Archive - Jan 2014

Increasing demand for U.S silver coins is set to send silver premiums higher. The premium charged by wholesale dealers for American Eagle coins from the U.S Mint may rise from 14%. The mint has said that weekly allocations will be reduced despite very strong demand so far this month and record sales in 2013. 

Non-GAAP EPS, sure. But non-GAAP revenues? Up until today one would think that kind of accounting gimmickry is solely reserved for the profitless one-hit wonders of the world, i.e. Tesla, but moments ago we just saw JPM report two sets of revenues: one which was the firm's GAAP revenue, and which was $23.156 billion, and another, far higher number, which was $24.112 billion which JPM described as revenue on a "managed basis" or also known as non-GAAP, and largely made up as they go along. So continuing with the other fudges, JPM also reported Net Income of $5.3 billion, or EPS of $1.30, once again on a pseudo-GAAP basis. However, this wouldn't be JPM if it didn't have a boat load of adjustments, and sure enough it did as per the waterfall schedule below. As can be seen, the biggest benefit aside from the $0.32 DVA & FVA (yes, blowing out your CDS is profitable once more), was the $0.27 in litigation charges. Of course, for these to be an addback, they have to be non-recurring instead of repeated, guaranteed every quarter, but once again, who cares.  And since we choose to stick with GAAP, the bottom line is that JPM revenues dropped from $23.7 billion in Q4 2012 to $23.2 billion this quarter, while EPS dropped from $1.39 to $1.31. Oh, and yes: for the purists, here is the bottom line: of that $5.3 billion in "earnings", $1.3 billion or double the expected (at least from Barclays) $616MM, came from loan loss reserve releases. Accounting magic wins again.

Following yesterday's major market drubbing, in which the sliding market was propped up by the skin of Nomura's (and BOJ, and Fed's) teeth at 103.00 on the USDJPY, it was inevitable that with Japan returning from holiday there would be a dead cat bounce in the Yen carry pair, and sure enough there was, as the USDJPY rose all the way back up to 103.70, and nearly closed the Friday gap, before starting to let off some air. However, now that US traders are coming back online, Japan's attempts to keep markets in the green may falter, especially since it only has a couple of ES ticks to show for its efforts, as for the Nikkei which dropped 3% overnight, it has now lost all US "Taper" gains.

In a country in which the lack of economic "growth" and prosperity are attributed to the occasional sequester, and a stingy congress that refuses to unleash the spending floodgates, the money is perfectly sufficient - the problem is that quite often it ends up in the hands of people who one may call criminals, if one were so inclined. Take the case of public school PS 106, located in Far Rockaway, Queens - the school is allocated $2.9 million to serve a low-income population with 98 percent of its students eligible for free lunches. As a Title 1 school, it gets extra federal funds. There is one problem: none of that state money actually makes its way to the students, and with no class, or books, and a rat infestation, PS 106 has officially earned the title of New York's worst school.

Medical marijuana is already legal in 20 states plus the District of Columbia. It is also completely legal for recreational use in two states; Colorado and Washington State. Nevertheless, big daddy government still thinks it knows best and continues to classify the substance as a schedule one drug under federal law. As such, the banking system, (including state banks) is simply to afraid to get involved. Legal marijuana merchants business is conducted almost entirely in cash because it is exceedingly difficult for them to open and maintain bank accounts, and thus accept credit cards. “Banking is the most urgent issue facing the legal cannabis industry today,” said Aaron Smith, executive director of the National Cannabis Industry Association in Washington, D.C. Enter Bitcoin - At least one marijuana dispensary in Colorado has reportedly begun accepting bitcoin.

While Amazon's online business is booming (in revenues - but decidedly not profits), its somewhat sunning inactions at CES this past week raised more than a few eyebrows. Quietly and with no grandiose Michael-Bay-style presentation, Wired reports the 'we-can-make-a-profit-any-time-we-like-if-we-really-wanted' company placed an Amazon Vending Machine at the Las Vegas Airport. As Wired continues, any foray by Amazon into the world of offline retail is a big deal... when Amazon ventures into the physical world - whether with in-store delivery lockers or grocery trucks or vending machines - the company’s sheer scale and ambition demand that you think in terms of world domination. Hhmmm...

Hyperinflation leads to the complete breakdown in the demand for a currency, which means simply that no one wishes to hold it. Everyone wants to get rid of that kind of money as fast as possible. Prices, denominated in the hyper-inflated currency, suddenly and dramatically go through the roof. The most famous examples, although there are many others, are Germany in the early 1920s and Zimbabwe just a few years ago. German Reichsmarks and Zim dollars were printed in million and even trillion unit denominations. We may scoff at such insanity and assume that America could never suffer from such an event. We are modern. We know too much. Our monetary leaders are wise and have unprecedented power to prevent such an awful outcome. Think again. Like previous hyperinflations throughout time, the actions that produce an American hyperinflation will be seen as necessary, proper, patriotic, and ethical; just as they were seen by the monetary authorities in Weimar Germany and modern Zimbabwe.

As a result of this, the financial sector remains rife with fraud and impossible to accurately value (how can you value a business that is lying about its balance sheet?).

Presented with no comment...

Any day, month, quarter, year, decade now; Goldman Sachs' mythical J-Curve will arise from the cinder-strewn ashes of Japan's current account. Japanese bond markets are rallying and JPY is weakening modestly after Abe's increasingly disapproved-of government announced the worst balance of payments current account deficit on record. At JPY -592bn vs expectations of JPY -36bbn and its 5th miss in the last 7 months as economists and analysts and pretend portfolio managers just keep getting it wrong. The trade deficit plunged once again, missed expectations once again and printed at the 3rd worst deficit ever with the 16th monthly trade deficit in a row. But apart from that, the Nikkei is -1000 points from the 2013 close highs and apart from rumors of a big bank selling JPY to defend 103, the trend ain't Abe's friend for now...

Russia is spending $51 billion on the Sochi Games; far exceeding the lavish-at-the-time $40 billion spent on China's 2008 Summer Olympics - which, as BusinessWeek notes, had more than three time the events. However, it is Sochi Organizing Committee President Dmitry Chernyshenko's promise that it will be "the safest games ever" that is really starting to add up in the face of suicide bombings and explosive device discoveries. As Al Jazeera shows, securing Sochi is costing twice the 2010 Vancouver Olympics and involves double the security forces of the London Olympics...

By now the distinction that "enrollment" in Obamacare does not actually mean coverage should be painfully clear: one still has to pay, and according to a recent analysis up to 50% of "enrollees" in any given state have not paid, which means the White House's number of 2.1 million sign ups through December 28 is vastly overstating the reality (especially if one ignores the 5+ million of torn up, lost insurance policies as a result of Obamacare). But even if one clearly delineates what is meant by "enrollment" in the most epic failure of a ponzi scheme to ever emerge from a developed nation (with a recently disclosed penchant for Big Brother-yness), what conclusions can one draw about the current participants in obligatory, socialized insurance as most recently disclosed by the administration? Here is the summary: only 24% of all new insured are in the targeted 28-34 age group; only 21% of participants will get no subsidy (which means 79% will be subsidized), and finally more women (54%) than men have signed up.

While McDonalds "coffee is hot" warning labels and litigation was a farce of lowest-common-denominator American exceptionalism; SirGriorgio Clardy, a Portland pimp, is suing Nike for not specifying that his trainers could be used as a dangerous weapon. As NBC News reports, Clardy is seeking $100 million from the Oregon sportswear company after he was sentenced to 100 years in prison for brutally beating a 'john' with his sneaker (apparently unaware of their potential for danger when one stomps on the face of another human being).

In January 2009, the number of "officially unemployed" workers plus the number of Americans "not in the labor force" was sitting at a grand total of 92.6 million.  Today, that number has risen to 102.2 million.  That means that the number of working age Americans that are not working has grown by close to 10 million since Barack Obama first took office.  The cold, hard reality of the matter is that there has not been an economic recovery in this nation. Anyone that tries to tell you that is lying to you.  If we were going to have a recovery, it would have happened by this point.  In fact, this is all the "recovery" that we are going to experience. From here on out, this is about as good as things are going to get. 

"The most unloved French leader in modern history."