Department of Energy Wants to Let Radioactive Scrap Metal Back into Consumer Products
It's going to be a week of being bombarded with data and earnings from all angles. This week will see the first reading of US Q4 GDP as well as the first FOMC statement, Payrolls and ISM print of the year. In Europe we will get a handful of confidence indicators in the earlier part of the week but the main highlight will be the Spanish and Italian manufacturing PMIs on Friday. The coming week could see further sizeable moves in FX, mainly because investors – and policymakers – have become a lot more focused on currency markets. Finally, a few potentially interesting policy speeches are scheduled in the upcoming week. In Japan, Prime Minister Abe will likely talk in parliament about his economic policy, which could contain more comments on the BoJ and the Yen. In Germany, Buba President Weidmann will talk at the car manufacturers association and the recent sharp move in EUR/JPY may well be a subject given the competition between German and Japanese brands. Interestingly, Mr. Weidmann already mentioned the BoJ in a recent speech about global pressures on central bank independence.
Just because there is a superficially-pacifist, yet supraficially genocidal, dictatorially-inclined egomaniac in every one of us, the moment the Maisto Fresh Metal Tailwinds 1:97 Scale Die Cast United States Military Aircraft - US Air Force Medium Altitude, Long Endurance, Unmanned Aerial Vehicle (UAV) RQ-1 Predator went on loss at Amazon (we would say sale, but that would imply some probability of profit, which as even the hotdog guy, knows is never going to happen at AMZN), everyone scrambled to buy one. However, only those first in line got one: everyone else was greeted by a "Currently unavailable. We don't know when or if this item will be back in stock" sign. So what does one do: what one should have done in the first place before going for the one impulse purchase that can murder innocent children half way around the world courtesy of the latest iPad app "iKiller": read the customer reviews of course. Below is a broad sample of the rather bipolar main street America response when faced with the opportunity of having the same great power, if not so great - or any - responsibility, as is given, by some 25% of the population (factoring for the 55% or so who don't vote) to the president of the USA, even if on a 1:97 scale.
The World Gold Council and leading academics and international think tanks believe that using a portion of a nation's gold reserves to back sovereign debt would lower sovereign debt yields and give some of the Eurozone's most distressed countries time to work on economic reform and recovery. According to research done by the World Gold Council using the European gold reserves as collateral for new sovereign debt issues would mean that without selling an ounce of gold, Eurozone countries could raise €413 billion. This is over 20% of Italy's and Portugal's two year borrowing requirements. The move to back sovereign bonds with gold would lower sovereign debt yields, without increasing inflation, which would help to calm markets. This should give European countries some vital breathing space to work on economic reform and recovery. Some citizens would be concerned that there may be a risk that the sovereign nations who pledge their gold as collateral could ultimately end up losing their gold reserves to the ECB, or whoever the collateral of the gold reserves are pledged to, in the event of a default. Unlike currency debasement and the printing and electronic creation of money to buy sovereign debt, under schemes such as Draghi's “outright monetary transactions” (OMT), the use of gold as collateral would not create fiscal transfers between Eurozone members, long term inflation or currency devaluation risk.
The market gets smoked for 1/4 Trillion in a single name, and we're trading at the highs. Go figure.
Earlier today, we reported that "Assistant Attorney General Admits On TV That In The US Justice Does Not Apply To The Banks" when we commented on last night's PBS special "The Untouchables." Explicitly, we said that it was "Lenny Breuer who made it very clear that when it comes to the concept of justice the banks are and always have been "more equal" than others. He does so in such shocking clarity and enthusiasm that it is a miracle that this person is still employed by the US Department of Justice." As of minutes ago that is no longer the case as his employment contract has been torn up. The WaPo reports, that Lanny A. Breuer is leaving the Justice Department "after leading the agency’s efforts to clamp down on public corruption and financial fraud at the nation’s largest banks, according to several people familiar with the matter....It is not clear when Breuer intends to leave, nor what he plans to do once he departs, but it is certain that the prosecutor’s days in office are winding down, according to people who were not authorized to speak publicly about the matter."
- Doubt Greets Bank of Japan's Easing Shift (WSJ)
- Japan hits back at currency critics (FT)
- Japan upgrades economic view for first time in eight months (Australian) - only to lower them in a few months again
- GOP critics get opportunity to grill Secretary Clinton on Benghazi (Hill)
- Global economy set for ‘slow recovery’ (FT)
- Obama to back short debt limit extension (FT)
- Unfinished Luxury Tower Is Stark Reminder of Las Vegas’s Economic Reversal (NYT)
- Draghi Says ‘Darkest Clouds’ Over Europe Have Subsided (BBG)
- High-Speed Dustup Hits a Clubby Corner (WSJ)
- U.S. Budget Discord Is Top Threat to Global Economy in Poll (BBG)
- Sir Mervyn King says abandoning inflation target would be 'irresponsible' (Telegraph)
- Spain Says It May Cover 13% of 2013 Funding in January (BBG)
Everyone's favorite bull made another magnificently arrogant appearance on TV this morning. Following his recent CNBC embarrassment, Bloomberg TV interviewed the outperforming hedge fund manager this morning - during which he explained his 'where else ya gonna go' bullish stocks thesis. From expectations for an "explosion of greatness" in the US to his gratuitous flirtation, he appears to have the inane ability to use many words where few are needed and his bullish thesis has the ring of any and every guest pumper (with nothing new to add): the same supposedly 'low' multiple, central-banks-are-printing, and wide spread between bond and equity yield argument that everyone's mom can explain. From expectations for the 'great rotation' from bonds to stocks and his 50%-upside prediction in Citi, Tepper is "balls to the wall" the best guest ever on any stock-touting network. However, one little thing gets in the way - the last time the Great-and-Powerful Tepper appeared so overtly bullish of stocks (and financials specifically), he also was dumping his holdings into the rally that followed.
Biggest loser? China.
“Here we go again”
For the Gov't to maintain its power and control over a growing population that has pockets of civilians who are using the advances we have in technology to share and collect information in an effort to fight the on-going information battle, it will need to restrict its citizens in another manner. So far the intelligence of the average American has been wittled down.
The question many of us had going into today was whether the no follow-through allowed rule would be implemented yet again by The Gold Cartel for the zillionth time in a row.
So much for the US trade renaissance. After posting a better than expected October trade deficit of ($42.1) billion, November saw the net importer that is the US revert to its old ways, with a massive deficit of some $48.7 billion - the worst number since April, far more than the $41.3 billion in expectations, which makes it the biggest miss to expectations since June 2010, driven by a $1.8 billion increase in exports to $182.6 billion, and a surge in imports which rose from $222.9 billion to $231.3 billion. Specifically "The October to November increase in imports of goods reflected increases in consumer goods ($4.6 billion); automotive vehicles, parts, and engines ($1.5 billion); industrial supplies and materials ($1.3 billion); foods, feeds, and beverages ($0.6 billion); capital goods ($0.4 billion); and other goods ($0.1 billion)." And with this stark reminder that the US has to import the bulk of its products, something which a weak USD does nothing to help, expect a bevy of lower Q4 GDP revisions, as this number may push Q4 GDP in the sub-1% category.
Every nation-state has a body of laws woven into the fabric of society. As Peruvian economist Hernando de Soto has commented on extensively, the stronger the rule of law, the stronger the economy. And by "stronger" laws, I mean laws that are impervious to tampering for personal or political gains. The connection between a sound judiciary and economic health is readily comprehensible, except maybe to a politician... businesses and individuals are far more likely to invest capital in a country with understandable laws that are impartially and universally enforced than if the opposite condition exists. That's because the lack of a consistent body of law breeds uncertainty and adds a huge element of risk for entrepreneurs. Which brings us back to the matter at hand – American justice on a slippery slope.
Update: those (few) worried if America's overactive Attorney General, best known for soon to be confiscating guns and perhaps shipping them off to Mexico, and doing nothing else in the past 4 years, will stick around for Obama's second term.
And no, before the questions pile in, she was not fired, as poetic as that would be (nor was she replaced by a 65 year old, part-time worker as is the case with the vast majority of the US labor force). She quit, saying "decided to begin a new future, and return to the people and places I love" and that as the product of "a large Mexican-American family I never imagined that I would...serve in a president’s Cabinet." From WaPo: "Labor Secretary Hilda Solis said in a letter to colleagues Wednesday she was stepping down from her post." Of course, using the BLS' own policies and "logic", this means the unemployment rate just ticked even lower. We look forward to Hilda's book due out in 6-12 months bashing, who else, Tim Geithner.