Archive - Dec 2013

Apparently having 5% of the world’s population, but 25% of its prisoners simply isn’t good enough for neo-feudal America. No, we need to find more creative and archaic ways to wastefully, immorally and seemingly unconstitutionally incarcerate poor people. Welcome to the latest trend in the penal colony formerly known as America. Debtors’ prisons. A practice we thought had long since been deemed outdated (indeed it has been largely eradicated in the Western world with the exception of about 1/3 of U.S. states as well as Greece).

To think it was just two weeks ago, on December 13, when the S&P was being supported by the "Independence Day" barrier of 1776. It was also on that day that Goldman's strategist David Kostin updated his most recent forward S&P500 price targets for both 6 months ahead (i.e. June), and December 31, 2014. The numbers were 1850 and 1900 respectively.  What is just a little bit concerning, is that the S&P, following yet another 10+ point move today on what can only be characterized as "hilarious" volume, will hit Goldman's S&P500 June price target some time tomorrow (or maybe today if the NY Fed trading desk sends the VIX to a 10 handle).

When it comes to screening for stocks, one traditionally uses CapIQ, Factset or the Bloomberg Terminal. However, in a welcome development, the Bloomberg website has launched its own free screener of companies titled the Bloomberg Industry Leaderboard, which this day and age of visual learning, has the added benefit of breaking down the data in an easily digestible, visual format. It allows the sorting of industry leaders by virtually every economic metric of relevance, and while it will never replace paid screeners, it does provide a useful first step in understand who the world leaders in any given industry are.

We wondered previously what happens when there are no more greater fools to sell to? But, US investors have turned the euphoria dial to 11 this week as the percent bullish is the highest since the peak in Fall 2007 and bears are at their lowest percentage since Spring 1987. Thus, the Bull-bear spread (based on AAII's survey) has never been wider (and don't forget, even Cliff Asness knows the unbridled idiocy of the 'money-on-the-sidelines'-meme).

Momentum stocks are the absolute best stocks to invest in from a risk and return standpoint, and there are 5 drivers for GM being a momentum stock 2014.

Obamacare's rollout may be in limbo even though the official deadline has come and gone (despite a much touted 2 million visitors to healthcare.gov on Monday which probably means it should IPO immediately), but the real sticker shock of actual fees awaits. And even as most insurers are opting to keep the full impact of the higher cost hidden, instead adding them to the overhead premiums charged, one company, Blue Cross Blue Shield of Alabama, has itemized the impact of the Unaffordable Care Act by adding a separate line itme for the "Affordable Care Act Fees and Taxes." Here is how these add up according to a breakdown conducted by the Post.

Don’t Be Foolish

For the second time in 6 months, French joblessness has re-surged back towards record highs, dashing the hopes and dreams of a European recovery. The first time it was thousands of texts that didn't get sent that implied joblessness dropped, this time, no excuse and we push back to within 2k of the all-time high unemployment in France. As Germany heads inexorably in the other direction, one can only hope the French President does not decide to take matters into his own hands and 'draft' the youth into employment.

As US and European stocks glide effortlessly higher, even the most ardent of US bulls has begun to realize things are getting out of hand. In order to keep his AUM flowing (and afford the next yacht), the friendly local asset gatherer will offer insights like... "there is value overseas" or "Europe is cheap" in hopes that his audience is none the wise as to the true state of affairs elsewhere in the world, let alone in the US. The truth, the gap between US and European earnings has never been wider and with 3 (or 4) false dawns already, European earnings (supposedly the true mother's milk of the stock market) continue to fall - as the strong 'whatever-it-takes' EUR does nothing but stymie their recovery.

Think sentiment in gold and silver are the same? They violently diverged this year. The difference could have a profound impact on your trades.

The Chinese population may be engulfed in a gold-buying spree to take advantage of low precious metal prices, but when it comes to sheer breadth of materialistic interests, they have nothing on the US consumer. And while previously we highlighted the products that filled online buyers' shopping carts during Walmart's record-breaking cyber Monday sales, they were, in a word, boring. So to get a sense of just how expansive the imagination of the US consumer is when armed with the trusty old credit card, and an internet connection, we go to Amazon which has just laid out it holiday best sellers. So without further ado, this is what Americans just couldn't live without this shopping season.

Whether your tipple of choice is a warm dark ale or a clear cool liquor, the price of alcohol is soaring (but there is still no inflation anywhere remember - especially in Europe) and so is demand.  From watered-down beer in the UK to rubbing-alcohol split scotch in New Jersey, stealth inflation is growing. So who is most responsible for this demand-pull (and cost-push) driven inflation in alcohol? Germany and Czech Republic (beer) and Russia (liquor) are topping the charts in per-capita demand and it seems the Italians, not content with spending less on gifts are also not drinking much...

Turkish stocks are tumbling, bond yields are soaring, and the Lira is collapsing to new record lows as the prosecutor in charge of investigating the nation's "Graft" case points out the seemingly obvious (but in public)...

*ISTANBUL PROSECUTOR SAYS GOVT INTERFERING IN GRAFT PROBE: NTV
*COURT ORDERS FOR SEARCH, DETENTION BEING PREVENTED, AKKAS SAYS
*TURKEY PROSECUTOR SAYS OFFICIALS CRIMINALLY DISOBEYING COURTS

Judge Akkas cites clear pressure on the judiciary through the police are affecting his ability to continue the probe into the Turkish government's potential misdeeds and corruption.

Japanese automakers may have regained some of their lost ground in China, though the recovery has come at a cost as they sacrifice profit for volume, but Abe's shrine visit may spark a repeat of last year when consumers boycotted Japanese cars, and thousands of Japanese cars were vandalized and businesses attacked by mobs (after the Senkaku debacle began). “The Japanese government is always making trouble," notes on potential Chinese car buyer, adding, "there are so many other choices, so why them? I know most of them are made in China now, but why help them make money?" In Shanghai, the Japanese consulate urged its nationals to be cautious as there’s a risk of worsening sentiment given the “strong anti-Japanese” tone in Chinese media reports.

According to pundits, 2012 was the worst year for the Eurozone's peripheral economies, only worse than the just as tumultuous 2011, while 2013 was - if only listens to Europe's propaganda masters - a year of recovery thanks to the ECB's "whatever it takes" mentality. Which fails to explain why families in recession-battered Italy spent 11.4% less on gifts this Christmas than last year and one in five households did without presents completely, according to the consumers' group Federconsumatori estimated on Thursday.