Month: January 2014

• Threatening snowstorm may be early test for N.Y. Mayor de Blasio (Reuters), U.S. Northeast Threatened With Blizzard, Travel Delays (BBG)
• Scarred U.S. consumers a hard sell for traditional retail (Reuters)
• Edward Snowden, Whistle-Blower (NYT)
• A Few Brave Investors Scored Huge, Market-Beating Wins (WSJ)
• Fiat gets full control of Chrysler for $4.35 billion (Reuters)
• Billions Vanish in Kazakh Banking Scandal (WSJ)
• SAC’s Cohen Focus of Trial as Martoma Rebuffs U.S. (BBG)
• World’s first state-licensed marijuana retailers open doors in Colorado (Reuters)
• Hyundai, Kia face fading growth as currency tides buoy Japan rivals (Reuters)
• Bond investors braced for new year shock (FT)
• Putin vows total destruction of ‘terrorists’ after bombings (AFP)
• Hackers post account info of 4.6 million Snapchat users (Reuters)
• AllThingsD Editors Unveil Technology-News Site Called Re/Code (BBG)
• Euro Supporter Credit Suisse Joins Bears (BBG)
• Chinese balloonist lands in midst of isle dispute with Japan (Reuters)

Overnight Media Digest

WSJ

A trader who made more than $100 million from a $10 million bet against gold. A hedge fund that gained 42 percent after a bullish wager on stocks. A firm that saw returns of 48 percent thanks in part to soaring Japanese stocks.

These were among the winning investors who managed to rack up huge gains forecasting a handful of key shifts in a year that vexed many market gurus.

* Kazakhstan’s BTA Bank accused its former chairman of fraud and embezzlement, sparking a complex legal drama that includes private eyes, gendarmes disguised as gardeners, a disputed deportation and billion-dollar court judgments.

* Fiat agreed to pay $4.35 billion to buy the rest of Chrysler, ending a standoff that clouded the future of both companies. The deal is likely to end the U.S. auto maker’s preparations for an IPO.

* U.S. stocks rose on the final trading day of 2013, capping the Dow industrials’ biggest annual rally in 18 years.

* After three fiery train accidents involving crude oil from North Dakota, regulators and industry officials are probing whether additives to the oil or mislabeling of the liquid contributed to the blasts.

* Steven A. Cohen is exiting the hedge-fund stage with a 2013 performance that is ahead of the pack.

* Apple said it never worked with the National Security Agency to create a backdoor way for the organization to spy on iPhone users.

* Google Inc’s Motorola Mobility unit dropped the price on its flagship smartphone Moto X on Wednesday, continuing its assault on the high margins of its smartphone rivals.

FT

Fiat will pay $3.65bn to acquire the 41.5 percent of Chrysler it does not already own, resolving one of the car industry’s biggest strategic issues.

Richard Desmond has asked advisers to work on a possible sale of Channel 5, the British free-to-air TV broadcaster, that would seek to raise more than £700m for the media entrepreneur.

Britain’s economic recovery is expected to strengthen in 2014 as the world’s sixth-largest economy shrugs off fears over the sustainability of the upswing, according to a poll of economists.

A historic change in the way insurance companies protect themselves against natural catastrophes has helped the industry secure the biggest drop in reinsurance prices in 15 years.

European Central Bank action has had only modest success in easing big differences in interest rates paid by businesses across the eurozone, which remain near peaks seen at the height of the region’s debt crisis.

NYT

* A legion of buyers, buoyed by a growing economy and a soaring stock market, are shedding whatever reluctance, or self-imposed restraint, they had during the recession by entering showrooms and leaving with trophy cars.

* Fiat SpA said it had reached an agreement to take full ownership of Chrysler Holding LLC in a $4.35 billion deal with the United Automobile Workers retiree health care fund.

* BATS, which has quietly moved closer to the top of the list of the largest stock exchange operators in the world in terms of value of shares traded, in the coming months is set to complete its merger with Direct Edge, in a deal that will turn it into what will most likely be the biggest stock exchange company in the United States, at least on some trading days.

* While global deal-making was basically flat for a fourth consecutive year, annual volume in the United States was up 11 percent in 2013 compared with the previous year, according to Thomson Reuters.

* Walter Mossberg and Kara Swisher, founders of the conference and news business All Things Digital, are expected to start their new venture, ReCode, on Thursday.

* WABC-AM (770), which is owned by Cumulus Media, will introduce a new lineup on Thursday that emphasizes live and local programming, as its two most popular hosts, Rush Limbaugh and Sean Hannity, move to a rival station, WOR-AM (710).

Canada

THE GLOBE AND MAIL

* Julie Paskall, a 53-year-old mother of three, who was savagely beaten as she waited for her son outside a Surrey hockey arena has died. There have been two dozen homicides so far this year in Surrey, which has been battling a reputation for crime for years.

* Jim Coutts, an accomplished political tactician who was a key adviser to two former Liberal prime ministers, Jean Chrétien and Pierre Trudeau, has died after a long battle with cancer.

* Toronto Hydro Corp declared on its Twitter account late Wednesday night that all power outages from last week’s devastating ice storm have been restored, but in reality the number of people without electricity is growing again.

Reports in the business section:

* Italian car maker Fiat SpA said on Wednesday it has signed an agreement to buy the stake in U.S. auto maker Chrysler Group LLC it does not already own, ending months of tense negotiations and allowing Chief Executive Sergio Marchionne to pursue his goal of creating the world’s seventh-largest auto group.

NATIONAL POST

* Police in the Cayman Islands on Wednesday said they suspect a Canadian cruise ship passenger who recently vanished may have fallen off the boat as search crews scoured waters around the British Caribbean territory.

* Service may be free on Toronto’s transit system on New Year’s Eve, but starting Jan. 1, it will cost more for tokens and metro passes. Cash fares will stay the same. The increase is expected to add to Toronto Transit Commission’s revenue and help cover costs of more riders on more public transit services.

FINANCIAL POST

* Tough new regulations aimed at quelling fears that foreigners are snatching jobs from Canadians kicked in on Tuesday, empowering government officials to conduct workplace inspections without warrants and to blacklist employers who break the rules.

Britain

The Telegraph

DAVID CAMERON: HELP TO BUY TRIGGERS £1BN OF NEW HOME LOANS

David Cameron claims that more than 6,000 people will move into their own property thanks to the Government’s Help to Buy scheme, just three months after it was launched.

JOHN LEWIS PLANS TO DOUBLE IN SIZE AND SET UP FRENCH WEBSITE

John Lewis is preparing to almost double in size over the next decade as well as launch a French website. The moves are part of ambitious growth plans for the UK and overseas that the department store chain is working on following a successful Christmas.

The Guardian

INDIA PULLS OUT OF £466M AGUSTAWESTLAND HELICOPTER DEAL

India has terminated a £466m helicopter order with the British-Italian company AgustaWestland following accusations that the firm bribed officials.

£2M: AVERAGE PAY AWARD FOR JP MORGAN’S TOP STAFF IN 2012 REVEALED

Fresh evidence of the pay deals on offer in the City has emerged, with the biggest US bank, JPMorgan Chase & Co, revealing it gave more than 100 of its top staff in London an average of £2m each in 2012.

The Times

CONFIDENT INVESTORS PUT AIM ON THE RIGHT TRACK

A five-year exodus of companies from the struggling Alternative Investment Market was reversed last year as confidence appeared to return to London’s junior share exchange.

LEGO SUPPLIES THE BUILDING BLOCKS OF BUMPER JOHN LEWIS CHRISTMAS

The age-old appeal of Lego provided a hit for yet another year as John Lewis revealed its Christmas bestsellers for 2013.

The Independent

£16BN OF FOREIGN CASH FLOODS INTO LONDON’S BOOMING COMMERCIAL SECTOR

A £16bn tide of overseas money flooded into the London commercial property market last year, fuelling the best year for the capital since the height of the boom in 2007, according to estate agents Jones Lang LaSalle.

SMALL FIRMS STILL NEED MORE HELP, SAYS BCC

A “structural failure” in the financing of small businesses in the UK is impeding the development of world-class technology firms, according to the British Chambers of Commerce.

Fly On The Wall 7:00 AM Market Snapshot

ANALYST RESEARCH

Upgrades

American Eagle (AEO) upgraded to Buy from Hold at Jefferies
American Electric (AEP) upgraded to Outperform from Market Perform at BMO Capital
Ann Inc. (ANN) upgraded to Buy from Hold at Jefferies
Ascena Retail (ASNA) upgraded to Buy from Neutral at Goldman
Astoria Financial (AF) upgraded to Outperform from Market Perform at Keefe Bruyette
Avista (AVA) upgraded to Market Perform from Underperform at BMO Capital
Bank of America (BAC) upgraded to Buy from Neutral at Citigroup
Chico’s FAS (CHS) upgraded to Buy from Hold at Jefferies
Duke Energy (DUK) upgraded to Outperform from Market Perform at BMO Capital
Duke Realty (DRE) upgraded to Outperform from Market Perform at BMO Capital
Liberty Property (LRY) upgraded to Outperform from Market Perform at BMO Capital
Urban Outfitters (URBN) upgraded to Buy from Hold at Jefferies
Xilinx (XLNX) upgraded to Buy from Neutral at Goldman

Downgrades

Abercrombie & Fitch (ANF) downgraded to Hold from Buy at Jefferies
Aeroflex (ARX) downgraded to Neutral from Buy at Goldman
Aeropostale (ARO) downgraded to Hold from Buy at Jefferies
Altera (ALTR) downgraded to Neutral from Buy at Goldman
Analog Devices (ADI) downgraded to Market Perform from Outperform at Wells Fargo
Analog Devices (ADI) downgraded to Sell from Neutral at Goldman
Apple (AAPL) downgraded to Market Perform from Outperform at Wells Fargo
CGG SA (CGG) downgraded to Neutral from Buy at UBS
Elbit Systems (ESLT) downgraded to Neutral from Buy at Citigroup
Endo Health (ENDP) downgraded to Sell from Hold at Cantor
Flushing Financial (FFIC) downgraded to Market Perform at Keefe Bruyette
Health Care REIT (HCN) downgraded to Underperform from Market Perform at BMO Capital
Intersil (ISIL) downgraded to Underweight from Equal Weight at Evercore
NXP Semiconductors (NXPI) downgraded to Neutral from Buy at Goldman
ON Semiconductor (ONNN) downgraded to Neutral from Buy at Goldman
Texas Industries (TXI) downgraded to Neutral from Buy at Longbow
United Insurance (UIHC) downgraded to Neutral from Buy at Sterne Agee
Ventas (VTR) downgraded to Underperform from Market Perform at BMO Capital

HOT STOCKS

Fiat (FIATY) acquired remainder of Chrysler Group from VEBA Trust, announced agreement with UAW, special distribution
Shell (RDS.A) announced purchase price of Repsol LNG portfolio will be $3.8B, not $4.4B
Star China to acquire 21st Century Fox’s (FOXA) 47% stake in Star China TV
Bombardier (BDRBF) announced $2.2B order for 38 business jets
Ford (F) announced C-MAX Solar Energi Concept

NEWSPAPERS/WEBSITES

• Investors likely will turn up the heat on certain U.S. CEOs, demanding improved results. Several top bosses hitting their second anniversary on the job in 2014 may feel squeezed by impatient investors, including at Avon Products (AVP), Yahoo (YHOO), and McDonald’s (MCD), the Wall Street Journal reports
• Google’s (GOOG) Motorola Mobility unit dropped the price on its flagship smartphone, continuing its assault on the high margins of its smartphone rivals. The Moto X with 16 gigabytes of memory would now cost $399 without a wireless contract for U.S. customers, down from $550, the Wall Street Journal reports
• If there was one lesson from this year’s holiday shopping season, it is that many traditional retailers (WMT, JCP, KSS) are having to work a lot harder to persuade Americans to open their pocketbooks. Even if the economy picks up significantly, retailers of many products could still struggle, Reuters reports
• Private equity firms (BX, CG, APO) are increasingly seeking to partner with U.S. companies rather than buying them outright, as they struggle to find ways to put their huge piles of money to work at a time when frothy markets have made takeovers expensive, Reuters reports
• Warren Buffett probably missed his target for the first time in 44 years. Berkshire Hathaway (BRK.A), his $292B company, is poised to report that it failed to increase net worth more rapidly than the S&P’s 500 Index during the past five years, according to analyst estimates, Bloomberg reports
• Shares of U.S. financial firms (MS, JPM, WFC, BAC, C, GS) just staged their biggest annual rally since 1997, creating a bonanza for Wall Street employees who received bonuses in deferred stock. The new year doesn’t hold the same promise, Bloomberg reports

ACTIVIST/PASSIVE FILINGS

SAC Capital reports 5% passive stake in Crocs (CROX)

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/zQtcgiwm1P4/story01.htm Tyler Durden

The first trading session of previous years has always been a whopper for those betting on central planning and capital flows. In fact, if one adds up the S&P performance on the first trading day of each year going back to 2009 (i.e., 1/2/13: + 2.54%, 1/3/12: + 1.55%, 1/3/11: + 1.13%, 1/4/10: + 1.60%, and 1/2/09: + 3.16%), one gets a whopping 10% return just on that one trading session. Which is why the fact that futures are glowing read, if only for the moment, may be disturbing for index investors and all those others who put all their faith, not to mention money, in St. Janet. Today’s red open is hardly being helped by the 10 Year which continues to drift lower with the yield now at 3.04%, even as the Spanish 10 Year yield just got a 3 handle as well. At this rate the two streams should cross some time in the next two months. Just what a higher yield in the US vs Spain would imply for fair and efficient markets, we leave up to readers to decide.

In terms of macro events, while China’s official and HSBC PMIs as well as that of Australia posted modest disappointing declines, at 52.7, the final Euro area manufacturing PMI for December was unchanged from its flash reading (and the Consensus expectation) and rose by 1.1pt on the month. The German PMI was 0.1pt higher than the flash estimate, while the French PMI was 0.1pt lower than its flash estimate, a 7 month low. Manufacturing expanded on the month in Italy and Spain, and surprised on the upside in both. The trend of disappointing data out of France continues and the recent enactment of the 75% millionaire tax will hardly help. As for the credibility of the peripheral European data, well – check back in a year.

The futures weakness likely has something to do with the EURUSD which has been in freefall all session and has now filled the gap from that ridiculous 200 pip ramp on December 26. Keep an eye on the pair as more turn bearish on the Euro to start the year.

A quick recap of global markets on the first trading day of 2014:

European shares fall with the basic resources and utilities sectors underperforming and media, travel & leisure outperforming. The Spanish and French markets are the worst-performing larger bourses, the Dutch the best. The euro is weaker against the dollar. Portuguese 10yr bond yields fall; Spanish yields decline. Commodities little changed, with silver outperforming. U.S. jobless claims, ISM manufacturing, construction spending data released later.

• S&P 500 futures down 0.2% to 1836.8
• Stoxx 600 down 0.4% to 327
• US 10Yr yield down 1bps to 3.02%
• German 10Yr yield up 3bps to 1.96%
• MSCI Asia Pacific down 0.6% to 140.5
• Gold spot up 1.5% to $1219.5/oz

EUROPE

• 3 out of 19 Stoxx 600 sectors rise; media, travel & leisure outperform, basic resources, utilities underperform
• 32.2% of Stoxx 600 members gain, 65.2% decline
• Euro-zone Dec. manufacturing PMI 52.7 inline with est.
• Top Stoxx 600 gainers: Fiat SpA  +12.4%, Hikma Pharmaceuticals PLC  +5.4%, Telecity Group PLC  +4.8%, Metso OYJ  +4.6%, Pandora A/S  +4.4%, Exor SpA  +4%, Vestas Wind Systems A/S  +3.9%, International Personal Finance  +3.5%, Hellenic Telecommunications Or  +3.3%, Banco Comercial Portugues SA  +3.2%
• Top Stoxx 600 decliners: Ophir Energy PLC -6.1%, Bankia SA -5.6%, TGS Nopec Geophysical Co ASA -5.2%, Banco de Sabadell SA -3.4%, K+S AG -3.3%, Aberdeen Asset Management PLC -3.3%, CGG SA -3%, Aker Solutions ASA -3%, Aurubis AG -2.8%

ASIA

• Asian stocks fall with the Kospi underperforming.
• MSCI Asia Pacific down 0.6% to 140.5
• Nikkei 225 closed, Hang Seng up 0.1%, Kospi down 2.2%, Shanghai Composite down 0.3%, ASX up 0.3%, Sensex down 1.2%
• 0 out of 10 sectors rise with utilities, industrials outperforming and energy, tech underperforming
• Gainers: China International Marine Con  +12.7%, China Everbright International  +9.8%, Newcrest Mining Ltd  +8.3%, AAC Technologies Holdings Inc  +7.7%, Chicony Electronics Co Ltd  +6%, Epistar Corp  +5.7%, Kalbe Farma Tbk PT  +5.6%, Sino Biopharmaceutical Ltd  +5.5%, Sihuan Pharmaceutical Holdings  +5.2%
• Decliners: True Corp PCL -9.3%, BEC World PCL -8.9%, Home Product Center PCL -8.6%, Central Pattana PCL -8.5%, Siam Commercial Bank PCL/The -8.4%, Minor International PCL -8.2%, Airports of Thailand PCL -7.6%, Glow Energy PCL -7.4%, Banpu PCL -7.4%, Hyundai Wia Corp -7.4%

Overnight bulletin summary from Bloomberg and RanSquawk

• Despite opening in positive territory after a record close on Wall Street, European indices have since pared the gains in what has been a relatively light session.
• FX markets continue to trade with relatively thin volumes following the New Year period. With USD benefiting from market talk of hedge fund names buying in USD/CHF.
• Going forward, market participants will get to digest the release of the weekly jobs report, ISM Manufacturing report for the month of December and also refunding announcement by the US Treasury.
• 10Y yields begin 2014 above 3.00%, ~120bps over levels seen at start of 2013; Treasuries delivered a total return of -3.35% last year, according to BofAML indexes, first annual loss since 2009, as Fed tapers bond buys.
• U.S. investment-grade corporates lost 1.45% last year while high yield bonds returned 7.4%, also according to BofAML indexes; the S&P 500 rallied 30%, its biggest yearly advance in 16 years
• A gauge of U.K. manufacturing fell to 57.3 in Dec. from a revised 58.1 while a separate report showed manufacturing in China weakened last month
• China’s yuan touched a 20-yr high as PBOC Deputy Governor Yi Gang yesterday said the nation will expand the opening up of the foreign-exchange market and increase the number of participants
• Japan’s population declined by the most on record in 2013, highlighting the demographic challenges faced by Abe in his campaign to revive the world’s third-biggest economy
• Italy 10Y yields fell to the lowest level since May after an industry report showed the nation’s factory output expanded at the fastest pace since April 2011
• The Northeast is bracing for a winter storm that is forecast to dump more than a foot of snow across parts of the region, threatening road closures after causing hundreds of flights to be canceled
• Part of Obamacare is on hold in a Colorado case until at least tomorrow, as the U.S. Supreme Court considers contentions from religious groups that say they don’t want to facilitate coverage for contraception
• Sovereign yields mostly higher; EU peripheral spreads tighten as Italy, Spain, Ireland and Portugal bonds rally. Nikkei closed for holiday; Japan reopens Jan. 6. Shanghai -0.3%. European stocks and U.S. equity-index futures decline.  WTI crude little changed, copper and gold gain

Market Re-Cap from RanSquawk

Stocks in Europe have failed to maintain early gains and gradually moved into negative territory in what has been a liquidity-thinned trading session. Nevertheless, Italian based FTSE-MIB outperformed since the open and remained in the green, where Fiat shares traded up over 14% following pre-market reports that the company has reached a deal to buy the remaining 41.5% of Chrysler shares for USD 3.65bln. The move lower was in part driven by touted profit taking related flow, as well as somewhat cautious sentiment which was observed overnight in Asia following the release of less than inspiring data from China. Of note, Korea’s benchmark stock index suffered its biggest loss since mid-2012, with automakers under selling pressure after Hyundai Motor and Kia Motors said they are bracing for their weakest sales growth in more than a decade this year.

There was little in terms of fresh central bank rhetoric this morning, but ECB’s Weidmann said that policy makers should charge more interest if they decide to offer additional long term loans to prevent carry trades.

Asian Headlines

Chinese HSBC Manufacturing PMI (Dec) M/M 50.5 vs. Exp. 50.5 (Prev. 50.8)

Chinese Manufacturing PMI (Dec) 51.0 vs. Exp. 51.2 (Prev. 51.4)

A Chinese state economist has said that 2014 GDP may grow 7.5%, according to Sec. News.

EU & UK Headlines

Euro-Zone PMI Manufacturing (Dec F) M/M 52.7 vs Exp. 52.7 (Prev. 52.7)

German PMI Manufacturing (Dec F) M/M 54.3 vs Exp. 54.2 (Prev. 54.2)

French PMI Manufacturing (Dec F) M/M 47.0 vs Exp. 47.1 (Prev. 47.1) – 7 month low

Italian PMI Manufacturing (Dec) M/M 53.3 vs Exp. 51.8 (Prev. 51.4) – Highest since April 2011
Spanish PMI Manufacturing (Dec) M/M 50.8 vs Exp. 49.8 (Prev. 48.6)
UK PMI Manufacturing (Dec) M/M 57.3 vs Exp. 58.0 (Prev. 58.4, Rev. 58.1)

ECB’s Weidmann says policy makers should charge more interest if they decide to offer additional long term loans to prevent carry trades.

The Italian 10y yield has dropped below 4% for the first time since May 23 supported by domestic buying and the earlier PMI Manufacturing release which came in at 53.3 vs Exp. 51.8, which is the highest reading since April 2011.

According to an FT survey, Britain’s economic recovery is expected to strengthen in 2014 as the world’s sixth-largest economy shrugs off fears for the sustainability of the upswing.

Equities

Despite opening in positive territory after a record close on Wall Street, European indices have since pared the gains in what has been a relatively light session. The notable outperformer has been the FTSE MIB, which has been lead higher by Fiat after reports that the Co. are to buy the remaining 41.5% of Chrysler shares for USD 3.65bln. Elsewhere, RWE shares did put some downward pressure on the Utilities sector after it was reported that the Co. are to seek option to boost capital by 10% at the next annual shareholder meeting. Furthermore, it is worth noting that retail related stocks likely to come under a greater scrutiny this morning and over the coming weeks as market participants review holiday trading performance.

FX

FX markets continue to trade with relatively thin volumes following the New Year period. With USD benefiting from market talk of hedge fund names buying in USD/CHF which has seen some upside for the pair and EUR/CHF. Elsewhere, markets have been largely unreactive to this mornings mixed Manufacturing PMIs from the Eurozone. Furthermore, NZD/USD has recently broken below the 200 DMA following this recent resurgence in the greenback.

Commodities

India 2014 gold imports seen at 350 tonnes to 400 tonnes on curbs.

Iraq exported an average of 2.341mln bpd in December, down from 2.381mln bpd in November, according to an oil ministry spokesman.

Libya oil minister official says Libya oil fields combined capacity is about 280kbpd.

Bernstein lowered their 2014 Brent and WTI crude forecasts by USD 1 to USD 110 and USD 101 respectively and say that global oil demand will rise to 1.3mln bpd in 2014 on global economic growth.

Iran and six world powers have proposed Jan. 20 as the date to implement the Geneva deal, according to PressTV, citing the head of Iran’s expert-level nuclear negotiation team.

China’s ambassador to London has launched a strong criticism of the Japanese PM Abe, accusing him of deliberately raising tensions in Asia and putting the world on a ‘perilous path.’

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/b4hQVLNxuwk/story01.htm Tyler Durden

How many people in the financial services industry understand how the financial system works?

We’ve all experienced it, we are dealing with someone who has all sorts of masters degrees, PhD’s, and doesn’t know the Federal Reserve is a private corporation, and even doesn’t know the product their company is selling.

In the spirit of professionalism, we must keep these quotes anonymous, but certainly if you have survived long enough in Finance or read the Financial news regularly, you will not need any references because you’ve probably heard it before.

“I don’t know Math, I know Finance.  If I wanted to study Math, I would have been a Scientist”

excuse me?

“I’m having some computer issues, I have to wait for my I.T. guy to fix it.” -Trader

“I just invest in companies that I understand.  I drink Coke.”

 

“By proposing the development of algorithmic trading systems based on genetic algorithms, you have insulted the Lord Jesus Christ, and I must leave this meeting”

 

“You may understand the markets, but you know nothing, until you have traded on the floor of the NYSE” (this was in the late 90’s)

 

“I see these documents you have shown me about the Fed being private, but if I accept these facts about the Fed, I would rather die.  As far as I’m concerned the Fed is part of the government.  Why do you think it’s called ‘Federal’ Reserve?”

 

“Foreign futures is Forex” -Regulator (who have since changed their wording)

Comparatively, in many other industries, even low level workers have an intimate knowledge of the smallest detail.  The car industry is a great example (although there are many others).  Many car  mechanics can completely disassemble and reassemble most makes and models even from different eras; where parts are different or unavailable, they become innovative.  And then there is the final test; does the car start?

Wall Street seems to be at the other end of this comparative spectrum.  How many brokers could disassemble and reassemble the entire business with all its working parts?  Many top level executives even fail to do this.

But we can say that Finance is one of few industries with highly trained and educated workers.  Because of regulatory requirements for education, company policies that extend this education further, nearly all workers are extremely educated.  They are trained what to say, what not to say, down to the level that scripts are memorized when speaking by phone, and any deviation from script wording can bring harsh consequences.  

Then why does there seem to be so much incompetence on Wall Street?

First, we must realize that Wall Street typically has a top down pyramid structure as an information policy.  A few people at the top know everything, and farther down the management chain you go to the bottom dwellers, they know less and less.  This is somewhat understandable due to the fact that Finance is largely an information business, and proliferating any trade secrets or divulging info about a trading strategy or investment strategy could impact the strategy.  

But there are consequences for such a structure, most obvious in financial frauds, where only a few top executives are aware that the big account in the Caymans is actually a fictitious account, or that the 100m of reg cap at US Bank doesn’t exist, and the bank account statement being sent to regulators is a bad Photoshop job.  

Another consequence is that if the leaders who have all the info are incompetent or make mistakes, they are left to fend for themselves, and could potentially bring down the whole company.

From a psychological perspective, one can say many in Finance are educated above their intelligence.

People may study Finance and dream of Wall Street for the similar reasons Hollywood attracts young wanna be starlets; they watch too many movies and dream of glory, fame, and money.  That’s fine, it’s a free country, and as many a Communist said “Capitalists will sell the noose to hang themselves.”  But what type of quality are we left with?  To use Wall Street expression “You can’t put lipstick on a pig” – nor can you increase the intelligence of a human being.  You can educate them; but based on their IQ they have a limit, as we all do.  And it’s impossible to educate someone (anyone) beyond their limit to understand.

As with any growth industry, and Wall Street has had an ‘epoch’ of growth (even considering market crashes), new companies form, and people are hired.  But do we really need a sea of well educated but yet incompetent workers?  How many people does it really take to manage a bank?  Certainly not 50,000.  With the advent of computing, the only task that cannot be automated is talking to other people (whether by phone or in person).  But do we really need this?  Oh we do, sorry I forgot about sales.  See, our strategy is really a bunch of toxic waste, and we need young ambitious kids on the phone selling this crap.  That can’t be automated.  But look where we would have been if sales didn’t exist, there may have been no .com bubble, no real estate bubble, no sub-prime bubble.

The point is, having a sea of workers who are educated above their intelligence in an industry that can collapse the world economy, ruin countries, corporations and families, and cause huge economic devastation, is very dangerous!

But in a society based on lies (marketing) – better lies that are in compliance with regulations, are seen as a sign of strength to the HR department (get more sales) whereas an honest analyst whose warning of a real estate crash in 2005 is laughed at, teased, and maybe even fired.

To make a ‘positive’ comment from the other side of the spectrum, there are a handful (in percentage terms) who really understand how the financial system works.  Some are in Academia (very few!), some in trading, and some from other fields.  We see them on the internet, on Zero Hedge, and occasionally on mainstream financial media.  But they are far the minority.  And many are behind the scenes, people we do not know and may never know.  

The problem with this incompetent mass is that since they do not fully understand the system, they do what they know how to do (which is usually not very smart).  This is bad for the organization they work for, and it’s bad for the financial system as a whole.  

The solution is that the stewards of the financial system should not be the “Kings of Wall Street” living in palaces, they should be Philosopher Kings as according to Plato.  They should have all resources available to them, but paid only a salary for an average existence (no bonuses!).  The entire model of private for profit banks, competing in the free markets with financial products, sitting opposite ‘regulators’ with Congress in between, is not only a farce, it’s a system based on conflict of interest.  This design itself is a conflict of interest, when these for profit banks are Washington’s largest financial supporters.  The rotating door of executives turn regulator ensures that there is no regulation going on.  

“Oh we can get an FCM license immediately, we just need to get to XXX XXXX and grease him up a bit” – Anonymous securities attorney

A system based on conflict only breeds conflict, as the saying goes “In a crooked environment, crooks are the most honest people.”  Is it possible to have an honest financial system?  Of course it is!  There are hundreds of historical examples of financial systems based on real money (not ever expanding debt based fiat currency).  They even exist today, although the dominant system is that controlled by the world’s central banks.  But the most amazing thing about such an honest system based on real value, banks could still compete in this system for a profit (although it would be more difficult because they would not have a complete monopoly, nor access to create as much free money as they need).  But this is far from a socialist idea.  In fact, there are hundreds of potential political and economic systems, which have nothing to do with Capitalism or Communism.  In fact these 2 words have become so overused in the wrong context, and used for social programming, they are synonymous in the West with good and evil, also a mis-characterization, because you have almost infinite number of types of Capitalism, which is also different in every culture.  

For generations we have been programmed to a belief system where only 2 options exist; good and evil, Coke and Pepsi, Republican and Democrat, Capitalism and Communism (or Socialism if you want).  This is very deceptive and completely untrue (although they have nearly made it true because everyone believes it so now it is our reality).  There are hundreds of economic and political systems that have been used and tested in practice, and countless others that have been researched and theorized.

One example of an economic system that is not very well known is that of Endogenous money.

Endogenous money creation or destruction is the concept that each participant in the economy has their own version of a ‘printing press’ for money. This concept was explained by Irving Fisher in his treatise on The Theory of Interest (1930) in terms of the value of currency being affected by two (potentially opposing) movements – expected growth in the money supply reducing the real purchasing power of money and expected increases in productivity increasing the real purchasing power of money.

While the concept of each of us having our own central bank seems almost ridiculous, consider how Bitcoin has changed the way we think about money.  Bitcoin is not backed by any central bank, and while not the private money of an individual, it was created and designed by private citizens (not central bankers) and is now being used as a payment system and investment by millions around the world.  Another interesting example is currency based on barter, or a system that simply tracks economic transactions between participants using a credit system.

A local exchange trading system (also local employment and trading system or local energy transfer system; abbreviated to LETS or LETSystem) is a locally initiated, democratically organised, not-for-profit community enterprise that provides a community information service and record transactions of members exchanging goods and services by using the currency of locally created LETS Credits.

The only way to achieve a new financial system that is sustainable (and more fair), is through financial education and training.  If the majority of the public knew what goes on at their financial institution, they probably wouldn’t participate.  Some have even speculated that Cocaine was the major cause of the financial crisis.  More likely it was stupidity, but certainly regular Cocaine use doesn’t help you make good financial decisions.  

George Bush Sr. was once quoted as saying: “If the American people knew the Damage we have done to their Country, they would hang us from the nearest lamp post.” 

The real intelligence in a fair and honest financial system is that we wouldn’t need regulators, we wouldn’t need sales people (they can sell cars, or we can pay them to stay at home and not bother us with their telemarketing) and there wouldn’t be an ongoing financial crisis.  We have technology today that can manage such a system very efficiently and cheaply.  The modern financial system as it is today has it’s roots over 500 years ago.  It might be time for an update.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/KtnZIM1HE-c/story01.htm globalintelhub

This isn’t about the top layer sex bullshit either, this about a product we’ve created and I’ve worked very hard to produce with the help and assistance of many gifted folks.  We’ve all helped each other build this network.  However, I will not allow those who trust me and the Calibrated Confidence brand to perceive me as affiliated in any of this low-brow titillating financial bullshit post The Wolf of Wall Street porno.  If you were as disgusted as I was at what happened, make sure to let the “benevolent dictator” knows your thoughts.  The problem has become now that instead of focusing on what you all want from BTFDtv, those in control have fallen to devilish motives attached to over-valuation on click-rate relevance.  Credibility goes much farther than statistics on a website.  Greed blinds people and causes them to view their audience as a revenue source and not a relationship.

I’m beyond disappointed in those I thought I could trust and extremely thankful to them for the sharp reminder of that I need to keep a more keen eye on those “close” to me.  What really pissed me off is that for 100 fucking views in BTFDtv’s precious click-bait box, we could have had the video I did with @Not_Jim_Cramer on ZeroHedge but we didn’t because some of the mob reached out to me concerned about what was happening with this Skirt bullshit.  So understand that BTFDtv has caused a broad audience similar to yourselves to miss out on the knowledge of what was discussed in that video (which I embedded below).  

So who’s ready to explain to me what @BTFDtv is and if/why finance people should watch it?
— DumbLuckCapital (@DumbLuckCapital) January 1, 2014

Wish @2yrflipper and @lefthash back on @BTFDtv . More of what I want to see out of @BTFDtv is not last nights episode or @MissTrade
— @StopRunner (@StopRunner) January 1, 2014

The @talktoskirt appearance on @BTFDtv last night confirms twitter is full of classless men. Step your game up gentleman. U know who u are.
— Trader of Things (@ZachShackleford) January 1, 2014

Really sorry I missed the @talktoskirt segment on @btfdtv last night. Half my timeline talking about it, hope there’s a rerun.

— Downtown Josh Brown (@ReformedBroker) January 1, 2014

I apologize to those of you who relied on BTFDtv for content and trusted me to always affiliate with those who had you guys in the forefronts of their minds.  Calibrated Confidence as a brand has learned a great deal from the first day of 2014.  Stay tuned here as I’ll stream in Special Reserve 200 Proof and hook you guys up with a tab at the top of this site.

Calibrated Confidence Interview @Not_Jim_Cramer

Skip the blathering and go to 7:06 for the interview

Again, I had no say or anything to do with what you saw on New Years Eve, this is the type of content Calibrated Confidence produces.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/GENLH9YxuBs/story01.htm CalibratedConfidence

In a little under four minutes, Marc Faber explains to Fox Business’ Dagen McDowell all that is wrong with the Central Planners ‘current plan’. From a re-bubbled housing ‘recovery’ pricing real buyers out of the market (“homes do not offer a great opportunity today“) to forced-renters paying increasing amounts of their stagnant wages, and the small percentage of ordinary Americans who actually benefit from a rising stock market, reducing their disposable income to which Faber sarcastically rants “well done, Mr. Bernanke.” His advice, be diversified, don’t BTFATH in stocks, and physical gold is always a good insurance.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/u7zuwOvbnp0/story01.htm Tyler Durden

In a little under four minutes, Marc Faber explains to Fox Business’ Dagen McDowell all that is wrong with the Central Planners ‘current plan’. From a re-bubbled housing ‘recovery’ pricing real buyers out of the market (“homes do not offer a great opportunity today“) to forced-renters paying increasing amounts of their stagnant wages, and the small percentage of ordinary Americans who actually benefit from a rising stock market, reducing their disposable income to which Faber sarcastically rants “well done, Mr. Bernanke.” His advice, be diversified, don’t BTFATH in stocks, and physical gold is always a good insurance.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/u7zuwOvbnp0/story01.htm Tyler Durden

Given that young people in Japan have lost interest in sex, with 45% of Japanese women 16-24 “not interested in or despise sexual contact,” it is perhaps not entirely surprising that, as Japan Times reports, Japan’s population fell by a record 244,000 in 2013. This further raises concerns over an ever-dwindling workforce that supports an ever-growing number of pensioners, with the proportion of people aged over 65 reaching nearly 40% by 2060.

Via Japan Times,

An estimated 1,031,000 babies were born in 2013, down about 6,000 from a year earlier, the ministry said.

 

On the other hand, around 1,275,000 people died — up about 19,000 from the previous year, the highest annual rise since World War II.

 

As a result, the natural population decline came to a record 244,000, the ministry said, beating the previous highest fall of 219,000 in 2012.

 

Japan’s population totalled 126,393,679 as of March 31, down 0.21 percent from a year earlier, according to a government figure.

 

It has continually declined since 2007 by natural attrition — deaths minus births.

 

Japan is rapidly greying, with more than 20 percent of the population aged 65 or over — one of the highest proportions of elderly people in the world. The country has very little immigration and any suggestion of opening its borders to young workers who could help plug the population gap provokes strong reactions among the public.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/Cm4LfRgk69c/story01.htm Tyler Durden