Something Doesn't Add Up - Strong Jobs, Weak Spending, Sagging Sales

The recovery economists are so sure is right around the corner never is. What we can reasonably assume here is that the economy was bumped in a manner not seen since the Great Recession, and that we still don’t know how that will be resolved. The inventory problem is enormous and it at least suggests far more humility about assured rebounds that have never yet arrived and to which are based on arguable figures that at best are backward facing.

A Seasoned Trader "Remembers" The Flash Crash

We suspect, given the plethora of newly-minted immodest gurus in the investment world, the following "memory" of the 2010 flash-crash - from a seasoned modest trader - will be repeated many times as 2015 progresses.

Free Trade Is Plutocratic Propaganda

In 2003, Kevin Flanagan was an information technology employee at Bank of America. They told him he was being replaced with foreign labor, and he was ordered to train his replacement. After he completed his assignment, he was laid off. Then he went to the parking lot and shot himselfThat's "free trade."

EPS 'Beats' Lose All Meaning As Downward Revisions, Buybacks Mask Weakness

The good news: companies are beating earnings estimates by the widest margin in four years. The bad news: this has very little to do with strong corporate earnings and quite a lot to do with buybacks and analysts cutting estimates. In fact, bottom-up EPS estimates fell by 8.2% in Q1, nearly double the 1-, 5-, and 10-year averages and the largest decline since 2009. Meanwhile, repurchase authorizations hit a record in April and are now set to climb to an all-time high in 2015, providing a wonderful frontrunning opportunity for everyone from retail investors to the SNB.

The Economics Of Tesla's PowerWall Don’t Make Sense For Most Customers In North America

Just like the Tesla electric car was spun as a niche product which will be adopted by everyone in the US (and the world) but increasingly appears that not only will this fad fade away only to be replaced by the next such attention-grabbing gimmick created by someone else, so the PowerWall is a product that while clearly appealing to some 40,000 early adopters "it’s yet not clear that it will expand much beyond that." According to Catalytic Engineering, the PowerWall "economics don’t make sense for most customers in North America" and that "by itself, the Tesla PowerWall residential unit won’t disrupt the energy industry, as it’s looking like a niche product."

Hundreds Leave "Boss-less" Zappos As "Get-Paid-To-Quit" Scheme Backfires

Zappos CEO Tony Hsieh wasn't satisfied with how quickly his company was transitioning to an "unconventional" boss-less corporate culture, so he sent a memo to his 1,500 employees reminding them that Zappos will pay unsatisfied workers to quit. The result: some folks quit...

China Cuts Rates (Again) In Desperate Bid To Buoy Stocks, Rescue Economy

On the heels of last week's equity rout, China cuts interest rates for the third time since November. The move comes on the heels of last month's RRR cut and follows trade data that missed expectations (again) and a PPI print that betrayed persistent deflation risks. Perhaps more importantly, Chinese stocks fell last week amid still more rumors that tighter margin requirements are on the way. 

Isolated? China & Russia Celebrate Victory Day Together, Obama Absent

"When a Chinese honor guard joins a military parade in Russia’s capital this weekend, watched by China’s President Xi Jinping, it will mark more than just a symbolic recognition of the two countries' contributions to the Allied victory in 1945... They've basically come to a consensus that despite their differences over some national interests, they really face the same common enemy..."

Transformer Explosion At The Indian Point Nuclear Facility Near New York Is 'Contained'

The words "explosion", "New York", "black smoke", and "nuclear" strike fear into the heart of most people but according to Entergy - who runs Indian Point, "the nuclear facility has been safely shutdown following a transformer failure." Reports of a loud blast at the nuclear facility just 38 miles north of New York, with dense black smoke rising from Unit 3 are no concern and represent "no danger to public health and safety." The plant, which dates back to 1962 (although the currently used reactors were installed later in the 70s) had just been brought back online on Friday, after being shut down for a steam leak repair.

A Multinational Trojan Horse: The Trans-Pacific Partnership

Peel back the layers of the TPP and you’ll find what some believe to be a “corporate Trojan horse.” Disguised as “free trade,” the TPP’s provisions and tactics undermine Constitutional safeguards and national sovereignty. But there’s also a silver lining. The TPP exposes who, in the marbled halls of political power, is working for whom. It forces politicians to put their cards on the table, and by their hands you will know them. Packaged as a gift to the American people that will renew industry and make us more competitive, the Trans-Pacific Partnership is a Trojan horse. It’s a coup by multinational corporations who want global subservience to their agenda. Buyer beware. Citizens beware.

Two Years Later, The VaR Shock Is Back

"The sharp rise in bond volatility over the past week or so is reminiscent of the VaR shocks of October 2014 in US rates and April 2013 in Japanese rates," JP Morgan says, before explaining how volatility induced selling (i.e. a VaR shock) is behind the rout in German Bunds. Predictably, QE has helped create the conditions which make such episodes possible.

Russell Napier Explains What's In Store For Gold If Cash Is Outlawed

"If banknotes are outlawed you will be forced to hold money that is a liability of a commercial bank (deposits) and refused access to money that is the liability of the central bank (bank notes)... In such a world, zero-yielding gold would be a high-yielding instrument. If the authorities ever sought to restrict access to banknotes, then gold would suddenly find itself enfranchised as money for the first time in many decades. So, given the scale of these competing forces, it is just too early to say what might happen to the gold price, but the allure of gold will grow the more it becomes clear that central bank fiat has failed and the age of government fiat is dawning."

Putin Celebrates 70th Anniversary Of Victory Over Hitler, Warns Of Dangers From Unipolar World

"... in the last decades, the basic principles of international cooperation have come to be increasingly ignored. These are the principles that have been hard won by mankind as a result of the ordeal of the war. We saw attempts to establish a unipolar world. We see the strong-arm block thinking gaining momentum. All that undermines sustainable global development. The creation of a system of equal security for all states should become our common task. Such system should be an adequate match to modern threats, and it should rest on a regional and global non-block basis. Only then will we be able to ensure peace and tranquillity on the planet."

The Charts That Matter - Everything's Relative

"It's all relative," as Einstein likely said once, and the following 18 charts from's Loic Schmid highlight a few clear divergences - Overweight cash as "the end is near" for US equities, buy dips on weakness in EU debt and gold, position for increasing vol...

The "Wrong" Reason Why Bernanke Is Making Bank

Why would financial firms pay so much for blogger Ben Bernanke’s thoughts? Aside from the marketing benefits we noted, there is one good reason. In essence, you’d want to know what Bernanke would think if he were wrong or ill-informed about some important economic issue. That is something money managers understand in a way that academics and policymakers do not, for being wrong – and knowing what to do next – is a critical skill for the professional. Getting the most information from Bernanke, either in a one-on-one or just reading his work online, boils down to just two questions: “What doesn’t he know” and “What is he sure of that is actually wrong?”

Record Numbers Of Americans Renounce US Citizenship

According to the IRS, in the first quarter of 2015 a record 1,335 Americans renounced their citizenship, 26% more than in the previous quarter, and 18% more than the previous all time high quarter which was in Q2 of 2013. If one anualizes the Q1 number, the number of 2015 expatriates is set to hit roughly 5,340, or a 56% increase to what was already the record expatriation year of 2014, in which 3415 Americans punched a hole through their passport.

Wall Street Is One Sick Puppy

In welfare state America its virtually certain that through one artifice or another taxes will go up and the national debt burden will rise to crushing heights in order to keep the baby boomers’ entitlements funded. While Keynesians and Wall Street stock peddlers are clueless about the implications of this - it actually doesn’t take too much common sense to get the drift. Namely, under a long-term path of fewer producers, higher taxes and more public debt, the prospects for rejuvenating the previous historically average rates of real output growth are somewhere between slim and none - to say nothing of the super-normal rates implied by the markets’ current bullish enthusiasm.

Why There Is No Treasury Liquidity In One Chart

The amount of ten-year equivalents held by the Fed decreased to $1.835 trillion from $1.849 trillion in the prior week, which reduces the amount available to the private sector to $3.944 trillion from $3.919 trillion in the prior week. There were $5.778 trillion ten-year equivalents outstanding, up from $5.768 trillion in the prior week. After the Treasury issuance, maturing securities, rising interest rates, and Fed operations during the week, the Fed owned about 32.05% of the total outstanding ten year equivalents.