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Herbalife Short Interest Explodes In Last Week Of 2012





Whooooooooosh!

 
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Greeks Raid Forests In Search Of Wood To Heat Homes





Tens of thousands of trees have disappeared from parks and woodlands this winter across Greece, authorities said, in a worsening problem that has had tragic consequences as the crisis-hit country’s impoverished residents, too broke to pay for electricity or fuel, turn to fireplaces and wood stoves for heat. Such woodcutting was last common in Greece during Germany’s brutal occupation in the 1940s, underscoring how five years of recession and waves of austerity measures have spawned drastic measures. “The average Greek will throw anything into the fireplace that can be burned, ranging from old furniture with lacquer, to old books with ink, in order to get warm,” said Stefanos Sapatakis, an environmental-health officer at the Hellenic Center for Disease Control and Prevention.

 
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"We Are Not A Deadbeat Nation" - Full Obama Transcript





The punchlines: "...the issue here is whether or not America pays its bills. We are not a deadbeat nation... And if the Republicans in Congress have made a decision that they want to shut down the government in order to get their way, then they have the votes, at least in the House of Representatives, probably to do that.... So we've got to pay our bills. And Republicans in Congress have two choices here. They can act responsibly, and pay America's bills, or they can act irresponsibly and put America through another economic crisis. But they will not collect a ransom in exchange for not crashing the American economy ... We've got to stop lurching from crisis to crisis to crisis when there's this clear path ahead of us that simply requires some discipline, some responsibility, and some compromise. That's where we need to go. That's how this needs to work."....  Yet should the "worst" (i.e. living within its means) happen to the US, then "Social Security checks, and veterans benefits will be delayed. We might not be able to pay our troops, or honor our contracts with small business owners. Food inspectors, air traffic controllers, specialist who track down loose nuclear materials wouldn't get their paychecks. Investors around the world will ask if the United States of America is in fact a safe bet. Markets could go haywire, interest rates would spike for anybody who borrows money. Every homeowner with a mortgage, every student with a college loan, every small business owner who wants to grow and hire.... As the speaker said two years ago, it would be, and I'm quoting Speaker Boehner now, "a financial disaster, not only for us, but for the worldwide economy.""

Still think "we are not a deadbeat nation"?

 
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Boehner Responds: "The American People Do Not Support Raising Debt Ceiling Without Reducing Spending"





The American people do not support raising the debt ceiling without reducing government spending at the same time. The consequences of failing to increase the debt ceiling are real, but so too are the consequences of allowing our spending problem to go unresolved. Without meaningful action, the debt will continue to act as an anchor on our economy, costing American jobs and endangering our children's future. The House will do its job and pass responsible legislation that controls spending, meets our nation's obligations and keeps the government running, and we will insist that the Democratic majority in Washington do the same.”

 
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JP Morgan Mortgage Bank Fires 529





Nobody tell JPM's Tom Lee that JPM just fired 529 bankers from its Brooklyn-based Mortgage Bank ("independent foreclosure review" division) for "economic reasons." He might have some trouble reconciling it with his view on both the market and the economy which sees nothing but smooth sailing ahead. More to the point, with this mass layoff in the foreclosure review group, does this mean that JPM will simpy proceed with debt forgiveness for those millions who have been in foreclosure for about 3 years on average in New York state, and during which time they have not made one mortgage payment?

 
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Obama Addresses Debt Ceiling And Potential US Default - Live Webcast





Curious why the teleprompter will grace the president, and the US public, with its presence in a few short minutes? Politico explains: "President Obama will hold a news conference at 11:30 a.m. Monday in the East Room, the White House announced. It will be the final one of his first term. Deputy Press Secretary Josh Earnest said he will discuss the need for Congress to raise the debt ceiling?" Shot every time Obama says "not negotiate", "cut spending", "raise taxes", and "fair." Drink everything, including from the deodorant bottle, if he or a member of the press mentions "trillion dollar coin" or, even better, "build the death star."

 
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French Military Embarrassments Continue As Insurgents Grab More Territory In Mali





As reported over the weekend, late on Friday French forces launched a military campaign, consisting primarily of airforce incursions, designed to crush the "Islamic extremists" in the country in order to protect "European interests" (it is unclear what these may be). Parallel with this came the first humiliation for French military forces as a French helicopter pilot was killed nearly at the same time as the offensive was launched. But even more embarrassing was the bungled attempt to rescue a hostage in Somalia, in which the hostage is said to have died (by France at least, not his captors), while at least one French commando is also reported to have been left behind. Moments ago, AP reported on the latest French military developments in Mali, which confirm that when it comes to the words "French military" and "success" will hardly ever be seen side by side. To wit: "Despite intensive aerial bombardments by French warplanes, Islamist insurgents grabbed more territory in Mali on Monday and got much closer to the capital, French and Malian authorities said. In the latest setback, the al-Qaida-linked extremists overran the garrison village of Diabaly in central Mali, France's defense minister said in Paris. Jean-Yves Le Drian said Monday the rebels "took Diabaly after fierce fighting and resistance from the Malian army that couldn't hold them back." In other words, "before France sent its forces in on Friday, the closest known spot the Islamists were to the capital was 680 kilometers (420 miles) away"... while "by now sweeping in from the west, they are now only 400 kilometers (250 miles) from Mali's capital, Bamako, in southern Mali." Yet another French military campaign stupendously executed.

 
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Hedge Funds Most Levered And Long Since 2004





In the last days of 2012 we penned an article describing the current situation of the market as follows: "Margin Debt Soars To 2008 Levels As Everyone Is "All In", Levered, And Selling Vol." Today, Bloomberg catches up with this rather critical topic, and confirms that the buying power of the biggest marginal traders left in the market who do not recycled deposits into stocks - hedge funds - is nothing more than debt piled upon debt, as "Leverage among managers who speculate on rising and falling shares climbed to the highest level to start any year since at least 2004, according to data compiled by Morgan Stanley." BBG also recaps what our readers already know: "Margin debt at NYSE firms rose in November to the most since February 2008, data from NYSE Euronext show." In other words: everyone is all in and levered. And soon, in about two weeks, Bloomberg will figure out that everyone, or at least a central bank here or there, is, indeed, "selling vol."

 
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The Geopolitical Hotspots Of 2013





Because in a world in which markets no longer are affected by fundamentals, and reflect nothing more than what politicians (and their Wall Street lobbies) believe the "fair value" of risk assets should be, it is likely that any fat-tail events will emerge not out of the markets, but out of politics (and perhaps out of central banks, although it is a safe bet that the world's central planners will merely do much more of the same). The chart below summarizes the geopolitical hotspots of the coming 12 months, which together with everything else are no longer reflected in asset prices courtesy of the central banks completely destroying the market's discounting function.

 
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Guest Post: The Neoliberal Financial Skim





If the Status Quo is ultimately a distribution system, as correspondent Simon H. proposes, then we should focus our attention on the inordinate share of the system's profits being distributed to the financial sector. Frequent contributor B.C. has ably captured this perfection of Neoliberal economic order in five charts.  The essence of neoliberalism is that a liberalized financial sector will efficiently regulate itself via market mechanisms and make more profitable use of capital than either the State or the non-financial sectors of the economy. This is the classic theory, but in practice the Neoliberal financial sector is the ultimate perfection of cronyism and political corruption, as the Central Bank and State protect the financial sector's vast skim of the national income with a combination of toothless regulations and regulations that are only enforced for purposes of percetpion management (see Soviet Show Trials). When the aforementioned benign neglect is insufficient to divert the national income to the parasitic finance-rentier sector, then the Central Bank and State actively transfer taxpayer monies to the financial sector via tax breaks, loopholes, and massive direct and indirect subsidies.

 
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AAPL Trades Under $500 For First Time In 11 Months





While the furious defense of $500 the second AAPL crossed under the psychological barrier - the first time it did so in regular trading since February 15, 2012 - was promptly launched as otherwise the hedge fund community, which as we reported two weeks ago, and as Bloomberg caught on today, is more levered and long than at any moment in the past 9 years and is mostly invested in AAPL, we expect this intervention to eventually succumb to the inevitable French military campaign conclusion, as not even every HFT algo programmed to lift every offer under $500 can delay the inevitable arrival of a very sad cashflow reality. As for the Bank of Israel which is now about 5% underwater on its AAPL cost basis: don't worry - Ben will bail you out too.

 
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"Time Often Heals What Reason Cannot"





What a long and wild ride it has been since then and the forks in the road have been marked with turmoil, disdain and an ever increasing amount of debt for this small nation. The solution for each and every problem has been more money appended by more taxes and more austerity measures and the Greeks keep lining up and will keep lining up until the cash dries up and then other conclusions will be found. You may think it is a never ending story and that the current act will go on forever but that would not be my bet nor do I think it is a likely conclusion. Whether it is the German Parliament or the IMF or some other nation in Europe under the guise of nationalism and prudence who has had enough and rightly says, “That is enough;” there is an ultimate endpoint to this game.

 
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Putting The Near-Record Equity Inflow In Context





There are some people who are very confused by last week's news of the "second highest inflow into equity funds on history." First and foremost, this is not "retail" capital reallocation, as EFSF/Lipper compile primarily institutional and ETF flow data. And indeed, as we reported earlier last week, the injection into the market, which also includes allocation to such vehicles as equity funds and ETFs by institutions, was driven primarily by a $220 billion surge in deposits in December, subsequently used by banks to reinvest said capital (most of which, ironically, coming from equity sales by retail investors as banks simply take the proceeds and reinvest into stocks). At the same time, retail investors [sic] continued to solidly pull money out of equity mutual funds. But while the source of funds was wrong, the use of funds was indeed accurate, and in the first week of the year there was a massive, $22 billion allocation to equities, second only to the $23 billion dumped into equity funds in the third week of September 2007. What happened the first time we such such an epic injection (whether it is from deposits, or from levered funding, or who knows what)? Brad Wishak of Newedge shows very clearly what happened then.

 
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Does Bank Of England Hold €235 Million Of Irish Gold Reserves?





The Central Bank of Ireland continues to be queried about the status of the Irish gold reserves. It has been reluctant to release information and said that it is “not obliged” to release information due to certain “rules and regulations”.  Ireland's finance minister, Michael Noonan, has also been asked about the country's gold vaulted at the Bank of England, such as whether the gold is held in allocated form with a bar list available and whether the gold is leased out into international markets. Answers are as of yet not forthcoming. The Sunday Independent, Ireland’s best selling Sunday broadsheet covered the story yesterday in an article (see news) published yesterday which is being widely shared on the internet and commented upon: Bankrupt Ireland owns six tonnes of gold, the bulk of which is held at the Bank of England, it has been revealed. The Central Bank of Ireland said the value of its gold holdings was €235m last time it checked. This represents just over 1 per cent of its total investments. A spokeswoman said the Central Bank was a party to the Washington Agreement on Gold, which recognised gold as an important element of global monetary reserves. She said the Central Bank had not entered into any lease arrangements regarding any of its gold but would not provide specific details of its storage arrangements with the Bank of England.

 
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More Than Half Of Republicans Prepared To Let US Default





Yesterday, Citigroup floated the idea that a temporary government shutdown once the full array of debt ceiling extension measures expires some time in mid/late February, is possible, which would also mean the first technical default of the US depending on the prioritization of US debt payments. Now, Politico reports that this idea is rapidly gaining support within the GOP and that "more than half of GOP members are prepare to allow default unless Obama agress to dramatic cuts he has repeatedly said he opposes." It gets better... or worse depending how many ES contracts on is long: "Many more members, including some party leaders, are prepared to shut down the government to make their point. House Speaker John Boehner “may need a shutdown just to get it out of their system,” said a top GOP leadership adviser. “We might need to do that for member-management purposes — so they have an endgame and can show their constituents they’re fighting.”" Of course, at this point not even a US government bankruptcy may send the ES more than one or two ticks lower. After all, there is no risk of anything happening anywhere, any time.

 
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