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If one of the biggest concerns in early 2013 was the progressively declining Bids To Cover in US Treasury auctions, the past few months have seen a halt in this trend, while today’s auction of $32 billion in 2 Year paper marked a substantial return to the high-flying  BTC day of yore when the just completed 2 Year auction not only priced strongly through the 0.303% high yield, pricing at 0.300, but more importantly, at a 3.54 Bid to Cover, a jump from October’s 3.09, and the second highest since February excluding only April’s 3.63. Curiously, the drop in the overall Bid To Cover (as can be sen on the chart below) correlates closely to the drop off in Direct take downs in the first half of the year. This too has reversed in recent months with Directs getting 27.28%, Indirects holding 22.47% and Dealers left holding just over half, or 50.25%. Over the next few days it will be revealed if the same rising BTC trend is sustained in the other near-term vintages, the 5 and 7 year auctions also due out later week.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/H71sm14PUUs/story01.htm Tyler Durden

In China, 9 out of 10 billionaires are self-made, the highest percentage of any country (and by self-made we are unsure whether BusinessWeek’s Christina Larson means via entrepreurial spirits or government connected handout) but there is another fact that makes the Chinese billionaire different from the rest of the average run-of-the-mill billionaires we discussed here. The average age of the country’s 157 billionaires is 53 years old – nine years younger than the world average. But perhaps the most shocking statistic among the luxury buyer is that the average Ferrari buyer in the U.S. is 47 years old; in China, he is 32.

 

Here’s how the wealth – among the families of Communist China’s “Eight Immortals” – has been grealt rotated and grown among them…

 

As Bloomberg BusinessWeek notes,

To be sure, self-made fortunes aren’t always made cleanly in China, as Bloomberg News documented in a 2012 investigative series on the extreme wealth of China’s leading political families, “Revolution to Riches.”

It’s no surprise, given the deep intertwinement of money and political power in China, that Beijing is home to the country’s highest number of billionaires, with 26. That’s followed by Shanghai, with 19 billionaires, and Shenzhen with 16. The UBS study calculates the combined net worth of China’s billionaires to be $384 billion, roughly equivalent to the entire annual gross domestic product of South Africa in 2012.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/B9PGzX5G6iM/story01.htm Tyler Durden

The U.S. holiday shopping season traditionally begins on Black Friday, the day after Thanksgiving, with alluring sales and promotions. On the day the ultimate discounter, Wal-Mart’s CEO resigns, as Bloomberg’s Rich Yamarone notes, the most agreed-upon take so far is that sales will be difficult amid a deteriorating economy – every major retailer in the Bloomberg Orange Book has made mention of the competitive market for the consumer’s dwindling dollar. Target Corp. CEO Gregg Steinhafel said, “it’s clear that the holiday season will be highly promotional and that consumers will be laser-focused on value.”

Via Bloomberg Economist Rich Yamarone,

Holiday spending expectations are not exactly lofty. A Gallup poll conducted Nov. 7-10 found Americans estimated spending $704 per household on Christmas gifts this season, notably lower than the $770 they projected at this time last year. A separate survey conducted by the National Foundation for Credit Counseling found the persistently high rate of unemployment coupled with the long duration of unemployment are still “very real challenges many people are facing.” The November poll revealed 53 percent said they would “cut back on spending, since I am worse off financially this year,” and 33 percent claimed they would “not spend at all, because I anticipate further financial distress.” Only 11 percent had intentions to spend at the same level as a year ago, while 3 percent looked to spend more.

 

Target’s CEO told investors last week consumer spending remain constrained. “In particular, lower and middle income households are shopping cautiously, as they work to stay within tight, very tight, household budgets, which have seen additional pressure from this year’s payroll tax increase,” he said.

Consumers simply don’t have the wherewithal to get the economy moving — real disposable personal incomes are advancing by a gradual 1.9 percent pace, while real average hourly earnings are only 1.3 percent higher than year ago levels. The household sector is limiting its purchases to necessities, like food, and retailers are well aware of this.

My colleague Matt Nolfo and I stopped by a Target in Birmingham, Alabama during a recent speaking tour. The biggest takeaway — other than a six-pack of Bud — was the enormous size of the grocery section. What used to be a few aisles of dry goods — coffee, cereal, and chips — has ballooned to a sizable dedication of square footage including frozen food, alcohol, and freshly baked produce.

Dollar Tree Inc. has been moving in this direction for several quarters. CEO Bob Sasser highlighted this during his company’s earnings report, noting comparative sales growth in the third quarter was the result of increased sales in need-based consumables. “We’re rolling out freezers and coolers at a faster pace,” Sasser said. In the third quarter Dollar Tree installed freezers and coolers in 122 additional stores for a total of 566 store installations year-to-date exceeding the company’s original plan for 550 store installations. “We now offer frozen and refrigerated product in 3,115 stores,” Sasser said.

All this food considered, maybe the year’s best seller will be fruitcake — a heavily discounted one.

 

Source: Bloomberg

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/Cce5kgN1uMc/story01.htm Tyler Durden

Submitted by James Howard Kunstler of Kunstler.com,

The financial wires and pod-waves are all lit up these days like it was happy hour at the Lottery Winner’s Lounge.  It appears that the American economy – capital management division – has found the long-wished-for magic alternative energy source: horseshit. It is fueling the conversation all over the Web and over the senile mainstream media megaphones. One technical analyst, celebrity Tweeter Ralph Acampora of Altaira Wealth Management, actually said this week that the USA would be “energy independent by 2016.” That’s rich. We’d only have to come up with 8.5 million new barrels of oil a day, or give up driving cars altogether.

Apparently, the Federal Reserve is not just hosing down the markets with liquidity (i.e. money for nothing), but has also turned its headquarters in lower Manhattan into the world’s biggest stationary crack pipe. Meanwhile, more than a few professional observers of the financial scene say there can’t be any bubble because that’s the only thing everybody talks about and bubbles only form when nobody notices them.

That’s just not true. Plenty of people were hollering and finger-pointing about the housing bubble years before it blew up the banking system, including yours truly in a book published in 2005 (The Long Emergency). The reason there is so much anxious chatter about the current bubble is because the bubble is there for all to see, and when it pops it is sure to leave a lot more rubble on the ground than the last time — for instance, the wreckage of trust in all paper investments, which would be quite an historic financial innovation. Since the interventions and manipulations of markets and interest rates are perfectly obvious, one would have to conclude from the current sentiment that faith in the crookedness of finance has completely solidified. The markets have now discounted their own dishonesty.

The story making the rounds these days is that the USA’s industrial economy is on the rise again; that the housing market has “recovered;” that (according to Meredith Whitney) the “central corridor” of the nation (Texas to Minnesota) is the second coming of Japan in the 1960s; that we have more oil than we know what to do with; that the nation has bred a super-race of intrepid entrepreneurial risk-takers like unto no other society in history; and finally that whatever else we are or are not, America is the cleanest shirt in the laundry basket of Mother Earth.

This is all horseshit of course, being smoked in the New York Fed’s crack pipe.

Here’s what’s actually going on. The Federal Reserve can only pretend to have any option besides force-feeding “money” into Wall Street as if it were a Strasbourg Goose with Crohn’s disease. What passes through goose is a vile toxic substance called malinvestment, which turns the energies of society into activities that produce nothing of value, like hedge fund employee bonuses, NSA operations, Tesla car promotion, Frank Gehry condo towers, drone strikes against Afghani wedding parties, Obama photo ops, inflated auction prices of oil paintings, and Barney’s new Jay-Z holiday fashion collection.

The Fed makes regular noises about ending the force-feeding program (a.k.a. “quantitative easing” or “bond purchases”) issued in the recorded minutes of its Open Market Committee (FOMC). The propaganda is called “forward guidance” to give it the appearance of seriousness and rectitude, but its actual nature is more like what goes on in a Jerry Lewis movie of the 1960s — a kind of antic mugging. Lately it’s referred to as “taper talk” in reference to the threat of tapering the Fed’s purchases of US Treasury bonds and other debt paper, which runs at around $85 billion a month. Sometime soon, the Fed may announce a tiny taper of say $10 billion a month. This head-fake taper will cause the interest rates on the ten-year-bond to shoot up north of 3 percent and threaten to bankrupt the government — which is too broke to pay interest that high on the loans it takes. The markets will have a whack attack over the tiny taper. The Fed will freak out at the odor of deflationary depression and go back to full-tilt force-feeding of the sick goose.

The outcome will be some combination of a complete loss of faith in paper currency and the “assets” denominated in it, a complete loss of trust between banks that they are solvent enough to do business with each other, and a conclusive implosion of Wall Street and all the institutions in and around it, extending to the executive branch of the federal government. The sorry little appendage to all that, US economy, will be left in the cold and dark, whimpering for its mommy.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/Q-05c_R-DZ0/story01.htm Tyler Durden

Submitted by James Howard Kunstler of Kunstler.com,

The financial wires and pod-waves are all lit up these days like it was happy hour at the Lottery Winner’s Lounge.  It appears that the American economy – capital management division – has found the long-wished-for magic alternative energy source: horseshit. It is fueling the conversation all over the Web and over the senile mainstream media megaphones. One technical analyst, celebrity Tweeter Ralph Acampora of Altaira Wealth Management, actually said this week that the USA would be “energy independent by 2016.” That’s rich. We’d only have to come up with 8.5 million new barrels of oil a day, or give up driving cars altogether.

Apparently, the Federal Reserve is not just hosing down the markets with liquidity (i.e. money for nothing), but has also turned its headquarters in lower Manhattan into the world’s biggest stationary crack pipe. Meanwhile, more than a few professional observers of the financial scene say there can’t be any bubble because that’s the only thing everybody talks about and bubbles only form when nobody notices them.

That’s just not true. Plenty of people were hollering and finger-pointing about the housing bubble years before it blew up the banking system, including yours truly in a book published in 2005 (The Long Emergency). The reason there is so much anxious chatter about the current bubble is because the bubble is there for all to see, and when it pops it is sure to leave a lot more rubble on the ground than the last time — for instance, the wreckage of trust in all paper investments, which would be quite an historic financial innovation. Since the interventions and manipulations of markets and interest rates are perfectly obvious, one would have to conclude from the current sentiment that faith in the crookedness of finance has completely solidified. The markets have now discounted their own dishonesty.

The story making the rounds these days is that the USA’s industrial economy is on the rise again; that the housing market has “recovered;” that (according to Meredith Whitney) the “central corridor” of the nation (Texas to Minnesota) is the second coming of Japan in the 1960s; that we have more oil than we know what to do with; that the nation has bred a super-race of intrepid entrepreneurial risk-takers like unto no other society in history; and finally that whatever else we are or are not, America is the cleanest shirt in the laundry basket of Mother Earth.

This is all horseshit of course, being smoked in the New York Fed’s crack pipe.

Here’s what’s actually going on. The Federal Reserve can only pretend to have any option besides force-feeding “money” into Wall Street as if it were a Strasbourg Goose with Crohn’s disease. What passes through goose is a vile toxic substance called malinvestment, which turns the energies of society into activities that produce nothing of value, like hedge fund employee bonuses, NSA operations, Tesla car promotion, Frank Gehry condo towers, drone strikes against Afghani wedding parties, Obama photo ops, inflated auction prices of oil paintings, and Barney’s new Jay-Z holiday fashion collection.

The Fed makes regular noises about ending the force-feeding program (a.k.a. “quantitative easing” or “bond purchases”) issued in the recorded minutes of its Open Market Committee (FOMC). The propaganda is called “forward guidance” to give it the appearance of seriousness and rectitude, but its actual nature is more like what goes on in a Jerry Lewis movie of the 1960s — a kind of antic mugging. Lately it’s referred to as “taper talk” in reference to the threat of tapering the Fed’s purchases of US Treasury bonds and other debt paper, which runs at around $85 billion a month. Sometime soon, the Fed may announce a tiny taper of say $10 billion a month. This head-fake taper will cause the interest rates on the ten-year-bond to shoot up north of 3 percent and threaten to bankrupt the government — which is too broke to pay interest that high on the loans it takes. The markets will have a whack attack over the tiny taper. The Fed will freak out at the odor of deflationary depression and go back to full-tilt force-feeding of the sick goose.

The outcome will be some combination of a complete loss of faith in paper currency and the “assets” denominated in it, a complete loss of trust between banks that they are solvent enough to do business with each other, and a conclusive implosion of Wall Street and all the institutions in and around it, extending to the executive branch of the federal government. The sorry little appendage to all that, US economy, will be left in the cold and dark, whimpering for its mommy.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/Q-05c_R-DZ0/story01.htm Tyler Durden

 

The US is heading towards a debt crisis.

 

Today, the US’s Debt to GDP ratio stands at over 105% (debt of $16.7 trillion on a GDP of $15.68 trillion). The only other time we’ve had more debt relative to our GDP was during WWII when the Debt to GDP ratio hit 112%:

 

 

Debt is not inherently evil. Debt that doesn’t create growth is. 

 

In the 1960s every new $1 in debt bought nearly $1 in GDP growth. In the 70s it began to fall as the debt climbed. By the time we hit the ‘80s and ‘90s, each new $1 in debt bought only $0.30-$0.50 in GDP growth.

 

And today, each new $1 in debt buys only $0.10 in GDP growth at best.

 

 

Put another way, the growth of the last three decades, but especially of the last 5-10 years, has been driven by a greater and greater amount of debt. As you can see, after the Crisis began in 2007, the US moved into the point of debt saturation at which each new $1 in debt generates no additional growth.

 

This is why the Fed has been so concerned about interest rates. With a debt load of this size, every 1% rise in the US’s debt payments means another $100 billion in debt payments.

 

Unfortunately for the Fed, rates will eventually rise. It is guaranteed. As you can see in the below chart, rates have fallen almost nonstop since the early ‘80s. This is not sustainable. At some point rates will rise again. I cannot state expressly when, but that point is coming sooner rather than later.

 

 

 

With that in mind, investors should take steps today to shield their wealth from the impact of this.

 

If you have not taken steps to prepare this, we have a FREE Special Report that outlines how to prepare your portfolio. To pick up a copy, swing by:

http://phoenixcapitalmarketing.com/special-reports.html

 

 

Best Regards

 

Phoenix Capital Research

 

 

 

 

 

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/S8IDgHCX8qk/story01.htm Phoenix Capital Research