TedBits - Newsletter
This past week saw the initial public offering of the single most anticipated IPO of 2013 - Twitter. If you tweeted about it then you are not alone as the news dominated the media headlines and the market. With Twitter already sporting a 11x price-to-sales ratio, and no earnings, what could possibly go wrong? However, it is that growing complacency among investors that should be the most concerning as the general sentiment has become that nothing can stop the markets as long as the Fed is in the game. This week's issue of things to ponder over the weekend provides some thoughts in this regard...
Ben Bernanke is participating in an IMF panel with Larry Summers, Ken Rogoff, and fromer Bank of Israel chief Stan Fischer... Full speech below...
Whether it is the conference board, Gallup, Bloomberg, or pretty much any other measure of the economic confidence or consumer comfort in the US, the numbers have been falling (or plunging) despite the incessant rise of US equities. The reason this is of particular note, as we have discussed previously, is that this pattern of exuberant highs in stocks with fading confidence-inspiration has ominous overtones for future performance... (especially for those hoping for moar multiple expansion). The UMich data this morning merely confirms the trend with the lowest print since Dec 2011 (3 misses in a row). This is the biggest miss since Feb 2006!
Has a second civil war been “gamed” by our government? And are Americans being swindled into fighting and killing each other while the banksters who created the mess observe at their leisure, waiting until the dust settles to return to the scene and collect their prize? Here are some examples of how both sides of the false left/right paradigm are being goaded into turning on each other.
Another day, another collapse in a measure of the 'peoples' confidence. Despite the animal spirits of euphoric dot-com bubble betting that is the new-normal US equity markets, it seems both rich and poor are not loving it. Bloomberg's consumer comfort index dropped to -37.9 - its lowest since October 2012 having dropped for the 6th week in a row. The last time we saw a collapse of this size, the Fed saved us all with QE3... what this time?
Move Over FX And Libor, As Manipulation And "Banging The Close" Comes To Commodities And Interest Rate SwapsSubmitted by Tyler Durden on 11/06/2013 13:20 -0500
While the public's attention has been focused recently on revelations involving currency manipulation by all the same banks best known until recently for dispensing Bollinger when they got a Libor end of day print from their criminal cartel precisely where they wanted it (for an amusing take, read Matt Taibbi's latest), the truth is that manipulation of FX and Libor is old news. Time to move on to bigger and better markets, such as physical commodities, in this case crude, as well as Interest Rate swaps. And, best of all, the us of our favorite manipulation term of all: "banging the close."
Forcing young workers to pay into a Ponzi Scheme is generational injustice on a vast scale.
Yes... a rating agency - the same entity that enabled the last housing market crash - just warned of a housing bubble. How the times have changed - maybe it is different this time?
Just as the European 'markets' have entirely disconnected from fundamental reality, Japan's bond market - the largest in the world - "is dead, with only the BoJ driving prices," Mizuho warns. Crucially, once again just as in Europe, "these low yields are responsible for the lack of fiscal reform in the face of Japan’s worsening finances. Policy makers think they can keep borrowing without problems." Market functions are sacrificed for the sake of ending deflation, but "liquidity has evaporated as the BOJ has gobbled up most of the market." This means that a reduction in monetary stimulus could cause a rapid drop in bond prices, which, just as in the US, "will make it difficult for the BOJ to normalize policy." Simply put, as Bloomberg notes, the BoJ has killed the nation’s sovereign bond market, leaving it unable to reflect either the success of stimulus policies or fiscal risks.
3 months later and it appears hope has reverted (once again) to its new normal reality. "Just one more quarter," we are sure, will be the clarion call from all asunder...
As the S&P 500 continues to push to one new high after the next, the bullish arguments of valuation have quietly given way to "it's all about the Fed." The biggest angst that weighs on professional, and retail investors alike, are not deteriorating economic strength, weak revenue growth or concerns over the next political drama - but rather when will the Fed pull its support from the financial markets. For the Federal Reserve, they are now caught in the same "liquidity trap" that has been the history of Japan for the last three decades. Should we have an expectation that the same monetary policies employed by Japan will have a different outcome in the U.S? More importantly, this is no longer a domestic question - but rather a global one since every major central bank is now engaged in a coordinated infusion of liquidity. Will the Federal Reserve "taper" in December or March - it's possible. However, the revulsion by the markets, combined with the deterioration of economic growth, will likely lead to a quick reversal of any such a decision.
“How Can I Explain To My Clients Afterwards That We Had A Third Crash In 15 years?”
Over the past year, pictures of China's unprecedented air pollution have been seen around the world (for a sample see here and here), Chinese smog has been exported to Japan, and there is even a dedicated hourly twitter update looking at the quality, or lack thereof, of Beijing air. As such, it was only a matter of time before the tragic consequences of China's unprecedented and unplanned scramble to industrialize started manifesting themselves. This happened overnight when an eight-year-old girl has become China's youngest lung cancer patient, reports said, with doctors blaming pollution as the direct cause of her illness. The girl, whose name was not given, lives near a major road in the eastern province of Jiangsu, said Xinhuanet, the website of China's official news agency.
While the Obamacare website rollout may be a huge slap in the face of government (in)efficiency and (dis)organization (healthcare.gov has now joined the ranks of all other New Normal "full-time" workers by working part-time following a daily maintenance shutdown from 1 am to 5 am), the reality is that sooner (unlikely) or much later it will be fixed. And while the realization that the Unaffordable Care Act is just that, and will soak up far more cash from the majority of the population will be a slap in the face of all who never understood that socialist Ponzi schemes always cost far more in the bitter end, it is nothing that America's favorite pastime can't resolve - paying on credit. Which means that the biggest threat to Americans as a result of Obamacare is neither the website, nor really who foots the bill (ask future generations), but the actual impact on services, and as CBS reports the next shock to brace for is the sudden drop off in healthcare providers as an imminent "explosion of demand for doctors and services" mean a looming doctor shortage is just around the corner.