Google Implodes But Dow Ramps To Unchanged To Preserve Confidence

UPDATE: MSFT (-2.6%), MRVL (-9.2%), AMD (-2.5%), and CMG (-14%) all ugly after-hours

ICYMI - GOOG -8.1% weighed heavy on the entire tech sector which really needed little help after IBM and INTC's earlier disappointments. But while there was a caTECHstrophe there, when GOOG re-opened, algos ran wild and ramped S&P futures all the way back up to VWAP and GOOG made a valiant attempt to reach that mystical level also. But we should not fear, for reading too much into the fact that three of the world's largest tech companies are doing poorly is no reason to not BTFD and so it is that the Dow Industrials and S&P closed only marginally lower and Dow Transports had a green day (never seeing red). USD strength in the afternoon - as GOOG scared - pushed commodities down with silver doing worst and gold -0.77% on the week. Despite general equity weakness, Treasury yields limped higher in the afternoon now up around 17bps on the week. Oil round-tripped after dumping into the US open as weak macro data hit and then resurging on news that the Keystone pipeline would be closed to a few days due to 'anomaly'. VIX ended unch at around 15%. S&P futures are fading off VWAP after-hours.

Google Trading Resumes At $687

After a 2.5 hours halt, GOOG just reopened at $687 from its pre-halt close at $687.30 (from $755.40 close yesterday). QQQs implied an open around $650! Please note that $711 is VWAP - the algos will be looking for that...

Man Self-Immolates In Front Of Rome's Presidential Palace

Over the weekend it was not some disenchanted and long-suffering Greek, nor Irishman, nor even a Spaniard, but a German who burned and stabbed himself to death in front of the Reichstag in broad daylight. Moments ago, yet another country which has so far had been spared ritualistic (attempted) suicides, joined the ranks of places where people would rather take their lives than live under the oppressive European depression, when a 55 year man of Romanian origin and father of six, currently living in Pinerolo in Piedmont, set himself on fire in from the presidential palace in Rome, the Quirinale. As Repubblica reports, he was protesting the economic conditions and the lack of job opportunities. It appears that whereas Europe may be "saved" and PIIGS bonds are being bought for the time being, the monetary transmission mechanism is still certainly clogged up and the central bank's record liquidity is neither reaching the ordinary citizens of Europe nor, most certainly, the most political square in Rome.

Banker-Muppet M.A.D. Begins: JPM Cuts 2013 GDP By 1% Due To "Fiscal Cliff"

A month ago every single bank was delighted when Bernanke proudly announced QEternity. What they did not realize is that by doing so, and by "getting to work" as Chuck Schumer had previously requested of the Chairsatan, Congress suddenly has no impetus to do anything over the fiscal cliff, i.e., to lose face with the electorate by compromising over difficult fiscal issues, because, guess what, Bernanke is on top of it. After all look at the market - no risk is allowed ever again. Because since the Fed is now in charge the market, and of fiscal policy, why bother with protection or Plan B. The banks, however, know better, and know that without hundreds of billions in continued stimulus from D.C., the musical chairs game is about to end and the market will implode. Which is why the warnings of Mutual Assured Destruction (M.A.D.) were only a matter of time. Sure enough, here comes JPM with the first of many official GDP revisions (don't worry - JPM's Mike Feroli will promptly revise everything much higher if a fiscal cliff deal is done... some time in March long after the S&P has tumbled by 20% in a replay of August 2011), in which he sees the fiscal cliff now reducing 2013 GDP growth by 1%, up from the previous estimate of 0.5%, and specifically sees Q1 and Q2 GDP of 1.0% and 1.5%. And it's all downhill from there...

What Did Goldman's Heather Bellini Know About GOOG That Noone Else Did?

44 analysts cover Google. 82% are Buys. Average Target Price is $811. The lowest and least herd-like was Heather Bellini of Goldman Sachs who has had a $660 price target (which is where GOOG is implied to trade currently) since 8/13/12. We wonder what Capstone's Rory Maher is thinking today with his $910 target?

Here Is Why GOOG Has Plunged By 10% (So Far)

While everyone knows that GOOG is halted and may or may not resume trading before market close (and no, RRD merely reported the facts, if only early, and as everyone knows the market has a revulsion to reality peeking during trading hours), few are aware just why it is that everyone dumped the stock which soared to all time highs a few short weeks ago. Here it is, in its full visual splendor - Google's Operating Income, which was expected to come in at $3.536 billion printed at $2.736 billion, a 23% miss!

QQQ Implies GOOG At $660 (-12.5%) - So Far

While GOOG is halted, the rest of the world goes on trading - with 165 hedge funds seeking protection somewhere... QQQ is trading lower, implying a $660 price for GOOG or down 12.5% on the day... so far...

It's All RR Donnelley's Fault

Sorry, it's not the Iranian hackers' fault this time:

  • GOOGLE SAYS 8K FILED WITHOUT AUTHORIZATION
  • GOOGLE SAYS RR DONNELLEY FILED DRAFT 8K EARNINGS W/O AUTHORITY

This means Dubya, Europe and the weather are all off the hook. It also means that the press release is accurate (unless of course GOOG decides to implement a last minute Morgan Stanleyesque's DVA "one-time" charge to EPS that is).

Google Reports Early: Huge Miss Sends Stock Plunging

Google is down over 8% as it reported earnings early and surprised to the downside...

  • GOOGLE 3Q REV. EX TAC $11.33B, EST. $11.83B           
  • GOOGLE 3Q ADJ. EPS $9.03, EST. $10.65
  • Q3 REVENUE EX-TAC $11.33 BLN VS EXP. $11.83 BN
  • Q3 NETWORK REVENUE USD 3.13 BLN

Full EDGAR filing below...

How '125' Became The Most Important Number For The US Economy

The unending efforts of our glorious central-banking planners to raise asset prices and encourage 'animal spirits' through the trickle-down of unicorn-tears via the wealth effect have side-effects. Unintended consequences of 'leaking liquidity' finding its way into hard assets and 'things that have relatively limited supply' have stalled hopes of a stimulus in China (food inflation) and caused refis to mysteriously lag on misplaced future rate expectations in the US (ZIRP). The biggest 'problem' the central-bankers face, however, is energy prices. The liquidity surges directly impact the price of oil (which is already under pressure from the ever-igniting fears of Middle-East flare-ups). Critically, as Goldman notes, once the price of Brent crude reaches $125, global economic growth becomes challenged and ultimately makes QE self-defeating. This means Bernanke and his cohorts are threading an ever-narrowing needle as crude's price range remains high enough to motivate supply, but not so high as to undermine the global economic recovery - and with a tight physical market, any disruption or 'anomaly' will be hard to jawbone us back from (SPR rumors aside).

Guest Post: Japan And The Exhaustion Of Consumerism

What few seem willing to acknowledge is the solipsistic, narcissistic nature of this reliance on public display of consumerist fantasy for self-identity. All consumerist fashion is based on superficiality and self-indulgence, of course; but if we look at the energy, money and attention "invested" in fashion lifestyles in Japan, we might conclude it is strong evidence that there is plenty of "money and time to burn" in Japan. While that is certainly true, this reliance on consumerist excess for self-identity and pastime is also evidence of a deeply troubled economy and society. Young people have money and time to burn on outlandish costumes because few earn enough to have their own families or flats. They work part-time for low wages and live at home or in tiny one-room apartments. Few own cars because they 1) don't earn enough to support a car and 2) they're uninterested in acquiring status symbols or prestige signifiers. This is not just a generational shift: it reflects a realistic understanding that opportunities for secure, high-paying employment have diminished over the past 20 years. There are plenty of low-level jobs, but few with the guarantees that their parents took for granted.

Google Threatens Cutting Off French Media Sites In Protest Over Local Content Subsidy Law

Two weeks ago we reported that the first unintended but perfectly expected consequence of the French socialist revolution, was the plunge in Paris luxury real estate prices as in the aftermath of Hollande's plan for a 75% millionaire tax, the wealthy promptly decided it is time to seek greener pastures and have launched a housing firesale, flooding the market with expensive (but getting cheaper by the day) housing. Now, we find that another consequence of Hollande's creeping government-enforced subsidies to uncompetitive sectors (coming soon to an insolvent country near you) may be none other than the French internet, as the world's biggest agregator of content, Google, is threatening to boycott French media websites if France demands it start paying for linked content.

A Small Printed Note Saying "Wait!"

The world is running down a quite slippery slope in its attempt to avoid calamity. The political machines in Europe and the United States and to a real but lesser extent in China have passed the hat to their central banks because either they cannot or will not face up to the severity of their problems. This “faith based initiative” is misplaced, as liquidity and faith are driving the boat and derelict accounting is providing the fuel. The United States, having moved far past the “safety net” that has always been in place, are faced with a very real choice between Socialism and Capitalism. In Europe the problems are also of a fundamental nature as the definition of “More Europe” in Germany is decidedly different than the definition in Spain. But the fantastical belief that the Central Bank will wave it magic wand and make everything all good again is the stuff of Mommy kissing the boo-boo and everything will be just fine.

Are Neo-Nazis Aiding Greek Cops With "DIY Law Enforcement"?

Forget the day-to-day images of riots and protests, the truth on the ground in Greece is far harsher. Just as we warned numerous times, social unrest is escalating rapidly and the extremists are gaining strength and power. One of Greece's neo-nazi Golden Dawn party MPs says "there is already civil war, and Greek society is ready - even though no-one likes this - to have a fight." The BBC's Paul Mason reports on recent demonstrations surrounding the performance of a controversial play as tensions escalated and the Golden Dawn party "de-arresting" demonstrators - pulling them from police detention, as the police do nothing. The somewhat shocking clip below points out the incredible reality that is occurring on the streets of Greece - even as EU leaders claim Greece was not a topic at the EU Summit. The people ask "if we are in a democracy or a dictatorship?" and Golden Dawn (which has 18 seats in parliament) proclaims "On the one side there will be nationalists like us, and Greeks who want our country to be as it used to be; and on the other side illegal immigrants, anarchists and all those who have destroyed Athens several times." As Mason concludes: the social and political outcome of the IMF and EU austerity program, and of the implosion of mainstream politics in Greece, looks like a catastrophe for democracy. "Europe must do something if they don't want a revival of the Third Reich again"

Philly Fed Beats Even As Core Components Deteriorate

The ridiculous economic data continues. Those looking at the headline Philly Fed, which jumped from -1.9 to 5.7, trouncing expectations of 1.0, such as the NY Fed's Simon Potter are pushing buy buttons left and right. And yet anyone who takes the 2 minutes to look at the internals, such as the collapse in the Number of Employees Sub-Index, which tumbled from -7.3 to -10.7 (the lowest since September 2009), the decline in the Average Employee Workweek, or the surge in Prices Paid from 8 to 19, double the change in Prices Received which means plunging corporate profits, or the ever critical New Orders which declined from 1.0 to -0.6, and one can see why this is a report only an Econ Ph.D-cum-Central Planner can love. Finally adding insult to injury, is the 6 month forecast, which unlike all other regional Fed diffusion indices, collapsed by half, from 41.2 to 21.6, as the Hopium at least in the city of brotherly mugging appears to be running out. Stocks kneejerk in every possible direction hoping the Fed will provide a direction.

Art Cashin On The 25th Anniversary Of 'Black Monday'

On this day (+1) in 1987 (that's 25 years ago, if you are burdened with a graduate degree), the NYSE had one of its most dramatic trading days in its 220 year history.  It suffered its largest single day percentage loss (22%) and its largest one day point loss up until that day (508 points). No one who was on the floor that day will ever forget it. While it was an unforgettable single day, there were months of events that went intoits making. The first two-thirds of 1987 were nothing other than spectacular on Wall Street. From New Year to shortly before Labor Day, the Dow rallied a rather stunning 43%.  Fear seemed to disappear. Junior traders laughed at their cautious elders and told each other to "buy strength" rather than sell it, as each rally leg was soon followed by another. One thing that also helped banish fear was a new process called "portfolio insurance". It involved use of the newly expanded S&P futures. Somewhat counterintuitively, it involved selling when prices turned down.

To Promote The Great European Socialist Revolution, France's Hollande Will Ban Homework

Homework favors the wealthy. This is the position that the increasingly imbecilic President of France is taking in proposing a ban on homework as part of a series of educational reforms. As ABC reports, Hollande sees "education as a priority" but work should be done during school hours rather than at home "in order to establish equal opportunities." But before the children of France rejoice, Hollande is unlikely to garner their future votes, as his proposal also looks to extend the French school week to nine half-days a week to be spread over four, five, or six days (as opposed to the current four days a week with Wednesdays off). Though we may sneer at this oh-so-socialist ideal of 'sharing' the homework load into the school-day, it is perhaps noteworthy that the US still lags France in Math (US 31st in the world vs France 22nd).