Category: zerohedge

Over the past few days, John Kerry flew to Egypt, where among other things, he proposed a weekling Gaza Truce. Alas, that was one taxpayer funded trip for the Secretary of State flushed down the drain:

• ISRAEL CABINET UNANIMOUSLY OPPOSED KERRY PLAN: CHANNEL 1
• ISRAEL’S SECURITY CABINET HAS REJECTED GAZA CEASEFIRE PROPOSAL, SEEKS MODIFICATIONS -GOVT SOURCE

AP had some more details:

Israel on Friday rejected a Gaza ceasefire proposal presented by US Secretary of State John Kerry, Israeli public television reported.

 

“The security cabinet has unanimously rejected the ceasefire proposal of Kerry, as it stands,” Channel 1 said, adding that ministers would continue discussing it.

Or, largely just as was expected (because even Bloomberg is now reporting how the entire middle east is mocking John Kerry). But perhaps the reason why gold appears to have suddenly found a bid is the following:

• JOHN KERRY TO SPEAK FROM CAIRO LATER TODAY

Because just when you thought things couldn’t get any worse, John Kerry opens his mouth…

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

No red lines, no YouTube clips, no “satellite images” of WMD this time: just more “straight to propaganda” speculation by the Pentagon. From Reuters:

The Pentagon said on Friday the transfer of heavy-caliber multiple-launch rocket systems from Russia to Ukrainian separatists appeared to be imminent with the arms close enough to the border they could be handed over “potentially today.”

 

“We have indications that the Russians intend to supply heavier and more sophisticated multiple-launch rocket systems in the very near future,” said Army Colonel Steve Warren, a Pentagon spokesman, adding that the weapons were in the over-200mm range.

 

Warren indicated the weapons had been seen getting closer to the border and the Pentagon believed a transfer was imminent and could happen “potentially today.”

 

“We believe that they are able to transfer this equipment at any time, at any moment,” he said.

So Russia “could”, “potentially today” transfer rocket launchers to Ukraine. But wait, wasn’t the same Pentagon reporting hours ago that Russia is now, with the entire world clearly watching, no longer even pretending to be not engaged and is firing at Ukraine forces directly from its own territory? Why would they stop now? And surely with every US spy satellite trained at east Ukraine, the moment this happens it will be blasted to every media outlet. Right?

More:

A multiple-launch rocket system is a wheeled or tracked vehicle mounted with multiple tubes capable of firing a half dozen or more guided or unguided rockets in quick succession at targets scores of miles (km) away. The rockets are generally 100mm to 300mm, with those over 200mm in the heavier-caliber category.

 

“We’re very concerned with the quantity and the capability of weapons flowing from Russia into the Ukrainian separatists’ hands,” Warren said.

 

“There has been a continuous flow over the last several weeks of weapons and equipment from Russia to Ukraine,” he said, noting that the “most egregious example” was a column of more than 100 vehicles crossing the border.

 

The Pentagon’s assessment that a transfer of heavy weaponry was imminent came as Russian authorities accused Ukraine of firing a volley of mortar rounds across the frontier into Russia on Friday while a group of investigators was in the area assessing reports of cross-border shooting.

 

A Russian security official said up to 40 mortar bombs fired by Ukrainian forces fell in the Russian province of Rostov near the border where Ukrainian government forces are fighting pro-Russian separatists. There were no reports of injuries.

Then there was this:

• EARNEST SAYS U.S. TALKING WITH EU ABOUT MORE RUSSIA SANCTIONS

And then, just to hammer home the message that crazy Putin, the “West’s Public Enemy Number One” is about to invade Ukraine, we get this from Reuters:

• MORE THAN 15K RUSSIAN TROOPS ON UKRAINE BORDER

Ok, we get it: the former KGB spy is on full tilt and deserves every #hashtag the West can unleash. So please activate the sanctions already, those including Gazprom and not the purely theatrical ones to date, and let’s all sit back and watch what happens to Europe’s economy.

In the meantime, due to popular demand, here is some cover art courtesy of William Banzai.

via Zero Hedge http://ift.tt/WR4trB Tyler Durden

No red lines, no YouTube clips, no “satellite images” of WMD this time: just more “straight to propaganda” speculation by the Pentagon. From Reuters:

The Pentagon said on Friday the transfer of heavy-caliber multiple-launch rocket systems from Russia to Ukrainian separatists appeared to be imminent with the arms close enough to the border they could be handed over “potentially today.”

 

“We have indications that the Russians intend to supply heavier and more sophisticated multiple-launch rocket systems in the very near future,” said Army Colonel Steve Warren, a Pentagon spokesman, adding that the weapons were in the over-200mm range.

 

Warren indicated the weapons had been seen getting closer to the border and the Pentagon believed a transfer was imminent and could happen “potentially today.”

 

“We believe that they are able to transfer this equipment at any time, at any moment,” he said.

So Russia “could”, “potentially today” transfer rocket launchers to Ukraine. But wait, wasn’t the same Pentagon reporting hours ago that Russia is now, with the entire world clearly watching, no longer even pretending to be not engaged and is firing at Ukraine forces directly from its own territory? Why would they stop now? And surely with every US spy satellite trained at east Ukraine, the moment this happens it will be blasted to every media outlet. Right?

More:

A multiple-launch rocket system is a wheeled or tracked vehicle mounted with multiple tubes capable of firing a half dozen or more guided or unguided rockets in quick succession at targets scores of miles (km) away. The rockets are generally 100mm to 300mm, with those over 200mm in the heavier-caliber category.

 

“We’re very concerned with the quantity and the capability of weapons flowing from Russia into the Ukrainian separatists’ hands,” Warren said.

 

“There has been a continuous flow over the last several weeks of weapons and equipment from Russia to Ukraine,” he said, noting that the “most egregious example” was a column of more than 100 vehicles crossing the border.

 

The Pentagon’s assessment that a transfer of heavy weaponry was imminent came as Russian authorities accused Ukraine of firing a volley of mortar rounds across the frontier into Russia on Friday while a group of investigators was in the area assessing reports of cross-border shooting.

 

A Russian security official said up to 40 mortar bombs fired by Ukrainian forces fell in the Russian province of Rostov near the border where Ukrainian government forces are fighting pro-Russian separatists. There were no reports of injuries.

Then there was this:

• EARNEST SAYS U.S. TALKING WITH EU ABOUT MORE RUSSIA SANCTIONS

And then, just to hammer home the message that crazy Putin, the “West’s Public Enemy Number One” is about to invade Ukraine, we get this from Reuters:

• MORE THAN 15K RUSSIAN TROOPS ON UKRAINE BORDER

Ok, we get it: the former KGB spy is on full tilt and deserves every #hashtag the West can unleash. So please activate the sanctions already, those including Gazprom and not the purely theatrical ones to date, and let’s all sit back and watch what happens to Europe’s economy.

In the meantime, due to popular demand, here is some cover art courtesy of William Banzai.

via Zero Hedge http://ift.tt/WR4trB Tyler Durden

Yesterday, we were beyond amused when we reported that the market’s response to rumors of Zillow’s $2 billion take over of Trulia was not only to push Trulia stock higher by $500 million but send the market cap of incomeless, EBITDAless Zillow higher by $1 billion. It appears we are not the only ones fascinated by the market’s reaction to every M&A announcement, which is to send not only the target but the acquiror stock soaring. One other such person is David Einhorn who laments precisely this bubblyness in his just released letter to investors, saying that “takeover season has returned and in a new twist, the buyers’ stock prices are also advancing in response to announced deals, enabling companies, including some of our shorts, to see gains as acquirers – even of other troubled companies.”

He proceeds to give several examples of how his shorts have worked against him, a trend which as we reported first in 2012 will continue indefinitely under a centrally-planned regime in which the Fed is the Chief Risk Officer of the market, and where no price declines are allowed, and thus the need to hedge (which means that going long the most hated, vile, worthless companies will, sadly, by and large continue to be a winning strategy).

Still, with a return of 5.2% in Q2 and 7.1% YTD, at least Greenlight is only barely underperforming the market, something that 90% of his hedge fund peers can only dream about.

Here are Einhorn’s full thoughts on the M&A bubble:

Costly takeovers of our shorts appear to be a cyclical phenomenon: We went from 1996-2003 without incurring a single material loss due to a takeover. Then in 2006-2007 we had a number of our shorts taken over in rapid succession, the most costly being Medtronic’s $4.2 billion acquisition of Kyphon at a 32% premium over Kyphon’s already lofty share price. In reviewing historical takeovers of our shorts where we lost money, almost none proved to be good deals for the acquirers.

Well, yes: it’s called forced capital misallocation for a reason.

Things got quieter again for a few years but now takeover season has returned and is again causing losses in our short portfolio. Companies we are short often have serious problems of which the boards and management are probably aware. This makes them more eager than usual to sell at any sort of premium. The prospective buyers ought to discover these problems during due diligence, which should make them walk away. But in the current environment, debt financing is so inexpensive that acquirers can pay premiums and have the deals be accretive to EPS, making them more willing to overlook or ignore any problems they discover.

Bingo.

And speaking of bubble, here is Einhorn on a topic near and dear to Yellen Capital Advisors, LLC: the tech bubble:

In our last quarterly letter, we wrote about the bubble in momentum stocks, most of which are in the technology sector. The media latched onto a single sentence embedded in a lengthy discussion about ‘cool kid’ stocks and suggested that we were declaring all technology stocks to be in a bubble. Nothing could be further from the truth. Many of our largest long positions are in technology, and we are not holding them with a cynical view that we want to play a bubble. We believe that stocks including Apple, Lam Research, Marvell Technology and Micron Technology have strong prospects and are undervalued.

 

At the same time, there are a number of tech stocks that are caught up in a smaller version of the 1999-2000 internet bubble, and as we mentioned, we created a bubble basket to short them. At this year’s Sohn Investment Conference in May, David presented athenahealth (ATHN), a healthcare IT company, as an example of a bubble basket stock. In response to our assertion that the shares are absurdly overvalued, CEO Jonathan Bush summed things up perfectly a few days after the conference when he told Bloomberg TV, “And those who buy our stock should not be sort of bottom [line] watching value investors. They should be people who dream of a health care cloud.” At Greenlight, dreams do not form the basis of investment theses.

How about hope? We only ask, because that seems to be the most profitable and widespread investment strategy over the past 5 years.

via Zero Hedge http://ift.tt/1lE3Uae Tyler Durden

Yesterday, we were beyond amused when we reported that the market’s response to rumors of Zillow’s $2 billion take over of Trulia was not only to push Trulia stock higher by $500 million but send the market cap of incomeless, EBITDAless Zillow higher by $1 billion. It appears we are not the only ones fascinated by the market’s reaction to every M&A announcement, which is to send not only the target but the acquiror stock soaring. One other such person is David Einhorn who laments precisely this bubblyness in his just released letter to investors, saying that “takeover season has returned and in a new twist, the buyers’ stock prices are also advancing in response to announced deals, enabling companies, including some of our shorts, to see gains as acquirers – even of other troubled companies.”

He proceeds to give several examples of how his shorts have worked against him, a trend which as we reported first in 2012 will continue indefinitely under a centrally-planned regime in which the Fed is the Chief Risk Officer of the market, and where no price declines are allowed, and thus the need to hedge (which means that going long the most hated, vile, worthless companies will, sadly, by and large continue to be a winning strategy).

Still, with a return of 5.2% in Q2 and 7.1% YTD, at least Greenlight is only barely underperforming the market, something that 90% of his hedge fund peers can only dream about.

Here are Einhorn’s full thoughts on the M&A bubble:

Costly takeovers of our shorts appear to be a cyclical phenomenon: We went from 1996-2003 without incurring a single material loss due to a takeover. Then in 2006-2007 we had a number of our shorts taken over in rapid succession, the most costly being Medtronic’s $4.2 billion acquisition of Kyphon at a 32% premium over Kyphon’s already lofty share price. In reviewing historical takeovers of our shorts where we lost money, almost none proved to be good deals for the acquirers.

Well, yes: it’s called forced capital misallocation for a reason.

Things got quieter again for a few years but now takeover season has returned and is again causing losses in our short portfolio. Companies we are short often have serious problems of which the boards and management are probably aware. This makes them more eager than usual to sell at any sort of premium. The prospective buyers ought to discover these problems during due diligence, which should make them walk away. But in the current environment, debt financing is so inexpensive that acquirers can pay premiums and have the deals be accretive to EPS, making them more willing to overlook or ignore any problems they discover.

Bingo.

And speaking of bubble, here is Einhorn on a topic near and dear to Yellen Capital Advisors, LLC: the tech bubble:

In our last quarterly letter, we wrote about the bubble in momentum stocks, most of which are in the technology sector. The media latched onto a single sentence embedded in a lengthy discussion about ‘cool kid’ stocks and suggested that we were declaring all technology stocks to be in a bubble. Nothing could be further from the truth. Many of our largest long positions are in technology, and we are not holding them with a cynical view that we want to play a bubble. We believe that stocks including Apple, Lam Research, Marvell Technology and Micron Technology have strong prospects and are undervalued.

 

At the same time, there are a number of tech stocks that are caught up in a smaller version of the 1999-2000 internet bubble, and as we mentioned, we created a bubble basket to short them. At this year’s Sohn Investment Conference in May, David presented athenahealth (ATHN), a healthcare IT company, as an example of a bubble basket stock. In response to our assertion that the shares are absurdly overvalued, CEO Jonathan Bush summed things up perfectly a few days after the conference when he told Bloomberg TV, “And those who buy our stock should not be sort of bottom [line] watching value investors. They should be people who dream of a health care cloud.” At Greenlight, dreams do not form the basis of investment theses.

How about hope? We only ask, because that seems to be the most profitable and widespread investment strategy over the past 5 years.

via Zero Hedge http://ift.tt/1lE3Uae Tyler Durden

Submitted by Charles Hugh Smith from Of Two Minds

Are We Addicted to Failure?

Like all addicts, Central Planners are confident they can manage the monkey on their back. But this is a self-serving illusion.

Addiction is many things, but beneath its complexities it is a self-destructive expression of the desire to avoid or suppress pain. The pain might be physical or the stuff of the mind, memories or inner demons or tortured misgivings about one’s choices, soul and life.

Though the self-destructive aspects of the addiction are painfully visible to observers, to the addict they represent a solution: perhaps not the ideal one or even a good one, but a solution nonetheless.

Fear plays a big part in many addictions–fear of life without the addictive salve. The fear in an addict’s eyes when the fix is not forthcoming is haunting to all who witness it.

To the non-addicted observer, addictions are not successes; they are failures of one kind or another, and those who care about the addict seek some way to extract the addict from the grip of his/her addiction, and from the fear that often drives it.

I have recently been wondering if America is addicted to failure. The oft-repeated definition of insanity is doing the same thing over and over again and expecting different results, generally attributed to Albert Einstein.

But given the right mix of blindness and fear, doing the same thing over and over again and expecting different results might not be insanity but a self-destructive addiction to failure.

In this light, please consider this chart of the broad-based U.S. stock market index, the S&P 500, which I have marked up as an addiction to failure:

The source of this addiction is a fear of life without credit/asset bubbles. Fearing life without the rush and high of asset bubbles, we see an addiction to financial bubbles as a solution in the same terrible way a heroin addict sees smack as a solution: not as a long-term solution or even a good one, but a solution nonetheless, because it makes the pain of facing life without Central Planning financial bubbles go away at least temporarily.

But bubbles inevitably leads to overdose and a subsequent self-destructive crash. Our central bankers/planners have injected enough monetary heroin into the nation to guarantee not just the rush and the high but the overdose that leads to a destructive crash.

Like all addicts, Central Planners are confident they can manage the monkey on their back. But this is a self-serving illusion; it’s the monkey who controls the addict, not the other way round.

If we’re not addicted to failure, why do we tolerate a central bank that creates one rush-high-overdose-crash after another? Perhaps it’s time to confess that we’re addicted to failure because we’re too afraid to face life without this financial addiction.

Pretty sad, huh? Like all observers, those of us without monetary heroin in our veins wonder when the poor addict will finally wake up and choose a path that isn’t self-destructive. But as many of us know from personal experience, it often takes a near-death experience to awaken the instinct for survival in the addict. Sadly, sometimes not even that is enough, and a once-great nation spirals down to ruin.

If you missed this week’s series:

The Rot Within, Part III: Our Political Order Is Defined by Favoritism and Extortion

The Rot Within, Part II: Inflation Is Not “Growth”

The Rot Within, Part I: Our Ponzi Economy

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

With “recoveries” like these who needs staged, false flag conflicts and wars covering over 10% of the globe? Well, socialist France for one which moments ago announced that total jobless rose from 3.389 million to 3.398 million, a new record high. Surprisingly, while the year-over-year unemployment change for people under 25 declined by 3.1%, it was workers 25-49 which saw a material 3.3% increase in joblessness, but it was workers aged 50 and older that saw a veritable surge in unemployment, rising by 11.5% from a year ago. Surely, just like in the US, this is due to young people retiring in droves.

Reuters reports:

The number of people without a job in France rose in June to yet another record in the latest blow to President Francois Hollande’s efforts to get unemployment falling.

The Labour Ministry said the jobless total in mainland France rose by 9,400 last month to 3,398,300, up 0.3 percent over one month and 4.0 percent over one year.

Hollande has seen his popularity collapse to record lows for a French president as he failed to live up to promises to get unemployment declining.

The Socialist leader is counting on plans to phase out 30 billion euros ($40.29 billion) in payroll tax on companies to get them investing and hiring.

In one ray of light for the job market, the Labour Ministry said the number of job offers received by the state employment agency had risen 5.4 percent in June from May.

The good news for France, which like Venezuela is on its way to becoming another socialist utopia, is that it sill has headlines like these to look forward to:

• Venezuela Bolivar Devalues 89% in Start of New FX Market
• Venezuela Devalues Bolivar By Another 44% For Some, Still 600% Higher Than Black Market Due To 50% Inflation
• Venezuela’s Maduro Averts Military Coup, Arrests Three Air Force Generals
• Venezuela About To Run Out Of Food Despite Fresh All Time High In Its Stock Market
• Venezuela Sets New “Fair” Prices For Chicken, Sugar, Rice & Coffee
• Socialist Paradise Central Planning In Action: Venezuela Looting Edition
• Venezuela Plunges Into Darkness As President Maduro Lays Out Socialist Vision On National TV
• No Spaghetti For You: Venezuela Noodle Maker Halts Production Due To Lack Of Dollars
• No Drinking Water In Venezuela Until Bankers Get Paid Back
• Venezuela Runs Out Of Toilet Paper
• Breathing The Air In Venezuela? Prepare To Pay
• Venezuela’s Transformation To Socialist Utopia Is Nearly Complete As Its Factories Grind To A Halt

And now, time for France to engage in another meaningless conflict in west Africa.

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

While the state of Liberia is scrambling to locate the missing woman who is “on the loose” in the capital Sierra Leone with a documented case of Ebola, we can at least close the book on the other developing story we reported yesterday involving a person who collapse in the international airport of Nigeria’s megacity, Lagos, and who was being tested for Ebola. The man has died.

From Reuters:

A Liberian man suspected to have Ebola virus has died in quarantine in Lagos, Nigeria, a Nigerian official in Geneva told Reuters on Friday.

 

The man, who collapsed on arrival at the airport in Nigeria’s commercial centre, Lagos, on Thursday, was being kept in isolation by authorities and had not entered the mega-city of 21 million people, he said.

 

“While he was in quarantine he passed away,” the official said.

It is unclear if he passed away from natural causes, such as being beaten to death to avoid any loose ends, or because the Ebola virus he was carrying was in very late stage.

No matter the open questions, we are confident that there is nothing to worry about and that the risk of anyone else encountering the man (who may or may not have died from Ebola 24 hours later) while at the airport, and certainly flying off to non-African destinations, is below zero. In fact, we are confident that no matter what the story is, it is bullish for risk assets and certainly for global healthcare companies.

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

While the state of Liberia is scrambling to locate the missing woman who is “on the loose” in the capital Sierra Leone with a documented case of Ebola, we can at least close the book on the other developing story we reported yesterday involving a person who collapse in the international airport of Nigeria’s megacity, Lagos, and who was being tested for Ebola. The man has died.

From Reuters:

A Liberian man suspected to have Ebola virus has died in quarantine in Lagos, Nigeria, a Nigerian official in Geneva told Reuters on Friday.

 

The man, who collapsed on arrival at the airport in Nigeria’s commercial centre, Lagos, on Thursday, was being kept in isolation by authorities and had not entered the mega-city of 21 million people, he said.

 

“While he was in quarantine he passed away,” the official said.

It is unclear if he passed away from natural causes, such as being beaten to death to avoid any loose ends, or because the Ebola virus he was carrying was in very late stage.

No matter the open questions, we are confident that there is nothing to worry about and that the risk of anyone else encountering the man (who may or may not have died from Ebola 24 hours later) while at the airport, and certainly flying off to non-African destinations, is below zero. In fact, we are confident that no matter what the story is, it is bullish for risk assets and certainly for global healthcare companies.

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

Curious why Brent just spiked by over 1% (and the S&P500 took a leg lower)? The reason is headlines from Reuters citing Europe’s unelected dictator, Van Rompuy who has said that sanctions should include Oil technology. However, in a hilarious twist, the unellected muppet of Europe’s insolvent banks, hopes to get his sanctions cake and snort Russia’s gas too, adding that Europe’s sanctions should exclude the gas sector.

• LETTER FROM EU COUNCIL HEAD VAN ROMPUY TO MEMBER STATES SAYS RESTRICTIONS ON SUPPLYING TECHNOLOGY TO RUSSIA SHOULD INCLUDE OIL, BUT EXCLUDE GAS SECTOR-EU SOURCES

More from Reuters:

EU leaders seeking to agree sanctions against Russia over its actions in Ukraine are expected to include oil technology but exclude technology for Russia’s all-important gas sector, EU sources said on Friday.

 

The scaling back of the EU’s ambitions shows the difficulty of agreeing forceful sanctions against Russia without risking damage to the bloc’s fragile economy.

 

Two sources quoted from an official letter sent to EU heads of government outlining “an emerging consensus on some key principles”.

Here it appears that Europe’s unelected leaders are somehow deluding themselves that if faced with escalating sanctions, Russia will not unilaterally cut off the gas to Europe.

It gets better. Reuters also added the following:

• LETTER FROM EU COUNCIL HEAD VAN ROMPUY ASKS EU LEADERS TO DELEGATE AUTHORITY TO AGREE TO RUSSIA SANCTIONS TO AMBASSADORS, AVOIDING NEED FOR SUMMIT-EU DIPLOMAT

Why? So that when things really escalate out of hand, and Russia does half gas deliveries sending Europe into a triple-dip recession or outright depression, the population will demand scalps. At that point the unelected Van Rompuys can say: “hey, don’t blame us. It was all the ambassadors fault.”

Lest anyone thinks that Russia is anywhere close to “blinking”, allow us to disabuse you of such naive thoughts with these Reuters and BBG headlines:

• RUSSIA SAYS UKRAINE SHELLED RUSSIAN TERRITORY WITH THE INTENT TO KILL LAW ENFORCEMENT OFFICERS; PROOF FOR `FALSE’ U.S. CLAIMS `SIMPLY DOESN’T EXIST’ – -INVESTIGATIVE COMMITTEE STATEMENT;

But the biggest telltale is what we have said the latest escalation is all about: the South Stream – the Russian nat gas pipeline which would circumvent Ukraine entirely. “A draft document on possible sanctions on Thursday also laid out a range of technologies that could be restricted, which could have delayed development of Russia’s South Stream gas project to ship gas to Europe via the Black Sea.“

Because just like with Syria, so with Ukraine and all the associated brewhaha, at the heart of the ongoing conflict is nothing more than Europe’s addiction to Russian energy.

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