Tag: news

Just because it wasn’t enough of a vote of confidence in Jamie “Dear Congress: oath I vouch under oath that it was nothing but a tempest in a teapot” Dimon that his pay rose 74% to $20 million in 2013 despite JPM’s Net Income crashing as the bank had to provision for tens of billions in legal expenses (conveniently excluded from Non-GAAP earnings) – but that’s ok because the Fed’s pumping of $1 trillion in fake buying power meant the stock soared – here comes folksy Crony Capitalist #1, aka cuddly Uncle Warren seemingly desperate for close encounters of the rectal kind with the JPM CEO, telling the world just how underappreciated poor, poor (we use the term loosely) Jamie is and said that if he owned J.P. Morgan, “he would keep Chief Executive James Dimon at the helm and would pay him even more than he’s making now.”

From the WSJ:

In an interview Friday, Mr. Buffett called Mr. Dimon “a bargain.”

 

“If I owned J.P. Morgan Chase, he would be running it and he would be making more money than the directors are paying him,” said Mr. Buffett, who has publicly defended the bank executive before and owns J.P. Morgan shares.

 

He added J.P. Morgan was a “huge plus to the American financial system” during the financial crisis and did much better than other big banks through that period.

 

“If Jamie decides he wants to make more money, all he has to do is call me and I’d hire him at Berkshire,” the billionaire investor added.

Warren had no comment how much he would pay Barack Obama if the president worked for him more than he already does, i.e., making sure that the Keystone Pipeline is mothballed indefinitely while Buffett’s various railroad interests become the New Normal trans-US pipelines.

And Buffett certainly had no comment what his compensation to Bernanke, Paulson or Congress would be for injecting a few hundred billion in the same financial companies that Berkshire had some $26 billion invested in, and would have all gone bankrupt, unless the US taxpayer had boldly, if involuntarily, stood up to defend the equity value of crony capitalist #1.

As Reuters reported at the time: “A good chunk of his fortune is dependent on taxpayer largess. Were it not for government bailouts, for which Buffett lobbied hard, many of his company’s stock holdings would have been wiped out. Berkshire Hathaway, in which Buffett owns 27 percent, according to a recent proxy filing, has more than $26 billion invested in eight financial companies that have received bailout money.  The TARP at one point had nearly $100 billion invested in these companies and, according to new data released by Thomson Reuters, FDIC backs more than $130 billion of their debt.”

Surely by the time the US finds Berkshire Hathaway to be a “systemically important” entity, any time Dairy Queen misses earnings or NetJets sells one less plane in the quarter than budgeted, the US will rush to bail it out.

As for “poor” Jamie, who obviously deserves much more than just that $20 million pittance, don’t cry for him.  We are confident soon enough he will take another massive risk with FDIC-insured depositor cash, which will either pay off, or the bank will simply be bailed out once again. Because once you are the king of the TBTF, the only way is up.

via Zero Hedge http://ift.tt/KVsMOw Tyler Durden

Just because it wasn’t enough of a vote of confidence in Jamie “Dear Congress: oath I vouch under oath that it was nothing but a tempest in a teapot” Dimon that his pay rose 74% to $20 million in 2013 despite JPM’s Net Income crashing as the bank had to provision for tens of billions in legal expenses (conveniently excluded from Non-GAAP earnings) – but that’s ok because the Fed’s pumping of $1 trillion in fake buying power meant the stock soared – here comes folksy Crony Capitalist #1, aka cuddly Uncle Warren seemingly desperate for close encounters of the rectal kind with the JPM CEO, telling the world just how underappreciated poor, poor (we use the term loosely) Jamie is and said that if he owned J.P. Morgan, “he would keep Chief Executive James Dimon at the helm and would pay him even more than he’s making now.”

From the WSJ:

In an interview Friday, Mr. Buffett called Mr. Dimon “a bargain.”

 

“If I owned J.P. Morgan Chase, he would be running it and he would be making more money than the directors are paying him,” said Mr. Buffett, who has publicly defended the bank executive before and owns J.P. Morgan shares.

 

He added J.P. Morgan was a “huge plus to the American financial system” during the financial crisis and did much better than other big banks through that period.

 

“If Jamie decides he wants to make more money, all he has to do is call me and I’d hire him at Berkshire,” the billionaire investor added.

Warren had no comment how much he would pay Barack Obama if the president worked for him more than he already does, i.e., making sure that the Keystone Pipeline is mothballed indefinitely while Buffett’s various railroad interests become the New Normal trans-US pipelines.

And Buffett certainly had no comment what his compensation to Bernanke, Paulson or Congress would be for injecting a few hundred billion in the same financial companies that Berkshire had some $26 billion invested in, and would have all gone bankrupt, unless the US taxpayer had boldly, if involuntarily, stood up to defend the equity value of crony capitalist #1.

As Reuters reported at the time: “A good chunk of his fortune is dependent on taxpayer largess. Were it not for government bailouts, for which Buffett lobbied hard, many of his company’s stock holdings would have been wiped out. Berkshire Hathaway, in which Buffett owns 27 percent, according to a recent proxy filing, has more than $26 billion invested in eight financial companies that have received bailout money.  The TARP at one point had nearly $100 billion invested in these companies and, according to new data released by Thomson Reuters, FDIC backs more than $130 billion of their debt.”

Surely by the time the US finds Berkshire Hathaway to be a “systemically important” entity, any time Dairy Queen misses earnings or NetJets sells one less plane in the quarter than budgeted, the US will rush to bail it out.

As for “poor” Jamie, who obviously deserves much more than just that $20 million pittance, don’t cry for him.  We are confident soon enough he will take another massive risk with FDIC-insured depositor cash, which will either pay off, or the bank will simply be bailed out once again. Because once you are the king of the TBTF, the only way is up.

via Zero Hedge http://ift.tt/KVsMOw Tyler Durden

In keeping up with “breaking” and otherwise engaging news on par with this, here is the latest installment of what 99% of the French population will be talking about in the next several days and weeks (instead of the nation’s impending triple-dip recession).

#BREAKING: France’s Francois Hollande announces split with partner Valerie Trierweiler to @AFP

— Agence France-Presse (@AFP) January 25, 2014

#ALERTE François Hollande annonce “la fin de sa vie commune” avec Valérie Trierweiler. http://t.co/Y3XgyxMeFU http://ift.tt/1hx1g5f

— Le Figaro (@Le_Figaro) January 25, 2014

For the background on this story, read here

via Zero Hedge http://ift.tt/1gd6Ixs Tyler Durden

Submitted by Charles Hugh Smith from Of Two Minds

The Recent “New High” in Stocks Is as Bogus as the Unemployment Rate

This is what happens when the Status Quo is incapable of reforming itself or recognizing reality: propaganda and bogus statistics are substituted for actual solutions.

The most heavily touted statistical “proofs” that the U.S. economy is “recovering” and “growing” are the unemployment rate and the stock market. Both are completely bogus. Yes, bogus, as in phony, wrong, rigged, misleading, carefully crafted propaganda.

Earlier this month, we showed that In Terms of Real Stuff, the Dow’s “New High” Is Pure Illusion (January 6, 2014). Another way of adjusting the nominal new high to reality is to adjust it for inflation, as measured by the producer price index (PPI) or the consumer price index (CPI). If we adjust for inflation, we find that the recent new highs are considerably lower than the stock market peak reached in 2000:

Simply put, “new highs” in the stock market are statistical sleight-of-hand. By any practical, real-world measure, the SPX is worth significantly less adjusted dollars in 2014 compared to the real peak in 2000.

Equally bogus is the unemployment rate, which has magically declined for years. You probably know this already, but it bears repeating: the unemployment rate is calculated by counting the labor force and those with a job of some sort–temporary, part-time, whatever.

If you slash the labor force down to the number of people with a job of any kind, presto-magico, the unemployment rate goes to zero. This is precisely what the Status Quo is doing: the number of people counted as in the labor force is plummeting. Even if the number of people with jobs is declining, as long as the number of people in the labor force is declining at a faster rate, eventually you get “full employment,” i.e. zero unemployment.

Gamed in such a fashion, an economy in a full-blown depression can sport an unemployment rate of near-zero. That’s precisely where we’re heading. Here are the three charts that show this. I’ve drawn in trendlines so the future decline in the unemployment rate is easily predictable.

Here’s the unemployment rate. If the downtrend continues (and it will, as long as the participation rate keeps going down), the unemployment rate will soon be 3%, regardless of how many people have full-time jobs they can live on.

The participation rate (percentage of the population in the labor force) will soon be at levels last seen when the typical household only had one employed adult:

Those not in the labor force will soon equal the number of people with full-time jobs (around 115 million):

This is what happens when the Status Quo is incapable of reforming itself or recognizing reality: propaganda and bogus statistics are substituted for actual solutions.

via Zero Hedge http://ift.tt/L2vMJx Tyler Durden

Submitted by Charles Hugh Smith from Of Two Minds

The Recent “New High” in Stocks Is as Bogus as the Unemployment Rate

This is what happens when the Status Quo is incapable of reforming itself or recognizing reality: propaganda and bogus statistics are substituted for actual solutions.

The most heavily touted statistical “proofs” that the U.S. economy is “recovering” and “growing” are the unemployment rate and the stock market. Both are completely bogus. Yes, bogus, as in phony, wrong, rigged, misleading, carefully crafted propaganda.

Earlier this month, we showed that In Terms of Real Stuff, the Dow’s “New High” Is Pure Illusion (January 6, 2014). Another way of adjusting the nominal new high to reality is to adjust it for inflation, as measured by the producer price index (PPI) or the consumer price index (CPI). If we adjust for inflation, we find that the recent new highs are considerably lower than the stock market peak reached in 2000:

Simply put, “new highs” in the stock market are statistical sleight-of-hand. By any practical, real-world measure, the SPX is worth significantly less adjusted dollars in 2014 compared to the real peak in 2000.

Equally bogus is the unemployment rate, which has magically declined for years. You probably know this already, but it bears repeating: the unemployment rate is calculated by counting the labor force and those with a job of some sort–temporary, part-time, whatever.

If you slash the labor force down to the number of people with a job of any kind, presto-magico, the unemployment rate goes to zero. This is precisely what the Status Quo is doing: the number of people counted as in the labor force is plummeting. Even if the number of people with jobs is declining, as long as the number of people in the labor force is declining at a faster rate, eventually you get “full employment,” i.e. zero unemployment.

Gamed in such a fashion, an economy in a full-blown depression can sport an unemployment rate of near-zero. That’s precisely where we’re heading. Here are the three charts that show this. I’ve drawn in trendlines so the future decline in the unemployment rate is easily predictable.

Here’s the unemployment rate. If the downtrend continues (and it will, as long as the participation rate keeps going down), the unemployment rate will soon be 3%, regardless of how many people have full-time jobs they can live on.

The participation rate (percentage of the population in the labor force) will soon be at levels last seen when the typical household only had one employed adult:

Those not in the labor force will soon equal the number of people with full-time jobs (around 115 million):

This is what happens when the Status Quo is incapable of reforming itself or recognizing reality: propaganda and bogus statistics are substituted for actual solutions.

via Zero Hedge http://ift.tt/L2vMJx Tyler Durden

 

Two theories to explain the year-to-date global dumpathon. The first is that it's all local issues – no single macro story explains the depth of the sell off. Some examples (and why they are individually no big deal):

 

+ Turkey is facing big domestic political/economic problems – it’s no surprise that some of the ‘air’ is coming out of the currency, bonds and equities that were so recently loved. All in, Turkey is now cheap – one should buy this dip.

+ South Africa is facing labor issues. This explains the drop in the Rand. This is not a ‘contagion’ story. It’s an isolated case.

+ Brazil is temporarily suffering from some weakness in other EM markets. But Brazil is a ‘special’ case – this is the land of the future.

+ Argentina’s deval is a good thing. Every time that Argentina has hit a wall over the past 30 years they have gone through this, and came out strong. Buying this dip will be a moneymaker.

+ Japan is going to ‘Whip Deflation’ in 2014. The coming 40% increase in the national sales tax is not going to be a speed bump at all. The (still) cheap currency that has been engineered is about to trigger an export boom. Japan has the ‘Platinum Coin’ option, and it will use it to eliminate the debt problem.

+ Europe is really in ‘recovery mode’ this time. All the evidence you need to confirm this is that Spanish ten-year bonds were sold the other day (in size – E13b) at a dirt cheap 3.75%. The offering was 3Xs oversubscribed.

+ The ‘worst case’ in Puerto Rico will never be seen. Treasury Secretary Jack Lew will ape Mario Draghi and pledge that PR will not default. There’s big money to be made in PR bonds.

+ China’s latest ‘blip’ in funding costs is going to go away as of Feb. 1 (New Year). The fact that there will be a default of a Wealth Management product in a few days is well known – it's already in Friday's market print. China Inc. will not allow defaults to spread. And what’s all the complaining about? GDP of 7.5% is in the cards.

+ The US is going to have the best year of GDP growth in years. The higher corporate top line/earnings that will follow this economic spurt will keep multiples expanding. Janet Yellen has confirmed that she’s going to keep the short end at zero for years to come, so the Fed’s put is alive and well. Buy this dip!

+ The US picture is bright because of all those new holes that are being pounded into the ground from Colorado to Pennsylvania. For the first time in decades crude is a short. $75 WTI is in our future. As this evolves, there will be no meaningful consequence to Saudi Arabia, Iran, Iraq, Indonesia and it will not hurt Mexico a bit.

 

The “spin” on the foregoing issues have the same theme. They are isolated issues that are (for the most part) not really interconnected. Yes, those issues are causing some markets to adjust, but there is no case to be made for a single source of the global puke-out. And anyway, there is a positive side to all of this.

 

But there is another take on this story. All of the issues that are emerging have one common thread – It’s the Fed’s Taper that is behind all the uproar.

 

Is this possible? Can a relatively small adjustment in the supply and demand equation for the US bond market be responsible for the rout? I think the answer is “Yes”.

The real question is what does Janet Yellen think is behind the global sell off. I’m as certain that I can be that Ms. Yellen is itching for an excuse to extend (expand) QE. QE is, after all, her ‘baby’.

Next weeks’ Fed meeting is supposed to bring us another notch down in the QE monthly purchases – at least that is what the WSJ’s Jon Hilsenrath told us a few days ago (link). Given what has happened since then, the possibility of a Fed ‘surprise’ is now a distinct possibility. Yellen could fall back on the ‘data dependent’ theme, and opt for a pause in the Taper. This translates to a continuation of QE at the rate of $75B a month for a bit longer.

What might be the consequences if Yellen does a U-turn on the Taper? The hoped for result would be a rapid turnaround for the EM markets, and with that, the US market would quickly revert to green. Happy days would be here again. There are enough people who believe in the magic of QE that a suspension of the Taper might be sufficient to turn the global capital markets back to stability (Yellen is on top of the list). But that outcome is by no means assured – a delay in the Taper could backfire. The difference between QE of $75B a month versus $65B is meaningless. The markets are not that dumb – it will just take a few days for markets to reach this conclusion.

We have only two scenarios:

 

1) Yellen opts for a continuation of the Taper and we have an immediate blowout in the EM economies/markets or,

2) She delays the Taper and holds QE at $75B for "a few more months". The next leg down in markets would start in less than a week as reality/disappointment set in.

 

Both of these outcomes have a bad ending. Either way, the concept of the "Fed Put" is about to be tested. Seat belts should definitely be worn (tightly) next week.

 

 

via Zero Hedge http://ift.tt/MaucX3 Bruce Krasting

What have we done: after a series of reports in late 2012 in which we showed, with no ambiguity, that not only might the Bundesbank’s offshore held gold be severly diluated (follow our 2012 exposes on German gold here, here, here, and here), but that on at least one occassion, the Fed and the Bank of England conspired against the Buba in returning subpar quality gold, the Bundesbank shocked everyone in early January 2013 when it announced it would repatriate 300 tons of gold helt in New York and all of its 374 tons of gold held in Paris. But convincing the Bundebsbank to demand delivery was peanuts compared to changing the tune of the Financial Times – that bastion of fiat “money”, and where the word gold is mocked and ridiculed, and those who see the daily improprieties in the gold market as nothing but “conspiracy theorists” – to say the magic words: “Learn from Buba and demand delivery for true price of gold”, adding that “one day the ties that bind this pixelated gold may break, with potentially catastrophic results.“

In other words, precisely what we have been saying since the beginning.

Welcome to the ‘conspiracy theorist’ club, boys.

From the FT’s Neil Collins: “Learn from Buba and demand delivery for true price of gold: One day the ties that bind the actual and the traded commodity will snap:

A year ago the Bundesbank announced that it intended to repatriate 700 tons of Germany’s gold from Paris and New York. Although a couple of jumbo jets could have managed the transatlantic removal, it made security sense to ship the load in smaller consignments. Just how small, and over how long, has only just become apparent.

Last month Jens Weidmann, Bundesbank president, admitted that just 37 tons had arrived in Frankfurt. The original timescale, to complete the transfer by 2020, was leisurely enough, but at this rate it would take 20 years for a simple operation. Well, perhaps not so simple. While he awaits delivery, Herr Weidmann is welcome to come and look through the bars in the Federal Reserve’s vaults, but the question is: whose bars are they?

In the “armchair farmer” fraud you are told: “Look, this is your pig, in the sty.” It works until everyone wants physical delivery of their pig, which is why Buba’s move last year caused such a stir. After all nobody knows whether there are really 260m ounces of gold in Fort Knox, because the US government won’t let auditors inside.

The delivery problem for the Fed is a different breed of pig. The gold market is far more than exchanging paper money for precious metal. Indeed the metal seems something of a sideshow. In June last year the average volume of gold cleared in London hit 29m ounces per day. The world’s mines are producing 90m ounces per year. The traded volume was many times the cleared volume.

The paper gold in the London Bullion Market takes the familiar forms that bankers have turned into profit machines: futures, options, leveraged trades, collateralised obligations, ETFs . . . a storm of exotic instruments, each of which is carefully logged, cross-checked and audited.

Or perhaps not. High-flying traders find such backroom work tedious, and prefer to let some drone do it, just as they did with those money-market instruments that fuelled the banking crisis. The drones will have full control of the paper trail, won’t they? There’s surely no chance that the Fed’s little delivery difficulty has anything to do with the cat’s-cradle of pledges based on the gold in its vaults?

John Hathaway suspects there is. He worries about all the paper (and pixels) linked to gold. He runs the Tocqueville gold fund (the clue is in the name) and doesn’t share the near-universal gloom of London’s gold analysts, who a year ago forecast an average $1700 for 2013. It is currently $1,260.

As has been remarked here before, forecasting the price is for mugs and bugs. But one day the ties that bind this pixelated gold may break, with potentially catastrophic results. So if you fancy gold at today’s depressed price, learn from Buba and demand delivery.

 

via Zero Hedge http://ift.tt/L1UZno Tyler Durden