Category: zerohedge

One of the following seems very eager to please his new master…

 

 

(h/t @AlbertoNardelli)

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/CTF6GvCLqas/story01.htm Tyler Durden

As we noted here, October 2013 NYSE margin debt stood at a new record high of $412.5b (up from $401.2b in September) and exceeded the prior high from April of $384.4b and net investor worth dropped to a record low. However, as BofAML notes, NYSE margin debt and the S&P 500 have +0.76 correlation using a 48-month (4-year) correlation as of October 2013. This is the highest correlation in our data history back to 1964. A positive correlation means that margin debt and the S&P 500 tend to move together; which as they helpfully note means – as long as the market rises, margin debt is not a risk. Better keep BTFATHing, it’s the patriotic thing to do.

 

 

Chart: BofAML

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/R9EXAj8PWkA/story01.htm Tyler Durden

As we noted here, October 2013 NYSE margin debt stood at a new record high of $412.5b (up from $401.2b in September) and exceeded the prior high from April of $384.4b and net investor worth dropped to a record low. However, as BofAML notes, NYSE margin debt and the S&P 500 have +0.76 correlation using a 48-month (4-year) correlation as of October 2013. This is the highest correlation in our data history back to 1964. A positive correlation means that margin debt and the S&P 500 tend to move together; which as they helpfully note means – as long as the market rises, margin debt is not a risk. Better keep BTFATHing, it’s the patriotic thing to do.

 

 

Chart: BofAML

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/R9EXAj8PWkA/story01.htm Tyler Durden

Renting and leasing of consumer products with the intention of testing them out or keeping them after a specific period is nothing new, and has been the basis for viable business models in the US, and around the world, with companies such as Rent-A-Center and Aaron’s for decades. However, renting and leasing clothes is something that only a materially cash strapped people would engage in. Such as those of Europe, where the depression has been going on for five years and has manifsted itself in record unemployment month after month, and youth unemployment that in many cases is well over the 50% mark. In this context one has no choice but to live thrifty, even if that means renting, and leasing, second-hand clothing.

Meet Anouk Gillis who is just such a person. As the WSJ reports, Anouk Gillis often sports a pair of organic-cotton jeans she ordered online. But she doesn’t actually own them. Rather than buying the pants, which retail for around €100 ($135), Ms. Gillis signed a 12-month lease with their designer, the small Dutch fashion label Mud Jeans. The terms: a €20 deposit and monthly installments of €5. After a year, Ms. Gillis, who is also Dutch, can decide to buy the jeans, return them, or exchange them for a new pair. Ms. Gillis, a 40-year-old receptionist who lives in the small Dutch city of Tilburg, regularly buys secondhand clothes and shoes on the Internet and grows vegetables in a shared garden. For her next trip to Rome, she booked a room on the website Airbnb Inc., an online matchmaker for budget travelers and people with a spare room or other lodging for rent.

The owner of Mud jeans, Bert vsn Son explains the logic: “The idea was to make high-quality jeans available to everybody.” He promises to recycle the used jeans into new pairs or sell them secondhand at the end of a lease. Of course, if he continues “flipping” the rented pair out, nobody would be the wiser.

In Europe, using rented clothes may be the start of a big trend for a youth that find itself in an unprecedented financial condition:

The deal shows how companies are trying to reconnect with Europe’s cash-strapped consumers, who increasingly rely on renting, sharing or even bartering for products and services ranging from clothing to vacations to lawn mowing. The euro-zone crisis and shallow European recovery has added urgency to those efforts, as high unemployment forces many consumers to carefully control spending.

 

Companies like clothing retailer Hennes & Mauritz are piling into a market that until lately has been dominated by Internet startups and consumers themselves. One immediate aim: to find more ways to get customers into their stores. But they are also pursuing a longer-term goal.

It goes without saying that the main impetus for the rent/lease business model came as a result of the 2008 financial crisis.

Sharing or renting goods and services isn’t a new business model, but it got a major boost from the 2008 financial crisis and the spread of digital technology, which spawned a series of startups focused on sharing, many of them in Silicon Valley. In Europe, consumers are increasingly buying into the idea, as the uncertainty sown by high unemployment and government austerity measures drives them to think about longer-term ways to save money.

In order to preserve some sense of worth, the process has even received a rather noble sounding name: “collaborative consumption.” Perhaps that is only fitting for a continent that is on the last innings of its “shared” welfare experiment.

“Everything that has to do with collaborative consumption is absolutely on the rise, and that has to do with people having less money to spend,” said Lucia Reisch, a professor of consumer issues at the Copenhagen Business School.

It should perhaps come as no surprise that the future is so bright, if leased, it increasingly looks two-thirds “collaborative”

According to a recent survey from the Observatoire Cetelem, a research arm of BNP Paribas SA’s consumer-credit firm, 68% of Europeans surveyed said they would buy secondhand products in the years to come, compared with 58% today, while 53% said they would barter for goods or services, versus 31% which said they do so already.

 

Consulting firm Frost & Sullivan estimates the number of Europeans sharing cars will climb to 15 million in 2020 from 700,000 in 2011.

 

Now, consumer-goods companies are getting into the act. In July, in a bid to boost revenue, French retailer Intermarché, part of closely held Groupement des Mousquetaires, started offering leases on household appliances and electronic products worth more than €349. It said it may expand the program to items such as garden furniture and textiles.

It gets better, or worse, depending on one’s sense of self-worth: “Since February H&M has been handing out vouchers or discounts in 42 countries in exchange for a bag of used clothing, regardless of the brand. The retailer sells the used clothes to a Swiss-based clothing and shoe recycling company.”

Finally, since we are in the New Normal, the supreme irony is that even these new “collaborative” start up ideas are not actually making a profit:

Many of Europe’s leasing or sharing experiments are in their early days. Mud Jeans isn’t making money yet, according to its CEO and owner. Since July Intermarché has made about 100 leases, mainly for smartphones or washing machines, at the 52 hypermarkets in France that offer the program.

Well there is always tomorrow, when in addition to clothes the business models may expand to include underwear and even food. After all, if doing something, best to do it right…

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

Renting and leasing of consumer products with the intention of testing them out or keeping them after a specific period is nothing new, and has been the basis for viable business models in the US, and around the world, with companies such as Rent-A-Center and Aaron’s for decades. However, renting and leasing clothes is something that only a materially cash strapped people would engage in. Such as those of Europe, where the depression has been going on for five years and has manifsted itself in record unemployment month after month, and youth unemployment that in many cases is well over the 50% mark. In this context one has no choice but to live thrifty, even if that means renting, and leasing, second-hand clothing.

Meet Anouk Gillis who is just such a person. As the WSJ reports, Anouk Gillis often sports a pair of organic-cotton jeans she ordered online. But she doesn’t actually own them. Rather than buying the pants, which retail for around €100 ($135), Ms. Gillis signed a 12-month lease with their designer, the small Dutch fashion label Mud Jeans. The terms: a €20 deposit and monthly installments of €5. After a year, Ms. Gillis, who is also Dutch, can decide to buy the jeans, return them, or exchange them for a new pair. Ms. Gillis, a 40-year-old receptionist who lives in the small Dutch city of Tilburg, regularly buys secondhand clothes and shoes on the Internet and grows vegetables in a shared garden. For her next trip to Rome, she booked a room on the website Airbnb Inc., an online matchmaker for budget travelers and people with a spare room or other lodging for rent.

The owner of Mud jeans, Bert vsn Son explains the logic: “The idea was to make high-quality jeans available to everybody.” He promises to recycle the used jeans into new pairs or sell them secondhand at the end of a lease. Of course, if he continues “flipping” the rented pair out, nobody would be the wiser.

In Europe, using rented clothes may be the start of a big trend for a youth that find itself in an unprecedented financial condition:

The deal shows how companies are trying to reconnect with Europe’s cash-strapped consumers, who increasingly rely on renting, sharing or even bartering for products and services ranging from clothing to vacations to lawn mowing. The euro-zone crisis and shallow European recovery has added urgency to those efforts, as high unemployment forces many consumers to carefully control spending.

 

Companies like clothing retailer Hennes & Mauritz are piling into a market that until lately has been dominated by Internet startups and consumers themselves. One immediate aim: to find more ways to get customers into their stores. But they are also pursuing a longer-term goal.

It goes without saying that the main impetus for the rent/lease business model came as a result of the 2008 financial crisis.

Sharing or renting goods and services isn’t a new business model, but it got a major boost from the 2008 financial crisis and the spread of digital technology, which spawned a series of startups focused on sharing, many of them in Silicon Valley. In Europe, consumers are increasingly buying into the idea, as the uncertainty sown by high unemployment and government austerity measures drives them to think about longer-term ways to save money.

In order to preserve some sense of worth, the process has even received a rather noble sounding name: “collaborative consumption.” Perhaps that is only fitting for a continent that is on the last innings of its “shared” welfare experiment.

“Everything that has to do with collaborative consumption is absolutely on the rise, and that has to do with people having less money to spend,” said Lucia Reisch, a professor of consumer issues at the Copenhagen Business School.

It should perhaps come as no surprise that the future is so bright, if leased, it increasingly looks two-thirds “collaborative”

According to a recent survey from the Observatoire Cetelem, a research arm of BNP Paribas SA’s consumer-credit firm, 68% of Europeans surveyed said they would buy secondhand products in the years to come, compared with 58% today, while 53% said they would barter for goods or services, versus 31% which said they do so already.

 

Consulting firm Frost & Sullivan estimates the number of Europeans sharing cars will climb to 15 million in 2020 from 700,000 in 2011.

 

Now, consumer-goods companies are getting into the act. In July, in a bid to boost revenue, French retailer Intermarché, part of closely held Groupement des Mousquetaires, started offering leases on household appliances and electronic products worth more than €349. It said it may expand the program to items such as garden furniture and textiles.

It gets better, or worse, depending on one’s sense of self-worth: “Since February H&M has been handing out vouchers or discounts in 42 countries in exchange for a bag of used clothing, regardless of the brand. The retailer sells the used clothes to a Swiss-based clothing and shoe recycling company.”

Finally, since we are in the New Normal, the supreme irony is that even these new “collaborative” start up ideas are not actually making a profit:

Many of Europe’s leasing or sharing experiments are in their early days. Mud Jeans isn’t making money yet, according to its CEO and owner. Since July Intermarché has made about 100 leases, mainly for smartphones or washing machines, at the 52 hypermarkets in France that offer the program.

Well there is always tomorrow, when in addition to clothes the business models may expand to include underwear and even food. After all, if doing something, best to do it right…

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

Submitted by Michael Snyder of The Economic Collapse blog,

One of the men that won the Nobel Prize for economics this year says that "bubbles look like this" and that he is "most worried about the boom in the U.S. stock market."  But you don't have to be a Nobel Prize winner to see what is happening.  It should be glaringly apparent to anyone with half a brain.  The financial markets have been soaring while the overall economy has been stagnating.  Reckless injections of liquidity into the financial system by the Federal Reserve have pumped up stock prices to ridiculous extremes, and people are becoming concerned.  In fact, Google searches for the term "stock bubble" are now at the highest level that we have seen since November 2007. 

Despite assurances from the mainstream media and the Federal Reserve that everything is just fine, many Americans are beginning to realize that we have seen this movie before.  We saw it during the dotcom bubble, and we saw it during the lead up to the horrible financial crisis of 2008.  So precisely when will the bubble burst this time?  Nobody knows for sure, but without a doubt this irrational financial bubble will burst at some point.  Remember, a bubble is always the biggest right before it bursts, and the following are 15 signs that we are near the peak of an absolutely massive stock market bubble…

#1 Bob Shiller, one of the winners of this year's Nobel Prize for economics, says that "bubbles look like this" and that he is "most worried about the boom in the U.S. stock market."

#2 The total amount of margin debt has risen by 50 percent since January 2012 and it is now at the highest level ever recorded.  The last two times that margin debt skyrocketed like this were just before the bursting of the dotcom bubble in 2000 and just before the financial crisis of 2008.  When this house of cards comes crashing down, things are going to get very messy…

"When the tablecloth gets pulled out from under the place settings, you're going to have a lot of them crash and smash on the floor," said Uri Landesman, president of Platinum Partners hedge fund. "That margin's going to get pulled and everyone's going to have to cover. That's when you get really serious corrections."

#3 Since the bottom of the market in 2009, the Dow has jumped 143 percent, the S&P 500 is up 165 percent and the Nasdaq has risen an astounding 213 percent.  This does not reflect economic reality in any way, shape or form.

#4 Market research firm TrimTabs says that the S&P 500 is "very overpriced" right now.

#5 Marc Faber recently told CNBC that "we are in a gigantic speculative bubble".

#6 In the United States, Google searches for the term "stock bubble" are at the highest level that we have seen since November 2007 – just before the last stock market crash.

#7 Price to earnings ratios are very high right now…

The Dow was trading at 17.8 times the past four quarters of earnings of its 30 components, according to The Wall Street Journal on Friday. That was up from 13.7 times its earnings a year ago. The S&P 500 is trading at 18.7 times earnings. The Nasdaq-100 Index is trading at 21.5 times earnings. At the very least, the ratios are signaling that stock prices are rich.

#8 According to CNBC, Pinterest is currently valued at more than 3 billion dollars even though it has never earned a profit.

#9 Twitter is a seven-year-old company that has never made a profit.  It actually lost 64.6 million dollars last quarter.  But according to the financial markets it is currently worth about 22 billion dollars.

#10 Right now, Facebook is trading at a valuation that is equivalent to approximately 100 years of earnings, and it is currently supposedly worth about 115 billion dollars.

#11 Howard Marks of Oaktree Capital recently stated that he believes that "markets are riskier than at any time since the depths of the 2008/9 crisis".

#12 As Graham Summers recently noted, retail investors are buying stocks at a level not seen since the peak of the dotcom bubble back in 2000.

#13 David Stockman, a former director of the Office of Management and Budget under President Ronald Reagan, believes that this financial bubble is going to end very badly…

"We have a massive bubble everywhere, from Japan, to China, Europe, to the UK.  As a result of this, I think world financial markets are extremely dangerous, unstable, and subject to serious trouble and dislocation in the future."

#14 Bob Janjuah of Nomura Securities believes that there "could be a 25% to 50% sell off in global stock markets" over the next couple of years.

#15 According John Hussman via Tyler Durden of Zero Hedge, the U.S. stock market is repeating a pattern that we have seen many times before.  According to him, we are experiencing "a well-defined syndrome of 'overvalued, overbought, overbullish, rising-yield' conditions that has appeared exclusively at speculative market peaks – including (exhaustively) 1929, 1972, 1987, 2000, 2007, 2011 (before a market loss of nearly 20% that was truncated by investor faith in a new round of monetary easing), and at three points in 2013: February, May, and today."

As I mentioned at the top of this article, this stock market bubble has been fueled by quantitative easing.  Easy money from the Fed has been artificially inflating stock prices, and this has greatly benefited a very small percentage of the U.S. population.  In fact, 82 percent of all individually held stocks are owned by the wealthiest 5 percent of all Americans.

When this stock market bubble does burst, those wealthy Americans are going to be in for a tremendous amount of pain.

But there are some people out there that argue that what we are witnessing is not a stock market bubble at all.  That includes Janet Yellen, the new head of the Federal Reserve.  Recently, she insisted that there is absolutely nothing to be worried about…

"Stock prices have risen pretty robustly," Yellen said. "But I think that if you look at traditional valuation measures, you would not see stock prices in territory that suggests bubble-like conditions."

We shall see who was right and who was wrong.  Let's all file that one away and come back to it in a few years.

So where are stocks going next?

If you had the answer to that question, you could probably make a lot of money.

Yes, the current bubble could burst at any moment, or stocks could continue going up for a little while longer.

After all, the S&P 500 has risen in December about 80 percent of the time over the past thirty years.

Perhaps that will be the case this December as well.

Perhaps not.

Do you feel lucky?

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/iu7gintNikY/story01.htm Tyler Durden

Annualized auto sales spiked their most MoM in almost 3 years reaching their highest level since May 2007 and beating expectations by the most since cash-for-clunkers in 2009. Inventories are at record highs, GM channels are almost the most-stuffed on record, and incentives are surging once again… the “field of dreams” economy rolls on… what could possibly go wrong?

 

 

Mal-investment anyone?

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/i0yRXosknbU/story01.htm Tyler Durden

Annualized auto sales spiked their most MoM in almost 3 years reaching their highest level since May 2007 and beating expectations by the most since cash-for-clunkers in 2009. Inventories are at record highs, GM channels are almost the most-stuffed on record, and incentives are surging once again… the “field of dreams” economy rolls on… what could possibly go wrong?

 

 

Mal-investment anyone?

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/i0yRXosknbU/story01.htm Tyler Durden

It seems some among the mainstream media believe “the economy is improving.” In the interests of clearing up that little misunderstanding, we hope the following chart will clarify which “economy” is improving…

 

 

Chart: Bloomberg

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/HF4DyOzcfpc/story01.htm Tyler Durden

It seems some among the mainstream media believe “the economy is improving.” In the interests of clearing up that little misunderstanding, we hope the following chart will clarify which “economy” is improving…

 

 

Chart: Bloomberg

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/HF4DyOzcfpc/story01.htm Tyler Durden