Archive - Dec 27, 2012
The Real Crisis: "People Have Lost Trust In The Government And The Market"
Submitted by Tyler Durden on 12/27/2012 22:18 -0500
The death of the 'cult of equities' was a popular topic this year among both fringe blogs and the best-known institutional asset managers and sell-side strategists. As AP discusses in this excellent article, ordinary Americans - defying decades of investment history - are selling stocks for a fifth year in a row. It's the first time ordinary folks have sold during a sustained bull market since relevant records were first kept during World War II. The answer is both complex and simple but summed up best by a former stock analyst's comment that in order to buy stocks "You have to trust your government. You have to trust other governments. You have to trust Wall Street, and I don't trust any of these." With Fed policy trying to force investors back into stocks (at any cost), a former fund manager notes, presciently that, "When this policy fails, as it will, baby boomers will pay the cost in their 401(k)s." Are we the new 'Depression Babies'? We suspect so.
Guest Post: Jobless Claims Not Translating Into Full-Time Jobs
Submitted by Tyler Durden on 12/27/2012 21:35 -0500
While the decline in initial jobless claims from a historical perspective should be a positive for economic growth in the future - it is likely to only be the case if employers began to convert part-time employees to full-time hires. This has been the hope since the end of the "Great Recession" yet subpar economic growth, increased productivity and weak consumer demand has kept businesses on the defensive to maintain profitability. The disappointment, from an economic standpoint, is that jobless claims could well hit much lower levels without a translation into stronger economic growth or significantly increased incomes.
Facebook Censors Prominent Political Critics
Submitted by George Washington on 12/27/2012 21:24 -0500Political Witch Hunt by Popular Social Media Sites
The Farce Is Complete: In The Case Of Countrywide, Congress Finds Itself Innocent Of Being "Friends Of Angelo"
Submitted by Tyler Durden on 12/27/2012 20:40 -0500
Just when you thought the seemingly endless rabbit hole of Wall Street-Washington corruption, cronyism, co-option, crime and kickbacks may have finally come to an end, here comes the House Ethic Committee to pronounce that no ethics breaches were found among House members in its investigation involving the scandal surrounding Countrywide "VIP loans" and the "Friends of Angelo." And in just doing so, the House effectively cleared itself of any wrongdoing and that's it, case closed - move along... Move along.
Fiscal Thursday – Last Ditch Efforts
Submitted by ilene on 12/27/2012 18:38 -0500More exiting than Christmas!
Another Bait And Switch: Congress Defeats E-Mail Privacy Legislation... Again
Submitted by Tyler Durden on 12/27/2012 18:36 -0500
This is how the corporate state rolls. They remove all the important stuff at the last minute, you know, like provisions that might actually protect constitutional rights. This is exactly what they just did with the NDAA. Repeat after me: Your Government Loves You. Now go back to sleep.
Savings Deposits Soar By Most Since Lehman And First Debt Ceiling Crisis
Submitted by Tyler Durden on 12/27/2012 17:43 -0500A month ago, we showed something disturbing: the weekly increase in savings deposits held at Commercial banks soared by a record $132 billion, more than the comparable surge during the Lehman Failure, the First Debt Ceiling Fiasco (not to be confused with the upcoming second one), and the First Greek Insolvency. And while there were certainly macro factors behind the move which usually indicates a spike in risk-aversion (and at least in the old days was accompanied by a plunge in stocks), a large reason for the surge was the unexpected rotation of some $70 billion in savings deposits at Thrift institutions leading to a combined increase in Savings accounts of some $60 billion. Moments ago the Fed released its weekly H.6 update where we find that while the relentless increase in savings accounts at commercial banks has continued, rising by another $70 billion in the past week, this time there was no offsetting drop in Savings deposits at Thrift Institutions, which also increased by $10.0 billion. The end result: an increase of $79.3 billion in total saving deposits at both commercial banks and thrifts, or an amount that is only the third largest weekly jump ever following the $102 billion surge following Lehman and the $92.4 billion rotation into savings following the first US debt ceiling debacle and US downgrade in August 2011.
Guest Post: No More Industrial Revolutions, No More Growth?
Submitted by Tyler Durden on 12/27/2012 16:49 -0500
The common feature of the transformative technologies of the 20th and 21st centuries is that they were one-offs that cannot be duplicated. What if the engines of global growth that worked for 65 years (since 1945) have not just stalled but broken down? The primary "engines" have been productivity gains from industrialization, real estate development and expansion of consumption based on the continual expansion of debt and leverage--in short-hand, financialization. Doing more of what has failed will only set up a grander failure as returns on all our debt-based "investments" become ever more marginal and the return on increasing complexity drops into negative territory. Once complexity yields negative returns, the systems that depend on complexity quickly destabilize and implode.
Reid-Off; Boehner-On; McConnell-Off; Reality-Gone
Submitted by Tyler Durden on 12/27/2012 16:14 -0500
UPDATE: ES -7 after-hours from closing highs (McConnell-Off)
Equity markets started the day off slowly but with confidence disappointing and Harry Reid's name-calling, not even the arrival of the chosen one was enough to juice anything but a minimal bounce in stocks. It looked like S&P 500 futures (ES) were going to retest the flash-crash lows from last week but thanks to a well-timed piece of news that Boehner will be in session on Sunday night (though no accompanying notes on exactly what magical book of crap they will sign off - or not - on) was enough to spur Johhny-5 and his friends into algo-asm action. The initial jerk was perfectly to VWAP and the second jerk took AAPL up to yesterday's closing VWAP. This strength dragged ES higher - reconnecting with a less excited risk-asset market that had remained flat from the day-session open. FX and vol were the main levers to the upside with Treasuries less enamored - though HYG was lifted to fill Monday's gap. Mitch McConnell spoiled the party a little into the unchanged close.
AAPL, Market Go Vertical On House Conference Call News
Submitted by Tyler Durden on 12/27/2012 14:49 -0500It appears that our expectation for a 3:35 pm rumor was some 45 minutes too late. No sooner than headlines crossed the wires that:
- *U.S. HOUSE SAID TO PLAN 6:30 P.M. SESSION ON DEC. 30
- *REPUBLICAN AIDE REPORTS FROM HOUSE MEMBERS' CONFERENCE CALL
then stocks ramped instantly to their VWAPs and beyond... efficient markets? whocouldanode? This way at least, when nothing happens on Sunday night, as nothing will (as it comes three days before Boehner's reelection), the flashbacks to the TARP 1 vote will be front and center, but the good news is that the downside will be limited by the limit down barrier in ES.
Cashin Commemorates Rasputin
Submitted by Tyler Durden on 12/27/2012 14:25 -0500
Today's anecdote from Art Cashin has nothing to do with the fiscal cliff, the stock market, the economy, geopolitics or even the fermentation committee. Instead it is a deep tangent from all things financial: an amusing anecdote focusing on the life and more notably, death anniversary of one Rasputin, narrated in the way only Art can do. So while we await the inevitable 3:35 pm rumor that a Fiscal Cliff resolution is imminent, just like all those other 99 rumors in the past few weeks, which sent the market soaring before they popped, what better way to kill the time until the next algo driven buying frenzy than with stories of possessed, mad monks in tsarist, WWI Russia.
The Fed is Playing a Very Dangerous Game
Submitted by Phoenix Capital Research on 12/27/2012 14:11 -0500
The US Fed is playing a very dangerous game by purchasing as many Treasuries as it is. But that game can last much longer than anticipated.
Are Stocks Catching Down To Gold?
Submitted by Tyler Durden on 12/27/2012 14:06 -0500
Year-to-date, the EuroStoxx 50 (Europe's Dow) is the best performing of the major asset classes of the developed world - besting the S&P 500 by over 300bps now. What is perhaps more interesting than this apparent dirty/clean shirt bet is that the S&P 500 was outperforming Gold by more than 850bps last week. It appears that since reaching that 2-sigma 'richness' that stocks and gold have begun to converge back to a more normal 'average' spread for the year. Gold remains +6.4% for the year versus 12% for the S&P (with recent historical vol considerably higher in stocks than gold) but the question is - is the long Gold, short Stocks pair due for a renaissance?
No GuTS No GLoRY!
Submitted by williambanzai7 on 12/27/2012 13:32 -0500Chinese downhill. It is zee only way!
So Much For That Santa Claus Rally?
Submitted by Tyler Durden on 12/27/2012 13:27 -0500
For those who prefer to trade by looking the rear-view mirror, December was looking like a bias-confirming 'Santa-Claus-Rally' month until just a few days ago. For the past 15 years, S&P 500 futures have averaged a rather consistent trend 2% gain in December and in the week leading up to Christmas, the S&P was holding up that plan at +2.6%; but now, sadly, the S&P is down for the month (underperforming the average by around 250bps). Oh, well, we hear there is a January effect to trade soon?







