December 26th, 2013
For the second time in 6 months, French joblessness has re-surged back towards record highs, dashing the hopes and dreams of a European recovery. The first time it was thousands of texts that didn't get sent that implied joblessness dropped, this time, no excuse and we push back to within 2k of the all-time high unemployment in France. As Germany heads inexorably in the other direction, one can only hope the French President does not decide to take matters into his own hands and 'draft' the youth into employment.
As US and European stocks glide effortlessly higher, even the most ardent of US bulls has begun to realize things are getting out of hand. In order to keep his AUM flowing (and afford the next yacht), the friendly local asset gatherer will offer insights like... "there is value overseas" or "Europe is cheap" in hopes that his audience is none the wise as to the true state of affairs elsewhere in the world, let alone in the US. The truth, the gap between US and European earnings has never been wider and with 3 (or 4) false dawns already, European earnings (supposedly the true mother's milk of the stock market) continue to fall - as the strong 'whatever-it-takes' EUR does nothing but stymie their recovery.
Think sentiment in gold and silver are the same? They violently diverged this year. The difference could have a profound impact on your trades.
The Chinese population may be engulfed in a gold-buying spree to take advantage of low precious metal prices, but when it comes to sheer breadth of materialistic interests, they have nothing on the US consumer. And while previously we highlighted the products that filled online buyers' shopping carts during Walmart's record-breaking cyber Monday sales, they were, in a word, boring. So to get a sense of just how expansive the imagination of the US consumer is when armed with the trusty old credit card, and an internet connection, we go to Amazon which has just laid out it holiday best sellers. So without further ado, this is what Americans just couldn't live without this shopping season.
Whether your tipple of choice is a warm dark ale or a clear cool liquor, the price of alcohol is soaring (but there is still no inflation anywhere remember - especially in Europe) and so is demand. From watered-down beer in the UK to rubbing-alcohol split scotch in New Jersey, stealth inflation is growing. So who is most responsible for this demand-pull (and cost-push) driven inflation in alcohol? Germany and Czech Republic (beer) and Russia (liquor) are topping the charts in per-capita demand and it seems the Italians, not content with spending less on gifts are also not drinking much...
Turkish stocks are tumbling, bond yields are soaring, and the Lira is collapsing to new record lows as the prosecutor in charge of investigating the nation's "Graft" case points out the seemingly obvious (but in public)...
*ISTANBUL PROSECUTOR SAYS GOVT INTERFERING IN GRAFT PROBE: NTV
*COURT ORDERS FOR SEARCH, DETENTION BEING PREVENTED, AKKAS SAYS
*TURKEY PROSECUTOR SAYS OFFICIALS CRIMINALLY DISOBEYING COURTS
Judge Akkas cites clear pressure on the judiciary through the police are affecting his ability to continue the probe into the Turkish government's potential misdeeds and corruption.
Japanese automakers may have regained some of their lost ground in China, though the recovery has come at a cost as they sacrifice profit for volume, but Abe's shrine visit may spark a repeat of last year when consumers boycotted Japanese cars, and thousands of Japanese cars were vandalized and businesses attacked by mobs (after the Senkaku debacle began). “The Japanese government is always making trouble," notes on potential Chinese car buyer, adding, "there are so many other choices, so why them? I know most of them are made in China now, but why help them make money?" In Shanghai, the Japanese consulate urged its nationals to be cautious as there’s a risk of worsening sentiment given the “strong anti-Japanese” tone in Chinese media reports.
According to pundits, 2012 was the worst year for the Eurozone's peripheral economies, only worse than the just as tumultuous 2011, while 2013 was - if only listens to Europe's propaganda masters - a year of recovery thanks to the ECB's "whatever it takes" mentality. Which fails to explain why families in recession-battered Italy spent 11.4% less on gifts this Christmas than last year and one in five households did without presents completely, according to the consumers' group Federconsumatori estimated on Thursday.
Despite the BLS claiming no states estimated their data and the previous week's apparently errant (but significantly not revised lower), the claims data this week saw its biggest week-over-week percentage drop since January 2006 (which ironically almost perfectly bottom-ticked the previous 'recovery' claims improvements). Continuing claims, however, rose for the 3rd week in a row - the largest 3-week rise in since March 2009! Of course, the more critical part of the labor department's report is the end of the Emergency Unemployment Compensation (EUC) program which will pay one more claim this week and then 1,333,332 will begin to lose their benefits. EUC benefits cannot be paid for any week of unemployment after Dec 28th (which, of course, is great news for the unemployment rate).
As the holiday spending season draws to a close, there has been a huge schism between hope and reality once again as captured by these two numbers: 3.9% and -3.5%. The first, aka hope, is how much the national retail federation predicted holiday sales would rise by at the start of the holiday season; the second, aka reality, is how much in-store retail sales declined by in the week before Christmas. So what is a despondent retail industry - which unlike the stock market can't put off delivering results forever - to do? Why bet it all on a huge after-Christmas surge of course.
- Late Surge in Web Buying Blindsides UPS, Retailers, Some Christmas Packages Aren't Delivered (WSJ)
- Yen Slides as Turkish Stocks Drop, U.S. Futures Rise (BBG)
- Turkish lira drops to record low against dollar, as Turkey’s Erdogan replaces 10 ministers (FT)
- Egypt designates Muslim Brotherhood as terrorist group (Reuters)
- Thai elections in doubt after political violence (AFP)
- Batista Cedes Oil Unit Control in $5.8 Billion Debt Deal (BBG)
- China celebrates Mao's birthday, but events scaled back (Reuters)
- First-class stamps to cost 49 cents as of Jan. 26 (AP)
- Obamacare Hits Snag in States as U.S. Site Finds Footing (BBG)
- NSA Struggles to Make Sense of Flood of Surveillance Data (WSJ)
The latest overnight meltup which has pushed the DJIA and S&P to new implied record opens has been driven by, what else, the falling Yen, which after tumbling to fresh new 5 year lows following the release of the BOJ minutes (which said nothing new), has sent both the Nikkei higher by 1%, to post-2008 highs of 16,174, while the S&P, up about 5 points just shy of 1840, and has only three trading days in which it should close the gap to the central banks' price target of 1900 as we first showed in April. In the absence of any actual newsflow (we now live in a world in which both good and bad news are P/E multiple beneficial, just continue keeping an eye on the EURJPY and the USDJPY - these are the only two signals tht matter for the market.
It has been 7 years and 4 months since the last Prime Ministerial visit to Yasukuni Shrine (a symbol of Japan's past militarism - and its convicted war criminals - which appears to be resurrecting); but in what China describes as an act that is "absolutely unacceptable to the Chinese people," current Japanese Prime Minister Shinzo Abe paid tribute to the war dead today. The strong reaction was met with a rapid 'apology' of sorts as Abe stated officially, "I am aware that, because of misunderstandings, some people criticise a visit to Yasukuni shrine as an act of worshipping war criminals... [but] I have no intention at all to hurt the feelings of Chinese or South Korean people."
Once upon a time, money - in the form of precious metals - used to be literally dug out of the earth. Limitations on the amount that could be mined, and on how much growth could be borrowed from the future (all debt is, is future consumption denied), is why eventually the world's central bankers moved from money backed by precious metals, to "money" backed by "faith and credit", in the process diluting both. It was the unprecedented explosion in credit money creation that resulted once money could be "printed" out of thin air that nearly destroyed the western financial system. Which brings us to Bitcoin, where currency "mining" takes place not in the earth's crust, or in the basement of the Federal Reserve, but inside supercomputers.
McDonalds' internal employee resource website McResource Line has been no stranger to surreal, farcical scandals in the past several weeks. First, it was revealed that the site was offering MCD workers tips, telling employees to find second jobs, apply for food stamps and sell their things to weather a financial crisis. The site had also given advice on how to tip au pairs, doormen, personal trainers and pool boys. The irony meter went off the charts following a study released in October by UC Berkeley Labor Center and University of Illinois that said 52% of families of fast food workers receive assistance from a public program like Medicaid, food stamps, the Earned Income Tax Credit or Temporary Assistance for Needy Families. Still, none of this even remotely compares to the latest debacle at the world's largest fast food maker, when on one of the resource website pages, McDonalds basically strongly urged its employees to eat... elsewhere. Fast forward to today when in the aftermath of these humiliating revelations we find that the McResource site has been taken down and that MCD workers are no longer strongly advised to eat elsewhere.