Why GoPro Kept Soaring: "Short Utilization Is Near 100%"

With GoPro up over 100% since its IPO (which the mainstream media decides indicates massive demand for the 'future' infrastructure monetization of camera-on-a-stick clips), it appears there is another much clearer reason for the surge. As WSJ reports, the utilization level - the percentage of shares available to loan that are actually being borrowed - is near 100%. As Astec Anaytics notes, it's rare for a stock to have such a high utilization level as the cost of borrowing GoPro shares, a proxy for short-selling activity, has “immediately become one of the highest in our system." It appears the squeeze has come and gone and today 9% tumble may just be the start...

Janet Yellen Explains Why You Should BTFATH - Live Feed

Alongside that other canard of global monetary machinations, Christine Lagarde (who oddly declared earlier that "the global economy will not return to 'pre-crisis' world" and asked if central banks need a 'financial stability goal' -mandating a market "put" of sorts); Fed head Janet Yellen will be addressing her peers at The IMF this morning. We expect a lot of "noise" comments, "lower for longer", "weather" excuses, and escape velocity is coming any minute as she desperately tries to keep the "don't worry, you will be ok without all our money printing" meme alive.

Where Disposable Income Goes To Die: Since 1990 Real Rents Are Up 15% While Median Incomes Are Unchanged

To the Fed's Janet Yellen, runaway inflation - at least that which can not be "hedonised" away by the BLS like iPad and LCD TV prices - may be simply "noise", which probably explains why she doesn't rent. But for the record number of Americans who are forced to rent as house prices are too high for the vast majority of the population while mortgage origination has tumbled to record lows (as banks can generate far higher returns on reserve by buying stocks than lending out said money), inflation is going from bad to worse. Case in point: as the WSJ shows, since 1990 asking rents - in real terms i.e., adjusted for inflation - have increased a whopping 15%. The change in median income over the same period? 0%.

The Inevitable Stock Market Reversal: The New Normal Is Just Another Bubble Awaiting A Pop

Is the New Normal of ever-higher stock valuations sustainable, or will low volatility lead to higher volatility, and intervention to instability? Though we're constantly reassured by financial pundits and the Federal Reserve that the stock market is not a bubble and that valuations are fair, there is substantial evidence that suggests the contrary.

Factory Orders Drop Most Since Jan; Inventories Surge Most Since Oct 2011

The post-weather rebound is over. Factory Orders, which were expected to fall modestly, dropped 0.5% - the biggest drop and biggest miss since January. Notably defense-spending dropped 30% as it seems we didn't need 10 new submarines in May (and this is with Ex-Im bank still funding growth). On the flip side, if you were wondering where the recent data (survey) exuberance has come from, wonder no more - inventories in May rose 0.8% - the biggest rise since Oct 2011. More malinvestment-driven exuberance - if only wages were up? Surely subprime credit is soaring so that will take care of it.

Planning For Future Rate Hikes: What Can History Tell Us That The Fed Won't?

It stands to reason that when the Fed eventually lifts interest rates, we’ll see the usual effects. After a sustained rise in rates, you can safely bet on: Fixed investment and business earnings dropping sharply; GDP growth following investment and earnings lower; Many people losing their jobs; and Risky assets performing poorly. These consequences follow not only from the arithmetic of debt service and present value calculations, but also from the mood swinging psychology of entrepreneurs, lenders and investors. Yet, policy economists claim that interest rates can be “normalized” at no cost. Our conclusion is to reject forecasts calling for the economy to power right through interest rate hikes without stumbling. A more likely scenario is that policy “normalization” leads us directly into the next bust.

Venture Capitalist Buys Entire Stash Of 'Silk Road' Bitcoins At US Marshall Auction

A single entity successfully scooped up the entire ~30,000 haul of Bitcoins that the US government seized from Silk Road. The successful bidder at the government's auction was V.C. Tim Draper (in partnership with Vaurum) who is infamous as the ideator of viral marketing, a marketing method for spreading a software application from customer to customer (making one wonder if the $19 million bid was more publicity stunt that investment). However, Vaurum has launched trading platforms in emerging markets, and we will be partnering with Tim to leverage the pool of ~30,000+ bitcoins as a liquidity source. The price of Bitcoin continues to rise, now at $650 - up from around $570 when the auction began.

Did Las Vegas Just Become China's Billionaire New Money-Laundering Mecca?

An odd thing has been happening in the last few months. Since the Chinese government began to crackdown on 'junkets' and 'corruption', Macau - the hub for Chinese billionaires to smuggle their money out of China - has seen revenues disappointing. So much in fact that, as Reuters reports, gambling revenue in Macau fell 3.7% in June on an annual basis, the first decline in more than four years. It could be coincidence, however, that as Macau has seen growth collapse, Las Vegas has seen Baccarat (the preferred game of China's rich) surge. In May, as Macau growth slumped, Las Vegas Baccarat surged over 85%. While slots (the staple indicator of the 99% in America) continues to decline (-4.4% in May), it seems rich foreigners are finding creative new ways to wash their money out of China.

ADP Employment Surges To Best Since Nov 2012

Today's epic catch-up in ADP jobs data (nicely extrapolated off the back of last month's NFP) is the biggest beat since Dec 2012 and biggest gain in jobs since Nov 2012, printing at 281K, up from 179K, and smashing expectations of 205K - in fact the number came above the highest estimate of 250K. While ISMs and PMIs are missing expectations - and notably small businesses in those surveys saying they are not seeing benefits - ADP claims that small businesses gained the most jobs. Of course, we assume the seasonal adjustments had nothing to do with that: from biggest miss in 4 months to biggest beat in 21 months, which is supposedly, normal.

Frontrunning: July 2

  • France's Sarkozy faces corruption probe in blow to comeback hopes (Reuters)
  • Ukraine Says Military Offensive Against Rebels Yielding Results (WSJ)
  • JPMorgan Investors Show Support for Dimon in Cancer Fight (BBG)
  • World’s ATM Moves to Frankfurt as Yellen’s Fed Slows Cash (BBG)
  • Argentina Seen Backtracking on Fernandez Vows as Legacy at Risk (BBG)
  • Palestinian teen killed in possible revenge attack (Reuters)
  • The Bill and Hillary Clinton Money Machine Taps Corporate Cash (WSJ)
  • London House Prices Surge the Most Since 1987, Nationwide Says (BBG)
  • Last Jew in Afghanistan faces ruin as kebabs fail to sell (Reuters)

Futures Prepare To Take Out Dow Jones 17,000

We could focus on whatever events took place in the overnight session or the seasonally-adjusted economic data avalanche that will dominate US newsflow over the next two days (ADP, ISM New York, Factory Orders, Services ISM, Yellen Speaking, and of course Nonfarm payrolls tomorrow), or we could ignore all of that as it is absolutely meaningless and all very much bullish, and use a phrase from Standard Chartered which said that "the dollars Yellen is removing could be compensated for by cheap euros from the ECB; result may be enough cash sloshing around to underpin this year’s run-up in risk assets even if  the Fed begins mulling higher interest rates too." In other words, the bubble will go on, as the Fed passes the baton to the ECB, if not so much the BOJ which is drowning in its own imported inflation. Case in point: two of the three HY deals priced yesterday were PIK, and the $1 billion in proceeds was quickly used to pay back equity sponsors. The credit bubble has never been bigger.

Was The Department Of Defense Behind Facebook’s Controversial Manipulation Study?

You have probably heard about the extremely controversial Facebook “emotional contagion” study in which the company intentionally altered its news feed algorithm to see if it could manipulate its users’ emotions; but here is where it starts to get really strange. Initially, the press release from Cornell highlighting the study said at the bottom: “The study was funded in part by the James S. McDonnell Foundation and the Army Research Office.” Once people started asking questions about this, Cornell claimed it had made a mistake, and that there was no outside funding. Jay Rosen, Journalism Professor at NYU, seems to find this highly questionable.. and it gets even more interesting from there.

Santelli Slams America's 'Debt-Is-Wealth' Mentality

In American society, 'debt' and 'income' have become increasingly synonymous over the past 3 decades; but as Rick Santelli blasts (commonsensically), "they certainly shouldn't be." It appears the average joe has been led to this conclusion by the Central Banks. Rhetorically asking "where's the horsepower in the economy coming from?" Rick reflects on the auto-loan fears we discussed earlier, santelli notes that 55% of used cars (and 30% of new cars) are financed by subprime lenders... and rages, "if we continue as a country to fuel our consumerism with debt, there is no way the bond market's going to be wrong."

18 Signs That The Global Economic Crisis Is Accelerating As We Enter H2 2014

We live in a world that is becoming increasingly unstable, and people need to understand that the period of relative stability that we are enjoying right now is extremely vulnerable and will not last long. The following are 18 signs that the global economic crisis is accelerating as we enter the last half of 2014...

VIX-Manipulating HFT Algo Is Booted From Dark Pool, Exposed For Whole World To See

VIX was monkey-hammered lower once again today, lifting stocks vertically to Russell 2000 record highs and The Dow within a point of 17,000. The question is who (or what) is doing it. Nanex seems to have found out who... It appears the un-visible hand of VIX manipulation (that we have shown previously) has been forced into the open public markets as Barclays goes dark. Simply put, massive bursts of 1-lot TVIX orders flood and delay the markets enabling HFTs to manipulate the tail that inevitably wags the market (via VXX, SPX options hedges and leverage) and now that the dark pools are disappearing, we see it all in real-time.

Goldman's Global Leading Indicator Drops In June

Goldman's June Final GLI came in at 3.1% year-over-year, down from the revised 3.3% year-over-year reading in May. Momentum came in at 0.15% month-over-month - flat from last month’s revised reading. Ever optimistic, Goldman views this results, as continuing to locate the global industrial cycle close to the ‘Expansion’ phase but has yet to signal positive acceleration... oh so close... The 3 big drivers of the deterioration were Japan's Inventory/Sales ratio worsened, US Initial Jobless Claims were marginally higher, and as we have been vociferously noting, The Baltic Dry Index continued to come in softer as well.

NY Anti-Fracking Ruling Deals Blow To Shale Industry

A recent court ruling giving cities and towns in New York State the authority to ban hydraulic fracturing (“fracking”) represents an enormous blow to the shale gas industry, which has been hoping to expand operations into the state for several years.

Global Markets Just Reached Record "Death Cross"-iness

Global GDP growth expectations for 2014 have dropped 15% since the start of QE3 in Dec 2012... Global stocks are up 35% in that same period. At 2.67% GDP growth expectations are the lowest on record for 2014 and with MSCI World stocks at record highs the death cross has never been more crossed...