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.
Gross: The crash on Oct 19 1987 showed that portfolio insurance puts were dangerous. R central bank “puts” in the same category?Very likelyNeedless to say, he is absolutely correct.
— PIMCO (@PIMCO) October 19, 2012
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.
What if the fiscal cliff collides with a replay of the Bush vs Gore 2000 election fiasco...
Because someone has to generate revenue for Apple.
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.
Spot the odd chart out (and which do you trust?)
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.
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?
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?
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.
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.
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 Are Gas Prices Falling?
1. Less gas used at this time of year.
2. The switch to the less expensive winter grade.
3. Refinery glitches have been addressed.
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.
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First Brownshirt Class
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