Category: zerohedge

Today’s AM fix was USD 1,250.75, EUR 919.80 and GBP 767.99 per ounce.
Yesterday’s AM fix was USD 1,250.75, EUR 923.88 and GBP 773.69 per ounce.

Gold fell $6.70 or 0.54% yesterday, closing at $1,242.10/oz. Silver slid $0.17 or 0.85% closing at $19.85/oz. Platinum fell $16.94 or 1.2% to $1,367.30/oz, while palladium dropped $3.25 or 0.5% to $715.47/oz.

Gold is higher today in London. There is speculation that lower prices, which fell to a four-month low, will lead to increased physical demand. Prices fell to $1,225.55/oz on Monday after another massive sell order led to trading being suspended for 20 seconds for the third time in less than a week. $1,225.55/oz was the lowest since July 8.

S&P/Case-Shiller Composite-20 Home Price Index Not Seasonally Adjusted

The German regulator has joined the British Financial Regulator and is opening up an examination of the gold and silver price ‘setting’ at banks.

The German financial markets regulator is scrutinizing gold and silver price setting operations at individual banks alongside other benchmark processes including Libor and Euribor, Bafin spokesman Ben Fischer told media. Bafin declined to elaborate on the status of the investigation or the banks involved.

Despite the very poor sentiment after recent price falls, gold’s fundamentals are actually quite sound.

Global physical demand is set to be very high again this year and may even reach a new record, despite the 25% price fall.

This is especially the case, as Chinese demand is set to be a new record this year despite the recent slight decline in demand. China’s net imports of gold from Hong Kong alone in October reached the second-highest level on record last month. This does not include direct imports from Australia, Africa, Vietnam and other countries.

Indeed, Chinese demand this year looks set to be a new record for the highest gold demand from one country in one year ever. It is important to look at the aggregate annual demand figures rather than the ebb and flows of weekly and monthly data which can mislead.

Momentum and technical traders are dominant at the moment and with the short term trend down, gold may incur further losses in the short term.

However, the smart money is gradually accumulating on the dips. Dollar cost averaging remains prudent for investors who wish to get exposure to bullion but are concerned about further price falls.

Gold in US Dollars – 5 Year

U.S. borrowers are increasingly missing payments on home equity lines of credit they took out during the housing bubble, a trend that could deal another blow to the country’s biggest banks according to Reuters Insight.

It would likely also deal another blow to the U.S. property market and the fragile U.S. economy.

Bank of America, JP Morgan and Wells Fargo appear to be the most exposed – meaning that either taxpayers will again be asked to bail out banks or more likely the new bail-in regime will confiscate cash from depositors.

From Reuters:
The loans are a problem now because an increasing number are hitting their 10-year anniversary, at which point borrowers usually must start paying down the principal on the loans as well as the interest they had been paying all along.

More than $221 billion of these loans at the largest banks will hit this mark over the next four years, about 40 percent of the home equity lines of credit now outstanding.

For a typical consumer, that shift can translate to their monthly payment more than tripling, a particular burden for the subprime borrowers that often took out these loans. And payments will rise further when the Federal Reserve starts to hike rates, because the loans usually carry floating interest rates.

At a conference last month in Washington, DC, Amy Crews Cutts, the chief economist at consumer credit agency Equifax, told mortgage bankers that an increase in tens of thousands of homeowners’ monthly payments on these home equity lines is a pending “wave of disaster”.
In terms of loan losses, “What we’ve seen so far is the tip of the iceberg. It’s relatively low in relation to what’s coming,” Equifax’s Crews Cuts said.

UK Nationwide House Price Index – 1971 – Today

There are concerns about Britain’s property market too and the Organisation for Economic Co-operation and Development (OECD) warned of a UK property bubble last week.

The Paris-based group said, in its semi-annual Economic Outlook, that it was urgent to continue to relax the barriers to housing supply to prevent overheating in the property market. It ignored the fact that the nascent new bubble is in a large part due to near zero percent interest rates leading to renewed property speculation by buy to let investors.

The UK government’s Help to Buy program that aids buyers with smaller deposits has been criticized by the International Monetary Fund and politicians for potentially stoking a property bubble as it boosts demand.

Given the very fragile recovery, despite near zero percent interest rates in the UK and the U.S. and the uncertain international backdrop, property prices in both countries look vulnerable.

Click Gold News For This Week’s Breaking Gold And Silver News
Click Gold and Silver Commentary For This Week’s Leading Gold, Silver Opinion
Like Our YouTube Page For The Latest Insights, Documentaries and Interviews
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via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/OZXJNhnQ98k/story01.htm GoldCore

Today’s AM fix was USD 1,250.75, EUR 919.80 and GBP 767.99 per ounce.
Yesterday’s AM fix was USD 1,250.75, EUR 923.88 and GBP 773.69 per ounce.

Gold fell $6.70 or 0.54% yesterday, closing at $1,242.10/oz. Silver slid $0.17 or 0.85% closing at $19.85/oz. Platinum fell $16.94 or 1.2% to $1,367.30/oz, while palladium dropped $3.25 or 0.5% to $715.47/oz.

Gold is higher today in London. There is speculation that lower prices, which fell to a four-month low, will lead to increased physical demand. Prices fell to $1,225.55/oz on Monday after another massive sell order led to trading being suspended for 20 seconds for the third time in less than a week. $1,225.55/oz was the lowest since July 8.

S&P/Case-Shiller Composite-20 Home Price Index Not Seasonally Adjusted

The German regulator has joined the British Financial Regulator and is opening up an examination of the gold and silver price ‘setting’ at banks.

The German financial markets regulator is scrutinizing gold and silver price setting operations at individual banks alongside other benchmark processes including Libor and Euribor, Bafin spokesman Ben Fischer told media. Bafin declined to elaborate on the status of the investigation or the banks involved.

Despite the very poor sentiment after recent price falls, gold’s fundamentals are actually quite sound.

Global physical demand is set to be very high again this year and may even reach a new record, despite the 25% price fall.

This is especially the case, as Chinese demand is set to be a new record this year despite the recent slight decline in demand. China’s net imports of gold from Hong Kong alone in October reached the second-highest level on record last month. This does not include direct imports from Australia, Africa, Vietnam and other countries.

Indeed, Chinese demand this year looks set to be a new record for the highest gold demand from one country in one year ever. It is important to look at the aggregate annual demand figures rather than the ebb and flows of weekly and monthly data which can mislead.

Momentum and technical traders are dominant at the moment and with the short term trend down, gold may incur further losses in the short term.

However, the smart money is gradually accumulating on the dips. Dollar cost averaging remains prudent for investors who wish to get exposure to bullion but are concerned about further price falls.

Gold in US Dollars – 5 Year

U.S. borrowers are increasingly missing payments on home equity lines of credit they took out during the housing bubble, a trend that could deal another blow to the country’s biggest banks according to Reuters Insight.

It would likely also deal another blow to the U.S. property market and the fragile U.S. economy.

Bank of America, JP Morgan and Wells Fargo appear to be the most exposed – meaning that either taxpayers will again be asked to bail out banks or more likely the new bail-in regime will confiscate cash from depositors.

From Reuters:
The loans are a problem now because an increasing number are hitting their 10-year anniversary, at which point borrowers usually must start paying down the principal on the loans as well as the interest they had been paying all along.

More than $221 billion of these loans at the largest banks will hit this mark over the next four years, about 40 percent of the home equity lines of credit now outstanding.

For a typical consumer, that shift can translate to their monthly payment more than tripling, a particular burden for the subprime borrowers that often took out these loans. And payments will rise further when the Federal Reserve starts to hike rates, because the loans usually carry floating interest rates.

At a conference last month in Washington, DC, Amy Crews Cutts, the chief economist at consumer credit agency Equifax, told mortgage bankers that an increase in tens of thousands of homeowners’ monthly payments on these home equity lines is a pending “wave of disaster”.
In terms of loan losses, “What we’ve seen so far is the tip of the iceberg. It’s relatively low in relation to what’s coming,” Equifax’s Crews Cuts said.

UK Nationwide House Price Index – 1971 – Today

There are concerns about Britain’s property market too and the Organisation for Economic Co-operation and Development (OECD) warned of a UK property bubble last week.

The Paris-based group said, in its semi-annual Economic Outlook, that it was urgent to continue to relax the barriers to housing supply to prevent overheating in the property market. It ignored the fact that the nascent new bubble is in a large part due to near zero percent interest rates leading to renewed property speculation by buy to let investors.

The UK government’s Help to Buy program that aids buyers with smaller deposits has been criticized by the International Monetary Fund and politicians for potentially stoking a property bubble as it boosts demand.

Given the very fragile recovery, despite near zero percent interest rates in the UK and the U.S. and the uncertain international backdrop, property prices in both countries look vulnerable.

Click Gold News For This Week’s Breaking Gold And Silver News
Click Gold and Silver Commentary For This Week’s Leading Gold, Silver Opinion
Like Our YouTube Page For The Latest Insights, Documentaries and Interviews
Like Our Facebook Page For Interesting Insights, Blogs, Prizes and Special Offers 

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/wAIZB5_3-uw/story01.htm GoldCore

krugman-picsay

Paul Krugman wrote an anti-cryptocurrency Op-Ed piece in the NY Times titled the “Anti-social Network“. Now, I know the Times needs to sell ad space and subscriptions, hence technical accuracy may not be exactly what they are going for, but Mr. Krugman (the classical Keynesian economist type – I don’t particularly subscribe to such schools of thought, I guess I’m not educated enough) has spewed so many inaccurate statements, false facts and just plain old indications of his total misunderstanding of the subject matter one would think it would behoove the Times to either have him issue corrections (or, since it is Op-Ed after all) have someone such as my self (you know, maybe a little less academically involved) come after him and clean up a little. 

Now, where shall I start? To quote Mr. Krugman:

So how is bitcoin different? Unlike credit card transactions, which leave a digital trail, bitcoin transactions are designed to be anonymous and untraceable. When you transfer bitcoins to someone else, it’s as if you handed over a paper bag filled with $100 bills in a dark alley.

I don’t think that’s true Mr.Krugman. Let’s refer to Wikipedia’s write-up on the Cryptocurrency…

 Once validated, every individual transaction is permanently recorded in a public ledger known as the blockchain.^[8] 

I believe Mr. Krugman made this error due to the accuracy of a statement made earlier in the Wikipedia description of Bitcoin, to wit:

Bitcoin (sign:  ; code: BTC or XBT^[7]) is a peer-to-peer digital currency that functions without the intermediation of a central authority.^[8] 

You see, the old school way of applied economics may very well have a big problem wrapping their collective heads around the concept of the absence of a “central authority” (read central bank) to act as the Grand Pubah, or ultimate financial intermediary. I’m just saying..

And to go on with the oh so witty comments from Mr. Krugman…

And sure enough, as best as anyone can tell the main use of bitcoin so far, other than as a target for speculation, has been for online versions of those dark-alley exchanges, with bitcoins traded for narcotics and other illegal items.

Bitcoin is a currency that’s no older than 4 or 5 years. Has any other currency experienced a genesis any different than Bitcoin? The US dollar, when freshly minted was used for the spurious trade of human lives, the lives of my very own relatives several generations back, actually. It was the tool for rampant speculation as well, prone to extreme volatility and purposeful devaluations. Was it really so different from Bitcoin before it went mainstream (that is except for the purposeful devaluations part since there is no Grand Pubah to unilaterally call the market shots)? Methinks this economist may be picking and choosing his facts. For instance, look at how he started the Op-Ed missive in the first place…

Bitcoin’s wild ride may not have been the biggest business story of the past few weeks, but it was surely the most entertaining. Over the course of less than two weeks the price of the “digital currency” more than tripled. Then it fell more than 50 percent in a few hours. Suddenly, it felt as if we were back in the dot-com era.

The economic significance of this roller coaster was basically nil. But the furor over bitcoin was a useful lesson in the ways people misunderstand money — and in particular how they are misled by the desire to divorce the value of money from the society it serves.

Volatility is the name of the game with new currencies that have limited penetration and distribution, no? Why pick on bitcoin? Let’s recall how the US dollar got started via the continental note, as per Wikipedia:

By the end of 1778, Continental Currency retained between only 1/5 to 1/7 of their original face value. By 1780, Continental bills – or Continentals – were worth just 1/40th of their face value. Despite efforts by Congress to reform the currency by removing the old bills from circulation and issuing new ones, the attempt met with little or no success. By May 1781, Continentals had become so worthless they ceased to circulate as money. Benjamin Franklin noted that the depreciation of the currency had, in effect, acted as a tax to pay for the war.^[1] In the 1790s, after the ratification of the United States Constitution, Continentals could be exchanged for treasury bonds at 1% of face value.^[2]..

Hey, it doesn’t end there…

 On August 8, 1785, the Continental Congress of the United States authorized the issuance of a new currency the US dollar.

However runaway inflation and the collapse of the Continental currency prompted delegates at theConstitutional Convention in Philadelphia in 1787 to include the gold and silver clause into the United States Constitution preventing individual States from issuing their own bills of credit. Article One states they were prohibited to “make any Thing but gold and silver Coin a Tender in Payment of Debts.”^[4] 

 Paul then goes on to compare Bitcoin enthusiasts to Goldbugs – which was inevitable. I’m far from a Goldbug, and those that follow me can attest. Apparently Mr. Krugman isn’t either, but he appears to make a specious argument, to wit:

The similarity to goldbug rhetoric isn’t a coincidence, since goldbugs and bitcoin enthusiasts — bitbugs? — tend to share both libertarian politics and the belief that governments are vastly abusing their power to print money. At the same time, it’s very peculiar, since bitcoins are in a sense the ultimate fiat currency, with a value conjured out of thin air. Gold’s value comes in part because it has nonmonetary uses, such as filling teeth and making jewelry; paper currencies have value because they’re backed by the power of the state, which defines them as legal tender and accepts them as payment for taxes. Bitcoins, however, derive their value, if any, purely from self-fulfilling prophecy, the belief that other people will accept them as payment.

I really need somebody from the academic ivory towers to explain to me the difference between paper currencies being backed by the power of the state and Bitcoins alleged self fulfilling fulfilling prophecy of the belief that other people will accept them as payment. Both of these concepts share one common theme that seems to have escaped Mr. Krugman – Belief!!! Being backed by the full faith and power of the government means nothing unless you believe that government backing has a real value. That real value, if you do believe in it, is solely a function of your level of belief in the government and the governments willingness to back the currency  and to what extent. After all, Greek bonds written under Greek law are backed by their government as well, as are Somalian bonds. So, pray tell, what’s the difference between the value of those bonds and US treasuries? Belief, that’s the difference! Again, a refresher from Wikipedia:  

Today, like the currency of most nations, the dollar is fiat money, unbacked by any physical asset. A holder of a federal reserve note has no right to demand an asset such as gold or silver from the government in exchange for a note.^[28] Consequently, some proponents of theintrinsic theory of value believe that the near-zero marginal cost of production of the current fiat dollar detracts from its attractiveness as a medium of exchange and store of value because a fiat currency without a marginal cost of production is easier to debase via overproduction and the subsequent inflation of the money supply.

 

 

Who is Reggie Middleton?

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/3koeAIfmg9Q/story01.htm Reggie Middleton

krugman-picsay

Paul Krugman wrote an anti-cryptocurrency Op-Ed piece in the NY Times titled the “Anti-social Network“. Now, I know the Times needs to sell ad space and subscriptions, hence technical accuracy may not be exactly what they are going for, but Mr. Krugman (the classical Keynesian economist type – I don’t particularly subscribe to such schools of thought, I guess I’m not educated enough) has spewed so many inaccurate statements, false facts and just plain old indications of his total misunderstanding of the subject matter one would think it would behoove the Times to either have him issue corrections (or, since it is Op-Ed after all) have someone such as my self (you know, maybe a little less academically involved) come after him and clean up a little. 

Now, where shall I start? To quote Mr. Krugman:

So how is bitcoin different? Unlike credit card transactions, which leave a digital trail, bitcoin transactions are designed to be anonymous and untraceable. When you transfer bitcoins to someone else, it’s as if you handed over a paper bag filled with $100 bills in a dark alley.

I don’t think that’s true Mr.Krugman. Let’s refer to Wikipedia’s write-up on the Cryptocurrency…

 Once validated, every individual transaction is permanently recorded in a public ledger known as the blockchain.^[8] 

I believe Mr. Krugman made this error due to the accuracy of a statement made earlier in the Wikipedia description of Bitcoin, to wit:

Bitcoin (sign:  ; code: BTC or XBT^[7]) is a peer-to-peer digital currency that functions without the intermediation of a central authority.^[8] 

You see, the old school way of applied economics may very well have a big problem wrapping their collective heads around the concept of the absence of a “central authority” (read central bank) to act as the Grand Pubah, or ultimate financial intermediary. I’m just saying..

And to go on with the oh so witty comments from Mr. Krugman…

And sure enough, as best as anyone can tell the main use of bitcoin so far, other than as a target for speculation, has been for online versions of those dark-alley exchanges, with bitcoins traded for narcotics and other illegal items.

Bitcoin is a currency that’s no older than 4 or 5 years. Has any other currency experienced a genesis any different than Bitcoin? The US dollar, when freshly minted was used for the spurious trade of human lives, the lives of my very own relatives several generations back, actually. It was the tool for rampant speculation as well, prone to extreme volatility and purposeful devaluations. Was it really so different from Bitcoin before it went mainstream (that is except for the purposeful devaluations part since there is no Grand Pubah to unilaterally call the market shots)? Methinks this economist may be picking and choosing his facts. For instance, look at how he started the Op-Ed missive in the first place…

Bitcoin’s wild ride may not have been the biggest business story of the past few weeks, but it was surely the most entertaining. Over the course of less than two weeks the price of the “digital currency” more than tripled. Then it fell more than 50 percent in a few hours. Suddenly, it felt as if we were back in the dot-com era.

The economic significance of this roller coaster was basically nil. But the furor over bitcoin was a useful lesson in the ways people misunderstand money — and in particular how they are misled by the desire to divorce the value of money from the society it serves.

Volatility is the name of the game with new currencies that have limited penetration and distribution, no? Why pick on bitcoin? Let’s recall how the US dollar got started via the continental note, as per Wikipedia:

By the end of 1778, Continental Currency retained between only 1/5 to 1/7 of their original face value. By 1780, Continental bills – or Continentals – were worth just 1/40th of their face value. Despite efforts by Congress to reform the currency by removing the old bills from circulation and issuing new ones, the attempt met with little or no success. By May 1781, Continentals had become so worthless they ceased to circulate as money. Benjamin Franklin noted that the depreciation of the currency had, in effect, acted as a tax to pay for the war.^[1] In the 1790s, after the ratification of the United States Constitution, Continentals could be exchanged for treasury bonds at 1% of face value.^[2]..

Hey, it doesn’t end there…

 On August 8, 1785, the Continental Congress of the United States authorized the issuance of a new currency the US dollar.

However runaway inflation and the collapse of the Continental currency prompted delegates at theConstitutional Convention in Philadelphia in 1787 to include the gold and silver clause into the United States Constitution preventing individual States from issuing their own bills of credit. Article One states they were prohibited to “make any Thing but gold and silver Coin a Tender in Payment of Debts.”^[4] 

 Paul then goes on to compare Bitcoin enthusiasts to Goldbugs – which was inevitable. I’m far from a Goldbug, and those that follow me can attest. Apparently Mr. Krugman isn’t either, but he appears to make a specious argument, to wit:

The similarity to goldbug rhetoric isn’t a coincidence, since goldbugs and bitcoin enthusiasts — bitbugs? — tend to share both libertarian politics and the belief that governments are vastly abusing their power to print money. At the same time, it’s very peculiar, since bitcoins are in a sense the ultimate fiat currency, with a value conjured out of thin air. Gold’s value comes in part because it has nonmonetary uses, such as filling teeth and making jewelry; paper currencies have value because they’re backed by the power of the state, which defines them as legal tender and accepts them as payment for taxes. Bitcoins, however, derive their value, if any, purely from self-fulfilling prophecy, the belief that other people will accept them as payment.

I really need somebody from the academic ivory towers to explain to me the difference between paper currencies being backed by the power of the state and Bitcoins alleged self fulfilling fulfilling prophecy of the belief that other people will accept them as payment. Both of these concepts share one common theme that seems to have escaped Mr. Krugman – Belief!!! Being backed by the full faith and power of the government means nothing unless you believe that government backing has a real value. That real value, if you do believe in it, is solely a function of your level of belief in the government and the governments willingness to back the currency  and to what extent. After all, Greek bonds written under Greek law are backed by their government as well, as are Somalian bonds. So, pray tell, what’s the difference between the value of those bonds and US treasuries? Belief, that’s the difference! Again, a refresher from Wikipedia:  

Today, like the currency of most nations, the dollar is fiat money, unbacked by any physical asset. A holder of a federal reserve note has no right to demand an asset such as gold or silver from the government in exchange for a note.^[28] Consequently, some proponents of theintrinsic theory of value believe that the near-zero marginal cost of production of the current fiat dollar detracts from its attractiveness as a medium of exchange and store of value because a fiat currency without a marginal cost of production is easier to debase via overproduction and the subsequent inflation of the money supply.

 

 

Who is Reggie Middleton?

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/3koeAIfmg9Q/story01.htm Reggie Middleton

Back in April 2012, before the topic of the Capital Expenditures crunch was even touched by the mainstream media, we penned “How The Fed’s Visible Hand Is Forcing Corporate Cash Mismanagement” in which we explained why as a result of faulty Fed policy corporations are dumping all their excess cash in dividends and buybacks, and which “means far less cash left for SG&A, i.e., hiring workers, as temp workers is the best that the current “recovering” economy apparently can do. It also means far, far less cash for CapEx spending. Which ultimately means a plunging profit margin due to decrepit assets no longer performing at their peak levels, and in many cases far worse.” Since then, virtually everyone has jumped on the “lack of CapEx” bandwagon. Alas, in today’s Durable Goods report we got yet another confirmation that over a year and a half ago we were once more right: there is simply no capex growth in the Fed’s centrally-planned New Normal.

While the Census Bureau disclosed that headline Durable Goods declined in October by 2.0% (and much more on an unadjusted basis), this was in line with expectations, and was driven by an unexpected -15.9% collapse in new aircraft orders, driven by Boeing which had a 60% drop in orders, down from 127 to only 79 for the month. However, the big surprise was in the ex-transport durable goods number, which declined by -0.1%, crushing expectations of a 0.5% increase and down from last month’s revised +0.2%. In other words, the modest rebound in orders in late summer now appears to have been purely a function of channel stuffing, which now has to work its way through the system, as manufacturing with unfilled orders dropped by a whopping -3.1%.

The sharp downward inflection point in both sets of order books can be seen clearly in the two charts below:

It will get much worse in November if there is no pick up in orders as the Y/Y will once again trend down to the unpleasant 0% number.

But the punchline was in the Core CapEx data set: the Capital Goods orders non-defense ex transports, which shocked everyone by dropping -1.2%, once again leaving the consensus estimate of a 0.8% increase hanging, and is the fifth consecutive miss in a row!

Finally, the capex shipments also declined by -0.2%, putting a nail on all those stories which predicted, as they do every year, that this year will finally be the year in which US corporate capex spending picks up. It did not. And 2014 will be no different either, when dividends and buybacks dominate, to the detriment of actual investment in labor and the long-run. Thank you activist investors.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/hZBafEjdfpY/story01.htm Tyler Durden

Initial claims fell 10k from last week’s revised (and missing 5 states) data for its biggest beat in 2 months and lowest print in 2 months. The ‘consistent’ YoY ebbing of the initial claims print (aside from the last month or so’s statistical glitches and idiocy) is all too predictable and the market simply shrugged as the claims data remains the least correlated to any sense of employment reality of all jobs data. This is the first supposedly “clean” data with no estimates in 2 months, however, the BLS is quick to point out that “claims are difficult to seasonally adjust during holidays” – so another pinch of salt for this data point.

 

 

but ‘it’s different this time’ and not structural at all…

 

Still think the claims data has anything useful to say about the economic progress the US is making?

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/4JdFLlLTnIk/story01.htm Tyler Durden

Initial claims fell 10k from last week’s revised (and missing 5 states) data for its biggest beat in 2 months and lowest print in 2 months. The ‘consistent’ YoY ebbing of the initial claims print (aside from the last month or so’s statistical glitches and idiocy) is all too predictable and the market simply shrugged as the claims data remains the least correlated to any sense of employment reality of all jobs data. This is the first supposedly “clean” data with no estimates in 2 months, however, the BLS is quick to point out that “claims are difficult to seasonally adjust during holidays” – so another pinch of salt for this data point.

 

 

but ‘it’s different this time’ and not structural at all…

 

Still think the claims data has anything useful to say about the economic progress the US is making?

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/4JdFLlLTnIk/story01.htm Tyler Durden

It didn’t take long to escalate Iran-Saudi relations, or the lack thereof, following this weekend’s nuclear (non) deal. Moments ago Iran’s Fars news agency reported that Iran’s coast guards have seized two Saudi fishing vessels after they entered the Islamic Republic’s territorial waters, a provincial official announced on Wednesday. “Yesterday, the coast guards deployed in the country’s Southern waters came to spot two vessels in Iran’s protected waters in the South using electronic and optic tools and equipment,” Commander of Bushehr province Coast Guards Qalandar Lashkari said. He said that the Iranian coast guards rushed to the scene and were faced with two vessels which were illegally fishing in the Iranian waters under the Saudi flag.

It was not immediately clear if, as in the case of China’s air defense zone, the US promptly decided to drive a battleship in Iran’s territorial waters, just because it can. However, the Saudi response will certainly be just as acute.

Noting that 9 sailors were arrested thereafter, Lashkari said further investigation showed that the 9 people are nationals of different countries.

 

Also earlier this year, forces of the Islamic Revolutionary Guards Corps (IRGC)’s second naval zone seized another Saudi vessel and its four-strong crew after it illegally entered Iranian waters. The vessel was later expelled.

 

In a relevant event on January 3, Saudi Arabia detained 21 Iranian nationals who were aboard two boats near al-Harqus Island 42 miles (78 km) off the Saudi coast, the Saudi border guard said.

We may need before an Israeli boat is arrested, and mysteriously blows up, before the middle-east returns to its wild type irrational, militant state.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/QFaZf2-H5CU/story01.htm Tyler Durden

• Winter storm lashes eastern U.S., threatens Thanksgiving travel (Reuters)
• Fed Reveals New Concerns About Long-Term U.S. Slowdown (BBG)
• Private equity keeps $789bn of powder dry (FT) – because they are “selling everything that is not nailed down”
• Merkel and SPD clinch coalition deal two months after vote (Reuters)
• Japan approves new state secrecy bill to combat leaks (BBC)
• CLOs are the new black: Volatile Loan Securities Are Luring Fund Managers Again (WSJ)
• Health website deadline nears (WSJ)
• Norway Debates $800 Billion Wealth Fund’s Investment Options (BBG)
• Set of global trade deals stalls (WSJ)
• Berlusconi To Learn Fate In Senate  (Sky)
• Silvio Berlusconi withdraws support from Italy’s government (FT)
• Thai Politician Leads Protesters to Defy Government (WSJ)
• Iran Deal Ripples Felt From Syria War Zones to Saudi Palaces (BBG)
• Iran opens contacts with oil groups (FT)
• Soccer World Cup Stadium Costs Soar by $435 Million in Brazil (BBG)

 

Overnight Media Digest

WSJ

* The Obama administration is moving to rein in the influence of tax-exempt groups in elections by creating rules to restrict their spending on a wide range of campaign-related activities.

* Cox Communications is considering jumping into the bidding for Time Warner Cable Inc according to people familiar with the situation, the latest twist in a fast-evolving takeover battle for the second-largest U.S. cable operator.

* Men’s Wearhouse Inc launched a surprise offer to buy rival men’s clothing retailer Jos. A. Bank Clothiers Inc turning the tables on its erstwhile suitor in what has become one of the year’s most colorful takeover dramas.

* Hewlett-Packard Co appeared to take a step forward in its latest turnaround effort with increased sales of corporate computers. But fiscal fourth-quarter revenue fell in each of its other units, highlighting ongoing challenges at the tech giant.

* After setting a deadline to fix the HealthCare.gov website, Obama administration officials have offered largely inexact measures of success. That has prompted Republicans to accuse the White House of moving the goal posts.

* Jon Horvath, the government’s star witness against Michael Steinberg, testified for the first time Tuesday, setting the stage for what will be pivotal testimony in the insider-trading case against the veteran SAC Capital Advisors LP portfolio manager.

* Vivendi SA’s board approved a plan to spin off its French telecommunication business next year and named top leaders to run the assets that will remain, pushing forward with its ambition to become a smaller media-focused firm.

* Investment funds aimed at individual investors are barreling into collateralized loan obligations, a complex and volatile type of security that was shaken by the financial crisis.

* The U.S. banking industry continued its recovery during the third quarter, reflecting the sector’s gradual rebound from the financial crisis, the Federal Deposit Insurance Corp said.

 

FT

Research group Preqin’s data shows that private equity firms are holding more cash for acquisitions and the value of unspent commitments to private equity funds has increased 12 percent since December 2012.

British Prime Minister David Cameron announced a crackdown on European Union immigration and said Europe has to reform to regain trust of its people.

The Serious Fraud Office may probe Royal Bank of Scotland under charges of criminal offence for systematically crushing smaller companies by forcing them out of business.

German power company RWE on Tuesday axed the 4 billion pound Atlantic Array project raising concerns over mixed signals that the UK energy policy was sending out to investors.

Spanish oil company Repsol has in principle agreed to accept a compensation of 5 billion pounds to settle dispute iver Argentine government’s seizure of its majority stake in YPF, according to sources.

Job search portal Adzuna says an upturn in construction has boosted vacancies in the south, making nine cities out of ten in southern England the best to get jobs.

 

NYT

* On Tuesday, Men’s Wearhouse abruptly turned the tables on Jos. A. Bank and bid $55 a share in cash to acquire its one-time suitor. It is rare for the prey to become the predator, a strategy that harks back to a 1980s corporate maneuver known as the Pac-Man defense.

* The star witness in the federal government’s insider trading prosecution of Michael Steinberg, once a senior trader at SAC Capital Advisors, told a federal jury on Tuesday why he was cooperating with prosecutors and testifying at the trial.

* The International Monetary Fund, convinced that Europe erred in forcing debtor countries like Greece and Portugal to bear nearly all the pain of recovery on their own, is pushing hard for a plan that would impose upfront losses on bondholders the next time a country in the euro area requests a bailout.

* The Securities and Exchange Commission announced a pair of enforcement actions on Tuesday, accusing Swiss company Weatherford International of bribery and a Detroit money market fund of fraud.

* Alfred Feld, the longest-serving employee at Goldman Sachs , with more than 80 years of service at the Wall Street bank, died on Monday in Palm Beach, Florida. He was 98. Feld was listed as a Goldman employee up until his death, although in recent years he came to work infrequently.

* Take-Two Interactive Software announced on Tuesday that it had bought back the stake held by Carl Icahn, compelling the resignations of three board members he was allowed to appoint.

* Applied Systems, a software company that focuses on the insurance industry, said on Tuesday that it had agreed to be acquired by the private equity firm Hellman & Friedman in a deal valued at $1.8 billion. The company is being acquired from Bain Capital, which purchased it for about $675 million in 2006.

* The Carlyle Group said on Tuesday that it would acquire the Diversified Global Asset Management Corporation, an independent hedge fund manager, the latest push by Carlyle into areas beyond its core leveraged-buyout bus
iness.

 

Canada

THE GLOBE AND MAIL

* Justin Trudeau is invoking the ghost of Jack Layton as he celebrates the Liberal Party’s strong showing in a series of by-elections, inflaming tensions with the New Democratic Party (NDP) and foreshadowing more negative politics between now and the 2015 general election.

* Higher mortgage rates and house prices have eroded the affordability of Canadian homes for the second quarter in a row. But the impact was largely confined to the markets for detached bungalows and single-family homes, which are becoming more of an unaffordable luxury in many parts of Toronto, Montreal and Vancouver, Royal Bank of Canada’s economics department suggests in a report to be released on Wednesday.

Reports in the business section:

* Sears Canada is laying off another 800 employees across its operations in the latest round of major cuts that have involved closing several of its highest profile department stores. The retailer said on Tuesday that most of the job losses would come from its repair parts and service business, where 712 staff are being eliminated over the next six months.

* While it continues to struggle in wealthier countries, BlackBerry Ltd is enjoying a surprising surge in Africa this year, offering a possible lesson in how the company could remain a competitive force in global markets with its cheaper devices.

NATIONAL POST

* An Ontario judge has ordered mercy for Martin McSweeney, the traumatized ex-boyfriend of Paul Bernardo victim Leslie Mahaffy, after the 38-year-old’s life descended into a legal nightmare that saw him lose his CSIS job and spend months in detention, all for allegedly sending an emotionally-charged message to his therapist.

* When all he wanted to do on Tuesday was raise his arms and hoist the C$5.2-billion ($4.9 billion) exclusive contract he had just announced with the NHL like it was a metaphorical Stanley Cup, Keith Pelley, president of Rogers Communications Inc’s media business, was peppered with questions about what the deal would mean for Canada’s media landscape.

FINANCIAL POST

* Real estate investment trusts, hampered by falling unit prices, have been squeezed out of the commercial property market over the last quarter by private investors, a new report shows.

 

China

CHINA SECURITIES JOURNAL

– The tax bureau of Shenzhen, a major southern Chinese city, said some property developers have dodged taxes by inflating expenses.

– Several investors, including private equity firm CDH, are interested in buying a strategic stake in real estate developer Greenland Group ahead of its planned Shanghai/Hong Kong dual listing.

CHINA DAILY

– Confucian thought, the basis of China’s education system for two millennia until the early 20th century, can still play a positive role in China’s development, President Xi Jinping said on a visit to the ancient sage’s hometown on Tuesday.

– There were over 69 million retirees (excluding civil servants) on the Chinese mainland by the end of 2012, according to data from the Ministry of Human Resources and Social Security. This was nearly double the figure in 2003.

CHINA BUSINESS NEWS

– China Mobile Ltd will launch 4G services next month, and will launch a new brand specifically for 4G.

– Microsoft had ended its partnership with TOM Online and will launch Skype services in China with new partner Guangming Founder.

PEOPLE’S DAILY

– China’s legal students and lawyers must learn from studying the people in order to contribute to building a legally governed socialist nation, an editorial in the official paper said.

 

Fly On The Wall 7:00 AM Market Snapshot

ANALYST RESEARCH

Upgrades

HP (HPQ) upgraded to Equal Weight from Underweight at Evercore
Isis Pharmaceuticals (ISIS) upgraded to Neutral from Underweight at Piper Jaffray
LATAM Airlines (LFL) upgraded to Neutral from Underperform at BofA/Merrill
Pzena Investment (PZN) upgraded to Overweight from Neutral at JPMorgan
UBS (UBS) upgraded to Outperform from Sector Perform at RBC Capital

Downgrades

Analog Devices (ADI) downgraded to Hold from Buy at Drexel Hamilton
Copa Holdings (CPA) downgraded to Sell from Neutral at UBS
Denny’s (DENN) downgraded to Neutral from Buy at Janney Capital
Intel (INTC) downgraded to Sector Perform from Outperform at RBC Capital
OGE Energy (OGE) downgraded to Hold from Buy at Jefferies
Signature Bank (SBNY) downgraded to Neutral from Buy at Sterne Agee
TiVo (TIVO) downgraded to Equal Weight from Overweight at Evercore
Tilly’s (TLYS) downgraded to Market Perform from Outperform at William Blair
Tilly’s (TLYS) downgraded to Neutral from Buy at Goldman

Initiations

Altisource Residential (RESI) initiated with a Buy at Deutsche Bank
Cedar Fair (FUN) initiated with an Outperform at FBR Capital
Chimerix (CMRX) initiated with an Overweight at Piper Jaffray
GW Pharmaceuticals (GWPH) initiated with an Overweight at Piper Jaffray
Insmed (INSM) initiated with an Overweight at Piper Jaffray
Merchant Bancshares (MBVT) initiated with a Buy at Sterne Agee
Nektar (NKTR) initiated with an Overweight at Piper Jaffray
Oi S.A. (OIBR) initiated with an Outperform at Bernstein
Qunar (QUNR) initiated with a Hold at Deutsche Bank
Repros Therapeutics (RPRX) initiated with an Overweight at Piper Jaffray
Ruckus Wireless (RKUS) initiated with a Buy at Stifel
SeaWorld (SEAS) initiated with a Market Perform at FBR Capital
Six Flags (SIX) initiated with a Market Perform at FBR Capital

HOT STOCKS

HP (HPQ) CEO Whitman said turnaround remains on track heading into fiscal 2014
Burger King (BKW) established JV with Groupe Olivier Bertrand in France
Crocs (CROX) said to be in discussions with Blackstone (BX), other firms, Bloomberg reports
Archer Daniels (AADM) announced enhanced commitments for GrainCorp acquisition
GNC Holdings (GNC) announced $500M share repurchase authorization
CME Group (CME) sold NYMEX building to Brookfield Office (BPO) for $200M
Frontline (FRO) won’t pay a dividend for Q3

EARNINGS

Companies that beat consensus earnings expectations last night and today include:
Frontline (FRO), Shanda Games (GAME), AeroVironment (AVAV), Zale (ZLC), Infoblox (BLOX), Tilly’s (TLYS), HP (HPQ), TiVo (TIVO), Analog Devices (ADI)

NEWSPAPERS/WEBSITES

• Amec is looking to acquire Foster Wheeler (FWLT), the London Times reports
• Sinopec (SHI), China’s largest refiner, is in early talks with Apache (APA) to buy a minority stake in a LNG project called Kitmat on Canada’s Pacific coast, sources say, the Wall Street Journal reports
• Amid all the talk about consumers moving away from old-school TV and towards streaming services, TiVo (TIVO) is still adding customers wanting to watch regular old TV, albeit with a digital twist. The company showed no signs of slowing growth in Q3 as it reported a big jump in subscriptions despite an increasing list of competitors, the Wall Street Journal reports
• Danaher Corp. (DHR) and Blackstone Group (BX) are pursuing a joint bid for chemicals manufacturer Ashland’s (ASH) water technologies unit, sources say, in a deal that could top $1.5B, Reuters reports
• Global banks and asset managers (GS, UBS) are opening hedge funds in Asia for the first time since the 2008 financial crisis, putting pressure on smaller firms that are already struggling to hold onto investors, Bloomberg reports
• International anger over the NSA’s Internet surveillance is hurting global sales by American technology companies and setting back U.S. efforts to promote Internet freedom. Disclosures of spying abroad may cost U.S.
  companies (IBM, INTC, AAPL, GOOG, CSCO) as much as $35B in lost revenue through 2016, Bloomberg reports

SYNDICATE

Acasti Pharma (ACST) files to sell common units and warrants
Global Brass & Copper (BRSS) files to sell 7.31M shares for holders
Pinnacle Foods (PF) files to sell 17M shares for holders

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/JcYx-sJbGYg/story01.htm Tyler Durden

One of the more painfully clueless observations made by pundits in recent weeks is that just because everyone is talking about a bubble, there can not possibly be a bubble.

Naturally, if one is tuned to only filter any bubble mentions, one will naturally have a cognitive bias of interpreting the world only through the eyes of “bubble watchers.” The flipside of course is that not everyone is a mindless member of the herd, rushing headlong into whatever precipice awaits lemmings just around the corner, and can still do simple math and recall what fundamentals looked like (as a reminder, forward multiples in 2007 looked very cheap too…before EPS for the S&P in 2008 plunged by over 50% which in retrospect would have made those forward multiples 100% higher).

But simple logic failure aside, what empirical evidence shows is that while there has been indeed a pick up in internet mentions of “stock bubble” according to Google Trends, it is still well below its prior high… hit in May 2007 and October 2007, just before and at the very peak of the last stock bubble.

We can only assume that the same pundits that somehow are getting airtime now, were the same ones who said in the summer of 2007 when the S&P had hit its prior, non-QE assisted all time high, that just because everyone is talking about a bubble there can’t possibly be a bubble…

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/a8j8mbf6GgI/story01.htm Tyler Durden