Herd Behavior: Why Lack Of Patience Could Spark Argentina’s Next Crisis

Time, that fickle mistress, is persistently stalking Macri’s administration and is not on his side.
It’s been almost one year since President Mauricio Macri shocked the world by winning Argentina’s presidential elections, and the country is in a state of flux – hovering in an uncertainty characterized by hope, anxiety, fear and just a few whiffs of the dreaded stench of failure.
Besides displaying a shocking lack of political PR and taking on a few petty wastes of time, this government is doing most things within its power correctly to right the course of a vessel that seemed destined to crash.
Despite these positive steps, one sinister question looms: Has the Macri government managed to avert the looming economic crisis entirely, or is it merely kicking the can down the road? It’s scary, but Argentina is in uncharted territory. Rather than boom, the economy is in a prolonged recession that could be heading for an all too familiar outcome – bust.
Yet this time, the question really isn’t about economic fundamentals. The real variable threatening Macri isn’t economic at all – it is time. Time, that fickle mistress, is persistently stalking Macri’s administration and is not on his side. And Argentines aren’t exactly famous for patience.

This post was published at Wolf Street on October 26, 2016.

Why Do You Allow Yourself to Be Manipulated?

After recently hitting our 5th anniversary at Elliottwavetrader, and now exceeding 3000 members, I have learned quite a lot about market participants. For example, the one thing that hurts investors the most is when they lie to themselves or allow others to lie to them.
The problem is that there are so many fallacies accepted as gospel in the financial world that it causes investors to continually be looking the wrong way. And, worse yet, ‘analysts’ without any analytical depth (or ethics) fall back upon these fallacies, which allows them to be inappropriately propagated even further throughout the market.
When I was in 5rd grade, my teacher had a sign hanging at the front of the room which said ‘put brain in gear before engaging mouth.’ I would like to slightly modify this sound advice to fit our purposes in the financial markets: ‘put brain in gear before engaging pocketbook.’
Unfortunately, too many investors today do not pay heed to this wise advice. You see, it is just easier to blindly accept what you hear or read in the market rather than actually engage in independent thought. I mean, how many of you actually question the internal logical consistency or even back-test the propositions presented in analysis you read? I will tell you – very few of you. As I said, it is just so much easier to blindly accept what you hear or read if it ‘sounds’ good, especially if it supports your own bias. Yet, what ‘sounds’ good is all too often such superficial analysis that it is rarely accurate and often causes losses.

This post was published at GoldSeek on 26 October 2016.

Global Equity Markets See Pressure From Downbeat U.S. Earnings Data, Lower Oil Prices

(Kitco News) – World stock markets were mostly lower Wednesday, following some downbeat U. S. corporate earnings news, including from Apple, and as crude oil prices are slumping this week. There were also some weak consumer confidence reports coming out of the European Union Wednesday.
U. S. stock indexes are also pointed toward lower openings when the New York day session begins.
Gold prices are under mild selling pressure in early U. S. dealings.

This post was published at Wall Street Examiner by Jim Wyckoff ‘ October 26, 2016.

Texas County Enacts “Emergency Paper Ballots” After “Software Glitch” In Voting Machines

Just yesterday we noted several social media complaints from Texas voters who alleged that when they voted a straight republican ticket that voting machines were switching their presidential selection to Clinton/Kaine. While most undoubtedly dismissed these reports as conspiracy theories, new official reports from Chambers County, Texas suggest that there might be some truth to the voting machine “irregularities”. According to an NBC affiliate, polling stations in Chambers County had to enact emergency protocols yesterday and revert back to paper ballots
after a “glitch” was discovered in the county’s voting
machines.
The issue was actually discovered on Monday morning when Chambers County Clerk Heather Hawthorne was casting her own ballot and the voter next to her noticed that one of her votes was not filled in when she reviewed her electronic ballot Hawthorne told 12News on Tuesday.
An error in the voting machine programming by Election Systems & Software (ES&S) caused votes for one statewide court of appeals race not to be entered when a voter tried to vote straight ticket in either party according to a release from Chambers County.

This post was published at Zero Hedge on Oct 26, 2016.

Another Confirmation That The Economy Is In A Recession And Collapsing Quickly – Episode 1111a

The following video was published by X22Report on Oct 26, 2016
More corporations are laying off. New home sales were revised downward for June, July and August to show an increase in September. Services PMI surged due to government spending. Wholesale inventories unchanged year over year. Richmond Fed confirms that we are in a recession head towards a major collapse. UK tells its banks to prepare for the collapse of Deutsche Bank.

Bitcoin Soars As China Launches Crackdown On Wealth-Management Products

After trading in a tight range for much of the summer, coiled within a $100 range around the mid-$500s, over the past several weeks bitcoin has once again started to push higher, closely tracking the decline in the Chinese Yuan as shown below.

However, the most recent burst in bitcoin activity, which sent it surging by over $20 overnight, has little to do with any moves in the official Chinese currency, which recently rebounded modestly tracking the recent dip in the dollar, and is likely attributable to a long overdue crackdown on China’s Wealth-management products, a key component of China’s “shadow banking” system.
As Bloomberg reported overnight, China’s central bank is finally conducting a trial monitoring of banks’ off-balance-sheet wealth-management products under its macro-prudential assessment system. A question one should ask perhaps is why the $1.9 trillion in asset locked up with WMPs had so far been exempt from regulatory supervision.

This post was published at Zero Hedge on Oct 26, 2016.

Snapchat To Raise Up To $4 Billion In IPO, Valuing Company As Much As $40 B

The long await IPO of Snapchat is finally coming: according to Bloomberg the social media will seek to raise as much as $4 billion in its planned initial public offering, making it the biggest social media company to go public since Twitter’s initial public offering in November 2013.
Bloomberg reports that The IPO could value Snapchat at about $25 billion to $35 billion, citing unnamed sources, and while no final decision has been made and the size of the IPO may change, and the valuation could reach as much as $40 billion, one of the people said.

This post was published at Zero Hedge on Oct 26, 2016.

Stocks Pump’n’Dump As Crude Crumbles To 3-Week Lows

Ok – to summarize – stocks ripped to a technical level then dipped, thanks to momentum ignition from the crude complex as machines misread the inventory draw data (which sent oil over $50 opnly to crash back to the lows)… Homebuilders dropped as new home sales rose… and restaurant stocks plunged as Services PMI soared… Makes perfect sense, right?
Builders battered despite surge in new home sales…

This post was published at Zero Hedge on Oct 26, 2016.

Rents Are Too Damn High: NYC Retail Vacancies Soar As Commercial Rents Start To Rollover

Cushman & Wakefield recently released their 3Q 2016 New York City retail rental update and it’s pretty much universally bad news for commercial real estate owners in Manhattan. Retail rental rates declined YoY in 9 out of the 11 Manhattan submarkets tracked by Cushman while vacancy rates soared to over 20% in several markets with the “Lower Fifth Avenue” corridor registering the highest vacancy rate in the city at 29.3%.

This post was published at Zero Hedge on Oct 26, 2016.

Key Industrial Indicators Say US Is Still In Long Term Depression

Last week we reviewed the US industrial production (IP) and saw that it contracting for more than a year. The IP indexes represent the production of factories, mines, and utilities in unit volume, not dollar sales, both by total output and output by industry. While these indexes do not represent service industries directly, they do indirectly because electric power production and distribution feeds service business.
The IP indexes give us a pretty good idea of how the US economy is performing overall and by industry. Let’s just say it’s not the picture of health. The industrial production data includes breakdowns by industry and sector which can tell us a great deal more about the state of the US economy. It’s worse than the headline writers would have you believe. I promised in the report last week to illustrate some of that data for you.

This post was published at Wall Street Examiner by Lee Adler ‘ October 26, 2016.

The Next Big Catalyst for Stocks/Commodities

We’re about to enter that time when financial commentators offer up their best guesses as to what investors can expect in the Near Year. It always makes for fun reading, but it also never fails to disappoint. Instead of engaging in that tired exercise in futility, investors would do better to focus on something more productive. And that would be next year’s most likely catalyst for stock and commodity prices.
Instead of asking the fruitless question, ‘At what price will the S&P 500 finish in 2017?’ wouldn’t it be better to ponder what could possibly stimulate asset prices out of their lethargy? Granted, this is as much a guessing game as the former question. But at least applying critical thinking to the catalyst question, investors are almost certain to uncover some hidden opportunities for profit.
Having said that, what could be next year’s biggest catalyst for a meaningful breakout-type move in the broad equities market, the commodities market, or individual issues within both categories? Putting the pieces of global events over the last year together and reading between the lines allows us to make at least one educated guess: military conflict. War is after all one of the biggest catalysts for both stock and commodity prices, and it has the added benefit of boosting the economy, short-term. Of course, war must be paid for down the line, but that’s why ‘kicking the can’ was invented (so that the day of reckoning can be perpetually delayed).

This post was published at FinancialSense on 26 OCTOBER 2016.

Bank of England Asks UK Banks To Detail Their Exposure To Deutsche And Italian Banks

In what may or may not be a coincidence, just hours after Bloomberg reported that DB launched a probe into whether it “misstated” derivatives, moments ago the FT reported that the Bank of England is seeking details from large British banks on their current exposure to Deutsche Bank and some of the biggest Italian banks, including Monte dei Paschi, “amid mounting market jitters over the health of Europe’s financial sector.”
The FT notes that the request was made in recent weeks by the BoE’s Prudential Regulation Authority as investors sold off Deutsche and Monte dei Paschi, both of which have been the subject of scrutiny over their capital levels. Supervisors worldwide have attempted to curtail the links between large institutions since the 2008 banking crisis, when the collapse of Lehman Brothers and other big groups threatened to drag down the entire global financial system.
While the PRA regularly speaks to banks about their exposures, particularly to any lender that might be facing difficulty, the BoE’s recent intervention is a sign of continued nervousness among regulators that the interconnectedness of Europe’s largest banks could harm otherwise healthy groups if one of the weakest links were to fall into crisis.
Som more details:

This post was published at Zero Hedge on Oct 26, 2016.

Bubble Mentality Collapses in San Francisco Office Market

Tough business decisions loom.
The rumored second round of layoffs at Twitter – which in 2011 was granted by the befuddled city of San Francisco the ‘Twitter tax break’ on employment taxes – comes at a very inopportune moment for the glory of commercial real estate. These layoffs would amount to 8% to Twitter’s workforce, or about 300 people, according to Bloomberg.
Already, Twitter has thrown 183,642 square feet of vacant office space at its two-building Mid-Market headquarters on the sublease market, thus bringing it to 1.51 million square feet (msf).
This comes at a time when, according to the ‘snapshot’ from Cushman & Wakefield, leasing activity nearly ground to a halt in the third quarter, with only 875,000 sf leased – the lowest since 2001!
There was only one major lease deal over 100,000 sf: Amazon’s live streaming video platform Twitch, which took 178,000 sf. The next largest deal was less than half that size: WeWork leased 78,000 sf.
Leasing activity for the three quarters this year plunged 30% from the same period last year, to just 4.7 msf, according to a report released this week by commercial real estate services firm Savills Studley, which added dryly, ‘The competition for space has calmed dramatically from several quarters ago.’

This post was published at Wolf Street by Wolf Richter ‘ October 26, 2016.

Economic Breadth Is Significantly Deteriorating in the US

Philly Fed state coincident data came out today and more states across the country are starting to contract (shown in red). Looking at the snapshot below, positively growing states still dominate the map (and don’t give much of an alarming picture), but a different story emerges when we look at the trend.

Here’s a look at how this data has trended over the past 36 years compared to the S&P 500. As you can see, states showing positive growth tend to rollover prior to economic recessions (red bars) with corresponding declines in the S&P 500. The latest data puts us near the weakest levels during this entire economic cycle and matches prior market tops.

This post was published at FinancialSense on 10/26/2016.

SP 500 and NDX Futures Daily Charts – VIX Rising, Wobbly Earnings Results

The data coming in for the most part seems to be confirming the idea that consumers are on the skids, and that corporate profits that depend on a healthy aggregate public demand are feeling the pinch.
Monopolies like big finance and healthcare, and firms that depend on special situations, like war for example, may be showing more resilience in this odd economy which we have grown over the years.
Everyone seems to be thinking about what the upcoming elections may mean to equities, what the central banks may do for the stock markets, and what additional military conflicts the neo-cons may provide.
But do you see that in each case, the focus is not on a healthy economy with organic growth through productive end.
This will not end well. But no one will do anything to stop it until after the fact. This seems to be the ‘MO’ of the ruling elites and their porcine constituents.

This post was published at Jesses Crossroads Cafe on 26 OCTOBER 2016.

Tesla Earnings Smash Expectations After Dramatic Change In Reporting Methodology

There was a sudden burst of confusion heading into today’s Tesla earnings. As Bloomberg reported, a change in the way Tesla Motors Inc. will report quarterly results after today’s market close has created a bit of a last-minute headache for analysts, with earnings estimates varying widely. The electric-car maker is phasing out most of the non-GAAP adjustments it’s traditionally made, including ones for resale value guarantees or vehicles leased through banking partners. Starting today, when the company discusses third-quarter adjusted non-GAAP earnings per share, it plans to exclude only stock-based compensation.
The SEC in recent months has raised concern that public companies may be straying too far too often from Generally Accepted Accounting Principles. Though Tesla has telegraphed its plan for weeks, many analysts are only now revising forecast models and some are sitting out the guessing game entirely this time. That means it may be challenging to draw firm conclusions about whether Tesla missed or beat Wall Street expectations – giving added importance to what Chief Executive Officer Elon Musk says on a follow-up conference call about cash or production plans.
So heading into today’s earnings, the average estimate in a Bloomberg survey of analysts stands at an adjusted loss of 54 cents a share, based on seven forecasts that have comparable methodologies that the firms say take the new practice into account. While all seven of those projected a loss, there are others who say the company may post a profit.
Well, those who expected a profit got just that, because momnets ago Tesla not only reported revenue of $2.3 billion, far higher than the $1.9 billion expected, but also reported its first quarterly profit of $74 cents, smashing consensus estimate of a 54 cent loss.
Since there will be much confusion over how these numbers make any sense, here is what the company said:

This post was published at Zero Hedge on Oct 26, 2016.