iftttwall

If the investing school of “Ackman-Tilson” is correct, in which nobody actually cares about the content, just the number of pages in a given “investing presentation” slideshow, then recently troubled Chinese mobile internet provider NQ just got the upper hand over Muddy Waters. Recall that on Thursday, with a “Strong Sell” report bashing NQ alleging the company is a fraud, Muddy Waters managed to cut the price of the company in question by over 50%. The size of that presentation: 81 pages. Moments ago NQ came out with its point by point rebuttal to Muddy Waters. The size of NQ’s presentation: a whopping 97 pages.  Game, set, match to NQ, duh.

P.S. For those confused, the above statement is sarcasm, wrapped in a farce, inside an absurdity. Just like this here “Bernanke market.”

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/i4CrkdBGgA8/story01.htm Tyler Durden

Aside from the fact that this morning’s dismal confidence data likely inspired more Fed-inspiration, the fact of the matter is that US equities remain beholden to the ebb and flow of JPY-carry trades. This morning’s surge in the latter (EURJPY) can be attributed to ECB’s Nowotny, who dropped this little tape-bomb earlier:

• *ECB’S NOWOTNY SAYS ‘NO REALISTIC PROSPECT’ OF RATE CUT: MNI
• *NOWOTNY SAYS ECB UNLIKELY TO CUT BENCHMARK OR DEPOSIT RATE: MNI
• *NOWOTNY SAYS POLICY MAKERS ‘HAVE TO LIVE WITH’ STRONG EURO: MNI

Which strengthened the EUR (against the JPY) and thus – in the new normal interconnected world (disconnected from fundamentals) – US equities spike.

 

 

At some point we assume reality will dawn that carry trades can’t carry us all the way to inifinity but for now, that seems to be the case at the margin – and the margin is all that matters…

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/wVxFvoGa4Qg/story01.htm Tyler Durden

Aside from the fact that this morning’s dismal confidence data likely inspired more Fed-inspiration, the fact of the matter is that US equities remain beholden to the ebb and flow of JPY-carry trades. This morning’s surge in the latter (EURJPY) can be attributed to ECB’s Nowotny, who dropped this little tape-bomb earlier:

• *ECB’S NOWOTNY SAYS ‘NO REALISTIC PROSPECT’ OF RATE CUT: MNI
• *NOWOTNY SAYS ECB UNLIKELY TO CUT BENCHMARK OR DEPOSIT RATE: MNI
• *NOWOTNY SAYS POLICY MAKERS ‘HAVE TO LIVE WITH’ STRONG EURO: MNI

Which strengthened the EUR (against the JPY) and thus – in the new normal interconnected world (disconnected from fundamentals) – US equities spike.

 

 

At some point we assume reality will dawn that carry trades can’t carry us all the way to inifinity but for now, that seems to be the case at the margin – and the margin is all that matters…

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/wVxFvoGa4Qg/story01.htm Tyler Durden

As we pointed out a month ago (and initially over a year ago) in this completely broken, levered-beta, mad dash for yield market, the only alpha-generating strategy that even remotely works, is to be long the most shorted stocks. This was confirmed based on the 1 year “New Normal” return of the S&P vs the “most shorted sotcks” – a trade we first suggested in September 2012 – demonstrated by the chart below.

 

Amusingly, as part of the trading basket of only stocks worth owning, i.e., the most shorted ones on the Russell 2000, where the beta is by far the highest, the top stock listed, the one with the highest short interest as a percentage of the total float, was none other than Blyth, Inc., as per the chart from one month ago.

According to the latest Bloomberg data, since then the short interest only rose even more, hitting an unprecedented 82.79% of all shares in the float held short.

Well, overnight a lot of shorts suddenly screamed out in terror and were suddenly silenced, not to mention carted out feet first, when none other than the most shorted Rusell 2000 stock received an unsolicited takeover proposal valuing the stock at $16.75/share, and sending it to the highest level since May.

Blyth, Inc. (BTH), a direct to consumer company and leading designer and marketer of health & wellness products, beauty products and candles and accessories for the home sold through the direct selling and direct marketing channels, today confirmed that it has received an unsolicited proposal from CVSL, Inc. to acquire, subject to conditions, all of the public common shares of Blyth for a per share consideration of $16.75, or approximately $269 million payable in CVSL shares or cash.

 

The proposal is conditioned on diligence and the negotiation of definitive documentation and is not supported by financing.  The proposal references a meeting last week between principals of Blyth and principals of CVSL; the Company noted this meeting was held at the request of CVSL and the principals did not discuss a business combination of Blyth and CVSL.

For the shorts who still believe in a rational, fundamentally-driven market: our condolences. For everyone else – just keep betting that career-risk driven idiocy will be the dominant investing strategy until the Fed’s central planning implodes, and buy what that anachronism in a market without risk, hedge funds, are shorting the most.

 

 

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/U0xQg38XsXE/story01.htm Tyler Durden

Following the lowest UMich confidence print in 2013, Gallup's economic confidence collapse, and Bloomberg's index of consumer comfort signaling major concerns among rich and poor in this country (in spite of record highs in stocks), today's Conference Board Consumer Confidence data  continues to confirm a problem for all those 'hoping' for moar multiple expansion. From 80.2 in September, confidence collapsed to 71.2 (the largest MoM drop in 2 years) to its lowest in six months, and notably below expectations. As we have noted in the past a 10 point drop in confidence has historically led to a 2x multiple compression in stocks (which suggests the Fed will need to un-Taper some more to keep the dream alive). Hope for the future dropped to 7-month lows but what is perhaps most intriguiging, just as with the Bloomberg surveys, we are seeing the wealthiest cohorts confidence plunging (even as stocks soar to new highs). It would appear the Fed has lost its wealth effect inpiration.

 

 

Once again we remind that it's all about confidence and hope appears to be fading…

As we have noted previously – this move in confidence is key…

But, it's all about confidence… investors will not be willing to pay increasing multiples unless they are confident that the future streams of earnings are sustainable and forecastable… And simply put, the current levels of Consumer Sentiment need to almost double for the US equity market tp approach historical multiple valuation levels…

 

 

 

and the cycle appears to be shifting…

Via Citi,

Is consumer confidence set to turn?

Consumer Confidence is once again following a dynamic where we see it move higher for 4 years and 4 months before beginning to collapse

• Moves higher from 1996-2000 with a smaller dip halfway through in October 1998
• Moves higher from 2003-2007 with a smaller dip hallway through in October 2005
• Moves higher and so far tops out in June 2013. Also sees a small dip halfway through in October 2011.

 

Higher yields do not help confidence…

 

A sharp rise in mortgage rates has a negative feedback loop to consumer confidence. For those families and individuals that were now looking/able to enter the housing market, the recent spike in rates acts as a headwind.

 

In addition to the economic backdrop, there is plenty of tail risk as we head into the end of the year. Oil prices have been rising since the summer began (and in reality since the Summer of 2012), partially due to geopolitical risks which are very much “top of mind.” A bigger spike due to a supply shock would choke the economic recovery.(In our view)

In the US, the appointment of a new Fed Chairman and the upcoming budget/debt ceiling debates are likely to bring added volatility. Tapering itself can also induce concern as the “Bernanke put” is being removed from markets.

In Europe, many of the structural problems related to the single currency union have not actually been addressed and the peripheral countries could still create turmoil going forward (see Fixed Income section focusing on Italy in particular for more on this). There has also been little concern with both the German elections and the German Court decision on the constitutionality of the OMT program. A surprise in either of these could be cause for concern.

Emerging Markets are still not out of the woods yet as growth has been weak relative to expectations and countries with current account deficits are beginning to feel pressure in their FX and Bond markets. This is an issue we believe is only starting to develop which we will continue to expand on at later dates.(We have also looked at this in our EM FX section this week)

Overall, the weak economic backdrop, poor housing recovery and potential for tail risk events over the next few months suggest that we have topped out in Consumer Confidence, a warning sign for equity markets.

 

The relationship between Consumer Confidence is clear, and IF June did mark the high and Confidence continues to decline, then we would expect to see that translate to weakness in the equity markets. The removal of the “Bernanke put” only adds to this concern.

A major turn has taken place in equity markets on average four months after Consumer Confidence turns, which would point to a decline beginning around September-October. As we have previously expressed, we remain of the bias that a correction in equity markets on the order of 20%+ is likely this year/ into 2014 and the current dynamics support such a move.

Should we see a decline of that magnitude, it is almost certain that yields would move lower in a rush to safe assets.

 

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/zwqfs9gPo5s/story01.htm Tyler Durden

The House Ways & Means Committee holds a hearing to receive testimony from Marilyn Tavenner, Administrator of the Centers for Medicare & Medicaid Services (CMS) at the U.S. Department of Health and Human Services (HHS). Grab your popcorn, nom nom nom

 

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/s8dtGaZFfTU/story01.htm Tyler Durden

September retail sales were a modest miss: that much was made clear earlier. However, what the market may have missed is that this “miss” was on the back of Department of Commerce’s favorite fudge factor: seasonal adjustments. The 0.1% “decline” in retail sales was for the seasonally adjusted numbers of $426.3 billion in August and $425.9 billion in September. So what happens when one strips away the Arima-X-12 a la carte adjustment which is always and everywhere in the eye of the beholder? Well, this:

As the chart above shows, the unadjusted retail sales number difference from August to September was a whopping $40 billion, or a 9% drop in one month, which in turn meant the headline retail sales number contained in it had an “adjustment factor” of $39.6 billion. This was the biggest NSA September retail sales drop on record, even worse than the prior worst such monthly drop posted in 2007 when the Second Great Depression was about to begin.

So one wonders: just what is the basis for the adjusters to apply the biggest ever seasonal add back to the raw number ever?

Either way, whatever it is, the algos are obviously infatuated with the record NSA September sales drop which is the reason for the fresh all time S&P high – if anything, record unadjusted retail sales drops is just what the Fed ordered to keep the taper forever on the backburner.

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

September retail sales were a modest miss: that much was made clear earlier. However, what the market may have missed is that this “miss” was on the back of Department of Commerce’s favorite fudge factor: seasonal adjustments. The 0.1% “decline” in retail sales was for the seasonally adjusted numbers of $426.3 billion in August and $425.9 billion in September. So what happens when one strips away the Arima-X-12 a la carte adjustment which is always and everywhere in the eye of the beholder? Well, this:

As the chart above shows, the unadjusted retail sales number difference from August to September was a whopping $40 billion, or a 9% drop in one month, which in turn meant the headline retail sales number contained in it had an “adjustment factor” of $39.6 billion. This was the biggest NSA September retail sales drop on record, even worse than the prior worst such monthly drop posted in 2007 when the Second Great Depression was about to begin.

So one wonders: just what is the basis for the adjusters to apply the biggest ever seasonal add back to the raw number ever?

Either way, whatever it is, the algos are obviously infatuated with the record NSA September sales drop which is the reason for the fresh all time S&P high – if anything, record unadjusted retail sales drops is just what the Fed ordered to keep the taper forever on the backburner.

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