Tag: finance

Moments ago the BEA reported the latest, November, data on Personal Income and Spending. For the second month in a row, Income, which rose a modest 0.2%, missed expectations which were at 0.5% for the month, even as Personal Spending rose by 0.5% – driven by a 2.2% increase in spending on Durable Goods even as spending on Nondurables was unchanged, in line with expectations. As a result, the US consumers dug even deeper into their meager savings, and in November the savings rate dropped once again, sliding from 4.5% to 4.2%, the lowest since January 2013, after hitting a high of 5.2% in September on “government shutdown uncertainty.”

But perhaps most important, is that Real Disposable Income rose by just 0.1% in November, following a -0.2% drop the prior month. As a result, and as the chart below shows, the annual growth in Real Disposable Income has once again resumed its downward trajectory, and at the current pace of declines, it will likely turn negative as soon as next month.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/bRKf-M7_-eY/story01.htm Tyler Durden

The following graphic from @Amazing_Maps struck us in its stunning comparison between Greater London and the Greater Tokyo Area superimposed over England.

With a population of around 36 million, making it by far the world’s most populous metropolitan area, it covers an area of approximately 13,500 km² (5,200 mi²), giving it a population density of 2,642 person/km² – which is more than twice the population density of Bangladesh.

The area has the largest metropolitan economy in the world, with a total GDP (nominal) of approximately US$1.9 trillion (¥165 trillion) in 2008.

And visually:

Souce: Amazing Maps

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

• Apple, China Mobile sign long-awaited deal to sell iPhones (Reuters)
• U.S. growth hopes help shares shrug off China money market jitters (Reuters)
• Rule Change on Health Insurance Rattles Industry (WSJ), Obamacare’s signup deadline on Monday has its exceptions (Reuters)
• Tale of Two Polish Mines Shows Biggest EU Producer’s Woes (BBG)
• Probes See U.K. Market Manipulation Reports Rise 43% (BBG)
• Shoppers Grab Sweeter Deals in Last-Minute Holiday Dash (BBG)
• Banks Mostly Avoid Providing Bitcoin Services (WSJ)
• Secret Handshakes Greet Frat Brothers on Wall Street (BBG)
• Businessmen and academics denied entry to Ukraine (FT)
• Quest to Track Nazi Loot Stirs Complex Emotions (WSJ)
• Tiffany Ordered to Pay Swatch $449 Million in Watch Case (BBG)

 

Overnight Media Digest

WSJ

* Monday is the final day for consumers to get health coverage that takes effect on Jan. 1, leaving thousands racing to sign up and insurers trying to figure out whether the law will work in the way they had hoped.

* Lenders are leery of dealing with virtual-currency companies because of concerns that the businesses could run afoul of anti-money-laundering laws or be involved in illegal activities.

* Tough restrictions, such as the Volcker rule, which prohibits banks from owning more than 3 percent of a hedge fund or private equity portfolio, excluded many real-estate loans, allowing Wall Street firms to continue making concentrated bets with their own capital.

* Money managers and analysts say they are beginning to think the Federal Reserve is succeeding in restoring economic growth. Some analysts now think the economy is on the mend, many money managers share the view that, while 2014 probably won’t match 2013, indexes probably will finish the year with gains. That helps explain why stocks surged last week despite the announcement of stimulus cuts.

* Gasoline futures are climbing in response to signs of unseasonably strong demand for the fuel. Prices surged 5.9 percent last week to a three-month high after the U.S. Energy

* Boeing Co’s largest union plans to hold a vote on a contract that would guarantee that the planned 777X jetliner would be assembled at unionized facilities in Washington state.

* The U.S. Transportation Department doesn’t plan to change regulations to better protect underground pipelines from riverbed erosion, a year after Congress ordered it to evaluate its policies in the wake of pipeline breaks that spilled hazardous liquids into waterways.

* As much as a third of all Internet sales gets returned, according to retail consultancy Kurt Salmon. And the tide of goods flowing back to retailers is rising. Shipper United Parcel Service Inc expects returns to jump 15 percent this season from last year, making them a significant and growing cost for retailers.

* YRC Worldwide Inc is close to raising funds to cover upcoming debt payments as the trucking company works to persuade employees to extend their labor contracts for five years, people familiar with the matter said.

* Investment firm Starboard Value LP which has taken a 5.6 percent stake in Darden Restaurants Inc thinks the company’s move to cast off Red Lobster falls short of what is needed to boost Darden’s shares.

* A growing number of Asian textile manufacturers setting up production in the U.S. Southeast to save money as salaries, energy and other costs rise at home. As costs continue to increase in China, textile manufacturers can ship yarn to manufacturers in Central America, which, unlike companies in China, can send finished clothes duty-free to the United States.

* Hedge-fund firm Paulson & Co sold its Washington Mutual Inc bank bonds last week following a lawsuit seeking billions of dollars from the thrift’s 2008 failure, according to people familiar with the move. The giant hedge fund, run by billionaire John Paulson, exited after JPMorgan Chase, which bought the banking operations of Washington Mutual, filed a suit last week against the Federal Deposit Insurance Corp.

 

FT

Apple struck a long-awaited distribution deal on Sunday night with China Mobile, a partnership worth billions of dollars in extra iPhone revenues that finally opens up the largest mobile market to the world’s most valuable technology company.
       
Companies that create data dossiers on consumers are tapping new technologies to unearth ever more intimate information despite intensifying regulatory scrutiny of the multibillion-dollar data broker industry.
   
Britain’s growing army of elderly shoppers is helping to breathe fresh life into the country’s battered high streets, with rising demand for hearing aids, mobility scooters and elasticated trousers sending retailers scuttling to open new stores to cope with growing demand.

Gold and chocolate covered strips of bacon, pastrami from New York’s famous Katz Deli and a subscription for monthly delivery of pickles are among the festive temptations being offered by a whole new generation of food start-ups in the United States.

The crisis in South Sudan, which has left hundreds dead, has started to hit global oil supplies, compounding the effects of production losses in Nigeria and Libya and putting upward pressure on prices.

 

NYT

* Apple Inc and China Mobile, the largest wireless network in the world, announced a deal to bring the iPhone to the Chinese carrier on Jan. 17. An agreement with China Mobile could, at least initially, give Apple a big lift into the vast Chinese market, analysts say, increasing its worldwide sales.

* A plan by the Tribune Company to separate eight newspapers, including The Los Angeles Times and The Chicago Tribune, from its more profitable digital and television businesses could threaten their survival, staff members, industry analysts and a congressman said last week.

* Tiffany & Company was ordered to pay Swatch Group about $449 million in compensation over a contractual dispute, the companies said Sunday. The dispute arose in 2011 when Swatch canceled its cooperation with Tiffany, saying the jeweler was in breach of contract because it was trying to “block and delay” a joint venture that both companies had entered in 2007.

* The police in Bangladesh charged the owners of a garment factory and 11 of their employees with
culpable homicide in the deaths of 112 workers in a fire last year that came to symbolize the appalling working conditions in the country’s dominant textile industry. The fire in Bangladesh, the No. 2 exporter of apparel after China, also revealed the poor controls that top retailers had throughout their supply chain.

* A former United States air base in neighboring Río Hato is set to reopen as an international airport, capable of handling direct flights from Canada and the United States. And the increased traffic is expected to bring more vacation home development in Farallón, best known for its white sandy beach, a rarity along Panama’s coast.

 

Canada

THE GLOBE AND MAIL

* A massive ice storm has plunged large parts of Toronto including the home of Mayor Rob Ford into darkness and crippled Southern Ontario’s transportation grid during one of the busiest travel times of the year, with the slippery aftermath threatening to keep hundreds of thousands without power until Christmas Day.

* Alberta Premier Alison Redford says that heading into 2014, she sees encouraging political signs in relation to approval of the Keystone XL pipeline in the United States, and North Americans are realizing that pipelines are a better means of shipping crude than rail.

* The Supreme Court of Canada effectively gutted Canada’s prostitution laws by finding this week that legislation against street soliciting, living on the avails and keeping a brothel was unconstitutional. The court gave Parliament one year to come up with a new legislative scheme before the old laws are unenforceable.

Reports in the business section:

* In 2013, Canadians who were carrying record debt levels did not shift to frugality as analysts had predicted. Consumers kept on buying, led by record purchases of cars and trucks. The trend is expected to stretch into next year, giving the economy an unexpectedly strong foundation to build on.

NATIONAL POST

* An analysis of federal accounting records by Postmedia News shows that Prime Minister Stephen Harper’s government has offered taxpayers’ subsidies for green projects to money-making companies such as Shell Canada, Suncor Energy Inc, Husky Energy Inc and Enbridge Inc to pursue projects in biofuels production and wind energy as well as new technology to capture carbon pollution and bury it underground. Canadian taxpayers have given more than C$400 million ($374.6 million) to some large oil, gas and pipeline companies in recent years to support green projects.

* Edgar Bronfman, the Canadian-born billionaire and longtime president of the World Jewish Congress, which lobbied the Soviets to allow Jews to emigrate and helped spearhead the search for hidden Nazi loot, died on Saturday at the age of 84.

* The Supreme Court’s ruling on the Constitutional amending formula on whether or how the Senate can be reformed or abolished does not give Nunavut, Yukon or the Northwest Territories a voice on how to change the document that outlines the way Canada is governed.

FINANCIAL POST

* In Vancouver, a new firm, Zipments, which launched in early December, is offering people the chance to make money by making local deliveries on their way to work, or elsewhere. They are dropping off anything from gift baskets, to water bottles, to chocolates and they’re all part of the new, shared economy. Zipments is effectively a franchise of an existing U.S. operation, said Robert Safrata, its chief executive, who owns courier company Novex.

 

China

SECURITIES TIMES

– Chinese investors invested $5.89 billion in the U.S. property market in the first 10 months of this year, six times of the combined value of their investment in 2011 and 2012, according to the data published by the New York-based research institute, Rhodium Group.

CHINA BUSINESS NEWS

– The People’s Bank of China’s pro-tight liquidity stance in recent weeks is believed partly motivated by preventing the repetition of a tradition that government departments rush to spend at the end of a year, analysts said.

CHINA SECURITIES JOURNAL

– The central bank’s pro-tight liquidity stance that has caused a money market squeeze implies that China’s stock market will remain weak in the short term, analysts said.

– Data published by the China Securities Regulatory Commission shows 756 Chinese companies are now on a waiting list to launch stock initial public offerings (IPOs).

SHANGHAI SECURITIES NEWS

– China is expected to build 6 million cheap homes next year in a continuation of a policy to support low-income families, although the number will be slightly less than that of this year.

– The Shanghai Stock Exchange said an unexpected 2-percent fall in China’s main Shanghai Composite Index last Friday was mainly caused by adjustments of share portfolio by a handful of foreign institutional investors in the last few minutes of trading.

CHINA DAILY

– China is moving in the right direction by pledging to set up dedicated courts for intellectual property rights cases, that will help judges become more proficient in handling complex cases, Johannes Christian Wichard, deputy director-general of the World Intellectual Property Organisation, said.

PEOPLE’S DAILY

– China published a chronicle of late leader Mao Zedong during the years from 1949 to 1976 ahead of the 120th anniversary of his birthday on Thursday.

 

Britain

The Telegraph

LIVINGSTON VOWS 10,000 FIRMS TO GET EXPORT HELP

Lord Livingston has vowed to offer each of Britain’s 10,000 medium-sized companies “personal” advice on overseas expansion in an effort to boost exports to £1 trillion a year by 2020.

ONLINE CLOTHING SELLER N BROWN SEEKS 20 STORES TO BOOST GROWTH

The online and catalogue clothes retailer N Brown has appointed property agents to find locations for 20 shops, delivering a timely Christmas boost to Britain’s troubled high streets.

The Guardian

VINCE CABLE: INTEREST RATES MAY HAVE TO RISE TO COMBAT HOUSING BOOM

The business secretary, Vince Cable, has warned that interest rates may have to rise to constrain a “raging housing boom” in London and the south-east.

LATE CHRISTMAS SHOPPING HELPS JOHN LEWIS TO RECORD WEEKLY SALES

A late shopping surge helped John Lewis serve up record weekly sales, but many retailers have been forced to slash prices to entice in cash-constrained customers.

The Times

BARRISTERS SAY ‘NO’ AND PUT FRAUD TRIALS IN JEOPARDY

The future viability of complex and expensive fraud prosecutions has been thrown into doubt after it emerged that there are not enough barristers prepared to defend fraudsters.

WARNING LIGHT FLASHES OVER GREEN LEVIES

Manufacturers are launching a lobbying campaign to persuade the Chancellor to exempt them from green energy levies in the Budget. The steel companies’ trade body is warning that the coalition’s green levies will make industry unable to compete with lower-cost rivals overseas.

The Independent

RETAILERS PANIC AND SLASH PRICES AMID LOW SALES

Retailers have slashed their prices this weekend in the hope that shoppers will finally flood Britain’s high streets today after one of the slowest Christmases on record.

 

Fly On The Wall 7:00 AM Market Snapshot

ANALYST RESEARCH

Upgrades

ARIAD (ARIA) upgraded to Outperform from Market Perform at William Blair
Five Below (FIVE) upgraded to Outperform from Neutral at Credit Suisse
Fortinet (FTNT) upgraded to Outperform from Neutral at RW Baird
Heartland Express (HTLD) upgraded to Buy from Hold at BB&T
LivePerson (LPSN) upgraded to Buy from Hold at Benchmark Co.
Sarepta (SRPT) upgraded to Neutral from Underweigh
t at Piper Jaffray
Skullcandy (SKUL) upgraded to Buy from Neutral at Roth Capital
Teekay Offshore Partners (TOO) upgraded to Overweight from Neutral at JPMorgan
United Therapeutics (UTHR) upgraded to Neutral from Underweight at JPMorgan
Xilinx (XLNX) upgraded to Buy from Hold at Drexel Hamilton

Downgrades

Coleman Cable (CCIX) downgraded to Hold from Buy at BB&T
Micron (MU) downgraded to Underperform from Neutral at BofA/Merrill
Navios Maritime Partners (NMM) downgraded to Neutral from Overweight at JPMorgan

Initiations

CONSOL Energy (CNX) reinstated with a Neutral at Goldman
Darling (DAR) reinstated with an Outperform at BMO Capital
Extended Stay America (STAY) initiated with a Buy at BofA/Merrill
Extended Stay America (STAY) initiated with a Hold at Stifel
Extended Stay America (STAY) initiated with a Neutral at Citigroup
Extended Stay America (STAY) initiated with a Neutral at Goldman
Extended Stay America (STAY) initiated with a Neutral at RW Baird
Extended Stay America (STAY) initiated with an Overweight at JPMorgan
NASDAQ (NDAQ) initiated with a Neutral at JPMorgan
OGE Energy (OGE) initiated with a Hold at KeyBanc
Plains All American (PAA) initiated with a Buy at Wunderlich
Plains GP Holdings (PAGP) initiated with a Buy at Wunderlich
Salesforce.com (CRM) initiated with an Outperform at BMO Capital
US Ecology (ECOL) initiated with an Outperform at Raymond James

HOT STOCKS 

Apple (AAPL), China Mobile (CHL) announced multi-year iPhone agreement
Engility Holdings (EGL) to acquire Dynamics Research (DRCO) for $11.50 per share in cash
Archer Daniels (ADM) reached Foreign Corrupt Practices Act settlement with DOJ, SEC
CIT Group (CIT) to pay $60M to settle with Tyco (TYC)
Tiffany (TIF) lowered FY14 outlook after Dutch court ruled in favor of Swatch Group (SWGAY), to take charge of $295M-$305M in Q4
CIT Group (CIT) to pay $60M to settle with Tyco (TYC)
Tribune (TRBAA), Time Warner Cable (TWC) announced new retransmission consent agreement
Arden Group (ARDNA) to be acquired by TPG for $126.50 per share in cash
CMS Bancorp (CMSB) announced termination of merger with Customers Bancorp (CUBI)

NEWSPAPERS/WEBSITES

• Behind the uptick in e-commerce is a little known secret: As much as a third of all Internet sales gets returned, and the tide of goods flowing back to retailers is rising. UPS (UPS) expects returns to jump 15% this season from last year, making them a significant and growing cost for retailers (LINTA, BBY, GPS, JWN, AMZN), the Wall Street Journal reports
• Today is the final day for consumers to get new health coverage that takes effect when the new year arrives, leaving thousands of people racing to sign up in time—and health insurers (CNC, UNH, WLP, CI, HUM) trying to figure out whether the federal health law will work in the way they had hoped, the Wall Street Journal reports
• GM’s (GM) European unit Opel is cautiously optimistic that sales will grow enough in 2014 to avoid a further round of cost cutting, CEO Karl-Thomas Neumann told newspaper Sueddeutsche Zeitung, Reuters reports
• Unionized workers at Boeing (BA) will vote on January 3 on the company’s latest proposed contract, according to the International Association of Machinists and Aerospace Workers last night, Reuters reports
• Fiat (FIATY) CEO Sergio Marchionne privately restarted negotiations with a UAW medical trust to buy the remaining shares of Chrysler Group LLC, sources say, Bloomberg reports
• Las Vegas Sands (LVS) billionaire Sheldon Adelson said he is considering building individual integrated resorts in major European cities, 10 days after abandoning a plan to construct a $30B mega-resort in Spain, Bloomberg reports

BARRON’S

Nike (NKE) facing near-term earnings headwinds
American Tower (AMT) could rise over 20%
Ambac Financial (AMBC) could rise 50% in a year
PVH Corp. (PVH) could see higher profits
A. M. Castle (CAS) could recover to $16.00 in the next year
Apache (APA) could rise over $100
A Discovery (DISCA) bid for Scripps (SNI) could draw takeover interest (VIAB, FOXA, DIS)

SYNDICATE

Facebook (FB) 70M share Secondary priced at $55.05
CollabRx (CLRX) files to sell $10M in common stock, preferred stock purchase rights

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/gpN-Yxw0xxo/story01.htm Tyler Durden

Anyone who had the pleasure of trading the long bond March future ZB H4 just before 1:40 am Eastern witnessed one of the more abnormal fat fingers seen in recent months, one that did not involve equities but instead was all bond…. long bond, which soared from 130 to over 135, after a large clip was traded on what was apparently an erroneous buy order put through during very illiquid trading. Then again, with no trades busted by the CME (yet), maybe it was intentional.

They saw this:

 

And, zoomed in, this.

It is unclear who or why executed the fat finger: we expect to learn more today, although we do know that a move like this during regular trading hours would have had an unprecedented and very adverse impact on not only bonds, but absolutely all risk-chasing asset classes. Let’s just hope it’s not a test, and certainly not a harbinger of what’s in store for bond traders now that HFT algos have firmly moved into the asset class and where “price action” is determined solely by what someone else’s “price” does.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/aYCO197lNuE/story01.htm Tyler Durden

Another day, another low volume overnight meltup to record highs in equity futures. Stocks traded higher in Europe this morning, with tech stocks outperforming following reports that Apple has finally secured a deal to bring the iPhone to China Mobile, which has more than 750 million subscribers. As a result, the likes of ARM Holdings and STMicro traded with gains of over 2% and Apple’s German listing traded up  around 2.5%. At the same time, French CAC index under performed its peers, with Technip among the worst performing stocks after being removed from Goldman’s Sustained Focus List. Addtionally, over the weekend, the ECB’s Praet said that the ECB is ready to intervene if credit contracts – and since Euro credit is contracting at a record pace, we wonder what he is waiting for. This happened as Fitch affirmed France at AA+, outlook stable. Looking elsewhere, thin trading conditions resulted in an aggressive spike higher in CME US 30y futures this morning after a large clip was traded, which consequently saw the exchange adjust prices lower, but did not bust any trades.

Overnight headline news bulletin from Bloombeg and RanSquawk

• Stocks traded higher in Europe this morning, with tech stocks outperforming following reports that Apple has finally secured a deal to bring the iPhone to China Mobile.
• Thin trading conditions resulted in an aggressive spike higher in CME US 30y futures this morning after a large clip was traded.
• Going forward, market participants will get to digest the release of the latest U. Michigan Confidence survey, but the price action is expected to remain somewhat muted give the looming holidays.
• Treasury yields rise, led by 5Y and 7Y maturities, as bear-flattening spurred by Fed taper continues; trading likely to be quiet this week with early close tomorrow, Christmas holiday Wednesday.
• Japan unveiled a record budget for the next fiscal year, as Prime Minister Abe boosts spending on social security, defense and public works while trying to contain the growth of the world’s biggest debt burden
• China’s benchmark money-market rate climbed for a seventh day and interest-rate swaps increased as banks hoarded cash to meet year-end regulatory requirements
• The yuan advanced to its strongest level in 20 years as the People’s Bank of China raised the currency’s reference rate by the most in two weeks
• Central bankers from around the world will meet next month to discuss whether to scale back their plans for a debt limit that banks say will force them to rein in lending
• The deadline to enroll in Obamacare health plans that begin Jan. 1 is today for most of the U.S., a cutoff that remains firm even as the Obama administration has urged insurers to allow retroactive sign-ups into next month
• Apple Inc., ending six years of negotiations, struck a deal to sell the iPhone through China Mobile Ltd., giving both companies a means to fight declining share in the market of 1.2 billion wireless subscribers
• Sovereign yields mostly higher. EU peripheral spreads tighten. Asian stocks steady to higher. European stocks and U.S. equity index futures gain. WTI crude and gold fall, copper little changed

Asian Headlines

Chinese propaganda officials have ordered financial journalists and some media outlets to tone down their coverage of a liquidity crunch in the interbank market, in a sign of how worried Beijing is that the turmoil will continue when markets reopen today.

EU & UK Headlines

ECB’s Praet said the ECB are ready to intervene if credit contracts.

German Import Price Index (Nov) M/M 0.1% vs. Exp. -0.1% (Prev. -0.7%)
German Import Price Index (Nov) Y/Y -2.9% vs. Exp. -3.1% (Prev. -3.0%)

Italian Consumer Confidence Index (Dec) M/M 96.2 vs Exp. 98.7 (Prev. 98.3, Rev. 98.2)

At 1400GMT there is the budget law confidence vote in the Italian Senate after the Italian government won a confidence vote on the budget law in the lower house on Friday.

Money market rates are continuing to edge higher and the short-sterling curve bear-steepened in what was an extension of the trend seen late last week, after both UK Unemployment and UK GDP came in better than expected. Following this the Sunday Times wrote: “The BoE could face pressure to change its forward guidance policy as early as March due to a faster than expected fall in unemployment”.

Barclays pan-Euro agg month-end extensions: +0.03y

Barclays Sterling month-end extensions:+0.06y

US Headlines

IMF’s Lagarde said tapering shows confidence in the economic outlook and the IMF may raise its expectations for US growth next year.

At 0737 there was a spike in the CME US 30y futures. This was not as a result of fundamental news flow but a large clip hitting stops in thin holiday volumes. Later the CME said that all trades in ZBH4 above 131-12 will be adjusted to 131-12, UBH4 above 140-17 will be adjusted to 140-17.

Equities

Following on From Apple signing a deal with China Mobile over bring the iPhone to China, the tech sector is leading the way in Europe with the likes of ARM Holdings, STMicroelectronics and Dialog Semiconductors all trading in positive territory. The DAX is the outperforming index this morning, being supported by it’s blue-chip names . Whilst the IBEX 35 is the underperformer after Repsol going ex-div and the CAC is being weighed upon by Technip who were removed from Goldman’s Sustained Focus List.

FX

FX markets are relatively rangebound amid the light volumes as markets head into the festive period with little in the way of macroeconomic releases or economic commentary to act as a guide for price action.

Overnight, minor USD weakness did lead to some gains in GBP/USD and EUR/USD. However, this move has been pared in European trade. Elsewhere overnight, AUD did see some strength which saw AUD/NZD attempt to climb back above the 1.0900 level. However, this move failed to bear fruition.

Commodities

WTI and Brent crude futures are trading lower as Iraq crude oil output was reported to have risen to 3.42mln bpd vs. 3.1mln bpd for November. However OPEC ministers met at the weekend and stated that they wont need to cut production in 2014 because growth in demand can absorb any additional crude from Iran or Libya.

Gold continues to head south after stops were tripped on the break of USD 1200. Last week’s low seen at USD 1187.13 and then end-June lows at USD 1180.50.

SocGen sees gold falling to USD 1,050 an ounce in 2016

The Iranian Deputy Foreign Minister Abbas Araghchi said Iran will agree on a specific uranium enrichment percentage in the final round of negotiations over its nuclear program.

Workers voted to end a strike over pay at Total’s Donges refinery in western France on Sunday, though industrial action continued at three other plants.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/5nu-RJ-oB5M/story01.htm Tyler Durden

Submitted by Nick Cunningham via OilPrice.com,

A new report from UBS finds that renewable energy and energy storage are together presenting a “perfect storm” for big utilities. The declining cost of solar, energy efficiency, and electric vehicle technologies threaten to upend centralized electricity generation, putting the utility business model in jeopardy. Grid parity has already been achieved in certain parts of the world where conventional electricity rates are high and renewable resources are plentiful.

Renewable energy is beginning to cut into the bottom line for U.S. utilities. The average price for solar PV modules declined by 80% between 2008 and 2012. Net metering policies and innovative financing schemes like SolarCity’s leasing model are making distributed generation – where consumers generate power on-site – much more financially viable. This leads to a utility “death spiral,” in which utilities begin to lose customers, forcing them to jack up rates to cover lost revenue, which in turn pushes more people away. As of 2011, about three-quarters of U.S. utilities had a BBB credit rating or worse, indicating a striking lack of confidence in their financial future. In 2000, less than 40% of utilities earned such an abysmal grade.

This concept is not new, but UBS’ report suggests the trend is picking up steam, particularly in developed markets with flat electricity demand including parts of the United States, Europe, and Australia. Data from the Energy Information Administration (EIA) shows that electricity sales have declined in four of the last five years in the U.S. While some of the drop off is attributable to the financial crisis and subsequent recession, energy efficiency and distributed generation are playing a key role. According to the EIA, “[g]rowing installed capacity of behind-the-meter sources of generation (largely from rooftop solar) is displacing some electricity sales that would otherwise occur.”

The latest UBS report finds that not only is solar PV eating into the utilities’ customer base, but it is also shaving off peak demand. Solar generates the most output during mid-afternoons, when demand is at its highest. With variable costs for renewables essentially nil, they beat out more expensive fossil fuel units. The result is leading to curtailed generation from big power plants along with lower peak electricity prices – a nightmare for utilities.

The unfolding transition to cleaner energy will force utilities to respond in a few ways. Some are fighting incentives that promote clean energy, as seen in the brutal fight in Arizona over its net metering policy. Another approach is for utilities to get into the clean energy game, which many have been doing for some time. The latest example came on December 16 when Warren Buffet’s MidAmerican Energy placed a $1 billion order for wind turbines in Iowa, as “a hedge for our customers going forward in an era of reduced coal generation,” according to MidAmerican’s CEO Bill Fehrman.

Yet another approach is to scale back generation and embrace the bold new world of distributed generation. In Germany, several utilities have announced power plant closures and are considering transitioning into a model where they offer energy “services,” such as trading and advice to customers, according to The Economist. Germany may be a harbinger of the future – in June 2013 prices actually went negative because of so much green power on the grid at one time. Germany’s two biggest utilities, E.On and RWE, have both seen their net income drop by one-third since 2010.

Earlier this year NRG CEO David Crane warned about the looming decline of the Big Utility, arguing that distributed generation poses a “mortal threat to the existing utility system.” More telling was a January 2013 report from the Edison Electric Institute, a trade group for utilities, which concluded that distributed generation presents a “game changer” – strong words from an organization with an interest in preserving the confidence of investors. Add to the pile the latest UBS report, which concludes that utilities will not be able to survive in their current form.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/JASSIwU8bMY/story01.htm Tyler Durden

Submitted by Nick Cunningham via OilPrice.com,

A new report from UBS finds that renewable energy and energy storage are together presenting a “perfect storm” for big utilities. The declining cost of solar, energy efficiency, and electric vehicle technologies threaten to upend centralized electricity generation, putting the utility business model in jeopardy. Grid parity has already been achieved in certain parts of the world where conventional electricity rates are high and renewable resources are plentiful.

Renewable energy is beginning to cut into the bottom line for U.S. utilities. The average price for solar PV modules declined by 80% between 2008 and 2012. Net metering policies and innovative financing schemes like SolarCity’s leasing model are making distributed generation – where consumers generate power on-site – much more financially viable. This leads to a utility “death spiral,” in which utilities begin to lose customers, forcing them to jack up rates to cover lost revenue, which in turn pushes more people away. As of 2011, about three-quarters of U.S. utilities had a BBB credit rating or worse, indicating a striking lack of confidence in their financial future. In 2000, less than 40% of utilities earned such an abysmal grade.

This concept is not new, but UBS’ report suggests the trend is picking up steam, particularly in developed markets with flat electricity demand including parts of the United States, Europe, and Australia. Data from the Energy Information Administration (EIA) shows that electricity sales have declined in four of the last five years in the U.S. While some of the drop off is attributable to the financial crisis and subsequent recession, energy efficiency and distributed generation are playing a key role. According to the EIA, “[g]rowing installed capacity of behind-the-meter sources of generation (largely from rooftop solar) is displacing some electricity sales that would otherwise occur.”

The latest UBS report finds that not only is solar PV eating into the utilities’ customer base, but it is also shaving off peak demand. Solar generates the most output during mid-afternoons, when demand is at its highest. With variable costs for renewables essentially nil, they beat out more expensive fossil fuel units. The result is leading to curtailed generation from big power plants along with lower peak electricity prices – a nightmare for utilities.

The unfolding transition to cleaner energy will force utilities to respond in a few ways. Some are fighting incentives that promote clean energy, as seen in the brutal fight in Arizona over its net metering policy. Another approach is for utilities to get into the clean energy game, which many have been doing for some time. The latest example came on December 16 when Warren Buffet’s MidAmerican Energy placed a $1 billion order for wind turbines in Iowa, as “a hedge for our customers going forward in an era of reduced coal generation,” according to MidAmerican’s CEO Bill Fehrman.

Yet another approach is to scale back generation and embrace the bold new world of distributed generation. In Germany, several utilities have announced power plant closures and are considering transitioning into a model where they offer energy “services,” such as trading and advice to customers, according to The Economist. Germany may be a harbinger of the future – in June 2013 prices actually went negative because of so much green power on the grid at one time. Germany’s two biggest utilities, E.On and RWE, have both seen their net income drop by one-third since 2010.

Earlier this year NRG CEO David Crane warned about the looming decline of the Big Utility, arguing that distributed generation poses a “mortal threat to the existing utility system.” More telling was a January 2013 report from the Edison Electric Institute, a trade group for utilities, which concluded that distributed generation presents a “game changer” – strong words from an organization with an interest in preserving the confidence of investors. Add to the pile the latest UBS report, which concludes that utilities will not be able to survive in their current form.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/JASSIwU8bMY/story01.htm Tyler Durden

Submitted by Ben Hunt of Epsilon Theory

 

The Construction of Robert Capa

 

I went to the Democratic Convention as a journalist, and returned as a cold-blooded revolutionary.

      – Hunter S. Thompson

 

Some people will say that words like scum and rotten are wrong for Objective Journalism — which is true, but they miss the point. It was the built-in blind spots of the Objective rules and dogma that allowed Nixon to slither into the White House in the first place. He looked so good on paper that you could almost vote for him sight unseen. He seemed so all-American, so much like Horatio Alger, that he was able to slip through the cracks of Objective Journalism. You had to get Subjective to see Nixon clearly, and the shock of recognition was often painful.

     – Hunter S. Thompson

 

It is said that God is always on the side of the big battalions.

     – Voltaire

 

There ain’t nothin’ more powerful than the odor of mendacity … You can smell it. It smells like death.

      – Tennessee Williams, “Cat on a Hot Tin Roof”

 

Capa: He was a good friend and a great and very brave photographer. It is bad luck for everybody that the percentages caught up with him. It is especially bad for Capa. He was so much alive that it is a long hard hard long day to think of him as dead.

      – Ernest Hemingway, hand-written note after learning of Capa’s death, May 1954

 

Unless you’re an avid photography buff, you’ve probably never heard of Robert Capa. That’s his most famous photograph at the top of this note, taken – as the story goes – in 1938 during the Spanish Civil War when Capa, embedded with a company of Republican volunteers, snapped a shot of a comrade right at the moment he took a Nationalist bullet in the brain. Capa landed with the Allied troops on the Normandy beaches at D-Day, rode with Patton’s tank column into Paris, spent 1948 and 1949 photographing the immigrants who built Israel, and died in 1954 while documenting the French retreat from a fort in Northern Vietnam. He was a personal friend of Picasso, Steinbeck, and Hemingway. He was Ingrid Bergman’s lover. Quite a life!

But in truth there was no Robert Capa. Or rather, “Robert Capa” was the invented persona of Andre Friedmann and his fiancée, Gerda Pohorylle. Friedmann was born in Budapest in 1913. He was smart, Jewish, and idealistic – three qualities that made him persona non grata with the Hungarian authorities. They assumed he was a Communist (although the local Communist Party wanted nothing to do with Friedmann, as his father was a tailor and thus he was too bourgeois for their taste), and after a particularly nasty beating at the hands of the political police he left Hungary for Berlin in 1931 at the age of 18. This, of course, was jumping from the frying pan into the fire for a young Jewish intellectual, but at least he was able to develop his talents for photography over the next 2 years before fleeing the rise of Nazism and relocating to Paris with Pohorylle.

Friedmann had a beautiful Leica camera (which he kept in hock at the pawn shop most of the time) and started taking photographs of the political events roiling France and Belgium. Fascism was by no means exclusively a German political development, and the streets of Paris and Brussels and Strasbourg were home to rallies and demonstrations by the Right and the Left alike. He had a phenomenal eye, and Gerda (who had changed her last name to Taro) had found a position in a photography agency where she could sell his work, so the future looked bright. But no one wanted to buy anything by this Friedmann fellow, and just changing his name to something non-Jewish wasn’t going to help. No, Friedmann and Taro decided, what they needed was a story.

Friedmann became the darkroom employee and Taro became the exclusive representative of “Robert Capa” – a rich, famous American photographer visiting Paris and bringing his unique American eye to the European scene. Moreover, because Capa was independently wealthy and didn’t really care about money, he would only sell his photographs for three times the going rate … a bargain at twice the price for a lowly Parisian newspaper seeking to print the work of this acclaimed artist. Of course, the plan worked. The photographs of Robert Capa became the toast of Paris, and money started rolling in for the young couple. In fact, a few months later Taro wrote to an American photography agency, claiming to be the exclusive representative of the world-famous French photographer Robert Capa, a ruse that worked just as well as the original.

At one point it seemed that the gig might be up when the publisher of Capa’s main Parisian outlet caught onto the act, but fortunately the publisher recognized the power of the Common Knowledge game … he was delighted that Friedmann and Taro had created the persona of Capa, because by then this by-line helped him sell more magazines. In fact, the publisher hired the plane that took Friedmann and Taro down to Spain to take pictures of the Civil War, and with the publication of “The Falling Soldier” in newspapers all over the world Andre Friedmann became Robert Capa once and for all.

Unfortunately, there’s not a Hollywood ending here. Gerda Taro (who probably was the actual photographer of “The Falling Soldier”, not Capa) was crushed by a tank in Spain a year after the photo was published, and afterwards it seems to me that Friedmann lost himself in the Capa persona. The post-Capa conversion photographs are all well and good, but it’s the pre-Capa conversion photos of life and politics in pre-WWII France and Belgium that really move me. I get the feeling that the constructed nature of Capa’s identity must have plagued him for the rest of his too-short life, that it became a very heavy weight, something to live up to rather than to live with. I mean … look at the movie star affairs, the suicidal professional risks, the Famous Artist “friends”. Are there any two human beings more self-consciously constructed or self-absorbed than Pablo Picasso and Ernest Hemingway? Look at Hemingway’s note on Capa’s death, where Papa makes a joke about Capa’s luck and can’t help himself but to scratch out a few words to make the prose more writerly. A great author, certainly, but a great friend? Not so much.

Still, I think there’s more to the Robert Capa story than a real-life example of the Emperor’s New Clothes and the Common Knowledge game, or a cautionary tale about losing oneself in a tangled web of identity invention. Three points …

First, Capa made no pretense that he and Taro were engaged in some sort of “objective” reporting of the conflicts they covered. They chose sides. Capa was with th
e Spanish Republicans, not Franco’s Nationalists. He was with the Allies, not the Germans. He was with the Chinese in 1938, not the Japanese. He was with Israel. He was with France. Moreover, he was an advocate for his chosen sides. There is a message in “The Falling Soldier”, and it’s intentional. The Capa persona might have been a pretense, but there is an honesty to the Capa work. It’s the same thing I admire about Hunter S. Thompson (also a pretty thoroughly constructed identity) … the guy may have been a dysfunctional nut job in most respects, but he sure could turn a phrase and you knew exactly where he was coming from.

Both Capa and Thompson were opposed to the anti-liberal, statist forces of their day and time. For Capa it was the Fascists of Spain, Germany, and Japan. For Thompson it was the Nixon Administration. For me it’s the theocracy of modern economic science, where our small-l liberal institutions have either been captured or are under assault by a particular brand of intellectual orthodoxy that cements its soft authoritarian control by a psychological persuasion of our social animal brains. It’s that last bit that bugs me the most … the way in which the value judgments that underpin monetary and fiscal policy are sold to us as an objectively or scientifically correct expression of our self-interest. It’s the sheer mendacity of the enterprise that galls me. As Tennessee Williams wrote, “There ain’t nothin’ more powerful than the odor of mendacity … You can smell it. It smells like death.”

Second, Andre Friedmann had to re-invent himself as Robert Capa in order to get his photos published. Talent wasn’t nearly enough to overcome a pervasive global environment of anti-Semitism, classist and nationalist prejudices, etc. etc. Today Friedmann could put up a website using Bluehost and WordPress for about the cost of one inflation-adjusted jar of developing fluid, come up with some semi-clever name like “F-stop Theory”, add a few artsy quotes, and bingo … global distribution to hundreds of thousands of viewers. Trust me on this. It can be done.

It’s all well and good to say that the more things change the more things stay the same, and for questions of human nature I’m in total agreement with that sentiment. But the fact is also that the tools invented by the human animal can create permanent and structural change in human society. The Internet is one such tool – maybe not on a par with the taming of fire but certainly on the top 10 list – as it has transformed every aspect of communication. Why is this important? For social animals like ants, termites, and humans communication is everything. For better and worse, we are biologically and culturally evolved to respond to signals from other humans, and a tool that  makes it possible for any one of us to signal every one of us is … breathtaking in its power. This is the singular thing that gives me any hope at all that the bloodless coup we have suffered in the form of NSA Omniscience and Central Bank Omnipotence can be reversed. There are independent and honest voices out there today, and there will be more voices tomorrow. Is there a lot of dreck floating around, a thousand comment cesspools for every David Rosenberg? Sure. But my faith as a small-l liberal is that so long as the voices can be heard, the competition of ideas and opinions will push the most useful of those voices to a place where everyone can hear them. And that’s how the pernicious dynamic of the Emperor’s New Clothes is broken … by an honest voice that’s heard above the crowd. The Internet makes that possible.

Third, and this has nothing to do with Capa himself, there’s an important market lesson to be drawn from the photograph and the war that made him famous. The story behind “The Falling Soldier,” at least as Capa told it, was of a brave but disjointed and unorganized assault on an entrenched Nationalist machine gun. Capa’s company of volunteers would send a couple of men over the trench and they’d get mowed down. Then the rest of the company would fire at the machine gun with their rifles, receive no fire in return, and so assume that one of their crack marksmen had knocked the machine gun out. At that point another cadre of Republicans would leap out from cover to charge the machine gun, probably shouting “Viva la republica!” or something like that, only to get mowed down as well. Wash, rinse, repeat. In many ways the entire history of the Republican defeat in the Spanish Civil War, particularly the history of the International Brigades, is encapsulated by this doomed assault on a professionally manned machine gun. The International Brigades and other Republican volunteers were a motley crew, under-equipped and under-officered, mostly ardent believers in some Leftist –ism like Trade Unionism or Communism or some such, willing to give their lives to prevent the spread of Fascism. If you’ve never read George Orwell’s Homage to Catalonia, you should. But what they lacked in training and materiel they made up for in conviction … and they got smoked. By 1939 Franco had wiped out all effective resistance, and 500,000 Republicans fled to France where they spent the next several years in internment camps.

The notion that individual conviction and bravery is a #MassiveFail when compared to a machine gun nest seems obvious and trite to us today. Strangely enough, though, when it comes to prevalent notions of market behavior it feels like we’re still in 1936. What I mean is that there is still a dominant belief in individual decision-making as the most effective route to successful investing, that if we could just learn a little bit more about Company X or Sector Y we will win the day. Is your individual knowledge and conviction level in Company X important for investing success? Absolutely, in exactly the same way that physical and psychological bravery is important for war-fighting success. Still more important, though, is the strength and cohesion of the groups that share your investment philosophy. Not your specific investment opinions, any more than one soldier has the same amount and type of instantiated bravery as another soldier in his unit, but the coherence of investment goals and operational practices across your fellow market participants in a particular market segment. This is the core insight of Adaptive Investing – that investment success requires a rigorous analysis of both individual AND group dynamics, and that modern evolutionary theory is a better place to find the tools for that analysis than modern economic theory. Ragtag crews, no matter how brave or informed, tend not to do very well in war or markets. If I’m going into battle or taking a market exposure … yes, I want to have personal conviction and information. But even more so I want to know if I have the intra-group and inter-group dynamics on my side. God is always on the side of the big battalions, said Voltaire, and that sounds like pretty good investment advice, too.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/ke9he–kw5M/story01.htm Tyler Durden

The last time China’s birdflu epidemic dominated the ether, and internet, was in April, when news of numerous casualties led many to believe that the epidemic was on the verge of breaching all local containment measures. And then, suddenly, all media coverage of China’s H7N9 story disappeared as if by Department of Truth (and propaganda) magic. Naturally, the quick popular response was to assume that all was again well since the government no longer made it a notable topic – just like the Japanese government did with Fukushima. However, as in the case of Fukushima, it turns out all may not have been well. As Japan’s NHK reports, H7N9 bird flu strain is once again spreading in southern China, claiming the 148th victim of the vicious flu virus. Or perhaps instead of “once again” it was simply “constantly.”

From NHK:

Provincial authorities in southern China are increasing measures against the spread of the H7N9 bird flu. They are warning that the chance of contracting the disease is rising.

 

Health officials of Guangdong Province said on Thursday that a 38-year-old man in Shenzhen came down with the H7N9 strain. The man is being treated at hospital and remains in critical condition.

 

This is the 148th case of human H7N9 infection in mainland China, Taiwan and Hong Kong. The first case emerged in Shanghai in March.

 

Reports of the H7N9 infection entered a lull in the summer. But Guangdong officials say the 38-year-old man is the 4th human infection case over the past week. Hong Kong authorities also confirmed the H7N9 virus in 2 people who had visited the province this month.

 

Guangdong’s government is increasing its counter-measures. It is sending teams of experts to inspect live poultry markets and medical institutions across the province.

Others aren’t waiting for the diligent, honest and accurate Chinese government to do its job. Because as SCMP reports, in next door neighbor Hong Kong, sales of chicken have already plunged by 40% on just the several hushed bird flu stories alone.

Chicken was absent from many local dinner tables last night as Hongkongers celebrated winter solstice, with wet market vendors complaining of a drop in sales because of bird flu fears.

 

Trader Ma Ping-loon, a member of the Poultry Dealers and Workers Association, said business was down about 40 per cent from last year’s festival. “We’re badly affected by this. Very few people are buying chicken compared with last year. Sales have been slow all day,” Ma said.

 

He added that the price for one catty (about 600 grams) of fresh chicken fell 30 per cent yesterday to about HK$45. A live-chicken vendor at the Java Road Municipal Services Building in North Point said sales of both local chickens and those imported from the mainland were down compared with last year, but the prices were about the same.

 

One shopper at the market said she would serve seafood instead of
chicken this year. “I’m avoiding any form of contact with chicken,
whether it’s dead or alive,” she said, adding that she had made the
decision after news of the first death from the new strain of bird flu
affecting humans, H10N8, in Jiangxi province.

Hopefully it is not seafood from the Fukushima region. As for the sources of this latest breakout:

Mainland health authorities last week confirmed that an elderly woman died earlier this month after contracting H10N8, another strain of bird flu that has crossed the species barrier.

 

…

 

The latest case is a 38-year-old migrant worker who lives and works in Nanwan Street, Longgang, near the market, who was in critical condition in hospital.

 

A second patient, a 39-year-old man from Dongguan, commuted to the district.

 

The pair follow Tri Mawarti, a domestic helper who on December 2 became the first person in Hong Kong diagnosed with the virus. She is believed to have handled a live chicken at a flat in Nanwan Street before falling ill.

 

Guangdong has confirmed six cases of H7N9 in humans since August. So far, there have been 143 confirmed cases on the mainland, in Taiwan and Hong Kong.

 

Meanwhile, public hospitals in Hong Kong have stepped up tests for bird flu. All patients with pneumonia and flu-like symptoms are required to be tested for bird flu, even if they have not come into contact with birds or poultry or travelled recently.

In other words, in the food heavy CPI-weighed country of China, as a result of tumbling demand for chickens and associated prices, the market may once again assume that there is deflation any minute just because the ultraviolet light special for chickens is on.

That, and of course the staff of YUM having to “explain” why its KFC China sales are once again about to crater, and why it is nothing to be concerned about.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/1UU4PMXmJF4/story01.htm Tyler Durden

How do you “fix” a nations’ banking system’s increasingly desperate need (and dependence upon) for government-provided liquidity without giving in and just providing all the inflation-stoking liquidity the banks demand? Simple – in China – you ban the media from discussing it. As The FT reports, Chinese propaganda officials have ordered financial journalists and some media outlets to tone down their coverage of a liquidity crunch in the interbank market, in a sign of how worried Beijing is that the turmoil will continue. The censors have warned reporters not to “hype” the multiple-sigma spikes in overnight-funding rates and have forbidden the press from using the Chinese words for “cash crunch.”

Of course – early prints in today’s repo market are seeing levels normalize back to around 4-5% (just as Goldman Sachs ‘suggested’ they would because this liquidity spike is nothing but ‘seasonals’ – hhhmm)

 

Via The FT,

Chinese propaganda officials have ordered financial journalists and some media outlets to tone down their coverage of a liquidity crunch in the interbank market, in a sign of how worried Beijing is that the turmoil will continue when markets reopen on Monday.

 

Short-term interest rates for loans in the interbank market shot up last week in an apparent repeat of the cash crunch in June

 

…

 

Money market rates surged again on Friday, even after China’s central bank announced on Thursday evening that it had carried out “short-term liquidity operations” to alleviate the problem.

 

…

 

In response Chinese censors have warned financial reporters not to “hype” the story of problems in the interbank market, and in some cases have forbidden them from using the Chinese words for “cash crunch” in their stories, according to two people with direct knowledge of the matter who asked not to be named.

 

The Communist party’s powerful propaganda department and various other party and government bureaux frequently issue bans and detailed instructions to Chinese media on “sensitive” issues that could undermine party legitimacy.

 

…

 

That directive also ordered media to “strengthen their positive reporting” and “fully report the positive aspect of our current economic situation, bolstering the market’s confidence”, according to a copy obtained by the FT.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/Zv1I63MfpJs/story01.htm Tyler Durden