Tuesday, November 13, 2012

Samsung Hikes Apple Component Price By 20%

Two months ago, when we commented on Apple's pyrrhic courtroom victory in which it managed to halt sales of older generation Samsung smartphones - a "victory" which would backfire with Samsung phone sales soaring, while AAPL results missed, forcing the company to accelerate its product launch cadence to a ridiculous 3 months with news that the iPhone 5s is already in the works a month after the launch of the iphone 5 -  we said "The paradox here is that AAPL's victory is quite pyrrhic: if and when Samsung feels sufficiently threatened, it can just pull a Gazprom and halt the supply of mission critical components to the world's biggest publicly traded company." Naturally, the hyperbolic all out response would mean an immediate nuclear war of attrition between the two electronics giants. Instead Samsung would be even better served to show Apple who is boss in quantized increments. Today, it has done just that, forcing Apple to swallow a 20% price increase on hundreds of millions of Samsung application processors used in iPads and iPhones. "Apple first disapproved it, but finding no replacement supplier, it accepted the (increase.)" Game, set, match Samsung.

Japan's Last Remaining Nuclear Power Plant May Be Built On An Active Fault Line

Following the disaster at the nuclear power plant in Fukushima last year, nearly all of Japan’s reactors have been shut down. The only power plant to remain operational today is the Oi nuclear plant in western Japan. A geologist working as part of team looking at the power plant, its location, and the geological history of the area, has now stated that the power plant is built on top of a fault line that can be described as ‘active’, and advises that it be shut down immediately. Watanabe fears that any seismic activity on this fault line could cause a catastrophe similar to the one at Fukushima; although his colleagues on the advisory panel disagree.

Quote Of The Day: "That Was Not A Joke"

  Question: Is the goal still to get Greece's debt to 120%?
Juncker: The fact is that the target of 120% will remain, but the target as far as the time frame is concerned has been postponed to 2022.
[Laughter in the room]
Juncker: That was not a joke!

The Totally 'Normal' 2% Dump-And-Pump Silver Market

  Presented without comment - but plenty of incredulity...

Distribution In Lumber

Eric De Groot at Eric De Groot - 1 hour ago
Traders might want to consider a defensive lumber stance over the short-term. Chart: Lumber (CC) And Lumber Diffusion Index (DI) ------------------------------------- Insights is intended to reflect excellence in effort and content. Donations will help maintain this goal and defray the operational costs. Paypal, a leading provider of secure online money transfers, will... [[ This is a content summary only. Visit my website for full links, other content, and more! ]] 

Financial Markets: Be Careful

Admin at Jim Rogers Blog - 1 hour ago
I would be very careful. The next couple years we're going to have turmoil and problems in most financial markets. - *in CNN * *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.* 

Why The Market Is Going To Go Down

Admin at Marc Faber Blog - 1 hour ago
I don’t think markets are going down because of Greece, I don’t think markets are going down because of the “fiscal cliff” – because there won’t be a fiscal cliff. The market is going down because corporate profits will begin to disappoint, the global economy will hardly grow next year or even contract, and that is the reason why stocks, from the highs of September of 1,470 on the S&P, will drop at least 20 percent, in my view. - *in CNBC* Related: SPDR SP 500 ETF (SPY), iShares MSCI Emerging Markets Index ETF (EEM); *Marc Faber is an international investor known for his uncanny pr... more » 

Institutionalizing of Liquidity/Bailouts As Public Policy

Eric De Groot at Eric De Groot - 2 hours ago
Currency induced (cost-push) inflation and crushing debt levels have lower the standard of living for nearly all Americans. This has forced many to survive with limited to no savings since the late 1990's (chart). The trend of reckless consumption, however, has reversed. A new era of savings and soon to be recognized 'prudent consumption' began in 2008. Recognition and the pace of... [[ This is a content summary only. Visit my website for full links, other content, and more! ]] 

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US Dollar on the Receiving End of Safe Haven Flows

Trader Dan at Trader Dan's Market Views - 10 hours ago
As much as it pains me to write the words, US Dollar and Safe Haven, in the same sentence, the rush into the Dollar is evident as the fallout from the US election, combined with fresh fears surrounding Greece and other parts of the EuroZone continues unabated at this point. This is perhaps one of the main reasons that the big shorts over at the Comex have been able to thus far stymie the yellow metal near the $1740 level. Note on the chart below that the US Dollar is working steadily higher after having managed a strong push through a heavy resistance level near the 80.50 region. I... more » 

Japan contracts in GDP by another .9%/Huge importation of gold into Hong Kong equal to 69.4 tonnes this month/Good demand for gold from India/Barrick suspends Pascua Lama temporarily due to safety issues/

Harvey Organ at Harvey Organ's - The Daily Gold and Silver Report - 15 hours ago
Good evening Ladies and Gentlemen: Gold closed today basically unchanged at $1730.30.  Silver lost 8 cents.  The bankers again were not happy with the high OI in silver so they orchestrated another of their annoying raids.  This will continue as the regulators show no interest in stopping this criminal behaviour on the part of the bankers.  In other physical news, China reported a massive

Bob Janjuah Waves Goodbye To The Greater Fool

A mere three weeks ago, Nomura's Bob Janjuah forcefully suggested that complacency warranted a tactical risk-off position given the misplaced confidence heading into the plethora of event-risk ahead. It seems, 60 points later, that he is on to something; but this time he is more critically concerned: "Investment decisions based largely on the greater fool theory and predicated by the assumption that central bankers can sustainably and credibly misprice money, supporting a significant misallocation of capital, without any major negative consequences, are in general not good investments."

The Strange (and Worrisome) Symmetry Of Bernanke's Bull Market

Sometimes a picture paints a thousand words. In the case of this chart, it paints an expectation of around 300 S&P points (to the downside). The strange symmetrical exponentiality of the last four years can only be marveled at in its reflection of greed and fear catalyzed by the machinations of an increasingly impotent central banking cartel. Trade accordingly.

Wall Street Prepares For Bonus Season Pain As Comp Set To Slide

In a shining example of the law of unintended consequences, when 2012 started Wall Street bankers had expected that all it would take for bonuses to surge and offset 2011's deplorable comp, is another round of QE. Well, QE came and went, not only in the US, but virtually everywhere else, and sure enough the market traded up to new 5 year highs (and just why of all time highs as well), yet something was not going according to plan: bank revenues. Another side-effect of the Fed buying the long end is everyone piling in and frontrunning Bernanke in the 10-30 Year segment, flattening the curve, and making Net Interest Margin profitability a thing of the past. The result has been a year in which despite stocks rising, banker pay is set to tumble even more (for those lucky enough to still even have a job that is, which for UBS and Nomura means about 80% of the employees a year ago) with traders of cash equities and derivatives set to see another 20% drop in comp from 2011 according to Options Group. The end result: 2012 all in comp will be half of what it was in 2007. Say goodbye to the Master of the Universe - they will now have to settle for a galaxy or two at most.

On The Game-Theoretic Market Crash 'Solution' To The Fiscal Cliff

We expect a return to a skittish environment in markets. We are confident in my prediction for the course of the economy by leveraging simple game theory in handling the upcoming crisis as Congress returns for its lame duck session. “Compromise” reflects a decision from either side that each find unpalatable. Both President Obama and Speaker Boehner would rather shove two sticks in their eyes than move from their hardened stance despite some of the recent rhetoric in favor of bargaining in good faith.  As long as the loss of utility from both sides’ digging in their heels is more favorable than conceding to the preferences from those across the aisle, then the game arrives at a Prisoner’s Dilemma. the above matrix concludes that the fiscal cliff virtually guarantees an aggressive selloff for equities until the stop loss for the Democrats and Republicans has been triggered.  For example, if the clock hits midnight on New Year’s Eve with the blue chip index at or near its September peak, each faction would feel comfortable standing up to the other well into January.

"Hot Money" At Boiling Point: Hong Kong Apartment Sells For Record $8773 Per Square Foot, New Asian Record

Over the past year, one of the more confounding developments has been the relentless surge higher in the Chinese currency, whose unpegged version has soared to multi-decade highs against the USD, even as the economy has been mired in a downward secular shift with various indicators showing an ongoing decline. The reason for this "hot money" phenomenon is the easy money policy adopted by all the world's central banks (except for the PBOC of course, which is forced to stick with reverse repo-based ultra short-term money injections), coupled with the anti-foreign capital stance adopted by Switzerland, making China, Hong Kong and Singapore as the go to targets for "excess global cash." And as long as the hot money continues to flow and keep the inflation threat "on the sidelines", all attempts to cool its notwithstanding, the PBOC will be unable to ease, and allow US tech companies' stock prices to finally rise, as their profitability is and has always been a reflection of Chinese end-market demand. By the looks of things, the PBOC will be stuck in a holding pattern for a long time, as just confirmed by the sale of a luxury Hong-Kong 6,683 sq. foot apartment in the Gehry-designed Opus Hong Kong in Mid-Levels East, at a price of HK$455 million, which translates to HK$68,000 per square foot, or just under $8,800: a new all time record for Asia. So much for cooling the hot money.

Living In 'The Day Before'

Markets, you see, always live in this “day before” where the bend in the highway never comes, where the path is always straight and fixed and where it is generally thought that nothing of consequence will happen. Then some event takes place, something magical or wonderful or awful occurs and the world is turned on its axis and nothing is ever the same again. We are in danger, “clear and present danger” and the strategy of the “day before” is no longer appropriate. $400 billion has poured into bond funds this year, an all-time record, with yields at depressed levels indicating a quite real flight to safety. The United States lost thirty-six percent of its wealth during the American Financial Crisis and, people or institutions, the song rolls across the landscape, “We won’t get fooled again!”

Frontrunning: November 13

  • The Bild is now a source for EURUSD stop hunts: Germany eyes 'bundled' loan payment to Greece-paper (Reuters, Bloomberg)
  • Congress comes back Tuesday to confront “fiscal cliff.”  (Reuters)
  • Gen. John Allen ensnared in Petraeus scandal (Politico)
  • FBI Agent in Petraeus Case Under Scrutiny (WSJ)
  • Comcast's NBCUniversal unit lays off 500 employees (Reuters)
  • University Fees Stoke U.K. Inflation (WSJ)
  • Consumers Closing Wallets in Japan Add to Noda’s Woes (Bloomberg)
  • John McAfee Wanted for Murder... and explaining bathsalt anal suppositories (Gizmodo)
  • Europe Gives Greece 2 More Years to Reach Deficit Targets (Bloomberg)
  • Where Spain Is Worse Than Greece (WSJ)
  • Microsoft's Windows unit head, once a possible CEO, exits (Reuters)
  • Glitch stops NYSE trading in 216 companies (FT)
  • Large European Banks Stash Cash (WSJ)
  • The death of San Bernardino: How a vicious circle of self-interest sank California city (Reuters)
  • Apple stores most productive US shops (FT)
  • Treasuries See U.S. Falling Over Cliff as Yields Converge (Bloomberg)
  • Bra-Bodysuits Make H&M One Hit Wonder as Zara Prospers (Bloomberg)


Overnight Sentiment: Europe Stumbles Over Itself, Again

It wouldn't be the New Normal if the basket case that is Europe, and its amusingly named "Union", didn't somehow manage to trip over itself. This is precisely what happened last night at the European finance ministers meeting after IMF head Lagarde and pathological liar and chair of the Europe's mostly broke Finance Minister, Jean-Claude Juncker, openly disagreed with each other, an event even the FT called a "feud" after they proposed two alternative visions for Greece, one which envisioned the 120% debt/GDP debt target goal pushed forward to 2022 (for Juncker), and on the other hand, IMF, which has been humiliated enough with its horrible predictions, and which refuses to budge from its 2020 Greek target. Per the FT: "In a rare breach, Mr Juncker told a post-meeting press conference the target would be moved to 2022, prompting Ms Lagarde to insist the IMF was sticking to the original timeline. When Mr Juncker again insisted it would be moved – “I’m not joking,” he said – Ms Lagarde appeared exasperated, rolling her eyes and shaking her head. “In our view, the appropriate timetable is 120 per cent by 2020,” Ms Lagarde said. “We clearly have different views.” Officials will meet again November 20 in an effort to reach agreement, Mr Juncker said. Despite the delay, officials insisted Greece would not default on Thursday, when Athens must make a debt payment of about €5bn without the benefit of international aid." Nothing like total coordination and organization within a monetary union that may not exit if Greece does not make its November 16 bond payment, which it likely will, by issuing debt and forcing the ECB to accept it as eligible collateral so that Greece can roll the maturity. And concluding this hilarious incident was Juncker's statement this morning that there is "no real dispute" with the IMF. When it gets serious...

Today’s Items:

Japanese Economy Sinking
The Japanese economy shrank in the third quarter.   Japan’s Central Bank has responded with more powerful monetary easing; such as, expanding its asset purchase program by $138.5 billion in October.   Japan’s only hope, at the moment, is for overseas economies to pick up before Japan’s own economy picks up.   In short, Japan is screwed.

Spain Declares 2-Year Moratorium on Evictions
The economy is getting so bad that people, served with evictions, were committing suicide.   In response, the Spanish government has placed a 2-year moratorium on evictions.   Needless to say, people will no longer have no incentive to pay their mortgages for the next two years and this will be a nightmare on landowners.   So what will be their plan a year from now when broke landlords begin committing suicide?   Why not just declare a moratorium on suicides?

US Dollar Reserve Currency
It is no secret that China is replacing the U.S. dollar with its own currency in more and more of its bilateral trading.    In fact, Chinese currency may soon have equal status with the U.S. dollar because of competitive devaluation.    As more and more nations start using other currencies, the dollar may go into the waste-bin of history; therefore, it is best not to be in dollar denominated assets and into something that is more long term.   With that in mind, after preparing, keep stacking physical.

Obama’s Fiscal Cliff Plan
Emboldened by his decisive re-election, Obama is looking to renew budget talks and end grid lock.    He wants to avert the “Fiscal Cliff” that he signed into law.    He wants to overhaul the tax code.    In short, he wants to wiggle out of responsibility for the “Fiscal Cliff” and raise taxes on the wealthy without cutting spending.   Here is an example of how dire the “Fiscal Cliff” is.   The wealthy are dumping their assets, and selling their businessess, before the start of next year.

The Die Is Cast
To no surprise, Robert Fitzwilson, joins many others believing that last week’s election ensured that we are now charging headlong for financial Armageddon.    There is no turning back.   The voters have in effect demanded hyperinflation and destruction of economies and currencies. In short, the voters have repeated Julies Caesar’s own march across the Rubicon into a foreboding future and they don’t realize it yet.

Red Cross Flawless With Sandy
Officials at the Red Cross are claiming that their response to superstorm Sandy was flawless.   Stop laughing folks, they’re serious!    Despite their slow response, with a week’s advance warning, in helping those affected by the storm, they have successfully raised more than $85 million.   To scam err… raise that kind of money so quickly is very impressive.  If they keep this up, they will be bigger than Apple!

Apple Scrambles
Make no mistake…    With Apple coming out with new versions of Iphones and Ipads every few months, the idea that people are willing to drop their current devices and buy the latest and greatest is beginning to have a negative feedback.    There is a difference between wanting something and needing something.    Officials at Apple simply have not conveyed the “need” part with their releases; thus, expect Apple to begin a nose dive.

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

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