Archive - Feb 13, 2013

Tyler Durden's picture

Home Prices Are Back... To 1894's Levels





Six years after the onset of the traumatic US housing crisis, the optics are there that suggest a stabilization is occurring. Whether real or manufactured by record-low foreclosures, bank supply withdrawals, and fed-subsidized cash REO-to-rent trades, the sad truth is that jobs (and the GDP-enhancing multiplier effect that they create) are just not coming. Even Bob Shiller prefers the potential for 4% gains in stocks over housing risk in the medium-term as he points out that - inflation-adjusted - house prices are back at levels first seen in 1894... now that is a long-term investor.

 

Bruce Krasting's picture

On Job Openings the Minimum Wage and Being Middle Class





 

Bottom line? $100 an hour is the minimum wage for a person with a family in NY. The Prez is offering $9.

 

Tyler Durden's picture

The Ultimate Global Equity Valuation Matrix





Tired of getting caught tongue-tied at the polo field bar when someone asks whether Russian Utilities are cheap? Annoyed at the lack of your ability to instantly respond on the richness of British Beverage companies when racing Veyrons in Dubai? Have no fear. UBS, Global Valuation Heat Map provides an at a glance table of the best (and worst) global sectors for your hard-earned local currency to be devalued in.

 

Tyler Durden's picture

Six More Equity Offerings Price After The Close As The Greater Fools Start Getting Second Thoughts





It appears that not only we are tracking the phaseout in equity inflows, all of which are simply the reversal of the massive $220 billion surge in bank deposits in the month of December due to fears of Fiscal Cliff dividend and capital gains tax increases (explained previously), and which as today's ICI update indicates have trickled down to just $683 million - the lowest weekly inflow year to date. Among the others who are keeping track of the weekly reduction in inbound capital euphoria, in addition to the six companies which priced equity offerings on Monday as was shown previously, are these fine corporations and existing stakeholders, including Apollo, KKR, Carlyle, Blackstone, Thomas H. Lee, and Bain,  who just can't wait to get out while the getting is good, split once again evenly between secondaries and follow ons.

 

Tyler Durden's picture

23% Of America Is Illiterate





Following on the heels of the dumbing down of the State of the Union speech we noted yesterday, we thought a simple visualization of just how stunningly poor our nation's reading skills really are would be useful. One in five Americans lacks the basic reading skills beyond a 4th grade level - are you one of them?

 

Tyler Durden's picture

Guest Post: Meet Stingray Surveillance: The "Unconstitutional, All-You-Can-Eat Data Buffet"





It’s getting impossible to keep track of all the new spy tools being rolled out by the police state in the name of “fighting terrorism”, aka spying on innocent American citizens unconstitutionally.  I thought that I had my hands full the other day with ARGUS: The World’s Highest Resolution Video Surveillance Platform, but this “Stingray” system is already being deployed illegally in cities throughout the United States.  As the EFF states: “The Stingray is the digital equivalent of the pre-revolutionary British soldier.”

 

Burkhardt's picture

Currency As the New WMD





How do you hedge when shots are pips? The next world war will be computerized. The global economy is on the brink and battle lines are forming with one objective, restoring economic balance. Properly engineered devaluation measures would accomplish precisely that. This is a new age of currency wars. In the past countries would directly manipulate the value of their currency with trade wars and the like. But today’s currency war is a result of unconventional monetary policy by central banks, which indirectly impacts the value of a countries currency.

 

Tyler Durden's picture

Japan Refuses To Exit Triple-Dip Recession As Q4 GDP Disappoints Expectations Of A Positive Print





Despite so much pent up hope that Japan would post a 0.4% annualized growth (and a 0.1% rise Q/Q) in its Q4 GDP, finally exiting that pesky triple dip recession it has been stuck in for the past five years, moments ago the Cabinet Office reported that contrary to optimistic expectations, in the 4th quarter the economy again contracted for the third straight quarter, this time by 0.4% annualized, and 0.1% on a Q/Q basis. This was driven by a whopping 14% SAAR implosion in exports, which should not come as a surprise to those who have been tracking the ongoing destruction of Japan's trade balance (and current account surplus). "Japan's economy may show some weakness for the time being. But it is likely to resume a moderate recovery thereafter due to the Bank of Japan's monetary easing, the effect of an emergency economic package, as well as an expected moderate recovery in the global economy," Economics Minister Akira Amari said in a statement. True: there is hope. And there is the reality that all the BOJ is doing is desperately trying to offset the loss of the Chinese export market, which courtesy of the ever escalating foreign relations snafu involving a few islands close to a massive gas field, remains as shut as ever. And as long as China refuses to assist Japan in its trade and current account deficit predicament, Amari can hope, and hope, and hope.

 

Tyler Durden's picture

How GETCO Went From HFT Trading Giant To Dwarf, And Raked Up Over $50 Million In T&E Expenses Along The Way





There was a time back in 2009 when GETCO was the absolute titan of the high frequency trading arena, printing money with the reckless abandon of a Federal Reserve on full tilt. It even got its own profile piece in the WSJ in the summer of 2009: "Meet Getco, High-Frequency Trade KingMeet Getco, High-Frequency Trade King." However, the good days were not to last as shortly thereafter we got a flash crash, then we got three + years of Ben Bernanke's (and every other bank's) central planning and some $10 trillion in combined exogenous liquidity to prop up the market, both of which resulted in the complete loss of faith in a standalone stock market by the retail investor (and once the current unwind of the December rotation from stocks into savings accounts over capital gains tax fears ends, the outflows will resume especially as latest ICI data shows with the smallest inflow into domestic equities to date in 2013). And since retail orders no longer would feed the frontrunning, sub-pennying, quote churning, flash crashing juggernaut that is HFT, that meant less revenue and profit for algo master GETCO. How much less? A whopping 82% less in the nine months ended September 30, 2012 compared to a year prior, and 92% less when annualizing 2012 results compared to the firm's heyday in 2008, the year in which it made a record $430 million in net income. Getco's net income as of September 30, 2012: a tiny $25 million.

 

Tyler Durden's picture

How VIX ETFs Help To Crush Vol And Ramp Risk Every Day





There are underlying options on the S&P 500 that trade on exchange or OTC (depending on size and strike and margin package - arb or outright). On top of that set of options lies a world of futures and options on a 'created' VIX (that are predicated on the implied vols of the underlying S&P options). And to top it all off - the wonderful world of Exchange Traded Products (ETPs) overlays various levered and unlevered short and long products for retail (and professionals) to speculate on (and some have their own compound options). As you can tell - there is a large amount of 'flow' impacting up and down the chain in this vol landscape.

 

Tyler Durden's picture

Guest Post: Don't Worry; Be Resilient





At some point, absorbing more information about the unsustainability of modern society yields diminishing returns. It becomes emotionally draining and thus counterproductive. Part of this exhaustion results from recognizing our powerlessness within the Status Quo, where independent thinking and structural innovation are intentionally winnowed out as threats to existing institutions and industries. Another part arises from the burden of knowing that the supposedly permanent Status Quo is far more vulnerable than generally believed. This is the psychology of knowing what lies ahead in The Burden of Knowing. These 'burdens of knowing' can diminish the small but real joys of the present - anti-thesised by an attitude such as “don’t worry; be happy.” And it certainly makes sense when life is still comfortable and enjoyable. But the philosophy of “thinking about the future is a downer, so I live in the present” ultimately rests on a false confidence that the future will take care of itself. Though Keynesian economists argue that nations are not like households, in truth debt/financial fragility is scale-invariant, meaning that rising debt, a high cost basis, and zero savings/investment lead to fragility in households, enterprises, communities, and nations alike.

 

Tyler Durden's picture

Greek Consumers Most Pessimistic On Earth: 40% Have No Disposable Income





Chronicling the collapsing Greek socioeconomic reality would be an interesting business school case study of what a zombie monetary regime kept alive at all costs does to the "weakest link(s)" (most recently "Greek Economy Grinds To A Halt As New Construction Implodes By 66.6%"), if only there weren't real men and women suffering as a result of the stupidity and greed of a few entrenched individuals who will stop at nothing to see their paper wealth preserved at all costs. The latest salvo of the utter misery Greek society finds itself in comes from Nielsen research, which reports that Greeks are now the most pessimistic consumers on the planet, with the Greek consumer confidence index dropping to 35 points in the last quarter of 2012. That is the lowest level among a total of 58 countries surveyed and 11 points lower than the same period last year in Greece. It gets worse. As Kathimerini reports: "Four out of 10 Greeks told the same survey that they no longer have any disposable money left after covering their basic needs, which is the highest rate ever recorded in Greece and the biggest in the October-December period in Europe. A year earlier (in Q4 2011) that rate had stood at 34 percent and in Q4 of 2010 it had been at 25 percent." Obligatory spin: once nobody has any disposable income, things can only get better. Unless, as Rajoy might add, they get much worse.

 

Tyler Durden's picture

What Comes Next: 1518, 1517, 1519, 1520, ...





Volumes were pitiful once again and while the range picked up a little (after yet another top-side stop-run) average trade size remains falling as equities appear all gung ho on the surface but the S&P 500 has closed the day session in a 2 point range for the last 4 days - 1518, 1517, 1519, 1518. All this as Treasury yields have actually been bleeding higher (+6-8bps this week), USD flat, Oil up 1.5%, and Gold and Silver -1.5%. Homebuilders remain in a high-beta world of their own +3% on the week with all the other S&P sectors between -0.25% and +0.75% (as Tech is dragged lower along with AAPL again). S&P 500 futures saw quite a drop intraday (9 points high to low) which is sad to get excited about but the ubiquitous VWAP ramp into the close saved the day and limped us into the green on the day (which was oddly accompanied by a huge sell block volume in AAPL). VIX pushed back up to 13% and credit made some more correction back up to stocks right at the close. The last 3 days in ES have seen the lowest aggregate volume in six months - not exactly the new bull market meme?

 

Tyler Durden's picture

Guest Post: Explaining The WTI-Brent Spread Divergence





Something totally bizarre has happened in the last three years. Oil in America has become much, much cheaper than oil in Europe. Oil in America is now almost $30 cheaper than oil in Europe. Why? The ostensible reason for this is oversupply in America. But there’s something fishy about this explanation...

 

Tyler Durden's picture

A Modest Proposal To Save The Postal Service: Hyperinflation





"The financial problems of the Postal Service are getting bigger every year," is how US Postmaster General Donahoe tried to convinced Congress not to block the bill the end Saturday delivery of mail. Raising the specter of mutually assured destructive bailouts in the future, the CEO rattle lawmakers (and other stakeholders) as NBC News reports, Representative Darrell Issa noting "It's very clear that ultimately, either the rate payer or the taxpayer will have to pay the $20 billion in debt of the Postal Service." Indeed Mr. Issa - so by our reckoning the plan to tax emails was a non-starter and so we compare the 73.5 billion pieces of mail handled by the USPS and the $20bn budgetary gap, it would appear the answer is simple - the current 46c stamp will have to rise in value by 27c or 60% in order to meet the shortfall. The problem of course is the legal limit on increasing stamp prices is bounded by what the BLS' official annual inflation report is, and which as the Fed is happy to reminds us, is at best 2% per year. Luckily, every problem, in this case too little inflation, has a solution: in this case hyperinflation.

 
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