Tag: finance

With the 10 Year When Issued trading comfortably above 3% around the time of today’s auction conclusion, it was expected that today we would see the first 10 Year auction, in the face of the WE6 9 Year 10 month reopening, pricing north of 3% for the first time since May 2011. Sure enough, moments ago the Treasury announced that it had sold $21 billion in benchmark paper at 3.009% tailing just slightly to the 3.007% When Issued. But while the yield was notable, the Bid To Cover actually picked up from last month’s 2.61 rising to 2.68, almost exactly in line with the TTM average of 2.69, and showing a modestly increase in recent BTCs. The internals were a snoozers, with Dealers getting 39.8%, one percent above the 12 month average, Indirects were allotted 46.6% – below last month’s 48.9% but above the 41.8% TTM average, and Directs got the balance, or 13.6% of the final allottment. Largely, a vanilla auction.

Perhaps the only notable item is to keep track of whether dealers sell it back to the Fed: during yesterday’s POMO, even though the OTR WE6 CUSIP was not part of the exclusions, dealers sold precisely $0 back to the Fed. Now that they have another $8 billion of the issue, expect this to change at the first possible POMO opportunity.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/5JS9FEhbbt8/story01.htm Tyler Durden

Wolf Richter   www.testosteronepit.com   www.amazon.com/author/wolfrichter

The civilian labor force in the US has been causing bouts of hand-wringing and head-scratching. It represents the official number of people working or looking for work. It’s what the official unemployment rate (U-3) is based on. If labor force participation drops – if for whatever reason, millions of people are no longer counted as part of the labor force, as is the case in the US – it’s a troublesome indicator for the economy and the real employment picture.

It also makes the unemployment rate, now 7.3%, look a lot less awful: if you’re not counted in the labor force, and you don’t have a job, you’re not counted as unemployed. There are millions of people in that category. And their numbers are growing, not diminishing.

“The irony of the U-3 unemployment statistic is the fact that while unemployment has gone down 30% since its 2009 peak, we have the lowest labor force participation rate in over 3 decades,” observed Ralph Dillon, Vice President at Global Financial Data, in an email. “The markets and politicians celebrate the official unemployment rate, but you have to be concerned with the trend that is most indicative of the health of the employment situation in this country: the downward trend of those who want to work and can’t.”

Before the financial crisis, the unemployment rate and the labor force participation rate weren’t correlated. Unemployment would jump up and down, based on the economy, but labor force participation moved to its own drummer:

“During the 1970s and 1980s, the labor force grew vigorously as women’s labor force participation rates surged and the baby-boom generation entered the labor market,” explained the Bureau of Labor Statistics. The labor force participation rate hit an all-time peak in early 2000 of 67.3%. “However, the dynamic demographic, economic, and social forces that once spurred the level, growth, and composition of the labor force have changed….” And labor force participation has since dropped to 63%.

The chart (Global Financial Data) juxtaposes the unemployment rate and the labor force participation rate since 1980. After the financial crisis, suddenly, for the first time in history, they both started moving in lockstep. Downward.

 

 

“This chart is a true representation of the crisis of employment in this country,” Dillon wrote. The diminishing labor force participation rate – the officially available labor pool, however unrealistic it might be – has been driving down the unemployment rate for the first time in history.

But beneath the overall numbers, it’s even worse. This chart by the BLS depicts labor force participation rates in 1992, 2002, and 2012, with an estimate for 2022:

 

 

People 55 to 64 years old, the first forget-about-retirement generation, are staying in the labor force to an ever greater degree. In 1992, only 56.2% were still in the labor force, in 2012, 64.5% were. Similar for older folks. The participation rate for people 65 to 74 years old jumped from 16.3% to 26.8%. Reality is this: fewer people can afford to retire.

But who is not making it into the labor force? Young folks. The participation rate for those 16 to 19 has plunged from 51.3% in 1992 to 34.3% in 2012. OK, the BLS explains that by an increase in school attendance, and that would be a good thing. But the 25 to 54 year olds? Even among them, participation rates dropped from 83.3% in 2002 to 81.4% a decade later.

Among the 18 to 34 year old “Millennials,” those lucky ones who’re official counted in the labor force, unemployment has been a nightmare, with double digit unemployment rates, still, nearly 6 years after the financial crisis, reported the youth advocacy group Young Invincibles. It’s even worse for the 16 to 24 year olds, whose official unemployment rate is still 15%!

In prior downturns, the employment rate for young adults nearly reached pre-recession levels within 5 years. In the Great Recession, young adult employment had not even recovered halfway by the same point. A quarter of all job losses for young adults came after the Great Recession was officially over. The lack of jobs had driven many discouraged young people from the labor force altogether. A recent report by Opportunity Nation estimates that 5.8 million young adults are neither working nor in school.

Sure, companies have been creating jobs since the Great Recession, but only at the growth rate of the working-age population, as evidenced by the BLS’s dreary employment-population ratio. It peaked in April 2000 at 64.7%, crashed during the Great Recession, and has been skittering along the bottom ever since. At 58.6%, it’s lower than it was during most of 2009! And the 30% improvement in the official unemployment rate – where the heck did that come from? The chart has the answer: people 54 and younger being statistically purged from the labor force.   

Fed Chairman Bernanke wanted to reflect on the “accomplishments of the past eight years” and demolish “sceptics” that still doubted the Fed was the best thing since sliced bread. His policies “have helped promote the recovery,” he said. The recovery of what? Read…. Bernanke’s Delirious Praise For His Handiwork, The Concentration Of Power At the Top Banks

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/lxhqprqZnyY/story01.htm testosteronepit

Having just missed out of +500% returns in the Caracas stock market last year, the reality of a hyperinflating world continue to cause chaos in the real world of Venezuela. As Bloomberg reports, the bolivar’s 73% decline against the dollar on the black market in 2013 is fueling contraband and worsening shortages of food and consumer goods in a country with the world’s biggest oil reserves, adding pressure on President Nicolas Maduro’s government to devalue. Smuggling to Colombia has exploded as “professional shoppers” traffic in wheat flour, corn flour and milk leaving more than one in five basic goods out of stock at any given time. Regulated foods are just too cheap to stay on the shelves, “you can’t get anything in the shops here… it is taken to Colombia like a locust plague.”

 

Via Bloomberg,

Venezuelan taxi driver Jose Sotomayor drives four hours through army checkpoints every week from the city of Maracaibo to buy rice in Colombia for his family at 10 times the government-set price back home.

 

“You can’t get anything in the shops here, I don’t even bother going to them for basics anymore,” Sotomayor, 39, said in a phone interview. “All of our food is taken to Colombia, it’s like a locust plague.”

 

Sotomayor hasn’t seen rice for sale in the shops of Venezuela’s second-largest city since July, as smugglers snap up the staple for a maximum of 7.2 bolivars ($1.14) per kilogram, just $0.11 at the black market exchange rate.

 

How hyperinflation works…

The bolivar’s 73 percent decline against the dollar on the black market in 2013 is fueling contraband and worsening shortages of food and consumer goods in a country with the world’s biggest oil reserves, adding pressure on President Nicolas Maduro’s government to devalue…

 

A weaker bolivar reduces Venezuelans’ purchasing power by making imported goods more expensive.

 

…

 

Under a decade-long system of currency controls, the government provides about 95 percent of dollars in the economy to selected companies and individuals at 6.3 bolivars per dollar. The exchange rate on the illegal black market is about 64 per dollar, giving foreigners and Venezuelans with access to dollars about 10 times more bolivars for their currency.

 

…

 

Which means hordes of prefessional shoppers from neighboring (non-hyperinflating) countries are taking advantage…

Price controls introduced by Maduro’s predecessor Hugo Chavez in 2003 to boost nutrition among the poor have fueled demand for staples such as flour, rice and milk as shoppers snap up products whose prices don’t change amid 56 percent annual inflation, the highest in the world.

 

Dozens of people take shifts to line up outside supermarkets in Maracaibo, a city of 2.1 million people located 800 kilometers (500 miles) west of the capital, waiting for the next delivery of regulated goods. The new stock is bought up as soon as it hits the shelves, leaving shops barren of products such as meat, grains and toilet paper.

 

The goods are then loaded onto trucks and taken to Colombia. Many of these professional shoppers are native Guajira Indians dressed in bright floral-print dresses who have double nationality and are exempt from border controls.

 

…

 

More than 300 trucks with everything from rice to car tires made the 130-kilometer drive from Maracaibo to the border through eight army and police checkpoints when a Bloomberg reporter did the journey on Nov. 10. Drivers of cars carrying food pay those staffing the checkpoints anywhere from 20 to 300 bolivars for quick passage, according to Sotomayor.

 

“Regulated goods are just too cheap to stay on the shelves.”

Nationally, the central bank’s scarcity index was 22.4 percent in October. That reading, the highest since January 2008 and up from 16.1 percent a year earlier, means that more than one in five basic goods were out of stock at any given time.

 

…

 

“It’s an endless caravan,” said Sotomayor. “The price difference is so great, no amount of soldiers can stop it.”

Still, things must be going great because the Caracas Stock Index was up 480% last year – think of the confidence-inspiration and wealth effect!!

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/kPHbUNx0fs4/story01.htm Tyler Durden

Having just missed out of +500% returns in the Caracas stock market last year, the reality of a hyperinflating world continue to cause chaos in the real world of Venezuela. As Bloomberg reports, the bolivar’s 73% decline against the dollar on the black market in 2013 is fueling contraband and worsening shortages of food and consumer goods in a country with the world’s biggest oil reserves, adding pressure on President Nicolas Maduro’s government to devalue. Smuggling to Colombia has exploded as “professional shoppers” traffic in wheat flour, corn flour and milk leaving more than one in five basic goods out of stock at any given time. Regulated foods are just too cheap to stay on the shelves, “you can’t get anything in the shops here… it is taken to Colombia like a locust plague.”

 

Via Bloomberg,

Venezuelan taxi driver Jose Sotomayor drives four hours through army checkpoints every week from the city of Maracaibo to buy rice in Colombia for his family at 10 times the government-set price back home.

 

“You can’t get anything in the shops here, I don’t even bother going to them for basics anymore,” Sotomayor, 39, said in a phone interview. “All of our food is taken to Colombia, it’s like a locust plague.”

 

Sotomayor hasn’t seen rice for sale in the shops of Venezuela’s second-largest city since July, as smugglers snap up the staple for a maximum of 7.2 bolivars ($1.14) per kilogram, just $0.11 at the black market exchange rate.

 

How hyperinflation works…

The bolivar’s 73 percent decline against the dollar on the black market in 2013 is fueling contraband and worsening shortages of food and consumer goods in a country with the world’s biggest oil reserves, adding pressure on President Nicolas Maduro’s government to devalue…

 

A weaker bolivar reduces Venezuelans’ purchasing power by making imported goods more expensive.

 

…

 

Under a decade-long system of currency controls, the government provides about 95 percent of dollars in the economy to selected companies and individuals at 6.3 bolivars per dollar. The exchange rate on the illegal black market is about 64 per dollar, giving foreigners and Venezuelans with access to dollars about 10 times more bolivars for their currency.

 

…

 

Which means hordes of prefessional shoppers from neighboring (non-hyperinflating) countries are taking advantage…

Price controls introduced by Maduro’s predecessor Hugo Chavez in 2003 to boost nutrition among the poor have fueled demand for staples such as flour, rice and milk as shoppers snap up products whose prices don’t change amid 56 percent annual inflation, the highest in the world.

 

Dozens of people take shifts to line up outside supermarkets in Maracaibo, a city of 2.1 million people located 800 kilometers (500 miles) west of the capital, waiting for the next delivery of regulated goods. The new stock is bought up as soon as it hits the shelves, leaving shops barren of products such as meat, grains and toilet paper.

 

The goods are then loaded onto trucks and taken to Colombia. Many of these professional shoppers are native Guajira Indians dressed in bright floral-print dresses who have double nationality and are exempt from border controls.

 

…

 

More than 300 trucks with everything from rice to car tires made the 130-kilometer drive from Maracaibo to the border through eight army and police checkpoints when a Bloomberg reporter did the journey on Nov. 10. Drivers of cars carrying food pay those staffing the checkpoints anywhere from 20 to 300 bolivars for quick passage, according to Sotomayor.

 

“Regulated goods are just too cheap to stay on the shelves.”

Nationally, the central bank’s scarcity index was 22.4 percent in October. That reading, the highest since January 2008 and up from 16.1 percent a year earlier, means that more than one in five basic goods were out of stock at any given time.

 

…

 

“It’s an endless caravan,” said Sotomayor. “The price difference is so great, no amount of soldiers can stop it.”

Still, things must be going great because the Caracas Stock Index was up 480% last year – think of the confidence-inspiration and wealth effect!!

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/kPHbUNx0fs4/story01.htm Tyler Durden

Much like the rest of peripheral Europe, Greek stocks have been on a rampage in the first few days of the year. Whether this is a global rotation into the junkiest of the junk – betting on the inevitable rescue and intervention to keep everyone safe, or merely front-running an ECB QE effort as inflation tumbles – is unclear but it is worth noting that this is the best start to a year for Greek stocks since 1994!! Remember Greece is not Japan (or Venezuela).

 

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

A few days ago it was revealed that numerous European users of Yahoo, as many as two million, had gotten infected with malware from virus-laden ads served by Yahoo’s homepage during the period from December 31 to January 3. The company admitted as much when it revealed that “From December 31 to January 3 on our European sites, we served some advertisements that did not meet our editorial guidelines – specifically, they spread malware.” Users in North America, Asia Pacific and Latin America weren’t affected, Yahoo said. Nor were users of Apple Macs or mobile devices. “We will continue to monitor and block any advertisements being used for this activity,” the company added. “We will post more information for our users shortly.” What was not clear is just what function the ad virus served. According to the Guardian, the purpose of the most prevalent virus spread by the website was to convert the infected computers into Bitcoin mining slaves.

According to the Guardian, “some of the malware would turn PCs into bitcoin miners – a huge drain on its computing resources – without users’ knowledge. Yahoo has been criticised for not saying how many people could be affected or doing anything to help those with the malware, which attacked flaws in Java modules on systems.”

As a reminder, in “A trip through the Bitcoin mines” we showed just how extensive the capital requirements can be for any legitimate Bitcoin mining operation, where the distributed calculations used to extract new Bitcoins have now risen to a stunning 10 quadrillion per second.

So what is an enterprising hacker in need of some quick cash, but unwilling to spend the CapEx for procuring the expensive equipment (especially when buybacks and dividends are so much more attractive, just kidding) to do? Why force others to do the mining for them. This is precisely what the creator of the Yahoo-hosted virus did.

According to Light Cyber, a security research firm which warned Yahoo of the attacks in late December, one of the malware programs delivered in the attack turned the victim’s computer into a bitcoin miner. The computer is set to work performing the calculations required to make the bitcoin network run, but the rewards for doing so accrue to the malware writer.

 

Fox IT, the Dutch cybersecurity firm which first disclosed the vulnerability to the public, estimated that there were around 27,000 infections every hour the malware was live on the site. If the malware was being served consistently for the three days, it may be the case that almost 2 million computers were infected.

 

Bitcoin is so valuable to botnet owners, criminals who control large numbers of compromised computers, that one academic paper argues that the security of the network is permanently at risk. Philipp Güring and Ian Grigg argue that the currency violates Gresham’s Law (pdf), an economic theorem that states that bad money drives out good. Since bitcoin mining is far more profitable done on stolen computers with stolen energy, they argue, it will soon be uneconomical to do it any other way.

 

“The attack focused on outdated software,” says Steve Regan of security site CSO. “The only way for the exploits to work is to have outdated versions of Java on your system. If Java is up to date, then the odds are, you’re safe. However, I don’t trust Java, so unless you absolutely need it, my advice is to uninstall it from your system. It seems like I see more zero-day attacks aimed at Java than anything else, the risk isn’t worth it for me.” Zero-day attacks exploit previously unreported flaws in software to install malware or take over a computer.

Mining for Bitcoin was not the only infection.

As well as the bitcoin mining malware, other software installed includes ZeuS, which attempts to steal banking information; Andromeda, which turns the computer into part of a “botnet” for use by third parties, and “adjacking” malware which hijacks the user’s browser to click on adverts, thus channeling income to corrupt site owners… Software such as ZeuS lets criminals install Cryptolocker, a dangerous new type of malware which first encrypts the user’s files and then demands a ransom, payable in bitcoin, to decrypt them. In most versions of Cryptolocker, the ransom is set at two bitcoins, currently worth around $2,000.

One can only hope that Yahoo, which hosted the ads willingly and apparently without filtering and pre-clearing the ad content, wasn’t in on the scheme. To be sure, it has been slammed for keeping users in the dark.

Yahoo has been criticised for not doing more to aid users infected by the faulty adverts. Dan Farber of technology site CNET says that: “At this point, Yahoo hasn’t addressed any of the details, such as how the malware exploit got into its Web pages, how many users are impacted, and what victims of the attack should do. The company may still be gathering data.”

All in all, a rather ingenious wealth extraction scheme: either have others mine for Bitcoin, or demand a ransom if they want their computer back. We wonder how long until these activities are added to the definition of GDP in the New Normal economy?

The best news, however, is that there are still at least two millions people who use Yahoo.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/eZqWn5Tf0FM/story01.htm Tyler Durden

Bitcoin is highly volatile. It also experienced astonomical returns. That we all know. What I wanted to know was the true source of those returns. Some say it’s speculation, some say is fundamentally derived. Most say things they have no business saying. I believe it’s fair to say that bitcoin adoption will increase, and increase rapidly. It makes sense to believe said adoption will increase bitcoin’s price. It’s interesting in that history doesn’t necessarily support that assumption though, as trading volume and daily returns have a low (or sometimes even negative) correlation.

 Bitcoin trading Volume vs return correlation copy copy

I believe I have amassed one of the biggest libraries of bitcoin investment and financial data available in a very short period of time. I will start distributing this data via forensic reports to all paying subscribers as of tomorrow. Professional and Institutional subscribers will recieve some very, very advanced trading strategies that I have discovered that appear to still be making some pretty big short term returns as well. They are not simple, they proffer more than a little risk, but they are capable of some very material returns.

On a different front, it is also widely known that bitocoin’s high volatility hampers its use by many would be vendors and institutions. I have created a solution, which I have illustrated in the following video – a brief demo of the early code of our Zero Trust Currency Contracts and an explanation of what they do.

Those who are interested in getting in on our closed beta, please email me at reggie at boombustblog dot com. Paid subscribers to my blog (click here to subscribe) get first crack at the closed beta, but I’m accepting those who are influential in the industry – IT security and cryptographcy experts, corporate finance guys, traders, etc. as well as the high net worth crowd. I’m trying hard to get the beta rolled out today, but you know how this software development stuff goes. As of now, we’re right on schedule for a beta release last week. 🙂

Although this is a mere introduction, paying subscribers can catch a preview with  Digital Currencies’ Risks, Rewards & Returns – An Into Into Bitcoin Investing For Longer Term Horizons

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/ppeS9IfzGuI/story01.htm Reggie Middleton

Today’s 6.5bps surge in 10Y Treasury yields is the largest since November 20th as the Dow slides and USD rises on the back of better-than-expected ADP jobs data implying moar taper. With 10Y back to 3.00% (2.9987% to be accurate), mortgage rates are once again on the rise (despite the recent drop in yields); though for now, Treasury yields remain lower in yield on the year.

 

Biggest single-day rise in yields since mid-November…

 

Pressing up to 3.00% but remain lower on the year for now…

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/1X4lhHDN0TU/story01.htm Tyler Durden

Just 2 day safter their release, The U.K.’s Royal Mint said it ran out of 2014 Sovereign gold coins “due to exceptional demand.”

• *U.K. ROYAL MINT SAYS RUNS OUT OF 2014 SOVEREIGN GOLD COINS
• *ROYAL MINT SAYS EXPECTS TO HAVE COIN STOCK AGAIN BY END OF JAN.

The mint added “Since the dip in the price of gold we have seen increased demand for our gold bullion coins from the major coin markets, and this presently shows no sign of abating.”

 

 

 

Via Bloomberg,

The U.K.’s Royal Mint said it ran out of 2014 Sovereign gold coins “due to exceptional demand.”

The mint expects to have stocks of the coins again by the end of January, it said in a statement e-mailed today. Gold dropped to a six-month low of $1,182.27 an ounce in London on Dec. 31, capping the largest annual decline since 1981.

“Since the dip in the price of gold we have seen increased demand for our gold bullion coins from the major coin markets, and this presently shows no sign of abating,” the mint said in the statement. “The Royal Mint continues to supply to its customers and is increasing production to accommodate the higher demand.”

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

“It’s the weather’s fault.”

Prepare to hear this excuse a lot more in the coming days as one after another expectation of the “any minute now” economic rebound is missed.

In today’s instance we find that holiday retail sales, on which the punditry placed so much hope to finally show a recovering consumer, rose 2.7%, however offset by a plunge in store foot traffic, which tumbled by a whopping 14.6% according to ShopperTrak and wildly missing expectations of a 1.4% decline, a far cry from 2012’s 2.5% increase.

A big part of the drop was due to the shorter shopping period as retailers only had 25 days to encourage shoppers to spend compared to 31 days earlier, although an even bigger contributor was the pulling of holiday sales into November with early promotions starting at the earlest time in history. “Consumers took a break from shopping after Thanksgiving weekend, so retailers were pressured to offer deep discounts and promotions in the final week before Christmas to finish the holiday on a positive note,” said ShopperTrak founder Bill Martin. Naturally the weather was also blamed with a “cold snap” invoked to explain why shoppers stayed away from stores.

Still, since the drop in traffic did not result in an overall collapse in spending, this is hardly the full explanation. So ShopperTrak provided the following goalseeked justification: “It’s a result of more and more technology in the hands of the consumer, which allows them to virtually window-shop.” Reuters adds that many shoppers went online to make purchases, particularly during a spell of abnormally cold weather in many parts of the United States during the first two weekends of December.

One would expect then that online sales would have more than made up for the shortfall? One would be wrong: while online retail spending rose 10% to $46.5 billion in the November-December 2013 holiday season, according to comScore, this too missed expectations of 14% growth that the data firm had forecast.

But while the true state of the US consumer – already having drawn down on their savings and refusing to splurge on credit card purchases – remains unclear, what is clear is that in their scramble to lure shoppers, retailers cut prices so violently that margins in the fourth quarter will likely be a sight to behold once earnings are reported. Indeed, earlier today we got a feel for what the expect when troulbed chain J.C. Penney Co said that it was “pleased with its performance” during the holiday period. It refused to provide any justification or numbers to go along with its cryptic press release and as a result the company’s shares are currently down 7%.

As for online retailers, if Amazon’s persistent inability to generate profits is any indication which continues to be rewarded by the market, they have nothing to worry about especially if bottom line losses will be “made up with volume.”

Finally looking forward into Q1, one can expect more of the same: “ShopperTrak estimated on Wednesday that U.S. retail sales would rise 2.8 percent in the first quarter of 2014, while shopper traffic would fall 9 percent.”

Finally, for those who are into that sort of thing, here is ShopperTrak’s infographic on the holiday sales season:

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/1K4q3c-taNw/story01.htm Tyler Durden