Category Archives: Sentiment
The Coming Uranium Bull
“In August 1956, the Calder Hall Power Plant in Seascale, England began generating electricity and earned the distinction of being the world’s first commercial nuclear power plant. It was a humble beginning for nuclear power; the plant only had a 50-megawatt (MW) output capacity, whereas the smallest US plant today has a 478 MW capacity. Nonetheless, Calder Hall represented the launch of a new era in energy that promised to bring electricity too cheap to meter.
But early on, the promising power source had its detractors. They objected to the high initial cost of constructing nuclear plants, the problems of radioactive waste disposal, and the risks of nuclear accidents and nuclear proliferation.
The detractors had an impact. The heavy regulation they pushed for and the litigation they initiated extended construction times and drove up construction costs. But despite their efforts, over 100 reactors had been placed in service in the United States by 1974.
Then came 1979 and a landmark event – the nuclear accident at Three Mile Island. In the aftermath, public opinion turned solidly in favor of the anti-nuclear movement, several construction projects were canceled, and no new US building permits for nuclear power plants were issued for the next 33 years.
Though the US abandoned nuclear expansion in the 1980s, other countries forged ahead. Worldwide startups peaked in 1984 and 1985, as over 30 plants were brought online in each of those years. However, escalating regulatory and litigation costs and pressure groups were not unique to the US. By the 1980s, it was becoming difficult to cost-justify new projects. On top of all that, the Chernobyl accident occurred in 1986, and the world had its own Three Mile Island moment.
In the 1990s, global startups fell to an annual average of less than six per year; in the first decade of the new century, average annual startups were just over three per year. In fact, since 1990 there have barely been enough startups to offset shutdowns.
The recent flurry of closures was caused to a great extent by yet another accident. After the earthquake and tsunami in Japan on March 11, 2011 and the ensuing catastrophe at the Fukushima Nuclear Power Plant, several countries began to rethink their nuclear energy policies. In May 2011, Germany announced that it would abandon nuclear energy entirely, shutting down all 17 of its plants by 2022. In June 2011, Italian citizens voted overwhelmingly in favor of a referendum to cancel plans for new reactors. The Japanese Cabinet, though unclear about a specific plan, has issued a white paper calling for less reliance on nuclear power.
So is nuclear on its last legs? It would appear so… but before we make the funeral arrangements, let’s take a closer look.
A Nuclear Renaissance….”
Global Poll: 71% Feel $AAPL Has Lost its Mojo
What do the masses know?
Bloomberg Poll: U.S. Recovery Will Continue Slowly Into 2015 Without Recession
“The U.S. economy will continue to recover until at least 2015 without tumbling into a recession, achieving the sustained growth that has eluded it since the last slump ended four years ago, according to a Bloomberg poll.
With the economy creating an average of 208,000 jobs a month since November, 69 percent of those surveyed call the recovery “sustainable” while 27 percent anticipate a new recession within two years, according to the global poll of investors, analysts and traders who are Bloomberg subscribers.
“I expect growth to accelerate,” says respondent Brandon Fitzpatrick, 35, a portfolio manager for D.B. Fitzpatrick in Boise,Idaho. “Consumers’ balance sheets are improving, and consumption is set to pick up.”
The prospect of increasing energy independence, a rise in home values after years of decline and a pause in the partisan budgetary battles in Washington are driving investor sentiment.
Real estate, the epicenter of the 2008 financial crisis, is a big part of the optimism. Even after yesterday’s reported drop in April’s housing starts, homebuilders began work on 853,000 new homes, up 78 percent from the April 2009 low. After watching the housing crash erase more than $7 trillion worth ofwealth, homeowners have recovered about $2 trillion in real estate holdings, according to Federal Reserve data.
In the poll, 71 percent of Bloomberg customers say the recent home-price increase in major U.S. markets is evidence of a genuine recovery in values; 21 percent say it’s a sign that a new bubble is inflating.
Above Average….”
Small Business Optimism Rises to a Six Month High
“WASHINGTON (Reuters) – A gauge of confidence for small businesses rose in April to its highest in six months, a sign of resilience in an economy beset by Washington’s austerity drive.
The National Federation of Independent Business said on Tuesday its Small Business Optimism Index rose 2.6 points to 92.1, the highest reading since October.
About half the gain was because businesses expect better business conditions over the next six months. Firms also were more optimistic about creating jobs and about sales….”
The Fed’s QE Exit Will More Than Quadruple Interest Costs For The US
“With the Fed now openly warning that there may actually come a time when the ‘flow’ stops; the most recent Treasury Borrowing Advisory Committee (TBAC) report has some concerning statistics for those change-ridden hopers who see a smooth Fed exit, deficit-reduction, and blue skies ahead. While they are careful not shout ‘sell’ in a crowded bond market; hidden deep in the 126 page presentation are two charts that bear significant attention. The first shows what TBAC expects (given the market’s expectations) to happen to interest rates in the US as the Fed ‘exits’ its QE program (taper, unwind, hold) – the result, the weighted-average cost of financing for the US government will almost triple from around 1.6% to around 4.3% over the next ten years. But more problematic is that even with CBO’s rather conservative estimates of the growth in US debt over the next decade the USD cost of financing will explode from around $205bn (based on TBAC data) to over $855bn. Still convinced the Fed can exit smoothly?
As TBAC warns…”
SLM Cancels Student Debt Bond Auction, Is the Bubble Bursting ?
“In 2007 a small number of French hedge funds imploded over sudden losses stemming from highly leveraged bets made on the unstoppable subprime mortgage market. At the time, a few saw the writing on the wall; but many simply wrote it off as just another over-levered hedge fund and the subprime mortgage market was ‘fine’. Fast forward six years and as we have discussed numerous times (most recently here and here) there is a bubble, potentially far bigger than subprime, in student loan debt. As one of the last remaining outlets for state-sanction credit creation, this is a big deal; but, of course, the popping of the bubble (or even a slight leak) is eschewed since there is so much ‘reach for yield’ and the Fed’s got your back. That is until this week. As WSJ reports, Sallie Mae (SLM), the nation’s largest non-government student lender just cancelled a $225 million debt offering as investors decided they simply were not getting paid enough for risk – amid rising student loan defaults. Simply put, there’s a limit to what investors will tolerate.
SLM was offering a stunningly low 3.5% interest on the deal and investors snubbed it, “There are certain limits that can’t, or shouldn’t, be crossed if you’re an investor,” adding that, “we’re beginning to see what the tolerances are.” This is a significant shift since SLM and other issuers of debt backed by student loans sold $7.8 billion worth of securities this year through last week, up from $5.7 billion in the same period of 2012. With the portion of student borrowers who are late on their debt payments by 90 days or more climbing to 31% in 2012, from 24% in 2008; we wonder if this is the tipping point for the student debt in 2013 that was generally ignored in subprime in 2007, until it was too late.
Via WSJ….”
Food Roulette
Often times there is no real win when it comes to eating out. The higher the quality of the restaurant the better your chances are.
Perhaps drinking a lot of alcohol could be a strategy, but it will likely complicate things.
Good luck dining out is all i can say if your not willing to go haute.
Capital Economics Cautions of a Crisis Out of Turkey and Venezuela
“With the bloom coming off the emerging markets rose, one economic model has drawn a circle around two countries that stand the greatest risk of falling into a crisis.
David Rees, emerging markets economist at Capital Economics, said the firm has developed five criteria to identify whether a country’s economy has overheated to the point where it is threatening to develop into a full-scale problem.
The good news is that the Capital model finds no country in “immediate threat of crisis.”
But the bad news is that at least two countries are tilting in that direction and could pose danger to investors.
Rees identifies the endangered duo as Turkey and Venezuela.
Turkey’s stock market has surged 7.3 percent in 2013 and is up 42 percent over the past 12 months. The country outperformed virtually all other emerging markets in 2012 as it modernizes its economy and pushes pro-growth programs.
Venezuela’s markets tell an even more robust story, with the Caracas exchange booming 37 percent this year and more than 200 percent over the past 12 months. While some feared the rally might falter due to political upheaval after President Hugo Chavez’s death, the market has gone on its merry way.
Despite the powerful gains, Rees advises investors to watch five factors: Growing current account deficits; rapid credit expansion; surging short-term external debt; bubbling stock market prices (50 percent is considered a red flag); and large growth in real exchange rates…..”
Gold Expert: Prices Fell Do to Central Banks Activity Trying to Avoid a Short Squeeze
“Theories about what triggered gold’s recent drop are “cover stories,” says Chris Powell, co-founder of the Gold Anti-Trust Action Committee (GATA), an organization focused on exposing, opposing and litigating against collusion to control the price and supply of gold and related financial instruments.
The reason the metal fell was because central banks stepped in and gutted gold prices to avert a short squeeze in London, he noted.
Gold saw its biggest two-day drop ever, reported CNBC, which compared the decline with the stock market crash of 1987…..”
AMG Expects Hybrids to be the Super Cars of the Future
“Mercedes-Benz in-house tuner AMG is best known for its thunderous, cacophonous V-8 gasoline engines. The brand’s latest model is something of a departure, though.
The 2014 Mercedes-Benz CLA 45 AMG still offers ballistic performance, but uses only a 2.0-liter, four-cylinder engine–albeit turbocharged to 355 horsepower.
AMG has now said that it’s a trend it expects to continue — while hybrids knock high-performance diesels aside in the pursuit of both power and economy.
According to Edmunds (via our sister site Motor Authority), AMG Chairman Ola Källenius thinks hybrids will be the future of performance vehicles.
Diesel, says Källenius, doesn’t deliver the aggressive characteristics of a gasoline engine — nor its pure throttle response, nor the NASCAR-style sounds common to many AMG products.
Hybrids, on the other hand, still allow automakers to use gasoline engines as a main source of propulsion, without sacrificing too much in the way of efficiency.
AMG will produce a hybrid vehicle “when the market is ready for it and in markets [that require it] due to their regulations”….”
Bill Ackman Says He is Still Hanging With $JCP
“Two days after J.C. Penney’s board of directors ousted Ron Johnson from the chief executive role, hedge fund manager and board member Bill Ackman has broken his silence to say he’s sticking by the beleaguered department store retailer, according to a report.
“We’re not going anywhere,” Ackman told “Women’s Wear Daily” in his first public comments about the retailer since Johnson was fired. “In fact, we’re going the other direction. We’re digging in.”
On Monday, the company announced that former CEO Mike Ullman, who held the position from 2005 to 2011, would take over again in the middle of a planned multi-year turnaround that hasn’t gone well so far.
Last year, comparable same-store sales dropped 25 percent as J.C. Penney customers turned away from its new everyday low price strategy, which replaced heavy discounting and couponing.
As sales have slid, so has the value of both the company’s stock price and Ackman’s Pershing Square Capital Management fund’s stake in the company. The fund currently holds 17.8 percent of the retailer’s outstanding shares.
The fund manager helped recruit Johnson last year, and had previously defended him throughout the company’s struggles but turned more critical of Johnson on Friday, shortly before he was fired….”
Expectations for Inflation Climb to 4.5 Year Highs in the U.K.
“The U.K. 10-year break-even rate, an index of annual inflation expectations, climbed to the highest level in more than 4 1/2 years after the nation sold index-linked securities at an auction today.
The 30-year break-even rate was close to the highest in almost two years as the Debt Management Office sold 1.6 billion pounds ($2.5 billion) of inflation-linked gilts maturing in 2024 in the second bond sale of the fiscal year starting this month. The pound advanced to the highest level in seven weeks against the dollar. U.K. 10-year government bonds were little changed.
“There is ongoing demand for inflation-protected securities,” said Simon Peck, a fixed-income strategist at Royal Bank of Scotland Group Plc in London. “There’s more room to go in the 30-year area. Longer-term break-even rates can move higher.”
The 10-year break-even rate, derived from the difference in yield between gilts and index-linked securities, rose four basis points, or 0.04 percentage point, to 3.38 percentage points as of 10:52 a.m. London time, after reaching 3.39, the most since September 2008. The 30-year break-even rate was little changed at 3.47 percentage point after touching 3.51 on Feb. 14, the most since August 2011.
The U.K. sold index-linked gilts due in March 2024 at a so- called real yield of minus 1.262 percent, the debt office said on its website. Investors bid for 1.86 times the amount of securities allotted.
Gilt Yields….”
Calling All Iron Clad Speculators: Natty Gas Could Benefit from Extra Ordinary Hurricane Season
“The 2013 Atlantic hurricane season will be “above average” with 18 tropical storms, nine of which will intensify into hurricanes, forecasters at Colorado State University predicted on Wednesday.
Four of the hurricanes will be major with sustained winds of at least 111 miles per hour (178 kph), the leading U.S. storm research team said.
An average season brings about 12 tropical storms, six hurricanes and two major hurricanes in the Atlantic, Caribbean and Gulf of Mexico, according to CSU. The hurricane season runs from June 1 to Nov. 30.
The prediction for a busier 2013 season was based on two factors, the researchers said. Hurricanes thrive on warm water and the Atlantic Ocean has warmed in recent months.
There is also little expectation of an El Nino effect this summer and fall.
El Nino is a warming of surface waters in the tropical Pacific that occurs every four to 12 years and has far-ranging effects around the globe. The weather phenomenon creates wind shear that makes it harder for storms to develop into hurricanes in the Atlantic-Caribbean basin.
The researchers said there was a 72 percent chance that a major hurricane will hit the U.S. coast this year, compared with a historical average of 52 percent….”
Madoff email to MarketWatch: “The Banks Were Complicit and Contributing to My Crime”
“Bernard Madoff, speaking out from prison, says the banks knew of his Ponzi scheme all along. The perpetrator of a history-making $50 billion Ponzi scheme wrote in a letter to MarketWatch from jail that he is now telling government committees the story.
Madoff: “From my first interview to the media I have said that ‘the banks must have known,’ and were complicit and contributing to my crime.”
In the emailed letter, he pointed to J.P. Morgan Chase & Co. JPM -0.27%, Bank of New York Mellon Corp. BK -0.04%, HSBC Holdings PLC HBC +0.83% and Citigroup Inc.C -0.32% as having access to information about his scam. He added that other banks also knew.
Madoff wrote that “the trustee seems unwilling to act on my offer” to help and is therefore “offering this information to the appropriate governmental committees in the hope that this information will prove helpful in future regulation of the appropriate institutions.”
The House Financial Services Committee and the Senate Banking Committee had no immediate comment on whether they had received information from Madoff. A spokesman for the Office of the Comptroller of the Currency declined to comment, and a spokesman for the Treasury Inspector General’s office did not return calls from MarketWatch….”
Italian Business Confidence Unexpectedly Rises
“Italian business confidence unexpectedly rose in March even after inconclusive elections last month produced a political gridlock in the nation mired in its fourth recession since 2001.
The manufacturing-sentiment index rose to 88.9 from a revised 88.6 the previous month, Rome-based national statistics institute Istat said today. Economists had predicted a reading of 88, according to the median of 12 estimates in a Bloomberg News survey.
Italy’s Feb. 24-25 vote failed to produce a clear majority, raising concerns the next government may fail to address the country’s economic issues.
Outgoing Prime Minister Mario Monti said last week that gross domestic product will fall 1.3 percent this year as exports may fail to offset the effect of shrinking domestic demand….”
Fred Hickey a Tech Guru Analyst Says Techs Have Rolled Over and He is Going Short
“Fred Hickey, the tech stock guru who runs The High-Tech Strategist newsletter, just made a rare bearish call on Twitter.
“For the 1st time in a long time I have begun to short big-cap tech stocks,” he said. “Despite money-printing rally, techs have rolled over – for good reasons.”
Unfortunately, he won’t be providing further details until some time next week.
Hickey is a regular on Barron’s exclusive Roundtable.
Here are his tweets….”
Full article
Capital Controls in Cyprus Expected to Last Years, Euro to Take the Toll
“Cyprus is on the verge of an unprecedented financial experiment: imposing controls on money transfers in an economy that doesn’t have its own currency.
Countries from Argentina to Iceland have used similar measures in the past to defend against devaluation. Being part of the euro zone may make it harder for the Mediterranean island to enforce restrictions, as any money that leaves the banking system can be taken out of Cyprus without losing value.
That also may make it more difficult to meet the goal set yesterday by Finance Minister Michael Sarris to lift any controls in “a matter of weeks.” When economies in Asia and Latin America tried to stem the outflow of money in the 1980s and 1990s, they ended up keeping the measures in effect for six months to two years. Iceland, another island nation with an outsize banking system, still has capital controls five years after its banks collapsed in 2008.
“Thanks to political mismanagement, we now have a first: capital controls in the euro zone,” said Nicolas Veron, a senior fellow at Bruegel in Brussels and a visiting fellow at the Peterson Institute for International Economics in Washington. “How long is temporary? It could turn out like Iceland, extending to many years.”
Russian Deposits…”
German Business Confidence Unexpectedly Falls
“German business confidence unexpectedly fell from a 10-month high in March as Cyprus inflamed the euro region’s debt crisis.
The Ifo institute in Munich said its business climate index, based on a survey of 7,000 executives, declined to 106.7 from 107.4 in February. That’s the first drop in five months. Economists predicted a gain to 107.8, according to the median of 42 forecasts in a Bloomberg News survey. In France, industrial confidence was unchanged this month.
With the European Central Bank threatening to cut off emergency funding for Cyprus’s banks unless it agrees to the terms of a European Union-led bailout, the tiny Mediterranean island has re-ignited concerns about the euro and roiled financial markets. Still, German investor sentiment unexpectedly rose to a three-year high this month and the Bundesbank said the nation’s economic recovery remains on track.
“While the decline in confidence is certainly a damper after the recent surge in optimism, the scenario of a moderate recovery gradually picking up speed in the course of the year hasn’t changed,” said Heinrich Bayer, an economist at Deutsche Postbank AG in Bonn. Uncertainty around Cyprus may weigh on the outlook for companies, “but it probably won’t have any real consequences for the German economy,” he said.
Executives’ Expectations…”
The Thought Process Behind Cyprus
“The Deeper Meanings of Cyprus (March 18, 2013)
The deposit-confiscation “bailout” of Cyprus reveals much about the Eurozone’s fundamental neocolonial, neofeudal structure.
At long last, Europe’s flimsy facades of State sovereignty, democracy and free-market capitalism have collapsed, and we see the real machinery laid bare: the Eurozone’s political-financial Aristocracy will stripmine every nation’s citizenry to preserve their power and protect the banks and bondholders from absorbing losses.
The deposit-confiscation “bailout” of Cyprus confirms the Eurozone’s fundamental neocolonial, neofeudal structure and the region’s political surrender to financialization.
The E.U., Neofeudalism and the Neocolonial-Financialization Model (May 24, 2012)
Let’s list what Cyprus reveals about the true state of financial-political power in Europe:
1. The Core-Periphery terminology masks the real structure: the E.U. operates on a neocolonial model. In the old Colonialism 1.0 model, the colonizing power conquered or co-opted the Power Elites of the periphery regions, and proceeded to exploit the new colonies’ resources and labor to enrich the Imperial core.
In Neocolonialism, the forces of financialization (debt and leverage controlled by State-enforced banking cartels) are used to indenture the local Elites and populace to the financial core: the peripheral “colonials” borrow money to buy the finished goods manufactured in the core economies, enriching the Imperial Elites with A) the profits made selling goods to the debtors B) interest on credit extended to the peripheral colonies to buy the core economies’ goods and “live large”, and C) the transactional skim of financializing peripheral assets such as real estate and State debt.
In essence, the core banks of the E.U. colonized the peripheral nations via the financializing euro, which enabled a massive expansion of debt and consumption in the periphery. The banks and exporters of the core exacted enormous profits from this expansion of debt and consumption.
Now that the financialization scheme of the euro has run its course, the periphery’s neocolonial standing is starkly revealed: the assets and income of the periphery are flowing to the core as interest on the private and sovereign debts that are owed to the core’s central bank and its crony money-center private banks.
This is not just the perfection of neocolonialism but of neofeudalism as well. The peripheral nations of the E.U. are effectively neocolonial debtors of the core (quasi-Imperial) banks, and the taxpayers of the core nations (now reduced to Germany and The Netherlands) are now feudal serfs whose labor is devoted to making good on any bank loans to the periphery that go bad.
Though we can term the E.U. a plutocracy or oligarchy, the neofeudal structure compels us to distinguish a class of those holding wealth and political power that is not limited to national border: this is an Aristocracy.
Serving the Aristocracy is a well-paid technocrat class of factotums, lackeys, toadies and enforcers. Below this well-compensated caste of technocrats is the larger class of debt-serfs, enslaved to interest payments on either their own debts or the debts of others, and bound by their class powerlessness to protecting banks and bondholders from losses.
Cyprus merely adds an expropriation twist to this well-oiled plunder: deposits will be expropriated directly to insure no Imperial (core) banks or bond holders lose money on their absurdly risky loans to periphery nations and serfs.
2. This is a supranational plunder. While commentators can wile away years debating how much Germany benefited from the euro, the real core is not national, it is supranational banks and the political machinery of the E.U. the banks have effectively captured.
The citizenry of Germany may approve or disapprove of the Cyprus expropriation, but it doesn’t matter either way: their own serfdom to banks and bondholders is simply being masked: the bailouts of periphery nations are transparently bailouts of core banks and bondholders…..”
Investor Confidence Rises Unexpectedly in Germany
“German investor confidence unexpectedly rose to a three-year high in March, suggestingEurope’s largest economy will return to growth.
The ZEW Center for European Economic Research in Mannheim said its index of investor and analyst expectations, which aims to predict economic developments six months in advance, increased to 48.5 from 48.2 in February. That’s the highest since April 2010. Economists forecast a decline to 48.1, according to the median of 40 estimates in a Bloomberg News survey.
The Bundesbank predicts the economy will expand in the current quarter after contracting 0.6 percent in the final three months of last year. Business confidence improved for a fourth month in February. Still, political turmoil in Italy and the specter of a bank run in Cyprus are spooking financial markets and threatening to derail an economic recovery in the euro area,Germany’s biggest export market….”
