Friday, October 19, 2012

Bill Gross Warns "Very Likely' Central Banks Will Cause 1987-Like Crash

What takes other Political Journalism majors (and CTRL-C/V minors) pages and pages of verbose essays full of acronyms and meaningless gibberish to refute, Bill Gross asserts in less than 140 characters.
Needless to say, he is absolutely correct.

Flashback To Mark Haines Commemorating 1987... As Stocks Plunge Most In 4 Months

On a day full of memories (and a market which is down the most in 4 months), we thought (courtesy of Doug Kass) the irreplacable Mark Haines view of the 1987 crash from 2007 (just a few days after what would be the market's absolute top) was worthy of remembrance. What is perhaps most notable in the discussion is Elaine Garzarelli's 'nailed-it' indicator-based call of the top in 1987 and subsequent total 'absolutely bullish' miss in 2007 - as central bank intervention had already removed any 'indicator-based' value from market participants' toolkits and business cycle comprehension. We wonder what Haines would have made of QEtc. and today's exuberant irrationality. Must-watch to 'check' some exuberance at the door.

The Political Black Swan

What if the fiscal cliff collides with a replay of the Bush vs Gore 2000 election fiasco...

Will The Real Economy Please Step Forward...

Dave in Denver at The Golden Truth - 4 minutes ago
*"I'm Dave In Denver and if you really believe that voting makes a difference, then I recommend voting early and often"* It really irritates me when I hear on financial tv and read in the online media/newspapers that the economy and the housing market are "recovering." So I wanted to go over some data that is not widely presented in the above sources of news and let readers draw their own conclusion. My contention is that, while on the surface the trillions pumped into the economy so far has provided a small, nominal "bounce" in the economy, beneath the "veneer" of this highly p... more » 

Another A-wave Delay In Gold Underway

Eric De Groot at Eric De Groot - 9 minutes ago
How many times have we seen gold collapse after the London physical market closes? This elevator shaft style decline is characteristic of a paper operation and should come as no surprise to regular readers. The A-wave delay unfolding as I write transfers ownership of the trend from the strong to weak hands despite limited downside risk. It accomplishes this feat through a fear based chop... [[ This is a content summary only. Visit my website for full links, other content, and more! ]] 

30-year mortgage rates falls to near-record low

Eric De Groot at Eric De Groot - 1 hour ago
The confluence of "too big to fail" and "too important* to fail" policies has sent 30-year mortgage rates near record lows. This is why I often say to myself, hold your nose and buy. This phrase reminds me not to let personal opinion or biases from corrupting the message of the markets. Chart 1: Phlx Housing Index Chart 2: Phlx Banking Index *... [[ This is a content summary only. Visit my website for full links, other content, and more! ]] 

Markets: It’s Going To Get Worse Next Year

Admin at Jim Rogers Blog - 2 hours ago
It’s going to get worse next year. 2013, 2014 – you should be very worried and you should prepare yourself. There are a few parts of the world economy that are going to boom over the next few years – agriculture is one of them. It’s not going to be all disaster. - *in Forbes * *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.* 

France's 'Rich' Tax = Deals on Paris Mansions

Eric De Groot at Eric De Groot - 4 hours ago
The main fallacy of the 'tax the rich' solution is the assumption of immobility. The rich following a path (of least resistance) clearly defined in the history books, however, flees uncertainty with great mobility. While there's a growing number of deals on Paris mansions, who's lining up to buy them? If the flight of physical and intellectual capital... [[ This is a content summary only. Visit my website for full links, other content, and more! ]] 

Retail sales point to stronger economic growth

Eric De Groot at Eric De Groot - 4 hours ago
The economy will continue showing nominal growth as long as retail sales (retailers) lead the broad market higher. Let the experts argue over adjectives chosen to describe the rate of growth. Observation, not opinion, is the key to timing the stock market’s transition from up to down. The stock market's new highs have yet to be confirmed by the S&P retail stock index (chart). We saw... [[ This is a content summary only. Visit my website for full links, other content, and more! ]]

Friday Humor: The Most Downloaded App At The New York Fed Today

Because someone has to generate revenue for Apple.

Checking Out At The Hotel AAPLfornia With 230 Rooms

Is this it? Nobody knows for sure, but just like yesterday's GOOG pogrom sent 165 hedge funds (at least) scrambling for cover (but, but, it is a perfectly efficient market - unpossible), and destroyed their October P&L in a millisecond move, forcing even the CME to lower index margins to avoid margin calls (as we predicted), so today's violent drop in AAPL stock to the furthest below the 100-DMA since June 2011 may test the nerves of all those residents of the hedge fund hotel cAAPLfornia, which at last check was a record 230 longs as of June 30 (and now well higher), many of whom have a cost basis that is now above the current price. Will selling remain cool, calm and collected, or will someone panic ahead of what is sure to be another late day margin call bonanza for the repo desks forcing massively levered beta-chasing hedge funds to dump assets in order to procure the suddenly invaluable margin? Stay tuned and find out.

Europe Ends Winning Week By Giving Half Of It Back

CNBC is convinced - this is just profit-taking, and think about where we have come from? We prefer to base our positioning on expectations of the future as opposed to extrapolations of the past. If only we could ignore the last two days, Europe would look awesome! Every asset class is indeed up for the week: stocks, EURUSD, sovereign bonds, and corporate and financial credit. However, the last 36 hours or so has seen almost half of the week's gain s chaffed away by them pesky profit-takers (apparently). EURUSD is 100pips off Wednesday's highs; Bloomberg's BE500 (broad equity index) is around 2% off Thursday's highs; IG and Financial credit spreads are around 5-10% riskier from Wednesday's tights; Spain's equity market is 3.5% lower than its peak on Wednesday and Italy down 2.5% from its mid-week highs. Sovereigns have remained relatively resilient - giving back only a few bps of their gains this week (Spain/Italy -40bps on the week). But apart from all that - Europe's doing great apparently. Spot the odd chart out (and which do you trust?)

The French Great Socialist Revolution Will Be Homework-Free, And Very, Very Cold

Whereas some may have welcomed the latest development in the Great French Socialist Revolution chronicles, primarily those 8-16 year olds who would directly benefit from president Francois Hollande's attempt to capture the vote of those still ineligible to actually vote, by promising to do away with homework (because it encourages "inequality" as homework apparently "favors the wealthy"), everyone else saw right through it for the sad attempt at populism it was. Luckily, the impact of this idiotic policy, if it were to actually pass, would not be visible for at least a decade at which point French society would be so dumb (not to mention poor) that few would actually care. However, another proposal being currently contemplated in France may have far more immediate terminal consequences to the life expectancies of those personally experiencing the reincarnation of wholesale of socialism. Because as Bloomberg notes, "Heating a French home could soon require an income tax consultation or even a visit to the doctor under legislation to force conservation in the nation’s $46 billion household energy market." Congratulations Europe: in your ongoing crusade of wealth redistribution (when all this could have been averted if you, and the US, had simply allowed the banks who control your society to collapse), you are about to make heating one's home a privilege for the despised Bourgeoisie, an act which must be monetarily punished, and socially ostracized.

AAPL Loses 100DMA (Again) As Trade Size Explodes

Presented with little comment - aside to note the explosion in average trade size today as AAPL plunges back below its 100DMA - BTFD or small doors, large crowds?

Pass The Salt; Pass The Government

How many European nations does it take to screw in a light bulb? Twenty-seven. One from Brussels to identify that the object in question is, in fact, a light bulb. Someone from Northern Europe to hold the bulb. A group from Southern Europe to turn the guy holding the bulb around and around until the thing is screwed in. A person from Germany or France to flick the switch and then the rest of the group, after tea, strudel and champagne to stand in front of the microphones and laud the effort. The end-result from the latest EU Summit is clear: More fluff, more stuff and more "pass the risotto if you please" as no one in America or Europe wants to own up to the very serious problems facing both continents

Spain's Regional Bailout Fund: A Drop In A Bucket Of Insolvency

UPDATE: Ironic timing:- Spanish region Asturias will seek EU261.7m from central govt’s rescue fund for regions
It will come as no surprise to many that the initial size estimates of Spain's regional bailout fund are now being questioned. The government is now 'analyzing' whether the EUR18bn 'temporary' bailout fund needs to be increased. In a word - Yes! As this chart from Bloomberg Briefs shows, the size of the 'help' is pittance compared to the debt-loads of Catalonia alone (which recently sought secession). As Bloomberg's Niraj Shah notes, Spanish regional elections in the Basque country and Galicia take place on Sunday, followed by a ballot in Catalonia on Nov. 25. Prime Minister Mariano Rajoy may prefer to seek a bailout after the elections as a series of defeats for his People’s Party could exacerbate investor concerns about the government’s ability to control spending and revenue and bring down the deficit. Perhaps our 'context' update on Spain's situation last night was rather prescient after all?

Here's What The Machines Are Doing With GOOG Today

We indicated yesterday, as GOOG re-opened, that the day's Volume-Weighted-Average-Price (VWAP) would be a critical level in the next day or two. The earnings SNAFU heard around the world and the sheer mania and herding going into earnings meant only one thing - the big boys will want out in a hurry (big crowds and small doors). And so the onslaught of talking heads appeared to play down this 'aberration', to talk up the future, and explain why everyone should BTFD. The machines, however, told a different story. From the moment we reopened, GOOG was tickled higher by market-maker algos desperate to allow their institutional order-flow out at anything like a VWAP level (the level that their bonuses are judged on and commissions paid from). Sure enough, by the open of the day-session today, we had reached yesterday's closing VWAP and a flood of large block size sell orders hit the market. Watching VWAP today will be key - that's what the machines will be doing as they revert every dip to dump at this mystical level.

Art Cashin On Today's Other Anniversary

Yesterday, we presented Art Cashin's unique perspective on the US equity market's darkest day 25 years ago. However, as Art notes, there was another event 555 years ago that offers some insight into the current state of the world. On this day in 1457, the government banned that most sacred of pastimes - golf. Most notably, Cashin reflects on the eventual backfire from this government intervention - as always seems to be the case.

The New Normal Trendlines

Although we showed these earlier, we believe the charts showing the trendlines in the two most critical components of US household purchasing power deserve to be shown again, without much if any commentary necessary. Just because.

Q3 Earnings Season To Date: Revenue Beats: 41%; Misses 59%

While as Bloomberg reports the EPS beat to miss ratio so far is 68%:32%, the scariest statistic of the day goes to Deutsche Bank who said that "The beat-to-miss ratio... is running 41%:59% for revenue." This means nearly 50% more misses than beats in the earnings season so far. DB continues: "Recall that Q2 was also one where we saw better EPS beat but weaker revenue performance so it seems that companies have been eking out earnings by squeezing costs and wages."  Now as every entry level analysts, Treasurer and CFO knows, there are 1001 ways to boost ESP cut corporate overhead (and those exclude accounting gimmicks, ahem all banks and GE), chief among them of course is laying people off and replacing them with part-timers and temps (something that has been going on in the US for 3 years now as we first showed in 2010), there is precisely zero way to hide the fact that there is simply less demand for products and services at the very top level in a world in which 2% growth, formerly known as stall speed, is the New Killing it, and in which real disposable income just turned negative once again, not to mention the endless collapse in average hourly earnings.

Why The Market Ignored GOOG's Plunge (If Only Briefly)

GOOG’s ill timed oops in the early afternoon dumped the S&P 500 approximately 12 handles from what been shaping up previously as a fourth straight “checkmark” session.  The technology behemoth provided another example of a non-financial firm’s missing earnings expectations by a country mile.  Despite the shocking nature of the disappointment, the TICK never registered a print worse than –925 in the immediate wake of the surprise headline, a highly unusual phenomenon given the aggressiveness of the downward move.  This suggests large institutions stayed with their VWAP buy programs out of confusion or necessity.  We can envision only two scenarios for such adherence to purchasing in the face of clear extremely negative news on, what was at the time, the third biggest stock in America...


Today’s Items:

Why Are Gas Prices Falling?
Gas prices are falling, almost 20 cents in some states, for the following reasons…
1. Less gas used at this time of year.
2. The switch to the less expensive winter grade.
3. Refinery glitches have been addressed.

Feinstein Protects Her Gal Pal (Hillary Clinton)
Diane Feinstein stated that it appeared an intelligence mistake along with inadequate security were to blame for the September 11 terrorist attack.    For some mysterious reason, she fails to mention the State Department’s denial of more security by those in the field.   Now, I wonder why?

London Trader
In the past few days, the London Trader has come out with the following dealing with precious metals…
1. The competition to buy physical gold is becoming extremely fierce.
2. The bullion banks had to halt gold’s advance or the weak shorts would have collapse causing a massive price explosion.
3. The LBMA Ponzi price fixing scheme is coming to an end with the physical silver market being extraordinarily tight.

U.S. to Get Downgraded
Scott Mather, Pimco’s head of global portfolio management, says that almost all sovereigns with poor debt dynamics, like the US, are going to get downgraded.   Only the pace of the downgrades will be different.    In addition, the Congressional Budget Office warns that if the tax increases and spending cuts that start in 2013 happen, then there will be another recession.    So folks, sit back and enjoy the political and economic kabuki dance.

Welfare Spending Jumps 32% in Four Years
From 2008 to 2011, the 80 programs that make up welfare, like food stamps to direct cash payments to the poor, have gone from $563 to $746 billion, or a jump of 32%.

First Brownshirt Class
231 Hitler err…  FEMA Brownshirt err… Corps made history recently by being the first class to graduate.    Unreliable sources claim proud mothers cried as graduates took turns groping them down during the ceremony.    Many will headed to the Gulf Coast to assist with Hurricane recovery and after completing 1700 hours of service, these NAZIS err… FEMA Corp members would receive $5,550.

Get Your Passport Now
Unless you know the dates of all of your mother’s pre- and post-natal medical appointments and the names and phone numbers of people attending your birth, you may not be able to successfully fill out the new Biographical Questionnaire for a U.S. Passport.   In short, if you do not get a passport very soon, you will most likely not be able to get one.

Student Loan Debt Hits Another New Record
At $26,600, the average college graduate’s debt has hit a new record.   The students in New Hampshire, on average, have the highest debt over $32,000.   Nothing says slavery like a mortgage like debt without the house.

Survivalists Health
Having the right tools, firearms, and food storage may not be enough to endure an economic collapse.    Physical strength, endurance, flexibility, adaptability, and mental discipline are all attributes of a true survivor.    Learning to defend yourself should be a worthwhile goal.   Or you could just resort to slapping.

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

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