Shorts Crucified As Most Shorted Russell 2000 Stock Gets Takeover Proposal

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

Consumer Confidence Plunges Most In 2 Years

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

Administration Updates House On Obamacare Enrollment – Live Webcast

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

What’s Wrong With This Picture?

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

What's Wrong With This Picture?

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

The Housing Bubble 2.0 Is Strong With These 5 Cities

It would appear that the ‘gambler’s in these 5 cities were not told that the government would be shutting down, that confidence would drop, that affordability would plummet… instead they were told that nothing has changed and 29% YoY home price gains are for buying not selling..

 

Year-over-Year Home Price Gains…

 

Though it does seem that some of the ‘froth’ is starting to fade in the Detroit metropolis… (though over 16% gains).


    



via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/ymZ0L-FY8Oc/story01.htm Tyler Durden

Case-Shiller Beats: Bankrupt Detroit Among Top 5 Fastest Appreciating Housing Markets

If yesterday’s collapse in September existing home sales was indicative that Housing is tumbling and it means the Fed will not taper until mid 2014 sending the S&P to a new record high, today’s August Case Shiller, which beat expectations of a M/M increase of 0.65% with a 0.93% print, and an increase of 12.82% Y/Y, probably means that the economy is very strong and will send the S&P to an even newer recorder high, since both bad and good news send only one signal to algos: buy. What is amusing is that while the NAR’s September fiasco was attributed to “concerns” over a government shutdown, the two month delayed Case Shiller print, which was for August, will be spun as no fears of a government shutdown in August, or something.

 

Listing the Top 5 cities in order of Y/Y price increase: Vegas +29.22%; San Francisco +25.4%; Los Angeles + 21.66; San Diego +21.5%; and….

Detroit +16.4%

That’s right: America’s biggest bankrupt city is among the Top 5 highest appreciating housing markets.


    



via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/SbNXjcc47TQ/story01.htm Tyler Durden

September Retail Sales Come In Line With Expectations As Unclothed Americans Buy iPads

Moments ago hopes that the S&P would hit 1800 on an epic miss in the September retail sales were dashed after both the headline and ex-auto/gas numbers came largely in line. The total Seasonally Adjusted retail sales for September dipped modestly by 0.1%, on expectations of an unchanged print. Excluding autos the number was exactly in line with expectations at 0.4%, while ex autos and gas was also a very modest miss of 0.4% vs Exp. 0.5%. Still, hardly bad enough to send the S&P500 futures into the stratosphere. The biggest outliers by business category were motor vehicles which tumbled -2.2 in September, the biggest decline since October 2012 (did the US government suddenly stop making NINJA loans?), Miscellaneous stores and Clothing stores, down 1.2% and -0.5% respectively, while electronics and appliance stores rose 0.7% in September. In short: Americans may have no clothing as we enter the winter season, but at least they have the new iPad.

So while noted the number was hardly bad enough to send stocks surging, the ES-leading EURJPY pair seems to have found a third-wind bid in an attempt to expand the S&P500 multiple by at least another 0.1-0.2x today: could it be that algos just noticed that unadjusted retail sales tumbled by 9% from August to September.

Retail sales historic trend:

Charting the September retail sales broken down by category:

And by business:

Source: Census


    



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

Fayette County arrest reports — Oct. 15–21

The following arrests were reported by local law enforcement agencies for the past week. All persons are considered innocent until proven guilty:

Tuesday, Oct. 15 – Monday, Oct. 21

Fayette County Sheriff’s Office

Qa’shun J. Alford, born in 1994, of Chauteau Cane, Riverdale, for revoked or suspended license and expired or no license plate.

Alexander K. Hall, born in 1989, of Gardener Drive, Jonesboro, for revoked or suspended license.

Brittany R. Paden, born in 1988, of Hillcrest Ridge Road, Canton, for financial identity fraud.

read more

via The Citizen http://www.thecitizen.com/articles/10-29-2013/fayette-county-arrest-reports-%E2%80%94-oct-15%E2%80%9321

Obama Knew Most Americans Would Not Be Able To Keep Their Existing Insurance Under Obamacare As Early As 2010

The news keeps going from worse to worse-er for the administration and Obamacare. The latest hit, however, does not revolve around the dysfunctional healthcare.gov website, whose hundreds of millions of lines of faulty code will take a very long time to fix, but relates to Obama’s promises that individuals would be able to keep their existing healthcare plans following the rollout of the Affordable Care Act. The truth, as NBC reports, is they can’t but what’s worse is that Obama knew as early as July 2010 that 40 to 67 percent of customers will not be able to keep their policy. And that’s not all: since the 14 millions consumers who buy their insurance individually will be forced into comparable plans, they are all set to experience a “sticker shock” when “opting” for the mandatory alternatives.

From NBC:

President Obama repeatedly assured Americans that after the Affordable Care Act became law, people who liked their health insurance would be able to keep it. But millions of Americans are getting or are about to get cancellation letters for their health insurance under Obamacare, say experts, and the Obama administration has known that for at least three years.

 

Four sources deeply involved in the Affordable Care Act tell NBC News that 50 to 75 percent of the 14 million consumers who buy their insurance individually can expect to receive a “cancellation” letter or the equivalent over the next year because their existing policies don’t meet the standards mandated by the new health care law. One expert predicts that number could reach as high as 80 percent. And all say that many of those forced to buy pricier new policies will experience “sticker shock.”

The reason for the sticker shock: mandatory cadillac plan replacements:

Individual insurance plans with low premiums often lack basic benefits, such as prescription drug coverage, or carry high deductibles and out-of-pocket costs. The Affordable Care Act requires all companies to offer more benefits, such as mental health care, and also bars companies from denying coverage for preexisting conditions.

Obama, it turns out, knew all about this:

None of this should come as a shock to the Obama administration. The law states that policies in effect as of March 23, 2010 will be “grandfathered,” meaning consumers can keep those policies even though they don’t meet requirements of the new health care law. But the Department of Health and Human Services then wrote regulations that narrowed that provision, by saying that if any part of a policy was significantly changed since that date — the deductible, co-pay, or benefits, for example — the policy would not be grandfathered. 

 

Buried in Obamacare regulations from July 2010 is an estimate that because of normal turnover in the individual insurance market, “40 to 67 percent” of customers will not be able to keep their policy. And because many policies will have been changed since the key date, “the percentage of individual market policies losing grandfather status in a given year exceeds the 40 to 67 percent range.” 

 

That means the administration knew that more than 40 to 67 percent of those in the individual market would not be able to keep their plans, even if they liked them.

Enter the lies:

Yet President Obama, who had promised in 2009, “if you like your health plan, you will be able to keep your health plan,” was still saying in 2012, “If [you] already have health insurance, you will keep your health insurance.”

 

“This says that when they made the promise, they knew half the people in this market outright couldn’t keep what they had and then they wrote the rules so that others couldn’t make it either,” said  Robert Laszewski, of Health Policy and Strategy Associates, a consultant who works for health industry firms. Laszewski estimates that 80 percent of those in the individual market will not be able to keep their current policies and will have to buy insurance that meets requirements of the new law, which generally requires a richer package of benefits than most policies today.

The White House was ready with a canned response:

Nothing in the Affordable Care Act forces people out of their health plans: The law allows plans that covered people at the time the law was enacted to continue to offer that same coverage to the same enrollees – nothing has changed and that coverage can continue into 2014,” she said.

 

White House spokesman Jay Carney was asked about the president’s promise that consumers would be able to keep their health care. “What the president said and what everybody said all along is that there are going to be changes brought about by the Affordable Care Act to create minimum standards of coverage, minimum services that every insurance plan has to provide,” Carney said. “So it’s true that there are existing healthcare plans on the individual market that don’t meet those minimum standards and therefore do not qualify for the Affordable Care Act.”

But the reality is always different:

Other experts said that most consumers in the individual market will not be able to keep their policies. Nancy Thompson, senior vice president of CBIZ Benefits, which helps companies manage their employee benefits, says numbers in this market are hard to pin down, but that data from states and carriers suggests “anywhere from 50 to 75 percent” of individual policy holders will get cancellation letters. Kansas Insurance Commissioner Sandy Praeger, who chairs the health committee of the National Association of Insurance Commissioners, says that estimate is “probably about right.” She added that a few states are asking insurance companies to cancel and replace policies, rather than just amend them, to avoid confusion.

 

A spokesman for America’s Health Plans says there are no precise numbers on how many will receive cancellations letters or get notices that their current policies don’t meet ACA standards. In both cases, consumers will not be able to keep their current coverage.

 

Those getting the cancellation letters are often shocked and unhappy.

In other words, nobody is kicked out of their existing plan… they just can’t keep it. Teleprompted semantics at its absolute best, or worst.

Finally, a case study in socialist failure:

George Schwab, 62, of North Carolina, said he was “perfectly happy” with his plan from Blue Cross Blue Shield, which also insured his wife for a $228 monthly premium. But this past September, he was surprised to receive a letter saying his policy was no longer available. The “comparable” plan the insurance company offered him carried a $1,208 monthly premium and a $5,500 deductible.

 

And the best option he’s found on the exchange so far offered a 415 percent jump in premium, to $948 a month.

 

The deductible is less,” he said, “But the plan doesn’t meet my needs. Its unaffordable.”

 

“I’m sitting here looking at this, thinking we ought to just pay the fine and just get insurance when we’re sick,” Schwab added. “Everybody’s worried about whether the website works or not, but that’s fixable. That’s just the tip of the iceberg. This stuff isn’t fix
able
.”

It isn’t, but who cares? By the time the realization that micromaganging anything and everything always fails, it will be someone else’s problem.


    



via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/CaIz9ox-NJs/story01.htm Tyler Durden