Tuesday, November 6, 2012

Art Cashin Warns: "Pray It's Not Close - For The Country's Sake"

We have discussed in detail the potential ramifications of a 'close' vote (here, here, and here), and only yesterday UBS Art Cashin opined on the potential for an 'embarrassing victory'. Today, the wizened market participant turns the rhetoric dial to 11 (and rightly so) as he warns "pray it's not close" for fear of the polarization of the populace that could occur. If Florida 2000 was a horror, a close election this year could present six or seven Floridas.

Bill Gross Preemptively Summarizes Today's Election Result In 22 Words

Presented without comment - adding anything to this concise summation of the state of the union is superfluous...

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How To Bring Back Capitalism

"Capitalists seem almost uninterested in Capitalism" is how Clayton Christensen describes the paradox of our recovery-less recovery. In an excellent NYTimes Op-ed, the father of the Innovator's Dilemma comments that "America today is in a macroeconomic paradox that we might call the capitalist’s dilemma." Business and investors are drowning in Fed-sponsored liquidity (theoretically, capital fuels capitalism) but are endowed with what he calls the Doctrine of New Finance - where short-termist profitability guides entrepreneurs away from investments that can create real economic growthWe are trying to solve the wrong problem. Our approach to higher education is exacerbating our problems. There is a solution, it's complicated, but Christensen offers three ideas to seed the discussion.

Spot The Foreign Demand For US Treasurys Under Obama

Few charts capture as effectively the shift in foreign demand for US Treasurys over the past 4 years, or under the Obama administration, as the following two, courtesy of the latest TBAC Q4 refunding presentation. They are quite self-explanatory.

The Imperial Presidency

There are few practical limits on presidential power. This is a key dynamic in the failed presidencies of G.W. Bush and Barack Obama. If you're not familiar with the term The Imperial Presidency, you soon will be. Presidents before G.W. Bush and Obama managed to perform their duties with a handful of Executive Orders--five per term seemed about average. President Bush issued 160 in his first term while President Obama has so far issued 139.  The implicit claim by defenders of essentially unlimited presidential power is that these broad powers are needed to run the American Empire. No Establishment figure would dare openly state that the U.S. operates a military, diplomatic, financial and commercial Empire, but that is nonetheless the case being made to justify the Imperial Presidency: an Empire requires an Imperial President with broad powers to act not just in the domestic economy and society but anywhere in the world. What we need is not a new president but a new presidency. Unfortunately neither candidate has expressed any interest in limiting the powers of the Imperial Presidency.

With Ohio This Election's Deciding State, Here Is The Truth Behind Its "Jobs Miracle"

Forget Florida. This election it is all about Ohio: without Ohio, Romney's winning chances plummet (as can be observed at the following interactive chart), even if one ignores history which is that since 1862 no Republican has won the presidency without winning Ohio. This is a fact well-known to the Obama administration, which explains why the incumbent has spent so much time in the ravaged state, where he has spent so much time ruminating on the the Ohio "unemployment rate miracle." Sure enough, in September, the Ohio unemployment dipped to 7.0%, the lowest since September 2008! On the surface, a tremendous metric and great improvement for a state that would have certainly been firmly in the pro-GOP camp had Obama not been able to hammer on this statistic time and time again. Yet, as always, the unemployment rate is only part of the story. The bigger question is whether or not another data set is being fudged to make the Ohio jobs situation appear better than it is in real life. The answer is, predictably, yes.

Goldman's Guide To The Election In 3 Simple Charts

Ahead of today's presidential and congressional elections, Goldman provides some brief thoughts on various election-night (and beyond) events. From a viewer's guide to the poll-closing times to a discussion of the apparent 'closeness' of the race and post-election market performance, they note that equity performance post 'tight' races has been better than in elections where the winner is more clear-cut. This election has a twist though in that it will be immediately followed by debate on the fiscal cliff, and thus resolution of the election will reduce, but not eliminate policy uncertainty.

Chart Of The Day: The Most Expensive Election Ever In Context

The GDP of Nicaragua: $6.4 billion; the cost of the US presidential election to the two candidates: $6 billion, or $20 in petty cash per every US man, woman and child. Some things Wall Street (with Diebold's help) can buy (because no matter which candidate is left standing after the recount and the legal challenge to the SCOTUS, Wall Street again wins). For everything else, there's BernankeCard.

Daily US Opening News And Market Re-Cap: November 6

Less than impressive macro data from the Eurozone failed to depress investor sentiment and as such, equity markets in Europe traded higher as market participants looked forward to US elections. Heading into the North American open, all ten equity sectors are seen in the green, with technology and financial stocks leading the pack. Still, despite the choppy price action and lack of progress on the much desired Spanish bailout, peripheral bond yield spreads are tighter, with SP/GE and IT/GE tighter by c. 6bps. EUR/USD failed to break below 1.2750 barrier level earlier in the session and since then stages an impressive recovery, partly helped by weaker macro data from the UK.

Democracies, Reforms & Revolutions

Admin at Marc Faber Blog - 1 hour ago
History kind of repeats itself. In democracies, you start with good intentions, and then power becomes polarized among few people and eventually you have either huge changes occurring in a peaceful fashion through reforms or usually through revolutions. - *in a recent interview* *Marc Faber is an international investor known for his uncanny predictions of the stock market and futures markets around the world.* 

Patience Promotes Emotional Balance During AB Transition Flushes

Eric De Groot at Eric De Groot - 2 hours ago
Well-timed release of paper supply initiates the operation and ignites the decline.Fear does the heavy lifting by flushing out the black box trading programs and numerous other weak hands until the invisible hand regains control of the trend before the C-wave advance. Today's flush following the lead of increasing volatility is bigger than its predecessors. Increasing amplitude of 'the chop' also... [[ This is a content summary only. Visit my website for full links, other content, and more! ]] 

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Millennials are eating out less

Eric De Groot at Eric De Groot - 3 hours ago
Millennials (18-to-34 age group) without the benefit of debt-fueled consumption supported in large part by the housing bubble (asset inflation) are eating out less because real (nominal less inflation) service-producing wages have been declining for decades. Service-producing jobs account for 86% of nonfarm payroll jobs. Those that can read between the lines know this trend spells... [[ This is a content summary only. Visit my website for full links, other content, and more! ]] 

Final polls: Too close to call

Eric De Groot at Eric De Groot - 3 hours ago
While the Presidential race remains too close to call, it's not without some certainty. One candidate will send capital underground faster than the other. Does that matter? Yes. Long time readers have come to realize the important of capital and money flows (through constant reference and analytical study of them) in defining an empire's social, political, and economic... [[ This is a content summary only. Visit my website for full links, other content, and more! ]] 

Video: No Government Complies With Anything

Admin at Marc Faber Blog - 4 hours ago
*Marc Faber is an international investor known for his uncanny predictions of the stock market and futures markets around the world.* 

It`s Not That Simple

Admin at Jim Rogers Blog - 4 hours ago
"If all you had to do was to pile up debt and print money, Zimbabwe would be the richest country in the world right now." - *in a recent interview* *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.*

Frontrunning: November 6

  • Obama-Romney: Breaking the Tie (BBG)
  • Fiscal cliff looms over campaign climax (FT)
  • Tough Calls on Deficit Await the Winner (WSJ)
  • Election Likely to Leave Housing Unmoved (WSJ)
  • Regulator Investigating Rochdale Trading (WSJ)
  • Greeks Plan Strikes On Eve of Votes (WSJ)
  • China Communists consider internal democratic reform (Reuters)
  • Wen urges Asia-Europe co-op to promote world economy (China Daily)
  • Italy Said to Reject Bad Bank That May Boost Ties to Sovereign (BBG)
  • IMF warning adds to French economy fears (FT)
  • Europe, Central Bank Spar Over Athens Aid (WSJ)
  • Unlimited Lending May Help Weaken the Yen, BOJ Official Says (BBG)
  • PBOC Official Says U.S. Election Won’t Impact Yuan Level (BBG) - Just the USD level to which it is pegged

Overnight Sentiment: Looking Forward To Today's Big Event

Today it is all about the elections. It is not about last night's relatively surprising RBA decision to not cut rates (on an attempt to create a reflexive feedback loop when it said that China has bottomed; it hasn't, and the RBA will be forced into another "surprising" rate cut as it did previously). It is also not about Europe missing its Service PMI estimate (just like the US), with the composite printing at 45.7 on expectations of a 45.8 print (with both core countries - Germany and France - missing badly, at 48.4 and 44.6 on expectations of 49.3 and 46.2, respectively).  It is not about reports that the EU believes Spain's GDP will again contract more than expected (it will, and certainly without any reports or beliefs). It is not about Greece selling €1.3 billion in 26-week bills even as, according to ANA, its striking power workers have taken 5 power plants online just as winter approaches. It is not about Jean-Claude Juncker telling the truth for once, and saying that Europe is still in crisis, and is facing the viability of the Euro (after saying weeks ago that the Euro is unshakable) and that some countries aren't facing up to their responsibilities. It most certainly isn't about German factory orders finally collapsing as the country is no longer able to delay its slide into full-blown recession, with a September decline of 3.3% on expectations of a modest drop of -0.5%, from the previous decline of 0.8% (the German ministry said that a weak Eurozone and lack of global growth are taking its toll; they will continue taking its toll for years and decades longer). No. It is all about the US elections, with the peak frenzy starting as soon as polls officially close at 8 pm. Everything else is noise.


Today’s Items:

Is Asia Planting the Seeds of the Next Financial Crisis?
Asia’s economies may still be booming, but a worrying amount of private sector credit is laying the groundwork of the next financial crisis.    Private sector credit as a share of gross domestic product has surged over the past few years and is now at an all-time high.   This expanding credit may be indicative of a massive bubble and you know what happens to bubbles…    Pop!

Yuan To Be World’s Reserve Currency?
Even with separate bilateral agreements, the Chinese Yuan may not replace the U.S. dollar because…
1. China’s bond market is not big enough yet.
2. Neither China nor the U.S. wants to be the global reserve currency.
With this, it is easy to see that perhaps another form of money…    Perhaps gold and silver will become the world reserve currency.    And with so much gold and silver showing up in Iran, such as the $1.4 billion worth smuggled from Turkey, this country could be a financial hub.   Time to invade.

About That Gold Stored in Flood-Prone Lower Manhattan
There is 15 million pounds of tungsten err… gold bricks stored at the New York Fed.    25,000 visitors tour the bank’s vaults each year; however, because of the flooding, visits have now been canceled indefinitely.    The New York Fed is tight-lipped about how it secures the planet’s largest concentration of gold; however, unreliable sources claim the Fed has ordered 200 gallons of gold paint for some reason.

Stock certificates Feared Damaged by Sandy
Trillions of dollars worth of stock certificates and other paper securities that were stored in a vault in lower Manhattan may have been destroyed.    Yes folks, we may be now hearing the bogus reason for any possible sell-off in the stock market in the near future.    Yes, I can see it now…    People will blame their collapsing 401K’s on the weather girl.

EPA vs. Coal
In a sign of panic, the EPA has devoted 50 bureaucrats to finalizing new anti-coal regulations that are set to be released at the end of November.   It would essentially ban all construction of new coal-fired power plants.    In short, the EPA is doing its best to destroy the U.S. economy as quickly as possible with as much bureaucratic red tape as possible.

Reasons Why Obama and Romney Are The Same
As you go vote, here are some things to know about Obama and Rommey:
1. Both agree on a nationalized healthcare.
2. Both support NDAA, the TSA and apparently oppose individual liberty.
3. Both support the criminal enterprise known as the Federal Reserve.
4. Both support war in the Mideast; such as Syria and Iran, and and the use of drones.
In short, the differences between these two are little more than the lipstick on a pig.    Sorry, I did not mean to offend pigs.

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

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