Real estate

Frontrunning: October 2

  • U.S. Government Shut Down With No Quick Resolution Seen (BBG)
  • 12 House Republicans now say they’d back a ‘clean’ CR (WaPo)
  • Republicans’ 2014 Senate Edge Muddied by Shutdown Message (BBG)
  • Obama Shortens Asia Trip Due to Government Shutdown (WSJ)
  • Fed Said to Review Commodities at Goldman, Morgan Stanley (BBG)
  • Foreign Firms Tap U.S. Gas Bonanza (WSJ)
  • Behind Standoff, a Broken Process in Need of a Broker (WSJ)
  • Japan Awaits Abe’s Third Arrow as Companies Urged to Invest (BBG)
  • Microsoft investors push for chairman Gates to step down (Reuters)

Frontrunning: October 1

  • Government Shuts Down as Congress Misses Deadline (WSJ); Shutdown starts, 1 million workers on unpaid leave (Reuters); Government Shutdown Begins as Deadlocked Congress Flails (BBG)
  • This is not The Onion: Stocks Rise on U.S. Government Shutdown (BBG)
  • Pentagon chief says shutdown hurts U.S. credibility with allies (Reuters)
  • In historic step, Japan PM hikes tax; will cushion blow to economy (Reuters)
  • Obama Says He Won’t Give Into ‘Ideological’ Budget Demand (BBG)
  • More part-time warehouse workers: Amazon to Hire 70,000 Workers for the Holidays (WSJ)
  • Less full-time legitimate workers: Merck to fire 8,500 workers  (BBG)
  • Education cuts hit America’s poor (FT)
  • Euro-Zone Factory Growth Slows (WSJ)
  • Watchdog Warns EU Not to Water Down Insurance Rules (Reuters)

Frontrunning: September 30

  • Government Heads Toward Shutdown (WSJ), First U.S. Shutdown in 17 Years at Midnight Seen Probable (BBG), Congress in game of chicken (RTRS)
  • Italian Premier Pursues Last-Ditch Rescue of Government (WSJ)
  • Election risk rattles Italian government bonds (RTRS)
  • Obama and Ryan Stay on Sidelines on Budget (WSJ)
  • Volcker Rule Costs Tallied as U.S. Regulators Press Deadline (BBG)
  • Faltering Chinese Factory Growth Adds to Rebound Fears (FT)
  • Health Law Hits Late Snags as Rollout Approaches (WSJ)
  • Apple Overtakes Coca-Cola as Most Valuable Brand, Study Finds (BBG)
  • Euro-Area September Inflation Slows More Than Forecast on Energy (BBG) - Puting will fix that shortly

Guest Post: The Boxed-In Fed

There may be temporary 'benefits in terms of employment gains' if the Fed creates an even more gigantic echo bubble than it has already done. We are willing to grant that much. The Fed apparently believes these days that there should be no limits whatsoever to the Fed's monetary pumping. 'Inflation' targets? Forget about it! Asset bubbles? Who cares! It is as if the past 20 years had not happened – as if they had simply erased the whole period from his memory. Do they really believe that pumping up another giant bubble will have more benefits than drawbacks? Where does it all end? However, there is no such thing as a free lunch, and there cannot be an 'eternal boom' by simply continuing to print, as once envisaged by Keynes. All that will happen is that the ultimate disaster will be even greater. In fact, is seems ever more likely that the next disaster will be the last one of the current monetary system.

How Marc Faber Prepares For "When The Shit Hits The Fan"

During a recent round-table discussion (accessible below), Marc Faber explained his asset allocation strategy and his incredulity at what the Fed is doing.

"I have around 25% in gold... and it's my insurance policy. It is important that one day when the so-called shit hits the fan - and I think the Fed is well on its way to creating that situation - you have access to your gold, that it is not taken away."

Faber goes on to discuss his lack of surprise at the Fed's un-Taper, the wealth in-equality impacts, and Asia's growing lack of faith in the USD.

Frontrunning: September 27

  • House GOP banking on Plan C (Politico)
  • Pimco shook hands with the Fed - and made a killing (Reuters)
  • BlackBerry's Torsten Heins has a $55 Million golden parachute (Reuters)
  • JPMorgan Urged to Pay More in Mortgage Deal (NYT)
  • Soros Adviser Turned Lawmaker Sees Crisis by 2020 (BBG)
  • U.N. Members Agree on Syria Disarmament (WSJ)
  • U.N. Says Humans Are 'Extremely Likely' Behind Global Warming (WSJ)
  • The non-falsifiable threats emerge: Shutdown Would Shave Fourth-Quarter U.S. Growth as Much as 1.4% (BBG)
  • Swaps Rules Worry Industry: Coming Regulations Have Market Players Concerned About Possible Disruption (WSJ)

Blast From The "No QE Exit" Past

Almost 4 years ago, The FT's Mike Mackenzie penned a very prophetic article explaining exactly the dilemma the Fed is now facing: "No matter how bulled up the equity market becomes, should data improve, the Fed is likely to remain very cautious, mindful that it needs to keep the bond market happy. Becoming the buyer of last resort in the past year resulted in the Fed crossing an important line in the bond market." The full piece is well worth a read as a reminder that plenty of people saw this coming, Mackenzie concludes: "the eventual end of QE will be a messier affair than perhaps many investors care to think. And one that bodes ill for the dollar and US fiscal policy down the road."

Piling On The JCPain: Citi Lowers JCP Target To $7, Questions "Adequate Cash For 2014/15", Sees $1/Share Floor

Yesterday, it was Goldman which (paradoxically, considering the firm's role in the recent Term Loan underwriting) took the axe to JCP securites, both bonds and stocks. Today, it is the turn of Citi's Deborah Weinswig which after reviewing its JCPenney cash burn analysis, goes for the jugular with phrases such as "We think adequate cash for 2014/2015 is in question", "The turnaround is taking longer than we anticipated, and we are concerned  about a softening macro environment combined with deteriorating vendor relationships", and of course "We maintain our EPS ests. but are lowering our target price to $7, down from $11 prev., based on an EV/Sales valuation methodology using our 2015 sales estimate." And it gets worse: "Where’s The Floor? — As a supplement to our EV/Sales valuation methodology, we have conducted a basic liquidation valuation, yielding $324M total value, or $1/share." Well, as long as there is a "floor"...

China Beige Book Exposes Government Lies: "Conventional Wisdom Of Economic Expansion In China Seriously Flawed"

There are facts; then there are completely fabricated, made up numbers. And then there is Chinese "data." After having been exposed in the past several years countless times on these pages alone as being absolute manipulated propaganda hogwash, it is amazing that anyone, anywhere still believes anything to come out of the official Beijing mouthpiece, which merely adjusts a few variable cells in the big central planning goalseeking excel spreadsheet and reports the answer. Yet the recent myth of a China "rebound" is one of the factors why stocks recently hit fresh all time highs: forget all that stuff about a CNY1 trillion deleveraging (yes, China's credit bubble is still the biggest in the world) - all that matters is made up garbage. Well, it may be more difficult this time. As Bloomberg reports, a "Beige Book" survey of the Chinese economy conducted in late August showed that "China’s economy slowed this quarter as growth in manufacturing and transportation weakened in contrast with official signs of an expansion pickup, a private survey showed." Surprise: China was lying again.

Frontrunning: September 25

  • JPMorgan eyes $4bn ‘pay for peace’ deal (FT)
  • Prosecutors Pursue Big SAC Settlement (WSJ) - in the US if you are rich enough, no crime is bad enough
  • Cruz's Defiant Stand Is Also a Lonely One (WSJ); Texas senator speaks for more than 14 hours (FT)
  • Iran Applies Brakes to U.S. Mideast Plans (WSJ)
  • Americans in Poll Doubt Economy Rebound in Defiance of Forecasts (BBG)
  • Big Banks Cut Basel III Shortfall by $112 Billion at End of 2012 (BBG) - the equivalent of 10 bridges to the Kalahari desert
  • Obama’s Jabs at Russia on Syria Shows Diplomacy Tensions (BBG)
  • ICAP Staff Face Criminal Charges Tied to Libor  (WSJ)
  • Alibaba Is Said to Shift Target for I.P.O. to U.S. From Hong Kong (NYT)
  • Home gold rush is over (Reuters)
  • Conoco in landmark Alaska drone flight (FT)