Recent comments by Rajesh

Are we going to see water districts in California sending tribunes to compete in the Thirsty Games?

sdtfs wrote:

Just out of curiosity, do think this hypothetical well adjusted person ever visits this blog?

Not that I know of.

sdtfs wrote:

A well adjusted person doesn't think that everybody else must be wrong.

Sometimes, a well adjusted person is wrong. Then the sociopaths score big.

What we need are robots programmed to take out sub-prime auto loans.

Outsider wrote:

if only schools taught finance, citizens wouldn't get so underwater and broke.

Feature, not bug

Outsider wrote:

You gotta wonder why the hedgies, etc. make such large loans to obviously failing economies

The hedge funds don't buy the bonds initially. But once the bonds are distressed, the hedge fund buys the bonds at a discount, hoping to make a fast buck when the bailout occurs. Except this time the bailout never came. Depending on how deep a discount the fund bought the bonds they still may make a profit, eventually. But their capital is tied up in a low returning asset now.

Outsider wrote:

But isn't life a gamble anyway?

Heads, I win. Tails, you lose?

The unofficial problem state list has increased to one.
Puerto Rico will fail to make Aug.1 payment, signaling default
| Reuters

Puerto Rico will miss a payment on debt due Aug. 1, the governor's chief of staff said on Friday, an event that will be considered a default by investors as the commonwealth lurches towards what could be one of the largest U.S. municipal debt restructurings in history.

The missed payment will mark the first default by the commonwealth and shows the depth of the island's economic and cashflow problems. Puerto Rico Governor Alejandro Garcia Padilla shocked investors in June when he said the island's debt, totaling $72 billion, was unpayable and required restructuring.

According to a 2014 bond offering statement, Puerto Rico has never defaulted on the payment of principal or interest of debt.

The Athens Stock market opens on Monday after being closed for the month of July. I'm thinking the index will close up 5% based on a Greek Debt Deal Soon rumor, so get your buy orders in early.. Snark

You may want to consult poic's newsletter for more details.

I work at nothing all day.

Outsider wrote:

Bank failures are a thing of the past.

It's hard to believe that when CitiGroup is still around.

Pacific Rim free trade talks unlikely to end in deal: sources
| Reuters

alks on a Pacific Rim free-trade pact are unlikely to end in a final deal, sources involved in the talks said on Friday, with a dispute between Japan and the United States over autos, New Zealand digging in over trade in dairy products and no agreement on monopoly periods for next-generation drugs.

Trade ministers from the 12 nations negotiating the Trans-Pacific Partnership, which would stretch from Japan to Chile and cover 40 percent of the world economy, delayed until 4 p.m. local time (10 p.m. ET) a news conference originally scheduled for 1:30 p.m. on the Hawaiian island of Maui.

Three sources involved in the talks said a last-minute breakthrough was unlikely due to issues with dairy and auto trade and a stand-off over biologic drugs, although ministers were due to meet again shortly.

"It would be very difficult to arrive at a deal," one of the officials said, requesting anonymity because discussions were ongoing.

Mike_PNW wrote:

I'm not following you guys

Shale oil drillers selling junk bonds means that falling oil prices not only effect the drilling company but also the funds/firms that bought the junk bonds. Just think of energy junk bonds as the new sub-prime MBS.

We recovered from a crash of an economy based on ever rising house prices by building an economy based on ever rising oil prices.

I think our next bubble will be based on ever longer duration auto loans.

Blackhalo wrote:

Oil is not the economy and cheap oil should allow oil dependent industries to thrive.

If there are leveraged bets on rising oil prices, the losses from falling oil prices is multiplied but the benefits are not.

Euro zone inflation stable at 0.2 percent, still far off ECB target
| Reuters

Euro zone inflation was unchanged in July as a further decline of energy prices negated the impact of more expensive industrial goods and services, leaving the European Central Bank with more work to do to push up prices.

The European Union's statistics office Eurostat said on Friday that consumer prices in the 19 countries sharing the euro rose by 0.2 percent year-on-year in July, as in June.

The flash estimate also matched market expectations, although Thursday reports of a mere 0.1 percent reading in Germany and the return of deflation in Spain in July had suggested the euro zone figure could have been even weaker.

homedad43 wrote:

So, it's really a question of whether I shift those assets from financial assets to hard assets.

Pay off half the mortgage and refinance the other half into a ten year mortgage. This will lower your fixed payments while still giving you cash vvailable for investing in higher return investments down the road.

UPDATE 4-Strong franc leaves Swiss central bank with record first-half loss
| Reuters

The Swiss franc's surge after a currency cap was dropped pushed Switzerland's central bank to a record first half loss, casting doubt on its ability to pay dividends on which some local government shareholders depend.

The 50.1 billion franc ($51.95 billion) loss reported on Friday means the Swiss National Bank will need to make a massive profit in the second half of 2015 if it is to pay out a dividend to owners.

Stakeholders include the federal government and Swiss cantons, or states.

"A dividend for 2015 for the federal government and cantons is ruled out if the SNB's results don't improve by year-end," SNB spokesman Walter Meier said.

The central bank currently carries 27.52 billion francs in distribution reserves. This would be wiped out if full-year results show a similar loss.

The profits of the SNB, which do not impact its monetary policy, have been a delicate subject politically since it paid no dividend in 2013 after a big loss on the value of its gold holdings.

"The dividend really makes a difference," said Credit Suisse economist Lukas Gehrig. "It can tip a budget from deficit to surplus or vice versa."

Gehrig estimated the SNB will need a second-half profit of 25 billion francs for a shareholder payout assuming it also utilises distribution reserves from 2014.

Pacific trade negotiators chase elusive final deal amid tough talks
| Reuters

Pacific Rim trade ministers neared the final spurt of negotiations on an ambitious free trade pact on Thursday, but differences over farm exports and monopoly periods for next-generation drugs were preventing them from reaching an elusive final deal.

Ministers from the 12 countries negotiating the Trans-Pacific Partnership, which would cut trade barriers and set common standards for 40 percent of the world economy, are meeting in Hawaii to try to hammer out a deal.

But major issues are still unresolved, including dairy exports and exclusivity periods for biologic drugs. The United States is pushing for 12 years but Australia and other countries want five.

"They are few but very contested," Mexican Trade Minister Ildefonso Guajardo told Reuters of the outstanding issues.

A final news conference is scheduled for 1330 local time on Friday (1930 ET). Ministers appeared relaxed as they were garlanded with leis at the official photo.

Outsider wrote:

But what about 2% inflation?

0% is the new 2%.

Venezuela currency blues hit U.S. blue-chip companies
| Reuters

Venezuela's currency woes cut nearly $3 billion in profit at U.S. blue-chip companies during the second quarter and prompted Procter & Gamble Co (PG.N) to remove its operations in the South American country from its consolidated financial reports.

More so-called deconsolidation moves and exits from Venezuela are likely to happen during the second half of the year as U.S. corporations grow increasingly frustrated with Venezuela's sinking Bolivar currency, according to analysts and U.S. regulatory filings.

Deconsolidating Venezuelan operations means that business can largely no longer hurt or benefit a U.S. parent company's financial results. Often companies are taking a big one-time charge so that they can ring-fence what is left in Venezuela.

Colgate-Palmolive Co (CL.N) and Goodyear Tire & Rubber Co (GT.O), for example, said they also may deconsolidate their Venezuela operations if economic conditions in that country worsen, according to U.S. regulatory filings made this week.

And Mattel Inc (MAT.O) said it may cease operations in Venezuela altogether if volatility in Venezuela worsens.

With slumping crude oil prices and debt payments coming due this year, the Venezuelan government has fewer U.S. dollar reserves available to meet the private sector’s demands. As a result, entities may have a harder time obtaining U.S. dollars than any time since currency controls were first implemented in 2003, Ernst & Young said in an April report.

Crop price supports are also entitlements. If we're cutting entitlements we should start there. Handing government money to millionaires is interfering with the free market.

Jackdawracy wrote:

Why don't we just allow Puerto Rico to print money like we did last century?

That's so last century.

Wilberforce wrote:

thankfully, Hi Ho Silver, Away! won't collapse because it's got industrial uses.

Making film for consumer cameras?

sum luk wrote:

we might as well offer mortgages @ 5%

A rise in short term rates may not increase long term rates a corresponding amount. See 2003-2005 (aka 'conundrum'.)

The minutes have already said that the committee agrees that the first move should be 25 basis points: from 0.25% to 0.50%.

Greece's Tsipras, hounded by left, vows 'thus far and no further'
| Reuters

Compounding his problems, former finance minister Yanis Varoufakis continues to pour abuse on the agreement in daily media interviews and articles, accusing the creditors of trampling on Greek sovereignty and justifying his own secret planning while in office to set up an alternative currency.

"It was a financial war," Varoufakis told Germany's Stern magazine in an interview released on Wednesday. "Today you don't need tanks to beat someone. You've got your banks."

Fair Economist wrote:

I may have to reconsider my opposition.

Are you reconsidering your objection or your opponents?

KarmaPolice wrote:

They don't have any choice other than to pump or go bankrupt.

They don't have any choice other than to pump or and go bankrupt. Fixed It For Ya

Greek PM says may have to call early election
| Reuters

Greek Prime Minister Alexis Tsipras said on Wednesday he may have to call an early election to bolster a parliamentary majority that has been strained by bailout reforms demanded by creditors.

About three dozen of his 149 lawmakers have refused to back reforms agreed by Tsipras at a European summit on July 13, forcing him to rely on opposition support to push through the legislation in exchange for a third bailout.

"I would be the last person to want elections, if I had the secured parliamentary majority to make it through to the end of the four-year term," he said in an interview with Sto Kokkino radio station.

"But if I don't have a parliamentary majority, we will be forced to go to elections."

Greek PM says will not implement measures beyond those set at summit
| Reuters

Greek Prime Minister Alexis Tsipras said on Wednesday that his government would not implement reform measures beyond what was agreed with lenders at a euro zone summit earlier this month.

"I know well the framework of the deal we signed at the euro zone summit on July 12," Tsipras told Sto Kokkino radio.

"We will implement these commitments, irrespective of whether we agree with it or not. Nothing beyond that."

Tsipras also said the country would report a primary budget balance that breaks even or registers a deficit this year, depending on the financial situation.

Mortgage interest rates are too high!

Japan’s Monthly Retail Sales Fall for Third Time This Year - Bloomberg Business

Sales slid 0.8 percent from May, following declines in January and March. The median forecast in a survey by Bloomberg was for a drop of 0.9 percent.

Weakness in consumer spending adds to risks to the world’s third-biggest economy, whose manufacturing sector has struggled with softness in exports to Asia. The task for Prime Minister Shinzo Abe is to convince companies to continue to boost wages to help consumers cope with a rise in living costs that the central bank sees picking up quickly this year.

“Consumers are hitting the brakes and I don’t think the economy is getting any upward momentum at all,” said Yasunari Ueno, the Tokyo-based chief market economist at Mizuho Securities Co. “I don’t see a strong, sustainable catalyst for growth. Exports are fragile, capital investment is limited.”

Mizuho and JPMorgan Chase & Co. are among those that estimate the economy contracted in the three months through June, ending a two-quarter rebound from last year’s recession. It may have shrunk as much as an annualized 2.5 percent, says Yoshiki Shinke at Dai-ichi Life Research Institute.

Nemo wrote:

I'm thinking HCN's problems are a cyberattack. Probably the Chinese.

Chinese? I'm thinking the NAR. Bill hasn't been optimistic enough for them.

It's not real home prices I worry about. It's the unreal home prices.

Outsider wrote:

the last chair being the throne.

Game of Thrones?

Outsider wrote:

Meh, the uber wealthy will just hire better accountants.

Higher wages for accountants! Inflationary!

Miner Freeport to review all costs, output cuts; shares jump
| Reuters

Freeport-McMoRan Inc (FCX.N) said on Tuesday it is reviewing its mining and oil and gas businesses for significant additional cuts in capital spending and operating costs because of weak prices for copper, molybdenum and gold.

Freeport, the biggest U.S.-listed copper miner, said these plans could result in adjustments to mine plans and future copper and molybdenum production volumes.

It aims to complete this review "promptly" and report back on its plans in the third quarter.

Shares in Arizona-based Freeport, which were higher before the announcement, leapt and were last up 10.2 percent at $12.54 in New York.

Freeport said it has a broad set of natural resource assets that provide "many alternatives for future actions to enhance its financial flexibility". It did not mention asset sales in the statement.

Freeport last Thursday reported an unexpectedly strong adjusted profit as sales of the metals and oil it produces rose, but its hefty debt load swelled to $20.9 billion and it also posted a big net loss.

Translation: we're going to be producing less copper in the future.

Outsider wrote:

This is like one of those perpetual Going Out Of Business sales.

It's only been five years. Kick Me

Remember, Aug 20 is the final deadline for a Greek Debt Deal.
EU/IMF mission chiefs to arrive in Greece for bailout talks on Wednesday
| Reuters

European Union and International Monetary Fund mission chiefs will arrive in Athens on Wednesday for talks on a third bailout program to keep Greece afloat, a finance ministry official said on Tuesday.

Talks on a technical level began on Monday and were expected to be wrapped up by Friday, the official said adding there could be "follow up" discussions over the weekend under exceptional circumstances.

"Both sides aim to reach a deal as soon as possible," the official said.

The creditors sending representatives to the talks comprise of the European Commission, the European Central Bank and the IMF, as well as the euro zone's rescue fund, the European Stability Mechanism (ESM).

Outsider wrote:

I wonder how they tackle the shipping part.

Ask what Brown can do for you.

Antipodes wrote:

There is no normal

That should make the factory really cheap.

Anybody need a car factory? Mitsubishi is selling their factory in Normal.

dilbert dogbert wrote:

If the People's Army sticks with them they can get whatever day they wish.

Cultural Revolution?

Media coverage in July and August of 2015 isn't worth a whole lot. The trick is to peak in September 2016.

The Donalds fifteen minutes may be over by then.

The Texas slump is now modest to moderate?

Mitsubishi Motors plans Japan, South East Asia, Russia output focus after U.S. pullout
| Reuters

Aikawa was speaking at a news conference on Monday after his company confirmed plans to end output at its sole North American plant in Normal, Illinois, and serve the U.S. market from factories in Japan and Thailand. Shares rose more than 5 percent as investors welcomed the switch.

The shift comes as Mitsubishi Motors increasingly focuses output in Southeast Asia, where its pickup trucks and sports utility vehicles (SUVs) are popular. The automaker currently makes cars in Thailand and the Philippines, and said in February it will build a new factory in Indonesia for vehicles such as its Pajero Sport SUV.

Jackdawracy wrote:

Poor hedge funds, they're claiming Puerto Rico is loaded now!

Can't they just loot some Spanish treasure ships? It worked for Captain Jack Sparrow.