Archive - Feb 5, 2015 - Story

The US chief analyst of Nordea, Johnny Bo Jakobsen, points out a curious statistical finding: in the past decade, consensus forecast over-estimated January reading on 9 out of 10 occasions. As the chart below shows, the average overoptimistic consensus miss for January is just about 50K, with the last time consensus was lower than the final result taking place in 2012, and before that, one has to go all the way back to 2003 for the second payrolls "beat".

In case algos still haven't gotten the message to jump all aboard into the S&P, here comes the CME with a gntle nudge in the form of 90 pages of margin hikes including Brent, RBOB and, just in case there is still anyone who wishes to trade paper precious metals against the BIS, silver. In fact, at first glance it appears the only future  whose margin was not hiked was stocks: apparently stocks are never volatile enough for a margin hike.

The Hong Kong government is so foolish that one official said: "There is a need to stimulate the city’s domestic consumption by introducing measures to leave more cash in the hands of the public." What are you talking about, man? Everyone knows that you stimulate the economy by increasing government spending, not reducing it and just leaving the people to decide what they’re going to spend it on. It’s insane.

On the surface, Twitter's Q4 numbers were good, with the company clocking in $479MM in revenue and $0.12 in EPS on consensus estimates of $454MM and $0.06. Of course, on a GAAP basis things were much uglier, with the company reported a loss per share of $0.20 cents in Q4, and a net loss of $577.8 million for 2014. However, as everyone knows, TWTR's value is not about its numbers, or rather adjusted numbers, but its user growth: after all the company has about a billion monthly active users it needs to catch up in order to compete with Facebook in total user engagement. And it was here that the company stumbled.

When the illusion that the Status Quo can fulfill all its promises to everybody dies, the Status Quo starts the terminal slide to effective collapse.

While today surprised some with its lack of images of Greeks standing in line furiously pulling cash from bank ATMs, as Bloomberg reports, Greeks are anxiously stashing cash in the most unusual places...

The earnings season is all over except for the shouting, but the outcome doesn’t remotely validate Wall Street’s happy times narrative. Reported Q4 earnings for the S&P 500 companies (with about two-thirds reporting) stand at $25.02 per share compared to $26.48 in the year ago quarter. That’s right. So far Q4 profits are down 5% but shrinking corporate profits is something that you most definitely have not heard about on bubble vision. But that’s just the tip of the iceberg. We have had a tremendous inflation of PE multiples during the last three years in anticipation, apparently, of the US economy hitting escape velocity and the overall global economy continuing to power onwards and upwards. As is evident from the financial news and “incoming” data, however, that presumption is not remotely correct.

The chart below, which presents not only the total amount of sovereign gold holdings, but indicates the percentage of the monetary base backed by gold reserves, shows something rather stunning.

For the 2nd time this week, the most-crowded trade in the world is getting exorcised. Just as we saw on Tuesday, The US Dollar is getting monkey-hammered lower driven by heavy buying of EUR (and a stop-run at 1.1500). CAD is also well bid (back under 1.24 against the USD). JPY is the only major that is ignoring this USD dump and is lower on the day... supporting the fundamentals of equity confidence.

Perhaps it is a coincidence that a day before John Kerry's arrival in Kiev (a visit which "coincided" with a 35% devaluation of the local currency) where among other things, he was supposed to discuss the possibility of official (as opposed to unofficial) deliveries of US "lethal support" to the civil war torn and now hyperinflation country, that Russia decided to put its nuclear ICBMs on combat patrol missions in various Russian regions. Specifically, according to Tass, "About 700 units of military equipment, including launchers are deployed in the positioning areas in the Tver, Ivanovo, Kirov, Irkutsk regions, as well as in Altai Territory and the Mari El republic."

“Elections change nothing,” said Wolfgang Schäuble, Germany’s tough-minded finance minister. He was talking about Greece, but he could have been talking about the entire EU racket. What else do the people absurdly known as “experts” have to do to convince us that they don’t have all the answers? The euro was their great endeavour, for Heaven’s sake. Yet, even now, they won’t admit that it was a mistake. Distrust of the masses is in the EU’s genome.

Seven years after the bursting of a global credit bubble resulted in the worst financial crisis since the Great Depression, debt continues to grow. In fact, as McKinsey explains in their latest report, rather than reducing indebtedness, or deleveraging, all major economies today have higher levels of borrowing relative to GDP than they did in 2007. They pinpoint three areas of emerging risk: the rise of government debt, which in some countries has reached such high levels that new ways will be needed to reduce it; the continued rise in household debt; and the quadrupling of China’s debt, fueled by real estate and shadow banking, in just seven years... that pose new risks to financial stability and may undermine global economic growth.