Archive - Nov 2013

If one of the biggest concerns in early 2013 was the progressively declining Bids To Cover in US Treasury auctions, the past few months have seen a halt in this trend, while today's auction of $32 billion in 2 Year paper marked a substantial return to the high-flying  BTC day of yore when the just completed 2 Year auction not only priced strongly through the 0.303% high yield, pricing at 0.300, but more importantly, at a 3.54 Bid to Cover, a jump from October's 3.09, and the second highest since February excluding only April's 3.63. Curiously, the drop in the overall Bid To Cover (as can be sen on the chart below) correlates closely to the drop off in Direct take downs in the first half of the year. This too has reversed in recent months with Directs getting 27.28%, Indirects holding 22.47% and Dealers left holding just over half, or 50.25%. Over the next few days it will be revealed if the same rising BTC trend is sustained in the other near-term vintages, the 5 and 7 year auctions also due out later week.

The U.S. holiday shopping season traditionally begins on Black Friday, the day after Thanksgiving, with alluring sales and promotions. On the day the ultimate discounter, Wal-Mart's CEO resigns, as Bloomberg's Rich Yamarone notes, the most agreed-upon take so far is that sales will be difficult amid a deteriorating economy - every major retailer in the Bloomberg Orange Book has made mention of the competitive market for the consumer’s dwindling dollar. Target Corp. CEO Gregg Steinhafel said, “it’s clear that the holiday season will be highly promotional and that consumers will be laser-focused on value.”

The story making the rounds these days is that the USA’s industrial economy is on the rise again; that the housing market has “recovered;” that (according to Meredith Whitney) the “central corridor” of the nation (Texas to Minnesota) is the second coming of Japan in the 1960s; that we have more oil than we know what to do with; that the nation has bred a super-race of intrepid entrepreneurial risk-takers like unto no other society in history; and finally that whatever else we are or are not, America is the cleanest shirt in the laundry basket of Mother Earth.

This is all horseshit of course, being smoked in the New York Fed’s crack pipe.

"Suicides rose by 17% between 2007 and 2009 and to 25% in 2010, according to unofficial 2010 data (398). The Minister of Health reported a further 40% rise in the first half of 2011 compared with the same period in 2010. Suicide attempts have also increased, particularly among people reporting economic distress (610). Homicide and theft rates have doubled. HIV rates and heroin use have risen significantly, with about half of new HIV infections being self-inflicted to enable people to receive benefits of €700 per month and faster admission on to drug-substitution programmes. Prostitution has also risen, probably as a response to economic hardship. Health care access has declined as hospital budgets have been cut by about 40% (398) and it is estimated that 26 000 public health workers (9100 doctors) will lose their jobs (611). Further cuts are expected as a result of recent negotiations with the IMF and European Central Bank."

Ass Seen On TV!

Is it just coincidence that Twitter is being Baumgartnered and both the NYSE (stock) and BATS (options) markets have now broken!

This is just farcical now...

The difficulty of US workers to obtain "desirable" jobs has been noted here previously. Recall in 2012 when Delta received 22,000 applications for about 300 flight attendant jobs in the first week after posting the positions outside the company (which was an improvement from 2010, when the Atlanta-based carrier received 100,000 applications for 1,000 jobs when it last hired flight attendants in October 2010). Or when in 2011 McDonalds hired 62,000 minimum wage applicants out of one million total applicants. However, that is nothing compared to the job seeking frenzy in China, where as AFP reports, more than one million people took China's national civil service exam at the weekend in a modern version of an age-old rite, but faced huge odds against clinching one of the few government jobs available. A total of 1.12 million took the National Public Servant Exam, according to figures from the State Administration of Civil Service figures. How many total job openings were there? A tiny 19,000 according to China's Global Times, meaning less than 1 on 50 would be successful.

Even as the Dot-Com 2.0 exasperates to new highs, it seems Twitter - the darling of the no-profit-but-lots-of-hype recent IPOs - is losing its lustre. TWTR is down 4% today to new lows post-IPO. The catalyst for this latest slump appears to be a WSJ article about "fake accounts" - whocouldanode? Of course, it wouldn't be the new normal markets without an exchange 'breaking'... The NYSE and NYSE MKT cash equities markets is working to resolve an issue with customer connectivity.

Despite the downtick in rates for a month or two, the housing 'recovery' appears to have come to an end. This is the fifth consecutive monthly decline in pending home sales and even though a smorgasbord of Wall Street's best and brightest doth protest, it would appear the lagged impact of rising rates is with us for good (as the fast money has left the flipping building). This is the biggest YoY decline since April 2011 as NAR blames low inventories and affordability for the poor performance. Perhaps more worrying for those still clinging to the hope that this ends well is the new mortgage rules in January that could further delay approvals.

Nope, no bubble here... and no complacency either. And while just like last time, the tech companies still have no profits, at least this time they have revenues... most of which originate from the seemingly infinite advertising budgets at struggling discretionary retailers. By way of gentle reminder - In 2000, total US debt was $5.7 trillion. Now it is three times greater, or $17.2 trillion. As Kyle Bass once warned, "we are right back there! The brevity of financial memory is about two years."

Moments ago, as we reported, the CEO of Walmart, Mike Duke, retired. And while he will hardly pocket quite as much as Hank Paulson, his departure may raise even more eyebrows as his retirement package, to which he is now entitled, is a whopping $113 million, or about 6,182 times greater than the average 401(k) balance of a typical Wal-Mart worker according to a NerdWallet analysis. Naturally, this is orders of magnitude greater than the already debatable ratio of CEO compensation, which was $20.7 million in 2012, or about 305 times more than the average Walmart manager, and 836 more than the take home of the median Walmart worker.

The video covers the race to debase and the manipulation of precious metal prices: "They can mess around with the price all they want, ultimately the price of everything in the long term will be dictated by supply and demand, particulary for a physical commodity like gold".

Most people – certainly most governments and economists – define inflation as a general rise in prices. But this is wrong. Inflation is an increase in the money supply, of which a rising general price level is just one possible result – and not the most common one. More often, excessive money creation shows up as asset bubbles, where the new money, instead of flowing equally to all the products that are for sale at a given time, flow disproportionately into the ‘hottest’ asset classes. In each case, mainstream economists and government officials pointed to modest consumer price inflation as a sign that things were fine. And in each case they were simply looking in the wrong place and completely missing the destabilizing effects of an inflating money supply. Now we’re at it again, with economists, legislators and central bankers using low consumer price inflation as a rationale for even easier money, while ignoring epic bubbles in sovereign bonds, equities, high-end real estate and collectibles around the world. A chart tracking the tangible asset classes of the super-rich would show all lines going parabolic - except one, gold - for now.

Yet another case of rodents departing a sinking ship as the pent up discrepancy between reality and future expectations means imminent scapegoating of executives for poor performance:

• WAL-MART STORES NAMES DOUG MCMILLON CEO, SUCCEEDING MIKE DUKE
  
• BLACKBERRY SAYS ROGER MARTIN RESIGNS FROM BOARD
• BLACKBERRY SAYS COO, MARKETING CHIEF TO LEAVE; REPLACES CFO

You decide... The press releases are mind-blowingly full of fluff.