iftttwall

It would appear, despite the President's urging, that Obamacare's helpline is living up to its mnemonics. As The National Review reports, President Obama emerged on Monday to assure Americans that the “kinks” surrounding the federal and state health-care exchanges are improving and urged consumers to call the exchange hotline if they continue to encounter problems online. Shortly after he made the suggestion, Twitter lit up with reporters and others who attempted to do so but failed to get through to a navigator as promised.

 

Indeed, Mr. President, 1-800-318-2596 to you too.

 

 

Via The National Review,

…

After dialing the number, some callers got a busy signal, others received an automated message, and yet others were referred back to Healthcare.gov.

 

 

For the record, just called 1-800-318-2596, got a busy signal.

— Annie Lowrey (@AnnieLowrey) October 21, 2013

.@AnnieLowrey And now a different message. “I’m sorry. Due to extremely high call volume, no customer service representative is available”

— Jonathan Weisman (@jonathanweisman) October 21, 2013

@AnnieLowrey “We’re sorry, but due to extremely high call volume, all of our customer service representatives are currently busy.”

— Silvia Killingsworth (@silviakillings) October 21, 2013

@AnnieLowrey “Please call back later in the day or during the weekend.”

— Scott Conroy (@RealClearScott) October 21, 2013

RT @philipaklein: Can’t make this up. Got through 800-number, followed prompts, and got referred to http://t.co/q7gyHgxRKR.

— Byron York (@ByronYork) October 21, 2013

 

In his speech, President Obama said that there was “no excuse” for the problems plaguing the website and assured Americans, “These problems are getting fixed.” He also said that the issues with the online exchanges do not reflect flaws in the legislation itself, which he said offers a high-quality product.

 

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/jm0xh-W5v6Y/story01.htm Tyler Durden

Authored by Stephen Roach, originally posted at Project Syndicate,

Yes, the United States dodged another bullet with a last-minute deal on the debt ceiling. But, with 90 days left to bridge the ideological and partisan divide before another crisis erupts, the fuse on America’s debt bomb is getting shorter and shorter. As a dysfunctional US government peers into the abyss, China – America’s largest foreign creditor – has much at stake.

It began so innocently. As recently as 2000, China owned only about $60 billion in US Treasuries, or roughly 2% of the outstanding US debt of $3.3 trillion held by the public. But then both countries upped the ante on America’s fiscal profligacy. US debt exploded to nearly $12 trillion ($16.7 trillion if intragovernmental holdings are included). And China’s share of America’s publicly-held debt overhang increased more than five-fold, to nearly 11% ($1.3 trillion) by July 2013. Along with roughly $700 billion in Chinese holdings of US agency debt (Fannie Mae and Freddie Mac), China’s total $2 trillion exposure to US government and quasi-government securities is massive by any standard.

China’s seemingly open-ended purchases of US government debt are at the heart of a web of codependency that binds the two economies. China does not buy Treasuries out of benevolence, or because it looks to America as a shining example of wealth and prosperity. It certainly is not attracted by the return and seemingly riskless security of US government paper – both of which are much in play in an era of zero interest rates and mounting concerns about default. Nor is sympathy at work; China does not buy Treasuries because it wants to temper the pain of America’s fiscal brinkmanship.

China buys Treasuries because they suit its currency policy and the export-led growth that it has relied on over the past 33 years. As a surplus saver, China has run large current-account surpluses since 1994, accumulating a massive portfolio of foreign-exchange reserves that now stands at almost $3.7 trillion.

China has recycled about 60% of these reserves back into dollar-denominated US government securities, because it wants to limit any appreciation of the renminbi against the world’s benchmark currency. If China bought fewer dollars, the renminbi’s exchange rate – up 35% against the dollar since mid-2005 – would strengthen more sharply than it already has, jeopardizing competiveness and export-led growth.

This arrangement fits America’s needs like a glove. Given its extraordinary shortfall of domestic saving, the US runs chronic current-account deficits and relies on foreign investors to fill the funding void. US politicians take this for granted as a special privilege bestowed by the dollar’s position as the world’s major reserve currency. When queried about America’s dependence on foreign lenders, they often smugly retort, “Where else would they go?” I have heard that line many times when I have testified before the US Congress.

Of course, America benefits from China’s outward-facing growth model in many other ways, as well. China’s purchases of Treasuries help hold down US interest rates – possibly by as much as one percentage point – which provides broad support to other asset markets, such as equities and real estate, whose valuation depends to some extent on Chinese-subsidized US interest rates. And, of course, hard-pressed middle-class American consumers benefit hugely from low-cost Chinese imports – the Walmart effect – that enable them to stretch their budgets in an era of unrelenting pressure on jobs and real incomes.

For more than 20 years, this mutually beneficial codependency has served both countries well in compensating for their inherent saving imbalances while satisfying their respective growth agendas. But here the past should not be viewed as prologue. A seismic shift is at hand, and America’s recent fiscal follies may well be the tipping point.

China has made a conscious strategic decision to alter its growth strategy. Its 12th Five-Year Plan, enacted in March 2011, lays out a broad framework for a more balanced growth model that relies increasingly on domestic private consumption. These plans are about to be put into action.  An important meeting in November – the Third Plenum of the Central Committee of the 18th Chinese Communist Party Congress – will provide a major test of the new leadership team’s commitment to a detailed agenda of reforms and policies that will be required to achieve this shift.

The debt-ceiling debacle has sent a clear message to China – and comes in conjunction with other warning signs. Post-crisis sluggishness in US aggregate demand – especially consumer demand – is likely to persist, denying Chinese exporters the support they need from their largest foreign market. US-led China bashing – a bipartisan blame game that reached new heights in the 2012 political cycle – remains a real threat. And now the safety and security of US debt are at risk. Economic alarms rarely ring so loudly. The time has come for China to respond with equal clarity.

Rebalancing is China’s only option. Several internal factors – excess resource consumption, environmental degradation, and mounting income inequalities – are calling the old model into question, while a broad constellation of US-centric external forces also attests to the urgent need for realignment.

With rebalancing will come a decline in China’s surplus saving, much slower accumulation of foreign-exchange reserves, and a concomitant reduction in its seemingly voracious demand for dollar-denominated assets. Curtailing purchases of US Treasuries is a perfectly logical outgrowth of this process. Long dependent on China to finesse its fiscal problems, America may now have to pay a much steeper price to secure external capital.

Recently, Chinese commentators have provocatively referred to the inevitability of a “de-Americanized world.” For China, this is not a power race. It should be seen as more of a conscious strategy to do what is right for China as it confronts its own daunting growth and development imperatives in the coming years.

The US will find it equally urgent to come to grips with a very different China. Codependency was never a sustainable strategy for either side. China just happens to have understood this first. The days of its open-ended buying of Treasuries will soon come to an end.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/1E5PgvWMcCA/story01.htm Tyler Durden

“The question is not ‘tapering’,” Marc Faber exclaims to his hosts on CNBC’s Squawk Box this morning, “the question is at what point will they increase the asset purchases to say $150 [billion] , $200 [billion], or a trillion dollars a month.” QE-4-EVA is here to stay, as Faber explained “every government program that is introduced under urgency and as a temporary measure is always permanent.” Simply put, “The Fed has boxed itself into a position where there is no exit strategy,” and while inflation may not be present in the ‘chosen’ indicators, Faber blasts, there’s been incredible asset inflation – “we are the bubble. We have a colossal asset bubble in the world [and] a leverage or a debt bubble.” There will be massive wealth destruction, he concludes, “one day this asset inflation will lead to a deflationary collapse one way or the other. We don’t know yet what will cause it.”

 

The Fed is Boxed In….

 

The world is in a gigantic bubble…

 

Back in April 2012, Faber said the world will face “massive wealth destruction” in which “well to-do people will lose up to 50 percent of their total wealth.”

In today’s “Squawk” appearance, he said that could still happen but possibly from higher levels because of the “asset bubble” caused by the Fed.

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

“The question is not ‘tapering’,” Marc Faber exclaims to his hosts on CNBC’s Squawk Box this morning, “the question is at what point will they increase the asset purchases to say $150 [billion] , $200 [billion], or a trillion dollars a month.” QE-4-EVA is here to stay, as Faber explained “every government program that is introduced under urgency and as a temporary measure is always permanent.” Simply put, “The Fed has boxed itself into a position where there is no exit strategy,” and while inflation may not be present in the ‘chosen’ indicators, Faber blasts, there’s been incredible asset inflation – “we are the bubble. We have a colossal asset bubble in the world [and] a leverage or a debt bubble.” There will be massive wealth destruction, he concludes, “one day this asset inflation will lead to a deflationary collapse one way or the other. We don’t know yet what will cause it.”

 

The Fed is Boxed In….

 

The world is in a gigantic bubble…

 

Back in April 2012, Faber said the world will face “massive wealth destruction” in which “well to-do people will lose up to 50 percent of their total wealth.”

In today’s “Squawk” appearance, he said that could still happen but possibly from higher levels because of the “asset bubble” caused by the Fed.

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

If there was ever a more complicated place in the world it’s Kenya. I just got back from my third trip there. It made me think about why they are so poor and we are so rich.

There are 42+ million people in Kenya and most of them are poor. The government says they are expanding at 4-5% per year. Annual GDP is only $71.4 billion. Apple had $156 billion in revenues in 2012. 40% of the workforce is unemployed. Per capita income is about $900 per year making one of the poorest countries on the planet. Yet the media there are brimming with optimistic reports of economic progress.

The capital, Nairobi, is a growing, sprawling city with an official population of 3,500,000 but it’s really much, much larger. There are large slums on the outskirts. While there is an emerging middle class and a top tier of 5,000 millionaires, most Nairobians are struggling.

It is not as if there has been no progress. There has been a lot of construction in and around Nairobi and real estate is in a boom phase. New shopping strip malls and housing developments serve the growing middle class. And many people (60% of the “poor”) have cell phones. More cars, more jitneys, and more buses clog the roads. And more inflation which robs people of their savings.

There are two foundations of their economy: agriculture and tourism. Tourism by far is the most important since it brings good jobs and foreign exchange. Tourism accounts for more than 50% of the economy. Half of farming is subsistence level only.

It makes you wonder. If things are so good, why are things so bad?

It isn’t the people. Many speak English and are well educated. But their talents are wasted because of a lack of opportunity. I discussed politics with a waiter who had wanted to be a biologist. A safari guide who speaks 3 or 4 languages, who is a trained and certified wildlife expert is paid $30 a month and relies on tips from generous tourists to get by. It is considered a very good job.

There are many explanations for poverty. One popular idea is Jared Diamond’s theory espoused in the book, Guns, Germs and Steel. He takes an historical look at why some parts of the globe thrived and some didn’t. His explanation for success was: the rise of grain agriculture in temperate zones, the decimation of non-temperate zone populations from diseases spread by temperate zone invaders, and the technology of advanced weaponry. Cultures living in temperate zones of the planet thrived and those elsewhere failed to grow beyond subsistence levels.

Diamond’s book was a response to a question from a New Guinean who asked him, “Why do you have so much cargo and we so little?” “Cargo” being pidgin for material goods. I believe that Diamond’s answer only goes so far. Those factors can explain many things in the dim historic past, but it is not as applicable today. It leaves out one really important thing: ideas. Or, to be more accurate, the right ideas.

For example, another question one can ask is: “Why do some societies in the temperate zones thrive and others fail?” Or, “Why do some societies in tropical zones thrive and others fail?” It’s not because technology isn’t known to poor societies. Everybody (almost) everywhere has access to this knowledge. The thing missing in Diamond’s theory are the sociological factors: the methods of human organization. Here I am talking about economic and political systems. These are the ideas the make us or break us.

The formula for success anywhere on the planet isn’t that difficult to discover. You need freedom. That is, solid property rights, a just legal system that protects property rights and the enforcement of contracts, and limited government and low taxation. Add in the personal freedom to do what you damn well please as long as you don’t abridge someone else’s rights. If you do these things, capital (wealth from savings) and an entrepreneurial spirit will rise and drive human progress. These are the ideas that emerged from the Enlightenment and culminated in the founding of the United States of America. It has worked everywhere it has been tried.

These are the things that Kenya and most African countries lack.

Since gaining independence from Britain in 1960, Kenya took the socialist path and the economy stagnated. Bad roads, bad communications, state owned industries, rising poverty, corruption. Basically they just spent the capital that had been accumulated during colonial times. Colonialism was bad but so were and still are the successive socialist-kleptocratic regimes that suck the country dry and keep them poor. They just raised the national sales (VAT) tax to 16% and everyone is complaining because prices have shot up. In 1989 impoverished China took a different road and now they are building roads in Kenya as part of their foreign aid (with a commercial ulterior motive, of course).

Everyone I talked to at “ground level” in Kenya said the number one problem is corruption. When you get down to the detail of what they really mean by that is that they lack the above mentioned freedoms needed for success. The courts are corrupt. The politicians are corrupt. The police are corrupt. The bureaucrats are corrupt. Crony capitalism is rampant. While they espouse the philosophy of “democracy”, that usually means the winners get to distribute political spoils to their cronies and fellow tribesmen.

How do you change that? Can you just change the system and expect human behavior to change overnight? Well, you’ve got to start somewhere. It won’t happen overnight, but if freedom breaks out in these countries, I believe things and people will change for the better. I believe that stripped down to our essentials, human beings behave pretty much the same. It’s all the crap that’s piled on top of us starting at birth that is the problem.

Free market capitalism is what I have been talking about here. It is what is called an emergent system, that is, a spontaneous social organization that emerges when the right conditions (freedom) are present. It is a ground up mostly self-regulating system. It’s not something that government invents (a top down system), but it’s the system that most closely matches human nature and allows individuals to reach their potential. Before you get too excited, recall the conditions of freedom I mentioned above require government to protect and enforce our human rights. It’s not easy; it takes time. And it’s not perfect, but as history has shown, it sure as hell beats anything else.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/Api6j7Ft2Yg/story01.htm Econophile

The high-beta honeys were not amused (despite another melt-up in NFLX into earnings) as the Russell 2000 underperformed (-0.25% on the day). The Dow and S&P ended practically unch, Nasdaq bid (helped by AAPL ahead of the product news tomorrow) and Trannies closed their highs of the day exuberating all the way… Treasury yields rose 2-3bps (steepening). FX was quiet with the USD very slightly higher (helped by JPY weakness) but AUDJPY was in charge of S&P 500 trading today. Oil dropped 1.6% closing back under $100 and Silver rallied 1.3%. Hedgers were active (6though clearly the selling was limited) as credit spreads and volatility markets saw protection buyers active.

 

Equity indices were quite notably divergent today…

 

But it was clear that macro overlays were being laid out once again in credit…

 

and in VIX…

 

Bonds quietly limped higher in yield but FX markets were dead…

 

with only AUDJPY (JPY weakness dominant) leading stocks…

 

Charts: Bloomberg

Bonus Chart: Apple catches up to Gold ahead of tomorrow’s product announcement

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/qxkWDUjgR7A/story01.htm Tyler Durden

And the hits just keep on coming for McDonalds. An animal rights organization is urging McDonald’s Canada to take a firm stand against what it calls “shocking animal cruelty” captured on a graphic video it says was taken at two Alberta farms, which shows dead hens rotting in the cages, and chicks being covered in feces. . As The Globe and Mail reports, McDonald’s, however, says while it does get eggs from Burnbrae along with many other Canadian companies, it says its eggs do not come from the farms referenced in the W5 story.

 

 

Via The Globe And Mail,

“They’re so crammed inside those cages they can’t spread their wings, they can’t walk, they can’t turn around, they can’t engage in any of their natural behaviour,” said Stephane Perrais, director of operations with Mercy For Animals Canada.

 

“They spend one year of their miserable life in there, basically producing eggs and after that time period, they’re considered spent by the industry because their productivity is declined, and then they’re slaughtered.”

 

The group says the footage was taken by an undercover investigator who was hired as a farm worker by Ku-Ku Farms and Creekside Grove Farms for 10 weeks in May.

 

The video also shows dead hens rotting in the cages, and chicks being covered in feces.

A statement said McDonald’s said it does not condone animal abuse by its suppliers.

 

…

 

“We care about the humane treatment of animals and believe they should be free from cruelty, abuse and neglect,” said spokeswoman Karin Campbell in the written statement emailed to The Canadian Press.

 

“Abuse is never tolerated in our supply chain and McDonald’s has strict policies in place concerning the treatment of animals that our suppliers must adhere to at all times. We also work with our suppliers and outside experts to continuously improve our standards and practices, both within McDonald’s and across the industry.”

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/8vGBXxvvsW8/story01.htm Tyler Durden

Submitted by Alasdair Macleod via GoldMoney.com,

China is now overtly pushing for the US dollar to be replaced as the world’s reserve currency.

 

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/ktM6UVgkNvU/story01.htm Tyler Durden

Across the entire curve, credit spreads on JCPenney are exploding. The curve is inverted with the market indicating an almost 50% chance of default within the next 2 years (specifically in 2014 as opposed to pre-2013 Xmas). The stock price is collapsing further (though we suspect a gaggle of analysts calls to catch the accelerating knife – just as we saw last time). At $6.30, this is the lowest stock price since March 1981, on the back of yet another downgrade (this time with a $1 target) by none other than the same Mary-Ross Gilbert who proclaimed the most recent quarter a success and suggested buying the debt in just August.

 

The CDS market is not painting a pretty picture for the future of JCP – 2Y CDS implies around a 50% probability of default (based on market standard recoveries – which we feel will be lower gven Goldman's 1st lien…)

 

and the stock is imploding even more…

 

Though there's always next week… this analyst hopes so (from Sept 25th):

 

$JCP: Why Brian McGough aka @HedgeyeRetail is a buyer of JC Penney here http://t.co/Xbc32aBFjG via @Hedgeye @KeithMcCullough

— Hedgeye (@Hedgeye) September 25, 2013

 

 

We’re buyers of J.C. Penney (JCP) on today’s sell-off. Let’s be clear about what kind of call this is, because it’s definitely not for the faint of heart.

 

We still know nothing about the long-term strategy or upcoming management transition, and are still living with the balance sheet baggage from the past two years.

 

This is a company with no square footage growth, where the average consumer could care less if it exists or not. (Sounds great, huh?).  But everything has a price.  And at $10, way too much credence is being given to the ‘terminal’ call.

 

We can say a lot of bad things about JCP, but we definitely don’t think it is terminal and our recent work suggests that much of the business lost is definitely recoverable.

 

As it relates to liquidity, we think that the only reason why the company would act now is to ensure that it has the best pool of CEO candidates possible (questions around liquidity would otherwise weed out the best candidates).

Here's another analyst from August:

"That's a sequential improvement from the down 16.6 percent in the first quarter. So I would say the numbers are closely in line," Mary Ross Gilbert, managing director at Imperial Capital, told CNBC shortly after Penney released its results. "We were [also] seeing a sequential improvement throughout the quarter. Comp sales were improving throughout the quarter."

 

…

 

"The debt, we think, is a great way to play the bet on J.C. Penney's turnaround," Gilbert said in a "Squawk Box" interview.

but then today…

Imperial Capital’s Mary Ross-Gilbert offers her answer by lowering her price target on JC Penney’s stock to $1, while cutting her rating on JC Penney’s bonds maturing in 2015-2018 to Sell. She explains why:

 

While we think JCP can be “turned around,” we are becoming increasingly concerned that without a “deep-pocketed” long-term investor providing financial and “halo” support, the company may strategically file for bankruptcy protection to conserve cash while it continues to execute a turnaround in 2014 and 2015. We continue to believe in the viability and sustainability of JCP, which with support from a significant investor and/or stronger than expected financial performance, could deliver equity-type returns (assuming they trade up to the low-to-mid 80s) to investors of the longer-dated bonds while potentially protecting the downside by hedging.

 

We are maintaining our Underperform rating on the shares, but we are lowering our one-year price target to $1 from $5. Our new $1 price target is based on the notional “option” value of the shares, given our increasing concerns the company may engage in a financial restructuring in 2014.

Meanwhile Citi nailed it:

"The turnaround is taking longer than we anticipated, and we are concerned  about a softening macro environment combined with deteriorating vendor relationships",  and of course "We maintain our EPS ests. but are lowering our target price to $7, down from $11 prev., based on an EV/Sales valuation methodology using our 2015 sales estimate." And it gets worse: "Where’s The Floor? — As a supplement to our EV/Sales valuation methodology, we have conducted a basic liquidation valuation, yielding $324M total value, or $1/share."

 

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/O5wkdEo9DKI/story01.htm Tyler Durden

Submitted by Claude Salhani via OilPrice.com,

Petro-dollars, the word used to describe the billions of dollars earned from the sale of oil and natural gas, have helped change the shape and future of many counties in the Middle East, usually for the better, but not always.

In a few short years Petro-dollars have helped shape the Gulf states into the modern and futuristic looking cities of the future that one finds in today’s architecture in Dubai, Doha and Riyadh.

But now those petro-dollars are being used to shape the political future of the region and to model specific policies in a number of countries, such as Syria, for example, where petro-dollars are hard at work today.

Saudi Arabia, for example is investing billions of its petro–dollars in an attempt at shaping the Syrian political landscape more in its favor and away from the Muslim Brotherhood, an organization that the Saudi and other Gulf states regard with contempt and fear. 

But after its brief string of successes in Egypt, Tunisia, Palestine, Syria, and to a lesser degree, Turkey, the MB now appears to be on the retreat.

Among the first signs that not all is well in the house of fundamental Islam comes amidst reports that Khaled Mashaal, the leader of Hamas is seeking to relocate from his current base in Doha, the capital of the oil and gas rich Gulf state of Qatar.

Although Hamas is denying this rumor, the Palestinian Islamist movement had also denied in the past similar reports that it was relocating to Qatar from Damascus in 2012, as indeed it had.
Should this report prove to be true it would sustain the fact that the Brotherhood is indeed on the retreat.

In the past 12 months alone the Brotherhood has suffered a number of serious setbacks. The group went from winning an election to holding power in Egypt, to being once again banned and driven underground.

In Tunis, similarly, the MB government that was voted into power after the fall of Zein el Adedine bin Ali, is now on the way out, as popular protests, much like in Egypt have forced the changes to take place.

And the inroads the MB was making in Syria seems to have receded after the intervention of Saudi Arabia. The petro-dollars are at work once again supporting the anti-Assad regime, but not those who tend to be too conservative and that the Saudis and the Emiratis know only too well will one day turn against them.

Riyadh, for one, is not about to forget the lesson of the returning “Afghan Arabs” that nearly toppled the royal house of Saud.

Riyadh also had to apply pressure on its smaller neighbor, Qatar, and “convince” the ruler Emir Hamed Bin-Khalifa, a strong supporter of the Muslim Brotherhood to step down in favor of his son, Tamim. The precise circumstances and reasons for the Qatari’s ruler sudden departure from power remain a mystery to this day.

With the son now in charge in Doha, Qatar’s financial support of the Brotherhood is virtually drying up.

In retrospect perhaps the rapid advance of the Muslim Brotherhood was a tad too fast in a part of the world that is unaccustomed to change. This rapid gallop frightened the ultra-conservatives regimes in Riyadh and Abu Dhabi, who then took steps to rectify what they did not like.

In the months that followed, the Brotherhood was forcibly removed from power in Egypt with help of Saudi and UAE petro-dollars.

And thanks to petro-dollars also supplied by Saudi Arabia and the UAE, the Muslim Brotherhood no longer seems to be about ready to remove Syrian President Bashar Assad from power. Not that the Saudis of the Emiratis have any great affection for Assad, quite to the contrary, they would like to see him go. And their petro-dollars are making sure of that.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/xS1wxCYVHEI/story01.htm Tyler Durden