Berkshire Hathaway

• Threatening snowstorm may be early test for N.Y. Mayor de Blasio (Reuters), U.S. Northeast Threatened With Blizzard, Travel Delays (BBG)
• Scarred U.S. consumers a hard sell for traditional retail (Reuters)
• Edward Snowden, Whistle-Blower (NYT)
• A Few Brave Investors Scored Huge, Market-Beating Wins (WSJ)
• Fiat gets full control of Chrysler for $4.35 billion (Reuters)
• Billions Vanish in Kazakh Banking Scandal (WSJ)
• SAC’s Cohen Focus of Trial as Martoma Rebuffs U.S. (BBG)
• World's first state-licensed marijuana retailers open doors in Colorado (Reuters)
• Hyundai, Kia face fading growth as currency tides buoy Japan rivals (Reuters)
• Bond investors braced for new year shock (FT)
• Putin vows total destruction of 'terrorists' after bombings (AFP)

• Firms to Face new Rules Over Pay, Taxes (WSJ)
• US to test commercial drones at six sites (CNN)
• China’s Local Debt Swells to 17.9 Trillion Yuan in Audit (BBG) - which is about 2 trillion less than where it actually is (Reuters)
• Fears after key China debt level soars 70% (FT) and in reality the debt level is saoring far more
• Pot Shops in Denver Open Door to $578 Million in Sales (BBG)
• China Says It Will Shun Abe After Shrine Visit (WSJ)
• De Blasio Taking Office Citing Wealth Gap as Crime Falls (BBG)
• China Approves $353 Million of Share Sales as IPOs Resume (BBG)
• Obama Seeks Way to Right His Ship (WSJ)
• Netflix Tests Subscription Fees Based on Number of Account Users (BBG)
• Three big macro questions for 2014  (FT)

A year which showed that central planning works (for the fifth year in a row and probably can continue to "work" at least a little longer - in the USSR it surprised everyone with its longevity before it all came crashing down), is drawing to a close. This is what has happened so far on the last trading session of 2013. As market participants head in to the New Year period, volumes are particularly thin with closures being observed across Europe with only the CAC, IBEX and FTSE 100 trading out of the major European indices, with German, Switzerland, Italy and the Nordic countries are already closed. The FTSE and CAC are both trading in the green with BP leading the way for the FTSE earlier in the session after reports the Co. have asked a federal appeals court to block economic loss payments in its settlement of the Gulf of Mexico oil spill. European stocks rise, with real estate, travel & leisure leading gains. Retail shares underperform as Debenhams slumps following its IMS. A number of major markets will close early today. The euro falls against the dollar. Fixed income market are particularly quiet with the Eurex being shut. Whilst Gilts are seen down this morning following on from yesterday’s short-covering gains.

• Late Surge in Web Buying Blindsides UPS, Retailers, Some Christmas Packages Aren't Delivered (WSJ)
• Yen Slides as Turkish Stocks Drop, U.S. Futures Rise (BBG)
• Turkish lira drops to record low against dollar, as Turkey’s Erdogan replaces 10 ministers (FT)
• Egypt designates Muslim Brotherhood as terrorist group (Reuters)
• Thai elections in doubt after political violence (AFP)
• Batista Cedes Oil Unit Control in $5.8 Billion Debt Deal (BBG)
• China celebrates Mao's birthday, but events scaled back (Reuters)
• First-class stamps to cost 49 cents as of Jan. 26 (AP)
• Obamacare Hits Snag in States as U.S. Site Finds Footing (BBG)
• NSA Struggles to Make Sense of Flood of Surveillance Data (WSJ)

A world, in which former permabears David Rosenberg, Jeremy Grantham and now Hugh Hendry have thrown in the towel and gone bull retard, and where none other than the Chief Investment Officer of General Re-New England Asset Management - a company wholly-owned by Warren Buffett's Berkshire Hathaway, has issued one of the direst proclamations about the future to date and blasts the Fed's role in creating the biggest mess in financial history, is truly upside down...

• China to Ease One-Child Policy (WSJ), China announces major economic and social reforms (Reuters)
• Consumers line up for launch of PlayStation 4 (USAToday)
• Trust frays between Obama, Democrats (Politico)
• Yellen Stands by Fed Strategy  (Hilsenrath)
• Hero to zero? Philippine president feels typhoon backlash (Reuters)
• Brussels warns Spain and Italy on budgets (FT)
• Moody’s Downgrades Four U.S. Banks on Federal Support Review  (BBG)
• CIA's Financial Spying Bags Data on Americans (WSJ)
• Germany Digs In Against Risk Sharing in EU Bank-Failure Plan (BBG)
• Bill Gates wants Norway's $800 billion fund to spend more in Africa, Asia (RTRS)

• US Blasts Germany's Economic Policies (WSJ)
• Citigroup, JPMorgan Said to Put Currency Dealers on Leave (BBG)
• Watchdog: Syria Destroys Chemical-Arms Equipment (WSJ)
• Kynikos Alumni Start Hedge Fund Betting on Declining Stocks (BBG)
• China state media calls for stern action after Tiananmen attack (RTRS)
• IMF warns of financial shock risk to Africa (FT)
• Insurers Oppose Obamacare Extension as Danger to Profits (BBG)
• BoJ content to ignore Fed tapering and go its own way (FT)
• U.S. attorney wants DOJ to take civil action against BofA (RTRS)
• NSA Fallout Hits AT&T's Ambitions In Europe (WSJ)

It was as if a million Warren Buffetts cried out in terror and were suddenly silenced. That is an artist's impression of what happened overnight following news that McDonalds would, after 40 years of serving the red tomato paste in its global restaurants, drop the use of Heinz ketchup from its stores. The apparent reason: executive bad blood due to the appointment of Bernardo Hees, the former CEO of biggest rival Burger King, as the current head of Heinz following the Berkshire purchase of the company in February, in the process making the John Kerry estate even richer.

Just as it is easy being a weatherman in San Diego ("the weather will be... nice. Back to you"), so the same inductive analysis can be applied to another week of stocks in Bernanke's centrally planned market: "stocks will be... up." Sure enough, as we enter October's last week where the key events will be the conclusion of the S&P earnings season and the October FOMC announcement (not much prop bets on a surprise tapering announcement this time), overnight futures have experienced the latest off the gates, JPY momentum ignition driven melt up.

"It is really going to end badly," is the ominous warning that Damien Cleusix has issued to his clients as he believes we are now reaching the top of the secular bull market. Crucially, he sees US stock markets as "grossly over-valued" but that it is hidden from most people's perceptions because (just as in 2000 and 2007) there are marginal sectors that make the 'aggregate' seem reasonable (not to mention the dreams of forward earnings.) His novel approach of a point-in-time Price-to-Sales comp shows the median valuation its highest in 23 years.. and Alan Greenspan's infamous "exuberance" valuations in 1996 were 40% below current levels of elation. Today, the big difference with 2000 and 2007 is that government and central banks have already spend a lot of firing power to "make believe" that everything is fine again. He concludes, "there will be no place to hide when the tide turns."

• Headline of the day: U.S. Risks Joining 1933 Germany in Pantheon of Deadbeat Defaults (BBG)
• As Senate wrestles over debt ceiling, Obama stays out of sight (Reuters)
• The "Truckers Ride for the Constitution" that threatened to gum up traffic in the capital was a dud as of Friday afternoon (WSJ)
• China New Yuan Loans Top Estimates as Money-Supply Growth Slows (BBG)
• Vegetable prices fuel Chinese inflation (FT)
• China Slowing Power Use Growth Points To Weaker Output Data (MNI)
• London Wealthy Leave for Country Life as Prices Rise (BBG)
• Gulf oil production hits record (FT)
• Every year like clockwork, analysts start out bizarrely optimistic about future results, then “walk down” their forecasts  (WSJ)
• Weak Exports Show Limits of China’s Growth Model (WSJ)

As Warren Buffet openly states that he believes that a default on US debt will be catastrophic and that lawmakers in Congress need to get their act together and get the federal government back to work by passing the budget we might well wonder if it’s just for show or if he really believes that.

We identify the six investment themes that look likely to generate alpha over the coming decade.

• U.S. Government Shut Down With No Quick Resolution Seen (BBG)
• 12 House Republicans now say they’d back a ‘clean’ CR (WaPo)
• Republicans’ 2014 Senate Edge Muddied by Shutdown Message (BBG)
• Obama Shortens Asia Trip Due to Government Shutdown (WSJ)
• Fed Said to Review Commodities at Goldman, Morgan Stanley (BBG)
• Foreign Firms Tap U.S. Gas Bonanza (WSJ)
• Behind Standoff, a Broken Process in Need of a Broker (WSJ)
• Japan Awaits Abe’s Third Arrow as Companies Urged to Invest (BBG)
• Microsoft investors push for chairman Gates to step down (Reuters)

• Government Heads Toward Shutdown (WSJ), First U.S. Shutdown in 17 Years at Midnight Seen Probable (BBG), Congress in game of chicken (RTRS)
• Italian Premier Pursues Last-Ditch Rescue of Government (WSJ)
• Election risk rattles Italian government bonds (RTRS)
• Obama and Ryan Stay on Sidelines on Budget (WSJ)
• Volcker Rule Costs Tallied as U.S. Regulators Press Deadline (BBG)
• Faltering Chinese Factory Growth Adds to Rebound Fears (FT)
• Health Law Hits Late Snags as Rollout Approaches (WSJ)
• Apple Overtakes Coca-Cola as Most Valuable Brand, Study Finds (BBG)
• Euro-Area September Inflation Slows More Than Forecast on Energy (BBG) - Puting will fix that shortly