Will Trump’s New Financial-Engineering Loophole Make Stocks Rally and Bonds Crash?

Goldman and the rest of Wall Street are smelling the money.

The profits that US corporations earned overseas, and that have remained untaxed in the US, have ballooned to $2.6 trillion, according to Congress’s Joint Committee on Taxation, cited by Bloomberg. This “overseas cash” made it onto Trump’s agenda. Wall Street and our Corporate Titans are licking their chops. They can smell a tax holiday or a new loophole to encourage them to “repatriate” this “overseas cash.”

Goldman Sachs now told its clients what these corporations are going to use this “cash” for. You guessed it: financial engineering.

The exact amount of this “cash overseas” remains a mystery. The numbers thrown around – including the $2.6 trillion above – are guesses. There is no official data. Companies are not required to disclose the details of their assets, in what currencies they’re denominated, or where they’re domiciled.

But in 2004, the last time there was a tax holiday for “overseas cash,” our Corporate Titans “repatriated” $300 billion at a tax-holiday rate of 5.25% and used 92% of if for share-buybacks.

The number of jobs that were promised to be created as a result of this repatriation? Forget it. But the number of share-buybacks soared by 84%.

Now Goldman predicts the same sort of thing in a note to its clients, assuming that the tax holiday or loophole becomes reality in 2017. Bloomberg:

“A significant portion of returning funds will be directed to buybacks based on the pattern of the tax holiday in 2004,” the team, led by Chief US Equity Strategist David Kostin, writes.

They estimate that $150 billion (or 20% of total buybacks) will be driven by repatriated overseas cash. They predict buybacks 30% higher than last year, compared to just 5% higher without the repatriation impact.

Financial engineering comes out on top. “Return to investors,” as Goldman calls it: 42% of the total cash used in 2017 will be dedicated to dividends and share-buybacks, matching the prior record ratio of the glorious acquisition-and-buyback year 2007 before it all fell apart.

Cash used for dividends will drop to 18% of total cash used in 2017, from 19% this year. But cash used for buybacks, which was 26% in 2016 and 24% in 2015, will soar to 30% in 2017, the highest ratio since glory-year 2007.

And investment “for growth” (capital expenditures and research & development) will drop to 52% of total cash used in 2017, lower even the 55% in 2016, matching the record low of the great financial-engineering year 2007. Goldman expects CapEx to drop to 28% of total cash used, matching the low of 2007. And R & D will drop to 11% of total cash used, matching the lowest ratios going back to 2000.

If Goldman is right, this “repatriation” of “cash” will lead to no economic benefits, but plenty of benefits for Wall Street. There are, however, a few wrinkles to it.

The first wrinkle:

On November 5, I reminded the world that this “overseas cash” is neither “overseas” nor “cash.” Much of it is already in the US, in US securities and other investments. I cited the 2013 Senate subcommittee investigation and hearings of Apple. It showed that Apple’s “overseas cash” wasn’t in a bank account in Ireland, where these extraordinarily profitable subsidiaries were located, but in US accounts, invested in US Treasuries, and other securities and investments. What Apple was barred from doing with these untaxed profits was buying back its own shares.

The article was my response to Moody’s report on this overseas cash: “Some falsehoods simply refuse to die,” I wrote. “No matter how many times they get stabbed in the heart, and no matter who stabs them, they rise again in their full glory [read…  Come on Moody’s, Spare us these Falsehoods: That “Overseas Cash” is Already in the US].

For 11 days, it was just your crazed blogger against Moody’s and the financial media. Then, on November 16, Bloomberg came out in support. My article had made the rounds. People had checked out the Senate documents I’d linked, etc. Bloomberg added some company-specific details:

Yet at Apple Inc., with the most overseas cash among S&P 500 members, more than 90% of its $216 billion stash is in the U.S. currency, according to former employees who had direct knowledge of the matter and asked not to be identified.

For Microsoft Corp., the second-largest holder of cash abroad, dollar-denominated bonds alone make up 66% of total cash, securities filing shows.

Dollars also make up most of the cash portfolio for Cisco Systems Inc., which has $60 billion abroad, according to the company’s chief executive.

Bloomberg even quoted the same Richard Lane of Moody’s whom I’d quoted on November 5; he’d changed his tune: “None of this information is explicitly disclosed, but most of the money is already in dollar-denominated securities,” he said.

Now Wall Street is smelling the money. Financial engineering would do wonders for fees and stock prices. Which brings us to…

The Second Wrinkle:

This “repatriation” bonanza, with the “overseas cash” already in the US, might not be all that great. Bloomberg elaborated today:

A new note from Morgan Stanley analysts Todd Castagno and Snehaja Mogre says that this is one of the top questions they are receiving from clients, and that most are overestimating how much cash will be brought back from overseas.

“The often cited $2.5 trillion statistic represents accumulated foreign earnings that companies have declared permanently reinvested abroad for GAAP accounting purposes,” they write. “We estimate that only 40% of this amount, or roughly $1 trillion, is available in the form of cash and marketable securities.

Thus, the other $1.5 trillion has been reinvested to support foreign operations and exists in the form of other operating assets, such as inventory, property, equipment, intangibles and goodwill.”

And the Third Wrinkle:

Everyone is hoping that these share buybacks will create a rally in stocks; this type of financial engineering was about the only thing that drove stocks to dizzying heights over the last few years. However, since much of this “overseas cash” is already in US securities and other US investments, companies would have to dump those securities and investments first to free up the cash to buy back their own shares.

Hence, these share-buybacks would entail a sell-off in these other securities. This includes Treasuries, which are very liquid, and corporate bonds, which are not very liquid, and other investments that may not be liquid at all, especially during a sell-off.

Massive corporate selling of this type would send shockwaves through those markets, propel yields higher, raise the cost of funding for Corporate America, and trigger all kinds of market mayhem. It’s hard to imagine that stocks would remain unscathed in this environment for long.

We’ve already seen the Credit Bubble peak. It was marked by “Totally Crazy Lending.” Read…  Now it Begins to Unravel

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  73 comments for “Will Trump’s New Financial-Engineering Loophole Make Stocks Rally and Bonds Crash?

  1. michael says:

    My guess is there will be no repatriation and wall street will be unhappy. Trump has already announced day 1 he will have executive orders on withdrawing from the TTP, eliminating restrictions on energy including coal, and driving the labor department to investigate visa fraud to name a few. It would appear to me is draining the swamp.

    Godspeed President Trump

    • Jas says:

      Well, I hope you stay tuned in and pay attention. I have a feeling the American people are going to be experiencing buyers remorse sooner than later.
      Trump has no interest in John Q Public, Clinton was correct when she referred to Trump as a “Puppet”. I don’t believe that Trump is necessarily a puppet for Putin, although the fellow who ran his campaign has a long and sordid relationship with Russia, Ukraine, Marco’s of Philippines and various dictators and drug lords around the world. Trump is going to be a puppet to the Koch Bro’s and their extreme right wing agenda thanks to Mike Pence and his crew. Pence is really the one in charge of the White House of Horrors.. Think contaminated rivers, streams, logging in national forests, fracking everything in sight, disenfranchising voters, deregulation of wall street (remember 2007/08?). Domestic spying, and destruction of civil liberties. You thought Bush/Cheney was bad? Pence makes Cheney look like a saint.
      Thinking Trump is going to drain anything other than the national coffers is a joke. His administration is ALREADY full of big business lobbyists and Washington insiders.

      • milking institute says:

        Yes,of course you forgot,he will kill your babies and and put your grandma in a death camp! the horrors! how did you get here,this is not the Daily Kos,did you get lost on the interwebs?

        • Edward E says:

          Mad dog Mattis, Tom Cottonmouth, Bolton, Flynn, Giuliani, Woolsey, Gaffney, Pompeo, Sessions, mister fixit Mitt Romney… don’t put away your bateaux, flat boats, pirogues or Atchafalaya Swamp skiffs just yet.

          Michael Hudson: Donald Trump Wants to Make the 1% Even Richer.


          Cost of defrauding 6000 Trump University students: $25million. Attacking “Hamilton” cast to distract from it : Priceless. Tulsi Gabbard, Ron and Rand Paul try to get him to not listen to the neocons he’s interested in.

        • jerry says:

          That’s how I lost my Grandma

        • Von Lmo says:

          I haven’t heard much about the FEMA Camps, fake news, lately. Will Trump be tearing them down soon?

        • Tom Kauser says:

          If i had capital overseas I would not be waiting for a two in a bush offer from a president elect commited to reaching the feds 4% inflation target by puling up the floor boards?

      • Winston says:

        “Clinton was correct when she referred to Trump as a ‘Puppet'”

        She should know being one herself. However, unlike Trump, she and hubby acquired their many millions through influence peddling.

        America Called B******t on the Cult of Clinton
        November 20, 2016


        • CrazyCooter says:

          One thing I have observed about Trump is that he is running literally everyone through his “consideration” process – so while one can legitimately look at the folks who served on his campaign – I think there is a lot more marketing in how he is going through the process of considering folks for his cabinet.

          Two perfect examples are Mittens and Cruz – no way those guys have a shot at anything, including White House Janitor. Same thing with Jamie Dimon for Treasury. No freaking way he would do that – yet, it was floated in the press.

          So why invite them to the tower and act like they are being considered?

          What he is doing is broadcasting to these folks, as he runs them through the Trump tower, exactly what is coming down the pike – and generating a ton of free press in the process.

          Buckle up – this is not the same chess game y’all are normally used to seeing played …



        • d says:

          The only reason the Brothel Owners son and grandson, made money in NY construction, is because they were connected.

          “What he is doing is broadcasting to these folks, as he runs them through the Trump tower, exactly what is coming down the pike – ”

          Or is he telling them, x is coming, when he knows y, is what he is going to do, so he can bet against them.

          This is a guy who said he can, make money, getting elected and has, and being president, TBA.

          Like you said, this train runs on a different set of, MOB rules.

        • Petunia says:


          I think you are wrong about Cruz not being considered for something. Trump doesn’t like competition and he can smell it a mile away. I think Cruz will be nominated for the Supreme Court, where he might actually do a good job, and more importantly, be out of the way. Romney might get something too, but I doubt it will be anything good.

      • marty says:

        Your details may be somewhat off (we don’t know yet) but your sentiment is exactly correct. It is simply impossible that anyone would get into the white house without being thoroughly vetted. The alt media and bloggers who are rah, rah Trump are being exposed as fake.

        Batten down the hatches, everyone. We’re in for rough weather.

        Meet the new boss, same as the old boss.

    • milking institute says:

      Yes,the Draining will be very painful imo Michael,who knows what Monsters the Donald will unleash,but i think the voters even in their limited understanding of things recognized the urgent need to dump the status quo and i think this great country will be the winner in this. so yes,Godspeed my man!

      • Petunia says:

        I too hope Trump gives the people some relief, because his election was only the first step, the next step will be heads on sticks.

        • Jerry Bear says:

          Petunia, how can you be so naive! You sound like the Liberals I have argued with. Obama utterly betrayed the voters who voted for him and in the end I have not the slightest doubt that Trump and his creep show will do the same. I know you have good intentions but you know where they can lead. In this case, I think they will lead to revolution ewhich I am very much beginning to sense in the air.

    • Ed says:

      Sending a swamp monster to drain the swamp isn’t going to work.

  2. Northwest Resident says:

    I estimate that the tax holiday and repatriation of overseas cash (or whatever it is) will goose “the market” for an extended duration of a few months, then they’ll be back to figuring out what their next trick will be to extend and pretend for a little while longer. Or maybe this is it and they know it — one last splurge before it all goes down. Reality beckons. It can’t be denied forever, or probably even much longer.

    • NotSoSure says:

      Why can’t it last much longer? Please enlighten us with your reasoning. It has certainly gone on for more years than the bears can bear. Heck, they thought Greece couldn’t last this long either but it has.

      And here’s the answer: because current conditions are still not that bad. TV’s still available, the microwave’s still working, etc, etc.

      As I said: in the new normal, it’s not a crisis unless it’s a revolution.

      • Gary says:

        That’s exactly what I was thinking NotSoSure. And then there’s this:

        “companies would have to dump those securities and investments first to free up the cash”

        This might sound amateurish, but couldn’t companies just use those securities as collateral and borrow against (e.g. from some Central Bank somewhere)? It would not be a sound loan but that doesn’t seem to mean anything these days.

        • Wolf Richter says:

          These companies, including Apple, have already borrowed lots of money for the sole purpose of buying back shares and paying dividends. They can issue bonds at very low cost as they have all done. Issuing bonds and using the proceeds to buy back shares has been the rule so far.

          But being able to use their own funds would cut the need to borrow. And it would reduce their costs somewhat. Another thought they might is this: what will their borrowing costs be in the future as rates rise? So for them, it makes sense to use their own funds if they can do it without major tax consequences.

      • Northwest Resident says:

        The one sure reason why it can’t last much longer is because there is a critical energy shortage looming in our future. At current prices, oil companies are not replacing their reserves. We are burning through our economically extractable oil at ever greater rates, but not replacing it. It takes years for new reserve finds to come on line, even if they are able to find them. I’ve seen several estimates by oil industry experts who believe that a near-term critical oil/energy shortage will hit within the next four years at current and projected rates of burn. But what you probably don’t realize is that the global economy is already suffering from critical energy deprivation, and that has everything to do with massive debt accumulation and rapidly deteriorating economic conditions — not to mention those who might disagree with your bold statement “current conditions are still not that bad”, including all or most of those who voted for Trump, the Brexit voters, people in Venezuela, Saudi Arabia and other ME countries including those voting with their feet to escape to Europe, and lots of other oil exporting nations that can’t sell their oil for what they need to because the masses on average don’t have enough money to pay higher prices. All of that ties back to energy depletion. Do you feel enlightened? :-)

        • Nik says:

          I find it Increasingly Comical when Governments, proverbial “Experts” Insiders..et al continue to talk about these Contrived Energy SHORTAGES……? Last Time I looked, over 100 years ago,Nikola Tesla ‘found’ Plenty of Free Energy,correct..? However,being thrown under JP Morgan’s ‘Copper-Profit Bus’ has amazing similarities to today’s ‘Oil-Profit Bus’…..can’t make a Big Profit…on Free lololol I will not even Mention the Energy Technology we have gained from ‘Retro-engineering’ Alien ‘Tools&Craft’..oops guess I did…lolol thanks for reading,aloha

  3. Harris says:

    Investing in coal? Ha! You’d have better luck investing in buggy whip manufacturers.

    • Kent says:

      Agreed. Natural gas and fracking has put a bullet in coal. The Donald can’t save coal and fracking at the same time. He can remove Obama’s regulations on coal production. But you pay a price showing that regulation is not the cause of coal’s demise. The rich boyz in TX are the cause. That’s going to cause some angst in WV and KY.

  4. Nik says:

    Aloha Friends…A Good guess would be…that ‘Trumpmania’ Populist restrictions would be placed on whatever that Cash Number is….and it could only be Invested/ReInvested in ways that would Monetarily Help the Positions of the myriad Individuals that were ‘disenfranchised’ by that Money’s and Business’ Economic movement…Offshore..thanks for reading,aloha

  5. milking institute says:

    Truly appreciate your hard work and research Wolf,few seem to bother to dig into the slime as much as you do. i am at the point of giving up trying to predict ANY outcome of ANYTHING as it seems to me things are spinning out of anybodies control in this giant happy casino. just ran across this Bloomberg story today and was truly amazed by the scale of capital involved in this Endevour and this is just a “sidekick” outside the china Bubble. curious as to what your thoughts are,but will not be surprised… lol http://www.bloomberg.com/news/features/2016-11-21/-100-billion-chinese-made-city-near-singapore-scares-the-hell-out-of-everybody

    • ru82 says:

      What is funny the price of these huge complexes seem to always go up in price. Maybe they have some great insight? Even the residential properties the Chinese have purchased in the U.S. have risen

    • Dan Romig says:

      As a Formula 1 fan, watching the Singapore Grand Prix is quite the spectacle. It appears that the goal of this development is to replicate Singapore just to the north in Malaysia. Can this enormous endeavor work?

      The US has a screwed up tax system for both individuals and corporations. If I ran a global business empire, I would do the same as Apple, Microsoft and Cisco. It’s not rocket science to set up subsidiaries in different nations and parcel out profit/loss as a company builds products. Think of auto manufacturing as so many parts come together from all over the globe and end up at the final assembly point as an example.

      Multinationals have accountants and attorneys who simply use the system that’s set up to maximize profit.

    • Nik says:

      Aloha friend..after reading the article..noticed the words (Chinese) State-Owned and Chinese developers and Partners…et al,repeated on a regular basis. My guess would be that China is trying to Keep/Control Money ‘In House’ (sorry could not resist…lolol) as opposed to Yuan Fleeing into Canada,Australia,Europe and the United States..etc etc,where it becomes a far greater International Monetary Liability for China,thanks for reading,aloha

  6. Akimbo says:

    So that creates a dilemma if you are conservative and thus have mostly Treasuries. Do you sell and buy Apple, Microsoft, Google, Cisco, Oracle? That could be seen as both risky and a safe bet. $%(*&@

  7. nick kelly says:

    This is peripheral to the topic, WR but AYC could you think about this idea:
    Most people think of a ‘dividend’ as part of a company’s profit that it returns to the shareholder. I believe this would be roughly the text book definition.
    But if the company borrows the money to pay the ‘dividend’, the share value is diluted, and the ‘dividend’ is the shareholder’s own money.

    Should this be legal under GAAP? Should a company be allowed to call a borrowed dividend a dividend?

    Of course it will appear on the balance sheet ( I trust) but should the average investor have to be an accountant to discover that what looks like an apparent profit, isn’t one?

    • George McDuffee says:

      there is the lower tax rate for capital gains that for dividends. A simple change in IRS regulations that removes the capital gains classification and declares profit resulting from stock buybacks to be ordinary or dividend income and taxed at the higher rate would reduce this practice. Indeed, a *HIGHER* tax rate seems justified. The IRS has ruled in the past that financial activities which had no legitimate economic justification and were mainly or entirely tax avoidance/evasion schemes were illegal. Stock buy-backs seem to fall in this category. If share prices are too low, for example causing exchange listing problems a reverse stock split seems a viable alternative that does not involve tax evasion,

    • Petunia says:

      In accounting, when you pay a dividend you didn’t earn, it is considered a liquidation. This is also a way of taking money out of a failing company, if you wanted to bankrupt it faster, while directing the cash, usually to management. Yes, if you want to be picky, you can call it fraud.

    • Michael Fiorillo says:

      During the Glass-Steagall era, this type of financial engineering was illegal, since it loads a company with debt and artificially juices the stock price. It’s essentially a form of insider trading, but done openly and brazenly.

      It’s also, according to William Black, who prosecuted fraud in the aftermath of the Savings and Loan Scandals (back when crooks in finance were actually indicted and jailed) a form of control fraud, whereby executives loot the company.

      This is not likely to end well if/when the stock prices of over-indebted companies fall.

  8. Justme says:

    >>On November 5, I reminded the world that this “overseas cash” is neither “overseas” nor “cash.”

    And that was a great service to all of us who did not know. For example, that Braeburn Capital in Reno, Nevada, is holding the overseas profits of Apple in untaxed form, and have it invested largely in US bonds and short-term securities.

    Perhaps we should start looking for better terminology.
    Perhaps “domesticated overseas funds”, or “retained overseas profits”, or “untaxed-but-domesticated overseas retained profits”.

    I realize “funds” have taken on the connotation of “stock mutual funds” in the vocabulary of many people, but I like the word to be used properly.

  9. Gian says:

    Funny that Wall Street crooks would salivate over a Trump victory when they helped finance Hillary’s campaign.

    • Jas says:

      Trump loves Wall Street and Wall Street loves Trump’s deregulation positions. The millionaires are going to get a big O’le tax break that will make George Bush blush, the rest of us will get very little or nothing. Since we’re broke, it’ll be payed for with cuts in Medicare and other social services if the “tea party” folks stick to their new religion (fiscal conservatism) otherwise we’ll do what we’ve done since GW Bush and borrow it! is it $15 Trillion yet?

    • Ed says:

      That would be what you call a hedge. Pretty good to because you end up in the money either way things go.

    • Nik says:

      “Keep your Friends Close and Your Enemies CLOSER”…lololol attributed to that paragon of Virtue..Niccolo Machiavelli

      • George McDuffee says:

        Vito Corleone [The Godfather], quoted by Michael

        • d says:

          Western Sources claim it to Mario Puzo & Francis Ford Coppola.

          In the east it was written by Sun-Tzu 400 BC and he was not the first to use it.

          Machiavelli also used it most of Machiavellis work can be traced to Sun-Tzu.

          A fair assessment is that Machiavelli simply westernized much of the works Sun-Tzu.

          Sun-Tzu Himself simply collected a lot of eastern methods into 1 volume.

  10. NotSoSure says:

    The loophole’s not here yet and stocks keep levitating up and away. Dow 30K. Heck that’s probably too low. How about Dow 300K?

    • MC says:

      If you look at financial performances over the past three months, US equities are the only winners.
      Everything else is getting crushed or slaughtered: US treasuries, EM bonds, Asian stocks… people are scuttling like rats to the safety of US equities, which are ironically enough turning into a haven in time of uncertainty despite being anything but cheap and affordable, especially with the dollar soaring against most currencies.

      • Ed says:

        Investors have been putting their money into dividend paying stocks to get yield. Some stocks have been doing well at that. Risk of course, but look a the bond market. Not much of a risk free play out there in the world today.

        • MC says:

          The problem is most dividends depend on buybacks to remain at “satisfactory” levels: growth is erratic at best and a thing of the past at worse.
          And this is without dragging into picture companies whose stock valuations don’t reflect their long term decline (Caterpillar and IBM to name but two) and companies struggling to turn a profit (Tesla and Twitter to name but another two).

          Personally I am waiting for the Bank of Japan and the European Central Bank to do something really stupid about those bond markets so that I can profit from it. Daddy needs a new pair of shoes.

  11. walter map says:

    Oh, puh-leeze. He’s taking his corporate dictatorship to the next level. Emphasis on the corporate. Double emphasis on the dictatorship. Profit maximization, y’know.

    What did you expect him to do? Actually make good on campaign promises designed to radically exploit the riff-raff, when there’s serious money to be made?

    Talk about kleptocracy. He’s gathering every corporatist on the planet to his cult, who are calling it like Christmas. Times ten.

    The gates of delirium are open. You Amerikans, you have no idea what you’ve done.

  12. night-train says:

    How will we know when America is great again? As far as I can see, we are just following the arc of a failing empire. Empires are expensive to create and maintain, which is why we have so many failed ones in history. The military requirements alone require staggering costs.

    Trump has a remarkable opportunity to make a difference in the lives of the average American. But, I expect he and his cronies are just like all those who came before.

    • Kent says:

      My mother told me she voted for Trump because she wanted her grandchildren to have the same opportunities she had when she was young.

      She was young in the ’60’s. I said “Mom, in the ’60’s we had liberal Democrats running every branch of government, massive labor unions and sky high taxes, is that where you think Trump is going to take us?”

      She said she hopes so.

      • d says:

        I wonder if she realises to get to the sixty’s the world first has to have the equivalent of, the1929 crash the 1930’s depression and WW II.

        No 200 and 08 were not 1929 scale events when scaled up for today’s dollars.

        • Kent says:

          Not to mention the flowering of the interstate highway system and suburbia, strip malls, and all the manufacturing to support automobiles and household appliance production necessary to support the new lifestyle.

          That’s not coming back.

        • Ed says:

          A prime reason for the post WW2 boom in the US economy was the fact that the US possessed the only intact industrial economy in the world for nearly two decades. Everywhere else it was blown up. Then everyone else rebuilt and there was fierce competition once more, oil demand went way up, and the US was then sitting on an ancient and less productive industrial plant. Now we have a situation where globally there is far more labor than demand for labor and much of that labor is easily substituted around the world.

        • d says:

          We know.

          we also know as the US boom slowed, the US corp[orations, started asset stripping the new European industries, and the resources in the developing nations.

          Now those same corporations, have Globalized, and are asset stripping, the US lower classes.

          We hope the US middle, and lower classes, are enjoying the experience.

          You voted for more of it, with POTUS Elect 45.

      • milking institute says:

        Not really, JFK would be considered a conservative pro business politician by today’s standards,so listen to your mom, mother is always right!

    • Dan Romig says:

      As Charles de Montesquieu stated, “An empire founded by war has to maintain itself by war.”

    • Chicken says:

      Great Again – How about trade deficits and maybe even tax receipts for example? Finally, some semblance of an Manufacturing Renaissance we were erroneously led to believe in by the previous administration would be nice.

  13. jerry says:

    I had expected the market to have collapsed before now but with ever much enthusiasm from world central bankers to keep spinning has many plates as they can……. Until they can’t.

    Plunge protection teams
    Money printing
    CB’s buying bonds & equities
    Interest rate suppression
    Rule changes mark to book from mark to market

    You can bet your bottom dollar that when the tide goes out their will be more bodies to count for sure.

    • d says:

      Unless Elect p45 is controlled. the outgoing tide on this one is going to make Falaise gap look like a Sunday school pick-nick.

      “The battlefield at Falaise was unquestionably one of the greatest “killing fields” of any of the war areas. Forty-eight hours after the closing of the gap I was conducted through it on foot, to encounter scenes that could be described only by Dante. It was literally possible to walk for hundreds of yards at a time, stepping on nothing but dead and decaying flesh.[73]
      — Eisenhower”


    • MC says:

      Well, if you exclude the “US equities” component, markets have been taking a pounding over the past month or so.
      Stocks (excluding US) have started to rebound somehow late last week, but it remains to be seen how much this is a true recovery and not a classic case of “buying the dip”.
      The rest is bad, with bond markets being the worst in years. EM bonds, which had made a completely unjustified comeback over the last 8 months, are getting back in the gutters where they belong.

      US equities have become a haven in times of uncertainty despite extremely high valuations and absolutely ludicrous P/E multipliers, especially now that the dollar is soaring again, another proof that the rats are abandoning ship for safer shores.
      Think of it as a far more liquid alternative to prime real estate.

  14. nick kelly says:

    It’s time for Yellen to go and she should make this official, perhaps in these words just after Trump takes the oath:

    ‘President Trump, you and many others have complained that interest rates have been too low for too long.

    You have identified myself as the standard bearer of this policy, brought in by my predecessor in a time of emergency that may in fact have passed.
    Although the main stream media has recently echoed this theory, or sentiment, the new medium the Internet, through various publications formal and informal has seethed with the idea that this Central Bank and its low interest rate policy are at the root of all that ails this economy, if not the world economy.
    To bring Federal Reserve Policy onto the same page as the Executive I will allow the new President his own Fed Chair and I will resign, pending
    his selection.
    And to mitigate the unwanted Fed policy of low interest rates- the Fed will raise them one percent at each of the next three quarterly meetings, until they approximate the average rates of the post-war period.

    It has been a pleasure to serve this administration but a new day is here.
    Good night and God bless.

    • Chicken says:

      So this is confirmation the FED is politically motivated, as opposed to data driven. It’s obvious they’re well paid for their opinions, just look at the results.

  15. Ed says:

    Spinning up a good stock bubble is just the thing to do.

  16. BJ says:

    Bill Gross of Janus Capital Group has said as much regarding corporate money “repatriation”:
    “The last time such a “pardon” was put into law in 2004, no noticeable pickup in investment took place. Of the $362 billion that earned a “tax holiday”, most went to dividends, corporate bonuses, and stock buybacks. Apple or any other large U.S. corporation can borrow the money they need here in the U.S. at historically low interest rates to fund investment. A few have, but over $500 billion annually in recent years has gone to the repurchase of corporate stock and the increase of earnings per share, instead of earnings and GDP growth. Why would they need to repatriate anything for investment in the real economy?”

  17. Uncle Frank says:

    With the Republican controlled Congress expected to pass repeated tax- cuts for the wealthiest and corporations the bull run in U.S. equities will continue on.

    • Tom Kauser says:

      Same as it ever was!
      4.4 trillion and growing up alongside the children!
      Little height marks on threshold of yellens door?

    • Ed says:

      Until it blows up anyway.

  18. Tom Kauser says:


    Most hated rally in history!
    No need to miss the repatriations since you already missed the appropriation!
    Free beer tomorrow and everyday in perpetuity

  19. Chicken says:

    Fake News – It’s what the MSM are full of.

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