Tag: finance

While the WSJ already broke the news yesterday that Hewlett Packard would split in two companies, and as such today’s “shocking” announcement will hardly have the impact of the just as “surprising” split of PayPal which came on the last day of September, what is probably most notable is that just as in the case of PayPal, so for Hewlett-Packard, the financial advisor, i.e., the company which pitched the spin off to executives, was none other than Goldman. One wonders where else Goldman is advising on “spin offs” to take advantage of the bubbly stock market valuations. As a reminder, HPQ is only doing this deal and accessing the public markets now because several years ago it tried to do exactly the same thing in a private transaction with a strategic or financial buyer, and found no bids. Luckily, now we have central bank froth and pervasive risk euphoria to help management bail out at the highest possible stock price.

From the Press Release:

HP to Separate Into Two New Industry-Leading Public Companies

• Hewlett-Packard Enterprise Will Define the Next Generation of Technology Infrastructure, Software and Services for the New Style of IT HP Inc.
• Will Be the Leading Personal Systems and Printing Company Delivering Innovations That Will Empower People to Create, Interact and Inspire Like Never Before
• Strategic Step Provides Each New Company With the Focus, Financial Resources and Flexibility to Adapt Quickly to Market and Customer Dynamics While Generating Long-Term Value for Shareholders

Highlights:

• Hewlett-Packard Enterprise will build upon HP’s
  leading position in servers, storage, networking, converged systems,
  services and software as well as its OpenStack Helion cloud platform
• Meg
  Whitman to be President and Chief Executive Officer of Hewlett-Packard
  Enterprise; Pat Russo to be Chairman of Hewlett-Packard Enterprise Board
• HP
  Inc. will be the leading personal systems and printing company with a
  strong roadmap into the most exciting new technologies like 3D printing
  and new computing experiences
• Dion Weisler to be President and Chief Executive Officer of HP Inc.; Meg Whitman to be Chairman of the HP Inc. Board
• Company
  reiterates fiscal 2014 non-GAAP diluted net earnings per share (EPS)
  outlook of $3.70 to $3.74 and updates GAAP diluted net EPS outlook to
  $2.60 to $2.64
• Company issues fiscal 2015 non-GAAP diluted net EPS outlook of $3.83 to $4.03 and GAAP diluted net EPS outlook of $3.23 to $3.43
• HP
  (NYSE: HPQ) today announced plans to separate into two new publicly
  traded Fortune 50 companies: one comprising HP’s market-leading
  enterprise technology infrastructure, software and services businesses,
  which will do business as Hewlett-Packard Enterprise, and one that will
  comprise HP’s market-leading personal systems and printing businesses,
  which will do business as HP Inc. and retain the current logo.
  Immediately following the transaction, which is expected to be completed
  by the end of fiscal 2015, HP shareholders will own shares of both
  Hewlett-Packard Enterprise and HP Inc. The transaction is intended to be
  tax-free to HP’s shareholders for federal income tax purposes.

Today’s
announcement comes as HP approaches the fourth year of its five-year
turnaround plan. Over this time, the company has executed successfully
against its turnaround objectives, keeping customers and partners at the
forefront. HP has reignited its innovation pipeline, strengthened its
go-to-market capabilities, rebuilt its balance sheet, and inspired its
workforce and management teams. The company is now positioned to
accelerate performance, drive sustained growth and demonstrate clear
industry leadership in key areas.

“Our work during the past three
years has significantly strengthened our core businesses to the point
where we can more aggressively go after the opportunities created by a
rapidly changing market,” said Meg Whitman, Chairman, President and
Chief Executive Officer of HP. “The decision to separate into two
market-leading companies underscores our commitment to the turnaround
plan. It will provide each new company with the independence, focus,
financial resources, and flexibility they need to adapt quickly to
market and customer dynamics, while generating long-term value for
shareholders. In short, by transitioning now from one HP to two new
companies, created out of our successful turnaround efforts, we will be
in an even better position to compete in the market, support our
customers and partners, and deliver maximum value to our shareholders.”

Both
companies will be well capitalized and expect to have investment grade
credit ratings and capital structures optimized to reflect their
distinct growth opportunities and cash flow profiles. The separation
into independent publicly traded companies will provide each company
with its own, more focused equity currency, and investors with the
opportunity to invest in two companies with compelling and unique
financial profiles well suited to their respective businesses.

Management Structure

Meg
Whitman, President and Chief Executive Officer of HP, and Cathie
Lesjak, Chief Financial Officer of HP, will hold these positions with
Hewlett-Packard Enterprise. When the separation is complete, Whitman
will also serve on the Board of Directors of Hewlett-Packard Enterprise,
and Pat Russo will move from Lead Independent Director of HP to
Chairman of Hewlett-Packard Enterprise.

Dion Weisler, Executive
Vice President of HP’s Printing and Personal Systems business, will lead
HP Inc. as President and Chief Executive Officer. Whitman will serve as
non-executive Chairman of HP Inc.’s Board of Directors.

Hewlett-Packard Enterprise

Hewlett-Packard
Enterprise will have a unique portfolio and strong multi-year
innovation roadmap across technology infrastructure, software and
services to allow customers to take full advantage of the opportunities
presented by cloud, big data, security and mobility in the New Style of
IT. By leveraging its HP Financial Services capability, the company will
be well positioned to create unique technology deployment models for
customers and partners based on their specific business needs.
Additionally, the company intends for HP Financial Services to continue
to provide financing and business model innovation for customers and
partners of HP Inc.

Customers will have the same unmatched choice
of how to deploy and consume technology, and with a simpler, more
nimble partner. The separation will provide additional resources, and a
reduction of debt at the operating company level, to support investments
across key areas of the portfolio. The separation will also allow for
greater flexibility in completing the turnaround of Enterprise Services
and strengthening the company’s go-to-market capabilities.

“Over
the past three years, we have reignited our innovation engine with
breakthrough offerings for the enterprise like Apollo, Gen 9 and
Moonshot servers, our 3PAR storage platform, our HP OneView management
platform, our HP Helion Cloud and a host of software and services
offerings in security, analytics and application transformation,”
continued Whitman. “Hewlett-Packard Enterprise will accelerate
innovation across key next-generation areas of the portfolio.”

HP Inc.

HP
Inc. will be a proven leader in the personal systems and printing
markets with exciting new technologies on the horizon. The new company’s
strong profitability and free cash flow will enable investments in
growth markets such as 3-D printing and new computing experiences. At
the same time, HP Inc. will continue to execute against a well-defined
and established strategic plan, ensuring continuity for customers and
consistent value to shareholders.

“Since assuming responsibility
for the Printing and Personal Systems Group, Dion and his leadership
team have done an excellent job of building our relationships with
customers and channel partners, segmenting the market and driving
product innovation,” added Whitman. “The creation of HP Inc. will only
accelerate the progress the team has made.”

“This is a defining
moment in our industry as customers are looking for innovation to enable
workforces that are more mobile, connected and productive while at the
same time allowing a seamless experience across work and play,” said
Weisler. “As the market leader in printing and personal systems, an
independent HP Inc. will be extremely well positioned to deliver that
innovation across our traditional markets as well as extend our
leadership into new markets like 3-D printing and new computing
experiences — inventing technology that empowers people to create,
interact and inspire like never before.”

Transaction Details

The
separation transaction is intended to be tax-free to HP shareholders
for federal income tax purposes. The transaction is currently targeted
to be completed by the end of fiscal 2015, subject to certain
conditions, including, among others, obtaining final approval from the
HP Board of Directors, receipt of a favorable opinion and/or rulings
with respect to the tax-free nature of the transaction for federal
income tax purposes and the effectiveness of a Form 10 filing with the
Securities and Exchange Commission.

Goldman Sachs & Co. is serving as financial advisor and Wachtell, Lipton, Rosen and Katz is serving as legal advisor to HP.

via Zero Hedge http://ift.tt/1uQ8ISQ Tyler Durden

While the biggest micro news of the weekend is certainly the report that Hewlett-Packard has finally thrown in the towel on organic growth (all those thousands laid off over the past ten years can finally breathe easily – they were not fired in vain), and has proceeded to do what so many said was its only real option: splitting into two separate companies, a personal-computer and printer business, and corporate hardware and services operations (which will certainly lead to even more stock buybacks only not at one but two companies) which in turn has sent its stock and futures higher, perhaps the most notable development in the macro world is Japan’s realization finally that the weaker Yen is crushing domestic businesses, which has resulted in the USDJPY sliding to lows last seen at Friday’s jobs report print, and also generally leading to across the board weakness for the dollar, whose relentless surge in the past 3 months is strongly reminiscent of the euphoria following the Plaza Accord, only in the other direction (and making some wonder if the Plaza Hotel caterer are about to see a rerun of September 22, 1985 in the coming weeks).

Some of the key overnight headlines:

• ABE: ENERGY PRICE RISES FROM WEAK YEN IMPACT CONSUMERS, SMES: BBG
• ABE: WILL TAKE MEASURES ON WEAK YEN, WATCH EFFECTS: BBG

Not helping Yen weakness is the WSJ report, previously noted here, that the “GPIF Unlikely To Announce New Portfolio Until November”, a delay which could rattle investors hoping fund will invest more in stocks… and pushing the USDJPY lower. Of course, all of this is connected to what we said last night would likely be the admission by the Japanese government that the country has once again entered a recession.

Aside from that, in primary presidential polling in Brazil, Aecio Neves has finished second, surprising many and entering the run-off against Dilma Rousseff in late October. Many analysts see Brazilian assets benefitting today, with UBS and Nomura arguing that this increases the chances that Rousseff will not be re-elected. Of course, Brazil may simply be doing what the “developed” nations do so well, and rig election polls and outcomes, merely to obtain the desired short-term market outcome; we will know for certain in a few weeks.

It has been a mixed start to Asian markets overnight amid a holiday-thinned session. Singapore and Australia are out on holiday and China will not officially return from its National Day Golden Week until Wednesday. The Nikkei and the Hang Seng are up +1.2% and +1.1%, respectively as we type. Bourses in Taiwan and Korea are off to a softer start to the week. The situation in HK has eased overnight as protestors allowed government workers to access the government complex which had been blocked since last Friday. Major thoroughfares are still closed on Monday but schools that were shut have reopened and the numbers of protestors have dwindled allowing some form of normalcy to return after over a week of protests. Meanwhile China’s state-run media has ruled out any possibility of Beijing changing its mind on HK’s political reforms.

Less than 20 protesters in front of the Chief Executive office in Admiralty, about 1/10 of the number yesterday. http://ift.tt/1EjWDbg

— Alan Wong (@byAlanWong) October 6, 2014

Staying in Asia, the World Bank has reduced its GDP growth estimates for China in 2014 to 7.4% from a previous forecast of 7.6%. Looking into 2015, the World Bank now sees growth at 7.2% from a previous forecast of 7.5%, mainly as the government seeks to put the economy on a more sustainable path with policies addressing financial vulnerabilities and structural constraints. However, except for China the World Bank is rather constructive on the rest of the region. The institution sees growth for developing East Asian countries (ex China) to bottom out at 4.8% this year before rising to 5.3% next year as exports rise and domestic economic reforms advance in the large Southeast Asian economies. Staying on EM but on the other side of the globe we saw the completion of the first-round vote of the presidential election in Brazil on Sunday.

European stock futures trade higher, with the DAX outperforming as it catches up on global equity strength on Friday, as German stocks were closed for Reunification Day. Germany’s progress has been slightly impaired by weakness in Siemens shares, who remain the only German stock in the red after warning their energy unit margins would be lower than expected in the future due to pricing pressure in wind turbines.

The usual post-payrolls lull in the economic data calendar this week will be populated by an eventful week of high level meetings around the globe. The IMF and World Bank annual meeting in Washington starts this Friday although there are plenty of events/speeches ahead of the official proceedings. Furthermore, we also have a few central bank rate meetings and a senior leadership summit between China and Germany. If that wasn’t enough company analysts will also be sharpening their pencils as we kick off the Q3 earnings season with Alcoa’s results this Wednesday.

Bulletin Headline Summary from RanSquawk and Bloomberg

• European stock futures trade strongly, as the impressive Wall Street close on Friday buoys European and Asia-Pacific markets
• USD-index pulls off multi-year highs printed on Friday as traders book profits, helping to lift EUR/USD on little volume
• The week gets off to a slow start, with no tier 1 releases due today, as the market looks ahead to FOMC minutes and the beginning of earnings season with Alcoa (AA) due on Wednesday
• Treasury yields mostly steady in overnight trading as German factory orders drop the most since 2009; this week will feature Treasury auctions of $27b 3Y, $21b 10Y (reopen) and $13b 30Y (reopen) starting tomorrow.
• Minutes from FOMC meeting of Sept. 16-17 will be released Wednesday; week features heavy Fed speaker calendar starting with Kansas City’s Esther George tonight at 8:30pm ET
• Lloyds Banking Group, Britain’s largest mortgage provider, is poised to eliminate thousands of jobs in what may be the biggest round of cuts since at least 2011, a person familiar with the matter said
• American banks are loading up on U.S. government debt, a sign they remain cautious on the economy even with the jobless rate at a six-year low and corporations at their healthiest in a generation
• Goldman Sachs says investors shouldn’t rush to anticipate a rate increase from the Federal Reserve after jobs gains beat economist forecasts while BlackRock said it’ll happen sooner than expected
• S&P 500 companies are poised to spend $914b on share buybacks and dividends this year, or about 95% of earnings, data compiled by Bloomberg and S&P Dow Jones Indices show
• Greece’s creditors insist the country should retain precautionary backstops next year even as the government presented an almost balanced budget for the first time in decades
• Pro-democracy demonstrations in central Hong Kong dwindled after the start of talks with the government, with some roads and schools reopening as tensions eased that police were poised to clear protesters
• Seven of the people officials are monitoring most closely for signs of Ebola are health workers who had close contact with a man in Dallas who is fighting for his life  against the virus, the Centers for Disease Control and Prevention said yesterday
• No IG priced Friday after seeing highest Thursday session of 2014 previous day, full week saw $18.9b, only the 12th time this year weekly volume failed to top $20b; no HY priced Friday, five deals for $2.7b priced last week, four deals totaling $1.65b MTD
• Sovereign 10Y yields mostly lower led by Portugal at -3.7bps. USD rises to highest level since June 8, 2010. Asian and European stocks mostly higher. U.S. equity-index futures rise. WTI crude, gold, copper rise

US Event Calendar

• TBD: Fed issues labor mkt conditions index, Sept. Central Banks
• TBD: Bank of Japan issues monetary policy statement
• 11:30pm: Reserve Bank of Australia seen holding overnight cash target rate at 2.5%
• 11:00am POMO: Fed to purchase $1.4b-$1.7b notes in 2021-2024 sector

ASIA

Asia-Pacific equities started the week strongly, with the Nikkei 225 closing higher by 1.2% as Wall Street’s impressive close on Friday buoyed Japanese stocks, as the Hang Seng Index also rose, up 1.1%, as demonstrators allowed access to government buildings for usual business to resume. Elsewhere, The World Bank has cut China’s growth forecast for the next three years as the country tackles structural reforms, seeing 7.4% growth this year, down from their prior forecast of 7.6%

FIXED INCOME

Bund futures opened unchanged, however early buying after disappointing German Factory Orders (-5.7% vs. Exp. -2.5%) pushed Bunds through Friday’s highs of 150.07, helping keep the peripheral European yield spreads against Germany slightly wider. Treasury futures have seen strength ahead of the CBOT open as spillover buying rooted in Bund strength and comments from Goldman Sachs’ chief economist Hatzius keeps T-notes on the front-foot. Hatzius believes the Fed will probably raise rates in Q3 2015 and will retain the ‘considerable time’ phrase in October’s policy statement.

EQUITIES

European stock futures trade higher, with the DAX outperforming as it catches up on global equity strength on Friday, as German stocks were closed for Reunification Day. Germany’s progress has been slightly impaired by weakness in Siemens shares, who remain the only German stock in the red after warning their energy unit margins would be lower than expected in the future due to pricing pressure in wind turbines.

Hewlett-Packard (HPQ) – Co. is said to be planning to split into two separate Co.’s, a personal-computer and printers business, and corporate hardware and service operations, according to a personal familiar with the matter. (BBG)

FX

EUR/USD has squeezed higher throughout the morning as the market takes profit on short positions after the sharp sell-off on Friday. Nonetheless, the pair remains well below Friday’s highs seen at 1.2676. Furthermore, a bulk of the short-covering follows ECB’s Weidmann adding his name to the list of ECB members that have openly criticised the ECB’s Asset Backed Securities Purchase Program, stating that the ECB risk taking on a significant level of credit risk by paying too much for low-quality securities. NZD trades slightly higher however saw some pressure overnight as the 100DMA fell below the 200DMA at 0.8454, which also prompted a tick lower in AUD/USD in sympathy.

In primary presidential polling in Brazil, Aecio Neves has finished second, surprising many and entering the run-off against Dilma Rousseff in late October. (BBG) Many analysts see Brazilian assets benefitting today, with UBS and Nomura arguing that this increases the chances that Rousseff will not be re-elected

COMMODITIES

WTI and Brent crude futures trade slightly firmer on light volumes as markets book profits on recent successful short positions, with WTI reclaiming the psychological USD 90/bbl handle and Brent testing USD 93/bbl. Price action in precious metals has been far more pronounced, as spot gold broke below its YTD lows, pushing platinum to its lowest level since September 2009 with silver also falling to the lowest since March 2010.

* * *

DB’s Jim Reid concludes the overnight recap

The usual post-payrolls lull in the economic data calendar this week will be populated by an eventful week of high level meetings around the globe. The IMF and World Bank annual meeting in Washington starts this Friday although there are plenty of events/speeches ahead of the official proceedings. Furthermore, we also have a few central bank rate meetings and a senior leadership summit between China and Germany. If that wasn’t enough company analysts will also be sharpening their pencils as we kick off the Q3 earnings season with Alcoa’s results this Wednesday. We’ll preview all those in a little more detail below but before all that let’s take a look at the trading session overnight.

It has been a mixed start to Asian markets overnight amid a holiday-thinned session. Singapore and Australia are out on holiday and China will not officially return from its National Day Golden Week until Wednesday. The Nikkei and the Hang Seng are up +1.3% and +0.5%, respectively as we type. Bourses in Taiwan and Korea are off to a softer start to the week. The situation in HK has eased overnight as protestors allowed government workers to access the government complex which had been blocked since last Friday. Major thoroughfares are still closed on Monday but schools that were shut have reopened and the numbers of protestors have dwindled allowing some form of normalcy to return after over a week of protests. Meanwhile China’s state-run media has ruled out any possibility of Beijing changing its mind on HK’s political reforms (BBC).

The better-than-expected payrolls report (248K v 215K expected) last Friday gave US equities, (S&P 500 +1.12%), US credit (CDX IG -3bp) and the US Dollar a boost. The Dollar strength is adding further negative pressure on other key currencies globally with the EUR, JPY and AUD now trading around 0.6%-0.7% below their pre-payrolls level at 1.25, 109.60 and 86.88, respectively as we type. Similar to equities, Asian credit is having a relatively quiet session overnight but the immediate focus should be on the iTraxx roll. The ISDA 2014 definitions for credit derivatives go live today. The new definition represents the biggest overhaul from ISDA in over a decade and, amongst other things, introduces greater bifurcation between Senior and Sub CDS contracts for banks mainly in response to the rollout of various bank resolution regimes and practices globally. The Asia iTraxx roll markets (from S21 to S22) are now being quoted at 22.75/23.75bp.

Staying in Asia, the World Bank has reduced its GDP growth estimates for China in 2014 to 7.4% from a previous forecast of 7.6%. Looking into 2015, the World Bank now sees growth at 7.2% from a previous forecast of 7.5%, mainly as the government seeks to put the economy on a more sustainable path with policies addressing financial vulnerabilities and structural constraints. However, except for China the World Bank is rather constructive on the rest of the region. The institution sees growth for developing East Asian countries (ex China) to bottom out at 4.8% this year before rising to 5.3% next year as exports rise and domestic economic reforms advance in the large Southeast Asian economies. Staying on EM but on the other side of the globe we saw the completion of the first-round vote of the presidential election in Brazil on Sunday. At the time of this writing (London Monday 5am), Dilma Rouseff is enjoying a commanding lead of 41.59%, with more than 99% of the votes counted. Aécio Neves is receiving 34% of the votes followed by Marina Silva with 21% (CNN). Our EM strategists noted that it is a surprisingly strong support for Aécio, and markets will likely react in a bullish way today.

Also on an encouraging note, the FT is suggesting that Q3 could be a good quarter for fixed income businesses for banks. Two senior US bank executives apparently said that their results for Q3 had been good thanks to recent pickup in market volatility. In particular, fixed income trading also received an additional boost in late September following the departure of Bill Gross from PIMCO. On the other side of Atlantic but also optimistic on Q3 European investment banking result is our European bank research head Matt Spick. In his recent note, he noted that whilst July and August were weaker months for primary activities, September was the month that made the difference. He also noted that both Rates and FX volatility picked up in September, which should drive better spreads and also client trading and hedging demand although he thinks Credit likely performed less well.

More on the industry, in an attempt to make corporate bond trading more efficient, a group of 12 global banks are working together to set up a platform for buyers and sellers of corporate bonds. The initiative called ‘Neptune’ will not be for executing trades, rather it will link up banks and investors in the market and potentially some of the existing trading platforms they use. The banks involved are set to pay GBP30k each for the first phase of consultancy work and a dozen or so buy-side firms are also reportedly involved in the discussions (WSJ).

We have a fairly light calendar today as far as key events are concerned. Things will pick up tomorrow with the release of the IMF’s latest World Economic Outlook and a speech on the economy by Fed’s Dudley. We also have monetary policy meetings in Australia, Indonesia and the conclusion of a two-day BoJ meeting tomorrow. On Wednesday the IMF will publish its latest Global Financial Stability Report whilst BoJ’s Kuroda will be speaking in New York. Washington will be the focus on Thursday with a press conferences held by IMF’s Chief Lagarde and World Bank’s President Kim ahead of the IMF/World Bank annual meeting on Friday. G20 Finance Ministers and Central Bankers will also meet on Thursday and Friday in Washington. ECB’s Draghi will also be speaking at the Bookings Institution on latest European developments and global central banking followed by what should be an interesting conversation between himself and Fed’s Vice Chair Stanley Fischer. If that wasn’t enough we also have the Bank of England’s rate decision on Thursday. The IMF/WB meeting on Friday aside, we note that Chinese PM Li and Germany’s Merkel will lead a joint cabinet meeting for the third time in Berlin to complete an investment partnership accord.

Data wise Tuesday’s highlights will be Germany’s and UK’s IP and an update on US consumer credit. Wednesday will see the release of the Fed’s latest meeting minutes and HSBC’s China Services/Composite PMI for September. We will get the usual US weekly jobless claims on Thursday as well as US wholesale inventories and German exports. Friday’s data highlights will be IP data from France and Italy, the US monthly budget statement and UK trade data. Earnings wise we have a total of 9 S&P 500 companies reporting this week with Alcoa’s Q3 on Wednesday (after market) before the banks report next week.

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

 

 

Jesus of Nazareth was a Jewish carpenter that was born about 2,000 years ago in Bethlehem, which is now a Palestinian city located in the central West Bank about 10 kilometers south of Jerusalem.  Over the course of a very short period of time (about a year) Jesus developed a large following as a miracle worker and religious teacher.  He was publicly executed by crucifixion around the year 35, and many believe the historical narrative that he was raised from the dead after three days in a tomb, and later ascended into the heavens.

Below is a summary of one of Jesus’ very famous outdoor lectures, which was shared by his disciples that were present, and eventually written down circa 70-90. 

If you take 5-10 minutes to read this sermon, then you will know what being a Christian is actually supposed to mean. 

I like to read this first thing in the morning, immediately followed by a few minutes of meditation where I sit quietly listening.  I would not expect everything in the reading to speak to you, but I believe something will, as is always the case for me.

Jesus’ Sermon on the Mount

Excerpted the Gospel of Matthew – Chapters 5-7

 

The Beatitudes

When Jesus saw the crowds, he went up the mountain; and after he sat down, his disciples came to him. Then he began to speak, and taught them, saying:

“Blessed are the poor in spirit, for theirs is the kingdom of heaven.

“Blessed are those who mourn, for they will be comforted.

“Blessed are the meek, for they will inherit the earth.

“Blessed are those who hunger and thirst for righteousness, for they will be filled.

“Blessed are the merciful, for they will receive mercy.

“Blessed are the pure in heart, for they will see God.

“Blessed are the peacemakers, for they will be called children of God.

“Blessed are those who are persecuted for righteousness’ sake, for theirs is the kingdom of heaven.

“Blessed are you when people revile you and persecute you and utter all kinds of evil against you falsely on my account. Rejoice and be glad, for your reward is great in heaven, for in the same way they persecuted the prophets who were before you.

 

Salt and Light

“You are the salt of the earth; but if salt has lost its taste, how can its saltiness be restored? It is no longer good for anything, but is thrown out and trampled under foot.

“You are the light of the world. A city built on a hill cannot be hid. No one after lighting a lamp puts it under the bushel basket, but on the lampstand, and it gives light to all in the house. In the same way, let your light shine before others, so that they may see your good works and give glory to your Father in heaven.

 

The Law and the Prophets

“Do not think that I have come to abolish the law or the prophets; I have come not to abolish but to fulfill. For truly I tell you, until heaven and earth pass away, not one letter, not one stroke of a letter, will pass from the law until all is accomplished. Therefore, whoever breaks one of the least of these commandments, and teaches others to do the same, will be called least in the kingdom of heaven; but whoever does them and teaches them will be called great in the kingdom of heaven. For I tell you, unless your righteousness exceeds that of the scribes and Pharisees, you will never enter the kingdom of heaven.

 

Concerning Anger

“You have heard that it was said to those of ancient times, ‘You shall not murder’; and ‘whoever murders shall be liable to judgment.’ But I say to you that if you are angry with a brother or sister, you will be liable to judgment; and if you insult a brother or sister, you will be liable to the council; and if you say, ‘You fool,’ you will be liable to the hell of fire. So when you are offering your gift at the altar, if you remember that your brother or sister has something against you, leave your gift there before the altar and go; first be reconciled to your brother or sister, and then come and offer your gift. Come to terms quickly with your accuser while you are on the way to court with him, or your accuser may hand you over to the judge, and the judge to the guard, and you will be thrown into prison. Truly I tell you, you will never get out until you have paid the last penny.

 

Concerning Adultery

“You have heard that it was said, ‘You shall not commit adultery.’ But I say to you that everyone who looks at a woman with lust has already committed adultery with her in his heart. If your right eye causes you to sin, tear it out and throw it away; it is better for you to lose one of your members than for your whole body to be thrown into hell. And if your right hand causes you to sin, cut it off and throw it away; it is better for you to lose one of your members than for your whole body to go into hell.

 

Concerning Divorce

“It was also said, ‘Whoever divorces his wife, let him give her a certificate of divorce.’ But I say to you that anyone who divorces his wife, except on the ground of unchastity, causes her to commit adultery; and whoever marries a divorced woman commits adultery.

 

Concerning Oaths

“Again, you have heard that it was said to those of ancient times, ‘You shall not swear falsely, but carry out the vows you have made to the Lord.’ But I say to you, Do not swear at all, either by heaven, for it is the throne of God, or by the earth, for it is his footstool, or by Jerusalem, for it is the city of the great King. And do not swear by your head, for you cannot make one hair white or black. Let your word be ‘Yes, Yes’ or ‘No, No’; anything more than this comes from the evil one.

 

Concerning Retaliation

“You have heard that it was said, ‘An eye for an eye and a tooth for a tooth.’ But I say to you, Do not resist an evildoer. But if anyone strikes you on the right cheek, turn the other also; and if anyone wants to sue you and take your coat, give your cloak as well; and if anyone forces you to go one mile, go also the second mile. Give to everyone who begs from you, and do not refuse anyone who wants to borrow from you.

 

Love for Enemies

“You have heard that it was said, ‘You shall love your neighbor and hate your enemy.’ But I say to you, Love your enemies and pray for those who persecute you, so that you may be children of your Father in heaven; for he makes his sun rise on the evil and on the good, and sends rain on the righteous and on the unrighteous. For if you love those who love you, what reward do you have? Do not even the tax collectors do the same? And if you greet only your brothers and sisters, what more are you doing than others? Do not even the Gentiles do the same? Be perfect, therefore, as your heavenly Father is perfect.

 

Concerning Almsgiving

“Beware of practicing your piety before others in order to be seen by them; for then you have no reward from your Father in heaven.

“So whenever you give alms, do not sound a trumpet before you, as the hypocrites do in the synagogues and in the streets, so that they may be praised by others. Truly I tell you, they have received their reward. But when you give alms, do not let your left hand know what your right hand is doing, so that your alms may be done in secret; and your Father who sees in secret will reward you.

 

Concerning Prayer

“And whenever you pray, do not be like the hypocrites; for they love to stand and pray in the synagogues and at the street corners, so that they may be seen by others. Truly I tell you, they have received their reward. But whenever you pray, go into your room and shut the door and pray to your Father who is in secret; and your Father who sees in secret will reward you.

“When you are praying, do not heap up empty phrases as the Gentiles do; for they think that they will be heard because of their many words. Do not be like them, for your Father knows what you need before you ask him.

“Pray then in this way:

Our Father in heaven,
    hallowed be your name.
    Your kingdom come.
    Your will be done,
        on earth as it is in heaven.
    Give us this day our daily bread.
    And forgive us our debts,
        as we also have forgiven our debtors.
    And do not bring us to the time of trial,
        but rescue us from the evil one.

For if you forgive others their trespasses, your heavenly Father will also forgive you; but if you do not forgive others, neither will your Father forgive your trespasses.

 

Concerning Fasting

“And whenever you fast, do not look dismal, like the hypocrites, for they disfigure their faces so as to show others that they are fasting. Truly I tell you, they have received their reward. But when you fast, put oil on your head and wash your face, so that your fasting may be seen not by others but by your Father who is in secret; and your Father who sees in secret will reward you.

 

Concerning Treasures

“Do not store up for yourselves treasures on earth, where moth and rust consume and where thieves break in and steal; but store up for yourselves treasures in heaven, where neither moth nor rust consumes and where thieves do not break in and steal. For where your treasure is, there your heart will be also.

 

The Sound Eye

“The eye is the lamp of the body. So, if your eye is healthy, your whole body will be full of light; but if your eye is unhealthy, your whole body will be full of darkness. If then the light in you is darkness, how great is the darkness!

 

Serving Two Masters

“No one can serve two masters; for a slave will either hate the one and love the other, or be devoted to the one and despise the other. You cannot serve God and wealth.

 

Do Not Worry

“Therefore I tell you, do not worry about your life, what you will eat or what you will drink, or about your body, what you will wear. Is not life more than food, and the body more than clothing? Look at the birds of the air; they neither sow nor reap nor gather into barns, and yet your heavenly Father feeds them. Are you not of more value than they? And can any of you by worrying add a single hour to your span of life? And why do you worry about clothing? Consider the lilies of the field, how they grow; they neither toil nor spin, yet I tell you, even Solomon in all his glory was not clothed like one of these. But if God so clothes the grass of the field, which is alive today and tomorrow is thrown into the oven, will he not much more clothe you—you of little faith? Therefore do not worry, saying, ‘What will we eat?’ or ‘What will we drink?’ or ‘What will we wear?’ For it is the Gentiles who strive for all these things; and indeed your heavenly Father knows that you need all these things. But strive first for the kingdom of God and his righteousness, and all these things will be given to you as well.

“So do not worry about tomorrow, for tomorrow will bring worries of its own. Today’s trouble is enough for today.

 

Judging Others

“Do not judge, so that you may not be judged. For with the judgment you make you will be judged, and the measure you give will be the measure you get. Why do you see the speck in your neighbor’s eye, but do not notice the log in your own eye? Or how can you say to your neighbor, ‘Let me take the speck out of your eye,’ while the log is in your own eye? You hypocrite, first take the log out of your own eye, and then you will see clearly to take the speck out of your neighbor’s eye.
Profaning the Holy

“Do not give what is holy to dogs; and do not throw your pearls before swine, or they will trample them under foot and turn and maul you.

 

Ask, Search, Knock

“Ask, and it will be given you; search, and you will find; knock, and the door will be opened for you. For everyone who asks receives, and everyone who searches finds, and for everyone who knocks, the door will be opened. Is there anyone among you who, if your child asks for bread, will give a stone? Or if the child asks for a fish, will give a snake? If you then, who are evil, know how to give good gifts to your children, how much more will your Father in heaven give good things to those who ask him!
The Golden Rule

“In everything do to others as you would have them do to you; for this is the law and the prophets.

 

The Narrow Gate

“Enter through the narrow gate; for the gate is wide and the road is easy that leads to destruction, and there are many who take it. For the gate is narrow and the road is hard that leads to life, and there are few who find it.

 

A Tree and Its Fruit

“Beware of false prophets, who come to you in sheep’s clothing but inwardly are ravenous wolves. You will know them by their fruits. Are grapes gathered from thorns, or figs from thistles? In the same way, every good tree bears good fruit, but the bad tree bears bad fruit. A good tree cannot bear bad fruit, nor can a bad tree bear good fruit. Every tree that does not bear good fruit is cut down and thrown into the fire. Thus you will know them by their fruits.

 

Concerning Self-Deception

“Not everyone who says to me, ‘Lord, Lord,’ will enter the kingdom of heaven, but only the one who does the will of my Father in heaven. On that day many will say to me, ‘Lord, Lord, did we not prophesy in your name, and cast out demons in your name, and do many deeds of power in your name?’ Then I will declare to them, ‘I never knew you; go away from me, you evildoers.’
Hearers and Doers

“Everyone then who hears these words of mine and acts on them will be like a wise man who built his house on rock. The rain fell, the floods came, and the winds blew and beat on that house, but it did not fall, because it had been founded on rock. And everyone who hears these words of mine and does not act on them will be like a foolish man who built his house on sand. The rain fell, and the floods came, and the winds blew and beat against that house, and it fell—and great was its fall!”

 

Now when Jesus had finished saying these things, the crowds were astounded at his teaching, for he taught them as one having authority, and not as their scribes.

via Zero Hedge http://ift.tt/1uPfDeT hedgeless_horseman

by Keith Weiner

 

How much higher can the dollar go? Betting on the Fed’s paper has been one helluva speculation. No doubt the Fed’s credit quality has been falling, but powerful forces are driving it up, such as desperate debtors clutching for cash to calm their creditors (sorry, couldn’t resist).

The dollar was up this week, from 25.5 to 26.1mg gold, or alternatively from 1.76 to 1.86g of silver. Since this move began, the dollar has risen from around 16mg gold, or about 63%.

If one prefers to measure value in terms of other currencies, the dollar was up from €0.788 to €0.80. It went up from £0.615 to £0.626. It went up from CAD$1.115 to CAD$1.124, or AUD$1.14 to AUD$1.15. It went up from ?39.14 (Russian rubles) to ?39.98. It went up in Japanese yen, Brazilian reals, Indian rupees, Indonesian rupiahs. You get the picture. In the past year and three quarters, the dollar has gone up about 33% in rubles. Exciting times for Russian speculators, many of whom probably feel they’re getting rich. Are they really? Not in our opinion.

Looked at the other way—in terms of most readers’ favorite paper currency—the prices of the metals fell this week. As usual, this means the price of silver fell in terms of gold as well. The gold to silver ratio made a new high on Thursday of 71.1. Last week, we said the following:

“We have long predicted the ratio will hit 70 and maybe 80. So we will call our target ‘hit’. Is this it? Will the ratio reverse direction, and will silver begin to rise in gold terms (and dollar terms) again?”

This wasn’t quite a premature calling of the top (particularly in light of our silver analysis). But it was not necessary to reach for 70 last week, when this week the market has solidly hit it.

What about 80? Read on…

First, here is the graph of the metals’ prices.

            The Prices of Gold and Silver
 

We are interested in the changing equilibrium created when some market participants are accumulating hoards and others are dishoarding. Of course, what makes it exciting is that speculators can (temporarily) exaggerate or fight against the trend. The speculators are often acting on rumors, technical analysis, or partial data about flows into or out of one corner of the market. That kind of information can’t tell them whether the globe, on net, hoarding or dishoarding.

One could point out that gold does not, on net, go into or out of anything. Yes, that is
true. But it can come out of hoards and into carry trades. That is what we study. The gold basis tells us about this dynamic.

Conventional techniques for analyzing supply and demand are inapplicable to gold and silver, because the monetary metals have such high inventories. In normal commodities, inventories divided by annual production can be measured in months. The world just does not keep much inventory in wheat or oil.

With gold and silver, stocks to flows is measured in decades. Every ounce of those massive stockpiles is potential supply. Everyone on the planet is potential demand. At the right price. Looking at incremental changes in mine output or electronic manufacturing is not helpful to predict the future prices of the metals. For an introduction and guide to our concepts and theory, click here.

Next, this is a graph of the gold price measured in silver, otherwise known as the gold to silver ratio. It rose 2.4% this week.

The most likely course is on towards 75.

The Ratio of the Gold Price to the Silver Price
 

For each metal, we will look at a graph of the basis and cobasis overlaid with the price of the dollar in terms of the respective metal. It will make it easier to provide terse commentary. The dollar will be represented in green, the basis in blue and cobasis in red.

Here is the gold graph.

            The Gold Basis and Cobasis and the Dollar Price
 

The cobasis may have finally broken out of its range since August, though it took a price below $1200 to make this happen. The cobasis is up noticeably on the week, from -0.21% to -0.15%.

There is no doubt that lots of physical metal has come to market in this period of falling prices since August. Maybe metal supplied to the market will dry up, and metal demanded will rise at the new, lower price? We prefer to call it as we see it, rather than predict such changes in behavior.

Now let’s look at silver.

The Silver Basis and Cobasis and the Dollar Price
 

The silver price had another breakdown this week, losing 0.81 Federal Reserve Notes. But the cobasis fell. Silver had been in (a small) backwardation at the close of last week. Now the cobasis is 0.0000.

Last week, we wrote:

“We are 18 cents closer to a bottom, which is to say .01 gram closer to a high in the dollar as measured in silver. This could be ‘it’, but if so the drop in the silver cobasis on Friday isn’t bolstering this view. Especially not a sharp ‘^’ shaped turnaround in the dollar price (i.e. “v” shaped turnaround in the silver price).”

Now we are 81 more cents closer. And the cobasis fell despite this, or because of it. Definitely not an encouraging sign for those looking for an abrupt end to the dollar’s relentless rally.

 

The Gold Standard Institute Presents The Gold Standard: Both Good and Necessary, in Manhattan on Nov 1. There hasn’t been a real recovery from the crisis of 2008. The reason is not simply that the Fed has made a particular mistake. The cause of the crisis is the dollar itself. There will not be a recovery until we return to the use of gold as money. Please come to this talk to hear Keith Weiner’s diagnosis of the dollar and urgent prescription for gold.

 

© 2014 Monetary Metals

via Zero Hedge http://ift.tt/1vI5K1r Monetary Metals

Submitted by Patrick Barron via Mises Canada,

I have started reading a new book about the collapse of the Zimbabwean dollar–When Money Destroys Nations, by Philip Haslam and Russell Lamberti.

One of the main causes of the hyperinflation was the decision of the Zimbabwean government to give army veterans of its recent wars a big bonus. The promise was too much for the Zimbabwean economy to manage, so the government printed money… and lots of it.

Why is this relevant? Well, look at America.

We have been fighting wars around the world for twenty-five years and recently promised universal healthcare to all citizens. The baby boom generation is retiring and will draw unfunded Social Security and Medicare benefits in ever larger amounts.

There is  no way that these promises can be funded by the American economy. We will print money, too, just like the Zimbabweans.

The Zimbabwean economy went into hyperinflation, because the Zim dollar was not held as a reserve anywhere in the world.

The US hyperinflation may be delayed, because our money printing is being sopped up by foolish central banks worldwide in order to reward their export industries.

In a non-manipulated currency market, the US would have to fund its budget with honest debt and repay it with honest money.

But the chickens eventually will come home to roost for the US, just as they did for the poor Zimbabweans. The political pressure to print money is the same everywhere as are the laws of economic science.

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

UDPATE:

• *JMA ISSUES TORNADO WARNINGS IN TOKYO AREA, IZU ISLANDS
• *TYPHOON PHANFONE MAKES LANDFALL AT JAPAN’S SHIZUOKA, JMA SAYS
• *ANA CANCELS 261 DOMESTIC FLIGHTS DUE TO TYPHOON
• *ANA SAYS 36,600 PASSENGERS AFFECTED BY FLIGHT CANCELLATIONS
• *TOYOTA SUSPENDS DAY SHIFT AT 12 PLANTS IN JAPAN ON TYPHOON
• *HONDA DELAYS START OF SUZUKA, HAMAMATSU PLANTS OPS. TODAY

 

#Typhoon #Phanfone made landfall a cpl hrs ago near Hamamatsu, #Japan. Several rain totals >14″ so far via @WxNick http://ift.tt/1uOSFEG

— Jennifer Watson (@JWatson_Wx) October 6, 2014

 

With 1 US airman dead and 2 missing, Super Typhoon Phanfone has already wreaked havoc in its doom-strewn approach of Japan, but as RIA reports, the Tokyo Electric Power Company (TEPCO), has revealed that the approaching typhoon could hit the damaged, decommissioned 40-year old nuclear power facility at Fukushima. Rather stunningly, The Japan Times reports tidal waves from the storm are likely to reach a maximum height of 26.3 meters or more (compared to the 2011 tsunami which reached a height of 15.5 meters when it hit the plant). Due to the expected ‘mingling’ of contaminated and Typhoon-driven ocean water, TEPCO admits 100 trillion becquerels of cesium to escape; Japan’s Nuclear Regulation Authority (NRA) plans to verify the accuracy of TEPCO’s estimate and the “appropriateness” of countermeasures being taken.

 

The Super-Typhoon is already deadly…

A powerful typhoon was heading toward Tokyo on Sunday after lashing southern Japan, where it killed at least one U.S. airman on Okinawa island and left two others missing, officials said.

 

Typhoon Phanfone was off the coast of Shikoku in southwestern Japan on Sunday night, packing winds of up to 144 kilometers (90 miles) per hour after hitting the southern regions of Okinawa and Kyushu, Japan’s Meteorological Agency said.

 

Three U.S. Air Force members were washed away by high waves Sunday, with one found dead and the other two still missing, Japan’s coast guard said. Tsuguyoshi Miyagi, an official at the coast guard’s Okinawa branch, said the airmen were on the island’s northern coast.

 

The U.S. Air Force confirmed that three of its airmen were washed out to sea and that one had died. It said the search for the other two had been interrupted by rough seas.

But the possibilities are disastrous, (via RIA)

Tepco, the Tokyo Electric Power Company, has revealed that the approaching typhoon could hit the damaged, decommissioned 40-year old nuclear power facility Fukushima No.1, which was severely affected during the earthquake and tsunami in 2011.

 

 

U.S. military bases on alert as Typhoon #Phanfone heads for Japan http://t.co/eqwPwJiZbP http://ift.tt/1q03NXx

— NBC Nightly News (@NBCNightlyNews) October 3, 2014

 

 

“The deluge would likely cause seawater to mingle with the radiation-tainted water accumulating in the basements of the reactor buildings at the six-unit plant, allowing 100 trillion becquerels of cesium to escape, according to an estimate that Tepco revealed Friday at a meeting of the Nuclear Regulation Authority,” the Japan Times reports.

 

According to the media outlet, tidal waves from the storm are likely to reach a maximum height of 26.3 meters or more. The storm is likely to strike the Fukushima No.2 nuclear plant as well, but “its idled reactors and fuel pools” are not expected to be destroyed, Tepco officials assert.

 

It should be noted that the 2011 tsunami reached a height of 15.5 meters when it hit the plant, which was followed by a 9.0  magnitude earthquake.

 

In order to minimize the impact of the hurricane, Tepco “will reduce the vast quantity of radioactive water” on the site, the Asahi Shimbun notes. Citing Tepco’s officials, the media source claims that the amount of contaminated wate, which is expected to spill into the ocean, could be decreased to 30 percent “by filling in trenches near reactors.”

 

 

Super Typhoon #Phanfone heading towards #Japan as seen from space few hours ago. http://ift.tt/1q03NXz

— MetDesk (@metdesk) October 4, 2014

 

 

Japan’s Nuclear Regulation Authority (NRA) plans to verify the accuracy of Tepco’s estimate and the “appropriateness” of countermeasures being taken in the face of the threat posed by the typhoon.

*  *  *

Cue Shinzo Abe explaining why it’s “contained” and how safe the Olympics (aside from the swimming and sailing) will be!

And in case you were wondering,  prepare for the headlines proclaiming Q3 GDP impacted negatively by the Typhoon (not a policy of currency debauchment and consumer crushing)

via Zero Hedge http://ift.tt/1q05RPo Tyler Durden

Same old, same old. Treasury yields are lower (futures prices higher); USDJPY (and thus S&P futures) are higher (though 110.00 is once again offering notable resistance); and gold is getting 'handled' lower. The divergence between stocks and bonds from Friday's jobs number is holding for now but it is gold that has been smacked to $1183 – near a four-year low: $1180.50 6/28/13, then back to Aug 2010). Silver is down 1% to March 2010 lows. Despite US equity exuberance, Asia-Pac stocks (ex-Japan) are down 0.3%.

 

Stocks and bonds remain divergent from Friday's jobs print

 

JPY started to break…

 

As a reminder, this is what happened last Friday into Sunday night's open…

 

Gold has been punched lower once again near 4-year lows…

 

But futures volume is negligible compared to the payrolls dump…

 

*SPOT SILVER DROPS 1% TO $16.6825/OZ, LOWEST SINCE MARCH 2010

 

And Bitcoin collapsed to as low as $275 overnight…

 

Charts: Bloomberg

via Zero Hedge http://ift.tt/10CYnNn Tyler Durden

Submitted by Raul Ilargi Meijer via The Automatic Earth blog,

Jack Delano Brakeman Jack Torbet at Atchison, Topeka & Santa Fe Railroad March 1943

As I watch the euro losing another 1.3% against the dollar today, it’s now at $1.25, and down from close to $1.40 recently, it’s getting clearer all the time: the greenback is busy eating currencies and economies alive.

There is of course the fact that Abenomics in Japan is living up to its longstanding promise of utter failure. And there is Mario Draghi torn between two lovers, one the one hand the Germany/Austria camp – with France as a surprise third – who don’t want the ECB to buy up junk paper, and on the other hand those EU members whose sole road to survival inside the EU is for Draghi to buy up anything that even looks like it was once toilet paper.

But Japan and Europe have been in the economic doghouse for a long time. It wasn’t until the Fed pulled the trigger on the dollar steamroller that they started paying the real price for it.

Japan, at least as long as it chooses to cling to the growth fairy, has nowhere to turn but to something in the vein of Abenomics, i.e. huge money and credit expansion. But it’s not the money supply, no matter how it’s defined, that is the problem, it’s that people refuse to spend. And if people don’t spend, no government or central banks has a way to boost inflation. Why they should want to in the first place is another question.

Europe has the added problem of disagreement on how to escape the walls that are closing in. And the more they close in, the less comfortable the shared living space on the old continent becomes. With a bit of imagination, you can see different people, different cultures, different languages, and different economies, all forced to live in the same ever shrinking – economic -space.

There’s less of everything to go around, and no-one wants to give up what’s theirs. Still, at the same time we already saw that two-thirds of Greeks live at or below the poverty line, and that Naples is even worse than Greece. Where do you personally think that will go? With a dollar that is set to make lots of things, not the least of which is oil and gas, more expensive?

It’s not just that for Europe, the growth fairy is evasive, their economies are bound to shrink a lot more still. And then what is Draghi, or his successor, supposed to do? The eurozone, and the EU itself, has already become a straightjacket with a noose attached to it, and that noose will start to tighten as we go forward. Brussels and Frankfurt can spin all they want – and do they ever -, but they can’t squeeze milk out of a deceased goat.

No matter what side of which fence you’re sitting on here, you have to give it to the Fed and Wall Street, though: their timing is impeccable. Victim no. 1 of the "Dollar is King"-move are the emerging markets:

Emerging Stocks Pummeled as Weak Yen Boosts Japan

The yen’s slide to a six-year low is amplifying a rout in emerging-market stocks as investors shift their focus to Japanese companies with earnings in dollars, according to Morgan Stanley. The MSCI Emerging Market Index tumbled 7.6% in September, the most since May 2012, led by China and Hong Kong. That compares with a 3.8% drop for the Topix Index in the period. The yen depreciated 5.1% versus the dollar to the weakest level since August 2008 last month, while a gauge tracking developing-nation currencies retreated 3.8%. “Asset allocation away from emerging markets was in part because Japan was back and that yen weakness is a positive catalyst,” Jonathan Garner, Hong Kong-based head of Asia and emerging-market strategy at Morgan Stanley, said by phone on Sept. 25.

 

“We don’t have a large export-industrial dollar earnings sector for EM, while Japan’s corporate-sector earnings responded positively to yen weakness.” Japan’s exporters are benefiting from a weaker currency, which boosts overseas income when repatriated, while developing-nation assets have come under pressure as the prospect for higher Federal Reserve interest rates dents demand for riskier assets. Toyota, the world’s biggest carmaker by market value which derives most of its revenue from the U.S., rallied 9% last month. Net inflows to U.S. exchange-traded funds that invest in emerging-markets tumbled 82% to $977.9 million in September, led by a 90% decline to China and Hong Kong, data compiled by Bloomberg show.

And the weak yen has long since stopped boosting Japan in a net, overall, sense:

Japanese Stocks Have Crashed Over 1000 Points Since Friday

After ticking just above 110.00, USDJPY has been a one-way street lower and that means only one thing… Japanese stocks are cratering. From Friday’s highs, The Nikkei 225 has crashed over 1000 points (despite Abe’s promises yet again of more pension reform buying of stocks). Of note, perhaps, is that, Japanese investors bought a net $3.6 billion of foreign stocks last week – the most since January 2009 – perfectly top-ticking global equities… Well played Mrs. Watanabe.

And:

Japan Inc. Begins To Turn Against The Weak Yen

When the Japanese yen began its long descent in late 2012 — around the time it became clear Shinzo Abe would be elected to another prime-ministership — the executives running Japan’s top corporations seemed to believe that the lower the currency, the better, regardless of all else. But since then, the yen has trekked steadily, inexorably downward against the dollar, with the greenback rising from around ¥78 two years ago to ¥110 earlier this week. And, at least according to a Nikkei news survey out Friday, some senior corporate officers are having second thoughts about the race to the bottom for forex. [..] … not a single CFO said they wanted to see the dollar breach above ¥115.

And also:

Yen’s Steepest Decline in 20 Months Spreads Unease in Japan

The yen’s steepest decline in 20 months is prompting concern in Japan that the central bank’s support for a weaker currency may hurt consumers and companies. Monetary authorities intervention to curb the slump is “possible,” according to Hirohisa Fujii, a former finance minister and member of the opposition party, after the currency’s steepest drop last month since January 2013. Some companies are suffering from the weaker yen, Nobuhide Minorikawa, Japan’s vice finance minister said this week [..] The chorus of dissent against the Bank of Japan’s accommodative monetary policy [..] is growing louder, as consumer prices remain depressed and growth is anemic. The weaker yen puts Japan at risk of recession, Kazumasa Iwata, deputy governor of the central bank until 2008, warned last month.

 

“The whole notion of devaluing the currency has been a bad policy,” Robert Sinche, a global strategist at Pierpont Securities, said. [..] BOJ Governor Haruhiko Kuroda said last month, after the dollar rose above 109 yen, that he didn’t see any big problems with current movements in exchange rates.

You have to like the suggestion that “The weaker yen puts Japan at risk of recession”. Tokyo may want to pick whatever stats they like, but it should be obvious that Japan, like the EU, is in a recession, not at risk of one. Take a look:

What 110 Yen to the Dollar Means for Japan’s Consumers

The weakening yen is starting to squeeze Japanese consumers as prices rise for everything from Burgundy wine to instant noodles, threatening Prime Minister Shinzo Abe’s plans to revive the country’s economy. The currency slid to 110 yen to the dollar yesterday, the lowest level in six years, making imported goods and materials more expensive. Though inflation is one of Abe’s monetary goals, the yen’s sharp slide undermines steps to boost consumer spending and endangers public backing for his economic program.

 

[..] The success of Abe’s plans for a sustained economic recovery after two decades of stagnation depends on consumers, since they account for about 60% of GDP. They’ve turned cautious as the sales tax rose and companies, including many that profited from the weaker yen, have failed to raise wages enough to keep up with inflation.

 

Supermarket sales fell for a 5th straight month in August, following an April jump in the consumption tax to 8% from 5%. Wages adjusted for inflation fell 2.6% in August from a year earlier, the 14th straight monthly decline …

 

Nissin Food Products, inventor of the world’s first instant noodles, is increasing their price in January and Ueshima Coffee Co., Japan’s biggest supplier of beans to retailers, will sell them for 25% more from November

 

[..] Abe, who must decide whether to raise Japan’s sales tax to 10% as planned next year. The increase this April plunged the economy into its deepest contraction in five years as the government tries to cap gains in the developed world’s highest debt burden.

 

Japan’s biggest employers, including Toyota, Hitachi and Panasonic, have benefited from the yen’s drop. A weaker currency makes their exports more competitive and increases the value of overseas earnings when converted into yen. Japanese companies’ pretax profit rose to a record 17.5 trillion yen ($161 billion) in the quarter ended March 31, according to figures from the finance ministry.

 

In the five years prior to Abe’s call for unprecedented monetary easing, the Japanese currency averaged 85.69 yen to the dollar and never rose above 93.03 yen, prompting manufacturers to move production out of the country and fueling declines in consumer prices.

 

The yen’s drop since Abe started his campaign to become prime minister helped fuel a 23% gain in the benchmark Nikkei 225 Stock Average in 2012, followed by a 57% surge last year, the biggest annual gain since 1972.

 

Abe’s failure so far to broaden the recovery beyond the direct benefits of a weaker currency and unprecedented monetary easing has damped enthusiasm, leaving the Nikkei down 1.3% this year, as of yesterday. Fast Retailing, which is Asia’s largest clothing retailer and accounts for 8.9% of the Nikkei, has fallen 15% this year. Aeon Co., the nation’s largest retailer, is down 22%.

 

Japan’s GDP shrank an annualized 7.1% in the April-to-June period, the most since the first quarter of 2009.

 

“The impact to the overall economy is not necessarily all positive; rather, negatives may be outweighing,” Kazumasa Iwata, the BoJ deputy from 2003-2008, said.

 

Japanese consumers have started to expect that imported foods will become too pricey. “I don’t go to import food shops much recently,” said Kazuha Hemmi, who works in the overseas section of a company in Tokyo. “Some of them stopped selling bargain products.”

“Not necessarily all positive”. Now there’s a dead spin. Any country that sees a 7.1% drop in GDP, no matter what sales tax changes, is in very serious trouble. The nation’s largest retailer is down 22% (!) Want to try that on for size at WalMart?

And then there’s Europe. Where plenty folk probably think they’re in some lower euro honeymoon still. Today, EU exchanges are up 1% or so. While the euro loses big. I suggest these happy shiny people should check on Japan to see what’s in store.

European Stocks Plunge Most In 16 Months As Draghi Disappoints

Broad European stocks plunged into the red for 2014 today as a rattled Mario Draghi disappointed a hungry-for-more risk market. Bloomberg’s BE500 index dropped its most since June 2013 to 2-month lows led by weakness in Italian banks. UK stocks underperformed (-3.6%) but Spain, Italy, and Portugal all tumbled 2-3%. The selling pressure interestingly stayed in stocks as bond spreads rose only modestly and EURUSD roundtripped to only a small rise from pre-ECB. Notably, US equities are cratering as they are so used to the pre-EU-close pump that did not happen.

Draghi’s plan to buy Toilet Paper Backed Securities is dead is a dead in the water as it is on dry land:

France’s Noyer Is Third ECB Dissenter Against ABS Buying Plan

France’s Christian Noyer joined European Central Bank policy makers from Germany and Austria in opposing a program to buy asset-backed securities, according to two euro-area officials. His dissent leaves President Mario Draghi facing a clash with policy makers from the region’s two largest economies, albeit for different reasons. While Noyer disapproved of the way the purchases will be conducted, Austrian central bank Governor Ewald Nowotny shared Bundesbank President Jens Weidmann’s view that the measure involves too much balance-sheet risk, said the people, who asked not to be identified because the talks are private.
 

Draghi unveiled details of the program yesterday, pledging to buy both covered bonds and ABS before the end of the year. He shied away from a definitive goal for the plan, saying total stimulus may fall short of the 1 trillion euros ($1.3 trillion) he had signaled in September. Noyer opposed the design of the program because it will exclude national central banks from its implementation …

And there’s more to that:

Mario Draghi’s QE: Too Little For Markets, Too Much For Germany

European stocks have suffered the steepest one-day fall in 15 months after the European Central Bank retreated from pledges for a €1 trillion blitz of stimulus and failed to clarify the scale of quantitative easing. The sell-off came amid a mounting political storm in Europe as leading German economists and jurists reacted with fury to the ECB’s first asset purchases, denouncing the move as monetary debauchery, and threatening a blizzard of lawsuits in the German courts. “Our worst fears are being fulfilled,” said Hans Werner Sinn, head of Germany’s IFO Institute. The Milan bourse tumbled almost 4pc, led by sharp falls in Italian banks counting on fresh ECB liquidity. [..]

 

Mario Draghi, the ECB’s president, seemed unable to secure backing for far-reaching measures from Germany’s two ECB members or from the German finance ministry, forcing him to play down earlier hints for a €1 trillion boost to the ECB’s balance sheet. As he spoke inside a renaissance palace in Naples, riot police doused crowds of protesters on the street outside with water cannon. The city has become a political cauldron, with the highest “misery index” Europe. Youth unemployment in Italy’s Mezzogiorno is still rising, topping 56pc in the second quarter. Mr Draghi said the ECB would start to buy covered bonds and asset-backed securities (ABS) as soon as this month, but gave no concrete figure and deflected all questions on the scope of stimulus.

 

“I wouldn’t want to emphasise the balance sheet size per se,” he said. Sovereign bond strategist Nicholas Spiro said the ECB was “backtracking” on earlier pledges and seemed to be losing confidence in its ability to halt deflation at all. “Mr Draghi is facing a severe credibility problem,” he said.

It’s not just Draghi, the entire EU leadership has a severe credibility problem. With – seemingly – nothing left on the economical front that member nations can agree on, other than there’s a huge and imminent disaster waiting in the wings, what ways forward are available? There’s only one, really: split up the whole caboodle in as amicable a divorce as you can muster, and then try to stay friends.

But even that doesn’t seem likely, at all. A split-up of the EU would obviously be grossly costly, and the lion’s share of those costs would have to be borne by the richer north. But the richer north, too, is getting poorer fast. So what campaign slogan do you think will win out in the next election in Germany, France etc?

Will it be: let’s pay for Greek debts, so they can have a good life again? Or will it be: let them cook in their own fat, so we can party on for a while longer in Berlin and Paris?

I think you know the answer. So does Albert Edwards. And he includes the US, and China, in his dark panorama for good measure. And he’s right of course

Albert Edwards Says Watch Japanese Yen and Be Very Afraid

The Japanese yen goes into freefall. China’s fragile economy tips over the edge. A wave of profit-crushing deflation comes washing over the U.S. and Europe. Investors panic. That’s the view of perennial pessimist Albert Edwards. The London-based analyst and his team at investment bank Societe Generale SA have been ranked No. 1 for global strategy in surveys by Thomson Reuters Extel every year since 2007, even with a history of saying unpleasant things that few want to hear. “My role is to step back from the excessive enthusiasm that builds up in the market, and to just say, ‘This is wrong. This is going to go horribly wrong,’” the 53-year-old said by phone last week. The cliche is that when the U.S. sneezes, Japan catches a cold. Edwards says Japan is just as apt to lead the way.

 

When the Internet bubble burst in 2000, Japan’s tech-heavy Jasdaq index started to slide weeks before the Nasdaq. Japan also pioneered the deflation that now threatens the West. In 1997, it was a plunging yen that helped trigger Asia’s currency crisis. With the yen’s drop this week to a six-year low of 110 versus the dollar, Japan’s currency may once again be the first domino to fall in a chain of events that could be bad for everyone, according to Edwards. The U.S. stock market rally has been going for 66 months since the financial crisis bottomed in March 2009, a streak that’s already a year longer than average. A disconnect between buoyant equity prices and corporate profit growth in the low single-digits makes the situation especially precarious. “Almost 100% of investors think we’re at the start of a long recovery,” Edwards said.

 

“It’s already a long recovery. Forget about starting from here.” In an hour-long interview, during which he made the global economy sound like a game of Mousetrap, Edwards explained why investors should be watching Japan for clues about what may happen in the next big trouble-spot: China, whose economy is already headed for its slowest full-year growth since 1990. The argument was this: if the yen falls, it will take other Asian currencies down with it. Eventually China will be forced to weaken the yuan, by adjusting its trading range and expanding its money supply, to keep its exports competitive. That will squeeze developed economies that have yet to fully recover from the financial crisis.

 

[..] In 2006, when the S&P 500 was rising ever higher and then-Fed Chairman Alan Greenspan was being feted as “the Maestro,” Edwards called him “an economic war criminal.” Two years later financial markets were in crisis. Edwards’ aversion to equities stems from watching the experience of Japan, where the market took more than two decades to find a bottom after the 1989 bust. According to Edwards’ view, it’s a template for the extended bear market that will unfold in the U.S. and Europe, as stocks recover only to crash again and plumb ever-new lows. “What happened in March 2009, when the S&P 500 touched 666, that was just a brief stop,” he said. “We will go lower than that.” The structural bear market ends when equities are dirt cheap.”

More Albert Edwards:

• “When Bad News Becomes Bad News Again”: Albert Edwards (Zero Hedge)

Inflation expectations in the US have just followed the eurozone by plunging lower. Until very recently, the Fed and the ECB had been quite successful at keeping inflation expectations in their normal range – this despite their clear failure to control actual inflation itself, which has consistently undershot expectations. Investors are beginning to realise that contrary to their confident actions and assurances, the Fed and the ECB have failed to prevent a dreaded replay of Japan’s deflationary template a decade earlier in the West.

 

The Ice Age is once again about to exert its frosty embrace on markets as investors wake up to a new and colder reality. There were two key parts to our Ice Age thesis. First, that the West would drift ever closer to outright deflation, following Japan’s template a decade earlier. And second, financial markets would adjust in the same way as in Japan. Government bonds would re-rate in absolute and relative terms compared to equities, which would also de-rate in absolute terms. [..]

 

Another associated element of the Ice Age we also saw in Japan is that with each cyclical upturn, equity investors have assumed with child-like innocence, that central banks have somehow ‘fixed’ the problem and we were back in a self-sustaining recovery. Those hopes would only be crushed as the next cyclical downturn took inflation, bond yields and equity valuations to new destructive lows. In the Ice Age, hope is the biggest enemy.

 

[..] “amid the inevitable impending global economic and financial carnage, when people, like Queen Elizabeth ask, as she did in November 2008, why no-one saw this coming, tell them that many did. But just like in 2006, before the Great Recession, investors once again chose to tilt their ears towards the reassuring siren songs of the Central Bankers and away from the increasingly hysterical ramblings of the perma-bears and doomsayers.”

Down the line, the insane debt levels all around the globe will do in everyone. That goes for, in order of appearance, Japan, Europe, China and the USA. An order that can still be shaken up by various kinds of unrest and other black swans. Hong Kong protests, Catalunya, a country voting to leave the EU, there are too many options to mention.

But aside from these, Japan looks the furthest gone, with 400%+ debt to GDP and rapidly rising. Europe is a good second, because of debt levels AND the difference in wealth between rich and poor member nations AND all the other differences between rich and poor member nations.

China is a bit of an odd one out, it has room to move, but it also committed to $25 trillion in new debt in just a few years, without anything solid to show for it except apartment buildings that can only go down in price and bridges to a nowhere nobody wants to go to. And then there’s dozens of emerging nations with nowhere to go but down.

For the US, it’s now shooting fish in a barrel – but just for now. The three-pronged plan the Fed has started to execute is plain for everyone to see:

1) Stop QE. This hauls back in to the US dollars from around the planet, from a million parties that owe debt denominated in USD. Already happening at a frantic pace, though no-one involved would advertize it.

 

2) Raise the value of the greenback. This makes it that more expensive for all parties under 1) to pay off their debts. They have to offer ever more just to stand still. And when they can’t, assets will be confiscated.

 

3) Raise interest rates. The final blow. It will make life much harder on the US government too, but they’ll have trillions of dollars flowing in to cope with that. It’ll put millions of Americans into the equivalent of medieval torture instruments, and out of their homes and cars and jobs, but that too will be initially softened by the dollars coming home to papa. Crucial take home: they’ve given up on the US real economy, likely a long time ago.

And it will have the rest of the world begging for mercy. In that regard, it’s funny to see Britain planning to raise its rates too. Do be careful what you wish for there, lads.

The full taper of QE means everyone needs dollars, and most who do are leveraged to the hilt, while the combination of higher interest rates and higher dollar value means the buck will come much more expensive.

It’s going to be carnage out there.

via Zero Hedge http://ift.tt/10CYmc8 Tyler Durden

We have been waiting for this particular bolded sentence ever since we predicted it would take place back in December 2012 when a bunch of Keynesians, a disgraced former/current prime minister with a diarrhea problem and, of course, the Goldman Sachs’ corner suite, first unleashed Abenomics.

From Goldman’s Naohiko Baba, previewing this week’s key Japanese economic events

The Cabinet Office makes an assessment of the state of the economy based on the trend in the coincident CI, using a set of objective criteria. The August coincident CI is set to print negative mom. In this case, the Cabinet Office’s economic assessment will likely shift downward to “signaling a possible turning point” from the current level of “weakening”. According to the Cabinet Office, such a change in assessment provisionally indicates a likelihood that the economy has already fallen into recession. This is effectively akin to the government acknowledging that the economy is in recession.

And because every Keynesian lunacy has to end some time, RIP Abenomics: December 2012 – October 2014.

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

As GreenLeft.org’s Peter Boyle explains,

It is a sadly familiar story: More death, pain and terror for the many translates into large profits for giant weapons making corporations.

h/t @NineInchBlade

 

Led by Lockheed Martin, the biggest US defence companies are trading at record prices as shareholders reap rewards from escalating military conflicts around the world.

…

Jack Ablin, chief investment officer at Chicago-based BMO Private Bank, told Bloomberg: “As we ramp up our military muscle in the Mideast, there’s a sense that demand for military equipment and weaponry will likely rise… To the extent we can shift away from relying on troops and rely more heavily on equipment – that could present an opportunity.”

More money for the war profiteers – never mind the terrible human toll.

Remote “precision” airstrikes – such as the US and its allies – including Australia, are carrying out in Iraq and Syria today, have a record of inflicting huge civilian casualties as so-called “collateral damage”.

Marc Herold, a professor of economic development at the University of New Hampshire, did a comparative study of civilian victims of the West’s war on Afghanistan. He said: “From 2006 to mid-2008, US/NATO aerial attacks killed 1,488 Afghan civilians with 1,458 tonnes of bombs, whereas between October 7 and December 10, 2001 US war planes dropped 14,000 tonnes of bombs resulting in 2,569-2,949 dead Afghan civilians (or 18-21 civilians killed per 100 tonnes of US bombs),” the Guardian reported in 2008.

The relative lethality for Afghan civilians (measured by the ratio of civilians killed per 100 tonnes of bombs) of NATO’s close air support strikes far exceeds the lethality of the US strategic bombing of Laos and Cambodia, Herold calculated. And the lethality of US airstrikes in Afghanistan between 2006-2008 exceeded by far that recorded in Vietnam, Laos, Cambodia, Yugoslavia, Iraq in 2003 and Afghanistan in 2001.

For all its deathly toll, has US/NATO bombing in Afghanistan put an end to “terrorism” in that war-devastated country? No.

But that does not concern those who protect the wealth of the super-rich. War is good for profits.

The Bloomberg’s share index for the four largest Pentagon contractors rose 19% this year, outstripping the 2.2% gain for the Standard & Poor’s 500 Industrials Index.

Bloomberg’s  Richard Clough reported that shares for Lockheed, the world’s biggest weapons maker, “reached an all-time high of $180.74 on September 19, when Northrop, Raytheon and General Dynamics also set records”.

Those four companies and the Chicago-based Boeing accounted for about US$105 billion in US military contract orders last year, according to data compiled by Bloomberg.

War generates big corporate profits and 21st century capitalism now wages a permanent war in the Third World. There is no peace in sight while this toxic system remains in place.

*  *  *

It appears the transition from Fed-sponsored economic-support back to Military-Industrial Complex-support is almost complete…

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