As we said yesterday, traders could have just slept through the entire day, ignored headlines about mad cows, auctions of European bonds maturing in a few weeks, speculation of Europe's alleged falling out favor with austerity which is very much irrelevant as all that matters is what German taxpayers/voters say, and the SEC's latest laughable scapegoating attempts, and just woken to the 4:30 pm announcement of iPhone sales in China. As expected, the entire world is now reacting. Here is Deutsche Bank's Jim Reid with the global response to the world's ongoing fascination with aspirational cell phones.
While images of car-chases and Gene Hackman's pork-pie hat may be conjured, the tough new reality that has emerged this week in Europe's rising tensions is the decisive development in France as the election proved a strong showing for both far-right and far-left political parties at the same time. Somewhat surprisingly these extremes are in agreement on critical economic policies: they both want to restrict free-trade and the labor market, and also want to subjugate the ECB. Together with the Socialists and even most Centrists, the extremes clearly converge on a very strong consensus for anti-growth structural policies and massively lax fiscal (fair estimate might be 60% of the voters) and monetary (ditto, perhaps 90% of the voters) policies. This means that France has given up its ambition to become anything like economically similar to Germany. Instead, they have reverted towards joining their natural economic allies in the Eurozone: Italy and Spain. Perhaps this is why French spreads/yields have risen over 40% in the last few weeks as the politically pragmatic Anglo-Saxon spirits are starting to seize the enormity of what is happening: France is no longer any form of supporter of ally of Germany. The idea that somehow, pragmatic voices will stop this political groundswell is entirely misplaced: this destructive belief set has started to run its course. It is now in the Continental blood and the healthiness of economies over the pond is deteriorating fast.
Economic Debunker Steve Keen is interviewed by outspoken Irish journalist Vincent Browne and no holds are barred as he describes the Maastricht Treaty as a suicide pact of critically poor central-planning design of a supposed market-economy, based on financial crises never occurring, locking European governments into an austere path when stimulus is required. "Ultimately the Euro has to fail and the longer we continue the farce of believing we can make it function the larger the ultimate crash will be" is how Keen portrays the situation and describes the foreign-exchange, fiscal policy, and monetary policy shackles that have created and exaggerated the situation. This leads into a longer discussion of the state of the World and its inability to 'export into the ponzi' like Japan could from 1990 to 2010 since the entire developed world is trying to do the same thing and "there is no ponzi scheme on Mars that we can export to" leaving the globe without Japan's initial way out. The must-watch 10 minute interview goes on to discuss the endgame (a break in the political compact based on austerity pressures and military or political coups) as Keen sums up "it's amazing to see us repeating the same mistakes that were made during the 1930s but we are doing just that." ending with some potential solutions noting that there is no easy way out of this.
Leading neoconservative (read “closet Trotskyite“) commentator Charles Krauthammer’s latest Washington Post editorial pays homage to the glory days of NASA and the retirement of the space shuttle Discovery. Titled “Farewell, the New Frontier,” the piece evokes mental images of Uncle Sam losing his international prestige as President Obama scales down NASA’s space exploration endeavors. Contrary to Krauthammer, NASA has never represented America’s collective vision of frontier exploration. It has been just another bureaucratic black hole for Washington to throw dollars at in hopes of buying reelection. Because one of the main tenets of economics is considering the unseen, then it can be assumed that space exploration would very well be advanced far beyond what we see today if it was left completely out of the hands of the state. If Krauthammer truly wished the human race capable of traveling into the new frontier of the stars, he would welcome NASA cuts rather than lament. How ironic then is today's news of Planetary Resources as investor and avowed anarchist Doug Casey thoughtfully observes on the inefficiency of NASA: "We should have colonies on the moon by now, and more: We should be mining the asteroids and developing real estate on Mars."
And here they are:
APPLE 2Q REV. $39.19B, EST. $36.87B
APPLE 2Q EPS $12.30, EST. $10.02
APPLE SOLD 35.1 MILLION IPHONES IN QTR, EST. 31.2M
APPLE 2Q IPOD UNITS SOLD 7.7MLN , DOWN 15%
APPLE 2Q IPAD UNITS SOLD 11.8MLN
APPLE 2Q GROSS MARGIN 47.4%, EST. 42.8%
APPLE 2Q MACINTOSH UNITS SOLD 4MLN , UP 7%
- APPLE SEES 3Q REV. ABOUT $34B, EST. $37.49B
- APPLE SEES 3Q EPS ABOUT $8.68, EST. $9.96
Draining your banking system dry of deposits and loans is no easy task (just see chart below), and yet the Greeks sure have succeeded. There was only one open question: where did all this money go. Now we know.
Eurostat just updated their statistics for government debt to GDP for 2011, so here is an updated graph over Belgium, Italy, Greece, Portugal, Ireland, Spain, France, UK, Netherlands, Germany and Sweden and the development of their gross government debt to GDP from 1996 to 2011. Countries not matching the new Merkozy-limit of a maximum of 3% budget deficit were Greece, Ireland, Portugal, Spain and... France. But we can forget the old euro convergence criteria of 2% deficit and at most 60% debt to GDP as instead of working back to the green 'safe' quadrant, the PIGS are heading in the exact opposite direction missing both deficit and debt convergence criteria.
Just because try hard as it may, the Chairman's printer simply can't issue infinite electronic equivalents of the 79 proton element, newspapers with a circulation of 435,000 (same as the Chicago Tribune) on this side of the Ganges will hardly ever be allowed to show the following anti-patriotic advertisement.
Just in case one is wondering what is a greater crime in America: vaporizing $1.5 billion in client money or having the temerity to downgrade the US (twice), JP Morgan and Morgan Stanley, here is the SEC with the answer:
- SEC SUES EGAN-JONES, SEAN EGAN ON ALLEGED MISREPRESENTATIONS
Somewhere Jon Corzine is cackling like a mad cow.
UPDATE: via Bloomberg:
*MEAT FROM ANIMAL DID NOT ENTER FOOD CHAIN, USDA SAYS
*COW WITH MAD-COW DISEASE CONFIRMED IN CALIFORNIA, USDA SAYS
Rumors of the return of bovine spongiform encephalopathy - or mad cow disease - in the US as the USDA conducts a conference to discuss the potential find of an infected animal has sent Live and Feeder Cattle futures limit-down and back to almost 8 month lows prices. The find has been confirmed, according to The Farmer-Stockman. Now, where is that zombie survival chart?
Modern investing offers the promise that investors who "do their homework" and use data more intelligently than the herd can gain a valuable edge. But what if the underlying data available to the investing public is fundamentally flawed?