"Our positive 2013 outlook for S&P 500 has played out much faster than we expected." That is how the latest equity update from Goldman Sachs, which until today had an S&P target of 1625 for the year end S&P, begins. And, logically, the only option for Goldman is to hike its outlook even more, because not even the Squid apparently could anticipate how quickly the policy it forced down the throats of central banks around the world, levitated markets to surpass its old price targets. The result is David Kostin (who until December had foreseen 1250 on the S&P for the end of 2012) and company were forced to goalseek even higher targets based on tried and true excel model fudging exercises, and such "value" creation as multiple expansion and dividend payments. To wit: "Our earnings estimates remain unchanged but we raise our dividend estimates and index return forecasts for 2013 through 2015. We expect S&P 500 will rise by 5% to 1750 by year-end 2013, advance by 9% to 1900 in 2014, and climb by 10% to 2100 in 2015. Our 2013 return implies a year-end P/E of 15.0x, a one multiple point premium to our fair-value estimate. We forecast dividends will rise by 30% during next two years. Dividend yield is likely to stay around 2%, in line with the 20-year average." For the record, Goldman had previously seen 1,900 in 2015. And now it sees another 200 points of value due to the magic of multiple expansion. That anyone can even pretend to forecast what happens three years into the future at a time when the central banks are injecting $160 billion (and soon $200 billion), and most likely will have to slowdown and halt such liquidity injection resulting in untold stock market carnage, is so beyond commentary we will leave it hanging for the ridiculous statement it is.
- IMF Tells Central Europe to Spend More (WSJ)
- Tornadoes Blast Oklahoma (WSJ)
- Frenetic search for survivors as 91 feared dead in tornado-hit Oklahoma (Reuters)
- JPMorgan investors on edge over vote on Dimon; what if they win? (Reuters)
- Wealthy bank depositors to suffer losses in EU law (Reuters)
- Yen Slips as Amari Backtracks (BBG)
- Japan Ready for More Yen Weakness Despite Recent Comments (WSJ)
- IRS officials back on Capitol Hill hot seat over targeting (Reuters)
- Li Keqiang pledges China boost to India trade (FT)
- Europe's Recession Sparks Grass-Roots Political Push (WSJ)
- Obama and Xi to meet in effort to calm growing US-China rivalry (FT)
- Berlin plans to streamline EU but avoid wholesale treaty change (FT)
- France must reform or face punitive measures - EU's Oettinger (Reuters)
Another event-free day in which the only major economic data point was the release of UK CPI, which joined the rest of the world in telegraphing price deflation, despite bubbles in the real estate and stock markets, printing 2.0% Y/Y on expectations of a 2.3% increase, the lowest since November 2009 and giving Mark Carney carte blanche to print as soon as he arrives on deck. In an amusing twist of European deja-vuness, last night Japan's economy minister who made waves over the weekend when he said that the Yen has dropped low enough to where people's lives may be getting complicated (i.e., inflation), refuted everything he said as having been lost in translation, and the result was a prompt move higher in the USDJPY, quickly filling the entire Sunday night gap. That said, and as has been made very clear in recent years, data is irrelevant, and the only thing that matters, at least so far in 2013, is whether it is Tuesday: the day that has seen 18 out of 18 consecutive rises in the DJIA so far in 2013, and whether there is a POMO scheduled. We are happy to answer yes to both, so sit back, and wait for the no-volume levitation to wash over ever. The US docket is empty except for Dudley and Bullard speaking, but more importantly, the fate of Jamie Dimon may be determined today when the vote on the Chairman/CEO title is due, while Tim Cook will testify in D.C. on the company's tax strategy and overseas profits.
The theory of Petrodollar Warfare can be attributed to US analyst and author William R Clarke, and his 2005 book of that title which interpreted the US-UK decision to invade Iraq in 2003. He called this an "oil currency war", but the concept of the petrodollar system and petrodollar recyling dates back to the eve of the first Oil Shock in 1973-1974. The role of the petrodollar system as a driving force of US foreign policy is explained by analysts and historians as basic to maintaining the dollar's status as the world's dominant reserve currency - and the currency in which oil is priced. Today however, with the major and massive changes of oil resource availability revealed by the shale energy revolution, rising global oil production capabilities, stagnating oil demand, and rising renewable energy supplies in all major developed countries, and the constantly declining role of oil in the economy, the Petrodollar System's days are surely numbered
A few days when reporting that the Russian Pacific fleet had crossed the Suez canal for the first time in decades in order to form a Mediterranean task force parked in Cyprus for obvious symbolic reasons (in close proximity to Syria and the Israel-parked Kearsarge), some observed that while the submarine support was adequate, the actual warship fleet designated to support any potential escalation in Syria would be largely insufficient. Perhaps the Russian Navy heard these complaints, and several hours ago RIA reported that two extra warships from the Russian Black Sea fleet had joined the Mediterranean task force, citing Capt. First Rank Vyacheslav Trukhachyov, has said. None of these recent deployment should come as a surprise: in March Russian Defense Minister Sergei Shoigu said a permanent naval task force in the Mediterranean was needed to defend Russia’s interests in the region. Read Syria, Cyrpus (where the task force will be on anchor indefinitely), and, of course, any and all western offensive involving Iran. And slowly but surely said task force is nearing completion.
An increasing number of people have complained about governments and central banks in recent years, even using the word “tyranny” to describe them. They are, of course, called names in the establishment press: conspiracy theorists, mainly. Calling someone a name, however, does not erase their argument (at least not among rational people) and both the governments and the big banks stand accused. Up till now, however, these accusations were never accepted by the general public. The average guy really didn’t want to hear about the evils of government money. After all, that was the only thing he had ever used to buy food, clothes, gasoline, cars, and so on. He didn’t want to acknowledge the accusations because he feared what might happen to him without his usual money. Now, however, we have a brand new currency (called Bitcoin) available to us: something radically different. This gives us a new way to directly address the subject of monetary tyranny, providing a clear test for the governments and money masters of the world.
"Earnings are the mother's milk of the stock market," is the oft-repeated anthem of a million marching lemmings; parroting the same phrase come hell or high-water in the dismal hope that they can gather moar assets-under-management, garner moar fees, and make moar TV appearances. However, as the chart below shows, we suspect perhaps given the reality of earnings expectations that the new normal mantra for stocks-for-the-long-term should be - "Central Bank liquidity is the PCP of the stock market."
Last September, when we exposed the heretofore unknown entity actively managing Apple's $100 billion+ in offshore held cash (and thus untaxed in the US), we made the following "bold" prediction: "with the topic of finding effective tax loopholes which are perfectly legal, yet which apparently are unfair, serving as the basis of the entire presidential race to date, what Apple can be absolutely certain of is that once the farce culminating on November 6 is over, the government's eye will finally turn to minimizing "externalities" among such companies which have been able to pass through corporate tax savings to end consumers by abiding within the legal system that countless other muppet congressmen, senators and presidents have developed over the ages. Because while AAPL may have built the iPhone, very soon it will be only fair that it share its profits acquired over the years, and thus its cash balance...with the general public." Or in other words, in September we predicted the Apple "tax witchhunt" would take place shortly after Obama won his reelection. Today, it has officially begun.
The Arctic is expected to become more important in the coming decades as climate change makes natural resources and transport routes more accessible. Satellite data collected since 1979 shows that both the thickness of the ice in the Arctic and range of sea ice have decreased substantially, especially during the summer months. The melting of the ice facilitates natural resource exploration in the high north. U.S. Geological Survey estimates from 2008 suggest that 13 percent of the world's undiscovered oil and 30 percent of undiscovered natural gas reserves are located in the Arctic Circle. Reflecting the growing interest in the region, the Arctic Council granted six new countries (China, India, Italy, Japan, South Korea and Singapore) observer status during a May 15 ministerial meeting in Kiruna, Sweden.
In August of 2011, Argentina’s government slowly began to implement a series of actions destined to curtail the right of citizens to access US dollars (foreign exchange in general). The goal was and is to force savings into pesos, as pesos are after the taxable asset in a country that cannot access capital markets and fully monetizes its deficits. From that moment onward physical US dollars started to trade at a premium. First-hand experience on the ground in Patagonia confirm the irreversible damage caused by interventionist policies: Widespread poverty, abandoned infrastructure, scarcity of consumer goods, unseen unemployment and criminality, and the madness of hedging against inflation with the purchase of new cars. The streets of any forgotten small town in Patagonia are filled with brand new 4×4 vehicles that would be the envy of many in North America. We can now see that the sustainability of the manipulation in a segmented/broken foreign exchange market causes a negative carry, which would create a quasi-fiscal deficit in Argentina (i.e. the deficit of the Banco Central), fully opening the gates to hyperinflation.
Courtesy of NBC, here is 10-x sped up footage of the massive 2-mile wide tornado ripping through Oklahoma one short hour ago.
We continue to hear that the US is the cleanest dirty shirt or that the US economy is doing 'relatively' well as a reason for buying stocks now. Not only is this plainly incorrect (as we have pointed out rather vociferously in the recent past) it flies the face of the disconnect between macro and markets. The fact of the matter is that year-to-date, the US economic data performance is the equal worst (with Japan) of all major economic nations and regions. That is a bucket-load of hope for the second-half of the year - or, as we noted recently, is it just plain silly.
The devastation from what is being described as a mile-wide tornado is horrifying according to local news. The live feed and raw footage of the aftermath suggests casualty rates will be significantly higher as the evening progresses... "The tornado on the ground right now is huge and has hit through populated areas,"
White House Explains: Obama Didn't Know What He Knew When Everyone Else Knew What He Should Have KnownSubmitted by Tyler Durden on 05/20/2013 - 18:04
Here is The Hill with the White House's official explanation for what happened: "White House officials were notified of a Treasury Department inspector general report on the IRS but elected not to tell President Obama about it." In other words, neither the IRS was not aware of what is going on (recall the countless "I don't knows" and "I don't recalls") and apparently, neither was the president. And in fact, it was someone else's executive duty to make the decision what the chief executive of the nation is and isn't allowed to know.
You know something isn’t right in your country when you have a “religious police force.” You know something is really, really not right in your country when the head of that religious police force starts condemning twitter and saying its users will go to hell as a consequence - echoing comments from the imam of the Grand Mosque in Mecca in April who used his sermon – seen by millions on TV – to warn that Twitter was a threat to national unity.