Tag: finance

Presented with little comment aside to note that 9 of the last 10 Januaries have seen negative surprises…

 

 

h/t @Not_Jim_Cramer

via Zero Hedge http://ift.tt/1ki0ywI Tyler Durden

Presented with little comment aside to note that 9 of the last 10 Januaries have seen negative surprises…

 

 

h/t @Not_Jim_Cramer

via Zero Hedge http://ift.tt/1ki0ywI Tyler Durden

According to a 2001 Fortune interview, Warren Buffett believes that Market-Cap-to-GDP is "probably the best single measure of where valuations stand at any given moment." As Doug Short shows in the following charts, we suspect Warren is a little more than worried about the valuation of his portfolio (unless of course, it's different this time).

 

Via Doug Short of dshort.com,

…

 

The raw data for the "Buffett indicator" only goes back as far as the middle of the 20th century. Quarterly GDP dates from 1947, and the Fed's B.102 Balance sheet has quarterly updates beginning in Q4 1951. With an acknowledgement of this abbreviated timeframe, let's take a look at the plain vanilla quarterly ratio with no effort to interpolate monthly data or extrapolate since the end of the most recent quarterly numbers. Here is a chart I created using the Federal Reserve Economic Data (FRED) data and charting tool.

 

 

That strange numerator in the chart title, MVEONWMVBSNNCB, is the FRED designation for Line 36 in the B.102 balance sheet (Market Value of Equities Outstanding), available on the Federal Reserve website here in PDF format.

 

For those of you who may have reservations about the Federal Reserve economists' estimation of Market Value, I can offer a more transparent alternate snapshot over a shorter timeframe. Here is the Wilshire 5000 Full Cap Price Index divided by GDP, again using the FRED repository charting tool.

 

 

So… Both the "Buffett Index" and the Wilshire 5000 variant suggest that today's market is at lofty valuations, now above housing-bubble peak in 2007.

So, given the unprecedented beta (and very little alpha) of Berkshire Hathaway's stock price to the market…

 

We suspect Warren is worried…

via Zero Hedge http://ift.tt/1nXw2bS Tyler Durden

Money on the sidelines? Em fixed? Expectations of a terrible jobs number tapering the taper? One thing we do know for absolute certain – this ramp in stocks has nothing whatsoever to do with fun-durr-mentals… as USDJPY 102 takes the S&P back to unch on the Taper and above its 100DMA.

 

USDJPY 102.000 Tagged…

 

It seems the so-called “market” liked the guilty verdict on Martoma?

Though we suspect the machines are desparate to get the S&P back to unchanged from the taper…

 

and above the 100DMA…

 

Charts: Bloomberg

via Zero Hedge http://ift.tt/1g6X8I7 Tyler Durden

And so the most lucrative insider trading case in history has just resulted in a criminal conviction.

• MARTOMA CHARGED IN MOST LUCRATIVE INSIDER SCAM IN U.S. HISTORY
• MARTOMA ACCUSED OF ILLEGAL TRADES TIED TO ALZHEIMER’S DRUG
• EX-SAC FUND MANAGER MARTOMA FOUND GUILTY ON ALL CHARGES
• MARTOMA ACCUSED OF ILLEGAL TRADES TIED TO ALZHEIMER’S DRUG

Hopefully Steve Cohen’s alleged hush money which bought Martoma’s allegiance and silence will be worth it (and still there upon release) to make Martoma’s stay in Federal pound me in the ass prison – up to 25 years – more pleasurable… 

via Zero Hedge http://ift.tt/1ev44lp Tyler Durden

And so the most lucrative insider trading case in history has just resulted in a criminal conviction.

• MARTOMA CHARGED IN MOST LUCRATIVE INSIDER SCAM IN U.S. HISTORY
• MARTOMA ACCUSED OF ILLEGAL TRADES TIED TO ALZHEIMER’S DRUG
• EX-SAC FUND MANAGER MARTOMA FOUND GUILTY ON ALL CHARGES
• MARTOMA ACCUSED OF ILLEGAL TRADES TIED TO ALZHEIMER’S DRUG

Hopefully Steve Cohen’s alleged hush money which bought Martoma’s allegiance and silence will be worth it (and still there upon release) to make Martoma’s stay in Federal pound me in the ass prison – up to 25 years – more pleasurable… 

via Zero Hedge http://ift.tt/1ev44lp Tyler Durden

The last month has made the baffle-’em-with-bullshit Schrodinger-driven central planning confusion proud as the all-important measures of confidence in the US (which stoke the fires of multiple expansion) have dropped, been revised, risen, and stalled. However, today’s third indication – from Bloomberg – of Consumer Comfort shows a notable fall to near three-month lows – diverging dramatically from the other measures. The last time this happened, the Conference Board and UMich data rapidly deteriorated to the year’s lows. It ha snow been a month since this indicator was in the ‘comfort’ zone but perhaps most notably those earning over $100k saw their biggest drop in comfort since July 2011.

 

Trilemma…

 

“Buying Climate” dropped to near its 2-year lows.

And the “rich” earning over $100k saw confidence collapse at fastest pace in almost 3 years…

 

Charts: Bloomberg

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Keep those dominoes steady… steady… and nobody exhale:

• UKRAINE IMPOSES LIMITS ON SOME INTERBANK FX OPERATIONS
• UKRAINE TIGHTENS RULES ON COPRORATE FOREIGN-CURRENCY PURCHASES
• UKRAINE CENTRAL BANK CITES HRYVNIA VOLATILITY ON FX MEASURES

There is of course, good news:

• UKRAINE CENTRAL BANK SAYS INTERBANK LIMITS ARE TEMPORARY

Just like in Cyprus.

via Zero Hedge http://ift.tt/1l10I9Q Tyler Durden

By Chris Andrew and Mustafa Zaidi at Clarmond

Gamblernomics

The concept of continuously doubling down in order to achieve financial and economic goals is now a respectable and established norm. Takahashi’s Wager of 1930s Japan shows that such a policy, while initially successful, can remove all sensible restraints

For a gambler on a losing streak the classic trap is to borrow money, trying to break even. Doubling down, time and time again, becomes routine as all caution is discarded; this does not make for sound financial planning.
 
In ‘Resurrecting Reflation’ (November 2012) we highlighted when this policy was first attempted; in 1931 Finance Minister of Japan, Takahashi Korekiyo, paid for Japan’s invasion of Manchuria whilst countering the collapse of capitalism around Japan with unorthodox measures of massive QE and deficit spending. These twin policies were heralded as a great success 70 years later by Governor Ben Bernanke and a decade after that by Prime Minister Abe.

‘Takahashi’s Wager’ led to a tripling of the Japanese stock market, a 40% currency devaluation and warfare spending that rose from 30% to 70% of the national budget. Having taken the gamble to reflate, the octogenarian established the principle that capital is costless and unlimited; doubling down had become routine.

This band-aid boom ended in a calamitous collapse years later; by then Takahashi was long gone…literally, as he had belatedly tried to slow the handout-hooked warfare train. In 1937 another ‘routine’ incident occurred at the Marco Polo Bridge, which gave Japan the excuse to invade the rest of China. This was, in effect another ‘doubling down’, but by this time Japanese economic statistics had plateaued, war casualties had hit a 100,000 and warfare spending comprised nearly the entire government budget. But the unorthodox ‘policy genie’ was out of the bottle, as Takahashi had demonstrated, one could double down again and again, as the goalposts for success were simply moved and all gambles appeared sane.   

Loaded Dice

Modern day Japan finds itself in a similar predicament, but instead of warfare the Japanese leadership is confronting the dual burdens of welfare spending and interest payments, which, at current interest rates, now account for 60% of the budget.

The Bank of Japan’s unconventional policy of massive QE, which is nearly 18% of GDP, is intended to ignite inflation and break the twenty-year deflationary cycle. This scheme, put in place by the current Prime Minister, has been dubbed ‘Abenomics’. Given zero interest rates for last 15 years, and the occasional bout of QE, ‘Abenomics’ is another ‘doubling down’ but, this time, it has staked everything on this one final throw of the financial dice. Perhaps ‘Gamblernomics’ may be a more reasonable nomenclature.

On the surface ‘Gamblernomics’, like the ‘Takahashi Wager’, appears successful – the equity market has risen substantially, the currency has fallen, and government bond yields remain low. So far, so good.
 
How is the government gauging the success of this dice roll? They are looking for two percent inflation, a positive growth number, and have committed to two years of massive QE to achieve these goals. As time passes and these targets are not met, the policy makers will double down again, by which point interest payments and welfare spending are likely to comprise most of the budget. Emergency shall have become routine and all further gambles shall appear sane.

Lessons

All gamblers are aware of their accumulated losses, in economic parlance this means their ‘sunk costs.’  Today’s adherents of ‘Gamblernomics’ are not only found in Tokyo, but also reign in all major financial capitals, each playing their own version of a similar wager. All believe that doubling down is a sober strategy given the sunk costs of lost growth.  As a new generation of gamblers sit at the table, ghosts of gamblers past whisper – “Place your bets.” 

via Zero Hedge http://ift.tt/1c7vyaS Tyler Durden

A leaked recording of a telephone conversation allegedly between US assistant secretary of state Victoria Nuland and the US envoy to the Ukraine, Geoffrey Pyatt discussing who should be in Ukraine's next government has, according to The FT, threatened to fuel east-west tensions over the troubled nation's future. In apparent frustration with the EU – which has failed to join the US in threatening sanctions against Ukraine’s leaders if they violently crush the protests – the voice resembling Ms Nuland at one point exclaims "Fuck the EU". As the two US diplomats decide whether "Klitsch" or "Yats" should be 'in' or 'out', listeners will be reminded (uncomfortably) that the governments of Ukraine and Russia previously alleged that the protests are being funded and orchestrated by the US. The authenticity of the recording has not been confirmed (though comparisons to Nuland's recent media appearances provide some confidence).

 

The controversial alleged Nuland "Fuck The EU" clip… (the discussion of the EU and UN involvement begins around 2:50)

 

And for comparison's sake – Nuland last month delivering a statement on the situation in Ukraine…

Via The FT,

…

 

In a clip posted on YouTube, voices resembling those of Victoria Nuland, a US assistant secretary of state, and Geoffrey Pyatt, ambassador to Ukraine, are heard talking by telephone about how to resolve the stand-off in Kiev after two months of anti-government protests.

 

In apparent frustration with the EU – which has failed to join the US in threatening sanctions against Ukraine’s leaders if they violently crush the protests – the voice resembling Ms Nuland at one point exclaims “F**k the EU”.

 

…

 

The two voices suggest Arseny Yatseniuk, the opposition leader and a former foreign minister, should be in a new government in Kiev. But Vitali Klitschko, a former heavyweight boxer and identified as “top dog” among opposition leaders, is also described as inexperienced and needing to “do his political homework”.

 

The voice resembling Ms Nuland refers to the two men as “Yats” and “Klitsch”.

 

…

 

It could also bolster a propaganda campaign by the governments of Ukraine and Russia alleging that the protests that erupted against Ukraine’s President Viktor Yanukovich last November are being funded and orchestrated by the US.

As we warned previously, after the Olympics, Ukraine becomes a very hot spot indeed…

The Western powers represented by the EU and the US have nothing to stand on to protect Ukraine and can only offer lip-service at best. So once again, it appears that Ukraine is doomed and the best one can hope for there, is that Russia will allow the West to leave. The countdown goes forward and the political and economic crisis is indicative of what we see with the first shot across the bow in the rising trend of the Cycle of War.

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