Archive - Nov 25, 2013 - Story

Moments ago, as we reported, the CEO of Walmart, Mike Duke, retired. And while he will hardly pocket quite as much as Hank Paulson, his departure may raise even more eyebrows as his retirement package, to which he is now entitled, is a whopping $113 million, or about 6,182 times greater than the average 401(k) balance of a typical Wal-Mart worker according to a NerdWallet analysis. Naturally, this is orders of magnitude greater than the already debatable ratio of CEO compensation, which was $20.7 million in 2012, or about 305 times more than the average Walmart manager, and 836 more than the take home of the median Walmart worker.

Most people – certainly most governments and economists – define inflation as a general rise in prices. But this is wrong. Inflation is an increase in the money supply, of which a rising general price level is just one possible result – and not the most common one. More often, excessive money creation shows up as asset bubbles, where the new money, instead of flowing equally to all the products that are for sale at a given time, flow disproportionately into the ‘hottest’ asset classes. In each case, mainstream economists and government officials pointed to modest consumer price inflation as a sign that things were fine. And in each case they were simply looking in the wrong place and completely missing the destabilizing effects of an inflating money supply. Now we’re at it again, with economists, legislators and central bankers using low consumer price inflation as a rationale for even easier money, while ignoring epic bubbles in sovereign bonds, equities, high-end real estate and collectibles around the world. A chart tracking the tangible asset classes of the super-rich would show all lines going parabolic - except one, gold - for now.

Yet another case of rodents departing a sinking ship as the pent up discrepancy between reality and future expectations means imminent scapegoating of executives for poor performance:

• WAL-MART STORES NAMES DOUG MCMILLON CEO, SUCCEEDING MIKE DUKE
  
• BLACKBERRY SAYS ROGER MARTIN RESIGNS FROM BOARD
• BLACKBERRY SAYS COO, MARKETING CHIEF TO LEAVE; REPLACES CFO

You decide... The press releases are mind-blowingly full of fluff.

Shortly after 1amET this morning, someone with no apparent fiduciary duty to their client's for best execution or any apparent trade allocation expertise decided it was time to dump 1500 contracts into an entirely illiquid gold futures market. The 150,000 ounce notional sell order ($184.5 million), captured graphically by Nanex, sent the price down $10 instaneously, tripped the exchange's circuit breakers and halted the market's trading for 20 seconds (once again). This is now the 4th market halt in the past 3 months (and this time on no news whatsoever), as the manipulative monkey-hammerings from who knows whom (BIS?) is becoming increasingly obvious.

Blockback against US companies took a turn for the worse moments ago, when Qualcomm said China's price regulator, National Development and Reform Commission (NDRC), has started an investigation of the mobile chipmaker under the Chinese Anti-Monopoly Law. According to Reuters, NDRC has advised that the substance of the investigation was confidential, the company said in a statement. Qualcomm said it was not aware of any violation. Well, maybe not any violation of its own, but it certainly is aware of the NSA exposed violations, which are now impacting US corporations across the globe.

Looking ahead at the week ahead, data watchers will be kept fairly occupied before Thanksgiving. Starting with today, we will see US pending home sales with the Treasury also conducting the first of 3 bond auctions this week starting with a $32 billion 2yr note sale later. We will get more housing data tomorrow with the release of housing starts, home prices as well as US consumer confidence. Durable goods, Chicago PMI, initial jobless claims and the final UofM Consumer Sentiment print for November are Wednesday’s highlights although we will also get the UK GDP report for Q3. US Equity and fixed income markets are closed on Thursday but US aside we will get the BoE financial stability report, German inflation, Spanish GDP and Chinese industrial profit stats. Expect market activity to remain subdued into Friday as it will be a half-day for US stocks and bond markets. As ever Black Friday sales will be carefully monitored for consumer spending trends. So a reasonably busy, holiday-shortened week for markets ahead of what will be another crucial payrolls number the following week.

• Washington turns bond market upside (FT)
• China Air-Zone Move Expands Field of Islands Spat With Japan (BBG); Japan rejects China claim on airspace over disputed islands (FT)
• 'Great Satan' meets 'Axis of Evil' and strikes a deal (Reuters)
• Iran Pact Faces Stiff Opposition (WSJ)
• Allies Fear a US Pullback in Mideast (WSJ)
• India to resume paying Iran in Euros (Economic Times)
• At 'Business Insider,' it's time to sell (USA Today)
• More ECB currency war jawboning: ECB’s Hansson Says Rate Cut Options Not Fully Exhausted (BBG)
• Spy World Links Plus Obama Ties Stoke Concern About NSA Review (BBG)
• A disunited Europe will struggle even to disintegrate (FT)

BREAKING: Thai protesters burst into Foreign Ministry compound after taking over Finance Ministry.

— The Associated Press (@AP) November 25, 2013

The only thing that prevents us from going all in short the S&P following the revelation that Goldman's first revealed top trade of 2014 is to go long the S&P Dec 2014 futures with a target of 2250 and a close below 1855, is that the reco is not from Tom Stolper but his colleague Noah Weisberger whose muppet wipe out record is not quite as prominent. Still, for Goldman clients to buy S&P futs, Goldman has to sell it to them, and as always - do what Goldman does, not what it says.

Another day, another carry currency-driven futures melt-up to daily record highs (the all important EURJPY soared overnight on the return of the now standard overnight Japanese jawboning of the JPY which sent the EURJPY just shy of a new 4 year high of 138 overnight), and another attempt by the ECB to have its record high market cake, and eat a lower Euro too (recall DB's said the "pain threshold" for the EUR/USD exchange rate - the level at which further appreciation impairs competitiveness and economic recovery - is $1.79 for Germany, $1.24 for France, and $1.17 for Italy) this time with ECB's Hansson repeating the generic talking point that the ECB is technically ready for negative deposit rates. However, with the halflife on such "threats" now measured in the minutes, and soon seconds, the European central bank will have to come up with something more original and creative soon, especially since the EURJPY can't really rise much more without really crushing European trade further.