Major Money Manager Braces for Bond-Market
Collapse - (www.bloomberg.com) TCW
Group Inc. is taking the possibility of a bond-market selloff seriously. So
seriously that the Los Angeles-based money manager, which oversees almost $140
billion of U.S. debt, has been accumulating more and more cash in its credit
funds, with the proportion rising to the highest since the 2008 crisis. “We
never realize what the tipping point is until after it happens,” said Jerry
Cudzil, TCW Group’s head of U.S. credit trading. “We’re as defensive as we’ve
been since pre-crisis.” TCW isn’t alone: Bond funds are holding about 8 percent
of their assets as cash-like securities, the highest proportion since at least
1999, according to FTN Financial, citing Investment Company Institute data. Cudzil’s
reasoning is that the Federal Reserve is moving toward its first interest-rate
increase since 2006, and the end of record monetary stimulus will rattle the
herds of investors who poured cash into risky debt to try and get some yield.
Big
investors are dumping stocks like it's 2008 - (www.businessinsider.com) Big investors are fleeing stocks. In a note
Tuesday, Jill Carey Hall at Bank of America Merril Lynch (BAML) wrote that the
clients' net sales of US stocks amounted to $4.1 billion last week, the largest
total since January 2008. Most of the selling is being led by institutional
investors. Here's Carey Hall: After three weeks of net buying, institutional
clients' net sales last week were the largest in our data history. Hedge
funds were net sellers for the ninth consecutive week, while private clients
bought stocks last week following the previous week's net sales. Buybacks by
corporate clients were slightly lower than in the previous week, but on a
four-week average basis have generally continued at a constant pace since
mid-May. Net sales last week were chiefly due to large caps (biggest sales ever
of this size segment), though small and mid-caps also saw outflows. The
strategists wrote that investors pulled the most money out of healthcare and
financial stocks. Last week, outflows from healthcare were the largest on
record, they said. On Friday, BAML strategists noted that investors last week
pulled the most from government bonds since
the so-called taper tantrum of 2013.
Why your state may be forced to raise your taxes - (www.cnbc.com) State government tax revenue is only 5 percent
above its pre-recession level. State finances across the U.S. have been
described as stable but slow growing. Six years into the post-recession
economic recovery, that statement may be accurate, but the full truth may be
more troubling. A handful of states are caught in a real pension fix. A few
statehouse budget battles in recent months have been notable for their
heightened drama—Kansas, where huge
tax cuts backfired on
Gov. Sam Brownback; and Louisiana, where a member of Gov. Bobby Jindal's own party referred to his
budget plan as "money laundering." But it's not the extremes that have state
budget experts concerned. More states have been unable to complete budgets so
far this year than is typical, and the situation points to long-term spending
problems—from K–12 education to Medicaid and infrastructure—that will persist.
Kansas budget woes could hit
small businesses hard - (www.cnbc.com) By the numbers, Kansas is in the midst of a boom in small-businesscreation. Some 333,000 small-business owners
filed returns this year, according to state revenue data, a record. But numbers
can be deceiving, and even some prominent stateRepublicans are pointing to what they say are
unintended consequences of a massive tax-cutting package championed by
Republican Gov. Sam Brownback in 2012. Brownback had sold the package as a
needed "shot of adrenaline" for the state economy, and particularly
for small-business owners, whose profits would be exempt from state taxes.
Indeed, the Kansas Department of Revenue reported 8,666 first-time
small-business filings in 2013, the first full year of the cut. But experts
agree the surge in filings probably has little to do with some sudden burst of
entrepreneurship in Kansas. Rather, they say, it is more likely the result of
people merely adjusting their filing status to take advantage of the tax break.
It is simple enough—and perfectly legal—for, say, a veterinarian to set himself
up as a corporation.
Facing "Full Blown Crisis", Bank Of
Greece Enlists Security Firm To Ensure ATMs Stay Stocked
- (www.zerohedge.com) he nice fellow shown above filling the cash machine at Arnie's Place
restaurant in Nidri Greece works for G4S, a security services firm which is
working with the Bank of Greece to coordinate the Greek bank run. In essence,
it’s the Bank of Greece’s job to accept stodgy collateral (including unsecured
bonds issued by the banks themselves and backed by the full faith and credit of
the insolvent Greek government) for newly-minted German TARGET2 claims euros
and it’s G4S’s job to determine how those euros should be allocated to ensure
that the ATMs don’t run out of cash. Here’s Reuters with more: Security services group G4S has drawn up plans
with Greece's central bank to keep the country's cash machines stocked in the
event of a full-blown economic crisis, the company told Reuters. "Tuesday,
Wednesday and Thursday were critical, really critical," he said, referring
to withdrawals of cash from Greek banks. He added the situation eased over the
weekend. Greeks withdrew more than 4 billion euros ($4.50 billion) from the
banking system last week on fears the country was set to default and potentially
leave the euro zone. That included withdrawals of more than 1 billion euros
each on Thursday and Friday amid rising fears Athens would have to impose
capital controls. The government denies it has any plans for that. G4S has
been drawing up plans on how much cash it should move around the country, and
when, Paterakis said. The firm has increased staff in recent months to meet an
increase in demand for cash, which it estimates has risen by about 30 percent
over the last two weeks.
U.S. to pre-position tanks, artillery in Baltics, eastern
Europe - (www.reuters.com)
We'll Meet More Often, U.S. Navy Captain Says to China - (www.bloomberg.com)
U.S.-China Talks Held Under Cloud of Suspicion - (online.wsj.com)
We'll Meet More Often, U.S. Navy Captain Says to China - (www.bloomberg.com)
U.S.-China Talks Held Under Cloud of Suspicion - (online.wsj.com)
El Nino Gains Strength as Pacific Warms Just Like It’s 1997 - (www.bloomberg.com)
The Way Humans Get Electricity Is About to Change Forever - (www.bloomberg.com)
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