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Sometimes you just have to laugh…
The Good – faith in this chart as being in anyway sustainable seems to beggar belief…
The Bad – especially as markets are already well into the ‘Euphoric’ stage of the cycle…
The Ugly – but firms have never (ever ever ever) been so downbeat in their guidance for the future…
So – you BTAFTH? The Shell game continues…
Source: Tobias Levkovich of Citi
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via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/Qtc_qL_GHcY/story01.htm Tyler Durden
Sometimes you just have to laugh…
The Good – faith in this chart as being in anyway sustainable seems to beggar belief…
The Bad – especially as markets are already well into the ‘Euphoric’ stage of the cycle…
The Ugly – but firms have never (ever ever ever) been so downbeat in their guidance for the future…
So – you BTAFTH? The Shell game continues…
Source: Tobias Levkovich of Citi
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via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/Qtc_qL_GHcY/story01.htm Tyler Durden
Following what we can only imagine was uproar following our discussion of Fidelity “allowing self-directed IRA holders to ‘invest’ in Bitcoin,” the company has very quickly reversed policy… As MarketWatch notes,
“On an individual basis, we allowed an investor to invest in that Bitcoin Investment Trust,” said Rob Beauregard, director of public relations at Fidelity, in a telephone interview Thursday morning. “We are no longer allowing that.”
The firm is not commenting on why that was allowed, and added “reviews are going on.”
Fidelity Investments is no longer allowing clients to invest in the virtual currency bitcoin through SecondMarket’s Bitcoin Investment Trust, a representative for Fidelity told MarketWatch on Thursday.
…
On Thursday, a Fidelity spokesman told MarketWatch that such investments are no longer allowed. The spokesman couldn’t confirm when or why the policy was changed.
“On an individual basis, we allowed an investor to invest in that Bitcoin Investment Trust,” said Rob Beauregard, director of public relations at Fidelity, in a telephone interview Thursday morning. “We are no longer allowing that.”
He continued: “We’re not commenting right now on why that was first allowed. There are reviews going on, and we’ll make a decision at a later date. At this time, it is not available on our retail platform.”
SecondMarket maintained Thursday that certain Fidelity clients can invest in bitcoin through the Bitcoin Investment Trust. “It is only accredited investors [who] have IRA accounts that are eligible to invest through Fidelity,” SecondMarket’s Silbert said in an email.
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via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/ouBMYzwpuLE/story01.htm Tyler Durden
From Stratfor
Since Dec. 9, the Pitchforks Movement has been staging rallies across Italy, blocking highways and rail and subway stations and protesting in front of public buildings. The protests are relatively small, comprising a few thousand people in each city, but they are widespread, stretching from Italy’s poor south to its wealthy north. The Pitchforks Movement first gained notoriety in Sicily in January 2012 when a group of agricultural producers and trucking companies blocked highways on the island for nine days to protest rising fuel and fertilizer prices, a result of austerity measures instituted by the government of Prime Minister Mario Monti.
Originally, the Pitchforks Movement had a heavy Sicilian element; it criticized the central government in Rome and sought greater autonomy for the island. Over the past year and a half and for various reasons, the movement has expanded beyond Sicily. The Pitchforks Movement is part of a growing trend in Europe. As the unemployment crisis lingers, the traditional representative institutions — political parties and trade unions — are proving incapable of channeling social unrest. In turn, groups that originally represented specific sectors are increasingly receiving support from other parts of the population. In several European countries, such as France and Spain, these groups are gaining popular support and participation from already disgruntled youths, workers, retirees and the unemployed. The emergence of groups like the Pitchforks Movement will likely become more common, since the economic crisis in Italy is unlikely to go away anytime soon. Their biggest challenge is becoming coherent enough to produce a lasting impact.
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via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/BsKzhFW3noo/story01.htm Tyler Durden
From Stratfor
Since Dec. 9, the Pitchforks Movement has been staging rallies across Italy, blocking highways and rail and subway stations and protesting in front of public buildings. The protests are relatively small, comprising a few thousand people in each city, but they are widespread, stretching from Italy’s poor south to its wealthy north. The Pitchforks Movement first gained notoriety in Sicily in January 2012 when a group of agricultural producers and trucking companies blocked highways on the island for nine days to protest rising fuel and fertilizer prices, a result of austerity measures instituted by the government of Prime Minister Mario Monti.
Originally, the Pitchforks Movement had a heavy Sicilian element; it criticized the central government in Rome and sought greater autonomy for the island. Over the past year and a half and for various reasons, the movement has expanded beyond Sicily. The Pitchforks Movement is part of a growing trend in Europe. As the unemployment crisis lingers, the traditional representative institutions — political parties and trade unions — are proving incapable of channeling social unrest. In turn, groups that originally represented specific sectors are increasingly receiving support from other parts of the population. In several European countries, such as France and Spain, these groups are gaining popular support and participation from already disgruntled youths, workers, retirees and the unemployed. The emergence of groups like the Pitchforks Movement will likely become more common, since the economic crisis in Italy is unlikely to go away anytime soon. Their biggest challenge is becoming coherent enough to produce a lasting impact.
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via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/BsKzhFW3noo/story01.htm Tyler Durden
Today the treasury sold 13bln 30yr bonds (re-opened the Nov-2043 issue).
After yesterdays fireworks following the weak 10yr auction, tensions were high going into today’s 30yr bond auction. Going into the auction, the 30yr bond had been outperforming on the curve all day (which is surprising on a 30yr bond auction day). The belly/front-end of the curve saw decent selling, but the 30yr did not (again, very surprising for a bond auction day).
Going into the auction, the wi 30yr (“wi” = “when issued” – which is what we call a bond before it is auctioned) was trading 3.89%. The 5yr and 7yr points on the curve were trading near the lows of the day (the 30yr bond was trading 97-18 @ 3.89%….and the low price pre-auction had been 97-12…so we went into the auction pretty close to the low). The auction priced 97-10+ @ 3.90% (so, a 1 basis point tail = 1bp cheaper than where the bonds were trading in the secondary market going into the auction).
(30yr UB bond futures vs inverse DX futures – the purple line)
Now, this is the exact same type of result that we saw at yesterdays 10yr auction (1bp tail) but the lead up to the auction was entirely different, and the price action post-auction is also completely different. Yesterday, the market rallied right into the auction and went in right near the day’s high. Today, the mkt sold off pre-auction, and we went in close to the lows (the 30yr bond was strong on the curve…but outright price was still lower on the day – especially if you look at the belly of the curve). Yesterday, the auction tailed 1bp, and the mkt sold off like a banshee. Today, the auction tailed 1bp, and the mkt hasn’t really gone anywhere…the mkt is going sideways in-between the auction stop price and the pre-auction price. This is VERY RARE for a 30yr auction. The result is almost always a big surprise one way or the other. I was saying before the auction that the entire mkt felt very weak, which indicated a tail was coming. Since i went into the auction short and was bidding to cover that short and get flat, i was hoping for a much larger than 1bp tail. The result of only a 1bp tail was a “meh” result (i still made a trading profit, but i was hoping for more). For a 30yr bond auction, i would consider a 1bp tail a practically “screws” result…and that explains why the mkt is just chopping sideways since the auction..this means the mkt was perfectly positioned, everybody is happy and nobody exited the auction with too many or too few bonds from the result.
If you are wondering “what next?” Well, next week the US treasury is auctioning 2yr, 5yr and 7yr notes. This is unusual (these auctions typically take place in the last week of the month) but the holiday calendar has pushed things up. This may partially explain the weakness in the 2-7yr part of the yield curve. Also of concern to the belly and front-end of the curve is the article recently published in the NY times talking about Fisher’s views of forward guidance. His comments on forward guidance were very “indecisive” regarding the front end of the curve, where the mkt has experienced and was expecting the more reliable “lower for longer” mantra. This combined with the auctions next week are both reasons for the front end of the curve to sell-off…and so it has. There are significant sums of money invested in the front of the US treasury curve for carry and roll-down, so these developments and next weeks FOMC meeting wil be very important, as is usual.
If you would like to see my thoughts on the UST market intraday as well as see my actual trades in real-time, then i would suggest joining my private twitter feed. The signup link is on the top-right of my blog.
http://govttrader.blogspot.com/
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via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/2mS32GRTIG8/story01.htm govttrader
By EconMatters
Era of Stock Buybacks
This has definitely been the era of stock buybacks with such low borrowing costs as companies are borrowing at very low rates not to expand the business, create innovative products, increase research and development but to buy back their own stock which isn`t cheap considering the multiple expansion in markets the last five years.
But earnings from a revenue side have been subpar to say the least and companies are buying back stock each quarter just to make their quarterly numbers look better than they actually are based upon the year over year business growth.
The funny thing is that this has been going on for four years, these are public companies right? At what point do the floats become so small that for all intents and purposes these are private companies? I am being a little facetious here, but this has to be the longest continuous era of stock buybacks on record all fueled by the Fed`s never before witnessed five straight years with the Fed Funds Rate at near zero percent.
Is this the Best Use of Company Capital?
It is a real shame that these companies don`t have some better use for this cheap government loans in essence than stock buybacks. How is the economy ever going to grow if these companies don`t try to expand their businesses with this cheap capital, hire more workers, and thus have future customers for their products who are now employed consumers.
But with stock floats getting smaller and smaller and company stocks at record highs isn`t this the opposite of buying low and selling high? The companies are buying their stock when it is extremely over-valued. Isn`t the smart use of stock buybacks to buy back the company stock when the company thinks that the shares are undervalued by the market? You know, buying low and selling high, doesn`t this just make for good business practices?
Further Reading: Why 401K Investors Should Move to Cash
50% Losses on Buybacks?
By my thinking most of these stock buybacks are going to be underwater once QE ends this summer of 2014, and the stock buybacks are going to be net losses for these companies down the line. How do responsible boards allow this type of behavior, buying back stock at exceptionally high levels?
Furthermore, once interest rates start rising and companies have to start raising capital where do you think it is going to come from? These same shares are going to return to market at much lower prices, further pushing stock prices down vie share dilution. This is the exact opposite of how a solid business would want to manage operations, cash on hand, borrowing, and managing stock buybacks.
The reasoning is that this is all setting up future earnings to be real bad when all these shares come back to market for equity raises, which you know is inevitable, and these stocks are going to have just terrible quarters, further sending their stocks down in the process.
Market Crash Inevitable
All the factors are coming together for quite a correction in stocks at some point down the line, and this is just another example of buying time now, but paying a heavy price in the future. All of which further exemplifies why we are going to have another huge market crash, the boom and bust cycle of credit markets, and how every investor better be damn good at market timing. There is no other choice with these types of poor cash management issues at companies.
Misplaced Incentives Short-term in Nature
The cynical side of me who has worked at many fortune 500 companies sees this as the real motivation or at least a driving force. All the executive team, all the players at companies receive stock options in compensation packages, stock buybacks not only help shareholders right now with increased returns, but all these ‘big dogs’ at these companies make a fortune on these stock options with stock prices higher each consecutive year, and each successive month for 2013.
The delta between the issue price, and when they exercise these options is incredible right now, and the incentive to push these compensation packages through the moon via stock buybacks, even with the market at all-time highs, is just too good for these executive teams to pass up right now.
Retirement Golden Options Plan
In addition who cares if this is a poor use of company resources, if these shares are going to be largely underwater in three years, with the money these executives ( and we are not just referring to CEOs – employees who receive options can be quite broad from a numbers standpoint at large firms – all at the upper management level of course) make on these stock options they can retire comfortably, and they probably aren`t even going to be around at these firms when the proverbial mess hits the fan at these companies.
Boards Same As They Always Are – Borderline Incompetent
Consequently again I ask where is the board in all of this excessive use of stock buybacks quarter after quarter? Aren`t they supposed to be the checks and balances for this type of short-sighted behavior? I thought we learned something from the “Enron Era” of good old boys Boards!
When I heard Kyle Bass discussing one of the reasons he was investing in Herbalife because he thought after the audit is completed that Herbalife will be able to borrow at 300 basis points to buyback future stock at all-time highs – I just shake my head as this isn`t going to end well folks!
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via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/uK1-s5G0Xmw/story01.htm EconMatters
With home prices in the UK driving people to live in boxes and Bob Shiller worried about the US, Bloomberg's Niraj Shah notes that the Knight Frank global house price index has risen to a record. The index, now 4% above the previous high in Q3 2008 is led by China and Emerging Nations (with Europe weakest) as investor speculation amid central bank liquidity fuels yet another bubble (that no one could see coming again).
Via Bloomberg's Niraj Shah (@economistniraj),
Record High for Global Index
Global house prices are gaining traction. Values rose an annual 4.6 percent in the third quarter compared with 1.7 percent in the same period in 2012, and the index is 12.7 percent above its financial-crisis low in 2009. Prices in more than 69 percent of the countries tracked by the index grew in the year through September, compared with 55 percent two years ago. The Knight Frank index incorporates house prices in 53 countries.
China, Emerging Countries Lead Price Growth
Prices in China rose the most, gaining 21.6 percent. Emerging economies made up the rest of the top five, with Taiwan, Indonesia, Turkey and Brazil recording price growth of more than 10 percent. The U.S., the biggest housing market, grew an annual 11.2 percent. The only countries outside Europe to experience declines were Japan, South Korea and New Zealand. Dubai recorded the largest growth rate for a city with 28.5 percent.
Europe Remains Weakest Region
While average values rose in every region, European property prices were the weakest performers in the year through October. Prices increased 0.8 percent in Europe, compared with 17.9 percent in the Middle East. Fourteen of the 17 countries experiencing annual price declines were in Europe. Average prices in Europe resumed growth in the second quarter.
European Prices Diverge
There is a widening divergence between countries in Europe. Annual house prices in Germany rose the most in the third quarter — 11.2 percent — while prices plunged 19.7 percent in Croatia over the same period. Ireland achieved the biggest turnaround, with values rising 4 percent in the three months through September. Property values were falling at a rate of 5.4 percent each quarter less than two years ago.
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via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/6K7EhTNcS6I/story01.htm Tyler Durden
Despite misses on stocks and gold, Citi FX Technicals' excellent "12 Charts of Christmas" performed well in 2013 directionally across FX, bonds, and commodities. This year, Tom Fitzpatrick and his team unveil 2014's most important charts – establishing a starting point for their outlook in the year ahead. From a slowing housing market to expectations of a strong USD; and from a "roll-over" in Consumer Confidence to strength in gold, they see the "repair process" continuing albeit at a slow pace but worry that the stock markets are looking more and more like 2000.
Via CitiFX Technicals,
What do we believe for 2014?
Overall: We see a backdrop where the “repair process” of recent years continues at a slow pace but where the US continues to look like the “best house on a bad street” when it comes to the major developed nations. This should also benefit the USD and keep the relative picture for yields (monetary policy) in favour of the US.
The corrective platform could be the “launch pad” for a move to new highs in the trend and a stronger USD all the way to 2016 as per previous post housing collapse cycles.
EURUSD turning lower like it did in 1998? A move towards 1.20 this year and much further over the next 2+ years looks likely.
A move similar to 1978-1982 could see USDJPY as high as 118 eventually while a repeat of 1995-1998 would suggest as far as 139. An average of the two could see USDJPY close to 130 by 2015. For 2014 we would expect a move to at least 110-111
Another 4 year and 4 month trend coming to an end?
The last 2 peaks in Consumer Confidence led the S&P by 3-4 months. That pretty much takes us to now… big divergence between the Equity market and the real economy.
Peak in the 1,820-1,830 area? Prior peaks have seen pretty quick falls to the 200 week moving average.
Is the US 30 year yield double topping as it has done so many times before?
The potential double bottom will target 3.70 with a break above 2.62. Beyond there the all-time USDBRL high at 4.00 could well be eventually tested.
And summarising their strong conviction 2014 views:
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via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/TTUJhIsccoI/story01.htm Tyler Durden
.
I’m dreaming of a white noise Christmas
Just like the ones I used to know
Where the tower tops glisten
And spooks can’t listen
To hear crypto-data in the snow
I’m dreaming of a white noise Christmas
With every Christmas card emailed
May your days be merry and bright
And may all
Your Christmases be private
.
MERRY CHRISTMAS ED, wherever you are…
From WilliamBanzai7 and the rest of the fringe low brows at Zero Hedge
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via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/MkCJdccN4Xc/story01.htm williambanzai7