en Tesla Jumps After Smaller Than Expected Loss; Warns Cash Burn Is About To Hit Ludicrous Speed <p>As we previewed yesterday, perhaps more so that the longs it was the company's near record shorts who were expecting today's earnings release to see if their bearish bets on the company will pan out. And while the stock slid all day, losing 4% in regular hours after Jim Chanos announced he was short the car maket, the stock now appears to be jumping in the after hours session having just reported its Q1 results which were as follows:</p> <ul> <li>Q1 GAAP Revenue: $1.6Bn, Est. $1.61BN</li> <li>Q1 EPS: $(0.57), Est $(0.60) </li> <li>Q1 Gross Margin 21.7%, Exp. 20.6%</li> <li>Tesla produced 15,510 vehicles in Q1, up 10% from Q4, and said it would produce 20,000 in Q1. We expect this number may be met but the actual number of deliveries will not.&nbsp; </li> </ul> <p>A modest beat on the bottom line with a smaller loss than expected, while revenue was in line. Tesla also said that "Model S production of 12,851 vehicles<br /> met plan, but Model X production of 2,659 vehicles was insufficient to meet our projected level of deliveries." But what was more important to investors was that Tesla reaffirmed full year deliveries <strong>which it expects to be in the 80,000-90,000 range</strong>. </p> <p>This is what else Elon Musk previewed in the quarterly letter:</p> <ul> <li>Advancing 500,000 unit build plan by two years to 2018</li> <li>Volume Model 3 production and deliveries to start in late 2017</li> <li>Model S orders up 45% compared to Q1 last year, accelerating globally</li> <li>Model X production increased from 507 in Q4 to 2,659 in Q1</li> <li>Cash balance up $245M sequentially inclusive of ABL &amp; exclusive of Model 3</li> <li>Affirming 80,000 to 90,000 deliveries this year</li> </ul> <p><strong>There was not one mention of China in the entire letter.</strong></p> <p>Of course, this being Tesla, all of the numbers, including revenue, were non-GAAP. Here is what GAAP vs non-GAAP looks like. First revenue:</p> <p><a href=""><img src="" width="600" height="335" /></a></p> <p>And then EPS:</p> <p><a href=""><img src="" width="600" height="334" /></a></p> <p>&nbsp;</p> <p>However, there was just one truly important question - one we asked on Twitter earlier: </p> <blockquote class="twitter-tweet"><p dir="ltr" lang="en">What new product will Elon Musk unveil today to distract from Tesla's cash flow</p> <p>— zerohedge (@zerohedge) <a href="">May 4, 2016</a></p></blockquote> <script src="//"></script><p>We now know: it's not a new product, but actually just a shift in the delivery calendar, because according to Musk, he now expects to deliver 500,00 cash a year not in 2020 but in 2018, and the result will be a surge in CapEx spending:</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>Given our plans to advance our 500,000 total unit build plan, essentially doubling the prior growth plan, <strong>we are re-evaluating our level </strong><strong>of capital expenditures, but expect it will be about 50% higher than our previous guidance of $1.5 billion for 2016</strong>.&nbsp;</p> </blockquote> <p>Which brings us to the key topic: Tesla's perpetual cash burn. In Q1 Tesla burned another $446 million in cash, bringing the total cash burn over the past year to $2.1 billion.</p> <p><a href=""><img src="" width="600" height="370" /></a></p> <p>&nbsp;</p> <p>Well, Tesla now has an excuse to burn even more as a result of a boost in CapEx spending to meet its accelerated schedule. And as expected:</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p><strong>Naturally, this will impact our ability to be net cash flow positive for the year, but given the demand for Model 3, investing to meet that demand is the best long-term decision for Tesla.</strong></p> </blockquote> <p>"Demand" which is based on $1,000 refundable deposits. Meanwhile, Tesla's Cash is now $1.44 billion, up from $1.2 billion three months ago, while it Debt increased by $500 million to $3.1 billion.&nbsp; The only question is whether Musk will fund his ludicrous cash burn with more debt or an imminent equity offering.</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="972" height="600" alt="" src="" /> </div> </div> </div> After Hours Capital Expenditures China GAAP Jim Chanos Twitter Twitter Wed, 04 May 2016 20:30:00 +0000 Tyler Durden 530498 at EIA Petroleum Weekly Report Analysis 5-4-2016 (Video) <p>By <a href=""><span style="color: #f24024;">EconMatters</span></a> </p> <p>&nbsp;</p> <div class="separator" style="clear: both; text-align: center;"><a title="Open in new window" class="external" href="" style="margin-left: 1em; margin-right: 1em;" target="_blank"><img src="" width="400" height="300" border="0" /></a></div> <p> Some impressive internals for this report are blunted because of OPEC supply finding its way to the United States. The drop in US Oil Production was noteworthy in this report. </p> <p> The United States should be thinking much more strategically with their energy policy right now. Again Politicians are dropping the ball at a crucial point from an economics standpoint in the energy industry. China is taking appropriate steps to monetize the current environment, while the United States continues to be the proverbial Deer in Headlights watching an excellent opportunity to add to the Strategic Petroleum Reserves at decade low prices in the oil market slip by the wayside.</p> <div class="separator" style="clear: both; text-align: center;"><iframe src="" width="320" height="266" frameborder="0"></iframe></div> <p> © <a href="" target="_blank"><span style="color: #f24024;">EconMatters</span></a> All Rights Reserved | <a title="Open in new window" class="external" href="" target="_blank"><span style="color: #f24024;">Facebook</span></a> | <a title="Open in new window" class="external" href="!/EconMatters" target="_blank"><span style="color: #f24024;">Twitter</span></a> | <a title="Open in new window" class="external" href="" target="_blank"><span style="color: #f24024;">YouTube</span></a> | <a title="Open in new window" class="external" href="" target="_blank"><span style="color: #f24024;">Email Digest</span></a> | <a title="Open in new window" class="external" href=";node=80" target="_blank"><span style="color: #f24024;">Kindle</span></a><strong>&nbsp;</strong><em>&nbsp;</em><span style="text-decoration: underline;">&nbsp;</span></p> China OPEC Twitter Twitter Wed, 04 May 2016 20:20:37 +0000 EconMatters 530495 at Stocks Slump, Dollar Jumps After China Sends Message To Fed <p>But but but Tim Cook said AAPL was &quot;optimistic&quot; about China!!!</p> <p><iframe allowfullscreen="" frameborder="0" height="315" src="" width="560"></iframe></p> <p>&nbsp;</p> <p>China started the shenanigans by devaluing the Yuan fix by the most since the August collapse...sending a loud and clear message to The Fed - <strong><em>if you normalize rates (and strengthen the USD) we will unleash &#39;wealth-destroying&#39; volatility...</em></strong></p> <p><a href=""><img alt="" src="" style="width: 600px; height: 297px;" /></a></p> <p>&nbsp;</p> <p>The message is being heard among the pajama traders...</p> <p><a href=""><img alt="" src="" style="width: 600px; height: 361px;" /></a></p> <p>&nbsp;</p> <p>European stocks stumbled once again as Italian bank risks surge...</p> <p><a href=""><img height="315" src="" width="600" /></a></p> <p>&nbsp;</p> <p><strong>&quot;Most Shorted&quot; stocks fell for the 2nd day in a row - the biggest 2-day drop in 3 months...</strong></p> <p><a href=""><img alt="" src="" style="width: 600px; height: 329px;" /></a></p> <p>&nbsp;</p> <p>Trannies &amp; Small caps bearing the brunt of the most shorted weakness...</p> <p><a href=""><img alt="" src="" style="width: 600px; height: 497px;" /></a></p> <p>&nbsp;</p> <p>With Nasdaq leading the way (down over 6% year-to-date), S&amp;P 500&#39;s 2-day tumble has plunged it back to the verge of red for 2016 (joining Small Caps yesterday).<strong> Gold (up 20.7%) and the Long Bond (Up 7.8%) remain the best performers year-to-date</strong> as The Fed rate-hike appears to have sparked a flight to safety not a rush to recovery...</p> <p><a href=""><img alt="" src="" style="width: 600px; height: 482px;" /></a></p> <p>&nbsp;</p> <p>Just as S&amp;P 500 cash nears 2043.94 (remember 2100?), VIX was smashed lower to save the world...</p> <p><a href=""><img alt="" src="" style="width: 600px; height: 466px;" /></a></p> <p>&nbsp;</p> <p>But Bonds &amp; Bullion remain 2016&#39;s biggest gainers...</p> <p><img height="369" src="" width="600" /></p> <p>&nbsp;</p> <p>As perhaps fear of the &quot;W&quot; remains...</p> <p><a href=""><img height="335" src="" width="600" /></a></p> <p>&nbsp;</p> <p>It seems we better get Tim Cook on CNBC again tonight...</p> <p><a href=""><img alt="" src="" style="width: 600px; height: 396px;" /></a></p> <p>&nbsp;</p> <p>Financials continue to slide and Energy stocks ended notably lower despite a small green close in crude...</p> <p><a href=""><img alt="" src="" style="width: 600px; height: 313px;" /></a></p> <p>&nbsp;</p> <p>HYG (high Yield bonds) broke back below their 200DMA..</p> <p><a href=""><img alt="" src="" style="width: 600px; height: 564px;" /></a></p> <p>&nbsp;</p> <p>Treasury yields ended the day lower by in a very narrow range</p> <p><a href=""><img alt="" src="" style="width: 600px; height: 312px;" /></a></p> <p>&nbsp;</p> <p>The US Dollar rose again (2nd day on a row after 6 straight days lower) led by commodity currency collapse (CAD/AUD down over 2% on the week)..</p> <p><a href=""><img alt="" src="" style="width: 600px; height: 314px;" /></a></p> <p>&nbsp;</p> <p>Crude managed a panic-bid into the NYMEX close to end green but in general commodities weakened with the stronger USD (copper, iron ore, rebar were hammered)</p> <p><a href=""><img alt="" src="" style="width: 600px; height: 320px;" /></a></p> <p>&nbsp;</p> <p><em>Charts: Bloomberg</em></p> Bond China Copper Crude Flight to Safety High Yield NASDAQ NYMEX recovery Volatility Yuan Wed, 04 May 2016 20:02:29 +0000 Tyler Durden 530494 at One Man (Who Is Not A Fan Of Trump) Explains Why Trump Winning Is Good For Democracy <p><strong><a href=""><em>By Mike Krieger of Liberty Blitzkrieg blog,</em></a></strong></p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><em><strong>While&nbsp;it might sound strange, a&nbsp;coronation of Hillary Clinton in the Democratic primary will mark the end of the party as we know it. There&rsquo;s been a lot written about the &ldquo;Sanders surge,&rdquo; with&nbsp;much of it revolving around Hillary Clinton&rsquo;s extreme personal weakness as a candidate. While this is indisputable, it&rsquo;s also a convenient way for the status quo to exempt itself from fault and discount genuine grassroots anger. I&rsquo;m of the view that Sanders&rsquo; support is more about people liking him than them disliking Hillary, particularly when it comes to registered Democrats. He&rsquo;s not merely seen as the &ldquo;least bad choice.&rdquo; People really do like him.</strong></em></p> <p>&nbsp;</p> <p><em><strong>The Sanders appeal is twofold. He is seen as unusually honest and consistent for someone who&rsquo;s held elected office for much of his life, plus&nbsp;he advocates a refreshingly&nbsp;anti-establishment view on core issues that matter to an increasing number of Americans. These include militarism, Wall Street bailouts, a&nbsp;two-tiered justice system, the&nbsp;prohibitive cost of college education, healthcare insecurity and a&nbsp;&ldquo;rigged economy.&rdquo; While Hillary is being forced to pay lip service to these issues, everybody knows she doesn&rsquo;t mean a word of it.&nbsp;She means it less than Obama meant it in 2008, and Obama really didn&rsquo;t mean it.</strong></em></p> <p>&nbsp;</p> <p>&ndash; From the post:&nbsp;<strong><a href="">It&rsquo;s Not Just the GOP &ndash; The Democratic Party is Also Imploding</a></strong></p> </blockquote> <p>Donald Trump and Bernie Sanders have done America a great deal of good. By running from the political fringes, they have shattered&nbsp;status quo taboos and exposed the two party political system for the monumental sham it is.</p> <p>Whether you like either one of them is irrelevant. The <strong>truth&nbsp;about how undemocratic our elections actually are, and the disturbing&nbsp;overlap when it comes to&nbsp;establishment&nbsp;Republicans and Democrats needed exposing</strong>, and that&rsquo;s exactly&nbsp;what&rsquo;s happened this election season. Personally, I wanted to see Trump vs. Sanders in the general election. I think the public deserved two non-mainstream choices for President for once in their lives, and such a match up would have provided two distinct non status quo visions for the future. That said, Trump vs. Clinton is the second best option.</p> <p>The process of awakening that&rsquo;s been happening across the electorate this campaign season is in large part due to the presence of Trump and Sanders, and this awakening is far more important than who wins in November. As Edward Snowden was quoted saying in yesterday&rsquo;s piece, <strong><a href="">A Whistleblower Manifesto</a></strong>:</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><em><strong>Fundamentally, in an open society, change has to flow from the bottom to the top.</strong></em></p> </blockquote> <p><strong>He&rsquo;s right. If you want fundamental, long-term change consistent with Constitutional principles, it needs to come from an informed citizenry. </strong>America has not had a remotely informed citizenry in over&nbsp;a generation. The divide and conquer tactics of both establishment parties have&nbsp;proven tremendously successful in pulling the wool over everybody&rsquo;s eyes and convincing them that there&rsquo;s actually a real difference, when in reality both parties maintain the&nbsp;exact same position on a vast majority of the nation&rsquo;s key issues. These include:</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>1) Support for interventionist wars of imperialism abroad.</p> <p>&nbsp;</p> <p>2) An embrace of cronyism and corruption throughout the public and private sector.</p> <p>&nbsp;</p> <p>3) A total pandering to Wall Street and support for taxpayer bailouts without accountability.</p> <p>&nbsp;</p> <p>4) Support for the inhumane&nbsp;failure that is the war on the drugs.</p> <p>&nbsp;</p> <p>5) Support for&nbsp;fake free trade deals that are actually corporate giveaways to insiders and donors.</p> <p>&nbsp;</p> <p>6) Support for&nbsp;the unconstitutional and unaccountable mass surveillance of the American&nbsp;public.</p> </blockquote> <p>I could go on, but you get the point. The interesting thing about the 2016 election is that millions of Americans are finally coming around to rejecting the policies listed above. <strong>The status quo, of course, has not; and therein lies the status quo&rsquo;s problem. </strong></p> <p>Between Sanders and Trump, the status quo policy planks listed above have&nbsp;all come under attack. This cannot be allowed, which is precisely why the establishment has relentlessly fought both men in their attempts to win the nomination of their respective parties.</p> <p>The status quo doesn&rsquo;t actually care if a Jeb Bush, Marco Rubio or Hillary Clinton wins the U.S. Presidency. The status quo wins either way. Not only because those individuals unquestionably will support the status quo agenda, <strong>but more importantly, they will largely refrain from bringing up any real issues during their campaigns.</strong> Rather than being fought along the lines of trade deals, Wall Street corruption and disastrous foreign policy, a Bush vs. Clinton matchup would largely be centered around debate about guns, abortion, transgender bathrooms and disingenuous talking points about the free market vs. big government. This distraction provides fertile ground for continued status quo theft.</p> <p><strong>The problem with Trump is Trump brings up some real issues he&rsquo;s not supposed to talk about,</strong> just like Sanders has done in the Democratic primary. This is extremely dangerous to the status quo because it teaches the American peasants to question issues and think about stuff they aren&rsquo;t supposed to think about or have an opinion on. There&rsquo;s nothing more dangerous than a public filled with critical thinkers. As George Carlin brilliantly explained so many years ago:</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><em><strong>The real owners are the big wealthy business interests that control things and make all the important decisions. Forget the politicians, they&rsquo;re an irrelevancy. The politicians are put there to give you the idea that you have freedom of choice.</strong></em></p> <p>&nbsp;</p> <p><em><strong>You don&rsquo;t. You have no choice. You have owners. They own you. They own everything. They own all the important land. </strong></em></p> <p>&nbsp;</p> <p><em><strong>They own and control the corporations. They&rsquo;ve long since bought and paid for the Senate, the Congress, the statehouses, the city halls. They&rsquo;ve got the judges in their back pockets. And they own all the big media companies, so that they control just about all of the news and information you hear. They&rsquo;ve got you by the balls. They spend billions of dollars every year lobbying &shy; lobbying to get what they want. Well, we know what they want; they want more for themselves and less for everybody else.</strong></em></p> <p>&nbsp;</p> <p><em><strong>But I&rsquo;ll tell you what they don&rsquo;t want. &nbsp;They don&rsquo;t want a population of citizens capable of critical thinking. They don&rsquo;t want well-informed, well-educated people capable of critical thinking. They&rsquo;re not interested in that. That doesn&rsquo;t help them. That&rsquo;s against their interests. They don&rsquo;t want people who are smart enough to sit around the kitchen table and figure out how badly they&rsquo;re getting fucked by a system that threw them overboard 30 fucking years ago. </strong></em></p> <p>&nbsp;</p> <p><em><strong>You know what they want? Obedient workers &shy; people who are just smart enough to run the machines and do the paperwork but just dumb enough to passively accept all these increasingly shittier jobs with the lower pay, the longer hours, reduced benefits, the end of overtime and the vanishing pension that disappears the minute you go to collect it. </strong></em></p> <p>&nbsp;</p> <p><em><strong>And, now, they&rsquo;re coming for your Social Security. They want your fucking retirement money. They want it back, so they can give it to their criminal friends on Wall Street. And you know something? They&rsquo;ll get it. They&rsquo;ll get it all, sooner or later, because they own this fucking place. It&rsquo;s a big club, and you ain&rsquo;t in it. You and I are not in the big club.</strong></em></p> <p><em><strong>This country is finished.</strong></em></p> </blockquote> <p>That&rsquo;s all you really need to know. Politicians are irrelevant. They are there to spin issues and make sure the public remains as ignorant, distracted and divided along inconsequentially themes as possible. The thing the status quo really fears is a population that begins to think outside the box, which is why both Trump and Sanders have been seen as existential threats to their corrupt and putrid sandbox of power.</p> <p>So with all of that out of the way, it makes perfect sense that some establishment Republicans have announced they will&nbsp;support Hillary Clinton. Go back and read my status quo policy planks outlined earlier. Any Republican in favor of them will naturally support Hillary Clinton, because Hillary Clinton will protect and coddle their racket. This is guaranteed. Trump may also end up coddling the establishment, but the status quo can&rsquo;t be 100% sure. He&rsquo;s a wildcard and he&rsquo;s uncaged. They can&rsquo;t have someone like that causing them headaches and&nbsp;potentially&nbsp;getting the plebs all wound up.</p> <p>Now let&rsquo;s turn to <em>Politico</em>, to see a little of what I&rsquo;m talking about. From the article,&nbsp;<a href="">Republicans Consider Clinton over Trump</a>:</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><em>While many conservative stalwarts are conflicted and stuck in a state of paralysis, some are considering the ultimate betrayal. </em></p> <p>&nbsp;</p> <p><em>Hours before Indiana polls closed Tuesday evening when it was becoming clear that Trump was headed for a decisive win, some prominent Republicans were moving away from him. <strong>Mark Salter, John McCain&rsquo;s former campaign speechwriter, signaled his support for Clinton via Twitter. Conservative pundit Ben Howe did the same.</strong></em><strong><em>&nbsp;</em></strong></p> <p>&nbsp;</p> <p><strong><em>Schmidt predicted that &ldquo;a substantial amount of Republican officials who have worked in Republican administrations, especially on issues of defense and national security, will endorse Hillary Clinton in the campaign.&rdquo;</em></strong></p> <div> <p>&nbsp;</p> <p><strong><em>But the most absolutist opposition to Trump is largely held by the GOP&rsquo;s donor class and Washington-based establishment&mdash;the very people Trump and his supporters have delighted in offending from the start.&nbsp;</em></strong></p> </div> </blockquote> <p>These four paragraphs tell you everything you need to know. It&rsquo;s one thing to dislike Trump and decide you are unable to support him. Given some of his rhetoric in the primary, I can certainly understand and respect this position. However, supporting Hillary Clinton, one of the most shady, dishonest, warmongering, corrupt animals the world has ever seen, is a whole other ballgame. It tells you who these so-called &ldquo;conservatives&rdquo; really are: <strong>status quo sycophants</strong>.</p> <p>But it&rsquo;s not just Republicans coming out in favor of Clinton. There&rsquo;s increasing evidence that Clinton will target establishment Republicans for votes. The <a href=""><em>AP</em></a> reports:</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><em>ATHENS, Ohio (AP) &mdash; With Donald Trump all but clinching the Republican nomination for president, <strong>Hillary Clinton is beginning to explore ways to woo Republicans turned off by the brash billionaire.</strong></em></p> <p>&nbsp;</p> <p><em>&ldquo;I&rsquo;m with her,&rdquo; tweeted Mark Salter, a top campaign aide to 2008 Republican nominee John McCain, on Tuesday.</em></p> <p>&nbsp;</p> <p><em>Democrats caution their effort to win over Clinton Republicans &mdash; or Hilla-cans, perhaps &mdash; is in its earliest stages, but could grow to include ads and other outreach targeted in particular at suburban women in battleground states. <strong>Already, aides say, a number of Republicans have privately told Clinton and her team they plan to break party ranks and support her as soon as Trump formally captures his party&rsquo;s nomination.</strong></em></p> <p>&nbsp;</p> <p><em>&ldquo;We have an informed understanding that we could have the potential to expect support from not just Democrats and independents, but Republicans, too,&rdquo; said Clinton spokesman Brian Fallon. <strong>&ldquo;There&rsquo;s a time and place for that support to make itself known.&rdquo;</strong></em></p> <p>&nbsp;</p> <p><em>Clinton has begun casting her candidacy in recent days as a cry to unify a divided country. After a series of victories last week, which all but ensured she will capture her party&rsquo;s nomination, <strong>Clinton called on Democrats, independents and what she called &ldquo;thoughtful Republicans&rdquo; to back her bid.</strong></em></p> <p>&nbsp;</p> <p><em>Guy Cecil, chief strategist of Priorities USA Action, the super PAC backing her campaign, echoed that language Tuesday night, <strong>calling on &ldquo;Democrats, independents and reasonable Republicans&rdquo; to reject Trump&rsquo;s &ldquo;outdated ideas.&rdquo;</strong></em></p> </blockquote> <p><strong>Irrespective of what you think of Trump, his continued survival&nbsp;in the Presidential circus&nbsp;is undoubtably good.</strong> Not because he&rsquo;s some sort of savior who will &ldquo;Make America Great Again,&rdquo; but because he&rsquo;s bringing up issues he&rsquo;s not supposed to bring up. <em><strong>Because he&rsquo;s getting people who have given up on the political process engaged again. Because he&rsquo;s convincing tens of millions of Americans that it really is possible to give the status quo the boot.</strong></em></p> <p>At the end of the day, it&rsquo;s not the actions of any particular individual that <strong>instills true fear in&nbsp;the&nbsp;U.S. establishment and deep state government</strong>. What really scares them is a population capable of critical thought beyond false left-right paradigm talking points, and <em><strong> both Sanders and Trump should be applauded for their roles in this regard.</strong></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="769" height="592" alt="" src="" /> </div> </div> </div> Bernie Sanders Corruption Cronyism Donald Trump Indiana John McCain national security Nomination Ohio Reality Twitter Twitter Wed, 04 May 2016 19:55:00 +0000 Tyler Durden 530485 at Pro-Brexit Leader Jokes "Keep Sending Obama Over" After Surge In Polls <p><strong><a href="">Who could have seen this coming?</a> </strong>Having told the British public in so many words, <em>&quot;Vote No To Brexit, Vote Yes To Undemocratic Superstate!&quot;</em> it appears President Obama&#39;s unwanted presence in the UK-EU Referendum debate has backfired beautifully. <a href="">As FreeBeacon reports</a>, Arron Banks, the British entrepreneur leading a grassroots effort to leave the European Union urges Americans to <strong>&quot;keep sending Obama over,&quot; as &#39;Brexit&#39; odds have risen above plunging &#39;Bremain&#39; odds since the President paid a visit to the Queeen</strong>.</p> <p>&nbsp;</p> <p><a href=""><img height="323" src="" width="600" /></a></p> <p>&nbsp;</p> <p><strong>Brexit leaders are thrilled President Barack Obama came out against them, because they are seeing a bounce in the polls.</strong></p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>&ldquo;I think it&rsquo;s hugely important geopolitically because the European Union is developing into a kind of United States of Europe, and that&rsquo;s something the British are naturally pretty anti,&rdquo;<a href=""> Arron Banks told the Washington Free Beacon.</a> &ldquo;And it&rsquo;s really come down to the point where most of our laws are now being made in Brussels&mdash;65 percent. Our ultimate court is in France and we&rsquo;ve got open borders to 500 million people. So clearly immigration is a massive issue, it&rsquo;s not dissimilar to a lot of the stuff they are discussing with Trump, in the sense of [how] some of these issues resonate.&rdquo;</p> </blockquote> <p>Banks said the American equivalent of being in the European Union would make Congress in Toronto, the Supreme Court in Havana while having a completely open border to Mexico.</p> <p><strong>Banks criticized Obama for his recent trip to London, where he threatened that leaving the European Union would cause the U.K. to &ldquo;be in the back of the queue,&rdquo; in terms of trade. </strong>The phrase led many to speculate the president was given talking points from Prime Minister David Cameron.</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>&ldquo;He basically said if you leave the European Union you&rsquo;ll go to the back of the trade queue,&rdquo; Banks said. <em><u><strong>&ldquo;Number one, we don&rsquo;t particularly like being threatened in our home doorstep. Number two, everyone was slightly confused why he used the word queue and not line. It led to a lot of discussion whether he had just been given it to read. So I think he was briefed obviously by the British government, and it was a favor.&rdquo;</strong></u></em></p> <p>&ldquo;But since his appearance polls have actually gone in the other direction,&rdquo; Banks added. &ldquo;We need to hear more from him, really. Send him back for another go, we&rsquo;d be delighted to see him again.&rdquo;</p> </blockquote> <p><strong>Banks is optimistic about the referendum vote, despite close polling, because core supporters of Brexit tend to be more energized. </strong>A new poll following Obama&rsquo;s visit saw Brexit gaining support over the Remain campaign, 51 to 49 percent.&nbsp; <a href="">The Free Beacon </a>asked Banks what Americans can do if they are sympathetic to his cause.</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><strong><u>&ldquo;Keep sending Obama over,&rdquo; he said.</u></strong></p> </blockquote> <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="968" height="521" alt="" src="" /> </div> </div> </div> Barack Obama European Union France Mexico President Obama Wed, 04 May 2016 19:40:00 +0000 Tyler Durden 530484 at Eight "New Normal" Charts That Are Insanely Abnormal (And Dangerous) <p><a href=""><em>Submitted by Charles Hugh-Smith of OfTwoMinds blog,</em></a></p> <p><em>Is there anyone on the planet who&#39;s actually stupid enough to believe these New Normal charts are healthy and sustainable?</em></p> <p><strong>Anyone questioning the sustainability and rightness of The New Normal is immediately attacked by the mainstream-media defenders of the crumbling status quo.</strong> Not only is everything that broke in 2008 fixed, everything&#39;s going great globally, and anyone who dares question this narrative in a tin-foil hat conspiracy nut or simply an annoyingly doom-and-gloomer who recalcitrantly refuses to accept the positive glories of official statistics: low unemployment, rising valuations of stock market Unicorns, etc.</p> <p><strong>But the New Normal is anything but normal; all the readings of artificial life-support and manipulation are off the charts.</strong> If the New Normal were indeed a return to normalcy, we&#39;d see a rapid and sustained decline in official life-support of the economy.</p> <p><strong>Instead, we see official life-support efforts rising to new and dangerous levels.</strong> The only reason stocks are at nose-bleed valuations globally is massive, sustained intervention on multiple levels.</p> <p><strong>We also see increasing dependence on debt to sustain increasingly weak growth.</strong> The New Normal is all about <em>diminishing returns on additional debt</em>.</p> <p><strong>The New Normal is also about the loss of institutional credibility.</strong> The Federal Reserve denies it makes policy decisions based on the stock market, but as soon as stocks start tumbling, the Fed&#39;s leadership hits the airwaves with a media blitzkrieg, frantically assuring the world that the Fed will do &quot;whatever it takes&quot; to keep stocks at absurdly overvalued levels forever.</p> <p><strong>It once cost the equivalent of a new auto to attend a highly regarded public university. Now they cost the equivalent of a new house--and a mansion at that.</strong> In the pre-New Normal world of academia, the highest paid employees were senior professors (other than the university president).</p> <p>Now under-assistant deans are paid $250,000 each while new tenured professors scrape by on $75,000, and most of the teaching (the actual purpose of the university, ahem) is done by academic serfs paid $35,000 to $45,000 a year, with few benefits and no pensions. (A fancy title masks the serfdom: <em>adjunct professors</em>.)</p> <p>Meanwhile, the quality and value of the education has reached such low levels, a large percentage of student debt-serfs gain no real knowledge and many don&#39;t even graduate.</p> <p><strong>Here&#39;s how all those billions of dollars in administrative salaries get paid: with debt enabled by the federal government.</strong> If this looks remotely sustainable or healthy to you, please get your eyes checked immediately:</p> <p><img align="middle" border="0" src="" /></p> <p><strong>Diminishing returns on soaring debt is the hallmark of The New Normal.</strong> Bank credit has shot up like a rocket, but GDP has been subpar:</p> <p><img align="middle" border="0" src="" /></p> <p><strong>The recent surge of hope in global stock markets is largely the result of soaring credit expansion in China.</strong> The New Normal boils down to this: <strong>paper over non-performing loans (NPL) and debt that will never be paid back with new loans.</strong></p> <p><a href="" target="resource">Debt and (not much) deleveraging</a> (McKinsey &amp; Company)</p> <p><a href="" target="resource">China&#39;s New Credit Surges to Record on Seasonal Lending Binge</a></p> <p><img align="middle" border="0" src="" /></p> <p>China&#39;s debt to GDP is another New Normal manifestation of diminishing returns on new debt: every government and central bank is dumping more credit into their economies in the vain hope that more credit will spark &quot;organic growth.&quot; Unfortunately for the New Normal cheerleaders, <strong>more credit chokes &quot;organic growth.&quot;</strong></p> <p><img align="middle" border="0" src="" /></p> <p><strong>The New Normal can only be propped up by massive central bank purchases of stocks and bonds.</strong> Look at the assets that have been purchased by the Bank of Japan in the past four years: up from 1.2 trillion yen to 4 trillion yen.</p> <p><img align="middle" border="0" src="" /></p> <p><strong>The New Normal means central bank balance sheets only go up, they never come down.</strong> Everyone knows that if central banks tried to sell even a sliver of their trillions in assets, global markets would promptly crash.</p> <p><img align="middle" border="0" src="" /></p> <p><strong>The New Normal is stagnant income for the bottom 95% and fewer people working.</strong> In The New Normal &quot;recovery,&quot; the percentage of the population with a job has advanced all the way back up to where it was 40 years ago, in the late 1970s.</p> <p><img align="middle" border="0" src="" /></p> <p>&nbsp;</p> <p><img align="middle" border="0" src="" /></p> <p><strong>Is there anyone on the planet who&#39;s actually stupid enough to believe these New Normal charts are healthy and sustainable?</strong> I doubt it. Rather, the apologists, toadies, apparatchiks and flacks are being well-paid to cheerlead, and the &quot;leadership&quot; (using the term lightly) of the discredited institutions are terrified of what will happen when people finally catch on.</p> <p><strong>The New Normal is not sustainable.</strong> Ramping up intervention and new debt to ever-more unprecedented levels will only serve to destabilize the economy and society-- a foolishly dangerous path indeed.</p> <p>*&nbsp; *&nbsp; *</p> <p><em>My new book is #3 on Kindle short reads -&gt; politics and social science: <a href=";camp=1789&amp;creative=9325&amp;creativeASIN=B01ELXQZGE&amp;linkCode=as2&amp;tag=charleshughsm-20&amp;linkId=33DAOPEVGBNGBS37" target="resource">Why Our Status Quo Failed and Is Beyond Reform</a> ($3.95 Kindle ebook, $8.95 print edition) For more, please visit the <a href="" target="resource">book&#39;s website</a>.</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="262" height="114" alt="" src="" /> </div> </div> </div> Bank of Japan Central Banks China ETC Federal Reserve fixed Japan McKinsey New Normal non-performing loans recovery Unemployment Yen Wed, 04 May 2016 19:25:00 +0000 Tyler Durden 530483 at China Warns 'Will Respond To Trump Presidency' <p><a href="">Speaking through its mouthpiece Global Times</a>, China has published its first reaction to &quot;unpredictable&quot; Trump&#39;s position as presumptive Republican nominee and their <strong>expectations of a Trump vs Clinton fight for The White House</strong>...</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>The GOP presidential front-runner Donald Trump won a sweeping victory in the Indiana Republican primary on Tuesday, dealing a heavy blow to his rival Ted Cruz, who dropped out of the race later that night. <strong>Trump cleared his way to the Republican nomination for the 2016 US presidential election.</strong> Chairman of the Republican National Committee Reince Priebus declared Trump to be the party&#39;s &quot;presumptive&quot; presidential nominee and called for unity against Hillary Clinton.</p> <p>&nbsp;</p> <p>Trump&#39;s breakthrough in the Republican primaries has caused a sensation in US politics, public discourse and the international community. At the beginning of the race, most analysts and observers believed that Trump was no more than a clown. <strong>A few months ago, few people believed that the endgame would be between Trump and Clinton.</strong></p> <p>&nbsp;</p> <p><em><strong>Although many analysts still insist the odds are in favor of Clinton, they are somewhat uncertain about the final result. Trump&#39;s performance in the primaries has proven them wrong. Why can&#39;t the unstoppable candidate prove them wrong again?</strong></em></p> <p>&nbsp;</p> <p><u><strong>If Trump really captures the White House, what will it mean? This scenario is becoming increasingly serious.</strong></u></p> <p>&nbsp;</p> <p><u><strong>The US traditional political elite and media have long ignored the drastic changes in US society</strong></u>. Rising against the repression of the GOP establishment and the mockery of US mainstream media, Trump will substantially shake the conventional US&#39; way of operation. <strong>Acquiring more authority from US society, he will be expected to bring in more reforms, that might change many established policies.</strong></p> <p>&nbsp;</p> <p><u><em><strong>According to Trump&#39;s current policy proposals, a Trump-led US might be inclined to isolationism and attach more importance to &quot;America First,&quot; and American economy. Ideology will be downplayed. Washington might engage in more squabbles with its free-riding allies, and tighten up its immigration policy which as a result will upset the Latin Americans. After enjoying massive trade surplus from the US for years, China and Japan will be demanded by Washington to widen market access.</strong></em></u></p> <p>&nbsp;</p> <p><strong>If Clinton is elected, the US politics will be more predictable and revolve around the previous orbit.</strong> Although Washington is expected to be tougher on Beijing, its policies are controllable. While Trump represents pragmatism, Clinton prioritizes ideology in political affairs. To China, this distinction is more important. Clinton sees the Sino-US relationship from a traditional perspective, and Trump from a much newer viewpoint. The latter will bring changes to the Sino-US relationship.</p> <p>&nbsp;</p> <p><strong>However, a single individual is unable to dictate the Sino-US relationship and the US domestic issues.</strong> If elected, Trump will be restricted by interior and exterior realities. As a result,<strong> he will be subject to &quot;transformation.&quot; </strong>In fact, the &quot;transformation&quot; is an interaction between Trump and the US. <strong>He will be more prudent if taking office in the White House</strong>. In fact, compared with the past, Trump has become more attentive to his words.</p> <p>&nbsp;</p> <p><strong>If elected as the president, Trump&#39;s ability to take action and make change will not be as great as suggested by his unrestrained performances.</strong> He has already &quot;created history&quot; today. Even if he is defeated by Clinton, Trump has deeply impressed the US politics.</p> <p>&nbsp;</p> <p>The US election pattern is basically finalized: Trump versus Clinton. <strong>It will be a super political show, attracting unprecedented attention and closely bound up to the world interests. </strong>While Trump is a practical business tycoon subverting US political correctness, Clinton is a former secretary of state and former first lady, representative of US political correctness and the mainstream thoughts.</p> <p>&nbsp;</p> <p>Improving strength is the most reliable way to respond to the US uncertainties. <strong>We believe that no matter Trump or Clinton, they will see a &quot;China with strength&quot; from different perspectives.</strong></p> </blockquote> <p>*&nbsp; *&nbsp; *</p> <p>So it would appear China favors the &quot;status quo&quot; of Clinton and while not <em>fearing</em> a Trump presidency, is <em><strong>more than willing to respond to any isolationist actions with &quot;strength.&quot;</strong></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="259" height="159" alt="" src="" /> </div> </div> </div> China Donald Trump Indiana Isolationism Japan Nomination White House Wed, 04 May 2016 19:22:02 +0000 Tyler Durden 530454 at A Very Bearish Stanley Druckenmiller Blows Up At The Fed; Reveals His Biggest "Currency" Position <p>If anyone had wondered if Stanley Druckenmiller's recent bearishness had dissipated, or transformed into at least modest bullishness as a result of the market meltup, we have bad news. </p> <p>Moments ago at the Sohn Conference, Druckenmiller raged at the Federal Reserve's dire monetary policies, saying that low interest rates have caused an environment where "<strong>not a week goes by without someone extolling the virtues of the equity market</strong>."&nbsp; The obsession with short term stimulus contrasts with the monetary reform of 80's which led to the bull market, he added.&nbsp; </p> <p>Instead, this action by the Fed - which he said was the least data-dependent in history <em>(actually it is the most data-dependent, only the data is the Dow Jones Industrial Average) </em>causes reckless behavior, Druck said and added that <strong>the Fed has no endgame and the end objective seems to be preventing the S&amp;P from having a 20% decline</strong>. </p> <p>"Three years ago on this stage I criticized the rationale of Fed policy but drew a bullish intermediate conclusion as the weight of the evidence suggested the tidal wave of central bank money worldwide would still propel financial assets higher.<strong> I now feel the weight of the evidence has shifted the other way; higher valuations, three more years of unproductive corporate behavior, limits to further easing and excessive borrowing from the future suggest that the bull market is exhausting itself</strong>."</p> <p>Repeating something else we have long said, Druckenmiller also correctly said that as a result of the Fed's permissive policies (who can ever forget Chuck Schumer statement to Ben Bernanke: "Get to work, Mr Chairman") means politicians can avoid things like tax reform. Or pretty much anything else. </p> <p>However, the Fed's action is not without a cost, as "the fed has borrowed from future consumption more than ever before." </p> <p><img src="" width="504" height="344" /></p> <p>He then noted that he is just as concerned about China, also correctly observing that the local "zombie lending" simply can't stop, and adding that Chinese people don't need more debt and houses. Which is true, however when debt and houses are merely financialized instruments, then all is well.&nbsp; </p> <p>If it wasn't clear already, Drucknemiller is very bearish stocks: "volatility in global equity markets over the past year, which often precedes a major trend change, suggests that their risk/reward is negative without substantially lower prices and/or structural reform. <strong>Don’t hold your breath for the latter.</strong>"</p> <p>The former Duquesne hedge fund manager, who averaged annual returns of 30 percent from 1986 through 2010, also agreed that negative rates are "absurd", said that he is bearish stocks, and concluded by revealing what his biggest currency allocation is. "<strong>Some regard it as a metal, we regard it as a currency and it remains our largest currency allocation</strong>" he said, without naming the metal.</p> <p>We know what he was talking about. Gold.</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="410" height="316" alt="" src="" /> </div> </div> </div> Ben Bernanke Ben Bernanke China Dow Jones Industrial Average Equity Markets Meltup Volatility Wed, 04 May 2016 19:17:33 +0000 Tyler Durden 530491 at Spot The Odd Car Maker Out <p>If ever one was in doubt about whether or not a brand can still command a premium price in the market, <strong><em>look no further than the recent global auto OEM valuation comparables produced by JPM.</em></strong></p> <p>One look at the comparable charts and you'll quickly notice that Ferrari is commanding a staggering brand premium from investors.</p> <p><a href=""><img src="" width="600" height="405" /></a></p> <p>&nbsp;</p> <p>Even after taking into consideration that profitability (using EBITDA margin as a proxy) is significantly higher than industry competitors, we can definitively conclude that brand premiums are alive and well,<em><strong> although the same can't be said for the sanity of investors.</strong></em></p> <p><img src="" width="600" height="234" /></p> Ferrari Wed, 04 May 2016 19:10:00 +0000 Tyler Durden 530384 at Will The (Falling) Buck Stop Here? <p><a href=""><em>Via Dana Lyons&#39; Tumblr,</em></a></p> <p><strong><em>The recent decline in the U.S. Dollar has people wondering where it might stop; its chart suggests right here is as good a spot as any.</em></strong></p> <p>Increasingly, the talk surrounding financial markets lately has centered around the U.S. Dollar (USD). Specifically, the focus is on the 5-month decline in the USD. Obviously, as much as any asset, the behavior of the USD has an impact, directly or indirectly, on many other assets within the financial markets. Thus, with the USD falling as it has recently, it has received much of the blame (or credit) for the unwanted (or welcomed) consequences on the behavior of other assets.</p> <p><strong>Therefore, market participants are wondering <em>where is the drop in the USD going to stop? </em></strong>Today&rsquo;s Chart Of The Day takes a peek at the chart of the U.S. Dollar Index (DXY) to identify potential areas of support. As it turns out, probably the most convincing level in terms of its likelihood in providing support is right where the DXY is currently trading, near 92.50. As the following chart shows, there are a few lines of interest here that may serve as potential support. These include:</p> <ul> <li><strong><em>The 38.2% Fibonacci Retracement of the DXY&rsquo;s big rally from July 2014 to March 2015.</em></strong></li> <li><strong><em><strong><em>The 61.8% Fibonacci Retracement of the rally from the December 2014 interim low to the March 2015 high.</em></strong></em></strong></li> <li><strong><em><strong><em>The bottom of the 14-month trading range since the March 2015 top, which was tested a couple of times last year.</em></strong></em></strong></li> <li><strong><em><strong><em>The 500-day simple moving average</em></strong></em></strong></li> <li><strong><em><strong><em>The top side of the post-March 2015 down trendline that was broken in October of last year.</em></strong></em></strong></li> </ul> <p>&nbsp;</p> <p><img alt="image" src="" style="width: 600px; height: 372px;" /></p> <p>&nbsp;</p> <p>Additionally, if we zoom out a little bit, we find another line of interest in its potential to provide support here (the key word being&nbsp;<em>potential</em>). This is the top side of the down trendline from the DXY&rsquo;s 1985 all-time high, connecting the 2001-2002 highs. The DXY broke through that trendline in its final push to its March 2015 highs. Subsequently, the lows in May and August 2015 seemed to find support near this long-term trendline.</p> <p>&nbsp;</p> <p><img alt="image" src="" style="width: 600px; height: 383px;" /></p> <p>&nbsp;</p> <p><strong>On a side note, so-called&nbsp;&ldquo;smart money&rdquo; commercial hedgers in the USD futures market are showing their smallest net short position since the 2014-2015 rally began. </strong>They have not yet reached a net long position, which has coincided with several intermediate-term bottoms over the past decade. However, what was a potential headwind a year ago is no longer one.</p> <p><strong>On another side note, the clamor over the USD&rsquo;s decline seems a bit of a reach to us.</strong> In our view, the USD has really been in a sideways trading range over the past 1 year plus. Considering the magnitude of the preceding rally, the counter-trend move has actually been extremely mild. In fact, going back 45 years, the size of the DXY&rsquo;s range of the past 14 months is in just the 9th percentile of all periods. In our view, while there are always exceptions, this type of action is often characteristic of a continuation pattern. That is, once the pattern runs its course, the likely direction of prices is a continuation of the preceding trend, i.e., up.</p> <p><strong>So will the buck stop here? </strong>We have no idea. However, based on a glance at the intermediate-term and long-term charts of the DXY, current levels offer as compelling a confluence of potential support as any down to the July 2014 liftoff area.</p> <p>*&nbsp; *&nbsp; *</p> <p><em><a href="" target="_blank">More</a> from Dana Lyons, JLFMI and My401kPro.</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="271" height="143" alt="" src="" /> </div> </div> </div> Fibonacci Futures market Smart Money Wed, 04 May 2016 18:55:00 +0000 Tyler Durden 530482 at