Following yesterday's "selfie-gate" furore at Nelson Mandela's memorial service, it is perhaps unsurprising that the AFP photographer responsible for the series of incriminating photos come out with a wordy (and picturey) response to explain what we all saw. Roberto Schmidt notes, "it was interesting to see politicians in a human light because usually when we see them it is in such a controlled environment. Maybe this would not be such an issue if we, as the press, would have more access to dignitaries and be able to show they are human as the rest of us." Indeed, especially for a president whose only focus is to be seen as "one of the people" and not actually doing, you know, work to help the people.
If one believes the various US diffusion indices - among which key are the assorted regional Fed surveys the monthly PMI data - and listens to the pithy soundbites of their respondents, the US economy has hardly ever been better (of course, that 60% of "growth" in the past year has been due to inventory accumulation on hope that the consumer end demand will finally come is neither here nor there). However, we don't exactly believe said indices. Instead, to get a true sense of what is going on, it is always better to listen directly to those who are not only deep in the trenches, but are also accountable to their shareholders every quarter: the various CEOs and CFOs of America's public corporations. Below, courtesy of Bloomberg chief economist Rich Yamarone, who has compiled a selection of Q3 earnings call soundbites, is an indicative snapshot of the US economy as seen most recently through the prism of executives in a wide range of industries.
At a time when Wall Street is absolutely swimming in wealth, New York City is experiencing an epidemic of homelessness. According to the New York Times, the last time there was this many homeless children in New York City was during the days of the Great Depression. And the number of homeless children in the United States overall recently set a new all-time record. Americans like to think of themselves as "the wealthiest nation on the planet", and yet the number of young kids that don't even have a roof over their heads at night just keeps skyrocketing. There truly are "two Americas" today, and unfortunately most Americans that live in "good America" don't seem to really care too much about the extreme suffering that is going on in "bad America".
Productivity. Every employer loves it, and every employee is fascinated by it, especially if it comes in cute colors, a retina screen, and weighs under a pound... at least until such time as "productivity" results in the loss of the employee's job, which in turn makes the employer love it even more as it results in even higher profits, even if it means one more pink slip and a 91 million people outside the labor force. With a labor force already in turmoil as millions drop out every year never to be heard from again, made obscolete by the latest technological and computerized innovation, and students stuck in college where they pile up record amounts of student loans (at last check well over $1 trillion) hoping form some job, any job, upon graduation, unfortunately the future is not bright at all. In a recently published paper, "The Future of Employment: How Susceptible are Jobs to Computerisation," Oxford researchers Frey and Osborne, look at the probability of computerization by occuption. What they find is shocking for nearly half of the US labor force.
Of the 25 companies with the largest corporate profits in the world; banking, energy and technology firms are absolutely raking it in. Despite stagnating incomes, these companies made $567,856,000,000 in 2012 alone... here's the subsidies, tax breaks, and offshoring that helped them do it...
Despite being found guilty of and fined for manipulations of every other market in the world (from FX to rates to energy), investors small and large continue to play the markets on the basis that they are fair and balanced. Aside from high-profile insider trades; day after day, the oddly high correlations, the obvious spikes, blips, and front-running are ignored... until now. In this brief documentary, CBC asks the critical question "are the world's stock markets rigged?" Amanda Lang concludes "there’s a sense among the general public that nobody seems to be maintaining the integrity of the system." as she highlights case after case "as though everything is rigged!" Conspiracy theory evolves once again into conspiracy fact as the system that's supposed to benefit many, but actually enriches a few.
Not since the Middle Ages has the bubonic plagues taken so many lives in a year. Having wiped out 25 million people in Europe, appearances of the Black Death since have been rare but the Red Cross is reporting a new outbreak has killed more than 20 people on the island of Madagascar. Living standards in the nation have collapsed since 2009 (what else happened in 2009?) and the prevalence of rats has helped spread the disease easily. While China claims to have the bird flu under control (despite some rumors out of Hong Kong), the Red Cross warns there is a risk of a Black Death epidemic.
We are sure this will all end well... but as Marketwatch reports, Fidelity has partnered with SecondMarket’s Bitcoin Investment Trust to allow its clients to save for their retirement by putting the virtual currency in self-directed IRAs.
In the 1st installment of this article – May the Odds Ever Be in Your Favor – The Reaping, we addressed how wealth inequality created by men rigging the system and utilizing media propaganda ultimately leads to rebellion. In Part 2, we will show how hope and defiance can ignite the flame of liberty in the minds of men. Edward Snowden has ignited that flame. A Lot of Hope is Dangerous... Linear thinking old timers are likely to scoff at the notion that some trilogy of novels for teenagers could capture the mood of the time in a way that explains how the people of this country will respond to the current worsening Crisis. History is cyclical and we’ve returned to a time where leaders will step forward to lead and brave heroes step forward to fight. The future of the country hangs in the balance.
While we are told that QE was "easing" but tapering is not tightening, it is worth remembering that "conventional" balanced portfolios have performed dramatically worse when the Fed is not easing. However, what is more worrisome for the 60/40 crowd is the following chart as "excess" returns suggest a period of disappointing performance lies ahead. As we've asked before, is this as good as it gets?
For the last year or two, European banks have engaged in the ultimate of self-referential M.A.D. trades - buying the sovereign debt of their own nation in inordinate size to maintain the ECB's illusion of control (even as their economies collapse and stagnate) while referentially obtaining the funding for said purchase from the ECB by repoing the purchase back to the central bank, usually with no haircut to mention. Today though, as The FT reports, a top official at the European Central Bank has signalled it will try to force eurozone banks to hold capital against sovereign bonds, in an attempt to stop weak lenders using its cash to hoover up the debts of crisis-hit countries.
The long anticipated and often rumored move of Facebook to the S&P 500 has finally arrived or technically will arrive on December 20 when FB will replace Teradyne, only this time we get two for the price of one. From BBG:
- FACEBOOK TO JOIN S&P 100 AND S&P 500
We can't wait for TWTR to move up in sympathy. As for the reasons behind the move - one must do whatever is needed to keep what little is left of retail speculators happy.
And in other news, Alliance Data Systems (ADS) and Mohawk (MHK) are also joining the S&P 500
With the Ukraine situation increasingly precarious, and now even the US state department getting involved with the occasional unexpected harsh warning into what Putin has made very clear is his brand new sphere of influence (it is unclear just why the US is responding in such a way: did the pro-Europe protesters not use Made in the US tear gas or chemical weapons?), Russia casually threw it out there earlier today that it would use nuclear weapons if it comes under an attack. As vice prime minister and defense industry chief made clear, "One can experiment as long as one wishes by deploying non-nuclear warheads on strategic missile carriers. But one should keep in mind that if there is an attack against us, we will certainly resort to using nuclear weapons in certain situations to defend our territory and state interests." Just in case it wasn't quite clear...
On a day when Sebelius faces more music, but small golf-claps are heard around Democrat offices at the sign-up rates for Obamacare, The Hill reports - rather dishearteningly, Capitol Hill staffers who signed up for ObamaCare through the Washington, D.C. healthcare exchange are being told to confirm their enrollments in person, and not to rely on data provided by the website... "Do not rely on your 'My Account' page or other correspondence from DCHL... do not assume you are covered."
S&P futures dumped their most in almost 4 months on marginal volume today as a budget deal (moar fiscal means less moar monetary policy) and a potentially hawkish Stan Fischer on the Fed spread taper fears across all assets with gold lower, Treasury yields higher, and USD rising. New 52-week-lows spiked to 4 month highs as higher beta muppetry took Trannies down most in almost 4 months. The S&P tested back below the payrolls-data and FOMC Minutes launchpad levels from last week as rather notably, while most sectors are still up 5-10% from the debt-ceiling lows, Utilities are now unch. Treasuries weakened back to unchanged from the payrolls print for 5Y (though 7s-130s are -3 to 4bps still). This is the biggest jump in VIX in 2 months as the term structure is the most inverted since US downgrade levels in Aug 2011. Dow <16,000; S&P <1,800; NASDAQ ~4,000 - Retirement Off!