Archive - Dec 1, 2015

It is vital to give proper consideration to the improper liberties that are being taken by those with “unwarranted influence” and “misplaced power”.   Value extraction has replaced value creation in pursuit of short?term, self?serving benefits at the expense of long?term stability and durability of corporate America and therefore the country as a whole.  As citizens, our obligation is to be well?informed, cognizant, outspoken and to vote. The words of men may temporarily suspend but they do not alter the laws of financial dynamics. The fundamentals always take precedence eventually.

While we can account for the jump of $339 billion in November total debt, which is the result of the "debt ceiling" accrued debt recognition, what is unclear is how in the remaining 4 weeks of November, the US managed to add another $335 billion in total debt, bringing the total increase for the month of November to a whopping $674 billion, and total US debt to a record $18.827 trillion.

Well this is a little awkward. After a day of exuberant unsubstantiated auto sales proclamations that a) it's not all subprime, b) 8-year credit terms do not pull forward demand, and c) it's totally sustainable; anyone could have been forgiven for being excited about the total vehicle sales of 18.12mm (according to Wards' data), just above expectations of 18.10mm and flat from October. However, Wards reported just 14.03mm domestic vehicles sold (missing expectations by the most since June) and dropping for the 2nd month in a row. Those darned facts do get in the way eh?

"In the three decades between the surveys, pollsters found the share of young Americans overall who said the American Dream 'is not really alive' grew sharply from 12 to 29 percent. Among white people, it nearly tripled from 10 percent to 29 percent."

"At first read, the report recalls an obituary. There is no room for any growth in the coming quarters. The situation is really, really bad."

After nine weeks of inventory builds in a row, expectations were for a modest 900k barrel draw in total inventory this week. Expectations were crushed as API reported a much-larger 1.6 million barrel build - the 10th week in a row. After three weeks of very significant builds, Cushing - having seen its storage capacity increased to 73mm (from 71.4mm) barrels - saw a smaller-than-expectd 433k build (+1mm build exp.). WTI prices had drifted higher into the API report (after an extremely volatile day) but slipped lower after the print, as anxiety builds ahead of OPEC.

The problem of suggesting that we have once again evolved into a "Goldilocks economy" is that such an environment of slower growth is not conducive to supporting corporate profit growth at a level to justify high valuations. Such a backdrop becomes particularly problematic when the Federal Reserve begins to raise interest rates which removes one of the fundamental underpinnings of an overvalued market which was low interest rates. Ultimately, higher interest rates, particulalry in an economy with a deteriorating economic backdrop, becomes the pin that "pops the bubble."  It is true that the bears didn't eat Goldilocks at the end of the story...but then again, there never was a sequel either.

"We will give 99% of our Facebook shares — currently about $45 billion — during our lives to advance this mission. We know this is a small contribution compared to all the resources and talents of those already working on these issues. But we want to do what we can, working alongside many others."

The atmosphere is getting thin up here, and every ounce counts triple when you're climbing in rarefied air. While near-term market dynamics are more likely to be impacted by Friday’s employment report than any other factor, our broad view remains that stocks are in the late-stage top formation of the second most extreme episode of equity market overvaluation in U.S. history, second only to the 2000 peak, and already beyond the 1929, 1937, 1972, and 2007 episodes, not to mention lesser extremes across history.

"Let us be clear: We have no cash left. This is a distress call from a ship of 3.5 million American citizens that have been lost at sea."

With 15 days left until the day that will live in monetary policy infamy, it appears investors are beginning to lose faith...

Meet Acorn International - an integrated multi-platform marketing company - which closed down 23% yesterday (after falliong 45% intraday) on 23x the average volume. Following a conference call this morning, in which the CEO cited some 'volatility' in the ADSs and discussed strong Singles Day sales, the stock is now up over 700%.

By the look on President Obama's face, Erdogan must have just announced the addition of dozens of coal-fired power plants...