Archive - Jun 9, 2014 - Story

"Our Fed... Who art in Manhattan... lead us not into deflation... but deliver us from volatility"

Yesterday's shooting in Las Vegas drew media attention for a number of reasons but perhaps of most note was the chilling comments and premeditation involved. As WaPo reports, Jerad and Amanda Miller simultaneously executed two Las Vegas police officers in a pizza restaurant as the officers ate lunch; and then Jerad Miller covered the dead officers with a Gadsden flag and put a manifesto with a swastika on one of the officers’ bodies. However, as the hours since the disaster go by, more details of the couple have been exposed including Jared's anti-government video-rant below, "Sounds a little like Nazi Germany to me, or maybe Communist Russia... Really, people? It’s time to wake up. It’s getting ridiculous." Comments on his Facebook page also indicated he would be a "martyr" and asked for "the death a hero deserves." However, potentially most interesting is Interior Secretary Sally Jewell noting that the two may have joined militiamen from around the country at Cliven Bundy’s ranch earlier this year.

The ever-rising ranks of youth unemployment coupled with the increasingly cheap and easy access to "distractions" from the dismal realities of life (if one is not a wealthy leveraged shareholder) mean a lot of potentially productive time is totally and utterly wasted in this world... how much time? As The Economist joking notes, the loony music video “Gangnam Style” surpassed two billion views on YouTube this week, making it the most watched clip of all time. At 4:12 minutes, that equates to more than 140m hours, or more than 16,000 years (the equivalent manpower it would take to build 4 Great Pyramids of Giza or 20 Empire State Buildings). The opportunity cost of watching PSY’s frivolity is huge, but humanity has at least been entertained.

Stocks have not "reached a permanently high plateau" nor will "this time be different." As with all late cycle bull markets, irrationality by investors in the financial markets is not new nor will it end any differently than it has in the past. However, it is also important to realize that these late cycle stages of bull markets can last longer, and become even more irrational, than logic would dictate. Understanding the bullish arguments is surely important, however, the risk to investors is not a continued rise in price, but the eventual reversion that will occur. Unfortunately, since most individuals are only told to consider the "bull case," they never see the "train coming."

Snow may have "crushed" the world's biggest economy by 1% in Q1, but in the last 6 years, the Fed has goosed its 20% higher than it otherwise would be.

The old economy is gone and is replaced now by a “social services economy,” meaning government checks, SNAP cards, and purposelessness.

Having previously admitted its an idiot and a liar over Greece forecasts, constantly missed world expectations with a much more rosy picture of hockey-stick-like growth than actually occurs, and now Ukraine's insanely optimistic assessments; we thought it only fair to point out that, yet again, Christine Lagarde has been forced to say "we got it wrong." This time the IMF underestimated UK growth - a year after blasting the nation's planners for "playing with fire" by cutting its budget spending. As Bloomberg reports, pressed on whether she had apologized to Chancellor of the Exchequer George Osborne, Lagarde stopped short of saying so and said “Do I have to go on my knees?”

With the world cup set to kick off in three days, things in the host country - which according to numerous report is largely unprepared for the grand spectacle - are going from bad to worse.

What if all the low-hanging fruit of outsourcing jobs and financialization have already been plucked by Corporate America?

"The dollar is king these days, but having them comes at a price," notes one working girl as Venezuelan prostitutes can more than double their earnings by moonlighting as currency traders, "yes, we got dollars to afford the things our families need, but we have to sell our bodies for it." The dollar shortage is turning Venezuela into a two-tier society similar to the Soviet Union and Cuba, said Steve Hanke; as Bloomberg notes, those with access to dollars such as prostitutes, tour agents, airport taxi drivers and expatriates are able to shield themselves from inflation by trading their greenbacks at ever higher rates. Those who can’t are seeing their living standards decline. Socialism at work...

With a closing P/E ratio over 17 and a VIX under 11, Deutsche Bank's David Bianco is sticking with his cautious call for the summer. Their preferred measure of equity market emotions is the price-to-earnings ratio divided by the VIX. As of Friday's close, this sentiment measure has never been higher and is in extreme "Mania" phase. Deutsche's advice to all the summertime-'chasers' - "wait for a better entry."

Moments ago, St. Louis Fed president Bullard gave one of his signature yellow-backgrounded presentations to the Tennessee Bankers Association Annual Meeting taking place at the favorited by 1%-ers everywhere Breakers hotel in Palm Beach, Florida. The bulk of his presentation is the usual trite platitudes, but he did have some chose comments, such as:

• BULLARD: FED SHOULDN'T BE `INTERVENING' ALL THE TIME IN MARKETS

So just intervene from 9:30 am to 4:00 pm in the US equity market? But what will those who have been screaming about rigged, manipulated, broken US equity markets rail about if the Fed isn't intervening all the time in "markets", and if some semblance of normalcy, even if highly crashy, returns?

McDonalds will have a tough time explaining is why after almost hitting 'escape velocity' and nearly posting positive annual comps in the US, McDonalds just reported that May US comps once again dipped, declining by 1.0%, on expectations of a tiny 0.1% increase, thus cementing the longest period in our records database, a total of 7 months, in which McDonalds has gone without posting a single month of increasing US sales! We can't wait for the company to blame the blamy balmy, spring weather as the reason why nobody could afford a 99 cent meal.

"The main goal of this attack was to damage the government, including by hijacking planes and destroying state installations," said Shahidullah Shahid, a Taliban spokesman, as Reuters reports a well trained and heavily armed group of Taliban fighters attacked Pakistan's largest airport in an attempt to hijack a plane. 27 people were killed (including 10 militants ) as the Taliban spokesman added ominously, "this was just an example of what we are capable of and there is more to come. The government should be ready for even worse attacks." This attack comes a day after John Kerry's dismissal of threats by some released Taliban prisoners that they will return to the battlefield and kill Americans as "a lot of baloney."