Remember when we said the Citi numbers were a miserable joke? Apparently at least two people (not Jim Cramer who absolutely loved Citi's "hairless" result) were aware of this:
- CITIGROUP NAMES MICHAEL CORBAT AS CEO VIKRAM PANDIT STEPS DOWN
- CITIGROUP PRESIDENT-COO JOHN P. HAVENS ALSO RESIGNS
- CITIGROUP NAMES MICHAEL CORBAT AS CEO VIKRAM PANDIT STEPS DOWN
- CITIGROUP BOARD UNANIMOUSLY ELECTED CORBAT TO CEO
- CITIGROUP SAYS HAVENS HAD BEEN PLANNING TO RETIRE AT YEAR END
Greek Troika Talks End Abruptly Following "Complete Disagreement"
What the Spanish rumor of a bailout lite (as a reminder, the full blown Spanish bailout has already been largely priced in, and today's action is a very confused market pricing in a second, bailout-lite) giveth, Greece taketh away.Germany Open To Mini Spanish Bailout, Ball In Rajoy's Court Now
Curious why the EURUSD has taken off like a stung dog again? The same reason as always: posturing out of Germany that contrary to previous Reuters misreports, it actually is happy with Spain doing a mini-bailout. To wit:- GERMANY OPEN TO PRECAUTIONARY CREDIT FOR SPAIN, LAWMAKERS SAY
Spain Bailout Lite Rumor Rejected
First the Greek Troika fiasco, and now the only reason stocks had to ramp today, just got rejected:- SENIOR GERMAN LAWMAKER SAYS MEDIA REPORT ON SPAIN APPLYING FOR PRECAUTIONARY CREDIT LINE "OVER-INTERPRETED" HIS COMMENTS
- SENIOR GERMAN LAWMAKER SAYS WAS NOT REFERRING TO SPAIN IN HIS COMMENTS TO BLOOMBERG
C-Wave Rally In Gold Is Coming
Eric De Groot at Eric De Groot - 28 minutes ago
A big rally driven by a flight to safety/quality from the ever-expanding
debt crisis is coming. Unfortunately, today’s short-term traders tend to
care more about when than why. This bias drives more failure than success
stories in this business. The A-wave pauses (dips) represent price building
cause in order to jump the creek with force. This process is also known as
the accumulation of...
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content, and more! ]]
Further Dollar Weakness Ahead
Eric De Groot at Eric De Groot - 2 hours ago
The best looking horse in the fiat glue factory syndrome has kept the U.S.
Dollar Index confined to a trading range since 2008. This fact has neither
prevented gold from hitting new, all-time highs or reversed the strong,
inverse dollar/gold relationship (chart 1). Chart 1: Gold and US Dollar:
Major Currency Index Change (YOY) The U.S. Dollar Index's trading range...
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content, and more! ]]
Video: Jim Rogers On CNBC`s Closing Bell
Admin at Jim Rogers Blog - 3 hours ago
*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.*
Video: Gold & Precious Metals Outlook
Admin at Jim Rogers Blog - 4 hours ago
*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.*
Drifting Through Stagnant Seas Towards the Gathering Storm
With Equity Traders 'Longest' Since 2008, Will History Repeat?
We noted yesterday that NYSE short-interest dropped to a five-month low removing much of the kindling for a centrally-planned world of goal-seek'd equity wealth creation. So when we hear that sentiment is so bad, and everyone's bearish - the simple fact is: they are not. To wit, the S&P 500 e-mini futures contract - the most liquid equity trading vehicle in the world - has pushed to its most
net-long position since December 2008. The last time equity traders
were this net-long, the S&P fell 22% in the next 11 days. The
psychology may be different - from "surely it can't drop any more"
then to the current "it can't drop much because Bernanke/Draghi has our
back" - but the positioning is just as complacent this time.The Future of America Is Japan: Stagnation
Japan's economy has stagnated for two decades despite the global economy experiencing one of its greatest economic booms ever.
Japan continues to avoid fiscal or financial crisis, and perhaps it can
do so for decades to come. But we should note that Japan has had the
incredible, once-in-a-lifetime tailwind of a global boom for the past 23
years. That has enabled Japan, and all the other developed economies,
the means to avoid facing their structural and demographic problems. If
Japan's economy has stagnated during a global boom, what will it do
during a global bust? Japan's stable stagnation will continue in a linear fashion--until it doesn't. China Continues To Boycott Treasurys As Japan Prepares To Become Largest Foreign Holder Of US Paper
Where there were notable developments in today's TIC report, was in the composition of buyers of US paper, which showed that for yet another month, there has been virtually no buying interest in US paper by the biggest non-Fed holder: China, whose total TSY holdings were $1,154 billion, down $12 billion since the beginning of the year, and down a whopping $125 billion from a year ago. Ironically that other massively indebted country, Japan, which has Y1 quadrillion in its own public debt to deal with, for a debt/GDP ratio will above 200%, continues to load up on US paper, as the biggest paper ponzi scheme continues going ever higher and nothing possibly can get in the way. In fact, as the chart below shows, the difference between total Chinese and Japanese holdings has declined to a record low $32 billion, and will likely see Japan surpass China as the biggest holder of US paper very soon.
Confusion Reigns In Europe
Chatter is that Rajoy is waiting for conditions to get worse so he can garner easier terms for a Spanish Bailout and seek a compromise whereby he can take a rescue with honor intact has been found.
But broadly speaking, confusion reigns in Europe as we wonder how the
European Elites will fudge a third bailout for Greece and the fact that
the IMF (as we noted here) have admitted that austerity doesn't work how they thought it should/would.
But don't expect anything sudden to replace austerity – it remains the
only option today, though the debate has begun. So what about something
utterly radical such as Gavyn Davies in the FT yesterday where he wrote:
“One radical option which is now being discussed is to cancel
(or, in polite language, “restructure”) part of the government debt
that has been acquired by the central banks as a consequence of
quantitative easing (QE).” How
will the central bank be recapitalised if it writes off its assets
without money printing – why not when inflationary expectations are low? And what would it do to banks?Vikram Pandit Bottom Line: Over $260 Million For A 90% Stock Drop
Here
is the bottom line. From the day Pandit took control in December 2007
until today, C stock is down 90%.......Even as Pandit has been paid a
total of over $260 million during his CEO tenure, even
including his famous $1 comp received in 2010. While CEO of Citigroup
in 2007, Vikram Pandit earned an annualized compensation of $3,164,320,
which included a base salary of $250,000, stocks granted of
$2,914,320, and options granted of $0. In 2008, he earned a total
compensation of $38,237,437, which included a base salary of $958,333,
stocks granted of $28,830,000, and options granted of $8,432,911. In
2009 he received total compensation of $128,751, including base salary
of $125,001; In 2010 he received total compensation of $1,00; In 2011 he
received total compensation of $14,857,103 including base salary of
$1,671,370. Oh, and this number includes the $165 million Pandit
received for his low performing hedge fund which was purchased by Citi
in 2007, and was closed by Citi a few months later for epic
underperformance.Except For Food And Gas, September Inflation Barely Higher
September core CPI, ex such trivial, hedonically displacable items as food and energy (remember: when in doubt, just nibble on your obsolete first generation iPad, for which you waited hours in line - cause Bill Dudley said so) rose a tiny 0.1%, on expectations of a 0.2% pick up. Of course, for those lucky few who still get to eat and/or have a job to drive to, inflation rose by 0.6% in September from August, higher than expectations of a 0.5% increase. Luckily, in America the intersection of the Venn Diagrams for those who i) eat and ii) drive is so small it is barely worth mentioning...Meet Michael Corbat - Citi's New CEO
The Goldman Party Is Back As Prop Revenues Soar, Average Compensation Surges To $404,172
Goldman is back. After the market beating hedge fund, which unlike its peers needs no DVA/CVA or loan loss releases to pad its numbers, was forced to exist in the scandalous shadow of its larger peers (coughjamiedimoncough), the tentacled one is back to making waves on its own, following a Q3 EPS beat of $2.85 on expectations of a $2.28 print, and revenues of $8.35 billion on expectations of $7.18 billion. The reason for the beat? A surge in Investing and Lending (aka Prop trading) revenues, which is the biggest quarterly variable, and which soared to $1.8 billion in Q3 from a paltry $203 million in Q2, and from a major loss of $2.5 billion in Q3 of 2011. All other business segments were in line, with IB down modestly from Q2, Client Flow in FICC in line sequentially, Client Flow in equities rising modestly due to a jump in Equities Client Execution, and a sequential drop in Investment Management. And that's it: no balance sheet or accounting gimmicks, which one has to at least give GS credit for. The bottom line for GS employees as a result of its hedge fund once again performing as expected? With compensation margin fixed firmly at 44% of net revenues, this means employee comp provisioning soared to $3.675 billion, far above the $2.9 billion in Q2 and $1.6 billion in Q3 2011. It also meant that the average comp for the firm's 32,600 in total staff at period end (up from 32,300 in Q2 and 32,400 in Q1) is now an average $404,172, the most since Q2 2011. It just may be a great bonus year for Goldman after all.
Frontrunning: October 16
- Hillary Clinton Accepts Blame for Benghazi (WSJ)
- In Reversal, Cash Leaks Out of China (WSJ)
- Spain Considers EU Credit Line (WSJ)
- China criticizes new EU sanctions on Iran, calls for talks (Reuters)
- Portugal sees third year of recession in 2013 budget (Reuters)
- Greek PM says confident Athens will secure aid tranche (Reuters)
- Fears over US mortgages dominance (FT)
- Fed officials offer divergent views on inflation risks (Reuters)
- China Credit Card Romney Assails Gives Way to Japan (Bloomberg)
- Fed's Williams: Fed Actions Will Improve Growth (WSJ)
- Rothschild Quits Bumi to Fight Bakries’ $1.2 Billion Offer (Bloomberg)
Overnight Sentiment: Pre-European Summity
If yesterday it was Greece that the market was once again inexplicably enthused about, today it is Spain's turn, which is once again in the open-ended action crosshairs, following an unsourced (are there any other kind these days?) report by the FT, saying the country with the 25% unemployment is prepared for an imminent bailout request (contrary to a previous report by Reuters saying the ETA on this is November). That these are simply more bureaucratic tests to gauge the market's response is by now known to all - the truth is nobody knows what happens even if Spain finally requests a (long overdue and priced in) rescue. Because even with bond yields briefly sliding, they will only ramp right back up, even as the Spanish economic deterioration continues. But that bridge will be crossed only when Rajoy is prepared to hand in his resignation together with a signed MOU to a Troika boarding commission. In other news, Spain sold €3.4 billion in 1 year Bills at a yield of 2.823% compared to 2.835% last, and €1.46 billion in 18 month Bills at a yield of 3.022% versus 3.072% last. Since both of these are within the LTRO's maturity (whose 1 year anniversary, and potential partial repayments, is coming fast in January) the bond was a token exercise in optics. Elsewhere, German ZEW Economic Sentiment rose more than expected from -18.2 to -11.5 on expectations of a -14.9 print, despite the ZEW's Dick summarizing the current Eurozone situation simply as "bad", and adding that "downward risks are more pronounced than upward." Confirming his fears was a government official sited by Bild who said that 2013 growth has been reduced from 1.6% to 1.0%. In all this newsflow, the EURUSD has quietly managed to do its usual early am levitation, and was at overnight highs of 1.3015 at last check.European Car Sales Crash Most In 2 Years But Q4 Earnings Hope Remains
Just
when the channel-stuffed world was hoping for some good news, European
car registrations pop up to smack the dream back to reality. A 10.8% YoY decline, the biggest drop in two years, makes it 11 months-in-a-row of dropping YoY comps.
Before the crisis began, car registrations had risen on average 1.7%
YoY each month; in the 4.5 years since they have dropped on average 4.7%
YoY each month. The Eurozone year-to-date is -10.5% with Cyprus (-19.4%), Greece (-42.5%), Italy (-20.5%), Portugal (-39.7%),
and Spain -11.0%. However, Spain's very recent past has been extreme
to say the least with a 36.8% YoY drop from last September.
Interestingly, Land Rovers are up 42.3% YTD while Alfa Romeos are down
31.6% YTD (and Mercedes and BMW down around 1% YTD). But apart from that, Europe is doing great - just look at earnings expectations for Q4. Today’s Items:
The Swiss government see what is happening
all around them and they are taking unusual precautions. The Swiss
army is launching military exercises, with 2000 troops, to respond to
the repercussions of the real possibility of instability in Europe.
The Swiss defense ministry doesn’t not rule out having to deploy troops
in the coming years. You can bet, they will be armed with more than a
Swiss knife.
If you are fortunate to still have a job
in 2013, you will see the Social Security tax withholding rate
increase. It will go from 4.2% to 6.2% to support a program that, in
fact, slipping and sliding into insolvency. For someone, who makes $50,000 a year, this will about an additional $1000 extra they will be paying into the ponzi scheme.
Carlos Slim, valued at about $69 billion,
just put $750 million into several gold mining projects. The move
marks a capital-intensive shift, by the world’s richest man, into the
world’s best currency and inflation hedge. With increased gold buying
from central banks, the new classification of gold as a top-tier asset
next to cash and treasury bonds for banks and unlimited quantitative
easing, gold is going to go up. Remember, one can print currency as
much as they like; however, they cannot print physical gold and
silver. So, after preparing, keep stacking physical.
US Homeowners are suing 12 major banks, claiming that Libor manipulation raised the their mortgage bills.
And when it rains, it pours… The ACLU is also suing Morgan Stanley,
charging that these bastards discriminated against African-American
homeowners and violated federal civil rights laws by providing funding
for risky mortgages. Needless to say, with the massive corruption in
the political and judicial system, these suits, and others like it, will
yield little results.
Even though there are massive environmental changes, it appears that Al Gore’s Inconvenient lie
about global warming has been fully exposed, as new data, compiled from
more than 3,000 measuring points on land and sea, show that the world
had stopped getting warmer 16 years ago. In fact, since 1880, the
world has warmed by a whopping 0.75 degrees Celsius.
The largest 100 public pension funds have
around $1.2 trillion of unfunded liabilities; otherwise known as a gap
that you could drive your truck through. The pension systems reported
a median funding level of a pathetic 75.1% for now, and with the aging
population, this number is going down. So, where will these public
pensions get the the money to pay the huge gap? Well, they will partner with their good buddies in Congress and seize your private retirement accounts of course. Remember, you were warned.
Obama claims that we got back every dime
that the government used to rescue the financial system while the
impartial Congressional Budget Office claims that $24 billion was lost.
While Obama may have gotten back every dime, wouldn’t it be nice if
he got back every dollar?
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