Google

Government On the Verge – Yet Again – of Doing Something Which Causes More Harm Than Good

Are y'all ready to dump your hard earned recession cash into that heavily Goldman recommended, high growth social networking stock? Can't 'ya just taste those IPO profits, pre-Euro bubble burst???

Today I'd like to talk a bit about the virtual radio silence in the Netherlands on its growing Target2 balances. While a healthy but acrimonious debate has raged on this topic in Germany, there is almost nothing to be heard about it in the Dutch media. I did three google news searches using:

Target2

Target2 + Dutch

and

Target2 + Nederland

In an admittedly quick look, I came up with a grand total of one article of three sentences:

Only half a year ago, Groupon was the talk of the town. It was the biggest, hottest IPO on the horizon,and it was the darling of the social media industry. Imitators were everywhere, but there was one giant that was far ahead of everyone else: Groupon.

Well, one glance at a stock chart will show you just how much the biggest, hottest IPO has been embraced since it went public. I offer you the following

Just a month ago we raised more than a proverbial eyebrow when we noted the creation of the NSA's Utah Data Center (codename Stellar Wind) and William Binney's formidable statement that "we are this far from a turnkey totalitarian state". Democracy Now has the former National Security Agency technical director whistleblower's first TV interview in which he discusses the NSA's massive power to spy on Americans and why the FBI raided his home. Since retiring from the NSA in 2001, he has warned that the NSA’s data-mining program has become so vast that it could "create an Orwellian state." Today marks the first time Binney has spoken on national TV about NSA surveillance. Starting with his pre-9-11 identification of the world-wide-web as a voluminous problem since the NSA was 'falling behind the rate-of-change', his success in creating a system (codenamed Thin-Thread) for 'grabbing' all the data and the critical 'lawful' anonymization of that data (according to mandate at the time) which as soon as 9-11 occurred went out of the window as all domestic and foreign communications was now stored (starting with AT&T's forking over their data). This direct violation of the constitutional rights of everybody in the country was why Binney decided he could not stay (leaving one month after 9-11) along with the violation of almost every privacy and intelligence act as near-bottomless databases store all forms of communication collected by the agency, including private emails, cell phone calls, Google searches and other personal data.

There was a time when Americans still cared about matters such as personal privacy. Luckily, they now have iGadgets to keep them distracted as they hand over their last pieces of individuality to the Tzar of conformity as simply put "The NSA Is Lying - The government has copies of most of your emails".

Is this the company to dominate mobile computing for the next decade? Either it's drastically misunderstood and insanely underpriced, or its a massive bubble. Here's the fundamental take...

This is so pathetic, it is beyond words:

• US SEC EXPECETED TO VOTE ON POSSIBLE CHARGES AGAINST RATING FIRM EGAN JONES ON THURSDAY - RTRS
  
• POSSIBLE CHARGES STEM FROM ALLEGED WILFUL MISTATEMENTS ON EGAN JONES' REGULATORY APPLICATION WITH SEC - RTRS

If nothing else, it explains the recent WSJ hit piece against Egan, just so it can make the public record in the SEC documentation. In other news, this will surely teach any other rating agency to downgrade the US not once (ahead of everyone else), but twice. In the meantime, the SEC still has NO IDEA what liquidity is, and continues to refuse to take ANY action against High Frequency Trading, to press criminal charges against ANY banker, or for that matter, to do anything that may jeopardize its staffers future careers as 7th assistant general council at assorted bailed out Wall Street firms. Now we wait to hear news that Fitch and Moody's will receive a cash bonus from the SEC for not downgrading the US properly filing their regulatory applications. And now back to midget porn.

One of the great existential debates about U.S. equities is essentially demographic in nature.  Nic Colas, of ConvergEx, asks the question, will retiring Baby Boomers cash out of stocks in the coming years, leaving lower valuations in their wake?  At least one recent Fed paper pointed to an 8x earnings multiple for stocks – down from 14x currently – in 2025, all due to the changing face (and age) of the typical investor.  But all this doom and gloom only fits if every generation has a similar risk tolerance.  If younger cohorts – dubbed Generation X and “Next” – have higher risk thresholds, they may actually buy more equities than their parents, alleviating the demographic time bomb behind that dire Fed prediction.  Getting a fix on how these nascent investors will evaluate the risk-return tradeoff is tough; they still don’t have much money to put to work.  Still, some signs exist.  Believe it or not, a third of young Americans have tattoos, an acknowledged sign of risk-loving behavior.  And if you think that is just bad decision-making, consider the business rock-stars of the under-30 set.  This latest wave of billionaires are all outsized risk takers, and role models to their generation.  Stocks may not be dead just yet.

• Downgrades Loom for Banks (WSJ)
• China Loosens Grip on Yuan (WSJ)
• Sarkozy Embraces Growth Role for ECB (WSJ)
• A Top Euro Banker Calls for Boost to IMF (WSJ)
• Wolfgang Münchau - Spain has accepted mission impossible (FT)
• Hong Kong Takeovers Loom Large With Banks Lending Yuan: Real M&A (Bloomberg)
• Banks urge Fed retreat on credit exposure (FT)
• Drought in U.K. Adds to Inflation Fears (WSJ)
• France faces revival of radical left (FT)
• Euro Area Seeks Bigger IMF War Chest as Spanish Concerns Mount (Bloomberg)

• ECB Seen Favoring Bond Buying Over Bank Loans (Bloomberg)
• Italians Rally Against Monti’s Pension-Overhaul Limbo (Bloomberg)
• Spain Cracks Down on Fraud as Rajoy Says Aid Impossible (Bloomberg)
• Europe’s Capital Flight Betrays Currency’s Fragility (Bloomberg)
• China’s Less-Than-Forecast 8.1% Growth May Signal Easing (Bloomberg)
• China Banks Moving to Lower Mortgage Interest Rates (China Daily)
• Fed Officials Differ on Need to Keep Rates Low to 2014 (Bloomberg)
• North Korea Confirms Rocket Failure (Reuters)
• Yuan Lending Set to Cross New Border in Pilot Plan (China Daily)

Red headline time. From Yonhap:

North Korea launches rocket - S.Korea's YTN Television
U.S official confirms North Korea has launched rocket
Rocket launch took place at 7:39 local time - South Korea Defense Ministry,

Japan likely in full mobilization mode right about now. Or not: this just in:

ABC's Martha Raddatz reports the North Korean rocket launch has FAILED.

Somebody is about to be punished big time since local rockets no fly long time.

The headlines flow in:

• GOOGLE 1Q REVENUE $10.65B
• GOOGLE 1Q REVENUE EX TAC $8.14B, EST. $8.14B
• GOOGLE 1Q ADJ. EPS $10.08, EST. $9.64
• GOOGLE 1Q PAID CLICKS ROSE 39% VS YEAR AGO
• GOOGLE 1Q TRAFFIC ACQUISITION COSTS $2.51B
• GOOGLE 1Q COST PER CLICK DOWN 12%

Earlier today, the Chinese Internet (yes, it is its own category) experienced a glitch in the matrix. Whether this is due to further potential confusion over the fate of Bo Xilai (and/or any rumors of a concurrent/past/future military coup), or just overall confusion as to what is actually happening in the country, or simply mere censorship gone uber-wild is unclear. As the WSJ explains it, "At around 11 a.m. local time Thursday, China’s Internet suddenly began behaving very strangely. People inside China reported being unable to access some Chinese web sites like Sina’s Corp’s portals as well as popular foreign web sites not normally blocked by China’s firewall. Simultaneously, Internet users outside China, including in Hong Kong, reported difficulties accessing key Chinese sites, like search engine Baidu and the website of the People’s Bank of China." And while we have no idea of what is going on behind the scenes, we are fairly confident what isn't. Such as the country growing at a 9% as has been wildly speculated all day in what some suggest is a leak of Chinese official data. For a glimpse of what is going on, we went to get some local color such as this message board posting at CND.org. Is this the full story? Of course not. But neither are the endless lies peddled by the PBOC and the CCP. Our advice: keep the below in mind while reading any economic data coming out of the country Ministry of Truth and Bureau of Propaganda in the coming weeks and months. Because if today's Internet glitch is any indication, things behind the scenes are truly starting to heat up.

And the plan was going so well. The plan, of course, being to dispose of German budget sovereignty and transfer decision-making authority to a fully immune organization seated in Luxembourg, which just happens to be a tax haven, in the process stripping not only all of Europe, but also Germany of sovereignty, with the ESM being run by a few bankers, held accountable to no one(explained here). German FAZ has just announced that jurists and 2 political parties in Germany are going to appeal to the Constitutional Court, and demand an end of the Merkel Fiscal pact and the ESM, both of which have been implemented without so much as an inquiry as to what the people think, those millions of ever angrier Germans we wrote about back in July. That may be finally changing.

So far futures are broadly unchanged, following the release of a Chinese trade report which while showing a resumption in the trade surplus, on expectations of further trade deficit in March, showed it was primarily due to a slide in imports, not so much a rise up in exports, a fact which impacted the Aussie dollar subsequently. We already noted that in conjunction with the BOJ, this means that Asia's central banks will likely hold off on further easing, and defer to the Chairman, especially with food inflation in China still prevalent. Aside from that the traditional European weakness is back, where April Sentic Investors Confidence slid to -14.7 on expectations of -9.1: to be expected from a meaningless market-coincident indicator. Keep a close eye on PIIGS bonds where whack a mole is now firmly back as the LTRO benefit is long forgotten, 3 month half life and all that.