$ES_F MOC SELL $650mil $$
$ES_F SPX moc implied imbal $1.3B for SALE $$
$ES_F 02:34:26 TRADINGDATA2: (bshepard) ESM moving the the favored direction of the imbalalce meter ... down $$
$ES_F 81% sell side $$
John_Monaco (13:41:50): 75% sell side on the close
Being "paid to wait" in high-yielding stocks last year was a death by 394 cuts. As Bloomberg reports, the number of dividend reductions far surpassed 2008, almost 100 more than at the outset of the Great Recession - a time when the implosion of Lehman caused equity markets to plummet in the later stages of the third quarter.
Just ignore it - it's transitory!!
The ratcheting down of payouts to shareholders is a function of weak commodity prices, sluggish growth dampening corporate profits, and a tightening of credit conditions. This combination—and in particular the stingier lending—could exacerbate the carnage already seen this year in financial markets, further dampening economic activity.
Because of the stigma associated with cutting dividends, management is loath to go down that path unless the need is dire. The trend toward trimmed payouts hasn't let up so far in 2016, especially among companies under stress from soft commodity prices. In recent days, ConocoPhillips slashed its dividend by 66 percent and Potash Corp. of Saskatchewan Inc. reduced its payout by 34 percent.
And as credit markets shut off the source for economically rational shareholder-friendliness, the situation is only going to get worse...
Back in the 1970’s as recession gripped the world for a decade, stocks stagnated and commodities crashed, investor Jim Rogers made a fortune. His understanding of markets, capital flows and timing is legendary.
As crisis struck in late 2008, he did it again, often recommending gold and silver to those looking for wealth preservation strategies – move that would have paid of multi-fold when precious metals hit all time highs in 2011. He warned that the crash would lead to massive job losses, dependence on government bailouts, and unprecedented central bank printing on a global scale.
Now, Rogers says that investors around the world are realizing that the jig is up. Stocks are over bloated and central banks will have little choice but to take action again. But this time, says Rogers in his latest interview with CrushTheStreet.com, there will be no stopping it and people all over the world are going to feel the pain, including in China and the United States.
We’re all going to suffer… I can think of very few places that won’t suffer. But most people are going to suffer the next time around.
Central banks will panic. They will do whatever they can to save the markets.
It’s artificial… it won’t work… there comes a time when no matter how much money you have, the market has more money.
I don’t know if they’ll even call it QE (Quantitative Easing) in the future… who knows what they’ll call it to disguise it… they’re going to try whatever they can… printing more money or lowering interest rates or buying more assets… but unfortunately, no matter how much P.R. or whitewashing they use, the market knows this is over and we’re not going to play this game anymore.
The entire world is about to get hammered and the average person on the street is the one who will pay the price, as is usually the case.
We can expect more losses in markets, more losses in jobs and more losses to freedom as governments and central banks point the finger at everyone but themselves.
Debt - the other 4-letter word...
“What’s going on in Syria can only go on for so long. At some point it has to change,” Turkish President Recep Tayyip Erdogan told reporters on a plane back to Turkey from Latin America over the weekend.
As we’ve documented extensively over the past several days, Ankara, Riyadh, and Doha have their backs against the wall when it comes to the effort to oust Bashar al-Assad and perpetuate Sunni hegemony in the Arabian Peninsula.
Hezbollah has surrounded Aleppo and their advance is backed by what’s been described as an unrelenting Russian air campaign. The rebels’ supply lines to Turkey have been cut and without a direct intervention by either the US or the Gulf states, the battle for Syria will have been lost for the opposition which pulled out of peace talks in Geneva citing the ongoing aerial bombardment by Moscow.
Now, with time running out, both Saudi Arabia and Turkey are weighing ground invasions.
“You don’t talk about these things. When necessary, you do what’s needed,” Erdogan said, when asked if Ankara was considering sending troops into Syria. “Right now our security forces are prepared for all possibilities,” he added.
For Erdogan, there’s only one acceptable outcome: Sunni militants oust Assad and take control of Damascus. Assad’s ouster is the desired outcome for the Saudis as well, but Erdogan has a secondary agenda in Syria: preventing the conflict from strengthening the Kurds. That means he’s against any support for the YPG - even if such support would help facilitate regime change.
Over the weekend Erdogan blasted both Russia and the US.
“What are you doing in Syria? You’re essentially an occupier,” he said, in a message to Vladimir Putin. “How can we trust you? Is your partner me, or is it those terrorists in Kobani?” he asked Obama’s envoy for the international coalition against Islamic State. By the “terrorists in Kobani", Erdogan is referring to the YPG.
Erdogan's frustration reflects the fact that the various groups fighting to take control of Syria are now virtually guaranteed to lose. As we said from the time Russia first flew combat missions from Latakia on September 30, the opposition has virtually no chance of winning a war with Hezbollah and the IRGC as long as Moscow is providing air cover. The rebels have no air presence whatsoever and no anti-aircraft capability and on top of that, there's no advantage to be had in fighting an asymmetric battle with Hezbollah. Hassan Nasrallah's army practically invented urban warfare.
The only option now is a coordinated ground invasion by the rebels' Sunni benefactors.
“With rebels losing ground, Gulf states said they would be prepared to send in ground troops as part of an international coalition battling Islamic State,” Bloomberg reported on Sunday.
Please note: that quote makes no sense. The rebels aren’t losing ground to ISIS, so why should their battlefield losses trigger international calls for ground troops to “battle Islamic State”?
This is a ridiculously transparent attempt to fabricate an excuse to shore up Sunni militants who are about to be relegated to the annals of sectarian history by the combined military prowess of Hezbollah and Russia.
Sure, there’s an ISIS presence in Aleppo, but if anyone was actually interested in eradicating the group, they’d be talking about Raqqa and Deir ez-Zor, not Latakia nand Aleppo.
Underscoring just how close the world is to careening into World War III, various reports out over the weekend indicated that the Saudis may be preparing to stage 150,000 troops in Turkey. That comes on the heels of reports out of Russia which indicate that Moscow believes Erdogan is on the verge of sending in troops to prop up the rebels. And then there was this, out earlier today from Reuters:
- U.S KIRBY SAYS WELCOME SAUDI, UAE OFFER FOR TROOPS IN SYRIA
Saudi foreign minister Adel al-Jubeir confirmed that Washington would support Riyadh if the Saudis did indeed decide to invade Syria just as they have Yemen.
For what it's worth, AA denied the Saudi troop reports.
'150,000 [Saudi] soldiers will enter Syria from Turkey' are not true, say Turkish prime ministry sources: report pic.twitter.com/KRO64Tg3gi
— ANADOLU AGENCY (ENG) (@anadoluagency) February 8, 2016
While that particular "rumor" may be unfounded, Turkey and the rest of the Sunni world will need to make a decision in the next few days as to just how they plan to proceed, because as is abundantly clear from the following first-hand account from a rebel fighter, this war is just about over.
"Our whole existence is now threatened, not just losing more ground. They are advancing and we are pulling back because in the face of such heavy aerial bombing [by Russia] we must minimize our losses."
* * *
Or, for those who need a visual summary of the above:
In 578 AD, a Korean immigrant named Shigemitsu Kongo made his way to Japan at the invitation of the royal family.
Buddhism was on the rise in Japan at the time; though it had only been introduced a few decades prior, the Empress consort had been actively encouraging the adoption of Buddhism across Japan.
But since the Japanese had no experience building Buddhist temples, they looked overseas for help.
That’s where Kongo came in.
Shigemitsu Kongo was a renowned temple builder, and the royal family in Japan commissioned him to build the Shitenno-ji temple, which still stands today in Osaka.
Kongo saw an incredible opportunity. Buddhism was catching on fast, and he knew he could be kept busy for decades building temples.
It turned out to be centuries. Over 14 centuries, in fact.
Shigemitsu Kongo formed his construction company Kongo Gumi in 578 AD, and it lasted 1,428 years.
It’s extraordinary that any single enterprise could last so long.
Even as late as 2004, temple building accounted for more than 80% of the company’s revenue, which exceeded USD $60 million.
But ten years ago the company finally went under due to the massive debt burden they had accumulated.
It started back in the 1980s. Japan was in the midst of an epic financial bubble thanks to unconstrained credit growth and expansion of the money supply.
Go figure, central bankers artificially suppressed interest rates, keeping them way too low for way too long. And it created a huge asset bubble.
Asset prices in Japan got so out of control that for a short time during the 1980s, it was said that the grounds of the imperial palace in Tokyo were worth more than all of the real estate in the entire state of California.
As part of this bubble, banks had relaxed their lending standards and were handing out loans to just about anyone.
And many Japanese companies took on vast amounts of debt, including Kongo Gumi.
Debt was like a popular drug. Everyone was doing it.
But when the bubble burst in 1989, asset prices collapsed. And companies that had borrowed heavily were left with nothing but debt.
Kongo Gumi didn’t go out of business right away. The company was able to limp along for more than two decades on basic life support.
Soon they were borrowing money just to pay interest on the money they had already borrowed, even though interest rates were at record lows.
But eventually the company’s revenues were no longer sufficient to service the debt.
And in 2006 Kongo Gumi was forced into liquidation.
This company lasted over 1,400 years.
They survived countless political crises, wars, and natural disasters.
They survived the Meiji Restoration in the 1800s, a period in which the government set out to eradicate Buddhism from Japan, and hence, the temple building industry.
They even survived two atomic bombs.
What Kongo Gumi couldn’t survive was debt.
It doesn’t matter if you’re an individual, a company, a government, or even a central bank; if your balance sheet doesn’t add up, sooner or later you’re going under.
* * *
It’s concerning to see consumer debt once again on the rise in the Land of the Free, at the fastest pace since the days of the financial bubble.
Perhaps most appropriate was a Superbowl commercial from Quicken Loans advertising how easy they have made it to obtain a loan.
“Push button. Get mortgage.” says the commercial.
More appropriate would be “Push button. Get into debt. Then buy more useless stuff.”
It’s a blatant snapshot of how far along we are in this latest financial bubble.
Of course, most western governments are in this position as well; they can go further into debt with a few strokes of the pen.
No surprise that many governments must borrow money to pay interest on money they’ve already borrowed, even at a time when interest rates are at record lows!
And yet the leading mainstream economic minds claim that debt (and money printing) are actually CURES to economic problems, and not causes of them.
As my colleague Tim Price points out, medieval doctors used to advocate leeches as a way to cure sick people.
Yet this approach turned out be largely ineffective and tended to kill the patient.
Sometimes the final consequences take years. Even decades.
Old, established institutions have the ability to kick the can down the road, just like Kongo Gumi did.
And even in terminal decline they can even give the appearance of strength.
Just a few years before its demise, Kongo Gumi was still a media darling that seemed strong, fit, and likely to last another 1,400 years.
The LA Times, for example, ran a story in 2003 praising the company for its deft ability to outlast Japan’s tough economic conditions.
Kongo Gumi folded less than three years later.
This is an incredibly important lesson: debt is a killer. And no one is immune to this inevitability.
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