For The First Time In Four Years Caterpillar Posts Negative Retail Sales Across The Board

All “recovery watchers” are urged to look somewhere else than the just released monthly Caterpillar dealer retail sales. Because while in September there was some hope that North American industrial demand may finally be picking up when retail sales on the continent posted the first two month sequential increase since 2012 even as the rest of the world was stuck deep in negative territory, that hope too was just been dashed with October North American retail sales posting the first decline of -2% since July. And unfortunately while North American sales just rejected any glimmer of a localized recovery, the rest of the world just keeps getting worse and worse, with negative sales prints across the board for every region – the first time this has happened since February 2010. The only difference is that then the trend was higher. Now, well, it isn’t.

As for the rest of the CAT story: we have covered it more than enough in the past – find more here, here, here and here. And then there is, of course, Jim Chanos.


via Zero Hedge Tyler Durden

"Whatever It Takes": European Corporate Results Crater Thanks To Strong Euro

Talking-heads and commission-takers have momentum-chased clients’ hard-earned money into Europe’s ‘what works now’ markets – on the basis of what has now proved to be entirely fallacious macro- and micro-fundamental improvement (as we noted here and here). But, while “whatever it takes” has smashed bond spreads lower and has blown stock prices higher; most critically, the ‘confidence’ has seen the EUR rise almost 15% against the USD from its July 2012 “whatever It Takes” lows. The effect of this EUR strength is to collapse earnings growth expectations as European competitiveness is crushed (core or periphery). Of course, bulls can rest assured, as the following chart shows, 2014 is expected to hockey-stock back to record EPS growth (just like 2013 was supposed to?).


So it would seem, “whetever it takes” now means – jawbone the EUR down whenever we can… (and we wonder what that will do to US earnings as the USD is ramped)…


Source: UBS


via Zero Hedge Tyler Durden

“Whatever It Takes”: European Corporate Results Crater Thanks To Strong Euro

Talking-heads and commission-takers have momentum-chased clients’ hard-earned money into Europe’s ‘what works now’ markets – on the basis of what has now proved to be entirely fallacious macro- and micro-fundamental improvement (as we noted here and here). But, while “whatever it takes” has smashed bond spreads lower and has blown stock prices higher; most critically, the ‘confidence’ has seen the EUR rise almost 15% against the USD from its July 2012 “whatever It Takes” lows. The effect of this EUR strength is to collapse earnings growth expectations as European competitiveness is crushed (core or periphery). Of course, bulls can rest assured, as the following chart shows, 2014 is expected to hockey-stock back to record EPS growth (just like 2013 was supposed to?).


So it would seem, “whetever it takes” now means – jawbone the EUR down whenever we can… (and we wonder what that will do to US earnings as the USD is ramped)…


Source: UBS


via Zero Hedge Tyler Durden

Core Retail Sales Just Beat Expectations While Annual Inflation Drops To Lowest Since 2009

Following several months of disappointing retail sales, and two months of missed expectations, October finally saw the best beat in headline expectations since April, with retail sales rising 0.4% vs 0.1% expected. However, as has been the case in all of 2013, the bulk of this beat was driven by car sales, which rose by 1.3%, leaving sales ex autos beating by the tiniest of fractions at 0.2% vs 0.1% expected, and ex autos and gas +0.3%, vs 0.2% expected.

Looking at the components, following month after month of clothing store
sales misses, this category finally posted a modest 1.4%
rebound, together with an increase in Electronic and Sporting goods
sales, amounting to 1.4% and 1.6%, respecitvely. This was offset by the
traditionally strong Building materials sales which declined by 1.9% in


Unlike the exuberant inflation-spree that government-provided CPI showed during the Fed’s QE2, since the start of QE3, inflation data (according to the never-manipulated government providers) has been on a downtrend. The latest print  – at expectations of 1.0% year-over-year – is the lowest CPI since October 2009. What is perhaps more notable is the drop into deflation on MoM basis (CPI -0.1% MoM vs +0.1% exp). Of course, the market’s reaction is exuberance as this clearly gives the Fed a green light to provide more life-giving liquidity to enable nominal stock prices to rise. However, a glance at the chart below might just remind traders (and the Fed) of the Einsteinian foolishness that expectation.



via Zero Hedge Tyler Durden

BoE Survey Shows Growing Fears Of House Price Crash

Today’s AM fix was USD 1,271.50, EUR 939.69 and GBP 787.11 per ounce.
Yesterday’s AM fix was USD 1,272.25, EUR 942.13 and GBP 790.12 per ounce.

Gold fell $0.30 or 0.02% yesterday, closing at $1,273.40/oz. Silver slipped $0.09 or 0.44% closing at $20.32/oz. Platinum climbed $3.40 or 0.2% to $1,411.40/oz, while palladium rose $3.75 or 0.5% to $718.47/oz.

Gold in GBP, 1 Year – (Bloomberg)

Gold in sterling terms is testing strong support at the £775/oz level. A breach of this level could lead to gold testing the next level of support at £740/oz and below that at £700/oz which was resistance in 2009 (see 5 year chart below).

Gold was trading in a tight range until it suffered another very sharp concentrated sell off at 1126 GMT which led to prices falling from $1,272/oz to $1,259/50 in seconds. The selling was so furious and concentrated that it led the CME to stop trading for a significant twenty seconds. Some entity appeared determined to get the gold price lower and they succeeded – for now.

Gold failed to make any headway despite dollar weakness after more dovish comments from exiting Fed Chairman Ben Bernanke about the bank’s bond purchases.
Bernanke said yesterday that the Fed will maintain an ultra loose U.S. monetary policy for as long as needed and will only begin to taper bond buying once it is assured that labour market improvements would continue.

The assumption that QE will be trimmed is like a lot of assumptions – wrong. There are strong grounds for believing that the weak state of the U.S. economy may lead to Bernanke’s even more dovish successor, Yellen, increasing the QE programme.

Physical demand continues at these levels but is not at the very high levels seen in recent months.

Many bullion coin and bar buyers have accumulated their allocation of gold and silver and are waiting for higher prices. There is a real sense of the calm before the storm in the gold market. How that will manifest and the catalysts for a resumption of the bull market is yet to be seen.

Gold in GBP, 5 Year – (Bloomberg)

?The Bank of England’s Systemic Risk Survey semi annual report to quantify and track market participants’ views of risks to, and their confidence in, the UK financial system shows increasing concerns of a house price crash.

The report presents the results of the 2013 H2 survey, which was conducted between 23 September and 24 October 2013 with 76 financial services companies.

Fears that a house price crash could damage the financial system have risen sharply in the last year, the key Bank of England survey shows. Increased concerns were expressed by the participants over ultra loose monetary policies and the extended low interest rate period.

Concerns about a property price bubble rose and were mentioned by 36% of respondents, up 21% from 14% since the previous survey in the second half of 2012. Concerns were concentrated almost exclusively on the residential market, where responses focused on the risk of a house price correction. 

As we know house price corrections tend to feed on themselves and often lead to house price crashes.

Other Key Risks To The UK Financial System:
• Perceptions of the two main risks to the UK financial system remain sovereign risk and the risk of an economic downturn, although citations of both have fallen: 74% of respondents mentioned the former (-3 percentage points since May 2013) and 67% (-12 percentage points) the latter. Concerns over sovereign risk continue to focus on Europe, but unsurprisingly given the uncertainty surrounding the U.S. debt ceiling negotiations that prevailed during the survey period, there was a sharp increase in concerns around U.S. sovereign risk.

• For the second survey in succession, risk surrounding the low interest rate environment was the fastest growing, with 43% of respondents citing it, up 17 percentage points since May 2013. Over half of the responses emphasised risks around low rates, with the remainder referring to risks associated with a snapback in those low rates to more normal levels. Perceived risk around property prices also rose, being mentioned by 36% of respondents, up 11 percentage points since the previous survey. Concerns were concentrated almost exclusively on the residential market, where responses focused on the risk of a house price correction.

• Other top risks include regulation/taxes (cited by 41% of respondents, up 1 percentage point since May 2013), financial institution failure/distress (+4 percentage points to 30%) and operational risk (+1 percentage point to 25%).

Outside of the top seven, geopolitical risk has grown in prominence, with concern focusing on instability in the Middle East.

The report may have led to GBP weakness upon its release as the pound fell against the dollar, euro and gold.

UK Rightmove Regional Avg Asking Price Greater London, 2002-Today – (Bloomberg)

Interestingly, also on Monday came news of a sharp 5% drop in London property prices in what could portend a bust of the London property bubble.

Values in the U.K. capital dropped 5%, or 26,956 pounds ($43,500), from the previous month to an average 517,276 pounds, Rightmove PLC said Monday. Across England and Wales, average prices declined by 2.4%.

Estate agents and property industry blamed the falls on a seasonal pre-Christmas decline, however valuations are extremely stretched with very low yields and the hot money that has fueled the huge increase in London property prices may be pulling back.

UK Rightmove Regional Avg Asking Price Greater London, 2006-Today – (Bloomberg)

“This is different” and “this location is different” is the mantra of every property bubble. We will soon see if the London property bubble is truly different or will suffer the fate of bubbles throughout history.

Of the four charts in our market update today, which ones do you think show characteristics of a bubble?

Those diversifying and buying gold in the UK today will be rewarded in the coming years. The smart money is reducing exposure to overvalued London property and increasing exposure to undervalued gold.

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via Zero Hedge GoldCore

Bitcoin Bonanza

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Five years ago it was worth $0. Then, a month and a half ago it went to $150 a piece. On Monday it shot to over $600. On Tuesday, the value rose to over $900, meaning a 6, 445%-increase in value since the start of the year. It plummeted to $531 at midday today and then recovered reaching $793 while being traded on the Asian markets. Bitcoin: it’s the bonanza of the century.

Volatility and hikes are based on nothing except speculation and the desire to make a mint, thinking that you can predict what the markets are going to do. But, will that Bitcoin volatility lead to a bubble? Or is it bringing in a new era of a new type of currency that people are willing to use and that merchants are now being forced to accept? It might never become a legitimate currency in the future, but that’s hardly important when you can make a profit from it. Of course central banks are at risk from the use of virtual currencies as it would mean that they would have little control over what we spend and how transactions are carried out. Is Bitcoin the death of our central banks?

Some might say that Bitcoin is associated with crime and is an easy way for illicit transactions to take place. Tell me one currency in the world that isn’t laundered these days? Tell me one place in the world where there is a currency that is clean? Pure snow-white virgin money doesn’t and never has existed. Just because it’s associated with crime doesn’t mean it’s not good for the rest of the world. All of the currencies of the world are associated with crime somehow.  Perhaps after all the fall of the Dollar, the death of the greenback will not be because the Chinese have taken the world over and imposed the Renminbi as the reserve currency on the world. Perhaps it will be the Bitcoin that takes over the world economically today.

  • When Bitcoin started out in 2009 after being founded by Satoshi Nakamoto (or under his real name of Gavin Andresen) one Bitcoin was worth $0.30.
  • Bitcoin Transactions in $ 

  • Bitcoin Transactions in $

  • It rose to $32, but then fell to $2. There are some 12 million Bitcoins in circulation today and the number of Bitcoins issued every four years is reduced by 50% (and will be until that number reaches a circulation level of 21 million Bitcoins).
  • The currency is already accepted on some of the world’s most highly-ranked internet sites today:
    • ranked 22 in the world, offering custom-designed software and templates. They have accepted Bitcoins since November 2012.
    • The Pirate Bay, ranked 108 in the world which started accepting Bitcoins in April 2013 for their music and move-software directory.
    • Reddit, which ranks 117 in the world and accepted Bitcoins for the first time in February 2013 for the social and entertainment network site.

There are plenty more and they will be increasing in the future, simply because it’s the people that have decided that they are willing and ready to use Bitcoins as a means of exchange. Have the people started the demise of the Dollar and all other currencies? Are we living a moment in history that we shall look back upon in years to come as we wave goodbye to the hegemonic control of the politically-aided and biased reserve currency that is the greenback and that all other currencies are vying to overtake? Will they all lose out, because we have decided for it to happen? That will certainly wipe the smile off the faces of some at the top of the hill.

Gaining legitimacy is essential for the Bitcoin to be a valued and a valuable means of exchange.  The difference between Bitcoin and any other currency that is controlled by a government is that Bitcoins have become accepted because the market has decided that they are. People want them and merchants accept them. It is not a political currency but quasi-commodity money.  The number of transactions has suddenly increased since the start of November and it has now reached dizzy heights around the world. Even governments are starting to recognize the existence and the validity of Bitcoins today. Germany in August 2013 decided to recognize the virtual money as a real currency, legally and fiscally approving it is valid.

When Andresen spoke of begging Julian Assange not to use Bitcoin back in 2010 as a means of getting around the normal method of financial transactions and thus finding a route to funding WikiLeaks, he said ‘it will destroy us’ adding that they were too small a company to be able to deal with it. Although, with hindsight the ‘you-will-destroy-us’- statement probably had little to do with the nascent company not being able to cope with the financial trading of the currency that had been invented, but the fact that Bitcoin would have been closed down and nipped in the bud before it had got off to a start. Now we can see why Bitcoin wanted to steer away from that can of worms. It had greater things in its sights than WikiLeaks.

It’s a rare thing to have the opportunity today to choose which currency we want to use. Maybe this time the choice will be the right one. Maybe the central banks, the ones that have done the damage in the past and are continuing to do so today will have their power taken away from them.

Climbing the greasy pole that politics has become is nothing to do with who you are and what you say. It has everything to do with where you come from and what you have in the bank account to back you up.


Originally posted: Bitcoin Bonanza


The Super Rich Deprive Us of Fundamental Rights |  Whining for Wine |Cost of Living Not High Enough in EU | Record Levels of Currency Reserves Will Hit Hard | Internet or
World Ready to Jump into Bed with China

 Indian Inflation: Out of Control? | Greenspan Maps a Territory Gold Rush or Just a Streak? | Obama’s Obamacare: Double Jinx | Financial Markets: Negating the Laws of Gravity  |Blatant Housing-Bubble: Stating the Obvious | Let’s Downgrade S&P, Moody’s and Fitch For Once | US Still Living on Borrowed Time | (In)Direct Slavery: We’re All Guilty |

Technical Analysis: Bear Expanding Triangle | Bull Expanding Triangle | Bull Falling Wedge Bear Rising Wedge High & Tight Flag



via Zero Hedge Pivotfarm

JCP Burns Through $3 Billion In 2013: All The Earnings Charts That Matter

Moments ago JCP announced results for Q3 which were atrocious, with Q3 earnings of -$1.81 coming in worse than already numerously lowered expectations of -$1.74. Comp store sales declined 4.8% with total revenues of $2.779 billion in the quarter, even as margins continued contracting, and dipped to 29.5%. The margin chart below says it all: Q3 margins have followed the following path: 2011- 37.4%, 2012 – 32.%5; 2013 – 29.5%… one can figure out what comes next. But most notably, in Q3 the company once again ignited its cash burn afterburners, with total free cash flow of $898 million, bringing the total cash burn for 2013 to a whopping $3 billion! Luckily for the company, in 2013 it has been able to fund all of this cash burn through a combination of cash and stock, amounting to $3.2 billion YTD. At October 31, the company had $1.2 billion in total cash which should allow it to enter 2014 without filing for bankruptcy, although with a total debt load of $5.6 billion compared to $3 billion a year ago, only very foolish people can possibly see how this story has anything but a very unhappy ending.

And with yet another horrible quarter in the books, and the company still hemmorhaging cash, we enter the make or break Q4, where revenues jump as margin crater, but cash flows are expected to increase. Because if JCP can’t generate positive FCF in the holiday quarter, it’s pretty much game over.

Free Cash Flow:


Revenues – Q4 will clearly be the liquidation make or break quarter.


Margins – liquidation comes at a price: if the margin is too low there will be no FCF. Can the company pull it off?


via Zero Hedge Tyler Durden

Frontrunning: November 20

  • JPMorgan $13 Billion Mortgage Deal Seen as Lawsuit Shield (BBG)
  • J.P. Morgan Is Haunted by a 2006 Decision on Mortgages (WSJ)
  • World powers, Iran in new attempt to reach nuclear deal (Reuters)
  • Keystone Foes Seek to Thwart Oil Sands Exports by Rail (BBG) – mostly Warren Buffet?
  • How Would Fed Deal With Debt Ceiling Crisis? Look to Minutes for Clues  (Hilsenrath)
  • Anything to prevent the loss of prop trading: ‘Volcker Rule’ Faces New Hurdles (WSJ)
  • BOE Sees Case for Keeping Record-Low Rate Beyond 7% Jobless (BBG)
  • Obama Backs Piecemeal Immigration Overhaul (WSJ)
  • Abenomics Seen Cutting Japan Bad-Loan Costs to 2006 Low (BBG)
  • Bernanke Signals Fed Target Rate to Stay Low Long After QE (BBG)
  • As Trader’s Trial Begins, Name of One Insider Stands Out (NYT)
  • U.S. Companies Split on Tax Plan (WSJ)
  • Sinopec in talks on Canada site for LNG project (Reuters)
  • Zurich Insurance Exiting New China Life (WSJ)


Overnight Media Digest


* President Obama, in an interview, said he would accept a piecemeal approach to revamping the immigration system, a shift from calls for comprehensive reform.

* The discovery of a 2006 meeting in which JPMorgan executives decided to continue selling shoddy mortgage securities despite red flags led to the biggest settlement between the government and a U.S. company.

* Two top regulators are raising new-and late-objections to the Volcker rule, arguing it is too soft on banks and threatening to further delay its implementation beyond the year-end deadline set by the Obama administration.

* Devon Energy is nearing a deal to buy GeoSouthern Energy for approximately $6 billion.

* Johnson & agreed to pay at least $2.5 billion to resolve thousands of lawsuits filed by patients who alleged they were injured by the company’s artificial hips.

* A Senate committee chairman released a sweeping proposal to overhaul the U.S. system for taxing corporations’ overseas profits, aiming to improve American firms’ global competitiveness while reducing their ability to dodge taxes offshore.

* Fed Chairman Ben Bernanke said that short-term interest rates may stay low “well after” the jobless rate falls below 6.5 percent, the latest effort by the central bank to assure markets that rates will remain low.

* Banks including Barclays Plc that are enmeshed in the global investigation into potential manipulation of foreign-exchange markets are looking into the possible roles played by their salespeople, according to people familiar with the matter.

* Top officials of the federal agency that regulates vehicle safety said Tuesday they support efforts by auto makers and digital technology companies to develop cars that can drive themselves, but cautioned it will be years before regulators are comfortable allowing fully autonomous vehicles on the road.



JPMorgan Chase agreed to pay $13 billion for mis-selling mortgage securities, in a landmark settlement with the U.S. Department of Justice and state authorities.

Fund managers in the U.S. have been making multi-billion-dollar bets on the recovery of eurozone banks over the past four months, believing that Europe’s stuttering economic recovery will soon gather pace.

A spate of scandals at the Co-operative Bank, the financial services arm of the UK’s largest co-operative, has suddenly tarnished the reputation of mutual and co-operative ownership in the United Kingdom.

Rupert Murdoch and Wendi Deng Murdoch are moving towards an ‘amicable’ divorce settlement this week, according to people familiar with the situation., Russia’s largest internet company, is expanding into the United States, by keeping its data centres in the Netherlands.

About a quarter of staff at stockbroker Oriel Securities have left the company in the past few months, highlighting the difficulties of the small-cap broking sector.



* President Obama is receiving surprising support among some states on allowing the renewal of canceled insurance plans: Of the 13 states that have said they will allow it, all but four are led by Republicans.

* JPMorgan Chase and the Justice Department reached a record $13 billion settlement on Tuesday, wrapping up a series of state and federal investigations that offer a rare glimpse into Wall Street’s mortgage machine before the financial crisis, when it churned out billions of dollars in securities that later imploded.

* In a speech in Washington, the central bank’s chairman, Ben Bernanke, said that even as the stimulus wound down, efforts would remain in place to keep interest rates low.

* Jefferson County, Alabama, will ask a federal court on Wednesday to approve its plan for exiting bankruptcy, including court oversight for a period of 40 years.

* A proposal from Max Baucus, chairman of the Senate Finance Committee, seeks to start the process of lowering corporate tax rates while slowing the flow of jobs and money abroad.

* Johnson & Johnson and lawyers for patients injured by a flawed hip implant announced a multibillion-dollar deal on Tuesday to settle thousands of lawsuits, but it was not clear whether the deal would satisfy enough claimants.

* After a third battery fire in a Tesla car in six weeks, the National Highway Traffic Safety Administration said Tuesday that it had started a formal investigation.

* The chairman of the Federal Communications Commission said on Tuesday that the agency would begin “a diverse set of experiments” next year that would begin to move the nation’s telephone system from its century-old network of circuits, switches and copper wires to one that transmits phone calls in a manner similar to that used for Internet data.




* Less than 24 hours after its debut on Monday night, Sun News axed “Ford Nation”, its highly touted TV talk show starring Toronto Mayor Rob Ford and Councillor Doug Ford
, despite record ratings for the network.

* Still reeling from its $1 billion gas-plant debacle, Ontario’s Liberal government says it will avoid making commitments for large-scale new power projects.

Reports in the business section:

* Relations between the Canadian federal government and the wireless industry have sunk to a historic low, raising the prospect that Canada’s Big Three carriers will face increasing pressure from regulators on issues such as domestic roaming charges.

* An order from low-cost airline flydubai announced at the Dubai Air Show illustrates one of the problems Bombardier Inc faces trying to crack the Airbus-Boeing duopoly with its single-aisle C Series aircraft.


* Toronto city hall has begun the transition to a new world order as key members of Mayor Rob Ford’s staff moved to the office of newly empowered Deputy Mayor Norm Kelly. Ford’s chief of staff Earl Provost moved to the deputy mayor’s office by his own accord, Kelly told reporters Tuesday afternoon.

* Architect Frank Gehry says there are only two buildings in Toronto worth saving: Old City Hall and Osgoode Hall. Everything else is fair game to be torn down, Gehry suggested to Toronto and East York Community Council on Tuesday morning.


* TransCanada Corp is playing up anxiety over crude-carrying trains in an explicit warning that the growing number of tank cars crisscrossing the continent poses a risk to public safety.

* Canada’s billionaire Weston family is bolstering its luxury presence yet again in preparation for the debut of Nordstrom and this country’s looming luxury showdown.




– The ruling Communist Party of China set up a special group to go around the country to promote the leadership’s latest reform plan, seen as the boldest reforms planned in three decades.


– The northeastern city of Harbin in Heilongjiang province has been hit by its heaviest snowfalls since records began after snow fell for nearly 60 hours, leaving snow piled as high as 50 millimetres in some areas. The storm caused four deaths in neighbouring Jilin province but no casualties were reported in Heilongjiang.


– The plan announced by the Chinese leadership this month to quicken the pace of economic reforms, including stepping up the pace to make the Chinese currency yuan fully convertible, heralds a new phase of active cross-the-border capital flows in and out of China, economists say.

– The Shanghai International Energy Trading Centre, a unit of the Shanghai Commodity Exchange, will start operations on Friday, the latest step taken by the exchange to prepare the launch of China’s first crude oil futures, possibly in the first half of next year.


– More and more Chinese are now trading bitcoins, with the daily volume of Chinese trading even exceeding that on the professional platforms of Mt.Gox and BitStamp on Monday, statistics issued by showed.

– Despite a consolidation of China’s stock market on Tuesday, stock index futures continued trading in premiums against spots, indicating optimism sparked by the country’s latest bold reform plan still prevails the markets.


– Yields of China’s benchmark 10-year government bonds have hit multi-year highs recently due to the central bank’s tight liquidity stance and are likely to rise above the main 5-percent resistance soon.


– Some Chinese banks are set to suffer losses in the looming bailout plans of Suntech Power, with policy bank China Development Bank possibly losing 1.6 billion yuan ($262 million).


– Anhui province is experimenting with letting farmers mortgage or transfer control of the publicly owned land they farm as China tries to finds ways to create a land market. However, the farmers will not be granted ownership of the land.


Fly On The Wall 7:00 AM Market Snapshot



Best Buy (BBY) upgraded to Buy from Neutral at Citigroup
Cabot Oil & Gas (COG) upgraded to Outperform from Market Perform at Bernstein
Green Plains (GPRE) upgraded to Overweight from Neutral at Piper Jaffray
Layne Christensen (LAYN) upgraded to Neutral from Sell at UBS
Mobile TeleSystems (MBT) upgraded to Equal Weight from Underweight at Barclays
ONEOK Partners (OKS) upgraded to Neutral from Sell at Goldman
Pearson (PSO) upgraded to Buy from Neutral at BofA/Merrill (PCLN) upgraded to Conviction Buy from Buy at Goldman


Boeing (BA) downgraded to Perform from Outperform at Oppenheimer
C.H. Robinson (CHRW) downgraded to Hold from Buy at Deutsche Bank
Dick’s Sporting (DKS) downgraded to Underperform from Market Perform at BMO Capital
Heartland Payment (HPY) downgraded to Market Perform from Outperform at Wells Fargo
Patterson Companies (PDCO) downgraded to Neutral from Buy at UBS
WhiteHorse Finance (WHF) downgraded to Hold from Buy at Wunderlich
Workday (WDAY) downgraded to Market Perform from Outperform at Cowen


Allegion (ALLE) initiated with an In-Line at Imperial Capital
Computer Programs (CPSI) initiated with a Hold at KeyBanc
Dunkin’ Brands (DNKN) initiated with a Neutral at Buckingham
FEI Company (FEIC) initiated with a Neutral at Goldman
Flowserve (FLS) initiated with an Outperform at Cowen
IDEX Corp. (IEX) initiated with a Market Perform at Cowen
ITT Corp. (ITT) initiated with a Buy at Stifel
Laredo Petroleum (LPI) initiated with an In-Line at Imperial Capital
Mueller Water (MWA) initiated with a Market Perform at Cowen
Nuverra Environmental (NES) initiated with an Outperform at Cowen
Pall Corp. (PLL) initiated with a Neutral at Goldman
Pennaco Energy Inc Pentair (PNR) initiated with a Buy at Stifel
Rentech Nitrogen (RNF) initiated with a Market Perform at BMO Capital
Starbucks (SBUX) assuming coverage with a Buy at Buckingham
Symmetry Medical (SMA) initiated with a Buy at Wunderlich
Twitter (TWTR) initiated with a Neutral at BTIG (VITC) initiated with an Outperform at Imperial Capital
Watts Water (WTS) initiated with a Market Perform at Cowen
Xylem (XYL) initiated with an Outperform at Cowen


Novatek, Gazprom (OGZPY) purchased Eni (E) stake in SeverEnergia for $2.94B
JPMorgan to pursue WaMu receivership funds in separate litigation
Yahoo (YHOO) raised share buyback program by $5B
GE Capital Real Estate (GE) to acquire portfolio of commercial property loans valued at GBP1.4B from Deutsche Postbank
J&J’s (JNJ) DePuy announced $2.5B U.S. settlement to compensate hip system patients
ONEOK Partners (OKS) to invest an additional $650M-$780M in Williston Basin
National Health Investors (NHI) to acquire 25 independent living facilities for $491M


Companies that beat consensus earnings expectations last night and today include:
Sociedad Quimica (SQM), Gladstone Capital (GLAD), La-Z-Boy (LZB), Xueda Education (XUE)

Companies that missed consensus earnings expectations include:
Lowe’s (LOW), America’s Car-Mart (CRMT), Oculus (OCLS)

Companies that matched consensus earnings expectations include:
Staples (SPLS), Model N (MODN)


  • Two top regulators, the SEC and and the Commodity Futures Trading Commission, are raising new–and late–objections to the “Volcker rule,” arguing it is too soft on banks and threatening to further delay its implementation beyond the year-end deadline set by the Obama administration, the Wall Street Journal reports
  • Electronics retailers (BBY, WMT, SNE, MSFT, RSH, SPLS) are bracing
    for a tough holiday season, as already narrow profit margins are expected to be shaved even thinner, the Wall Street Journal reports
  • Short-seller Jim Chanos of Kynikos Associates said that shares of international oil majors like Exxon Mobil (XOM) increasingly look like a value trap for investors as cash flows decline and return on capital slides. His comments came a week after Warren Buffett (BRK.A) disclosed a large position in Exxon, Reuters reports
  • Sharp Corp. (SHCAY) may get an original equipment manufacturing  deal to make copy machines under the Hewlett-Packard (HPQ) brand, sources say, Reuters reports
  • Bank of America Corp. (BAC) exceeded $15.06 yesterday, the price on the day before Brian T. Moynihan became CEO about four years ago. The  lender rose 1.9%, bringing this year’s gain to 31%. That follows last year’s 109% advance, the best in the DJIA, as Moynihan eased investor concern that mortgage costs would force the bank to issue more stock, Bloomberg reports
  • Four Senate Republicans say they’re inclined to support Janet Yellen to be chairman of the Federal Reserve, leaving her nomination one vote short of the 60 needed for confirmation, Bloomberg reports


Aeterna Zentaris (AEZS) files to sell common stock and warrants
Atlantic Coast Financial (ACFC) files to sell $42M in common stock
Campus Crest (CCG) files to sell 9.95M shares of common stock for holders
Ceragon Networks (CRNT) files to sell common stock
Clovis (CLVS) files to sell 3.72M shares of common stock for holders
Cytori Therapeutics (CYTX) files to sell 8M shares of common stock for holders
Demandware (DWRE) 3.3M share secondary priced at $57.00 per share
Gladstone (GOOD) files to sell common stock
Graphic Packaging (GPK) to sell 47.87M common shares for holders
National Health Investors (NHI) files to sell 4.5M shars
Northwest Biotherapeutics (NWBO) to offer common stock and warrants
Norwegian Cruise Line (NCLH) files to sell 22M shares for holders
SeaWorld (SEAS) files to sell 15M shares of common stock for holders
Seaspan (SSW) files to sell 3.5M shares of common stock
Spark Networks (LOV) proposes secondary offering of common stock
Yahoo (YHOO) files to sell $1B of convertible senior notes due 2018


via Zero Hedge Tyler Durden

Furious Gold Slamdown Leads To Yet Another 20 Second Gold Market Halt

What do the following dates have in common: September 12, October 11 and now, November 20? These are all days in which there was a forced gold slamdown so furious, it triggered a “stop logic” event on the CME resulting in a trading halt of the precious commodity. In today’s case gold trading was halted for a whopping 20 seconds as the market tried to “reliquify” itself following what was a clear attempt to reprice the gold (and silver) complex lower. Needless to say, there was absolutely no news once again to drive the move. Ironically, this comes just as the London regulator is launching an investigation into London gold benchmark manipulation – we are, however, confident that all these glaringly obvious manipulative events that take places just around the London AM fix will be routinely ignored. After all it is perfectly normal for someone to dump 1500 GC contracts in one trade and suck up all the liquidity from the market with zero regard slippage costs, or getting the best execution price possible. Well, it’s normal if that someone is the Bank of International Settlements.

Since there is nothing new in the narrative, here is what we said last time this event happened just over a month ago:

What is Stop Logic? Basically, it is a the mother of all stop hunts, which takes out the entire bid stack and continues until such time as there is absolutely no liquidity left in the entire market! From the CME:

Stop Logic detects potential market movements caused by the triggering and trading of Stop orders where the resulting price move would extend beyond an exchange specified threshold.


The triggering of Stop orders can potentially exaggerate price movements in temporarily illiquid markets. When triggered Stop orders attempt to move the market to an executing price beyond a pre-established value, a Stop Logic event occurs. Stop Logic detects these situations and responds by placing the identified market in a Reserved state for a predetermined period of time, usually 5 to 10 seconds, depending on the instrument. During the Reserve period, new orders are accepted and an Indicative Opening Price (IOP) is published, but trades do not occur until the Reserve period expires, thereby providing an opportunity for participants to respond to the demand for liquidity. At the end of the Reserve period, the instrument will re-open and matching will resume.


When a futures contract designated as a lead month contract experiences a STOP Logic event, associated options markets are paused and Mass Quotes canceled.


Stop Logic will not prevent markets from ultimately moving in the direction of the order flow, but allows time for liquidity to enter the market so that new orders can be matched against the triggered stop order(s).

Of course, the liquidity we re-enter at a time when the prevailing price has been reset substantially lower on what is basically a “banging the open” type of event, or in this case market open, when one or more traders attempt to generate the well-known “momentum ignition” event so known to HFT algo manipulators everywhere.

Most indicative is that this is taking place less than 24 hours after the FSA announced it was investigating precisely this kind of gold manipulation. What’s the saying… “in your face”?

And, as usual, capturing this moment of epic manipulative smackdownness which took place precisely at 6:26:40, here is Nanex showing both the 20 second trading halt and the evaporation of all liquidity following the forced sell of 1500 GC contracts pushing the price of gold over $10 lower.

1. December 2013 Gold (GC) Futures Trades.


1b. December 2013 Gold (GC) Futures Trades – Zoom 1.


1c. December 2013 Gold (GC) Futures Trades – Zoom 2.
The 20 second halt shows up clearly.


2. December 2013 Gold (GC) Futures Quotes.


2b. December 2013 Gold (GC) Futures Quotes. Zoom 1


2c. December 2013 Gold (GC) Futures Quotes – Zoom 2.


3. December 2013 Gold (GC) Futures Depth of Book


3b. December 2013 Gold (GC) Futures Depth of Book – Zoom.


via Zero Hedge Tyler Durden

DJIA 16000, S&P 1800 Looking Increasingly More Distant

After the DJIA and S&P briefly crossed the key resistance levels of 16000 and 1800, the upper bound on the markets has been looking increasingly more distant and this morning’s lack of an overnight ramp only makes it more so. Perhaps the biggest concern, however, is that with both Yellen and Bernanke on the tape yesterday, the S&P still was unable to close green. This follows on Monday’s double POMO day when the S&P once again closed… red. Not helping things was the overnight announcement by the Japanese government pension fund, the GPIF, in which the fund announced it would lower its bond allocation further however the new law to reform the GPIF could be written by spring 2015. This was hardly as exciting as the market had expected, and as a result both the USDJPY and the ES-moving EURJPY find themselves at overnight lows. Will the EURJPY engage in its usual post 8 am ramp – keep a close eye, especially since the usual morning gold and silver slam down just took place.

While there has been little overnight macro events of note, today’s US docket is heavy with October retail sales, October CPI, weekly mortgage applications and existing home sales on deck. The Fed releases its FOMC minutes in the latter half of the US trading session. The baffle with BS, good Fed cop/bad Fed cop routine continues once more as Ny Fed’s Dudley and St Louis Fed’s Bullard speak on the economy and monetary policy.

US Data Docket

  • US: CPI % y/y, cons 1.0% (8:30)
  • US: Retail sales advance m/m, cons 0.1% (8:30)
  • US: POMO $1.25-$1.75 billion
  • US: Existing home sales m/m, cons -2.7% (11:00)
  • US: Fed speaker Bullard (13:10)
  • US: Minutes of Oct 29-30 FOMC meeting (15:00)

Market Re-Cap

Dovish comments by Bernanke late yesterday, together with the release of comments by an advisory panel in Japan which indicated that Japan’s GPIF (pension fund) should raise its ratio of foreign assets failed to encourage sustained flow into riskier assets and instead stocks traded lower as market participants awaited the release of the FOMC minutes. Nevertheless, reports citing an advisory panel which said that Japan’s GPIF should review domestic bond-focused portfolio and that foreign asset ratio should be raised resulted in a temporary lift in equity markets, with Bunds also trending lower ever since. However, the move higher was not sustained after it became apparent that new a law to reform GPIF can be written only by spring 2015 and as such is unlikely to result in any immediate impact on global asset classes.

In other news, as expected the release of the minutes from the most recent BoE policy meeting largely echoed the details of the Quarterly Inflation Report. The minutes also noted that the rise in inflation expectations are of little significance, few signs of them affecting wage demands, expectations seen well-anchored in medium term. Going forward, market participants will get to digest the release of the latest Existing Home Sales data, as well as the weekly DoE report from the US.

Overnight bulletin digest from Bloomberg and RanSquawk

  • It was reported that Japan’s GPIF should review domestic bond-focused portfolio and that the foreign asset ratio should be raised, according to the GPIF Advisory Panel.
  • However, later it was revealed by the Head of the GPIF Advisory Panel Ito that a new law to reform GPIF can be written by spring 2015 and thus provided a longer-term timeline for the news than initially expected.
  • BoE minutes showed a 9-0 vote to keep QE unchanged at GBP 375bln and 9-0 to keep interest rates unchanged at 0.50%. Looking ahead market participants will get to digest a host of tier 1 data from the US as well as the FOMC minutes for the October meet.
  • Treasuries maturing in 7Ys and longer gain after Bernanke last night said Fed will likely hold down fed funds rate long after ending QE and possibly after unemployment rate falls below 6.5%.
  • Bank of England officials voted unanimously to keep policy unchanged this month and said a record-low interest rate may be needed even after unemployment falls to the threshold set under forward guidance, minutes to Nov. 6-7 meeting showed
  • Japan’s Government Pension Investment Fund, the world’s largest manager of retirement savings, should become more independent of the government and review its domestic bond holdings, an advisory panel said
  • The yuan’s three-month forwards touched a record high after China’s central bank strengthened the daily fixing to a record and elaborated on plans to ease exchange-rate controls
  • Iran and world powers hold their third round of talks in six weeks toward a nuclear deal that would break a decade-long deadlock in the face of opposition from Israel and Saudi Arabia
  • Sovereign yields higher, EU peripheral spreads wider. Asian stocks excluding China, European stocks, U.S. equity-index futures lower. WTI crude, copper little changed; gold lower

Asian Headlines

Japan GPIF should review domestic bond-focused portfolio, foreign asset ratio should be raised, according to panel.

– Japan should consider investing in Reits, private equity, commodities.
– Funds should consider investing in inflation-linked JGBS and indexes other than Topix.
– Pension funds should consider using JPX-Nikkei Index 400.

Head of the GPIF Advisory Panel Ito says new law to reform GPIF can be written by spring 2015.

– To consider lowering Japan bond allocation from level now.
– Japan reform panel head: GPIF, public pension funds won’t switch overnight to new ROE index from TOPIX for passive investment.

Of note, 5Y Chinese Interest Rate Swaps have reached a record high and overnight repo rates edged higher after Communist Party economic official Fang said very big chance one or two small China banks will fail next year and China must plan for bank fail scenarios to manage risks. Separately, China PBOC Deputy Governor Hu said China LGV financing may hide problems and make size too big

EU & UK Headlines

BoE MPC voted 9-0 to keep QE unchanged at GBP 375bln and 9-0 to keep interest rates unchanged at 0.50%.

– MPC growth and inflation projections underline there could be a case for not raising bank rate immediately when 7% threshold hit.

Rise in inflation expectations of little significance, few signs of
them affecting wage demands, expectations seen wellanchored in medium term.

Italian Head of Debt Management says expects domestic banks to cut bond holdings due to ECB’s sector check up.

ECB’s Weidmann said that there is no easy way out of crisis, printing money definitely not the solution.

Also stated that it is not sensible to immediately embark on next round of monetary policy easing after November rate cut, but also added that the ECB technically not at the end of its options.

Credit Suisse ZEW Survey Expectations (Nov) M/M 31.6 vs Prev. 24.9

US Headlines

Of note, Bernanke stated that the Fed remains committed to maintain highly accommodative policies for as long as they are needed and rates may stay near zero for considerable time after bond buys end.

Senate Democratic negotiator Patty Murray said she sees a path toward an agreement to ease automatic spending cuts Murray, asked if there was a path forward in her talks with her counterpart, Republican Representative Paul Ryan, said: “I believe there is.”


Heading into the North American open, stocks are lower across the board in Europe, with telecommunication sector underperforming where Vodafone is trading with losses close to 2%, with the stock trading exdividend today. Even though stocks traded lower, there is little sign of distress in credit markets. On a positive note, the FT reported tha
t US fund managers are eyeing a bank revival in the Eurozone with the belief that the regions stuttering economic recovery will soon gather steam.


USD/JPY failed to benefit from the reports citing an advisory panel which said that Japan’s GPIF should review domestic bond-focused portfolio and that foreign asset ratio should be raised and instead was driven by option related flow. In particular, the 100.00 level said to mark good size option strikes. Elsewhere, GBP outperformed its major counterpart EUR this morning, supported by lower EUR/GBP cross which fell below the 10DMA and was itself driven by touted offers in
EUR/USD by US names.


Heading into the North American open, WTI Crude in minor negative territory whilst Brent crude futures trade in minor positive territory amid relatively light news flow.

Saudi Arabia say they are unconcerned by a rising tide of US shale output which threatens to eat into OPEC’s market share according to the nations Deputy Oil Minister.

The Iranian Supreme leaders says Iran will not step back ‘one iota’ from its nuclear rights.

World copper demand is expected to grow 4.5% on year in 2014 according to the ICGS.

Moody’s says growth in Euro-area GDP and in steel demand user markets turns European steel industry outlook stable.

China September gold output at 37.64 tonnes, according to Industry Association.


SocGen summarizes the main macro developments

The minutes of the October FOMC meeting will help to determine if the melt-up in risk is justified and whether 2.66% is too low for the UST 10y (2.71% in swaps). The statement of the last Fomc meeting was perceived as a tad less dovish after the Fed eliminated the notion (i.e. showing less of a concern) that financial conditions had tightened. One must assume that a soft CPI number and tepid gain in retail sales before the minutes would potentially offset that bearish influence. We look for annual CPI to have slowed to 1% in October vs 1.2% last month. A further deviation from the target rate of 2.0% (corroborating with a corresponding fall in the Fed’s preferred inflation proxy, the PCE index) should give investors confidence that yields will stay in a range before the December employment report. This should help to support the flow of corporate issuance which has been very strong already over the last 48hours, resulting in 5y swap spreads tightening to below 10bp, the lowest in a year.

In the euro zone, ECB speakers are not shying away from efforts to jawbone the EUR lower but to not much avail. After chief economist Praet, vice-president Constancio joined the bandwagon yesterday but acknowledged that no detailed discussions have taken place (yet). Asmussen instead decided to highlight the option of a negative deposit rate. The OECD, forecasting 1% real GDP growth in 2014 and 1.6% in 2015, said the ECB should look at non-standard measures (i.e. QE) to bolster the economy and counter deflation risks. EUR/JPY accelerated to a new high above 135.50, supported by PBoC comments on widening the yuan band. A break of 135.82 will lift the medium-target to the October 2009 high of 138.50. Against this backdrop, the peripheral spread tightening has further to run with yield hungry investors nudging the 10y BTP yield closer to the 4% mark.

DB’s Jim Reid concludes the overnight event summary

A dovish-sounding Bernanke has failed to lift markets this morning as we enter a second day of consolidation. There was an initial pop as the text of the speech at the National Economists Club Annual Dinner in Washington was posted online. Indeed, S&P 500 futures traded up at +0.3% and EURUSD hit a high of 1.358 (+0.3%) shortly after the speech hit the newswires. But those moves were quickly pared, and there was little further from the Q&A to excite markets. And so we are now back to trading to flat on S&P500 futures while EURUSD is +0.1% on the day (the latter shrugging off further talk of unconventional policy tools from the ECB’s Constancio and the OECD). 10yr UST yields are unchanged at 2.71% as we type.

The message from Bernanke’s speech was very much as we have come to expect from the Chairman with an emphasis on lower for longer rates and the data-dependency of QE. He agreed with Yellen’s recent testimony that the surest path to a more normal approach to monetary policy is for the Fed to do all it can today to promote a more robust recovery. There was discussion over Bernanke’s overarching goals of improving the Fed’s transparency and he repeated previous statements that unemployment thresholds for rate hikes are purely thresholds and not triggers for action. The short Q&A was a little more informative where Bernanke argued that the effect of fiscal tightening is very near term. He also talked down the implications of falling employment participation by saying that falling participation had preceded the global financial crisis. He also said that he looks forward to life after the Fed where he will be concentrating on “writing and speaking”.

So as briefly touched upon above, Asian markets this morning are trading with a heavier tone, with the initial positive sentiment at the open replaced by a more subdued atmosphere. USDJPY is holding just above 100 while the TOPIX is down 0.3%. Japanese trade data for October showed that the trade balance deteriorated to -JPY1trn on the back of surging fossil fuel imports. Partly balancing this out, exports grew 18.6% YoY which beat expectations of 16.2%. The Chinese yuan non-deliverable forward is relatively stable overnight after dropping 0.2% yesterday on comments from the PBoC that it will lessen its intervention in FX markets and commit to a wider trading band. The Hang Seng China Enterprises Index remains the clear regional outperformer today (+0.8%) and is one of the only Asian bourses to trade higher today. Indeed, the H-share index is poised to close higher for its fifth consecutive day which would be its longest winning streak in three months. During the past five days the index has added about 11%, and has significantly outperformed its domestic onshore counterpart, the Shanghai Composite, which is only up 5%.

The China offshore/onshore dichotomy is something which we have highlighted in recent days, with there appearing to be more optimism offshore about Third Plenum reforms, while some onshore indicators lag. One of the issues we wrote yesterday was the tightening onshore liquidity conditions in China – despite offshore indicators such as USD Chinese corporate credit spreads and the HSCEI performing relatively well and seemingly indicating the opposite. The issue of liquidity is something which our Chinese rate strategist, Linan Liu, has highlighted as well. Linan writes that a couple of recent developments point to a potentially unsettling liquidity issue in China before the year-end. Firstly, the recent strong capital flows into China have been quite supportive but this is expected to reverse with dividend outflows expected before the year end. Secondly, liquidity supply from fiscal spending and treasury cash management auctions has been quite low. Thirdly, the PBoC has refrained from being very accommodative in the provision of liquidity. Fourthly,  investment in non-standardized assets by large financial  institutions is a near-term threat to interbank liquidity. All this leaves her bearish on rates into year end. Linan notes that 10yr CGB yields are trading at all-time highs (and they are up a further 5bp at 4.73% this morning), but that a further squeeze in money market rates may drive the 10Y CGB yield towards 5%. We would highlight this is not the first time we’ve seen a liquidity squeeze in China this year but we’re unsure if the latest bout is more a technical phenomenon or indicative of something more structural. Either way it’s something we’ll be watching over the coming weeks as the initial optimism over reform
announcements passes.

Coming back to the Fed, we should remind readers that today will see the release of the FOMC’s minutes from the October meeting. As with the previous month, market participants will be keen to see where the Fed is on the timing of tapering and whether there is anything on strengthening forward guidance. DB’s Joe Lavorgna suggests that the Fed may want to strengthen such guidance alongside a potential tapering of asset purchases in order to counteract any undesired tightening of financial conditions. While we’re on the topic of the Fed, vice-chair Janet Yellen sent a letter to US senators ahead of the Senate Banking committee’s vote on her nomination this Thursday. There was no new material information contained in the letter that we hadn’t heard in last week’s dovish testimony. Yellen repeated that she saw few signs that pre-crisis imbalances had returned.

Looking to today, we have a number of important risk events occurring over the next 24 hours. In the US we have one of the more busy days this week in terms of dataflow with October retail sales, October CPI, weekly mortgage applications and existing home sales. Consensus is expecting a 0% MoM print on headline CPI and markets will be watching to see whether we get the second straight month-on-month contraction in headline retail sales. The Fed releases its FOMC minutes in the latter half of the US trading session. The NY Fed’s Dudley and St Louis Fed’s Bullard will be speaking on the economy and monetary policy. Bullard is considered a bellwether in the Fed. The Bank of England also releases its latest meeting minutes this morning.


via Zero Hedge Tyler Durden