Archive - Oct 2015

Moments ago VRX stock flash crashed on news CVS had just terminated Philidor from its Caremark PBM network: CVS CITES 'NONCOMPLIANCE' W/ PROVIDER PACT ON PHILIDOR; CVS MOVE BASED ON RECENT AUDITS OF PHILIDOR, DJ SAYS

Once more in this new normal in which we 'live', the necessary creative destruction of capitalism is eschewed in favor of saving a zombie company that the CEO admitted was "overwhelmed." The good news for American taxpayers is that it is Canadian taxpayers - via a generous $1.3 billion 'investment' by the Quebec government - that are bailing out private-jet-maker Bombardier. Following aircraft projects plagued by overruns, missed deadlines, and scant interest from airlines, Bombardier posted a $4.9billion loss in Q3. Well never mind that, Quebec taxpayers now own 49.5% of the challenged CSeries program.

"... judging from market-based implied measures of longer-term inflation expectations, the effectiveness of the ECB’s announcements has proved limited so far."

- Goldman Sachs

It appears even Goldman Sachs was surprised by the recent rally in US equities - especially in light of the explicit hawkishness of The Fed yesterday. In a trading note this morning, the bank says that market risks are real and rising (but are not overwhelming) as it explains, we assume with no intent at humor or sarcasm, that they "prefer to think of the recent equity rally as 'macro-free' rather than 'low quality'," reiterating their view of the cycle and of markets as "fundamentally upbeat." They do, however, admit over the last month, the likelihood of a drawdown in the US equity market further increased, and remains at mildly elevated levels.

Don't call us, we'll call you: "This is an Iraqi affair and the government did not ask the U.S. Department of Defense to be involved in direct operations. We have enough soldiers on the ground."

Venezuela has two immediate bond payments due this and next week amounting to $3.5 billion. Where did the near-insolvent country obtain the funds needed to make these debt payments? The answer: it has been dumping its gold, which its former ruler Chavez worked hard in 2011 to repatriate from London, and which its current president Maduro, just four short years later, is busy sending back to its creditors.

"This is not our war. I cannot condemn in strong enough terms this ill-advised US military escalation in the Middle East. Whoever concluded that it is a good idea to send US troops into an area already being bombed by Russian military forces should really be relieved of duty."

Once the algos had their way with stop-running to yesterday's highs (following a smaller than expected build in stocks for the second week in a row), NatGas has collapsed back to new cycle lows into the close...

The “equal-weight” S&P 500 has dropped to near 3-year lows versus the cap-weighted version. Previous such events under similar conditions occurred at inauspicious times.

With very strong demand for the belly of the curve, today's auction puts to rest any concerns about a buyers' strike.

Those were just excuses, it’s not like any of those factors suddenly changed and were fixed magically on October 1^st.

Here is our question: on May 7, the Price-to-Sales ratio of the stock market was 1.8264x. As of this moment it is higher at 1.8408x. So, dear Janet, can you please confirm what the attached chart shows, namely that "equity market valuations" are now even higher than when you said they were "generally quite high", and if so, should we still be buying stocks and why?

For generations, single family housing development was a driver of US economic growth. Today, there is no single family housing industry to speak of. These 7 charts derived from this week’s release of new house sales data from the Census Bureau illustrates just how bad things are.