Strategic Relocation: Are You Missing Out?

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The concept of strategic relocation is not new, but it’s recently become more popular, as more and more liberty-loving folks get tired of being crammed into crowded public transportation or spending hours on the road in the daily snail-pace commute. For many, the thought of leaving everything can be a bit terrifying, and if you have a family who doesn’t want to leave, you might be thinking that your Big Move is more of a pipe dream than a real possibility, even though you see the death grip on your everyday freedoms tightening by the day. Here’s the truth: it can be done. And yes, you can be amazingly happy in a new location that is more conducive to the type of life you want to live.

Just like changing your physical condition requires time, discipline, and effort, so does changing your permanent residence. Add to that a lot of planning, and you’ll see yet another reason why a lot of people don’t do it. Before we get into how to effectively and efficiently plan such a move, however, let’s look at why you might choose that path — or at least, why you’re probably interested in the idea. Over the next few days we’ll go through the process of aligning your thought process, getting down to brass tacks, and even what you should be doing when you get to your new location.

Why Move?

Maybe you live in a high-crime neighborhood. Contrary to what society will tell you these days, moving because you don’t want to deal with crime, homeless camps, drug addicts, or other social problems and vices does not make you a racist. If you want a safer environment for your family, then moving might be your best bet. When I first purchased my home in a quiet lake community north of Seattle, it was a great environment for my kid to grow up, with lots of opportunities. A few short years later, within a five block radius, there was a convicted rapist, a chop shop, a meth house, two shootings, and a hotbed of criminal activity on the next corner. That’s not counting the commute, which more than doubled in time due to exploding population. It was time to go, and I don’t regret making that move one bit. It was hard — and it continues to be. For us, it’s worth it, and we would never even consider leaving our little farm.

There is a long list of reasons why moving out of the city is an excellent choice; if you’re already considering it, then you’ve probably already thought of at least some of these:

  • Crowds
  • Crime
  • Traffic/Long commutes
  • Nosy neighbors
  • Inability to become truly sustainable
  • Lack of room for storing preps or other necessities
  • Higher prices and cost of living
  • Draconian HOAs and suburban “beautification” organizations
  • Gun laws
  • Overregulation, ordinances, taxes, levies, and all the related idiocy
  • Wanting to get your kids out of public schools
  • Lack of like-minded attitudes or political/religious ideals

Another thing you might be dealing with in your area is the locale’s natural disaster type. Everything is a trade, and while preparing for natural disaster is somewhat the same regardless of where you live, each area has its own specific challenges that you might not be okay with.

If you live in an urban or even suburban area, you might also find that you’re having a hard time finding people who believe as you do, whether that be your worldview, politics, or religious belief. Like it or not, harassment is a very real thing—and not in the ways the media would have you believe. Being liberty-minded, religious, or even just the wrong color in certain areas can get you in big trouble—and that goes for anyone. Regardless of what race you are, there are places you aren’t welcome.

The reasons to move are many, and the bottom line is that you don’t need to justify those reasons to anyone. What matters is what’s best for you and your family, and if that means pulling stakes, then so be it. If you’re set on moving, let’s talk about how to make it happen.

Choosing a Location

Once you’ve outlined your reasons for moving (thereby outlining what you’d need in a new location), you’ll need to figure out where to go. Do you just move to a different neighborhood? Out of the city into a nearby suburb? Do you stay in the same state but move to a rural locale? Or do you go all out and move to a different part of the country?

A lot of this will depend on what your reasons for moving are. If state gun laws are an issue for you, for instance, then you’ll probably need to move out of state. If you just want to be able to see your kids go to a less violent or better school, you may be able to get away with just moving to a different neighborhood. If you’ve ever wanted to try your hand at homesteading, you’ll be looking at states where that’s being done successfully.

If you use social media, you can look at groups that are local to the area you’re interested in moving to, to get a feel for the culture. Read their local paper, maybe even pull up the radio frequencies for their local police and fire and listen to the type of calls they’re dealing with on a daily basis. Are they getting a lot of overdoses? Shootings? What area of the town or county are the calls coming from? Are they places you can avoid? Is the crime location-based (such as a specific block or business) or is it widespread all over the county? If you notice over the course of a few weeks of paying attention that a specific street gets a lot of calls, or maybe the cops get called to a certain bar for fights, you can avoid that problem by simply not going to that location.

Look up the laws in your proposed new locale and see what’s considered legal and what’s not. You may very well choose to ignore certain laws in your quest for more freedom, but you should at least be able to make an informed decision about what you’re choosing, and what the potential consequences are so you can mitigate any potential fallout.

Check the county zoning laws and building permit requirements, too. One person I know found the perfect off-grid home—only to find that it was sitting just on the wrong side of the county line, in a location where the county wanted permits for everything and lots of taxes and fees. They chose to pass on that house and went to a county where there are no building permits, and no one cares what they do on their land.

Before choosing a location, you can also pull up all manner of data on everything from average income and education level to demographics, home prices, economic growth, and anything else you’d like to know. It all depends on what kinds of information you seek, and whether you’re willing to do the research. You’re never going to find the perfect place; you can, however, find something that fits the non-negotiables. Check out the local weather too, and keep in mind what will be expected in that area. Are you choosing a place with hard winters? Super-hot summers? Higher altitude? Before you throw out the idea of living in a place with rough winter, for instance, keep in mind that there are positives to everything. Snow runoff, for instance, can help you water your garden months later during a drought if you’ve thought ahead in terms of collection. And after the busyness of spring and summer, you’ll look forward to winter, when you have a freezer full of meat, shelves and root cellar packed with food, enough firewood to keep the house warm, and lots of time to work on indoor projects or study new skills in preparation for spring thaw.

One more thing—be aware of any tourist attractions, natural wonders, or other curiosities in your area. They draw crowds and everything that goes with them. You might have your heart set on living in the mountains of Wyoming—only to later realize that you moved too close to Yellowstone National Park and now have tens of thousands of people clogging your local area for half the year.

Taking the Next Step

Once you’ve decided on a location (or at least narrowed it down to 2), it’s time to talk funding. Look at average rents/mortgage payment amounts. You may need to rent a smaller place until you can buy. You may want a bit of land to raise animals. You may choose to live remotely or in a small town near a larger area. If your ultimate goal is to get as off-grid as possible, understand that you’re not going to want to go directly from an urban or suburban environment directly to a place where you have no electricity and have to haul water. You and your family will get frustrated very fast, and you’ll be tempted to move back. Start small; rent a place with a well and power.

Above all, be realistic about how it’ll be. The first year is really, really hard. The second year is a bit easier but it’s still difficult. Don’t be tempted to show up and assume you’ll be able to be fully sustainable within a year. You’ll learn some hard lessons; those lessons, however, will not only make you stronger, but you’ll find that you’re able to adapt better for the next situation. You’ll learn to use what you have instead of running to the store for everything. Depending on where you end up, you may find that certain times of the year require you to prepare, or forego certain activities in favor of making your life easier later. You’ll learn that at least part of each season is spent preparing for the next one, or getting done various tasks that need doing. There’s a routine to it, however, and over time you’ll also find that you are emotionally attached and invested in your homestead. It’s something you’ve worked on and sweated over, and it helps you survive. If you can find your spot in a state or area that is also more liberty-minded than where you are, you’re doubly blessed.

If you’ve read this far and aren’t interested in taking the leap of faith, that’s fine too — there are those who believe that freedom can be found anywhere. Ultimately, it’s your choice, and you don’t have to defend that to anyone either. For those who can smell the fresh air and imagine a different life for yourself and your family, however, stay tuned. Tomorrow we’ll talk about where you’ll find the money to make it happen.

Source: by Kit Perez | American Partisan

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Wells Fargo Just Reported Their Worst Mortgage Number Since The Financial Crisis

(ZeroHedge) When we reported Wells Fargo’s Q1 earnings back in April, we drew readers’ attention to one specific line of business, the one we dubbed the bank’s “bread and butter“, namely mortgage lending, and which as we then reported was “the biggest alarm” because “as a result of rising rates, Wells’ residential mortgage applications and pipelines both tumbled, sliding just shy of the post-crisis lows recorded in late 2013.”

Then, a quarter ago a glimmer of hope emerged for the America’s largest traditional mortgage lender (which has since lost the top spot to alternative mortgage originators), as both mortgage applications and the pipeline posted a surprising, if modest, rebound.

However, it was not meant to last, because buried deep in its presentation accompanying otherwise unremarkable Q3 results (modest EPS miss; revenues in line), Wells just reported that its ‘bread and butter’ is once again missing, and in Q3 2018 the amount in the all-important Wells Fargo Mortgage Application pipeline shrank again, dropping to $22 billion, the lowest level since the financial crisis.

Yet while the mortgage pipeline has not been worse in a decade despite the so-called recovery, at least it has bottomed. What was more troubling is that it was Wells’ actual mortgage applications, a forward-looking indicator on the state of the broader housing market and how it is impacted by rising rates, that was even more dire, slumping from $67BN in Q2 to $57BN in Q3, down 22% Y/Y and the the lowest since the financial crisis (incidentally, a topic we covered recently in “Mortgage Refis Tumble To Lowest Since The Financial Crisis, Leaving Banks Scrambling“).

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Meanwhile, Wells’ mortgage originations number, which usually trails the pipeline by 3-4 quarters, was nearly as bad, dropping  $4BN sequentially from $50 billion to just $46 billion. And since this number lags the mortgage applications, we expect it to continue posting fresh post-crisis lows in the coming quarter especially if rates continue to rise.

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That said, it wasn’t all bad news for Wells, whose Net Interest Margin managed to post a modest increase for the second consecutive quarter, rising to $12.572 billion. This is what Wells said: “NIM of 2.94% was up 1 bp LQ driven by a reduction in the proportion of lower yielding assets, and a modest benefit from hedge ineffectiveness accounting.” On the other hand, if one reads the fine print, one finds that the number was higher by $80 million thanks to “one additional day in the quarter” (and $54 million from hedge ineffectiveness accounting), in other words, Wells’ NIM posted another decline in the quarter.

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There was another problem facing Buffett’s favorite bank: while true NIM failed to increase, deposits costs are rising fast, and in Q3, the bank was charged an average deposit cost of 0.47% on $907MM in interest-bearing deposits, nearly double what its deposit costs were a year ago.

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Just as concerning was the ongoing slide in the scandal-plagued bank’s deposits, which declined 3% or $40.1BN in Q3 Y/Y (down $2.3BN Q/Q) to $1.27 trillion. This was driven by consumer and small business banking deposits of $740.6 billion, down $13.7 billion, or 2%.

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But even more concerning was the ongoing shrinkage in the company’s balance sheet, as average loans declined from $944.3BN to $939.5BN, the lowest in years, and down $12.8 billion YoY driven by “driven by lower commercial real estate loans reflecting continued credit discipline” while period-end loans slipped by $9.6BN to $942.3BN, as a result of “declines in auto loans, legacy consumer real estate portfolios including Pick-a-Pay and junior lien mortgages, as well as lower commercial real estate loans.”  This is a problem as most other banks are growing their loan book, Wells Fargo’s keeps on shrinking.

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And finally, there was the chart showing the bank’s overall consumer loan trends: these reveal that the troubling broad decline in credit demand continues, as consumer loans were down a total of $11.3BN Y/Y across most product groups.

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What these numbers reveal, is that the average US consumer can barely afford to take out a new mortgage at a time when rates continued to rise – if not that much higher from recent all time lows. It also means that if the Fed is truly intent in engineering a parallel shift in the curve of 2-3%, the US can kiss its domestic housing market goodbye.

Source: Wells Fargo Earnings Supplement |ZeroHedge

Mortgage Rates Surge The Most Since Trump’s Election, Hit New Seven Year High

With US consumers suddenly dreading to see the bottom line on their next 401(k) statement, they now have the housing market to worry about.

As interest rates spiked in the past month, one direct consequence is that U.S. mortgage rates, already at a seven-year high, surged by the most since the Trump elections.

According to the latest weekly Freddie Mac statement, the average rate for a 30-year fixed mortgage jumped to 4.9%, up from 4.71% last week and the highest since mid-April 2011. It was the biggest weekly increase since Nov. 17, 2016, when the 30-year average surged 37 basis points.

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With this week’s jump, the monthly payment on a $300,000, 30-year loan has climbed to $1,592, up from $1,424 in the beginning of the year, when the average rate was 3.95%.

Even before this week’s spike, the rise in mortgage rates had cut into affordability for buyers, especially in markets where home prices have been climbing faster than incomes, which as we discussed earlier this week, is virtually all. That’s led to a sharp slowdown in sales of both new and existing homes: last month the NAR reported that contracts to buy previously owned properties declined in August by the most in seven months, as purchasing a new home becomes increasingly unaffordable.

“With the escalation of prices, it could be that borrowers are running out of breath,” said Sam Khater, chief economist at Freddie Mac.

“Rising rates paired with high and escalating home prices is putting downward pressure on purchase demand,” Khater told Bloomberg, adding that while rates are still historically low, “the primary hurdle for many borrowers today is the down payment, and that is the reason home sales have decreased in many high-priced markets.”

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Meanwhile, lenders and real-estate agents say that, even now, all but the most qualified buyers making large down payments face borrowing rates of 5%. And while rates have been edging higher in recent months, “the last week we’ve seen an explosion higher in mortgage rates,” said Rodney Anderson, a mortgage lender in the Dallas area quoted by the WSJ.

Meanwhile, the WSJ reports that once-hot markets are showing signs of cooling down. Bill Nelson, president of Your Home Free, a Dallas-based real-estate brokerage, said that in the neighborhoods where he works, the number of homes experiencing price cuts is more than double the number that are going into contract.

The rise in rates could have far-reaching effects for the mortgage industry. Some lenders—particularly non-banks that don’t have other lines of business —could take on riskier customers to keep up their level of loan volume, or be forced to sell themselves. Many U.S. mortgage lenders, including some of the biggest players, didn’t exist a decade ago and only know a low-rate environment, and many younger buyers can’t remember a time when rates were higher.

Meanwhile, in more bad news for the banks, higher rates will kill off any lingering possibility of a refinancing boom, which bailed out the mortgage industry in the years right after the 2008 financial crisis. If rates hit 5%, the pool of homeowners who would qualify for and benefit from a refinance will shrink to 1.55 million, according to mortgage-data and technology firm Black Knight Inc. That would be down about 64% since the start of the year, and the smallest pool since 2008.

Naturally, hardest hit by the rising rates will be young and first-time buyers who tend to make smaller down payments than older buyers who have built up equity in their previous homes, and middle-income buyers, who can least afford the extra cost. Khater said that about 45% of the loans that Freddie Mac is backing are to first-time buyers, up from about 30% normally, which also means that rising rates could have an even bigger impact on the market than usual.

Younger buyers are also more likely to be shocked by higher rates because they don’t remember when rates were more than 18% in the early 1980s, or more recently, the first decade of the 2000s, when rates hovered around 5% to 7%.

“There’s almost a generation that has been used to seeing 3% or 4% rates that’s now seeing 5% rates,” said Vishal Garg, founder and chief executive of Better Mortgage.

Source: ZeroHedge

When The Fed Comes Marching Home: Mortgage Refinancing Applications Killed, Purchase Applications Stalled by Fed Rate Hikes

It was inevitable. Federal Reserve rate hikes and balance sheet shrinkage is having the predictive effect: killing mortgage refinancing applications.

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And, mortgage purchases applications SA have stalled in terms of growth with Fed rate hikes and balance sheet shrinkage.

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WASHINGTON, D.C. (October 10, 2018) – Mortgage applications decreased 1.7 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending October 5, 2018.

The Market Composite Index, a measure of mortgage loan application volume, decreased 1.7 percent on a seasonally adjusted basis from one week earlier. On an un-adjusted basis, the Index decreased 2 percent compared with the previous week. The Refinance Index decreased 3 percent from the previous week. The seasonally adjusted Purchase Index decreased 1 percent from one week earlier. The un-adjusted Purchase Index decreased 1 percent compared with the previous week and was 2 percent higher than the same week one year ago.

The refinance share of mortgage activity decreased to 39.0 percent of total applications from 39.4 percent the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 7.3 percent of total applications.

The FHA share of total applications increased to 10.5 percent from 10.2 percent the week prior. The VA share of total applications remained unchanged at 10.0 percent from the week prior. The USDA share of total applications increased to 0.8 percent from 0.7 percent the week prior.

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Yes, The Fed has begun its bomb run.

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Source: Confounded Interest

US Home Prices Hit Peak Unaffordability ─ Prospective Buyers Are Better Off Renting

With unaffordability reaching levels not seen in decades across some of the most expensive urban markets in the US, a housing-market rout that began in the high-end of markets like New York City and San Francisco is beginning to spread. And as home sales continued to struggle in August, a phenomenon that realtors have blamed on a dearth of properties for sale, those who are choosing to sell might soon see a chasm open up between bids and asks – that is, if they haven’t already.

While home unaffordability is most egregious in urban markets, cities don’t have a monopoly on unaffordability. According to a report by ATTOM, which keeps the most comprehensive database of home prices in the US, of the 440 US counties analyzed in the report, roughly 80% of them had an unaffordability index below 100, the highest rate in ten years. Any reading below 100 is considered unaffordable, by ATTOM’s standards. Based on their analysis, one-third of Americans (roughly 220 million people) now live in counties where buying a median-priced home is considered unaffordable. And in 69 US counties, qualifying for a mortgage would require at least $100,000 in annual income (Assuming a 3% down payment and a maximum front-end debt-to-income ratio of 28%). As one might expect, prohibitively high home prices are inspiring some Americans to relocate to areas where the cost of living is lower. US Census data revealed that two-thirds of those highest-priced markets experienced negative net migration, while more than three-quarters of markets where people earning less than $100,000 a year can qualify for a mortgage experienced net positive migration.

Rising home prices have played a big part in driving home unaffordability, but they’re not the whole story. Stagnant wages are also an important factor. The median nationwide home price of $250,000 in Q3 2018 climbed 6% from a year earlier, which is nearly twice the 3% growth in wages during that time. Looking back over a longer period, median home prices have increased 76% since bottoming out in Q1 2012, while average weekly wages have increased 17% over the same period.

Instead of fighting to overpay for existing inventory, one study showed that, for now at least, most Americans would be better off renting than buying a residential property. According to the latest national index produced by Florida Atlantic University and Florida International University faculty, renting and reinvesting will “outperform owning and building equity in terms of wealth creation.”

However, with the average national rent at an all-time high, American consumers are increasingly finding that there are no good options in the modern housing market. Which could be one reason why millennials, despite having more college degrees than any preceding generation, are increasingly choosing to rent instead of buying, even after they get married and start a family.

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Source: ZeroHedge

J.P. Morgan Chase Laying Off 400 Mortgage Staff In 3 States

Chase, one of the biggest home lenders, announces cutting employees in Florida, Ohio, Arizona.

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JPMorgan Chase & Co. is laying off about 400 employees in its consumer mortgage banking division as parts of the market slow down, people familiar with the matter said.

The bank JPM, -0.56% one of the largest mortgage lenders with about 34,000 mortgage-banking employees, is in the midst of laying off employees in cities including Jacksonville, Fla.; Columbus, Ohio; Phoenix and Cleveland particularly as mortgage servicing has fallen, the people said.

Home sales have slowed as the rise in mortgage rates has been compounded by a lack of homes for sale, increasing prices and a tax bill that reduced some incentives for home ownership. Rising interest rates have also discouraged homeowners from either refinancing their current mortgage or moving and having to get a new mortgage.

JPMorgan isn’t the only bank to lay off mortgage employees. Wells Fargo & Co. WFC, -0.60% the largest U.S. mortgage lender, said in August it is laying off about 650 mortgage employees who mainly work in retail fulfillment and mortgage servicing “to better align with current volumes.”

Source: Market Watch

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More layoffs at Movement Mortgage mean about 200 jobs have been cut since opening Norfolk headquarters in 2017

Movement Mortgage CEO Casey Crawford addresses employees at the weekly Friday Morning Meeting.

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Verizon Lays Off 44,000, Transfers 2,500 More IT Jobs To Indian Outsourcer Infosys

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Liquidity Crisis Looms As Global Bond Curve Nears “The Rubicon” Level

(Nedbank) The first half of 2018 was dominated by tighter global financial conditions amid the contraction in Global $-Liquidity, which resulted in the stronger US dollar weighing heavily on the performance of risks assets, particularly EM assets.

GLOBAL BOND YIELDS ON THE MOVE AMID TIGHTER GLOBAL FINANCIAL CONDITIONS

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Global bond yields are on the rise again, led by the US Treasury yields, which as we have highlighted in numerous reports, is the world’s risk-free rate.

The JPM Global Bond yield, after being in a tight channel, has now begun to accelerate higher. There is scope for the JPM Global Bond yield to rise another 20-30bps, close to 2.70%, which is the ‘Rubicon level’ for global financial markets, in our view.

If the JPM Global Bond yield rises above 2.70%, the cost of global capital would rise further, unleashing another risk-off phase. Our view is that 2.70% will hold, for the time being.

We believe the global bond yield will eventually break above 2.70%, amid the contraction in Global $-Liquidity.

GLOBAL LIQUIDITY CRUNCH NEARING AS GLOBAL YIELD CURVE FLATTENS/INVERTS

A stronger US dollar and the global cost of capital rising is the perfect cocktail, in our opinion, for a liquidity crunch.

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Major liquidity crunches often occur when yield curves around the world flatten or invert. Currently, the global yield curve is inverted; this is an ominous sign for the global economy and financial markets, especially overvalued stocks markets like the US.

The US economy remains robust, but we believe a global liquidity crunch will weigh on the economy. Hence, we believe a US downturn is closer than most market participants are predicting.

GLOBAL VELOCITY OF MONEY WOULD LOSE MOMENTUM

The traditional velocity of money indicator can be calculated only on a quarterly basis (lagged). Hence, we have developed our own velocity of money indicator that can be calculated on a monthly basis.

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Our Velocity of Money Indicator (VoM)is a proprietary indicator that we monitor closely. It is a modernized version of Irving Fisher’s work on the Quantity Theory of Money, MV=PQ.

We believe it is a useful indicator to understand the ‘animal spirits’ of the global economy and a leading indicator when compared to PMIs, stock prices and business cycle indicators, at times.

The cost of capital and Global $-Liquidity tend to lead the credit cycle (cobweb theory), which in turn filters through to prospects for the real economy.

Prospects for global growth and risk assets are likely to be dented over the next 6-12 months, as the rising cost of capital globally will likely weigh on the global economy’s ability to generate liquidity – this is already being indicated by our Global VoM indicator.

Source: ZeroHedge

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The “VaR Shock” Is Back: Global Bonds Lose $880 Billion In One Week

 

 

Debts & Deficits: A Slow Motion Train Wreck

Europe’s Junk Bond Bubble Has Finally Burst