Archive - Oct 15, 2014

4 weeks ago this is what President Obama said "the chances of an Ebola outbreak here in the United States are extremely low." Today, having reassured Americans that "Ebola is not like the flu, it's not airborne," (despite experts' concerns that Ebola could indeed be aerogenically transmitted) Obama stated that a "widespread outbreak of Ebola in the US is 'unlikely'"

From "Extremely Low" to "Unlikely"... in a month.

The Fed’s policy of financial repression sends the wrong signal.  It punishes savers, such as pensions and retirees, while rewarding speculators and debtors.  It is like giving my son ice cream after he yells at his mother and punches his brother. Many Fed policies have been, or have become, counter-productive.  Events may certainly force the Fed to be ‘lower for longer’, but expecting some type of new stimulus measure is an exceptionally long way off. The explosion of market volatility has shaken the foundation of investor psyche. The unwind process has far to go.

The last time the stock market reached a fevered peak and began to wobble unexpectedly was August 2007. Markets were most definitely not in the classic “price discovery” business. Instead, the stock market had discovered the “goldilocks economy." But what is profoundly different this time is that the Fed is out of dry powder. Its can’t slash the discount rate as Bernanke did in August 2007 or continuously reduce it federal funds target on a trip from 6% all the way down to zero. Nor can it resort to massive balance sheet expansion. That card has been played and a replay would only spook the market even more. So this time is different.  The gamblers are scampering around the casino fixing to buy the dip as soon as white smoke wafts from the Eccles Building.  But none is coming. For the first time in 25- years, the Wall Street gamblers are home alone.

Presented with little comment aside to say - WTF!!

Curious why Netflix is being obliterated after hours, plummeting to 5 month lows, down some $100, or 24% after hours after reporting earnings? The answer is highlighted in the Q3 investor letter, and specifically the red highlighted number, which is NFLX' guidance for Q4 EPS...

With each new piece of legislation being proposed in the Land of the Free, Atlas Shrugged seems to be ever more prophetic. While even the most terrifying elements of the book are coming true, so are the reactions. People and companies are leaving, refusing the put up with the looting of their efforts any longer. Despite politicians’ desperate attempts to stop it, Atlas is already shrugging.

If anyone wanted any confirmation that corporate earnings are always and only driven by the (very rigged) market, look no further than Wal-Mart, which moments ago did the inevitable: it just cut its sales forecast by nearly half, to just 2-3% from the prior forecast of 3-5%.

It would appear The Fed is in panic mode. According to two "people familiar with her comments" - who asked not to be named because the meeting was private last weekend:

• *YELLEN SAID TO VOICE CONFIDENCE IN EXPANSION AMID FOREIGN RISKS

Of course, this is now the last thing that markets want to hear since it means she is less likely to unleash QE4.

Last week we hinted at what was to come as Ebola fears spread across America. Today, we get confirmation. As The Daily Caller reports, one passenger at Dulles International Airport outside Washington, D.C. is apparently not taking any chances. A female passenger dressed in a hazmat suit - complete with a full body gown, mask and gloves - was spotted Wednesday waiting for a flight at the airport.

Theories abound why this is suddenly happening, after years of deceptive calm.

The health-care worker was not identified by public health officials, but family members told Reuters and the Dallas Morning News that her name is Amber Vinson, a nurse at Texas Health Presbyterian Hospital. She was part of a team that had cared for Thomas Eric Duncan, a Liberian man who flew to Texas and was diagnosed with Ebola last month, during his hospitalization in Dallas. Duncan died last week. Nina Pham, a nurse who also cared for Duncan, was diagnosed with Ebola on Sunday.

Central banks have reached a fork in the road.

From 17,350 intraday highs "proving the recovery is here," we are 1500 points down just 3 weeks later. The Nasdaq just fell 10.5% from its highs, officially in correction. VIX broke above 30. Perhaps, just perhaps, the gap to fundamentals is finally about to be filled...

But, but, but they said it wasn't contagious unless you came into contact with bodily fluids. According to the CDC, the 2nd health-care worker infected with Ebola traveled on Frontier Flight 1143 from Cleveland to Dallas on October 13th and are asking all 132 passengers on the flight to get tested. One question... what about the thousands of people that those 132 passengers came in contact with in the last 2 days?