Archive - Aug 2013 - Story

The country "without a military coup" is progressing nicely on the way to democratic, CIA-supported utopia.

• EGYPT PRESIDENCY ANNOUNCES STATE OF EMERGENCY ACROSS THE COUNTRY STARTING AT 4 P.M. (1400 GMT)
• EGYPT STATE OF EMERGENCY TO LAST FOR ONE MONTH - STATEMENT
• EGYPT PRESIDENCY ORDERS ARMY TO SUPPORT INTERIOR MINISTRY IN IMPOSING SECURITY-STATEMENT
• EGYPT PRESIDENCY AUTHORIZES THE ARMED FORCES TO AUGMENT EGYPTIAN POLICE IN IMPOSING STATE OF EMERGENCY

In other news, John Kerry is currently contemplating if the upcoming civil war will be best characterized as a "mere scratch", or at worst, a street skirmish.

As expected, the scapewhaling of (former) JPMorgan marine wildlife has begun

A CNBC anchor's friendly hint (to keep monitoring twitter) and a well-timed (SEC reg pre-empted) tweet is all one needs to generate a 'healthy' 7900% gain 'trading' stocks in the US markets. Courtesy of the much-hyped expectations that @Carl_C_Icahn would tweet his next big idea, when the activist dropped the buy signal heard around the world yesterday, the lucky holders of the $480 AAPL Aug Calls saw their position appreciate from a cheap bet at $0.20 to a magnificent $16.00... not a bad return for 140 characters work...

Over the past several years, alongside the increasingly more "hedonically" doctored government inflation data, the Producer Price report has slowly but surely lost its significance. Today's report was no different: according to the BLS' seasonal adjustments, July PPI data was unchanged, dropping from the 0.8% increase in June and missing expectations of a 0.3% increase. This was driven by a -0.2% drop in energy finished good prices after a surge of 2.9% and 1.3% in energy prices in June and May, with food prices unchanged on the month. Core PPI excluding food and energy was also virtually unchanged at 0.1% on expectations of a 0.2% increase. And while the tapering in PPI inflation will likely be concerning to the Fed, the reality is that the unadjusted Y/Y increase was 2.1%, or in line with where it should be. Of course, we use the term "reality" loosely: anyone who thinks prices have increased only 2% over the past year, doesn't drive, eat or rent.

Once upon a time there was a Twitter-based, pump-and-dumping daytrading bucket shop posing as a "successful hedge fund manager" also known as Davian Letter/Davian Capital Advisors run by an Ohio gentleman known as Anthony Davian, which for reasons unknown even managed to run outside capital (somehow raking up to $1.5 million in idiot AUM), and which didn't like Zero Hedge much.  That's ok because the feeling was mutual - we had advised the SEC in late 2009 that the Davian operation was nothing but a ponzi scheme. A few years later, said outside capital is gone, and moments ago, following a four year delay since our notice, the SEC finally acted on our suggestion and charged Anthony Davian with fraud.

As we noted in the previous post discussing the inevitable pre-civil war crack down on pro-Mrusi protesters, the only thing that matters, at least to the "developed" West, is how the overnight events in Cairo impact risk, i.e., markets and stocks. Moments ago we got the first take, courtesy of Noah Capital Markets. The conclusion: Sell Egypt.

• Vocal billionaire activist IRR - 150x: Icahn bought $1 billion of AAPL stock, seeks $150 billion buyback (BBG)
• BlackBerry Said to Have Sought Buyers Since 2012 (BBG) - for a phone or the entire company?
• IPhone Fingerprint Reader Talk Boosting Biometric Stocks (BBG) - also, the NSA will need to grow its Utah data center
• UPS Jet Crashes in Birmingham, Ala. (WSJ)
• America's Farm-Labor Pool Is Graying (WSJ)
• Hong Kong Lowers Storm Signal as Typhoon Closes on China (BBG)
• Indian submarine explodes in Mumbai port (FT)
• BofA Banker Sued by Regulator Later Joined Fannie Mae (BBG)
• Software that hijacks visits to YouTube uncovered (FT)
• Chinese Billionaire Huang Readies Iceland Bid on Power Shift (BBG)
• China to launch fresh pharmaceutical bribery probe (Reuters)
• Defeat at J.C. Penney Hurts Ackman as Performance Trails (BBG)

The amusing news overnight was that following slightly better than expected Q2 GDP data out of Germany (0.7% vs 0.6% expected and up from 0.0%) and France (0.5% vs 0.2% expected and up from -0.2%), driven by consumer spending and industrial output, although investment dropped again, which meant that the Eurozone which posted a 0.3% growth in the quarter has "emerged" from its double dip recession. The most amusing thing is that on an annualized basis both Germany and France grew faster than the US in Q2. And they didn't even need to add iTunes song sales and underfunded liabilities to their GDP calculation - truly a miracle! Or perhaps to grow faster the US just needs higher taxes after all? Of course, with the all important loan creation to the private sector still at a record low, and with the ECB not injecting unsterilized credit, the European depression continues and this is merely an exercise in optics and an attempt to boost consumer confidence.

As was reported over the weekend, it was only a matter of time before the Egyptian police began its violent crackdown on protesting pro-Mursi supporters across Egypt. But after the specified ETA came and went on Monday morning, most thought that this was yet another false alarm. It appears it was only delayed until Wednesday. Overnight, depending on the source one reads, Egyptian security forces killed anywhere between 43 and hundreds people when they cleared a camp of Cairo protesters who were demanding the reinstatement of the deposed Mohamed Mursi. There was no official confirmation of the deaths at Rabaa al-Adawiya, in northeast Cairo, where thousands of Mursi supporters awoke to police helicopters circling over the site. A second camp near Cairo University was swiftly cleared in the early morning. So is this the final step that will ultimately catalyze what has been an almost preordained civil war, with or without but most likely with America's blessing (after all the deficit spending surge so needed for the untaper won't happen on its own)?  The answer should be appearing promptly.

Nuclear power accounts for 5.7% of the world’s energy and 13% of the world’s electricity. Uranium, used in nuclear power, is a relatively clean source of energy that does not produce greenhouse emissions. Uranium is extremely dense – it is nearly as heavy as gold. It is, however, about 500 times more common than gold in the earth’s crust. This infographic covers the history of uranium, its properties, the supply and demand forecasts, the advantages and disadvantages of nuclear power, uranium as an energy source, and military applications.

If you are a stock picker, then it’s basically now or never for whatever investment discipline you might follow.  Asset class and industry correlations have taken a surprising nosedive in recent weeks, which - as ConvergEx's Nick Colas notes. should allow your strategy/blend of magic to (hopefully) shine versus the benchmarks.  Average industry sector correlations to the S&P 500 have dropped to 69.9%, by far the lowest observation for over two years.  High yield bonds now show just 16% correlation to U.S. stocks, and the numbers for Emerging Markets (58%), EAFE stocks (76%), and currencies like the Australian dollar (11%) are also plumbing new lows.  Why the sudden return to a ‘Normal’ world? Expectations that the Federal Reserve will begin to ‘Taper’ its bond buying help, to be sure.  As do actual inflows (some $8 billion last month) into actively managed mutual funds.  We’ll have to wait and see if current trends continue, but for now we welcome the return of the ‘Stock picker’s market’.  Let the dart-throwing begin...

“Is the gold market manipulated?” This is one of those extremely dodgy questions that has left both investors and economists very divided. By arguing whether or not gold manipulation exists, we may find that we are wasting our brain cells on the question. A better question, and one that we might choose to monitor on a regular basis, might be, “To what degree is successful manipulation taking place?” We might then use the on-going answer as a guide, to inform our reasoning going forward, as to what impact any perceived manipulation is likely to have with regard to our precious metals investment.

After a surge at the beginning of the economic recovery, productivity growth has cooled. For the nonfarm business (NFB) sector, BofAML notes that productivity has slowed from a peak of 5.8% year-over-year in 4Q 2009 to just 0.9 in 1Q of this year. This week we will see Q2 data - expected to show a further slowing to just 0.6%. Moreover, what we show below is that, outside of the tech boom in the late 1990s, productivity tends to slow as business expansions mature. Our current 'expansion' is now thoroughly mature...

A recent survey of asset managers globally, managing USD 27.4 trillion between them, found that 78% of defined-benefit plans would need annual returns of at least 5% per year to meet their commitments, while 19% required more than 8%, "a target of 5% per year can be reached but only by using leverage, shorting, and derivavtives." And sure enough, as Deutsche Bank (DB) reports, in short, investors have rarely been more levered than today! According to DB, a MoM change in NYSE margin debt >10% has to be taken as a critical warning signal as there are astonishing similarities in the sequence of events among all crises. As the S&P 500 just hit a new all-time high, investors might want to ask themselves when it is a good time to become more cautious – yesterday, in our view. Simply put, the higher margin debt levels rise, the more fragile the underlying basis on which prices trade; with even a less severe sell-off in equities capable of triggering a collapse.