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Member since: Tue May 13, 2014, 06:50 PM
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JPMorgan Chase Has Billions in CRE Loans Riding on WeWork Surviving

JPMorgan Chase is so interconnected with WeWork that to a number of minds WeWork looks like little more than a strawman for the bank and the bank’s biggest commercial real estate clients in New York City where WeWork is taking vacant space off the market at seismic speed. WeWork is now the largest office tenant in New York City.

The interconnections between WeWork and JPMorgan Chase include the following: JPMorgan Chase Bank, N.A., a federally insured bank, “has made loans and extended credit to Adam Neumann totaling $97.5 million across a variety of lending products, including mortgages secured by personal property and unsecured credit lines and letters of credit,” according to the prospectus filed with the SEC for the recently aborted IPO.

JPMorgan Chase is also one of three banks that has given Neumann a $500 million line of credit, which he had drawn down to the tune of $380 million as of July 31, 2019. That whopping line of credit is secured by shares of stock in The We Company, the parent of WeWork. Unfortunately for JPMorgan Chase, the valuation for The We Company has been melting faster than a snow cone in July. The initial buzz around the WeWork IPO was that the company could have a valuation of over $60 billion. Then there was talk of a $47 billion valuation, which is where its largest investor, a Japanese investment fund operated by SoftBank, last bought private shares. The valuation continued to come down to around $15 billion, and still failed to find enough interest to launch an IPO.

In fact, WeWork has never made any profits in its nine years of existence and its losses are alarmingly out of control. The company lost $1.6 billion last year and its losses have spiraled to over $900 million in just the first half of this year.

DOW 26807

Previous close 26950. 52 wk high 27398. 52 wk low 21712. Today's low 26704. High 27079.

NASDAQ : 7993 ▼

S&P : 2699 ▼

Soybeans : 8.93 ▲

Oil WTI : 56.86 ▼

DOW 26950

Previous close 26934. 52 wk high 227398. 52 wk low 21712. Today's low 26831. High 27011.

NASDAQ : 8112 ▼

S&P : 2991 +/-

Soybeans : 8.91 ▲

Oil WTI : 58.50 ▲

Some Monday morning doom and gloom...

The Disconnect Between The Markets & Economy Has Grown
Authored by Lance Roberts via,

The reality is that after 3-massive Federal Reserve driven “Quantitative Easing” programs, a maturity extension program, bailouts of TARP, TGLP, TGLF, etc., HAMP, HARP, direct bailouts of Bear Stearns, AIG, GM, bank supports, etc., all of which total more than $33 Trillion, the economy grew by just $3.87 Trillion, or a whopping 24.11% since the beginning of 2009. The ROI equates to $8.53 of interventions for every $1 of economic growth.

Not a very good bargain.

We can look at this another way.

The stock market has returned almost 103.6% since the 2007 peak, which is more than 4-times the growth in GDP and nearly 3-times the increase in corporate revenue.

While suppressed wage growth, layoffs, cost-cutting, productivity increases, accounting gimmickry, and stock buybacks have been the primary factors in surging profitability, these actions have little effect on revenue growth. The problem for investors is all of the gimmicks to win the “beat the estimate game” are finite in nature. Eventually, real rates of revenue growth will matter. However, since suppressed wages and interest rates have cannibalized consumer incomes – there is nowhere left to generate further sales gains from in excess of population growth.

++++ This trend has little to do with trump.

DOW 26934 Friday 9-20-19

Previous close 27094. 52 wk high 27398. 52 wk low 21712. Today's low 26926. High 27194.

NASDAQ : 8117 ▼

S&P : 2992 ▼

Soybeans : 8.82 ▼

Oil WTI : 58.09 ▼

So much for a rate cut..

Have a good weekend.

Fed Repo Oversubscribed For Third Day But Total Drops As Funding Pressures Ease

There was some bad and some good news in today's, 4th consecutive repo operation conducted by the NY Fed.

First, the bad news is the for a 3rd consecutive day, the total amount of securities submitted for "liquification" at the Fed was greater than the total size of the Fed's $75 billion repo facility, meaning it was once again oversubscribed.

However, the good news is that whereas yesterday the total securities "parked" into the repo op was $83.875 billion, on Friday, the total dropped to just $75.55 billion, meaning the facility was oversubscribed by just $550 million, down sharply from Thursday's $8.875 billion.

Is this to be expected? Why yes: as we noted yesterday, even Goldman now expects that the Fed will resume QE, pardon, POMO, or bond purchases in November, with Goldman expecting the Fed to start purchasing roughly $15bn/month rate of permanent OMOs, "enough to support trend growth of the balance sheet plus some additional padding over the first two years to increase the size of the balance sheet by $150bn, restoring the reserve buffer and eliminating the current need for temporary OMOs." That strategy would result in balance sheet growth of roughly $180bn/year and net UST purchases by the Fed (the sum of the red and grey bars) of roughly $375bn/year over the next couple of years.

Colt will suspend production of AR-15 rifles for civilian sales...

Colt will suspend production of AR-15 rifles for civilian sales, saying there's an "adequate supply" of the high-powered weapons already in the market, the famed gun manufacturer said Thursday.

The gun-maker, based out of West Hartford, Connecticut, said its decision is purely market-driven and made no mention of any public pressure over the AR-15's use in several mass shootings in the United States.

"The fact of the matter is that over the last few years, the market for modern sporting rifles has experienced significant excess manufacturing capacity," Colt President and CEO Dennis Veilleux said in a statement.

Veilleux said his company will continue to make and sell AR-15s for "our warfighters and law enforcement personnel" who "continue to demand Colt rifles and we are fortunate enough to have been awarded significant military and law enforcement contracts."

DOW 27094

Previous close 27147. 52 wk high 27398. 52 wk low 21712. Today's low 27064. High 27272.

NASDAQ : 8182 ▲

S&P : 3006 +/-

Soybeans : 8.94 ▲

Oil WTI : 58.41 ▲

DOW 27147

Previous close 27110. 52 wk high 27398. 52 wk low 21712. Today's low 26899. High 27161.

NASDAQ : 8177 ▼

S&P : 3006 ▲

Soybeans : 8.89 ▼

Oil WTI : 58.10 ▼

Rate cut .25 by the FED.

Fed's Repo Oversubscribed As Funding Demand Soars 50% Overnight

Liquidity Shortage Getting Worse: Fed's Repo Oversubscribed As Funding Demand Soars 50% Overnight

20 minutes after today's repo operation began, it concluded and there was some bad news in it: as we feared, yesterday's take up of the Fed's repo operation which peaked at $53.2 billion has expanded substantially, and according to the Fed, today there was a whopping $80.05BN in bids submitted, an increase of $27 billion, or 50% more than yesterday.

It also meant that since the operation - which is capped at $75BN - was oversubscribed by over $5BN, that there were participants who did not get the last-minute liquidity they needed, and that the Fed will see demands to either expand the size of its operations, or implement a fixed operation and/or transition to permanent open market operations, i.e. QE

Overnight U.S. Funding Rate at 2.8%, Elevated for a Third Day

++++++++++ This is the second day that these rates and volumes have gone higher. It's not a panic call or all doom and gloom. The insiders know someone is having a problem raising money or may be caught on the wrong side of a trade.

One other possibility is the big boys want the FED to restart QE. If that's the case, then they are looking to protect their positions in expectation of the economy slowing faster based on what they see. Or one of the big boys has (legal-credit) problems in the near future and they see risk of a spill over.

There is a post on the velocity of money and one on negative interest rates. Both ave more influence on the economy than most people realize. Not just in the US, but globally. What happens out there eventually filters back here.

An ounce of prevention is worth a pound of cure.

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