Archive - May 2013

May 31st

Tyler Durden's picture

Apple Hikes Japanese iPad, iPod Prices By 16%





The missing link to Japan's Abenomic recovery is and will be wage inflation: without it, soaring import costs which have more than offset any benefits from a modest rise in exports (and a still negative trade balance), will be for nothing, and if the wealth effect begins slowing or, heaven forbid, reversing, and the USDJPY slides back under 100 dragging the Nikkei down with it and all those hedge funds who scrambled into Japan with hopes of get rich quick dreams exit stage left, all bets are off. The result, ironically, would be an even worse bout of deflation than the country had in the recent past as all Abenomics will have done is pulled demand forward driven by transitory stock market gains, while far stickier import energy costs hammer the consumer's discretionary cash flow. In the meantime, corporations aren't waiting, and in a need to protect their bottom lines are doing to selling prices what they have zero intention of doing to wages and costs: hiking them. So following in the footsteps of many other luxury, and not so luxury, goods makers, Apple was the latest to announce overnight that it is hiking the prices of select iPad and iPod models by 16% and 14% respectively.

 

Tyler Durden's picture

New Record European Unemployment, 101 USDJPY "Tractor Beam" Breach Bring Early Selling





Everything was going so well in the overnight session, following some mixed Japanese data (stronger than expected production, inline inflation, weaker household spending) which kept the USDJPY 101 tractor beam engaged, and the market stable, until just before 2 am Eastern, when Tokyo professor Takatoshi Ito, formerly a deputy at the finance ministry to the BOJ's Kuroda, said overvaluation of the yen versus the dollar has been corrected, which led to a very unpleasant moment of gravity for the currency pair which somehow drives risk around the world based on what several millions Japanese housewives do in unison. The result was a slide to just 30 pips away from the key 100 support level, below which all hell breaks loose, Abenomics starts being unwound, hedge funds - short the yen and long the Nikkei - have no choice but to unwind once profitable positions, the wealth effect craters, and streams are generally crossed.

 

Pivotfarm's picture

Philippines Waiting in the Wings





At the moment, it seems like the US is that naïve kid sitting in front of the Chinese magician watching China pull economic growth out from behind their ears and rabbits to chase after (that disappear down holes usually). But while their attention is focused on the Chinese magician, they are missing the assistant! She’s doing far more than they could ever imagine. And, nobody is taking the blindest bit of notice. The Philippines! You’d better watch out! She’s behind you!

 

May 30th

Tyler Durden's picture

Jim Rogers: "Nobody Gets Out Of This Situation Until There’s A Crisis"





Jim Rogers was recently interviewed by GoldMoney and had plenty to say (as usual):

On Bernanke: "He doesn’t want to be around for the consequences of what he’s doing."

 

On Fiat: "Paper money doesn’t have a very glorious history, but again, nothing imposed by the government has a very long and glorious history."

 

On Europe's Crisis: "You can postpone it all you want, but the problems just mount."

 

On Capitalism: "You are not supposed to take money away from the competent people and give it to the incompetent so that the incompetent can compete with the competent people with their own money. That’s not the way capitalism is supposed to work."

 

Tyler Durden's picture

Is This China's 'Minsky Moment'?





China’s credit growth has been outstripping economic growth for five quarters with the corporate debt bubble looking increasingly precarious (as we explained here and here). This raises one key question: where has the money gone? As SocGen notes, although such divergence is not unprecedented, it potentially suggests a trend that gives greater cause for concern – China is approaching a Minsky moment. At the micro level, SocGen points out that a non-negligible share of the corporate sector and local government financial vehicles are struggling to cover their financial expense. At the macro level, they estimate that China’s debt servicing costs have significantly exceeded underlying economic growth. As a result, the debt snowball is getting bigger and bigger, without contributing to real activity (see CCFDs for a very big example). This is probably where most of China’s missing money went.

 

 

Tyler Durden's picture

'Liberty Reserve' And Why Some Money Launderers Are "More Equal" Than Others





There are countless examples of rampant criminality and corruption as well as blatant evidence of a two-tier system of justice in America today.  Too many to note or write about, but in this case we want to focus on this concept of “money laundering” in light of the recent shutdown of Liberty Reserve.  The crackdown on Liberty Reserve has nothing to do with “money laundering.”  It’s about a cartel of “too big to jail” banks and the fraud financial system they operate eliminating any players that try to encroach on their turf.  That isn’t capitalism, or socialism and it certainly isn’t anything close to freedom.  It is a parasitic, oligarch created feudalistic structure that must be done away with.  We often hear people say “we never learn from our mistakes.”  Incorrect.  People learn from their mistakes when there are consequences to their actions.  Of course criminals don’t learn from their mistakes when there are no serious consequences to their crimes.

 

Tyler Durden's picture

Things That Make You Go Hhmm... Like Our Current Bizarro World





In his recent presentation, Grant Williams picked out several mathematical equations that simply don't work: equities vs. fundamentals, the gold price vs. the price of gold, Chinese economic activity vs. the Chinese GDP number, and France vs. well ... logic. In his latest 'Things That Make You Go Hhmm' extravaganza, he extends this series of 'Bizarro' situations to Japan, US Housing, high-yield credit, the outlandish effects that comments by central bank policy makers have on markets, and the curious disconnect between insider trades and the broader market among others. There are countless more of these disconnects (the strength of the euro vs. EU economic data being a key one), which lead to a fundamental conclusion that is hard to deny: Sdnob, seitiuqe, setar tseretni, and seicnerruc will all eventually leave Bizarro World and come crashing back down to Earth (where they are known as bonds, equities, interest rates, and currencies); and when they do, they will likely do the opposite of what they're doing right now.

 

Tyler Durden's picture

US Cyber Chief: Military Is Unprepared For Hacking





The head of the U.S. Cyber Command said that the U.S. military is unprepared for cyber attacks, specifically singling out China.

"What we're seeing in cyber is going to continue and it's going to grow and it's going to get worse,"

 

Tyler Durden's picture

IceCap Asset Management: "Bernanke's Bouncing Ball"





Contrary to popular belief, Bozo wasn’t the first clown to drop the ball. That honour goes to 16th century jester William Sommers simply told one joke too many, and before he knew it, both his juggling balls and his head were hitting the floor at the same time. Today, we have the making of the biggest financial clown of all time. As head of the world’s most powerful institution, the US Federal Reserve, Ben Bernanke has lobbed one giant money ball into the global financial system. This ball continues to bounce along one market to the other, and so long as it doesn’t touch the ground everyone is happy. Yet, should this ball grow so large it cannot be supported, one simple slip will be unfortunate for everyone. To follow the interconnectedness of markets, just follow Bernanke’s bouncing ball.

 

Tyler Durden's picture

Japan Pre-Open: Equities Green, Bonds Red, Abenomics Blue





JPY is clinging sheepishly to the 101 level versus the USD almost as if there is an 'agreement'. It has been testing this level for a week now with many viewing the 100 line in the sand as a pass/fail mark for Abenomics. Tonight's heavy data flow is mixed. While we noted yesterday the inconsistencies in Abenomics, there are two interesting anecdotes this evening worth paying attention to. First, Household spending missed expectations by the largest amount in 18 months (not a good sign for real growth coming back); and second, in a brief moment on CNBC this afternoon, the CEO of Japan's mega corp Sony admitted that while, "the preconception is that a weaker Yen is good overall. Unfortunately for us, versus the USD, it goes the other way." Futures markets signal a green open (just like last night) for the equity markets and a slight red open for JGBs.

 

Tyler Durden's picture

"Tax The Rich (More)?": Paul Krugman And Newt Gingrich Square Off - Live Webcast





The periodic Munk debate spectacle out of Canada is memorable for bringing together very flamboyant personalities, discussing very germane topics. The one that has just started has a topic of whether the rich should be taxed. More. Surely an issue that has seen its share of discussion in the US in the past year, so we hardly expect to learn anything new. What is most amusing, however, is that the debate tonight pits none other than Paul Krugman (and former Greek socialist leader and economic destructor extraordinaire George Papandreou, whose family incidentally was found with tax-evading Swiss accounts so brownie points for extra hypocricy) defending more tax hikes, and pitting Newt Gingrich and Arthur Laffer on the "don't tax me bro" side. The result should be quite a memorable catfight.

 

Tyler Durden's picture

American, British Citizens Killed In Syria





First a big caveat: the following comes from CNN, the world's farce leader, so take it with a quarry of salt. That said, CNN's household access is pervasive and when it comes to setting the social mood based on a news report, be it completely fabricated or not, the news organization is second to none. Which may be precisely why it is CNN that is reporting that in Syria - a place just itching for the proverbial match to be struck on a mountain of geopolitical gunpowder involving all the key actors: from the US, to Russia, Europe, China, and of course Israel, said match may have just been lit. To wit: "Syrian state-run television reported Thursday that forces loyal to President Bashar al-Assad killed three Westerners, including an American woman and a British national, who they claim were fighting with the rebels and were found with weapons and maps of government military facilities."

 

Tyler Durden's picture

Guest Post: Would It Make Sense For The Fed To Not Manipulate The Gold Price?





Does it really make any sense at all that Bernanke would leave gold to trade in an open and transparent market? Hardly. Consider. The Fed has conjured multiple trillions of digital dollars out thin air in the last five years. These efforts have propped up the Treasury market, the domestic TBTF banks, the foreign TBTF banks, the ECB, the BOE, every European sovereign bond market, the RMBS market, the CMBS market, the equity market, the housing market and the entire industrial and soft commodity complexes, to name a few. Since the price of gold we see on our Bloomberg screens is set via derivatives and overwhelmingly settled in USD, the ability for central banks and bullion banks to manipulate the price of gold is way too easy. All the bullion banks have to do is coordinate (as in LIBOR), sell in size and punish anyone in their way. Take losses? No problem, more fiat can be conjured post-haste. So long as no one is taking physical delivery, the band(k) plays on. (Actually, physical demand delivery IS becoming a major new problem for the banks but this is a topic for a different note.) A quickly rising gold price upsets this fiat-engineered, centrally planned, non-market based recovery. Gold left to its’ own devices would signal the unwinding the rehypothecated world of shadow banking where latent monetary inflation goes to summer (think of it as the monetary Hamptons where only the Wall Street elite get to play). Most importantly, it would signal a huge lack of faith in the US dollar. A currency backed by nothing more than faith in central banking.

 

Capitalist Exploits's picture

Investing in White Gold!





Scandals in Chinese food products, infant formula in particular have created a soaring demand for quality product. We have invested in the sector.
 
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