Archive - Aug 2013

On Thursday afternoon, there was a disturbance in the Bloomberg headline-generating force, after the world's premier newswire CNN-ed both the news surrounding Sylvio Berlusconi's verdict (announcing he had been cleared when he hadn't, and correcting shortly thereafter), followed promptly by a repeat when minutes later it reported that Goldman's CDO mastermind  - the person on whom all the evils of the housing bubble era have now been scapegoated - Fab Tourre had been cleared, when in reality he had just been found "liable in defrauding investors." We were, however, quite stunned to learn that one day later, the editor who was responsible for misreporting the Tourre news, was unceremoniously fired. But what was truly shocking is that while Pickering was fired for an innocent error, Bloomberg still keeps on its payroll people such as Greg Giroux who on the same day reported the following mindblowing "news"...

Voltaire, the French enlightenment philosopher, believed in the power of reason as a defense against the whimsical monarchies and religious doctrines of the 18th century. See any parallels?

Everybody in America wants health care - but most Americans seem to want someone else to pay for it.  In the United States today, the way that our system works is that the hard working, productive members of society pay for the health care of everyone else.  At least under socialism everyone gets the same benefits.  Our system of health care is a very twisted version of socialism where millions upon millions of very hard working people are forced to pay for the health care of others, but often can't afford to purchase decent health insurance for themselves. When you add it all up, the hard working, productive members of society are at least partially subsidizing the health care of well over half of all Americans while having to pay for their own health care at the same time. Needless to say, it isn't too hard to see who is getting the raw end of the deal.

Wall Street bankers, Washington politicians, economists and the media trumpet a substantial rebound in the U.S. economy, in the second half of 2013 and beyond, as a result of the Federal Reserve’s continued and open ended use of $85 billion dollars a month in quantitative easing. Learn why this is wishful thinking.  Rather than do want is necessary to solve the ongoing 2008 credit crisis, those in power stoop to public relations tricks and propaganda.

Over two years after Zero Hedge first accused Goldman and JPMorgan of becoming monopolists in the commodity warehousing business (see "Goldman, JP Morgan Have Now Become A Commodity Cartel"), and two weeks after the NYT's reminder the world of just this leading to the latest Kangaroo Court congressional hearing on the matter, which may or may not have resulted in JPMorgan announcing it would exit the physical commodities business, the long overdue legal fight began this Friday when lead plaintiff Superior Extrusion sued Goldman and London Metal Exchange owner HKEx for engaging in "anticompetitive and monopolistic behaviour in the warehousing market in connection with aluminium prices" and accusing the firms of violating the Sherman anti-trust act. Precisely what Zero Hedge said, some 26 months ago.

If S&P had any guts it would lower the US another notch.

With manufacturing flatlining, I was surprised to find that Industrials were actually the only outperforming equity in the entire bunch. 

A very specific threat...

The time has come to remind Americans that "you can't have 100-percent security and also have 100-percent privacy and zero inconvenience" or, in other words, why only the government can provide a veil of impenetrable protection, and why such things as personal privacy in an age of murderous Al Qaeda (the non-US funded variety, supposedly) terrorists lurking behind corners, are not only unnecessary but unpatriotic. According to CBS, the "terrorist threat prompting the U.S. government to close nearly two dozen embassies and consulates Sunday is the most specific, credible threat information in years" (even more credible than the Boston marathon bombers?) Specific but lacking the actual date, or timing, of an alleged "terrorist attack." Information which, however, can not be shared with the general public for obvious reasons - just trust the government and ignore that spy drone peeking into your window to see if you are dutifully spending your daily quota of "confident consumer" fiat on Amazon.com. 

When one examines the impending disaster in Egypt, it is important to avoid using a narrow lens and take into account the bigger picture. An Egyptian civil war will not ultimately be about Egypt. Rather, it will be about catalyzing the whole of the Middle East towards breakdown and drawing in larger nations in the process, including the United States. It will also be about triggering energy price increases designed to give cover to the collapse of the dollar's world reserve status. If globalists within our government and within central banks allow the dollar to die today, THEY will be blamed for the collapse that follows. THEY will be painted as the villains. But, if they can create a crisis large enough, that crisis becomes the scapegoat for all other tragedies, including dollar debasement. Egypt is just one of many regions in the world where such a crisis can be fabricated. Right now, it seems to be the most opportune choice for the elites.

Following the posting of the Patent Troll-In-Chief article, we were bombarded with requests to show where, how much to whom Apple had given money in the past. After all the last thing Apple wants, is to give the impression the president is intervening on its behalf due to conflicts of interest. Or money. So without further ado, here, courtesy of Open Secrets, is the full breakdown of Apple's historical lobbying spending.

“China’s model, which depends on the export of lower-priced products, is coming to an end”

The man who in the first months of his reign took over the bankruptcy process turning it over on its head to benefit the state over centuries of established creditor rights (with GM, Chrysler and a whole lot of union votes), and who defined his entire first term by nationalizing the US healthcare system, who personally determined the cutoff for "wealth" at $250,000 per year (with the corresponding tax hike "benefits" to go with it), not to mention inheriting the George W. Bush personal surveillance apparatus and taking the nationalization of individual rights and liberties to a whole new level, has just decided to branch out and subordinate yet another two birds of distributed, efficient, global decision-making to his will: trade and patent law.

In a nutshell:

• Relatively low unemployment rates for the “Western Leaders” aren’t just an artifact of recent strength in, say, energy production and commodities. These states have consistently outperformed the rest of the country.
• Abysmally high unemployment rates for the “Eastern Super-laggards” have also persisted for over two decades, exceeding all other parts of the country.
• The “Northern Coastal and Great Lakes Laggards” and “Western Laggards and Southeast” fall somewhere between the other two regions, but always favoring the southern states over the northern states.

Not surprisingly, California, Nevada and Florida are more volatile than the other regions, cycling well above and then back toward the Western Leaders in each of the past two decades. Also, the unemployment problems in California and Nevada have been consistently worse than Florida’s unemployment. These trends may or may not persist in coming years. But if your goal is to anticipate the next Stockton, San Bernardino or Detroit, watch the unemployment data closely and pay particular attention to the cities listed here.

Yesterday, we reported about private equity's laments that even with ZIRP there are no longer any bargains available in the US (which is why, naturally, the PE industry is now actively selling) with EV/EBITDA multiples north of the traditional 8x borderline benchmark level. Sure enough, as can be seen below, this is indeed the case as the US is now overpriced even for those who have direct access to the Fed's near zero-cost debt funding. So where are PE firms looking next (if anywhere, assuming they aren't spending their time selling "anything that isn't nailed down" which as we know from Leon Black's presentation from April is precisely what they are doing)? The following heatmap of global aggregate Enterprise Value/EBITDA will hopefully put things in their proper, highly overvalued, perspective.