Just the Facts

By: Doug Noland | Sat, Nov 25, 2017
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For the Week:

The S&P500 gained 0.9% (up 16.2% y-t-d), and the Dow rose 0.9% (up 19.2%). The Utilities added 0.2% (up 14.4%). The Banks slipped 0.3% (up 7.8%), while the Broker/Dealers advanced 1.4% (up 21.0%). The Transports rallied 1.4% (up 6.4%). The S&P 400 Midcaps gained 1.0% (up 12.0%), and the small cap Russell 2000 jumped 1.8% (up 11.9%). The Nasdaq100 advanced 1.5% (up 31.8%).The Semiconductors surged 2.7% (up 48.0%). The Biotechs gained 1.6% (up 37.2%). Though bullion fell $5, the HUI gold index added 0.2% (up 3.2%).

Three-month Treasury bill rates ended the week at 124 bps. Two-year government yields increased two bps to 1.75% (up 56bps y-t-d). Five-year T-note yields added a basis point to 2.06% (up 14bps). Ten-year Treasury yields were unchanged at 2.34% (down 10bps). Long bond yields slipped a basis point to 2.76% (down 30bps).

Greek 10-year yields rose 12 bps to 5.29% (down 173bps y-t-d). Ten-year Portuguese yields declined four bps to 1.94% (down 181bps). Italian 10-year yields dipped three bps to 1.81% (unchanged). Spain's 10-year yields fell seven bps to 1.49% (up 11bps). German bund yields were unchanged at 0.36% (up 16bps). French yields slipped a basis point to 0.70% (up 1bp). The French to German 10-year bond spread narrowed one to 34 bps. U.K. 10-year gilt yields fell four bps to 1.25% (up 1bp). U.K.'s FTSE equities increased 0.4% (up 3.7%).

Japan's Nikkei 225 equities index gained 0.7% (up 18.0% y-t-d). Japanese 10-year "JGB" yields slipped a basis point to 0.03% (down 1bp). France's CAC40 rallied 1.3% (up 10.9%). The German DAX equities index recovered 0.5% (up 13.8%). Spain's IBEX 35 equities index increased 0.4% (up 7.5%). Italy's FTSE MIB index gained 1.5% (up 16.5%). EM markets were mixed. Brazil's Bovespa index rose 1.0% (up 23.1%), and Mexico's Bolsa added 0.2% (up 5.0%). India's Sensex equities index rose 1.0% (up 26.5%). China's Shanghai Exchange fell 0.9% (up 8.1%). Turkey's Borsa Istanbul National 100 index dropped 1.6% (up 33.8%). Russia's MICEX equities index gained 1.4% (down 3.2%).

Junk bond mutual funds saw outflows of $209 million (from Lipper).

Freddie Mac 30-year fixed mortgage rates dipped three bps to 3.92% (down 11bps y-o-y). Fifteen-year rates added a basis point to 3.32% (up 7bps). Five-year hybrid ARM rates gained one basis point to 3.22% (up 10bps). Bankrate's survey of jumbo mortgage borrowing costs had 30-yr fixed rates up a basis point to 4.14% (up 6bps).

Federal Reserve Credit last week declined $12.7bn to $4.410 TN. Over the past year, Fed Credit fell $12.2bn. Fed Credit inflated $1.591 TN, or 57%, over the past 263 weeks. Elsewhere, Fed holdings for foreign owners of Treasury, Agency Debt increased $3.2bn last week to $3.372 TN. "Custody holdings" were up $252bn y-o-y, or 8.1%.

M2 (narrow) "money" supply rose $20.2bn last week to a record $13.778 TN. "Narrow money" expanded $642bn, or 4.9%, over the past year. For the week, Currency slipped $0.2bn. Total Checkable Deposits jumped $49.8bn, while Savings Deposits declined $26.1bn. Small Time Deposits added $0.9bn. Retail Money Funds declined $4.2bn.

Total money market fund assets gained $21.9bn to $2.761 TN. Money Funds rose $56bn y-o-y, or 2.1%.

Total Commercial Paper declined $4.0bn to $1.029 TN. CP gained $107bn y-o-y, or 11.6%.

Currency Watch:

The U.S. dollar index dropped 0.9% to 92.782 (down 9.4% y-t-d). For the week on the upside, the Mexican peso increased 1.9%, the Swedish krona 1.8%, the Norwegian krone 1.4%, the South Korean won 1.1%, the New Zealand dollar 1.0%, the Swiss franc 1.0%, the British pound 0.9%, the Brazilian real 0.9%, the Singapore dollar 0.8%, the Australian dollar 0.7%, the Japanese yen 0.5%, and the Canadian dollar 0.4%. For the week on the downside, the South African ran declined 1.1%. The Chinese renminbi increased 0.37% versus the dollar this week (up 5.2% y-t-d).

Commodities Watch:

The Goldman Sachs Commodities Index gained 1.4% (up 8.2% y-t-d). Spot Gold slipped 0.4% to $1,289 (up 11.8%). Silver declined 1.6% to $17.093 (up 7.0%). Crude surged $2.40 to $58.95 (up 9.5%). Gasoline rose 2.5% (up 7%), while Natural Gas sank 9.2% (down 25%). Copper jumped 3.3% (up 27%). Wheat dropped 2.0% (up 7%). Corn was unchanged (up 1%).

Trump Administration Watch:

November 24 – Bloomberg: "The $1.4 trillion item on President Donald Trump's wish list -- a package of tax cuts for businesses and individuals that he has said he wants to sign before year's end -- is headed into the legislative equivalent of a Black Friday scrum next week. Senate Republican leaders plan a make-or-break floor vote on their bill as soon as Thursday -- a dramatic moment that will come only after a marathon debate that could go all night. Democrats are expected to try to delay or derail the measure, and the GOP must hold together at least 50 votes from its thin, 52-vote majority in order to prevail. Their chances improved this week when Republican Senator Lisa Murkowski of Alaska said she'll support repealing the 'individual mandate' imposed by Obamacare -- a provision that Senate tax writers are counting on to help finance the tax cuts."

November 19 – Wall Street Journal (Lingling Wei, Jacob M. Schlesinger, Jeremy Page and Michael C. Bender): "A month before President Donald Trump's visit to Beijing, Chinese officials presented an offer they thought Washington couldn't refuse. China proposed that during the trip, Mr. Trump and his counterpart, Xi Jinping, unveil a plan to widen foreign firms' access to China's vast financial industry, according to people with knowledge of the matter. It was a move previous U.S. administrations had sought for years. To Beijing's consternation, according to the people, Washington wasn't interested. The offer was made a second time during one of Mr. Trump's meetings at the Great Hall of the People. Hours after Air Force One took off from Beijing, China announced the opening on its own. The cold shoulder from the White House reflects a fundamental shift in how the U.S. manages its relationship with China, one that suggests a bold gamble and a rocky road ahead despite the bonhomie of the presidential summit earlier this month in Beijing."

November 21 – Wall Street Journal (Jacob M. Schlesinger and Dudley Althaus): "President Donald Trump's chief trade negotiator issued a downbeat assessment... of efforts to rewrite the North American Free Trade Agreement, decrying 'a lack of headway' and accusing Canada and Mexico of refusing to 'seriously engage' on controversial U.S. proposals aimed at cutting the U.S. trade deficit. U.S. Trade Representative Robert Lighthizer didn't go as far as repeating Mr. Trump's threat to pull out of the 23-year-old pact if the other parties don't agree to American demands to 'rebalance' Nafta to make it more favorable to the U.S. But he made clear he expected them to do so by next month. 'Absent rebalancing, we will not reach a satisfactory result,' Mr. Lighthizer said..."

November 20 – Reuters (Jeff Mason and David Brunnstrom): "President Donald Trump put North Korea back on a list of state sponsors of terrorism on Monday, a designation that allows the United States to impose more sanctions and risks inflaming tensions over Pyongyang's nuclear weapons and missile programs."

November 21 – Politico (Rachael Bade and Heather Caygle): "Concern is growing in both parties that a clash over the fate of Dreamers will trigger a government shutdown this December. House conservatives have warned Speaker Paul Ryan against lumping a fix for undocumented immigrants who came to the country as minors into a year-end spending deal. They want him to keep the two issues separate and delay immigration negotiations into 2018 to increase their leverage... But many liberal Democrats have already vowed to withhold votes from the spending bill should it not address Dreamers..."

November 20 – CNBC (Liz Moyer): "The Justice Department sued... to block AT&T's merger with Time Warner, calling it an 'illegal' combination that harms consumers and stifles innovation, DOJ officials said. AT&T and Time Warner announced their $85 billion merger last year, but the closing has been dragged out by the government's antitrust review. It is the latest salvo in a drama more than one year in the making. Earlier this month, reports circulated that the government had demanded AT&T sell Turner Broadcasting, operator of the CNN news network, or DirectTV as a condition of approval, though the government pushed back at those reports."

China Watch:

November 20 – Bloomberg: "When China unveiled plans on Friday to end the implicit guarantees underpinning asset-management products worth trillions of dollars, it should have been a bombshell for the nation's savers. But for Yolanda Yuan and other individual investors who've piled into AMPs issued by banks, insurers and securities firms, the government's announcement was largely a non-event. The reason: they didn't believe it. 'I don't think any big banks will dare to take the risk of allowing defaults on AMPs, as that will lead to a flood of fund redemptions,' said Yuan, a 29-year-old sales manager at a state-run financial company... She has about 100,000 yuan ($15,069) of personal savings in products covered by the new regulations. Over the past 13 years, assets in Chinese AMPs have swelled from almost nothing to $15 trillion in large part due to one key assumption: that investors would be made whole no matter what happened to the products' underlying assets. Authorities are now moving to quash that belief amid concern that rampant moral hazard is distorting market prices and making the financial system vulnerable to crises."

November 22 – CNBC (Huileng Tan): "China has been pumping a lot of cash into its system to lift market sentiment, as the world's second-largest economy walks a thin line between curbing debt and keeping everything running smoothly. Last week, the People's Bank of China injected cash totaling 810 billion Chinese yuan ($122.4bn) in five straight days of daily liquidity management operations. Those actions, which represented the largest weekly net increase since January, were in part a Beijing response to its 10-year sovereign bond yields spiking to multiyear highs, experts said. 'Surging Chinese government bond yields hit the nerve of policymakers, so in order to further prevent a greater surge, they injected liquidity into the system to improve market sentiment,' said Ken Cheung, a foreign exchange strategist at Mizuho Bank..."

November 22 – Bloomberg: "When Zhou Xiaochuan finally hands over the baton at the People's Bank of China after a decade and a half in charge, his successor will inherit a series of headaches crowned by a debt pile racing toward 300% of output. The next governor will be tasked with not just reining in that leverage without tripping up economic growth, but keeping an eye on accelerating inflation too, all as the institution's role in a complex regulatory structure evolves. As if that wasn't enough, they'll also be tasked with maintaining a stable currency as it opens up to market forces and boosting communication to keep global investors in the loop. 'The PBOC is in more of bind than ever with its monetary policy,' said Zhao Yang, chief China economist at Nomura Holdings Inc. in Hong Kong. 'While it was fine to just look at inflation and economic growth targets in the past, the central bank now has to strike a balance among more targets, some of them conflicting.'"

November 23 – Bloomberg (Justina Lee): "A $2.2 trillion superbank is feeling the pinch of China's bond slump. The yield on China Development Bank's 10-year bonds surged past 5% on Wednesday, bringing the rise this quarter to about 70 bps. More striking has been the jump in its premium over government debt with a similar maturity, given that the state-owned lender is a so-called policy bank that aligns lending with national goals. The spread surged to 1 percentage point this week, up more than a quarter point just this month. The latest increase comes in the wake of tightened rules unveiled this month for CDB and two sister banks, with regulators pushing for strengthened risk management. As these lenders rely on market funding rather than deposits, the bond rout poses an increasing challenge both to their earnings and the credit they extend -- to everything from shantytown redevelopment to President Xi Jinping's signature Belt and Road Initiative across Eurasia."

November 21 - Bloomberg: "China's drive to reduce its debt burden has shifted into a higher gear following the Communist Party's twice-a-decade congress in October. Regulators have set their sights on a key pressure point -- shadow banking -- with rules around asset-management products tightened last week as they seek to bring the market under control. But these popular, high-yielding products are just one slice of China's sizable banking leverage pie, characterized by state media as the 'original sin' of the financial system. Even if credit growth eases, China's debt is on track to be more than three times the size of the economy by 2022..."

November 22 – Financial Times (Emily Feng): "China has halted all approvals for new online lending companies, sending a chill through the country's fast-growing fintech sector, which has produced some of the biggest and most well subscribed offshore listings this year. The regulations came from a new state body set up to regulate internet finance. The rules also forbid fresh approvals of offline microlending companies that lend across provinces. Existing companies will be allowed to continue operating but may see their operations more heavily regulated."

November 22 - Bloomberg (Lianting Tu, Enda Curran, and Emma Dai): "China's deleveraging campaign is finally starting to bite in the nation's corporate-bond market, a shift that will make 2018 a clearer test of policy makers' appetites to let struggling companies fail. Yields on five-year top-rated local corporate notes have jumped about 33 bps since the month began, to a three-year high of 5.3%... Government bonds... had already moved last month as the central bank warned further deleveraging was needed. With more than $1 trillion of local bonds maturing in 2018-19, it will become increasingly expensive for Chinese companies to roll over financing -- and all the tougher for those in industries like coal that the nation's leadership wants to shrink."

November 23 – Wall Street Journal (Nathaniel Taplin): "It is well known that Chinese history is circular—dynasties rise and dynasties fall. So is commentary on the country's economy. In 2008, China was supposedly on the brink of collapse. In 2009, its farsighted stimulus program saved the world economy. And in 2015, its nearsighted stimulus and ham-handed regulation was poised to tank the world economy. Now, according to market consensus, China's problems have largely been fixed and it is poised to dominate the new century. If that sounds suspicious, it should."

November 17 - Bloomberg: "Chinese home prices rose in more cities in October, snapping a three-month decline, a sign the market is stabilizing amid government efforts to curb property speculation. New-home prices, excluding state-subsidized housing, climbed in 50 of the 70 cities tracked by the government, compared with 44 in September, the National Bureau of Statistics said on Saturday. Prices fell in 14 cities from the previous month and were unchanged in six."

Federal Reserve Watch:

November 22 – CNBC (Jeff Cox): "Federal Reserve officials expressed largely optimistic views of economic growth at their most recent meeting but also started to worry that financial market prices are getting out of hand and posing a danger to the economy. Minutes from the Oct. 31-Nov. 1 Federal Open Market Committee meeting indicate members with almost universally positive views on growth — the labor market, consumer spending and manufacturing all were showing solid gains. While there were disagreements on the pace of inflation, and even a discussion about changing the Fed's approach to price stability, the sentiment otherwise was largely positive."

November 21 – Reuters (Jonathan Spicer and Stephanie Kelly): "Federal Reserve Chair Janet Yellen stuck by her prediction that U.S. inflation will soon rebound but offered... an unusually strong caveat: she is 'very uncertain' about this and is open to the possibility that prices could remain low for years to come. A day after announcing her retirement from the U.S. central bank, planned for early February, Yellen said the Fed is nonetheless reasonably close to its goals and should continue to gradually raise interest rates to keep both inflation and unemployment from drifting too low."

U.S. Bubble Watch:

November 20 - Bloomberg (Emma Orr and Scott Moritz): "Some of the biggest landline phone providers in the U.S., from Connecticut to Arizona, are running headlong into a debt crisis after borrowing heavily to add more territory and then failing to escape the industry's decline. CenturyLink Inc., Frontier Communications Corp. and Windstream Holdings Inc. -- the three largest rural phone carriers -- have lost 8% of their lines in the past year alone as people abandon home-phone service for more convenient wireless plans. The companies have merged with equally weak peers and drained dwindling cash reserves in an effort to pay dividends. Their bonds have plunged, with some of Frontier's trading as low as 73 cents on the dollar and Windstream's for as little as 65 cents. CenturyLink is in better shape, but some of its notes now trade at about 95 cents, down from more than 106 cents in July."

November 20 – CNBC (Fred Imbert): "Investors are too optimistic and taking on too much risk in this low volatile environment, setting the stock market up for a potential downfall, according to strategists at... Societe Generale. 'In a goldilocks scenario of low interest rates, abundant liquidity, stable growth and a focus on the 'good' Trump, investors continue to push asset prices, volatility and leverage to historical extremes,' said Alain Bokobza, head of global asset allocation at Societe Generale... 'Yet, a low volatility carry environment with rather extreme positioning is a dangerous combination, which we recently likened to dancing on the rim of a volcano.' Bokobza also compared U.S. stocks to the boiling frog that doesn't realize the trouble surrounding it."

November 20 – Wall Street Journal (Dana Mattioli): "Investment bankers have gotten used to being asked by worried retail-industry chief executives to pitch takeover ideas aimed at fending off Amazon.com Inc. Now the fear has spread to media, health care and many other sectors, where CEOs dread the breathtaking competitive advancements made by not just Amazon but also Facebook Inc., Alphabet Inc.'s Google and Netflix Inc. The result is an explosion of mergers and acquisitions. So far this month, about $200 billion of deals have been announced in the U.S., according to Dealogic. November is on pace to be the second-biggest deal-making month since the firm began tracking them in 1995."

November 23 – Wall Street Journal (Ben Eisen and Chris Dieterich): "Large companies are repurchasing their shares at the slowest pace in five years, as record U.S. stock indexes and an expanding economy propel more money out of flush corporate coffers into capital spending and mergers. Companies in the S&P 500 are on pace to spend $500 billion this year on share buybacks, or about $125 billion a quarter, according to... INTL FCStone. That is the least since 2012 and down from a quarterly average of $142 billion between 2014 and 2016."

November 19 - Bloomberg (Shobhana Chandra, Vince Golle and Jordan Yadoo): "Faster apartment building was instrumental in pulling the U.S. housing market out of its slump a decade ago. Now, that engine is starting to throttle back. A softening in the multifamily segment is something to keep an eye on even as overall homebuilding... is expected to keep moving forward. The supply of apartments and condominiums has surged in recent years as builders responded to rising demand... A Commerce Department report... showed completions of multifamily units in October reached the fastest annualized rate in almost three decades. What's more, the pipeline of apartments under construction is leveling off from a 42-year high reached at the start of 2017."

Central Banker Watch:

November 23 – Wall Street Journal (Tom Fairless): "European Central Bank President Mario Draghi appears to have gone beyond what top officials agreed by stating last month that the ECB's giant bond-buying program will continue beyond next September. The minutes of the ECB's October meeting... show officials were divided over whether to announce a concrete end-date for their bond purchases, known as quantitative easing or QE—and didn't agree to any extension or wind-down phase after September 2018. On the contrary: Some officials warned against leaving the program open-ended, precisely because it might lead investors to believe that QE would be extended again. A fresh extension 'did not appear justified in the absence of major new shocks,' the minutes said."

November 21 – Reuters (Leika Kihara): "The Bank of Japan is dropping subtle, yet intentional, hints that it could edge away from crisis-mode stimulus earlier than expected, through a future hike in its yield target, according to people familiar with the central bank's thinking. With inflation still way below its 2% target, the BOJ sees no immediate need to withdraw stimulus, and regards weak price growth as its most pressing policy challenge. But bank officials are now more vocal on the rising cost of prolonged easing..."

Global Bubble Watch:

November 22 - Bloomberg (Luke Kawa): "'I'm melting, I'm melting!' The dying lament of a Wicked Witch? Yes. But it's also an apt description of what's been happening to bond yields since the financial crisis, according to Bank of America Merrill Lynch. In 2008, there was $28 trillion of debt yielding 4% or more. Now, it's down to $3 trillion. An era of unprecedented monetary accommodation and structurally slower growth has been accompanied by a seemingly insatiable search for yield. Investors will now accept lower relative returns on risky debt or extend duration to clip coupons on sovereign bonds that still aren't anywhere close to pre-crisis levels."

November 21 – Financial Times (Robin Wigglesworth): "The difference between US short and long-term bond yields has dropped below the 1% mark for the first time in a decade, sparking concerns that the post-crisis economic expansion may be approaching its end. The so-called yield curve made up by the US government's borrowing costs is one of the most widely followed financial indicators... On Tuesday the difference between two and 30-year US Treasury yields slipped to 98.8 bps, below the 100 bps (or 1%) level for the first time since November 2007."

November 24 – Financial Times (John Authers): "Bats with Fangs can bite back. For those who do not speak fluent acronym, the Bats are the dominant Chinese internet groups — Baidu, Alibaba and Tencent — while the Fangs are the dominant US players in the internet, a list which includes Facebook, Amazon, Apple, Netflix, Google and some others. They have risen extraordinarily this year, so that all the world's largest seven companies by market value are now either Bats or Fangs. The co-ordinated advance of online companies in the world's two largest economies is one of the phenomena of the age. It can cloud perceptions of China, which is now the fulcrum of world capital markets. China's political model is changing as Xi Jinping asserts greater control over the economy, while its attempts to change its economic model continue — and while officials throughout the Chinese power structure signal their worry about the country's huge overhang of debt."

November 22 – Bloomberg: "Unease rippled through China's stock market on Thursday, with a gauge of large-cap shares plummeting the most since June last year, as investors fretted a bond rout is getting out of control. The CSI 300 Index sank 3%, with losses steepening in the last hour of trading... Industrial & Commercial Bank of China Ltd., Ping An Insurance (Group) Co. and Kweichow Moutai Co. were among the biggest drags on Shanghai's benchmark index. Hong Kong's Hang Seng Index slid 1% from a decade-high."

November 23 – Bloomberg (Chris Bourke): "The party is finally winding down for Australia's housing market. How severe the hangover is will determine the economy's fate for years to come. After five years of surging prices, the market value of the nation's homes has ballooned to A$7.3 trillion ($5.6 trillion) -- or more than four times gross domestic product. Not even the U.S. and U.K. markets achieved such heights at their peaks a decade ago before prices spiraled lower and dragged their economies with them. Australia's obsession with property is firmly entrenched in the nation's economy and psyche, fueled by record-low interest rates, generous tax breaks, banks hooked on mortgage lending, and prime-time TV shows where home renovators are lauded like sporting heroes. For many, homes morphed into cash machines to finance loans for boats, cars and investment properties."

Fixed Income Bubble Watch:

November 20 – CNBC (Patti Domm): "Corporate debt is at its highest level relative to U.S. GDP since the financial crisis, and while not now a concern, that mountain of corporate IOUs could quickly turn into a heap of worry under the right circumstances. Fueled by low interest rates and strong investor appetite, debt of nonfinancial companies has increased at a rapid clip, to $8.7 trillion, and is equal to more than 45% of GDP, according to David Ader, chief macro strategist at Informa Financial Intelligence. According to the Federal Reserve, nonfinancial corporate debt outstanding has grown by $1 trillion in two years."

Europe Watch:

November 23 – Bloomberg (Birgit Jennen and Arne Delfs): "Germany's biggest opposition party said it's open to talks on backing a government led by Chancellor Angela Merkel, offering a way to restore political stability to Europe's biggest economy. Social Democrat Secretary General Hubertus Heil told reporters that the party is ready to start discussions if that's the course that President Frank-Walter Steinmeier, who is trying to broker a deal, decides upon. Heil spoke after an eight-hour meeting of the SPD leadership in Berlin that wrapped up in the early hours of Friday. The SPD is firmly convinced that talks are needed,' Heil was quoted as saying... 'The SPD won't reject such talks.'"

Japan Watch:

November 19 - Bloomberg (James Mayger): "Japan's exports grew by double digits for a fourth straight month in October, continuing the best year-to-date performance since the global financial crisis. The value of exports rose 14% from a year earlier. Imports increase 18.9%."

Emerging Market Watch:

November 20 - Bloomberg (Srinivasan Sivabalan): "Anyone wondering whether there's still a price to pay for political risk need look no further than Turkey. The extra returns investors demand to buy the country's assets are among the highest for developing nations, surpassing the premia for politically troubled peers such as Brazil, South Africa and Mexico. And the gap widened in recent days, after Turkish President Recep Tayyip Erdogan hit out at the central bank's rate policy, reviving concern over government meddling in monetary decisions. That drove the nation's bonds lower, pushing the yield on the benchmark 10-year debt to a record high on Monday, while the Borsa Istanbul 100 Index posted the biggest four-day loss in local currency terms since the aftermath of a failed coup last year."

Geopolitical Watch:

November 23 – Reuters (Noah Browning and Parisa Hafezi): "Saudi Arabia's powerful Crown Prince called the Supreme Leader of Iran 'the new Hitler of the Middle East' in an interview with the New York Times..., sharply escalating the war of words between the arch-rivals. The Sunni Muslim kingdom of Saudi Arabia and Shi'ite Iran back rival sides in wars and political crises throughout the region. Mohammed bin Salman, who is also Saudi defense minister in the U.S.-allied kingdom, suggested the Islamic Republic's alleged expansion under Ayatollah Ali Khamenei needed to be confronted."

November 19 - Reuters (Patrick Markey and Mohamed Abdellah): "Saudi Arabia and other Arab foreign ministers criticized Iran and its Lebanese Shi'ite ally Hezbollah at an emergency meeting in Cairo on Sunday, calling for a united front to counter Iranian interference. Regional tensions have risen in recent weeks between Sunni monarchy Saudi Arabia and Shi'ite Islamist Iran over Lebanese Prime Minister Saad al-Hariri's surprise resignation, and an escalation in Yemen's conflict."

November 22 - Bloomberg (Donna Abu-Nasr): "Lebanese Prime Minister Saad Hariri suspended his resignation after the country's president called for talks on how and why he ended up in Saudi Arabia this month and quit suddenly. Hariri said he accepted a request from President Michel Aoun to delay his departure, temporarily defusing a crisis that's drawn in regional and global powers and rattled investors. The premier, who had said he feared for his life in Lebanon, has denied he was pressured by the Saudis to step down."

November 21 – Reuters (MacDonald Dzirutwe): "Robert Mugabe resigned as Zimbabwe's president on Tuesday, a week after the army and his former political allies moved to end four decades of rule by a man once feted as an independence hero who became feared as a despot."

 


 

Doug Noland

Author: Doug Noland

Doug Noland
Credit Bubble Bulletin

Doug Noland

I just wrapped up 25 years (persevering) as a "professional bear." My lucky break came in late-1989, when I was hired by Gordon Ringoen to be the trader for his short-biased hedge fund in San Francisco. Working as a short-side trader, analyst and portfolio manager during the great nineties bull market - for one of the most brilliant individuals I've met - was an exciting, demanding and, in the end, a grueling and absolutely invaluable learning experience. Later in the nineties, I had stints at Fleckenstein Capital and East Shore Partners. In January 1999, I began my 16 year run with PrudentBear, working as strategist and portfolio manager with David Tice in Dallas until the bear funds were sold in December 2008.

In the early-nineties, I became an impassioned reader of The Richebacher Letter. The great Dr. Richebacher opened my eyes to Austrian economics and solidified my lifetime passion for economics and macro analysis. I had the good fortune to assist Dr. Richebacher with his publication from 1996 through 2001.

Prior to my work in investments, I worked as a treasury analyst at Toyota's U.S. headquarters. It was working at Toyota during the Japanese Bubble period and the 1987 stock market crash where I first recognized my love for macro analysis. Fresh out of college I worked as a Price Waterhouse CPA. I graduated summa cum laude from the University of Oregon (Accounting and Finance majors, 1984) and later received an MBA from Indiana University (1989).

By late in the nineties, I was convinced that momentous developments were unfolding in finance, the markets and policymaking that were going unrecognized by conventional analysis and the media. I was inspired to start my blog, which became the Credit Bubble Bulletin, by the desire to shed light on these developments. I believe there is great value in contemporaneous analysis, and I'll point to Benjamin Anderson's brilliant writings in the "Chase Economic Bulletin" during the Roaring Twenties and Great Depression era. Ben Bernanke has referred to understanding the forces leading up to the Great Depression as the "Holy Grail of Economics." I believe "The Grail" will instead be discovered through knowledge and understanding of the current extraordinary global Bubble period.

Disclaimer: Doug Noland is not a financial advisor nor is he providing investment services. This blog does not provide investment advice and Doug Noland's comments are an expression of opinion only and should not be construed in any manner whatsoever as recommendations to buy or sell a stock, option, future, bond, commodity or any other financial instrument at any time. The Credit Bubble Bulletins are copyrighted. Doug's writings can be reproduced and retransmitted so long as a link to his blog is provided.

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