Hey, it helps the big banks ... so shut up, already!
Insider Selling Update: 2 Buyers, 50 Sellers; Ratio Of Corporate Stock Buybacks To Insider Purchases: 16,800 To 1Submitted by Tyler Durden on 06/28/2011 12:53 -0500
Nothing new in the latest S&P 500 insider selling (and occasional buying). There were 2 (count them: two) purchases of stock by corporate insiders, of which one, which accounted for 97% of all purchases, came from Berkshire Hathaway. As usual selling dominated, with a ratio of 41 in notional sales to buys. And while we have been exposing this relentless dumping by insiders for years now, TrimTabs has added some voice to these ongoing warnings in which insiders sell their holdings to far less knowledgeable investors who are happy to burn "other people's money." Specifically, TrimTabs looks at the corporate share repurhcase-to-insider stock buying ratio, and gets some shocking results, namely that companies that have enacted $168 billion in corporate buybacks in 2011 have matched this with just $10 million in insider buying, a 16,800-to-1 ratio.
Freedom on quantitative easing, deflation, restructuring, gold, etc.
Today's weak ADP was the first indication of why Wall Street may need to promptly revise its NFP consensus for Friday following last month's blowout 283,000 number. And while that number is legendary in its total irrelevance and complete lack of correlation to what the BLS reports, a more credible analysis of why NFP will likely come in lower than consensus comes from TrimTabs, which says that "Fed-fueled inflation in April has put breaks on consumption." The key culprit, and the main reason why the dollar just plunged again, is the realization that the economy has once again failed to restart the virtuous loop of trillions in monetary stimulus becoming a virtuous loop. And, as before, the only outcome will be more QEasing, and another massive spike up in commodities once Wall Street once again well delayed, realizes this is inevitable (as we have been claiming since January).
When it comes to following the trail of money, capital flows specialist TrimTabs has traditionally focused on the stock market. In the past, TrimTabs' Charles Biderman has discussed how according to any reasonable calculations, there appears to be a key buyer missing among the usual market participant suspects, leading Biderman to conclude that the Fed may be buying stocks directly (or indirectly through Citadel as the case may be). To our surprise, in its most recent release, TrimTabs takes a look at the buyers in the gold market, and ends up with the same question: "Gold prices hit a record high in nominal terms for the second consecutive day. We are not sure who is driving up prices." The speculative conclusion: "Are central bankers loading up on gold as they crank up the printing presses and keep interest rates ridiculously low?" Of course, at first glance this would be preposterous as it has long been accepted that for the Fed a jump in surge prices is a very adverse development. Well, is it? Traditionally rising gold prices have been merely indicative of abnormally high inflation, which for the Fed was a "bad" thing in the past. Not so much any more, or at least since the advent of the "wealth effect" experiment. Recall that it is now the Fed's "goal" to give the impression of inflation (and reality for those who eat and use energy). This is based on Bernanke's false assumption that inflation is much more easily controllable (15 minutes...) than deflation. So while on the surface this may appear to be a preposterous claim, in reality there is nothing that prohibits a gold price surge in the context of the Fed's third mandate.
The economy is in a structural readjustment that will leave the middle class higher and drier. Long-term factors will continue to negatively affect employment. We are headed to a higher level of permanent unemployment than the 5% that existed in pre-crash 2008.
After yesterday TrimTabs Charles Biderman made it all too clear who runs the stock market, today the same firm exposes the system's dirty socialist core: "In a research note, TrimTabs highlights that government social benefits —including Social Security, Medicare, Medicaid, and unemployment insurance—were equal to 35% of all private and public wages and salaries in the 12 months ended January, up from 10% in 1960 and 21% in 2000. “We have no quibble with the view that the U.S. economy is expanding at a moderate pace,” says Madeline Schnapp, Director of Macroeconomic Research at TrimTabs. “But we believe Wall Street does not fully appreciate the degree to which growth depends on government support.” Schanpp's conclusion: QE3 is inevitable, leaving aside debt monetization concerns, as without it the US welfare state will collapse. DXY: meet 50, just in time for the NYSE Borse to extends its rollup with the Zimbaber stock exchange.
Last week the S&P 500 experienced its first weekly decline in eight weeks. On January 19th the index fell by more than 1%, something it hasn’t done in 37 trading days. The technology heavy Nasdaq was down 2.4% as AAPL was a big drag, falling 6% on the week. Smaller stocks, captured by Russell 2000, underperformed large caps in their second weekly decline since mid-November, down 4.26%. Further, transportation index diverged from the Dow, sometimes a harbinger of less than optimistic technicals of sorts. Earnings per share reports that beat estimates are coming in at 68%, below the past four quarter average of 74% and risk premiums are too low as VIX indicates complacency which can be seen by the routing in financial stocks last week. In each of the past three years, the stock market has weathered serious January selloff and has never experienced four down Januaries in a row. Pending on the outcome for this week, we will learn if this precedent upheld.
"The Fed No Longer Even Denies that the Purpose of Its Latest Blast of Bond Purchases ... Is To Drive Up Wall Street"Submitted by George Washington on 01/15/2011 12:10 -0500
Some good charts ...
During today's little CNBC circlejerk shindig, Ben Bernanke, in defense of his disastrous, and now deadly policies, once again confirmed that the (one and only) benefit from QE2 has been to boost stock prices. Oddly enough, there was no mention of surging energy, food and commodity prices. Nor did Liesman ask the Chairman about 43.2 million Americans on foodstamps, just as he did not ask the dictator of the centralized ponzi for his comments on why at last count 50 people in Tunisia were dead protesting, among other, record food prices and cost of living.
When we looked at the changing composition in the US work force one month ago, we discovered, to our dismay, that since the start of the Depression, the US labor pool has transformed substantially from a full-time time to an increasingly more part-time dominated one. Specifically we found that "America has lost 10.5 million full time jobs, offset by a 2.8 million increase in part time jobs" and that "the US not only lost 478k seasonally adjusted full time workers in November but has lost full time jobs for 6 months in a row, for a total of 1.6 million job losses!" In an attempt to further refine this number, we present some TrimTabs data which proves beyond a shadow of a doubt, that the Fed's QE (1, Lite, and 2) efforts, when expressed in labor force "pick up" has been an abysmal failure. To wit: "In 2010, the BLS reports that the economy added 1.12 million jobs. Almost 60% of these jobs are in one of three relatively low-paying areas—temporary employment (308,000), leisure & hospitality (240,000), and retail trade (116,000)." In other words, of the 1.1 million private jobs gained in the last year, 650,000 or 60% are jobs that have absolutely no real wealth creation capacity, nor do they provide any real benefits. In fact, the retail jobs are becoming increasingly distressed, as more Americans shop online, leading to a job pickup... in Chinese warehousing and QC plants, and the irretrievable loss of even the lowest paying US jobs. Perhaps this is another question to add to the increasing list of lies to be justified by Ben Bernanke at earliest convenience. And the next time the teleprompter claims to have added millions in jobs, and that very inappropriately named Fed "Dove" Janet Yellen says the Fed's QE has been a tremendous job creation success, someone please ask them to break down the actual types of jobs "created."
In her weekly HF positional analysis, BofA' Mary Ann Bartels (whose recent technical predictions did not quite pan out) finds that Long Short hedge fund exposure has declined from 25% to 18% as of January 10, well below the 40% average, market neutrals are -3% net short (explaining the ongoing bloodbath in the space), and that macro HFs are long commodities and short US equities and 10 year Treasuries. All in all, exposure continues to be below average bullish levels, yet the market continues to go up. Cue in TrimTabs...
It was the night before Christmas Eve, and CNBC trucked out TrimTabs' Charles Biderman to a de minimis audience, knowing full well that a man with his understanding of money flows would very likely repeat his statement from last year, that there is no real, valid explanation for the inexorable move in stocks higher, as equity money flows in 2010 were decidedly negative, and any explanation of the upward melt up would need to account for Fed intervention (and no-volume HFT offer-lifting feedback loops but that is a story for another day). A year after the first scandalous report was published, TrimTabs is sticking with its story: "If the money to boost stock prices by almost $9 trillion from the March
2009 lows did not come from the traditional players, it had to have come
from somewhere else. We believe that place is the Fed. By funneling
trillions of dollars in cash to the primary dealers in exchange for
debt, the Fed has given Wall Street lots of firepower to ramp up the
prices of risk assets, including equities." And, wisely, Biderman, just like Zero Hedge, asks what happens when the buying one day, some day, ends: "...stock prices will be higher by the time
QE2 ends, but economic growth will not be sustainable without massive
government support. Then even more QE will be needed, and stock prices
could keep rising for a while. In our opinion, however, no amount of QE
will be able to keep the current stock market bubble from bursting
eventually." Ergo our call earlier that Bernanke has at best +/- 150 days to assuage the market's fear that QE2 is ending (not to mention that we have a huge economic recovery, right Jan Hatzius? We don't need no stinking QE...). Therefore the best Bernanke can hope for is to buy some additional time. At the end of the day, the biggest problem is that the massive slack in the economy means that LSAP will have to continue for a long, long time, before the virtuous circle of self-sustaining growth can even hope to take over. By then bond yields may very well be high enough that Ron Paul will demands someone finally bring Paul Volcker out of the fridge.
The prevalence of crude is undeniable. You might dabble in green-think cultism or you might drive an obnoxious monolith of a Hummer (what I like to call an “overcompensation-mobile”), but neither philosophy of consumption dares to contradict that this world runs on oil. Petroleum is used in the manufacture or shipping of almost every industrial product on the planet, and even many agricultural goods. Therefore, it behooves the public to seriously consider the ramifications of oil price and its underlying effect on the entirety of our economy. Even minor increases holding over an extended period of time cause economic reverberations that can be felt for years afterwards. Financial and social adjustments to commodity inflation can sometimes take decades if the event is historically unprecedented. Petroleum is a foundation ingredient, it is energy itself; the higher its cost, the greater the cost of every other product we use, and the worse off our financial structure is. Period. There is no scenario yet experienced by any nation in which oil inflation actually benefited the masses or the overall economy, even in countries that sell oil! Americans have had a small taste of the tensions involved in an oil crisis, during the 1979-1980 Iranian snafu, and the massive gas spike of 2008, but these events are nothing compared to the steamrolling inflation we are soon to see at the pump in the next couple of years. Let’s examine why…
Update: Charles Biderman sends us an addendum to his earlier CNBC appearance...
A year after Charles Biderman's provocative post first appeared on Zero Hedge, in which he asked just who is doing all the buying of stocks as the money was obviously not coming from retail investors (and came up with one very notable suggestion), today Maria Bartiromo invited the TrimTabs head once again (conveniently in CNBC's lowest rated show, during Christmas Eve eve, at a time when perhaps 5 people would be watching) in an interview which disclosed that after more than a year of searching, Biderman still has no idea who actually buying. In response to Bartiromo's question if the retail investor, who left after the flash crash (thank you SEC), Biderman responds what every Zero Hedger has known for 33 weeks: "Retail investors are not coming back to the US. Those investors that are investing are buying global equities and are buying commodities. We are seeing lots money going into commodity ETF funds: gold, silver..." and the even more unpleasant summation: "individuals have been selling, companies are net selling, insider selling and new offerings are swamping any buyback and any cash M&A activity since QE 2 was announced. Pension funds and hedge funds don't really have that much cash to invest. So what nobody's asking is what happens when QE 2 stops: if the only buyer is the Fed, and the Fed stops buying, I don't know what is going to happen...When I was on your show a year ago I was saying the same thing: we can't figure out who is doing the buying it has to be the government, and people said I was nuts. Now the government is admitting it is rigging the market." Cue Bartiromo jaw dropping.