Archive - Jan 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.

Having just completed his 75% millionaires tax and seen at the center of a what is likely to be a confiscatory "wealth tax" across Europe, Volkskrant shows that it is not just French President Hollande's people that see him as the least popular ever, but the world's leaders also...as no one will shake his hand...

Today the ECB just announced the latest set of undead monetary statistics for November. To nobody's surprise, even though M3 posted the tiniest of possible annual increases, rising from 1.4% to 1.5% (3% below the ECB's 4.5% reference value which it considers consistent with its price stability mandate), loan creation to the private sector declined once again, this time dumping to -2.3% from a revised -2.2%. As the WSJ reports what we have said for the past year, "The deepening decline increases pressure on the central bank to embark on further measures to stimulate lending, analysts said."

As we warned was likely to happen back in February of 2013 (given the typical trajectory of earnings expectations through a year), JP Morgan has confirmed that the S&P 500 is now more expensive on a forward P/E basis than it was at its peak in October 2007. So, despite the self-referential bias of each and every talking head asset-gatherer on mainstream media's denial, stocks do not offer value here... no matter how many TINAs or BTFATHs you hear...

With Bitcoin having almost completed another double off the Dec 17 lows, it is hardly surprising that the fast-money volatility-chasing world of 2-and-20-ers is reaching out for a Bitcoin Execution Trader. The San Francisco hedge fund is hiring a "Junior" position, which suggests they already have a "senior" trader who has got tired of trading the digital currency 24 hours a day and is looking to offload the 24x7x365 duties to a lower-level employee with "strong analytic skills" and who is "willing to work odd hours including weekends and late nights/early mornings."

It's that cold. BBC reports that Firemen tackling a blaze in Minneapolis, where temperatures have been below -20C, saw the spray from their hoses turn to ice as it hit the building.

• Heavy snowstorm hammers northeastern U.S. (Reuters)
• Coins Remain a Bright Spot for Gold (WSJ)
• Gross’s Mistake on Fed Taper Echoes Across Pimco Funds (BBG)
• China December services PMI falls to four-month low (Reuters)
• General Mills Starts Making Some Cheerios Without GMOs (WSJ)
• U.S. considers flammability risk of Bakken crude after accidents (Reuters)
• China Mobile’s Costly iPhone Deal with Apple (WSJ)
• Hezbollah Upgrades Missile Threat to Israel (WSJ)
• UK House Prices Cap Best Year Since 2006 as Mortgages Surge (BBG)
• China tells police to be loyal to party amid graft crackdown (Reuters)

Snow and cold weather... in the Northeast... in January. Surely, such an unprecedented development in the New Normal should predictably justify explaining away at least a 1% miss of Q1 GDP (which when inventory destocking is factored in, will likely come in negative). Still, 20 inches of snow dropping in one night is somewhat abnormal, especially when one adds a blast of cold air to accompany them, and explains why even the area major airport hubs - JFK in New York and Logan in Boston - are all closed currently, while key NYC transportation hubs, I-84 and the LIE, closed at midnight and won't open until 8 am.

In a day that will be remembered for the first major snowstorm to hit New York in 2014 and test the clean up capabilities and resolve of the city's new populist mayor (not starting on a good note following reports that JFK airport will be closed at least until 8:30 am Eastern), it was only fitting that there was virtually no overnight news aside for the Chinese non-manufacturing PMI which dropped from 56.0 to 54.6, a new 4 month low. Still, following yesterday's ugly start to the new year, stocks in Europe traded higher this morning, in part driven by value related flows following the sell-off yesterday. Retailers led the move higher, with Next shares in London up as much as 11% which is the most since January 2009 and to its highest level since 1988 after the company lifted profit forecast after strong Christmas trading performance. Other UK based retailers with likes of AB Foods and M&S also advanced around 2%.

Gold and silver prices surged higher today in the opening hours of trade in 2014. Gold rose 1.8% to $1,220/oz and silver surged over 3% to $20.02/oz.

Gold fell 28% in 2013, while silver recorded a 36% decline. It was gold’s first annual drop since 2000 and gold and silver’s worst performance since 1981 and 1984 respectively.

Despite the government's ongoing efforts to cut gold imports - aimed at closing a widening current account deficit among other status-quo-questioning factors, the following brief clip from Bloomberg TV sums it all up perfectly - For this country of over one billion, "Gold is, was, and always wlll be... money." And now, following import bans and higher taxes, the government is considering restrictions on the holiest of holies - wedding gifts, and "legislating against love."

2014 is upon us. For a person who graduated from Georgia Tech in 1961, a year in which the class ring showed the same date right side up or upside down, the 21st century was a science fiction concept associated with Stanley Kubrick's 1968 film, "2001: A Space Odyssey." To us George Orwell's 1984 seemed so far in the future we would never get there. Now it is 30 years in the past. Did we get there in Orwell's sense? In terms of surveillance technology, we are far beyond Orwell's imagination. In terms of the unaccountability of government, we exceptional and indispensable people now live a 1984 existence. In America today people with power are no longer accountable. This means citizens have become subjects, an indication of social collapse.

While the taper is apparently priced in, someone forgot to tell Emerging Market FX markets again as from India to Indonesia and from Thailand to the Philippines, currencies are tumbling against the USD. While most of Asian FX is weakening, the JPY is surging - its biggest gain in 4 months. Of course, with Japanese cash markets still closed, futures are bearing the brunt as Nikkei 225 futures are down 450 points from New Year's Eve's high close, filling the Christmas Eve gap perfectly.

All it took was a year or two of extremely obvious "catches" of leaked data for the government to begin to decide that perhaps, just perhaps, it is time to end the press lockup for each week's initial jobless claims data. As the WSJ reports, the original idea behind lockups was to give reporters time to digest complicated economic reports to produce accurate reports for the public. In the past decade, news organizations have also built expensive networks to send government data to high-speed investors who can make trades on the data before members of the public can react. Now, however, the BLS believes, "government data is for the public good and it is paid for by taxpayer dollars. There must be a commitment to a level playing field."