Tag: finance

Remember the “last minute” ICBM launch by Russia just as the Crimean tensions were peaking? Moments ago Russia revealed another such unexpected “military exercise” which resulted in a French Airbus380 airplane, with over 500 passengers and crew on board being diverted from Shanghai to Paris after Russia without a warning decided to shut down a part of its airspace.

From AP:

Air France says a plane carrying 495 passengers and 22 crew was diverted on its way from Shanghai to Paris after Russia announced at short notice that part of its airspace was closed for a military exercise.

 

The company said flight AF111 was forced to land in Hamburg, Germany, early Wednesday to refuel because the plane had too little fuel on board to complete the flight following its detour.

 

Hamburg Airport confirmed that the plane landed shortly after 6 a.m. (0500 GMT) and was able to take off for Paris again after an hour and a half.

 

It wasn’t immediately clear if Russia’s military exercise was linked to the increased troop activity on its western border with Ukraine.

Considering that Russia is the largest country in the world, and is located at a rather strategic position between the East and West, perhaps this is merely Putin’s latest warning about just how Russia’s “military drills” will respond to Europe should further sanctions be enacted. Because flights from Shanghai to Europe across the Pacific, and over the US, may not be quite an agreeable retaliation to the old continent.

via Zero Hedge http://ift.tt/1jI3uj5 Tyler Durden

Netflix (NFLX) is underappreciated using conventional valuation measures such as P/E or EV/EBITDA as the company operates near financial break-even in order to more aggressively grow its brand. Often those inexperienced in understanding valuation measures will cite the high earnings multiples as justification that the stock is overvalued and thus a justifiable short. My intent is to show how much long run earnings power Netflix’s current user base represents given Netflix has the ability to substantially raise prices from the current level. How much they are able to raise the price is outside of the scope of this analysis. I will simple remind readers that HBO currently costs subscribers between $15 and $20/month, and the highest price scenario in my analysis is $3/month higher than current rates, or $10.99/month.

In the real world of difficult to value growth companies, the market assigns this company a value based on a terminal scenario of where it judges earning power. The Netflix of today is very different than the high flier of several years ago, the last time it was at these seemingly nose-bleed price levels. The user base is much more massive, ending the 2013 year with 31.7 million US streaming users. Growth is still substantial. The product offering is nothing like the Netflix of a few years ago – shows such as House of Cards and Orange is the New Black make today’s Netflix more directly comparable to HBO than ever before. The impact of Netflix’s aggressive children’s line-up along with exclusive Disney offerings in the future is underestimated. Anecdotally, when my 5 year old son says ‘I love Netflix’ when getting ready to watch whatever cartoon he prefers, I realize Netflix is not just an earnings engine – it is a brand here to stay because it is a habit of a new generation of future consumers. Netflix won the spoils as a first mover in streaming, and is successful now because it has executed and proven itself as able to develop its content offerings to make it a lasting and formidable media player.

Granted, headwinds exist – lack of net neutrality and bargaining power threaten to increase their cost structure. Other streamers will of course try to chip away at their platform advantage – Amazon prime amongst them. But the new paradigm of television watching is one where we pay for several streamers and ditch the cable networks of the past. If Apple makes in-roads in its rumored arrangement with Comcast, the endgame is not necessarily one where media buyers ditch Netflix for Apple. The endgame and new media consumption paradigm is one where individuals subscribe to several streaming services to avail themselves of content they want, perhaps leaving more conventional sources of television media such as cable and satellite.

Shifting focus back to the original premise of this piece, it is underappreciated how significant an earnings power Netflix already has. At $7.99/month for streaming services, I joke with friends they could charge $15/month and I’d be pressed to ditch the service. While I can respect many other consumers are much more price sensitive, I believe demand is somewhat inelastic at the current price offering, and thus Netflix has significant wiggle room to adjust prices without meaningfully denting growth prospects. It is my intention to just present several price increase scenarios to reflect how much value Netflix’s current user base represents. The model will be oversimplified, based on the following assumptions for 3 price increase scenarios: ~15% paid streaming user base growth over 2013, an expectation of 15% increase of cost of revenues for 2013, a 10% increase year over year of T&D, G&A, and Marketing costs, a breakeven for the international business, and a 10% decline in the DVD business contribution margin.

Let me note: The purpose of this analysis is merely to demonstrate the stock isn’t as expensive as it may seem. This is not a multi-period model and minimal effort was put into the creation of forecast assumptions. While the quality of these forecast assumptions leaves room for improvement, I do attempt to factor in some of the current narrative we’ve already heard. For wherever I may be overly optimistic, it should be balanced by the fact that I am assigning no value to the international streaming business (which is overly pessimistic). It should be remembered this forward view is meant merely to show the enormous operating earnings leverage to subscription rates that Netflix’s common equity represents.

The bottom line: in a world where Facebook’s exuberant spend of $19 billion doesn’t result in its common equity falling in half, I hardly see Netflix’s $22 billion market cap trading at a forward PE of 20 ($9.99/month pricing) as a screaming short, especially considering such a valuation assigns zero value to its international streaming business. At $9.99/month versus $15 minimum for HBO, I see this as an attainable revenue point. If the market is willing to put a 30 multiple on a tech company such as Google with questionable upside to growth potential (just restricted by their size alone), I see no reason why Netflix won’t be able to reach above $560 levels and still justifiably not be worthy of being called a ‘bubble’. This business isn’t going anywhere, and its risk premium will reflect this over time.

via Zero Hedge http://ift.tt/1fiF9Nx scriabinop23

From GoldCore

Russia Raises Gold Holdings By 7.247 Tonnes To Over 1,040 Tonnes In February

Russia has increased its gold holdings by 7.247 tonnes to 1,042 tonnes in February. Turkey and Kazakhstan also raised their bullion reserves, data from the International Monetary Fund showed today.

Turkey’s gold holdings rose 9.292 tonnes to 497.869 tonnes, the data showed.

Many analysts are ignoring the important context of today’s new geopolitical backdrop. Russia alone has some $400 billion in foreign exchange reserves – mostly in U.S. dollars. If they were to diversify just 5%, worth some $20 billion, of those reserves into gold – it would be equal to nearly 500 tonnes of gold or nearly 25% of global annual production.

Demand By Country (GFMS via Thomson Reuters)

Russia bought another 7.247 tonnes of gold in February. It will be interesting to see what Russian demand is in March and indeed in the coming months. Sanctions could lead to materially higher demand from the Russian central bank, Bank Rossii.

This would cause a material strain on the already fragile supply demand dynamics of the physical gold market. The possibility of a default on the COMEX gold exchange would become more likely, with a consequent surge in the cost of gold coins and bars and a difficulty of securing physical gold either in allocated gold accounts or for delivery.

Hong Kong’s net gold exports to China jumped 25% in February after a small drop in the previous month, data showed overnight.

Net gold exports to China from Hong Kong rose to 112.31 tonnes from 89.75 tonnes in January. Total gold exports rose to 125 tonnes in February from 102.64 tonnes in the previous month.

China imported about 1,158.16 tonnes from Hong Kong alone in 2013, more than double its 557.48 tonnes in 2012, according to data from the Hong Kong government.

China, the world’s biggest gold buyer, does not publish trade data for gold and there is the possibility that demand was even higher.Official sector demand from the People’s Bank of China is not declared and is not reflected in these figures. Nor are direct imports into other cities such as Shanghai from gold producing nations and countries that have seen rising gold exports in recent months such as the UK and Switzerland.

This has been due to large London good delivery bars (400 oz) being shipped to Switzerland from bullion banks in London to be refined and cast into smaller kilo bars for the Chinese and Asian market. 

The numbers from Hong Kong, a main conduit for gold into China, give an indication of Chinese demand for gold but should not be relied on solely as there is clandestine importation of gold into China in recent months and years.

The People’s Bank of China is widely believed to have engineered a sudden and sharp fall in the yuan in recent weeks to punish speculators who have seen the currency as a one way appreciation bet. The yuan gained some 30% since 2005. Thus, Chinese retail buyers have pulled back and demand has fallen in the short term.

However, it is important to realise that there is more to Chinese demand than the so called “Chinese aunties”. Ignore noise regarding fluctuations in short term demand for gold and focus on the big picture quarterly and annual Chinese gold demand data which we believe will continue to be very positive.

This is especially the case given the increasing risks emanating from the Chinese shadow banking system, the Chinese property market and indeed the Chinese banking system with localised bank runs being seen in recent days.

via Zero Hedge http://ift.tt/1gpw6P7 Tyler Durden

• One-Ship Ukraine Navy Defies Russia to the End (WSJ)
• Crimea-Induced Trading Surge Stokes Moscow Exchange Rally (BBG)
• Moscow says Ukraine stops Russian crews disembarking in Kiev (Reuters)
• New images show more than 100 objects that could be plane debris (Reuters)
• Anger of Flight 370 Families Explodes in Beijing (BBG)
• Murdoch Promotes Son Lachlan in Succession Plan for Empire (BBG)
• Facebook to buy virtual reality goggles maker for $2 billion (Reuters)
• Syrian Regime Exploits Rebel Despair (WSJ)
• King Digital IPO price may not bode well for stock (Reuters)
• Rothschild in Twitter Spat as Bakries Cut Ties With Miner (BBG)
• Spooked by defaults, China banks begin retreat from risk (Reuters)
• Mt. Gox Cooperating With Police (WSJ)
• New York Times to Introduce New Digital Subscriptions (WSJ)

 

Overnight Media Digest

WSJ

* Facebook Inc made its second big acquisition of the year, agreeing Tuesday to acquire Oculus VR Inc, a 20-month-old maker of virtual-reality goggles, for $2 billion in cash and stock. The deal highlights the intense competition among big technology companies for promising startups, even when those startups, like Oculus and WhatsApp, have little revenue. (http://ift.tt/1jtsK0J)

* BlackRock Inc Chief Executive Laurence Fink has privately warned big companies that dividends and buybacks that activists favor may create quick returns at the expense of long-term investment. In doing so, the head of the world’s largest money manager by assets lent his voice to a popular criticism of activist investors, even as his firm sometimes aligns with and may benefit from their efforts. (http://ift.tt/1jtsK0L)

* One of JPMorgan Chase & Co’s top executives quit suddenly to take a top job in private equity firm Carlyle Group , a departure that raises new questions about who will eventually succeed Chief Executive James Dimon. Michael Cavanagh’s decision to leave his job as co-head of J.P. Morgan’s Wall Street operations marks the latest in a long line of departures from Dimon’s inner circle. (http://ift.tt/OYQxrj)

* The Securities and Exchange Commission, under pressure from the asset-management industry, is preparing to exempt a majority of money-market mutual funds from a central plank of rules intended to curb risks in the $2.6 trillion market, according to people familiar with the agency’s discussions. (http://ift.tt/OTc4St)

* Activist investor Dan Loeb sued auction house Sotheby’s to remove its so-called poison pill, setting up a crucial first test for a new generation of corporate defenses aimed at thwarting activist hedge funds. (http://ift.tt/1jtsMpa)

* America’s moviegoing audience shrank yet again in 2013, and theater owners are considering a radical idea to turn the tide: cutting ticket prices. A report from the Motion Picture Association of America released Tuesday said that domestic movie box-office sales rose to $10.9 billion last year, from $10.8 billion in 2012, but the number of tickets sold slipped yet again, this time 1.5 percent to 1.34 billion. (http://ift.tt/1jtsKgZ)

* Rescue crews continued to search through the night after a devastating weekend mudslide killed at least 16 people. Crews recovered two more bodies Tuesday but believe they located eight more, possibly bringing the death toll to 24. (http://ift.tt/1jtsMpe)

 

FT

Mobile game maker King Digital Entertainment raised $500 million from its stock market float late on Tuesday, valuing the company’s equity at $8 billion on a fully diluted basis and making it one of the most valuable.

Britain’s government announced plans to sell more than 4 billion pounds worth of its shares in Lloyds Banking Group , moving a step closer to returning the lender to the private sector before next year’s election.

Facebook said it would buy Oculus VR, a maker of virtual-reality glasses for gaming, placing a $2 billion bet that virtual reality headsets will be the next big social platform after computers and smartphones.

Banks have shelled out $100 billion in U.S. legal settlements since the financial crisis, according to Financial Times research, reflecting a substantial shift in political attitudes towards the financial sector.

Santander UK is to be slapped with a 12.5 million-pound fine by Britain’s Financial Conduct Authority on Wednesday for providing unsuitable investment advice to customers in its branches.

 

NYT

* Facebook Inc on Tuesday said it had reached a $2 billion agreement to buy Oculus VR, maker of a virtual reality headset. The acqusition reflects the Facebook founder’s belief that virtual reality could be the next big computing platform after mobile and social networking could become an immersive, 3-D experience. (http://ift.tt/1judlwW)

* Michael Cavanagh, considered to be one of the likely candidates to replace JP Morgan Chase’s CEO Jamie Dimon, said on Tuesday that he would resign as JPMorgan’s co-head of investment banking to take on the role of co-chief operating officer of the Carlyle Group. (http://ift.tt/1judj8i)

* Candy Crush Saga-maker King Digital Entertainment priced its IPO at $22.50 per share. The company, valued at $7 billion post the IPO, will start trading on the New York Stock Exchange under the ticker symbol KING from Wednesday. (http://ift.tt/1judj8k)

* The IRS announced on Tuesday that it would treat bitcoin, the computer-driven online money system, as property rather than currency for tax purposes, a move that forces users who have grown accustomed to operating under the government’s radar to deal with new tax issues and reporting requirements. (http://ift.tt/OZZW1Q)

* Baxter International, the country’s only manufacturer of injectable nitroglycerin, recently told hospitals that it was sharply cutting shipments of the drug. The shortage of nitroglycerin, a critical drug for heart patients, is the latest example of how patchy the supply of some of the nation’s most critical drugs has become in recent years. (http://ift.tt/1judj8o)

* Senate Democrats dropped reforms of International Monetary Fund governance from a Ukraine aid package on Tuesday, handing President Obama an embarrassing defeat. (http://ift.tt/1judj8q)

* Democrat senators Edward Markey of Massachusetts and Richard Blumenthal of Connecticut introduced a Senate bill on Tuesday that would make auto companies give the National Highway Traffic Safety Administration copies of insurance claims made against them and lawsuits about fatal crashes in which they were defendants. This comes as investigators begin to pour over internal General Motors documents seeking to understand the failure by regulators and the company to act on reports of a defect in Chevrolet Cobalts and other cars. (http://ift.tt/1judj8s)

* Walmart is recalling 174,000 dolls because they could overheat and burn consumers. The Consumer Product Safety Commission said on Tuesday that the My Sweet Love/My Sweet Baby Cuddle Care Baby Doll has a circuit board in its chest that can overheat. Walmart had reports of 12 incidents including two burns or blisters to the thumb. (http://ift.tt/OZZZus)

* A start-up, Junction Investments, plans to open for business on Wednesday, allowing wealthy individuals to invest in movies alongside veteran film financiers. (http://ift.tt/OZZZuv)

 

Canada

THE GLOBE AND MAIL

* Quebec Premier Pauline Marois struggled to regain control of a floundering Parti Quebecois election campaign amid signs the Quebec Liberal Party is widening its lead among voters in the final weeks of the election race and could be on track to form a majority government. (http://ift.tt/1eOnT5O)

* Prime Minister Stephen Harper said the country must begin to “assess the pain” of increasing pressure on the Putin government over Russia’s seizure of the Crimean peninsula, after the Group of Seven countries said it is prepared to impose economic sanctions if Moscow escalates the crisis further. The Prime Minister has singled out the prospect of sanctions against Russia’s energy industry, which would in all likelihood curtail the ability of Canadians, and those in other G7 countries, from doing petroleum-related business with Russians. (http://ift.tt/1g0edkV)

Reports in the business section:

* Goldcorp Inc Chairman Ian Telfer dared Osisko Mining Corp to find an alternative to his company’s $3-billion hostile offer, saying the smaller miner has had more than enough time. It has been more than two months since Vancouver-based Goldcorp announced the unsolicited bid, and time is running out for Osisko. (http://ift.tt/1h8Vuby)

NATIONAL POST

* Quebec Premier Pauline Marois rejected Quebec Liberal Party leader Philippe Couillard’s call to make public the extent of her considerable personal wealth. Couillard announced that he would be publishing his 2012 tax return as well as an accounting of all assets held by him and his wife, Suzanne Pilote on his party’s website before Thursday’s leaders’ debate. (http://ift.tt/1eOnT5S)

* Conservative senator Don Meredith’s spending is under special scrutiny from the Senate itself after he made a trip to Washington that the Senate’s leadership didn’t approve. Meredith, a pastor from Toronto, spent five days in Washington for the National Prayer Breakfast, a gathering of some 3,000 international politicians and diplomats that included U.S. President Barack Obama and members of the United States Congress. (http://ift.tt/1g0eaWj)

FINANCIAL POST

* BlackBerry Ltd’s plan to transform BlackBerry Messenger into a money maker will begin in earnest sometime in the next week with the launch of a new virtual storefront within the popular instant messaging application. BlackBerry plans to roll out a new virtual goods storefront known as BBM Shop sometime in the next week as part of a broader previously announced strategy to begin generating revenue from the company’s most popular piece of software. (http://ift.tt/1izoOIa)

* An official at Canada’s top banking regulator said the country’s biggest financial institutions need to do a better job managing risks within their individual retail business lines, and communicating these risks to the board of directors. (http://ift.tt/1g0edkX)

 

Britain

The Telegraph

TREASURY TO SELL LLOYDS SHARES WORTH 4 BLN STG, REDUCING STAKE TO 25 PERCENT

The Government has launched the largest sale yet of shares in Lloyds Banking Group in a deal that could raise more than 4 billion pounds ($6.60 billion) for the taxpayer. (http://ift.tt/1iyFcsf)

ONLINE TAKEAWAY SERVICE JUST EAT TO BE VALUED AT OVER 1 BLN STG IN IPO

Online food takeaway service Just Eat is expected to be valued at more than 1 billion pounds on Wednesday as it reveals the price of its initial public offering in London. (http://ift.tt/1iyF9N4)

The Guardian

ROYAL MAIL FACES STRIKES OVER PLAN TO SHED 1,600 STAFF

Postal unions have reacted angrily and raised the prospect of industrial action after Royal Mail announced plans to cut 1,600 jobs in the postal group’s first big round of redundancies since it was privatised in October. (http://ift.tt/1h864j0)

KINGFISHER ANNOUNCES SHAREHOLDER PAYOUT AFTER SURGE IN PROFITS

Kingfisher, the DIY group that owns B&Q, will pay out about 200 million pounds to shareholders this year after its financial performance experienced a revival along with the British housing market. (http://ift.tt/1iyF9Na)

HONDA TO CUT SWINDON CAR PRODUCTION, THREATENING 340 JOBS

Honda Motor is to cut production at its Swindon factory from three shifts to two, threatening 340 jobs at the car manufacturer. (http://ift.tt/1h866aE)

The Times

CENTRICA SEEKS ENERGY BOOST WITH FIRST FORAY INTO IRELAND

A consortium led by Centrica has bought the supply division of Bord Gais for 1.1 billion euros ($1.52 billion). The owner of British Gas intends to replicate its integrated model of owning power stations and a supply business in the Republic of Ireland, which offers better growth prospects than Britain. (http://ift.tt/1p3bHSa)

RSA RESPONDS TO CRISIS WITH SHARE DISCOUNT

Shareholders have been invited into a deeply discounted 773 million pound cash call from RSA as the insurer attempts to restore its reputation after financial problems and a scandal in Ireland. (http://ift.tt/1iyF9Nc)

SCOTS INDEPENDENCE PLAN ‘DOES NOT ADD UP’

The Scottish Government’ plan to leave Britain simply does not make sense even after its prized oil and gas revenues are taken into account, the country’s biggest business lobby group has warned. (http://ift.tt/1h864jf)

The Independent

NAT ROTHSCHILD’S BUST-UP WITH WEALTHY BAKRIE FAMILY TURNS INTO TWITTER STORM

Financier Nat Rothschild and a prominent Indonesian businessman, Aga Bakrie, engaged in a spectacular and very public bust-up on Twitter after the wealthy Bakrie family agreed to cut ties with London-based investors and buy back their stake in the mining firm Bumi, now known as Asia Mineral Resources . (http://ift.tt/1h866aI)

TULLOW OIL DISCLOSES TAX IN TRANSPARENCY DRIVE

Tullow Oil has broken ranks with the rest of the industry to disclose for the first time how much tax and royalties it pays governments in the mainly poor countries in which it operates, on a project-by-project basis. (http://ift.tt/1h864zv)

 

Fly On The Wall 7:00 AM Market Snapshot

ECONOMIC REPORTS

Domestic economic reports scheduled today include:
Durable goods orders for February at 8:30–consensus up 1.0%

ANALYST RESEARCH

Upgrades

Carlyle Group (CG) upgraded to Buy from Neutral at UBS
Covanta (CVA) upgraded to Outperform from Neutral at RW Baird
Garmin (GRMN) upgraded to Buy from Neutral at Citigroup
Penn National (PENN) upgraded to Outperform from Market Perform at FBR Capital
Sirius XM (SIRI) upgraded to Overweight from Equalweight at Barclays

Downgrades

Abraxas Petroleum (AXAS) downgraded to Hold from Buy at Canaccord
Alpha Natural (ANR) downgraded to Neutral from Buy at UBS
Arch Coal (ACI) downgraded to Neutral from Buy at UBS
CONSOL (CNX) downgraded to Neutral from Buy at UBS
EPL Oil & Gas (EPL) downgraded to Market Perform from Outperform at Cowen
Eni SpA (E) downgraded to Underweight from Neutral at HSBC
Equity Lifestyle (ELS) downgraded to Neutral from Buy at Citigroup
Home Properties (HME) downgraded to Neutral from Buy at Citigroup
Peabody (BTU) downgraded to Neutral from Buy at UBS
Telefonica (TEF) downgraded to Underperform from Neutral at BofA/Merrill
WPX Energy (WPX) downgraded to Market Perform from Outperform at Cowen
Walter Energy (WLT) downgraded to Neutral from Buy at UBS
Yadkin Financial (YDKN) downgraded to Market Perform from Outperform at Keefe Bruyette

Initiations

athenahealth (ATHN) initiated with a Neutral at SunTrust
Glimcher Realty Trust (GRT) initiated with a Buy at MLV & Co.
Macerich (MAC) initiated with a Buy at MLV & Co.
Manning & Napier (MN) initiated with a Strong Buy at Raymond James
Medidata Solutions (MDSO) initiated with a Buy at SunTrust
PFSweb (PFSW) initiated with a Buy at B. Riley
Rouse Properties (RSE) initiated with a Hold at MLV & Co.
Simon Property (SPG) initiated with a Hold at MLV & Co.
Tesla (TSLA) initiated with a Neutral at UBS
WebMD (WBMD) initiated with a Buy at SunTrust

COMPANY NEWS

Facebook (FB) announced a deal to acquire virtual reality technology company Oculus in a cash and stock deal worth about $2B
News Corp (NWS, NWSA) named Lachlan Murdoch non-executive co-chairman
21st Century Fox (FOX, FOXA) promoted James Murdoch to Co-COO
New York Times (NYT) launched new subscription plans
Insmed (INSM) said it will announce results from its Phase 2 clinical trial of Arikayce to treat lung infections this morning
International Game (IGT) cut its FY14 earnings outlook, gave a Q2 earnings view that was well below expectations and announced plans to cut 7% of its global workforce
Body Central (BODY) said its losses and negative cash flows “raise substantial doubt about [the company’s] ability to continue as a going concern”
Global Cash Access (GCA) said its cash access deals with Caesar’s (CZR) were not renewed, and added that it was not willing to accept the business and financial terms proposed by Caesar’s

EARNINGS

Companies that beat consensus earnings expectations last night and today include:
Alexco Resource (AXU), Steelcase (SCS), Landec (LNDC), Five Below (FIVE), Cherry Hill Mortgage (CHMI), Cyclacel Pharmaceuticals (CYCC), Sungy Mobile (GOMO), PVH Corp. (PVH), Intra-Cellular (ITCI)

Companies that missed consensus earnings expectations include:
EXFO Inc. (EXFO), Evoke Pharma (EVOK), Five Prime (FPRX), Gevo (GEVO)

NEWSPAPERS/WEBSITES

Amazon (AMZN) dropping some programming from Scipps (SNI), Discovery (DISCA), WSJ reports
Target (TGT) looking again at why security team missed signs of hackers, WSJ reports
Coca-Cola (KO) defends executive pay proposal, FT reports
Honda (HMC), Toyota (TM) to introduce fuel cell cars next year, Nikkei reports
Obamacare enrollment deadline to be extended, NY Times says
Blackstone (BX) near $5.5B plus deal for Gates Global, Reuters reports
Carlyle’s (CG) PQ holdings said to receive offers from several firms (BX, KKR), Bloomberg says 

SYNDICATE

Bright Horizons (BFAM) files to sell 7M shares of common stock for holders
Cache (CACH) files $15M mixed securities shelf
Endocyte (ECYT) files to sell 4.5M shares of common stock
Essex Property Trust (ESS) announces 450k shares equity distribution agreement
Inuvo (INUV) files 15M mixed securities shelf
King Digital (KING) 22.2M share IPO priced at $22.50
Nord Anglia (NORD) 19M share IPO priced at $16.00
Regency Energy Partners (RGP) files to sell 4.04M common units for holders
Solazyme (SZYM) files to sell 5M common shares
Veeva (VEEV) 12M share Secondary priced at $26.35
William Lyon Homes (WLH) files to sell 2M shares of Class A common for holders

via Zero Hedge http://ift.tt/1fiD0kQ Tyler Durden

Another morning melt up after a less than impressive session in China which saw the SHCOMP drop again reversing the furious gains in the past few days driven by hopes of more PBOC easing (despite China’s repeated warning not to expect much). A flurry of market topping activity overnight once again, with Candy Crush maker King Digital pricing at $22.50 or the projected midpoint of its price range, and with FaceBook using more of its epically overvalued stock as currency to purchase yet another company, this time virtual reality firm Occulus VR for $2 billion. Perhaps an appropriate purchase considering the entire economy is pushed higher on pro-forma, “virtual” output, and the Fed’s capital markets are something straight out of the matrix. Despite today’s pre-open ramp, which will be the 4th in a row, one wonders if biotechs will finally break the downward tractor beam they have been latched on to as the bubble has shown signs of cracking, or will the mad momo crowd come back with a vengeance – this too will be answered shortly.

In Europe, shares rose and also traded close to intraday highs, with the autos and insurance sectors outperforming and telcos, real estate underperforming. The German and Spanish markets are the best-performing larger bourses, Swedish the worst. The euro is weaker against the dollar. Japanese 10yr bond yields rise; Greek yields increase.

Taking a brief look at overnight markets, EURUSD is holding at around the 1.382 level, but the lower USD vs EMFX theme over the last day or so has moderated. The IDR (-0.1%), CNH (-0.15%) and CNY (-0.15%) are all trading a bit weaker against the USD overnight. Asian equities are in positive territory again following the lead of the S&P 500 which closed at +0.44% yesterday. Chinese banks (+2.2%) are leading the Hang Seng China Enterprises Index (+1.8%) higher after a fairly solid set of results from Agricultural Bank of China which are partly allaying fears of an impending banking crisis in China. ABC reported profit growth of 14.6% YoY and at the same time management provided some reassuring comments on net interest margins and asset quality. Against expectations, non-performing loans fell by 0.2% QoQ and the NPL ratio fell to 1.22% as at Dec 2013 (vs 1.24% previous quarter). Management indicated that it expects NPLs to remain stable in 2014. The rest of China’s big four banks will be reporting earnings this week. The positive commentary from ABC stood in contrast to reports from another Chinese bank, small rural lender Jiangsu Sheyang Rural Commercial Bank, which yesterday suffered a deposit run at one of its branches after talk that it was insolvent (South China Morning Post). The bank has denied those rumours. Outside of China, the Nikkei (+0.3%) is trading somewhat cautiously ahead of a planned sales tax hike which will be instituted from next week onwards. The AUD is trading a multimonth highs against the USD (0.919) after the RBA’s Stevens said that there are encouraging signs of a transition from mining-led growth to domestic consumption.

On today’s calendar, there are a few economic releases on the radar plus an EU-US Summit in Brussels which may result in more noise around the Ukraine-Russia situation. A press statement is due at 11:30am London time. The Fed releases part two of its annual bank capital stress tests in the form of its Comprehensive Capital Analysis and Review. The main data releases is US durable goods, but ahead of that there is consumer confidence in Germany and Italy and employment data in France.

 

Bulletin News Summary from RanSquawk and Bloomberg

• Treasuries steady as week’s auctions continue with $13b 2Y FRN and $35b 5Ys. 5Y yields 1.755% in WI trading; stopout at that level would be highest since May 2011.
• 2Y auction yday was awarded at 0.469%, highest 2Y stop in almost three years; stop was 0.8bp lower than WI yield at 1pm according to Stone & McCarthy, biggest stop through by a 2Y since Feb. 2011
• St Louis Fed’s James Bullard said policy makers haven’t committed to a specific month to end bond purchases even as it would take a significant shift in the outlook to alter the path of tapering
• Reserve Bank of Australia Governor Glenn Stevens said there are encouraging early signs of a handover from mining-led demand growth to domestic consumption and the nation’s economy may strengthen later this year
• Americans will get more time to enroll in Obamacare insurance plans if they started the process but were unable to complete it before the March 31 deadline
• North Korea fired two ballistic missiles capable of reaching both Japan and South Korea as President Barack Obama hosted the first meeting between the leaders of the U.S.’s biggest Asian allies
• Obama and Hillary Clinton’s vision for a globalized foreign policy and “reset” relations with Russia have been disrupted by Putin’s annexation of the Crimea and a Russian troop buildup along the Ukrainian border
• Sovereign yields mostly lower. Nikkei +0.4%, Shanghai -0.2%. European equity markets, U.S. stock-index futures higher. WTI crude and gold higher; copper declines

US Economic Calendar

• 7:00am: MBA Mortgage Applications, March 21 (prior -1.2%)
• 8:30am: Durable Goods Orders, Feb., est. 0.8% (prior -1%); Durables Ex-Transportation, Feb., est. 0.3% (prior 1.1%); Capital Goods Orders Non-defense Ex-Air, Feb., est. 0.5% (prior 1.7%, revised 1.5%)
• Capital Goods Shipments Non-defense Ex-Air, Feb., est. 0.8% (prior -0.8%, revised -1%)
• 9:45am: Markit U.S. Composite PMI (prior 54.1); Markit U.S. Services PMI, est. 54.0 (prior 53.3) Central Banks
• 4:00pm: Fed releases capital analysis and review results
• 8:20pm: Fed’s Bullard speaks in Hong Kong Supply
• 11:30am: U.S. to sell $13b 2Y FRN
• 1:00pm: U.S. to sell $35b 5Y notes
• 11:00am POMO: Fed to purchase $2.25b-$2.75b in 2021-2024 sector

Wrapping up, here is the overnight summary by DB’s Jim Reid

As we’ve been discussing over the last couple of days, we’ve become a bit more worried of late about what might happen to markets in the second half of the year due to a more hawkish Fed than we expected and an ECB that seemed stuck after what looked like a promising pre-emptive rate cut in November last year. However we only tweaked our still bullish spread forecasts slightly as we felt there was still time for central banks to become more dovish again. Well yesterday some members of the ECB broke their silence to perhaps signal a softening of their stance. Ironically of all the ECB speakers yesterday, it was Draghi (the last speaker) who appeared the least dovish. He argued that current monetary policy will start to become more effective as the economy recovers. He did say that the ECB stands “ready to take additional monetary policy measures” but only if any downside risks to this scenario appear” adding that “right now we think that the risks of having deflation are limited”.

This came after the Bundesbank’s Weidmann had indicated that he wouldn’t rule out QE in Europe. Specifically he said the ECB could consider QE, but that it has to be considered with respect to the costs and side-effects. He signalled that he sees no immediate need for fresh intervention but also kept the door open on negative interest rates in order to counter a strong Euro. In addition to Draghi and Weidmann, ECB governing council members Liikanen, Makuch and Visco all warned on the dangers of deflation and suggested that the ECB is prepared to act decisively through non-standard measures or further rate cuts.

Due to all the commentary yesterday, the Euro saw a wild ride as a result – trading down 0.64% to 1.3750 at the lows before bouncing back strongly to close at 1.382. So although the rhetoric did talk down the Euro for a while it will likely need actual action to make a difference. However at least yesterday saw ground for hope for those looking for a better deflation firebreaker from the ECB.

While we watch the policymakers at the ECB and Fed, we should also highlight the importance of policymakers in China and their potential reaction to recent disappointing economic data and leading indicators. Following the weaker than expected HSBC flash manufacturing PMI on Monday, a number of commentators have been calling for policymakers to loosen policy either through fiscal or monetary means. The prospect of stimulus has provided a bit of a boost to domestic equities since late last week (Shanghai Comp +3.7% since Friday). However from a fiscal standpoint, Finance Minister Lou Jiwei said last week that the government will not resort to fiscal policies to boost growth and will instead focus on the quality of growth. This has been partly countered by recent suggestions from the State Council that they could accelerate programs in a bid to shore up growth in the immediate term. On the monetary side, our Chinese rates strategist Linan Liu asks the question whether we could see a RRR cut in China in Q2. Linan concludes that the chances of an RRR cut in Q2 are rising given potential capital outflows from China in the coming months and a breakdown in the transmission between falling money market rates to lower financing costs for the real economy. For the time being, it appears that the balancing act between carrying out reforms and loosening policy is still being played out in China, with important consequences for near term growth.

Taking a brief look at overnight markets, EURUSD is holding at around the 1.382 level, but the lower USD vs EMFX theme over the last day or so has moderated. The IDR (-0.1%), CNH (-0.15%) and CNY (-0.15%) are all trading a bit weaker against the USD overnight. Asian equities are in positive territory again following the lead of the S&P 500 which closed at +0.44% yesterday. Chinese banks (+2.2%) are leading the Hang Seng China Enterprises Index (+1.8%) higher after a fairly solid set of results from Agricultural Bank of China which are partly allaying fears of an impending banking crisis in China. ABC reported profit growth of 14.6% YoY and at the same time management provided some reassuring comments on net interest margins and asset quality. Against expectations, non-performing loans fell by 0.2% QoQ and the NPL ratio fell to 1.22% as at Dec 2013 (vs 1.24% previous quarter). Management indicated that it expects NPLs to remain stable in 2014. The rest of China’s big four banks will be reporting earnings this week. The positive commentary from ABC stood in contrast to reports from another Chinese bank, small rural lender Jiangsu Sheyang Rural Commercial Bank, which yesterday suffered a deposit run at one of its branches after talk that it was insolvent (South China Morning Post). The bank has denied those rumours. Outside of China, the Nikkei (+0.3%) is trading somewhat cautiously ahead of a planned sales tax hike which will be instituted from next week onwards. The AUD is trading a multimonth highs against the USD (0.919) after the RBA’s Stevens said that there are encouraging signs of a transition from mining-led growth to domestic consumption.

Looking more broadly at EM in general, the stability of the EM complex over the last week or so has probably surprised many. With the more-hawkish-thanexpected March FOMC now almost a week behind us, a number of EM assets are in fact trading at stronger levels than they were going into last Wednesday’s meeting. Indeed if we compare Tuesday 18th to Tuesday 25th closes, EM credit (CDX EM index -15bp) and EM equities (MSCI EM +0.6%) have performed resiliently. The story is fairly consistent in individual assets across EMEA, Asia and LATAM with the Ibovespa (+4.4%), HSCEI (+3.7%), Turkish lira (+0.1%), Mexican peso (+0.3%) and Russia 5yr CDS (-10bp) all trading firmer during the past week. Even a rating downgrade from S&P failed to dampen the price action in Brazilian CDS and the BRL yesterday, with both closing tighter/firmer as investors unwound short positions throughout the day. The jury appears split here – some think we are seeing a delayed reaction to the Fed, while others believe that EM’s lower valuation or lighter positioning has made the asset class better able to withstand the commentary from the Fed.

Speaking of the Fed, the Philly Fed’s Charles Plosser (a FOMC voter and a hawk) was the latest Fed official to confirm Yellen’s heavily-debated “six months” statement. Plosser argued yesterday that Yellen did not make a mistake when she said that there may be around six months between the end of QE and first rate hikes. Plosser also said that the six months time frame was already expected in markets, but conceded that it was data dependent. Though he is a noted hawk, it was interesting to see that Plosser thinks the rates will rise to 4% in 2016. This was at odds with the Atlanta Fed’s Dennis Lockhart, who said yesterday that the Fed will likely begin raising rates in the second half of 2015, and that the six months timeframe was really a minimum.

On today’s calendar, there are a few economic releases on the radar plus an EU-US Summit in Brussels which may result in more noise around the Ukraine-Russia situation. A press statement is due at 11:30am London time. The Fed releases part two of its annual bank capital stress tests in the form of its Comprehensive Capital Analysis and Review. The main data releases is US durable goods, but ahead of that there is consumer confidence in Germany and Italy and employment data in France.

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When we left China last night, it was all shits and giggles that bad news is great news and a Chinese stimulus plan will be here any minute to save the day. Having realized the sad fact that is not going to happen (as we explained here most recently) and the specter of banks runs looming, this evening’s session has seen property developer stocks tumble – retracing all of last night’s losses – the Yuan plunges by the most in a week back above 6.2150. Copper is holding in for now at the magic $300 level but corporate bond prices are falling once again (worst run in 4 months).

 

The Yuan is dumping at its fastest rate in a week…erasing all the hope-strewn gains from yesterday

 

 

Property Developers are taking it on the chin…

 

And it’s no wonder, as Bloomberg notes…

Chinese developers’ gross margins declined by a weighted average 294 bps last year.

 

Most developers have forecast a recovery. Further declines in prices could present a threat.

 

…

 

Chinese developers that have reported 2013 results have set an average 2014 sales growth target of 16%, about half last year’s 30% rate. This is likely recognition of a need for better inventory management and of a more challenging sales environment. Developers will also probably curb construction because of slowdowns in some tier two and three cities.

 

…

 

Longfor Properties summed up the attitude among major Chinese and Hong Kong property developers in its company filings… .“In 2014, the Group’s key operating focus will be inventory clearance and cost control… For the coming 6-12 months period, we wil strive to reduce the leve of unsold inventory, hereby gradually improving our sale through rate.”

But apart from that… China’s fixed and the world economy will be back to normal as soon as the US weather clears up…

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Submitted by Justin McDonnell via The Diplomat,

The Diplomat‘s Justin McDonnell spoke with Larisa Smirnova, an expert on Sino-Russian relations and professor at Xiamen University, about the crisis in Ukraine, Russian foreign policy, and more.

 

The people of Crimea have overwhelmingly voted to leave Ukraine for Russia. Threats have been made to sanction Russia, claiming the referendum is in fact illegitimate.  Given Europe’s economic dependence on Russia’s energy supplies, will sanctions actually come together and how might that circumvent the situation? Or will it have the opposite effect?  And how might Russia respond in turn?

It does not seem that the sanctions are going to be drastic. Nor that they are going to circumvent the situation.

I have a feeling that more and more people in Russia approve of President Putin’s action. The Russian people have had a long-term hidden feeling of shame for the collapse of the Soviet Union that they perceive as humiliating and denigrating them vis-à-vis the West. They believe that the move in Crimea helps to restore Russia’s glory. Military and diplomatic glory is what has constituted the confidence of the Russians for centuries.

Therefore, Russia is likely to ignore any sanctions and/or consider that the price is justified.

For the good and for the bad, regardless of whether this perception is grounded in reality, but this is how many Russians might now feel.

Russia cites the threat of Ukrainian banderavski in Kiev helping Russia’s enemies and the need to protect ethnic Russians. From this standpoint, Putin’s geopolitical ambitions are unlikely to end in Crimea, as nearly all of eastern Ukraine is Russian-speaking.  What is the likelihood of Russian efforts to seize further territory and the outbreak of a Ukrainian civil war? Where does the situation go from here and what will happen to former ousted president, Victor Yanukovych?

Well, first of all, throughout the crisis I have personally called for the compromise between Russia and Ukraine. My concern is exactly extremist nationalism, which I dislike: in Russia, in Ukraine, or in any other country. Things that happened around Crimea might actually favor nationalists of all kinds. Moreover, I have strong anti-war convictions, and am consistently against achieving one’s goals by force or ruse.

So said, I really don’t think that Russia has ambitions to spread its Crimean move to Eastern Ukraine.

Crimea is slightly different in a way that there was indeed a perception in Russia and in Crimea that its transfer to Ukraine by Khruschev was unfair in the first place. In 1954, when Crimea was transferred from Russia to Ukraine, no one thought that the USSR would collapse, so it all seemed to be a mere administrative rearrangement issue: it made geographic sense because Ukraine bordered Crimea while Russia did not.

It did create some grievances among the Russians. I remember hearing, when I was little, that the transfer was instrumented by Nikita Khrushchev because he was a Ukrainian.

Even the Ukrainians possibly thought that keeping Crimea after 1991 was a matter of luck: that they kind of won in a lottery…

In 1991, Boris Yeltsin was very much in a rush to disintegrate the Soviet Union, which would give him access to power over the head of Gorbachev, so he just neglected the Crimean issue.

But again, I think that agreements, even stupid ones, are agreements, and Russia could have as well promoted investment in Crimea’s tourism industry while keeping it as part of Ukraine!

Some people admire President Putin for his quick moves. People read history, watch movies, read books, play computer games after all – and that is how many heroes behave in history, movies, books, and games, right?

But I do also think that there should be some containment for “heroic,” computer game-style nature. International law, the United Nations, and even nuclear weapons are tools that we invented, and more or less successfully used for war prevention.

Those who call for wars are acting irresponsibly.

Yanukovych? I think he is out of the game. Based on his biography, he seems to be a strange guy, arguably with criminal record and fake diplomas. I don’t think many people in Ukraine regret him. I hope that the new government in Ukraine, whoever they are, will act more responsibly and more in the interests of the common Ukrainian people.

There is an argument that Russia annexing Crimea will actually favor the West because these pro-Russian voters would no longer be part of the Ukrainian electoral process.  Do you believe Ukrainians would more likely move further West toward potential EU membership, mirroring the former Soviet bloc state,  Poland?

Ukraine’s European integration will depend much on the conditions that Europe is ready to offer to the Ukrainians.

It is true that the European integration seems to be viewed by many Ukrainians as a panacea to Ukraine’s economic and social problems.

So said, the Ukrainians, like the Russians, are a very proud people. In a way, we are the same people; when I meet a Ukrainian I have no cultural or language barrier at all.

The Ukrainians, like the Russians, have a hidden feeling of failure after the collapse of USSR. They also feel that they were not treated as equal by the EU, and they will strongly protect their pride and their interests.

For example, after the Orange Revolution, the Ukrainian government unilaterally cancelled visas for the European nationals. Obviously, they expected that the EU would lift their visa requirements for the Ukrainians. But the EU didn’t, even when the government in Kiev was “pro-European.”

Eventually, the Ukrainians got disappointed in the West. Yuschenko lost the election miserably, and Yanukovych, considered pro-Russian, won.

The Russians went through the exact same process and they got to support Putin, who is considered a strong-Russian known for standing up to the West.

By the way, Prime Minister Yatsenyuk has already said that the signature of the economic part of the Association Agreement between Ukraine and the EU has been postponed so that it will not lead to negative consequences for the industrial regions in the east of the country.

Ultimately, how does Ukraine begin to reconcile the cultural-linguistic divide within the country?  

The differences are very much exaggerated. There are some issues, like when I went to Lviv in 2005 some people were reluctant to talk in Russian to me (I really don’t care, if I stayed for a few more days I would have started to pick up Ukrainian).

And they have a Dzhohar Dudaev street in Lviv (Dudaev was a separatist Chechen leader). This is so ostensibly meant to annoy the Russians so I also think we should not care.

The Ukrainians and the Russians are really the same people. I have Ukrainian friends and we do not consider ourselves as “foreigners.” A couple of weeks ago I took part in a TV show on Ukraine with a Ukrainian diplomat and a Ukrainian journalist. We talked in Russian and shared much of our analysis of the situation, actually (the show dealt with the current Ukrainian crisis).

You can have differences with your brothers or sisters, even fight with them, take over their property or bring them to court on property issues, do all kinds of annoying things to each other, but you can still understand each other better than anyone else.

Therefore, I am still very confident in the ties between the Ukrainians and the Russians…

I like what Mr. Yatsenyuk has said: “We do not see relations with the EU and Russia on an either-or principle. Despite the catastrophic worsening of relations with Russia, which was not committed through our fault, and despite Russia’s armed aggression against Ukraine, I will do everything possible to not only maintain peace, but also build a genuine partnership and good neighborly relations with Russia.”

China seems to be facing a diplomatic dilemma on the Ukrainian crisis, as it is refraining from taking any position at all, having abstained from the UN referendum vote. While it has a strong partnership with Russia that often counteracts the West in foreign policy decision-making, China is opposed to any form of intervention. How should China handle its relationship with Moscow? Will the crisis strain relations or help bolster it?    

I think China will, as it does, keep neutrality. China is like an old wise man who can be a very good friend to anyone who can appreciate him.

China understands that the Russians and the Ukrainians are brother peoples. It has advised the Russians and the Ukrainians to talk, and it will recognize whatever compromise these two brothers achieve.

Actually, China probably disapproves in its heart that Russia has bullied Ukraine recently but after all, it is a value in Chinese culture not to interfere in other people’s family, so it will encourage the two countries to figure out their relations on their own.

Moreover, both Russia and Ukraine are China’s “strategic partners” in terms of diplomacy, so it will not be willing to spoil its relations with either of them for the sake of the other.

President Obama put the relationship on “pause” last year, hoping to restore ties between Washington and Moscow.  That hasn’t seemed to work.  From Syria, to Snowden, and to Ukraine, the two countries seem unable to find any common ground and bilateral relations are again quite dismal. First, why does the U.S.-Russia relationship matter today? And what should each country be doing to mend ties and restore moderation?

I am not really an expert on Russia–U.S. relations. I can only talk as a person who has experience living in the U.S.

I think that there is some degree of misunderstanding between the two countries now.

Actually, the Russians have never been anti-American. There was anti-German propaganda in the USSR for decades after World War II, but never actually a strong anti-American propaganda. But now Germany has a very good relationship with Russia!

So, it is a shame that Angela Merkel can handle President Putin but Barack Obama cannot! I think that he probably just lacks expertise on Russia, in his career he never actually had to deal with Russia, and he might have some fears of Russia that are not grounded.

There are many good American experts on Russia who are tough but often fair — everyone defends their own interests after all. They are of an older generation: Madeleine Albright, Henry Kissinger, Zbigniew Brzezinski. They have had good relations with the Russians, including personal relations, despite all the differences in positions. Their comments are often translated and published by the Russian media and heard by experts and policy makers. Their example proves that the Russians are actually not monsters!

As someone put it already, the U.S. should perhaps invest more in growing a young generation of strong Russia experts, like they now invest in growing a generation of China experts.

 

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Authored by BofAML's Hans Mikkelsen,

Fear the bear flattening

What if this was the year where the Treasury curve bear flattened completely as happened in 1994? While this is not what we are looking for, we have highlighted this outcome as the biggest and most relevant risk to credit this year, and with a probability that we believe appears uncomfortably high. While the total return performance of the high grade market in a Treasury complete flattening scenario would be extremely adverse (losses of at least 10%), the pension "reverse rotation" story that we subscribe to serves to significantly limit losses for excess return investors to just 80bps, as the long end of the spread curve outperforms.

Still, as the majority of high grade investors nowadays have total return – as opposed to excess return – objectives (Figure 8), a complete bear flattening of the Treasury curve would be quite devastating.

 

To show the potential impact on credit returns we run three scenarios as described in Figure 11.

First our “Baseline” scenario is simply the most likely outcome this year for reference – i.e. higher interest rates and tighter credit spreads, without the big flattening move. As shown in Figure 9 we expect total returns of -105bps under this baseline scenario between now and year-end and, as highlighted in Figure 10, excess returns of +198bps. Furthermore total returns should be positive in the front end, while excess returns are especially attractive toward the back end.

 

In the “Treasury flattening” scenario (see Figure 11 for the details) we show the impact of a complete bear flattening Treasury curve to 5% yields at all maturities, while credit spreads tighten as in the baseline scenario. Clearly the impact on total returns (Figure 9) is devastating, as our index stands to lose 10%, led by the long end (-14%) – but even the front end 3-5-year maturity bucket stands to lose 9%.

 

Finally we show a more realistic “Flattening, widening” scenario where the bear flattening of the Treasury curve leads to a rotation out of credit and much wider credit spreads (Figure 11). Obviously this scenario compounds the total return losses in Figure 9. However, we assume that the 50bps spread widening from current levels is led by the front end and 10-year sectors, as the pension/insurance bid for long paper keeps the back end in check. Thus excess returns under this scenario in Figure 10 range from -210bps in the 7-10-year sector to just -3bps and -8bps in the 1-3-year and 15+-year maturity buckets, respectively.

 

++++++++++++++++

The bottom line is a more dramatic bear flattening in the Treasury curve has very significant implications for credit spreads and pension fund returns (and allocations) all of which are negative for stocks – no matter what your friendly local asset-getherer tries to tell you about Forward P/Es or higher rates mean strong economy… you can't fund buybacks or dvivdends at anything but shareholder-wealth-destroying levels once rates and spreads start to rise… and if spreads are rising then SMEs are not going to be getting the credit that everyone assumes will fuel the next leg of Capex (or whatever dream there is)…

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The Greek economic collapse, depression and bankruptcy has seen many odd things in its brief and often times violent history (in those days when the violent elements were not on strike), but this surely is the first time when one of the countless Greek bailouts may be on the rocks due to the disagreement over the definition of “fresh milk.” No, really. Reuters explains that Greece’s government risks another rebellion over bailout terms this week after milk producers lobbied against a move to free up prices as part of efforts to make the economy more competitive. Basically, for Greeks, milk is fresh if it is 5 days old or less, yet according to the always fascinating codex of the Troika, “fresh” can be labeled anything that is as old as 11 days…. including the salmonella bacteria it contains. What’s worse, is that the “spoiled milk” scandal, far from a joke, has swept over the country, and now even threatens to topple the government.

From Reuters:

The country’s international lenders want it to ditch rules, such as limiting the shelf life of fresh milk to five days, that effectively deter importers.

 

But Greek dairy producers and lawmakers representing farming constituencies are fighting the move to call milk up to 11 days old ‘fresh’ – the latest in a long line of last-minute disruptions to Greece’s bailout reviews with the European Union and International Monetary Fund.

 

Six lawmakers from within the ruling coalition – three from Prime Minister Antonis Samaras’s New Democracy party and three from the Socialist PASOK – have opposed the proposal that will be submitted to parliament on Friday as part of an omnibus reform bill that Greece must pass to secure bailout aid.

 

If they vote against it, Samaras and PASOK leader Evangelos Venizelos could be forced to expel them, further reducing the government’s slim majority of just 153 seats in the 300-seat assembly.

In other words, there is a possibility that Samaras’ government, which nearly brought down the Eurozone after the summer of 2012 elections were almost won by the “anti-bailout” Samaras, will have no choice but to expel enough people from his party to leave it without an absolute 50%+1 majority, and potentially lead to a government collapse! All because of the definition of fresh milk.

Yup: it sure sounds like the European “Union.”

The bill – which will pave for the way for up to 10 billion euros ($14 billion) of aid – is expected to pass after last-minute wrangling, but the row has highlighted how powerful lobbies can undermine the country’s bailout lifeline.

 

“You don’t need to be an expert to understand that extending the shelf life is aimed at allowing milk from abroad to be labelled as fresh,” PASOK lawmaker Mihalis Kassis told Greek radio at the weekend. “If that’s a prerequisite by the (EU/IMF) troika then we deserve what we get.”

 

The controversy has captured headlines and days of debate on Greek television, overshadowing expectations that the country will soon be able to raise money on bond markets again.

 

“It is unfair and saddening, at a time when Greece is spreading its wings to emerge from a rut, that there is such dissonance,” Samaras said during a trip to Brussels on Friday.

 

“MPs drowning in a glass of milk!” the daily Ethnos wrote on its front page on Saturday. “Spoiled milk” proclaimed the center-left Eleftherotypia newspaper’s headline.

Why are foreign exporters so interested in penetrating the Greek milk market? Simple: prices. “Greece is the only country in Europe that has legislation to determine the shelf life of fresh milk and the price, at around 1.30 euros per litre, is among the highest in the EU. The Paris-based Organisation for Economic Co-operation and Development (OECD) says Greeks paid about a third more for dairy produce than the EU average in 2012.”

One would think that the Greeks would welcome the competition from abroad, and that the lower price would be a good thing. Well, if cow farms and milkmen account for a substantial portion of the Greek GDP, not to mention employment pool, which apparently in Greece they do, it becomes clear why the nation which is now a complete and utter economic disaster quarantine area, would be leery of allowing any foreign influence to raise its already laughter inducing unemployment rate.

So aside from that, the Grecovery is on pace.

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By: Chris Tell at http://ift.tt/146186R

We’re quickly heading into the abyss. I’m serious. I offer the story you’ll read below as a mere anecdote in a sea of troubles.

On return from a recent trip to Sri Lanka Mark and I traveled through Australia. Proceeding through the cattle stop that is “customs” we then met with the “security screeners”. These are the folks allegedly protecting us from attackers armed with nail clippers and toothpaste.

The first thing we saw was a giant sign that said refusing to undergo a body scan would result in detention. Mark, seeing this and having never been “body scanned” was immediately taken aback. Sure enough, he was singled out to be the random subject.

Fortunately he was prepared… “I’m sorry. I have a medical condition that precludes me from the scanner.” To which the security woman said, “Sure, OK no problem, come through here (metal detector) instead.”

I on the other hand, tired, unprepared and not thinking much about it had no such response. Instead I suggested, “Just go ahead and give me the pat down, I don’t  mind.”

I was told to dutifully sit down and wait for a “supervisor”. Fifteen minutes later the supervisor came over to “educate” me because, well, clearly I’m uneducated. I was handed an official document prepared by the Department of Infrastructure and Transport.

Flipping through it I was struck by the psychology being used. Now I’ve read a wee bit about psychology over the years, as it’s of interest to me. After all the financial markets are really just a collective aggregation of millions of people acting, and being acted upon. It’s psychology in a test tube.

This document was textbook “Good Cop, Bad Cop.”

• On the first page the document told me that “Body scanners are safe”. Remember, anybody reading this would only ever be someone who was protesting the scan, so it’s only natural that a soft cuddly comforting approach was required. (Good cop)
• The next page told me explicitly what to do when selected for a scan. This page provided the reader with the expectations. (Bad cop)
• Page 3 reinforced the comforting approach. It was titled “Privacy” and explained how your genitals would not be displayed to the stumbling brain dead, thugs “protecting our borders”, and how as such your privacy is “protected”. (good cop)

Now at this stage if you weren’t yet convinced by the harmlessness of subjecting yourself to this ridiculous charade called “security”, and in case you had any doubts as to what the “Bad Cop” had in mind, you were left with no doubt upon reading the final page, which I’ve placed below:

• If you are selected to be screened by a body scanner and you refuse you will not be allowed to pass through the screening point for 24 hours. This will mean that you are unable to board your flight.

There you have it. You have choice… no, really you do. Just like democracy you have a choice. Whatever country you’re in take a look at your voting choices. My guess is you’re looking at death by moron, or death by idiot.

Why are they doing this? Why randomly? Why not everyone? It certainly isn’t for security! The answer is that introducing radical change always meets with resistance.

Imagine for a minute telling an entire line of people, “Hey you’re all getting body scanned whether you like it or not.” Now, if just a couple of people in that line don’t like the idea you will have the very real potential for outrage within minutes. One person yells, “F$%k that! Over my dead body, those things cause cancer.” Next, a mother of a young child thinks, “Y ikes I hope he’s not right…I don’t want to take the risk.” She digs her heels in and says, “I’m with you, you’re not radiating my child.” And on it goes…

Now at this point if the authorities push ahead they do so risking a full-blown riot.

This answers the question of random selection. Random selection means that consensus opinion cannot come to the fore. Now if someone protests there are ten other people scooting through without incident, nothing to see here, it’s not me, odds are good I won’t get chosen so I don’t care.

Why don’t those others speak up?

Because they don’t want to be singled out and they’re hoping they will not be selected. They are playing the lottery.

Furthermore the guy who is making noise about this is now treated as someone who is “making trouble”. A rabble rouser. What’s he hiding? the rest of the queue thinks. Why doesn’t he just comply? They say it’s safe.

The mother who protests in the crowd has no backing on her own, and she doesn’t want to upset her children. Instead she reviews her options and instead complies. It’s easier to just get through it and forget about it. Maybe it is safe..?

THIS, ladies and gentleman is how to turn an entire populace into slaves. Combine it with fear mongering, “Terrorists want to kill you because they hate your freedoms.” and you have a recipe for a genocidal outcome. How does one go from enforcing a body scan to running death camps? 

In increments. The boiling frog we’ve all heard so much about. 

Think I’m kidding. Hitler used EXACTLY these tactics and by the time the people woke up to the fact it was too late, way too late.

Familiarity begets slavery. Most people don’t even realise they are slaves. I’m a slave and I realise it. I do everything in my power to fight my masters and I hate every intrusion made, but I realise that in many small ways, and sometimes not so small, I am still a slave. I don’t know anyone that isn’t frankly.

The well-meaning yet pig-ignorant drone who was brought over to explain my “choices” is just “following orders”. This comes with a mother lode of ignorance. Ignorance because you can bet the farm that he hasn’t studied history, or much of anything for that matter, other than what he finds on his Facebook page or in the propaganda he’s forced to digest and spew forth. If he considers the morality of what he’s doing, which would be unusual, he may find that there is none.

That I view this behaviour with nothing but utter contempt, and the fact that citizens are treated like barnyard animals is beside the point. We are headed in the wrong direction. It will take a giant iceberg to change course.

After the Snowden revelations there was a glimmer of hope that the “Citizens” would be outraged and call for change…but look, my Twitter feed shows that Miley Cyrus just got knocked up. And tonight is the American Idol semi-final rounds… God help us.

– Chris

“The only way to deal with an unfree world is to become so absolutely free that your very existence is an act of rebellion.” – Albert Camus

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