Business

On Friday we presented Kyle Bass' latest interview in which the Texas hedge fund manager explained the reasoning why he thought shorting the Yuan is the "greatest investment opportunity right now." The crux behind the argument was well-known to Zero Hedge readers, namely China's peaking credit cycle driven by soaring bad, or non-performing, loans which have so far been swept away, but which courtesy of a $35 trillion financial system are nothing short of a "neutron bomb", as we first dubbed the embedded risk, waiting to go off. Here is Bass:

Via GEFIRA,

World oil consumption is more than 90 million barrels a day. Between 2009 and 2014 oil was traded for about 110 dollars a barrel; now oil is changing hands for 32 dollars a barrel. Roughly a 7-billion-dollar cash flow a day is vanishing from the global market.

Norway’s sovereign wealth fund that has accumulated a stake of 4.5 billion dollars in Apple over the past years, will turn from an Apple buyer into an Apple seller.

It's not the economy (or fundamentals), stupid - It's The Fed!

So we had a rate-hike, and...surprise - markets puked

Source: NorthmanTrader.com

Still think anything other than The Fed matters?

The S&P 500 has just caught back down almost perfectly to The Fed's balance-sheet-implied level...

Submitted by Charles Hugh-Smith via OfTwoMinds blog,

All the phantom wealth piled up in China's boost phase is now melting down, and the China Syndrome will trigger a meltdown in global phantom assets.

The 1979 film The China Syndrome took its name from the darkly humorous notion that a nuclear reactor meltdown in the U.S. would burn straight through the Earth to China. (wikipedia: The China Syndrome)

Some companies are notorious for buying back billions in stock in order to mask the decline in their earnings by reducing the number of shares outstanding. Alcoa, which still has a major debt overhang from the last financial crisis, is unable to do that as it simply does not have the free cash flow to dedicate to shareholder friendly activities. Instead, Klaus Kleinfeld's company is forced to resort to an even more primitive form of EPS fudging: massive quarterly EPS addbacks.