Archive - Aug 15, 2013
Chinese Stocks Flash-Smash +6%; Exchange Says "Operations Normal"
Submitted by Tyler Durden on 08/15/2013 23:07 -0500
Update: The entire spike has been fully retraced by the close of China
In the new normal where broad-based equity indices that represent the corporate health of entire nations in one bit-sized propaganda-plagued number, the fact that China's Shanghai Composite spiked instantaneously by 6.2% this evening will come as no surprise...Some large stocks (PetroChina and AgBank jumped as much as 10% before plunging back instantly to reality). While the Exchange is "investigating" the spike, their PR is currently saying that it is "operating normally" - 'new normally' we presume. Between today's gold and silver spikes, FX market volatility, and now Chinese stocks gapping wildly, it would appear something is afoot in the leveraged world of carry-trades (and instant illiquidity).
If This Guy Is What The Future Of America Looks Like, We Are In Big Trouble
Submitted by Tyler Durden on 08/15/2013 21:50 -0500
Recently, Fox News interviewed a self-described beach bum named Jason Greenslate who was very open about the fact that he has no problem sponging off of all the rest of us. When he was asked if he ever had any interest in actually getting a job, his response was "not whatsoever". Instead, he says that his job is to "make sure the sun's up and the girls are out" and he would rather spend his days partying. Of course every American should be free to live their own lives as they see fit, but the problem is that Jason Greenslate is using food stamps to help support his lifestyle. Of course the vast majority of those enrolled in the food stamp program are not like this. But there are also those such as Jason Greenslate that are openly abusing the system and making it more difficult for those that actually need the help to get it. Sadly, he is a product of the system that he was raised in.
Welcome To The Silk Road: A Mind-Blowing Interview With Dread Pirate Roberts
Submitted by Tyler Durden on 08/15/2013 21:45 -0500
Most readers have probably heard of the Silk Road. No, not the historical trade routes that linked Europe to Asia, but rather the online illegal drug marketplace accessible only via anonymity browsing software Tor, and where the only currency accepted is Bitcoin. Those of you who have heard about it, probably know far less about the man that runs it. A character who only goes by the name Dread Pirate Roberts. Irrespective of what you think of the Silk Road specifically, there is no doubt it has led the way in figuring out a way to retain a certain level of anonymity and privacy within the surveillance state due to the nature of its business. We can all learn from, and hopefully improve on their tactics, as we transition from extreme centralization to a more decentralized and freer world.
Fed Losing The Inflation Battle
Submitted by thetechnicaltake on 08/15/2013 21:14 -0500How is the Federal Reserve going to stem the deflationary tide with equity markets at their highs?
Gold, Silver, And The Seven Stages Of Empire
Submitted by Tyler Durden on 08/15/2013 20:59 -0500
Mike Maloney warns that "The world will have a new monetary system in this decade... people will simply lose confidence in currency, and what do they always go back to through out history? Time after time, for the last 5000 years, they always go back to gold and silver." This excellent documentary - which focuses on the inevitability of the seven stages of empire - and the endgame of the most predictable long-term economic cycle, connects the dots across 140 years of monetary history.
Why The Taper Matters (In One Simple Chart)
Submitted by Tyler Durden on 08/15/2013 20:31 -0500
Obviously, there are numerous reasons why (no matter what the economic situation is) the Fed will need to Taper (deficits, technical fragilities, and sentiment). Furthermore, it seems the world is more than happy to give the central bankers the benefit of the doubt that not only is Tapering not tightening but that Tapering is a 'positive' as it means all is rosy in the world (despite our earlier point of the 'difficulty' that any actual unwind poses). However, there is one big reason (highlighted further this morning in the TIC data) why the Fed's Taper matters... they are (simply put) the only one buying...
Top Security Expert: Treating EVERYONE Like a Potential Terrorist Weakens Our Ability to Protect America
Submitted by George Washington on 08/15/2013 19:55 -0500Mission Creep Is Weakening Counter-Terror Efforts
Good Luck Unwinding That
Submitted by Tyler Durden on 08/15/2013 19:08 -0500
Presenting Exhibit A: the Fed's balance sheet represented in the form of 10 Year equivalent holdings
100 Years Of Tax Rates For The 0.01%
Submitted by Tyler Durden on 08/15/2013 18:17 -0500
Presented with no comment...
The Future Ain't What It Used To Be
Submitted by Tyler Durden on 08/15/2013 17:40 -0500
Analyst expectations for top line growth in the back half of 2013 continue to fade, and worries over a looming “Revenue recession” grow commensurately. As ConvergEx's Nick Colas notes, the first quarter of 2013 posted an average negative 0.6% revenue comparison for the 30 companies of the Dow Jones Industrial Average, and Q2 (with a few companies left to report) looks to be +0.3%. But back out the financials, and he points out that the number goes negative to the tune of (0.3%). Analysts are still chopping away at their back half expectations, now down to 1.9% for Q3 and 2.1% for Q4 2013. Those are down from 4-5% expected comps back in March, so the trend is still clearly not our friend. As we have pointed out previously, equity markets have been powered by multiple expansion year-to-date, but, as Colas asks (rhetorically) do you really want to pay up at this point in the business cycle for still declining expectations?
Two Down, One To Go
Submitted by Tyler Durden on 08/15/2013 17:03 -0500
We have the equity market surging to new highs. We now have the surge in yields. As Citi's FX Technicals group warn, that's "2 down and 1 to go"… A push above the 2011-2012 peaks in Brent crude ($127-128.40) would be the “straw” that breaks the proverbial camel’s back with the elevated likelihood of a negative feedback loop... knocking the third leg of consumer confidence out.
A Stunning 60% Of All Home Purchases Are "Cash Only" - A 200% Jump In Five Years
Submitted by Tyler Durden on 08/15/2013 16:29 -0500
Remember when housing was the primary aspirational asset for a still existent US middle class, to be purchased with some equity down by your average 30 year-old hoping to start a family in his or her brand new home, and, as the name implies, aspire to reach the American dream? Those days are long gone. Back in those days the interest rate on the 10 Year bond mattered as it determined the prevailing marginal affordability of leveraged real estate. That is no longer the case, at least not for about 90% of Americans, because as Goldman shows, while before the great crisis only 20% of home purchases were "all cash", since then the number has soared threefold, and currently the estimated percentage of cash transactions (by count and amount) has hit a record 60%. In other words, less than half of all home purchases are debt-funded, and thus less than half of all home purchases are actually representative of what middle-class America is doing.
Equity Bulls, Look Away
Submitted by Tyler Durden on 08/15/2013 15:44 -0500
It seems to us that the corporate bond market (now absent the underpinning of a dominating retail technical flow) has reverted back to the macro background reality.... the question is - what happens when the equity market 'admits' that perhaps things are not so rosy...
Stocks, Dollar Plunge While Precious Metals Surge
Submitted by Tyler Durden on 08/15/2013 15:09 -0500
Equity markets saw their highest volume in 7 weeks as the major indices plunged the most since June 20th, falling back to their lowest level in 5 weeks. 380 new 52-week lows dominated the meager 18 new 52-week highs. The early snap higher in Treasury yields (following the claims data) sparked the 'disorderly rotation' out of stocks that we have warned of and as stocks saw no significant BTFD mentality so Treasuries went modestly bid (ending the day only 5bps higher in yield) with the belly (7Y) 8bps off its intraday high yields. The USD was smashed lower as JPY and EUR strength dominated flow (and carry-unwind) which further helped push the story of the day - gold and silver - up large on the day (+2.1% and 5.6% respectively on the day). VIX surged to 14.5%, credit underperformed, as the Dow broke its 50DMA (15,280) closing near its 100DMA (15,097). Nikkei futures are -530 From yesterday's highs
Reaching For Yield... In Treasuries?
Submitted by Tyler Durden on 08/15/2013 14:57 -0500
For the last 18 months we have been inundated with asset-gatherers explaining that stocks are cheap and investors should by them for they yield advantage over Treasuries. However, that 'meme', like most others once it disagrees with the "Always Be Buying Stocks" thesis, has been ignored recently. At current levels, 10Y US Treasuries offer a 70bps yield advantage over the S&P 500 - the highest in 2 years (that is a 32% yield advantage over 'the most levered equity market ever'). Tapering 'rock' meet 'leverage-unwind' hard place...




