Archive - Sep 2013

You know the Internet is in trouble when people start taking plane flights to deliver messages.  After Glenn Greenwald's partner was detained for nine hours and stripped of all his computer gear, it's clearly time to look at new ways of communicating...

We would be the first to espouse the view that, in speculative markets, the 'sentimentals' can long trump the fundamentals, but there is a counterpoint to such a projection, not that many wish to countenance it. The dispiriting truth is that some of the steam has already gone out of the US and were this to continue to be the case, given that esteemed institution’s pathological aversion to short-term difficulty, the Fed's "taper" might yet prove an all too short-lived gesture in the direction of a belated restoration of monetary sanity. As the following 3 charts suggest, equity 'sentimental' valuations are at extremes and fundamentals are deteriorating rapidly, making for an uncomfortable rock- and hard-place-straddle for a Fed that faces 4 reasons it has to Taper (sentiment, deficits, technicals, and international resentment).

It's a holiday, so today we have two for the price of one... well zero.

In the 21st century economy, if you want to stay employed, seek out a field that is ascending rather than declining. Most people understand that technology is fundamentally changing the nature of work and employment. These changes are also having a profound effect on the state of the US economy...

It is convenient that in a recent post covering the latest historic Verizon M&A deal we showed a spaghetti chart, created by the WSJ, of the US telecom space because it lays roughly how many current subscribers that other US telecom giant, AT&T, has.  The reason for this is that according to the latest revelations from the NYT, which following recent work-sharing with the Guardian is now another official distributor of the Edward Snowden leaks (who in a brilliant move has decided to spread out his disclosures week after week, many times allowing such staggered disclosures to catch the administration - which has no idea what is coming next - in flagrant lies), the chart above shows that 140 million landline and wireless paying AT&T customers is the minimum number of affected Americans whose every call is recorded, however not directly or indirectly by the government, but rather by a private corporation working in collaboration with the US government.

The name of the collaboration: the Hemisphere Project, fomerly Hudson Hawk.

In an inconvenient truth moment for the anti-gun lobby, Harvard's Don Kates and Gary Mauser expose the facts behind gun control and violent crime. While not the first time we have discussed this awkward reality, the depth of the academics' datasets and the findings are unquestionable that there is in fact a "negative correlation" between violence and gun ownership. As they state, "where firearms are most dense violent crime rates are lowest, and where guns are least dense violent crime rates are highest," concluding that "The burden of proof rests on the proponents of the more guns equal more death and fewer guns equal less death mantra, especially since they argue public policy ought to be based on that mantra... But those correlations are not observed when a large number of nations are compared across the world."

Because nothing says "bring it on" like CGI-aircraft explosions and a dozen dancing Syrian soldiers...

Vodafone is to sell its 45% stake in Verizon Wireless to Verizon for $130bn in cash and stock, subject to regulatory approvals, comprising $61.4bn in cash and assumption of net liabilities, $60.2bn in stock (within a $47-51 per share collar), $5bn in a VZ loan note and $3.5bn ascribed to VZ’s 23.1% stake in Vodafone Italy. As the WSJ reports, this is the second-largest ever behind another Vodafone deal - the $172 billion acquisition of Mannesmann AG in 1999 (which is somewhat ironic in its largesse and timing). The cash component - nearly twice the state budget of Verizon Wireless's New Jersey home - is by far the largest amount of cash ever deployed in an acquisition and will be financed by 4 $15 billion 'bridge loans', "until more permanent financing can be found over the next 12 to 18 months." Of course, we assume investors will be over-subscribing to the higher-leveraged firm's bonds (just like they did with AAPL but 4 times bigger!)

What's Labor Day to the 130 million not working?

Deluxe onegai!

Nearly four years after Zero Hedge first suggested an HFT tax should punish algos that "churned" quotes and blasted empty bids and offers to stimulate "momentum ignition" strategies, and generally corrupt market structure in a way that lead to both the flash crash, the BATS IPO farce, the FaceBook IPO debacle and the Nasdaq 3 hour crash, the first such tax is now a reality. And while it is not, and likely never will be implemented in a major (if declining) exchange such as the NYSE or Nasdaq, the first country to finally put an end to millions of parasitic empty quotes is Italy.

The Buffets and the Gates of the US will be shedding a few tears this week as the United States and Switzerland have reached an agreement that brings the status of the latter as a tax haven for Americans (or will they?).

Following President Obama's decision to pass the blame buck to Congress (and its oh-so-great track record of making decisions), the Syrian Electronic Army has struck again. This time right at the heart of the matter - defacing the "Marines.com" website. As The Independent reports, the US Marines received a message calling for support from their "brothers, the Syrian army soldiers" – in the form of a web attack changing the homepage of the official Marines recruitment site to a page entitled "“Hacked by SEA." The message also stated, "Obama is a traitor who wants to put your lives in danger to rescue al-Qaida insurgents," which seems to fit with many of their perspectives as we have noted previously. Full text and screenshot below...

The first signs are emerging that the cult-like status given to the world's central bankers is starting to wane, with significant market implications.