Archive - Aug 2014 - Story

Since 2011 Cisco has repurchased $21.9 billion in stock. Since then, it has fired 21,000 people.

This just happened...

1645ET *PALESTINIAN NEGOTIATOR SAYS TRUCE EXTENDED BY 5 DAYS
1659ET *THREE MORE GAZA ROCKETS HIT ISRAEL, ARMY SAYS
1729ET *IDF TOLD TO RESPOND TO PALESTINIAN CEASEFIRE BREACH: HAARETZ
1740ET *ISRAELI WARPLANES BOMBING GAZA: AL JAZEERA

For the record, Hamas denies responsibility for the rockets. We presume that "ceasefire" means something different in Gaza?

Worst Japanese consumer spending data drop ever - BTFD. China financing slowed - BTFD. European industrial production tumbled - BTFD. US retail sales miss dramatically - BTFD. The worse the news the better the buy-the-dippiness as between JPY (102.50) and VIX (12 handle), US equities shrugged off shitty data and worsening geopolitics to jump to August highs. But it wasn't just stocks... investors piled into Treasuries (slamming yields 7bps lower from pre-retail sales), bought gold (back over $1310), bid for US Dollars (now up 0.25% on the week), and lifted oil prices (WTI $97.50). S&P futures volume was the worst of the week (50% below average). Notable oddities: Copper clubbed today (-2% on the week), Brent-WTI jumped $1.50, and the VIX curve remains inverted for 14th day in a row.

The hackers' group "Anonymous" has released the full audio recordings of the St.Louis Police Despatch from the night of Mike Brown's murder.

"be advised officer involved shooting... observation came from the news! ...All cars, be advised we are switching over to the riot channel. riot A"

It’s common for the world’s most powerful country to issue a currency that becomes adopted around the world as the standard for international trade. But whenever that country reaches a point of epic, terminal decline, and especially when it rapidly debases its currency, the rest of the world seeks an alternative. The US has been enjoying this special privilege for decades now. And while these changes never happen overnight, it’s clear that the dollar is quickly losing this status.

Accountability... Responsibility... and 'torturing a few folks'...

"It's time to start look for a top in the S&P500," are the cautious words that BofAML's Macneil Curry begins his latest note, adding that this corrections will pressure 10Y yields to new cycle lows.

Well that didn't take long. Mere day after Russia announced its ban on Western nation food imports, European countries are scrambling (as we explained why here). Greece has already expressed dismay, but now Spanish officials will meet with EU leaders to discuss offsetting the country’s estimated up to $800 million in food and agriculture losses due to sanctions. Poland is pissed and has complained to the WTO claiming "Russia has broken international law in both its embargo;" and Finland's largest dairy producer has announced 800 layoffs due to the sanctions. When does Europe tell Washington - enough!

According to a new report by the Pew Trust, states in the US collectively spent $31 billion to insure 2.7 million employee households in 2013, an uptick in spending from 2011 and 2012 after adjusting for inflation. The average per-employee per-month premium for employees’ and dependents’ coverage was $963. States paid $808 (84 percent) of the total on average, and employees covered the remaining $155 (16 percent). However, this average masks sharp differences across the states, due to factors such as plan richness, average household size, provider price and physician practice patterns, as well as the age and health status of enrollees. There is much in the full report but for those pressed for time here is the full breakdown of the average health plan by each state, showing plan premiums as well as average employer and employee contributions.

A report in The New England Journal of Medicine traces the spread of the recent Ebola outbreak from Gueckedou, Guinea, to nations worldwide. As The NY Times reports, West African governments have gone 'medieval' as they have revived a disease-fighting tactic not used in nearly a century: the “cordon sanitaire,” in which a line is drawn around the infected area and no one is allowed out. And most worryingly, Reuters reports that a nurse who had close contact with a Liberian Ebola patient skipped quarantine in Lagos and went to her home in the eastern city of Enugu, where she made contact with 20 other people.

From Ukraine to Gaza, geopolitical risks are weighing heavily on investors’ minds. But there are plenty more out there that may not be getting headlines.

Last night we nearly exploded when the adminstration tried to explain how the 130 Marines (military advisers) were non-combat troop 'boots-on-the-ground' in Iraq. Today, the State Department, Pentagon, and White House are all out with mind-numbing propaganda to reassure an anxious America that a planned rescue mission of 'thousands' of Yezidi will be entirely supported by non-combat troops.

The not so good news about today's Treasury auction, the second of the week in which $24 billion in 10 Year paper was sold, is that the yield came at 2.439, which was a 0.4 bps tail to the When Issued. The good news is pretty much everything else: the Bid To Cover jumped from July's 2.57 to 2.83, well above the TTM average of 2.68. Indirects took down 47% of the auction, also an improvement of the 39.6% last month, and above the past year average as Direct takedown also rose modestly from 13.9% to 15.1%, which however was just below the TTM average print. The plug, dealers, were left holding 37.9% of the auction: the least since May.  Overall, a rather uneventful auction.

Now that everyone is finally focusing on the strategy of bloating any available company with massive leverage in order to use the proceeds to either buyback stock or engage in "synergy-creating" M&A (leading to countless pink slips), which is affectionately known as "activism", here is Bill Ackman's latest, Q2, letter with his take on this topic of how massive leverage which is great for shareholders now, but a disaster waiting to happen for employees and bondholders in the future as soon as rates rise, is the greatest thing since sliced bread.

Update: it took minutes for another media outlet, a Russian one again, this tima RIA, to deny the Itar-TASS report.

Moments after the tragic news that Brazil's presidential candidate Eduardo Campos died in a plane crash, Russian Itar-Tass reported, citing press agency Novorossya, that another prominent public figure, this time the leader of the Donetsk rebels and the minister of defense of the Donetsk People's Republic has been "seriously injured."