The World’s Favorite New Tax Haven Is the United States – Bloomberg 01-27-16

Salient to Investors:

The US is emerging as a leading tax and secrecy haven for rich foreigners because it is resisting new global disclosure standards. The US is one of only a few countries left actively promoting accounts that will remain secret from overseas authorities – with Bahrain, Nauru, and Vanuatu.

Andrew Penney at Rothschild said the US is effectively the biggest tax haven in the world.

Confidential accounts that hide wealth protect against kidnappings or extortion in their owners’ home countries.

Gabriel Zucman at Berkeley said Swiss banks hold $1.9 trillion in assets not reported by account holders in their home countries.

The UN estimates at least $1.6 trillion in illicit funds are laundered through the global financial system each year.

Read the full article at http://www.bloomberg.com/news/articles/2016-01-27/the-world-s-favorite-new-tax-haven-is-the-united-states

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Opinion: Investors avoiding both stocks and bonds looks bearish for market – MarketWatch 11-05-15

Salient to Investors:

Conrad de Aenlle at Conrad de Aenlle’s Funds for Thought writes:

Louise Yamada at Louise Yamada Technical Research Advisors says ICI’s report of net withdrawals from both stock and bond mutual funds in July and August is a pattern not seen since the fall of 2008.

Todd Rosenbluth at S&P Capital IQ says mutual fund withdrawals around August were soaked up by ETFs: mom-and-pop investors accounted for the majority of mutual fund flows and institutions were behind the ETF flows – The trend away from mutual funds and toward ETFs represents an ongoing shift to passive products as people do not want to pay up to lose money.

Morningstar found 5 prior months over the last decade when investors had net withdrawals from stock mutual funds and ETFs combined, and from bond funds: 2 coincided with minor blips in long bull markets, and 3 occurred just before or in the middle of corrections or bear markets.

Read the full article at http://www.marketwatch.com/story/investors-avoiding-both-stocks-and-bonds-looks-bearish-for-market-2015-11-05

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Inflation Targeting Unmasked – The August CPI Crushed The Case For ZIRP – David Stockman’s Contra Corner 09-17-15

Salient to Investors:

David Stockman writes:

The August CPI gives the Fed an excuse to keep shoveling free money into the casino. No Fed rate increase would be a clear indication of its fear of reining in Wall Street’s greedy and gamblers and that Keynesian central banking in the last two decades has been a fraud.

A market correction is long overdue and eventually unavoidable.

The BLS inflation report shows that prices of commodities and goods are falling due to global deflation, while the cost of shelter and domestic services is briskly rising: averaging the two is purely a statistical accident, and outside of the Fed’s ability to shape. Falling prices for commodities and goods cannot be countered by supplying more free money to the Wall Street casino.

The Fed’s 2% inflation target is arbitrary and there is no historical evidence that it is connected with economic growth or gains in wealth and living standards.

7 years of interest rate repression has fueled a near 45% rise in direct auto credit outstanding and even bigger rise in new leased vehicles, resulting in a flood of used cars, prices of which have fallen 1.5% during the past year, while new car prices have remained flat due to excess global production capacity.

Since 2000, inflation has outstripped real household incomes. The index for services less energy services has risen by at a 2.6% compound rate, with no deceleration evident. More than 66% of living costs for average households comprise shelter, transportation, medical care, education and entertainment; which have risen at annual rates of 3.1%, 2.1%, 2.2% 3.5%, and 2.7% respectively.

China is the epicenter of the global deflation and the leading edge of the collapse in the petro-states, commodity exporters and mercantilist exporters which fed on China’s boom. By pegging their currencies at artificially low exchange rates, they created huge current account surpluses which they then invested back into developed market stocks and bonds.

The US economy cannot be decoupled from the global deflation. Dollar denominated assets – treasuries, ETFs and individual stocks – were financed not out of savings from current global production, but from central bank fiat credit.

Saudi Arabia’s $350 billion annual surplus has become a deficit, where it will remain for years as world oil demand falters and supply increases from investments.

Financial markets will be hurt by petro states liquidating their assets to cover current account deficits.

Read the full article at http://davidstockmanscontracorner.com/inflation-targeting-unmasked-todays-cpi-crushed-the-case-for-zirp/?utm_source=wysija&utm_medium=email&utm_campaign=Mailing+List+Mid+Day+Friday

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Why Hedge Fund Hot Shots Finally Got Hammered – David Stockman’s Contra Corner 09-06-15

Salient to Investors:

David Stockman writes:

A growing chorus of investors blamed last week’s stock market sell-off on esoteric but increasingly influential trading strategies pioneered by hedge funds like Bridgewater.

Hedge fund performance has benefited from broken capital markets rigged by the Fed. Thesecasino gamblers bought every one of the 30 identifiable dips in the SPX since the March 2009 low, confident that the Fed would intervene to keep the stock averages rising. A few ten thousand punters have made trillions in return for little economic value added.

Bridgewater profited by buying more stocks when prices were rising and equity volatility was falling, and more bonds when prices were dipping and equity volatility was rising as investors retreated to fixed income securities. Pumping out volatility and milking the market on alternating strokes is only possible when the regularity of market waves are unnatural, engineered by a Fed held hostage to the casino gamblers. However, bond prices in August did not rise like they were supposed to when the stock market dropped 12%, so Bridgewater’s entire profits for the year were wiped out in a few days. Bridgewater now pleads for QE4, while Goldman Sachs said the latest jobs report calls for no rate increase in September, despite the failure of 80 months of ZIRP.

China’s 20-yr long, $4 trillion cumulative bids for US treasuries and DM fixed income securities has now become “offers”, and which will prove to be one of the great financial pivots of history. China bought US debt to peg the RMB exchange rate and keep its exports humming, but eventually was forced to let the RMB slowly rise against the dollar, drastically accelerating global fund inflows into the Chinese economy. Deng’s naivete unleashed a credit monster that sucked in capital and resources from all over the globe into a domestic spending boom that was inherently unstable. To prevent the RMB exchange rate from plunging and inciting even more capital flight, the PBOC has now shifted into reverse in a large, sustained and strategic way.

If the market holds above next week’s retest of the SPX 1967 low, the Fed will likely announce a “one and done” move in September, and if the market does not hold this low, then the Fed will defer its rate rise: both outcomes will cause a short-lived, half-hearted rally, but not another leg higher in the phony bull market because the global “dollar short” is unwinding and China’s house of cards is cratering, causing economies to plunge throughout the China supply chain.

Read the full article at http://davidstockmanscontracorner.com/why-hedge-fund-hot-shots-finally-got-hammered/?utm_source=wysija&utm_medium=email&utm_campaign=Mailing+List+Sunday+10+AM

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Bulls Set To Be Tasered Again By Severe Downleg – Clive Maund 09-06-15

Salient to Investors:

In a bear market poised to plunge again. Markets drop twice as fast as they rise because fear is a stronger emotion than greed.

Bearish technicals:

  • Broken down from the 6-year bearish Rising Wedge pattern.
  • First bearish moving average cross for 4 years
  • Volume on the recent plunge was the heaviest for 4 years

Bearish fundamentals:

  • Global debt saturation and sovereign debt crisis in Europe
  • Insoluble debt crisis in an aging Japan
  • Ballooning US deficits
  • Bursting debt bubble in China
  • Collapsed commodity markets
  • Collapsing Emerging Markets
  • Record margin debt
  • Huge derivatives pyramid
  • A world in denial

The Fed wants to raise interest rates to start to reduce its huge balance sheet and head off a collapse of the dollar and Treasury market, but doing so would collapse the stock market and create a depression.

Market will crash whether or not the Fed raises rates in September.

The Fed would sacrifice the stock market in order to save the dollar and bond market – the resulting rate differential would induce fund inflows into the US and create a cushion: and end up supporting the stock market regardless of the state of the economy.

Read the full article at http://www.clivemaund.com/article.php?art_id=3559

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China Boosts Efforts to Keep Money at Home – The Wall Street Journal 09-01-15

Salient to Investors:

  • Many investors move money out of China in ways that circumvent its tough limits.
  • China’s foreign-exchange reserves reached nearly $4 trillion in 2014 but have dropped by more than $341 billion since.
  • CBRE estimates that Chinese investment in overseas commercial properties totaled $6.5 billion in half1 2015 vs. $10.5 billion for all of 2014.
  • Goldman Sachs said stability of the yuan and capital outflows are their biggest China concerns and estimated $150 billion to $200 billion has left the country since the August 11th  yuan devaluation.
  • Zhu Haibin at JP Morgan Chase estimates $340 billion left China from Q3, 2014 to Q2, 2015  vs. $264 billion according to Larry Hu at Macquarie.
  • Zhang Ming at Chinese Academy of Social Sciences said capital outflows could worsen in Q3, 2015 because of deprecation expectations for the renminbi.
  • Standard Chartered said polled Chinese companies expect the yuan to weaken with a limited boost to business prospects.
  • Andy Seaman at Stratton Street would not advise shorting the yuan given China’s stated intention to open up the domestic capital markets over time.
  • Zhong Zhengsheng at Hua Chuang Securities said China’s recent efforts to discourage betting against the yuan is a step back from China’s market-oriented revision.
  • Tommy Ong at DBS Bank said Chinese central bank wants to damp short-term speculation of renminbi selling.

Read the full article at http://www.wsj.com/articles/china-boosts-efforts-to-keep-money-at-home-1441120882

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Taxed Out of Mansions, London Investors Head Down-Market – BloombergBusiness 08-06-15

Salient to Investors:

Even the wealthiest property investors are fleeing London’s best districts due to higher sales taxes of up to 12% on the amount above £1.5 million.

Camilla Dell at Black Brick Property Solutions said clients are spending an average of £2 million less on each transaction this year and are buying in less expensive neighborhoods because taxes are less when splitting the money between several properties in the sub-1 million-pound market.  Dell said prices below the tax threshold of £937,000 pounds are climbing and owner-occupiers are being penalized.

Lonres said sales of London homes for £2 million or more fell by a third in Q2 from a year earlier and a buyers’ market has returned, with no improvement in market conditions seen before September.

Johnny Morris at Hamptons Intl said £500,000 apartments in London typically yield 4% to 5% versus 2% for a luxury home in London’s best districts.

137 homes in Kensington & Chelsea were sold in April, the lowest monthly total since March 2009.

Knight Frank said 2015 prices through July dropped 2.3% in Chelsea, 2.1% in Knightsbridge and 0.6% in Notting Hill.

Giles Hannah at Christies Intl Real Estate said the decline in prime central London is temporary and prices will eventually continue to rise – the market has historically recovered from shocks before.

Savills said their average sale of a London home fell by £200,000 to £3 million in half1, 2015 vs. half1, 2014, and the number of transactions fell by 15%.

Read the full article at http://www.bloomberg.com/news/articles/2015-08-07/taxed-out-of-mansions-london-investors-head-down-market

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Hedge Fund Losses From Commodity Slump Sparking Investor Exodus – BloombergBusiness 08-06-15

Salient to Investors:

Cargill, the world’s largest grain trader, shut its commodities hedge fund last month, a sign that commodity speculators are in trouble.

Donald Steinbrugge at Agecroft Partners said hedge funds are supposed to make money in both bull and bear markets but managers bias towards rising prices. Steinbrugge said demand for commodity-oriented hedge funds is very low as no one wants to catch a falling knife. Christoph Eibl at Tiberius Asset Mgmt said no money is going into commodities.

The Bloomberg Commodity Index is down 29% in the past year and 18 of its 22 components are in a bear market. Hedge Fund Research said assets of commodity hedge funds are 15% below the peak 3 years ago. The Newedge index suggests natural resource funds have lost money for clients during most of the past 4 years. At the end of June, the average commodity hedge fund had fallen 7% since the January 2011 peak vs. the S&P 500 index gain of 80%, including dividends. The index rose almost sixfold from 1999 to a peak in June 2008.

Read the full article at http://www.bloomberg.com/news/articles/2015-08-06/hedge-fund-losses-from-commodity-slump-sparking-investor-exodus

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Pension Funds Hunting Yield Return to Bonds Tied to Risky Loans – BloombergBusiness -7-22-15

Salient to Investors:

Citigroup said pension funds bought 8% of the top-rated US CLOs, which slice high-yield loans into securities with varying risks , and 7% of the riskier mezzanine notes in Half1, 2015, versus minimal amounts a few years ago. Pension purchases accounting for 26% of new top-rated debt in the smaller European market.

Maggie Wang at Citigroup said the asset class performed tremendously well through the crisis, with less than 1% of speculative-grade slices defaulting.

Banks bought 38% of AAA rated US securities sold through June, their lowest amount since the 2008 financial crisis and down from 85% in 2012. Banks bought 9% of mezzanine CLO notes sold this year, a post-crisis low, and down from 35% in 2012.

Asset managers bought 35% of the top-rated debt this year, and insurers bought 17%.

Read the full article at http://www.bloomberg.com/news/articles/2015-07-22/pension-funds-hunting-yield-return-to-bonds-tied-to-risky-loans

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U.S. Banks See Worst Outflow of Money in ETF Since 2009 – Bloomberg 10-27-14

Salient to Investors:

  • The flow of funds into the Financial Select Sector SPDR ETF turned negative for the year following its biggest withdrawal last week since 2009.  Its short position is the highest since June 2002
  • Todd Rosenbluth at S&P Capital IQ said investors should have less exposure to financials than the broader market because of poor prospects for interest rates.
  • Charles Peabody at Portales Partners said the upside for financials is taken away if the Fed keeps rates low, and we have moved to bad volatility, which makes tougher. Peabody said the jump in mergers and acquisitions has probably peaked.

Read the full article at http://www.bloomberg.com/news/2014-10-27/u-s-banks-see-worst-outflow-of-money-in-etf-since-2009.html

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