ECB May Have Only €220 Billion In QE Left If The Hawks Get Their Way

After seemingly sending out trial balloons (via Bloomberg and Reuters simultaneously) on tapering last Thursday, which had almost zero impact (see “ECB Reportedly Considering Slashing QE in Half in January, EURUSD Shrugs), Draghi’s minions have been busy again.

“Central bank officials familiar with the matter” told Bloomberg that some - presumably quite hawkish - ECB policy makers “see room for little more than 200 billion euros ($235 billion) of purchases under the institution’s bond-buying program next year.”  With said “officials” (who asked not to be named because the talks are not private anymore) seeing a limit to bond buying of 2.5 trillion euros under the current rules and purchases expected to reach 2.28 trillion by the end of 2017, we can do the calculation.

According to last week’s trial balloons, the ECB was looking at reducing its purchases from €60 billion euros to about €30 billion for at least nine months.

As we also explained in “How Will The ECB"s QE Tapering Impact The Market? Here Are The Possible Scenarios”, the market neutral level of APP extension estimated by Citi appears to be around 250 billion Euros, or roughly €50 billion more than "some" ECB policymakers will permit. The three broadly market neutral scenarios laid out in Citi’s model were €20bn x 12mth, €30bn x 9mth and €40bn x 6mth as shown below.

For what it’s worth, Citi’s neutral scenario corresponded closely with a Reuters poll (from 11-14 September) which suggested the consensus amongst economists was for €40bn (range €30- 50bn) over 6mths (range 3-12mths).

And while we can argue about what the ECB should do to optimize conditions in the real economy, it now has a little problem vis-à-vis market expectations for the upcoming 26 October meeting. A 220 billion Euro extension is among the worst scenarios and, as Bloomberg confirmed “such a limit is at the lower end of volumes under discussion, setting the Governing Council up for a potentially difficult policy meeting.”

Citi previously noted that risks are skewed towards higher yields and bear-steepening due to issuer limit constraints. Following today’s trial balloon, HSBC commented that “The debate about the likely pace of QE continues to intensify in the run-up to the 26 October ECB meeting...If the ECB are correct then this would mean the pool of bonds would be used up beyond that point.”

Marc Ostwald, global strategist at ADM ISI in London, also commented on the ECB’s limited room to maneuver. “If they stick to the capital key, then there are only about 55 billion of Bunds that they could buy, which in turn caps what they can buy in total, especially with limits on what they can buy of smaller countries debt. However, they could reduce the relative proportion of govt bonds in a 30 billion euro per month QE pace to try and circumnavigate the problem…but even that will only be a marginal help.”

Bloomberg also notes that some policy makers are concerned about the reluctance of investors to sell their bonds “Reducing monthly buying to 25 billion Euros – which would total 225 billion euros over nine months – may address some of those concerns, the officials said.”

Perhaps the best tactic here is to release as many trial balloons beforehand, that 26 October becomes a non-event...

Owner Of The Plaza Hotel, Once Trump's Crown Jewel, Hires Broker To Pursue A Sale

Here’s some news that might interest the President.

The Indian owners of the Plaza Hotel have hired a broker to tell the New York City landmark, according to the Wall Street Journal. The step is “a sign that a world-wide scramble among investors, celebrities and governments to acquire the property could be nearing an end.”

Perhaps more than any other property (Trump Tower included), the Plaza Hotel is emblematic of Donald Trump’s meteoric rise in the world of New York City real estate. The hotel had for years been an object of fascination for Trump, who reportedly jumped at the opportunity to buy it from Texas billionaire Robert Bass in 1988. According to the New York Times, Trump paid $400 million for the hotel, an unprecedented sum for a hotel at the time.

However, it would also eventually become a symbol of his debt-fueled brush with ruin, as the property was eventually forced into bankruptcy in 1992; in 1995, he bitterly agreed to sell it to a group of Saudi investors.

More than 30 years after Trump was forced to sell it, industry experts believe the hotel could fetch more than $500 million. However, that sum isn’t even close to the highest ever paid for a NYC hotel: Back in 2015, China’s Anbang Insurance Group Co. bought the Waldorf Astoria for $1.95 billion to the highest price ever paid for a U.S. hotel, according to data tracker STR Inc. Now Anbang is being pressured to sell the Waldorf, along with its other foreign assets. Regulators are concerned that a foreign buying spree by Anbang and other Chinese conglomerates has left domestic corporations dangerously overleveraged.

“While it is unclear how much a buyer would pay for a trophy property like the Plaza, hotel investors and brokers suggest it could be one of the most expensive hotel sales on a per-room basis, a popular industry metric. By that method of valuation it could bring in more than $500 million.”

A representative of the company to told WSJ that a buyer has been found, and “a sale is under process and not yet competed.

Per WSJ, the list of potential buyers includes both the Qatari sovereign-wealth fund and Pras Michel, former member of the Fugees.

“Dozens of real estate moguls, foreign government funds and other hotel investors around the globe in recent years have looked into buying the Plaza after Sahara indicated it would listen to offers, according to people familiar with the matter.

A Qatari sovereign-wealth fund, a Shanghai municipal investment fund and Pras Michel, the Grammy-winning co-founder of the hip-hop group Fugees, are among those that have expressed interest, say people who have been close to the process."

Sahara Chairman Subrata Roy reportedly handled some of the negotiations while serving time in a New Delhi jail.

“Sahara founder and Chairman Subrata Roy, who spent two years in a New Delhi jail on contempt charges, even negotiated with potential buyers from the jail’s guesthouse, according to people familiar with the situation.”

According to WSJ, several interest parties walked away from talks early on because they didn’t think Sahara was serious about selling hotel (i.e. Sahara wouldn’t budge from its asking price, whatever it was). However, the hiring of a broker suggests that this time, they intend to close.

"Sean Hennessey, chief executive officer of the hotel consultants Lodging Advisors told WSJ that hiring a broker suggests that Sahara is, in fact, serious about pursuing a sale of its crown-jewel hotel.

“This suggests a commitment to consummate a transaction,” he said, adding that a professional broker handling the process “might draw people back that looked once and walked away.”

Because of its appearance in classic works of American film and cinema, the hotel has a cultural cache that few can match.

“It has been featured in novels like “The Great Gatsby” and numerous films, including Alfred Hitchcock’s “North by Northwest.” Marilyn Monroe and the Beatles stayed there. John F. Kennedy’s sister Patricia Kennedy held the reception after her wedding to Peter Lawford in the Plaza’s ballroom.

Previous owners of the 110-year old property include hotelier Conrad Hilton and Donald Trump, who once compared it to the Mona Lisa.”

Unfortunately for the Plaza’s owners, they’re selling at a difficult time for the Manhattan real-estate market. As we mentioned above, Chinese authorities are cracking down on foreign real-estate transactions to stanch capital outflows that have helped drain the country’s foreign reserves and put pressure on its currency, the yuan. The effects of these new regulations have already begun to manifest: The average Manhattan hotel sales price in the first half of 2017 was about $515,000, down 26% from the recent peak in the first half 2015, according to data company Real Capital Analytics.

According to a team of analysts at Morgan Stanley, the Manhattan real estate market is headed for a valley as purchases of foreign-real estate by Chinese companies are expected to decline by 84% in 2017, and another 18% in 2018. The influx of Chinese buyers in the aftermath of the financial crisis helped drive bull markets in hot urban markets like New York City, London and Hong Kong.
 

Is There A Relationship Between Coffee Shops And High Rent?

Submitted by Priceonomics

The American city runs on coffee. It’s served nearly everywhere, in cafes, restaurants, and corner stores, and it’s an ingrained part of most people’s morning routines. From the distinct taste, to the plethora of ways it can be prepared, to the benefits of caffeine, most people can find an aspect of the drink that they love.

Though while it is common, getting coffee from a coffee shop rather than making it at home can be expensive. It is somewhat of a luxury item, especially if you consider the cost of fancy cafes serving espresso and pour over drinks (generally referred to as third wave coffee). For this reason, some measure of coffee shops could be useful as a barometer of city and neighborhood cost. Our hypothesis is that an area with a greater number of coffee shops would have a population with a larger disposable income, who can also afford more expensive housing.

So, in US cities, are the number of coffee shops and rent prices connected in any way?

We analyzed data from Priceonomics customer RentHop, an apartment listing site,  to explore that question. We have thousands of recent rental listings, which we used to find median rental prices. Then, by connecting that with business data from Datafiniti (also a Priceonomics customer) detailing coffee shops in each city, we were able to highlight the relationship between the two factors. We conducted analysis at the city level, but also completed a deep dive into neighborhoods in Manhattan, NYC. 

At the Manhattan neighborhood level, high rent is positively correlated with coffee shops, but the results nuanced. Generally neighborhoods that were more expensive had a greater number of coffee shops per capita, especially around Midtown. Areas with large concentrations of office buildings have large numbers of coffee shops to cater to office workers (e.g. Midtown Manhattan, Financial District). Other neighborhoods are appealing specifically because they are more residential (and have fewer businesses) and can command higher rents (e.g. Stuyvesant Town-Cooper Village). 

We also examined the number of coffee shops per capita in various cities across America. We found that generally, the number of coffee shops in a city did not correlate strongly with the median rental price, though there were some standout cities like San Francisco with a lot of coffee shops and high rent.

***

For our first look at the data, we want to determine median rental prices for our cities of interest. In our analysis, we will examine cities where there is sufficient data about both rentals and businesses.

Data source: RentHop

New York City has the highest median rent while Atlanta has the lowest. This follows what we would expect, with coastal cities with higher population densities being the most expensive.

Within these cities, we also need to count the number of coffee shops and cafes. Restaurants or corner stores that also serve coffee were not included.

Data source: RentHop

Already we can see that our rankings are very similar to what we had for median rent. New York City is first with over 1,600 coffee shops. The next in our list is San Francisco with 650.

Cities that are larger in general will tend to have more of any kind of business. By adjusting for population, calculating number of coffee shops per 100K residents, we can control for this fact. 

Data source: RentHop

Washington D.C. and San Francisco have the greatest number of coffee shops per capita. Los Angeles has the fewest. New York, which had the greatest absolute number of coffee shops, now sits at the middle of the pack.

Now we will take the two measures, coffee shops per capita and median rent, and plot them together to visualize the relationship.

Data source: RentHop

Overall, we do not see a clear trend supporting the relationship between coffee shops and rent.  We are only looking at seven rental markets so additional research would be necessary to definitely prove the relationship between coffee and rent.

We do, however, have a rich set of data specifically for Manhattan in New York City. Manhattan is divided into 28 Neighborhood Tabulation Areas (NTAs) by the city government. We will group the business and rental data into these geographic areas and complete a similar analysis. 

Now at a more granular level, will we see a clearer correlation between coffee shops and rent prices? Again, our first step is to list median rental prices.

Data source: RentHop

The area of SoHo-TriBeCa-Civic Center-Little Italy has the most expensive median rent. This area is one of the trendiest, with many expensive bars, restaurants, galleries, and boutique stores. Additionally due to history of development in Manhattan, the residential buildings are much smaller, increasing the pressure on price. Marble Hill-Inwood, at the very northern tip of Manhattan and across from the Bronx, is the least expensive. Inwood once had the highest crime rate in Manhattan, but recently has seen a large decrease in crime consistent with New York City overall. It also has a lower median income than most neighborhoods in

We have a map to help visualize the differences in rent. Neighborhoods were split into rent quintiles (five equal sized groups) based on prices.

Data source: RentHop. Grey areas do not have sufficient data for analysis

We can see that the areas of high rent are concentrated around the middle of the island especially near Central Park as well as the West Village area.

Next we will look at coffee shops in each NTA. How many coffee spots does each neighborhood have:

Data source: RentHop

Midtown-Midtown South has the greatest number of coffee shops. It has close to double the number of shops as SoHo-TriBeCa-Civic Center-Little Italy and Hudson Yards-Chelsea-Flatiron-Union Square. These areas with many coffee shops either the primary centers of business in the city or areas with lots of shopping and dining (for tourists). Several neighborhoods have 10 or fewer shops. There are a few possible reasons for their low ranking including being a smaller size or having a lower proportion of business in the area. Additionally many of these are neighborhoods with lower incomes generally, which seems like a plausible explanation but cannot be proven from this analysis.

Again we will map this data to help visualize the differences. Similar to the last map, neighborhoods have been placed into quintiles based on the number of coffee shops.

Data source: RentHop. Grey areas do not have sufficient data for analysis

Again we see similar concentrations of the neighborhood groups. More coffee shops tend to be around Midtown and the lower-west end Manhattan.

It is clear from the maps of Manhattan though that each neighborhood is a different size. We can also confirm that they have different sized populations. To accurately compare each, we must account for the population in our calculation. We will do this by finding coffee shops per 100K residents, just as we did earlier.

Data source: RentHop

Several of the same neighborhoods are at the top and bottom of our list. The top neighborhood again is Midtown-Midtown South. It has so many more coffee shops per capita than any other neighborhood due to it’s large commuter population and tourist population. Two of the other top four neighborhoods, Battery Park City-Lower Manhattan and Turtle Bay-East Midtown, are similar in nature and comprise areas around Grand Central Terminal and the Financial District.

With our map of Manhattan, we can see if a similar pattern appears in our neighborhood locations

Data source: RentHop. Grey areas do not have sufficient data for analysis

In this map, there is more of a clear gradient from the northern tip of Manhattan (neighborhoods with the fewest coffee shops per capita) towards the bottom (neighborhoods with the most coffee shops per capita). This makes sense as we have explained earlier many of the neighborhoods below central park are full of offices and destinations for tourists. The other neighborhoods are more residential in nature, with relatively fewer businesses.

Finally, we will plot the relationship between coffee shops per capita and median rent to understand the relationship. We’ve labeled several neighborhoods to illustrate how different areas of Manhattan fall on the spectrum of coffee vs. rent.

Data source: RentHop

This time the relationship, while still not linear, has a generally positive direction. A few notable outliers include Midtown-Midtown South and Stuyvesant Town-Cooper Village. 

Midtown-Midtown South has more coffee shops per capita than any other neighborhood. As stated earlier, it is largely made up of office towers and tourist destinations. Most of the daytime population is made of up commuters coming into the city from outlying areas (especially NY state, NJ, and CT). This is also where Times Square and other areas where visitors to the city flock. It is most likely that these coffee shops are catering toward these crowds in addition to regular residents and therefore need more locations to keep up with demand.

A neighborhood with very few neighborhoods despite being one of the most expensive is Stuyvesant Town-Cooper Village, a private housing development built after World War II originally for veterans and their families. The area is almost entirely residential, featuring 110 buildings surrounded by public parks. It has become a very desirable neighborhood due to the amenities and location, therefore quite expensive. As it was planned to be entirely residential, the neighborhood does not have the same mix of commercial and residential space as the rest of NYC. This artificially creates a shortage of coffee shops that we do not account for in our hypothesis.

***

It appears that the relationship is somewhat clearer for neighborhoods than cities overall. At the neighborhood level in Manhattan, there is a positive correlation between coffee shops and rental prices.

Citi's Sentiment Indicator Crashes, And Four Other Things That Scare The Bank

In his latest note, Citi"s Jeremy Hale shows something troubling to all those, such as Bloomberg, who point to yesterday"s ISM manufacturing sentiment indicator (while ignoring the rapidly slowing PMI) as indication of more upside left in the economy: according to the Citi cross-asset strategist the bank"s NISI Index (news implied sentiment indicator, Figure 1), has plunged sharply into bearish territory in the latest print, to its lowest level in 18 months, since January 2016. According to Hale, as Trump “Optimism” fades, there may have been too much "spirit" priced into the SPX. The latest print in NISI suggests renewed skew towards pessimistic sentiment and thus looking at past correlations to the NISI, Citi warns that the SPX may fall relative to trend for a period on this measure.

It"s not just the market"s fading euphoria that worries Citi: according to Hale there are 4 other things that worry the bank when it comes to equities, with valuations at the top.

Arguably already rich and perhaps increasingly reliant on earnings to do the “heavy lifting” from here. Breaking down the P/E ratio to P vs. E illustrates how much the market has re-rerated significantly in the last couple of years (Figure 2). Even value stocks are expensive in the US. Additionally, estimates for the current ex-ante ERP are starkly below average historic excess equity returns of +4.7%. In order to even achieve this mean level of excess return, we’d need to see a nominal gdp growth rate of >5.25% (which would be above trend on a 5y, 10y and 30y basis). As such, this would require significant upwards revisions to Citi’s current growth outlook, at a time where Citi Economists say they are close to the cyclical peak in global growth and see increasing downside risks to their forecasts. Combined with  undershooting inflation/ declining inflation expectations, this seems even more unrealistic and makes equities appear richer on this basis.

Third, Citi looks at the earnings outlook, and warns that while Q2 and the next two quarters will likely be good, the problem emerges in 2018.

We have no doubts 2017 will indeed be a positive earnings year, but the key is for this to also transpire next year globally. This will require the feed through of higher oil prices (due to the commodity sensitive UK and EM EPS). Whilst Citi currently forecasts higher oil prices, we note that the strong base effects witnessed more recently are slowly rolling off as we move past the oil trough in a one year rolling window. Meanwhile, spot oil prices are trending lower. And earnings surprises have been strong in commodity related sectors. So we need to see earnings strength broaden out heading into 2018.

Next, liquidity.

As Matt King points out, a global shift to tighter monetary policy next year may be quite threatening to risk assets, given how important unconventional monetary policies have been for markets in recent years. His chart, which plots risk asset momentum vs. global central bank asset purchases in a 12 month rolling window, suggests in the event that all major CB’s shrink liquidity together, the implied path may see stocks correct -30% (Figure 3).

As Figure 4 & Figure 5 show, it’s not just equities which are rich in valuation terms. Term premia in long end $ rates remains compressed and close to all-time lows. Citi"s credit FV models also indicate that  spreads in $IG and $HY are rich, to a magnitude of > 1 std. deviation.

Finally, Hale touches on a chart we posted last week when we discussed whether equities are starting to become irrational. The one chart of interest, which is showed on Figure 6, is a pair-wise correlation
measure of the price action amongs S&P 500 sectors.

We find that as the cycle matures, pair-wise correlations drop. When the cycle turns and stock markets drop, correlation picks up rapidly as investors “sell what they own”. In 2000/2001 and 2006/2007, this correlation indicator fell to around 20% before markets peaked out. Note that we are currently at 30%. Perhaps not quite in the “danger zone” but definitely worth keeping an eye on.

Citi"s conclusion:

At the end of the day, the positive economic backdrop observable right now is a risk asset positive, in our view. However downside risks are definitely building at a time when valuations are getting more  stretched. We feel like it’s too early to fully allocate out of risky assets just yet, and stick to our relatively defensive approach to the reflation trade by being slightly overweight stocks with our preferred adjacent overweight in cash. The latter serves as three things: i) a better portfolio hedge in a base case world which sees rising government bond yields ii) an acknowledgment that valuations are rich, and iii) a tool to be tactical even in medium term GAA portfolios, by having powder to jump into opportunities when they arise.

Citi is not alone: yesterday Goldman also told clients to start leaving risk assets and "go into cash."

New York's "Billionaires Row" Suffers Biggest Foreclosure In History

In the latest sign that NYC’s ultra-high end property market is on the verge of imploding after a wave of overly aggressive development, another luxury condo at Manhattan’s One57 tower, a member of “Billionaire’s Row,” a group of high-end towers clustered along the southern edge of Central Park, has gone into foreclosure - the second in the span of a month.

The 6,240-square-foot (580-square-meter) full-floor penthouse in question, One57’s Apartment 79, sold for $50.9 million in December 2014, making it the eighth-priciest in the building.

“It’s probably the most-expensive foreclosure we’ve ever seen in luxury development,” said Donna Olshan, president of high-end Manhattan brokerage Olshan Realty Inc. “I don’t know of a foreclosure that’s larger than that.”

According to Bloomberg, the shell company that purchased the property took out an unusually large mortgage and promised to repay in full a year later.

In September 2015, the company took out a $35.3 million mortgage from lender Banque Havilland SA, based in Luxembourg. The full payment of the loan was due one year later, according to court documents filed in connection with the foreclosure.

The borrower failed to repay, and now Banque Havilland is forcing a sale to recoup the funds, plus interest.

And, in what’s become a strong contender for the “no sh*t” quote of the day, a spokeswoman for Extell Developments, the developer that built One57, said there" s a lesson to be learned from this unfortunate situation.

“This shows that too much leverage is probably not wise,” Anna LaPorte, an Extell spokeswoman, said of the most recent default.

A June 14 auction was scheduled for a 56th-floor apartment at the same tower. That condo was purchased in July 2015 for $21.4 million. Public records have yet to reveal any transfer of ownership for that property.

Investors across the NYC property spectrum should take note; prices in Manhattan and Brooklyn have risen so quickly they’ve effectively pushed marginal buyers out of the market and forced renters to devote a greater share of their income to housing. Today, more than 30% of Americans pay half their income in rent - the highest percentage in decades.

And with more investors in the city concentrating on luxury properties, some ultra-luxury buildings like One57 are struggling with unsustainable vacancy rates of nearly 40%.

Until last month, no apartments on Billionaires’ Row, which also includes 432 Park Ave., had been subject to a foreclosure auction, according to PropertyShark. The loss of a Manhattan residential property to creditors is a rare event, regardless of the unit"s price-tag: Only 27 new residential foreclosures in the borough in the first quarter.

Could this be the start of a trend? We think so. Which leads us to our next question: How, exactly, does one short the luxury real-estate market?

We also look forward to The Left deciding that a probe into this transaction is warranted, just in case it was some complex way to transfer Russian funds to Trump... (only half-kidding).

Citi's "Scariest Chart" Prompts Concerns About Holding American Equities

This year through June 5, 7,561 M&A deals were announced, the lowest count since 2013, according to S&P Global Market Intelligence.

While M&A volume reached a record $2.055 trillion 2013, the volume has slipped in 2016 to just $1.7 trillion.

As RealInvestmentAdvice.com"s Lance Roberts notes, given the length and maturity of the current economic expansion, tighter monetary policy in the U.S. and a lack of legislative agenda moving forward in Washington, there is further risk of M&A support being pulled from the markets.

And Tobias Levkovich, the chief US equity strategist at Citi, appears to agree that there is potential problems ahead...

"In some respects, one of the scariest charts to look at currently is the number of announced mergers & acquisition deals over the past year or two,"

"M&A lawyers argue the "uncertainty" factor, which has come about recently, given some unpredictable aspects of the new Trump administration, has been the issue. It only may explain the last six months, but the trend has been poor for about two years or more.

In the past, there has been some correlation with the S&P 500 and thus it could generate more legitimate fears than some of the other excuses that are put forth for not wanting to buy American equities."

Despite surging CEO confidence, it appears their money is not being put where their mouth is in terms of betting on the long-term future (that stocks are clearly trying to price in from some utopia).

Macy's Tumbles After Issuing Profit Margin Warning

Another day, another guidance cut by a retailer, this time from Macy"s which during its investor meeting, warned investors that the company"s gross margin could be below the forecast given just this part February, some 60-80 basis points lower.

According to Fly on the Wall, Macy’s CFO Karen Hoguet said at investor day that the gross margin for the fiscal year ending January 2018 is trending 60bps-80bps below FY17, with the 2Q rate ~100bps below 2QFY17. One possible explanation: liquidation of excess inventory as the company is unable to sell enough product per planned prices. Indeed, this was confirmed moments ago by a statement made on the investor call:

• MACY"S INC EXEC SAYS NOT SATISFIED WITH INVENTORY LEVELS IN STORES

The silver lining: Macy’s, at least for now, reaffirmed its FY18 sales and EPS forecast, and said it plans for exclusive product to reach 40% by 2020.

Some other details from the investor meeting per Bloomberg:

• Macy’s says it can expand gross margin on apparel side of business over time, but can’t say when beauty margin will grow: mgmt speaking at investor day.


• Excess inventory, beauty markdowns hurt margin forecast


• There is a place for both Amazon, Macy’s to succeed


• Hoping to scale Backstage next year; beauty working very well in Backstage, partly due to bath & body; home products also working


• Herald Square property getting more valuable


• Ralph Lauren, Michael Kors are part of M’s power brands; they may be having trouble right now, but confident they will turn, just like Tommy Hilfiger did


• Nothing in forecast that is counting on traffic changing from current trends


• Buy online/pickup in stores capability will be available by year end


• Looks at product every day with an eye towards "editing" SKUs


• Not satisfied with inventory turns

The market did not take the warning in stride, and M stock has tumbled to session lows, down as much as 5% to lowest intraday since mid-May.

Speeding Vehicles Strike Pedestrians In Separate Times Square, Staten Island Incidents: At Least Two People Killed

Update: in a separate incideint, Breaking911 reports that 5 People were just struck by vehicle, 1 DOA, 3 likely to die / very critical on Broadway & Castleton Ave. It is unclear if the two incident are llinked, especially if as the NYPD is trying to claim, the first driver had no intention of driving into pedestrians.

BREAKING IN STATEN ISLAND, NYC: 5 People just struck by vehicle; 1 DOA, 3 likely to die / very critical. Broadway & Castleton Ave.

— Breaking911 (@Breaking911) May 18, 2017

Staten Island: Broadway & Castleton Ave, @NYPDhighway CIS Requested after 3 people struck by a vehicle and 1 aided is DOA. #BREAKING

— NYC Scanner (@NYScanner) May 18, 2017

* * *

A car jumped a curb and plowed into a busy sidewalk in Times Square during the lunchtime rush, killing one person and injuring several others on Thursday, sources said. The driver is in custody and being tested for alcohol. One person is dead, and at least 13 injured.

Reuters witnesses said that the driver"s actions "appeared intentional" and that the vehicles "drove against traffic" and onto the sidewalk, striking pedestrians.

The crash happened at Broadway and West 45th Street at about 12 p.m., officials said. FDNY said 13 patients were being treated at the scene.

According to NYPD, the driver is 26 year old Richard Rojas from the Bronx.

The vehicle that struck pedestrians was a red sedan and the driver has been arrested and removed.

The arrest of driver shown below:

And yet despite the immediate arrest, in the past 30 minutes the NYPD has already figured out that the incident was not terrorism:

• CBS SAYS TIMES SQUARE INCIDENT NOT CONNECTED TO TERRORISM, CITING NEW YORK CITY POLICE

A video of the arrest below:

WATCH THIS - BREAKING VIDEO: NYPD taking driver from Times Square incident into custody pic.twitter.com/lP0yyfMUZt

— Breaking911 (@Breaking911) May 18, 2017

A live feed from Pix 11 below:

Video: At least 10 people receiving treatment after vehicle strikes pedestrians in NYC"s Times Square@BraddJaffy pic.twitter.com/vSk548yHNs

— Global News (@GlobalZarfati) May 18, 2017

According to the NYPD, the car lost control on 7th Avenue between 42 and 43rd streets, and an investigation is underway.

NYPD: Car "lost control" on 7th in Times Square between 42nd/43rd. People injured. Investigation underway. Driver in custody. .

— David Shuster (@DavidShuster) May 18, 2017

The New York Police Department closed off the area. A Reuters witness said at least 10 people were being treated for injuries on the ground after the collision at the Midtown Manhattan tourist site.

MORE: At least 10 people receiving treatment after vehicle strikes pedestrians in New York"s Times Square - Reuters witness

— Reuters Top News (@Reuters) May 18, 2017

Just heard about car hitting pedestrians on the sidewalk in Times Square. I"m at Thomson Reuters and lobby is locked down. #nyc

— Nia Armstrong (@niaarmstrong) May 18, 2017

While the NYPD is initially claiming that the incident was not an act of terrorism, in a clear bid to preserve calm, we would recommend waiting for a definitive conclusion.

Developing.

China Iron Ore Prices Crash Through Key Support To 6-Month Lows

After a few short days of respite - suggested by some as indicative that the worst is over - China commodities are crashing again tonight with Dalian Iron ore snapping below 460 to its lowest since before Trump"s election...

This has erased the entire post-Trump reflation trade hope...

The commodity has sunk on concern mine supplies will go on rising just as China’s mills enter a weaker period for demand and policy makers in Asia’s top economy rein in leverage. Stockpiles at mainland ports are near a record after robust shipments from Australia and Brazil, with miner BHP Billiton Ltd. citing the inventories as among risk factors that may tug prices lower. Citigroup Inc. has said there may have been forced sales by some traders in China.

With all the industrials now red post-Trump...

As Citi warned over the weekend, "We suspect that a good number of physical traders that are financially leveraged up to five times have been forced to destock due to rising short-term borrowing costs and the recent sharp price corrections."

Citigroup isn’t alone in saying that some traders may be compelled to sell holdings into a falling market as China tightens. Shanghai Cifco Futures Co. said this week signs are emerging that traders are dumping their holdings.

Thank God 'The People' Are Back in Power: Kushner Family Pitches 'Invest $500k, Immigrate to America' Visa Program in China

Representatives from the Kushner family descended upon the Ritz Carlton in Beijing to pitch wealthy Chinese the EB-5 visa program aka crony capitalism.

Nicole Kushner, Jared"s sister, was alleged to be in attendance.

The pitch was “Invest early, and you will invest under the old rules,” according to the Washington Post.

The event, which was closed to foreign press, was hosted by the Chinese company Qiaowai -- who is working on behalf of the Kushner family for one of their projects in New Jersey.

It"s dubbed the "Kushner 1" project, like Airforce 1 only cooler: “This project has stable funding, creates sufficient jobs and guarantees the safety of investors’ money, read one of the promotional brochures.

The materials painted Jared as a "celebrity" in America, encouraging rich Chinese to trust their status and business acumen in America -- which is funny considering the ruinous state of their crown jewel property 666 5th avenue (extra anti-Christ). The Kushner"s are trying to restructure the 666 deal, bringing in Chinese insurance giant Anbang, in an effort to finance a massive expansion and conversion of the top floors into posh condos.

Thank God "the people", plumbers, electricians and all of the other rubes, are running America again. Get the wall up, unless of course all Mexican migrants are willing to fork over $500,000 to invest.
Content originally published at iBankCoin.com

US Macro Data Crashes Most In 7 Years - What Happens Next?

The last week or so has seen both "hard" real economic data and "soft" survey data disappoint notably.

This has sent the Citi Macro Surprise Index plunging to 5-month lows with its biggest drop since 2010.

The question is - what happens to the stock market next?

Of course this is no surprise to bond traders...

Hayes: "A Lot Of What I Know Even The DOJ Is In The Dark”

An exclusive excerpt from the hot new financial and legal thriller "The Spider Network" by David Enrich

The small ski resort town, nestled in the mountains outside the city of Karuizawa, was a popular destination for day trips for Japanese families. Bustling during the day, it was mostly quiet this Saturday night. Clouds cloaked the moon.

A chartered bus pulled up outside a bar, its windows aglow. A light snow was falling. Out into the peaceful evening stumbled dozens of rowdy bankers, some toting tall cans of Asahi and Kirin. Most of them were drunk. They quickly took over the small bar.

The drinkers were employees of the American bank Citigroup, one of the world’s largest and most troubled financial institutions. A year earlier, at the beginning of 2009, American taxpayers had finished pumping a staggering $45 billion into Citigroup to bail out the collapsing behemoth. Now the transfused recipient was treating dozens of its investment banking employees to a weekend getaway. The bankers were housed nearby in a sprawling luxury hotel, each employee’s room designed in Japan’s typical spare style.

These festivities weren’t so spartan. The point was to foster camaraderie, and that was happening in spades. The party had begun on the hundred-mile ride on the bullet train out from Tokyo. After a day of hitting the slopes, Citigroup ferried the bankers to a bowling alley, where they drank and bowled and drank some more. Their bus had then deposited the intoxicated crew at this bar, before leaving the partiers behind to fend for themselves.

One of the fiesta’s ringleaders was a wiry, curly-haired American named Chris Cecere. You wouldn’t know it from his behavior now, but he was one of the sharpest people in Tokyo’s cutthroat financial markets. A foul-mouthed veteran of the doomed Wall Street firm Lehman Brothers, Cecere had only worked in Japan for a year or so, but he had quickly assembled a team of rock-star traders. His mandate was to push the already risk-hungry Citigroup into brave new financial frontiers.

That wasn’t all Cecere was pushing. This snowy night, he was practically pouring shots down the throat of his subordinate, a disheveled British thirty-year-old named Tom Hayes. Slim and nearly six feet tall, Hayes was a brilliant mathematician, one of the most prolific, aggressive traders in Tokyo, if not the world. As with Cecere, he didn’t look or act the part. Bespoke suits and expensive shoes were found nowhere in his wardrobe. Specks of dandruff dusted his shoulders. He was far happier with a glass of orange juice or a mug of hot chocolate than a pint of beer, a preference that once earned him the nickname “Tommy Chocolate.”

Hayes found social situations uncomfortable to the point of painful—this one included. Before departing for the ski weekend, he had grumbled to his fiancée that he didn’t want to go. She told him he didn’t have a choice. Hayes’s life revolved around work, and Citigroup was his new family. He had only started there a couple of months earlier, and it was important that he make a good impression on his colleagues. So far, he was off to a promising start in that regard. His new bosses bathed him in praise, introducing him around Citigroup’s global organization as their newest trophy asset. Only hours before they showed up at the bar, a top Citigroup executive, Brian Mccappin, had described Hayes as “a star” who represented the future of the firm’s enormous business in Tokyo. Mccappin proclaimed that their division would further shift its trading approach to take advantage of their new hire’s extraordinary talent. Hayes was certainly being paid like a star. After years of feeling like he was getting stiffed by six-figure payouts at his former employer, the Swiss bank UBS, he had pocketed a roughly $3 million cash signing bonus when he joined Citigroup.

Mccappin, the CEO of Citigroup’s investment bank in Japan, came along to the bar that night, along with Cecere and Hayes. A native of the gritty English city of Birmingham, Mccappin was tall, with a chubby, dimpled face. A talented singer at thirteen, he and a friend had formed a band called Deadline that sometimes performed at a pub frequented by workers, including Mccappin’s father, emptying out of a nearby Rolls-Royce plant. After Deadline split, some of its members went on, years later, to form Ocean Colour Scene, which briefly rose to fame touring with Oasis. By then Mccappin had moved on to other things, but that didn’t stop him from occasionally claiming that he’d been a founding member of the infinitely more familiar band.

At the time Hayes arrived at Citigroup, the main outlet for Mccappin’s stymied musical ambitions was karaoke, and he was a frequent and enthusiastic practitioner. As Mccappin belted out tunes this night, Hayes grudgingly accepted shot after shot of Jägermeister from Cecere. He struggled to swallow the sweet herbal concoction, fighting an increasingly powerful gag reflex. But he kept throwing the shots back, unwilling or unable to withstand Cecere’s schoolboy pressure. Hayes didn’t want to disappoint his boss. The earlier part of the day had been easier: Hayes was an expert skier, who embraced risk as eagerly on a black-diamond trail as he did on a frenzied trading floor, and he thrived in the deep powder of the Karuizawa resort. Now, though, beads of sweat started tingling on his scalp. The room began to spin. Hayes staggered to the bathroom and vomited. Then he rejoined the party.

****

Three years later, in January 2013, I was sitting on a sofa in my cramped apartment in London’s Clerkenwell neighborhood. Centuries earlier, the area had been the stomping ground of knights who were about to embark on crusades to the Holy Land. In a nod to that history, the narrow alleyway that my wife and I shared with a Belgian beer hall was named Jerusalem Passage. The neighborhood had been repopulated by trendy design studios, sushi bars, and art galleries.

It was just after 8 p.m. when my iPhone buzzed with a text message from a number I didn’t recognize. “I’ll meet you tomorrow but I need to be certain I can trust you,” the text read. “This goes much much higher than me and a lot of what I know even the DOJ is in the dark.”

The message was from a terrified, and very sober, Tom Hayes.

* * *

This piece was excerpted from David Enrich’s new book, “The Spider Network: The Wild Story of a Math Genius, a Gang of Backstabbing Bankers, and One of the Greatest Scams in Financial History."

Macy's Surges On Hudson's Bay Takeover Report; Would Add To Portfolio Including Saks And Lord & Taylor

With Macy"s making the headlines in the past few days on speculation it was shopping itself for a potential buyer, a thesis first laid out by David Einhorn one year ago, moments ago the WSJ reported that Hudson"s Bay, the Canadian owner of Saks and Lord and Taylor, has made a takeover approach for the landmark retailer, sending the shares of both companies surging, and tripping a circuit breaker for M, which was lst up just shy of 5%.

The likely catalyst for the sale is that Macy"s veteran CEO, Terry Lundgren, announced last June he would be stepping down later this year.

As the Post recently reported,  Lundgren is trying to avoid an ugly board shakeup that could tarnish his 13-year legacy and turn the largest US department store into a battleground littered with discarded top brass.

Lundgren, who had not planned to cap his tenure with a sale, has recently become open to offers from potential friendly buyers as a proactive measure to head off any attempt to mess with the board, sources familiar with the situation said.  A partner at a private equity firm told The Post that he’d been contacted about a Macy’s sale by a real estate investor — while other industry sources close to the situation say they, too, have had similar discussions.

As the Post further added, "the catalyst is Jeffrey Smith’s Starboard Value, the activist New York hedge fund. Smith is said to be fed up with Macy’s poor performance since he invested in it in July 2015. Macy’s shares are down nearly 60 percent since then. Smith is angling for seats on Macy’s board, according to several sources, who describe the situation as a looming proxy battle in advance of Macy’s annual meeting, which will likely take place in late April or May."

Then, moments ago, the WSJ"s Dana Mattioli, who has an infamous "deep throat" source on Goldman"s M&A team, confirmed that indeed Hudson"s Bay is preparing to acquire Macy"s, completing a trifecta of US retailers, including Lord and Taylor and Saks, however she cautions that the talks are in the early stages and may not lead to a deal, especially since "complicating a takeover, Macy’s is saddled with about $7.5 billion in debt."

Some more details from the WSJ:

Hudson’s Bay is an acquisition-hungry owner of marquee names in retail including Lord & Taylor department stores and Saks Fifth Avenue. While its market value is dwarfed by that of Macy’s—$1.8 billion compared with $9.8 billion as of Friday morning—Hudson’s Bay could raise equity and debt against its real estate portfolio, which could be worth $14 billion, one of the people said. It could also bring in a partner.

Macy’s has struggled in recent years amid increasing competition from upstarts and as shopping habits change and consumers buy more over the internet. Its stock has fallen more than 50% from the highest level it reached in 2015. In January, Macy’s said it would slash more than 10,000 jobs and detailed plans to close dozens of stores after another weak holiday-sales season. It’s facing mounting investor pressure to turn around its performance and reverse the stock drop. Starboard Value LP took a stake and a board seat and called on Macy’s to hive off its valuable real estate, which the activist investor says is worth more than $20 billion.

It is unclear if Trump would have any particular objection to having America"s northern neighbor own three of the most valuable and well-known retail brands in the US.

Citi: "There Is Something Strange Going On... Something Doesn't Smell Right"

With the Dow Jones rising excruciatingly close, or within 0.37 points of 20,000 on Friday only to let down the market cheerleaders in the last minute, it would appear that there is nothing one can throw at a market which is determined to keep rising no matter what happens in the world.  So leave it to our favorite skeptic, Citi"s Matt King to throw a fly in the ointment by asking how is it possible that "nothing sticks to markets."

He proposes one possible reason: perhaps analysts were overly pessimistic going into the election and year end, which is possible considering the "most synchronized DM upturn in years"...

... an upturn, which however, has been largely predicated by the reflexivity of soaring stock markets, which in turn have spiked not on actual news, but frontrunning the "everyone"s-a-winner-under-Trump" trade...

... which however may never actually materialize in practice, and which could very well also lead to a recession as the surging dollar leads to a global GDP slump while paralyzing financial conditions (see recent record FX volatility in China).

As King then notes, earnings bullishness gets you only so far, and as the chart below shows, the recent surge in global stock prices is not a function of earnings, but expanding P/E multiples relative to Trasuries, which then prompts him to ask why, now that yields are surging, "shouldn"t we be discounting using higher bond yields."

This is turn prompts King to propose one of his trademark rhetorical questions: "There Is something strange going on" adding that "something doesn"t smell right" in a world in which uncertainty is soaring yet spreads are collapsing, as SocGen first pointed out last month in its "most frightening credit chart", even as leverage also keeps rising.

What is the "key ingredient" in the mix that makes sense out of this market chaos? Simple: according to King, central bank buying of anything that is not nailed down is the "missing link."

Furthermore, despite all talk of a shift from monetary to fiscal stimulus, "central banks aren"t done yet", not by a long shot:

Which in turn has - so far - allowed markets to ignore the reality that the credit bubble is getting bigger by the day as debt and interest coverage continue to rise while EBITDA still shrinks, resulting in late cycle fundamentals and valuations.

And yet, there is always a tipping point: according to King, such a point would arrive once real yields spike higher "not matched by a pick-up in growth."

His final rhetorical question: how long until this tipping point happens? The answer: 50 basis points.

Now if only a 50 basis point spike in real yields would also put an end to all the other "strange things" taking place in a world which is burning every day, yet where the Dow Jones is partying like it"s 19,999.

Russophobia And Anti-Trumpism Running Wild In America

Authored by Steve Lendman,

War-profiteers, neocons infesting the Obama administration, the CIA under John Brennan, NSA head admiral Michael Rogers, and other pro-Hillary dark forces are going all-out to assure no change in US geopolitics - along with wanting Trump denied the presidency he legitimately won.

They notably want adversarial relations with Russia maintained, heading for war between the world’s leading nuclear powers if not stopped.

For them, the notion of Trump wanting normalized ties, including cooperating with Vladimir Putin in combating terrorism, is anathema - to be quashed by whatever means necessary, a no-holds-barred assault for the status quo.

Throughout months of campaigning, media scoundrels played the lead role in denigrating Trump relentlessly, serving as press agents for Hillary, turning journalism into shameless advocacy.

They play the same role in longstanding vilification of Russia - not because of its policies, solely because of its sovereign independence and Putin’s outspoken anti-imperial, anti-war advocacy.

The fever pitch of things today is unprecedented in my memory, McCarthyism on steroids, along with a plot afoot to deny Trump his electoral triumph, things on a fast track toward full-blown tyranny.

The neocon, CIA-connected Washington Post long ago fell from grace, today making the National Enquirer look respectable by comparison.

Here are some fake news headlined reports on its current opinion page:

“Trump infrastructure will not include outfrastructure” - a cartoonist ridiculing Trump his way.

“The Putin-Trump bromance”

“Trump is the star of his own movie. Here is a review” - vilifying him, as expected.

“Trump is playing a risky spy game”

“What will be Trump’s legacy? Who cares” - writer Garrison Keillor has sunk from Lake Wobegon to WaPo fake news proliferator.

“Trump is already antagonizing the intelligence community, and that’s a problem” - former CIA director Michael Hayden the contributor.

“New York should seize Trump Tower”

“Trump is assembling an anti-government. Did Russia help get him here?”

“Trump’s dangerous diss of the CIA”

The prospect of Trump getting along with Putin intensified Russophobia and bashing him to a fever pitch.

The hyped notion about Russian interference in America’s election process for Trump is an absurdity on its face. It’s virtually impossible for any foreign nation or outside source to swing the any Western election for a preferred candidate.

Instead of setting the record straight, The New York Times headlined “The Perfect Weapon: How Russian Cyberpower Invaded the US.”

The fake news story claimed a modern-day version of Watergate, this time by Russian cyberattacking - “the burglary…from afar, directed by the Kremlin…hacking DNC emails and interfering in America’s election, The Times spuriously claimed.

Its account has a familiar foul odor. It never happened. It’s all made up - to vilify Russia and deny the legitimacy of Trump’s election to swing things for Hillary even though she decisively lost.

If pulled off, it would be a coup d’etat, either in the Electoral College or House if it gets to decide by denying Trump 37 or more votes he legitimately won.

The Times: “Many of Mrs. Clinton’s closet aides believe that the Russian assault had a profound impact on the election…”

NSA head admiral Michael Rogers was quoted, saying “(t)here shouldn’t be any doubt in anybody’s mind. This was not something that was done casually.”

“This was not something that was done by chance. This was not a target that was selected purely arbitrarily. This was a conscious effort by a nation-state to attempt to achieve a specific effect.”

Fact: The Times, Rogers and others claiming Russian interference in America’s election lied. Not a shred of evidence supports their allegations - entirely baseless without credible proof. None exists.

Things are likely in the early stage of the latest round of Russia bashing, along with tyrannical methods to prevent Trump from becoming America’s 45th president.

Kanye West Arrives At Trump Tower, Discusses "Life" With The President-Elect

Following his pro-Trump outbursts (and subsequent nervous breakdown), Kanye West has been summoned to Trump Tower.  A pool reporter was unable to determine the reason for his visit.

JUST IN: Kanye West walks into Trump Tower https://t.co/84ClHD4MX3

— NBC News (@NBCNews) December 13, 2016

The meeting between the two:

My bro Kanye West and Trump choppin it up in New York https://t.co/CHx7xk5cJs

— LottoMoney (@LottoMoney_) December 13, 2016

West arrived at Trump Tower Tuesday morning, a surprise since the meeting had not been previously announced. Mr. Trump and West came down to the lobby after their meeting, where Mr. Trump called West a “good man.”

“Just friends, just friends,” he said. “He’s a good man. Long time. Friends for a long time.”

Asked what they had discussed, Mr. Trump replied: “Life. We discussed life.”

When reporters began directing questions at West, he said: “I’m just here to take a picture right now,” giving them a thumbs-up.

Maybe they talked about the presidency. Last year, West announced at the MTV Awards, “I have decided in 2020 to run for president.”

On a more serious note,  according to E News, West and Trump discussed a potential leadership role during their meeting Tuesday morning.  Trump spoke with West about becoming an “ambassador of sorts” in an “entrepreneurial leadership role," the entertainment news site reported.

West made waves when he and an entourage entered Trump Tower on Tuesday morning for a meeting with the president-elect. The duo emerged for photos after the meeting, where they "discussed life," Trump told media.

In addition to his music career, West owns his own clothing line. Earlier this year, West claimed he plans to run in the presidential election in 2020.

At a concert in November, West said that although he didn"t vote, if he had cast a ballot, it would"ve been for Trump. “I said something that was kind of politically correct,” West told the concert crowd in San Jose, Calif. "I told y’all I didn’t vote, right? What I didn’t tell you ... If I were to have voted, I would have voted on Trump.”