• Category Archives Corporate
  • Ted Butler Quote of the Day 07-26-17

    I have been expecting a price explosion in silver since early May, when the COMEX positioning extremes in silver hit then-record levels (Remember the unprecedented 17 days of consecutive price declines?). But incorporated in my price explosion premise was that the raptors would be ready sellers of their big long positions as prices rose. With the new COT report indicating that not only have the raptors not begun to sell on higher prices, they actually added new longs. If this was no fluke and is indicative that the raptors may be in no rush to sell, then who the heck is going to sell to the technical funds when they plow onto the buy side?

    There’s no question that the technical funds will rush to buy (or attempt to buy) many tens of thousands of COMEX gold and silver contracts on higher prices from here; the only question is who will sell to them? If it isn’t the raptors, it is a near-certainty that prices will explode.

    This is the perfect set up for a selling vacuum and price explosion that I have long envisioned, but not with such clarity. If there’s ever been a better time to be positioned to the maximum for a silver rally than now, that time is unknown by me.

    A small excerpt from Ted Butler’s subscription letter on 22 July 2017.

    More precious metals news & information available at
    Ed Steer’s Gold & Silver Digest.
     


  • Will Plunging Store Rents Slow the Retail Doom-and-Gloom?

    Landlords are reading the memo, but it may be too late.
    Shares of Amazon multiplied by a factor of ten since 2009. Shares of Wal-Mart are flat over the past five years but are up 30% since the beginning of 2016. Since mid-2015, shares of Best Buy are up 58%, Home Depot 28%, and Costco 10%. These and other retailers like them saw their share prices rise because they managed to navigate the new retail environment.
    Many online retailers and online operations of brick-and-mortar retailers are thriving. Other retailers are thriving because, like Home Depot, they’re in a segment that is booming. So not all brick-and-mortar retailers are melting down. But many are, including the samples in the list below. The percentage denotes the crash in share prices over the past two years:

    This post was published at Wolf Street by Wolf Richter ‘ Jul 23, 2017.


  • The ECB Morphs into the Mother of All ‘Bad Banks’

    As part of its QE operations, the ECB continues to pour billions of freshly created euros each month into corporate bonds – and sometimes when it buys bonds via ‘private placements’ directly into some of Europe’s biggest corporations and the European subsidiaries of non-European transnationals. Its total corporate bond purchases recently passed the 100 billion threshold. And it’s growing at a rate of roughly 7 billion a month. And it’s in the process of becoming the biggest ‘bad bank.’
    When the ECB first embarked on its corporate bond-buying scheme in March 2016, it stated that it would buy only investment-grade rated debt. But shortly after that, concerns were raised about what might happen if a name it owned was downgraded to below investment grade. A few months later a representative of the bank put such fears to rest by announcing that it ‘is not required to sell its holdings in the event of a downgrade’ to junk, raising the prospect of it holding so-called ‘fallen angels.’
    Now, sixteen months into the program, it turns out that the ECB has bought into 981 different corporate bond issuances, of which 34 are currently rated BB+, so non-investment grade, or junk. And 208 of the issuances are non-rated (NR). So in total, a quarter of the bond issuances it purchased are either junk or not rated (red bars):

    This post was published at Wolf Street by Don Quijones – Jul 20, 2017.


  • Technology that Glitters in Gold: Solar Energy, Bioprinting and Tractor Beams

    Researchers continue to come up with amazing new technologies utilizing gold.
    We generally think of gold as an investment as well as money, but it is increasingly being used in high-tech applications. Gold’s conductivity and malleability make it suitable for a number of futuristic applications, from energy production to healthcare. Researchers are even using the metal in things that sound like they came out of a sci-fi book. In fact, the tech sector accounted for about 6% of gold demand in 2016.
    A team of researchers in Japan has developed a material incorporating gold nanoparticlescapable of harvesting a broader spectrum of sunlight in solar panels. According to AsianScientist, the new formulation makes traditional semiconductor material 60 time more efficient at splitting water to harvest hydrogen atoms. This could revolutionize hydrogen energy production.
    Hydrogen ranks among the cleanest low-carbon fuels. It gives off energy when it combines with oxygen. The byproduct is water. But currently, the process of harvesting hydrogen molecules by splitting H2O takes more energy than the produced hydrogen gives back. AsianScientist explains how gold may make the process more efficient.


    This post was published at Schiffgold on JULY 20, 2017.


  • Net Neutrality: The Liars Need To Be Locked Up

    The last couple of days have been so-called days of action on so-called “Net neutrality” and now a veritable trove of large “consumer” corporations have joined the fray — Amazon, Facebook and (of course) Netflix among them.
    It’s time to cut the crap on all of this — every one of these firms simply wants to shove their costs down your throat, whether you use their services or not.
    That’s what this is really about, you see.
    It’s obvious with Netflix, of course, but less-so with the others. Facebook, for example, has to deliver advertising — including high-bandwidth video advertising — to make money. To do that someone has to pay for the transport of the data from their servers to your computer or phone.
    Who pays?

    This post was published at Market-Ticker on 2017-07-13.


  • BART Withholds Video Of Attacks Over Concern About “Stereotypes”

    Over the last few months, several attacks by large groups have targeted riders on San Francisco’s Bay Area Rapid Transit (BART) trains, resulting in robberies and injuries. The first of these took place in April and involved as many as sixty youth and seven victims, two of whom were beaten. The two most recent came at the end of June, including an armed robbery with a knife and another incident with a dozen perpetrators robbing a woman.
    BART riders have begun to fear for their safety, and want video released to see who are committing these robberies. BART won’t release the video, however, and BART board member Deborah Allen tells CBS that it’s because they are afraid that the videos will ‘unfairly affect and characterize riders of color’:
    According to a memo distributed to BART Directors, the agency won’t do a press release on the June 30 theft because it was a ‘petty crime’ that would make BART look ‘crime ridden.’ Furthermore, it would ‘unfairly affect and characterize riders of color, leading to sweeping generalizations in media reports.’
    The memo was from BART Assistant General Manager Kerry Hamill.

    This post was published at Zero Hedge on Jul 12, 2017.


  • BOND ROUT!!!

    Nothing ever goes in a straight line. For every rally there will inevitably be a retracement, a minor selloff often of no more than profit taking. These are generally pauses where a durable trend either overcomes doubts, or succumbs to them. In the stock market, they call it the wall of worry. In bonds, it’s become a bit more complicated.
    At this particular moment, US treasuries are again being sold. It’s really not to this point all that much, but you wouldn’t know it from the commentary trying to describe it. The headlines all scream in unison BOND ROUT! It is in many ways the opposite of stocks, where even larger corrections (like the liquidations in 215 and 2016) get shrugged off as nothing of great concern.
    This disparity is, however, quite easily explained. Stocks on the way up are a reflection of the way the world is supposed to be. It just isn’t possible, in mainstream convention, for prolonged economic agony. Share prices as they are now, as they have been since especially QE3 in 2012, are signaling the end of the malaise and the belated return of conventional sense. Bond yields going only lower are a loud (and more robust) contradiction to good orthodox understanding of the way the whole world might actually work.

    This post was published at Wall Street Examiner by Jeffrey P. Snider – July 7, 2017.


  • Digital Advertising: It’s WORTHLESS

    This is an interesting article sent to me by a reader; it’s ~6 months old, but there’s a hell of a lot of truth in there.
    So, at the end if the line, on average, it looks like you are probably getting somewhere about 3 worth of actual ads seen by actual people for every dollar you spend on display advertising.
    The funny part of this analysis (read the whole thing; it’s amusing) is that the overhead is utterly ridiculous. Sixty percent is “absorbed” before a single pixel reaches a single screen.
    You know a so-called “industry” is nothing other than a giant fraud-filled theft ring when that sort of number shows up. Nobody gets away with absorbing 60% off the top without either using a gun or a scam somewhere — usually both.
    I used to oversee the entire ad budget at MCSNet; one of the pleasures of being a reasonably-small corporation is that the CEO sees basically everything that gets spent and someone has to justify that spend to said CEO before it happens — without exception.

    This post was published at Market-Ticker on 2017-07-06.


  • How The “Enigma Network” Led To A Historic Crash In One Hong Kong Market

    Yesterday morning we discussed the sudden crashes amid 17 small cap Hong Kong firms, which collectively lost over $6 billion in market cap, on what we dubbed was a marketwide margin call, as confidence in the entire sector vaporized instantly, sending the small cap Growth Enterprise Market (GEM) plunging by over 9%, with some stocks plunging over 90%. Quoted by Bloomberg, Francis Lun, the CEO of HK’s Geo Securities said ‘we’re seeing a domino effect; all the companies in the same network got cut. These shares are owned by the same group of people so they must be experiencing a liquidity crunch and they don’t have the money to support the share prices.”
    ***
    It turns out there was more to this story, at the heart of which is a report issued six weeks ago titled ‘The Enigma Network: 50 stocks not to own’ by David Webb, a former director of the Hong Kong stock exchange, whose argument is that companies which crashed were entwined in a complex web of cross-shareholdings that had pushed their valuations to unsustainable levels. As Reuters adds, “Webb’s report mapped out a complex web of cross-shareholdings between companies listed on both the main board and its sibling, the Growth Enterprise Market, which he said created a breeding ground for volatility.”

    This post was published at Zero Hedge on Jun 28, 2017.


  • SocGen: “Fundamentals No Longer Matter? Yeah Right…”

    Following JPM’s calculation that only 10% of trading is fundamentally driven by flesh-and-blood investors, and increasing rumblings that traders now exist at the mercy of machines, many of which respond merely to fund flows and not fundamentals, SocGen’s Andrew Lapthorne cross-asset strategist will have you know that he will have none of that nonsense, and in a note that is sure to spark strong reactions across Wall Street, writes this morning that “with all the talk of systematic and passive investment dominating markets and, conversely, the apparently low participation of fundamentally-driven investors in daily stock flows (which we also see), many are concluding (we’d say once again) that stock fundamentals no longer matter.”
    We disagree. There remains a clear correlation between changes in bottom-up consensus earnings expectations and relative share price movement – see charts below. So it is not that changes in fundamentals are not driving share prices, it is that predicting those changes is (’twas ever thus) incredibly difficult. What is Lapthorne’s thesis? Qite the opposite of what is slowly becoming conventional knowledge, namely that value investing is dead (as Goldman recently suggested tongue-in-cheek), and that fundamentals no longer matter. Here’s why:
    Many also argue that quantitative systems ignore these fundamentals. However the inverse is perhaps more accurate. Any systematic strategy formulated around any notion of price momentum (we’d put volatility weighted and risk parity into this group as well) are simply following slavishly these changes in fundamentals using price as the principal signal for a change in expectations. So it is not that systematic strategies are not driven by fundamentals, it is they offer no view to the future. Forecasting fundamentals is and has always been the main problem. His evidence:

    This post was published at Zero Hedge on Jun 26, 2017.


  • (Cape) Fear! Shiller CAPE Ratio At 1929 Black Tuesday Levels (Probability Of Further Rate Cuts Low)

    Robert Shiller, the Nobel Laureate in economics from Yale University, has a cyclically-adjusted price-earnings ratio termed the CAPE ratio. And it just rose to the same level as Black Tuesday of 1929, the famous stock market crash.

    This post was published at Wall Street Examiner by Anthony B Sanders ‘ June 19, 2017.


  • “Probably Nothing”

    For the first time since September 2001, Robert Shiller’s CAPE Ratio measure of stock market valuation has topped 30x…
    (…and yes, we know, we “don’t get it” and “this time is different” and “the world is a changed place” and so on…)
    Time will tell…

    This post was published at Zero Hedge on Jun 19, 2017.


  • What Happens When the Machines Start Selling?

    The death of fundamental analysis.
    The infamous FAANG stocks – Facebook, Apple, Amazon, Netflix, and Google’s parent Alphabet – along with other ‘tech’ stocks have been getting ‘hammered,’ to use a term that for now exaggerates their ‘plight.’ The FAANG stocks are down between 1.7% and 2.5% at the moment and between 5.5% and 11% since their peak on June 8. Given how far these stocks have soared over the past few years, this selloff is just a barely visible dip.
    But fundamental analysis has long been helpless in explaining the surge in stocks. The shares of Amazon now sport a Price-Earnings ratio of 180, when classic fundamental analyses might lose interest at a PE ratio of 18 for the profit-challenged growth company that has been around for over two decades. For them, the stock price might have to come down 90% before it makes sense.
    Or Netflix, with a PE ratio of 195. Or companies like Tesla. Forget a PE ratio. There are no earnings. The company might never make any money. Its sales are so minuscule in the overall US automotive market that they get lost as a rounding error. It bought Elon Musk’s failing solar-panel company as a way to bail it out. And the battery-cell technology Tesla uses comes from Panasonic. So what should a company like this be worth? Fundamental analysis has been completely irrelevant: Tesla’s current stock price gives it a market capitalization of $61 billion.

    This post was published at Wolf Street by Wolf Richter /Jun 15, 2017.


  • Seth Klarman On ‘Trumptopia’: “Investors Are Being Too Trusting”

    Via RealInvestmentAdvice.com,
    Baupost Group’s Seth Klarman laid out his concerns with the market in a recent client letter…
    ‘Risk, Klarman wrote, is the most important consideration when investing, and investors are being too trusting. When share prices are low, as they were in the fall of 2008 into early 2009, actual risk is usually quite muted while perception of risk is very high. By contrast, when securities prices are high, as they are today, the perception of risk is muted, but the risks to investors are quite elevated.’
    The problem with overvaluation and investor exuberance is they are clear hallmarks of historical bull market peaks. This is particularly the case when there is a central asset, or asset class, that investors are piling headlong into without regard to the consequences. As I addressed recently:
    ‘When it comes to investing, ALL investors, individual and professionals, are subject to making ‘stupid’ decisions. As Idiscussed recently: At each major market peak throughout history, there has always been something that became ‘the’ subject of speculative investment. Rather it was railroads, real estate, emerging markets, technology stocks or tulip bulbs, the end result was always the same as the rush to get into those markets also led to the rush to get out. Today, the rush to buy ‘ETF’s’ has clearly taken that mantle, as I discussed last week, and as shown in the chart below.’

    This post was published at Zero Hedge on May 29, 2017.


  • New Home Prices Are Over 50% Higher In Canada Than The US

    The price of new homes is quickly diverging in Canada and the US.
    Data from the Canadian Housing and Mortgage Corporation (CMHC) show that new homes are selling for substantially more than the same time last year.
    Meanwhile south of the border, data from the US Bureau of Census show that new home prices are on the decline.
    This has lead to an even wider gap between the average price of a new home in Canada and the US.
    Canadian New Construction Is Higher The price of a new home across Canada is up for the second month in a row. The average sale price in April was CA$751,881 (US$559,123). This represents an 11% increase from the same time last year, when measured in Canadian dollars. When compared in US dollars, that increase drops to a much more conservative 2.64%. Even after factoring in the loonie’s decreased buying power in Canada, new home prices still climbed.

    This post was published at Zero Hedge on May 28, 2017.


  • Silver Superman coins prove to be Kryptonite to Royal Canadian Mint’s bottom line

    In 2011, the mint began selling a series of silver collectible coins, with a face value of $20, at a time when the price of silver was soaring. The cost to buy one was also just $20, tax free.
    Superman, Bugs Bunny, the starship Enterprise and other catchy images on the coins attracted hundreds of thousands of coin collectors and investors, and fattened revenues at the Crown corporation. More than 4.2 million such coins have been struck to date.
    But the price of silver has fallen dramatically in the five years since, and Canadians are returning the coins by the truckload, protected from the fall in silver prices by that fixed $20 face value which the mint must pay back on request.
    Stung by the massive returns, the mint abruptly ended its so-called Face Value collectible coin business earlier this year, and has taken a big hit on its balance sheet.
    The 2016 annual report, delayed for months because of revised accounting for the Face Value reversal, says there’s no plan to place an expiry date on redemptions of the coins.

    This post was published at CBC News


  • Buffett Sells A Third Of His IBM Stake: ‘I Don’t Value IBM The Same Way That I Did Six Years Ago”

    When Warren Buffett surprised markets in 2011 after announcing that he had started building up a stake in IBM – a member of the tech sector from which Buffett had traditionally kept a safe distance – we joked that the only reason for his involvement was IBM’s then unprecedented buyback spree. A few short years later, IBM’s buybacks ended with a whimper when its debt level hit record highs (the company’s credit rating was recently downgraded) even as its revenues continued to post a record slide and were back to levels seen at the start of the Millennium, while EPS only beat thanks to ever lower effective tax rates.
    Which is why we were not surprised to learn overnight that Buffett’s Berkshire had dumped a third of its stake in IBM in the first explicit sign of declining confidence by the famed investor.
    Speaking with CNBC, Buffett said he had sold the substantial holding, worth more than $4bn at the current share price, after “revising his view of the company’s competitive prospects.”
    ‘I don’t value IBM the same way that I did six years ago when I started buying’.’.’.’I’ve revalued it somewhat downward,’ he said. ‘IBM is a big strong company, but they’ve got big strong competitors too.’
    “I think if you look back at what they were projecting and how they thought the business would develop I would say what they’ve run into is some pretty tough competitors,’ Mr Buffett added,

    This post was published at Zero Hedge on May 5, 2017.


  • FOMC Preview: Here Are The Possible Surprises In Today’s Statement

    Today’s FOMC announcement at 2:00pm is expected to be mostly a non-event, and the only incremental information will be what is contained in the updated statement, which comes one month ahead of the Fed’s next expected rate hike in June. There will be no press conference and no update to the summary of economic projections. The statement is expected to incorporate modest changes to reflect recent (mixed) data but see the risks around the meeting are low.
    Here is what Wall Street consensus looks like ahead of 2pm:
    The market expect no rate hike at the May meeting; Fed Fund futures are currently pricing in a 65% probability of a June rate hike. There is a risk of a small hawkish surprise if the committee indicates they are “looking through” Q1 weakness in growth and inflation. A less likely dovish surprise could come from the FOMC emphasizing the decline in inflation. It is likely too soon for the committee to update language related to reinvesting balance sheet securities. Subsequent Fed speeches by Yellen, Fischer, Williams and Rosengren on Friday will likely provide additional color Continuing the trend from recent weeks, most Wall Street firms expect the Fed to hike twice more this year despite the recent slowdown in US economic indicators and the near record collapse in the Citi eco surprise index, in June and September and announce balance sheet reduction in December.

    This post was published at Zero Hedge on May 3, 2017.


  • JPM Cuts Q1 GDP Forecast To Just 0.3%

    While we wait to see if the Atlanta Fed will cut its final Q1 GDP estimate ahead of tomorrow’s official print to 0% or negative, here comes JPM which after slashing its Q1 GDP tracker from 0.6% to 0.4% yesterday, having started the quarter – like most others on Wall Street – at 3%, just trimmed its Q1 GDP estimate to the lowest yet, at just 0.3%.
    Here is the full note from JPM’s Daniel Silver
    We now believe that real GDP increased 0.3% saar in 1Q. This incorporates the various source data that were released this morning as well as a correction to our treatment of the annual revision to the retail sales data that was released yesterday. The updated details of our forecast are in the table below.
    In terms of the retail sales data, it appears that this year the BEA will not incorporate the updated figures until the May GDP report, so this Friday’s GDP release will be based on an older vintage of retail sales data. Reverting to the older data, we think Friday’s GDP report will show real consumption at 0.9% saar.

    This post was published at Zero Hedge on Apr 27, 2017.


  • Trump Keeps His Pledge on Tax Reform

    A lot of emails are coming in asking if I have been advising Trump on the taxes since this is similar to the plan I proposed when I testified before Congress. The answer is no. If they took the tax proposals we had worked on with members of Congress back in the Nineties, who knows. They are on file and have been endorsed by many different tax reform advocates.
    I have not spoken with anyone in the White House regarding taxes. I testified why the corporate tax rate must be cut to 15% before the House Ways & Means Committee. The answer is very simple. Corporations will be taxed in their home country unless they pay some tax where they are domiciled overseas. Our headquarters back then was in Hong Kong. Everyone was there because of a 15% corporate tax rate. I testified if the USA lowered the corporate tax rate to 15%, then the USA would become the tax-haven and corporations would move to the States. This is a no brainer and was based on the fact that we did in fact advise multinational corporations – not just theory. I knew what they would do and would have advised them to move accordingly.

    This post was published at Armstrong Economics on Apr 27, 2017.