Archive - Dec 2013 - Story

The COO of the Centers for Medicare and Medicaid Services, who supervised the disastrous rollout of Obamacare, is retiring. Michelle Snyder is the second official to depart the sinking ship CMS following CIO Tony Trenkle's resignation in November. While in charge of day-to-day activities, the allocation of resources, and “standing up new programs and activities required by the Affordable Care Act," the NY Times reminds readers that Kathleen Sebelius said "Michelle Snyder is not responsible for those debacles." We can only wonder at the retirement package this 41-year veteran will receive...

That didn't take long. A day after Saudi Arabia pledged a record $3 billion to prop up Lebanon's armed forces, in what the WSJ described as "a challenge to the Iranian-allied Hezbollah militia's decadeslong status as Lebanon's main power broker and security force", Lebanese troops fired at Syrian warplanes for what is thought to be the first time since the conflict in Syria began. Quid pro quo.

How do you get a poll to register a large majority in favour of EU membership? Easy. Confine your survey to quangocrats, charity heads, civil servants, CEOs of multi-national corporations and the like. The pro-EU lobby group, British Influence, has been trying to get people excited about its poll of “leading figures” – that is, 700 bien pensant metropolitans of whom, sure enough, 69 per cent want to stay in the EU. Not that we blame them, when every poll of the general population shows an anti-EU majority, you have to clutch at whatever support you can find. When the vote was extended to all adults, the moderate men, the sensible men, the men of bottom and judgment, suddenly remembered that they had favoured the idea all along. The same will happen with Brexit. Just watch.

The trapped-in-the-Antarctic-ice Australian research vessel's mission, among others, is to examine the effect of global warming on a receding Antarctic ice shelf...

This morning we were treated to the usual stupifying comments from Greek leadership that "Greece won't need more loans," and will "start becoming a normal country," because the Greek 'recovery' is "built on solid foundations." However, it appears the public-at-large is not so happy as the BBC reports shots were fired at the German ambassador's residence in Athens. Samaras said Greeks "have gone through hard times." With over 60 bullets fired, it seems the someone is upset that their union overlords won't lift those hard times anytime soon...

Following up on the latest stunning revelations released yesterday by German Spiegel which exposed the spy agency's 50 page catalog of "backdoor penetration techniques", today during a speech given by Jacob Applebaum (@ioerror) at the 30th Chaos Communication Congress, a new bombshell emerged: specifically the complete and detailed description of how the NSA bugs, remotely, your iPhone. The way the NSA accomplishes this is using software known as Dropout Jeep, which it describes as follows: "DROPOUT JEEP is a software implant for the Apple iPhone that utilizes modular mission applications to provide specific SIGINT functionality. This functionality includes the ability to remotely push/pull files from the device. SMS retrieval, contact list retrieval, voicemail, geolocation, hot mic, camera capture, cell tower location, etc. Command, control and data exfiltration can occur over SMS messaging or a GPRS data connection. All communications with the implant will be covert and encrypted."

"We're an easy target for recruiters," one homeless man explains. "We turn up here with all our bags, wheeling them around and we're easy to spot. They say to us, are you looking for work? Are you hungry? And if we haven't eaten, they offer to find us a job." As Reuters exposes, 3 years after the earthquake and tsunami that caused the meltdown at Fukushima's nuclear facility, Northern Japanese homeless are willing to accept minimum wage (from yakuza-based entities) for one of the most undesirable jobs in the industrialized world: working on the $35 billion, taxpayer-funded effort to clean up radioactive fallout across an area of northern Japan larger than Hong Kong.

If being wealthy was the same as pretending to be wealthy then people who care about reality would have a little less to complain about. But pretending is a poor way for a society to negotiate its way through history. It makes for accumulating distortions which eventually undermine the society’s ability to function, especially when the pretending is about money, which is society’s operating system. The dislocations of 2008 when the banking system nearly imploded were Nature’s way of telling us that dishonesty has consequences. In the meantime, we amuse ourselves with fairy tales about “the shale oil revolution” and “the manufacturing renaissance.” 2014 could be the year that the forces of Nature compel our attention and give us a reason to stop all this pretending.

"It's going to put my family and me out on the streets," is a perspective shared by many of the 1.3 million Americans about to lose their emergency unemployment claims. The program, started during the recession, was intended to help jobless people after they exhausted state benefits, typically lasting six months. House Republicans resisted continuing the benefits without budget cuts elsewhere to cover the cost. As Bloomberg reports, opponents say the extended benefits discourage the unemployed from accepting jobs and that the program should be curtailed, given the recovery in the nation’s labor market.This has profound implications for the oh-so-important unemployment rate that  the Fed is so dependent upon...

For the 5th month in a row, pending home sales missed expectations (though a silver lining is a positive print MoM - breaking a 5-month streak). Year-over-year, home sales collapsed at 4% - its worst drop since April 2011, and that even after prior data was revised lower. Still, despite this ongoing plunge, there is always hope - as engendered by NAR's chief economist who states (somewhat unconfidently), "we may have reached a cyclical low." Cylical low indeed - just don't look at the chart.

For the second time in its brief life as a publicly-traded stock, the latest exhibit in 2013's FOMO meme has hit a bear market. Twitter has dropped 20% from its all-time high and must - must - be a bargain here?

From Paula Dean and twerking to Drones and Duck Dynasty with a peotic sprinkling of Mandela, Thatcher, "if you like it you can keep it", and government shutdown; UBS' avuncular floor director Art Cashin unleashes his latest ode with a subtle reminder of the most important 'word' for 2013 - FOMO - "fear of missing out."

As we observed two weeks ago, Europe's year-end liquidity situation is dire and deteriorating. On December 17, the ECB failed to sterilize its cumulative €184 billion in SMP bond purchases by a whopping €32 billion, the second such failure in one month. Since then things have gotten progressively worse, as banks, already scrambling for year-end liquidity, and eager to preserve their windows well-dressed by having crisp European currency on their balance sheet instead of sterilized ECB bonds on December 31, have led to two more sterilization failures, first a week ago when 103 bidders only indicated interest for €140 billion of SMP bonds, leaving a €39 billion shortfall, culminating with the sterilization failure from this morning, when a tiny 89 banks submit bids for only €104.8 billion in ECB purchased bonds, leaving a record unsterilized gaping hole of €74 billion.

For the second time in a week, the market is running (not walking) away from the USD. Despite all the equity market exuberance over the taper, the USD is now unchanged from the FOMC decision and in relative free-fall for the world's reserve currency - on a scale we saw during last Friday's craziness... Treasuries are modestly bid this morning, equities are flat and precious metals are lower (thogh gold is recovering as the USD sinks)...

The release schedule is relatively light in the current week, without major central planning meetings. Nonetheless, there will a number of speeches from US FOMC members at the annual American Economic Association meeting. In terms of economic data releases we have manufacturing surveys from the US (Tuesday and Thursday), China (Wednesday and Thursday) and Europe (Thursday and Friday). On balance, slightly softer prints are expected for most of these releases when compared to the previous data points. However, consensus expects US consumer confidence to pick up significantly in December.  Also of interest: harmonized inflation numbers from Spain and Italy on Friday, as low inflation remains an issue for ECB policy. Consensus expectations are for a small increase in the former and decrease in the latter.