The next Great Depression is already happening - it just hasn't reached the United States yet. Things in Europe just continue to get worse and worse, and yet most people in the United States still don't get it. We have been warning that the next major wave of the ongoing economic collapse would begin in Europe, and that is exactly what is happening. In fact, both Greece and Spain already have levels of unemployment that are greater than anything the U.S. experienced during the Great Depression of the 1930s. Pay close attention to what is happening over there, because it is coming here too. A full-blown economic depression is raging across southern Europe and it is rapidly spreading into northern Europe. Eventually it will spread to the rest of the globe as well. The U.S. economy has become a miserable junkie that is completely and totally addicted to reckless money printing and gigantic mountains of debt. If we stop printing money and going into unprecedented amounts of debt we are finished. If we continue printing money and going into unprecedented amounts of debt we are finished. Either way, this is all going to end very, very badly.
There is a very explicit link between the volatility (or risk) associated with one of the world's lowest yield and supposedly risk-free sovereign bond complexes and the need for liquidity (or cash over gold or commodities). The last two weeks has seen JGB bond volatility drop and gold rally as the correlation (which appears to have strong causal links) continues; and suggests notably more upside for Gold (especially as CoT data shows net longs remain extremely low).
CME's Terry Duffy: "What’s interesting about gold, when we had that big break two weeks ago we saw all the gold stocks trade down significantly, we saw all the gold products trade down significantly, but one thing that did not trade down, was gold coins, tangible real gold. That’s going to show you, people don’t want certificates, they don’t want anything else. They want the real product."
In a little under two minutes, Nigel Farage sums up the utter farce that "the religion" that Europe has become. He explains, his fear is that what will break up the Euro, "is not the economics of it, but wholesale, violent revolution," in the Mediterranean, and that is "all so unnecessary!" Speaking at Simon Black's Offshore Tactics workshop, the so-called modern day Cicero goes on to point out that France's Hollande is "the number 1 among idiots running countries around the world," and worries that Merkel's pending election means there will be more and more 'tough talk and action' as she shows the people she is in charge. Simply put he warns, alongside Ron Paul, that if you have money in European banks, "Get your money out," because, "when the next phase of the disaster comes, they will come for you."
Less than a month after being ejected from Chesapeake Energy, the charismatic, yet controversial, Aubrey McClendon, has launched his next venture in the form of the American Energy Partners. Forbes were sent a copy of the email that Aubrey sent to his many contacts in the oil and gas industry in his search for potential acquisitions, or assets that his new company could get involved with...
People always stop and stare at traffic accidents (no matter how minor) and arguing couples (no matter how unattractive); ConvergEx's Nick Colas has the same problem with the ever-moribund CBOE VIX Index, even though it’s essentially the exact opposite of the proverbial train wreck. Even with the zombie-like march higher for US stocks, surely the uncertain state of the world would demand more than a 13-handle VIX? Well, it doesn’t; and Nick offers up some off-the-beaten track explanations for why “13” isn’t the right answer. Implied volatility should either be higher or… (gulp)… much lower. The biggest overlooked factor for both directions: the role of technology in society and commerce.
'Commingle' hundreds of millions in client funds which are subsequently stolen rehypothecated as collateral by JPMorgan while your firm goes bankrupt as a result of your idiotic prop trading decisions, and what happens? Your toughest choice is whether to vacation in Fiji or St Barths. That said, being former CEO of the world's biggest TBTF hedge fund also known as Goldman, a former governor and senator, and most importantly bundler for the president of the "transparent" administration certainly helps. On the other hand, be a lowly algo trader and quant programmer working at the aforementioned hedge fund, and having dared to "steal" secret trading client code what can "manipulate markets" and what - you get the full wrath and anger of the FBI, the Federal Court System, and now the Supreme Court.
What seems to be known by very few, is what appears to be a very disturbing trend in the distribution of cash domestically vs cash abroad. As the chart below shows, when it comes to offshore-held cash, AAPL is indeed a cash cow. And with the bulk of the company's growth prospects, and ever more so, sales abroad, this makes intuitive sense. As noted above, AAPL reported $102 billion in cash abroad, an increase of $8 billion in the quarter. This is terrific news... if only the company could dividend, buyback or engage in any other shareholder friendly action with this cash. It can't. How about cash held domestically? Well, as can be seen in the red bar below, domestic cash has not only stagnated in the $30-40 billion area for two years, it actually declined in the most recent quarter. And yes, this is the cash that Apple has full recourse to, and which it uses to make dividend payments out of, and to fund stock buybacks. Congratulations to Apple for its record $17 billion bond offering today. Perhaps the real question, however, is when is the next one?
"Horrible" PMI, no problem; just add it to the list of macro data that has missed significantly in recent weeks. Bloomberg's US Macro index has utterly collapse in recent weeks - now at its worst level in 7 months but apparently if good is good, bad is better, and totally shitty is absolutely awesome. It would appear the world of nominal equity index chasers is now fully cognizant that the reality of their lemming like herding is based on one simple thing (no matter how much they kick and scream and proclaim wisdom about earnings cycles, growth, margins, transformative energy, or new AAPL products) - and that is... Central Bank promises. If the Fed needed any ammo for tomorrow to hint that there is a time frame longer than infinite and that there is a size of imprudence larger than infinity, then they have it... of course, there is, once gain, very weak volume on this uptick (but like everything else, that doesn't matter either.)
Three years after Congress first told the SEC that it required public companies to uncloak the details of their CEO compensation relative to his lowly employees; the ever-ready SEC has yet to implement any rules. However, in an effort to ease the tough job that the SEC has, Bloomberg has calculated ratios for the Top 250 companies in the S&P 500, based on industry-specific averages for pay and benefits for the rank-and-file (since companies don't disclose median worker pay). The table below, of the top 50 companies (meaning highest CEO pay relative to workers), suggests it remains good to be king (and Ron Johnson just made another #1 Spot earning an estimated 1,795x the average JCP employee - money well spent...).
Way back in 2006 at the height of the housing bubble, we prepared this chart proposing the housing bubble might exhibit symmetry, i.e. the decline would mirror the rise. We also proposed that the decline would be characterized by phase shifts that corresponded to the decay of whatever reason was being given for the "recovery" in housing, for example, "this must be the bottom." Perhaps all the trillions of dollars of intervention has accomplished is extend Phase 2. Central bank and state manipulation distorted the symmetry of housing's decline, but did they stave off Phase 3 permanently? If bubbles eventually revert to their starting level, Phase 3--capitulation and a return to pre-bubble prices--still lies ahead.
Previously, when previewing the next month's POMO days, we cautioned readers by saying that "Shorting Stocks On These POMO Days May Be Hazardous To Your Health." Courtesy of the BOJ ludicrous speed launch of its own version of POMO, which sees the combined global central bank authority raising the amount of monthly incremental liquidity to $160 billion, we are upgrading the cautionary language from "may" to "will."
Tuesday Humor: GM Announces It Is Losing Money On Every Volt Sold, Will Make Up For It With More LossesSubmitted by Tyler Durden on 04/30/2013 14:44 -0400
In what should not come as a major surprise to anyone, GM just announced that:
- GM SAYS LOSING MONEY ON EVERY VOLT SOLD
There is good news: being implicitly funded by the US taxpayer means never admitting failure. In fact, the faster one fails, the faster one gets bailed out.
- GM SAYS NOT GIVING UP ON VOLT
And when failure is not an option, the only other option is even greater failure. And even bigger losses.
- GM SAYS NEXT GEN VOLT WILL BE $7,000 TO $10,000 CHEAPER
Slowly but surely everyone is figuring out that in the USSA, where making a profit is becoming increasingly impossible, the only credible business model is that of Amazon: lose lots of money but make up for it in volume.
Now that many are convinced we've moved into totally unjustifiable extremes of complacency in risky assets, we are having a look at some historic stock market breaks and how they have unfolded. In that light, the current setup is rather ominous. Saxo Bank's John Hardy likes to look at historic patterns, particularly when the past might provide a historic parallel for the present situation. In this case, we're interested in what many historic major equity chart tops look like in a technical sense now that if feels like we've entered into a blow-off territory technically. Somewhat to our surprise, we found that many major market tops had remarkably similar traits as the one we have just posted.