Archive - Apr 2013

April 29th

Tyler Durden's picture

QBAMCO On Precious Metals And The Coming 'Great Reset'





We recently asked:"are there really unpredictable market shocks or are investors paid not to care? To us, all signs point towards the next currency reset. We think monetary authorities are compulsively destroying the current global monetary system; they simply have no choice if they are to keep it afloat in the short term." With Bernanke not attending Jackson Hole, we think the choice for next Fed Chair may have profound economic implications, and that it would not require expertise in econometric modeling, credit policy management, and maintaining the public perception of economic stability. We think the next Fed Chairman will oversee a conversion of the global monetary regimeNeither growth nor austerity nor gloom of night will stay these currencies from their appointed devaluations. Bank balance sheets must be preserved; ergo sufficient inflation must be manufactured. We think the dull but persistent economic malaise amid increasingly aggressive monetary intervention policies will soon engender fear among the not-so-great washed – net savers. We think all should question whether we are 100% wrong. If not, then prudence dictates some allocation to properly held precious metals. (Presently, it is less than 1% of all global pensions.)

 

Tyler Durden's picture

"Freely Traded Markets Are An Anachronism; Fundamental Rules No Longer Apply"





The latest personal income and expenditure report for March was of particularly interesting reading.  However, as opposed to the mainstream headlines that immediately reported that despite higher payroll taxes consumers were still spending, and therefore a sign of a strong economy, it was where they were spending that was most telling. In reality, The personal income and spending report does little to brighten the economic picture. The reality is that we now live in a world where "freely traded markets" are an anachronism and fundamental rules simply no longer apply.  However, the problem is that such actions continually lead to asset bubbles, and eventual busts, that not only impact economic stability but destroy the financial stability of families. The consumer is clearly delivering a message about the state of the real economy.  Eventually, the disconnect between the economy and the markets will merge.  Unfortunately, there is no historical evidence of such reversions being a positive event.

 

Tyler Durden's picture

Female DNA Found On Boston Bomb





Earlier today we heard unsubstantiated chatter that FBI agents were in front of the house of Katherine Russell in North Kingstown, widow of the dead bombing suspect Tamerlan Tsarnaev. Moments ago we got an explanation for this. The WSJ reports that "investigators have found female DNA on at least one of the bombs used in the Boston Marathon attacks, though they haven't determined whose DNA it is or whether that means a woman helped the two suspects carry out the attacks, according to U.S. officials briefed on the probe. The officials familiar with the case cautioned that there could be multiple explanations for why the DNA of someone other than the two bombing suspects—Tamerlan Tsarnaev and his younger brother, Dzhokhar—could have been found on remnants of the exploded devices. The genetic material could have come, for example, from a store clerk who handled materials used in the bombs or a stray hair that ended up in the bomb."

 

George Washington's picture

FBI Report Implicates Saudi Government in 9/11





But "We Can’t Afford to Irritate the Saudis" By Actually Looking Into Who Backed 9/11 ...  "Especially with Oil Prices Going Up Now"

 

Tyler Durden's picture

Herbalife Beats, Guides Higher, But...





On the surface, Herbalife's numbers were great. The company reported EPS of $1.27 on expectations of a $1.06 print. The company also boosted its EPS forecast for the full year from a range of $4.45-$4.60 to $4.60-$4.80, putting the Wall Street forecast of $4.66 plainly in the achievable zone. Finally, HLF reported $137MM in cash from operations (compared to $120MM a year ago), which net of CapEx of $24.8MM means Free Cash Flow by that definition of $112.7MM, above the $96MM reported a year earlier. And yet, not even all the cash generated from operations was enough for HLF to fund just its stock buyback in the quarter which amounted to $164.5 million resulting in the Diluted share count plunging from 122.4 million to 108 million. So far so good. There is, however, a "yes but...."

 

Tyler Durden's picture

S&P Comes Within Whisker Of All Time Highs, Fails, Despite Lowest Volume Of 2013





"Off the highs" is perhaps the phrase that the mainstream should be using. The S&P gave up allits post-EU-close gains into the US close. It seems, as we noted earlier, that AAPL capturing its 50DMA, relative strength in VIX and Bonds, and a total lack of volume just could not lift the S&P 500 to new highs. The early short squeeze provided the momentum but that faded into the last hour or so. USD weakness supported the risk rally (as very little else did) and commodities were all higher on the day with the Brent Vigilantes on the prowl once again as WTI topped $94.50 back to near 3-week highs. AAPL's best day in over 3 months (up to its 50DMA) led Tech to lead the day (and the Nasdaq was the notable outperformer). The exuberance led stocks rich relative to all risk-assets and the slide into the close merely corrected to that risk-asset-proxy. JPY carry was not helpful as JPY tried and failed to recover the 98.00 level. Silver outperformed. With the Japanese on vacation last night, JPY's rip into the close is a little worrying for the risk-on crowd but month-End here we come...

 

Tyler Durden's picture

And The Highest Paid College Majors Are...





Presented with little comment but perhaps it is time to rethink that $100,000 loan and the extended MBA program...

 

Tyler Durden's picture

What Do Bonds, VIX, 'Shorts', And Volume Know?





With 40 minutes to go, as the world's media focused intently on all-time new highs in the S&P 500 - following a 20 point rip off pre-market lows, seemingly encouraged by the worst miss in Dallas Fed ever - it seems interest in actually participating is lagging significantly. Today's volume pro-rata on the NYSE and in S&P futures is among the lowest non-holiday day in months. There has been no 'rotation' as Treasuries are modestly bid. VIX is not participating in the surge at all. And the 'shorts' have started to outperform on the day (following the squeze earlier).

 

Tyler Durden's picture

Revolving Door Goes Both Ways: Morgan Stanley Hires Former Treasury Staffer To Head Corporate Affairs





Think the revolving door for Morgan Stanley's diaspora of clutch interests goes only from the private sector outward, with the recent appointment of MS' darling Mary Jo White (who will promptly recuse herself in virtually all major cases involved her former clients at Debevoise for years to come) to head the SEC? Think again. Moments ago, Reuters reported that according to a memo sent internally today, Morgan Stanley has hired Michele Davis, "a public relations official and policy director who helped shape the Treasury Department's strategy during the financial crisis, to become global head of corporate affairs, according to a bank memo sent on Monday."

 

Tyler Durden's picture

Guest Post: Why The Fed's Buy-And-Hold (No Sales) Exit Is Not Feasible





In the past months and right after implementing Quantitative Easing Unlimited Edition, the Fed began surfacing the idea that an exit strategy is at the door. With the latest releases of weak activity data worldwide, the idea was put back in the closet. However, a few analysts have already discussed the implications of the smoothest of all exit strategies: An exit without asset sales; a buy & hold exit. We have no doubt that as soon as allowed, the idea will resurface again. Underlying all official discussions is the notion that an exit strategy is a “stock”, rather than a flow problem, that the Fed can make decisions independently of the fiscal situation of the US and that international coordination can be ignored. This is logically inconsistent as we address below...

 

Tyler Durden's picture

At $72.8 Trillion, Presenting The Bank With The Biggest Derivative Exposure In The World (Hint: Not JPMorgan)





Think JPMorgan's $69.5 trillion in total notional derivative exposure is big to quite big? You ain't seen nothing yet...

 

Tyler Durden's picture

The End Of 'Orderly And Fair Markets'





Capitalism may have bested communism a few decades ago, but exactly how our economic system allocates society’s scarce resources is now undergoing its first serious transformation since the NYSE’s founding fathers met under the buttonwood tree in 1792.  Technology, complexity and speed have already transformed how stocks trade; but As ConvergEx's Nick Colas notes, the real question now is what role these forces will play in long-term capital formation and allocation.  Rookie mistakes like the Twitter hack flash crash might be easy to deride, but make no mistake, Colas reminds us: the changes that started with high frequency and algorithmic trading are just the first step to an entirely different process of determining stock prices.  The only serious challenge this metamorphosis will likely face is a notable crash of the still-developing system and resultant regulation back to more strictly human-based processes.

 

Reggie Middleton's picture

I Go For 2nd Win On CNBC Stock Challenge Causing TROUBLE, Fighting "Experts" & Shock Most Using The Same Stock - Google!





He looks different! He speaks different! He thinks different! And Dammit, I think he's RIGHT! Enter the 2nd CNBC Stock Draft Challenge....

 

Tyler Durden's picture

Iceland Just Says "Nei" To Pro-European Party





During the crisis Iceland was held up as one of the best examples of what was so wrong with the bubble that was created and sold to any and all. The party in power during this debacle was summarily dismissed by the people. However, a mere few years later, and given the apparent abhorrence with all things European, the Icelandic people have just ousted the incumbent pro-Europe party in favor of the Independence and Progressive parties that governed during the crisis. As the WSJ reports, the Social Democratic Alliance, which had overseen economic recovery and pushed for European Union membership, saw support tumble as the electorate's concern about personal finances overshadowed the ruling coalition's ability to stabilize the economy. Couple this with the promises of the two parties to cut taxes and the sweell of nationalist sentiment and the Social Democrats were summarily crushed. The leader of the Progressive party perhaps summed up the poeple's views best: "deeper integration with a Europe in "historic decline" isn't necessarily the best for Iceland," and that "economic crisis in Iceland and Europe has taught us the importance of being able to control your own destiny." Of course, as with any election, lots of promises are made; "they have really been promising the moon, people might get dissatisfied when they see that not everything can be realized."

 

Tyler Durden's picture

Deutsche Bank Releases Q1 Earnings Early





Moments after reporting its surprising 10% equity dilution, DB proceeds to release it Q1 earnings early. Some of the highlights:

  • Revenue €9.4 bn, Est. €9.23 bn, up €197MM Y/Y
  • Non-Interest expenses €6.6Bn, down 5% Y/Y
  • Net Income €1.661 billion, up €253MM Y/Y
  • Diluted earnings per share €1.71
  • Provision for credit losses at €354MM, up €40 MM from prior year, but down €79MM from Q4.
  • Sales and Trading(debt and other products) down €438MM, or -14% Y/Y
  • Origination and Advisory net revenues increased by EUR 38 million, or 6%, compared to the first quarter 2012
 
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