Archive - Dec 2014

Following 2 months of improving growth and beats after a mid-year slump, ADP Employment in November dropped to 208k (from a revised 233k in Oct) missing expectations of 222k by the most since August. November has historically seen a significant bump higher in employment but 2014 saw a drop (the first since 2008) with the lowest November print since 2010.

First it was Shoppertrak, then it was the National Retail Federation, then it was IBM, and now, with its own set of internal data, here is Bank of America slamming the door shut on US retail spending as a source of Q4 growth, and proving once and for all that the extended Thanksgiving-weekend, and the start to US holiday spending season, was the biggest dud since Lehman.

Yes, the CEO of JP Morgan sits on the board of his own regulator as part of a deal that was struch way back in 1905 at the origin of the Federal Researve.

Several days ago we heard rumors, unsubstantiated, of an accident at Ukraine's Zaporozhye nuclear power plant, Europe's largest and the 5th biggest in the world. Considering Ukraine's history with nuclear accidents, and resultant panics, we decided it would be prudent to wait for an official confirmation before proceeding with a report. We got the confirmation about an hour ago, when Ukraine's new/old Prime Minister Arseny Yatseniuk, or "Yats" as his puppetmaster Victoria Nuland likes to call him, said "on Wednesday an accident had occurred at the Zaporizhye nuclear power plant (NPP) in south-east Ukraine and called on the energy minister to hold a news conference."

• Fall of the Bond King: How Gross Lost Empire as Pimco Cracked (BBG)
• Hong Kong 'Occupy' leaders surrender as pro-democracy protests appear to wither (Reuters)
• Ashton Carter, Ex-Pentagon No. 2, Emerges as Obama Favorite for Defense Secretary (WSJ)
• Oil, the Ruble and Putin Are All Headed for 63. A Russian Joke -- for the Moment (BBG)
• New U.S. oil and gas well November permits tumble nearly 40 percent (Reuters)
• Swedish government on brink of collapse (AJ)
• China says Britain has no moral responsibility for Hong Kong (Reuters)
• Indian Labs Deleted Test Results for U.S. Drugs, Documents Show (BBG)

Is this weakened system able to absorb a spike in one-directional volume? Will it step up and keep order? Or will it back off and allow volatility to roar?

Those wondering why European stocks are higher but off earlier highs, the answer is simple: the latest Service ISM was bad but it wasn't a complete disaster. And while RanSquawk notes that "the particularly disappointing slew of Eurozone Service PMI’s from France and Spain capped any potential upside seen across the European indices" stocks are clearly green on hopes Europe's ongoing economic devastation accelerates enough for the ECB to finally start buying Stoxx 600 and various other penny stocks. This is what happened, in Goldman's words: the November Euro area final composite PMI came in at 51.1, 0.3pt below the flash (and Consensus) estimate. Relative to October, the composite PMI fell by 0.9pt. The weaker final composite PMI was driven by flash/final downward revisions to the German manufacturing PMI and the French services PMI. Today’s data also showed some improvement in the Italian services PMI, and a deterioration in its Spanish counterpart.

With Black Friday sales plunging and Cyber Monday growth slowing, it appears the chicken of stagnant wages and debt-saturation are coming home to roost for a massacred middle-class America. However, as WSJ reports "we are buying less stuff," because the basic costs of necessities such as healthcare, food eaten at home, rent, education, and cellphones have surged. Overall spending for the group rose by about 2.3% over the six-year period from 2007, even as inflation totaled about 12%.

On October 22, 1981, the government of the United States of America accumulated an astounding $1 TRILLION in debt. At that point, it had taken the country 74,984 days (more than 205 years) to accumulate its first trillion in debt. It would take less than five years to accumulate its second trillion. And as the US government just hit $18 trillion in debt on Friday afternoon, it has taken a measly 403 days to accumulate its most recent trillion. There’s so much misinformation and propaganda about this; let’s examine some of the biggest lies out there about the US debt...

Did you know that there exists a federal Immigrant Investor Program that grants “EB-5? immigration visas to foreigners who provide at least $500,000 to U.S. projects that create 10 or more American jobs? Apparently the good folks at the Pennsylvania Turnpike Commission are well aware of it, and are using it to raise $200 million. Here’s what we’d like to know. Who are these investors and who vets them? It is a known fact that corrupt Chinese officials and businessmen are scrambling to get themselves and their money out of their homeland as the government cracks down on corruption. How many of them are going to use this program to get into the U.S., and what will be the long-term impact to our society?

What we experience today is completely contrary to the German (maybe not the U.S.) understanding of the role of the Central Bank. The ECB has now assumed a role not only to protect the value of our common currency against inflation but also to take action as if it is responsible to create economic growth and full employment with instruments like money printing, zero interest rates and unlimited investments in bonds which the free market is rejecting... Is it really worth it to increase the already heavy burden of public debt, which our children must service someday, by accepting even more debt in a vain effort to increase public demand? Let’s instead be happy with zero GDP growth, zero inflation and zero growth of public debt! That could be a more rational solution.

Only the 1% can afford to go to a basketball game...

As reported two weeks ago, following to a stunning announcement by the head of Ukraine's central bank, Valeriya Gontareva, we learned that (virtually) all of Ukraine's gold was gone, or - in the parlance of Jon Corzine - had "vaporized." And as we also predicted two weeks ago, it was only a matter of time before Ukraine's people - the vast majority of whom are innocent pawns in a vast game of realpolitik between the west and east - finally got angry and demanded some answers. That time came earlier today when as Interfax.ua reported "a Kyiv-based court has instructed Kyiv prosecutors to bring an action against National Bank of Ukraine (NBU) Governor Valeriya Gontareva on charges of abuse of power or misuse of office to obtain illegal profit, the Vesti newspaper reported on Tuesday."

With African Americans. However, even they are unhappy with Obama's Ferguson performance.

Not a quarter passes without a bank announcing, as part of its earning statement, that - it just so happens - it has incurred a few hundreds million (or billion) in legal fees, expenses and charges for breaking the law and manipulating this market or that (recall that for banks "Crime Is Now An Ordinary Course Of Business"), but it's ok, because it is a one-time, non-recurring thing, so please exclude it from the EPS calculation.... Until the next quarter when everything repeats once more. But the repetition of "one-time" events is not the only constant: the other one, of course, is that nobody ever goes to jail. The latter is also the reason why, as the WSJ reports, British regulators are "getting exasperated with banks failing to clean up their act after repeated wrongdoings." No, really: the UK's equivalent to the SEC truly can't understand how banks refuse to stop breaking the law when the have a paid for by others - and quite literal - get out of jail card.