• Sprott Money
    01/30/2015 - 08:31
    The quick-and-easy way to categorize the retail sector of the U.S. economy would be to use the metaphor of “falling off a cliff”. However, such a characterization would be overly simplistic. A...
  • ilene
    01/28/2015 - 19:33
    Suppose you could print up counterfeit dollars, euros or yen that were identical to the real things. Fun, you think? Here's how it plays out. 

Tyler Durden's picture

Perfectly Broken Market Ramps On Yesterday's News

Was it just yesterday that this efficient market rallied on Boehner's return and news that Obama will propose a scaled back Democratic Plan B (subsection ii, para (a))? Perhaps - or did we dream it? Anyway, stocks are beholden to nothing but the next flashing red headline and so - a 7 point ramp in the S&P 500 is warranted for no news whatsoever of any consequence:

  • *OBAMA TO MEET WITH CONGRESS LEADERS AT WHITE HOUSE TODAY
  • *OBAMA SAID TO PLAN OFFER OF SCALED-BACK BUDGET PACKAGE TODAY
  • *OBAMA PLAN SAID TO AVERT SOME OF TAX AND SPENDING CHANGES


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The Senate Can At Least Agree On One Thing

While coming to some agreement over living within America's means now seems hopelessly beyond the ability of Congress, at least the Senate can agree on one thing:

  • U.S. SENATE HAS ENOUGH VOTES TO RENEW WARRANTLESS WIRETAP LAW - BBG
  • WIRETAP LAW LETS U.S. GOVERNMENT MONITOR E-MAILS AND CALLS

In other words, when it comes to spying on its citizens, the US government is quite united. It will also be unanimous when it has to vote its annual COLA salary increase to keep up with the true 10% inflation.



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Chicago PMI Rises Even As Employment Index Slides To Three Year Low; Respondents Warn On Obamacare

If there was any good news in today's Chicago PMI, it is that the headline number beat expectations of 51.0, rising from November's 50.4, to 51.6, leaving the two months of sub 50 prints in September and October in the past, or so the ISM institute would like us to believe. Because a casual glance at the data reveals that things are actually getting worse, with the Employment index plunging from 55.2 to 45.9, the lowest print in three years, while the all critical Capital Equipment buying policy plunged to a new 28 month low. So much for that CapEx spending. In fact the only indicator that posted an increase in today's release was the New Orders index which jumped to 54.0 while Order Backlogs, Supplier Deliveries, and Prices Paid all dropped. And for those hoping that in Q4 that inventory glut will finally clear itself, we have news: it won't -the Inventory index posted yet another jump, from 47.1 to 49.8. And while the data was ugly, perhaps the saddest, or funniest blurb, came from one of the respondents, which probably captures business sentiment in America with absolute precision: "We are on a hiring freeze in Q4, waiting to assess the outcome of the fiscal cliff deliberations. We are also planning cutbacks due to increased healthcare costs and Obamacare related expenses." Nuf said.



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Another Flashing Red Light: Euro Liquidity Shortage Leads To First ECB Sterilization Failure Since November 2011

The ECB's original bond monetization program (the SMP) may now be defunct, having been replaced with the mythical OMT which will work as long as it never has to be used (see Spain), but its aftereffects linger on. Specifically, the aftermath of the SMP manifests itself in the weekly sterilization of accrued SMP bond purchases, which at last check amounted to some €208.5 billion. Why do we bring this up? Because a few hours earlier, the ECB failed, for the first time, to find enough demand and interest to sterilize the full amount of rolling peripheral bond purchases, and was instead able to find only enough bidders, 43 of them or the lowest in a year, to "sterilize" just €197.6 billion of the total weekly allottment. The last time the ECB failed in a sterilization action? November 29, 2011, one day before the coordinated global central bank bailout of 2011.



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Instragram Loses 25% Of All Users In Aftermath Of Rule Change Fiasco

It seems between photos of the family Zuckerberg brunching Christmas Day and the revolt against the rules change, Instagram has been slapped with an exodus of users. As NY Post reports, Instagram, which peaked at 16.4mm users the week it rolled out the policy change, had fallen to 12.4mm users as of yesterday - a massive 25% plunge. The terms of service change which enabled the selling of user's photos 'without any compensation' seems to have perturbed more than a few tweens (including Justin Bieber and one of the Kardashians). How quickly the worm turns as these 'fad' sites come and go; from its busiest 24 hours over Thansgiving to a 25% plunge by Christmas - and all this as Twitter steps up its competition. We are sure that Facebook was priced for this decline though and will monetize the mobile exodus.



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Run-Time Error -2147418113: Catastrophic Failure

Apparently this is the message that popped up on the Congressional computer system when they were scheduling the last, last, last minute meeting before jumping over the cliff. The techies worked for hours I have heard but to no avail. What is interesting about this is that neither the computer geeks nor the people in charge of our government has any responsible position that is really useful to prevent the failure that is about to take place. The best that can even be hoped for now is some minor change in the rigging which may be heralded as “the fix to fix all fixes” but will be of little importance when considered in the light of day. I think the odds of any grand scheme that will honestly make a difference is equivalent to the value of a toe nail clipper when performing brain surgery.



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‘Fiscal Cliff’ Distracts As ‘Fiscal Abyss’ In Japan, UK and U.S. Cometh

The U.S. federal deficit is now exceeding $1 trillion dollars every year —up from $161 billion in 2007, the last year before the financial crisis. Spending is up some $1 trillion, as outlays for Social Security, Medicare, Medicaid and other entitlements have increased by an amount equal to the entire 2013 military budget – a budget which may again surpass the combined military expenditure of every other nation in the world. U.S. unfunded liabilities are now estimated at between $50 trillion and $100 trillion and by the end of the decade (in less than just 7 years), runaway entitlement spending will require shutting down the military or crippling many other vital domestic spending programs to head off massive deficits that will likely lead to a dollar crisis and significant inflation. No matter what deal is eventually agreed, whether before or after the new year, it will at best nibble at the edges of the trillion dollar annual deficits that are being piled up. While all the focus has been on the so called U.S. ‘fiscal cliff’, amnesia has taken hold and many market participants have forgotten about the far from resolved Eurozone debt crisis – not to mention looming debt crisis in the UK and Japan.



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China Passes Law Legalizing Deletion Of Internet Posts Or Pages Containing "Illegal" Information

While the US is caught in a rancorous debate over allowing the government to define just what was and wasn't meant by the Second amendment, and how best to limit it and give the government even more powers, China is more focused on its version of the First. Because on Wednesday we reported that in its attempt to make the Internet "healthier, more cultured and safer" and to curb what Chinese regulators dub "rumors and vulgarity" it would pass a law making internet anonymity impossible. Sure enough, said proposal has now been enacted into law, which just happens to also ensure that the First amendment is never an issue China has to worry about. Per Reuters: "China unveiled tighter Internet controls on Friday, legalizing the deletion of posts or pages which are deemed to contain "illegal" information and requiring service providers to hand over such information to the authorities for punishment. The rules signal that the new leadership headed by Communist Party chief Xi Jinping will continue muzzling the often scathing, raucous online chatter in a country where the Internet offers a rare opportunity for debate." So much for reform. And so much for a democratic definition of what constitutes "illegal" information. But fear not: like in China, once the various US amendments start seeing encroaching government "redefinition" ultimately they it will be the First's turn. Alas, by then it will be too late: any complaints will by then be deemed "illegal" too.



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Frontrunning: December 28

  • Lawmakers, Obama in last chance talks on "fiscal cliff" (Reuters)
  • Obama Summons Congress Leaders as Budget Deadline Nears (BBG)
  • Hopes for fiscal cliff deal fade  (FT)
  • Iran starts navy drills in Strait of Hormuz (Reuters)
  • Looming Port Strike Deadline Pressures Obama to Intervene (BBG)
  • Home Depot to Lowe’s Busiest Season Threatened by Strike (BBG)
  • 'Whale' Capsized Banks' Rule Effort (WSJ)
  • China tightens Internet controls, legalizes post deletion (Reuters)
  • Goldman Sachs Buying Japan’s Exporters on Abe Policy Bets (BBG) and preparing one Goldman alumnus to take over the BOJ
  • IPOs Slump to Lowest Level Since Financial Crisis After Facebook (BBG)
  • Blackstone seen sticking with SAC despite insider trading probe (Reuters) - what a shock
  • Mistry at Tata Helm as Investors Query $500 Billion Goal (BBG)
  • High-Speed Traders Race to Fend Off Regulators (WSJ)


Tyler Durden's picture

Same Cliff Different Day

We could say that news is actually relevant or matters in this "market" but we would be lying, just as we would be lying if we said that this market has not become so utterly predictable, with yesterday's late day market surge - on yet another ridiculous catalyst - visible from so far away, it was almost painful to watch it take place in real time. Sure enough, futures are now sliding back, and giving back much of yesterday's gains - but don't worry, in a day full of even more meetings and flashing red headlines, at least some combination of carefully phrased MSM words will set off today's algo-driven buying frenzy, guaranteeing yet another "retail investor" decides they have had it with this farcical "free market" casino for ever.



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The Real Crisis: "People Have Lost Trust In The Government And The Market"

The death of the 'cult of equities' was a popular topic this year among both fringe blogs and the best-known institutional asset managers and sell-side strategists. As AP discusses in this excellent article, ordinary Americans - defying decades of investment history - are selling stocks for a fifth year in a row. It's the first time ordinary folks have sold during a sustained bull market since relevant records were first kept during World War II. The answer is both complex and simple but summed up best by a former stock analyst's comment that in order to buy stocks "You have to trust your government. You have to trust other governments. You have to trust Wall Street, and I don't trust any of these." With Fed policy trying to force investors back into stocks (at any cost), a former fund manager notes, presciently that, "When this policy fails, as it will, baby boomers will pay the cost in their 401(k)s." Are we the new 'Depression Babies'? We suspect so.



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Guest Post: Jobless Claims Not Translating Into Full-Time Jobs

While the decline in initial jobless claims from a historical perspective should be a positive for economic growth in the future - it is likely to only be the case if employers began to convert part-time employees to full-time hires.  This has been the hope since the end of the "Great Recession" yet subpar economic growth, increased productivity and weak consumer demand has kept businesses on the defensive to maintain profitability.  The disappointment, from an economic standpoint, is that jobless claims could well hit much lower levels without a translation into stronger economic growth or significantly increased incomes.



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The Farce Is Complete: In The Case Of Countrywide, Congress Finds Itself Innocent Of Being "Friends Of Angelo"

Just when you thought the seemingly endless rabbit hole of Wall Street-Washington corruption, cronyism, co-option, crime and kickbacks may have finally come to an end, here comes the House Ethic Committee to pronounce that no ethics breaches were found among House members in its investigation involving the scandal surrounding Countrywide "VIP loans" and the "Friends of Angelo." And in just doing so, the House effectively cleared itself of any wrongdoing and that's it, case closed - move along... Move along.



Tyler Durden's picture

Another Bait And Switch: Congress Defeats E-Mail Privacy Legislation... Again

This is how the corporate state rolls.  They remove all the important stuff at the last minute, you know, like provisions that might actually protect constitutional rights.  This is exactly what they just did with the NDAA. Repeat after me: Your Government Loves You.  Now go back to sleep.



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Savings Deposits Soar By Most Since Lehman And First Debt Ceiling Crisis

A month ago, we showed something disturbing: the weekly increase in savings deposits held at Commercial banks soared by a record $132 billion, more than the comparable surge during the Lehman Failure, the First Debt Ceiling Fiasco (not to be confused with the upcoming second one), and the First Greek Insolvency. And while there were certainly macro factors behind the move which usually indicates a spike in risk-aversion (and at least in the old days was accompanied by a plunge in stocks), a large reason for the surge was the unexpected rotation of some $70 billion in savings deposits at Thrift institutions leading to a combined increase in Savings accounts of some $60 billion. Moments ago the Fed released its weekly H.6 update where we find that while the relentless increase in savings accounts at commercial banks has continued, rising by another $70 billion in the past week, this time there was no offsetting drop in Savings deposits at Thrift Institutions, which also increased by $10.0 billion. The end result: an increase of $79.3 billion in total saving deposits at both commercial banks and thrifts, or an amount that is only the third largest weekly jump ever following the $102 billion surge following Lehman and the $92.4 billion rotation into savings following the first US debt ceiling debacle and US downgrade in August 2011.



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