Archive - Jan 22, 2014 - Story

Like being sworn at? Then these are the jobs for you. As the myth of a manufacturing renaissance in America remains just that, the Services industries bear the brunt of an ever-increasingly entitle public's needs. As IB Times' Lisa Mahapatra notes, according to a study by Marchex that examined rates of crusing across 20 service industries, Satellite TV providers's customer service agents get the most abuse.

A United Nation study has reported that about 206 million people are now unemployed. This is the cost of socialism taxing the rich so there is no job creation with nearly half of that number amounting to youth under 25 years old. The economy on a global scale is terribly weak. This UN annual report released Monday by the International Labour Organisation (ILO) is shocking and politicians cannot see what they are doing to the future.

Simple: it reassigned, or fired, all the investigators and police officers.

With the world awash in liquidity and yet every one of the world's leaders spreading the "ogre of deflation" myth to ensure the administration of moar free money; we thought it interesting that with government identified inflation statistics entirely benign that the prices of US cattle and milk have reached record highs (and show no sign of stopping as Cattle is limit-up today again). The rise has been almost non-stop beginning in early 2009... now what else began to rise in an almost straight line then?

No matter how centrally-planned and meticulously managed the US economy/market has become, the policy-setting powers-that-be have yet to be able to control one thing... mother nature...

Today the ante was just upped once more, as the 4 Week Bill Bid to Cover rose yet again, from 6.4x to 6.6x. Logically, this print is now the latest and greatest highest Bid to Cover since December 2011, and the question remains: why the scramble for safety?

The current Administration has taken on the "war on poverty" as its primary battle ground going into the mid-term elections later this year.  As NFIB's Bill Dunkleberg recently noted, "since it is an election year, the main theme will be addressing the disparities in income and wealth (i.e. tax the rich and increase welfare programs) rather than promoting policies that would create jobs and raise incomes in a growing economy. This year, policy will be all about votes." This isn't a new fight.  As Robert Rector stated recently - that particular war has been less than successful.

"Fifty years and $20 trillion later, LBJ's goal to help the poor become self-supporting has failed."

However, while the Administration will use the argument to garner votes in an election year, the most interesting aspect about the income inequality debate is that it is the very policies of the current Administration that is fueling the income shift. 

Comedy hour comes early today, courtesy of Japan's PM Shinzo Abe who just started speaking on the topic of "reshaping the world" at Davos. Like we said: pure comedy.

While Edward Snowden's legacy has already been felt in official, government circle most recently with Obama's amusing, if completely meaningless, theatrical reformation of the NSA (so wait, the Utah's superstasi spy center is now closed, right?), it is now the private sector's turn. Moments ago, Verizon - in what is hopefully the first such action of many - provided an extensive "Transparency Report" in which it disclosed the "number of subpoenas, orders, and warrants we received from law enforcement in the United States last year. We also received emergency requests and National Security Letters. The vast majority of these various types of demands relate to our consumer customers; we receive relatively few demands regarding our enterprise customers." So regular retail customers are being actively spied on, but corporations are safe. Good to know.

The decay of the "build it and they will come" model of commercial real estate is gathering speed for a simple systemic reason: the decline is self-reinforcing in several critical ways. Before we start the analysis, let's ask a basic question: How much of the stuff and services purchased at retail outlets, malls, strip malls, etc. is absolutely necessary and how much is excess consumption? Conventional "Growth by any means" Cargo Cultists such as Paul Krugman never ask this basic question, because the answer (very little is essential, most is excess consumption) undermines the entire narrative that all growth is good, even the most marginal, unsustainable, wasteful and fiscally imprudent. I've captured the essence of retail in America with this photo:

And sure enough, less than 24 hours later, here comes the now well-known Icahn Tweet-pump

Since tweeting about our large position in $AAPL on Aug 13, when the stock was 468 per share, we’ve kept buying shares of this ‘no brainer.’

— Carl Icahn (@Carl_C_Icahn) January 22, 2014

Venezuela can be proud: while the US stock market has gone exactly nowhere in 2014, the Caracas stock exchange of the socialist paradise has continued kicking ass and taking names, just today printing a fresh all time high.  However, as everyone knows, there are trade offs to soaring stock markets in all socialist countries, be they paradises or not. By now everyone knows that Venezuela has had a rather systemic issue when it comes to procuring toilet paper, and from what we understand, the local population is still forced at times to wipe with stock certificates. Alas, things are about to get worse. As a result of Maduro's recent policies which have Lenin, Stalin and Engels positive beaming from the grave, the country may soon add another shortage to its growing list of daily product in short, or no, supply. Food.

The theme of this year's Davos meeting where the world's wealthiest and most powerful people meet to enjoy each other's company, a fawning media, and of course the best food and entertainment that money can buy, is social stability, class hatred, and how to fix a world torn by a record wealth inequality. An ambitious task to be sure, especially for the very people who have benefited the most from the record wealth transfer of the past 5 years. Still, while these true Robin Hoods of the modern gilded age are desperate for a few minutes of humanitarian TV exposure, or at least a soundbite or two, their advice to the peasants out there is quite clear: don't get too close. And just to make sure the appropriate distance of at least a few hundred meters to every member of the great unwashed class they are "saving" is maintained, here is the hotel in which the bleeding heart Davos billionaires are staying: a $170 million fortress surrounded by barbed wire, security cameras, motion sensor and even its own helipad.

Following last night's implementation of emergency rule in Thailand for a period of 60 days, where the ongoing clashes between protesters and the government mean the economy is likely set to grind to a halt at least judging by the constant downward revisions in the country's GDP, the default risk of Thailand just jumped to a fresh one year high, rising to 159 bps, or double where it was in May of this year (but still well below the 240bps hit at the peak of the European crisis in September 2011). However, since tensions do not appear to be getting resolved, expect this particular CDS to continue drifting higher, especially following news that the Thai leader of a pro-government group was shot last night.

When it comes to the opinions of financial pundits and "experts", most can be chucked into the garbage heap of groupthink and consensus. However, one person whose opinion stands out is Elliott Management's Paul Singer. One of the most successful hedge fund managers has consistently stood against the grain of conventional wisdom over the past three decades and been handsomely reward, which is why his opinion is certainly one worth noting. Singer, together with Martin Wolf and several other panelists will be speaking at 45 minutes past the hour on a panel discussing one of the most pressing topics nearly 6 years after the Bear Stearns collapse: "Are Markets Safer Now." Watch their thoughts on the matter in the session live below.