, but utilities and consumer staples are extremely vulnerable to pullbacks on any move higher in yields. He’s calling for two (count ’em) Fed rate hikes in 2016.

Fucking delusional.

This is a perfect example of government stupidity. The CEO of CME is threatening, or promising rather, to leave Illinois over a proposed transaction tax that would shatter his business to pieces–leaving it in ruins. The absurdity of the tax proposal lies in the fact that the CME has 28 other data centers, in different states, that would welcome the CME with open arms. The State of Illinois is directly targeting the CME with this tax, in an attempt to raise $12 billion for their financially and morally bankrupt state.

Duffy is calling their bluff and promising to protect his shareholders.

I can hear the violent waves cresting against the ark’s bow as I write this. This harmonious treachery of the sea, wreaking havoc on those without a safe haven. From my vantage point, there are two places to play this market.

1. Board the ark and get long TLT in the hopes that investors continue to arb against German bunds via the purchase of American bonds.
2.  Get in the gold mine and hope central banks will continue to believe they can print their way out of the jam box they find themselves in.

Understand, the circumstances of the market and the central banks are completely different. They have to go to work every day and print money, like morons, then go out and buy junk bonds, crossing their fingers and hoping it will spur inflation. From their perspective, THINGS ARE AS DIRE AS THEY COULD BE. Why else would the BOJ and ECB be QEing themselves to death? If everything was going swimmingly, rates would normalize and central banks would be unwinding their positions, not the opposite.

Going forward, all eyes will be on the currency crosses, the price of commodities and sovereign bonds yields.

Swiss 20 yr bonds are yielding -.04%.

I like U.S. bonds and gold, indefinitely.