Archive - Oct 2013

Toga, Toga, Toga!!!

The zero-nuclear option has a hugely popular and powerful backer in Shinzo Abe’s own party: former Prime Minister Koizumi

Be it BBQ judging, investing, picking out an outfit, or even choosing whether or not you’re going to show up for work tomorrow – ConvergEx's Nick Colas notes that there’s a decision making process occurring.  Quite simply, decision making is the cognitive process resulting in the selection of a final choice among several alternative scenarios.  Final choices can be opinions (as in “This brisket is an 8”) or actions (such as “I will invest in tech stocks”), and decisions are both conscious and unconscious.  For investors, financial decisions and how we tend to arrive at them are of particular importance.  The following is a cautionary tale of the 'Top 10' common biases that creep into the decision making process.  Recognizing and eliminating these biases from your financial choices will make you a sharper and smarter investor... or BBQ judge... or whatever it is that you do.

“Spies … Can Now, For The First Time, Monitor Everything About Us, And They Can Do So With A Few Clicks Of A Mouse And – To Placate The Lawyers – A Drop-Down Menu Of Justifications”

Trading Halt - Extraordinary Event Halt

"Trading is halted because FINRA has determined that an extraordinary event has occurred or is ongoing that has had a material effect on the market for the OTC Equity Security or the security underlying an OTC ADR or has caused or has the potential to cause major disruption to the marketplace or significant uncertainty in the settlement and clearance process."

Wondering what drove stocks higher? Assumed it was all the "hope" for a deal this weekend after Boehner's comments (which were absolutely not conciliatory)? Think again - Only one thing that matters...

The EUR is dumping as EURUSD cracks back to unchanged relative the "shutdown" level from 09/30/13 midnight. Treasury yields are above those levels as are stocks with gold below as it appears (for now) that hope of a weekend deal in DC is priced into markets. Of course, the USD strength could actually be a safe-haven repatriation on fears this goes on longer but when the algos are in charge a rise in AUDJPY is all that is needed to levitate stocks...

Billionaires and political lackeys alike have been falling all over themselves in the rush to praise the Federal Reserve's unprecedented monetary intervention since 2008. That billionaires and political hacks, apparatchiks and toadies cannot laud the Fed's Cargo Cult enough is no surprise: the billionaires and the government that feeds them both gained handsomely from the Fed's policies. As the Fed-induced asset bubbles in stocks, bonds and real estate follow the inevitable Supernova track to implosion, that we've reached Peak Federal Reserve will be obvious - in hindsight.

This chart from Citi's Matt King pretty much sums it up.

Berlusconi's bye-bye (and hope from Draghi) seems to have trumped all else as European macro data continues to slide but stocks and sovereign bonds surge higher amid the US turbulence. EUR jumped 0.65% on the week as it seems anxiety sent hot money into the highest beta muppetry in Europe. Greek stocks +3.6% on the week, Italian stocks +3.7%, Spain +2%... Germany -0.6%. Bunds bid - outperforming Treasuries by 4bps on the week but the "safe havens" of Portugal (-50bps - the 3rd best week of the year), Spain (-21bps), and Italy (-20bps) saw heavy bids. Amid all this exuberance, Europe's VIX rose 16% to 19.6%.

It was all going so well... restating the same old news that Boehner would not end the world was working for a few more points every time and managed to get the S&P up to "shutdown" levels to run the stops. But then, reality hit...

*BOEHNER SAID TO TELL MEMBERS HE WON'T PUT CLEAN CR ON FLOOR
*BOEHNER SAYS 'THIS ISN'T SOME DAMN GAME', HE HAS NO INTENTION OF `ROLLING OVER' ON SPENDING

And sure enough stocks start to tumble...

So "no end of the world", *BOEHNER SAID TO TELL REPUBLICANS HE WON'T ALLOW U.S. TO DEFAULT

but "no clean CR",*BOEHNER SAID TO TELL MEMBERS HE WON'T PUT CLEAN CR ON FLOOR

Riddle us that...

• *BOEHNER SAYS REID TOLD HIM NO NEGOTIATIONS UNTIL `WE SURRENDER'
• *BOEHNER SAYS HE HAS NO INTENTION OF `ROLLING OVER' ON SPENDING

The long-delayed vote has finally come:

• Italy Senate Panel Recommends Berlusconi Expulsion
• Italy Senate panel head Stefano speaks in Rome.
• Panel decision follows Berlusconi’s definitive conviction for tax fraud in August; the former premier has always denied any wrongdoing

So unless Sylvio has some other card up his sleeve, it may be a final goodbye for Italy's legendary ex-leader.

One of the biggest laughs of the conference came when Smith presented the slide, ‘Emperor … With No Clothes’  which compared how the value of the Roman denarius, silver coin and the U.S. paper dollar have fared during periods of currency debasement. 

The chart shows the silver denarius since Nero and the dollar since Nixon and looked at the level of debasement during the reign of each Roman Emperor and the term of each Presidency.