Category Archives: Economy

National Bankruptcies Nearly Doubled in March

The number of bankruptcy filings nationally rose significantly in March, according to the March 2017 Bankruptcy Trends report by Epiq Systems

Filings in March were up 40 percent from February’s. In raw numbers, that’s a jump from a little more than 58,000 total filings to 81,590 filings. Compared directly to March of 2016, filings were also up last month. A year ago, there were 78,372 filings in March.

However, year-to-date cumulative totals remained absolutely flat. Year-to-date, there have been just shy of 193,000 filings, a flat 0 percent difference from this point a year ago, Epiq reported.

March’s totals reverse a five-year trend of total national filings for the month. Since 2011, when filings in March peaked at more than 146,000, each passing March since has seen the month’s total filings drop, until this year. However, the uptick does mirror February, which saw more filings than January after a sharp drop in filings in December.

According to Epiq’s AACER data, filings per capita, nationally, averaged 2.51 per 10,000 people in March. That’s up from 2.19 filings per 10,000 in February. Sixty-two percent of filings were 7 Ratio bankruptcies, which comprised 59 percent of filings in February.

As they have been for months, Alabama and Tennessee were again ranked first and second in the number of filings per 10,000. So far in 2017, Alabama has filed 6,966 bankruptcies, which is 5.9 filings per 10,000. That’s a 0.43 percent increase compared to last year. Tennessee filed 5.74 bankruptcies per 10,000, up just barely from the 5.23-per-capita totals from a year ago.

Though the total number of filings in Montana and Wyoming cumulative through March were comparatively few, 273 and 225, respectively, the percentage increases from February in each state were enormous. Montana saw a 168 percent rise in bankruptcy filings in March, while Wyoming saw a 157 percent spike. Maine, with 289 cumulative filings this year, saw a 112 percent rise in filings in March.

Those numbers are somewhat deceiving, however, as year-to-date filings compared to this point in 2016 for Montana and Maine were actually down, 23 percent and 7 percent, respectively. Wyoming’s filings to-date compared to last year are up 8 percent. Ironically, Maine’s drop was the largest of its kind compared to a year ago.

North Dakota again saw a percentage increase in filings compared to this time a year ago. The state reported 27 percent more filings in March than in February, which itself saw 85 percent more filings in January. Conversely, South Dakota saw a 19 percent drop over the same timeframe. Alaska saw the largest overall percentage increase compared to last year, with 51 percent.

Businesses filed 3,658 filings over 23 filing days in March. That compares to 2,797 filings in 19 filing days in February, and equates to 159 filings per day in March, compared to 150 per day in February. March’s business filings were also up from last year, when businesses filed 147 bankruptcies per day over 23 days in March.

Source: DS News

Latest On US Auto Sales

https://i2.wp.com/www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/03/21/20170328_auto.jpg

Most of you reading this are probably aware the U.S. auto market is a train wreck waiting to happen, but a recent report by Moody’s really puts the industry’s insane lending practices into perspective.

Reuters reports:

As U.S. auto sales have peaked, competition to finance car loans is set to intensify and drive increased credit risk for auto lenders, Moody’s Investors Service said in a report released on Monday.

“The combination of plateauing auto sales, growing negative equity from consumers and lenders’ willingness to offer flexible loan terms is a significant credit risk for lenders,” Jason Grohotolski, a senior credit officer at Moody’s and one of the report’s authors, told Reuters.

Motor vehicle sales have boomed in the years since the Great Recession. U.S. sales of new cars and trucks hit a record annual high of 17.55 million units in 2016.

Industry consultants J.D. Power and LMC Automotive on Friday reiterated their forecast for a 0.2 percent increase in sales in 2017 to 17.6 million vehicles.

But Moody’s says it expects U.S. new vehicle sales to decline slightly to 17.4 million units in 2017.

In the first nine months of 2016, around 32 percent of U.S. vehicle trade-ins carried outstanding loans larger than the worth of the cars, a record high, according to the specialized auto website Edmunds, as cited by Moody’s.

Wow.

Typically, car dealers tack on an amount equal to the negative equity to a loan for the consumers’ next vehicle. To keep the monthly payments stable, the new credit is for a greater length of time.

Over the course of multiple trade-ins, negative equity accumulates. Moody’s calls this the “trade-in treadmill,” the result of which is “increasing lender risk, with larger and larger loss-severity exposure.”

To ease consumers’ monthly payments, auto manufacturers could subsidize lenders or increase incentives to reduce purchase prices, though either action would reduce their profits, the report said.

Bad loans and reckless behavior generally seems to be already baked into the cake, so the real question is when will it all truly enter the market and create major problems? The cycle is already long in the tooth and a year of negative sales growth could turn out to be a tipping point.

Source: ZeroHedge

Rothschild Makes Dismal Admissions To His Investors

https://s15-us2.ixquick.com/cgi-bin/serveimage?url=https%3A%2F%2Fseeker401.files.wordpress.com%2F2016%2F06%2F4071279737_c3002005034100.jpg%3Fw%3D497&sp=2558d78c8358f592f3b11a0799f03e75RIT Capital Partners fund issued its 2016 year-end report in late February. While the company was pleased to report a net profit of 12.1 percent and total shareholder returns hold at 14.2 percent, the company, and its chairman Lord Jacob Rothschild, seem preoccupied with risks associated with political and economic instability.

Rothschild announced that while the funds’ assets are at an all-time high, the announcement comes, “Against a background of daunting uncertainty and political turmoil.” Going further, he stated a more ominous warning. “At this time of upheaval and uncertainty, our investment portfolio will continue to be well diversified,” he wrote comforting his shareholders their fund’s portfolio would be as protected as possible from any coming downturns in the market.

However comforting the report may be for individual investors, Rothschild’s final comments loom large over the mostly positive economic report. He wrote, “There could well be a period ahead of us when the avoidance of risk is as high a priority as the pursuit of gain.” The investment banker’s chosen word of “period” seems to indicate a coming downturn in profitability, even though for the past five years the fund has realized a profit of more than 1 billion Euros.

https://s14-eu5.ixquick.com/cgi-bin/serveimage?url=http%3A%2F%2Fwww.ritcap.com%2Fsites%2Fdefault%2Ffiles%2Fstyles%2Fsub_banner%2Fpublic%2Fsub_banner_1.png%3Fitok%3DNqS-8_x1&sp=7bf18ec2a4adc9f408dd3bcfb737dcab

According to the report, Rothschild and his very powerful family have a vested interest in preserving their assets. “RIT Capital Partners plc is an investment company listed on the London Stock Exchange. Its net assets have grown from £280 million on listing in 1988 to over £2.7 billion today. RIT is chaired by Lord Rothschild, whose family interests retain a significant holding,” the issue reveals. If the fund, whose value is at an

If the fund, whose value is at an all-time high, suddenly declines, falling with it will be a large portion of wealth the Rothschild family enjoys. Although, any such declines would hardly come as a surprise to the Rothschild family who reportedly controls much of the world’s wealth and has a hand in nearly all of the world’s banking institutions, including the Federal Reserve, as some have stated.

The chairman’s statement continues with what some might say is an ominous and uncertain view of the future. “Since the last World War, we have enjoyed some 70 years of patiently crafted international cooperation, which is now threatened,” an apparent reference to Brexit and the UK’s referendum to withdraw from the European Union.

https://s16-us2.ixquick.com/cgi-bin/serveimage?url=http%3A%2F%2F1.darkroom.stylist.co.uk%2F980%2F1d94529f09f2ad1f0dc8dfaed83b6419%3Ac4d9bfb6bca78937ad3630576e57fc37%2Flondon-riots-in-photos&sp=02a2bab93a41338c4b46040002b61bdf 

“Against this deeply worrying geo-political situation,” he wrote seeming to highlight the potential of WWIII if the Syrian conflict continues, “one can point to a number of positive investment factors.” Echoing many statements made by the current U.S. president, Lord Rothschild stated he was hopeful corporations would receive a break in government imposed revenue. He said, “in the US, the proposed tax reduction for companies and individuals,” was a favorable policy change for his fund’s portfolio.

Resounding President Trump’s call for deregulation, Rothschild also was reportedly pleased with the “reforms of an over-regulated system.” Likewise, in step with Trump’s call to exponentially increase spending on America’s failing transportation infrastructure, Lord Rothschild is pleased. However, Trump’s call for, “increases in fiscal and infrastructure expenditure…come at a time late in the business cycle, when the labor market is close to full employment,” meaning there’s no forecast of immediate returns on infrastructure spending projected in the future.

The banking and financial baron also seemed to lament that “wage increases up by some 4% over the last few months” a factor which affects the bottom line for every company. He also stated across the fund’s portfolio will also be affected by rising interest rates. “Valuations are at the high end of their historical range, inflation is returning and in these circumstances, it is likely that interest rates in the US will rise meaningfully,” he said. And coming from the man whose familial connections and financial partners control the Federal Reserve, he should know.

By Jack Burns | The Free Thought Project

Ready For A Bout Of Stagflation, After The Next Depression, Like We’ve Never Seen Before

Money manager Michael Pento says don’t believe the Fed when it says “the economy is doing well.” It’s not. Pento explains, “As long as the stock market continues to go up, the Fed is going to continue to slowly raise interest rates. So, when the inevitable collapse occurs, and that’s what the Fed does, the Fed is in the business of lowering interest rates, creating asset bubbles, which pile up the level of debt, then raising rates and collapsing the economy. That’s their mantra. That’s their MO (modus operandi) and it has happened over and over again. The occurrences are going to be much more dire as we go through time. So, the Fed is trying to get bullets in the chamber. The Fed is going to raise rates slowly. The yield curve is going to invert. . . . We are going to have another catastrophe in the stock market and in the bond market and in the real estate market and in the global economy.”

With the latest GDP number now coming in at less than 1%, Pento says the Fed will be forced to reverse course soon when the economy tanks again. Pento contends, “They will have no choice, this is what they are going to do. They are going to do everything they can to rebuild the asset bubble, but it’s going to take a lot more than lowering interest rates and a little bit of QE. They’re going to have to have helicopter money, and I think that’s going to happen right after we enter this next depression. I don’t use hyperbole here either. I say depression because I look at the data. The data tells me the great recession that was headed towards a depression started in 2007 and ended in 2009. They were talking about not getting money out of the ATMs and massive bank defaults. That was going to make the Great depression in the 1930’s look like a Sunday picnic. That was caused by a Fed Funds rate at 1% for one year and a housing bubble. You look at the bubbles we have today, the national debt in 2008 was $10 trillion. It’s now $20 trillion. . . . You have the entire globe that has massively and exponentially raised its level of debt . . . and the level of asset bubbles. . . . Most of the metrics are at all-time record highs. The GDP has been artificially boosted by 100 months of 1% or lower Fed Funds rate. I think a depression is absolutely unavoidable. What did they fix? Absolutely nothing. They just made the economy exponentially more artificial and more dependent on free money.”

Pento predicted the bond market would ultimately collapse in his 2013 book titled “The Coming Bond Market Collapse.” He says the collapse has started and will get worse quickly. Pento is watching Europe and says, “When the European Central Bank (ECB) announces they are going to take the $60 billion a month of easing and take it to zero, you are going to see a bond market revolt. The free market, whatever is left of it, is going to aggressively start shorting bonds. You will see yields spike in Europe, which is going to drag up bond yields across the globe. That’s when this thing will all unravel and unravel very, very quickly.”

In closing, Pento predicts, “The stock market is a bubble. It’s going to fall at least 50% for starters and before The Fed gets to helicopter money. You better be ready.”

By Greg Hunter | USA Watch Dog

Elite Are Prepped And Ready For The Economic Crisis

The following is an interesting overview, via X22Report.com, of our current economic situation and the behavior of the elites going into the next stage of the collapse process.

https://i1.wp.com/www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/03/09/20170314_world.jpg

As Alt-Market’s Brandon Smith notes, take special note of the information on the abrupt decline in bank issued loans (debt); is it not rather coincidental that as the Federal Reserve presses forward with the interest rate hiking process that credit issuance suddenly freezes up?

This is what I have been warning about since last year, and now we are watching it unfold


Lawyer Joke:

One afternoon a lawyer was riding in his limousine when he saw two men along the roadside eating grass.

Disturbed, he ordered his driver to stop and he got out to investigate.

He asked one man, “Why are you eating grass ?”

“We don’t have any money for food,” the poor man replied. “We have to eat grass.”
“Well, then, you can come with me to my house and I’ll feed you,” the lawyer said.
“But sir, I have a wife and two children with me. They are over there eating grass under that tree”

“Bring them along,” the lawyer replied.

Turning to the second poor man he stated, “You may come with us, also.”
The other man, in a pitiful voice, then said, “But sir, I also have a wife and six children with me!”

“Bring them all as well,” the lawyer answered.

They all entered the car, which was no easy task, even for a car as large as the limousine. Once under way, one of the poor fellows turned to the lawyer and said,

“Sir, you are too kind. Thank you for taking all of us with you.”

The lawyer replied, “Glad to do it.

You’ll really love my place.

The grass is almost a foot high.”

Did you really think there was a heart-warming lawyer story?
Look at Congress — over 300 LAWYERS

Trump vs. $20T Debt Ceiling – Coming March 15th

Former Reagan Administration White House Budget Director David Stockman:  “I think what people are missing is this date, March 15th 2017.  That’s the day that this debt ceiling holiday that Obama and Boehner put together right before the last election in October of 2015.  That holiday expires.  The debt ceiling will freeze in at $20 trillion.  It will then be law.  It will be a hard stop.  The Treasury will have roughly $200 billion in cash.  We are burning cash at a $75 billion a month rate.  By summer, they will be out of cash.  Then we will be in the mother of all debt ceiling crises.  Everything will grind to a halt.  I think we will have a government shutdown.  There will not be Obama Care repeal and replace.  There will be no tax cut.  There will be no infrastructure stimulus.  There will be just one giant fiscal bloodbath over a debt ceiling that has to be increased and no one wants to vote for.”

Stockman also predicts very positive price moves for gold and silver as a result of the coming budget calamity.

https://theconservativetreehouse.files.wordpress.com/2012/01/baby-newt.jpg?w=960&h=680

https://reclaimourrepublic.files.wordpress.com/2015/09/trump-gop.png?w=640

Despite The Recent Rise, Trend In Rates Remain Lower

Yield Bottom Is Still Ahead Of Us

Donald Trump’s victory sparked a tremendous sell-off in the Treasury market from an expectation of fiscal stimulus, but more broadly, from an expectation that a unified-party government can enact business-friendly policies (protectionism, deregulation, tax cuts) which will be inflationary and economically positive. It doesn’t take too much digging to show that the reality is different. The deluge of commentaries suggesting ‘big-reflation’ are short-sighted. Just as before last Tuesday we thought the 10yr UST yield would get below 1%, we still think this now.

https://i2.wp.com/www.kesslercompanies.com/sites/default/files/media/images/10yrlong.png

Business Cycle

No matter the President, this economic expansion is seven and a half years old (since 6/2009), and is pushing against a difficult history. It is already the 4th longest expansion in the US back to the 1700’s. As Larry Summers has pointed after 5 years of recovery, you add roughly 20% of a recession’s probability each year thereafter. Using this, there is around a 60% chance of recession now.

History also doesn’t bode well for new Republican administrations. Certainly, the circumstances were varied, but of the five new Republican administrations replacing Democrats in the 19th and 20th centuries, four of them (Eisenhower, Nixon, Reagan, and George W. Bush) faced new recessions in their first year. The fifth, Warren Harding, started his administration within a recession.

Fiscal Stimulus 

Fiscal stimulus through infrastructure projects and tax cuts is now expected, but the Federal Reserve has been begging for more fiscal help since the financial crisis and it has been politically infeasible. The desire has not created the act. A unified-party government doesn’t make it any easier when that unified party is Republican; the party of fiscal conservatism. Many newer House of Representatives members have been elected almost wholly on platforms to reduce the Federal debt. Congress has gone to the wire several times with resistance to new budgets and debt ceilings. After all, the United States still carries a AA debt rating from S&P as a memento from this. Getting a bill through congress with a direct intention to increase debt will not be easy. As we often say, the political will to do fiscal stimulus only comes about after a big enough decrease in the stock market to get policy makers scared.

Also, fiscal stimulus doesn’t seem to generate inflation, probably because it is only used as a mitigation against recessions. After the U.S. 2009 Fiscal stimulus bill, the YoY CPI fell from 1.7% to 1% two years later. Japan has now injected 26 doses (link is external) of fiscal stimulus into its economy since 1990 and the country has a 0.0% YoY core CPI, and a 10yr Government bond at 0.0%.

Rate Sensitive World Economy

A hallmark of this economic recovery has been its reliance on debt to fuel it. The more debt outstanding, the more interest rates influence the economy’s performance. Not only does the Trump administration need low rates to try to sell fiscal stimulus to the nation, but the private sector needs it to survive. The household, business, and public sectors are all heavily reliant on the price of credit. So far, interest rates rising by 0.5% in the last two months is a drag on growth.

https://i2.wp.com/www.kesslercompanies.com/sites/default/files/media/images/debt.png

Global Mooring

Global policies favoring low rates continue to be extended, and there isn’t any economic reason to abandon them. Just about every developed economy (US, Central Europe, Japan, UK, Scandinavia) has policies in place to encourage interest rates to be lower. To the extent that the rest of the world has lower rates than in the US, this continues to exert a downward force on Treasury yields.

https://i2.wp.com/www.kesslercompanies.com/sites/default/files/media/images/germus.png

Demographics

As Japan knows and we are just getting into, aging demographics is an unmovable force against consumption, solved only with time. The percent of the population 65 and over in the United States is in the midst of its steepest climb. As older people spend less, paired with slowing immigration from the new administration, consumer demand slackens and puts downward pressure on prices.

https://i2.wp.com/www.kesslercompanies.com/sites/default/files/media/images/oldpop.png

Conclusion

We haven’t seen such a rush to judgement of boundless higher rates that we can remember. Its noise-level is correlated with its desire, not its likelihood. While we cannot call the absolute top of this movement in interest rates, it is limited by these enduring factors and thus, we think it is close to an end. In a sentence, not only will the Trump-administration policies not be enacted as imagined, but even if they were, they won’t have the net-positive effect that is hoped for.  We think that a 3.0% 30yr UST is a rare opportunity buy.

Source: California Mortgage Broker