Archive - Nov 1, 2013 - Story

Reports hitting the tape of a shooting at LAX terminal 3, and that an evacuation is underway. According to local TV at least one TSA agent was inured and covered in blood, and the shooter may still be at large.

When even Bank of America has a note titled "It's getting frothy, man", and joins such other bubble-warners as JPM, Bill Gross, Larry Fink, and David Einhorn, one can be absolutely positive that the Fed will do... absolutely nothing.

There was a time when the only complaint the SEC's 4000 employees had was that some porn sites charge just too much - after all, the SEC's "enforcement" budget is limited, while the worldwide supply of pornography is virtually endless. It's time to add one more grievance to the list of all those overworked regulators who have yet to put someone, anyone, from the big banks in jail as a consequence for nearly destroying the western way of life, or do more than merely wrist slap Steve Cohen with a penalty that costs more than three or four Picasso paintings: lunch breaks.

One thing that was not mentioned in the otherwise blemish-free GM sales report, is that the biggest reason for the surge in GM "deliveries" was because the car company once again resorted to that old faithful gimmick: dealer channel stuffing. At 728K units in dealer inventory at month end, or 87 days supply, this was the highest number since March 2013, but more troublingly, the monthly rate of increase was the highest since GM's emergency as a "new" company from bankruptcy.

So much for the government shutdown - as one of the just released manufacturing ISM respondents so candidly put it, "The government shutdown has not had any impact on our business that I can determine, nor has it impacted any supplier shipments." And speaking of the ISM itself, it naturally rejected everything that the Markit PMI noted, and printed at 56.4, beating expectations of a 55.0 print, the 5th beat in a row, and the highest print since April 2011. Sadly, it was not 66.4 or 76.4 to at least partially "confirm" the Chicago ISM surge. So while virtually all ISM components rose, with exports spiking by 5 points to 57.0, it was the employment index that dipped yet again, from 55.4 to 53.2, the lowest since June, but in the New Normal who needs jobs when one has Schrodinger diffusion indices to confuse everyone on a daily basis. Either way, while stocks did not like yesterday's exploding Chicago PMI and dipped on fears of a December taper, today's 2 years ISM high is one of those good news is good news instances, and ES soars as usual.

Today's "good Fed cop" award goes to St. Louis Fed president James Bullard who has some words of caution which neither he, nor anyone else at the FOMC, will pay attention to:

• BULLARD SAYS RISK OF ASSET PRICE BUBBLES ‘HUGE ISSUE’ FOR FOMC
• BULLARD: LOW RATES, NOT JUST QE, WOULD ACCOUNT FOR ANY BUBBLE
• BULLARD SAYS LABOR FORCE PARTICIPATION DECLINE BEGAN IN 2000
• BULLARD SAYS LAND PRICES MAY BECOME ASSET PRICE BUBBLE
• BULLARD SAYS ‘I’M THE BIGGEST INFLATION HAWK’, or better known as dove in hawk's clothing

And the punchline:

• BULLARD: `THERE MAY BE SOME OTHER' ASSET BUBBLE `GOING ON'

Yes: the bubble of Fed "assets"

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If anyone needed confirmation that yesterday's soaring Chicago PMI data (to the highest since March 2011) was a typical "Made In Chicago" fabrication, then look no further than today's final MarkIt US Manufacturing PMI, which instead of soaring as its Chicago counterpart, tumbled from 52.8 to 51.8, the lowest print since October of 2012 as the report indicated "only modest improvement in business conditions", "output growth weakest for over four years", and "new orders increasing at the slowest pace since April." Then again, in the New Normal world in which data reports separated by 24 hours are expected to indicate diametrically opposite things, this is quite normal, and if nothing else, absolutely bullish. Why? Who knows, but cratering Manufacturing Output is surely beneficial to the stock market, if not the actual economy.

"The motivation behind America's extensive eavesdropping is unclear. The explanations the White House has been forced to offer are far from explanatory, and the diorthosis President Barack Obama has promised seems all but skin-deep.  The apparent application of a double standard only reinforces the image of a Janus-faced America. In the sunlight, it preaches; in the dark, it pries. On the offensive, it orates; on the defensive, it equivocates. The wayward practice has now backfired, and the damage is increasing...  Trust is the first and foremost casualty. Common sense dictates that trust is a two-way street: One has to trust in order to be trusted. It is particularly true in friendships and alliances. America obviously failed to follow the simple rule.  If Washington did not knit the worldwide wiretapping web just because it could, then its pillage for information unveils an Uncle Sam too deeply entrenched in suspicion and isolation to treat anyone as a real friend. Ironically enough, the bugging undermines the very thing it is supposed to protect -- national security. As America pins its security on alliances, the tapping tale would sour its relationship with allies -- and thus erode its security bedrock -- more than any terrorist would be capable of."

Back in January,  we highlighted the main problem plaguing the Greek financial system, and why a bailout (at least third, but likely fourth and fifth, and so on) is inevitable because "the amount of non-performing loans has exploded by a laughable amount, rising some 50% from December 2011, when it was "only" 16% and stood at a gargantuan 24% last month (indicatively, in the US this would mean that some $1.7 trillion in loans was nonperforming). And therein lies the rub, because as Kathimerini prudently notes, the "bad loans come to a considerable 55 billion euros. This means that the sum of NPLs already exceeds the total funds set aside for the recapitalization of the local credit system, which amounts to €50 billion." Yesterday, Kathimerini provided a much needed update on the amount of NPLs in Greece: according to the latest PwC report, NPLs have risen by another €10 billion in under one year, and now amount to €65 billion, which is now larger than the recapitalization funding and amounts to more than double the €30 billion capital base of local banks!

It is now clear why according to the Obama administration there were no glitches plaguing the Healthcare.gov website administering Obamacare: because a whopping six people managed to sign up on the first day it was launched - the same day the government proudly reported previously it had received 4.7 million unique visitors - a conversion factor of, well, Div/0. By the end of the second day: 248 happy participants in a socialized healthcare ponzi scheme. It is also clear why there was nobody happier than the president when the republican party decided to shut down government on the same day as Obamacare was rolled out: because if public attention had focused on the absolute and now confirmed, disaster that the healthcare law's rollout had been, then everyone, not just the Tea Party, would be demanding a substantial delay in Obamacare.

• US admits surveillance on foreign governments ‘reached too far’ (FT)
• He must be so proud: Obama halted NSA spying on IMF and World Bank headquarters (RTRS)
• Obamacare website gets new tech experts; oversight pressure grows (Reuters)
• R.B.S. to Split Off $61 Billion in Loans Into Internal ‘Bad Bank’ (NYT)
• Draghi’s Deflation Risk Complicates Recovery (BBG)
• Abenomics: Nissan slashes full-year profit forecast 15% (FT)
• Credit Suisse Dismisses London Trader Over 'Unusual Trading' Losses (WSJ)
• RBS avoids break-up with 38 billion pounds 'internal bad bank' (Reuters)
• Twitter Said to Attract More Than Enough Interest for IPO (BBG)

Curious which were the best and worst performing asset classes for the month of October? Deutsche Bank explains.