The latest policy being implemented by Governments around the world consists of simply making data points up when reality doesn’t conform to their wishes.
Following yet another rout in Asia overnight, which since shifted over to Europe, US equity futures have stabilized as a result of a modest buying/short-covering spree in the 10 Year which after threatening to blow out in the 2.90% range and above, instead fell back to 2.81%. Yet algos appear confused by the seeming USD weakness in the past few hours (EURUSD just briefly rose over 1.34) and instead of ploughing head first into stock futures have only modestly bid them up and are keeping the DJIA futs just above the sacred to the vacuum tube world 15,000 mark. A lower USDJPY (heavily correlated to the ES) did not help, after it was pushed south by more comments out of Japan that a sales tax hike is inevitable which then also means a lower budget deficit, less monetization, less Japanese QE and all the other waterfall effect the US Fed is slogging through. Keep an eye on the 10 Year and on the USD: which signal wins out will determine whether equities rise or fall, and with speculation about what tomorrow's minutes bring rife, it is anybody's bet whether we get the 10th red close out of 12 in the S&P500.
The man who called the turns in RIMM/Blackberry, AAPL, GOOG and NOK answers this question in detail!
Asia has become the most important issue for the markets today. The Central Bankers’ dream of endless QE has become a nightmare for Japan while China’s “growth miracle” is rapidly falling to pieces.
My cocaine dealer vs medical device profit margin article bruised a lot of sensitive skin. Good! I aim to wake people up and cause contusions in the politically correct veneer-like epidermis that serves to protect the gross distortion that is the 3rd party payer system healthcare economic bubble.
- This won't end well: Islamists call Cairo protest march as Egypt death toll mounts (Reuters)
- JPMorgan Said to Expect Multiple Fines for Whale Loss (BBG)
- Ex-bosses at JPMorgan unlikely to face charges in 'Whale' scandal (Reuters)
- China could target oil firms, telecoms, banks in price probes (Reuters)
- For once, it's not the weather's fault: U.K. Retail Sales Increase More Than Forecast on Heatwave (BBG)
- Japanese visits to shrine on war anniversary anger China (Reuters)
- India Fighting Worst Crisis Since ’91 Seeks to Buoy Rupee (BBG)
- Japan Signals Corporate Tax Cut a Long Shot as Deflation Eases (Reuters)
- Indonesia Tackles Graft in Energy Sector (Reuters)
- Merkel Touts Strength of German Economy (WSJ)
- and... British stuntman who parachuted into London Olympics opening ceremony as James Bond dies in fall (AP)
- Vocal billionaire activist IRR - 150x: Icahn bought $1 billion of AAPL stock, seeks $150 billion buyback (BBG)
- BlackBerry Said to Have Sought Buyers Since 2012 (BBG) - for a phone or the entire company?
- IPhone Fingerprint Reader Talk Boosting Biometric Stocks (BBG) - also, the NSA will need to grow its Utah data center
- UPS Jet Crashes in Birmingham, Ala. (WSJ)
- America's Farm-Labor Pool Is Graying (WSJ)
- Hong Kong Lowers Storm Signal as Typhoon Closes on China (BBG)
- Indian submarine explodes in Mumbai port (FT)
- BofA Banker Sued by Regulator Later Joined Fannie Mae (BBG)
- Software that hijacks visits to YouTube uncovered (FT)
- Chinese Billionaire Huang Readies Iceland Bid on Power Shift (BBG)
- China to launch fresh pharmaceutical bribery probe (Reuters)
- Defeat at J.C. Penney Hurts Ackman as Performance Trails (BBG)
The amusing news overnight was that following slightly better than expected Q2 GDP data out of Germany (0.7% vs 0.6% expected and up from 0.0%) and France (0.5% vs 0.2% expected and up from -0.2%), driven by consumer spending and industrial output, although investment dropped again, which meant that the Eurozone which posted a 0.3% growth in the quarter has "emerged" from its double dip recession. The most amusing thing is that on an annualized basis both Germany and France grew faster than the US in Q2. And they didn't even need to add iTunes song sales and underfunded liabilities to their GDP calculation - truly a miracle! Or perhaps to grow faster the US just needs higher taxes after all? Of course, with the all important loan creation to the private sector still at a record low, and with the ECB not injecting unsterilized credit, the European depression continues and this is merely an exercise in optics and an attempt to boost consumer confidence.
If you are a stock picker, then it’s basically now or never for whatever investment discipline you might follow. Asset class and industry correlations have taken a surprising nosedive in recent weeks, which - as ConvergEx's Nick Colas notes. should allow your strategy/blend of magic to (hopefully) shine versus the benchmarks. Average industry sector correlations to the S&P 500 have dropped to 69.9%, by far the lowest observation for over two years. High yield bonds now show just 16% correlation to U.S. stocks, and the numbers for Emerging Markets (58%), EAFE stocks (76%), and currencies like the Australian dollar (11%) are also plumbing new lows. Why the sudden return to a ‘Normal’ world? Expectations that the Federal Reserve will begin to ‘Taper’ its bond buying help, to be sure. As do actual inflows (some $8 billion last month) into actively managed mutual funds. We’ll have to wait and see if current trends continue, but for now we welcome the return of the ‘Stock picker’s market’. Let the dart-throwing begin...
While we congratulate Carl Icahn (or is that iCahn) for once again taking over the spotlight in what has otherwise been a newsflow empty summer doldrum week, and like everyone else, are surprised by his most recent activist target, the country's on-again, off-again most valuable by market cap company, Apple, we do, as we did before when David Einhorn proposed virtually the same activist play, have some questions. Chief among them: how will AAPL fund any proposed expanded buyback or increased dividend using domestic cash?
Regardless of what I (or you) do throughout the day we're tracked, logged, profiled and otherwise "identified" in a hundred different ways.
We currently have a large position in APPLE. We believe the company to be extremely undervalued. Spoke to Tim Cook today. More to come.
— Carl Icahn (@Carl_C_Icahn) August 13, 2013
Why sell cocaine at a 200% markup when there are much bigger profits to be had in this moral hazard economy funded, government protected business.
- U.S. Regulator Subpoenas Banks Over Long Warehouse Queues (BBG)
- Apple Said to Prepare Holiday Refresh of IPhones to IPads (BBG)
- Fed's Yellen Says Stance on Banks Hardened (WSJ)
- Mexico opens up its energy sector (FT)
- Spin: Greek GDP marks gradual deceleration of recession (FT) ... spin aside, it dropped 4.6%, and in reality, probably over 10%
- Made-in-Canada Solution For BlackBerry Avoids Nortel Fate (BBG)
- America's Farm-Labor Pool Is Graying (WSJ)
- Video of 'lame' cattle stirs new concern over growth drugs (Reuters)
- Paulson Bid for Steinway Trumps Kohlberg Offer (WSJ)
- Egyptian government yet to decide on pro-Mursi vigils (Reuters)
It's only fitting that in a bizarro new normal, the news that passes for positive is either conflicting, reflexive or, well, simply bizarre. Last night was no exception as the "good" news came in the form of speculation that in order to promote its consumption tax hike, the Abe government would consider a corporate tax cut. How that helps the country with the 1 quadrillion yen in debt is not exactly clear, or how it makes consumer tax hikes any more palatable in a nation in which more people than anywhere in the world are retired and elderly, and thus removed from the corporate lifecycle, is just as nebulous. But the market liked it. Just as it liked the good ole' European cop out, of posting a surge in consumer confidence, or relying on reflexive indicators to represent an improvement in the economy, when in reality the only thing "improving" is the stock market. This happened when the German ZEW Economic Sentiment survey soared from 36.3 to 42.0 on expectations of a 39.9 print. So one must buy futures, or that's what the GETCO algo programming says.