Archive - Feb 18, 2014

First Mercedes, then Porsche, and now Ferrari and Maserati post record US sales in January...

*FERRARI POSTS RECORD SALES IN U.S. AND U.K. IN 2013
*FERRARI AND MASERATI GLOBAL MORE THAN DOUBLE IN JAN TO 2,400

...a month where the non-1%-auto-makers struggled mightily. Of course, the latter missed expectations are blamed on weather (as opposed to dealer inventories stuffed at record levels, a replacement cycle that has run its course, or a consumer that is once again credit-tapped out). So, the clear findings from this is that the 1% - who are buying more luxury cars than ever before in January - clearly don't feel the weather...

Watch as sparks fly between a Ukrainian military APC, possibly the same one we revealed earlier, as it gets into some blazingly close encounters with the Kiev protesters. It is unclear who won however it is quite clear that at this point the proxy war in Ukraine between Russia/Gazprom and the European Union/US State Dept/Saudi/Qatar can be upgraded to "hot."

As we initially exposed over five years ago, with luminary frat brothers and sister such as Jimmy Cayne, Richard Fuld, Stan O'Neil, Martin Gruss, Michael Bloomberg, Jon Corzine, Mary Shapiro, Alan Schwartz, Larry Fink, Larry Fink, Wilbur Ross, James McDonald, this "secret" organization puts the Masons, Bilderbergs, Skull and Bones, Templars, Fight Club and all other secret societies to shame. Now, as New York Magazine infiltrates the inner workings of the "Kappa Beta Phi" society, Liberty Blitzkrieg's Mike Krieger notes the following will confirm what everyone already thought - that a great many of these oligarch financiers are complete and total sociopaths and a menace to society. 

The world has grown tired of the inexorable rise in radiation levels and propaganda-talk sourrounding nuclear issues in Japan from the government in the last few years since Fukushima changed the nation's future. However, there is another source of nuclear materials that is increasingly angering the Chinese. The tensions and rhetoric, from WWI analogs to Nazi comparisons, have risen recently; but this time, the Chinese are asking a legitimate question... "If a country claims that it sticks by the three non-nuclear principles but at same time hoards far more nuclear materials than it needs, including a massive amount of weapon-grade plutonium, the world has good reason to ask why.... After all, Abe and his cabinet have already caused too much trouble to regional peace and stability." Of course, this places "ally" President Obama in an awkward position given his anti-proliferation stance... though we suspect he will have an angle: "if you like your plutonium stockpile, you can keep it."

By early March "the US will be in the 2nd longest bull market of the last 80 years," and as Marc Faber warns, "usually, these long bull markets end badly." Simply put, The Gloom, Boom, & Doom Report publisher notes "it's too late to buy US stocks," warning of previous major declines like 1987, 2000, and 2007. "It's not an opportune time" to buy US stocks but while it might be too early to buy some of the beaten-down emerging markets at these levels, Faber believes investors can make money in the longer-term - "I think I can make the case that over the next five to 10 years, I will make more money by buying now in the emerging economies then in the U.S."

Have you noticed that people are becoming angrier?  You can see it everywhere – in our homes, in our schools, in our workplaces, in our television shows, in our movies, and certainly in Washington.  In fact, many have said that there is an “epidemic” of anger in America today.  And it is undeniably true.  As you will see below, a whole host of surveys and opinion polls show that America has become a seething cauldron of anger and frustration unlike anything that we have ever seen before. The very fabric of our society is coming apart at the seams and the thin veneer of civilization that we all take for granted is beginning to disappear.  What is America going to look like if we continue to go even farther down this road?

While we will have more to say about the disastrous December TIC data shortly, which was released early today, and which showed a dramatic plunge in foreign purchases of US securities in December - the month when the S&P soared to all time highs and when everyone was panicking about the 3% barrier in the 10 Year being breached and resulting in a selloff in Tsy paper - one thing stands out. The chart below shows holdings of Chinese Treasurys (pending revision of course, as the Treasury department is quite fond of ajdusting this data series with annual regularity): in a nutshell, Chinese Treasury holdings plunged by the most in years, after China offloaded some $48 billion in paper, bringing its total to only $1268.9 billion, down from $1316.7 billion, and back to a level last seen in March 2013! This was the second largest dump by China in history with the sole exception of December 2011.

Valuations are stretched. Profit margins are stretched. And given that these two have been reliable mean-reverting indicators, they are what drive our sobriety. We’re not saying the party’s over. For all we know, 2014 could post another positive year for the risk markets. There’s enough good news out there in terms of cash on the sidelines, declining unemployment numbers, U.S. as a safe haven in the event of an emerging meltdown ... yada, yada, yada. All we’re saying is that, as value investors, we’re nervous about the longer-term prospects for equities, especially in the U.S.  Markets in the U.S. are not a little bit overvalued—they are overvalued by a hefty margin, especially small-cap stocks. And it is this concern, above all else, that will be driving our asset allocation decisions.

It’s the same old story being told in the London housing market and it’s like a re-run of a boring series or some B movie starring George Osborne, the UK Chancellor of the Exchequer and the Prime Minister David Cameron. 

And just like that, the MyRA propaganda goes full Goebbels retard. Unfortunately, due to time differences, neither Pravda, nor Izvestia or Moskovskij Komsomolets could reply with affirmative comments due to time constraints

Now that Ben Bernanke has handed over the keys of the Federal Reserve, there are all sorts of theoretical arguments, pro and con, concerning his bold quantitative easing (QE) programs, in which the Fed massively expanded its balance sheet. Many critics have worried that this will disrupt the proper functioning of credit markets, and threatens to severely debase the US dollar. The defenders of Bernanke have argued that he spared the US (and indeed the world) from a second Great Depression. One of the odd (more farcical) points that people raise in Bernanke’s defense is the case of Japan...  We do have historical examples of central banks ruining their economies/currencies through massive expansions of their balance sheets (Weimar Germany, Zimbabwe, etc.). To our knowledge, this has never actually worked anywhere in history...

Over 7 in 10 Obama voters, and 55% of Democrats, regret voting for President Obama's reelection in 2012, according to a new Economist/YouGov.com poll. As The Washington Examiner reports, the poll was conducted to test the media hype about a comeback by 2012 Republican presidential nominee Mitt Romney. While the poll found voters still uninspired by Romney, they are also deeply dissatisfied with Obama (though given the choice of Obama versus Romney, Obama supporters said they would stick with their guy, 79% to 10% for Romney) giving Obama, as The Examiner notes, very early lame duck status before the midterm elections.

It's getting form bad to worse in the Ukraine: either martial law will be announced any time soon or the proxy civil war becomes a real one. On the bright side, there is something to be said about having a nation's criminal cases all in paper format: once there is a revolution, everyone's slate gets wiped clean...

While there are many hopes pinned on the housing recovery as a "driver" of economic growth in 2014, the data suggests otherwise. The optimism over the housing recovery has gotten well ahead of the underlying fundamentals.  While the belief is that the current push in housing is a side-effect of a recovering economy, the reality may be a function of the speculative rush into buying rental properties for cash which created a temporary, and artificial, inventory suppression. The real driver of an economic recovery is full time employment that leads to rising wages and savings.  Unfortunately, this is something that eludes the current Administration that is focused on creating new regulations on the average of every 8 minutes, raising the cost of healthcare and increasing taxes. Call us crazy, but maybe its time to try something different.

The chart is very disturbing: it shows that as the S&P rises higher and higher (on ever declining volumes), foreigners are buying fewer and fewer US securities. In fact, on a 12 Month Moving Average basis, foreigners bought less long-term US securities than they did when Lehman crashed!  And so we have come full circle, because while, understandably, nobody had any apetite for US securities around the Lehman crash when until the Fed stepped in and singlehandedly took over the US capital markets it was unclear if there even would be a US capital markets, now that five years later the S&P has risen to a level nearly three times the March 2009 lows thanks entirely to the Fed's $4.1 trillion balance sheet backstop, the interest in US securities is... lower than it was in the days just after Lehman!