"As I leave, I really urge everyone to take note of, and stand against, what I and others have written about for years, but which is becoming increasingly more threatening: namely, a sustained and unprecedented attack on press freedoms and the news gathering process in the US. That same menacing climate is now manifest in the UK as well. Allowing journalism to be criminalized is in nobody's interest other than the states which are trying to achieve that. I hope everyone who believes in basic press freedoms will defend those journalistic outlets when they are under attack – all of them – regardless of how much one likes or does not like them."
Confused how to trade the second coming of the dot com bubble and a world in which irrational exuberance has hit irrationally exuberant levels? You are not alone. Here is some insight from none other than David Einhorn originating in his latest letter to investors.
Now that an October taper is out of the question, bored investors, in a world in which fundamentals no longer matter, are looking forward to the next possible FOMC meetings and potential taper announcement dates, with three specific dates sticking out: December/January, which are really one cluster, and June, as possible announcement dates. Why are these dates important: because while a September tapering announcement would have resulted in a $4 trillion final Fed balance sheet (assuming the tapering proceeded to a full QE halt) before even more QE was unleashed, any subsequent taper dates imply a nice round number to the final Fed balance sheet at the end of 2014: either $4.5 trillion, assuming a January 2014 taper, or $5 trillion if the Fed waits until June to announce a tapering. This can be seen on the following chart from Bank of America...
If US consumers were miraculously supposed to regain all their confidence when the government reopened (even if companies completely ignored said shutdown according to the epic jump in the Chicago PMI - the biggest jump in 30 years), so far that has failed to happen based on the latest weekly Bloomberg consumer comfort index, which moments ago hit -37.6 down from -36.1 a week earlier, its lowest print since October 2012. With this drop the index has extended its five-week retreat that accelerated during the federal government’s partial shutdown and has slowed – but not stopped – in the two weeks since. Today the index is 21.3 points worse than its long-term average and 6.3 points worse than this year’s average. And what is more worrisome for The Fed, they have lost "the rich" as the comfort of the highest income survey participants has fallen to its lowest in 7 months - collapsing back to its 'normalized' divide with the 'poor'.
Sometimes you just have to laugh... Chicago, it would seem, felt not just no bad impact from the government shutdown (that so many asset managers and CEOs have proclaimed as the reason for any slowdown - and the need to avoid a Taper) but it roared to its highest since March 2011. This blew expectations away by the most on record (8-sigma). New orders are at the highest level since October 2004. October’s advance in the Barometer was its biggest monthly increase in over 30 years and only the third time in the past decade the Barometer has risen for four consecutive months. US equities are not happy about this apparent 'taper-on' improvement (and have dropped 8 points on the release) - though it appears seasonals are playing a major part.
It was the best of times, it was the worst of times. In a little over 12 hours, the unstoppable glory of all things 2013 dot-com bubble has collapsed over 20% from its highs. After being proclaimed as "cult" by many and a "must buy" by others only last night, the opening bell this morning sees little to no BTFD'ers coming to its rescue (for now)...
The "wedge" between 'market-perception' and economic reality, that we discussed in detail last night, driven by Merkel's enabling of Draghi's excess, has never been more extreme. As Elliott's Paul Singer noted, things are indeed "wrong and dangerous" when politicians are proclaiming victories, stocks are at record highs, bonds risk is at multi-year lows and yet unemployment rates (most specifically among the under-25 youth of the region) soars back to record highs. A stunning 24.1% of young people across the entire euro-zone is unemployed; Spain (having 'exited' its nominal recession) stands at a record 56.5% youth unemployment, topped only by Greece's mind-numbing 57.3% youth unemployment record (as Greek bond yields hit 3 year lows). France and Italy also hit record highs and Cyprus' broad unemployment level has exploded from 28% a year ago to 43% now. Amid all of this, Germany's youth unemployment continues to improve to a 20 year low. Recipe for disaster?
This morning, like many other mornings in the last few months, precious metals prices are being pummeled lower in a vertical dumpfest (for no apparent sudden reason other than its opening time). What is ironic about this apparent lack of demand is that around the world, demand is extreme - and is most clearly evident in India, where thanks to government intervention, physical premiums push to new record highs yet do nothing to detract from Indians buying demand (as Reuters reports supplies of the precious metal disappear). Of course, the real reason why gold and silver prices have dropped since 10/28 is that none other than "the world renowned Gartman" went long again...
For the 4th week in a row, initial jobless claims came in worse than expected. According to the BLS there are no special adjustments for "glitches" or shutdowns or any other caveats and in fact California (at the center of the software glitch that impacted everything) saw the biggest 'drop' in claims: 13,033 as fewer layoffs in service, wholesales trade, and retail trade industries supported the data. If this is indeed a clean number, it is still the highest level of jobless claims in over 3 months. It seems, post-FOMC, that the market needs moar bad prints to spark some more momentum and a mere 10k miss is just not enough to warrant another BFTATH ramp (for now).
If the "success" of Abenomics is measured by the soaring prices of food and energy, if little other inflation, by the exploding monetary base and by a wealth effect, pardon, stock market which has flatlined in the past 3 months, then it has so far done passable job of being considered good policy. If, however, one actually looks at the general improvement in living conditions measured most directly by that key metric -wages - then Abenomics has been the worst thing to hit Japan since the Fukushima tsunami, and an unmitigated disaster. As the Japan labor ministry reported overnight, the nation's salaries extended the longest slide since 2010, as regular wages excluding overtime and bonuses fell 0.3 percent in September from a year earlier, marking a 16th straight month of decline. That this is happening even as Prime Minister Shinzo Abe "urges companies to raise workers’ wages as part of his bid to reflate the world’s third-largest economy" is merely the latest slap in the face of central-planners everywhere who believe that flipping an economy and deeply engrained behaviors can happen on a dime.
The last time major explosions were reported near Damascus, it was in May, when Israel and its air force did everything in its power to provoke the Assad regime to escalate military operations both domestically and abroad. It almost succeeded when three months later Obama nearly led a falseflag-driven "liberation" force facilitating Saudi and Qatari energy interests in the region and their pipeline ambitions below Syria. Since then Israel had been largely dormant, seething in its (and Saudi) disappointment that it was unable to play Obama like a fiddle. The unstable detente changed again overnight, when as Haaretz reports "a large explosion was heard at a Syrian army missile base in Latakia. Eye witnesses told the Britain-based Syrian Observatory for Human rights that the explosion took place near Snobar Jableh, south of the city. It was not yet clear whether anyone was wounded in the strike." And not surprisingly, it is once again Israel' that was implicated in the latest regional provocation because as Haaretz adds, the "strike follows Lebanese media reports that Israeli aircraft circled above southern Lebanon."
- US Blasts Germany's Economic Policies (WSJ)
- Citigroup, JPMorgan Said to Put Currency Dealers on Leave (BBG)
- Watchdog: Syria Destroys Chemical-Arms Equipment (WSJ)
- Kynikos Alumni Start Hedge Fund Betting on Declining Stocks (BBG)
- China state media calls for stern action after Tiananmen attack (RTRS)
- IMF warns of financial shock risk to Africa (FT)
- Insurers Oppose Obamacare Extension as Danger to Profits (BBG)
- BoJ content to ignore Fed tapering and go its own way (FT)
- U.S. attorney wants DOJ to take civil action against BofA (RTRS)
- NSA Fallout Hits AT&T's Ambitions In Europe (WSJ)
In addition to the bevy of ugly European unemployment and inflation news just reported, the overnight session had a dollop of more ugly macro data for the algos to kneejerkingly react to and ramp stocks to fresh time highs on. First it was China, where the PBOC did another reverse repo, however this time at a fixed 4.3% rate, 0.2% higher than the Monday iteration and well above the 3%-handle from early October, indicating that China is truly intent on tightening its monetary conditions. Then Japan confirmed that despite the soaring imported food and energy inflation, wages just refuse to rise, and have declined now for nearly 1.5 years. Then, adding core insult to peripheral injury, Germany reported retail sales that missed expectations of a +0.4% print wildly, declining -0.4% from a prior downward revised 0.5% to -0.2%. And so on: more below. However, as usual what does matter is how the market digests the FOMC news, and for now the sense is that the risk of a December taper has risen based on the FOMC statement language, whether warranted or not, which as a result is pushing futures modestly lower following an epic move higher in the month of October on nothing but pure balance sheet and multiple expansion. The big data week in the US rolls on with the highlights being the Chicago PMI and initial jobless claims, which are expected to print their first accurate, non-impaired reading since August.
Europe Stuns With "Surprising" Record High Unemployment Print, Inflation At 4 Year Low; Euro TumblesSubmitted by Tyler Durden on 10/31/2013 - 06:35
Those following the Euro FX pairs saw a plunge at 6 am Eastern, when Eurostat released the latest Eurozone unemployment and inflation statistics. They were, in a word, abysmal. After the August unemployment data finally saw a modest drop forcing many to announce the end of the European depression, not only did the the September number revise the August print from 12.0% to 12.2%, a new record high as 73,000 thousand people became unemployed, but more importantly made the September unemployment rate 12.2% as well following another 60,000 Eurozoneans losing their jobs, effectively meaning that for all the talk of a European recovery, its unemployment rate keeps hitting new all time record highs every single month.
It seems like it was an eternity ago that Obama was doing his post-government shutdown gloating media tour, when day after day the world was bombarded with news of the GOP's record low popularity rating, paradoxically following their attempt to do what even the president is now desperate to achieve: delay Obamacare. Well, the tables have turned and now that the government shutdown is history, at least until January, and the public focus has shifted to where it should have been in the first place - namely the embarrassing ponzi scheme experiment that is Obamacare, and the epic failure surrounding its rushed rollout - it is Obama's turn to suffer a record low rating, which is precisely what happened according to a just concluded WSJ/NBC News poll.