The Chart That Shows Why EU's Barroso Is A Liar

Despite record levels of unemployment across Europe (most specifically among the youth), record high (and surging) levels of loan delinquencies, and collapsing credit creation, the leaders of the EU continue to peddle their own brand of dis-information and willful blindness. While UKIP's Nigel Farage tongue-lashings are normally enough, EU's Barroso this morning unleashed the following:

  • *EU'S BARROSO SAYS ECONOMIC GROWTH 'SLOWLY RETURNING'
  • *EU'S BARROSO SAYS EU AT TURNING POINT IN CRISIS

However, as the following chart of earnings estimated for European firms shows, there is absolutely none, zero, nada sign on a 'turning point' and, as we have noted previously, unless the EUR weakens significantly, Europe will rapidly dip back into recession once again.

 

Via Goldman Sachs:

While being a strong year for equity returns, 2013 has been poor on the earnings side. Consensus now expects 2013 earnings to shrink by 3.5% and the level of earnings has been revised down by close to 15% YTD. Looking at actual earnings rather than consensus expectations, with the exception of the second quarter of 2013, earnings seasons have been poor through 2013.

Spot the "Turning point" in that chart…

and still think the collapse in EM is not a problem… (Companies exposed to emerging markets saw markedly more negative sales surprise than the overall market. 39 companies from our EM exposure basket reported sales in 3Q. Out of these 39 companies, 25 missed estimates by more than 2% while only 2 beat estimates by more than 2%.)

Unless the EUR weakens significantly, Europe's major export growth markets will continue to weigh the region back into recession.

The strength of the Euro, notably against EM currencies was frequently mentioned in 3Q by companies missing estimates.

 

Of course, Barroso's lies should not be a total surprise from Europe (as we noted here) and of course the final admission of guilt by Jean-Claude Juncker:

Asked whether such deliberate misinformation would undermine the market’s confidence in future euro-zone pronouncements, Mr. Schuller, lamenting that the market had practically no confidence in pronouncements already, said “not at all.”

 

When Mr. Juncker, or European Central Bank President Jean-Claude Trichet, or French Finance Minister Christine Lagarde says something to the markets, Mr. Schuller said, “nobody seems to believe it.”

 

Mr. Juncker has voiced support for the practice of lying before.

 

The Web site EUobserver has video of Mr. Juncker, at a conference on economic governance in April, expounding on the practice and reasons for lying in financial and economic communications.

 

On the tape, Mr. Juncker says he has “had to lie” and, speaking about touchy economic topics, “When it becomes serious, uopu have to lie.


    



via Zero Hedge http://ift.tt/1aEYIxx Tyler Durden

Manipulating the Entire IPO Market With Just $250 Million

Wolf Richter   http://ift.tt/NCxwUy   http://ift.tt/Wz5XCn

Tech isn’t exactly booming, as we’ve seen from numerous revenue and earnings debacles. Most recently, Intel’s: revenues were down 1% from 2012 and 2.4% from 2011. Net income was down 13% from 2012 and 25% from 2011. Looking forward, they’d be flat, CEO Brian Krzanich warned. In 2013, the PC industry just saw its worst decline in shipments ever.

Dell and HP announced big layoffs. Other tech companies too are “realigning” their workforce. And after rumors started spinning out of control on Friday, Intel confirmed that it too would axe 5% of its workforce of about 105,000 “to align our resources to meet the needs of our business.” Revelations of how the NSA has compromised products and services of US tech companies caused orders to collapse in China, Russia, and other countries, where orders were supposed to grow at big double-digit rates. It left IBM, Cisco, and brethren with a mess on their hands [read…. Costs Of NSA Scandal To Bleed US Tech For Years].

But that hasn’t kept valuations of tech startups from being pushed into the stratosphere. Turns out, it’s relatively easy these days. By the stroke of a pen and $250 million, an elite club decided amongst each other that the “valuation” of on-line storage provider Dropbox was close to $10 billion.

BlackRock, the world’s largest money manager with $4.3 trillion in assets, is leading the deal, according to unnamed sources of the Wall Street Journal. The elite club includes “previous backers,” and they included Goldman Sachs, Sequoia Capital, Index Ventures, and Accel Partner. In 2011, Dropbox had raised $250 million from these previous backers. The deal valued it at $4 billion. With the above stroke of a pen, the value of their investments has jumped 150%. With that same stroke of the pen, they also jacked up the future valuations of all other IPOs, and many more billions will be made – just like Twitter’s IPO helped jack up Dropbox’s valuation.  

Unlike certain other highfliers, like Pinterest, which raised $225 million last year in a deal that valued it at $3.8 billion though it hasn’t even figured out how to generate revenues, Dropbox has measurable revenues. Not a lot – about what a large Ford dealership might rake in, without the profits. Growth has been dramatic: In 2010, it had $12 million in revenues; in 2011, $46 million; in 2012, $116 million, and in 2013, more than $200 million, according to these unnamed sources. It has 200 million users, as co-founder and CEO Drew Houston claimed in November, up by a factor of 10 over the last three years.

But growth is slowing. So it has been trying to refocus. Instead of only going after consumers, it’s trying to reel in corporate customers with its cloud storage services. Everyone and his dog is in this business, including Microsoft, IBM, Google, Amazon, and another furiously hyped startup, Box, which has a $2 billion valuation and is planning to sell its inflated shares to the public this year.

Dropbox calls its cloud services “safe and secure.” But in April, it was widely reported that it wasn’t hard to hack into the service and then use it as a vector to deliver malware to a corporate network that could wreak all sorts of havoc and pilfer the digital crown jewels. Many corporate customers have now blacklisted Dropbox.

Unperturbed, the members of the elite club decided out of the blue that it had a $10 billion valuation, printing an instant billionaire (Drew Houston) and a lot of multi-millionaires. All for just $250 million. For BlackRock, it was petty cash.

But inflating Dropbox’s valuation to $10 billion manipulates the entire IPO market that depends on buzz and hype and folly to rationalize these ridiculous valuations. Unnamed sources “leaking” these valuations to the media are part of it. It balloons the valuations of other startups. It creates that “healthy” IPO market where money doesn’t matter, where revenues and profits are irrelevant, and where custom-fabricated metrics are used to sell these shares to the public – mostly mutual funds that bury them in your portfolio.

Even the SEC, which hardly ever warns about anything, warned about these newfangled metrics that are designed, as Chair Mary Jo White said, “to illustrate the size and growth” of these outfits that lack outmoded metrics, such as revenues and profits. She and her staff were particularly concerned that “the true meaning of the metric (or more importantly the link from metric to income and eventual profitability) may not be clear or even identified.”

So Dropbox’s 200 million users? A cute metric, sure. “It sounds good,” to use White’s words. But it says nothing about revenues and “eventual profitability.” In fact, “the connection may not necessarily be there.” Investors are supposed to be impressed and hand over their money. It’s all part of the IPO buzz and hype that characterize a “healthy” IPO market.

“Healthy” for whom? Goldman and other members of that elite club.

The purpose is to rationalize to the public that this deal is worth buying so that they will pile in and drive up the value even further. It makes the IPO market look “healthy.” Hopefully, the exuberance will last until the original investors get to dump their shares, take their hard-earned money, and move on. A similar wealth transfer takes place when a corporation prints a truckload of its shares to buy the startup, at the expense of existing shareholders. Happens all the time.

There will be a few successes out of the hundreds of IPOs spilling out of a “healthy” IPO market, and they’ll be held up forever to whet your appetite. The rest will languish in mutual funds and retirement accounts, where they eat into people’s wealth and hopes. Many of them will become penny stocks.

It isn’t often that the public is this blind to these machinations. It only happens during times of stock market exuberance, when nothing can go wrong, when stocks can only go up, and when high prices only justify even higher prices. When it all goes to heck, as it periodically does, the window of the “healthy” IPO market closes. At that point, IPOs receive actual scrutiny, buzz and hype fall on deaf ears, rationality reigns, and hardly any IPOs make it out of the gate. Those are the long years between stock market bubbles.

Corporate earnings growth slowed to almost zero, as did growth in capital expenditures, cash-flow, and sales, and corporations hold more debt than they did in 2009, wrote Societe Generale’s exasperated Global Quantitative Research team. “Thank goodness equities went up in 2013, otherwise it might have been a rather depressing year.” Read…. The Corporate Malaise That The Stock Market Is Furiously Ignoring (for now)


    



via Zero Hedge http://ift.tt/1aEYIxu testosteronepit

Working for the Few

Click here to follow ZeroHedge in Real-time on FinancialJuice

Next time you cry over your paycheck or you scrimp and scrape to find the extra few dollars to finish the month, remember that admittedly money doesn’t grow on trees…but it also serves no purpose when we slave away for someone else to strike it rich. Oxfam, the UK-headquartered charity, has just published a new report today and it shows that the world’s richest 85 people have the same quantity of wealth as 50% of the world’s population. Yes, there is a handful in this world that we have created that notch up more billions than half of the planet put together. Can it really be acceptable for the world to be working for so few?

Working for the Few was published Monday 20th January and its aim was to highlight the growing inequality in the world between the rich and the poor. The haves don’t just have, they have it all, it might seem and 3.5 billion people in the world are slaving away to keep them (more than) afloat.

• There are 210 people that have been made billionaires within the last year somewhere on this planet. 
• Those people now belong to the few (only 1, 426 individuals) that have a net worth together of $5.4 trillion.
• So, today the richest 1% on the planet has a combined net value of $110 trillion today. 
• That means that the top 1% have 65 times the total wealth of the poorest half of the world today.

The report mentions that “This massive concentration of economic resources in the hands of fewer people presents a significant threat to inclusive political and economic systems.”

The report has been published just in time for the World Economic Forum that will be taking place in Davos, Greece between January 22nd and 25th. There will be over 2, 500 participants, 100 countries and 1, 500 economic leaders and 40 heads of state. The subjects that are high up on the agenda will be:

• happiness and how to improve it (although if the WEF knew the answer to that question, everybody would be splitting their sides with laughter)
• research and knowledge 
• health, emerging economies
• the place of women in society and 
• Syria

Four days of heavy discussion. Let’s wonder exactly what the outcome will be.

Probably everyone will unanimously agree on the fact that happiness is a state of mind that is unattainable right now (just as long as the economies are nose-diving, as usual); it’s a concept that they sold to the world, but we didn’t have enough money to buy. Research and knowledge are also wonderful ideas in theory. We see people spending their entire lives searching and yet finding little. Health would be great if we could actually afford it. Even your health is up for grabs by the financiers these days. The place of women in society is currently pretty much at the bottom somewhere after the other hoards of slaves and drudges that have been employed historically and at the present time. We shall hear endless cases of how we need to provide women with equality and yet they will do nothing except vociferate and pontificate about why, where and how. Then Syria will be told it’s been a naughty boy and Al-Assad shall get his knee-caps spanked should he continue doing the dirty on his population. Then, he will stand for elections (because the people want him to?) and will be re-elected in true Supreme Soviet fashion.

The discussion on women is centered around the fact that ‘behind every woman there is a man’, which supposedly despite the obvious ambiguity, means that for every woman that gets into the board room and that manages to climb the executive ladder, there is a man that enters a profession of ‘caring for other people’. That’s, according to the WEF, what we should be doing turning men into care-givers and equally things out that way.

The WEF states “Profound political, economic, social and, above all, technological forces are transforming our lives, communities and institutions. Rapidly crossing geographic, gender and generational boundaries, they are shifting power from traditional hierarchies to networked heterarchies. Yet the international community remains focused on crisis rather than strategically driven in the face of the trends, drivers and opportunities pushing global, regional and industry transformation.”

Too focused on the crisis? Transformation?

The largest group of people that will be attending the Davos meeting are government officials (288 participants). They are followed by the banking and capital markets sector (230 representatives). Then, there are 225 media representatives.

In other worlds, are these the people that care about the world enough to improve it’s state and to make out happiness their goal?

No comment.

Originally posted: Working for the Few

You might also enjoy: USA:The Land of the Not-So-Free 


    



via Zero Hedge http://ift.tt/1akyiXp Pivotfarm

Greek Unpaid Electricity Bills Grow By €4 Million Per Day: Over 700,000 Pay In Installments

Judging by the collapsing Greek yields, which at this rate may drop below US bonds soon enough, the Greek economy has never been stronger. Sadly, manipulated bond levels driven by yet another bout of pre-QE euphoria (suddenly the conventional wisdom is that the ECB will conduct QE in a few months as first explained here in November) no longer reflect anything besides a massive liquidity glut and momentum chasing lemmings. Alas, as usual the reality on the European ground is much worse. The latest example comes from the Greek Public Power Corporation which has reported that Greek households and corporations are finding it increasingly difficult to pay their electricity bills. In total, debts to the power utility from unpaid bills currently amount to some €1.3 billion and growing at an average rate of €4 million per day. Also known as the Grecovery.

Not surprisingly, it is the poorest households who have the bulk of the debt. Remember: “the rich hold assets, the poor have debt.”

Kathimerini reports more:

The lion’s share of that debt is owed by low- and medium-voltage consumers – households and very small enterprises. The total arrears of these categories amount to an estimated 600 million euros, of which some 65 percent concerns households. The debts of the broader public sector amount to 190 million euros. The arrears of corporations connected to the medium-voltage network total some 130 million euros, while mining company Larco alone has run up debts of more than 135 million euros.

So since such a substantial portion of low-income society, and in Greece that by definition means society period, is unable to even afford their electricity, the Greek state’s solution is perfectly anticipated for a country which is insolvent due to too much debt but can’t declare bankruptcy because it is ruled by a few not so good bankers: convert one’s basic social amenity into a liability, and pay it off over time. i.e., a debt.

In an effort to make it easier for households to repay what they owe and to boost the cash inflow into its coffers, PPC introduced a flexible and extensive payment plan scheme last year that over 700,000 consumers have joined. The scheme has proven so popular that the utility has given its customers the option of securing a payment plan via telephone in order to reduce long queues at its offices, as staff had been unable to handle the volume of applications.

 

PPC customers can now complete the process over the phone, by calling 11770 and applying to pay 12 monthly installments along with a down payment of between 20 and 50 percent. The category of socially sensitive consumers (the unemployed, those with low incomes etc) can pay their dues in up to 40 installments. Consumers only have to go to PPC offices to pay their installments.

In other words, for the low low price of €49.99, payable in 40 installments, you too can have electricity!

Which perhaps explains why the vast majority of households who had their electricity cut off opted not to fall even more in debt, but to take the short cut.

An estimated 7,500 households who had their supply cut off have now been reconnected thanks to a government decision to secure power for the country’s poorest households. There are, however, another 35,000 households, according to official figures, that have illegally reconnected their electricity supply, which is very dangerous.

Since Greece is now nothing more than a placeholder figurehead designed to preserve the stability of Deutsche Bank, the German export miracle, and the myth that all insolvent peripheral European banks are viable, who can blame them.


    



via Zero Hedge http://ift.tt/1mvuTYq Tyler Durden

The Central Bank “Tell” That QE is Beginning to Fail

The financial markets are now being almost entirely driven by activity in Japan where the Great Global rig of the last five years is finally hitting a wall.

 

As noted in last issue, the Bank of Japan or BoJ has provided the playbook to Central Bankers for dealing with the deflationary crisis of 2008. All told, the BoJ has launched QE plans equal to over 40% of Japan’s GDP.

 

The “shock and awe” plan announced last year ($1.4 trillion) has put the bond market into revolt. But it’s done more than that; it’s shown the “limits” of QE.

 

This was the first “tell” that the Central Banks are losing control of the markets. The second “tell” occurred yesterday when the BoJ announced that it is not implementing any new stimulus.

 

Let us put this into perspective: the BoJ just announced that it would monetize $605 billion per year in early April 2013l… and by the summer traders are looking for the BoJ to announce more measures?

 

This is possibly the single most important “tell” that things are beginning to deteriorate: that the single largest QE policy ever announced by the most debt-saturated country in the world not only resulted in a stock market drop but that only two months later investors are looking for more stimulus. 

 

We get additional indications of the end of Central Bank rigging in Europe where supposedly “unlimited” mega-bailout program called the Outright Monetary Transactions program or OMT hit a wall yesterday.

 

For those of you who do not recall, it was the OMT program which held the EU together last year. Starting in June 2012, ECB President Mario Draghi hinted at the ECB providing “unlimited” bond buying for European Sovereign nations (essentially a massive multi-country QE program). The ECB formalized this program in September 2012… but has yet to release any details regarding how precisely it would be implemented and what exactly it would do.

 

Put another way, ECB President Mario Draghi promised he’d engage in a massive QE policy… but didn’t actually do anything from a monetary perspective. Indeed, he didn’t have to… the markets took care of everything for him as investors piled into EU sovereign bonds based on the belief that the ECB had put in a “floor” under the bond market.

 

The end result? Spanish and Italian bonds rallied, forcing their yields (or borrowing costs) lower and EU politicians proclaimed the crisis “over.” All based on a vague promise from the ECB.

There are definite limits to what QE can do. Now that even Bill Dudley and other Fed officials admit that the Fed doesn’t understand QE, it’s only a matter of time before the market begins to crumble.

 

For a FREE Special Report outlining how to set up your portfolio from this, swing by: http://ift.tt/170oFLH

 

Best Regards

Phoenix Capital Research 

 

 

  

 

 

 

 

 

 


    



via Zero Hedge http://ift.tt/1kQLbN2 Phoenix Capital Research

The Central Bank "Tell" That QE is Beginning to Fail

The financial markets are now being almost entirely driven by activity in Japan where the Great Global rig of the last five years is finally hitting a wall.

 

As noted in last issue, the Bank of Japan or BoJ has provided the playbook to Central Bankers for dealing with the deflationary crisis of 2008. All told, the BoJ has launched QE plans equal to over 40% of Japan’s GDP.

 

The “shock and awe” plan announced last year ($1.4 trillion) has put the bond market into revolt. But it’s done more than that; it’s shown the “limits” of QE.

 

This was the first “tell” that the Central Banks are losing control of the markets. The second “tell” occurred yesterday when the BoJ announced that it is not implementing any new stimulus.

 

Let us put this into perspective: the BoJ just announced that it would monetize $605 billion per year in early April 2013l… and by the summer traders are looking for the BoJ to announce more measures?

 

This is possibly the single most important “tell” that things are beginning to deteriorate: that the single largest QE policy ever announced by the most debt-saturated country in the world not only resulted in a stock market drop but that only two months later investors are looking for more stimulus. 

 

We get additional indications of the end of Central Bank rigging in Europe where supposedly “unlimited” mega-bailout program called the Outright Monetary Transactions program or OMT hit a wall yesterday.

 

For those of you who do not recall, it was the OMT program which held the EU together last year. Starting in June 2012, ECB President Mario Draghi hinted at the ECB providing “unlimited” bond buying for European Sovereign nations (essentially a massive multi-country QE program). The ECB formalized this program in September 2012… but has yet to release any details regarding how precisely it would be implemented and what exactly it would do.

 

Put another way, ECB President Mario Draghi promised he’d engage in a massive QE policy… but didn’t actually do anything from a monetary perspective. Indeed, he didn’t have to… the markets took care of everything for him as investors piled into EU sovereign bonds based on the belief that the ECB had put in a “floor” under the bond market.

 

The end result? Spanish and Italian bonds rallied, forcing their yields (or borrowing costs) lower and EU politicians proclaimed the crisis “over.” All based on a vague promise from the ECB.

There are definite limits to what QE can do. Now that even Bill Dudley and other Fed officials admit that the Fed doesn’t understand QE, it’s only a matter of time before the market begins to crumble.

 

For a FREE Special Report outlining how to set up your portfolio from this, swing by: http://ift.tt/170oFLH

 

Best Regards

Phoenix Capital Research 

 

 

  

 

 

 

 

 

 


    



via Zero Hedge http://ift.tt/1kQLbN2 Phoenix Capital Research

Short-Sellers Set-Up Shop As Sentiment Starts To Shift

"It's dangerous to be short still, but we might be building toward a moment where the market becomes quite vulnerable," warns Bill Fleckenstein who is finishing up the documentation on a new short fund he is about to start marketing. With the slowing growth of the Fed balance sheet, over 70% of the S&P's gains since 2011 from hope-driven multiple-expansion alone, bond and equity market sentiment at extremes, and (as Goldman warned) valuations anything cheap; it is hardly a surprise that, as Reuters reports, after years of hiding under their desks, short sellers are re-emerging – slowly. Whether outright short or long/short funds, the market-share of this corner of the business bottomed at approximately 25% in 2013, but in the last weeks, several S&P 500 companies have seen large increases in shares borrowed for short bets; and the "tide might be turning."

 

Sentiment extremes in stocks

and bonds

 

 

 

Fed balance sheet growth slowing and dislocated from the equity exuberance…

 

Multiple-expansion the only hope left…

 

And Goldman dashing those hopes

S&P 500 valuation is lofty by almost any measure, both for the aggregate market (15.9x) as well as the median stock (16.8x). We believe S&P 500 trades close to fair value and the forward path will depend on profit growth rather than P/E expansion. However, many clients argue that the P/E multiple will continue to rise in 2014 with 17x or 18x often cited, with some investors arguing for 20x. We explore valuation using various approaches. We conclude that further P/E expansion will be difficult to achieve. Of course, it is possible. It is just not probable based on history.

 

 

 

The current valuation of the S&P 500 is lofty by almost any measure, both for the aggregate market as well as the median stock: (1) The P/E ratio; (2) the current P/E expansion cycle; (3) EV/Sales; (4) EV/EBITDA; (5) Free Cash Flow yield; (6) Price/Book as well as the ROE and P/B relationship; and compared with the levels of (6) inflation; (7)
nominal 10-year Treasury yields; and (8) real interest rates. Furthermore, the cyclically-adjusted P/E ratio suggests the S&P 500 is currently 30% overvalued in terms of (9) Operating EPS and (10) about 45% overvalued using As Reported earnings

Is it any surprise that the Short-sellers are setting-up shop once again as greed dominates fear… (via Reuters)

After years of hiding under their desks, short sellers are re-emerging – slowly.

 

 

Buying the most heavily shorted stocks was a much better bet than the S&P 500

Jim Chanos, president and founder of Kynikos Associates and one of the most prominent short sellers, said the market is primed for people like him and as a result he has gone out to raise capital.

 

"Now I think is not a bad time to be raising capital for what we do. When we got a rough going in the mid-90s, that was exactly the time to raise capital," Chanos said, adding it was better to do this when critics viewed him as "like the village idiot and not an evil genius."

 

Already, there are signs 2014 may be different.

 

 

"We're about done with the document and I'll be marketing it officially very shortly, like within a week," he said.

 

That's not to say he is brimming with confidence – not yet.

 

"It's dangerous to be short still, but we might be building toward a moment – whether it's two weeks from now or 10 months from now I don't know, where the market becomes quite vulnerable," said Fleckenstein.

 

 

"There's growing interest on (shorting) a number of stocks, concentrated in areas that did well last year," said Brian Jacobsen, chief portfolio strategist at Wells Fargo Funds Management in Menomonee Falls, Wisconsin.

 

 

"Biotech is in full bubble mode, meaning companies that have no prospects of a drug continue to grind higher," said John Hempton, chief investment officer and founder of Bronte Capital, a Sydney, Australia-based asset management firm that often takes short positions.

 

Short sellers say they believe bulls may be getting too confident. The S&P 500's forward price-to-earnings ratio is at its highest since mid-2007.

 

 

"Short selling over the last two years has been a hedge against profits," said Douglas Kass of hedge fund Seabreeze Partners Management Inc. But he said recent disappointments from companies as varied as Ford, Intel, and Elizabeth Arden are signs that the "tide might be turning."

 

For shorts, it appears to be the opposite of "blood in the streets" time…

 

Charts: Bloomberg, Goldman Sachs, and @Not_Jim_Cramer


    



via Zero Hedge http://ift.tt/KskJJn Tyler Durden

Pakistan Enforces 30-Day Ban On Gold Imports To Stall “Steep Increase” In Smuggling To India

As we have discussed numerous times, India’s ban and tariffs on gold imports (supposedly to protect their current account balance) is having numerous unintended consequences. From flights full of gold-laden passengers entering the country,  to trying to roll-back centuries of tradition surrounding Indian weddings, the capital control efforts are back-firing as the smuggling epidemic spreads. The foolishness of this ‘control’ is also spreading as Pakistan has noticed the surge in smuggling, concerned at a steep increase in import duties on gold in a “neighboring country,” and has imposed a 30-day ban on gold imports to curb the ‘trade’.

  • *PAKISTAN IMPOSES TEMPORARY 30-DAY BAN ON GOLD IMPORTS

 

(Via Bloomberg)

The ban is only to stop the smugglers…

Ban to curb smuggling without affecting legitimate demand-supply

Which of course will always wear a patch over one eye and skull and crossbones bandana to ensure officials can tell them apart from the legitimate demand-meeters…

But what is there can be exported…

Export of gold to continue without any restriction

At a nice profit to the high-premium-paying Indians.

Of course, this is not about managing the status quo or manipulating gold prices, this is about managing the FX rate (because the reason the rupee is tumbling is all about gold and nothing to do with fast money outflows thanks to the Fed)…

Impact of gold smuggling on Pakistan rupee exchange rate raised by foreign-exchange traders at recent meeting

This is not the first time they have tried such a plan…

Pakistan had imposed a ban on duty-free import of gold on July 30 for 30 days on concern rule was being misused and imported gold was being smuggled to India

So, of course, that worked so well before that they will just keep repeating the same failed plan…?

 

So India’s efforts have led to Pakistan’s controls… what next? Tell the Chinese to stop or the Blangladeshis… or Myanmar and Sri Lanka?


    



via Zero Hedge http://ift.tt/1aEBMOT Tyler Durden

Pakistan Enforces 30-Day Ban On Gold Imports To Stall "Steep Increase" In Smuggling To India

As we have discussed numerous times, India’s ban and tariffs on gold imports (supposedly to protect their current account balance) is having numerous unintended consequences. From flights full of gold-laden passengers entering the country,  to trying to roll-back centuries of tradition surrounding Indian weddings, the capital control efforts are back-firing as the smuggling epidemic spreads. The foolishness of this ‘control’ is also spreading as Pakistan has noticed the surge in smuggling, concerned at a steep increase in import duties on gold in a “neighboring country,” and has imposed a 30-day ban on gold imports to curb the ‘trade’.

  • *PAKISTAN IMPOSES TEMPORARY 30-DAY BAN ON GOLD IMPORTS

 

(Via Bloomberg)

The ban is only to stop the smugglers…

Ban to curb smuggling without affecting legitimate demand-supply

Which of course will always wear a patch over one eye and skull and crossbones bandana to ensure officials can tell them apart from the legitimate demand-meeters…

But what is there can be exported…

Export of gold to continue without any restriction

At a nice profit to the high-premium-paying Indians.

Of course, this is not about managing the status quo or manipulating gold prices, this is about managing the FX rate (because the reason the rupee is tumbling is all about gold and nothing to do with fast money outflows thanks to the Fed)…

Impact of gold smuggling on Pakistan rupee exchange rate raised by foreign-exchange traders at recent meeting

This is not the first time they have tried such a plan…

Pakistan had imposed a ban on duty-free import of gold on July 30 for 30 days on concern rule was being misused and imported gold was being smuggled to India

So, of course, that worked so well before that they will just keep repeating the same failed plan…?

 

So India’s efforts have led to Pakistan’s controls… what next? Tell the Chinese to stop or the Blangladeshis… or Myanmar and Sri Lanka?


    



via Zero Hedge http://ift.tt/1aEBMOT Tyler Durden

The Retail Death Rattle

Submitted by Jim Quinn of The Burning Platform blog,

“I was part of that strange race of people aptly described as spending their lives doing things they detest, to make money they don’t want, to buy things they don’t need, to impress people they don’t like.” ? Emile Gauvreau

If ever a chart provided unequivocal proof the economic recovery storyline is a fraud, the one below is the smoking gun. November and December retail sales account for 20% to 40% of annual retail sales for most retailers. The number of visits to retail stores has plummeted by 50% since 2010. Please note this was during a supposed economic recovery. Also note consumer spending accounts for 70% of GDP. Also note credit card debt outstanding is 7% lower than its level in 2010 and 16% below its peak in 2008. Retailers like J.C. Penney, Best Buy, Sears, Radio Shack and Barnes & Noble continue to report appalling sales and profit results, along with listings of store closings. Even the heavyweights like Wal-Mart and Target continue to report negative comp store sales. How can the government and mainstream media be reporting an economic recovery when the industry that accounts for 70% of GDP is in free fall? The answer is that 99% of America has not had an economic recovery. Only Bernanke’s 1% owner class have benefited from his QE/ZIRP induced stock market levitation.

The entire economic recovery storyline is a sham built upon easy money funneled by the Fed to the Too Big To Trust Wall Street banks so they can use their HFT supercomputers to drive the stock market higher, buy up the millions of homes they foreclosed upon to artificially drive up home prices, and generate profits through rigging commodity, currency, and bond markets, while reducing loan loss reserves because they are free to value their toxic assets at anything they please – compliments of the spineless nerds at the FASB. GDP has been artificially propped up by the Federal government through the magic of EBT cards, SSDI for the depressed and downtrodden, never ending extensions of unemployment benefits, billions in student loans to University of Phoenix prodigies, and subprime auto loans to deadbeats from the Government Motors financing arm – Ally Financial (85% owned by you the taxpayer). The country is being kept afloat on an ocean of debt and delusional belief in the power of central bankers to steer this ship through a sea of icebergs just below the surface.

The absolute collapse in retail visitor counts is the warning siren that this country is about to collide with the reality Americans have run out of time, money, jobs, and illusions. The most amazingly delusional aspect to the chart above is retailers continued to add 44 million square feet in 2013 to the almost 15 billion existing square feet of retail space in the U.S. That is approximately 47 square feet of retail space for every person in America. Retail CEOs are not the brightest bulbs in the sale bin, as exhibited by the CEO of Target and his gross malfeasance in protecting his customers’ personal financial information. Of course, the 44 million square feet added in 2013 is down 85% from the annual increases from 2000 through 2008. The exponential growth model, built upon a never ending flow of consumer credit and an endless supply of cheap fuel, has reached its limit of growth. The titans of Wall Street and their puppets in Washington D.C. have wrung every drop of faux wealth from the dying middle class. There are nothing left but withering carcasses and bleached bones.

The impact of this retail death spiral will be vast and far reaching. A few factoids will help you understand the coming calamity:

  • There are approximately 109,500 shopping centers in the United States ranging in size from the small convenience centers to the large super-regional malls.
  • There are in excess of 1 million retail establishments in the United States occupying 15 billion square feet of space and generating over $4.4 trillion of annual sales. This includes 8,700 department stores, 160,000 clothing & accessory stores, and 8,600 game stores.
  • U.S. shopping-center retail sales total more than $2.26 trillion, accounting for over half of all retail sales.
  • The U.S. shopping-center industry directly employed over 12 million people in 2010 and indirectly generated another 5.6 million jobs in support industries. Collectively, the industry accounted for 12.7% of total U.S. employment.
  • Total retail employment in 2012 totaled 14.9 million, lower than the 15.1 million employed in 2002.
  • For every 100 individuals directly employed at a U.S. regional shopping center, an additional 20 to 30 jobs are supported in the community due to multiplier effects.

The collapse in foot traffic to the 109,500 shopping centers that crisscross our suburban sprawl paradise of plenty is irreversible. No amount of marketing propaganda, 50% off sales, or hot new iGadgets is going to spur a dramatic turnaround. Quarter after quarter there will be more announcements of store closings. Macys just announced the closing of 5 stores and firing of 2,500 retail workers. JC Penney just announced the closing of 33 stores and firing of 2,000 retail workers. Announcements are imminent from Sears, Radio Shack and a slew of other retailers who are beginning to see the writing on the wall. The vacancy rate will be rising in strip malls, power malls and regional malls, with the largest growing sector being ghost malls. Before long it will appear that SPACE AVAILABLE is the fastest growing retailer in America.

The reason this death spiral cannot be reversed is simply a matter of arithmetic and demographics. While arrogant hubristic retail CEOs of public big box mega-retailers added 2.7 billion retail square feet to our already over saturated market, real median household income flat lined. The advancement in retail spending was attributable solely to the $1.1 trillion increase (68%) in consumer debt and the trillion dollars of home equity extracted from castles in the sky, that later crashed down to earth. Once the Wall Street created fraud collapsed and the waves of delusion subsided, retailers have been revealed to be swimming naked. Their relentless expansion, based on exponential growth, cannibalized itself, new store construction ground to a halt, sales and profits have declined, and the inevitable closing of thousands of stores has begun. With real median household income 8% lower than it was in 2008, the collapse in retail traffic is a rational reaction by the impoverished 99%. Americans are using their credit cards to pay their real estate taxes, income taxes, and monthly utilities, since their income is lower, and their living expenses rise relentlessly, thanks to Bernanke and his Fed created inflation.

The media mouthpieces for the establishment gloss over the fact average gasoline prices in 2013 were the second highest in history. The highest average price was in 2012 and the 3rd highest average price was in 2011. These prices are 150% higher than prices in the early 2000′s. This might not matter to the likes of Jamie Dimon and Jon Corzine, but for a middle class family with two parents working and making 7.5% less than they made in 2000, it has a dramatic impact on discretionary income. The fact oil prices have risen from $25 per barrel in 2003 to $100 per barrel today has not only impacted gas prices, but utility costs, food costs, and the price of any product that needs to be transported to your local Wally World. The outrageous rise in tuition prices has been aided and abetted by the Federal government and their doling out of loans so diploma mills like the University of Phoenix can bilk clueless dupes into thinking they are on their way to an exciting new career, while leaving them jobless in their parents’ basement with a loan payment for life.

 

The laughable jobs recovery touted by Obama, his sycophantic minions, paid off economist shills, and the discredited corporate legacy media can be viewed appropriately in the following two charts, that reveal the false storyline being peddled to the techno-narcissistic iGadget distracted masses. There are 247 million working age Americans between the ages of 18 and 64. Only 145 million of these people are employed. Of these employed, 19 million are working part-time and 9 million are self- employed. Another 20 million are employed by the government, producing nothing and being sustained by the few remaining producers with their tax dollars. The labor participation rate is the lowest it has been since women entered the workforce in large numbers during the 1980′s. We are back to levels seen during the booming Carter years. Those peddling the drivel about retiring Baby Boomers causing the decline in the labor participation rate are either math challenged or willfully ignorant because they are being paid to be so. Once you turn 65 you are no longer counted in the work force. The percentage of those over 55 in the workforce has risen dramatically to an all-time high, as the Me Generation never saved for retirement or saw their retirement savings obliterated in the Wall Street created 2008 financial implosion.

To understand the absolute idiocy of retail CEOs across the land one must parse the employment data back to 2000. In the year 2000 the working age population of the U.S. was 213 million and 136.9 million of them were working, a record level of 64.4% of the population. There were 70 million working age Americans not in the labor force. Fourteen years later the number of working age Americans is 247 million and only 144.6 million are working. The working age population has risen by 16% and the number of employed has risen by only 5.6%. That’s quite a success story. Of course, even though median household income is 7.5% lower than it was in 2000, the government expects you to believe that 22 million Americans voluntarily left the labor force because they no longer needed a job. While the number of employed grew by 5.6% over fourteen years, the number of people who left the workforce grew by 31.1%. Over this same time frame the mega-retailers that dominate the landscape added almost 3 billion square feet of selling space, a 25% increase. A critical thinking individual might wonder how this could possibly end well for the retail genius CEOs in glistening corporate office towers from coast to coast.

This entire materialistic orgy of consumerism has been sustained solely with debt peddled by the Wall Street banking syndicate. The average American consumer met their Waterloo in 2008. Bernanke’s mission was to save bankers, billionaires and politicians. It was not to save the working middle class. You’ve been sacrificed at the altar of the .1%. The 0% interest rates were for Jamie Dimon and Lloyd Blankfein. Your credit card interest rate remained between 13% and 21%. So, while you struggle to pay bills with your declining real income, the Wall Street bankers are again generating record profits and paying themselves record bonuses. Profits are so good, they can afford to pay tens of billions in fines for their criminal acts, and still be left with billions to divvy up among their non-prosecuted criminal executives.

Bernanke and his financial elite owners have been able to rig the markets to give the appearance of normalcy, but they cannot rig the demographic time bomb that will cause the death and destruction of our illusory retail paradigm. Demographics cannot be manipulated or altered by the government or mass media. The best they can do is ignore or lie about the facts. The life cycle of a human being is utterly predictable, along with their habits across time. Those under 25 years old have very little income, therefore they have very little spending. Once a job is attained and income levels rise, spending rises along with the increased income. As the person enters old age their income declines and spending on stuff declines rapidly. The media may be ignoring the fact that annual expenditures drop by 40% for those over 65 years old from the peak spending years of 45 to 54, but it doesn’t change the fact. They also cannot change the fact that 10,000 Americans will turn 65 every day for the next sixteen years. They also can’t change the fact the average Baby Boomer has less than $50,000 saved for retirement and is up to their grey eye brows in debt.

With over 15% of all 25 to 34 year olds living in their parents’ basement and those under 25 saddled with billions in student loan debt, the traditional increase in income and spending is DOA for the millennial generation. The hardest hit demographic on the job front during the 2008 through 2014 ongoing recession has been the 45 to 54 year olds in their peak earning and spending years. Combine these demographic developments and you’ve got a perfect storm for over-built retailers and their egotistical CEOs.

The media continues to peddle the storyline of on-line sales saving the ancient bricks and mortar retailers. Again, the talking head pundits are willfully ignoring basic math. On-line sales account for 6% of total retail sales. If a dying behemoth like JC Penney announces a 20% decline in same store sales and a 20% increase in on-line sales, their total change is still negative 17.6%. And they are still left with 1,100 decaying stores, 100,000 employees, lease payments, debt payments, maintenance costs, utility costs, inventory costs, and pension costs. Their future is so bright they gotta wear a toe tag.

The decades of mal-investment in retail stores was enabled by Greenspan, Bernanke, and their Federal Reserve brethren. Their easy money policies enabled Americans to live far beyond their true means through credit card debt, auto debt, mortgage debt, and home equity debt. This false illusion of wealth and foolish spending led mega-retailers to ignore facts and spread like locusts across the suburban countryside. The debt fueled orgy has run out of steam. All that is left is the largest mountain of debt in human history, a gutted and debt laden former middle class, and thousands of empty stores in future decaying ghost malls haunting the highways and byways of suburbia.

The implications of this long and winding road to ruin are far reaching. Store closings so far have only been a ripple compared to the tsunami coming to right size the industry for a future of declining spending. Over the next five to ten years, tens of thousands of stores will be shuttered. Companies like JC Penney, Sears and Radio Shack will go bankrupt and become historical footnotes. Considering retail employment is lower today than it was in 2002 before the massive retail expansion, the future will see in excess of 1 million retail workers lose their jobs. Bernanke and the Feds have allowed real estate mall owners to roll over non-performing loans and pretend they are generating enough rental income to cover their loan obligations. As more stores go dark, this little game of extend and pretend will come to an end. Real estate developers will be going belly-up and the banking sector will be taking huge losses again. I’m sure the remaining taxpayers will gladly bailout Wall Street again. The facts are not debatable. They can be ignored by the politicians, Ivy League economists, media talking heads, and the willfully ignorant masses, but they do not cease to exist.

“Facts do not cease to exist because they are ignored.”Aldous Huxley


    



via Zero Hedge http://ift.tt/1aEqaeV Tyler Durden