Archive - Feb 2014

While the FT promptly retracted an article on precisely the topic of gold manipulation from earlier this week (recorded for posterity here), Bloomberg appears to not have had the same "editorial" concerns and pressures, and today released an article once again slamming the final conspiracy theory that while every other asset class is manipulated, gold is in a pristine class of its own, untouched by close-banging, price fixing traders or central bankers, and reports that "the London gold fix, the benchmark used by miners, jewelers and central banks to value the metal, may have been manipulated for a decade by the banks setting it, researchers say." And the punchline: "Large price moves during the afternoon call were also overwhelmingly in the same direction: down. On days when the authors identified large price moves during the fix, they were downwards at least two-thirds of the time in six different years between 2004 and 2013. In 2010, large moves during the fix were negative 92 percent of the time, the authors found."

First it was frat bros, then it was sluts, then it was Richard Simmons. Now, that the doge meme has arrived, Obamacare marketing desperation has just sunk to unfathomable lows.

In his commentary of yet another month of weak existing home sales, Larry Yun said that: "ongoing disruptive weather patterns in much of the U.S. inhibited home shopping." Thanks to the chart below showing the break down of the NAR's Pending Home Sales Index by region we know that he was obviously referring to the disruptively warm and pleasant weather in the Northeast where home sales ticked up by 2.3%, and also to the unprecedented freezing cold and freak snow storms from San Diego to San Francisco, which in turn led the West to post a -4.8% drop in pending home sales.

... In one chart which, because panic BTFATH means more panic BTFATH. Now imagine what would have happened if Q4 GDP had actually beats instead of sliding. In other news, the S&P is now just a little over 30 points away from Goldman's 2014 year end price target of 1900. At this rate it will be taken out by 2 pm.

If only it wasn't for that pesky GDP print, it would have been 4 out of 4 beats today. Well, three and a half: moments ago the Pending Home Sales number was released and showed a tiny 0.1% increase in January activity, compared to the expected 1.8%. The means that the data has bounced the smallest possible bounce off the lowest print since November 2011. But don't worry: in the same release we found that the data also beat, because on a year over year basis, sales declined by "only" 9.1%, compared to the -10.8% expected. So this is great news. Finally, just in case someone focused on the bad news instead of the good news, NAR's Larry Yun made it quite clear that it was the weather's fault: "Ongoing disruptive weather patterns in much of the U.S. inhibited home shopping."

Today, China decided to strike back at the US with its own report on US "human rights." In a nutshell, China launches a full frontal attack on the hypocrisy of the US, saying that "posing as "the world judge of human rights," the U.S. government "made arbitrary attacks and irresponsible remarks" on the human rights situation in almost 200 countries and regions again in its just-released reports, the report says. "However, the U.S. carefully concealed and avoided mentioning its own human rights problems," it adds. The report calls the U.S. tapping program, code-named PRISM, which exercises long-term and vast surveillance both at home and abroad, "a blatant violation of international law" and it "seriously infringes on human rights."

Who cares about tumbling GDP: it is all about the confidence of Wall Street CEOs, pardon, consumers whose confidence that the winter weather would finally end , if not so much in the economy with over 91 million people out of the labor force, resulted in yet another beat in the data, sending the Final UMichigan print higher from 81.2 to 81.6 on expectations of an unchanged print. The internals were largely irrelvant, but in terms of current conditions, consumers were most confident since November, up from 94.0 to 95.4, while expectations about the future was at 72.8 the highest since August. Finally, 1 year inflation expectations dropped modestly from 3.3% to 3.2%: don't worry though - in the New Normal declining inflationary expectations is enough to send the S&P 500 to new all tinme highs.

"If you have physical gold or silver, you are in a golden position,” Celente said. Despite the many risks of today, Celente saw light at the end of the tunnel. He said that there are opportunities in “clean food”, breakthrough alternative energy, alternative medicine and in digital education and internet learning.

In a stunning turn of events, Chicago, where the bulk of the polar vortex impact was felt in the past month, apparently experienced zero negative economic impact from, you know, the weather, after moments ago the Chicago PMI February print blew away forecasts of a 56.4 print, and after printing at 59.6 in January in fact rose to 59.8, just shy of the highest sellside forecast of 60. Because after beating expectations 5 times in a row why not make it six.

"Fair and efficient markets."

Naval blockade, check. APCs and military vehicles rolling into the Crimean, check. Mysterious gunmen taking over the parliament and airports, check. And now: Russian military helicopters, which as the clip below shows were sighted on their way to Belbek airport in Sevastopol.

The latest algo-arbing gimmick: report estimate bearing results to get the momentum-ignition algos sending your stock higher... then a month later announce you "discovered" fraud in a subsidiary, which magically cut earnings by $235 million, hoping nobody will notice. This is precisely what Citigroup just did. "I can assure you there will be accountability for those who perpetrated this despicable crime and any employee who enabled it, either through lax supervision, circumvention of our controls, or violating our Code of Conduct. All will be held equally responsible and we will make sure that the punishment sends a crystal clear message about the consequences of such actions,” Mr. Corbat concluded.

So much for that blow out initial estimate of Q4 GDP that had annualized GDP at 3.2%. One month later and the number has been cut by 25% to 2.4% following a substantial downward revision to Personal Consumption, which dropped from 3.3% to 2.6%, well below the 2.9% expected. As a percentage of the acual annualized GDP number, it dropped from 2.26% to 1.73%. The other components in the calculation that had material revisions were inventories which added just 0.14% to GDP vs 0.42% in the last revision and 1.67% in Q3, as the destocking from record high inventory build up levels continues to take a bite out of growth; offsetting this was an increase in the Fixed investment estimate from 0.14% to 0.58%. Which in turn means that even more CapEx growth was pulled back into last year than previously expected, suggesting further downward cuts to Q1 2014 GDP are coming. Finally, the government deducted -1.05% from Q4 GDP as opposed to the 0.93% estimated previously.

In investing you have opportunities that open up because dogmatic investors say “I don’t do ... ”