Archive - Jan 3, 2014

Looks like he's still got it... (or the NY Fed Trading desk wanted to send him off with a smile on his face...)

Good riddance to the original snow job...

Ben Bernanke will momentarily speak at the American Economic Association symposium in Philadelphia. His speech is titled "Looking Back, Looking Forward" and can be found at the end of this post.  Watch what may be his last speech live.

Real estate bubble, sub-prime mortgages, securitized products and their derivatives were largely responsible for the ultimate collapse, leading us to the economic conditions of today. Policy makers and investors alike were, and still are, basing their actions on a false set of commonly accepted myths.

Most people believe that when inflation hits, prices have to go higher. This is true, but higher prices can be manifested in multiple ways. Firms usually do not simply raise prices in nominal terms as price elasticity can kill revenues because it would hurt sales.

If what happened in the last days of 2013 was indeed merely reverse repo-assisted window dressing, then we would expect the that first days of 2014 should see a comparable collapse in the magnitude of the Fed's reverse repo operations. Sure enough, as the chart below shows, this is precisely what has happened following today's far more modest $56.7 billion reverse repo operation conducted among 50 bidding counterparties and the Fed, of course.

Sales of gold coins are booming even as the precious metal's price is falling (and it's not just central banks). Despite gold futures 28% drop in 2013 (its worst since 1981), the WSJ reports that demand for gold coins shot up 63% to 241.6 metric tons in the first three quarters of 2013.

Nothing can be a more pungent metaphor for today's investment climate than the headline, “Macau gambling revenue hits record $45 bn in 2013.”

While the non-luxury auto-manufacturers suffered from a case of cannel-stuffed constipation in December, Luxury brands appeared to do very well thank you Mr. Bernanke:

• *PORSCHE REPORTS RECORD SALES IN '13 21% RISE OVER '12
• *PORSCHE CARS NORTH AMERICA DEC. SALES UP 10%

As the company notes, it "exceeded 40,000 sales for the first time in the history of Porsche in the US," as the 911 sold 10,442 units and Cayenne 18,507 units.

While it will hardly come as a surprise that in the age of pervasive, accessible and cheap pink slime fast food, more people than ever are obese, the actual numbers may be a shock to most. Conveniently, quantifying the world's obesity epidemic is precisely what the London-based Overseas Development Institute has done with a just released report titled Future Diets (pdf link). Its findings are stunning: more than a third of all adults in the world - 1.46 billion to be exact - are obese or overweight.

As Europe closes, the 'recovery' in US equities has faded to red for the majors (though Trannies and all the high-beta momos are still in the green thanks to JPY just not wanting the party to stop - for now) seeimngly led by AAPL's plunge to its 50DMA. This morning's jerk higher appears as much about BTFD catch up for Trannies than anything else. Bonds sold off modestly but the USD continues to surge (led by EUR weakness after ugly loan creation data). WTI crude (and Brent) is tumbling further - back at $94.50 - but gold is surging back to yesterday's highs at around $1236. VIX is stable for now around 14% as stocks rotate back to play catch-down.

The Future of Money: The Dumb Dollar vs Smart, Programmable Currencies!

With unemployment stuck at record highs and loan delinquencies surging (as we discussed here, here and here), it is hardly surprising that El Economista reports that more than two-thirds of Spaniards do not believe the "recovery" promised by Prime Minister Rajoy has been created. While Cramer ignorantly confidently espoused this morning that Spain is recovering (and with Spanish stocks and bonds back near pre-crisis levels), a massive 75% of the Spanish people believe their personal situation will be the same or worse in 2014.

Moments ago, GM, now fully non-government backstopped (and perhaps because of), reported adjusted US vehicle sales of 230,157, a decline of 6.3% from the 245,733 cars delivered a year earlier, on expectations of a 1.5% increase in sales. As Kurt McNeil, VP of US sales, announced "“December started a little slow but sales were stronger later in the month, especially in the week between Christmas and New Year’s. We didn’t make any big changes to our ‘go-to-market’ strategy during the month, which is to offer competitive incentives and market aggressively, and we are carrying good momentum heading into January." GM also was quick to put blame on wintry weather in December - fear not though, they won't be the last. It was unclear just how substantial GM's incentives were in a month in which below margin inventory liquidation was the name of the game for all retailers: we expect to learn soon. But perhaps the most interest datapoint in today's release, and one which may explain why GM's sales missed, was that the car's near record channel stuffing, which as we reported last month had soared in the past three months at a record pace, and was just shy of its all time high, saw a modest decline from 780K to 748K. Still, the latter number was still the highest ever December GM dealer inventory for the month of December in the restructured company's history.