Tuesday, October 30, 2012

The East Coast In Pictures: The Morning After


Stunning pictures of the devastation the east coast wakes up to the morning after.




Now The Rats Are Sinking The Leaking Ship


While the massive population of New York City is awfully impacted by Sandy, there is a more populous and even more caustic population that is struggling with the aftermath: Rats! As Forbes notes, the NYC Subway is notorious for its rat population and with all five subway tubes now submerged, one can only imagine where these cute cuddly rabies-wielding devil rodents will make their new homes. "Rats are incredibly good swimmers and they can climb" is hardly the reassuring news lower Manhattan homeowners were looking for, and as the Daily Mail notes, this could bring infectious diseases such as leptospirosis, hantavirus, typhus, salmonella, and even the plague into human contact. On the bright side (well not really), rats don't need to bite a human to transmit its gross payload; rodent feces and urine can spread conditions like hantavirus just as easily - get long hand sanitizer stocks!


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When ¥11 Trillion Is Not Enough: Japan's QE 9 Disappoints, Halflife Zero, Time For QE 10

It was only yesterday that we pointed out the ever decreasing halflives of central bank interventions. We are grateful that none other than the biggest intervention basket case of all came out and proved us 100% correct, when the BOJ announced none other than QE 9 just one month after the impact from QE 8 fizzled about 8 hours after it was disclosed. This time around, the destructive "benefit" to the JPY was negative from the first second, resulting in the first instance of monetary easing that.. wasn't. Japan just came up with a brand new New Normal concept: tightening through easing, when its ¥11 trillion intervention proved to be woefully insufficient for a market addicted to ever more liquidity injections.


Eric Sprott On America's Great Endangered Species: "The 99%"

Other than some obligatory arrests for disorderly conduct, the Occupy Wall Street movement celebrated its one year anniversary this past September with little fanfare. While the movement seems to have lost momentum, at least temporarily, it did succeed in showcasing the growing sense of unease felt among a large segment of the US population – a group the Occupy movement shrewdly referred to as “the 99%”. The 99% means different things to different people, but to us, the 99% represents the US consumer. It represents the majority of Americans who are neither wealthy nor impoverished and whose spending power makes up approximately 71% of the US economy. It is the purchasing power of this massive, amorphous group that drives the US economy forward. The problem, however, is that four years into a so-called recovery, this group is still being financially squeezed from every possible angle, making it very difficult for them to maintain their standard of living, let alone increase their levels of consumption.


Selling Short

Admin at Jim Rogers Blog - 3 hours ago
I don`t like to sell something short unless it`s unbelievably expensive. - *in Hot Commodities* *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.* 

Austerity Will Not Be The Path To Prosperity in Western Economies

Eric De Groot at Eric De Groot - 3 hours ago
Hubert Hoover chose austerity as the path to prosperity in 1930. This choice handed the 1932 election to Roosevelt. Roosevelt proposed in his first "hundred days," a sweeping program to bring recovery to business and agriculture, relief to the unemployed and to those in danger of losing farms and homes, and reform, especially through the establishment of the Tennessee Valley... [[ This is a content summary only. Visit my website for full links, other content, and more! ]] 

The Invisible Hand Is A Master of What the Public Ignores

Eric De Groot at Eric De Groot - 3 hours ago
Those frustrated by timing gold have two choices. Remove opinion and emotion by (1) turning off the quote machine and refrain from using leverage going forward, or (2) through mathematical study of money flows, confidence, and time to interpret the market. The latter is much harder than the former. Those expecting gold to transition from the power D-wave decline (DOWN) to C-wave... [[ This is a content summary only. Visit my website for full links, other content, and more! ]] 

The Chinese Economy Is Slowing Down Rapidly

Admin at Marc Faber Blog - 3 hours ago
The Chinese economy is slowing down rapidly. In my opinion, it is not growing at any more than 4 percent now. - *in Economic Times* *Marc Faber is an international investor known for his uncanny predictions of the stock market and futures markets around the world.*


From One Closing Ramp To Another


Presented with little comment - for any comment would simply end in ridicule and exasperation - but it seems quite clear that more than a few algos feel the need to keep S&P 500 futures above 1400 into the month-end and OPEX. S&P futures closed at 1411.25 (+3.75 from Friday's close).


As The Hurricane Damage Tally Begins, Here Is Who Pays

While it is too early to estimate the ultimate losses wreaked by Hurricane Sandy in the last 24 hours, we thought it useful to start gauging relative exposures and which companies are the most exposed. As it stands, Hurricane Katrina remains #1 of all US Catastrophes as the most-costly at $46.6bn (2011-equivalents) with 9/11 second at $38.5bn; with the worst MTA disaster in its history and the relative wealth in the areas affected, one can't help but feel like Sandy could be up there. The P&C insurance industry will bear the brunt of personal and corporate losses (as well as federal relief we pre-suppose) and is better capitalized than in the past but as JPM notes, initial estimates of losses tend to be revised upwards. The most exposed insurer is State Farm with an 11.4% share of all potential liability lines in the states impacted, followed by Allstate and Travelers. We finally note that when the P&C industry experiences losses of this magnitude, it typically leads to increased pricing for an extended period of time (as they rebuild capital bases).


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New York Paralyzed As Subways Shut Down Indefinitely: Subway Chief: "Worst Disaster Ever"


As everyone who has been to New York City knows, without its underground arteries - the subway system - the city is if not dead, than certainly in an indefinite coma. By that logic, New York will not get out of the critical ward for many days, because hours ago the head of the New York City’s transit system just called Hurricane Sandy "the most devastating event to the city’s subway system ever." At last check seven subway tunnels under the East River had flooded, as did the Queens Midtown Tunnel—and Metropolitan Transit Authority chairman Joseph Lhota said there is “no firm timeline” for when the system would be back up and running. According to other MTA employees it would take between 14 hours and 4 days just to pump the water out of the subway system. We'll take the over. And as long as there are no subways, there are no clerical and support workers, there is no Wall Street, there is no beating heart to the city.


Daily Market Re-Cap: October 30

Equity markets in Europe traded higher today, supported by solid corporate earnings, further monetary policy easing from Japan, as well as what can only be described as “less bad” GDP report from Spain. Also, commodity complex benefited from upward revision to China’s GDP estimate by analysts at Bank of America (Q4 GDP estimate now stands at 7.8% vs. Prev. view of 7.5%). Decent demand for the latest debt issuance saw IT/GE 10s tighten by c.5bps, with SP/GE 10s also seen tighter by 3bps.


Frontrunning: October 30


  • U.S. Super Storm’s Record Flooding Lands Blackout Blow (Bloomberg)
  • Sandy Carves a Path of Destruction Across the U.S. East Coast (WSJ)
  • Losses May Exceed Those of 2011 Storm (WSJ)
  • Hurricane Sandy Threatens $20 Billion in Economic Damage (Bloomberg)
  • Huge fire in Sandy's wake destroys dozens of NYC homes (Reuters)
  • Possible levee break in New Jersey floods three towns (Reuters)
  • Apple Mobile Software Head Forstall Refused to Sign Apology (WSJ)
  • Stagflation in Spain (Bloomberg)
  • German Oct. Unemployment Rose Twice as Much as Forecast (Bloomberg)
  • A declining Japan loses its once-hopeful champions (WaPo)
  • Unable to copy it, China tries building own jet engine (Reuters)
  • Obama Signs Disaster Declarations for NY, NJ (YNN)

With American Markets Shut For Second Day, China And Japan Come To Its Rescue

With the stock markets of the "developed world" in limbo for the second straight day and leaderless as New York is paralyzed, and the US was set to be closed for a second straight day, and with futures tumbling to their lowest level in over 2 months overnight, it was time for the East to step up. And step up it did! First, it was China's turn, which while still refusing to ease outright, conducted a massive 395 billion yuan reverse repo - this operation is the biggest on record, according to Bloomberg data going back to 2004, which in turn sent China's seven-day Repo rate plunging the most since January. And because this whopping injection would prove to be promptly internalized, a few short hours later Japan followed with nothing less than QE9! Just around 2 am eastern, the BOJ announced the 9th installment in its neverending monetary farce, when it said it would proceed to monetize an additional Y11 trillion in assets. From BusinessWeek: "The BOJ expanded its asset-purchase program by 11 trillion yen ($138 billion) to 66 trillion yen, the central bank said after a policy meeting today. The range of forecasts in a Bloomberg survey was from 10 trillion yen to 20 trillion yen." Of course, in this bizarro world in which intervention is the only thing left, the latest Japanese QE had an immediate and opposite effect of that planned, sending the USDJPY lower the second it was announced, as the amount announced was disappointing to most who had expected even more easing, and the halflife was for the first time in recorded monetary intervention history, absolute zero! But at least this failed intervention for Japan, helped America, sending ES from 1393, a full 13 ticks higher, where they are now. And so the epic defense of 1400 (and 1.2900 in EURUSD) continues for a 5th straight day!





Today’s Items:

First…
Panic at the Bundesbank
http://maxkeiser.com
It has hit the fan at the Bundesbank folks. Bundesbank may have withdrawn its bullion in self-protection since it did not, apparently, have its own specifically allocated bars in London. In addition, the German gold bars stored in the New York Fed may no longer be there as they may have been sold off a long time ago. Hell, if you have an American Gold Eagle, you may be physically holding a part of that German gold that was supposed to be at the New York Fed. No wonder, officials are Bundelesbank are freaking out; however, they may need a clue as to where the gold went. hmm…

Next…
$2 Billion in Gold Smuggled into Dubai
http://www.wealthwire.com
36 tons of gold has been smuggled into Dubai and have been delivered to Iranian buyers in the past few months to satisfy gold demand without adhering to strict Western financial regulations. Yes, as Iran sells oil for gold, the gold just magically appears out of nowhere for the oil trade.   How is that for a clue Bundesbank?

Next…
Global Economy Is Slowing
http://www.cnbc.com
Warren Buffet is saying that while the American economy may be doing better than Europe, the entire global economy is definitely slowing. Buffett has also given a strong endorsement to Benji Bernanke for a third term, saying he’s done an “absolutely superb job.” Yes, if his job is to prop up criminal banks and screw the American people.   Yes, he sure has.   Even with his endorsement, he goes on to say that he is worried about the Fed’s expanding balance sheet.  Well Warren, so are we.

Next…
Countries With Zero Income Taxes
http://www.cnbc.com
Here are a few…
1. United Arab Emirates
2. Qatar
3. Oman
4. Kuwait
5. Cayman Islands

Next…
High Executives Suddenly Dumping JP Morgan Stock
http://www.silverdoctors.com
Many of JP Morgan’s high level executives have dumped a large number of shares that could be described as unusual activity. Do they have inside knowledge of what is to come? We will see.

Next…
Scrap Electoral College?
http://thehill.com
Many politicians, from Gore to Obama, want the electoral college scrapped. They prefer the idea of the popular vote to decide the Presidential election; however, the electoral college was created to prevent corrupt political machines from deciding elections. This process forces candidates to visit other areas other than the few largest cities in the US. With that said, the winner-take-all for a state’s electoral votes should be scrapped. The Congressional District method, as in Maine and Nebraska, would force each candidate go after each congressional district in a state.   The use of the Congressional District method is more indicative of a popular vote and keeps the political machines in check.    For an idea of a political machine, one only look at Chicago or even Tammany Hall.    Unfortunately, this method does not address voting machine corruption.

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

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