Archive - Jan 2014

In the aftermath of earlier comments from White House spokesman Carney that the US is considering sanctions for Ukraine violence, a move aimed squarely at Putin, at least several US private sector companies have decided to take matters into their own hands. To wit: "Express delivery companies DHL and FedEx said on Thursday they had suspended foreign shipments to individual customers in Russia because of stricter customs procedures, making it harder for internet users to buy goods from abroad. DHL will suspend all shipments of goods for personal use to Russia from January 27, the company said in emailed comments, after already suspending most such imports already in 2010."

UPDATE: The Argentine Trade Balance missed surplus expectations by the most in 3 years (and 2nd most on record).

As those who follow Zero Hedge on twitter know, we have recently shown a keen interest in the collapse of the Argentine currency reserves - most recently at $29.4 billion - which have been declining at a steady pace of $100 million per day over the past week, as the central bank desperately struggles to keep its currency stable. Actually, make that struggled. As of today it is not just the collapse in the Latin American country's reserves, but its entire currency, when this morning we woke to learn that the Argentina Peso (with the accurate identifier ARS), had its biggest one day collapse since the 2002 financial crisis, after the central bank stopped intervening in currency markets. The reason: precisely to offset the countdown we had started several days back, namely "an effort to preserve foreign exchange reserves that have fallen by almost a third over the last year." Oops.

...Gold and Silver miners...

With the ongoing strength in JPY, Japanese stocks (the highest beta to the previous collapse in the Yen) are crumbling. The Nikkei 225 is now down over 500 points from yesterday's highs and at its "cheapest" to the Dow this week... Still think it's all about China?

While most of the attention in the Chinese shadow banking system is focused on the Credit Equals Gold #1 Trust's default, as we first brought to investors' attention here, and the PBOC has thrown nearly CNY 400 billion at the market in the last few days, there appears to be a bigger problem brewing. As China's CNR reports, depositors in some of Yancheng City's largest farmers' co-operative mutual fund societies ("banks") have been unable to withdraw "hundreds of millions" in deposits in the last few weeks. "Everyone wants to borrow and no one wants to save," warned one 'salesperson', "and loan repayments are difficult to recover." There is "no money" and the doors are locked.

Back in August, when we wrote that "A Stunning 60% Of All Home Purchases Are "Cash Only" - A 200% Jump In Five Years" based on Goldman data, many laughed, unable to fathom that the majority of the US housing market has become a flippers' game played by institutions and the uber wealthy, who don't need a stinking mortgage to buy that South Beach mansion. As it turns out we were just a little ahead of the curve as usual, and as real estate company RealtyTrac reported overnight, with data that naturally is delayed due to the delayed impact of houses coming out of the much delayed foreclosure pipeline, "All-cash purchases accounted for 42.1 percent of all U.S. residential sales in December, up from a revised 38.1 percent in November, and up from 18.0 percent in December 2012." That's a 10% increase in one month for a 6-9 month delayed series, which means that in reality, roughly about 60% of all homes are now purchased with cold, hard cash.

One of the most disturbing and relentless trends over the past several years has been the redirection of war technology and equipment from the battlefield abroad toward domestic use in the USA. This has resulted in a militarization of police across the nation and has encouraged small towns to use Department of Homeland Security (DHS) grants to purchase ridiculous items such as tanks. Sadly, it appears this trend is only accelerating. With billions of dollars already spent, and failed wars abroad, the military-industrial complex needs to continue to generate cash flow. May as well just use it against the American people...

Defense contractor Raytheon last year touted an exercise in which it outfitted the aerostats planned for deployment in suburban Baltimore with one of the company’s most powerful high-altitude surveillance systems, capable of spotting individual people and vehicles from a distance of many miles.

"Gold gets explosive above 1270. Watch out. With the US $ coming under pressure, the potential further gold gains is high and rising. 1270 IS KEY. A break of the 1270 pivot should be the catalyst for short squeeze higher, exposing the confluence of resistance between 1362/1399."

Ass seen from Fort Lee New Jersey.

With chatter that over $3 billion has been thrown into the FX market to buy Turkish Lira, it appears the central bank is losing control quickly and Turkish stocks are tumbling. The Turkish Lira collapse almost 400 pips this morning to around 2.30 to the USD - an all-time record low as the combination of corruption, social unrest, and Fed taper are seeing hot money outflows faster than the Turkish Central bank can keep control.

*TURKISH LIRA WEAKENS PAST 3.15 AGAINST EURO; WEAKENS TO NEW RECORD 2.3029 PER DOLLAR

This is the biggest tumble in the Lira in almost 5 months as the Istanbul 100 (stocks) drops 2.9% - its biggest drop in a month; and Turkish bond yields are backing up to 2-year highs.

This chart shows the year over year change in a very important data series. Guess what it is.

NAR chose to blame the weather in keeping with the rest of the nation as it cited "cold" in the Northeast and Midwest for the 4th miss on existing home sales in a row and the lowest level of sales since October 2012. What is ironic is that while the always independent NAR proclaims weather to blame for the miss (despite Midwest condo sales up 14%!?), it crows that December sales were the strongest for a December in 7 years. The median home price rose 9.9% Year-over-year (so half that of China's). NAR sums it up: "we lost some momentum toward the end of 2013 from disappointing job growth and limited inventory..." It would appear home sales are catching down to the collapse in mortgage applications as the fast-money cash-buyers have stepped away for now...

Wondering why Herbalife is down over 12% in the past few minutes? Wonder no more: moments ago Massachusetts Senator Edward Markey, who apparently has a morbid interest in protein shakes - more so than the FTC - asked for more information about the business practices of nutrition company Herbalife. Markey sent letters to the Securities and Exchange Commission, the Federal Trade Commission and to Herbalife itself to try an obtain more information, his office said in a news release on Thursday. The take home from all of this?  Senator Edward Markey has an advance invite to the Pershing Square holiday ball.

Stock futures have been fading since China's PMI missed expectations but this weakness, we suspect, is more about the BoJ's somewhat less dovish comments last night - "as long as steady progress is being made toward the 2% target, we do not see a need for additional monetary accommodation." All US indices are tumbling this morning with the Dow now at its lowest level in over a month.

"What will drive this "strength"? More of the same I suspect – any weakness in earnings will be ignored (virtually all of last year's equity market gains were NOT earnings or revenue growth driven, but were rather virtually all multiple expansion driven), any bad economic data will be ignored – the weather provides a great cover,  and instead markets will I think see (one last?) reason to cheer the Fed and/or the BOJ and/or the ECB and/or the PBoC.... The only real "success" of these current policies is to create significant investment distortions and misallocations of capital, at the expense of the broad real economy, leading to excessive speculation and financial engineering. If I am right about the final outcome over 2014 and into 2015, the non-systemic three-year bear market of early 2000 to early 2003 may well be a better "template". Of course the S&P lost virtually the same amount peak-to-trough in both bear markets, and in real (as opposed to nominal) terms actually lost more in the 2000/03 sell-off than in the 2007/09 crash." -Bob Janjuah