Tesla Announces Offering Of Common Stock, Convertible Notes
Submitted by Tyler Durden on 05/15/2013 - 16:19Several moments ago, TSLA (hardly) surprised the world when it filed an open-ended S-3 (Shelf) statement, as many had expected it was only a matter of time before the company used the recent surge in its stock price to sell shares. Then, a few moments later, TSLA once again (hardly) surprised the world when it announced a joint $450 million convertible bond and 2.7 million share common stock offering. And because a dilution is not a dilution if the founder is participating in the common offering (buying his own equity at an unprecedented price to "anchor" it as a benchmark- sure why not - after all he is making much on all the other equity he has in the firm that he is not buying, as a result), the stock is trading up after hours.
- Comments: 47
- Reads: 5,821
Humpday Humor: The Rise Of China's Counterfeit Condoms
Submitted by Tyler Durden on 05/15/2013 - 15:45
Fake iPhones - who cares? Fake Gucci handbags - spread the wealth? but fake condoms is going too far. As China Daily reports, a underground workshop producing fake brand-name condoms was busted after police found clues on an online marketplace. Police confiscated more than 2 million bogus condoms labeled Jissbon, Durex and Contex. While a knock-off prophylactic is priced at 1 yuan (16 cents), it costs less than 0.2 yuan to produce. In February, police noticed that prices of brand-name condoms were unreasonably low on one online store, and they bought some products (just to check we are sure). As Bloomberg adds, in April, public health authorities from Ghana impounded more than 1 million substandard condoms, many of them imported from China. “When we tested these condoms, we found that they are poor quality, can burst in the course of sexual activity, and have holes which expose the users to unwanted pregnancy and sexually transmitted disease." Another unintended consequence of the Fed's exported inflation?
- Comments: 143
- Reads: 10,118
Subprime 2.0 - Auto Loan Deliquency Balances Rise 24% YoY
Submitted by Tyler Durden on 05/15/2013 - 15:16
As we warned six weeks ago, the Fed's ZIRP side-effects have driven auto-lenders to scrape the bottom of the subprime-lending barrel once again (loans to subprime borrowers +18% YoY). It seems, based on the Fed's latest data, that this over-exuberant lending is coming back to bite once again as delinquent balances surge 23.9% year-over-year (though optimistically Experian reflects "obviously, we never want to see a rise in delinquencies or repossessions, but... they are still lower than the recession-level rates,"). As Experian also notes today, repossessions rose 16.9% year-over-year. All this as lending volumes overall rose 9.6% to $726 billion in Q1 2013 but average charge-off amounts rose by 9.8% to $7,401 on each defaulted loan - and the worse is yet to come, as "we continue to move forward, we should start to see more increases as some of the subprime loans coming onto the books begin to deteriorate." This will end well.
- Comments: 84
- Reads: 10,780
Senate Foreign Relations Panel To Vote On Arming Syrian Rebels Next Week
Submitted by Tyler Durden on 05/15/2013 - 14:48With the scandal-ridden administration in major need of a geopolitical distraction, preferably of the exothermic variety, and with Syria still in desperate need of "liberation" by remote controlled-airborne units, the Senate may have put two and two together, and following today's introduction of the bipartisan "Syria Transition Support Act", at least one part of the US legislative process - the Senate Foreign Relations Committee - is set to vote as soon as next week on whether to arm Syrian rebels. The ultimate passage of such a move through Congress is guaranteed to finally escalate the regional mid-east conflict to the next stage with the inevitable involvement of Russia which as a reminder yesterday, in a very demonstrative and well-timed move, exposed a CIA agent operating in the heart of Moscow.
- Comments: 105
- Reads: 5,032
Guest Post: The Brewing Generational Conflict
Submitted by Tyler Durden on 05/15/2013 - 14:27
The promises made to the 76 million baby Boomers cannot be met. It's really very simple: promises made when the economy was growing by 4% a year and the next generation was roughly double the size of the generation entering retirement cannot be fulfilled in an economy growing 1.5% a year (and only growing at all as the result of massive expansions of public and private debt) in which the generation after the cohort entering retirement is significantly smaller. We desperately need an adult discussion focused on reality rather than resentment. The solution will require dismantling open-ended, everyone-deserves-everything Medicare, which will bankrupt the nation itself. The solution is currently "impossible". What nobody dares say is that if the 76 million Boomers press their claims to the point the nation is bankrupted, then the next generations (X and Y) will have to wrest political power from the retirees, not for their own sake but for the sake of the nation and for the generations behind them.
- Comments: 210
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US Government Begins BitCoin Crackdown
Submitted by Tyler Durden on 05/15/2013 - 14:02
As we first noted here (regulation) and here (supervision), the US government has been gradually encroaching on the independence and freedom of the virtual currency. This week, as The Washington Post reports, the government escalated. The feds took action against Mt. Gox, the world’s leading Bitcoin exchange. Many people use Dwolla, a PayPal-like payment network, to send dollars to their Mt. Gox accounts. They then use those dollars to buy Bitcoins. On Tuesday, Dwolla announced that it had frozen Mt. Gox’s account at the request of federal investigators. It’s the first federal action against the currency. Considering the great antipathy the central planners have toward such legacy money as gold and silver, is it any surprise that they would move aggressively and rapidly to halt the emergence of yet another alternative to fiat, especially one which the ECB made it very clear will not be tolerated in an insolvent world. Because all is fair in preserving the FIATH...
- Comments: 235
- Reads: 22,298
The Other Great Rotation - From Reach-For-Yield To Dash-For-Trash
Submitted by Tyler Durden on 05/15/2013 - 13:24
It appears that the only thing driving this market higher now is shorts covering. The 'most shorted' names (as we first suggested here) have tripled the performance of the market in the last 4 days (+5.2%). Simply put, this is not a reach-for-yield anymore (which is somehow pitched as a reasonable conservative 'ah shucks' thesis to be buying stocks), this is a dash-for-trash (at a time when financing for this trash is actually blowing higher) - and that always ends well...
- Comments: 37
- Reads: 9,688
Eric Holder Testimony To House Judiciary Committee: Live Webcast
Submitted by Tyler Durden on 05/15/2013 - 12:56
We present today's main circus event: Eric Holder, Attorney General of the US, who will field questions from assorted members of the House Judiciary Committee chaired by Bob Goodlatte whose career donors can be found here broken down by industry. As a reminder, earlier today we got this: "House Speaker John Boehner wants to know, "Who's going to jail over this scandal?" He's talking about the Internal Revenue Service's targeting of conservative groups for extra scrutiny of their applications for tax-exempt status." We know the answer: nodody.
- Comments: 209
- Reads: 15,119
Visualizing The Taper
Submitted by Tyler Durden on 05/15/2013 - 12:32
When the noisy-as-you-like-prone-to-epic-revisions non-farm-payrolls figure hit on May 3rd, it seems we crossed the streams. From a regime where Fed liquidity was expected to be large for long, discussions started to turn to good-is-bad and Fed 'Tapering' conversations began. Across every asset class, prices began to shift in the direction one would assume based on a less expansive monetization scheme by the Fed. But there is one market; a market incapable of believing reality; that remains in its own world of hope and unicorns. The US equity market has seen one of its best runs ever during this post-NFP period in the face of the rest of the world's pricing in a tapering.
- Comments: 62
- Reads: 8,848
Tepper Files First Quarter 13F, Cuts Core Holdings
Submitted by Tyler Durden on 05/15/2013 - 12:03Back in September 2010, following David Tepper's first "balls to the wall" appearance on CNBC, we were not very surprised to learn that the seemingly permabullish hedge fund manager had taken the opportunity to follow up on the brief euphoria his speech generated then to cut 20% of his positions in assorted financial stocks - just the stocks he was praising loud and clear to the financial station with the plunging viewership. Moments ago, Tepper's Appaloosa filed its 13F for the quarter ended March 31, so yes, before his most recent appearance yesterday. Yet we were somewhat confused by why the manager, once again so bullish he could see no scenario that could send stocks lower, and who estimated a war in the middle east could lead to a mindblowing 5% drop in the market, decided to trim his core holdings.
- Comments: 36
- Reads: 9,982
Guest Post: 5 Questions That Every Market Bull Should Answer
Submitted by Tyler Durden on 05/15/2013 - 11:50
There have been a litany of articles written recently discussing how the stock market is set for a continued bull rally. There are some primary points that are common threads among each of these articles which are that interest rates are low, corporate profitability is high and the Fed's monetary programs continue to put a floor under stocks. The problem is that while we do not disagree with any of those points - they are all artificially influenced by outside factors. Interest rates are low because of the Federal Reserve's actions, corporate profitability is high due to accounting rule changes following the financial crisis and the Fed is pumping money directly into the stock market. Being bullish on the market in the short term is fine. The expansion of the Fed's balance sheet will continue to push stocks higher as long as no other crisis presents itself. However, the problem is that a crisis, which is always unexpected, inevitably will trigger a reversion back to the fundamentals.
- Comments: 44
- Reads: 10,758
Previewing Today's Main Attraction: Eric Holder Testifies Before The House At 1 PM
Submitted by Tyler Durden on 05/15/2013 - 11:24
Today at 1pm the real circus starts. From the House Committee on the Judiciary: "On Wednesday, May 15 at 1:00 p.m., Attorney General Eric Holder will testify before the House Judiciary Committee for an oversight hearing on the U.S. Department of Justice. The hearing will focus on the Justice Department obtaining two months of telephone records of reporters and editors for The Associated Press, the unwarranted targeting of conservative groups by the IRS, the recent bombings in Boston, wasteful spending at the Justice Department, and troubling allegations of the politicization of the Justice Department under Attorney General Holder’s leadership."
- Comments: 90
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The Unintended Consequence Of The Soaring Dollar
Submitted by Tyler Durden on 05/15/2013 - 11:10
It seems the S&P 500's recent strength is somehow comforted by the fact that the USD is riding high on its cleanest dirty shirt meme at 34 month highs but unfortunately for the Chinese (and their practical peg to the USD), things are a little less fun than in the old mercantilist manipulation days. The implicit benefit that dollar flows appear to be getting (via the wealth effect in the US stock market) is not there in China (lower equity ownership); in fact, the rising Yuan is drastically hurting them as despite export orders remaining in growth mode, the China Daily reports that "most exporters in the delta region have told us that the rising yuan value has led to a big profit decline." Of course, the exporters are calling for a weaker Yuan but as the nation struggles with an exploding shadow banking system, bubbles in real estate and credit, and inflation concerns it knows that any implicit effort to weaken the CNY will create a surge in capital inflows and fuel further imbalances. China remains in the middle of the 'currency war'-driven inflation rock and 'sagging growth' hard place; and with two 91-day bill issues in the last week (in addition to repo) the clear signal (masked by export data fudges) is that China is much more worried about inflation than it is letting on (and has little ability to manage hot money inflows).
- Comments: 72
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Gold Drops Below $1400
Submitted by Tyler Durden on 05/15/2013 - 10:44
After retracing 61.8% of the gold crash, spot gold prices have fallen back and are now trading back under $1400 for the first time in four weeks. It would seem more time is perhaps needed to enable the gathering of physical gold to fufill Germany's demands... (and cue, the death of gold headlines) So, in summary, we have had a notable increase in tapering discussions - Treasury yields have surged, the USD has surged, Gold has dropped, and credit has widened - all reflecting lower liquidity flow expectations; but stocks just keep going...
- Comments: 344
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Argentines Are Hoarding 1 Of Every 15 Cash Dollars In The World
Submitted by Tyler Durden on 05/15/2013 - 10:36
With the shadow (or blue) market for Argentina Pesos already devalued by an incredible 50%, it is little surprise that the population is bidding for any store of value. Demand for luxury cars is soaring (BMW sales up 30% in the last 20 months) and Bitcoin activity is often discussed as the population transfer increasingly worthless Pesos into a fungible "currency" or domestic CPI protection; but it is USD that are the most-cherished item (despite a ban on buying USD) as hyperinflation hedges. But as Bloomberg Businessweek reports, a lot of US Dollar bills are tucked away somewhere in Argentina (in stacks of $100 bills since the number in circulation has risen from 58% of the total to 62% since 2008). One table is a 2012 Fed paper on demand abroad for US currency shows net inflows to Russia and Argentina has increased by 500% since 2006 (compared to US demand up around 10%). In fact, demand for large dollar transfers to Argentina since 2006 has outstripped demand for dollar cash overall in the world. It is safe to surmise from the data (that is relatively well guarded by the government) that over $50bn is being hoarded in Argentina (or well over one in every fifteen dollars). It is little wonder that the government is furiously digging at the country's undeclared (stashed under the mattress) wealth.
- Comments: 63
- Reads: 14,370
