Japan's PM Shinzo Abe has seen his approval ratings collapse for the first time since his 'devalue-to-glory' strategy was unveiled a year ago. Kyodo News reported, support for Mr. Abe fell 10.3ppt to 47.6%, while Japan News Network reported a 13.9-point fall to 54.6% as WSJ reports, public concern over the controversial secrecy bill (designed by Kafka, inspired by Hitler) and its nationalist overtones merely exacerbated Japanese people's concerns about their pocketbooks (as incomes stagnate and costs rise). As Abe plays lip service to economic issues (with a very Maduro-like speech recently on profit margins and wage increases), there is little but public outrage to hinder his plans as his ruling Liberal Democratic Party has big majorities in both houses of parliament, with no election scheduled until 2016. So much for Abenomics...
What do you do if you have more money than you can ever spend, and own residences in most major metropolises around the world. You invest in the most exclusive "third" (or fourth, or fifth) vacation "house" that can be purchased by people for whom money is no object, such as the $1 billion Faena Miami Beach, which has lined up as buyers none other than the creme of the (bailed out courtesy of a multi-trillion ongoing taxpayer bailout) Wall Street crop including Apollo's Leon Black, and of course Goldman's very own resident of a duplex in 15 CPW, Lloyd Blankfein. The Faena oceanfront development for the megarich is financed by another billionaire, chairman of Access Industries, Len Blavatnik, whose $16.1 billion net worth puts him 49th in the Bloomberg Billionaires index. This is what Lloyd and company will buy with the Fed's "wealth effect."
Technically, "High Yield" is no longer the appropriate name for the riskiest credit issuance since the average coupon has declined to where Investment Grade used to trade in the years before the New Normal. It is therefore only appropriate that as part and parcel of this record high yield bond issuance surge levering the riskiest companies to the gills with low interest debt, that there is also a scramble between underwriters to become as competitive as possible. And, sure enough, as Bloomberg Brief reports, "the underwriting fees disclosed to Bloomberg on U.S. junk bond deals average 1.276 percent for the year to date, the lowest since our records began. The prior low was set in 2008, when fees averaged 1.4 percent." 2008... that was when the last credit bubble burst on unprecedented demand for junk bonds: we are confident the bubble apologists will find some other metric with which to convince everyone that reality, and the Fed's Stein, have it all wrong.
It would be tragic if it wasn't so hilarious. Nearly a year after we first suggested that Herbalife is the long of 2013, as a result of the epic short squeeze potential resulting from the Ackman announcement of his mega short,(promptly followed by the traditional Whitney Tilson piggyback) which it has been, rising from $25 to an all time high of $77.39 days ago, Herbalife has had enough of the so-called retail expert's (coughJCPcough) repeated allegations of fraud, and after taking a well-deserved victory lap costing Ackman hundreds of millions, has decided to hit him where it truly hurts - his clients. Bloomberg reports that Herbalife is approaching investors in Ackman’s hedge fund, suggesting they pull their money from the $12 billion firm.
Chart Of The Day: US Labor Force Declines By 25,000 In Past Year Despite 2.4 Million Rise In Employable AmericansSubmitted by Tyler Durden on 12/07/2013 13:48 -0400
As today's chart of the day shows, while the civilian noninstitutional population (i.e. employable Americans over the age of 16) grew by 2.4 million in the past year (from 244.2 million to 246.6 million), the US labor force somehow, very mysteriously, declined.
With just a tad more than three weeks left in the year it is time to start focusing on what 2014 will likely bring. Of course, what really happens over the next twelve months is likely to be far different than what is currently expected but issuing prognostications, making conjectures and telling fortunes has always kept business brisk on Wall Street.
As equities celebrate today's better than expected jobs report (for now), apparently comfortable in the knowledge that it's good-enough-but-not-too-good, we are reminded that just six short months ago, none other than the Fed chairman himself uttered these crucial words during his June 19th press conference:
"...when asset purchases ultimately come to an end the unemployment rate would likely be in the vicinity of 7%"
So here we are at 7.0%... and no taper in sight as excuse after excuse is rolled out for keeping the floodgates open. Whocouldanode? This appears to right up there with "subprime is contained", "nobody really understands gold", and "tapering is not tightening." But still we are supposed to give great credibility to their forward guidance?
While we don't want to detract in any way from the world's mourning the passage of one of 20th century's most luminary personalities, we can't help but be confused by the hypocrisy exhibited by certain members of the US government. The reason: it was none other than the US government-controlled Central Intelligence Agency that was instrumental in Nelson Mandela's 1962 arrest that resulted in his 27 year imprisonment on Robben Island.
Today, in the latest escalation by minimum paid restaurant workers who demand greater wages, Fast-food workers and labor organizers are set to turn out in support of higher wages in cities across the country Thursday and walkouts are planned in 100 cities, with rallies set for another 100 cities. While it's not clear what the actual turnout will be, how many of the participants are workers and what impact they'll have on restaurant operations, it is possible that your 99 cent lunch may be delayed or outright cancelled today. While they are of course free to act as they choose, they may want to reconsider since in the very near future you may not even have the option of choosing, as it will be done for you. Earlier this week, restaurant chain Applebees unveiled what may soon be the "Waiter Terminator."
Nearly a year ago, we penned "Return = Cash + Beta + Alpha": in which we performed "An Inside Look At The World's Biggest And Most Successful "Beta" Hedge Fund. The fund in question was Bridgewater, and Bridgewater's performance was immaculate... until the summer when the sudden and dramatic rise in yields as a result of the Bernanke Taper experiment, blew up Bridgewater's returns for 2013 and at last check, at the end of June, was down 8% for the year. As further explained in ""Yield Speed Limits" And When Will "Risk Parity" Blow Up Again", an environment in which rates gap suddenly higher (and in the current kneejerk reaction market all moves are purely in the form of gaps as risk reprices from one quantum to another in milliseconds) is the last thing Ray Dalio's strategy wants. Be that as it may, and successful as Dalio's fund may have been until now, tonight James Montier of Jeremy Grantham's GMO takes none other than Bridgewater to task, in a letter in which among other things, he calls risk parity "just old snake oil in new bottles", and sums up his view about the strategy behind Bridgewater in the following equation:
Risk Parity = Wrong Measure of Risk + Leverage + Price Indifference = Bad Idea
and proceeds to skewer it: 'At a fundamental level, risk parity is the antithesis of everything that we at GMO hold dear. " Read on for his full critique.
As we have been covering for the past year and a half, most explicitly in "A Record $2 Trillion In Deposits Over Loans - The Fed's Indirect Market Propping Pathway Exposed", when it comes to the pathway of the Fed's excess deposits propping up risk levels, it has nothing to do with reserves sitting on bank balance sheets as assets, and everything to do with excess deposits (of which there are now $2.4 trillion thanks to the Fed) which are used as Initial collateral by banks such as JPM and then funding such derivatives as IG9 in a failed attempt to cover a segment of the corporate bond market.
"In order for currencies to be 'exchangeable' they have to be backed by something," is the remarkably ironic initial comment from none other than debaser-of-the-entirely-fiat-dollar Alan Greenspan when asked about the "bubble in bitcoin," by Bloomberg TV's Trish Regan. Unable to "identify the intrinsic" backing of Bitcoin (or see bubbles in equity, credit, real estate, or greater fools) Greenspan is, apparently, capable of identifying Bitcoin "as a bubble," because "there is no fundamental means of "repaying' it by any means that is universally accepted." The farcical double-speak continues as the Maestro does a great job of making Bitcoin (which Ron Paul earlier noted could be the "destroyer of the dollar") look even better than the readily-printed fiat we meddle with every day.
With the mainstream media inundated with tales of low paid workers demanding higher minimum wages (thus theoretically expecting to be paid more than a market rate for their services), we thought a look at the other end of the scale was worthwhile (where, some might argue, the following 10 CEOs are also paid above market rates for their 'ability')...
Although Vice President Joe Biden’s trip to Northeast Asia this week will likely focus on defusing tensions over China’s new Air Defense Identification Zone (ADIZ), this is hardly the only issue plaguing the U.S. in Asia. In general, U.S. Asia policy during the second Obama administration has lacked focus as senior officials have been preoccupied with domestic and other international challenges. Moreover, a number of other issues suggest that the administration continues to give inadequate attention to the Asia-Pacific, and the results it is getting reflect this relative neglect.