On the heels of his less-than-optimistic presentation, DoubleLine's Jeff Gundlach tells Europe's Finanz und Wirtschaft "he's concerned about the growing amount of speculation" and draws a parallel between today’s markets and the dot-com boom of the late Nineties. This excellent interview takes the themes of his recent conference call and extends them as he warns "In the over thirty years I’ve been in the financial investment industry, I don’t recall a single year where I saw the year begin with the consensus being so solidified in its thinking across virtually every asset class." His biggest worry (for investors, as opposed to his funds), "the most unthinkable things happen this year and that is a basic pain trade that forces people into treasury bonds."
- NSA phone data control may come to end (AP)
- China to rescue France: Peugeot Said to Weigh $1.4 Billion From Dongfeng, France (BBG)
- China to rescue Davos: Davos Teaches China to Ski as New Rich Lured to Slopes (BBG)
- Hollande’s Tryst and the End of Marriage (BBG)
- Iran has $100 billion abroad, can draw $4.2 billion (Reuters)
- Target Hackers Wrote Partly in Russian, Displayed High Skill, Report Finds (WSJ)
- Nintendo Sees Loss on Dismal Wii U Sales (WSJ)
- Goldman's low-cost Utah bet buoys its bottom-line (Reuters)
- Royal Dutch Shell Issues Profit Warnin: Oil Major Hit by Higher Exploration Costs and Lower Oil and Gas Volumes (WSJ)
- EU Weighs Ban on Proprietary Trading at Some Banks From 2018 (BBG) - so no holding of breaths?
- Sacramento Kings to Accept Bitcoin (WSJ)
Moments ago The Hill reported that what many thought was absolutely impossible, may in fact become a reality: President Obama is considering issuing an executive order (#394,039,993,837?) to raise the minimum wage for Federal Workers... and in the process - with the help of that other central planner par excellence Bern-ellen - lap all those other Banana republics that everyone so enjoys making fun of.
Americans have never had less economic freedom than they do right now. The 2014 Index of Economic Freedom has just been released, and it turns out that the level of economic freedom in the United States has now fallen for seven consecutive years. But of course none of us need a report or a survey to tell us that. All we have to do is open our eyes and look around. At this point our entire society is completely dominated by control freaks and bureaucrats. Our economy is literally being suffocated to death by millions of laws, rules and regulations and each year brings a fresh tsunami of red tape. As you will see below, the U.S. government issued more than 80,000 pages of brand new rules and regulations last year on top of what we already had. Even if we didn't have all of the other monumental economic problems that we are currently facing, all of this bureaucracy alone would be enough to kill our economy.
Day two of the bounce from the biggest market drop in months is here, driven once again by weak carry currencies, with the USDJPY creeping up as high as 104.50 overnight before retracing some of the gains, and of course, the virtually non-existant volume. Whatever the reason don't look now but market all time highs are just around the corner, and the Nasdaq is back to 14 year highs. Stocks traded higher since the get-go in Europe, with financials leading the move higher following reports that European banks will not be required in upcoming stress tests to adjust their sovereign debt holdings to maturity to reflect current values. As a result, peripheral bond yield spreads tightened, also benefiting from good demand for 5y EFSF syndication, where price guidance tightened to MS+7bps from initial MS+9bps. Also of note, Burberry shares in London gained over 6% and advanced to its highest level since July, after the company posted better than expected sales data. Nevertheless, the FTSE-100 index underperformed its peers, with several large cap stocks trading ex-dividend today. Going forward, market participants will get to digest the release of the latest Empire Manufacturing report, PPI and DoE data, as well as earnings by Bank of America.
Tax burdens are so high that it might not be possible to pay off the high levels of indebtedness in most of the Western world. At least, that is the conclusion of a new IMF paper from Carmen Reinhart and Kenneth Rogoff - “The size of the problem suggests that restructurings will be needed, for example, in the periphery of Europe, far beyond anything discussed in public to this point.” The 'not different this time' couple see two facts of life for Europe’s future: financial repression through higher inflation rates and taxes levied on savings and wealth.
Poor Uber: the limo company has had its share of tribulations in the US over the past month, being accused periodically of price gouging when it implemented surge pricing during times of peak demand and lack of alternatives (and a very confused consumer, who naturally has the option of not paying the surge price if they feel insulted by it). However, this is nothing compared to the treatment the company that is a manifestation of pure capitalism at its rawest received in socialist France yesterday. As Rudebaguette reported previously, a French taxi drivers strike turned ugly for none other than an Uber driver who was carrying Eventbrite CTO Renaud Visage & Kat Borlongan from the airport to Paris, when "he was attacked by multiple assailants, who allegedly, after smashing one window and slashing two tires (as seen in the photo), as well as defacing one side of the car with glue, attempted to enter the vehicle" That was just the beginning. Later Uber confirmed that no less than a dozen confirmed incidents in Paris & Lyon, including “flat tires, eggs, broken windows."
It would appear that in order to appease the masses - despite his recent small bump in popularity post-Affair - France's President Hollande has gone full Socialist-tard. Aside from promises to cut spending by EUR50 billion in the next 3 years (so less taxes?), Hollande has suggested...
- FRANCE'S HOLLANDE SAYS FRANCE MUST PRODUCE "MORE AND BETTER"
- HOLLANDE SAYS COMPANIES WILL IN RETURN BE GIVEN QUANTITATIVE TARGETS FOR HIRING, TRAINING
- HOLLANDE SAYS PUBLIC SPENDING CUTS CAN BE MADE WHILE PRESERVING FRENCH SOCIAL MODEL
Channeling Stalin, he further calls for "more economic governance of the Euro-zone" and the creation of a Franco-German energy company and more tax-harmonization with the Germans. We are sure Merkel will be over-the-moon at that suggestion.
Following yesterday's major market drubbing, in which the sliding market was propped up by the skin of Nomura's (and BOJ, and Fed's) teeth at 103.00 on the USDJPY, it was inevitable that with Japan returning from holiday there would be a dead cat bounce in the Yen carry pair, and sure enough there was, as the USDJPY rose all the way back up to 103.70, and nearly closed the Friday gap, before starting to let off some air. However, now that US traders are coming back online, Japan's attempts to keep markets in the green may falter, especially since it only has a couple of ES ticks to show for its efforts, as for the Nikkei which dropped 3% overnight, it has now lost all US "Taper" gains.
After a banner year for the former KGB spy, who first neutralized Prince Bandar and John Kerry (not to mention the president of the US), and subsequently reannexed the Ukraine into the Russian sphere of influence now that the second coming of the former USSR is in the works, it should come as no surprise that Russia's Vladimir Putin has been named the third most admired person in the world. Then again when one considers who is ahead of Putin in the Time poll, perhaps this distinction is nothing to write to the NSA about - third spot is located behind Microsoft founder Bill Gates and US President Barack Obama. Indicatively, this also means that Barack Obama is inexplicably still the second most respected person in the world.
When it comes to socialism, the world's premier promoter of egalite - France's Francois Hollande - is very aware that in a socialist utopia, no property is private. Hence everything can be shared, such as actress Julie Gayet with whom it was revealed last week he had an affair. The problem is that the First Lady, er, Girlfriend of France, Valerie Trierweiler, 48, did not share her boyfriend's Marxist view. And, as Reuters reports, when Trierweiler found out about an affair between Francois Hollande and the aforementioned Julie Gayet, 41, she was hospitalized on Sunday morning "because of exhaustion." But before readers cry for Madame Trierweiler, recall that while Hollande is a fervent fan of socialism, the former first girlfriend some far more interested in being more equal than others. Per the Mail: "She currently has five staff working for her at her office as well as numerous other taxpayer-funded perks, including homes across France, private jets and limousines. As anger at the scandal grew, politicians suggested Miss Trierweiler’s position was already untenable."
It's not just Bank of America that is 'worried' about the health of its junior employees. As Bloomberg BusinessWeek reports, Americans eat at their desks, work longer days, and retire later than their counterparts in most other parts of the world (especially France). But, while the likes of Oprah offer holistic solutions to harness yopur stress, and bosses insist that you take your weekends off (or else), the workload itself is not reduced. Do not fear though as Senator Glenn Grotham is pressing to undo a "goofy" law requiring employers to give workers a day off - "all sorts of people want to work 7 days-a-week," he noted... indeed they do Senator.
Perhaps the most amusing and curious aspect of this entertaining summary of the Mississippi Bubble of 1720, the resulting European debt crisis (the first of many), how bubble frenzies are as old as paper money, the man behind both - convicted murderer and millionaire gambler, John Law, what happens when paper money's linkage to gold is broken, and how everyone loses their wealth and hyperinflation breaks out, is who the source is. The New York Fed. Perhaps the Fed-employed authors fail to grasp just what their institution does, or have a truly demonic sense of humor. In either case, the following "crisis chronicle" highlighting how banking worked then, how it works now, and how it will always "work", is a must read by all.
Risks surrounding the looming release of the latest jobs report by the BLS later on in the session failed to weigh on sentiment and heading into the North American open, stocks in Europe are seen higher across the board. The SMI index in Switzerland outperformed its peers since the get-go, with Swatch Group trading up over 3% after the company said that it expects good results for 2013 at operating profit and net income level. At the same time, in spite of stocks trading in the green, Bunds remained better bid, with peripheral bond yield spreads wider as market participants booked profits following the aggressive tightening observed earlier in the week amid solid Spanish bond auctions, as well as syndications by Ireland and Portugal. Fake Chinese trade data failed to boost Chinese stocks, which dropped anoter 0.7% and is just 13 points above 2000 as Shanghai remains one of the world's worst performing markets since the financial crisis. The yoyoing Nikkei was largely unchanged. All eyes today will be fixed on the headline streamer at 8:30 when the latest nonfarm payrolls report is released.
If you are anxiously awaiting the arrival of the "economic collapse", just open up your eyes and look at what is happening in Europe. The entire continent is a giant economic mess right now. Unemployment and poverty levels are setting record highs, car sales are setting record lows, and there is an ocean of bad loans and red ink everywhere you look. Over the past several years, most of the attention has been on the economic struggles of Greece, Spain and Portugal and without a doubt things continue to get even worse in those nations. But in 2014 and 2015, Italy and France will start to take center stage. France has the 5th largest economy on the planet, and Italy has the 9th largest economy on the planet, and at this point both of those economies are rapidly falling to pieces. Expect both France and Italy to make major headlines throughout the rest of 2014. The following are just a few of the statistics that show that an "economic collapse" is happening in Europe right now...