Archive - Feb 8, 2013
Guest Post: Is The NDAA Lawsuit Headed To The Supreme Court?
Submitted by Tyler Durden on 02/08/2013 20:13 -0500
The NDAA lawsuit is one of the key topics we have written about over the past year or so. For those of you that aren’t up to speed, one of the most popular posts we ever wrote was NDAA: The Most Important Lawsuit in American History that No One is Talking About. Basically, Section 1021 of the NDAA allows for the indefinite detention of American citizens without charges or a trial. Journalist Chris Hedges and several others sued Obama on the grounds of it being unconstitutional. Judge Katherine Forrest agreed and issued an injunction on it. This was immediately appealed by the Obama Administration to a higher court, which promptly issued a temporary stay on the injunction. Yesterday, oral arguments began in front of this aforementioned higher court; the 2nd Circuit. As Chris Hedges states in the interview below, if they win the case then it will likely be brought in front of the Supreme Court within weeks. On the other hand, if the Obama Administration wins and the Supreme Court refuses to hear the appeal, Hedges states: “at that point we’ve just become a military dictatorship.”
Blast From The Past - 6 Years Ago Today...
Submitted by Tyler Durden on 02/08/2013 20:12 -0500
Six years ago today, with the S&P 500 around 1460 - having risen 20% without a correction for seven months - a handful of Wall Street's best and brightest joined CNBC's Larry Kudlow and Bob Pisani to discuss the Goldilocks economy, why the bears are wrong, and where the market is going next. Sometimes, we just need a reminder to snap us out of that recency bias... for example, Bob Pisani: "We have got a global rally going on... and the important thing is... there's a floor to the market - every time, for the last seven months, they sell the market down for 2 days, it comes right back... When you are in a global expansion like this, to sell...is foolish."
Weekly Bull/Bear Recap: Feb. 4-8, 2013
Submitted by Tyler Durden on 02/08/2013 20:10 -0500
This objective report concisely summarizes important macro events over the past week. It is not geared to push an agenda. Impartiality is necessary to avoid costly psychological traps, which all investors are prone to, such as confirmation, conservatism, and endowment biases.
The Activist-Beleaguered CEO's Survival Guide
Submitted by Tyler Durden on 02/08/2013 19:31 -0500
Excess cash on corporate balance sheets has been a hot topic the better part of the last decade, but ConvergEx's Nick Colas believes it's about to become even more important to capital markets. U.S. companies have, after all, regained all the profitability they collectively enjoyed prior to the Financial Crisis. Moreover, they've accomplished that by rationalizing their business models to succeed in a period of distinctly sub-par growth. Combine that with markets that will likely offer only average returns, and activist investing seems like a worthwhile approach to alpha generation. Sometimes, however, it pays to look at the world through the eyes of the fox rather than the hounds. As the Einhorn-Cook battle commences, we graciously offer up a few kernels of advice for other companies who get the "Where’s my money at?" call from an activist. E.g. #1 – The country’s central bank doesn’t think we are really out of the crisis – why do you?
Friday Humor: "When It Needs To Get There On Saturday"
Submitted by Tyler Durden on 02/08/2013 18:04 -0500
Remember the popular myth that there are some things that the private sector can never, ever possibly replicate the public sector in because, you know, "they didn't build that" and they couldn't possibly build that, even after accumulating some $16,487,564,297,892.03 in debt - no, only the government can be that efficient? We do. And apparently so does FedEx, which does so with just the faintest of a smirk...
Venezuela Launches First Nuke In Currency Wars, Devalues Currency By 46%
Submitted by Tyler Durden on 02/08/2013 18:03 -0500
While the rest of the developed world is scrambling here and there, politely prodding its central bankers to destroy their relative currencies, all the while naming said devaluation assorted names, "quantitative easing" being the most popular, here comes Venezuela and shows the banana republics of the developed world what lobbing a nuclear bomb into a currency war knife fight looks like:
VENEZUELA DEVALUES FROM 4.30 TO 6.30 BOLIVARS
VENEZUELA NEW CURRENCY BODY TO MANAGE DOLLAR INFLOWS
CARACAS CONSUMER PRICES ROSE 3.3% IN JAN.
And that, ladies and gents of Caracas, is how you just lost 46% of your purchasing power, unless of course your fiat was in gold and silver, which just jumped by about 46%. And, in case there is confusion, this is in process, and coming soon to every "developed world" banana republic near you.
Currency Wars Often Lead to Trade Wars ... Which In Turn Can Devolve Into Hot Wars
Submitted by George Washington on 02/08/2013 17:27 -0500- Australia
- Bank of England
- China
- Eurozone
- Federal Reserve
- Federal Reserve Bank
- Germany
- Global Economy
- Japan
- Jim Rickards
- Jim Rogers
- Krugman
- Mexico
- Norway
- Nouriel
- Nouriel Roubini
- Paul Krugman
- Quantitative Easing
- recovery
- Reggie Middleton
- Robert Reich
- Trade War
- Trade Wars
- Unemployment
- Wall Street Journal
- World Trade
Currency War ... Trade War ... Hot War
200 Years Of Escalating Policy Mistakes
Submitted by Tyler Durden on 02/08/2013 17:16 -0500
"Central Bankers and policymakers can’t stop themselves from interfering." To be fair on them (unusual in his case), SocGen's Albert Edwards admits the pressure to do something in the face of “bad” economic news is overwhelming. The general public or more inconveniently, the electorate, clamor for action from policymakers to counter any economic pain. Any ‘Austrian School’-type suggestion that it is best to let the cycle play out is derided as heartless and defeatist. Something can and must always be done. Whether intervention makes things worse in the medium to long run is an inconvenience that can be ignored until later. We feel Edwards pain as he "sheds tears of despair as [he] was reminded of the blundering incompetence of our overconfident policymakers, whose interventions, despite their best intentions, seem to bring about financial crises with increasing rather than decreasing regularity."
"China Accounts For Nearly Half Of World's New Money Supply"
Submitted by Tyler Durden on 02/08/2013 16:46 -0500After having less than half the total US deposits back in 2005, China has pumped enough cash into the economy using various public and private conduits to make even Ben Bernanke blush: between January 2005 and January 2013, Chinese bank deposits have soared by a whopping $11 trillion, rising from $4 trillion to $15 trillion! We have no idea what the real Chinese GDP number is but this expansion alone is anywhere between 200 and 300% of the real GDP as it stands now. And more: between January 2012 and January 2013 Chinese deposits rose by just over $2 trillion. In other words, while everyone focuses on Uncle Ben and his measly $1 trillion in base money creation in 2013 (while loan creation at commercial banks continues to decline), China will have created well more than double this amount of money in the current year alone!
USD Surges By Most In 7 Months As Stocks Stumble And Bonds Bid
Submitted by Tyler Durden on 02/08/2013 16:07 -0500
Keep Calm and Keep Buying. We are sure this will be the message as for the first time this year, the Dow closed the week in the red. First time in 42 years that the S&P 500 started the year up six weeks in a row... as the S&P and Nasdaq managed modest gains (thanks to AAPL's help) - making new multi-year highs as yet another high stop-run was sent out early. After testing back under 13%, VIX popped back higher in the afternoon to close the week slightly higher. However, while stocks stumbled along sideways not really doing anything - every other asset class saw significant risk-off related moves. The USD saw its biggest weekly rise in 7 months! Treasury yields dropped 6-8bps - the biggest rally in bonds in 5 weeks. High-yield credit has suffered its biggest 2-week plunge in 9 months. WTI Crude saw its biggest weekly drop in 2 months. Given the USD strength, gold performed very well (ending the week unch). Stocks remain significantly dislocated from credit, rates, and FX markets in the medium-term (all of which closed the week with a risk-off shift). Volume, amid the blizzard, was dismal today.
4 Contrarian Views
Submitted by Bruce Krasting on 02/08/2013 15:01 -0500The forecast for me is 12-18 inches. I'm hoping it pushes three feet.... Some odds and ends:
Faith Vs Fate
Submitted by Tyler Durden on 02/08/2013 14:59 -0500
The S&P 500 P/E ratio is testing 15x - its highest in 19 months. This takes the stock market's valuation back to its highest since the debt-ceiling debacle and USAAA downgrade (as if nothing ever happened). Since that time, expectations for GDP growth in 2013 has plunged from 3.2% to a measly 2.0%. The 'Market of Dreams' economy continues as Bernanke's "If you BTFD, we will recover" is the only mantra left. Was it only August 2007 that Bob Pisani was reminding us all that: "improved policies on the part of those steering the economy are the likely reason we have avoided recessions."
Guest Post: Time To Choose
Submitted by Tyler Durden on 02/08/2013 14:28 -0500- Bill Gross
- Bob Janjuah
- Bond
- Case-Shiller
- China
- Davos
- ETC
- fixed
- Foreclosures
- Global Economy
- Guest Post
- headlines
- Housing Market
- Housing Prices
- Insider Selling
- Japan
- Jeremy Grantham
- Jim Rogers
- John Hussman
- New Normal
- Oklahoma
- Personal Income
- Precious Metals
- Purchasing Power
- Reality
- Recession
- recovery
- Reuters
- Switzerland
- Tax Revenue
- Unemployment
Whether you're aware of it or not, a great battle is being waged around us. It is a war of two opposing narratives: the future of our economy and our standard of living. The dominant story, championed by flotillas of press releases and parading talking heads, tells an inspiring tale of recovery and return to growth. The other side, less visible but with a full armament of high-caliber data, tells a very different story. One of growing instability, downside risk, and inequality. As different as they are in substance, they both share one fundamental prediction – and this is why you should care: This battle is about to break. And when it does, one side will turn out to be much more 'right' than the other. The time for action has arrived. To position yourself in the direction of the break you think is most likely to happen. It's time to choose a side.
"No Easy Off-Ramps" - Compare And Contrast
Submitted by Tyler Durden on 02/08/2013 13:48 -0500
"I will veto any effort to get rid of the automatic spending cuts" - Barack Obama, November 21, 2011
...
"The President will urge Congress to come together and act to ensure these devastating cuts to defense and job-creating programs don’t take effect." - White House statement, February 5, 2013






