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Monthly Archives: November 2012

Brazil GDP Grows at Half Expectations

Brazil’s economy expanded in the third quarter at half the pace forecast by economists, as government stimulus efforts fail to revive investment that fell for the fifth straight period. Rate futures plunged.

Gross domestic product grew 0.6 percent in the third quarter, the national statistics agency said today in Rio de Janeiro. That was less than the forecasts of all 54 economists surveyed by Bloomberg whose median estimate was for a 1.2 percent expansion.

President Dilma Rousseff’s government has slashed interest rates to record lows, cut taxes and boosted spending over the past 12 months to prop up an economy heading toward its worst two-year performance in a decade. While the efforts are keeping retail sales buoyant amid a global slowdown, companies are holding back on investment. With growth still patchy, the government is now focusing on reducing production costs.”

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Muddy Waters Offers to Pay S&P for Second Opinion on Olam

Muddy Waters LLC, the short-seller sued by Olam International Ltd. (OLAM) for defamation, offered to pay to get the commodity trader’s debt rated as it sticks to its contention the company is in danger of failing.

Investors will benefit from the rating of Olam’s public debt by Standard & Poor’s, Muddy Waters said in a statement today. Olam boosted its capital expenditure plans since Muddy Waters criticized the Singapore-based trader Nov. 19 and this increased its risk of failure, the research firm said.

“Olam now has no good reason to avoid having its debt rated,” Muddy Waters said. “Should it continue to refuse a rating, investors should wonder whether the company is worried that a rating would mortally wound it by making clear that the market has been underpricing its risk.”

Chief Executive Officer Sunny Verghese bought 1 million Olam shares today, lifting his holding to 4.67 percent, according to a regulatory filing. Verghese bought the shares at S$1.54 apiece.

Olam, whose debt isn’t rated by any agency, has the equivalent of $5.8 billion of debtoutstanding, of which $2.89 billion is in bonds, according to data compiled by Bloomberg. The yield on its S$500 million of 6 percent bonds due October 2022 rose 21 basis points to 9.37 percent, according to prices compiled by Bloomberg, gaining for a fourth straight day.

The commodity trader’s shares gained 1 percent to S$1.575 at the close in Singapore. The stock has declined 9.5 percent since Block first questioned the company’s finances and accounting practices at a London conference.”

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The Euro Rises With Commodities and Equities

“The euro strengthened to a five-week high against the dollar, metals rose and European stocks headed for the longest monthly rally since 2006. The yen weakened as Japan approved additional stimulus.

The euro appreciated 0.3 percent to $1.3007 at 7:20 a.m. in New York. The Stoxx Europe 600 Index (SXXP) increased 0.3 percent, poised for a sixth month of gains. Futures on the Standard & Poor’s 500 Index added 0.2 percent. Copper jumped to a one-month high and zinc increased 1.3 percent. The perceived risk of corporate default has fallen 30 percent in the past six months. The yield on Japan’s benchmark 10-year note fell 1 1/2 basis points to 0.695 percent, the lowest since June 2003.”

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The Yen Falls on Weak CPI Data and More Speculation Easing is Near

“The yen slid to the weakest in seven months versus the euro after data showed Japan’s consumer prices stagnated in October, fanning speculation the central bank will increase stimulus to spur inflation.

The Japanese currency fell versus all of its 16 major peers and was set for its biggest monthly decline versus the 17-nation euro since June as Japan’s opposition leader called for measures to boost inflation. The euro rose with stocks after German lawmakers approved Greece’s latest rescue package. The dollar slid to a five-week low versus the shared currency as U.S. Democrats and Republicans wrangled over the spending cuts and tax increases of the so-called fiscal cliff.”

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New Bank Reserves Coming Up Shortly, Get That Commodity Inflation Trade On

“Under Fed Chairman Ben Bernanke, the Fed has been the great enabler of Washington’s fiscal excesses of the past few years. The Fed’s quantitative easing blurs the line between fiscal and monetary policies. The Fed may still be politically independent, but fiscal policy has become very dependent on the willingness of the Fed to purchase lots of government securities. A consolidated statement of the US Treasury and the Fed would show that $1.7 trillion of US government debt, which is held at the Fed, is costing the government only 0.25%.

In yesterday’s WSJ, Jon Hilsenrath reported that the FOMC is likely to vote for QE4 when the committee meets on December 11-12. In September, the FOMC implemented QE3, i.e., an open-ended commitment to purchase mortgage-backed securities at the rate of $40 billion per month. The Fed’s Operation Twist is scheduled to terminate at the end of the year. Under this program, the Fed purchased $45 billion a month in long-term Treasuries, paying for them with the proceeds from its holdings of short-term debt.

Now some members of the FOMC are pushing for more purchases of Treasury bonds. However, the Fed is running out of short-term securities to sell. Hence, QE4! As Hilsenrath observes…”

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Consumer Spending Grows Less Than Expected

Consumer spending in the U.S. grew less than forecast in the third quarter, underscoring why Federal Reserve policy makers are zeroing in on fighting unemployment to spur the world’s largest economy.

Household spending climbed at a 1.4 percent rate, the smallest gain in more than a year and down from a previously reported 2 percent advance, revised figures from the Commerce Department showed today in Washington. Gains in inventories and a smaller trade deficit more than offset the slowdown to propel gross domestic product to a 2.7 percent rate, exceeding the 2 percent pace previously reported.

“The economy is moving forward at a moderate pace,” saidChris Rupkey, chief financial economist at Bank of Tokyo- Mitsubishi UFJ Ltd. in New York. “The pace of consumer spending was disappointing, but it seems less worrisome given that some other sectors of the economy are doing better, like housing.”

Fed policy makers such as William Dudley say joblessness remains too high as central bankers consider whether they need to step up record stimulus heading into the so-called fiscal cliff of tax increases and spending cuts that may take effect next year if lawmakers fail to reach a compromise. At the same time, another report today reinforced signs of a rebound in housing that is helping underpin consumer confidence.”


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You Are Fucking Dead !

Right now many games of chicken are being played. Business vs workers, Dems vs GOP, bears vs bulls, etc.

It is in my opinion that the fiscal cliff will be resolved one way or the other.

You need not be a chicken and buy up equities with cocaine gorilla fever.

While I’m generally a bear who makes more short bets than longs, i have to say that the markets are giving me a gut feeling that for the next few months the BEARS ARE FUCKING DEAD.

The last time i felt this way the S&P went from 1100 to 1470 in no time at all.

The writing is on the wall. Bernanke says he has little tools left in the box; so congress and the White House need to take center stage, the markets have expressed dismay (not shear terror,) at not resolving the fiscal cliff, Spanish and Italian bond yields are falling like stones, idiot countries are lining up for austerity in exchange for bailouts, critical technical levels are broken and then erased instantly, and this is fucking America for Christ’s sake.

The only thing that i find suspicious is the enormous amount of dividends being paid out. Usually an equity trap, but plausible given next year’s tax implications.

Enjoy it for now. We shall see what happens over the next two qs. It seems like it is safe to play hard in the garden being long equities.

The bears are scared little shits climbing up trees.

Prepare for a gunshot in the cave while your sleeping bears.

[youtube://http://www.youtube.com/watch?v=dzQAhC3ra4w 450 300]


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Market Update

U.S. equities continue yesterday’s hope rally  over ongoing fiscal cliff discussions.  Currently paring gains as Speaker Boehner comments on fiscal cliff talks.

John Boehner had some rosy comments that helped out global equities as investors felt comfortable speculating. He is currently speaking now talking a little tougher than yesterday. He is establishing his grounds and putting onerous on the White House. We will see how markets react to today’s comments.




Market update

3D heat map 

[youtube://http://www.youtube.com/watch?v=ZQ_JAgHxR14 450 300]

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Berlau: Recession Possible Even if Fiscal Cliff Averted

“The U.S. could still slide into a recession next year even if Congress steers the economy away from the fast-approaching fiscal cliff, said John Berlau, a Senior Fellow for Finance and Access to Capital at the Competitive Enterprise Institute.

Lawmakers are debating how to avoid tax breaks from expiring at the end of this year right when deep spending cuts are scheduled to take effect.

The combination of tax hikes and spending cuts, known as the fiscal cliff, could siphon over $600 billion out of the economy next year alone, according to some estimates.

Watch our exclusive video. Article continues below.”

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$AAPL Gets One Step Closer to the iPhone 5 Launch in China

“Things seem to be on track for the iPhone 5 to meet its December release timeline in Greater China, since the device has now received approval for the final piece in the regulatory puzzle required for it to go on sale. The Wall Street Journal reports that it has now obtained its “network access” license, and the notice mentions China Telecom by name, though not a version of the phone that would work with China Unicom.

China Telecom backed up the timelineproposed by Apple CEO Tim Cook during a conference call earlier this month, saying at an event that the phone would arrive on its network by early December at the latest. At the time, China Unicom did indeed express skepticism about when exactly the phone would be hitting its network, suggesting it was all in the hands of regulators at that point. If China Telecom has an exclusive head start on iPhone 5, it could attract away some subscribers hungry for the device.”

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Does GDP Data Suggest the Economy is Soaring ?

“One glance at today’s second read of Q3 GDP may leave some with the false impression that the US economy is soaring, because after sliding to 1.3% in Q2, and after a preliminary read of 2.0% in the first Q3 estimate, today’s print, which missed estimates of a 2.8% print, did nonetheless rise to 2.7%. “A stunning success”, the administration sycophants would say. Absolutely wrong. Because a quick glance at the underlying numbers shows the true picture of the economy which contracted far more than most expected, with personal consumption collapsing to 1.4% Q/Q, on hopes of a 1.9% rise, and down from 2.0%. In fact, at 0.99% personal consumption expenditures – the core driver of 70% of the US economy – were a tiny 36% of the headline number. Ironically today’s second GDP revision was far worse when analyzed at the component level, than the first Q3 estimate, which while lower overall at 2.0%, at least had personal consumption nearly 50% higher at 1.42%, or well over half of the total contribution. So what drove “growth” in Q3? Nothing short of the most hollow and worst components of GDP: Government Spending, which soared to 0.67% of the annualized number, the first positive print in years, and of course, Inventories, which were responsible for 30% of the headline number. Finally, and most importantly, Fixed Investment, aka CapEx, was a meager 0.1%, or the lowest GDP contribution since Q1 2011. Without CapEx there is no corporate revenue growth (and future hiring intentions) period.

Sadly not even Sandy can be blamed on the collapse in consumption in Q3,…”

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