Is Harry Reid The Most Hypocritical Man In The World?

While Dos Equis has its most-interesting-man, we think we have found the 'most hypocritical'. Until today we thought Sandy Weill was the undisputed champion in this category, but after seeing this clip we think he has strong competition. At around 40 seconds into this lengthy diatribe, everyone's favorite Libertarian Las Vegan utters the most two-faced hypocritical words that he could possible have uttered: "I think we should audit the Federal Reserve". Between Harry Reid's recent vehement anti-Paul behavior and the whip-order that Democrats received on Ron Paul's bill yesterday, this is stunning. While the sell-out nature of this kind of politician does not surprise us, we thought it prudent for all US citizens to understand the true nature of the political class that decides an increasing amount of our day to day lives.

Biderman Batters 'Believe-Me'-Draghi

Somewhat stunned by the market's exuberant reaction to Mario Draghi's 'Believe Me' speech this morning, Charles Biderman, CEO of TrimTabs, sees the slow-motion train-wreck that is the European crisis speeding up and rapidly running out of track. Charles sees the European crisis as "not a solvable problem the way the world works today." Neither Draghi nor any of the bankers even bothers to talk about the real problem of not enough regional income and too much government spending. Draghi's only solution is some form of money printing. "Printing money to pay bills maybe will work over the short term. But long term, it cannot"; if money printing works in the real world why not print and give every one a billion Dollars, Euros or Yen? While governments will do anything to maintain the status quo (and avoid the tough times ahead), Charles succinctly reminds that, "the road to hell is paved with good intentions."

The Cherry On Top: CME Lowers Equity Index Margins By Over 20%

In a week which has seen the Fed telegraphing further QEasing by its favorite mouthpiece, and the ECB promising, but never delivering, both that the ESM would get a banking license, which prevented the EURUSD from tumbling below 1.20 yesterday yet which has been totally forgotten today, and that we should "beeleeve" Mario Draghi that unlike before he will not let the EUR fail, the cherry on top and the one event which removes any doubt that the coordinated events of this whole have had the sole purposes of masking that US corporate success has finally plateaued and it is 'only downhill from here', comes courtesy of the CME which moments ago cut the margin requirements on the bulk of its equity indices by 20-25%.

The Energy Showdown In Argentina

Angering Spain by seizing and nationalizing a majority of Repsol’s shares in YPF and ramping up the rhetoric over the Falkland Islands as exploration deals promise to make the territory a major oil player overnight, Argentina is making few friends in the fossil fuels industry these days. Sam Logan, owner of the Latin America-focused private intelligence boutique, Southern Pulse, speaks to Oilprice.com about the politics of populism behind Argentina’s energy aggression.

 

 

Draghi gooses all bourses higher with hints of shared eurobonds/

Harvey Organ at Harvey Organ's - The Daily Gold and Silver Report - 2 hours ago

Good evening Ladies and Gentlemen: Gold closed up today by $7.00 to $1615.00. Silver fell by 2 cents to $27.43. With markets heading southbound in Asia and in Europe,  Mario Draghi, the ECB chairman, without confirmation from Germany, commented that the central bank might engage in a joint sovereign issue of eurobonds and purchase struggling sovereign bonds in the secondary markets. Both of

 

Talk Of A Gold Bubble Is Nonsense

Admin at Marc Faber Blog - 2 hours ago

Talk of a gold bubble is nonsense. There is no sign of the price surge you saw with the Nasdaq bubble or oil stocks in the late 70s, or the jump in the gold price from $380 an ounce to $800 between November 1979 and February 1980. - *in Arabian Money* Related: SPDR Gold Trust ETF (GLD), Newmont Mining (NEM), Barrick Gold (ABX) *Marc Faber is an international investor known for his uncanny predictions of the stock market and futures markets around the world.* 

 

Gold Daily and Silver Weekly Charts - Cap, Cap, Cap

SP 500 and NDX Futures Daily Charts - Facebook, Starbucks, Amazon

Net Asset Value Premiums of Certain Precious Metal Trusts and Funds

 

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Eric De Groot at Eric De Groot - 6 hours ago

Many of the world’s global citizens have already been forced into 'survival mode' by chronic unemployment, underemployment, and/or a general standard of living squeeze trigged by expenses rising faster than income for years. Survival mode will encompass a larger cross-section of the world’s developed nations as the financial crisis expands and intensifies in 2015. The... [[ This is a content summary only. Visit my website for full links, other content, and more! ]]

 

Housing: Look Out Below

Dave in Denver at The Golden Truth - 8 hours ago

*I don't think we are at the beginning of the recovery. I think we are at the end of a disastrous debt supercycle that has gone on for the last thirty or forty years, really. It started when Nixon defaulted on our obligations under Bretton Woods and closed the gold window. Incrementally, year after year since then, we have been going in a direction of extremely unsound money, of massive borrowing in both the private and the public sector*. - David Stockman, former OMB Director for Reagan and former Congressman I have to admit, I get excited when I put forth a thesis and the data ... more »

 

Video: Global Crash, US Bond Bubble & Chinese Slowdown

Admin at Marc Faber Blog - 8 hours ago

*Marc Faber is an international investor known for his uncanny predictions of the stock market and futures markets around the world.*

Central Banks Are Chomping At The Bit

Will the Fed then just keep printing forever and ever? As an aside, financial markets are already trained to adjust their expectations regarding central bank policy according to their perceptions about economic conditions. There is a feedback loop between central bank policy and market behavior. This can easily be seen in the behavior of the US stock market: recent evidence of economic conditions worsening at a fairly fast pace has not led to a big decline in stock prices, as people already speculate on the next 'QE' type bailout. This strategy is of course self-defeating, as it is politically difficult for the Fed to justify more money printing while the stock market remains at a lofty level. Of course the stock market's level is officially not part of the Fed's mandate, but the central bank clearly keeps a close eye on market conditions. Besides, the 'success' of 'QE2' according to Ben Bernanke was inter alia proved by a big rally in stocks. But what does printing money do? And how does the self-defeating idea of perpetual QE fit with the Credit Cycle relative to Government Directed Inflation (or inability to direct inflation where they want it in the case of the ECB and BoE)?

Which Of These Facebook Analysts Is Not Like The Others?

Yesterday we showed how out of a universe 21 'analysts', just one ended up being correct on ZNGA. The trick part of the question was that the 'analyst' in question was actually a computer quant model. Today, we look at FB whose price has just tumbled to a new all time post-IPO low with a $23 handle. And just like with ZNGA today, where BTIG's Richard Greenfield ended up apologizing for his horrible call, something tells us tomorrow we will get quite a few more apologies too, not least from Greenfield again whose Neutral call will hardly be "good enough" for a stock that has now lost over a third of its value since its market cap.

In Case Of Collapsing Earnings, Expand Multiples And Pray

Both earnings and revenues for 2012 have been cut dramatically in the last three months, rejuvenating a sliding consensus trend for 2012 that began in the middle of last year, and now Q3 expectations are negative YoY for the first time since Q3 2009. However, as we are told again and again, the economy must be doing fine because the market is up so much in that period. In fact, what is even more fun to hear is that the market is cheap (never mind the incredulous hockey-stick expectations for Q4 this year). In fact, the market is not cheap at all. The correlation between the S&P 500 in the last two years and the P/E multiple shows that performance has been driven almost entirely by multiple-expansion alone. Forward P/E is now getting close to recent peaks suggesting the market is far from cheap and on a longer-term view (based on both an as-reported and operating basis), the S&P 500 appears expensive - and perhaps these charts will re-anchor whatever cognitive bias that seems to pervade the long-only manager's herding mentality.

Visual Summary Of AMZN: 263x PE Multiple, 1.2% Operating Margin, $7 Million Net Income And 69,100 Employees

Amazon's AH stock price may be up or down, or sideways, but here are the three charts that make us scratch our heads as we valiantly try to explain how a company which just said it will have 'Operating income (loss) inbetween $(350) million and $(50) million" and currently has a 263x P/E, is worth anywhere close to where it is trading.

Earnings Reality Bites

UPDATE: FB -17%, AMZN -0.5%, SBUX -5.3%
A quick run-down of this evening's catastrophe among the sweetheart hope stocks. From Facebook, Amazon, and Starbucks - not pretty. Top line misses, earnings misses, and outlook guides down... FB -13%, AMZN -2% (was -6%), SBUX (-6%). Via Bloomberg...

• *FACEBOOK 2Q COSTS/EXPENSES $1.93B MOSTLY ON SHR BASED COMP
• *FACEBOOK 2Q ADJ. EPS 12C, GAAP LOSS 8C-SHR
• *AMAZON.COM 2Q EPS 1C, EST. 3C
• *AMAZON.COM 2Q SALES $12.83B, EST. $12.90B 
• *AMZN SEES 3Q NET SALES $12.9B-$14.3B, EST. $14.11B
• *STARBUCKS 3Q EPS 43C, EST. 45C; FORECAST CUT, SHARES FALL
• *STARBUCKS TARGETS FY13 EPS $2.04-$2.14, EST. $2.28 
• *STARBUCKS SEES 4Q EPS 44C-45C, SAW 46C-48C, EST. 48C

But have no fear - Draghi and Bernanke have our backs... so why are all the CEOs cutting outlooks? Don't they 'believe'?

Equities Close Monday's Gap Down On Lowest Average Trade Size Of Year

CRAAPL taketh and Draghi giveth it all back. The question remains - given all the front-running anticipatory moves on the back of jawbone after jawbone, will ECB/Fed action have anything but a brief romance with higher prices when/if it occurs? The S&P 500 pushed up to fill its Monday opening gap-down on a reasonable volume day (heading into T-3 from month-end shenanigans) but the participation is absolutely not what one would expect if this was belief with S&P 500 e-mini futures seeing their lowest average trade size of the year. Gold was a winner again as the USD was sold against everything. Treasuries gave back some of their gains - yields leaking higher by around 3-5bps at the mid- to long-end. Credit and equity stayed largely in sync but the former was quiet and likely being reracked more than traded as it gapped at the open and stayed there. Stocks took off from their broad-risk-asset peers from the day-session open, retested VWAP, then pushed back to highs into the close - ending well above risk-assets' view of the world as correlations fell modestly. VIX ended the day down 2 vols at 17.5% but was unable to close the gap to Friday's close like stocks - which closed (rather coincidentally, given month-end, at June's closing price)

Amazon Misses, Forecasts Inverse Profit

Another epic retail disappointment:

• AMAZON.COM 2Q EPS 1C, EST. 3C
• AMAZON.COM 2Q SALES $12.83B, EST. $12.90B

And the kicker, proving that the company has finally gone "inverese" profit:

• AMZN SEES 3Q OPER LOSS $50M-$350M, EST. PROFIT $119.6M - yes, negative
  
• AMZN SEES 3Q NET SALES $12.9B-$14.3B, EST. $14.11

Mario Draghi promises that whatever AMZN loses in profit, it will make up in volume: "beleeeeve me." In other news, the US consumer is fine.

Greek Deposit Plunge Continues As Tax Inspection Finds Every Business On Zakynthos Broke The Law

On one hand we have Mario Draghi promising he has a magic wand (not a printer - remember the keys to that are now held by Angela Merkel who is on vacation) and to "believe him" that the EUR will survive. On the other we have Greece which is a poster child of everything that is wrong in Europe. And that we summarize as follows: i) an epic and now relentless deposit outflow from Greek banks which continues as all trust in the local banking system is now gone, as €7 billion in deposits or the second biggest amount ever, is pulled and 20% of the entire corporate and household deposit base has vaporized in the past year, and ii) an economy in which it is every man for himself and where nobody pays any taxes any more, period. Good luck Super Mario.

Barofsky On Geithner: "We Should See People In Handcuffs"

There is no point in recapping the ongoing vendetta between former SIGTARP Neil Barofsky and former head of the NY Fed, and current Treasury secretary and resident TurboTax expert Tim Geithner. One need but follow the former on Twitter for a quick and concise sampling of the sentiments harbored vis-a-vis the latter. However, in the following interview Barfosky does touch on some points which in the context of the recent Liborgate, should be brought front and center, especially since the increasingly apathetic US audience seems to not care about one bit (as opposed to their distant cousins across the Atlantic for whom Lieborgate has become a daily distraction). Namely, what Barofsky says is that Geithner and other regulators who allowed Lieborgate to proceed should not only lose their job but we should "see [Geithner] in handcuffs."  Sadly that will never happen as it would actually be a deterrent to future crime among the highest echelons of America: something which is just not allowed to happen in a system whose very survival is increasingly reliant on rampant criminality.

The US Is Not Japan Or Your Average Stagnation: It Is Much Worse

Every day we are told how this recovery is the slowest since WWII and that nothing is working. Well, we think we can trump that for dysphoria. Not only is this the slowest recovery since WWII, it is even slower than the average 'stagnation'. Based on Goldman's analysis of 93 stagnations the US GDP per capita is growing even more stagnantly than ever (and dramatically worse than during Japan's 'lost decade').

A Quick Reminder On The Effectiveness Of The ECB's Bond Buying

Given the anticipation that is now built-in for next week's ECB meeting, we hope that Draghi has a little more up his sleeve than reviving the Treaty-testing, bondholder-subordinating SMP. Presented with little comment is the market's reaction during the last two periods of buying as it seems that Italian and Spanish bondholders are more than happy to know that there will always be a buyer no matter how much they keep selling their exposure down.

4 Reasons Why You Should Stop Believing In Chinese Leadership

Did you know that Chinese government officials are all corrupt? Did you know that many of Chinese statistics look either weird or totally unreliable to a point that even the Vice Premier can’t help admitting it? People outside of China have never really trusted the Chinese Communist Party as far as politics are concerned, and probably never will. However, the seemingly unstoppable growth engine of China has produced a remarkable level of complacency among investors that China is going to do well. While recent economic data from China are mixed at best, the market consensus is unanimously biased towards believing that the second quarter is the bottom. We do not understand the reasons behind the faith in the Chinese leadership as far as running the economy is concerned.  Here are a few reasons why you should just stop believing in the Chinese leadership when it comes to running the economy.

Citi On Draghi: Expect Nothing From The ECB Before The ESM Is Active (In September At The Earliest)

Earlier we heard Goldman's talk down of Draghi's comments, which we will not tire of saying, were absolutely nothing new. Now here is Citi's Jurgen Michel throwing cold water in the face of all those who believe that the ECB (which can't really do more LTROs unless it is willing to accept Zynga's virtual farms as collateral) will save the day with more direct intervention. To wit: "in our view, such action is only likely to be taken after governments have taken action first, i.e. by activating the bond market support facility for Spain and Italy." In other words, nobody believes Draghi, despite his stern warning to "believe" him - everyone wants action out of the ECB head, not talk.

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