Archive - Nov 2013 - Story

With Janet stealing the limelight, we really don't expect any market-moving fireworks from the lame-duck Bernanke's town hall presentation to US educators this evening. Discussing the Fed's 100-year history and his efforts to bring greater transparency to the central bank's actions, Bernanke will also take questions (which may well be much more interesting than the speech itself). But, to ensure some 'fair-and-balanced' coverage, we offer an alternate history of the Fed's 100-year war against gold (and economic common sense).

You know it's bad when...

With gold down 10 of the last 11 days (until today), Peter Schiff tells CNBC that this temporary downswing is due to "the fantasy of a US recovery," that so many actually believe and thus, due to this 'recovery' the Fed will taper back its quantitative easing. "It's not gonna happen," Schiff explains, "we have a phony recovery," and the Fed will more likely increase the amount of QE in order to sustain it, "which is very bullish for gold." Crucially, Schiff clarifies that he "doesn't think a taper is inevitable," as many believe, "but an end to QE won't happen by the Fed's choice - the market will force them to tread on the brakes as the USD collapses." As we noted earlier, Schiff also believes there is an attempt to do "whatever it takes" to pull the EUR down to maintain the USD - but as today's price action shows, it's not working... "Long-term, the fundamentals have never been better for gold."

On the surface, CSCO's numbers were not terrible: the company only missed its revenue expectation which is fine: after all nobody cares about revenues anymore and the only thing that matters are adjusted, recasted, pro-forma, non-GAAP, made up EPS numbers excluding virtually all COGS, R&D and SG&A items. Just for kicks, CSCO also threw in that last refuge of a company with no growth prospects: yet another massive $15 billion stock buyback. However, in light of the ongoing idiotic hopium that a recovery is just around the corner, as has been the case for the past 5 years always to no avail, what is cratering the company in after hours trading, was its forecast for the next quarter. It was a doozy:

• Q2 EPS was expected to be $0.52. Instead the company lowered the outlook to a range of $0.45-$0.47.
  

But the punchline... wait for it:

• Q2 revenues was expected up 4%. Instead it will be... drumroll... -8 to -10%!

Yup: the company expected an up to a 10% drop in revenues. Welcome to Mr. Yellen's recovery.

Update: In a shocking turn of events, the FT reports that JPM just canceled the #AskJPM event. The bank said: "#That idea back to the drawing board."

Today, in what is a clear attempt at faux transparency and social media openness, JPM tweeted the following:

Tomorrow at 1pm ET $JPM Vice Chairman Jimmy Lee takes over @JPMorgan to answer your questions for 1 hour. Tweet your Q early using #AskJPM

— J.P. Morgan (@jpmorgan) November 13, 2013

Unfortunately for the criminal organization (because after all JPM did admit to violating securities laws), the outcome was not quite as planned...

After spending a day ignoring the reality of moar money printing, it seems 'natural' non-algo forces released Gold and it is spiking after hours. The USD is fading further, stocks soaring moarer, and treasury yields tanking...

Just as the market was expecting, and may have been leaked once again, Janet didn't let anyone down. Today's exuberance in stocks matched only by confirmation that Janet Yellen has gained her helicopter pilot's license and is ready to take over the reigns of printer-in-chief from Bernanke. Key extracts:  "Unemployment is down from a peak of 10 percent, but at 7.3 percent in October, it is still too high, reflecting a labor market and economy performing far short of their potential...  I believe the Federal Reserve has made significant progress toward its goals but has more work to do." In short: Get to work Mr. Chairwoman, and allow Congress to keep doing more of what they have been doing under the Fed's central planning: nothing.

Treasuries rallied 4-6bps on the day (with the POMO-driven belly outperforming). The USD dumped back its knee-jerk gains on Europeans trying desparately to talk down the EUR early on. High yield credit banged higher into the close. VIX was man-handled back under 12.5% (despite being bid early). Oh - and every US equity market malted up in an insane intrday swing which seems to be pinned on the back of expctations Yellen will open her shirt tomorrow showing a big red "S" on it. So while every flow-driven market banged higher in a mad scramble of un-tapery goodnesss, gold went sideways and silver was monkey-hammered (-4.5% on the week). The last 3 days have seen "most shorted" names double the market's performance. Nasdaq's swing from low to high is the largest positive intraday move for the index in 5 months!

At first it was the cars, now it is Tesla's Fremont, California plant that has caught fire... according to local newsfire trucks and an ambulance are on scene.

• *TESLA SAYS FAILURE IN A LOW PRESSURE ALUMINUM CASTING PRESS
  
• *TESLA SAYS THREE EMPLOYEES INJURED BY HOT METAL

Despite rewriting history as usual, proclaiming that the administration 'knew' early numbers would be low (not true since they estimated 500,000 and are rumored to only have ~50,000), and changing the definition of what an enrollee is, and managing our expectations via Carney's press conference, we are intrigued to see what the "huge demand" Kathleen Sebelius expected for Obamacare has actually resulted in... Perhaps she needs to call the helpline! Remember, as Peter Schiff noted, the website can be fixed, but Obamacare can't (unless, of course, more keg-standers and sluts sign up).

*OBAMACARE ENROLLS 106,185 IN PRIVATE HEALTH PLANS IN OCTOBER (26,794 on Federal Exchange,79,391 on State Exchanges)

Lately not a day seems to pass without some tragic mass shooting. The latest comes from Pittsburgh, where Channel 11 News reports that three people were shot Wednesday afternoon outside Brashear High School.

The following statement and chart from the RBS' Drew Brick pretty much explains it all: "QE has seen the Fed extend its dominion on the US curve away from the short-end and into longer duration paper is patent, too. On a rolling six-month average, in fact, the Fed is now responsible for monetizing a record 70% of all net supply measured in 10y equivalents. This represents a reliance on the Fed that is greater than ever before in history!"

Press Secretary Jay Carney is desperate to manage expectations ahead of Secretary Sebelius' announcement of the Obamacare enrollment data in an hour:

• CARNEY SAYS ENROLLMENT FIGURES WILL BE LOWER THAN ANTICIPATED

To watch him squirm under a press corps unwilling to take their foot off his throat (for now)... Maybe we can read into this...

• REID SAYS HAVING FULL CAUCUS TOMORROW ON HEALTH CARE
• REID SAYS WHITE HOUSE INVITED TO HEALTH-CARE CAUCUS

...just how bad it is!

Attracting some attention in Russian media today is proposed legislation by State Duma lawmaker Mikhail Degtyaryov of Vladimir Zhirinovsky's controversial Liberal Democratic Party and former candidate for mayor of Moscow (where he got 2.86% of the vote), who seeks to ban dollar deposits and transactions at Russian banks warning that the U.S. dollar is on the brink of collapse. As Moscow Times reports, "Mikhail Degtyaryov said the dollar will collapse in 2017 if U.S. national debt continues to grow at the current rate, and he cautioned that countries with a high dependence on the currency would suffer an economic disaster... In light of this, the fact that confidence in the dollar is growing among Russian citizens is extremely dangerous," he said in an explanatory note attached to the bill, according to Interfax. But before anyone scrambles to convert all their dollars into crisp rubles, keep in mind this is the same candidate who previously proposed banning gay and bisexual men from donating blood, paid days off for menstruating women, and has said he believes Russia will lead the world in vanquishing the Antichrist.

On the back of yet another VIX smashing and "most shorted" squeeze, amid the glory of a news-less, macro-data-less day, the S&P 500 has managed to get back above its record intraday highs at 1775.22 ignited by some minor EURJPY momentum sparks.