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Frontrunning: August 22

  • SURPRISE - Goldman Sachs won a preliminary victory to limit losses from a wave of erroneous trades that roiled U.S. options markets (WSJ)
  • HP’s Whitman abandons 2014 revenue growth target (FT) - just keep doing those buybacks and ignore CapEx: revenue growth estimated in 2022
  • Republicans in Echo Before Big Burn Defy Affordable Care (BBG)
  • China's banks to take next step in rate reform push  (Reuters)
  • Berlin’s Consistency on Greece’s Rescue (FT) and lack thereof
  • Summers as Obama Voice of Authority Rides Car Rescue in Fed Race (BBG)
  • Cuomo in Manure Fight as New York Promotes Yogurt (BBG)
  • Yellen’s Ties From London to Shanghai Bypass White House (BBG)
  • Sanctions Gap Allows China to Import Iranian Oil (WSJ)

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Key Events In The Coming Week

The week ahead will be relatively quiet with few major data releases. The main focus will be on the Flash PMIs in the Eurozone and China as well as the FOMC minutes and Jackson Hole. In the US the relatively new Preliminary PMI has been found useful by our US team in forecasting the ISM. Existing and new home sales are additional data points of interest in the US.  The key focus this week will be on central bank action. Minutes from the FOMC and the RBA will be followed by rate decisions in Thailand and Turkey. Finally, on Thursday starts the annual Jackson Hole conference with lots of Fed speakers, including Yellen next weekend. Chairman Bernanke, whose term ends in January, will not attend.


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Airline Stocks Monkeyhammered On News DOJ Seeks To Block American-US Airways Merger

The Justice department is said to plan to block the AMR-US airline merger:


Both stocks are down notably on the news - AMR -22%, LCC -11%; and the rest of the airlines sector is weakening. Among the DoJ's 'gotchas - "A US Airways document said that capacity reductions have “enabled” fare increases." Perhaps the lowly lobbyists of the Airline industry should have 'donated' just a little more money...?


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Frontrunning: August 9

  • JPMorgan Nears Settlement With SEC on London Whale Loss (BBG)
  • Without even a wristslap: Iksil to face no U.S. charges in 'Whale' probe (Reuters)
  • China’s Credit Expansion Slows as Li Curbs Shadow Banking (BBG)
  • China slowdown shows signs of abating (FT), even as...
  • Australia central bank Lowers Growth Outlook as Economy Transitions From Mining (BBG)
  • SAC Business Plan Goes to Judge, Plan Would Allow Firm to Maintain Business Operations but Restrict Its Ability to Move Assets (WSJ)
  • Another buyer of Herbalife? - Norway’s oil fund plans to turn active (FT)
  • Mark Carney plays down scepticism over interest rate policy (FT)
  • Orders Evaporate for Celebrity Perfumes (WSJ)

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11 Examples Of The Escalating Crime And Violence Plaguing America Today

Even though the United States has the highest incarceration rate and the largest total prison population in the world by a very wide margin, hundreds of communities all over America are being overwhelmed by crime and violence.  For many years, violent crime had actually decreased in the United States, but now the trend is going the other way. The frightening thing is that crime statistics are going up even though police departments in some major cities have publicly announced that they will not even respond to certain crimes anymore. So what is causing the rise in crime and violence?  Well, we live at a time when economic opportunities for young people are extremely limited.  The younger you are, the more likely you are to be unemployed, and poverty in America has been steadily rising even in the midst of this so-called "economy recovery". When people are poor and feel like they are out of options, they tend to get desperate.  And desperate people do desperate things.


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"Market Parasite" JPMorgan Added To Goldman Aluminum "Cartel" Lawsuit

"Financial institutions have intentionally made a mockery of market logic, forcing end-users to keep paying more despite rising global aluminum supplies. As the Times points out, each time you “open a can of soda, beer or juice,” GOLDMAN SACHS gets a cut....  By inserting itself into a healthy industry producing widely needed commodities, severely degrading functionality, and widely distributing costs while itself benefiting, GOLDMAN SACHS and JP MORGAN couldn’t fit a more archetypal description of a parasite on the markets. Hoarding in aluminum, however, is just one in a bevy of ever-multiplying non-innovations, demonstrating how the leeching of productive society has emerged as finance’s guiding light, and leeching that antitrust laws are designed to prohibit and make the economic sanctions and repayment to consumers for entering such destructive enterprises too high to pursue."


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Jan Hatzius' First 2013 Mea Culpa: "Glass Half Full"

Back in late 2012, Goldman's Jan Hatzius did precisely what he did at the end of 2010: predicted that after many years of delays, the US economy would finally soar higher on the back of the reignition of the virtuous cycle driven by now endless Fed micromanagement of virtually every aspect of the economy. We mocked him in 2010 (6 months later he pulled his call following a series of embarrassing mea culpas), and did the same in 2012. So here we are, 8 months later, and this much-delayed recovery has been "delayed" again - just as we thought. Of course, once bitten by the fringe blogosphere, Jan is not willing to pull his recovery call for the second time in a row despite deteriorating GDP and employment data, and instead (like everyone else) if placing his faith with the Fed, despite five consecutive years of disappointment from St. Ben. Maybe this time it will be different... although it won't. In the meantime, from a glass fully full (which is where it was supposed to be by this time in the year), the Goldmanite has now reduced his economic assessment to half that.


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America’s Urban Distress: Which States And Regions Set Up Their Cities To Fail?

In a nutshell:

  • Relatively low unemployment rates for the “Western Leaders” aren’t just an artifact of recent strength in, say, energy production and commodities. These states have consistently outperformed the rest of the country.
  • Abysmally high unemployment rates for the “Eastern Super-laggards” have also persisted for over two decades, exceeding all other parts of the country.
  • The “Northern Coastal and Great Lakes Laggards” and “Western Laggards and Southeast” fall somewhere between the other two regions, but always favoring the southern states over the northern states.

Not surprisingly, California, Nevada and Florida are more volatile than the other regions, cycling well above and then back toward the Western Leaders in each of the past two decades. Also, the unemployment problems in California and Nevada have been consistently worse than Florida’s unemployment. These trends may or may not persist in coming years. But if your goal is to anticipate the next Stockton, San Bernardino or Detroit, watch the unemployment data closely and pay particular attention to the cities listed here.


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Guest Post: Drones And The Right To Privacy

On August 6th, the small town of Deer Trail, Colorado is set to vote on an ordinance that will permit the hunting of unmanned surveillance drones. The author of the ordinance, Phillip Steel, claims the gesture is “symbolic.” A handful of other American states are pursuing measures to limit the spying operations of Uncle Sam’s unmanned aerial vehicles. One has to be either lying or painfully ignorant to believe government will not abuse surveillance drones. State officials have rarely failed to use their capacity to terrify the populace. The prospect of around-the-clock surveillance is a chilling thought and one that should not be taken lightly. Unfortunately the only means to achieve some semblance of privacy requires a luddite approach to technology and a hermit’s approach to community. Otherwise, you avail yourself to the terror of visibility in what should otherwise be, in Thomas Paine’s words, the blessing of society.


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Obama Among The Middle Class: The Photo Album So Far

Today, the wealth redistributor par excellence came to us live from an Amazon warehouse in Chattanooga, TN where with dramatically rolled-up sleeves, Obama praised a vision of a full-time middle class to a fulfillment center gathering of racially diverse, part-time workers, thereby concluding "America's Transformation To A Part-Time Worker Society" first observed here in 2010.


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The Visual History Of State Credit Ratings In The 21st Century

When Standard & Poors is not engaged in "Puffery" (a defense which admits "our entire business model is worthless") it pretends to analyze credits and assign ratings, usually with both humorous and systematically catastrophic results. Just as it has done in the chart below. In the aftermath of the Detroit filing, one may be interested to see just how the rating agency, which had Greece rated at "A" months before the Eurozone's bananaest-republic member had its first bailout, evaluated America's various states since the start of the 21st century through 2012. Among the best: Florida. Worst: California. Michigan, whose main city just went bankrupt: AA-. And with countless cross-default provisions and collateral waterfalls upon a multi-notch downgrade, one can be certain that as reality finally comes to the muni space with roughly a 3 years delay, that this too will have a happy ending.


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Commander-In-Chief Compare And Contrast

The Obama "Better Bargain for the Middle Class" roadshow continues. We can only assume in it he desperately tries to find a representative of said class, so far without success. We will spare readers the repetitive oratory streamed by the teleprompter which is a carbon copy from yesterday and cut straight to the money shots.


hedgeless_horseman's picture

99-Year-Old Man Works For Minimum Wage…For Over 30 Years

"One thing he apparently for sure doesn’t talk about is retirement."


Tyler Durden's picture

Frontrunning: July 24

  • Humans Beating Robots Most Since ’08 as Trends Shift (BBG)
  • Easing of Mortgage Curb Weighed (WSJ)
  • European Banks Face Capital Gap With Focus on Leverage (BBG)
  • Signs Suggest China Warming to Idea of Stimulus (WSJ)
  • China Coal-Fired Economy Dying of Thirst as Mines Lack Water (BBG)
  • Jeans and shoes show criminal underbelly of China-EU trade (Reuters)
  • How U.S. drug sting targeted West African military chiefs (Reuters)
  • Japan scrambles jets after China plane flies by southern islands (Reuters)
  • Apple Plots Return to Growth After Coping With Aging Lineup (BBG)
  • AT&T Falls Shy of Analyst Estimates as Discounts Hurt Margins (BBG)
  • SAC insider trading case takes twist (FT)

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