Archive - Nov 2013 - Story

One momo company that will almost certainly miss out on all of today's Twitter/ECB induced BTFATH-euphoria, is Tesla which is down 3% premarket at last check for one simple reason: the one shown on the photo below. This is the third reported car fire in the past month. So much for that "best safety rating of any car ever tested" - perhaps it really is time to inquire just what the NHTSA kickbacks were in order to go with that "objective" determination?

Perhaps it is not surprising that with the absolute majority of economists and strategists, or 67 of 70, predicting no rate cut by the ECB, this is exactly what the ECB just did, when in a stunning move it cute rates for both the main refi rate and the marginal lending facility by 25 bps, to 0.25% and 0.75% respectively. And there is your reaction to Europe's encroaching deflation. The Euro will need a bigger chart to show just how far it tumbled as a result of the stunner...

Is someone a little bit nervous ahead of the year's most anticipated IPO?

• Twitter's IPO to Make Market Debut (WSJ); Twitter Raises $1.82 Billion, Pricier Value Than Facebook (BBG)
• Worried Senators Press Obama on Health Law (WSJ)
• Greenspan Says Yellen Was His Guide to Economics Research at Fed (BBG)
• European Central Bank seen holding rates despite inflation tumble (Reuters)
• Wall St. Bonuses Over All Are Predicted to Rise 5 to 10% (NYT)
• Cautious consumers seen curbing U.S. economic growth (Reuters)
• China Grants U.S. Investors Indirect Access to Its Stock Markets (WSJ)
• Higher Tax Rates Give Top U.S. Earners Year-End Headaches (BBG)
• Iran Loses Nuclear Leverage as World Ignores Export Drop (BBG)
• NYPD Commissioner Ray Kelly in the running for JPMorgan job (Post)

Moments ago the Czech Republic officially entered the global currency wars with the first currency intervention in 11 Years

CZECH CENTRAL BANK APPROVES KORUNA INTERVENTION; CZECH CENTRAL BANK SAID TO BUY EUROS IN MARKET
KORUNA WEAKENS 3.2% VS EUR AS CENTRAL BANK OKS INTERVENTION

This has led to the biggest Koruna drop in 4 years. Whoever was long the EURCZK, take the rest of the day off:

When it comes to US equities today, the picture below summarizes it all... the only question is whether the NYSE breaks to celebrate the year's overhyped social media IPO.Aside from the non-event that is the going public of a company that will likely not generate profits for years, if ever, the overnight market has been quiet with all major stock indices in Asia trading modestly lower on the back of a modestly stronger dollar, although the main currency to watch will be the Euro (German Industrial production of -0.9% today was a miss of 0.0% expectations and down from 1.6% previously), when the ECB releases its monthly statement at 7:45 am Eastern when it is largely expected to do nothing but may hint at more easing in the future. On the US docket we have the weekly initial claims (expected at 335k) which now that they are again in a rising phase, have been the latest data item to be ignored in the Bizarro market, as well as the latest Q3 GDP estimate, pegged by consensus at 2.0%.

The “authorities” can shut down website after website, but the tide of new technology and the human spirit itself cannot and will not be overcome. This is the hard lesson that statists and collectivists will be learning the hard way in the years to come, as decentralization and freedom stage a gigantic, peaceful revolution. A revolution that is already in full swing and gaining tremendous momentum with each passing day.

It took only a little over a month for Silk Road 2.0 to launch on the “dark web,” and there are already close to 500 illegal drug listings.

Chinese officials are worried. Not about inflation... not about growth... not even about pollution per se... but security. As the South China Morning Post reports, government officials are raising concerns about the function of its vast network of surveillance cameras because of the thick smog blocking visibility for some of them. In a truly central-planned world, there is nothing more dangerous that not being able to keep an eye on the population and officials fear that threat of terrorism could be heightened on smoggy days. Improving air quality in China has been often discussed but a new military team is looking for a solution (as security trumps health it would appear) - harsher punishments on polluters are needed to help improve air quality in China, a senior Chinese official said here on Tuesday.

With the growth of the shadow economy and the surveillance society, it is no surprise that so much is now transacted in the so-called "black-market."

Shouldn't Internet companies actually "make a profit" at some point before being considered worth billions of dollars?  A lot of investors laugh when they look back at the foolishness of the "Dotcom bubble" of the late 1990s, but the tech bubble that is inflating right in front of our eyes today is actually far worse.

Is it possible the war on drugs is to blame for increased potency in marijuana and for how crack ravaged inner cities in the 1980s? Prof. Adam Martin explains how the drug war has altered incentives for both drug buyers and sellers, leading them to favor higher potency drugs. This is what economists call the potency effect. As penalties for purchasing marijuana go up, for example, the cost difference between high- and low-potency marijuana decreases and people may think that if they're risking a fine or jail time anyway they may as well buy the stronger drugs. Similarly, cartels and dealers have shifted their focus to high-value, high-potency drugs like cocaine as a result of the steeper fines and penalties for drug trafficking. The potency effect is just one of many economic forces that make markets so complex. Public policies that alter the incentives people face - as the war on drugs does - can lead to unintended and even dangerous consequences.

How fickle are the wealthy? Six weeks after having never been happier relative to the poor, and mere days after we showed their recent collapse in confidence, it seems the rich are no longer amused by Bernanke's game. As The FT reports, for the second time in a week, an elite art auction has failed for all intent and purpose. One-quarter of the high-profile Impressionist and Modern paintings under the hammer at Christie’s went unsold on Tuesday night, signalling a bleak start for the autumn auction season in New York. The muted results came hot on the heels of disappointing sales on Monday evening for Christie’s, after the collection of the late art dealer Jan Krugier went under the hammer yet failed to dazzle. But how will the wealth effect trickle down?

When the U.S. economy dipped into an inflationary recession in 1969, the Keynesian paradigm could not explain that phenomenon. Given the fact that both the George W. Bush and Barack Obama administrations (not to mention Congress) have followed the Keynesian playbook, the sorry results should be enough to discredit Keynesianism, this time for good. Either a theory explains and predicts phenomena or it does not, and it should be clear that Keynesian theory has failed, but, alas, it seems that the Keynesian paradigm is more influential than ever. Here is a paradigm that claims there cannot be an inflationary recession, yet all of the recessions that have wracked the U.S. economy in recent decades have been inflationary. Alas, the academic “market test” really does not embrace the actual success or failure of a theory.

And they are off as Twitter prices just shy of the whisper $27 upper end of the IPO range, raising $1.82 billion in equity proceeds for the 70 million shares it will sell (before the greenshoe is exercised).