Archive - Oct 2013
October 29th
The Ten US Cities With Less Than Ten Days Of Cash On Hand
Submitted by Tyler Durden on 10/29/2013 12:59 -0500
As the Detroit bankruptcy hearing heats up following news that the city's unsecured creditors, among them pensioners, are set to recover pennies on the dollar, 16 to be precise, the question of which are the next cities to follow in the footsteps of bankrupt Motown, becomes relevant once again. Courtesy of the WSJ, and the second part of its series on "U.S. Cities Grapple With Finances", here is a list of the US cities that when push comes to shove metaphorically, and when the money runs out literally, will have no choice but to knock on the door of the local regional bankruptcy court and submit that long-prepared bankruptcy petition. Specifically, here are the cities that have 10 days or less in cash on hand available. Because, unless one is the Fed, cash and lack thereof is all that matters.
JPMorgan Slides On "Deal" Breakdown Chatter
Submitted by Tyler Durden on 10/29/2013 12:39 -0500
JPMorgan shares have dropped modestly (though any drop is notable in the new normal) as the WSJ reports that the $13bn deal with the Department of Justuice may be at risk:
*JPMORGAN FALLS 0.6% AS DOW JONES SAYS DOJ DEAL AT RISK
*JPMORGAN, JUSTICE DEPT SAID TO DISAGREE ON FDIC REIMBURSEMENT
*JPMORGAN PROPOSED SETTLEMENT SAID TO FACE U.S. RESISTANCE
It appears the 'breakdown' is over JPMorgan's demands that they offset payments to the DoJ from the FDIC fund (i.e. they wanted to use FDIC to fund this penalty on the basis of som epossible indemnification from the WaMu deal). DoJ lawyers are not amused (for now)...
Spot The Spanish Reality
Submitted by Tyler Durden on 10/29/2013 12:32 -0500
Having recently pointed out Draghi's worst nightmare, we thought the anti-thesis of hope over reality that is occurring in European "markets" was worth pointing out. Spanish sovereign bond spreads have collapsed this week to their lowest (least risky) in 30 months at a mere 229bps. The total and utter disconnect of this supposed 'free market' based measure in the face of nothing but terrible Spanish data is entirely without precedent...
Spot The Difference
Submitted by Tyler Durden on 10/29/2013 11:41 -0500
As the investing public looks around for reasons why US equities are rallying, the harsh reality is highlighted in the following chart... all that matters is what JPY carry is doing. While correlation is not causation, we suspect you'd be hard-pressed to suggest we are not on to something here...
Nasdaq Breaks Again: Data Feed Not Disseminating, Trading Halted In SOX, OSX And HGX Options
Submitted by Tyler Durden on 10/29/2013 11:23 -0500Update: The NASDAQ OMX PHLX and NOM will resume trading in NDX, SOX, OSX, and HGX. PHLX will resume trading as of 12:55 PM . NOM will resume trading as of 1:00 PM . Please contact Market Operations at (215) 496-1571 if you have any further questions.
Head Of World's Largest Asset Manager Says Taper "Imperative" To End "Bubble-Like Markets"
Submitted by Tyler Durden on 10/29/2013 10:55 -0500JPMorgan, Pimco, and now BlackRock, the world's largest asset manager, all join the bubble warning chorus. From Bloomberg:
- FINK SAYS IT'S "IMPERATIVE" THAT THE FED BEGIN TO TAPER
- FINK CALLS MARKET `OVER-ZEALOUS'
- FINK SAYS THERE ARE "REAL BUBBLE-LIKE MARKETS AGAIN"
So... when the three largest banks/asset managers in the US say that Ben Bernanke has blown the largest asset bubble in history and that the time to taper has come, will Janet Yellen once again turn a blind ear to warnings that come not just from the "tinfoil" blogosphere but the "respected" legacy financial institutions made up of serious people, and after the cataclysm admit that, just like last time, she "never saw it coming?"
Bill Gross: "All Risk Asset Prices Artificially High"
Submitted by Tyler Durden on 10/29/2013 10:38 -0500Gross: All risk asset prices artificially high. When won’t they be? When they don’t produce growth in real economy. Is 2% GDP enough?
— PIMCO (@PIMCO) October 29, 2013
Guest Post: System Reset 2014-2015
Submitted by Tyler Durden on 10/29/2013 10:22 -0500
Resets occur when the price of everything that has been repressed, manipulated or obscured is repriced. The greater the manipulation and financial repression, the more violent the reset. What been manipulated, obscured or repressed? Virtually everything: risk, credit, assets, labor, currency, you name it. Everything that has been manipulated by central banks and central states will be repriced. Trust is difficult to price. Every reset erodes trust in the capacity of the centralized status quo to manipulate/repress price to its liking. Once trust in the system is lost, it cannot be purchased at any cost.
NQ Responds To Muddy Waters Fraud Allegations With Paperweighty 97-Page Presentation
Submitted by Tyler Durden on 10/29/2013 10:00 -0500If the investing school of "Ackman-Tilson" is correct, in which nobody actually cares about the content, just the number of pages in a given "investing presentation" slideshow, then recently troubled Chinese mobile internet provider NQ just got the upper hand over Muddy Waters. Recall that on Thursday, with a "Strong Sell" report bashing NQ, alleging the company is a fraud, Muddy Waters managed to cut the price of the company in question by over 50%. The size of that presentation: 81 pages. Moments ago NQ came out with its point by point rebuttal to Muddy Waters. The size of NQ's presentation: a whopping 97 pages. Game, set, match to NQ, duh.
ECB's "Frankness" Sparks EURJPY Spike Sending US Stocks To Higher All Time Highs
Submitted by Tyler Durden on 10/29/2013 09:43 -0500
Aside from the fact that this morning's dismal confidence data likely inspired more Fed-inspiration, the fact of the matter is that US equities remain beholden to the ebb and flow of JPY-carry trades. This morning's surge in the latter (EURJPY) can be attributed to ECB's Nowotny, who dropped this little tape-bomb earlier:
*ECB'S NOWOTNY SAYS 'NO REALISTIC PROSPECT' OF RATE CUT: MNI
*NOWOTNY SAYS ECB UNLIKELY TO CUT BENCHMARK OR DEPOSIT RATE: MNI
*NOWOTNY SAYS POLICY MAKERS 'HAVE TO LIVE WITH' STRONG EURO: MNI
Which strengthened the EUR (against the JPY) and thus - in the new normal interconnected world (disconnected from fundamentals) - US equities spike.
Shorts Crucified As Most Shorted Russell 2000 Stock Gets Takeover Proposal
Submitted by Tyler Durden on 10/29/2013 09:37 -0500As we pointed out a month ago (and initially over a year ago) in this completely broken, levered-beta, mad dash for yield market, the only alpha-generating strategy that even remotely works, is to be long the most shorted stocks. This was confirmed based on the return of the S&P vs the "most shorted sotcks" - a trade we first suggested in September 2012 - demonstrated by the chart below. Amusingly, as part of the trading basket of only stocks worth owning, i.e., the most shorted ones on the Russell 2000, where the beta is by far the highest, the top stock listed, the one with the highest short interest as a percentage of the total float, was none other than Blyth, Inc., as per the chart from one month ago. According to the latest Bloomberg data, since then the short interest only rose even more, hitting an unprecedented 82.79% of all shares in the float held short. Well, overnight a lot of shorts suddenly screamed out in terror and were suddenly silenced, not to mention carted out feet first, when none other than the most shorted Rusell 2000 stock received an unsolicited takeover proposal valuing the stock at $16.75/share.
Administration Updates House On Obamacare Enrollment - Live Webcast
Submitted by Tyler Durden on 10/29/2013 09:13 -0500
The House Ways & Means Committee holds a hearing to receive testimony from Marilyn Tavenner, Administrator of the Centers for Medicare & Medicaid Services (CMS) at the U.S. Department of Health and Human Services (HHS). Grab your popcorn, nom nom nom
*TAVENNER REFUSES TO TELL COMMITTEE ENROLLMENT DATA ON OBAMACARE
*TAVENNER SAYS ENROLLMENT DATA WILL BE RELEASED MID NOVEMBER
Consumer Confidence Plunges Most In 2 Years
Submitted by Tyler Durden on 10/29/2013 09:11 -0500
Following the lowest UMich confidence print in 2013, Gallup's economic confidence collapse, and Bloomberg's index of consumer comfort signaling major concerns among rich and poor in this country (in spite of record highs in stocks), today's Conference Board Consumer Confidence data continues to confirm a problem for all those 'hoping' for moar multiple expansion. From 80.2 in September, confidence collapsed to 71.2 (the largest MoM drop in 2 years) to its lowest in six months, and notably below expectations. As we have noted in the past a 10 point drop in confidence has historically led to a 2x multiple compression in stocks (which suggests the Fed will need to un-Taper some more to keep the dream alive). Hope for the future dropped to 7-month lows but what is perhaps most intriguiging, just as with the Bloomberg surveys, we are seeing the wealthiest cohorts confidence plunging (even as stocks soar to new highs). It would appear the Fed has lost its wealth effect inpiration.
What's Wrong With This Picture?
Submitted by Tyler Durden on 10/29/2013 08:50 -0500September retail sales were a modest miss: that much was made clear earlier. However, what the market may have missed is that this "miss" was on the back of Department of Commerce's favorite fudge factor: seasonal adjustments. The 0.1% "decline" in retail sales was for the seasonally adjusted numbers of $426.3 billion in August and $425.9 billion in September. So what happens when one strips away the Arima-X-12 a la carte adjustment which is always and everywhere in the eye of the beholder? Well, this...
The Housing Bubble 2.0 Is Strong With These 5 Cities
Submitted by Tyler Durden on 10/29/2013 08:32 -0500
It would appear that the 'gambler's in these 5 cities were not told that the government would be shutting down, that confidence would drop, that affordability would plummet... instead they were told that nothing has changed and 29% YoY home price gains are for buying not selling..





