Mobs, Stampedes, Fights, Brawls, A Stabbing And Shooting: A Video Compilation Of Black Thursday 2013Submitted by Tyler Durden on 11/29/2013 22:17 -0500
That greatest of all American traditions - the Black Friday Thursday stampede, this year accompanied with a stabbing and a shooting, is back. A quick review of all readers may have missed by not lining up in droves outside of stores that were selling products at just above cost instead of the usual massive pre-Thanksgiving markup. So what did it all look like? The answer: like this...
- Top China Banks Triple Debt Write-Offs as Defaults Loom (BBG)
- PBOC suspends open market operations again (Global Times)
- Eurozone bank shares fall after ECB outlines health check plan (FT)
- O-Care falling behind (The Hill)
- Key House Republican presses tech companies on Obamacare glitches (Reuters)
- J.P. Morgan Faces Another Potential Huge Payouta (WSJ)
- Yankees Among 10 MLB Teams Valued at More Than $1 Billion (BBG)
- Free our reporter, begs newspaper as China cracks down on journalists (Reuters)
- Peugeot Reviews Cost-Saving Alliance With GM (WSJ)
Druckenmiller Blasts Obama: "Show Me When You Initiated Budget Discussions Without A Gun At Your Head"Submitted by Tyler Durden on 10/20/2013 21:45 -0500
One of the great ironies of the Obama presidency is that it has been a disaster for the young people who form the core of his political coalition. High unemployment is paired with exploding debt that they will have to finance whenever they eventually find jobs, and as Stan Druckenmiller explains in his WSJ interview, the "rat through the python theory," (that fiscal disaster will only be temporary while the baby-boom generation moves through the benefit pipeline and then entitlement costs will become bearable) is simply wrong; since, by then Druck exclaims, "you have so much debt on the books that it's too late." Unfortunately for taxpayers, "the debt accumulates while the rat's going through the python." The hedge fund billionaire adds that he "did not think it would be nutty to tie entitlements to the debt ceiling because there's a massive long-term problem. And this president, despite what he says, has shown time and time again that he needs a gun at his head to negotiate in good faith." The interview goes much, much further...
It’s become almost cliche these days to point out how many governments are broke beyond belief. The theater playing out in the US right now is irrelevant. America’s debt challenge is not a political problem. It’s an arithmetic problem. Same in Japan and most of Europe. However, most of these ‘rich’ western nations aren’t doing anything about it. It’s business as usual, and their debts are only getting bigger. Poorer countries don’t have this luxury of kicking the can down the road and delaying the inevitable. They must face their financial reckoning now... and they are finding increasingly unique ways to encourage 'revenues'.
If one looks at various sovereign states, it seemingly doesn't matter that their public debts continue to rise at a hefty clip. The largest ones are considered to have economies that are big and resilient enough to be able to support the growing debt load. Part of the calculus is no doubt the notion that they contain enough accumulated wealth to allow their governments to confiscate even more of their citizens property and income in order to make good on their debts. Then there are the small and mid-sized states in the EU that are getting bailed out by their larger brethren, or rather, the tax payers of their larger brethren. However, things are different when the territories or municipalities concerned are considered too small and have no such back-up. Detroit was a recent case in point, and it seems that the US territory of Puerto Rico is the next domino to fall.
"If the politicians lead us into a 'prioritization of payments' situation for Treasury Secretary Lew or an actual missed payment, there is nothing you can do to protect yourself from that!" are the ominous words that Kyle Bass uses to describe the farce that is rapidly approaching (and for now being ignored by stocks). Bass went on to pull no punches in his "disappointment" in JCPenney's performance (and dilution) coming as close as he can to saying "sell." But his piece de resistance was a dismal destruction of any silver lining for Puerto Rico and the significant implications that will have on Muni bonds in general.
- Hilsenrath: Tense Negotiations Inside the Fed Produced Muddled Signals to Markets (WSJ)
- Biggest US Foreign Creditors Show Concern on Default Risk (BBG)
- Shutdown Costs at $1.6 Billion With $160 Million Each Day (BBG)
- What default? Republicans downplay impact of U.S. debt limit (Reuters)
- Top Bankers Warn on U.S. Debt Proposal (WSJ)
- India to stick with austerity despite looming election (Reuters)
- Japan's Current-Account Surplus Plunges (WSJ)
- Amazon Wins Ruling for $600 Million CIA Cloud Contract (BBG)
- German Factory Orders Unexpectedly Fall on Weak Recovery (BBG)
- Britain's Higgs, Belgium's Englert win 2013 physics Nobel prize (Reuters)
- Supreme Owner Made a Billionaire Feeding U.S. War Machine (BBG)
UPDATE: AAPL +5.7% on revised guidance
Despite concerns about supply (and 'change') the lines we saw on Friday and the disappointments in the UK have been dismissed by the latest Apple press release as opening weekend iPhone sales top their record at 9 million sales (compared with the 5 million sold at iPhone 5 launch and 6-7mm units expectations).
APPLE SAYS OVER 200M IOS DEVICES RUNNING IOS 7
APPLE 9M NEW IPHONE 5S AND IPHONE 5C MODELS SOLD IN 3 DAYS
APPLE SAYS OVER 11M UNIQUE LISTENERS USED ITUNES RADIO
APPLE SEES 4Q REV. NEAR HIGH END OF $34B-$37B, EST. $36.11B
The share price was up over 4.5% from Friday's sub-50DMA close in pre-market trading; but is fading back now.
To say that bonds are under pressure would be an understatement. Over the last few months, sentiment about fixed income has flipped dramatically: from a favored investment destination that is deemed to benefit from exceptional support from central banks, to an asset class experiencing large outflows, negative returns and reduced standing as an anchor of a well-diversified asset allocation. Similar to prior periods, history will regard the ongoing phase of dislocations in the bond market as a transitional period of adjustment triggered by changing expectations about policy, the economy and asset preferences – all of which have been significantly turbocharged by a set of temporary and ultimately reversible technical factors. By contrast, history is unlikely to record a change in the important role that fixed income plays over time in prudent asset allocations and diversified investment portfolios – in generating returns, reducing volatility and lowering the risk of severe capital loss. Understanding well what created this change is critical to how investors may think about the future.
"It's getting concerning," notes one fixed-income banker, Puerto Rico muni bond yields "never got near 10% [yields] even in the crisis." Some of the 27-year maturity Puerto Rico bonds just traded at a dismal 67 cents on the dollar (10.082% yield) and the most recently issued 2036 Electric Power bonds have collapsed from par a month ago to just above 82 cents on the dollar today. As the WSJ reports, the fall in prices also is a sign of investor risk aversion in the wake of Detroit's record municipal-bankruptcy filing in July; but it seems the anxiety and outflows from ETFs is having just as big an impact as Puerto Rico bonds now trade cheaper than Detroit's. "It's out of whack," one analysts warns, though the island's double-digit unemployment and recent weakness in economic indicators somewhat support the concerns - and while the "yields are attractive" it is possible that the island's borrowing costs could go higher as supply is extremely heavy in coming months. With 77% of managers holding Puerto Rico bonds, this is a problem...
First Fiat, Now Printing Comes To Rewards Programs As Hertz Dilutes Rewards Points By "A Modest" 15%Submitted by Tyler Durden on 08/13/2013 12:29 -0500
Because diluting the paper currency through endless global central-bank printing is obviously not enough to boost corporate top and bottom lines, next up on the dilution wagon are the corporate "rewards programs" which have decided to join the fray and are kind enough to advise honored clients their point purchasing power is about to be diluted by "a modest" 10%-15%. First on deck: Hertz. To wit: "in light of rising costs, we find it necessary to implement our first reward redemption point increase since 2008. Beginning October 1, 2013, point redemption levels for Rewards will increase a modest 10-15% in the United States, Canada, Puerto Rico and U.S.V.1."
Good news appaears (for now) to not be bad news for stocks but it is bad news for bonds as they sell-off modestly on the best beat in initial claims in 3 months and the lowest absolute (pre-revision next week) level since January 2008. The highest insured unemployment rates in the week ending July 20 were in Puerto Rico (4.9), New Jersey (3.6), Connecticut (3.5), Alaska (3.4), California (3.4), Pennsylvania (3.4), New Mexico (3.2), Nevada (2.9), Virgin Islands (2.9), Illinois (2.8), New York (2.8), Oregon (2.8), and Rhode Island (2.8). So these are pre-recessionary levels of jobless claims and extended claims continue to slide (and Challenger this morning was positive) - but how does this exuberant job situation fit with the dismal economic data? Perhaps this?
We feel that now there is a Bermuda Triangle of economics - a space where everything tends to disappear without radar contact, a black hole in which rationality and science is replaced by hope, superstition and nonsense pundits pretending to understand the real drivers of the economy. The Bermuda Triangle in real life runs from Bermuda to Puerto Rico to Miami. The Economic Bermuda Triangle (EBT) one runs from high stock market valuations to high unemployment to low growth/productivity. There is a myth that the sunken Atlantis could be in the middle of this triangle. It has been renamed Modern Monetary Theory (MMT) to make it suit the black hole's main premise of ensuring there is a fancy name for what is essentially the same economic recipe: print and spend money, then wait and pray for better weather. The EBT is getting harder and harder to justify - if for nothing else because the constant reminders of crisis keep us all defensive and non-committed to investing beyond the next quarter. We all naively think we can exit the "risk-on" trade before anyone else. We are due for a new crisis. We have governments and central banks proactively pursuing bubbles. A long time ago, policymakers entered a one-way street where reversing is, if not illegal, then impossible.
- Berezovsky Died of Hanging Without Struggle, Police Say (BBG)
- BRICS Nations Plan New Bank to Bypass World Bank, IMF (BBG)
- China pledges more investments to Africa (FT)
- BOJ's Kuroda signals targeting longer-dated JGBs (Reuters)
- North Korea orders artillery to be combat ready, targeting U.S. bases (Reuters)
- Supreme Court to take up gay marriage for the first time (Reuters)
- U.S. Cracks Down on 'Forced' Insurance (WSJ)
- Japanese courts press Abe on electoral reform (FT)
- Vietnam accuses China of attack on fishermen in South China Sea (Reuters)
- Italy's High Court Overturns Knox Acquittal (WSJ)
- Facebook’s Zuckerberg Said to Explore Forming Political Group (BBG)
There is one problem with relentlessly ramping markets (whether due to four years of liquidity injections by the Fed, or due to four years of liquidity injections by the Fed) - they make all those who by definition have to be hedged, seem stupid by comparison. In this case, this means that for the fifth year in a row, the vast majority of brand name hedge funds are once again underperforming the S&P, even though most of them have shifted to the highest net long exposure in history, while charging their increasingly more angry investors 2 and 20 for the privilege of underperforming the most micromanaged asset of all - the S&P500, and its unpaid portfolio manager, Ben Bernanke. And while there are three certain things in life: death, taxes and Paulson being one of the worst performers in the world (perhaps he is moving to Puerto Rico not to avoid paying taxes but to escape furious LPs), as he indeed is for the third year running what is most surprising is that through the middle of March, according to HSBC, every single brand name hedge funds is once again underperforming the S&P.