Once upon a time there was a Twitter-based, pump-and-dumping daytrading bucket shop posing as a "successful hedge fund manager" also known as Davian Letter/Davian Capital Advisors run by an Ohio gentleman known as Anthony Davian, which for reasons unknown even managed to run outside capital (somehow raking up to $1.5 million in idiot AUM), and which didn't like Zero Hedge much. That's ok because the feeling was mutual - we had advised the SEC in late 2009 that the Davian operation was nothing but a ponzi scheme. A few years later, said outside capital is gone, and moments ago, following a four year delay since our notice, the SEC finally acted on our suggestion and charged Anthony Davian with fraud.
As we noted in the previous post discussing the inevitable pre-civil war crack down on pro-Mrusi protesters, the only thing that matters, at least to the "developed" West, is how the overnight events in Cairo impact risk, i.e., markets and stocks. Moments ago we got the first take, courtesy of Noah Capital Markets. The conclusion: Sell Egypt.
As was reported over the weekend, it was only a matter of time before the Egyptian police began its violent crackdown on protesting pro-Mursi supporters across Egypt. But after the specified ETA came and went on Monday morning, most thought that this was yet another false alarm. It appears it was only delayed until Wednesday. Overnight, depending on the source one reads, Egyptian security forces killed anywhere between 43 and hundreds people when they cleared a camp of Cairo protesters who were demanding the reinstatement of the deposed Mohamed Mursi. There was no official confirmation of the deaths at Rabaa al-Adawiya, in northeast Cairo, where thousands of Mursi supporters awoke to police helicopters circling over the site. A second camp near Cairo University was swiftly cleared in the early morning. So is this the final step that will ultimately catalyze what has been an almost preordained civil war, with or without but most likely with America's blessing (after all the deficit spending surge so needed for the untaper won't happen on its own)? The answer should be appearing promptly.
- Vocal billionaire activist IRR - 150x: Icahn bought $1 billion of AAPL stock, seeks $150 billion buyback (BBG)
- BlackBerry Said to Have Sought Buyers Since 2012 (BBG) - for a phone or the entire company?
- IPhone Fingerprint Reader Talk Boosting Biometric Stocks (BBG) - also, the NSA will need to grow its Utah data center
- UPS Jet Crashes in Birmingham, Ala. (WSJ)
- America's Farm-Labor Pool Is Graying (WSJ)
- Hong Kong Lowers Storm Signal as Typhoon Closes on China (BBG)
- Indian submarine explodes in Mumbai port (FT)
- BofA Banker Sued by Regulator Later Joined Fannie Mae (BBG)
- Software that hijacks visits to YouTube uncovered (FT)
- Chinese Billionaire Huang Readies Iceland Bid on Power Shift (BBG)
- China to launch fresh pharmaceutical bribery probe (Reuters)
- Defeat at J.C. Penney Hurts Ackman as Performance Trails (BBG)
The amusing news overnight was that following slightly better than expected Q2 GDP data out of Germany (0.7% vs 0.6% expected and up from 0.0%) and France (0.5% vs 0.2% expected and up from -0.2%), driven by consumer spending and industrial output, although investment dropped again, which meant that the Eurozone which posted a 0.3% growth in the quarter has "emerged" from its double dip recession. The most amusing thing is that on an annualized basis both Germany and France grew faster than the US in Q2. And they didn't even need to add iTunes song sales and underfunded liabilities to their GDP calculation - truly a miracle! Or perhaps to grow faster the US just needs higher taxes after all? Of course, with the all important loan creation to the private sector still at a record low, and with the ECB not injecting unsterilized credit, the European depression continues and this is merely an exercise in optics and an attempt to boost consumer confidence.
Back in 2010, when few still dared to question that the entire move in the market is predicated on the Fed's daily POMO (then still on QE2), we laid out, in a way so easy even a caveman could grasp it, how every tiny move in the stock market is nothing but a function of the Fed's daily POMO on those days in which Bernanke would be directly injecting liquidity into the capital markets using his Primary Dealer frontmen. Since then nearly three years have passed, and thousands of POMO days. All of which brings us to this quarter's Treasury refunding presentation, and specifically the section "Effects of policy and market structure" from the Presentation to the Treasury Borrowing Advisory Committee, in which we learn that we had in fact been right all along, and that perhaps for the first time ever, the Treasury admitted that not only "no one dares fight the Fed" but that, as expected, it is "all POMO."
Nuclear power accounts for 5.7% of the world’s energy and 13% of the world’s electricity. Uranium, used in nuclear power, is a relatively clean source of energy that does not produce greenhouse emissions. Uranium is extremely dense – it is nearly as heavy as gold. It is, however, about 500 times more common than gold in the earth’s crust. This infographic covers the history of uranium, its properties, the supply and demand forecasts, the advantages and disadvantages of nuclear power, uranium as an energy source, and military applications.
If you are a stock picker, then it’s basically now or never for whatever investment discipline you might follow. Asset class and industry correlations have taken a surprising nosedive in recent weeks, which - as ConvergEx's Nick Colas notes. should allow your strategy/blend of magic to (hopefully) shine versus the benchmarks. Average industry sector correlations to the S&P 500 have dropped to 69.9%, by far the lowest observation for over two years. High yield bonds now show just 16% correlation to U.S. stocks, and the numbers for Emerging Markets (58%), EAFE stocks (76%), and currencies like the Australian dollar (11%) are also plumbing new lows. Why the sudden return to a ‘Normal’ world? Expectations that the Federal Reserve will begin to ‘Taper’ its bond buying help, to be sure. As do actual inflows (some $8 billion last month) into actively managed mutual funds. We’ll have to wait and see if current trends continue, but for now we welcome the return of the ‘Stock picker’s market’. Let the dart-throwing begin...
“Is the gold market manipulated?” This is one of those extremely dodgy questions that has left both investors and economists very divided. By arguing whether or not gold manipulation exists, we may find that we are wasting our brain cells on the question. A better question, and one that we might choose to monitor on a regular basis, might be, “To what degree is successful manipulation taking place?” We might then use the on-going answer as a guide, to inform our reasoning going forward, as to what impact any perceived manipulation is likely to have with regard to our precious metals investment.
For the 5th time in the last 7 days, equity market internals have triggered an anxiety-implying Hindenburg Omen. Based on our data, this is the most concentrated cluster of new highs, new lows, advancing/declining based confusion on record. The last few occurrences have not ended well (though obviously not disastrously) but as the creator of the 'Omen' notes, the more occurrences that cluster, the stronger the signal.
After a surge at the beginning of the economic recovery, productivity growth has cooled. For the nonfarm business (NFB) sector, BofAML notes that productivity has slowed from a peak of 5.8% year-over-year in 4Q 2009 to just 0.9 in 1Q of this year. This week we will see Q2 data - expected to show a further slowing to just 0.6%. Moreover, what we show below is that, outside of the tech boom in the late 1990s, productivity tends to slow as business expansions mature. Our current 'expansion' is now thoroughly mature...
The percentage of Americans that are economically independent has dropped to a stunningly low level. What we have in America today is a situation where economic independence is being systematically eradicated and the government is increasingly being expected to provide our daily bread and to take care of all of us from the cradle to the grave. And once you become a serf of the state, it is very hard to resist anything the government is doing in a meaningful way. After all, the money that you are getting from the government is enabling you to survive. In essence, your allegiance has been at least partially purchased and you may not even realize it. At this point, the number of Americans that are financially dependent on the government is absolutely staggering, and it gets worse with each passing year. Just consider the following statistics...
While all the attention of the world's investing public - focused on the short-term repo markets in China - has been ameliorated by the PBOC's 'fold' thanks to ~CNY600bn in liquidity provision (or an equivalent 65bp RRR cut), liquidity concerns remain high (and not so hidden if one knows where to look). Not only has there been a surge in copper imports - based on the cash-for-copper deals replacing short-term funding but concerns raised by investors and the PBOC over duration mismatches (exposed by the recent crisis) has forced Chinese banks to seek longer-term funding. Banks are now raising longer-term deposit rates in order to attract stickier term-deposits and this is causing medium-term Chinese bond yields to surge.
"Preservation of Capital" is much more important than any other strategy in the marketplace and this has been demonstrated time and time again over the centuries. Gold, since ancient times, has served four functions. The first is for jewelry and this is a subject for lunch at the Four Seasons. This is not where we are dining today. The three other functions of gold are a replacement for a currency, an asset that rises in value in times of inflation and an asset that becomes more valuable when Fear is hard upon the market place. It is then a matter of viewpoint where you think we are now but given the sell-off in gold, the possibility of a dark horse or two beginning to trot after the German elections or the fantasy numbers pumped out of China becoming unmasked; gold is an interesting option these days. But there is potentially another 'trade'...
British Prime Minister David Cameron has written an article in the Daily Telegraph in which he has called for all UK communities to show support for the fracking industry, and welcome the coming shale gas boom, stating that such a boom will lower energy bills and create jobs. Despite his demand for Brits to do the patriotic thing, "experts from Ofgem to Deutsche Bank to drilling company Cuadrilla itself argue that UK shale will not bring down bills, because, unlike the US, the UK is part of a huge European gas market.”