Archive - Aug 14, 2013 - Story

If the physical gold market is anywhere near as tight as these two market observers indicate, get ready for some serious fireworks in the precious metals markets... "After this drop [in price] we have 90 days order logbook. So we cannot fill the demand we have at this stage."

While many Wall Street economists and strategists shrugged in the face of tin-foil-hat-wearing bloggers who suggested the disaster that is the part-time jobs receovery was due to The Affordable Care Act - of 953,000 jobs created In 2013, 77%, or 731,000 are part-time - epitomized best by Larry Kudlow and Deutsche Bank's ever-smiling Joe Lavorgna; it seems the drag on employers' hiring has now hit the mainstream media. As NBC Nightly News reports in this succinct clip, things are not going according to plan for the President's better bargain even as Fed's Bullard proclaims "clear improvement in labor markets." Perhaps he should watch TV this evening?

With the US denouncing actions left, right, and center, it is tough to know what they stand for (or against) as the coup-less coup appears to have turned into a bloody civil war. Casualty reports vary; from 278 people dead (health ministry) to 2,000 dead (Muslim Brotherhood) including 43 policemen and from 2,001 injured (health ministry) to 10,000 (Muslim Brotherhood). As the dreadful images below suggest, the Egyptian people have grown divided beyond the point of no return, and despite the jingoist platitudes and rhetoric of John Kerry describing the "deplorable" situation on the ground, the reality of a civil war now seem inevitable. So with the US still stuck in denial (and for the CIA - phonetically so), pro-Mursi protesters clash with police, military, and one another as all hell breaks loose.

Presented with no comment...

Today, we believe, we are a bit more enlightened that those in the past. Humanity has progressed, and we can look back on those days with utter incredulity wondering how anyone could have possibly believed such nonsense... how anyone could pass off such ridiculous assertions as real science. Well guess what... in the future, they’ll probably look back and say the same thing about us. Only this time, our ‘faux science’ is economics.

It is an odd affair these days made odder by the political desires of those that control the switches. The worst offender is China, followed by Europe and then it would be the United States in last position. Made up numbers, fantasy figures, smoothed out data are all the bread and butter of each region. It is the central banks that are running the world, it is the governments that are distorting events and we are left, like homeless children, to accept the succor that is provided. Because there is no choice we are stuck eating their food but we do not accept the fantasy on the package naming the ingredients. It is a collective attempt to Bamboozle!

With Silver's strong recent run, Citi FX Technicals suggest the present technical set up is now starting to look very constructive. At the same time, they add, Gold is also starting to move higher; and trending moves in the precious metals (up or down) tend to be led by the Silver price and the Gold/Silver ratio remains supportive of that view again. Given that they remain cautious near term about the fortunes of the US Dollar, all of the above would suggest, Citi concludes, that the "playbook" is to be long Silver against the USD.

It seems like it was just yesterday when CSCO announced it would fire 10,000 people. And then another 1,300. And then another 500. Fast forward to today when the "one-time, non-recurring" termination charges are back, as the "recovery", now in its 5th year, progresses a little differently than expected, this time with another 4,000 FTE told to pack their bags. 

CISCO TO CUT 4,000 JOBS OR 5% OF WORKFORCE
CISCO SAYS IT REMAINS 'VERY MUCH A COMPANY ON THE OFFENSIVE'

Nobody can blame the company, however: why keep full-time workers, when switching over to part-timers will do just as fine, and generate significant benefits to the bottom line and shareholders.

Something funny happened on the road to the epic consumer balance sheet cleansing and subsequent releveraging (without which there can be no actual non-Fed sugar high fueled recovery): the second quarter. And specifically, as the Fed just disclosed in its quarterly Household Debt and Credit Report, the number of consumer bankruptcies during the second quarter, just jumped by 71K, to 380K from 309K in Q1, the biggest quarterly jump in precisely three years - on both an absolute and relative basis - and the most since the 158K jump recorded in Q2 2010. It appears that when the "releveraging" US consumer isn't busy buying stuff on credit, they are just as busy filing for bankruptcy. Healthy consumer-led recovery and all that.

The cluster of Hindenburgs is indicating a very worried market (for example 99 New Highs and 231 New Lows) and for a change a Fed speaker was unable to provide the headline-reading BTFD ammo to save us from the drop in stocks. The 6th down day in the last 8 in stocks and red on the month-to-date screens is not something we are used to seeing. The USD was flat to slightly lower on the day (even as AUD surged and JPY leaked higher) as were Treasury yields (which took a pause after 2 days of being smashed higher). While bonds were flatish, homebuilders and utilities stocks were jammed lower once again (as AAPL pulled Tech and the Nasdaq to outperform again). Copper and oil were also flat on the day but gold saw some improvement (over $1330) and Silver surged 2% (up over 6% on the week now - biggest week since Oct 2011). Yesterday's near-record steepness in VIX's term structure that we warned about seems to have been followed by the usual short-end rip as VIX broke back above 13%.

We have not been shy of sharing our opinion on the hedonics-adjusted, constantly recalibrated-basket-based idiocy that is the government's measures of inflation. However, this morning's Liesman-led cognitive dissonance at the PPI was smashed from the government's Matrix by Rick Santelli's frustration spilling over... Santelli barks, "Listen, I don't believe the government's calculations. There, I said it... I don't have better numbers; I have common sense;" adding that (just as we noted here with energy and real expenses) that "there's a difference between real life and the government."

How Bad Can Things Get? Nobody knows the answer, so we have to consider our responses to a spectrum of possibilities. President Calvin Coolidge famously remarked, "If you see ten troubles coming down the road, you can be sure that nine will run into the ditch before they reach you." While there is certainly much wisdom in this reassurance, that still leaves us the task of preparing for the one that doesn't run harmlessly into the ditch.

Freshly-minuted MBAs "are willing to sleep on a couch for a year or two, but they can't do it with the burden of student loans," is how on senior lecturer describes the entrepreneurial-spirit-sucking debt loads that college-leavers face in the new normal. Faced with mounting monthly payments, the WSJ reports that would-be-Bezos have little choice but to look for the steady paychecks that accompany a regular job. Recent surveys find that "the single largest inhibitor to entrepreneurship is the student loan" burden and it seems states are beginning to realize this growth-inhibiting reality. In order to tamp down ambition-busters such as "I would be a serial entrepreneur if it weren't for my student loans," California (and Rhode Island) are enacting legislation to reduce college costs and looking at the feasibility of temporary forbearance. While some see their student-loans as a motivator, it seems many more are forced down a different path due to the "real responsibilities."

It appears John Kerry has once more disembarked from the "Isabel" and was kind enough to share his latest incisive thoughts on the borderline civil war in non-coup'y, democratic Egypt.