Archive - Feb 5, 2015

As credit markets have been indicating for 15 months, 94-year-old consumer-electronics chain RadioShack has finally pulled the ripcord...

*RADIOSHACK FILES FOR BANKRUPTCY PROTECTION AS LOSSES MOUNT
*RADIOSHACK WILTS UNDER BIG-BOX, ONLINE COMPETITION

RadioShack lists $1.2bn in assets and $1.38bn in debt. Additionally, Bloomberg reports that a post-bankruptcy deal is being worked on with Sprint.

The US chief analyst of Nordea, Johnny Bo Jakobsen, points out a curious statistical finding: in the past decade, consensus forecast over-estimated January reading on 9 out of 10 occasions. As the chart below shows, the average overoptimistic consensus miss for January is just about 50K, with the last time consensus was lower than the final result taking place in 2012, and before that, one has to go all the way back to 2003 for the second payrolls "beat".

In case algos still haven't gotten the message to jump all aboard into the S&P, here comes the CME with a gntle nudge in the form of 90 pages of margin hikes including Brent, RBOB and, just in case there is still anyone who wishes to trade paper precious metals against the BIS, silver. In fact, at first glance it appears the only future  whose margin was not hiked was stocks: apparently stocks are never volatile enough for a margin hike.

ECB putting interests of banks over those of people … again.

People versus the banks ... time to take a stand ...

The Hong Kong government is so foolish that one official said: "There is a need to stimulate the city’s domestic consumption by introducing measures to leave more cash in the hands of the public." What are you talking about, man? Everyone knows that you stimulate the economy by increasing government spending, not reducing it and just leaving the people to decide what they’re going to spend it on. It’s insane.

On the surface, Twitter's Q4 numbers were good, with the company clocking in $479MM in revenue and $0.12 in EPS on consensus estimates of $454MM and $0.06. Of course, on a GAAP basis things were much uglier, with the company reported a loss per share of $0.20 cents in Q4, and a net loss of $577.8 million for 2014. However, as everyone knows, TWTR's value is not about its numbers, or rather adjusted numbers, but its user growth: after all the company has about a billion monthly active users it needs to catch up in order to compete with Facebook in total user engagement. And it was here that the company stumbled.

Six years on from the financial crisis and central banks are still hacking away at interest rates. Australia and Romania's did this week and while Poland and India held off, both are expected to prune rates later in 2015.

This was the “Rubicon” moment: the instant at which Central Banks gave up pretending that their actions or policies were aimed at anything resembling public good or stability. 

When the illusion that the Status Quo can fulfill all its promises to everybody dies, the Status Quo starts the terminal slide to effective collapse.

While today surprised some with its lack of images of Greeks standing in line furiously pulling cash from bank ATMs, as Bloomberg reports, Greeks are anxiously stashing cash in the most unusual places...

The earnings season is all over except for the shouting, but the outcome doesn’t remotely validate Wall Street’s happy times narrative. Reported Q4 earnings for the S&P 500 companies (with about two-thirds reporting) stand at $25.02 per share compared to $26.48 in the year ago quarter. That’s right. So far Q4 profits are down 5% but shrinking corporate profits is something that you most definitely have not heard about on bubble vision. But that’s just the tip of the iceberg. We have had a tremendous inflation of PE multiples during the last three years in anticipation, apparently, of the US economy hitting escape velocity and the overall global economy continuing to power onwards and upwards. As is evident from the financial news and “incoming” data, however, that presumption is not remotely correct.

The chart below, which presents not only the total amount of sovereign gold holdings, but indicates the percentage of the monetary base backed by gold reserves, shows something rather stunning.

For the 2nd time this week, the most-crowded trade in the world is getting exorcised. Just as we saw on Tuesday, The US Dollar is getting monkey-hammered lower driven by heavy buying of EUR (and a stop-run at 1.1500). CAD is also well bid (back under 1.24 against the USD). JPY is the only major that is ignoring this USD dump and is lower on the day... supporting the fundamentals of equity confidence.