Archive - Jul 21, 2015

"The size of the required ‘upfront’ (i.e. to be introduced in 2016) principal haircut to be €110bn (60% of annual Greek nominal GDP in 2014). Note that we do not see much difference in an alternative scenario based on a ‘tranched’ principal haircut framework (of around €15bn per year), also starting in 2016. However, a ‘backloaded’ (i.e. to be introduced in 2022) approach relying on a single haircut would be more expensive, amounting to €130bn (72% of annual Greek nominal GDP in 2014)."

This charmed circle includes Google, Amazon, Baidu, Facebook, Saleforce.com, Netflix, Pandora, Tesla, LinkedIn, ServiceNow, Splunk, Workday, Ylep, Priceline, QLIK Technologies and Yandex. Taken altogether, their market cap clocked in at $1.3 trillion on Friday. That compares to just $21 billion of LTM net income for the entire index combined. The talking heads, of course, would urge not to be troubled. After all, what’s a 61X trailing PE among today’s leading tech growth companies?

"Lenders in general are increasing pressure on oil companies either to raise more equity or do some sort of transaction to pay down their credit lines and free up extra cash."

"There’s another redetermination cycle in the fall, And I’m not going to say likely but it’s possible we’ll be selectively downgrading some clients."

Since yesterday there has been another of wave of negative, misleading and almost triumphalist commentary on gold most of which studiously ignores the clear evidence of manipulation of the price on Sunday night.

Moments ago we got the latest BofA client flow update in which we were expecting to find that the "smart money", flush with cash, and taking advantage of the Greek "deal" would jump in on last week's biggest weekly market surge since October 2014 when Bullard hinted at QE4 and unleashed a buying surge. To our surprise we find that not only did "smart" money continue selling, but they were joined by the "smartest" money of all, hedge funds.  And who did they sell to? Why retail investors of course... and corporate buybacks but that should go without saying.

USDJPY rolls over after the Fed revised IP lower and BoJ comments on inflation outlook, Johnny 5 decided "time's up," and stocks tumble...

"We need to hang him on the courthouse square as soon as we get a hold of him."

– Former vice chairman of the Senate Select Committee on Intelligence, Saxby Chambliss, on Edward Snowden

Stocks, bond yields, and the Dollar suddenly started dropping right as The Fed unveiled its revisions for industrial production and capacity utlization. Already at weak levels, both were revised notably lower, slowing the market's rate-hike expectations and stalling any hope that the recovery is gathering pace. Judging by the chart below, the June payrolls report was right: snowfall in the summar was indeed much worse than most remember.

Earlier today one of Icahn's favorite energy names (you won't find him tweeting about this one much thought) Chesapeake Energy, the second-largest US natural gas producer, announced it too is now scrambling to conserve cash (in this case $240 million per year) by suspending its dividend payment.

With the mainstream media onslaught against precious metals climaxing this weekend as WSJ's Jason Zweig proclaimed gold "like a pet rock," describing owning gold as "an act of faith," we thought it worthwhile looking back at the last time 'everyone' was slamming gold and entirely enthused by the omnipotence of central bankers... May 4th, 1999 - "Who Needs Gold When We Have Greenspan?"

If pouring billions of dollars into outrageous "look at me" buildings isn't tempting the gods, what is it?

Unfortunately for millions of people living in east Ukraine nothing has been resolved and every new day continues to be one filled with dread and fear just where may death come from next. Nowhere is this seen better than in the following dramatic video clip released moments ago which captured a Ukraine artillery shell flying mid-air through a Donetsk residential region, just an instant before it strikes its target. The dramatic moment can be seen 1 minute 37 seconds into the clip below.

... of the 6,657 days since 1965 when the S&P 500 closed up, Friday had the 6,627th worst breadth... the last 12 times this situation occurred, the S&P 500 was lower 3 weeks later each time by an average of 4%. Also of note, for what it is worth, this is the closest to a 52-week high the S&P 500 has ever been on any of the occurrences.

While Abenomics has been an unmitigated disaster for Japan's ordinary population, where the soaring stock market has benefited the top decile of the population while everyone has been slammed by a record 25 consecutive months of declining real wages and soaring input costs, there had been one bright spot: corporate earnings. Then on Friday, a report out of Reuters caught our attention when news hit that 140 year old electronics conglomerate, and "pillar of Japan Inc", Toshiba had inflated profits by a stunning $1.2 billion for a whopping 7 years, with fabricated figures amounting to 30% of the company's "profits" since 2008!