Retirement is still on for now. Late-minute desperation (in EURJPY) dragged the Dow just back over 16,000 and the S&P limped above 1,800. Bonds were sold (though less aggressively than gold and silver) and the USD rallied as early exuberance gave way to an uglier realization that good-news-is-really-bad-news after all following today's data. Volume was average as VIX continued to rise to 14.3% - its highest close since mid-October as we see the 4th session in a row with selling into the close. Today was the worst frst-day-of-month for the S&P since May.
From the start of 2012, the S&P 500 up over 40% with the bulk of that surge coming since QE3 (and 4EVA) was unleashed. Until that point, Goldman's global risk and macro models had stayed relatively well synced with stock market 'reality' but once that torrent of liquidity was released, all bets were off. As the following chart shows, more than half the equity market performance is due to factors unrelated to risk, macro fundamentals, or country-specific factors. So, BFTATH of course?
The rock is reality. The squishy place is the illusion that pervasive racketeering is an okay replacement for an economy. The essence of racketeering is the use of dishonest schemes to get money, often (but not always) employing coercion to make it work. Some rackets can function on the sheer cluelessness of the victim(s).
Spot Silver is trading back to early July 2013 levels as it drop 4.1% - its biggest down-day since the SeptTaper debacles began. Gold is also being monkey-hammered; down 2.9% for the biggest drop in 2 months. Meanwhile, Bitcoin is on the rise...
Are Another 1.3 Million Americans About To Drop Out Of Labor Force (And Send Unemployment Plunging)?Submitted by Tyler Durden on 12/02/2013 - 14:40
With even the Fed somewhat challenging the credibility of the official unemployment rate - as labor force participation collapses structurally - the possibility that if Congress does not act by Dec 28th, a further 1.3 million people will lose emergency aid and may be deemed 'out' of the labor force merely exaggerates an already farcical situation. As JPM's Mike Feroli notes, the "official" unemployment rate may drop up to 0.8 percentage points, but it won't mean the economy is any better. Is this the 'excuse' the Fed needs to transition from QE to forward guidance (with the public seeing only a rapidly collapsing unemployment rate as evidence of their success) even as the data that they are so "dependent" on becomes worse than useless?
The Fed is absorbing over 0.3% of all Ten Year Equivalents, also known as "High Quality Collateral", from the private sector every week. The total number as per the most recent weekly update is now a whopping 33.18%, up from 32.85% the week before. Or, said otherwise, the Fed now owns a third of the entire US bond market.
Here's your Excuse Book, America. There's something for almost everyone. Luckily, there is still an infinite abundance of excuses, guilt-tripping, victimhood, rage against those with "more" (never mind what they sacrificed to build it) and denial of choice, consequence, risk and fact. Sadly, there are consequences to the pursuit of victimhood and the denial of will, choice, consequence, risk and fact, and they will be consequential indeed.
If the unfortunate, yet hilarious, sinking of the Costa Concordia cruise liner in January 2012 off the Tuscan coast was the best symbol of the foundering Eurozone, then we are unsure just what the symbolic value is of the fire that raged over the weekend on the Majestic International’s Ocean Countess cruise ship while laid up at a shipyard in Greece.
Of the 92 firms that offer their guesses at the GDP data, Goldman is now 6th lowest as today's construction spending disappointment pressured their estimate for Q4 2013 GDP to a mere 1.3%. Deutsche Bank's Joe Lavorgna still tops the list at 3.5% - so quite a dispersion.
Putin Announces Russia Not Involved In Ukraine Unrest, Says Local Events Are Not A "Revolution" - Live StreamSubmitted by Tyler Durden on 12/02/2013 - 12:27
While events in the Ukraine continue down a very slippery path, and just a few short minutes ago the Prime Minister Azarov fired the Kiev chief of Police who got into hot water over the weekend for various clips showing Police brutality in dealing with demonstrators, one specific party that is keeping a very close eye on the ongoing developments is Russian leader Vladimir Putin who scored a major victory over Europe when he managed to realign the Ukraine away from the EU and sign a trade pact with the "European bread basket" nation, an event which according to the prevailing narrative the main reason for the surge in civil discontent as hundreds of thousands took to the streets over the weekend. As such, it is important to keep track of news not only from Kiev but also from Moscow. One such update which came moments ago was the following:
- President Vladimir Putin has said Russia respects any choice made by Ukraine, Dmitry Peskov tells Bloomberg in Yerevan, Armenia.
- Russia not in talks with Ukraine on loans, bailout
- Russia not involved in current unrest in Ukraine: Peskov
This came just hours after Putin stated that events unfolding in Ukraine should not be described as a revolution, but were rather more reminiscent of a “pogrom.”
Over the past 30 years, the rise in the price of Christmas according to PNC's annual 12-days-of-Christmas price index has matched the CPI at around 2.9% YoY. However, in recent years, the reality is considerably worse than the well-managed inflation data the government profers. The price of Christmas in 2013 is up a stunning 7.7% over 2012 - the biggest jump since 2010' 9.2% rise. The biggest driver of the increase were the dancing ladies (must be the minimum wage decree?) though 8 items saw modest increases also. Once again, it seems the government's benign inflation data is fictionalized by reality's rising price of everything.
While nobody is impressed by breaking equity and options markets anymore, since this has become a virtually daily ocurrence and the habituation level is high, bond markets, and especially the US government's "guaranteed" bond issuance machinery, are a different matter altogether. Which is why any time something out of the ordinary happens, people pay attention. Such as what happened moments ago when the US Treasury announced that it would delay the closing of the 3 and 6 month Bill auctions, originally scheduled to close today, to tomorrow. The reason: "an error that occurred during a test of Treasury's auction system."
With Ukraine's CDS spiking and the protests growing ever more violent, the government is oddly honest:
- *AZAROV SAYS KIEV PROTESTS SPINNING OUT OF CONTROL: INTERFAX
- *AZAROV SAYS GOVT AWARE OF PLAN TO SEIZE PARLIAMENT BUILDING:IFX
- *AZAROV SAYS UKRAINE ASKING WEST FOR HELP TO CALM PROTESTS: IFX
Of course, the only voice that matter is still calm:
- *PUTIN SAYS CRISIS IN UKRAINE WILL SUBSIDE
Is that a directive or a statement...?
While it is not a surprise, and had been reported previously, there is a certain dose of humor in Reuters reminding us that Jeffrey Zients, who is currently tasked with fixing Obamacare.gov Healthcare.gov (and which crashed yesterday for CNN when it experiment with the upgraded website), will soon be leaving his post and replace Gene Sperling as Obama's top economic advisor. Surely if anyone can fix the economy, it is the man who has hired every private sector sysadmin genius and managed to expand the 500 million lines of code website to accomodate a few more thousand simultaneous requests.... before it crashes again.