Archive - Aug 2015 - Story

We were amused to learn that in the quarter in which AAPL stock almost hit a new all time high, the Swiss Central Bank, which reported a record $20 billion loss in the second quarter, and a record $52 billion in the first half, added another 500,000 AAPL shares, bringing its new grand total to a whopping 9.4 million shares, equivalent to $1.2 billion as of June 30 (well below that now following the recent 10% correction).

It wasn’t until the Americans were free to issue unlimited amounts of ‘dollars’ that these claims lost their soundness in a rambunctious belief in the never-ending global supremacy of US manufacturing. Now the damage is done. The gross misallocations that have plagued the world economy for well over four decades cannot be corrected without a cataclysmic event that will dramatically change living standards as the US realign their manufacturing and service sectors. But it cannot continue indefinitely either. Something will have to give.

"The wealth management arm of Bank of America Merrill Lynch is liquidating its clients’ money from one of Paulson & Company’s funds and has put another fund under "heightened review,'" NY Times reports. As it turns out, this was not the year to be long Greece and Puerto Rico. 

Hillarinochio strikes again as The FBI unleashes a probe into her email server...

Another talking-head myth destroyed: there has never, ever, been a higher percentage of IPOs that are are unprofitable! It really is different this time, it's worse.

Low oil prices and the battle against Islamic State (IS) are pushing Iraq toward a financial crisis. Only fundamental reforms, especially decentralization of power, can resolve the challenges facing Iraq today.

Just two days after a jury agreed that Colorado theater shooter James Holmes could still face the death penalty for the tragic July 2012 mass shooting which killed 12 and injured 70, and a month after another shooter killed two and injured 8 before killing himself, moments ago WSMV reported that another active shooter situation had emerged in Nashville with the Nashville Fire Department confirming that shots were being fired at the Carmike 8 Cinemas on Bell Road at 1:55 p.m.

In the weeks before AAPL's adition to The Dow, the stock soared over 13% (for no good reason). In the almost 4 months since - after some sideways trading - AAPL shares have plunged. The announcement on March 6th, that AAPL would be included in The Dow on March 19th marked the end of exuberance and has now turned into a "no brainer" trade as the curse of The Dow strikes again. Ironically AT&T - which was replaced by Apple - has surged since its removal from the venerable index.

In historical context, this uninterrupted inventory accumulation is by any count extreme (the last time it was this high, scaled by real GDP, was just prior to the Asian flu in early 1998). This is a major problem for future growth, one that has been building for more than a year which is why the constant mainstream references to the great recovery are so very unhelpful. Anyone inclined to believe in the fantasy only makes this process more drawn out and, in the end, susceptible to that much greater of a downside to restore productive balance. In short, we already have the outlines of recession with the full weight of recession processes yet to be released.

In an attempt to publicly shame CEOs into lowering their pay, or boost the compensation they pay their employees (because the forces of labor supply and demand apparently no longer work) moments ago, in a 3-2 vote, the SEC approved a rule Wednesday requiring companies to reveal the pay gap between the chief executive officer and their typical worker. The problem: this latest attempt at wealth redistribution will backfire massively, lead to even higher comp for executives, while assuring an even faster collapse for the US middle class.

Paul Volcker's "policy and demeanor were very solid," explains Donald Trump in a brief Bloomberg TV interview, pointing out that the inflation-taming former Fed head is a role model for the type of central banker he would pick. While admitting he "has always done well in a low rate environment," Trumps slammed the current Fed's ZIRP for "creating a bubble.. and the bubble could explode." Trump had  - as usual - plenty to say on topics from Ex-Im Bank (against it as not "free enterprise"), to campaign financing (favoring full transparency of money in politics) careful to brag - jabbing at The Kochs - that "I don't need anybody else's money."

Pervasive “occupancy fraud in lending” – purposely misidentifying “investment” properties as “second/vacation” for the purpose of obtaining prime, “owner-occupied”, low-down payment mortgages vs expensive “investment” property loans — is back in a big way and driving housing demand, based on NAR’s “2015 Investment and Vacation Home Buyers Survey”. It comes on the heels of a multi-year cycle of increasingly “bad” appraisals – a widespread problem — by the Appraisal Management Companies (AMC) that in Bubble 2.0 are similarly conflicted, as independent residential appraisers were during Bubble 1.0 . Both appraisal and occupancy fraud are primary features to a speculative, house-price bubble. This is an identical replay of 2005 to 2007 that nobody recognizes, expects, or is even looking for, which will present an opportunity at some point.

"I could tell [Tsipras] was dispirited. It was a major victory, one that I believe he actually savoured, deep down, but one he couldn’t handle. He knew that the cabinet couldn’t handle it. It was clear that there were elements in the government putting pressure on him. Already, within hours, he had been pressured by major figures in the government, effectively to turn the no into a yes, to capitulate."