Tesla Surpasses Netflix, Becomes World’s Most Valuable “Junk” Company

Tesla Surpasses Netflix, Becomes World’s Most Valuable “Junk” Company

Update (1135ET): Thanks to the parabolic melt-up in Tesla’s share price, its market capitalization has now surpassed that of Netflix…

Making Tesla the most-valuable, junk-rated company in the world.

We do note, however, that TSLA’s bonds still trade dramatically cheap relative to NFLX’s bonds…

*  *  *

Update (1035ET): While TSLA remains up over 10%, its notably off its highs as Citron Research unleashes its latest short on the carmaker:

And price is starting to wobble a little…

TSLA is now more over bought than Bitcoin was at the peak of its bubble in 2017…

*  *  *

On a morning when one of Tesla’s biggest bulls, New Street’s Ferragu downgrades the stock, saying:

“Limited sources of further appreciation in the next 12 months. .. We see 2020 playing out fine, but it is largely expected, and we see some risks on the stock: end of the short squeeze, 1Q20 miss on gross margins”

It is up almost 15% in the pre-market – topping $900 for the first time ever…

But Ron Baron was on CNBC earlier saying he isn’t selling a single share and sees Tesla rising to $1TN in revenue in 10 years.

Nothing to see here…

While the move is clearly a continuation of the historic squeeze that has crushed any residual shorts in the name, and may be an attempt by Musk, who has pulled his borrow, to put prominent Tesla short David Einhorn out of business, it was assisted by Ron Baron speaking on CNBC, and predicting that Tesla revenue will hit $1 trillion in ten years. In short, Tesla is the new Volkswagen… and bitcoin. Is this surge real? Well if it is was, Tesla would be selling stock here and prefund itself for the next decade. That it isn’t, tell you all you need to know.

So where does it stop?

If it’s like Bitcoin, maybe $1200?

It it’s like the VW squeeze in 2008, maybe $1600?

And it it’s the South Sea Company, it could hit $1800…

TSLA is now 1.5% of the QQQ Nasdaq 100 ETF. For every 10% move in TSLA, Nasdaq is up ~14 points.

Trade accordingly.


Tyler Durden

Tue, 02/04/2020 – 11:34

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DHS Offered To Test Iowa Voting App, Democrats Declined

DHS Offered To Test Iowa Voting App, Democrats Declined

Authored by Zachary Stieber via The Epoch Times,

The Iowa Democratic Party declined to have a new voting application vetted by the Department of Homeland Security, the agency’s Acting Secretary Chad Wolf said on Tuesday.

The app, developed by Shadow Inc., was blamed for some of the problems during the Democratic caucuses on Monday night. The issues led to the results of the caucuses being delayed.

Our cybersecurity and infrastructure security agency has offered to test that app from a hacking perspective,” Wolf said during an appearance on “Fox & Friends.”

“They declined, so we’re seeing a couple of issues with it.”

There was no evidence of a hack, Wolf said.

“Right now, we don’t see any malicious cyber activity going on. No one hacked into it. This is more of a stress or a load issue as well as a reporting issue that we’re seeing in Iowa,” he said.

“Given the amount of scrutiny that we have on election security these days, this is a concerning event, and it really goes to the public confidence of our elections.”

The Iowa Democratic Party didn’t immediately respond to a request for comment about how the party tested the app. Party officials declined to provide details about the app when asked by multiple outlets before the election. Troy Price, the chairman of the state party, told NPR that the state party worked with the national party’s cybersecurity team and Harvard University’s Defending Digital Democracy project.

We as the party have taken this very seriously, and we know how important it is for us to make sure that our process is secure and that we protect the integrity of the process,” Price said.

“We want to make sure we are not relaying information that could be used against us.”

Party spokeswoman Mandy McClure said late Monday that the election results were delayed due to “quality checks” and inconsistent reporting, but said the app developed by Shadow did not go down and was not hacked. Ballots provided a sound paper trail that was being used to tally the results, she added.

No email addresses or phone numbers were listed on Shadow’s website. The company is full of “campaign and technology veterans” who have built and put into place technology for Hillary Clinton’s and Barack Obama’s campaigns as well as Google, the Democratic National Committee, and the AFL-CIO union, the company said.

“Our passion is to create a permanent advantage for progressive campaigns and causes through technology,” it stated. No staff members were named on the site.

Supporters of Democratic presidential candidate Senator Bernie Sanders (I-Vt.) cheer next to an Iowa flag at his rally in Des Moines, Iowa on Feb. 3, 2020. (Jim Bourg/Reuters)

Several high-level Shadow executives, including CEO Gerard Niemira, worked on Clinton’s 2016 campaign. Niemera was previously the chief technology officer and chief operating officer at ACRONYM, a nonprofit digital strategy firm.

Shadow was created in part from investments by ACRONYM, founder and CEO Tara McGowan said in January 2019.

In a statement issued overnight, the nonprofit attempted to distance itself from Shadow, noting it was one of multiple investors into the company.

“We are reading confirmed reports of Shadow’s work with the Iowa Democratic Party on Twitter, and we, like everyone else, are eagerly awaiting more information from the Iowa Democratic Party with respect to what happened,” ACRONYM spokesman Kyle Tharpe said in a statement.

ACRONYM did not provide any technology to the DNC, Iowa Democratic Party, or presidential campaigns, the statement said.

Robby Mook, Clinton’s 2016 campaign manager, also distanced himself from the app on Monday night after people drew attention to the Des Moines Register reporting last week that Mook and experts in a number of fields “simulated the different ways that things could go wrong on caucus night.”

“Sorry, folks,” Mook wrote on Twitter.

“I did NOT have anythjng [sic] to do with building the Iowa caucus app. I dont know anything about it, had no role in it, and dont own a company that makes mobile appa [sic].”

Shadow was paid $58,000 in August 2019 by the Nevada Democratic Party and the Iowa Democratic Party paid the company over $63,000 in late 2019. The Nevada Democratic Party didn’t respond to a request for comment. Former South Bend Mayor Pete Buttigieg’s campaign also paid Shadow over $42,000 last year for “software rights and subscriptions.”

Buttigieg said early Tuesday that “all indications” showed that he won the Iowa Democratic caucus.


Tyler Durden

Tue, 02/04/2020 – 11:30

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The Iowa Caucuses Have Always Been Terrible

On yesterday’s Reason Roundtable podcast, my colleague Matt Welch asked an open-ended question: What outcome do you hope for from the Iowa caucuses, however unrealistic? 

The answer I decided not to give because it seemed too glib was: It’s a shame they can’t all lose. 

Yet here we are. 

It’s the morning after the caucuses, and, thanks to a combination of rule changes and  (probably avoidable) technological foibles that resulted from a poorly tested, dysfunctional results-reporting app, there are still no official results.

The state Democratic Party, which took hours to even begin to explain the delay, has blamed vague “inconsistencies” in the reporting and offered precious little information about what actually happened. 

Several candidates gave not-quite-victory speeches of varying degrees of confidence, and campaign memos based on internal reporting made various arguments for victory. Former Vice President Joe Biden, meanwhile, who has a history of poor performance in Iowa, and who looked to be slipping in the polls in the final weeks before the vote, is now formally complaining that the reporting process had “considerable flaws.” 

Someone, probably Sen. Bernie Sanders (I–Vt.), actually won last night’s caucuses. But we may never know the actual result with total certainty.

And the delayed results mean that, at minimum, the process was useless to the candidates who spent millions of dollars and months of their lives (along with the time and effort of campaign staffers and volunteers) in hopes of winning the state, not so much for the tiny number of electoral delegates it provides but for the morning-after boost in momentum leading into next week’s New Hampshire primary. 

Last night’s election was an utter fiasco—a meltdown of small-d democracy—in which the system simply failed. As Eric Levitz wrote in New York magazine, the caucuses “effectively produced a five-hour-long infomercial for the Democratic Party’s administrative incompetence, broadcast across all of the major news networks.” And it wasn’t the first such failure either. 

Over the last several years, the Iowa caucuses have been the site of multiple systemic breakdowns. In the 2012 Republican caucuses, state officials initially declared Mitt Romney the winner; eventually, that decision was reversed, and Rick Santorum was belatedly granted the top slot. In 2016, an extremely close result between Democratic rivals Hillary Clinton and Bernie Sanders led to a series of rule changes and new reporting requirements that raised the hypothetical possibility that there could be multiple winners, each claiming victory based on a different metric. 

In a democracy, the point of an election system isn’t just to create a mechanism for casting and counting votes. It’s to confer broad-based legitimacy on the result, in which most people can generally agree that the system is transparent, functional, and fair. The consistent breakdowns in Iowa have instead done the opposite. Even after the final results are announced, it may be that the effective result is that no one really won. 

Breakdowns like this have broader cultural effects, and they contribute to the sense that important institutions simply don’t work, that they can’t be trusted to deliver accurate and impartial results. When you see national survey results showing that trust in government institutions is at an all-time low, this sort of high-stakes foul-up is why. 

Yet the problems with Iowa go much deeper than a broken app and voting rules so inscrutable they make Destiny 2‘s maddeningly complex leveling system look like a game of Go Fish. In its modern incarnation as the official start to presidential election season, which dates back to 1972, the Iowa caucuses have always been, in some sense, illegitimate.

It’s a small state that’s not demographically or culturally representative of the rest of the country, meaning that large blocs of voters, especially minorities, are underrepresented in a contest that helps shape the rest of the race. Iowa voters are disproportionately older, and the relatively high religiosity of Iowa voters and their discomfort with immigrants has, over the years, tilted national politics in a direction that, all else being equal, is more socially conservative and less immigrant-friendly. For years, the influence of the state’s corn farmers helped maintain political support for ethanol subsidies and fuel mandates, despite just about every economist and policy analyst agreeing that they were a lousy idea. 

Meanwhile, national political media would descend on Iowa every four years to lavish it with attention, using it as an early proxy for the overall state of the race. In recent years, journalists have become more alive to the ways that Iowa isn’t representative, but the frenzy of attention has nonetheless conferred a special status on the state and its opening electoral throwdown. Even with critical coverage, Iowa set the tone for the race to come, ensuring that it would represent the interests of a select and special few rather than the larger voting population. 

The best argument for Iowa’s primacy has always been its intimacy, the way that the manageable scale of the state might allow lesser-known candidates with less funding to connect in person with voters. (The small size no doubt helped journalists trying to cover the race too.) But in the age of social media politics and intimate-interview podcasts, in which politics—especially for younger voters—is increasingly conducted in online forums and virtual communities, this argument carries less and less weight. 

Meanwhile, even Iowans don’t seem all that excited about their caucuses: Overall turnout was middling, and first-time participation was down.

America doesn’t need Iowa to set the tone for its presidential elections. American politics doesn’t need Iowa to show up early and try to pick a winner. Iowa isn’t America, and America isn’t Iowa.

There are already rumblings about ending Iowa’s reign of terror, about replacing it with some other system that might be more demographically representative, less culturally conservative, less beholden to the narrow interests of corn farmers. Or, at the very least, that could accurately report an election result in a reasonable period of time. A system, in other words, that could confer some small measure of legitimacy, not to mention a reasonable night’s sleep.  

One can only hope. Everyone competing in last night’s caucuses may have lost, but if Iowa’s caucuses end up less influential in future presidential elections, we’ll all end up winners. 

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Trump Approval Rating Hits All-Time High Amid Impeachment; GOP Sees Upswing In Support

Trump Approval Rating Hits All-Time High Amid Impeachment; GOP Sees Upswing In Support

President Trump’s approval rating is the highest it’s ever been, coming in at 49% in a new Gallup poll, which also found that 63% of Americans approve of the way Trump is handling the economy. Trump’s ratings for handling foreign affairs and foreign trade also topped out at 47% and 50% respectively, his best numbers to date.

While Democrats maintained roughly the same level of hatred for Trump, his gains came from higher ratings among Republicans and independents – with approval ratings among Republicans up 6% to 94%, and up 5% among independents to 42%.

Democratic approval is down 3%, dropping Trump from 10% to 7%. No surprises there.

What’s interesting is that the 87-point gap between Republican and Democratic approval in the current poll is the largest in Gallup history, “surpassing the prior record, held by Trump and Barack Obama, by one point.”

More from Gallup:

The Jan. 16-29 poll was conducted in the midst of the Senate impeachment trial that will likely result in the president’s acquittal. The poll finds 52% of Americans in favor of acquitting Trump and 46% in favor of convicting and removing him from office.

In addition to possibly reflecting sentiment regarding his impeachment, Trump’s increased approval rating may also result from other issues, including:

  • The recent military action in Iran. More Americans in the new poll approve (53%) than disapprove (45%) of the U.S. military action that resulted in the death of a leading Iranian military general. Iran retaliated but, despite fears of escalation, no further military action has been taken by either side.
  • Foreign trade. During the poll’s field period, Trump also signed the United States-Mexico-Canada trade deal to replace the North American Free Trade Agreement.
  • The economy. Americans’ confidence in the economy is higher than at any point in the past two decades. Similarly, national satisfaction is the highest in nearly 15 years.

Sixty-three percent of Americans now approve of the way Trump is handling the economy, up six points from the prior reading in November. It is the highest economic approval rating not only for Trump, but for any president since George W. Bush enjoyed stratospheric job approval ratings in the first few months after the Sept. 11, 2001, terrorist attacks.

Gallup also notes that as President Trump’s approval rating has gone up, so has that of the GOP, with 51% of Americans viewing the Republican Party favorably, up from 43% in September. 

Views of the Democratic party rose slightly from 45% to 48% over the same period, while 48% of Americans identified as Republicans or leaning towards that party vs. 44% Democratic identification or leaning.

The polling company observed similar trends when Bill Clinton was impeached – with his approval rating spiking to a personal high of 73% after the House impeachment vote – a level he maintained through his acquittal by the Senate in early 1999.


Tyler Durden

Tue, 02/04/2020 – 11:10

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The Strongest Seasonal Advance In Precious Metals Stocks Begins Now

The Strongest Seasonal Advance In Precious Metals Stocks Begins Now

Authored by Dmitri Speck via Acting-Man.com,

Bonanza Season

In the 18 December 2019 issue of Seasonal Insights I discussed the strong seasonal advance in precious metals around the turn of the year. In silver it begins in mid December and continues until the end of February. A roughly similar pattern can be observed in platinum and palladium, while seasonal buoyancy is at least to some degree evident in gold as well.

Long-term silver and platinum seasonal charts from the late 2019 issue of Seasonal Insights : the seasonally strongest phase lasts from mid December until late February. [PT]

You may well wonder: what is the trend in precious metal stocks? Are they typically advancing around the same time of the year?

Mining Stocks Track Precious Metals Seasonality

Take a look at the seasonal chart of the HUI gold mining index below. This is not a standard chart depicting price moves over a specific time period. Rather, the seasonal chart shows the moves in the HUI in the course of a calendar year averaged over the past 25 years.

HUI seasonal pattern over the past 25 years: the HUI typically rallies strongly in February

As the chart illustrates, gold & silver mining stocks typically begin to rally in mid December. In January they continue to gain ground in a choppy and somewhat muted advance. Then prices rise very steeply until the end of February. Thereafter the seasonal average declines again.

In short, the strongest seasonal advance in precious metals mining stocks lies directly ahead.

Seasonal Strength is Driven by Fundamentals

Thus gold and silver mining stocks track the seasonal pattern in precious metals. The seasonal advance in precious metals in turn is very likely mainly driven by purchases of industrial users (fabrication demand). Many industrial processors place large buy orders at the beginning of the financial year, once planning for the new year has been completed and new orders to replenish  inventory can be booked.

Industrial silver processors in medias res. Clockwise from the top left: silver strip coiling machine, continuous cast LBMA ingot shape, silver billet extrusion, induction vacuum casting machine, gold strip for coins, silver strip, silver dore casting machine.  [PT]

By extension the seasonal rally in precious metals mining stocks is therefore underpinned by fundamentals as well.

An Annualized Gain of Almost 100 Percent

The strongest part of the seasonal rally takes place between 28 January and 18 February. The average return achieved in this time period over the past 25 years was 4.03 percent. This is equivalent to an annualized gain of 98.75 percent, which represents an extraordinarily strong seasonal advance.

The following bar chart shows the returns generated between 28 January and 18 February in every single year since 1994. Green bars indicate years in which gains were posted, red bars indicate losses.

HUI: return between 28 Jan and 18 Feb in every single year since 1994 in percent. Prices often rise very strongly.

As the chart illustrates, the distribution of returns is not exactly uniform. The reasons: the gold mining sector is highly speculative, and it was furthermore frequently mired in bear markets in the past 25 years, which have a negative impact on performance in all time periods of the year.

However, as a result of this, gains achieved in these mere 15 trading days can be all the more spectacular. For example, in 2016 the HUI index rallied by a remarkable 36.65%.

*  *  *

As can be seen, individual shares or sectors often exhibit unique seasonal patterns on account of various fundamental drivers. As there are a great many listed stocks, it is possible to use seasonality as a diversification tool. Moreover, at any time in the course of a calendar year certain individual stocks stand out in terms of their seasonal performance. In other words, investors can take advantage of numerous opportunities  throughout the year. On our web page www.app.seasonax.com or with the help of the Seasonax app on Bloomberg or Thomson-Reuters Eikon you can examine the seasonal patterns of countless individual shares (to be precise: at www.app.seasonax.com you can analyze more than 22,000 different stocks!).


Tyler Durden

Tue, 02/04/2020 – 10:55

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Avenatti Misled And “Totally Blindsided” Client Who Brought Him Nike ‘Dirt,’ Prosecutors Say

Avenatti Misled And “Totally Blindsided” Client Who Brought Him Nike ‘Dirt,’ Prosecutors Say

Now that the trial of “creepy porn lawyer” Michael Avenatti is underway, New York city tabloids like the New York Post are bringing us all of the juiciest updates from the prosecution’s case.

The first bombshell dropped on Tuesday: As it turns out, Avenatti mislead the clients who brought him the ‘dirt’ on Nike that Avenatti allegedly used to try and extort the sportswear giant into a $25 million payoff (he demanded that Nike hire him to conduct an internal investigation).

Instead of sharing his plans with Cal Supreme Gary Franklin, the youth basketball coach who first tipped off the lawyer about Nike’s illegal ‘sponsorships’ of college basketball recruits, Avenatti kept his clients in “total darkness” as he tried to shake down Nike.

Jeff Auerbach, a witness in the Avenatti trial who allegedly introduced Franklin to Avenatti, said Avenatti deliberately misled them.

“I trusted that [Avenatti] was going to go to Nike and try and achieve Gary’s goals,” Jeff Auerbach told jurors.

But when they met up to discuss Avenatti’s meetings with Nike’s lawyers, Avenatti would allegedly make vague statements like saying things “went great” while failing to mention his quest for a rich payday, or the involvement of celebrity lawyer Mark Geragos, who was never charged but was cited anonymously in the original indictment.

Auerbach told the jury that he and Franklin decided to bring the Nike dirt to Avenatti because they thought he would be “diplomatic” about it.

Their motivation was simple: Thanks to Nike’s intrusions, Franklin was fighting to regain control of his team. But instead of helping them, the pair were allegedly met with “utter shock and horror” as Avenatti repeatedly violated their trust in a string of events leading up to his arrest.

“It would be detrimental, damaging and totally averse to meeting Gary’s objectives,” Auerbach replied when asked by prosecutors whether he and Franklin genuinely wanted to expose Nike’s conduct. “We were trying to forge a new future.”

Nike lawyer Scott Wilson previously testified that Avenatti kept threatening that he had reporters on “speed dial”, and wouldn’t hesitate to leak the story to the press if Nike didn’t cave to his demands.

“I’ll take $10 billion off your client’s market cap,” Avenatti infamously warned according to court filings. “This is gonna be a major f–king scandal.”

Avenatti claims he was simply advocating for Franklin, which prosecutors say can’t possibly be true since he left Franklin out of the loop.

The disgraced lawyer is also facing charges in California related to deceiving clients, though his alleged deceptions in that case are even more egregious: He allegedly forged documents to help conceal from a client that some settlement money owed to the client had finally come in. Instead of handing it over, Avenatti used the money to try and save a coffee shop that he owned.


Tyler Durden

Tue, 02/04/2020 – 10:35

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Rabobank: “Central Banks Will Save Us Not Just From The Business Cycle And Climate Change, But From Global Pandemics”

Rabobank: “Central Banks Will Save Us Not Just From The Business Cycle And Climate Change, But From Global Pandemics”

Submitted by Michael Every of Rabobank

Chinese stocks are up; the Chinese currency is up, slightly (though still weaker than 7); global stocks are up; and US Treasury yields are slightly higher.

Yet at the same time we have the first reported death of a 39-year old resident in Hong Kong, where medical workers are on strike over the refusal to totally close the border with China; China reporting 425 deaths and over 20,000 cases despite massive quarantine efforts; China’s Global Times reporting that the virus can be transmitted via the digestive system and contact with surfaces such as doorknobs or mobile phone screens, computer keyboards, etc. (which is also the case with many other coronaviruses); Xi Jinping publicly stating the virus “directly affects” China’s economic and social stability and has again cracked the whip against the bureaucracy to act better and faster; and the US Centre for Disease Control (CDC) stating it is planning as if this will become a global pandemic. The WHO remains relatively upbeat, however, stating the virus’s progression will remain “minimal and slow” if it is fought at the source and countries cooperate – which does not include closing their borders, apparently.

Who aside, something doesn’t seem to fit in that market reaction, perhaps? The missing link here is that the PBOC injected CNY400bn (USD57bn) in market liquidity this morning, the equivalent of one month’s QE in the US in recent times past. (Ah, the good old days!) Lots more is to follow apparently. Naturally, this relieves some immediate liquidity pressures. It also allows the PBOC to scoop up all the assets that nobody else wants to hold right now via reverse repo – which the Fed knows a thing or two about. What I fail to see is how this is in any way positive for CNY. Only the USD can operate on such a profligate basis without risk of collapse due to its global role: who is stockpiling CNY right now?

Hypothetically, if this virus were to follow the dreadful path mapped out by the CDC, even just within China, would more central bank money really ease our pain? It’s almost as if all of the believers in Adam Smith’s free markets also have no idea what he wrote (following Plato and others) about the relative value of water and diamonds in different circumstances, an intellectual argument that ended up with Marxism via the labour theory of value – and here we come full circle back to China and the PBOC.

The underlying market hope is clear: central banks will save us, not just from the business cycle, and not just from climate change, but now from global pandemic too. The same people who can’t generate 2% y/y CPI sustainably will ensure we all stay at 36.5 – 37.5 degrees centigrade body temperature range. As Bloomberg helpfully summarises today, “Coronavirus Won’t Restrain Global Stocks For Long”. This is because, as the detail and irony of the article become clear, “It’s a bullish sign for global stocks that facts have taken a back seat in much of the market ‘analysis’ of how to react to the coronavirus.” How true that is. Nonetheless, in such an uncertain dynamic, I would still wager that if one wants to be brave enough to dive in to these markets aggressively, one should also be brave enough to stand next to someone who has recently been in Asia coughing without wearing a mask: if you won’t do the latter, are you really sure about the former?

In other news that might induce a fit of coughing, the RBA left rates on hold today despite bushfires, the coronavirus, and a global slowdown centred on China. Why, one might ask? Perhaps because CoreLogic house prices and building approvals are both up again: what else matters to the RBA and their unofficial Sydney and Melbourne house-price target? 😉 Regardless, we still expect them to keep cutting and move to join the NOT-QE reverse repo liquidity party soon. (They will want to be buying mortgage bonds , one would wager.)

I would also have liked to include the results of the key Iowa Democratic Party caucus, and whether Bernie Sanders beat Joe Biden or vice-versa. However, inexplicably the result has been delayed by voting issues and “inconsistencies” and instead we have total chaos, with many candidates claiming some form of victory: mayor Pete Buttigeig is saying he won, and even Amy Klobuchar is saying she is doing well vis-à-vis Biden. President Trump tweeted this was “The sloppiest train wreck in history,” and it takes one to know one; but what a harbinger this is for the upcoming 2020 election at a time of rising lack of faith in the democratic process.

Central banks to the rescue again, then? Perhaps. But, as we have long argued, only under seriously new management if so. And markets really won’t like that when the grasp the full implications. Then again, the same markets can’t grasp what a virus is or isn’t, so let’s not hold our breathe – at least not for that reason.


Tyler Durden

Tue, 02/04/2020 – 10:15

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US Factory Orders Continue Year-Over-Year Decline

US Factory Orders Continue Year-Over-Year Decline

After Boeing-battered durable goods orders data, but ISM Manufacturing surged by the most in 7 years, all eyes were on December’s Factory Orders data to break the tie on the real state of the US economy.

After a notable down revision for November (from -0,7% MoM to -1.2% MoM), December US Factory Orders rose 1/8% MoM (better than the 1.2% rise expected). That is the biggest MoM jump since Aug 2018.

However, on a year-over-year basis, factory orders remain lower (-0.4% YoY) for the 7 month in 2019…

Source: Bloomberg

For now it seems like the surveys over-reacted, but the overall trend of manufacturing hard data is not at all positive…

Source: Bloomberg

Sorry to say, hard data should trump soft data every time… but that’s not how the algos work.


Tyler Durden

Tue, 02/04/2020 – 10:08

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“A Lot Of Green Screens… Not A Lot Of High-Fiving!”

“A Lot Of Green Screens… Not A Lot Of High-Fiving!”

Authored by Richard Breslow via Bloomberg,

Equities are having quite a nice rally today. And it’s a global phenomenon. My guess is the majority of traders took one look at their screens this morning and did a double take. And then began scouring the news to learn the reason.

Some of the explanations are quite plausible. Some a bit of a stretch. But buying the dip has, for the moment, paid off once again. Now it will be all about the follow-through. And the air is a lot thinner at this altitude.

I get the sense, however, that there will be a lot more equity bulls up here than were loving the market down there. And just as many fixed income players mystified by this modest back-up in yields. Do huge size and it doesn’t take a gigantic move to be felt.

Traders still insist on sacrificing location on the altar of a good story. There have been a lot of block trades going through looking for a further fall in yields. And the five-year Treasury looks very different back at 1.40% than it did retesting 1.30%. Especially with the reality check of taking into account what happened to the yield last September and October when it also got down there and failed miserably. So much for “third time’s a charm” for the bulls.

I was listening to one analyst this morning try to explain the moves as occurring in expectation of a “V-shaped” recovery for the Chinese economy once this “incident” is behind them.

Now that is an explanation that’s hard to swallow.

But if you want to put it down to central bank and regulator reaction functions, who can argue? Not to mention local reports of insurance companies prepared to make sizable purchases, if necessary. We have City Hall. They have the China Securities Regulatory Commission.

Separately, it didn’t seem insignificant that the RBA, after keeping rates on hold at today’s meeting, and keeping their previous GDP forecasts unchanged, presented a refreshing, if still modest, upbeat assessment of the external environment. The statement included the line “There have been signs that the slowdown in global growth that started in 2018 is coming to an end.” But for those looking for the “V” around the corner, they also, correctly, pointed out that there is no way to know how long the hit to the Chinese economy will last.

Still, coming on the heels of other optimistic comments by Fed and ECB officials, maybe things are indeed looking up. Or at least the official narrative might be slowly changing. But there remain a lot of “ifs” out there, which we would be well-advised not to assume away. Yet, if central banks are trying to stay on hold, with a tacit willingness to still do whatever it takes should the need arise, on top of a global economy that may be showing life, ex-this catastrophe, it’s possible good news can be good news. Or, I’m being hopelessly optimistic. But you have to try it out every once in a while.

The Shanghai Composite Index remains in a large, long-term ugly range. There is very little technically that’s giving helpful direction in the big picture. And, as we’ve witnessed, it can make sizable moves, ultimately signifying little. It also likes to have periodic booms and busts. In the shorter-term it doesn’t look like it is out of the woods yet. It’s a tough trade. And you had better know all of the actors involved if you want to play.

Aside from all of the reasons which may or may not have been the cause of the global equity move, it’s tempting to give some credence to the theory that the mess in Iowa last night was a contributing factor. Traders have their own unique priorities and worldview.


Tyler Durden

Tue, 02/04/2020 – 09:45

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Dems Want to Run the Country, but They Can’t Even Run an Election in Iowa

No one knows which Democrat took top place in Iowa due to flawed new systems implemented by state party officials for the presidential caucuses yesterday. In addition to instituting complicated new caucus rules, Iowa Democrats also had precincts report final results using a new app that no one could figure out.

Making matters weirder, Pete Buttigieg went ahead and declared victory anyway.

Supporters of other Democratic candidates have been accusing the South Bend, Indiana mayor of trickery#MayorCheat is currently trending on Twitterafter it was reported that Buttigieg had made payments to Shadow, the company behind the broken app.

Shadow was launched by progressive organization ACRONYM, and has worked with multiple campaigns (including Joe Biden’s). In announcing Shadow last year, founder and CEO Tara McGowan complained about how 2016 election tech got buzz but with “little attention or resources paid to how these tools would be integrated.” She promised Shadow would be different.

With Shadow, we’re building a new model,” McGowan tweeted in 2019, stressing the company’s “deep focus on” helping Democrats “use the most effective new tools in smarter ways.”

That hasn’t gone so hot, judging by the ruckus out of Iowa. As of this morning, Buttigieg’s statement suggesting he won still stood while Sen. Elizabeth Warren’s (D–Mass.) campaign was claiming she’s in a three-way tie for winner Buttigieg and Sen. Bernie Sanders (I–Vt.). Many are predicting this is the end of the Iowa caucuses’ importance as a bellwether for campaigns.

“It’s dead. The campaigns gave them millions of dollars. It’s dead,” an unnamed Democratic campaign adviser told Hunter Walker, YahooNews’ White House correspondent. 

Iowa Democrats had promised a better, more efficient tallying of voter results via Shadow. Instead, it’s turned into a prime case of technocratic progressive promises that don’t deliver.

Plenty of people reported concerns about the app before voting opened in Iowa on Monday.

According to NPR reporter Miles Parks, Iowa precinct leaders had their doubts. “One caucus organizer told me that of the 57 precincts he was overseeing, ‘about 20’ were having some sort of issue with the app before caucusing even began,” Parks tweeted early this morning.

“The caucus workers will use the app on their personal smartphones, which [University of Iowa computer science professor Douglas] Jones said could be vulnerable,” cautioned The Wall Street Journal on January 26.

Iowa Democratic Party Chairman Troy Price told the paper then: “We are confident in the security systems we have in place.”

To be clear, security concerns don’t seem to be the issue; officials aren’t suggesting the app was tampered with, nor that any underlying voting data was compromised.

If it comes down to it, Iowa caucus officials can manually count and then verbally report voting results (which some are now doing). And state leaders can trace everything and double-check their math if need be. It just takes a lot longer, hence the delay on knowing who really won in Iowa.

Overall, issues seem to be mainly of the mundane user-error and bad-bureaucratic-planning variety.

Still, this hasn’t stopped conspiracy theories about Buttigieg, Russians, and other alleged app-sabotaging culprits from popping up.

Amusingly, a lot of powerful Democrats have been scrambling to blame this on anyone but their own side. For instance, Andrew Yang chalked it up, in part, to a lack of technological prowess by the president.

Julián Castro called it a failure of some amorphous system to protect democracy:

The whole mess has created room for not only more intra-Democratic mudslinging but also accusations by Republicans that their opponents’ electoral process is rigged.

For his part, President Donald Trump chalked it up to ineptitude:

On the other side of the political spectrum, left-leaning Democrats are sounding just like Republicans, pointing fingers at their party’s establishment and arguing over whether bias or merely bad decisions are at play.

What all but the most partisan Democrats seem to agree is that the most moderate and charitable interpretation here is gross incompetence.

This morning, the Iowa Democratic Party said in a statement that “while the app was recording data accurately, it was reporting out only partial data. We have determined that this was due to a coding issue in the reporting system.” It said the “plan is to release results as soon as possible today.”

 

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