Archive - Jun 9, 2014

As we pondered the new normal and the disappointed anchors on CNBC this evening noting that we did not hit S&P 2,000 or Dow 17,000 (but there's always tomorrow); two headlines crept across the Bloomberg feed that could not have been more perfectly timed representatives of the new normal record highs in stocks:

• *COVANTA CUTTING JOBS
• *COVANTA TO BOOST CASH DIV TO 25C-SHR FROM 18C, EST. 18C

Here's a tip for management: as a cost-cutting initiative, maybe don't spend 'cash' on buybacks at record highs and invest in productive assets, instead. Of course, that's silly-talk in the world where work is punished; as CVA's stock is jumping after-hours.

Bail-ins or deposit confiscation can now be used in the UK, EU, U.S. and G20 countries. Investors and savers best get prepared for the coming bail-in era. After Cyprus, which country will be the next to suffer bail-ins?

After last night's tumble in copper and surge in CNY during Asia, Europe steadied the ship with more plunging yields (especially the front-end) but the US was all about USDJPY ignition at the open to blast the S&P through 1,950 comfortably and decouple stocks once again from reality. VIX was higher and credit markets were not as exuberant and by the time Europe closed and POMO was done, stocks crumbled back to unchish (apart from the Russell - lifted by another epic short squeeze from the Biotech sector this time). This is the best 4-day swing in the Russell 2000 since Jan 2013 (led by Biotechs today) Gold, silver, and copper ended almost unch as Oil surged 1.7% to over $104 (biggest day in 2 months). Treasury yields bear flattened (5Y +4bps, 30Y +1bps). The USD rose 0.3% - its best day in a month - as EUR closed at 4-month lows.

"Our Fed... Who art in Manhattan... lead us not into deflation... but deliver us from volatility"

Yesterday's shooting in Las Vegas drew media attention for a number of reasons but perhaps of most note was the chilling comments and premeditation involved. As WaPo reports, Jerad and Amanda Miller simultaneously executed two Las Vegas police officers in a pizza restaurant as the officers ate lunch; and then Jerad Miller covered the dead officers with a Gadsden flag and put a manifesto with a swastika on one of the officers’ bodies. However, as the hours since the disaster go by, more details of the couple have been exposed including Jared's anti-government video-rant below, "Sounds a little like Nazi Germany to me, or maybe Communist Russia... Really, people? It’s time to wake up. It’s getting ridiculous." Comments on his Facebook page also indicated he would be a "martyr" and asked for "the death a hero deserves." However, potentially most interesting is Interior Secretary Sally Jewell noting that the two may have joined militiamen from around the country at Cliven Bundy’s ranch earlier this year.

The ever-rising ranks of youth unemployment coupled with the increasingly cheap and easy access to "distractions" from the dismal realities of life (if one is not a wealthy leveraged shareholder) mean a lot of potentially productive time is totally and utterly wasted in this world... how much time? As The Economist joking notes, the loony music video “Gangnam Style” surpassed two billion views on YouTube this week, making it the most watched clip of all time. At 4:12 minutes, that equates to more than 140m hours, or more than 16,000 years (the equivalent manpower it would take to build 4 Great Pyramids of Giza or 20 Empire State Buildings). The opportunity cost of watching PSY’s frivolity is huge, but humanity has at least been entertained.

Stocks have not "reached a permanently high plateau" nor will "this time be different." As with all late cycle bull markets, irrationality by investors in the financial markets is not new nor will it end any differently than it has in the past. However, it is also important to realize that these late cycle stages of bull markets can last longer, and become even more irrational, than logic would dictate. Understanding the bullish arguments is surely important, however, the risk to investors is not a continued rise in price, but the eventual reversion that will occur. Unfortunately, since most individuals are only told to consider the "bull case," they never see the "train coming."

Snow may have "crushed" the world's biggest economy by 1% in Q1, but in the last 6 years, the Fed has goosed its 20% higher than it otherwise would be.

The old economy is gone and is replaced now by a “social services economy,” meaning government checks, SNAP cards, and purposelessness.

Having previously admitted its an idiot and a liar over Greece forecasts, constantly missed world expectations with a much more rosy picture of hockey-stick-like growth than actually occurs, and now Ukraine's insanely optimistic assessments; we thought it only fair to point out that, yet again, Christine Lagarde has been forced to say "we got it wrong." This time the IMF underestimated UK growth - a year after blasting the nation's planners for "playing with fire" by cutting its budget spending. As Bloomberg reports, pressed on whether she had apologized to Chancellor of the Exchequer George Osborne, Lagarde stopped short of saying so and said “Do I have to go on my knees?”

What has the top attention of the residents in my fair town of Palo Ato? The answer: the monthly salary of the 20 year old interns at local firms like Facebook, Google, and Palantir. Here ya go, America - - this is what kids still in colllege are pulling down:

A dispassionate look at what the ECB announced last week and the potential implications

But have you heard  of...

With the world cup set to kick off in three days, things in the host country - which according to numerous report is largely unprepared for the grand spectacle - are going from bad to worse.