There has been much debate in Washington about how to get the economy growing again. Unfortunately, fiscal policy has done little to address the core of economic growth, which is the consumer, or the productive investment required to generate real employment and wage growth. As Schumpeter observed, "there are no entrepreneurs without capital." Simply put, there are no companies, and no jobs, without investment first. For anyone irrespective of ideology to deny the latter brings new meaning to willful blindness. Until we focus on creating an environment that leads to greater investment opportunities by business owners we will likely see a further deterioration in personal consumption. There is currently a fine line between expansion and contraction within the overall economy, and while hopes are that 2014 will be a "breakout" year for the economy, the current economic data trends suggest otherwise.
Before you buy the dip "because this Bull market will run until 2016," please ponder this chart... Empirically, the stock market advances when credit is expanding and declines when credit growth slows. If credit expansion leads the stock market, the market is in trouble...
Quietly, while no one was watching, European stocks have been pummeled lower in the last 2 weeks. Since the start of December, Spanish and Italian stock markets are down 6% and the broad-based Bloomberg 500 Index is down 4.75% - its biggest such drop in 6 months - to 2-month lows. With the EUR testing multi-year highs against the USD, and the earnings picture fading dismalling into the dark, it seems all those "believers" in a European recovery (on the basis of some "soft" surveys) have been proved wrong (or early?).
As the surreal facts and fictions surrounding Nelson Mandela's death grow (as hundreds breached security and flooded his coffin), the story of the "fake" interpreter goes from the sublime to the ridiculous. eNCA is reporting that Thamsanqa Jantjie - who stood mere feet away from the world's leaders (and waved his hands like a muppet) is being treated for schizophrenia, has also faced rape (1994), theft (1995), house-breaking (1997), malicious damage to property (1998), murder, attempted murder and kidnapping (2003) charges. Many of the charges brought against him were dropped, allegedly because he was mentally unfit to stand trial. But apart from that... we are sure his mom says he is really good boy...
With just over two weeks left in 2013, here is a reminder, via AFP, of the main technological developments of the year.
A major issue is the growing disparity between rich and poor, the 1% versus the 99%. While the president’s solutions differ from Republicans, they both ignore a principal source of this growing disparity. The source is not runaway entrepreneurial capitalism, which rewards those who best serve the consumer in product and price. (Would we really want it any other way?) There is another force that has turned a natural divide into a chasm… dun, dun, dun… the Federal Reserve. The relentless expansion of credit by the Fed creates artificial disparities based on political privilege and economic power.
While the good times are about to end for the Japanese Bond Market (as shown in yesterday in Counting Down To Japan's D-Day In Two Charts), the reality is that anyone who bet on an surge in Japanese bond yields in the past few years has been carted out feet first. Which is also why shorting the Japanese bond market has been widely known as the "Widowmaker" trade in the investing community. However, according to Charles Gave, another "Widowmaker" has emerged in the past year: "It looks like the euro is competing to grab title for itself. Many traders have been shorting the currency, with poor results so far."
Hot on the heels of JPMorgan's "web cash" developments in the virtual currency arena, the CEO of Russia largest bank - Sberbank - appears to be looking for alternatives...
- *SBERBANK CEO GREF SAYS FUTURE BELONGS TO VIRTUAL CURRENCIES
- *GREF SAYS DEVELOPMENT OF VIRTUAL CURRENCIES 'CAN'T BE STOPPED'
- *SBERBANK CEO CALLS FOR GREATER REGULATION OF VIRTUAL CURRENCIES
- *SBERBANK MAY FORM OWN VIRTUAL CURRENCY ON BASIS OF YANDEX MONEY
When a pseudonymous 'Japanese' coder creates a crypto-currency that gains acceptance among thousands of vendors, it's dismissed by the powers-that-be and called a ponzi scheme by the MSM. One wonders what happens when the largest banks of the US and Russia sanction the 'idea' of a decentralized, unregulated, 'money' transfer system.
Instead of kicking the can and maintaining the zombie nation, Iceland ripped its over-levered bank-based-debacle band-aid off and has slowly but surely emerged from its own crisis (notwithstanding capital controls and pain for many) unlike the rest of the Western world which has reverted to the mean of ignorance and status quo. Now, however, The Guardian reports Iceland has one more lesson to teach the world - an Icelandic court has sentenced four former Kaupthing bankers to jail for market abuses. Instead of fining the banks (in nothing more than a cost-of-doing-business line item), there are real consequences for the actors involved...
November Producer Prices Decline For Third Consecutive Month, Rising Pork Offset By Falling Chicken PricesSubmitted by Tyler Durden on 12/13/2013 09:46 -0400
In the aftermath of a series of "better than expected", and thus "taper on" economic data, there is just one wildcard remaining for the Fed: inflation, or rather the lack thereof. And while next week's CPI report will be very closely watched in this regard, producer prices also provide a glimpse into pricing pressures and resource slack. And judging by the just announced -0.1% drop in finished goods producer prices in the month of November, below the 0.0% expected if up from last month's -0.2%, which happens to be the third consecutive decline in overall PPI, a first in the past year, the Fed's December taper decision just got even more complicated. Looking into the components, core PPI rose by the tiniest possible fraction, or 0.1%, in line with expectations, while it was energy prices that dipped 0.4%, pulling the overall number lower with the BLS noting that home heating oil's 5.7% decline was among the key culprits for the drop. Food producer prices were unchanged for the month, with higher prices for pork offset by lower prices for processed young chickens.
Five Years After ZIRP Began, Here Are The Biggest Winners In The Weakest Economic Recovery On RecordSubmitted by Tyler Durden on 12/13/2013 08:55 -0400
- Presidential Task Force Recommends Overhaul of NSA Surveillance Tactics (WSJ)
- Monte Paschi's Largest Shareholder Says It Will Vote Against $4.1 Billion Capital Increase (WSJ)
- SAC Reconsiders Industry Relationships—and Its Name (WSJ)
- Icahn’s Apple Push Criticized by Calpers as ‘Johnny Come Lately’ (BBG)
- In Yemen, al Qaeda gains sympathy amid U.S. drone strikes (Reuters)
- Missing American in Iran was on unapproved mission (AP)
- In China, Western Companies Cut Jobs as Growth Ebbs (WSJ)
- U.S. lays out steps to smooth Obamacare coverage for January (Reuters)
- Las Vegas Sands Said to Drop $35 Billion Spanish Casino Proposal (BBG)
- Twitter Reverts Changes To Blocking Functionality After Strong Negative User Feedback (TechCrunch)