another site
As US equity markets explode higher at the open this morning (Dow over 17,300 and S&P testing 2,020) extending the week’s gains to 2%, we thought it intriguing that Treasury yields are now lower on the week… long live the Queen (Janet not Elizabeth), long live Jack Ma, and long live quad-witching.
Someone is wrong…
Stocks on the week…
And bonds…
Charts: Bloomberg
via Zero Hedge http://ift.tt/1r62cVa Tyler Durden
Secession is
a recurring theme in recent years. Remember all of those petitions
to the White House to
Let My People Go signed by ticked off residents of mostly red
states, but some blue ones, too? Well, perhaps sparked by all of
the debate leading to the failed secession vote in Scotland,
Americans have a continuing interest in the idea—so says a
Reuters/Ipsos poll. According to Reuters, “Some 23.9 percent of
Americans polled from Aug. 23 through Sept. 16 said they strongly
supported or tended to support the idea of their state breaking
away.”
Interestingly, what many of the would-be splitters seem to be
hankering for is an equivalent of the promise that UK politicians
made to head off the secessionist vote in Scotland:
greater autonomy, with fewer top-down policy making and more
local decision-making.
“I don’t think it makes a whole lot of difference anymore which
political party is running things. Nothing gets done,” said Roy
Gustafson, 61, of Camden, South Carolina, who lives on disability
payments. “The state would be better off handling things on its
own.”
Respondents also said they resented Obamacare, federal meddling,
and what they see as a fumbling White House. They think their
states could do better. Once upon a time, we called that sort of
state-level decision-making “federalism”—back when we indulged such
a radical idea.
While more Republicans (29.7 percent) favor taking their states
out of the union compared with Democrats (21 percent), the results
were flipped just a few years ago. When
Zogby polled Americans in 2008 during the Bush Administration,
32 percent of mainline liberals said they agreed that states had
the right to leave the union, compared to 17 percent of mainline
conservatives.
It seems that a desire to flee the federal government comes hand
in hand with a forced feeding of unwelcome policies from on high.
Who could imagine?
Partisan positions on secession changed places from 2008 to
2014, but a specific desire to leave the union has risen from 18
percent to 23.9 percent. Those numbers may not be in spitting
distance of sparking a Scottish-style referendum anytime soon. But
it’s probably not too early to give some thought to that autonomy
talk.
It used to work pretty well.
from Hit & Run http://ift.tt/1wN2y6F
via IFTTT
September 15, 2014
Santiago, Chile
It was known as Directive 10-289, and it was the government’s last-ditch, desperate effort to control the collapsing economy.
The President, along with some of his senior advisors at the Bureau of Economic Planning and National Resources, all widely agreed that the only way out of the crisis was expand government power.
The directive was passed quickly, and among its key provisions:
“Point One. All workers, wage earners and employees of any kind whatsoever shall henceforth be attached to their jobs and shall not leave nor be dismissed nor change employment. . .”
“Point Two. All industrial, commercial, manufacturing and business establishments of any nature whatsoever shall henceforth remain in operation, and the owners of such establishments shall not quit nor leave nor retire, nor close, sell or transfer their business. . .”
If you’re searching through your favorite news feed right now wondering why you haven’t heard of Directive 10-289, it’s because the law is fictitious. It’s part of the story from Ayn Rand’s Atlas Shrugged.
At that part in the book, the economy was in a full blown crisis.
The government had engineered one emergency after another, and their only idea to ‘fix’ things was to award themsleves even more power and control over the economy… specifically to freeze everything in place.
No one could be fired or quit his/her job. And no business could stop working. It didn’t matter how much money they were losing.
Crazy idea, right? This could never happen in reality… at least not in the West. It sounds like something straight out of the Soviet Union– forcing unprofitable companies to stay in business.
Enter H.R. 5445, the “Postal Jobs Protection Act of 2014″.
I was utterly stunned when I read this. The meat of the bill consists of just 26 words:
“Notwithstanding any other provision of law, no mail processing facility operating as of September 1, 2014, may be closed or consolidated prior to December 31, 2015.”
Let that sink in a minute: they want to pass a law to ensure that NO US postal center can be shut down through the end of next year.
For the sake of context, let’s walk through the numbers.
In its most recent quarter, the US Postal Service lost a massive $1.9 BILLION. That’s far worse than the $699 million loss they rack up over the same quarter last year.
And so far this fiscal year, USPS has lost over $4 billion.
What’s more– the post office has maxed out its $15 billion credit line. They have almost no liquidity left to continue financing operations, they’re not profitable, and they have no capacity left to borrow more money in order to plug the shortfall.
Perhaps most alarming is that, according to the US Postal Service’s own financial statements, its NET worth (i.e. assets minus liabilities) is NEGATIVE $44 billion.
This doesn’t happen by accident. And it’s not the result of some temporary downturn. It takes years… decades of mismanagement and structural issues to reach this point.
Just for kicks, I compared 2-day shipping rates among major carriers in the US for a simple envelope package.
FedEx: $25.12
UPS: $24.16
And the US Postal Service? $5.05 if I order online.
Duh. It doesn’t take a rocket scientist to see the problem here.
Bear in mind that FedEx and UPS are, you know, profitable, earning $3.3 billion and $6.7 billion in pretax income, respectively. (And they each paid an effective tax rate of more than 35%.)
Curiously, when I was in Ethiopia a few weeks ago, there was an article in the local paper there about how profitable the Ethiopian postal service had become.
I mean– postal services around the world have the same problems. A place like Ethiopia has a massive rural population, and it costs a lot to maintain those small offices. Everyone face rising fuel costs and declining volume.
Yet even in Ethiopia they’ve figured it out. They know they can’t continuously run an unprofitable operation, so they reinvent the business model. That’s life.
In fairness, the Postal Service knows what to do. They’re at the end of their rope. And if they’re going to survive, they need to raise revenue and cut costs dramatically.
This includes the uncomfortable prospect of laying off employees and closing down unprofitable processing centers.
But Congress doesn’t want that. And they’re lifting legislation directly from the pages of Atlas Shrugged to ensure the post office keeps operating at a loss.
This is yet another example of incredibly dangerous central planning being planned, proposed, or in progress in the Land of the Free.
Can you see where this trend is going?
from SOVEREIGN MAN http://ift.tt/1sCf8i9
via IFTTT
I reviewed Tusk, Kevin Smith’s bonkers new
weirdo-movie, in
today’s Washington Times.
Short version: I liked the focused, nutso first half. And then
the movie just trails off. From my review:
Much of the movie’s first half
pits Wallace against Howe in increasingly
quirky, tension-building conversations. These scenes are long, slow
and masterfully acted and written.
Mr. Smith, one of the icons of indie cinema in the 1990s, built
his reputation on his ability to craft nimble, funny,
existentialist dialogue. In films like “Clerks” and “Mallrats,” he
captured the circular rhythms and pop-infused sensibility of bored
and aimless Gen Xers.In “Tusk,” his target is the cruel, nihilistic wit of the
Internet generation, embodied with sleazy gusto by Mr.
Long (who first came to fame in a series of ads for Apple
computers). But instead of pairing Mr. Long with another
of his own kind, Mr. Smith sets him up against someone
who turns out to be far more cruel and mischievous.Howe is an exquisitely deranged horror-flick villain,
played with intense and often hilarious midnight-movie menace by
Mr. Parks, and written with a kind of meticulous specificity
by Mr. Smith.I won’t spoil the details of Howe’s big plan, but let’s
just say it’s not an accident that Wallace’s name sounds an
awful lot like “walrus.” Essentially, Howe plans to use
and abuse Wallace for his own amusement, just
as Wallace planned to do with the young man he originally
intended to interview.
Most attempts to create instant cult-hits fall flat. They’re too
over the top, too self-conscious, too in-on-the-joke. Smith isn’t
totally successful, but he comes a lot closer than usual on
Tusk, because even though the central concept is
completely ridiculous, the movie isn’t just an exercise in
wink-wink, nudge-nudge goofiness. It’s straight faced enough, and
yet also bizarre enough, that there are times when you can’t quite
tell whether it’s a horror movie or a comedy or just a stunt with a
wide theatrical release. The real answer, I think, is that it’s all
of the above.
from Hit & Run http://ift.tt/1qR7jtu
via IFTTT
I reviewed Tusk, Kevin Smith’s bonkers new
weirdo-movie, in
today’s Washington Times.
Short version: I liked the focused, nutso first half. And then
the movie just trails off. From my review:
Much of the movie’s first half
pits Wallace against Howe in increasingly
quirky, tension-building conversations. These scenes are long, slow
and masterfully acted and written.
Mr. Smith, one of the icons of indie cinema in the 1990s, built
his reputation on his ability to craft nimble, funny,
existentialist dialogue. In films like “Clerks” and “Mallrats,” he
captured the circular rhythms and pop-infused sensibility of bored
and aimless Gen Xers.In “Tusk,” his target is the cruel, nihilistic wit of the
Internet generation, embodied with sleazy gusto by Mr.
Long (who first came to fame in a series of ads for Apple
computers). But instead of pairing Mr. Long with another
of his own kind, Mr. Smith sets him up against someone
who turns out to be far more cruel and mischievous.Howe is an exquisitely deranged horror-flick villain,
played with intense and often hilarious midnight-movie menace by
Mr. Parks, and written with a kind of meticulous specificity
by Mr. Smith.I won’t spoil the details of Howe’s big plan, but let’s
just say it’s not an accident that Wallace’s name sounds an
awful lot like “walrus.” Essentially, Howe plans to use
and abuse Wallace for his own amusement, just
as Wallace planned to do with the young man he originally
intended to interview.
Most attempts to create instant cult-hits fall flat. They’re too
over the top, too self-conscious, too in-on-the-joke. Smith isn’t
totally successful, but he comes a lot closer than usual on
Tusk, because even though the central concept is
completely ridiculous, the movie isn’t just an exercise in
wink-wink, nudge-nudge goofiness. It’s straight faced enough, and
yet also bizarre enough, that there are times when you can’t quite
tell whether it’s a horror movie or a comedy or just a stunt with a
wide theatrical release. The real answer, I think, is that it’s all
of the above.
from Hit & Run http://ift.tt/1qR7jtu
via IFTTT
Following a plant tour to TSLA, Goldman is confident that the company will meet its 2014 production objectives. However, what keeps them more guarded is the aggressive timetable of the gigafactory as well as a potential escalation of capital needs given the planned capacity ramp, model and derivative expansion, service expansion as well as other undisclosed projects. Simply put, Goldman warns, at the low end of our three disruptive scenarios for TSLA, they see the need for an additional $6bn in capital – and 18% dilution to the current market cap around $33bn. With 3Q likely to be a noisy quarter and shares seemingly baking in flawless execution at present, Goldman remains sidelined for now with a $210 target.
Via Goldman Sachs,
What’s changed
We hosted a visit to TSLA’s Fremont, CA facility and met with the CFO.
Key takeaways:
(1) Production ramp post launch of new line is proceeding according to plan. Production is back to 800+ units a week (similar to before the shutdown); TSLA expects a rate of over 1,000 by year end.
(2) The body shop is the next bottleneck, with max capacity of 1,500 a week; a significantly larger body shop is planned for 1H15.
(3) Post the shutdown, wait times have extended: China at >5 months, and anecdotes of over 3 months in the US. Cancelations are not elevated relative to history, however.
(4) TSLA believes it could self-fund capex but is keeping funding options open depending on the pace of growth and new products it wants to undertake in the future.
(5) Biggest near-term cash calls are the body shop and paint shop upgrades, Model X preproduction and launch costs, to be followed by the gigafactory and Model 3.
(6) Gigafactory will ramp in phases, with localization increasing over time; Nevada site selection allows TSLA to meet its timing, not accelerate the process.
Implications
On balance, the plant tour was positive with Tesla on track to meet its 2014 production objectives. What keeps us more guarded is the aggressive timetable of the gigafactory as well as a potential escalation of capital needs given the planned capacity ramp, model and derivative expansion, service expansion as well as other undisclosed projects. So with 3Q likely to be a noisy quarter and shares seemingly baking in flawless execution at present, we remain sidelined for now.
Valuation
Our 6-month price target – derived from five probability-weighted automotive scenarios plus stationary storage optionality – remains $210.
Key risks
Cadence of North America/Europe/China demand, gigafactory timing, Model X launch, and downward revisions to estimates.
* * *
No pull back in spending expected
With numerous projects laid out (as well as those not currently communicated) ahead for TSLA, we see a possible need for additional capital.
In the near term (end of 2014 through 2015) projects include upgrading the paint and body shops for Model S and Model X, continued Model X development/launch spending, and initial gigafactory costs. Into 2016, spending for the gigafactory accelerates and Model 3 spending begins. Beyond that, there will be incremental follow through capital deployment related to the Model 3 and gigafactory. TSLA management has noted that the company could self-fund these amounts but would consider external funding depending on its growth cadence and other projects it takes on.
For example, at the low end of our three disruptive scenarios for TSLA, we see the need for an additional $6bn in capital.
* * *
We value Tesla in Exhibit 1 by modeling three “disruptive” automotive upside cases, in addition to our automotive base and downside cases, through 2025 and by incorporating the option value from stationary storage.
When probability weighted (25% disruptive scenarios, 50% base case, and 25% downside case), our automotive valuation implies a price of $190. On top of this we add our $20 grid storage option value, which is derived by evaluating potential earnings from our projected stationary storage opportunity from 2018 through 2020. The total implied value from this methodology comes to $210, implying 20% downside.
* * *
It appears shareholders are nervous…
via Zero Hedge http://ift.tt/Xuvd0S Tyler Durden
While Scotland was busy concluding the count of its votes against independence, Royal Air Force fighter jets based out of the northern Scottish base in Lossiemouth in Moray, were scrambled to identify and intercept two airplanes which subsequently were revealed to be Russian Tu-95 Russian “Bear H” strategic bombers, that were spotted in international airspace although the exact location of the encounter has not been disclosed. As the RAF later clarified in a statement, the aircraft did not enter UK airspace.
The statement said the launch was the first time a Quick Reaction Alert (QRA) had been issued from RAF Lossiemouth since the Moray base took on the role of defending the UK’s northern airspace.
As Sky reports, RAF Lossiemouth’s Station Commander, Group Captain Mark Chappell, said: “This first successful launch for QRA North has been what all of the hard work by RAF Leuchars and RAF Lossiemouth personnel over recent months has been for.
“The relocation of two Typhoon squadrons was a significant challenge, one that was met by our whole team.
“The many months of preparation and infrastructure improvements have made us absolutely ready for this launch, and shows we are in the best position to provide the service to the United Kingdom that the Royal Air Force was primarily created for – that is, the protection of our airspace.”
And while the RAF apparently was merely responding to what was yet another training exercise by Russia – as a reminder in June two Typhoon jets were scrambled into action to head off four separate groups of Russian aircraft that were flying near the Baltic, which the Ministry of Defence said appeared to be carrying out a ‘routine training’ exercise in international airspace and were later escorted out of the area – it did take the opportunity to release a photo album of the interception in progress.
A British Typhoon jet, bottom, is seen intercepted one of two Russian ‘Bear’ aircraft that were spotted flying in international airspace
Another angle
And yet another.
The interception, which involved two Typhoon jets pictured, was the first time a Quick Reaction Alert had occurred since the Lossiemouth, Scotland, base had taken on the role of defending the UK’s Northern airspace.
via Zero Hedge http://ift.tt/1mkSPkD Tyler Durden
While Scotland was busy concluding the count of its votes against independence, Royal Air Force fighter jets based out of the northern Scottish base in Lossiemouth in Moray, were scrambled to identify and intercept two airplanes which subsequently were revealed to be Russian Tu-95 Russian “Bear H” strategic bombers, that were spotted in international airspace although the exact location of the encounter has not been disclosed. As the RAF later clarified in a statement, the aircraft did not enter UK airspace.
The statement said the launch was the first time a Quick Reaction Alert (QRA) had been issued from RAF Lossiemouth since the Moray base took on the role of defending the UK’s northern airspace.
As Sky reports, RAF Lossiemouth’s Station Commander, Group Captain Mark Chappell, said: “This first successful launch for QRA North has been what all of the hard work by RAF Leuchars and RAF Lossiemouth personnel over recent months has been for.
“The relocation of two Typhoon squadrons was a significant challenge, one that was met by our whole team.
“The many months of preparation and infrastructure improvements have made us absolutely ready for this launch, and shows we are in the best position to provide the service to the United Kingdom that the Royal Air Force was primarily created for – that is, the protection of our airspace.”
And while the RAF apparently was merely responding to what was yet another training exercise by Russia – as a reminder in June two Typhoon jets were scrambled into action to head off four separate groups of Russian aircraft that were flying near the Baltic, which the Ministry of Defence said appeared to be carrying out a ‘routine training’ exercise in international airspace and were later escorted out of the area – it did take the opportunity to release a photo album of the interception in progress.
A British Typhoon jet, bottom, is seen intercepted one of two Russian ‘Bear’ aircraft that were spotted flying in international airspace
Another angle
And yet another.
The interception, which involved two Typhoon jets pictured, was the first time a Quick Reaction Alert had occurred since the Lossiemouth, Scotland, base had taken on the role of defending the UK’s Northern airspace.
via Zero Hedge http://ift.tt/1mkSPkD Tyler Durden
It used to be that if you were on the no-fly list,
you stayed on the no-fly list. But earlier this year,
a judge deemed the government’s secretive process for
placing individuals on the list unconstitutional and demanded
reform. Today, officials from the Transporation Security
Administration (TSA), the FBI, and the Government Accountability
Office (GAO) assured lawmakers of the House Subcommittee on
Transportation Security that areas for reform have been identified
and that everyone involved is sufficiently balancing civil
liberties with national security.
Sadly, the proceedings did not excite much confidence in these
assurances. Some legislators at the hearing stressed that
the danger posed by ISIS requires better intelligence and a
better no-fly list. It seems the ISIS situation will ensure that
the concerns of civil libertarians will once again be put on the
backburner here.
Regarding the TSA Secure Flight program, which matches
passengers to
the government’s Terrorist Watch List, Jennifer Grover of the
GAO put forward a rather lackluster proposal, recommending a faster
appeals process for people wrongly placed on the list.
Christopher Piehota, director of the FBI’s Terrorist Screening
Center, intoned that the screening process is rigorous. But
the current criteria for inclusion on the list still seem entirely
too vague: “if an individual is known, suspected to be, or has been
in preparation for, in aid of, or related to, terrorism or
terrorist activity.”
Only Rep. Mark Sanford (R-S.C.) forcefully addressed civil
liberties concerns—justified concerns, considering a remarkable 98
percent of people who seek redress for being put on the no-fly list
eventually get taken off the list because they’ve been placed there
erroneously.
Forty percent of people on the list have no affiliation with a
terrorist organization at all.
Sanford wanted to know why it was taking these people up to a
year to disappear from the list. Stephen Sadler, the TSA’s
assistant administrator for intelligence &
analysis, claimed that the agency “can do it within about two
weeks,” but when external agencies get involved, it can take up to
60 days.
“That’s where the majority of those individuals of the 98
percent fall,” said Sadler. But the GAO found that the average time
is 276 days. And getting taken off the list doesn’t mean
getting out of the TSA watch system. In true Kafkaesque fashion,
you are instead transferred to a “cleared list.”
Sandler justified the procedure: “It’s our way of ensuring you
go through the checkpoint without any inconvenience.” Presumably
because you’ve been flagged before. Now you’re flagged again—but
differently.
When Sanford worriedly pointed out that it seems like all
Americans are on some sort of list according to their potential
terrorist threat, Sadler blithely agreed that this is indeed the
case.
from Hit & Run http://ift.tt/1wMQhPs
via IFTTT
.
.
via Zero Hedge http://ift.tt/ZtWxOl williambanzai7