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France Summons US Ambassador in Snowden Affair

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It’s all for play isn’t it when the French Minister of the Interior Manuel Valls summons the US Ambassador? It’s just for the newspeak and the media on the advice of his spin-doctor to swivel the French public around so much that they won’t know what’s hit them. The National Security Agency will hardly be quaking in its eavesdropping boots since they probably got wind of it long before Valls had even picked up the phone. Anyhow, what will come of it all. The NSA is hardly going to either back down or come clean, is it?

Revelations

The French newspaper Le Monde has published an article today in which it reveals that Edward Snowden has provided the proof that there was a massive-scale program carried out between December 2012 and January 2013in which not only suspected terrorists were being listened in on but also members of industry and politicians as well as the general public.

There were 70.3 million calls that were recorded during that period.

Apparently by simply dialing certain numbers the NSA was triggered and the calls were listened into. The codename of the operation was US-985D. It also covered text messages that were sent and not just voice communication.

Valls: NSA Spying Scandal in France

USA

The US has declined to make a comment so far on this matter and has simply referred media to a statement that was issued by the NSA in June regarding the surveillance of foreign countries. It was restated today that the practices “are lawful and conducted under authorities widely known and discussed, and fully debated and authorized by Congress. Their purpose is to obtain foreign intelligence information, including information necessary to thwart terrorist and cyber-attacks against the United States and its allies”. So, the US has been listening in on French politicians to thwart terrorist attacks on those very same allies. Ah! Gotcha! It’s a homegrown version of terrorism yet again. It’s the French state that is pitching against itself in this story. Is that it?

Just as we thought that there was nothing more to come, Edward Snowden’s father returned after a visit to meet with his son to publically announce that there were more revelations. Snowden had been rather quiet for the past few months and rightly so. The media space was taken up with the trials and tribulations of the US shutdown. Now, it’s the best time for new impact.

France’s Reaction

Valls has also requested an explanation from Washington. But, what is happening is nothing more than the tentative vociferations by a country that will do nothing in the face of the USA. What happened last time when the NSA was revealed to have spied on the EU?

Hollande said “we would like an explanation…please” and Merkel said nothing more than “you can’t do that to your friends” or words to that effect. Nobody did much else in the EU as they were more preoccupied by their own state fallout from the sovereign debt-crisis than human rights. To boot, we all know that all countries are doing the self-same thing. Spying is as old as the hills and nearly as old as the other oldest profession. Wouldn’t do any good to shout too much, the people might just hear you leaders and they certainly wouldn’t want questions to be raised about their own eavesdropping on their very own citizens, would they?

Valls stated on Europe-1 Radio station: “Rules are obviously needed when it comes to new communication technologies, and that’s something that concerns every country. If a friendly country, an ally, spies on France or other European countries, then that is completely unacceptable”.

Mais oui, Mais oui, but what are you going to do about it Monsieur Valls? Is there going to be a duel at dawn after knocking back a good drop of claret? At one time Manuel Valls had stated that despite looking at a request for asylum for Edward Snowden he wouldn’t be in favor of it. Then, it really isn’t worth saying anything. Another example of newspeak?

39% of US citizens believe that Snowden is a traitor, while 35% believe him to be a patriot. It would be interesting to see just how many French people agree with those figures of a divided nation. I thought that Putin had granted asylum on the condition that Snowden would cease damaging the US. That has obviously been thrown out of the Siberian window, hasn’t it?

Well, no worries, Snowden is learning Russian and reading Dostoyevsky by all accounts. I wonder what he is leafing through right now? Is it Crime and Punishment or The Idiot?

Looks as if Dostoyevsky was made for Snowden anyhow…it could have been any of his books but maybe one has a more fitting title than any of the others: The Dream of a Ridiculous Man.

Originally posted: France Summons US Ambassador in Snowden Affair

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

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/mbJI8LfZBZ4/story01.htm Pivotfarm

What MoMo Massacre? Stock Scramble Sends S&P To New Record High

While Cramer exclaimed this morning that his 'cult' stocks were unstoppable, the MoMo names were crushed today (for no good reason) with NFLX, FB, P (late saved by AAPL), and TSLA all monkey-hammered (as rumors of a major option algo going pear-shaped spread). Meanwhile, the S&P rose for the 9th day of the last 10 and closed once again at another all-time high above another magical level – 1750. Markets keyed off the weakness in the jobs report (ignoring the construction spending beat) and ran in a Taper-off-related manner across all assets – USD was battered, Bond yields compressed, Gold and silver soared. Oil prices did not follow the pattern leaking to $97.60 (-3% on the week). Market internals today were very "glitchy" though… EURJPY was in charge once again but VIX remains bid (and higher on the day), and while credit rallied, it remains less exuberant than stocks.

The market was a mess today as clearly algos went nuts early on with indices soaring and the widely held momo names bashed (and AAPL's mini flash crash) suggesting someone was knocked out of their market-hedged longs…

From last week's lows… this is just unreal…broadly…

and in sectors…

Treasuries bid…

USD sold…

But EURJPY ran the world today…

Gold and silver in demand… (but oil not so much – not exactly "growthy")…

S, we wonder… the Fed did not Taper last time because EVERYONE was expecting it… This time around, not only are the bubbles bigger (stocks and credit), the market technicals worse (fails are up), data is just as nebulous (some bad, some good)… but this time EVERYONE expected No TAPER… are you ready for shOctTaper…

Some seem more worried than others… notice the rise in VIX at the open even as stocks surged higher…. and the top came when AAPL flash-crashed… very fishy

Charts: Bloomberg

Bonus Chart: NFLX is now losing out to Caracas as best performing idiocy of the year…

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/TsuztTx4KLI/story01.htm Tyler Durden

What MoMo Massacre? Stock Scramble Sends S&P To New Record High

From last week's lows… this is just unreal…broadly…

and in sectors…

Treasuries bid…

USD sold…

But EURJPY ran the world today…

Gold and silver in demand… (but oil not so much – not exactly "growthy")…

Some seem more worried than others… notice the rise in VIX at the open even as stocks surged higher…. and the top came when AAPL flash-crashed… very fishy

Charts: Bloomberg

Bonus Chart: NFLX is now losing out to Caracas as best performing idiocy of the year…

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/TsuztTx4KLI/story01.htm Tyler Durden

Americans Just Want To Get High

For the first time (in the 44 years of polling), the majority of Americans favor legalizing marijuana. As Gallup notes, from a low of 12% in favor in 1969, the latest poll shows a clear majority (58%) now believe the drug should be made legal.

Perhaps not so surprising, given the prospects for much of today’s youth (67% of 18 to 29 year olds in favor), Gallup adds that a sizable percentage of Americans (38%) this year admitted to having tried the drug, which may be a contributing factor to greater acceptance.

Those who identfied themselves as Democrats were almost twice as ‘in favor’ of legalization as Republicans.

Via Gallup,

It has been a long path toward majority acceptance of marijuana over the past 44 years, but Americans’ support for legalization accelerated as the new millennium began. This acceptance of a substance that most people might have considered forbidden in the late 1960s and 1970s may be attributed to changing social mores and growing social acceptance. The increasing prevalence of medical marijuana as a socially acceptable way to alleviate symptoms of diseases such as arthritis, and as a way to mitigate side effects of chemotherapy, may have also contributed to Americans’ growing support.

Whatever the reasons for Americans’ greater acceptance of marijuana, it is likely that this momentum will spur further legalization efforts across the United States. Advocates of legalizing marijuana say taxing and regulating the drug could be financially beneficial to states and municipalities nationwide. But detractors such as law enforcement and substance abuse professionals have cited health risks including an increased heart rate, and respiratory and memory problems.

With Americans’ support for legalization quadrupling since 1969, and localities on the East Coast such as Portland, Maine, considering a symbolic referendum to legalize marijuana, it is clear that interest in this drug and these issues will remain elevated in the foreseeable future.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/uJsc02iBaM0/story01.htm Tyler Durden

Fitch's "Reserve Currency" Loophole: 80-90% Debt/GDP Rule Does Not Apply To You

It would appear that French-owned Fitch, following its rating-watch-negative shift on the US credit rating last week, has got a tap on the shoulder from the powers that be. As Hollande complains about Obama's espionage, Fitch has released a statement explaining how the USA can do whatever it wants and not be downgraded. With only the Chinese ratings agency "able" to openly comment on the creditworthiness of the USA, it is no surprise that Fitch gave itself an "out" on the basis of the USDollar's exorbitant previlege.

Via Fitch,

Fitch Ratings says in a new report that even for a sovereign with the strongest credit fundamentals, there will be a gross general government debt (GGGD)/GDP level above which Fitch believes its rating is no longer compatible with 'AAA'.

This is usually 80%-90%, but can be higher for sovereigns with exceptional financing flexibility, such as benchmark borrowers with reserve currency status. As we have highlighted before, for France, Germany and the UK, this threshold is currently 90%-100%, and for the US, it is currently 110%, provided debt is then placed on a firm downward path over the medium term.

Our 80%-90% threshold recognises that sovereigns with (otherwise) 'AAA' characteristics have high financing flexibility and debt tolerance. Nevertheless, such a high level of debt tends to persist and potentially limits the capacity to respond to future shocks. It can also have a negative impact on growth.

Fitch gives a 'AAA' rated sovereign some leeway in allowing a temporary rise in its GGGD/GDP ratio before a downgrade. This stickiness also works in the other direction. The ratio needs to be steadily declining before restoring 'AAA' status, if warranted by other credit factors. Debt dynamics would need to be resilient to shocks to ensure that the 80%-90% level is not breached again. This would imply a fall in the debt ratio (not just a projected fall) of around 10pp of GDP or more from the downgrade level and would likely take several years.

A larger fall in the debt ratio would likely be required to restore the 'AAA' if the associated shock that precipitated the sharp increase in the debt ratio and downgrade revealed or triggered other negative credit developments such as weakening in the fiscal policy framework or credibility, a worsening in the structure of government debt, deterioration in economic growth prospects or a weakening in political stability or governance.

The 2013 median GGGD/GDP ratio for 'AAA' rated sovereigns is 47%, compared with 42% for all Fitch-rated sovereigns. But other credit strengths are sufficient to outweigh the potential drag on the rating from public debt. They typically have debt denominated in their own currency and can issue at long maturity while low interest rates hold down service costs.

The trajectory of GGGD/GDP may, at a particular time, be the key driver of rating actions for 'AAA' or 'AA+' rated sovereigns. However, ratings reflect the strengths and weaknesses of many factors, not just public debt. Thus rating actions can bite at various GGGD/GDP ratios.

So there it is folks… because of the dollar's exorbitant privelege position of world reserve currency, Reinhart and Rogoff's 90% barrier is irrelevant… It seems that Fitch is measuring pure default risk and not a "default and recovery" measure…

Simply put, there ain't no stopping US now…

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

Fitch’s “Reserve Currency” Loophole: 80-90% Debt/GDP Rule Does Not Apply To You

Via Fitch,

Fitch Ratings says in a new report that even for a sovereign with the strongest credit fundamentals, there will be a gross general government debt (GGGD)/GDP level above which Fitch believes its rating is no longer compatible with 'AAA'.

This is usually 80%-90%, but can be higher for sovereigns with exceptional financing flexibility, such as benchmark borrowers with reserve currency status. As we have highlighted before, for France, Germany and the UK, this threshold is currently 90%-100%, and for the US, it is currently 110%, provided debt is then placed on a firm downward path over the medium term.

Our 80%-90% threshold recognises that sovereigns with (otherwise) 'AAA' characteristics have high financing flexibility and debt tolerance. Nevertheless, such a high level of debt tends to persist and potentially limits the capacity to respond to future shocks. It can also have a negative impact on growth.

Fitch gives a 'AAA' rated sovereign some leeway in allowing a temporary rise in its GGGD/GDP ratio before a downgrade. This stickiness also works in the other direction. The ratio needs to be steadily declining before restoring 'AAA' status, if warranted by other credit factors. Debt dynamics would need to be resilient to shocks to ensure that the 80%-90% level is not breached again. This would imply a fall in the debt ratio (not just a projected fall) of around 10pp of GDP or more from the downgrade level and would likely take several years.

A larger fall in the debt ratio would likely be required to restore the 'AAA' if the associated shock that precipitated the sharp increase in the debt ratio and downgrade revealed or triggered other negative credit developments such as weakening in the fiscal policy framework or credibility, a worsening in the structure of government debt, deterioration in economic growth prospects or a weakening in political stability or governance.

The 2013 median GGGD/GDP ratio for 'AAA' rated sovereigns is 47%, compared with 42% for all Fitch-rated sovereigns. But other credit strengths are sufficient to outweigh the potential drag on the rating from public debt. They typically have debt denominated in their own currency and can issue at long maturity while low interest rates hold down service costs.

The trajectory of GGGD/GDP may, at a particular time, be the key driver of rating actions for 'AAA' or 'AA+' rated sovereigns. However, ratings reflect the strengths and weaknesses of many factors, not just public debt. Thus rating actions can bite at various GGGD/GDP ratios.

Simply put, there ain't no stopping US now…

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

Silhouettes light up the hallway

Life-size silhouettes of 85 seventh graders bring the main corridor of Whitewater Middle to life, each revealing something special about the student it represents.
Language arts teacher Danna Taylor came up with the idea as she was settling into her new classroom before the start of the school year. Taylor, who was a teacher at the former Fayette Middle School, had all but finished decorating her room when she realized she had a blank wall with nothing to go on it. She quickly came up with an idea of putting silhouettes of her students on the wall.

via The Citizen http://www.thecitizen.com/articles/10-22-2013/silhouettes-light-hallway

Furry Vermin

This column originally appeared 11-15-95.

It was nearly dark when I walked through the house one evening several years ago. Seeing movement on the tubular bird feeder outside the window, I wondered what bird would be there so late.
Then I realized that it was a rat wrapped around the sunflower seed. I called to Dave — this he had to see.

Moments later he came around the corner of the house intending to dispatch that rat. But he forgot that his own movement would turn on flood lights, and the rat zipped up the chain from which the feeder hangs, and disappeared up over the roof.

via The Citizen http://www.thecitizen.com/blogs/sallie-satterthwaite/10-22-2013/furry-vermin

Wallowing in Fed-Induced Stock Market Delirium, Even Texas Instruments Admits: Stocks Are Overpriced

Wolf Richter www.testosteronepit.com www.amazon.com/author/wolfrichter

Stocks go up, we’re incessantly told, because companies are doing well. Revenues are rising due to ingenious management strategies, irresistible products, or brilliant marketing. Earnings are rising due to, well, if not rising revenues, then cost cutting, moving production to cheaper countries, squeezing suppliers, cutting pay and benefits of the lucky ones who get to work there, and so on. We love that, and given that sales and earnings of these wondrous outfits are ballooning, their shares should be ballooning as well. And they are!

But what if revenues are declining and earnings are plunging, and not just for a bad-hair quarter, but for years, and companies issue earnings guidance that disappoint the wishful thinkers with clockwork regularity, and then even have the temerity to disappoint them again with actual results?

Their shares dip temporarily and might stay down for a week or two. But then the hype machine kicks in, and other metrics are dragged out, such as “free cash flow,” or how much “money” the company “returns to shareholders,” and everyone cherry-picks the data and suddenly remembers that none of this really matters anyway, certainly not such irrelevant facts as years of declining sales and plunging profits.

Because the only thing that really matters is how much money the Fed will print, and for how long; and secondarily, how much money the other central banks will print, because the rising tide of freshly printed money lifts all boats – even that of a company with declining sales and plunging profits. Its shares too gets pushed to new highs, and this happens quarter after quarter. Texas Instruments, for instance.

The list of what ails TI is long: crummy demand for some of its products, inconvenient changes in the semiconductor market, tough competition in the mobile-chip market…. So TI’s revenues have been declining for three years, from $13.97 billion in 2010 to $13.73 billion in 2011 and to $12.82 billion in 2012. This year is turning into another doozie.

Late Monday, as it announced its shriveling earnings for the third quarter, it disappointed wishful thinkers with revenues of $3.24 billion, down 4.3% from a year ago. It also forecast revenues for the fourth quarter of $2.86 billion to $3.1 billion, again disappointing wishful thinkers. Revenues for the whole year, at the midpoint of its estimate, would be 12.12 billion, down 5.5% from 2012, and down 11.7% from 2010.

And the earnings cliff-dive has been stunning. In 2010, TI earned $3.23 billion. In 2011, earnings plunged 31% and in 2012 another 21.3%, to $1.76 billion. This year isn’t shaping up to be pretty either. In Q3, earnings sagged 20%, to $629 million from a year ago.

What is striking is just how consistent this performance has been. TI could have had an up-year in between, either in revenues or in profits, just to liven up the scene, add some humor, and give us hope for a plot twist. But NO!

What is even more striking is the stock price. It started 2010 at $26, and after some major ups and downs along the way, it’s changing hands as I’m writing this at $40.22, down 1.9% for the day, but up over 30% for the year, despite sagging sales and earnings. And just a hair lower than its post-dotcom bubble high. TXN has soared 54% over a period when revenues have dropped 11.7% and earnings were cut nearly in half.

During the earnings call, Ron Slaymaker, VP of Investor Relations, tried to put some lipstick on the thing. Yes, revenue declined, he admitted, but then he went about cherry-picking his revenue data to throw analysts something to rave about. So excluding “legacy wireless revenues,” the remaining revenues actually increased, he said. It was all due to “the strength of our business model.” And since earnings, however much they may have plunged, beat TI’s own lowered projections “with some help from discrete tax items,” everything was hunky-dory.

“The quality of our revenue is much higher today,” explained CFO Kevin March – thanks “to the structural changes that we’ve made at TI over the past few years.” So revenues dropped over the years, but they were “more diverse, more profitable, and less capital intensive,” he said. And earnings – due to these higher quality revenues? – were about cut in half.

They all hyped TI’s share repurchases. Over the past twelve months, the company spent $2.7 billion on share repurchases. Money that was “returned to shareholders,” they claimed. That’s a lot of moolah. Awesome!

Reality is this: at an average price of $32 per share, the 12-month share repurchases would amount to about 84 million shares. But the actual number of shares outstanding dropped only by 34 million shares to 1.096 billion.

The missing 50 million shares? At the same average share price, only $1.1 billion were returned to shareholders. The remaining $1.6 billion, despite Mr. Slaymaker’s assurances, were used to buy back 50 million shares that had been newly issued for executive compensation and for acquisitions. Money that was not “returned to shareholders.” It was handed to TI executives and owners of acquired companies.

This happened year after year. Despite the many billions “returned to shareholders” via share repurchases since 2010, the actual number of shares outstanding only dropped by 103 million shares, and shareholders never saw most of the money that was supposed to have been “returned” to them. A fact that Wall-Street hype mongers consistently and very conveniently fail to mention.

So would there be more acquisitions? Mr. March responded as if walking on eggs. He didn’t want to come out and say it outright. He chose his words carefully: “Given the valuations that we presently see with many companies out there that might be an attractive addition to our portfolio, it’s difficult for us to look at what we might have to pay for some of those acquisitions and actually get a reasonable return on the investment for our shareholders.”

In other words: the market is overpriced.

And with respect to companies like TI, that suffer from sagging revenues and plunging profits, but whose shares are soaring regardless, there can only be one rational explanation: the market has sunk into a Fed-induced delirium.

Earnings estimates for Q3 have been crashing for a year. On October 1, 2012, our brilliant Wall Street analysts estimated that they’d leap 15.9%. These same brilliant analysts have since chopped their forecasts for the same brilliant quarter down to a measly growth of 2.1%. Stagnation! Now they’re hyping how companies are beating these crummy forecasts! Read…. Another Heap Of Wall-Street Hype and BS.