“Clients Are Stretching To Find Reasons Not To Cut”

Citi's Tobias Levkovich sums up the hope… "we have received a fair amount of questions from clients over the last couple of weeks about the effect of share buybacks supporting earnings in the coming year, almost as if they are stretching to find reasons not to cut their numbers." The following charts suggest we are stretched indeed…

 

The Panic/Euphoria Model went into Euphoria 11 weeks ago and is still suggesting a better than 80% chance of a down market even from current levels…

 

The 4Q13 rally driven by liquidity and momentum had left investors feeling emboldened. Earnings estimate revision trends not support the run up in the S&P 500 last year as earnings and markets somewhat delinked

 

Investors were bullish and had bought into bottom-up annual Street consensus estimates in a way we had not seen before

 

despite the sharp spike in negative-to-positive pre-announcements late last year…

 

Even the bad earnings recession times of 2001-02 and 2008-09 did not show such a sharp takedown of numbers via preannouncements – and yet total ignorance by investors of that reality… The critical dynamic though has been guidance which has to be characterized as soft. The guidance numbers that we have collated show a clear downtrend

 

and the expected bottom-up consensus growth expectation are crumbling…

 

 

Perhaps Citi's Tobias Levkovich sums it up best…

"Interestingly, we have received a fair amount of questions from clients over the last couple of weeks about the effect of share buybacks supporting earnings in the coming year, almost as if they are stretching to find reasons not to cut their numbers."

But a glance at the following 3 charts should clarify that…

The average American is in trouble…

 

And appears unable to use the Keynesian wet-dream of credit expansion to to fix his ability to spend

 

And even corporates are not spending

 

On anything but buybacks…

Of course – what really matters is USDJPY 102…

 

As John Hussman noted this week, the problem is always that historical outcomes are easy to observe in hindsight, but the outcome of the present instance is still unseen – even if the underlying conditions are the same. As we saw in 2000 and again in 2007, until unseen risks become observable reality in hindsight (and by then, it’s too late), all of these concerns are quickly dismissed and ignored by investors.

Quantitative easing has distorted not only financial markets, but financial memory. The awakening is not likely to be gentle.

 

Charts: Bloomberg, Barclays, Citi, and @Not_Jim_Cramer


    



via Zero Hedge http://ift.tt/1kBasr1 Tyler Durden

I love having gym junkie friends for conversations like these. "Real friends" just don't understand the #fitlife and the underwear struggles that come with it. cc: @theisaacblakemore

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I love having gym junkie friends for conversations like these. "Real friends" just don’t understand the #fitlife and the underwear struggles that come with it. cc: @theisaacblakemore

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I love having gym junkie friends for conversations like these. “Real friends” just don’t understand the #fitlife and the underwear struggles that come with it. cc: @theisaacblakemore

@hooper_fit

I love having gym junkie friends for conversations like these. "Real friends" just don’t understand the #fitlife and the underwear struggles that come with it. cc: @theisaacblakemore

LIKES: 3  COMMENTS:8

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Great Depression Deja Vu – "A Chicken In Every Pot And A Maserati In Every Garage"

In 1928, just as income inequality was surging, stocks were soaring and monetary distortions were rearing their ugly head, the now infamous words "a chicken in every pot and a car in every garage" were integral to Herbert Hoover's 1928 presidential run and a "vote for prosperity," all before the market's epic collapse. Fast forward 86 years and income inequality is at those same heady levels, stocks are at recorderer highs, the President is promising to hike the minimum wage to a "living wage" capable of filling every house with McChicken sandwiches and now… to top it all off – Maserati unveils their (apparent) "everyone should own a Maserati" commercial. It would seem that chart analogs are not the only reminder of the pre-crash era exuberance and its recovery mirage and massive monetary distortions.

 

Income inequality – check

The last time the top 10% of the US income distribution had such a large proportion of the entire nation's income was the 1920s – a period that culminated in the Great Depression and a collapse in that exuberance.

 

"Wealth effect" – check

 

 

Monetary distrortions – check

"Today there is a tremendous amount of monetary distortion, on par with the 1929 stock market and certainly the peak of 2007, and many others," warns Universa's Mark Spitznagel.

 

 

and "a Maserati in every garage"

 

 

It's a great looking car and emotionally imploring but… did they really just suggest (subliminally of course) that such luxury is to be had by all?

Perhaps a gentle reminder of the reality for 99.99% of Americans…compared to the Maserati buyer…

 

As Mark Spitznagel warned:

The reality is, when distortion is created, the only way out is to let the natural homeostasis take over. The purge that occurs after massive distortion is painful, but ultimately, it’s far better and healthier for the system.

 

While that may sound rather heartless, it’s actually the best and least destructive in the long run.

 

Look what happened in the 1930s, when the actions of the government prolonged what should have been a quick purge. Instead, the government prevented the natural rebuilding process from working, which made matters so much worse.


    



via Zero Hedge http://ift.tt/1nG8KqY Tyler Durden

Great Depression Deja Vu – “A Chicken In Every Pot And A Maserati In Every Garage”

In 1928, just as income inequality was surging, stocks were soaring and monetary distortions were rearing their ugly head, the now infamous words "a chicken in every pot and a car in every garage" were integral to Herbert Hoover's 1928 presidential run and a "vote for prosperity," all before the market's epic collapse. Fast forward 86 years and income inequality is at those same heady levels, stocks are at recorderer highs, the President is promising to hike the minimum wage to a "living wage" capable of filling every house with McChicken sandwiches and now… to top it all off – Maserati unveils their (apparent) "everyone should own a Maserati" commercial. It would seem that chart analogs are not the only reminder of the pre-crash era exuberance and its recovery mirage and massive monetary distortions.

 

Income inequality – check

The last time the top 10% of the US income distribution had such a large proportion of the entire nation's income was the 1920s – a period that culminated in the Great Depression and a collapse in that exuberance.

 

"Wealth effect" – check

 

 

Monetary distrortions – check

"Today there is a tremendous amount of monetary distortion, on par with the 1929 stock market and certainly the peak of 2007, and many others," warns Universa's Mark Spitznagel.

 

 

and "a Maserati in every garage"

 

 

It's a great looking car and emotionally imploring but… did they really just suggest (subliminally of course) that such luxury is to be had by all?

Perhaps a gentle reminder of the reality for 99.99% of Americans…compared to the Maserati buyer…

 

As Mark Spitznagel warned:

The reality is, when distortion is created, the only way out is to let the natural homeostasis take over. The purge that occurs after massive distortion is painful, but ultimately, it’s far better and healthier for the system.

 

While that may sound rather heartless, it’s actually the best and least destructive in the long run.

 

Look what happened in the 1930s, when the actions of the government prolonged what should have been a quick purge. Instead, the government prevented the natural rebuilding process from working, which made matters so much worse.


    



via Zero Hedge http://ift.tt/1nG8KqY Tyler Durden

Guest Post: Bitcoin – Revolution Or Trap?

Excerpted from The Money Bubble by James Turk and John Rubino,

In the Internet’s early days there was general agreement that one of the first killer apps would be some form of cyber-currency. Since money was already largely non-corporeal, existing as entries in bank accounts and ready to spend with plastic cards, the next logical step would be to move the whole thing online and dispense with paper and coins and their costly and burdensome infrastructure of banks, regulators and printing presses. The emergence of such currencies would, in this optimistic scenario, consign relics like the dollar and the Fed to history’s circular file and usher in an era of trust, stability, and growth similar to what occurred under the classical gold standard.

But the digital liberation of money turned out to be easier said than done, as the first wave of cyber-currencies came and went without much of an impact. eCash, for instance, was an encrypted, anonymous payment system that allowed anyone anywhere to send and receive instant payments. But it relied on the existing banking infrastructure, and because “anonymous” meant “money laundering” to the police, it faced extreme pushback from authorities who viewed such currencies as primarily empowering drug dealers – and from banks that saw no point in encouraging the competition. Only one small bank ever accepted eCash, and the currency died a quiet death a few years after its introduction.

A larger impact was made by e-gold, which offered accounts denominated in grams of gold from which owners could make and receive payments. It generated some buzz, peaking at five million users and $2 million of transactions in 2009. But here again, the fact that much of this action was apparently money laundering by parties with good reason to stay anonymous led to legal pressure that eventually led to its failure.

James’ company, GoldMoney, was originally designed to operate as a gold-based payment system based on several digital currency patents. It avoided the money laundering stigma by requiring users to register under their own names, and also met with early enthusiasm. But other logistical and legal barriers proved to be insurmountable, and GoldMoney’s payment system was deemphasized in favor of offshore gold storage. By the late 2000s, purely digital currencies looked, to most observers, like a near-impossibility in a world where governments and banks had the power to prevent such competition.

ENTER BITCOIN

In 2008, a mysterious person or group using the apparent pseudonym Satoshi Nakamoto unveiled a new digital currency called Bitcoin that appeared to solve some of its predecessors’ problems. Without going too deeply into the technical details, the Bitcoin system tracks each piece of currency from buyer to seller, eliminating the possibility of one person spending the same piece of currency multiple times before the counterparties catch on. The network is distributed, with no central clearinghouse or bank holding everyone’s money and imposing rules. “Miners” create more Bitcoins by solving complex algorithms to add more Bitcoin to the system, with the difficulty of the number crunching increasing as the quantity of Bitcoin grows, thus keeping their supply rising at a steady, predetermined rate until it reaches is a preordained limit of 21 million a century or so hence.

Bitcoins, which are a long string of alphanumeric characters, can be stored in a variety of places, from a digital “wallet” on a desktop computer to a centralized service in the cloud, or even completely off-grid by being printed on a piece of paper. And because it operates over peer-to-peer networks similar to those used by techies and teens to download music and videos, it bypasses the established banking/regulatory system, making it, at least initially, free of government oversight.

Nakamoto, whoever he (or she, they) was, disappeared in 2010. But by then the Bitcoin community had taken on a life of its own. Hundreds of users began to mine Bitcoins with increasingly sophisticated computers, and the number of merchants and individuals willing to accept, store, and transact in the currency rose steadily.

As the buzz grew louder, the small community of techie/libertarian early adopters was joined by traders sensing a serious momentum play. The dollar price of a Bitcoin rose from 5 cents in early 2010 to 36 cents in November. In February 2011 it briefly achieved parity with the dollar, and when a Forbes Magazine ran a favorable story that called it a “crypto currency,” the price went parabolic, to nearly $9. More breathless press ensued, sending the price to $27 and putting the market value of Bitcoins in circulation at $130 million.

On the Internet’s black market – the network of sites only accessible to computers running anonymizing software such as Tor – Bitcoin was rapidly becoming the preferred form of money. This drew the ire of the establishment, with US Senator Charles Schumer demanding the closure of online drug emporium Silk Road and describing Bitcoin as “an online form of money-laundering.”

At about the same time, Bitcoin’s Achilles heel became apparent, which is that it has to be stored somewhere, and no place is 100 percent secure. Bitcoins stored on a desktop can be wiped out by a crashed hard drive. Backed up on other storage media, they’re vulnerable to hackers. Kept in an online storage service – which sounds like a bank but has no deposit insurance or even physical reality – they can disappear without a trace. Traded on an online exchange they can likewise simply disappear, with no recourse to former owners.

As Bitcoin rose in value the number of high-profile crimes and crashes rose apace. A Tokyo-based exchange was hacked and lost numerous client accounts. A Poland-based storage service accidentally overwrote its customer records. A West Indian storage service simply shut down, and its owner disappeared. And viruses aimed at Bitcoin caches proliferated. Newcomers, meanwhile, discovered that working with Bitcoin required skills not yet common among the non-techie 99 percent. The press turned scornful, and a consensus formed that the concept was fatally flawed and without much of a future.

The Comeback

Throughout that boom and bust, Bitcoin retained a core user base that saw its possibilities and worked to overcome its flaws by developing point-of-sale hardware and online merchant services while lessening its dependence on a small number of exchanges.

And then, just when the outside world had stopped paying attention, Bitcoin recovered. From under $20 at the beginning of 2013 it rose to $240, crashed to below $100, and then in one dramatic arc soared to more than $1,000. In early 2014 Bitcoin’s market value exceeded $10 billion and the number of merchants willing to accept it was soaring.

 

The market appears to have spoken: Bitcoin is for real.


    



via Zero Hedge http://ift.tt/1cLsLrU Tyler Durden

Coweta schools closed in advance of storm, but wrecks tangled county roadways

The winter storm earlier last week played havoc on Coweta County roadways with ice on roads as late as Friday morning and still contributing to traffic accidents. The storm resulted in one weather-related traffic fatality.

Coweta County Emergency Management Agency Director Jay Jones on Wednesday morning said the 911 center through Tuesday and into Wednesday received 100-200 calls, with many of those being accident-related.

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Fayette students delayed from leaving school as PTC streets iced over

Peachtree City was not immune to the weather-related struggles Tuesday, though a police presence on the road helped officials direct sand to where it was most needed to help get folks home as safely as possible.

One of the first roads to close was north Peachtree Parkway from the Lake Kedron boat docks northward. Because it had iced over before school let out, cars were spinning out and unable to make it up hills, police reported.

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