The Nation's Financial Condition

[Typical Lax Dad]

I can’t even begin to get into it all but your missing a lot using basic investopedia definitions. Market is 90%+ and regulations includes to be long biased, mutual funds misrepresent all the time, look at angel oak providing daily liquidity, proshares and etf backed funds, fidelity and jeffries trading outside of end of day NAVs and the act from 1940 is designed to protect retail investors and is anachronisic in the modern world. HF are for sophiscates investors (the test of sophistication may leave a lot
To be desired) but there’s a lot your missing. Additionally the definitions you underline and cite as proof say things like “some” while you make blanket assertions of all.

Ares and fortress are public as is blackstone. Got any clue what they are doing in their private credit funds? Look at BDCs like main st, prospect capital, alcentra, capitala (close friend is CFO there). They’re middle market loans to medium sized businesses where the book value often lies on really squishy (bad) quality of earnings reports that come from some top ten (usually like a BDO to grant thornton, large but below the big four) accounting firms.

These are all public vehicles regulated that have tons of risk the rules can’t even begin to cover. And they’re all a symptom of low rates and the retail worlds demand for income when we have QE, rate cuts etc.

Those middle market leveraged deals are great when the goings are great...when they cycle it isn’t pretty. No liquidity means a deep deep discount. The liquidity premium is immense. Frafromgeneva knows of what he speaks.

[foreverlax]

I can’t even begin to get into it all but your missing a lot using basic investopedia definitions. Market is 90%+ and regulations includes to be long biased, mutual funds misrepresent all the time, look at angel oak providing daily liquidity, proshares and etf backed funds, fidelity and jeffries trading outside of end of day NAVs and the act from 1940 is designed to protect retail investors and is anachronisic in the modern world. HF are for sophiscates investors (the test of sophistication may leave a lot
To be desired) but there’s a lot your missing. Additionally the definitions you underline and cite as proof say things like “some” while you make blanket assertions of all.

Ares and fortress are public as is blackstone. Got any clue what they are doing in their private credit funds? Look at BDCs like main st, prospect capital, alcentra, capitala (close friend is CFO there). They’re middle market loans to medium sized businesses where the book value often lies on really squishy (bad) quality of earnings reports that come from some top ten (usually like a BDO to grant thornton, large but below the big four) accounting firms.

These are all public vehicles regulated that have tons of risk the rules can’t even begin to cover. And they’re all a symptom of low rates and the retail worlds demand for income when we have QE, rate cuts etc.

The definition came from the SEC.

I get your points, agreed there are a ton of regulations. TONS!!

As you know, under the Obama administration, there were rules being created to further eliminate the conflicts of interest that plague the industry. Trump comes in and refuses to defend it in court, so it dies. One of the biggest issues - the risk of class actions lawsuit vs arbitration. Are individual investors better protected now vs before the crisis?

Sure there are some good and bad players within the industry, like in every industry.

After close to 40 years in the financial services industry...even though I do believe it's still the best system, it's far from perfect. Guess time has made me very very cynical.

[Farfromgeneva]

I’m with you on the last part except for I’m more like 15ish years in.

I was responding to what I thought felt like conflating hedge funds with the private credit/shadow banking world, which they participate in but isn’t by any means all or even the majority of it these days. Ties back to the repo financing needs. Speaks to a ton of illiquidity in the financial system which is where I worry. Personally, I think the next recession comes in small business and related finance, which won’t be as tragic as the mortgage meltdown, but does tie back to individuals and consumers.

The old theory in SBA backed bonds for why they pick up acceleration in prepayments is:
Year 1 make pmts
Year 2 start using liquidity to continue pmts
Year 3 use credit cards and some helpful funds to repay debt service
Year 4-5 default or voluntary prepayment (the former being more prevalent)

Have to go to pdf from link here but also interesting to some: https://www.sba.gov/document/report--sm ... erformance

Add to this the private middle market lenders, FinTech (Kabbage or can capital which basically failed and was recreated after an issue with their warehouse line w Wells Fargo) etc and that’s my best hunch on what ultimately drives the next recession.

[a fan]

Fascinating stuff. Thank you for sharing this!

[Farfromgeneva]

Apologies, I get on a roll and inertia sets in on these topics for me.

[Trinity]

"At $28 billion so far, the farm rescue is more than twice as expensive as the 2009 bailout of Detroit’s Big Three automakers, which cost taxpayers $12 billion." bloomberg.com/news/articles/… via @BW

[a fan]

But "Socialism is bad".

[Typical Lax Dad]

https://modernfarmer.com/2019/08/farm-b ... et-richer/

[CU88]

The Fed pumps another $105 billion into markets, continuing its streak of capital injections

https://markets.businessinsider.com/new ... 1028549481

[a fan]

Where's farfromgeneva on this.

Yet another move that scares me. Why are these things happening in a, relatively, healthy economy. Setting aside the massive debt that's out there, both public and private, that freaks me out, that is...

[Farfromgeneva]

Driving from Atlanta to suburban Philly LL day only to find my hotel was overbooked somehow and had to drive to another one just crashing soon bc I have to be suited and booted at 7:00 for a presentation...

This was at least signaled last week, appears the Fed is expanding its balance sheet again. Makes no sense to me,the marginal benefit is so slim w where we are at. But in the context of global rates the Fed seems to feel it has to do something even though it’s not part of their dual mandate.

Europe is such a mess, Danske banks ex ceo is running around in hiding, commerzbank is cutting like 20,000 people and still thinks it’s going to take til 2024 to get a suboptimal profitability and Deutsche Bank looks like a science experiment mashing together WaMu/Lehman/Continental illinois/the Hindenburg/titanic on meth. To think I was considering buying their CoCos 2yrs ago looking at the discount px and “juicy” 9.25% yield to maturity...

One of the large Asian banks just had a rogue trader lose $300mm on bad oil bets faster than Ed Norton in Rounders. Credit Suisse is spying on its employees when they leave. Barclays is giving up on consumer banking initiatives they threw billions at. Credit Unions are buying small commercial banks w cash at stupid prices. P&C insurers have been getting crushed for two years like the dude who got stoned in Rimers of Eldritch.

Bloomberg has a piece on family offices stockpiling cash and not having good options right now. When rich guys like that can’t deploy capital it’s not looking good.

Nowhere safe to hide. Even a little scary how much 3G has been liquidating of their Heinz and Burger King positions.

[a fan]

When rich guys like that can’t deploy capital it’s not looking good.

We discussed this for years at Laxpower. The income disparity is inherently dangerous. There aren't enough customers, and the 1% are holding more and more of the spending money. This is inherently bad for economies.

TrumpEconomics is Reaganomics all over again.....give as much money and giveaways to the 1%, and tell Republican voters it will trickle down.

This path would be fine (sort of) if we had a balanced budget. But the US government is borrowing trillions and giving it to the 1%, and hoping that they give it to their workers.

Nope.

[foreverlax]

While the Treasury could attract demand for an occasional sale of ultralong-term bonds, some dealers said that could siphon demand from its regular sales of 30-year bonds—currently its longest maturity. That could lead the government to pay higher interest on its 30-year bonds, of which it sells almost $200 billion each year.

And in the context of a $16 trillion debt load, the potential savings from locking in low interest rates—even for such long periods on billions of dollars of debt—would be fairly modest, dealers said.

Some dealers also perceive business risks from ultralong securities.

“It could stress already stretched dealer balance sheets and put more pressure on trading desks,” said Gennadiy Goldberg, a government-bond strategist at TD Securities. The firm is among a group of 24 domestic and foreign banks, overseen by the Federal Reserve Bank of New York, obligated to bid at every auction of U.S. government securities. Others include Goldman Sachs Group Inc., JPMorgan Chase & Co. and Barclays PLC.

https://www.wsj.com/articles/bond-deale ... 1568890800

[foreverlax]

Fed Loses Control Of Its Benchmark Interest: Repo Rates Through The Roof!

Summary

The Fed's tightening takes months to start to play through the whole economy.

This week's shock wave is the effect of all that tightening now starting to seriously play through the financial system.

With almost $300 billion in overnight Fed infusions, we haven't seen Fed action on this scale since we plummeted into the Great Recession.

[a fan]

Headline: America's factories just suffered their worst month in a decade





https://www.cnn.com/2019/10/01/economy/ ... index.html

[CU88]

Headline: America's factories just suffered their worst month in a decade


https://www.cnn.com/2019/10/01/economy/ ... index.html

And the market adjusts for this news, but who is to blame?

Feds or Democrat's???

Certainly not o d and his tariff's...

[jhu72]

Headline: America's factories just suffered their worst month in a decade


https://www.cnn.com/2019/10/01/economy/ ... index.html

And the market adjusts for this news, but who is to blame?

Feds or Democrat's???

Certainly not o d and his tariff's...

Market down today. I think I heard Trump had already tweeted it was the Democrats' fault.

[runrussellrun]

"At $28 billion so far, the farm rescue is more than twice as expensive as the 2009 bailout of Detroit’s Big Three automakers, which cost taxpayers $12 billion." bloomberg.com/news/articles/… via @BW

Unless an article contains a recipients list and the actual dollar amount the "Farms" get........stop wasting our time.

[Typical Lax Dad]

"At $28 billion so far, the farm rescue is more than twice as expensive as the 2009 bailout of Detroit’s Big Three automakers, which cost taxpayers $12 billion." bloomberg.com/news/articles/… via @BW

Unless an article contains a recipients list and the actual dollar amount the "Farms" get........stop wasting our time.

Here you go slick: https://farm.ewg.org/region.php?fips=OH04

You can search by zip code to see a list of the welfare recipients

https://farm.ewg.org/region.php?fips=20000

[jhu72]

Good news in Federal Court. A judge has ruled that individual states can make their own Net Neutrality rules/laws. This circumvents the republicans attempt to raise everyone's Internet access bills and hand out goodies to their big company buddies. This had been achived at the Federal level under Obama until Trump roled it back and appointed Agit Pai (ex Sinclair Broadcasting employee) to make sure the FCC put the fix in for the monied interests. This will allow the states to individually require unbundling of product offerings by service providers. Something like 40 states already have laws on the books or are in the process of passing such laws.

https://www.msn.com/en-us/news/technolo ... spartandhp