Archive - Feb 9, 2014

Argentina is a country re-entering crisis territory it knows too well. The country has defaulted on its sovereign debt three times in the past 32 years and looks poised to do so again soon. Its currency, the peso, devalued by more than 20% in January alone. Inflation is currently running at 25%. Argentina's budget deficit is exploding, and, based on credit default swap rates, the market is placing an 85% chance of a sovereign default within the next five years. Want to know what it's like living through a currency collapse? Argentina is providing us with a real-time window.

By hosting the Winter Olympics in Sochi, Russia has brought a surge of international attention to the state of its economy, its interethnic relations, its domestic politics, and its foreign policy. Already much of the scrutiny has become unwelcome. The reluctance of many foreign leaders to come to Sochi provides a convenient scorecard by which to evaluate Russia’s global standing. Corruption, terrorism, human rights protests, high-level no-shows—all these represent ways in which the Sochi Olympics have embarrassed Putin. Yet in each case, the problem goes well beyond any connection to the Games. Each reflects a major tension in the system that Putin has created...

UBS' George Magnus believes the next global economic "crisis"' lightning rod will be the emerging markets and as Jim Rogers tells BoomBust's Erin Ade in this brief interview, "the emerging market crisis has only just begun." While Rogers is careful to add that there are lots of emerging markets - "some better than others;" he warns that "there are some serious problems out there and they are going to get worse." Who is to blame? The Fed, of course - "by driving rates so low and providing as much liquidity as anyone in the world could want, the EMs have borrowed to cover up their real problems... be worried."

For a few brief weeks, there was hope among the millions of Japanese that do not love Shinzo Abe as two former premiers entered the race for governor of Tokyo on a zero nuclear-power platform. Today, as The Economist notes, those hopes melted away as quickly as the snow which had blanketed Tokyo on the eve of the vote. The race was won handily by Yoichi Masuzoe - the "women are abnormal during their periods" pro-nuclear, Abe-apologist that personifies Japan’s gender gap. Perhaps Subculturist sums it up best: once again, Japan has shown us that with enough voter apathy (3rd lowest turnout on record), a compliant media, and the connections and funding of the nuclear industry, that any middle-aged asshole guy can be the leader of one of Japan’s largest city-states.

Much has been said about the January Non-farm payrolls number, which rose by 113K on expectations of a 180K increase, most of which has been focused on the US atmospheric conditions during the winter. There is a problem with those numbers: they don't really exist (as for the non-impact of "the weather" on jobs we showed previously that the number of people "not at work due to weather" as calculated by the BLS itself. this winter was lower than 2008, 2009, 2010, 2011 and 2012 - so much for historic winter weather). So what really happened in January? For the real answer we have to go to the BLS' non-seasonally adjusted data series. It is here that we find that in January, some 2.870 million real, actual jobs were lost, not gained. Putting this further in perspective, the number of NSA jobs losses in January 2014 was greater than in January of 2013, 2012, 2011 and tied that of 2010. In fact only during the peak of the depression in January 2009 was there a greater NSA drop in the first month of the year when 3.691 million jobs were lost.

Low-wage workers clocked the shortest workweek on record in December - even shorter than at the depth of the recession, new Labor Department data showed Friday. The figures underscore concerns about the Obamacare employer insurance mandate's impact on the work hours and incomes of low-wage earners. Still, as Krugman told Colbert recently, he's "ok with a little bit of wealth redstribution from people who have been lucky to people who are unlucky."

"Stay defensive," warns BofAML's Macneil Curry. While risk assets ended last week on a very strong note, with the S&P500 putting in its best 2 day performance since October; the weight of evidence says that new S&P500 lows are coming and that risk assets should suffer in the weeks ahead. From the S&P500’s impulsive decline from 1850, to negative February seasonals, to deteriorating equity market breadth (the percent of NYSE stocks trading above their 200d avg is at its lowest since Oct'12); it should pay to remain defensive. In the week ahead we look for a top into the 1800/1823 area before the downtrend resumes for 1711/1686; and stay bullish bonds.

While China (or Russia) are held up as the world's most corrupt among developed nations among the status-quo-huggers, it would seem there are two other nations that dominate when it comes to getting caught. Europe paid more in fines  (in fact double the US and 10 times China) for price-fixing, bid-rigging, and other anti-trust abuses in 2013. So why would we believe them that 'recovery' is right around the corner?

Now that the full court press to refute the findings of the CBO report which, as we reported, confirmed what was largely known - that as a result of Obamacare, the strapped US economy will have even fewer workers as millions will fall back on welfare state entitlements which make hard work obsolete - has failed, it is time for the propaganda to take a different track: one where not having a job, and in fact losing it due to Obamacare, is hailed as an act of nobility. Sure enough, here comes one of the administration's favorites, the Bezos Times, with "They quit their jobs, thanks to health-care law" which does largely as its name suggests: highlights just how "enabling" and "liberating" Obamacare is for one's life, once a person is no longer burdened by something as trivial as a job.

Three times more Americans gave up on America in 2013 than in 2012. As The WSJ reports, last year saw a record number of US taxpayer expatriations. While "exceptionalism" and living the American Dream remain cornerstones of maintaining the US citizenry's view of the world, it seems everything from tax-code changes to spying drove 2,999 people to hand in their passports last year, "above all, fear seems to be driving this increase."

We previously examined 240 years of US market history for a sense of 'trend' or sustainability but some were not satisfied. In order to get a truly long-term perspective, we reach back 1000 years to The Middle Ages and look at how stock prices, interest rates, commodity prices, and gold have changed in a millennia (and most notably how the key historical events have shaped those price changes).

The Likeness of God is to Create not Consume.  Ingenuity and innovation are hallmarks of our human creativity. Curiously, those marvelous characteristics unique to mankind, which have delivered the most astoundingly advanced technological productivity gains ever conceived, are now fast displacing a multitude of relatively menial jobs previously attended to by human beings, who having been anchored to unsatisfying and unfulfilling laborious routines, were less able to enjoy the free time and space certainly required to become more creative enlightened beings themselves.

Gloomy commentary on the world's ageing population appears overdone. We look at key silver linings and the significant investment opportunities ahead.

This wasn't supposed to happen. At a time when the European Union, reeling from the ongoing near collapse of the Eurozone, has been preaching its key benefits - the removal of borders and the free transit of labor - moments ago Switzerland, with a tiny majority of 50.4%, voted in favor of new immigration curbs which requires the government to set an upper limit for foreigners, risking a backlash from the (utterly toothless) European Union.

In recent months, the attention of the public has been consumed by concerns over private data abuse by such public spy agencies as the NSA, as well as what personal financial information may have been intercepted by rogue hacker black hats who in the past two months have been blamed for millions in credit card privacy breaches. However, so far there have been two major loose ends in the story of personal data collection (and abuse): just how web search browsers and cookie-based advertising companies collect everything there is to know about the particular interests and desires of any given individual, and just as importantly, how banks abuse client confidentiality by taking the secret financial data of their clients less than seriously. Today, one of these loose ends got some much needed public exposure.