Modest Excesses

Jon

New York Lumberjacks It’s cold here in Manhattan. We’ve never lived in New York. And every previous visit had left us unenthusiastic.
The city is not pretty … at least not compared to Paris. And Lower Manhattan always seemed gritty, dirty and unkempt. Like a homely man or a homeless woman.
But a lot has changed. New York is now full of foreigners. Enter our hotel lobby and you hear a din of strange and familiar accents: English, French, Russian… and many we’ve never heard before (We make a small contribution to the cacophony by taking Portuguese lessons in the tearoom).
Soho is full of young people – often dressed in country duds. Almost all the men below 40 have facial hair. One man at a fancy restaurant we were eating in wore a plaid shirt and had a full beard. He looked like a lumberjack.
‘That’s the style,’ said our 26-year-old son, Jules. Here on the Bowery the pace is fast… and there are new shops, luxury stores and chic restaurants on every street. Just a few blocks away is Wall Street. Thanks largely to the feds, more and more of the world’s wealth runs through the US financial industry.
Money Moves Around
‘Isn’t nature marvelous,’ we began, obscurely, a monologue directed at our wife, Elizabeth.
‘What do you mean?’
‘I mean, it never would have occurred to me that I should pay $10 for a cup of coffee and a cookie… or $200 for a theater ticket… or $500 a night for a hotel room… or $1,200 for what looks for all the world like a 1970s Danish Modern chair.
‘Of course, I never thought people would pay ‘2 and 20.’
‘That’s what hedge funds charge – 2% of invested capital and 20% of profits – for money management. But when you hang around in New York for a while it all begins to seem normal.’
Uptown, developers are putting up the most expensive condos in the history of the world. From Forbes:

This post was published at Acting-Man on December 10, 2014.

AAA , Great Ebay Synergies, Tremendous PayPal Shareholder Value; Over Three Thousand Layoffs

Jon

Throughout the summer, one of the biggest activist stories, therefore one naturally involving Carl Ichan, was whether eBay would spin off PayPal. And sure enough, following months of promises and vows by John Donohoe that the company would never split, on September 30, around the time the market started hitting one record high after another, the company announced it would do precisely the opposite and all those activist demands would be fulfilled (and that John Donohoe would be handsomely compensated for his lies, especially since he would have no role in the resulting company).
So when the press release hit, some were wondering just what do the following buzzwords mean:
Maximizes strategic focus and flexibility for eBay and PayPal to capitalize on respective growth opportunities in highly competitive, rapidly changing global commerce and payments markets Preserves eBay and PayPal relationships through arm’s length operating agreements Provides shareholders with more targeted investment opportunities; best path to sustainable shareholder value Followed by even more confusing corporate buzz speak:

This post was published at Zero Hedge on 12/10/2014.

Karl Marx seemed to know more about gold than Ben Bernanke

Jon

When Karl Marx wrote about the bourgeoisie as the ‘unproductive class’ he was writing from personal experience.
The foremost champion of the proletariat, Marx never actually belonged to the working class himself.
Born into a well-off middle-class family, Marx ascended up the social hierarchy by marrying into Prussian aristocracy.
Seven kids later, a lavish lifestyle, and an unwillingness to hold down a job, he found himself deeply in debt, only to be saved by the generosity of his friend Friederich Engels.
Engels found Marx’s ideology so amusing he offered to pay off his friend’s debts AND give him an annual stipend of 350.
That may sound like a paltry figure in today’s terms, but at the time, this was a sizeable sum.
Back then Britain was on the gold standard, meaning that those paper notes were attached to something with weightier value.
The price of an ounce of gold at the time was fixed at 4.24.
So in gold terms, Marx was offered a lush 82.55 ounces of gold per year. And back then, you could actually redeem paper currency for gold.
So while 350 doesn’t even register a week’s wages anymore, the 82.55 ounces of gold that Marx’s stipend was worth is valued at nearly $100,000 per year in today’s money.
(I wonder if the Occupy movement would have included him amongst their ranks, given that this salary nearly puts him in the top 1% at the time)
As Marx ironically shows, paper does not stand the test of time. Gold does.
This of course defies mainstream thinking. We should all feel excited and privileged to hold paper. We’re told that gold is a barbarous relic.
Ben Bernanke once told Congress that he doesn’t ‘pretend to understand gold prices.’
There’s not really much to understand. Are your pieces of paper really going to be worth anything 150 years from now? Probably not.
If you want your savings and wealth to actually hold value over the long-term, follow the example from the father of communism and enemy of private property: own some gold.

This post was published at Sovereign Man on December 10, 2014.

Gold Daily and Silver Weekly Charts – Somebody to Love

Jon

“He who makes a beast of himself gets rid of the pain of being a man.”
Samuel Johnson
The metals were held in place today, consolidating their recent gains at the top of the support and resistance channel.
I am sure that some day this protracted market manipulation and price rigging will collapse.
And I am also sure that some day we will be offered an elaborate story of how the Western central bankers used our gold to hold the line on its price for the sake of the system.
After all, this is their mandate, to insure the integrity of the currency by hiding the effects of their malfeasance, while shamelessly printing bushel loads of hot money and handing it to their Banking friends so they can use it to game the system.

This post was published at Jesses Crossroads Cafe on 10 DECEMBER 2014.

It’s Different This Time… Rig-Count Edition

Jon

In July 2008, crude oil prices peaked and began to fall quickly. After 2 months they had dropped 30%, but being the smartest extrapolators in the room, producers piled on the rig count driving it higher and higher until around 5 months after oil prices peaked… the rig count completely collapsed. Today, it has now been almost 6 months since oil peaked and began its accelerating free-fall and rig counts have just started to drop (still 2% above the June peak oil levels)…

This post was published at Zero Hedge on 12/10/2014.

Silver Demand for Industrial Applications Forecasted at 680 Million Ounces in 2018

Jon

Total silver industrial demand is forecast to grow 27 percent, adding an additional 142 million ounces of silver demand through 2018 compared with 2013 levels, according to a new report issued today by the Silver Institute. Half of this growth will be accounted for by the electrical and electronics sector, but additional demand will be due to growth in other industrial applications, as highlighted in the report entitled, ‘Glistening Particles of Industrial Silver.’
The unique properties of silver – its excellent thermal and electrical conductivity, as well as its malleability, ductility and optical reflectivity – make it indispensable in many industrial applications, from watch batteries to industrial-scale solar energy systems, according to CRU Consulting, the London-based metals consultancy and authors of the report.
Increasingly, applications for silver are being invented, discovered and, importantly, commercialized. The report outlines the potential for growth from several of the most important industrial silver applications. Increasing demand for silver in solar panels, as well as in the production of ethylene oxide, automobiles, bearings and batteries, has influenced consumers in developed and developing countries to varying degrees, with silver industrial demand shifting among key geographical locations. Increased use of silver has driven consumption growth in both China and India and the trend seems likely to continue.

This post was published at GoldSilverWorlds on December 10, 2014 |.

Spain Seeks 60 Billion of Juncker’s Alleged 315 Billion Development Fund; Vaporware Funding

Jon

Yesterday, Spain Requested 60 Billion of Juncker’s Alleged 315 Billion Development Fund.
Via translation from La Vanguardia …
Economy Minister, Luis de Guindos, said Tuesday that Spain has submitted projects worth around 60 billion euros to the President of the European Commission, Jean Claude Juncker, who aims to mobilize 315,000 billion euros.
Guindos stressed the priorities for the Government are energy interconnections, transport and R & D. Juncker said the plan is a “key initiative” of the new Commission, “with the appropriate times, quickly and effectively.”
Vaporware Funding
Spain wants 60 Billion. How much will France want? Greece? Portugal? Germany? How far will 315 Billion go?
The answer is not far. As I commented on November 24, Juncker’s 315bn EU Slush Fund is 299bn Sleight of Hand Magic…

This post was published at Global Economic Analysis on December 10, 2014.

This Is What Americans Will Spend Their Whopping $380 In “Low Gas Price Savings” On

Jon

For all the talk about the boost to the US economy (if only in consumer spending terms, certainly not as a result of crushing CapEx and energy sector investment), the bottom line is actually not all that exciting: as the WSJ reports, “If prices were stay at their current levels under $3 a gallon, the average American household could save $380 over the coming year, up from $83 since prices first declined this past summer, according to research firm ClearView Energy Partners. Regular gasoline fell to $2.64 a gallon in the U. S. on Wednesday, according to auto club AAA, near a five-year low. Gas prices have fallen more than $1 a gallon from their high in June and are down 60 cents from a year ago, the greatest year-over-year savings since 2009. AAA estimates that gasoline prices could fall to $2.50 a gallon by Christmas.”
The spin was immediate:
The drop in gas prices has already raised retailers’ hopes for a stronger shopping season, since less spending at the pump gives consumers more to spend on everything from restaurant meals to clothing and haircuts. Great… just ignore the terrible Thanksgiving weekend spending numbers, traditionally the strongest for spending 4-day period of the year, which this year just happened to be the worst since Lehman. And yes, plunging gas prices were already clearly demonstrated at gas stations in the weeks and months heading into the end of November.
The spin continues:

This post was published at Zero Hedge on 12/10/2014.

Name That Chart? Oil Supply Or Demand Edition

Jon

While the question of supply vs demand in global oil markets is merely different sides of the same coin, we hope the following “name that chart” image provides some clarifying perspective on what is really dragging oil prices lower…
Nope… they are not the same… one of these is a commodity that is crashing but is believed to be “unequivocally” good for the global economy… the other is the global economy!!

This post was published at Zero Hedge on 12/10/2014.

SP 500 and NDX Futures Daily Charts – A Cold Shot Baby

Jon

There was quite a bit of talk today about the Sony hack attack, and some gossipy emails about some director calling Angelina Jolie a ‘spoiled brat.’ This was a major preoccupation today on Bloomberg TV. You couldn’t trade baseball cards off the information that they provide. Clinton on The Chew offers more useful commentary.
Maybe if the same Hollywood artiste had written snarky emails about the homeless and the hungry, the ongoing collapse of the middle class, or the pervasive culture of fraud in high places, we might have heard about that. Probably not.
Hey did you hear the one about the Wall Street Banker calling Malala a spoiled brat? Malala. Is she on Survivor? Who does her clothes?
Well, at least they did not have to spend any time talking about serial perjury and gratuitous torture for its own sake. Or the general chaos into which the Anglo-American empire is falling. Or the serial policy failures of a Federal Reserve fully captured by the moneyed interests.
Cultural vacuity, bad paper, and financial fraud are our major exports.
To paraphrase that other black hole of banality Richard Nixon, We are all Kardashians now.
Stocks took a cold shot today, with a half hearted attempt to rally giving way to end of day selling.

This post was published at Jesses Crossroads Cafe on 10 DECEMBER 2014.

Belgium asks for solidarity to prevent electricity blackouts

Jon

After several of its nuclear reactors had to be taken offline, the country is facing the possibility of electricity shortages, particularly on cold days.
Across the country, posters ask people to try and reduce energy demand, by switching off lights when they are not needed, washing clothes at lower temperature and cooking using fewer pans.
Lower temperatures means more people spend their time inside, using electricity. Not only for electrical heaters, but also devices like televisions and computers.
The big problem is the period of peak demand, between 5pm and 8pm. Electricity supply and demand have to remain in balance, otherwise a blackout can occur.

This post was published at EU Observer

Dead-Cat-Bounce Done As Dow Dumps 200 Points; Oil, USDJPY, & Bond Yields Plunging

Jon

All of yesterday’s v-shaped recovery gains off the lows are gone as the S&P tests new lows and the Dow is down over 200 points. Treasury yields are back at the mid-October Bullard lows – due for lowest close of the year. Oil has collapsed to a $60 handle (now down opver 8% on the week), as Energy stocks have crashed, giving up all of yesterday’s bounce agains. HY credit is blowing wider as HY Energy breaks above 930bps!! USDJPY is tumbling. VIX is up at 17.5.

This post was published at Zero Hedge on 12/10/2014.

Weaponizing Social Science: Pentagon Plans To Shape and Control Mass Civil Breakdowns

Jon

To protect and promote our vital corporate interests with advanced social techniques, a compliant press, and boatloads of dark money, at home and abroad.
Managing perceptions.
O brave new world, that has such creatures in it.
We had a dream. And now its becoming a nightmare.
We come in peace.
“A US Department of Defense (DoD) research programme is funding universities to model the dynamics, risks and tipping points for large-scale civil unrest across the world, under the supervision of various US military agencies…
Social science is being militarised to develop ‘operational tools’ to target peaceful activists and protest movements….

This post was published at Jesses Crossroads Cafe on 10 DECEMBER 2014.

Here Are America’s Most Levered Energy Companies

Jon

Instead of beating an already dead horse so it looks like the Japanese (and soon, European) economy, and commenting even more on what the oil price collapse will mean for America’s energy producers (and Investment as a component of GDP) we decided to bypass the foreplay and proceed straight to showing the 70 or so most levered publicly traded US companies, with exposure to not just crude but all aspects of energy, that have a leverage (Debt/EBITDA) over 4x, as well as LTM EBITDA and CapEx both more than $20 million.
So, without further ado, here is the list of companies which America’s bankruptcy advisors are already circling over. Note the preponderance of LPs – what the taxman giveth, OPEC taketh away?

This post was published at Zero Hedge on 12/10/2014.

Why Is The US Treasury Quietly Ordering “Surival Kits” For US Bankers?

Jon

The Department of Treasury is spending $200,000 on survival kits for all of its employees who oversee the federal banking system, according to a new solicitation. As FreeBeacon reports, survival kits will be delivered to every major bank in the United States and includes a solar blanket, food bar, water-purification tablets, and dust mask (among other things). The question, obviously, is just what do they know that the rest of us don’t?
As Free Beacon reports,
The Department of Treasury is seeking to order survival kits for all of its employees who oversee the federal banking system, according to a new solicitation. The emergency supplies would be for every employee at the Office of the Comptroller of the Currency (OCC), which conducts on-site reviews of banks throughout the country. The survival kit includes everything from water purification tablets to solar blankets.
The government is willing to spend up to $200,000 on the kits, according to the solicitation released on Dec. 4.

This post was published at Zero Hedge on 12/10/2014.

Whoops – Homebuilders Getting Hammered

Jon

Toll Brother’s missed earnings expectations. The stock is down 4%. Contracts were down 5% from Q3 and backlog was down 8%. This is in a housing market which is being supported by near-record low mortgage rates. Interestingly, despite a huge increase in reported average price per unit, Toll’s gross margin – revenues less cost of revenues – were flat. One would think that, ceteris paribus, Toll’s gross margin should be soaring.

This post was published at Investment Research Dynamics on December 10, 2014.

Venezuela Default Probability Has Never Been Higher; Maduro “Working To Raise Oil Prices”

Jon

With OPEC slashing demand expectations to 12 year lows, oil prices have re-cratered today putting further pressure on socialist-utopia Venezuala which needs $121/bbl to break-even. Credit risk for the South American nation has exploded today to record highs – implying a 93% probability of default and President Maduro has taken to the airwaves to calm a benefit-needy nation… tensions are mounting…

This post was published at Zero Hedge on 12/10/2014.

With an Eye Toward Early 2015

Jon

Monday’s pullback appears on track to continue into today’s session as well, with overnight weakness in Asia carrying into Europe and weighing on U. S. sentiment. Chinese stocks pulled back sharply in response to new restrictive measures by that country’s regulators to rein in rampant speculation in stocks. The oil price slide and fresh Fed worries appear to be at play a well.
Falling oil prices are a boon for the U. S., with low gasoline prices and an improving labor market helping the buying power of consumers, partly reversing the restraining effect of stagnant wages. On the flip side, the oil price development will have some negative effect on investments in the energy space that could have a bearing on players in other industries and regions as well.
Depending on the duration of low oil prices, the regional oil-centric economies of Texas and North Dakota could be at risk, as recent news-flow about oil exposed regional banks likeCullen/Frost (CFR), Texas Capital Bancshares (TCBI) and others shows. The net effect, however, is positive for the U. S. economy, with low energy costs freeing up consumers to spend the savings elsewhere in the economy.

This post was published at FinancialSense on 12/09/2014.