Thursday, October 18, 2012

Here Is Why GOOGLE Has Plunged By 10% (So Far)

While everyone knows that GOOG is halted and may or may not resume trading before market close (and no, RRD merely reported the facts, if only early, and as everyone knows the market has a revulsion to reality peeking during trading hours), few are aware just why it is that everyone dumped the stock which soared to all time highs a few short weeks ago. Here it is, in its full visual splendor - Google's Operating Income, which was expected to come in at $3.536 billion printed at $2.736 billion, a 23% miss!

QQQ Implies GOOG At $660 (-12.5%) - So Far

While GOOG is halted, the rest of the world goes on trading - with 165 hedge funds seeking protection somewhere... QQQ is trading lower, implying a $660 price for GOOG or down 12.5% on the day... so far...

Google...It's All RR Donnelley's Fault

Sorry, it's not the Iranian hackers' fault this time:
This means Dubya, Europe and the weather are all off the hook. It also means that the press release is accurate.

165 Hedge Fund Suddenly Cried Out In Terror And Were Suddenly Silenced

Oops... The second most widely held company after AAPL just destroyed the quarter for 165 hedge funds.

Google Reports Early: Huge Miss Sends Stock Plunging

Google is down over 8% as it reported earnings early and surprised to the downside...
  • *GOOGLE 3Q REV. EX TAC $11.33B, EST. $11.83B            :GOOG US
  • *GOOGLE 3Q ADJ. EPS $9.03, EST. $10.65                  :GOOG US
Full EDGAR filing below...

How '125' Became The Most Important Number For The US Economy

The unending efforts of our glorious central-banking planners to raise asset prices and encourage 'animal spirits' through the trickle-down of unicorn-tears via the wealth effect have side-effects. Unintended consequences of 'leaking liquidity' finding its way into hard assets and 'things that have relatively limited supply' have stalled hopes of a stimulus in China (food inflation) and caused refis to mysteriously lag on misplaced future rate expectations in the US (ZIRP). The biggest 'problem' the central-bankers face, however, is energy prices. The liquidity surges directly impact the price of oil (which is already under pressure from the ever-igniting fears of Middle-East flare-ups). Critically, as Goldman notes, once the price of Brent crude reaches $125, global economic growth becomes challenged and ultimately makes QE self-defeating. This means Bernanke and his cohorts are threading an ever-narrowing needle as crude's price range remains high enough to motivate supply, but not so high as to undermine the global economic recovery - and with a tight physical market, any disruption or 'anomaly' will be hard to jawbone us back from (SPR rumors aside).

Athens Full Day Strike Turns Violent: Tears Gas, Petrol Bombs Exchanged

Same old, same old from the country whose future is supposedly being decided at today's latest (we have now lost count) Eurosummit. Spoiler alert: nothing will be decided until after the US election. From AP: 'Violence has broken out at an anti-austerity demonstration in Athens during a 24-hour general strike, with youths pelting riot police with petrol bombs and rocks. Riot police responded with tear gas to disperse the troublemakers during the clashes Thursday in the capital's central Syntagma Square, as thousands of people marched through the streets. Greek workers are holding their second general strike in a month, protesting new austerity measures the government is negotiating with the debt-ridden country's international creditors." Too bad "rioter" is not a Full Time Equivalent employment position according to the Greek BLS. Or at least not yet.

Are Neo-Nazis Aiding Greek Cops With "DIY Law Enforcement"?

Forget the day-to-day images of riots and protests, the truth on the ground in Greece is far harsher. Just as we warned numerous times, social unrest is escalating rapidly and the extremists are gaining strength and power. One of Greece's neo-nazi Golden Dawn party MPs says "there is already civil war, and Greek society is ready - even though no-one likes this - to have a fight." The BBC's Paul Mason reports on recent demonstrations surrounding the performance of a controversial play as tensions escalated and the Golden Dawn party "de-arresting" demonstrators - pulling them from police detention, as the police do nothing. The somewhat shocking clip below points out the incredible reality that is occurring on the streets of Greece - even as EU leaders claim Greece was not a topic at the EU Summit. The people ask "if we are in a democracy or a dictatorship?" and Golden Dawn (which has 18 seats in parliament) proclaims "On the one side there will be nationalists like us, and Greeks who want our country to be as it used to be; and on the other side illegal immigrants, anarchists and all those who have destroyed Athens several times." As Mason concludes: the social and political outcome of the IMF and EU austerity program, and of the implosion of mainstream politics in Greece, looks like a catastrophe for democracy. "Europe must do something if they don't want a revival of the Third Reich again"

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Overnight Sentiment: Greece Greets Latest Eurozone Summit With 24 Hour Strike

Today Europe awakes to yet another Eurozone summit, one at which such topics as Greece, Spain, the banking union project or a economic/budgetary union will have to gain further traction, if not resolution. In fact Greece could hardly wait and has already launched it latest 24 hour strike against austerity. The same Greece which demands a 2 year, €30 billion extension from Europe to comply with reform, a move which Europe has/has not agreed to as while the core have said yes to more time, all have refused to fund Greece with any more money. Alas the two are synonymous. As SocGen predicts unless there is some credible progress today, all the progress since the September ECB meeting, which has seen SPGB 10 Year yields decline from 690 bps to sub 550 bps, may simply drift away. And as everyone knows, there is never any progress at these meetings, except for lots of headlines, lots of promises (the Eurozone June summit's conclusions have yet to be implemented) and lots of bottom line profits by Belgian caterers. Elsewhere, Spain sold 3, 4 and 10 year bonds at declining yields on residual optimism from the pro forma bailed out country's paradoxical Investment Grade rating. In non-hopium based news, Spanish bad loans rose to a record 10.5% in August from 10.1% previously while the oldest bank in the world, Italy's Banka Monte dei Paschi was cut to junk status. All this is irrelevant though, as no negative news will ever matter again in a centrally-planned world. Finally the only real good news (at least until it is revised)came out of the UK, where retail sales posted a 0.4% increase on expectations of a 0.2% rise from -0.2%.

To Promote The Great European Socialist Revolution, France's Hollande Will Ban Homework

Homework favors the wealthy. This is the position that the increasingly imbecilic President of France is taking in proposing a ban on homework as part of a series of educational reforms. As ABC reports, Hollande sees "education as a priority" but work should be done during school hours rather than at home "in order to establish equal opportunities." But before the children of France rejoice, Hollande is unlikely to garner their future votes, as his proposal also looks to extend the French school week to nine half-days a week to be spread over four, five, or six days (as opposed to the current four days a week with Wednesdays off). Though we may sneer at this oh-so-socialist ideal of 'sharing' the homework load into the school-day, it is perhaps noteworthy that the US still lags France in Math (US 31st in the world vs France 22nd).

Japan And The Exhaustion Of Consumerism

What few seem willing to acknowledge is the solipsistic, narcissistic nature of this reliance on public display of consumerist fantasy for self-identity. All consumerist fashion is based on superficiality and self-indulgence, of course; but if we look at the energy, money and attention "invested" in fashion lifestyles in Japan, we might conclude it is strong evidence that there is plenty of "money and time to burn" in Japan. While that is certainly true, this reliance on consumerist excess for self-identity and pastime is also evidence of a deeply troubled economy and society. Young people have money and time to burn on outlandish costumes because few earn enough to have their own families or flats. They work part-time for low wages and live at home or in tiny one-room apartments. Few own cars because they 1) don't earn enough to support a car and 2) they're uninterested in acquiring status symbols or prestige signifiers. This is not just a generational shift: it reflects a realistic understanding that opportunities for secure, high-paying employment have diminished over the past 20 years. There are plenty of low-level jobs, but few with the guarantees that their parents took for granted.

Gold Holding near Secondary Support Level, but is struggling

Trader Dan at Trader Dan's Market Views - 1 hour ago
As you can see on this shorter term chart, gold has broken the nice STAIR-STEPPING PATTERN that had been in plce since the middle of August. The overhead resistance at $1,800 has proven to be too formidable for the bulls to overcome and thus the market has set back due to a combination of both stale long liquidation and fresh shorting against this resistance line. The market is probing lower looking to see at what price level more demand, especially on the physical market, can be generated. It is important that the line marked, "SECONDARY SUPPORT" does not give way. If it does, gold ... more » 


No Good Option In The Presidential Race

Admin at Jim Rogers Blog - 1 hour ago
"These are the guys who got us into this problem. So why does anyone think they’ll get us out?” - *in MoneyNews* *Jim Rogers is an author, financial commentator and successful international investor. He has been frequently featured in Time, The New York Times, Barron’s, Forbes, Fortune, The Wall Street Journal, The Financial Times and is a regular guest on Bloomberg and CNBC.*


Market Says Equity and Gold Bears Will Get Mauled Again

Eric De Groot at Eric De Groot - 1 hour ago
The message of the market says that the equity and gold bears will get mauled again. Yesterday's new all-time high in the AD(E) illustrates a build up of trend energy on the NYSE (chart 1). This build up comes as the NYSE composite lags behind. This positive divergence says that the equity bears will be mauled again. Chart 1: NYSE Composite &... [[ This is a content summary only. Visit my website for full links, other content, and more! ]]


We Can`t Avoid Recession

Admin at Jim Rogers Blog - 2 hours ago
We can’t avoid recession. Every four to six years since the beginning of the republic we’ve had a slowdown. It’s going to happen again. Do you think we’ve abolished recessions? For 2013-14, you should be very worried and you should prepare yourself. - *in Yahoo Finance * Related ETFs: SPDR S&P 500 ETF (SPY) *Jim Rogers is an author, financial commentator and successful international investor. He has been frequently featured in Time, The New York Times, Barron’s, Forbes, Fortune, The Wall Street Journal, The Financial Times and is a regular guest on Bloomberg and CNBC.*


China Is Growing At Maximum 4%

Admin at Marc Faber Blog - 3 hours ago
“I think at the present China is growing at maximum 4 percent.” - *in the IMF/World Bank annual meetings * * *Related ETFs: iShares FTSE/Xinhua China 25 Index ETF (FXI), United States Oil Fund LP ETF (USO) *Marc Faber is an international investor known for his uncanny predictions of the stock market and futures markets around the world.*


Few Parts Of The World Economy Will Boom Over The Next Few Years

Admin at Jim Rogers Blog - 3 hours ago
"Few parts of the world economy will boom over the next few years, but agriculture will be one of them." - *in Yahoo Finance* * *Related ETFs: ELEMENTS Rogers Intl Commodity Index - Agriculture Total Return ETN (NYSE:RJA), PowerShares DB Agriculture Fund (NYSE:DBA) *Jim Rogers is an author, financial commentator and successful international investor. He has been frequently featured in Time, The New York Times, Barron’s, Forbes, Fortune, The Wall Street Journal, The Financial Times and is a regular guest on Bloomberg and CNBC.*


Morning Mailbox

Eric De Groot at Eric De Groot - 3 hours ago
1. Thanks Roham. I hope the community is beginning to appreciate and better understand the complexity within the movement of capital around the global. Morning Eric No questions today. I just wanted to share my sincere thanks and gratitude for all your work, which is a consistent product of hard work and integrity. Thank you for your contributions to the rest of us.... [[ This is a content summary only. Visit my website for full links, other content, and more! ]]


Summers: 'Hugely Irresponsible' to Dive Off 'Fiscal Cliff'

Eric De Groot at Eric De Groot - 4 hours ago
Austerity, either forced or involuntary, is not an option. Headline: Summers: 'Hugely Irresponsible' to Dive Off 'Fiscal Cliff' Former Treasury Secretary Larry Summers joined the chorus of voices calling on Washington to forge a solution to the massive tax hikes and spending cuts that loom early next year, saying it would be "an act of huge irresponsibility" for policymakers to... [[ This is a content summary only. Visit my website for full links, other content, and more! ]]


New rules, tough talk as Singapore seeks to end tax haven image

Eric De Groot at Eric De Groot - 4 hours ago
Singapore 's economy, well run and managed, is attracting a capital from around the world. Headline: New rules, tough talk as Singapore seeks to end tax haven image SINGAPORE (Reuters) - Billionaire Australians buying exclusive condominiums. Germans moving money from Swiss accounts. Secretive banking laws. Asia's premier wealth management centre. Low tax rates. As Singapore revels... [[ This is a content summary only. Visit my website for full links, other content, and more! ]]


Different Year, Same A-wave Setup

Eric De Groot at Eric De Groot - 4 hours ago
The 'body blocks' during the NY session could very well be politically motivated. Jamming the A-wave rally with high-octane paper supply, however, is a common delaying tactic used at critical resistance zones (chart). Either way, the delay as Jim suggests will be limited. The up trend will pick up speed once this supply quietly disappears after the... [[ This is a content summary only. Visit my website for full links, other content, and more! ]] 

Propaganda and Perception Management, and the Process of Dehumanisation

Google Threatens Cutting Off French Media Sites In Protest Over Local Content Subsidy Law

Two weeks ago we reported that the first unintended but perfectly expected consequence of the French socialist revolution, was the plunge in Paris luxury real estate prices as in the aftermath of Hollande's plan for a 75% millionaire tax, the wealthy promptly decided it is time to seek greener pastures and have launched a housing firesale, flooding the market with expensive (but getting cheaper by the day) housing. Now, we find that another consequence of Hollande's creeping government-enforced subsidies to uncompetitive sectors (coming soon to an insolvent country near you) may be none other than the French internet, as the world's biggest agregator of content, Google, is threatening to boycott French media websites if France demands it start paying for linked content.

A Small Printed Note Saying "Wait!"

The world is running down a quite slippery slope in its attempt to avoid calamity. The political machines in Europe and the United States and to a real but lesser extent in China have passed the hat to their central banks because either they cannot or will not face up to the severity of their problems. This “faith based initiative” is misplaced, as liquidity and faith are driving the boat and derelict accounting is providing the fuel. The United States, having moved far past the “safety net” that has always been in place, are faced with a very real choice between Socialism and Capitalism. In Europe the problems are also of a fundamental nature as the definition of “More Europe” in Germany is decidedly different than the definition in Spain. But the fantastical belief that the Central Bank will wave it magic wand and make everything all good again is the stuff of Mommy kissing the boo-boo and everything will be just fine.

Philly Fed Beats Even As Core Components Deteriorate

The ridiculous economic data continues. Those looking at the headline Philly Fed, which jumped from -1.9 to 5.7, trouncing expectations of 1.0, such as the NY Fed's Simon Potter are pushing buy buttons left and right. And yet anyone who takes the 2 minutes to look at the internals, such as the collapse in the Number of Employees Sub-Index, which tumbled from -7.3 to -10.7 (the lowest since September 2009), the decline in the Average Employee Workweek, or the surge in Prices Paid from 8 to 19, double the change in Prices Received which means plunging corporate profits, or the ever critical New Orders which declined from 1.0 to -0.6, and one can see why this is a report only an Econ Ph.D-cum-Central Planner can love. Finally adding insult to injury, is the 6 month forecast, which unlike all other regional Fed diffusion indices, collapsed by half, from 41.2 to 21.6, as the Hopium at least in the city of brotherly mugging appears to be running out. Stocks kneejerk in every possible direction hoping the Fed will provide a direction.

Goldman Lowers 2013 Brent Price Target From $130 To $110

Translation: Goldman is now buying Brent from its clients, aka Goldman 101.

Reality Storms Back As Initial Claims Explode Higher By 46K From Last Week's Upward Revised Aberration

So much for last week's aberration initial claims print of 339K (revised higher of course to 342K). With expectations of an increase to 365K, the DOL just came out with a whopper of a miss, the largest in three months, at 388K, an increase of 46K in one week, which was also the highest print in three months. Remember: this number will be revised to 391K next week. So much for single print indicative of a recovery. As the chart below shows, the rate of change was a 13.45% from last week: the highest in five years! So far, there has been no explanation from the BLS or DOL for last week's outlier print. And no, last week's print was not due to  California, which the DOL reported just decreased by 4,979 in the week ended Oct 6, not the required 49K. What is however worse, is that it is becoming increasingly clear that nobody at the DOL knows what is actually going on following a statement by the Labor Dept that "it appeared that state-level administrative issues were distorting the data", and numbers are simply picked out of thin air. Finally, in truly amusing news, those on Extended Benefits have once again started to rise, after dropping to virtually 0 following expiration of state benefits.

Chart Of The Day: Spanish Bad Loans Hit New Parabolic Record

It just refuses to get any better in Spain, whose banks are now aggressively marking down real estate to something resembling fair value. Last month we reported that Spanish bad loans jumped by the most ever, rising by over 1% to just under 10%. Today, last month's number was revised even higher to 10.1%. But the worst news is that the August bad loan total just hit a fresh record of €178.6 billion, or 10.5% of the total €1,698.7 billion in bank loans. Making things worse is that the primary bank funding lifeline - deposits - continues to flow out. That both Spain, and its banking sector are utterly insolvent, is clear to anyone but Oliver Wyman and those who have bought SPGBs (although granted the latter are merely hoping for a quick flip). And the ECB of course. Indicatively, as a % of GDP, this would be equivalent to roughly $2.7 trillion in US bank loans going sour (for more on the collapse of Spanish banking, and the laughable stress test whose worst case has already become the baseline, read here). The chart summarizing this staggering statistic is below.

The Latest Bubble?

Wall Street is doing some wild and wacky things. UBS has just launched a 16-times-leveraged MBS ETN. The ETN, called the ETRACS Monthly Pay 2x Leveraged Mortgage REIT, offers double the return of the Market Vectors Global Mortgage REITs Index – itself an investment vehicle 8x leveraged to mortgage-backed securities. The idea appears to be that with the Fed acting as a buyer-of-last-resort that prices will take a smooth upward trajectory and that 16:1 leverage makes sense for retail investors as a bet on a sure thing.

The World Gold Council Publishes Gold’s Q3 Summary

The World Gold Council issued a summary on gold’s price performance in various currencies during the third quarter.  The report looks at influences that monetary policies and central bank actions have on gold. Gold’s 11.1% USD/oz return in 3Q was in response to central bank stimulus measures. Volatility decreased and generally correlated with other assets. Central banks announced a continuation of their unconventional monetary policy programmes in Q3 which mainly are used to lower borrowing costs and supporting financial markets.Financial assets have responded to central bank policy announcements, but gold's reaction has been the strongest. There is a consensus that these policies drive investment into gold purely due to inflation-risk impact. The World Gold Council believes that there are not one but four principal factors that provide further support to the investment case for gold: Inflation risk, Medium-term tail-risk from imbalances, Currency debasement and uncertainty, and Low real rates and emerging market real rate differentials.

Frontrunning: October 18

  • Germany will pay Greek aid (Spiegel)
  • Spain Banks Face More Pain as Worst-Case Scenario Turns Real (Bloomberg)
  • China’s Growth Continues to Slow (WSJ)
  • Executives Lack Confidence in U.S. Competitiveness (WSJ)
  • Poor Market Conditions will See 180 Solar Manufacturers Fail by 2015 (OilPrice)
  • Wen upbeat on China’s economy (FT)
  • Gold remains popular, despite the doubts of economists (Economist)
  • Armstrong Stands to Lose $30 Million as Sponsors Flee (Bloomberg)
  • IMF urges aid for Italy, Spain but Rome baulking (Reuters)
  • EU Summit Highlights Financial Divide (WSJ)
  • FOMC Straying on Price Target, Former Fed Officials Say (Bloomberg)
  • Putin defiant over weapons sales (FT)

Today’s Items:

Special Operations Teams on Standby for Libya Revenge Strike
Officials say the White House has put special operations strike forces on standby and moved drones into place to hunt down those responsible for the death of the U.S. ambassador, and three others, in Libya.    Well, because of the denial of the upgrade in security requests, one only need look at the US State Department.   Either officials at the State Department were incompetent and/or negligent.   After the attack, they tried to cover their back sides with a lie that a You Tube video was responsible.   Simply put, it does not take special forces and drones to find out who is responsible.

Here are some items from the second Presidential Debate…
1. Romney misstated his position on auto bailouts.
2. Romney made misleading statements on job creation.
3. Obama understated tax savings proposed by Romney.
4. Obama lied about the $3,600 in middle-class tax cuts.
Even if voters did hear what they wanted, they now need to find out “Was it accurate?”

U.S. Suffers a Huge Gold Deficit
The U.S. exported a total of 488 metric tonnes of gold for the entire year in 2011.   The U.S. produced 134 metric tonnes of gold in the first half of 2012.    The top 3 destinations for U.S. gold are Switzerland, the UK, and Hong Kong.    What is interesting is that 96% of Mexico’s 4 million ounces in gold reserves are in London and New York.   The Mexican government better do an audit quickly.

Global Food Reserves Have Reached Their Lowest Level In Almost 40 Years.
Because of multiple droughts around the planet, food reserves are the lowest since 1974.    In 1974, the world population was 4.012 billion, today it is over 7.07 billion.   We can expect to see food prices increase between 5 to 20 percent without factoring in inflation in the very near future.   On top of that, with food costs souring, expect more violence around the world and more 911 calls about fast food orders.

Top 10 Stories Under-Reported by the Mainstream Media
Here are a few…
1. FBI agents responsible for terrorist plots.
2. 22,000 American infants are dead because of Fukushima.
3. NATO war crimes in Libya against innocent men, women and children.
4. What the hell is going on Louisiana with sinkholes and explosions?

25 Signs Of Extreme Social Decay
Here are a three…
1. People have come to accept, as normal, security goons being allowed to touch private parts of children in the name of national security.
2. Sex trafficking has become a raging epidemic in America.
3. Racial hatred is rising to distressing new heights in this country.

26 Things to Get Done before the Global Debt Collapse
Here are a few…
1. Get hard-copy books.
2. Bury your gold and silver.
3. Pay off as many assets as soon as you can.
4. Make color copies of all your important documents.
5. Learn and practice basic gardening skills.

Finally, please prepare now for the escalating economic and social unrest.   Good Day!

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