http://www.zerohedge.com/fullrss2.xml/contributed/contributed/news/speaking-credibility-here-cbos-2001-forecast-which-predicted-negative-25-trillion-net-debt-2011 en Ebola Devastates West Africa: Revenues Down; Markets Not Functioning; Projects Canceled; GDP Plunges 4% http://www.zerohedge.com/news/2014-08-27/ebola-devastates-west-africa-revenues-down-markets-not-functioning-projects-canceled <p>In all of its infinite wisdom, the "market", which stopped reacting to newsflow or discounting the future some time after the Fed officially announced it would centrally-plan it indefinitely, decided that just like the trade war against Russia is irrelevant only to find itself a week ago with Europe staring at the abyss of a triple-dip recession, so it decided that the worst Ebola outbreak in history is a non-event, even though it has put virtually all of western Africa on indefinite lockdown, and as <a href="http://in.reuters.com/article/2014/08/27/us-health-ebola-idINKBN0GQ17920140827">Reuters reports</a>, is "<strong>causing enormous damage to West African economies and&nbsp; draining budgetary resources</strong>." In fact the damage from Ebola to Africa is already so acute, it is expected that <strong>economic growth in the region will plunge by up to 4 percent as foreign businessmen leave and projects are canceled, </strong>according to the African Development Bank president said.</p> <p>"<strong>Revenues are down, foreign exchange levels are down, markets are not functioning, airlines are not coming in, projects are being canceled, business people have left - that is very, very damaging</strong>," African Development Bank (AfDB) chief Donald Kaberuka said in an interview late on Tuesday.</p> <p>"<strong>The numbers I have had vary from one percent to four percent of GDP. That is a lot in a country with a GDP of US$6 billion</strong>," Kaberuka said, when asked to quantify the impact.</p> <p>That's ok, surely the Central Bank of Nigeria will just print some "growth" to offset the 4% GDP plunge. Oh wait, wrong continent for such moronic drivel. Here businesses actually have to, well, "business" in order to generate cash flow and to grow, and where printing prosperity and wealth out of thin air is still a novel concept. </p> <p>And while all the world's central banks can push the CTRL-P button and mask the simple fact that global trade is crumbling around the world, which despite the happy all time high stock market facade, is getting dragged down ever deeper into currency and trade wars...</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2014/08/IMF%20World%20Trade%20growth%20July%202014.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2014/08/IMF%20World%20Trade%20growth%20July%202014_0.jpg" width="500" height="400" /></a></p> <p>... sooner or later the reality that globalization is rapidly unwinding will finally come to the surface. And while the sudden stop of the German economy in the aftermath of the Russian sanctions may not be the stick the breaks the camel's back, said stick may be, appropriately enough, in the continent much more preferred by camels. </p> <p>Here is what <a href="http://in.reuters.com/article/2014/08/27/us-health-ebola-idINKBN0GQ17920140827">else is going on:</a></p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>As transport companies suspend services, cutting off the region, governments and economists have warned that the worst outbreak of the hemorrhagic Ebola fever on record <strong>could crush the fragile economic gains made in Sierra Leone and Liberia following a decade of civil war in the 1990s.</strong></p> <p>Air France, the French network of Air France-KLM said on Wednesday it has suspended its flights to Sierra Leone following advice from the French government. France did not recommend suspending flights to Nigeria and Guinea.</p> <p>&nbsp;</p> <p>Liberia has already said that it would have to lower its 2014 growth forecast, without giving a new one.</p> <p>Sierra Leone Deputy Minister of Mineral Resources Abdul Ignosis Koroma also told Reuters that the government would miss its target of exporting $200 million in diamonds this year because of the Ebola outbreak, versus $186 million last year.</p> <p>&nbsp;</p> <p>"There is no way the government can reach this amount since the districts where diamonds are mined are not Ebola-free, especially the main diamondiferous region Kono," Koroma said. Miners, he added, are too afraid to go to alluvial diamonds pits in the country's Ebola-striken east.</p> </blockquote> <p>But while nobody cares about the cataclysm the locals find themselves in because clearly, they are&nbsp; "out of sight", one firm that will be furious is De Beers: <strong>"Diamond trade had also been stopped by tough border controls to curb the spread of the virus</strong>."&nbsp; Which means the world's billionaires will have to spend more on bling, and we can't have that.</p> <p>Actually we jest: nobody cares about Africa - it is on its own. </p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>The AfDB this week donated $60 million toward essential supplies to help train medical workers and purchase supplies to fight the outbreak, which has already killed more than 1,400 people, mostly in Guinea, Sierra Leone and Liberia.</p> </blockquote> <p>Sadly Africa needs hundreds of millions more,&nbsp; money which it doesn't have... money which represents several minutes of the Fed's daily market manipulating POMO liquidity injection. </p> <p>And since it won't get it, the epidemic could soon lead to an all out economic depression in west Africa: "Kaberuka described the health care systems of the affected countries as "overloaded". He said he hoped the donation would stop money being diverted away from other programs such as the education and agriculture, thereby reducing the long-term damage from the outbreak."</p> <p>"We need to begin now to plan what could happen next when Ebola is beaten," he said.</p> <p>Sure, but let's get there first, and also let's hope that the epidemic, which shows zero signs of abating, doesn't lead to another slashing of GDP other places: places which the general <em>ice-bucket challenge-</em>obsessed public actually does care about. Because printing antibodies is not one of the Fed's "shotgun approach" specialties.</p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="580" height="399" alt="" src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/ebola%20africa%202.jpg?1409171492" /> </div> </div> </div> http://www.zerohedge.com/news/2014-08-27/ebola-devastates-west-africa-revenues-down-markets-not-functioning-projects-canceled#comments Central Banks France POMO POMO Reality Recession Reuters Trade War Trade Wars Wed, 27 Aug 2014 21:01:05 +0000 Tyler Durden 493595 at http://www.zerohedge.com Russia Sanctions Hit German Consumers, “Economic Expectations Completely Collapse” http://www.zerohedge.com/news/2014-08-27/russia-sanctions-hit-german-consumers-%E2%80%9Ceconomic-expectations-completely-collapse%E2%80%9D <p>It starts out un-alarmingly. The optimism of German consumers weakens somewhat, according to the forward-looking <a href="http://www.gfk.com/de/news-und-events/presse/pressemitteilungen/seiten/dämpfer-fürs-konsumklima.aspx"><span style="text-decoration: underline;"><span style="color: #0009c4;">Gfk survey</span></span></a>, conducted on a monthly basis for the European Commission. So the overall index fell to 8.6 for September, from 8.9 in August. It was the first decline since January 2013.</p> <p>The index bottomed in late 2008 below 2, after a breathtaking crash during the financial crisis. In late 2007, it had hovered above 9. Early 2014 was the first time since the prior bubble that the index broke above 8. And August’s level of 8.9 represented an “extremely optimistic economic outlook,” as Gfk calls it. German consumers have been feeling good, and according to the headline index, they’re <em>still</em> feeling good up there somewhere in the rarefied air above 8.</p> <p>But beneath the surface, there is serious trouble. Gfk reports that the sub-index of economic expectations, “in light of the intensified state of international affairs, completely collapses.”</p> <p>It plunged 35.5 points to 10.4. The worst monthly plunge since the beginning of the survey in 1980. In a single month, it nearly wiped out all the gains of the boom of the last 12 months. Gfk cites the escalation of the situation in Iraq, Israel, the Eastern Ukraine, and particularly “the faster rotating sanctions spiral with Russia.”</p> <p>Since there appears to be no sustainable solution to any of the trouble spots, consumers are showing increased uncertainty about the possible consequences for the German economy, Gfk reports. “Particularly the sanctions against Russia, which have already hit exports noticeably, could become a real danger for the German economy.”</p> <p>The two sub-indices for income expectations and propensity to spend have been spared so far this type of brutal collapse, though they both fell from their lofty perches. Income expectations hit an all-time record in August. But for September, the index dropped 4.6 points to 50.1. The propensity to spend dropped 1.7 points to 49.3. At these levels, both are&nbsp; still “relatively robust.”</p> <p>Gfk credits “the continued stable domestic conditions, stable employment levels, good income development, and low inflation” for limiting <em>so far&nbsp;</em>the impact of collapsing economic expectations on income expectations and the propensity to spend.</p> <p>ECB President Mario Draghi, along with inflation mongers in the new French government, at the Fed, on Wall Street, and elsewhere should take note: inflation, as the report points out repeatedly, is important to Germans. Watch what happens to German consumer attitudes – and spending – if you steal their income and scarce savings one bite at a time.</p> <p>But dark clouds have already appeared over German consumer spending: Gfk cites the increase in the propensity to save in August as “the first indicator that the consumer will be more careful in the future and that the impulses for the propensity to consume could decline.”</p> <p>For this still “relatively robust” propensity to spend to continue, “it is necessary from the consumer’s point of view, that the situation in the crisis regions does not escalate further, but that sustainable solutions are found.” Gfk then warns: “If domestic conditions deteriorate significantly in the wake of a possible further escalation, difficult times loom ahead&nbsp;for the economy.”</p> <p>Given the new economic malaise in Germany [<a href="http://wolfstreet.com/2014/08/14/the-sanctions-are-now-eating-their-lunch-russian-ceos-beg-for-bailouts-german-economy-swoons/"><span style="text-decoration: underline;"><span style="color: #0009c4;">Sanctions Are Eating their Lunch: Russian CEO Begs for Bailout, German Economy Swoons</span></span></a>], any decline in consumer spending, which grew at a measly 0.9% last year, could wreak real havoc, not just in Germany, but also in its most critical trading partner France, in Italy, and other struggling economies in the Eurozone. German consumers are infamous for closing their wallets. And if they do it again, after they finally started spending more, they’d quickly prick any remaining hopes for a “recovery” in the Eurozone.</p> <p>Even the folks at the German Ministry of Finance <em>very belatedly</em>&nbsp;admit that the sanctions spiral&nbsp;caused Germany’s current economic swoon, as if they’d finally found my site where I’ve been explaining this to them with utmost patience&nbsp;for months. Hilarity ensued. Read….&nbsp; <a href="http://wolfstreet.com/2014/08/22/german-finance-ministry-belatedly-follows-wolf-street-in-blaming-sanctions-for-economic-swoon/"><span style="text-decoration: underline;"><span style="color: #0009c4;">This Is what Happens when otherwise Competent, Diligent, and Hard-Nosed Bureaucrats Fail to Read my Stuff </span></span></a></p> http://www.zerohedge.com/news/2014-08-27/russia-sanctions-hit-german-consumers-%E2%80%9Ceconomic-expectations-completely-collapse%E2%80%9D#comments Eurozone Fail France Germany Iraq Israel Italy Ukraine Wed, 27 Aug 2014 20:45:03 +0000 testosteronepit 493596 at http://www.zerohedge.com Saxo Bank CIO Warns "It's Time To Be Defensive... Very Defensive" http://www.zerohedge.com/news/2014-08-27/saxo-bank-cio-warns-its-time-be-defensive-very-defensive <p><em>Via <a href="https://www.tradingfloor.com/posts/nothings-wrong-with-changing-your-mind-its-time-to-short-usd-1410761">Saxo Bank&#39;s Steen Jakobsen of TradingFloor.com</a>,</em></p> <p>Lee Iacocca, one of the true greats of the motor industry and a prolific author on leadership and management, once noted:<span style="font-style: italic;"> <u>&quot;What is wrong with changing your mind because the facts change? But you have to be able to say why you changed your mind and how the facts changed.&quot;</u></span></p> <p>My biggest call all year has been for lower rates globally, and in particular lower core country (Germany, Denmark and US) yields led by this magic trinity of factors:</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><strong>1. China and Asia rebalancing growth away from nominal to quality growth</strong></p> <p>&nbsp;</p> <p><strong>2. US current account deficit reduced by 50% (see chart below)</strong></p> <p>&nbsp;</p> <p><strong>3. A Europe where Germany will pay the price for the first two factors with a lag of six to nine months.</strong></p> </blockquote> <p>The headline call was and remains that Germany will be close to recession by Q4-2014 or Q1-2015 setting up a desperate European Central Bank and an anemic Europe once again close to zero growth instead of the &ldquo;escape velocity&rdquo; everyone and their dog promised you and me in December and January.</p> <p>US current account and the missing $400bn worth of exports<span style="font-size: 12px; line-height: normal;">:</span></p> <div style="line-height: 1.5; font-size: 14px;"><img alt="current account" class="popup-image" data-original-image="/images/article/original/40366044-f018-4913-9dc2-5190e0d7e8b3.png" src="https://www.tradingfloor.com/images/article/max608w/40366044-f018-4913-9dc2-5190e0d7e8b3.png" style="height: 323px; width: 601px;" /></div> <p><em>Source: St. Louis Fed</em></p> <p>This past week we went through the important floor of 1% on the 10-year German Bund yield and I took profit on my long-held position <span style="font-size: 12px; line-height: normal;">:</span></p> <div style="line-height: 1.5; font-size: 14px;">&nbsp;</div> <div style="line-height: 1.5; font-size: 14px;">&nbsp;</div> <div style="line-height: 1.5; font-size: 14px;"><img alt="10/yr" class="popup-image" data-original-image="/images/article/original/7ed8bc97-9722-49fd-8762-0d72e51f8de2.png" src="https://www.tradingfloor.com/images/article/max608w/7ed8bc97-9722-49fd-8762-0d72e51f8de2.png" style="height: 206px; width: 599px;" /></div> <p><em>Source: Bloomberg</em></p> <p>This was a position I established back in Q4-2013. Feeling &ldquo;naked&rdquo; I did some additional work and heavily supported by our Saxo JABA model we have changed the asset mix and also our yield call:</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><strong>Highest conviction call remains for lower global yields</strong> (low in Q1-2015), but for the rest of 2014 I see US yields falling more than their European equivalents &ndash; this will lead to bunds underperforming the 10-year Treasury and will set up the second call:</p> <p>&nbsp;</p> <p><strong>USD will weaken significantly from mid-Q3 into Q1-2015</strong>. The market remains overexposed to the dollar and US equities relative to the norm. Furthermore, with mid-term elections on November 4 the coming budget talks will have a hard time producing the convincing and long-term results needed.</p> <p>&nbsp;</p> <p><strong>Bunds will not be able to follow the Fed&#39;s repricing</strong> (away from early 2015 hike) and growth in the US (it&rsquo;s not the weather) as Q2 gets revised back down to 2.25-2.50%. Another difficulty for Bunds will be geopolitical risk and a lag of global earnings for S&amp;P- 500 companies which reduces margins and cash-flow. Average GDP in the US for the last five years has been 2.0%......</p> </blockquote> <p>am at present almost square in fixed income &ndash; alpha model &ndash; from very long, but will use any correction in US bonds to activate medium-term long. (Again, that Bund yields will continue to fall but by less than US rates remains the new call&hellip;) hedging any US dollar exposure back into JPY and EUR. The pair EURUSD could trade 1.4000+ and USDJPY below 97.00<span style="font-size: 12px; line-height: normal;">.</span></p> <div style="line-height: 1.5; font-size: 14px;">&nbsp;</div> <div style="line-height: 1.5; font-size: 14px;"><img alt="333" class="popup-image" data-original-image="/images/article/original/b354ebc8-205d-4c45-9557-89125438e962.png" src="https://www.tradingfloor.com/images/article/max608w/b354ebc8-205d-4c45-9557-89125438e962.png" style="height: 353px; width: 600px;" /></div> <p><em>Source: Bloomberg</em></p> <p><strong>Global growth is slowing down</strong> &ndash; World Growth in 2014 was expected in January to be higher than 3.1%. Today, my learned colleagues have revised their &ldquo;guesstimates&rdquo; down to 2.53% - a &ldquo;small&rdquo; drop of 0.6% - which is not only worrying but also puts at risk the coming budget talks &ndash; certainly in Europe but also in the US.</p> <div style="line-height: 1.5; font-size: 14px;">&nbsp;</div> <div style="line-height: 1.5; font-size: 14px;"><img alt="World gdp" class="popup-image" data-original-image="/images/article/original/bd21f7b4-3995-4f2c-ab5e-df8bf6589483.png" src="https://www.tradingfloor.com/images/article/max608w/bd21f7b4-3995-4f2c-ab5e-df8bf6589483.png" style="height: 316px; width: 600px;" /></div> <p><em>Source: Bloomberg</em></p> <p>These are, of course, relatively bold calls considering the market and the consensus have short EURUSD, long USDJPY and overweight US stocks as their main risk vehicles when VaR (value at risk) is allocated.</p> <p>It&rsquo;s important to underline that major US investment houses, and certainly every single sales person I talk to, believe US is about to accelerate in growth not slow down. Q3 could be ok but the real damage will come in Q4 as the lead-lag factor of geopolitical risk, lack of reforms and excess global supply leads to low inflation. Despite recent Fed optimism about an exit strategy the fact remains that few institutions are worse than the Fed in projections as even its simple target goals show <span style="font-size: 12px; line-height: normal;">:</span></p> <div style="line-height: 1.5; font-size: 14px;"><img alt="Fed forecasts" class="popup-image" data-original-image="/images/article/original/a69aba9f-2097-413c-a497-3af33b0c7447.png" src="https://www.tradingfloor.com/images/article/max608w/a69aba9f-2097-413c-a497-3af33b0c7447.png" style="height: 480px; width: 601px;" /></div> <div style="line-height: 1.5; font-size: 14px;">&nbsp;</div> <p><strong>The Fed is simply terrible at predicting&hellip;&hellip;here is its &ldquo;score&rdquo; on inflation target:</strong></p> <div style="line-height: 1.5; font-size: 14px;">&nbsp;</div> <div style="line-height: 1.5; font-size: 14px;"><img alt="pce ^ cpi" class="popup-image" data-original-image="/images/article/original/8b1a60b4-e769-4a0f-9f7d-ef1744bef3ac.png" src="https://www.tradingfloor.com/images/article/max608w/8b1a60b4-e769-4a0f-9f7d-ef1744bef3ac.png" style="height: 372px; width: 600px;" /></div> <div style="line-height: 1.5; font-size: 14px;">&nbsp;</div> <p>Why would they be right this time? They won&#39;t. Q2 will be revised down to 2.5-ish in a third correction &ndash; the standard correction is 1.5% from the first to the third reading:</p> <div style="line-height: 1.5; font-size: 14px;"><img alt="gdp revisions" class="popup-image" data-original-image="/images/article/original/65a639a8-90b9-4aa8-b392-bab88626d849.jpg" src="https://www.tradingfloor.com/images/article/max608w/65a639a8-90b9-4aa8-b392-bab88626d849.jpg" style="height: 413px; width: 601px;" /></div> <div style="line-height: 1.5; font-size: 14px;">&nbsp;</div> <p>&hellip;.and largely ignored they US consumer remains on strike despite &ldquo;lower&rdquo; unemployment:</p> <div style="line-height: 1.5; font-size: 14px;"><img alt="retail sales" class="popup-image" data-original-image="/images/article/original/7a03ae9b-5335-40cb-8537-462929c7b6ed.jpg" src="https://www.tradingfloor.com/images/article/max608w/7a03ae9b-5335-40cb-8537-462929c7b6ed.jpg" style="height: 453px; width: 600px;" /></div> <p><em>Source: St. Louis Fed</em></p> <p>No hope and a distinct lack of alternatives is ruling the markets. Our major call is:</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><u><strong>short the US dollar index and long commodities soon as well as the weak dollar and US yields (which will soon fall) set up great value trades <span style="font-size: 12px; line-height: normal;">.</span></strong></u></p> </blockquote> <div style="line-height: 1.5; font-size: 14px;"><img alt="999" class="popup-image" data-original-image="/images/article/original/1ff7ea59-a29c-450d-8b97-d8243c778beb.png" src="https://www.tradingfloor.com/images/article/max608w/1ff7ea59-a29c-450d-8b97-d8243c778beb.png" style="height: 439px; width: 600px;" /></div> <div style="line-height: 1.5; font-size: 14px;">&nbsp;</div> <div style="line-height: 1.5; font-size: 14px;"><img alt="cry index" class="popup-image" data-original-image="/images/article/original/1ac1b9d4-f876-4aba-ae9c-060ed8bb7d9e.png" src="https://www.tradingfloor.com/images/article/max608w/1ac1b9d4-f876-4aba-ae9c-060ed8bb7d9e.png" style="height: 426px; width: 600px;" /></div> <p><em>Source Bloomberg, Saxo Bank</em></p> <p>&nbsp;</p> <p><u><strong>Yes, it&rsquo;s time to be defensive&hellip;very defensive.</strong></u></p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="586" height="257" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20140827_saxo.jpg?1409163081" /> </div> </div> </div> http://www.zerohedge.com/news/2014-08-27/saxo-bank-cio-warns-its-time-be-defensive-very-defensive#comments China European Central Bank fixed Germany Recession Saxo Bank St Louis Fed St. Louis Fed Unemployment US Dollar Index Wed, 27 Aug 2014 20:31:42 +0000 Tyler Durden 493594 at http://www.zerohedge.com Confidence In Central Planning Saved With Last Second All Time High Ramp http://www.zerohedge.com/news/2014-08-27/confidence-central-planning-saved-last-second-all-time-high-ramp <p>Once Europe closed, US equity markets rolled over on what is a new &#39;lowest-volume-day-of-the-year&#39; led by recent winner Russell 2000.<strong> The Dow is now red on the week and the Nasdaq up 11 days in a row</strong>. Today was not about stocks though (aside from the close). While CAD saw its best gain in over 2 years, it was US Treasuries (as EUR weakened and Bund yields plunged) that made the flashing red headlines with 30Y back at 15-month lows (at 3.10%) and 10Y -3.5bps at 2.36% as the yield curve flattened even further. <strong>2s30s dropped below 260bps - its flattest since Dec 2012</strong>. Un-de-escalation concerns evident in TSYs and credit finally started to bleed into VIX and stocks. Gold, silver, and oil limped higher as US weakened (and copper fell). <strong>A desperate buying panic into the close smashing S&amp;P futures to VWAP magically enabled the S&amp;P to close at the confidence-inspiring centrally-planned &#39;wealth effect&#39; level of 2000.07!!</strong></p> <p>&nbsp;</p> <p>Come on...</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2014/08/20140827_EOD8.jpg"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2014/08/20140827_EOD8_0.jpg" style="width: 600px; height: 499px;" /></a></p> <p>&nbsp;</p> <p>all thanks to the machines driving S&amp;P 500 e-mini futures back perfectly to VWAP...</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2014/08/20140827_EOD10.jpg"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2014/08/20140827_EOD10_0.jpg" style="width: 600px; height: 318px;" /></a></p> <p>&nbsp;</p> <p>Seriously...</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2014/08/20140827_EOD11.jpg"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2014/08/20140827_EOD11_0.jpg" style="width: 600px; height: 344px;" /></a></p> <p>&nbsp;</p> <p>Treasuries were once again heavily bid...</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2014/08/20140827_EOD6.jpg"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2014/08/20140827_EOD6_0.jpg" style="width: 600px; height: 316px;" /></a></p> <p>&nbsp;</p> <p>And the divergence grows...</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2014/08/20140827_EOD3.jpg"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2014/08/20140827_EOD3_0.jpg" style="width: 600px; height: 355px;" /></a></p> <p>&nbsp;</p> <p>leaving the Dow red on the week...</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2014/08/20140827_EOD9.jpg"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2014/08/20140827_EOD9_0.jpg" style="width: 600px; height: 496px;" /></a></p> <p>&nbsp;</p> <p>and Utes heavily bid into the close - not exactly risk on!!</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2014/08/20140827_EOD4.jpg"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2014/08/20140827_EOD4_0.jpg" style="width: 600px; height: 519px;" /></a></p> <p>&nbsp;</p> <p>The yield curve is utterly collapsing...which bodes very badly for P/E multiple expansion</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2014/08/20140827_EOD1.jpg"><img height="303" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2014/08/20140827_EOD1_0.jpg" width="600" /></a></p> <p>&nbsp;</p> <p>Credit markets widened once again...</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2014/08/20140827_EOD2.jpg"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2014/08/20140827_EOD2_0.jpg" style="width: 600px; height: 317px;" /></a></p> <p>&nbsp;</p> <p>FX markets saw USD weakness as EUR strength (QU unlikely) and CAD strength (technicals and tax inversions) dragged it lower</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2014/08/20140827_EOD7.jpg"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2014/08/20140827_EOD7_0.jpg" style="width: 600px; height: 318px;" /></a></p> <p>&nbsp;</p> <p>Commodities trod water (copper dropped) despite the USD weakness</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2014/08/20140827_EOD5.jpg"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2014/08/20140827_EOD5_0.jpg" style="width: 600px; height: 312px;" /></a></p> <p>&nbsp;</p> <p><em>Charts: Bloomberg</em></p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="1044" height="869" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20140827_EOD8.jpg?1409169984" /> </div> </div> </div> http://www.zerohedge.com/news/2014-08-27/confidence-central-planning-saved-last-second-all-time-high-ramp#comments 2s30s Copper Equity Markets headlines NASDAQ Russell 2000 Yield Curve Wed, 27 Aug 2014 20:06:42 +0000 Tyler Durden 493593 at http://www.zerohedge.com Sometimes 0% Is Better Than -82% http://www.zerohedge.com/news/2014-08-27/sometimes-0-better-82 <p><a href="http://www.thestreet.com/story/891820/1/the-winners-of-the-new-world.html">The Best Investment Article Ever Written:</a></p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p><strong><a href="http://www.thestreet.com/story/891820/1/the-winners-of-the-new-world.html">The Winners of the World</a></strong></p> <p><a href="http://www.thestreet.com/story/891820/1/the-winners-of-the-new-world.html">February 29, 2000...</a></p> <p>&nbsp;</p> <p><strong>You want winners?</strong> You want me to put my Cramer Berkowitz hedge fund hat on and just discuss what my fund is buying today to try to make money tomorrow and the next day and the next? You want my top 10 stocks for who is going to make it in the New World? You know what? <strong>I am going to give them to you. Right here. Right now.</strong></p> <p>&nbsp;</p> <p><strong>OK. Here goes. Write them down -- no handouts here!</strong>: 724 Solutions (SVNX), Ariba (ARBA), Digital Island (ISLD), Exodus (EXDS), InfoSpace.com (INSP), Inktomi (INKT), Mercury Interactive (MERQ), Sonera (SNRA), VeriSign (VRSN) and Veritas Software (VRTS).</p> <p>&nbsp;</p> <p>We are buying some of every one of these this morning as I give this speech.</p> </blockquote> <p>And then this...</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2014/08/20140827_winner.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2014/08/20140827_winner.jpg" width="632" height="149" /></a></p> <p>&nbsp;</p> <p>*&nbsp; *&nbsp; *</p> <p>Sometimes - it would appear - <strong>0% is better than -82%</strong>...</p> <p>*&nbsp; *&nbsp; *</p> <p><em>h/t @RudyHavenstein</em></p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="316" height="230" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20140827_winner1.jpg?1409164687" /> </div> </div> </div> http://www.zerohedge.com/news/2014-08-27/sometimes-0-better-82#comments Wed, 27 Aug 2014 19:56:01 +0000 Tyler Durden 493592 at http://www.zerohedge.com "THe U.S. CaN'T SoLVe THe WoRLD'S PROBLeMS ANYMoRe…" http://www.zerohedge.com/news/2014-08-27/us-cant-solve-worlds-problems-anymore <p style="text-align: center;"><iframe src="https://www.flickr.com/photos/expd/15037134972/player/" width="606" height="1024" frameborder="0"></iframe></p> http://www.zerohedge.com/news/2014-08-27/us-cant-solve-worlds-problems-anymore#comments Wed, 27 Aug 2014 19:40:15 +0000 williambanzai7 493591 at http://www.zerohedge.com Chinese Developers "Destocking" Desperation: Bikini-Clad Model Car Washes, iPhones, & Alibaba Discounts http://www.zerohedge.com/news/2014-08-27/chinese-developers-destocking-desperation-bikini-clad-model-car-washes-iphones-aliba <p>We have presented numerous examples of the turmoil under the surface of China's unprecedentedly placid GDP headlines but, as <a href="http://www.ft.com/intl/cms/s/0/4bb43194-2cd7-11e4-ada0-00144feabdc0.html?ftcamp=crm/email/2014826/nbe/AsiaMorningHeadlines/product&amp;siteedition=intl#axzz3BXxgJrBs">The FT reports</a>, the <strong>desperation of property developers</strong> should be the biggest canary in the coalmine that all is not well. Developers began cutting prices this year but have so far failed to revive flagging volumes and so are <strong>increasingly resorting to creative sales tactics to drum up interest</strong>. From discounts on Alibaba purchases up to $325,000 to car-washes by bikini-clad models, as "putting full effort into destocking has become the common choice of most developers. <strong>They’re still not optimistic about the market situation</strong>." <em>So why are US investors so upbeat about China's 'recovery'?</em></p> <p><em><br /></em></p> <p><object id="flashObj" width="400" height="225" data="http://c.brightcove.com/services/viewer/federated_f9?isVid=1&amp;isUI=1" type="application/x-shockwave-flash"><param name="data" value="http://c.brightcove.com/services/viewer/federated_f9?isVid=1&amp;isUI=1" /><param name="bgcolor" value="#FFFFFF" /><param name="flashVars" value="videoId=3726400001001&amp;linkBaseURL=http%3A%2F%2Fvideo.ft.com%2Fv%2F3726400001001&amp;playerID=754609517001&amp;playerKey=AQ~~,AAAACxbljZk~,eD0zYozylZ0BsBE0lwVQCchDhI4xG0tl&amp;domain=embed&amp;dynamicStreaming=true" /><param name="base" value="http://admin.brightcove.com" /><param name="seamlesstabbing" value="false" /><param name="allowFullScreen" value="true" /><param name="swLiveConnect" value="true" /><param name="allowScriptAccess" value="always" /><param name="src" value="http://c.brightcove.com/services/viewer/federated_f9?isVid=1&amp;isUI=1" /><param name="name" value="flashObj" /><param name="flashvars" value="videoId=3726400001001&amp;linkBaseURL=http%3A%2F%2Fvideo.ft.com%2Fv%2F3726400001001&amp;playerID=754609517001&amp;playerKey=AQ~~,AAAACxbljZk~,eD0zYozylZ0BsBE0lwVQCchDhI4xG0tl&amp;domain=embed&amp;dynamicStreaming=true" /><param name="allowfullscreen" value="true" /></object></p> <p>&nbsp;</p> <p><a href="http://www.ft.com/intl/cms/s/0/4bb43194-2cd7-11e4-ada0-00144feabdc0.html?ftcamp=crm/email/2014826/nbe/AsiaMorningHeadlines/product&amp;siteedition=intl#axzz3BXxgJrBs">As The FT reports,</a> things are not well in the China real-estate market...</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p><strong>Residential property sales fell 9.4 per cent in floorspace terms in the first seven months of the year</strong> compared with the same period in 2013, according to government statistics.</p> <p>&nbsp;</p> <p><strong>Developers began cutting prices this year but have so far failed to revive flagging volumes. </strong>More than 30 cities have also removed purchase restrictions introduced in 2010 to restrain price growth amid public anger over high prices.</p> </blockquote> <p>And developers are desperate... </p> <p> <blockquote class="twitter-tweet" lang="en"> <p>Scary China real estate data point #527 in an unending series: sales volume in top 30 cities down 31% YoY in July <a href="http://t.co/AaAA8LIOWA">pic.twitter.com/AaAA8LIOWA</a></p> <p>&mdash; Tom Orlik (@TomOrlik) <a href="https://twitter.com/TomOrlik/statuses/503920459822268416">August 25, 2014</a></p></blockquote> <script async src="//platform.twitter.com/widgets.js" charset="utf-8"></script></p> <p>&nbsp;</p> <p>Developers are increasingly resorting to creative sales tactics to drum up interest.</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>In the latest sign of Chinese developers’ desperation to unload inventory into a weak property market, <span style="text-decoration: underline;"><strong>China Vanke Co is offering discounts of up to $325,000 to homebuyers who shop on Alibaba’s Taobao</strong></span>, an e-commerce platform.</p> <p>&nbsp;</p> <p>The country’s biggest developer will give discounts that match shoppers’ spending of up to Rmb2m ($325,000) on the eBay-like service. Homes in real estate developments in Beijing, Shanghai, Guangzhou and Chongqing, among other cities, will qualify, according to an advertisement on Taobao’s website.</p> <p>&nbsp;</p> <p>...</p> <p>&nbsp;</p> <p>An office tower in Henan province <span style="text-decoration: underline;"><strong>offered car washes by bikini-clad models to people</strong></span> who referred a friend to the building’s account on WeChat</p> <p>&nbsp;</p> <p> A residential developer in Wuhuan <span style="text-decoration: underline;"><strong>offered new iPhone 6s to potential buyers</strong></span> who showed up at the sales office.</p> </blockquote> <p>Not exactly signs of optimism...</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p><span style="text-decoration: underline;"><strong>“Putting full effort into destocking has become the common choice of most developers. They’re still not optimistic about the market situation,”</strong></span></p> <p>&nbsp;</p> <p><strong>The inventory build-up may get worse before it gets better.</strong> Several developers noted in their recent half-year reports that September and November will be a peak period for new housing completions. That will add to the supply overhang and increase pressure on developers to cut prices.</p> </blockquote> <p>*&nbsp; *&nbsp; *<br />But apart from that... China's PMIs say everything's great, right?</p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="615" height="465" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20140827_china.jpg?1409168022" /> </div> </div> </div> http://www.zerohedge.com/news/2014-08-27/chinese-developers-destocking-desperation-bikini-clad-model-car-washes-iphones-aliba#comments China headlines Real estate Twitter Twitter Wed, 27 Aug 2014 19:33:43 +0000 Tyler Durden 493590 at http://www.zerohedge.com 30Y Treasury Yield Plunges To Fresh 15-Month Lows http://www.zerohedge.com/news/2014-08-27/30y-treasury-yield-plunges-fresh-15-month-lows <p>Someone is gonna be wrong...</p> <p>&nbsp;</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2014/08/20140827_TSY1.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2014/08/20140827_TSY1_0.jpg" width="600" height="320" /></a></p> <p>&nbsp;</p> <p>Lowest yields since May 2013...</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2014/08/20140827_TSY.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2014/08/20140827_TSY_0.jpg" width="600" height="315" /></a></p> <p>&nbsp;</p> <p><em>Charts: bloomberg</em></p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="950" height="506" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20140827_TSY1.jpg?1409166824" /> </div> </div> </div> http://www.zerohedge.com/news/2014-08-27/30y-treasury-yield-plunges-fresh-15-month-lows#comments Wed, 27 Aug 2014 19:10:27 +0000 Tyler Durden 493589 at http://www.zerohedge.com CBO Thinks Millions Of Americans Aren't Going To Sign Up For Obamacare http://www.zerohedge.com/news/2014-08-27/cbo-thinks-millions-americans-arent-going-sign-obamacare <p><em>Submitted by <a href="http://mises.ca/posts/blog/cbo-thinks-millions-of-americans-arent-going-to-sign-up-for-affordable-care/">Robert Murphy via Mises Canada</a>,</em></p> <p><strong>In June the U.S. Congressional Budget Office (CBO) <a href="http://www.cbo.gov/sites/default/files/cbofiles/attachments/45397-IndividualMandate.pdf">updated its forecasts</a> regarding the &ldquo;individual mandate&rdquo; component of the Affordable Care Act (ACA), also known as &ldquo;ObamaCare.&rdquo;</strong> Recall that the individual mandate is the tax levied on Americans who commit the outrage of refraining from buying health insurance. You can click the link for the full list of the (ascending) fine structure, and the list of exemptions. But in this post I want to draw your attention to a shocking table from the CBO report:</p> <p><a href="http://1y4o79syc6g4difua2cvof9qco.wpengine.netdna-cdn.com/wp-content/uploads/2014/08/CBO-on-Individual-Mandate.png"><img alt="CBO on Individual Mandate" class="aligncenter wp-image-9344 size-full" height="211" src="http://1y4o79syc6g4difua2cvof9qco.wpengine.netdna-cdn.com/wp-content/uploads/2014/08/CBO-on-Individual-Mandate.png" width="679" /></a></p> <p>Let&rsquo;s walk through some of these numbers, all of which refer to CBO&rsquo;s estimates for Calendar Year 2016. (The penalties would actually be assessed in 2017 when these people pay their CY 2016 taxes.) First of all,<strong> the &ldquo;3.9&Prime; at the bottom of the first numerical column says that&nbsp;3.9 million people will <em>actually pay</em> the relevant penalty to the government. </strong>(Earlier in the document CBO explains that some people will not have health insurance, and will not be eligible for an exemption, but may simply evade their legally owed tax payment.)</p> <p>Keep in mind that this figure includes dependents on behalf of whom others might actually make the payment. For example, if a family of 4 decides to forego health insurance altogether and does not qualify for the poverty exemption, then the person filing income taxes for the family has to pay the penalties because of everybody. But that family would show up as 4 people in the 3.9 million total, not 1 person.</p> <p>However, one of the notes under the table (not shown above) explains: <em>&ldquo;Individual penalty payments are classified by the income of the tax-filing unit.&rdquo;&nbsp;</em>So in our example, if the head of household earns $100,000, while the 5-year-old twins earn $0, then&ndash;my understanding is&ndash;each of the 4 going into the total calculation would be classified as having an income of $100,000 for the purposes of the above table.</p> <p>Finally, note that the poverty level is defined in this way: <em>&ldquo;In 2016, the federal poverty guidelines (commonly referred to as the federal poverty level) are projected to equal about $12,150 for a single person and about $24,750 for a family of four.&rdquo;</em></p> <p>Now that we have an idea of what the table shows, here are some fun facts:</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>==&gt; In total, the government expects to collect $4.2 billion in one year&nbsp;from individuals because they don&rsquo;t&nbsp;have health insurance.</p> <p>&nbsp;</p> <p>==&gt; 1 million people who earn less than twice the poverty level will be fined for not having health insurance in 2016.</p> <p>&nbsp;</p> <p>==&gt; &nbsp;This group of people&ndash;earning less than twice the poverty level&ndash;accounts for 25% of those who will be fined.</p> <p>&nbsp;</p> <p>==&gt; The government will extract $500 million in penalties from this group. These people are too poor to buy health insurance, remember.</p> <p>&nbsp;</p> <p>==&gt; Drilling down further, 200,000 people will be fined who earn less than the poverty level. These 200,000 people whom the government says are living below the poverty level will be forced to pay the IRS a total of $100 million in fines just for 2016. They also will not have health insurance, remember.</p> </blockquote> <p>What is not shown in the above table&ndash;though the report itself explains&ndash;is that the <strong><em>total number</em> of nonelderly uninsured Americans projected for calendar 2016 is some 30 million</strong>. This figure includes illegal immigrants and people who are exempt for various reasons from the mandate.</p> <p>Isn&rsquo;t it interesting that the &ldquo;universal coverage&rdquo; provided by the &ldquo;Affordable Care Act&rdquo; will still yield&ndash;according to the government&rsquo;s own projections&ndash;<strong>almost 4 million Americans who will <em>prefer to pay an average&nbsp;tax of more than $1,000</em> to the government for 2016, rather than buying health insurance that year?</strong></p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="325" height="325" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20140807_obamacare1_1.jpg?1409147558" /> </div> </div> </div> http://www.zerohedge.com/news/2014-08-27/cbo-thinks-millions-americans-arent-going-sign-obamacare#comments Congressional Budget Office Obamacare Wed, 27 Aug 2014 18:47:26 +0000 Tyler Durden 493588 at http://www.zerohedge.com NATO Canada Has A Message For Russian Soldiers http://www.zerohedge.com/news/2014-08-27/nato-canada-has-message-russian-soldiers <p>NATO Canada tweeted: <strong><em>"Geography can be tough. Here’s a guide for Russian soldiers who keep getting lost &amp; 'accidentally' entering Ukraine"</em></strong></p> <p>&nbsp;</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2014/08/20140827_NATO.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2014/08/20140827_NATO_0.jpg" width="600" height="468" /></a></p> <p>&nbsp;</p> <p><em>Source: @CanadaNATO</em></p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="813" height="634" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20140827_NATO.jpg?1409163638" /> </div> </div> </div> http://www.zerohedge.com/news/2014-08-27/nato-canada-has-message-russian-soldiers#comments Ukraine Wed, 27 Aug 2014 18:22:00 +0000 Tyler Durden 493587 at http://www.zerohedge.com