Archive - Nov 2, 2015

Two months ago, Tim Cook reportedly wrote Jim Cramer that everything was awesome with iPhone sales in China. Days later, channel checks appeared to call Cook's statement into question. Several day ago, one of Apple's component makers - Dialog Semi - issued cautious guidance strongly suggesting iPhone sales momentum was weakening. Apple's earnings produced disappointment as China sales rather notably fell (but was quickly dismissed by analysts as US sales rose) and now, perhaps most worrying of all, Taiwan’s Pegatron Corp - maker of Apple's next-gen iPhone 6S and iPad - has halted hiring in its Shanghai factory as workers note "sales of iPhone 6S have been disappointing."

It's a busy night in AsiaPac. The ubiquitous Japanese stock buying-panic at the open quickly faded. China weakened the Yuan fix quite notably and injected another CNY10bn of liquidity but news of the arrest of the President of China's 3rd largest bank and a graft investigation into Dongfeng Motor's general manager sparked greater uncertainty and Chinese stocks extended the losses from yesterday. Commodities had started to creep lower, with Dalian Iron Ore pushing 2-month lows with its biggest daily drop in 3 months, were extended when the Aussie central bank kept rates steady (as expected) but sparked turmoil in FX markets with forward guidance of th epotential for more easing.

First the good news for Bill Ackman: as of October 31, it appears that Pershing Square has not had a spike in redemption requests (or if it has, it hasn't granted them yet). We know this because as of October 31, Pershing Square's AUM was $15.1 billion. The bad news is that at $15.1 billion, this is the lowest AUM for Bill Ackman in over a year and his current net performance for October and YTD is a deplorable -7.3%, and -19.0% respectively.

While understandably all eyes have been fixed on every monthly capital outflow update from China (even the ones that the Politburo is clearly massaging), few have noticed that one of the biggest total outflows currently in the global developed economy is taking place right in America's own back yard.

Our ancestors were wiser and far more educated than modern Americans about the dangers posed by a centralized, monopolistic system charged with the creation and distribution of money, and our society and economy have paid a very heavy price for its ignorance. Indeed, some of today’s Fed critics aren’t even aware that the U.S. Central Bank originally had far less power than it does today. As concerned as they were, its early critics could never have imagined how perverted its mandate would become in the subsequent 100 years. A mandate that has now made it the single most powerful and destructive force on planet earth.

“Some Chinese traders are expressing a view on the CNY exchange rate after the last devaluation and you have interest by mainland speculators to move to other assets after the stock market fallout.”

We found something unexpected when skimming through the website of China's finance ministry.

The recent Catalonia vote in favor of secession from Spain is great news for libertarians the world over, as, to our minds, this is a clear step forward for those who seek greater freedom from governments worldwide; and, of course, any blow against the present trend toward empires is a step in the right direction. However, this is not the whole picture and, if we’re going to look at the greater truth instead of the truth that we’d like to see, things get a bit more complicated.

"While traditional bank loans are not Chu’s prime focus -- she looks at the wider picture, including shadow banking -- she says her work suggests that nonperforming loans may be at 20 percent to 21 percent, or even higher."

Did you know that the United Nations intends to have biometric identification cards in the hands of every single man, woman and child on the entire planet by the year 2030?  And did you know that a central database in Geneva, Switzerland will be collecting data from many of these cards?

Having watched the credit markets grow more and more weary of the major US financials, it should not be total surprise that ratings agency S&P just put all the majors on watch for a rating downgrade:JPMORGAN, BANK OF AMERICA, WELLS FARGO, CITIGROUP, GOLDMAN SACHS, STATE STREET CORP, MORGAN STANLEY MAY BE CUT BY S&P. Despite all the talking heads proclamations on higher rates and net interest margins and 'strongest balance sheets' ever, S&P obviously sees something more worrisome looming. S&P blames The Fed's new resolution regime for its shift, implying "extraordinary support" no longer factored in. This comes just hours after Moody's put Bank of Nova Scotia on review also (blaming the move on concerns over increased risk appetite).

If you thought the increases in insurance premiums incurred to date, you ain't seen nothing yet. According to a new study by McKinsey looking at the perverse consequences of Obamacare, "insurers struggled to predict their costs, and many didn’t set rates high enough to cover the care of those they enrolled." And now, they are going to do just that...

It is becoming increasingly clear that, come hell, high water, or dismal data, The Federal Reserve will raise rates in December whether the market likes it (which it will guarantee) or the economy doesn't (which doesn't matter after all). Fischer brushed off weak inflation (at Jackson Hole), Yellen dismissed global turmoil cocnerns (in the last FOMC statement), and now, with the final nail in the coffin of data-dependent lies, The San Fran Fed just dismissed 'wage growth' as entirely irrelevent for forecasting future growth or inflation; thus enabling The Fed to justify a December rate-hike no matter how bad the data they are so dependent on turns out to be.

In an ironic twist, just hours after we discussed the record capital outflow from Canada, resulting from the plunge in oil prices and the mothballing of Canada's energy industry, Obama's long-desired goal of killing the Keystone XL pipline has finally come true.

There are very real threats to the business models of oil companies, threats that need to be explained to investors, according to a new report by Carbon Tracker. Right now, those threats are not being taken seriously.