New York Stock Exchange
That margin debt just soared to new all time highs in december should come as no surprise to anyone. However what may come as a shock to many is that the other key metric provided by the NYSE - total net free credit - also known as investor net worth (calculated as Free Credit Cash plus Credit Balances in Margin Accounts less Margin Debt) just dropped to a whopping $148 billion, double where it was in February 2013, and double where it was during the peak of the last stock (and credit and housing) bubble, when it rose to a then-all time high of $79 billion in June 2007. It was all downhill from there.
There are two major factors that have emerged in the last five years that have sparked a surge in LNG investments. First is the shale gas “revolution” in the United States, which allowed the U.S. to vault to the top spot in the world for natural gas production. This caused prices to crater to below $2 per million Btu (MMBTu) in 2012, down from their 2008 highs above $10/MMBtu. Natural gas became significantly cheaper in the U.S. than nearly everywhere else in the world. The second major event that opened the floodgates for investment in new LNG capacity is the Fukushima nuclear crisis in Japan. Already the largest importer of LNG in the world before the triple meltdown in March 2011, Japan had to ratchet up LNG imports to make up for the power shortfall when it shut nearly all of its 49 gigawatts of nuclear capacity. In 2012, Japan accounted for 37% of total global LNG demand. The future of LNG may indeed be bright, especially when considering that global energy demand has nowhere to go but up. But, investors should be aware of the very large threat that Japanese nuclear reactors present to upstart LNG projects.
While 2014 has not quite panned out (so far) as the traveling-strategist-roadshow would have hoped, the last few days have been outright perilous for the record high numbers with bullish sentiment sucked into a world of central-bank-suppressed volatility and jawboned utopia. The following charts show where the pain has been (e.g. Greece, Spain, Argentina, European banks) and where it has not been (e.g. gold miners, China, Philipinnes, and Egypt) with the US indices sitting squarely in the middle with some of their biggest losses in months. For now, the BTFATH'ers are absent - even though the drooling mouths of asset-gatherers are demanding the 'cash on the sidelines' use this 2-3-4% drop from the all-time highs to load the boat for retirement heaven... However, some have increasing concerns...
- Gross Told El-Erian ‘Hell No’ Seeking to Stop Departure (BBG)
- How Caterpillar got bulldozed in China (Reuters)
- Davos Bankers Struggle to Convince Elite That Markets Are Safer (BBG)
- Lucrative Role as Middleman Puts Amazon in Tough Spot (WSJ)
- Arctic Air Blankets Northern U.S. as Texas to Get Snow (BBG)
- Lenovo buys IBM's server business in China's biggest IT acquisition (Reuters)
- SEC judge bars "Big Four" China units for six months over audits (Reuters)
- U.S. Accuses Security Background Check Firm of Fraud (WSJ)
- RIP BOE forward guidance: Bank of England rate rise is 'still some way off' - Fisher (Reuters)
Frontier markets offer some of the best investment opportunities over the next decade. We like Vietnam which is recovering after a massive credit bust.
NU Skinned Alive: NUS Stock Plunges, Repeatedly Halted On Company Admission Of Chinese InvestigationSubmitted by Tyler Durden on 01/16/2014 14:47 -0400
After the Chinese news/rumors that pummeled NU Skin the last 2 days, the company has finally been forced to make a statement...
*NU SKIN AWARE CHINESE REGS INITIATED INVESTIGATIONS
*NU SKIN SAYS LIKELY NEGATIVE EFFECT ON CHINA REV
*NU SKIN HAS STARTED OWN PROVINCE-BY-PROVINCE BUSINESS REVIEW
After being halted on news pending, NUS was re-halted upon re-opening, plunged further, and is now re-halted down $45 (39%. Herbalife (down 12%) and USANA (down 12%) are also tumbling on this news.
It’s NEVER to Protect Us From Bad Guys
Forget the last two day's decline. The consensus opinion for 2014 is pretty uniform: stocks will go up modestly, bond will decline in similar fashion. Job growth will grind higher, as will inflation. The Fed will taper its bond-buying program, slowly. And so it may all come to pass... But ConvergEx's Nick Colas ponders what could go wrong, or at least different. Top of his list: fixed income volatility, in conjunction with stock market valuations that are, at best, average. Colas reflects ominously on 1914, where if you read the papers of the day you would have seen much of the same "Yeah, we got this" tone that prevails today. As the great market sage Yogi Berra once opined, “It’s tough to make predictions, especially about the future.” Either way, a cautious outlook is the better part of valor so early in the year.
How many people in the financial services industry understand how the financial system works?
We've all experienced it, we are dealing with someone who has all sorts of masters degrees, PhD's, and doesn't know the Federal Reserve is a private corporation, and even doesn't know the product their company is selling.
In the spirit of professionalism, we must keep these quotes anonymous, but certainly if you have survived long enough in Finance or read the Financial news regularly, you will not need any references because you've probably heard it before.
Is the U.S. consumer tapped out? If so, how in the world will the U.S. economy possibly improve in 2014? Most Americans know that the U.S. economy is heavily dependent on consumer spending. If average Americans are not out there spending money, the economy tends not to do very well. Unfortunately, retail sales during the holiday season appear to be quite disappointing and the middle class continues to deeply struggle. And for a whole bunch of reasons things are likely going to be even tougher in 2014. Families are going to have less money in their pockets to spend thanks to much higher health insurance premiums under Obamacare, a wide variety of tax increases, higher interest rates on debt, and cuts in government welfare programs. The short-lived bubble of false prosperity that we have been enjoying for the last couple of years is rapidly coming to an end, and 2014 certainly promises to be a very "interesting year".
We are not exactly sure why the ballerinas of the Nutcracker can be found on the floor of the TV studio formerly known as the New York Stock Exchange (currently owned by the Atlanta-based ICE), but we are sure there is a good reason.
It is time to crank up the Looney Tunes theme song because Wall Street has officially entered crazytown territory. Stocks just keep going higher and higher, and at this point what is happening in the stock market does not bear any resemblance to what is going on in the overall economy whatsoever. So how long can this irrational state of affairs possibly continue? Stocks seem to go up no matter what happens. If there is good news, stocks go up. If there is bad news, stocks go up. If there is no news, stocks go up. On Thursday, the day after Christmas, the Dow was up another 122 points to another new all-time record high. In fact, the Dow has had an astonishing 50 record high closes this year. This reminds me of the kind of euphoria that we witnessed during the peak of the housing bubble. At the time, housing prices just kept going higher and higher and everyone rushed to buy before they were "priced out of the market". But we all know how that ended, and this stock market bubble is headed for a similar ending.
While some individual stocks (cough TWTR cough) may have reached irrational bubble territory, the US equity market is undergoing a seemingly 'rational' bubble. However, as John Hussman illustrates in the following chart, the probability of a stock market crash is growing extremely rapidly.
As students vie for 2014 internships, Bloomberg finds a fraternity-based network whose Wall Street alumni guide resumes to the tops of stacks, reveal interview questions with recommended answers, offer applicants secret mottoes and support chapters facing crackdowns. Despite apparent crackdowns on cronyism, nepotism, and fraternism; it seems nothing has changed as "secret handshakes" and the fraternity pipeline helps undergraduates beat odds three times steeper than Princeton University’s record-low acceptance rate... "People like people who are like themselves," notes one recruiter, seemingly proven by the fact that JPMorgan employs 140 Sigma Phi Epsilon members with BofA and Wells Fargo even more.