Category: zerohedge

To ‘prove’ everything is fine, President Obama met with and hugged Ebola-survivor Nina Pham today… The White House confirms no bodily fluids were exchanged during the meeting…

• *EARNEST SAYS OBAMA SAW NO RISK HUGGING NURSE CURED OF EBOLA

“No Tongues!”

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Yesterday, we summarized all that was wrong in Amazon’s worst quarter in history where apparently one can no longer “make up for negative profits with volume.”

Here is another way of deconstructing Amazon’s love-hate relationship with profitability: in all of its 20+ year history, Amazon has generated under $2 billion in Net Income. The offset? Jeff Bezos’ net worth, which according to Bloomberg is about $30 billion (that was the number in April, when Bezos had lost a whopping $6.5 billion due to the collapse of AMZN, by now the number is surely far lower making Bezos the biggest billionaire loser in 2014). Still, for indicative purposes, the data is good enough.

In short: this is what Jeff Bezos’ value creation looks like (one does wonders if Amazon has purposefully been a perennial “bottom-line loser” for decades simply to avoid paying taxes).

 

And as a bonus chart, this from the WSJ:

Inspired by @ReutersJamie

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The “Hotel California” market in one simple chart… you can check in, but never check out…

 

 

Source: @NanexLLC

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Submitted by Charles Hugh-Smith of OfTwoMinds blog,

The stock market's wild swings of sentiment have got me thinking it's living on reds, vitamin C and cocaine. This is a famous line from the Grateful Dead song Truckin'.
 

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While JPM’s eligible gold holdings are nowhere near the record lows hit in the summer of 2013, when they dropped to a tiny 46K ounces, sparking concerns of a potential deliverable default, yesterday according to the daily CME gold depository report, JPM saw a whopping 321,500 ounces, or about 10 tons of gold, withdrawn. This was the biggest outflow since the August 5 rebalance when nearly 1.5 million ounces were withdrawn and added, and was the biggest, and is tied with two identical 321,500 oz outflows recorded in early January. As of yesterday, JPM’s eligible gold tumbled by 40% in one day, declining to 485.K ounces from over 800K the day before: the lowest eligible gold inventory since almost exactly a year ago.

What is perhaps more notable, is that the recent outflows of eligible golds are taking place at the same time as there has been a significant reduction in the NAV/gold holdings of the GLD ETF. A question thus arises once again: where is the gold being withdrawn to and who is doing these not insubstantial withdrawals.

Finally, it bears pointing out that since September 1, eligible gold at JPM’s vault has declined from 1.5 million ounces to under 500K: a decline of over 1 million ounces in just over a month, and matching the fastest decline on record for the JPM vault recorded in early 2013.

It would appear that someone is certainly in a rush to “withdraw” as much eligible gold as possible at a time when gold has been stubbornly trading in the $1200/ounce range, and when significant moves of either physical or paper gold, appear to not have much of an impact on gold price.

Will JPM’s gold vault be further emptied today? We will know the answer in just about 3 hours.

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The investment world is banking on real growth being just around the corner.

However, the data does not confirm this view.

Let’s talk about China first. Half of all global growth is expected to come from China, which is forecast to grow by 6.5%-7% next year.

Now, China’s economic numbers are for the most part fictitious. However, there is one metric that cannot be fudged and that is electricity consumption. Either electricity is being used or it is not.

With that in mind, we must consider that China’s electricity demand is collapsing, having fallen to a year over year rate of 3.5% in August 2014.

 

Source: Zerohedge

Indeed, given that Chinese electricity consumption cannot be faked and is growing at just 3.5% year over year, we can safely assume that China’s economy is likely growing at a pace more like HALF of the official forecast of 6.5%-7%.

So China will not be driving global growth.

What about the US?

As is the case in China, official GDP growth numbers in the US are massaged to the point of being fictitious.  The reason for this is that all “adjusted” GDP data involves a “deflator” metric that is meant to adjust for inflation.

The Feds often use an inflation adjustment that is even lower than their official Consumer Price Index metric (which is already massaged to downplay inflation) in order to make GDP growth look greater.

Consider this simple example. Let’s say that the US GDP grew by 10% last year. Now let’s say that inflation also grew by 10%. In this scenario, real inflation adjusted GDP growth was ZERO. However, announcing ZERO GDP growth is a major problem politically. So what do the Feds do? They claim that inflation was just 8%, and BOOM you’ve got 2% GDP growth announced for a year in which real GDP growth was actually zero.

By using nominal GDP measures, you remove the Feds’ phony deflator metric. With that in mind, consider the year over year change in nominal GDP that has occurred.

As you can see, we’ve broken below four, the reading that has been triggered at every recession in the last 30 years. At best, we’re flat-lining. At worst we’re already in recession again.

Don’t believe the hype both China and the US are making up their GDP growth numbers for political reasons. Neither will be a major engine for growth next year…

Which means that the markets are completely mispricing what’s coming… and the stage is set for another Crash.

If you’ve yet to take action to prepare for the second round of the financial crisis, we offer a FREE investment report Financial Crisis "Round Two" Survival Guide that outlines easy, simple to follow strategies you can use to not only protect your portfolio from a market downturn, but actually produce profits.

You can pick up a FREE copy at:

http://ift.tt/1rPiWR3

Best Regards

Phoenix Capital Research

 

 

 

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France’s President Francois Hollande states confidently that “everyone should respeoct treaties,” then ‘Junckers’ it with this stunningly hypocritical bullshit, “budget rules must be adapted” to support growth and France “has done what it has to do” on its deficit… one glance at the following chart suggests that Hollande has done nothing and has been enabled by Draghi… What a farce!!

 

 

So:

• *HOLLANDE SAYS `EVERYONE’ SHOULD RESPECT TREATIES
• *HOLLANDE SAYS FRANCE RESPECTS DEFICIT TREATY WITH FLEXIBILITY

But:

• *HOLLANDE SAYS FRANCE `HAS WORK TO DO ON REFORMS’
• *HOLLANDE SAYS COUNTRIES WITH SURPLUSES SHOULD SUPPORT DEMAND
• *HOLLANDE SAYS BUDGET RULES `MUST BE ADAPTED’ TO SUPPORT GROWTH
• *HOLLANDE SAYS FRANCE HAS `DONE WHAT IT HAS TO DO’ ON DEFICIT

How long before Schaeuble explodes?

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Submitted by Michael Pollaro via Acting-Man blog,

QE3 Is Coming to an End

The Federal Reserve’s latest asset purchase program, QE3, is coming to an end.  What was once an $85 billion a month program, one in which at its peak had been goosing the financial markets and economy at an annual rate of $1.0 trillion – and over its 27 month life will have pumped $1.7 trillion of money into the economy – is going to zero. Given the outsized impact QE has had on the growth of U.S. money supply and thus the U.S. economy, we say investors take note, especially those furthest out on the risk curve, because what was once your primary tailwind could soon become your greatest headwind.

Here’s why…

Recapping the tenets we presented here, here, and here, once an economy is subjected to a bout of monetary inflation, whether that be via direct central bank money creation or via money (and credit) creation by the fractional reserve banking system, an unsustainable, artificial economic boom is born, whereby malinvestments (bubbles if you like) are created that sooner or later must be liquidated. And whether that bust takes the form of a hyperinflationary bust or a deflationary bust, bust we will get.

The form the bust takes will depend on the course of the inflation. If the central bank/banking system pursues an inflationary course, by throwing continual and importantly ever larger doses of money (and credit) into the economy, the bust will take the form of a hyperinflationary bust – a collapse in the value of the currency and with that a breakdown of the entire economy. If instead the central bank/banking system ends its money creation activities or even moderates that increase in a material way, the bust will take the form of a deflationary bust – a healthy liquidation of the malinvestments made during the boom and with that a commensurate fall in the prices of those same malinvestments.

Austrian Business Cycle Theory (ABCT) in a nutshell.

Thus, when an economy is subjected to a bout of monetary inflation, investors can enhance their performance by correctly positioning their portfolios on the right side of the boom-bust cycle.  Though easier said than done, one should buy claims to the malinvestments of the boom; i.e., when the money supply is surging; then sell those same claims after the growth in the money supply peaks and begins to head down.  Importantly, the bigger the bout of monetary inflation, the more important it is to be positioned on the correct side of the boom-bust cycle.  The reason is simple – lots of monetary inflation means lots of malinvestments in the economy and financial markets.  Indeed, correct positioning is even more important on the downside of the boom-bust cycle.  You see, booms tend to develop slowly.  Busts, complicated by the distortions created during the boom, more often than not do anything but.

Now, as we first presented here and update for you below, we have one heck of a boom-bust cycle in train. Indeed, what we have termed the Bernanke Risk-On Boom – Bust-to-Be is even more grand than the boom-bust cycles that gave us the Tech Boom-Bust and the Housing Boom-Bust turn Credit Bust turn Great Recession.  Defined by how we measure inflation cycles – by the year-over-year rate of change in our broad money supply metric TMS2, cycle trough to trough – here is how the Bernanke Risk-On Boom – Bust-to-Be stacks up through September 2014 …

 

 

Chart by Michael Pollaro/Forbes

The remainder of the article can be read at Forbes here:

 

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Having worked extremely hard on their coordinated talking points last night – “Ebola is hard to catch”, “Doctor self-isolated”, “been preparing for months” – we await NYC Mayor Bill De Blasio’s public update on the state of Ebola in New York this morning… Keep Calm and Go Ebowla-ing?

As NBC reports, experts stress that since the 33-year-old physician was not symptomatic at the time, it’s unlikely he transmitted the virus — which can only be passed through bodily fluids while a person is sick.

 

De Blasio is due to speak at 1130ET…

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Wolf Richter   www.wolfstreet.com   http://ift.tt/Wz5XCn

What is it with these consumer-products companies that need to sell a lot of cheap stuff to a lot of consumers around the world? Over the last few days, one after the other reported what are more or less unvarnished quarterly revenue and earnings debacles.

At McDonald’s, global revenues fell 5% and net income plunged 30%. At Coca-Cola, international volume was up a measly 1%, but in the US, volume declined 1%. Revenues were down fractionally for the quarter and 2% year-to-date. Net income in the quarter dropped 14%. Revenues at third largest beer-giant Heineken, which brews its stuff in 70 countries, dropped 1.7%. People are scratching their heads: are consumers actually cutting back on beer? Other companies too have reported disappointing results.

On Thursday it was Unilever, the Anglo-Dutch giant maker of shampoos, deodorants, laundry detergents, ice cream… that warned in its quarterly report about what it looks like “out there,” not in the stock market, but in the real economy around the world.

“It is really tough out there,” said CFO Jean-Marc Huët. “We have been at pains to say that for a long period of time.” Consumers are in trouble and are cutting back across key markets, leaving the company with price pressures and crummy sales.

Revenues fell 2%. “Underlying sales,” which are adjusted for a variety of things, rose 2.1%, but it was the worst growth since Q4 of crisis-year 2009, and down from 3.8% in the prior quarter.

Unilever warned of a slowdown in all the right places, in the emerging markets, in Europe, and of stagnation in the US. Like other consumer-products companies, it complained about currency issues, political unrest, bleak economies, the wrong kind of weather, and other uncertainties that perplex consumers to no end and cause them to get stingy.

“We expect markets to remain tough…,” CEO Paul Polman said.

In the emerging markets overall, where nearly 60% of its revenues come from, underlying sales managed to increase 5.6%, down from 6.6% in the prior quarter, with Turkey, Indonesia, and the Philippines being particular bright spots. But Brazil is sliding into recession, Russia is slowing down as well, and China, oh my!

As China is entering its worst slowdown in many years, consumers are reacting by closing their wallets. Retailers and wholesalers are reacting to the newly prudent consumers by “de-stocking,” the company reported. The result was a “sharp slowdown.” Underlying sales plunged 20%!

Then there’s the problem in the developed markets: sales dropped 2.5%, while they were still growing fractionally in the prior quarter. In North America, sales inched up a barely visible 0.6%. And Europe – which had been fixed not long ago, based on the hype being propagated ceaselessly – has become unfixed again. Unilever bravely blamed “poor summer weather” across Europe for the lousy performance of its ice cream category. Whatever the reasons, sales dropped 4.3%.

“Europe is not around the corner by any means,” Huët admitted.

And after complaining about price pressures and outright “price deflation” in Europe – though overall prices went up, just not fast enough to doll up Unilever’s revenues – it then ironically reported the following about its entanglements in, well yes, price fixing allegations:

Unilever is involved in a number of ongoing investigations by national competition authorities. These proceedings and investigations are at various stages and concern a variety of product markets. Where appropriate, provisions are made and contingent liabilities disclosed in relation to such matters.

So how is Unilever grappling with these economic and weather-related issues? It’s introducing cheaper products, on the basis of shrinkflation. For example, it developed smaller ice cream cones that sell for €1 ($1.27) in Spain so that even newly impoverished, jobless, or underpaid Spaniards can buy one every now and then. CFO Huet explained it this way:

We’ve learned from the previous economic crises the importance of having such value brands in the portfolio that can capture some of the down-trading that inevitably happens when disposable income levels fall.

And that sums up the economic problems facing Unilever, Coca-Cola, McDonald’s, Heineken, and all the others: it’s an economic crisis for consumers who’re struggling with falling disposable incomes.

And then there’s the corporate response to all this: the requisite “savings program,” as Huët called it, “to apply all the levers to translate top line growth … into earnings per share.” Because that’s the only thing that matters.

So Unilever would cut expenses here and there, axe 1,400 people, and whittle down its exposure to pension costs, all of which will do wonders for the disposable incomes of those folks…. And that’s the vicious cycle of corporate cost cutting in response to strung-out consumers who’re cutting back because they’ve been hit with the consequences of corporate cost cutting.

An epidemic of store closings, restructurings, and even bankruptcies has hit US retailers as consumers run out of options. Read… What NCR just Said about the American Retail Quagmire

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