Archive - Jul 10, 2013
Gold Mining Shares: Less than Glittering
Submitted by ilene on 07/10/2013 22:18 -0500Traders who bought shares of gold mining companies as a way to play rising metals prices made a huge miscalculation.
What Happens Next?
Submitted by Tyler Durden on 07/10/2013 21:53 -0500
Each time the S&P 500 has traded more than 12% above its 200-day moving-average, the following correction has not ended until the average itself was breached by price action. Fundamentally, one can tie 'events' to each of these exuberance spikes - in this case, liquidity-turns-into-a-taper - but sometimes historical prices can be a better guide to the human biases for extrapolating trends and building fragility. Given current levels that would mean a 10% drop from current levels to 1516.
Guest Post: Snowden, Jesus And Interest Rates
Submitted by Tyler Durden on 07/10/2013 21:20 -0500
With the Snowden saga, it seems suddenly, the idea that there should be a limit to governments has resuscitated; wherever the governments and whatever the limits are. But there is indeed a limit and the global collective mind is trying to figure it out...
Oil Myths & Why WTI Is a Short
Submitted by EconMatters on 07/10/2013 20:40 -0500The Downward cycle is in the on deck circle warming up, and will be coming to bat soon in the Oil Market Speculation Game!
'Chiraq' Update: Illinois Overturns Ban On Concealed Weapons
Submitted by Tyler Durden on 07/10/2013 20:32 -0500
"Following a weekend of horrific violence in Chicago in which at least 70 people were shot and 12 killed, this was the wrong move for public safety in Illinois," Democratic Governor Jim Quinn noted as lawmakers overturned his veto to allow Illinois to become the last state in the US to allow residents to carry concealed handguns. As the BBC reports, the governor warned that the new law will allow people to carry guns in pubs and bars (and carry virtual arsenals on their persons), we suspect, if Chi-raq (the slang for the anarchic gang-ridden areas of Chicago) is any example, that this is already occurring en masse in a wide population of the state. Gun rights proponents, meanwhile, celebrated, "this is a historic, significant day for law-abiding gun owners, they finally get to exercise their Second Amendment rights."
Spain's Slush Fund Scandal
Submitted by Tyler Durden on 07/10/2013 19:57 -0500
According to a recent report in the FT, the former treasurer of Spain's ruling Popular Party, Luis Bárcenas, has claimed in an interview that the party has been in breach of Spain's campaign finance laws for a minimum of 20 years. Presumably he was moved to talk because he was the one who got caught and is expected to fall on his sword. Now that he is facing a lengthy prison sentence, he no longer has a reason to clam up. Incidentally, no-one in Spain was surprised to learn what he had to say. What we are seeing here is actually a strong parallel to Greece. The EU has been complaining about the Greek government's inability to collect taxes, without considering that Greek tax payers may have very good reason to pay as little as possible to the corrupt apparatus installed by the ruling class. As a Greek shipowner told a journalist when asked why he thought it was fine that rich shipowners are tax-exempt in Greece: “Would you want to pay money to Al Capone?” Pause. “Me neither.” Finally, as the bankruptcy of the Western welfare/warfare states becomes more glaringly evident, even stronger growth of the informal economy seems likely to ensue.
Bernanke Sets Cat Among the Pigeons
Submitted by Marc To Market on 07/10/2013 19:45 -0500Bernanke's comments give market cause to re-think its outlook for tapering and eventaul rate hike. Here's why and what it means.
What Bernanke Really Said, Or How The Chairman Just Lost Control Over Policy Again
Submitted by Tyler Durden on 07/10/2013 19:22 -0500"We don’t believe the Chairman’s intentions have changed. Regardless, the Chairman’s credibility is once again damaged. If the Dollar breakdown continues, it will be a sign that the market believes the Chairman has again lost control over policy. The asset clearly in the best position in such an environment is Gold. After such a notable correction in the past 9 months, the precious metal once again becomes a very attractive global asset if monetary policy in the largest economy of the world spins out of control." - Mike O'Rourke
Senate Liberals Push Status Quo Student Loan Bubble Ever Bigger
Submitted by Tyler Durden on 07/10/2013 18:37 -0500
When every indicator of stress is screaming 'bubble' in the student loan debacle, it would make perfect sense for the government to ignore it and maintain the status quo. As the WSJ reports, the never-ending federal effort to "make college affordable" simply provides the resources to sustain higher prices - especially as an increasing amount of the rising subsidies are pocketed by universities. This policy disaster which results in rising costs, taxpayer losses and over-strapped borrowers is now manifest. So naturally this week Senate liberals will bring to the floor a plan to ensure that the policy continues unchanged (and the CBO-estimated $95 billion losses) - and dismisses a coalition plan that ties student loan rates to 10Y Treasuries, providing some marginal encouragement to students to decide whether their chosen course of study is worth the money.
Currencies Go Berserk As Bernanke Kills King Dollar
Submitted by Tyler Durden on 07/10/2013 18:02 -0500
We noted earlier the brief chaos that the minutes created but - following Bernanke's promise to print moar - the after-hours collapse in the USD against every major (and minor) currency pair in the world is tremendous. USDJPY is over 200 pips off the day's highs (JPY surging below 98.50), GBPUSD is getting smashed higher (+275 pips from pre-close), and EURUSD is screaming higher (up 220 pips from the US close breaking above 1.3200). Retaliation for Carney and Draghi's comments? Who knows... but the currency wars are back on (and the 'other' currency is surging to $1290 per ounce).
About Those Gold Shorts....
Submitted by Tyler Durden on 07/10/2013 17:39 -0500
One wonders: at what price does the squeeze of the collateral-scarce (as per today's ongoing negative GOFO) yellow metal begin now that Bernanke has made it clear (supposedly) that the new gameplan is just more of the same old?
Guest Post: 9 Plagues That Are Collapsing Capitalism
Submitted by Tyler Durden on 07/10/2013 17:28 -0500
Let us be blunt: Our capitalist system is approaching failure. Or, perhaps better said: Our marginally capitalist, partly-free market systems are approaching a massive collapse. Not because of what capitalism is, mind you, but because the powers that be have bastardized it. Capitalism can bear many distortions and abuses, but it is not indestructible. And, make no mistake, the ‘capitalist’ system we have today has been massively corrupted, so much so that it’s sagging under the load... and will continue to do so until the proverbial straw breaks its back.
Rick Santelli Asks The Only Question That Matters
Submitted by Tyler Durden on 07/10/2013 16:52 -0500
Commenting on the divergence between the bond market's Taper-On reaction and the equity markets Taper-off reaction amid the total lack of clarity from the FOMC, CNBC's Rick Santelli asks the (rhetorical) question that everyone should ask: "[What the Fed minutes said] is, listen, we have to wait for bigger confirmation that the economy is doing better; and for that, we're going to look at the employment side. [At the same time] we have the fewest people working that can work in 30 years, and all-time-record-high profits for corporations. Now, does that strategy sound rational to you?" It seems, now that Bernanke has seemingly promised that it will really never end, that Santelli's question will become increasingly critical in this country.
Gold, Bonds, And Stocks Soar As Bernanke Promises Moar
Submitted by Tyler Durden on 07/10/2013 16:13 -0500
The punchline (as far as markets are concerned) of Bernanke's Q&A appears to be: Inflation and jobs signal more Fed stimulus needed and that Tapering does not end stimulus. In other words - highly accomodative policy needed for foreseeable future:
BERNANKE: 'TOO EARLY' TO SAY U.S. 'WEATHERED FISCAL' RESTRAINT
BERNANKE SAYS INFLATION, JOBS SIGNAL MORE FED STIMULUS NEEDED
So on one hand Bernanke admitted he had to pop the HY bubble with the Hilsenrath leaks a few weeks ago (talk the market down), but is happy to take the equity gains in hopes they will trickle down to wealth effect, inflation and employment even if credit is spooked (and the bond market technically corrupted).
So keep buying (anything) - they'll always be a greater fool (The Fed) to sell to, no matter how much we destroy the markets (yes, collateral is short) until the economy is entirely back on its feet (inflation, jobs, or anything we decide).
Here Is Why Yum! Brands Just "Beat" Earnings
Submitted by Tyler Durden on 07/10/2013 15:43 -0500On Monday it was Alcoa, now it is Yum! Brands' turn. The food company, best known for its KFC mystery meat, and over-reliance on a suddenly careening China just reported results which were mixed. Revenue of $2.904 billion was less than the expected $2.92 billion and was 8% lower than the $3.2 billion reported a year ago. Operating profit excluding refranchising gains and losses was $358MM, below expectations of $375MM, leading to a EBIT margin of 12.5% also substantially less than the 14.5% reported a year ago. In short, worldwide operating profit crashed 20% including a 63% drop in China. But thanks to various below the line adjustments, including a tax rate of 22.1% or lower compared to the 23.9% a year ago, the company's EPS of $0.56 beat expectations of $0.54.






