Friday, October 24, 2014

04/16/2010 It is about Trust *

For the week, the S&P500 declined 0.2% (up 6.9% y-t-d), while the Dow added 0.2% (up 5.7%). On the back of today’ steep declines, the Banks ended the week down 1.0% (up 28.2%), and the Broker/Dealers fell 1.5% (up 4.3%). The broader market again outperformed. The S&P 400 Mid-Caps gained 0.8% (up 12.9%), and the small cap Russell 2000 jumped 1.7% (up 14.3%). The Morgan Stanley Cyclicals added 0.6% (up 12.7%), and the Transports jumped 3.1% (up 13.3%). The Morgan Stanley Consumer index slipped 0.3% (up 6.9%), and the Utilities fell 1.3% (down 4.3%). The Nasdaq100 rose 0.9% (up 8.2%), and the Morgan Stanley High Tech index advanced 1.3% (up 6.9%). The Semiconductors jumped 4.8% (up 9.4%). The InteractiveWeek Internet index increased 0.7% (up 9.4%). The Biotechs dropped 1.7%, reducing 2010 gains to 30.2%. With bullion dropping $25, the HUI gold index sank 4.8% (down 0.4%).

One-month Treasury bill rates ended the week at 15 bps and three-month closed at 15 bps. Two-year government yields fell 11 bps to 0.96%. Five-year T-note yields sank 16 bps to 2.44%. Ten-year yields fell 12 bps to 3.77%. Long bond yields declined 6 bps to 4.67%. Benchmark Fannie MBS yields dropped 13 bps to 4.41%. The spread between 10-year Treasury and benchmark MBS yields declined one basis point to 64 bps. Agency 10-yr debt spreads declined one to 34 bps. The implied yield on December 2010 eurodollar futures dropped 10.5 bps to 0.695%. The 10-year dollar swap spread declined 1.25 to end the week at negative 2.75. The 30-year swap spread declined 2.25 to negative 21.5. Corporate bond spreads were somewhat wider. An index of investment grade bond spreads widened 2 bps to 87 bps, and an index of junk spreads widened 5 bps to 494 bps.

It was a decent week for debt sales. Investment grade issuers included Southern Copper $1.5bn, Lowes Companies $1.0bn, MassMutual $600 million, Discover Bank $500 million, and Semco Energy $300 million.

Junk issuers included CCO Holdings $1.6bn, Cablevision Systems $1.25bn, Harrahs $750 million, Ryland $300 million, Rosetta Resources $200 million, Standard Steel $140 million, and Vector Group $75 million.

I saw no convert issues.

International dollar debt sales were enormous. Issuers included Telefonica Emisiones $3.5bn, Bank of China $2.5bn, CIE Financement Foncier $2.0bn, European Bank of Reconstruction and Development $1.0bn, Dubai Electricity & Water $1.0bn, BBVA Bancomer $1.0bn, Brazil $750 million, Country Garden $550 million, Banco Santander $500 million, Hyundai Motor $500 million, Pontis $325 million, Soc Quimica Minera $250 million, Banco Bradesco $250 million, and International Finance Corp $200 million.

U.K. 10-year gilt yields declined 6 bps to 3.98%, and German bund yields dropped 6 bps to 3.08%. Greek bond yields jumped 24 bps to 7.38%. The German DAX equities index declined 1.1% (up 3.8% y-t-d). Japanese 10-year "JGB" yields fell 4 bps to 1.34%. The Nikkei 225 declined 0.9% (up 5.3%). Emerging bonds were resilient and equities were on the weak side. For the week, Brazil's Bovespa equities index dropped 2.8% (up 1.2%), and Mexico's Bolsa dipped 0.6% (up 4.7%). Russia’s RTS equities index gained 1.3% (up 14.4%). India’s Sensex equities index declined 1.9% (up 0.7%). China’s Shanghai Exchange slipped 0.5% (down 4.5%). Brazil’s benchmark dollar bond yields declined 7 bps to 4.80%, and Mexico's benchmark bond yields sank 15 bps to 4.81%.

Freddie Mac 30-year fixed mortgage rates sank 14 bps to 5.07% (up 25bps y-o-y). Fifteen-year fixed rates dropped 12 bps to 4.40% (down 8bps y-o-y). One-year ARMs slipped one basis point to 4.13% (down 78bps y-o-y). Bankrate's survey of jumbo mortgage borrowing costs had 30-yr fixed jumbo rates down 9 bps to 5.86% (down 46bps y-o-y).

Federal Reserve Credit expanded $8.0bn last week to $2.298 TN. Fed Credit was up $77.8bn (12.2% annualized) y-t-d and $199bn, or 9.5%, from a year ago. Elsewhere, Fed Foreign Holdings of Treasury, Agency Debt this past week (ended 4/14) jumped $9.9bn to a record $3.034 TN. "Custody holdings" have increased $79.1bn y-t-d, with a one-year rise of $393bn, or 14.9%.

M2 (narrow) "money" supply increased $12.0bn to $8.503 TN (week of 4/5). Narrow "money" has declined $9.8bn y-t-d. Over the past year, M2 grew 2.0%. For the week, Currency increased $1.2bn, while Demand & Checkable Deposits sank $14.8bn. Savings Deposits jumped $34.1bn, while Small Denominated Deposits declined $4.9bn. Retail Money Funds fell $4.3bn.

Total Money Market Fund assets (from Invest Co Inst) sank $50.9bn to $2.913 TN. In the first 15 weeks of the year, money fund assets have dropped $380bn, with a one-year decline of $904bn, or 23.7%.

Total Commercial Paper outstanding declined $15.4bn last week to $1.074 TN. CP has declined $95.8bn, or 28.4% annualized year-to-date, and was down $400bn over the past year (27.1%).

International reserve assets (excluding gold) - as tallied by Bloomberg’s Alex Tanzi – were up $1.208 TN y-o-y, or 18.0%, to a record $7.907 TN.

Global Credit Market Watch:

April 16 – Bloomberg (Joshua Gallu and Christine Harper): “Goldman Sachs Group Inc. was sued by U.S. regulators for fraud tied to collateralized debt obligations that contributed to the worst financial crisis since the Great Depression… Goldman Sachs created and sold CDOs tied to subprime mortgages in early 2007, as the U.S. housing market faltered, without disclosing that hedge fund Paulson & Co. helped pick the underlying securities and bet against the vehicles, the Securities and Exchange Commission said…”

April 14 – Bloomberg (Christine Harper): “Washington Mutual Inc.’s former Chief Executive Officer, Kerry Killinger, didn’t trust Goldman Sachs Group Inc. to give the bank advice in 2007 as it slid toward collapse, according to e-mail released by congressional investigators. ‘I don’t trust Goldy on this,’ Killinger wrote in an Oct. 12, 2007, e-mail… ‘They are smart, but this is swimming with the sharks. They were shorting mortgages big time while they were giving CfC advice,’ he said, referring to Countrywide Financial Corp…”

April 16 – Bloomberg (Lilian Karunungan and Garfield Reynolds): “Emerging-market bond funds received an unprecedented $1.8 billion in the past week, lifting 2010 inflows to a record, as high-yielding debt attracted global investors away from stocks, according to EPFR Global.”

April 16 – Bloomberg (Emre Peker): “Cerberus Capital Management LP and Phillips-Van Heusen Corp. led companies this week tapping banks to finance acquisitions as high-yield, high-risk loans extend a record rally that is spurring mergers and buyouts. Banks committed to back as much as $1.17 billion of Cerberus’s leveraged buyout of DynCorp International… Lenders began talks on a $2.45 billion loan package to support the purchase of Tommy Hilfiger… Companies seeking acquisitions and private-equity firms looking to deploy about $500 billion of funds raised for buyouts are tapping investor demand for leveraged loans…”

April 16 – Bloomberg (Tim Catts, John Detrixhe and Kristen Haunss): “Leveraged buyout firms, taking advantage of investor demand for higher yields, are selling more junk bonds and loans to pay themselves dividends than at any point since credit markets started to freeze in 2007. Companies controlled by private-equity groups have raised $10.8 billion in debt to fund payouts in 2010, compared with $1 billion in all of 2009…”

April 14 – Bloomberg (Katrina Nicholas): “Companies in the U.S. will struggle to refinance a $2 trillion ‘wall of debt’ maturing over the next five years as banks grapple with lending restrictions of their own, according to Standard & Poor’s. ‘Most of this debt was issued during the period of 2004 to 2007 when the bank and high-yield bond markets were very robust,’ John Bilardello, S&P’s global head of corporate sector ratings, said… ‘There’s a serious question over whether the securitization market will come back and whether banks will be able to lend to the extent they did several years ago.’”

Currency Watch:

April 12 – Bloomberg: “China’s foreign-exchange reserves rose by the most in four months in March, suggesting a renewed appetite from overseas investors for bets on yuan appreciation. Holdings jumped $22.5 billion last month, after gaining $9.4 billion in February and $16 billion in January… ‘There is a clear sign of renewed hot-money inflows, as the yuan appreciation story seems to have revived,’ said Tao Dong… economist at Credit Suisse Group AG. ‘Such inflows will make it more difficult for the central bank when it wants to tighten policies.’”

The dollar index slipped 0.3% this week to 80.82 (up 3.8% y-t-d). For the week on the upside, the Japanese yen increased 1.1%, the Singapore dollar 1.0%, the South Korean won 0.7% the Taiwanese dollar 0.6%, and the Swiss franc 0.4% For the week on the downside, the South African rand declined 1.8%, the New Zealand dollar 1.1%, the Canadian dollar 1.0%, the Australian dollar 1.0%, and the Mexican peso 0.7%.

Commodities Watch:

April 12 – Bloomberg: “China, the world’s biggest consumer and producer of coal, may be a net importer of the resource for a second year as the government shuts unsafe mines while the economy surges.”

April 13 – Bloomberg (Glenys Sim): “Copper consumption in China, the world’s largest consumer of the metal used in appliances and automobiles, may gain 14% this year as the economy extends a recovery, according to CRU International Ltd.”

April 12 – Wall Street Journal (Spencer Swartz): “The International Energy Agency warned that rising oil prices, which have been flirting with 18-month highs, could squeeze economic recovery in the U.S. and other industrialized nations.”

April 12 – Bloomberg (Stuart Wallace): “Citigroup Inc. raised its forecast for nickel prices in the first half of 2010 by 35 percent to $10 a pound…”

The CRB index added 0.1% (down 2.5% y-t-d). The Goldman Sachs Commodities Index (GSCI) increased 0.4% (up 3.7% y-t-d). Spot Gold dropped 2.2% to $1,137 (up 3.6% y-t-d). Silver sank 3.3% to $17.74 (up 5.3% y-t-d). May Crude dropped $1.94 to $82.98 (up 4.6% y-t-d). May Gasoline declined 0.7% (up 11% y-t-d), and May Natural Gas fell 0.5% (down 27% y-t-d). May Copper dropped 1.8% (up 6% y-t-d). May Wheat rallied 5.3% (down 9.4% y-t-d), and May Corn gained 5.3% (down 12% y-t-d).

China Bubble Watch:

April 13 – MarketNews International: “The Chinese economy grew at its fastest pace in nearly three years in the first quarter… crystallizing expectations of more aggressive policy actions to head off the threat of overheating. The National Bureau of Statistics said that GDP rose 11.9% y/y in the first quarter, at the high end of expectations…”

April 13 – MarketNews International: “The Chinese government's fiscal intake rose 36.8% y/y in March to CNY602.3 billion, the Ministry of Finance said… Fiscal revenues rose 34% y/y in the first quarter to CNY1.96 trillion.”

April 14 – Bloomberg (Chia-Peck Wong): “China’s property prices rose at a record pace in March, indicating government efforts to stem gains aren’t working and more drastic measures may be needed… Residential and commercial real-estate prices in 70 cities climbed 11.7% from a year earlier, the National Bureau of Statistics said on its Web site. The data goes back to 2005.”

April 14 – Bloomberg: “China’s government will crack down on price speculation in the property market and curb attempts to hoard land, according to… the Chinese Housing and Urban-Rural Development Ministry. The Chinese government plans to increase the supply of affordable housing to first-time home owners, including building 3 million low- and medium-cost houses, and 2.8 million units in shanty areas…”

April 15 – Bloomberg: “China’s cabinet raised minimum mortgage rates and down payment ratios for some home purchases, saying ‘more forceful’ steps are needed to cool speculation after property prices rose at a record pace in March. Down payments for second homes must be at last 50%, up from 40%, and interest rates can’t be lower than 110% of benchmark rates, the State Council said…”

April 15 – Bloomberg: “China’s State Council ordered minimum 30% down payments for purchases of first homes larger than 90 square meters…”

April 12 – Bloomberg (Katrina Nicholas): “Chinese banks extended a less-than- estimated 510.7 billion yuan ($74.8 billion) of new loans in March after the central bank told lenders to set aside bigger reserves and pace credit growth. The figure compares with 700 billion yuan in February… M2… grew 22.5% in March from a year earlier…”

April 13 – Bloomberg: “China’s vehicle sales last month rose 56% from a year earlier to 1.74 million units, the Ministry of Industry and Information Technology said… Vehicle sales in the first quarter rose 72% to 4.6 million units…”

April 12 – Bloomberg (Wendy Leung and Kelvin Wong): “Ju Wei, the owner of an advertising company in China’s north-western Gansu province, makes an 1,800 kilometer (1,100 miles) trek to Hong Kong at least six times a year to go shopping. ‘Hong Kong is an international city, and that shopping atmosphere and environment is fantastic,’ said Ju, 29… Mainland residents, their wealth bolstered by an economy that grew at the fastest pace since 2007 in the fourth quarter, are visiting Hong Kong in record numbers and spending on luxury. February retail sales rose 36% from a year earlier… They are also paying record prices for apartments, prompting the government to warn of a property bubble.”

Japan Watch:

April 13 – Bloomberg (Yusuke Miyazawa and Takashi Ueno): “Japanese companies sold 305 billion yen ($3.3 billion) of bonds in the nation’s busiest day of corporate debt sales this year, as firms including Nippon Steel Corp. took advantage of falling funding costs."

India Watch:

April 15 – Bloomberg (Pooja Thakur): “Mumbai home prices have jumped about 30% over the past six months, leading to a drop in home sales in India’s financial capital as higher prices deter buyers, Knight Frank LLP said. ‘Residential property prices have risen too much too fast,’ Pranay Vakil, chairman of Knight Frank (India) Pvt. Said… ‘We are seeing resistance at higher prices and as a result volumes have declined.’”

April 12 – Bloomberg (Unni Krishnan): “India’s industrial production growth exceeded 15% for a third month as demand for cars and televisions increased, adding to inflationary pressures… Output at factories, utilities and mines expanded 15.1% from a year earlier in February…”

Asia Bubble Watch:

April 13 – Bloomberg (Shamim Adam): “Asia needs to start raising interest rates to prevent inflation from accelerating and avert the formation of asset bubbles as the region’s economies recover from the global crisis, the Asian Development Bank said. The region will probably expand 7.5% in 2010 after growing 5.2% in 2009…”

April 14 – Bloomberg (Clementine Fletcher): “South Korea’s credit ratings were raised to A1 from A2 by Moody’s Investors Service, which cited accelerating economic growth and a ‘relatively small’ deficit.”

April 12 – Bloomberg (Seonjin Cha and Bomi Lim): “South Korea’s economy will expand this year at the fastest pace since 2006… Gross domestic product will increase 5.2% in 2010, the Bank of Korea said…”

April 14 – Bloomberg (Sangim Han): “South Korea’s unemployment rate declined in March by the most in more than 10 years as government programs to create public-sector jobs gathered pace. The jobless rate fell to 3.8% from 4.4% in February…”

April 14 – Bloomberg (Patricia Lui): “Singapore unexpectedly revalued its currency… after the government raised forecasts for economic growth and inflation. The Monetary Authority of Singapore said it will seek a ‘modest and gradual appreciation’ in the local dollar and shift to a stronger range for currency fluctuations… The trade ministry said the $182 billion economy will expand as much as 9% in 2010, compared with a previous outlook of 6.5%...”

Latin America Bubble Watch:

April 16 – Bloomberg (Matt Winkler, Adriana Arai and Richard Jarvie): “Argentine President Cristina Fernandez de Kirchner, locked out of international capital markets since taking office, said an offer to holders of $20 billion of unpaid debt marks a “turning point” in her country’s history and will be a good deal for investors. ‘I thought that if I could get us out of the default, I’d feel I’ve done something for this country,’ Fernandez said… ‘We’re back in the world.’”

Unbalanced Global Economy Watch:

April 13 – Bloomberg (Greg Quinn): “Canada posted a fifth straight trade surplus in February, the longest series since November 2008… The monthly trade surplus of C$1.4 billion ($1.39 billion) was the largest since October 2008…”

April 15 – Bloomberg (Johan Carlstrom): “Swedish unemployment fell in March as stimulus measures and improved demand for the country’s exports encouraged companies to hire again. The…rate… fell to 5.2% from a revised 5.5% the previous month…”

U.S. Bubble Economy Watch:

April 13 – Bloomberg (Sudeep Reddy): “The U.S. trade deficit widened in February as an improving economy led consumers to buy more clothes, electronics and other goods from abroad… That sent the deficit to $39.7 billion from $37 billion in January.”

April 13 – Bloomberg (Shobhana Chandra): “Confidence among U.S. small businesses fell in March to the lowest level since July 2009 as executives grew more concerned about earnings and sales, a private survey found.”

April 10 – Wall Street Journal (John D. McKinnon): “Most Americans believe taxes are heading higher. The big questions are by how much, when, and on whom? Unless Washington summons the nerve to drastically cut spending, taxes are likely to rise a lot, soon and probably hit many ordinary Americans, but especially the well-to-do. A January study by the nonpartisan Tax Policy Center provides the worst-case scenario. It found that to reduce the federal budget deficit to a sustainable 3% of gross domestic product, the government would have to find an average of about half a trillion dollars each year in new revenue (or spending cuts). That’s roughly how much the federal government spends now on the giant Medicare program."

Real Estate Watch:

April 15 – Bloomberg (Dan Levy): “Foreclosure filings in the U.S. rose 16% in the first quarter from a year earlier and bank seizures hit a record as lenders stepped up action against delinquent homeowners, according to RealtyTrac Inc. A total of 932,234 homes, or one out of every 138 households, received a default or auction notice, or were repossessed by banks…”

April 15 – Bloomberg (Gemma Daley): “Chinese investment in Australian farms increased 10-fold in the past six months, real estate agents said, as Australia relaxed rules governing residential property purchasing and buyers see opportunities in agriculture. ‘They are interested in large scale cattle farms, they are cashed up and see a financial opportunity here in a secure investment environment,’ said Geoff Hickson, real estate manager at Landmark Operations Ltd. “There has been a big increase from Chinese buyers in the past six months, it has grown 10-fold.’

Central Bank Watch:

April 13 – New York Times (Sewell Chan): “The Federal Reserve chairman said… that the government had to make ‘difficult choices’ to address its gaping deficits and warned that ‘postponing them will only make them more difficult.’ The chairman, Ben S. Bernanke, said that a credible plan for reining in federal deficits could help lower long-term interest rates. ‘Although sizable deficits are unavoidable in the near term, maintaining the confidence of the public and financial markets requires that policy makers move decisively to set the federal budget on a trajectory toward sustainable fiscal balance,’ he said.”

Fiscal Watch:

April 13 – Bloomberg (Dunstan McNichol): “Taxpayers across the U.S. owe public school teacher retirement accounts about $933 billion, nearly triple the amount reported by the plans themselves, a study says. The $332 billion gap estimated by teacher retirement funds between what they have on hand and the cost of promised benefits is low because it includes an ‘aggressive’ 8% assumption on future investment earnings, the Manhattan Institute for Policy Research said… The report, covering 59 plans for 13 million working and retired educators, found that California had the largest unfunded teacher pension liability at almost $100 billion, more than the $42.6 billion reported by the system in January.”

April 14 – Bloomberg (Jonathan Keehner and Phil Mattingly): “Starwood Capital Group LLC, Colony Capital LLC and TPG, whose leaders profited from the 1990s savings and loan crisis, are among firms buying assets from the Federal Deposit Insurance Corp. for as little as 22 cents cash on the dollar… The sales, some including no-interest financing from the agency, are part of an FDIC effort to clean out $40 billion of loans that regulators seized from failed banks. Starwood Chief Executive Officer Barry Sternlicht told potential investors in February it’s ‘very hard to lose money’ on the deals.”

Muni Watch:

April 10 – Wall Street Journal (Conor Dougherty): “State and local governments will continue to face budget squeezes long after the economic recovery is well established, as costs rise and tax revenues lag, according to tax experts gathered here for a conference… State and local tax collections fell 6% in 2009, the largest yearly percentage decline on record. ‘State and local governments see themselves in a full-blown cyclone,’ said Ronald Fisher, an economics professor at Michigan State University.”

April 13 – Bloomberg (Darrell Preston): “Nashville… will boost city-backed debt by almost 40% to borrow $633 million for a new convention center three times the size of the Tennessee municipality’s current one.”

California Watch:

April 13 – Bloomberg (Daniel Taub): “Southern California house and condominium prices rose 14% in March from a year earlier… research company MDA DataQuick said. The median price climbed to $285,000…”

Speculation Watch:

April 15 – Bloomberg (Miles Weiss): “Sears Holdings Corp. is bypassing barriers to junk-rated companies in the $1.1 trillion commercial-paper market by selling the debt to its largest stockholders, including Chairman Edward Lampert. Lampert and his hedge fund, ESL Investments Inc., bought $150 million of 30-day commercial paper from a Sears subsidiary in March…"

It's About Trust:

Perhaps today will provide somewhat of a needed market wakeup call: Washington may have orchestrated a powerful reflationary backdrop throughout the financial markets. There are, however, myriad financial and economic aspects to the bust that will not be disappearing anytime soon. Trust in Wall Street and the marketplace is these days anything but impenetrable.

Irrespective of today’s allegations and market pullback, reflationary forces have attained considerable momentum; massive government borrowings and ultra-loose financial conditions have incited a self-reinforcing stampede into risk assets. Almost $50 billion exited money market funds the past week alone, boosting the 15-week outflow to $380 billion. Money Fund assets are down an incredible $900 billion in just 12 months, a historic wall of finance unleashed upon global risk markets.

The Morgan Stanley Retail index closed yesterday above its previous all-time high set all the way back in April, 2007. From its low of 68.41 in November of 2008, the Morgan Stanley Retail index has tripled in price. While down almost 3% today, the S&P500 Regional Bank index sports a 2010 gain of 34.8%. During the height of the Credit crisis, I wrote that I believed the U.S. economy was heading into a depression. I was wrong.

A commentator on CNBC the other day suggested that the Credit crisis had only interrupted an ongoing bull market. He explained that the complexion of the marketplace traditionally changes after a true bear market. New leadership emerges, while the old favorites tend to languish during the market recovery. This commentator argued that market leadership has changed little, and I can’t disagree. I just don’t share his sanguine interpretation of market dynamics.

The Fed’s and Treasury’s historic reflation interrupted the U.S. (and global) economy’s sorely needed period of adjustment and rebalancing. I would argue that market leadership has not changed specifically because government intervention precluded economic restructuring. Massive government Credit inflation has, at least for now, sustained the existing economic structure – buy retailers, regional banks, homebuilders, restaurants, etc. It’s back to Bubble Economy business as usual.

The bone I have to pick with the bulls relates to their view that buoyant markets are signaling the emergence of a sound and sustainable recovery. I see instead a desperate policymaker crisis response reigniting Credit Bubble excesses and fomenting only deeper systemic distortions. This week, Chairman Bernanke suggested that the strong market environment is confirmation of the soundness of policymaking and market trust that Washington will get its fiscal house in order. Fed officials are again deluding themselves and, in the process, indulging asset market inflation and destabilizing speculation.

But I’ve been to this movie before. I’m familiar with how the plot develops. And I have an abundance of gray hair and wrinkles as evidence of the number of reflations I’ve observed. I know how asset inflation fosters optimism in the bullish camp and discredit to bearish analysis.

Loose “money,” as has been the case throughout history, breeds excess and malfeasance. The Wall Street/mortgage finance Bubble was a fiasco, and today’s allegations are a reminder of how ugly things turned in the waning days of the subprime mortgage scheme. Clearly, there was way too much “money” sloshing around – so much to be made so quickly gaming the system and fleecing the less informed.

The destruction and inequitable redistribution of wealth are the hallmarks of financial Bubbles. Today, Trillions of securities are created globally on the basis of the creditworthiness of the borrowers coupled with perceived adeptness of policymakers. It is quite amazing how quickly Trust has been restored. A new bull market is celebrated, while another bout of Monetary Disorder has unfathomable amounts of “money” sloshing around for the taking.

At the center of it all, policymaking at home and abroad has distorted market perceptions and market pricing mechanisms. The unsuspecting again have little notion of the underlying risks they are accepting. Fleeing zero rates and chasing inflating securities prices, investors have been left again dangerously exposed to another financial Bubble and a postponed economic restructuring. It may never be called “fraud” or “misrepresentation. The outcome will be about the same. At the end of the day, markets are made or broken on Trust.