- Dot Com part deux: Investors are showing increasing hunger for initial public offerings of unprofitable technology companies (WSJ)
- Poll Finds GOP Blamed More for Shutdown (WSJ)
- House, Senate Republicans Offer Competing Plans on Debt-Limit, Government Shutdown (WAPO)
- Obama, Republicans aim to end crisis after meeting, hurdles remain (Reuters)
- US Rethinks How to Release Sensitive Economic Data (WSJ)
- Chinese East Oil Fuels Fresh China-US Tensions (WSJ)
- ECB Agrees on Swap Line With PBOC as Trade Increases (BBG)
- China September Auto Sales Surge 21% on Japanese Rebound (BBG)
- JPMorgan Taps Taxpayer-Backed Banks for Basel Rules (BBG)
Every year there seems to be a few momentum stocks defying logic, reality while bleeding all shorts getting in the way. This year, Tesla Motor is one such stock.
A few days ago we noted a major Senate demand of the Treasury Secretary that foreign nations' currency manipulations should be punished (supported by American Manufacturers Associations). Today we find out that Eric Holder and his DoJ crew have found that nine Japanese car parts makers have colluded to raise prices. As part of the scheme, more than $5 billion in auto parts were sold to U.S. car manufacturers and installed in cars sold in the United States and elsewhere. The companies will pay more than $1.6bn in criminal fines. Seems like a small price to pay for the Japan being allowed to devalue its currency boosting its own car exports?
- Hedge Funds Cut Back on Fees (WSJ) as we predicted would happen in May
- Syria's Assad denies chemical weapons use; U.S. presses case for strike (Reuters)
- Unemployment Falling for Wrong Reason Creates Fed Predicament (BBG)
- U.S. tapped into networks of Google, Petrobras, others (Reuters)
- Chinese Zombies Emerging After Years of Solar Subsidies (BBG)
- Monte Paschi doubles planned capital hike to 2.5 billion euros (Reuters)
- Loan Size to Be Cut for Fannie, Freddie (WSJ)
- Japan Growth Revision Opens Door to Sales Tax Rise (FT)
- Inside the End of the U.S. Bid to Punish Lehman Executives (NYT)
- Financial Crisis: Lessons of the Rescue, A Drama in Five Acts (WSJ)
- Time Warner Joins IBM in Health Shift for Retirees (WSJ)
- Mideast Derails Key Issues in Congress (WSJ)
- Summers Faces Key 'No' Votes if Picked for Fed (WSJ)
- NYT Editorial Board Says Summers Would Be Wrong Fed Choice (NYT)
- Russia says it's compiled 100-page report blaming Syrian rebels for a chemical weapons attack (McClatchy)
- China says Syria crisis can't be resolved with military strike (Reuters)
- G-20 Faces Growth Threats as Syria Adds to QE Exit Risks (Bloomberg)
- Apple Supplier Fire Spurs Biggest Chip Price Rise in 3 Years (BBG)
- U.S. Decided Not to Horse-Trade With Russia on Assad (WSJ)
- Financial Crisis: For Corporations and Investors, Debt Makes a Comeback (WSJ)
- Gorman Says Chance of Another Financial Crisis ‘Close to Zero’ (BBG) and in other news, "no risk of a Us downgrade" - Tim Geithner
- A Biotech King, Dethroned (NYT)
It seems the exuberance of a recovering housing market has spread not just to Ford, Toyota, and GM this morning but to the luxury-end of the 'renaissance'-ing auto industry... Because nothing says 'recovery' like a $4.4 million, 750 horsepower, 6.6 liter V12 'Batmobile'-style Lambo...
- Opposition figure: major decisions on Syria expected within hours (Al Arabiya)
- Syria challenges U.S. to "produce the evidence" that Assad regime launched chemical attack (CBS)
- British PM says world must act on Syria, weighs response (Reuters)
- U.S. Treasury to Hit Debt Limit in Mid-October (WSJ)
- U.S. could look beyond U.N. Security Council in any Syria strike (Reuters)
- Nasdaq, NYSE at odds on outage cause as SEC seeks facts (Reuters)
- Ackman’s J.C. Penney Sale Ends Failed Saga to Agitate for Change (BBG)
- Zandi, LaVorgna, Blinder, Rattner all is one con puff piece (BBG)
- Best Buy Founder Schulze Plans Stock Sale to Diversify Assets (BBG) - "diversify assets" = dump overpriced junk
- Zero Worship: Credit-Card Firms Compete With No-Interest Transfers (WSJ)
- Len Blavatnik wins $50m in JPMorgan lawsuit (FT)
- Danone Finds Yogurt’s All Greek as Oikos Chases Chobani (BBG)
A look the end of the rising cycle and the start of the falling cycle, including its dynamics and capital destruction. How does the central bank respond?
If you are a stock picker, then it’s basically now or never for whatever investment discipline you might follow. Asset class and industry correlations have taken a surprising nosedive in recent weeks, which - as ConvergEx's Nick Colas notes. should allow your strategy/blend of magic to (hopefully) shine versus the benchmarks. Average industry sector correlations to the S&P 500 have dropped to 69.9%, by far the lowest observation for over two years. High yield bonds now show just 16% correlation to U.S. stocks, and the numbers for Emerging Markets (58%), EAFE stocks (76%), and currencies like the Australian dollar (11%) are also plumbing new lows. Why the sudden return to a ‘Normal’ world? Expectations that the Federal Reserve will begin to ‘Taper’ its bond buying help, to be sure. As do actual inflows (some $8 billion last month) into actively managed mutual funds. We’ll have to wait and see if current trends continue, but for now we welcome the return of the ‘Stock picker’s market’. Let the dart-throwing begin...
I fully expect that tens of thousands of young Americans will be visiting Yemen in the near future.
A week that has been all about acronyms - GDP, PMIs, FOMC, ECB, BOE, ADP, ISM, DOL, the now daily record highs in the S&P and DJIA - is about to get its final and most important one: the NFP from the BLS, and specifically an expectation of a July 185K print, down from the 195K in the June, as well as an unemployment rate of 7.5% down from 7.6%. The number itself is irrelevant: anything 230 and above will be definitive proof Bernanke's policies are working, that the virtuous circle has begun and that one can rotate out of everything and into stocks; anything 150 or below will be definitive proof the Fed will be here to stay for a long time, that Bernanke and his successor will monetize everything in sight, and that one can rotate out of everything and into stocks, which by now are so disconnected from any underlying reality, one really only mentions the newsflow in passing as the upward record momentum in risk no longer reflects pretty much anything.
- Humans Beating Robots Most Since ’08 as Trends Shift (BBG)
- Easing of Mortgage Curb Weighed (WSJ)
- European Banks Face Capital Gap With Focus on Leverage (BBG)
- Signs Suggest China Warming to Idea of Stimulus (WSJ)
- China Coal-Fired Economy Dying of Thirst as Mines Lack Water (BBG)
- Jeans and shoes show criminal underbelly of China-EU trade (Reuters)
- How U.S. drug sting targeted West African military chiefs (Reuters)
- Japan scrambles jets after China plane flies by southern islands (Reuters)
- Apple Plots Return to Growth After Coping With Aging Lineup (BBG)
- AT&T Falls Shy of Analyst Estimates as Discounts Hurt Margins (BBG)
- SAC insider trading case takes twist (FT)
The Innovator’s Dilemma strikes again, this time with the news that the city of Detroit has filed for bankruptcy protection. As a business term, ConvergEx's Nick Colas reminds us that the “Dilemma” describes how successful companies fall from grace because they ignore new competition with disruptive technologies at the low end of their markets. In a world that increasingly revolves around intellectual capital (a.k.a. people), government at all levels needs to think about how they do not fall prey to the same error. As for Detroit, any lasting solution likely needs far more government intervention than is currently possible. And so to where Detroit goes from here, we’ll borrow from another business paradigm that parses all solutions to troubled operations into three buckets: "Fix, Close or Sell." In summary, Detroit’s failures are certainly of its own making. The way forward will need leadership that is unavailable locally.
While last night's Tankan manufacturing reports met lowered expectations, it seems the reality of the domestic Japanese economy remains as bleak as ever. As Nikkei reports, Japan's domestic sales of new cars, trucks, and buses declined 15.8% for a year earlier in June for the second consecutive month. Even if one argues that Abenomics goal is not just boosting the domestic economy, total Japanese car sales were down almost 11% YoY as Honda saw its sales drop a stunning 40.7%. The latest figures continue this year's downward trend and while some blame the particularly sharp drop on fewer selling days in June, the auto dealer's association also said reflects the "ongoing severe" situation in the domestic market.
Were you under the impression that your credit card transactions are private? If so, I am sorry to burst your bubble. As you will see below, there are actually multiple government agencies that are gathering and storing records of your credit card transactions. And in turn, those government agencies share that information with other government agencies that want it. So if you are making a purchase that you don't want anyone to know about, don't use a credit card. This is one of the reasons why the government hates cash so much. It is just so hard to track. In this day and age, the federal government seems to be absolutely obsessed with gathering as much information about all of us as it possibly can. But there is one big problem. What they are doing directly violates the U.S. Constitution.