Archive - Sep 13, 2013

The collapse of Lehman Brothers, the risk of other large important banks failing in the coming months and the still significant systemic, macroeconomic, monetary and geopolitical risk of today shows the vital importance of real diversification and an allocation to physical gold.

Sept. 11, 2013, marked the anniversary of the attack on the U.S. Consulate in Benghazi, Libya, that left four U.S. diplomatic employees - including Ambassador Chris Stevens - dead. The anniversary saw new attacks in the eastern Libyan city, this one against a Libyan Foreign Ministry building (and this morning's awful attack in Afghanistan). The anniversary and recent attacks prompt a look at how the security situation in Benghazi has evolved over the past year, and at how the United States has tackled security issues worldwide since the consulate attack.

For those interested in seeing a standout example of the resource misallocation resulting from 5 years (and running) of central planning, we present the following pair of data sets: restaurant workers, which in August just hit an all time high of 10.4 million, and restaurant retail sales, which moments ago we found continued to slow on a year over year basis, and at this pace in a few months, will postits first Y/Y decline since early 2010.

The last time CBOE suffered an outage similar to this, it led to the NASDARK debacle and 3 hours of radio silence from the largest (and most liquid) exchange in the world:

The all important retail sales report, the final economic data point before next week's taper announcement, has just come and it was a disappointment, printing at just 0.2% for the month of August, down from an upward revised 0.4% in July, and below the 0.5% expected. Excluding the government loan-funded autos and volatile gas sales, retail sales barely rose, increasing at the lowest possible pace, or 0.1%, and below the expected 0.3% rate, and well below the revised 0.6% from July. General merchandise stores went so far to post a -0.2% dip. However, the most notable number is likely the -0.9% drop in building and garden material sales, which is a screeching halt to the recent upward bias in home renovation, and further evidence that the recent cheap-credit fueled housing bubble has finally popped. As for clothing retailers: with a -0.8% drop in August, don't expect a rebound any time soon. So much for retail strength. But hey: at least consumers have stocks they can buy... at all time highs.

Have a listen if you need a laugh this morning, but there is really nothing funny about this:

Earlier today, when we observed the overnight "news" floated by Japan's Nikkei we cautioned that the Nikkei is best known not for breaking news but for floating trial balloons. In other words, the report was merely leaked to gauge the market response. Sure enough, the response was gauged, and here comes the official news, shooting down this latest trial balloon.

• White House Is Saying Reports In Japanese Press That Obama Is Set To Name Larry Summers Are Wrong - Dow Jones

Sure enough, any modest USD strength accumulated on the overnight rumor, is now being promptly unwound.

No surprises here: Silver and Gold are the best, Banks and Greece - worst.

• U.S., Russia to push for new Syria peace talks (Reuters)
• Elite Syrian Unit Scatters Chemical Arms Stockpile (WSJ)
• Obama to nominate Summers as Fed chief: Nikkei (Reuters)
• Boehner Wants Joint Talks on Debt, Budget (WSJ)
• House Republicans go for broke in fiscal battles (Reuters)
• Pimco, BlackRock Together Received More Than a Quarter of Verizon's $49 Billion Bond Deal (WSJ)
• Insane financial system lives post-Lehman (Gillian Tett)
• JPM to add $2.5 billion to its litigation reserves in the second half of the year (WSJ)
• Goldman’s Zurich offices visited over working-hours complaint (FT)

Overnight asset classes got a jolt following a report by Nikkei that Obama was moving toward naming Summers the next Fed chairman, citing “several close US sources,”  pushing stocks modestly lower in Europe, with bond yields higher. According to the report, Obama is to name Summers as next Fed chairman as early as late next week, after the Federal Open Market Committee meeting. Otherwise, risk is still digesting the news of the confidential Twitter IPO, as it is becoming quite clear that some of the largest names (Hilton also announced yesterday) are seeking to cash out in the public markets. Is this the top?

Two years after insurgents attacked the main U.S. embassy and NATO headquarters in the heart of Kabul, killing at least nine people in a battle lasting several hours as attackers fired from a partially constructed building, and one year after the infamous Benghazi consulate attack which resulted in the deaths of Americans, overnight yet another attack was staged against US property in Afghanistan, this time the US consulate in Herat, western Afghanistan's main city, where detonated a powerful bomb outside the front gates and launching a gunbattle with security forces. At least three people were killed, however none of them Americans. The attack began at about 6 a.m. (0150 GMT). A Reuters witness said he saw flames in front of the compound rising from the wreckage of the vehicle and could hear the gunbattle as the attack unfolded.

Everything flows, it all evolves and nothing remains static. The Lavoisier Universal Law whereby nothing is created, nothing is lost, everything is transformed.