As we showed back in April, the marginal cost of production of gold (90% percentile) in 2013 was estimated at between $1250 and $1300 including capex. Which means that as of a few days ago, gold is now trading well below not only the cash cost, but is rapidly approaching the marginal cash cost of $1125... Of course, should the central banks of the world succeed in driving the price of gold to or below its costs of production (repressing yet another asset class into stocks) then we fear the repercussions will backfire from a combination of bankruptcies, unemployment, and as we have already seen in Africa - severe social unrest (especially notable as China piles FDI into that region).
"NSA's Mission Is Of Great Value To The Nation" - The Complete "Authorized" NSA Thanksgiving Dinner Talking PointsSubmitted by Tyler Durden on 12/02/2013 - 19:00
It seems getting an 8 pm "escape" from friends and family this Thanksgiving to rush into the nearby World Wrestling Federation Walmart may have been a welcome reprieve for some. Those some in question being NSA agents, and just in case their friends and family got a little too pesky, boisterous or simply inquisitive, all the employees of the National Security Agency and the Central Security Services received a prepared memo with preauthorized talking points designed to "guide" conversations over the Thanksgiving dinner table. Plastered at the head of the 2-page propaganda is a Douglas Adams-like (or was that Isaac Asimov) in its simplicity bullet point: "(1) NSA's mission is of great value to the Nation." How was it that "defenders" of the fatherland during the Third Reich were being brainwashed again? But we digress.
Until early May of this year, trends in US macro fundamentals and US stock markets were 'relatively' well correlated. However, since the first stirrings of Taper concerns, the relationship has seemingly explicitly inverted. Day after day we see markets react to "good" or "bad" news but over time, as the following chart shows, the Fed's total farce has been exposed. Simply put, if the last 7 months of market-macro relationships hold (which makes sense in a world entirely driven by Fed liquidity), the Bulls should be praying for the economic fundamentals to collapse or things will get painful fast for stocks.
The two bullet points below from a just released update by Yum Brands explain all you need to know about the "magic" of half-off retail discounts.
- YUM BRANDS- IN CHINA, LIMITED-TIME "HALF PRICED" BUCKET PROMOTION YIELDED AN ABOUT 16% INCREASE IN KFC SAME-STORE SALES FOR FIRST 10 DAYS OF NOVEMBER
- YUM BRANDS - IN CHINA, KFC SAME-STORE SALES WERE DOWN APPROXIMATELY 8% FOR THE REMAINDER OF NOVEMBER
So, sales were up 16% for the 10 days in which margins were crushed, then down 8% for the remaining 20 regular margin days. And the net impact on the bottom line is...
As far as our well-being is concerned, government intervention in the economy is no more effective than the straw aeroplanes and wooden headphones of some bewildered “cargo cult.” In truth, it probably does more harm.
In Bernanke's centrally-planned, inverse Robin Hood world, record stock prices for the few unfortunately mean record homelessness for the many: this is what the state of Massachusettes found out the hard way after it was flooded with a record number of homeless families who are overwhelming the state's emergency shelter system. As the Boston Globe reports, citing a recent report from the Department of Housing and Urban Development, the number of homeless people in shelters and living on the streets in Massachusetts has risen 14 percent since 2010 to a record 20,000 in January 2013, even as homelessness has declined nationally. However, in what may be the most curious twist, and yet another example of how perverted the incentive and capital allocation system in the US is, the nearly 2,100 families who could not find place in shelters, were housed in motel rooms at a greater cost to all US taxpayers amounting to tens of millions.
Retirement is still on for now. Late-minute desperation (in EURJPY) dragged the Dow just back over 16,000 and the S&P limped above 1,800. Bonds were sold (though less aggressively than gold and silver) and the USD rallied as early exuberance gave way to an uglier realization that good-news-is-really-bad-news after all following today's data. Volume was average as VIX continued to rise to 14.3% - its highest close since mid-October as we see the 4th session in a row with selling into the close. Today was the worst frst-day-of-month for the S&P since May.
From the start of 2012, the S&P 500 up over 40% with the bulk of that surge coming since QE3 (and 4EVA) was unleashed. Until that point, Goldman's global risk and macro models had stayed relatively well synced with stock market 'reality' but once that torrent of liquidity was released, all bets were off. As the following chart shows, more than half the equity market performance is due to factors unrelated to risk, macro fundamentals, or country-specific factors. So, BFTATH of course?
The rock is reality. The squishy place is the illusion that pervasive racketeering is an okay replacement for an economy. The essence of racketeering is the use of dishonest schemes to get money, often (but not always) employing coercion to make it work. Some rackets can function on the sheer cluelessness of the victim(s).
Spot Silver is trading back to early July 2013 levels as it drop 4.1% - its biggest down-day since the SeptTaper debacles began. Gold is also being monkey-hammered; down 2.9% for the biggest drop in 2 months. Meanwhile, Bitcoin is on the rise...
Are Another 1.3 Million Americans About To Drop Out Of Labor Force (And Send Unemployment Plunging)?Submitted by Tyler Durden on 12/02/2013 - 14:40
With even the Fed somewhat challenging the credibility of the official unemployment rate - as labor force participation collapses structurally - the possibility that if Congress does not act by Dec 28th, a further 1.3 million people will lose emergency aid and may be deemed 'out' of the labor force merely exaggerates an already farcical situation. As JPM's Mike Feroli notes, the "official" unemployment rate may drop up to 0.8 percentage points, but it won't mean the economy is any better. Is this the 'excuse' the Fed needs to transition from QE to forward guidance (with the public seeing only a rapidly collapsing unemployment rate as evidence of their success) even as the data that they are so "dependent" on becomes worse than useless?
The Fed is absorbing over 0.3% of all Ten Year Equivalents, also known as "High Quality Collateral", from the private sector every week. The total number as per the most recent weekly update is now a whopping 33.18%, up from 32.85% the week before. Or, said otherwise, the Fed now owns a third of the entire US bond market.
Here's your Excuse Book, America. There's something for almost everyone. Luckily, there is still an infinite abundance of excuses, guilt-tripping, victimhood, rage against those with "more" (never mind what they sacrificed to build it) and denial of choice, consequence, risk and fact. Sadly, there are consequences to the pursuit of victimhood and the denial of will, choice, consequence, risk and fact, and they will be consequential indeed.
If the unfortunate, yet hilarious, sinking of the Costa Concordia cruise liner in January 2012 off the Tuscan coast was the best symbol of the foundering Eurozone, then we are unsure just what the symbolic value is of the fire that raged over the weekend on the Majestic International’s Ocean Countess cruise ship while laid up at a shipyard in Greece.