Archive - Mar 12, 2015 - Story

When things are this obviously crazy, anything is possible.

China now has the opportunity to take a dominant role in London, without having to direct its order flows through the fixing banks. Therefore, it is no exaggeration to say that from 20th March, China will be able to control the global physical gold market, which will permit her to manage the price. She has the deepest pockets, backed by the largest single stockpile.

Since QE has been far and away the most important variable impacting the economy and markets since the crisis, ignoring its impact on wealth inequality is simply unforgivable. Yet, it’s more than that. Much more. Many of the polices existing in these United States not only encourage foreign oligarch money laundering into luxury skyscrapers that remain empty, but our society seems to go out of its way to ensure they have to pay as little in property tax as possible. Indeed, tax polices don’t benefit the rich, they benefit the super rich. Nowhere is this more apparent that in the oligarch capital of America, New York City.

If Vladimir Putin is alive and remotely capable of laughter (the jury is out on that one...) then he’s probably doing so right now. For the last several months, despite numerous warnings of the consequences, the US and UK governments have been pushing to block Russia from the SWIFT payments system. And so what is utterly hilarious - On Monday afternoon, not only did SWIFT not kick Russia out... but they announced that they were actually giving a Board Seat to Russia.

A new report suggests that the government agency in charge of backstopping private-sector pension plans (the Pension Benefit Guaranty Corporation) isn’t entirely optimistic about its own ability to provide an effective safety net for multiemployer plans. In fact, more than half of participants will see their benefits cut if their plans become insolvent and are forced to turn to government guarantees.

GM did $20.4 billion worth of buybacks from 1986 through 2002. If it had saved that money and earned a modest 2.5% on it, the company would have had $35 billion on hand when the financial crisis and Great Recession hit and probably would not have had to file for bankruptcy protection. As Bob Lutz, the veteran auto executive, said recently, stock buybacks are “always a harbinger of the next downturn…in almost all cases, you regret it later”... Taxpayers and workers brought GM out of bankruptcy, yet it is the hedge funds that will reap the biggest rewards. Taxpayers and workers should demand that open-market repurchases by all companies be banned. Stock buybacks manipulate the stock market and leave most Americans worse off. In this case, it is clear that what is good for the hedge funds is bad for the United States.

What is the chance of the S&P 500 entering a bear market in 2015?

Accused of illegally repossessing cars from active-duty service members, Santander Consumer has agreed to pay $9.35 million to the Justice Department in the largest auto reposession-related settlement in history. A look at the company's subprime auto securitizations speaks volumes not only about the lender, but about the furture course of subprime ABS issuance in the US.

From February through May, gas prices have historically tended to rise. However, between refinery strikes and shutdowns (and blend transitions), 2015 has seen gas prices rise from the start of February at the fastest pace on record. Despite the total lack of 'surge in consumer spending' from the low gas prices that we were promised, the velocity of this price rise is eerily reminiscent of the 2007 surge that, within months, saw the US in recession...

"Although the market seems obsessed with the euro/dollar parity, SG's Technical Analysis guru Stephanie Aymes stresses that it is the $1.05/1.04 level that is more important, being the lower limit of the EUR/USD?s massive upward channel (see chart below). Stephanie argues that the move since last summer has been relentless and is very similar to the one seen in the late 1990s. She suspects that a break below $1.05/1.04 will confirm that the ongoing move is not a correction of the upmove since 2000, but a much larger down move. In such scenario, the EUR/USD will achieve parity, but this may well be just a temporary support before the downleg extends towards $0.98/0.96 - and even perhaps towards the lows of $0.84/0.82 reached in 2000."

Herbalife stock is up over 5% after hours after WSJ reports Bill Ackman (among others) made false statement about Herbalife's business models to regulators - in order to spur investigations into the company and lower its stock price. This comes just months after Ackman kinda-sorta-didn't-really insider-trade in the Allergan 'scam' that we detailed here. We suspect Whitney Tilson (and his Lumber Liquidators positions) is getting a little nervous now... and Carl Icahn is quietly laughing to himself.

"I did not have typographical relations with anyone..."

The Greco-Germanic war of words continues... Having pissed off The Greeks with his "Troika" remarks, Germany's Schaeuble went on today to more ad hominum attacks by reportedly calling the Greek FinMin "foolishly naive." The Greek ambassador has 'officially' complained to "friend and ally" Germany about the personal insult. But The Greeks had the last laugh, as first Varoufakis and then Tsipras explained respectively that "Greece would never pay back its debts," and "Greece cannot pretend its debt burden is sustainable." The German response, via tabloid Bild, "there must be an end to this madness. Europe must not be made to look stupid."

"Shanghai remained the top Chinese city for average monthly salary, but major cities saw their salary decline, recruitment portal Zhaopin.com said in a survey.  But the average salary in Shanghai fell from last year’s 7,214 yuan in line with the 6 percent decline from a year ago to 6,518 yuan in the four largest Chinese cities, the survey showed."