Home / 2013 / June

Monthly Archives: June 2013

Documentary: The Great Culling

I have come across this subject many times, but never found a medium in which to communicate the message. This documentary has a lot of science behind it and will make you wonder WTF is really going on here.

At any rate, cheers on your weekend!

[youtube://http://www.youtube.com/watch?v=P7BqFtyCRJc 450 300] [youtube://http://www.youtube.com/watch?v=ZWrzqvL0r6Q 450 300]

Comments »

Does the VIX Suggest More Downside?



z (1)


The above chart shows that the S&P does not recover until it interacts with the VIX. Does this chart suggest that equities have a way to go? Developing….

Comments »

Is Yesterday and Overnight Trade the Beginning of a Reversal?

“I have long held the opinion that the markets, all of them, have been buoyed by what the Fed and the other central banks have done which was to pump a massive amount of money into the system. There are various ways to count this but about $16 trillion is my estimation. The economy in America has been flat-lining while the economies in Europe have been red-lining and while China has claimed growth their numbers did not add up and could not be believed.

In other words, the economic fundamentals were not supporting the lofty levels of the markets which had rested upon one thing and one thing alone which was liquidity. I have also stated often enough that the long awaited reversal would take place either due to an “event” or due to a change in the Fed’s position where the liquidity was going to be stopped. In one of the clearest and most open meetings ever conducted by the Fed, in my opinion, they said quite clearly that the end to its liquidity operations was coming and while the postulated this and that if the markets did this and that the message was quite clear; we are going to unwind what we have we have done.

Yesterday was the first day of the reversal. There will be more days to come.

What you are seeing, in the first instance, is leverage coming off the table. With short term interest rates right off of Kelvin’s absolute Zero there was been massive leverage utilized in both the bond and equity markets. While it cannot be quantified I can tell you, dealing with so many institutional investors, that the amount of leverage on the books is giant and is now going to get covered. It will not be pretty and it will be a rush through the exit doors as the fire alarm has been pulled by the Fed and the alarms are ringing. There is also an additional problem here.

The Street is not what it was. There is not enough liquidity in the major Wall Street banks, any longer, to deal with the amount of securities that will be thrown at them and I expect the down cycle to get exacerbated by this very real issue. Bernanke is no longer at the gate and the Barbarians are going to be out in force….”

Full article

Comments »

U.S. Manufacturing Slows in June

“U.S. manufacturing activity growth slowed slightly in June as the pace of hiring and overseas demand weakened, making the second quarter the weakest for the sector in the last four, a survey showed.

Financial data firm Markit said its “flash,” or preliminary, U.S. Manufacturing Purchasing Managers Index fell to 52.2 in June from 52.3. A reading above 50 indicates expansion.

June’s 52.2 reading was also the average for the second quarter, behind the 54.9 average in the first three months of the year and the worst showing since the third quarter of 2012.

“Slower growth in the goods-producing sector looks likely to have acted as a drag on the wider economy,” said Markit chief economist Chris Williamson. The U.S. economy grew at a 2.4 percent rate between January and March.

Markit’s output index rose to 53.9, a three-month high, from 52.7 in May while the gauge of new orders also rose to its highest level since March, offering some hope. But the pace of hiring slowed to 50.4 from 52.6, reflecting the weakest rate of job creation since January 2010….”

Full article

Comments »

WTF? Bank of China Denies Default

“Either things in China are now very serious (and Jean-Claude Juncker has been hired as chief propaganda officer), or the BOC hired Erin Callan as CFO. Either way, for now at least, the Bank of China “is fine”…”

Full look

Comments »

Report Shows Banks Fail to Comply With Mortgage Settlement

“Four large U.S. banks have failed to comply with key elements of a landmark $25 billion mortgage settlement, an independent monitor said Wednesday.

The report shows that lenders continue to bungle their dealings with struggling homeowners seven years after the bursting of a national housing bubble.

Bank of America Corp., BAC -0.61%J.P. Morgan Chase JPM -1.05% & Co.,Citigroup Inc. C -0.97% and Wells Fargo WFC -0.44% & Co. each failed to meet at least one of 29 standards for providing timely and accurate relief to homeowners at risk of foreclosure, Joseph A. Smith Jr., the independent monitor responsible for overseeing the settlement, said.

The bank lapses show that some homeowners still face challenges despite an improving housing market and a legal settlement designed to provide more transparency and accountability from lenders.

“Delays in the foreclosure process result in homeowners falling further behind,” said Shaun Donovan, secretary of the U.S. Department of Housing and Urban Development, during a Wednesday news conference. “This is unacceptable.”

Mr. Donovan warned that banks that fail to correct continued missteps will face “serious consequences,” including “hauling them back into court.” ….”

Full article

Comments »

$SD Hits the Bid on CEO, Company Pays $90 Million Golden Parachute

SandRidge Energy Inc. SD +2.17% on Wednesday ousted Chief Executive Tom Ward after dissident investors pushed for his removal. But the founder’s fall is being cushioned by about $90 million, one of the larger severance packages seen in the energy industry.

Mr. Ward’s departure wasn’t a surprise. SandRidge came under fire last year from activist investors for Mr. Ward’s high pay, a weak stock performance and its dealings with businesses controlled by Mr. Ward and his family. A spokesman for Mr. Ward said he wasn’t available to comment.

In March, the Oklahoma City company settled a proxy fight with a big activist shareholder, agreeing to either fire Mr. Ward or give control of its board to the activist, hedge fund TPG-Axon Capital LP. SandRidge appointed four directors nominated by the investor at that time.

SandRidge promoted President and Chief Financial Officer James Bennett to CEO. Mr. Bennett, who will remain president, worked in private equity before joining SandRidge in 2011….”

Full article

Comments »

$MU Turns the Corner Hopefully Leaving Seven Qs of Losses Behind

“Micron Technology Inc. (MU) reported third quarter fiscal 2013 earnings per share of 4 cents beating the Zacks Consensus Estimate of 3 cents per share. After posting losses in the past seven quarters, this quarter’s beat seems to be a sigh of relief for Micron. The beat can be attributed to favorable memory market condition that led to higher shipments and improved average selling price (ASP). Nevertheless, lackluster PC demand and macro uncertainty remained headwinds.


Micron reported revenues of $2.32 billion, up 6.7% year over year and 11.5% sequentially. The quarter’s revenues came above the Zacks Consensus Estimate of $2.26 billion. The improvement was mainly due to higher DRAM and NAND shipments.

DRAM revenues grew 23.0% from the prior quarter aided by 6.0% hike in sales volume and 16.0% surge in ASP. NAND sales grew 7.0% sequentially due to an 8.0% increase in ASP. NOR flash sales remained flat sequentially.

Higher DRAM ASP was the effect of balancing supply with slowing PC demand. NAND fundamentals improved due to continuous growth in SSD sales.

Operating Results…”

Full report 

Comments »

$RHT Reports Stellar Q and Edges Guidance Higher

“Red Hat (RHT) late Wednesday released results that edged analyst expectations, and its shares rose late after a rough day for the stock market.

But the provider of open-source Linux products’ year-over-year revenue growth of 15% tied for its smallest percentage increase since August 2009. Red Hat is diversifying into more product areas as the rate at which companies convert to Linux from the Unix computer operating platform slows.

And the company’s outlook for the current quarter was a tad short of Wall Street views, as the company pointed to slow spending by U.S. government customers.

Still, the company’s shares were up 2.5% in after-hours trading, after it released results. This came on a day when the stock market tanked after Federal Reserve Chairman Ben Bernanke said the central bank expects to slow the pace of its bond purchases later this year as the economy recovers. The tech-heavy Nasdaq composite index fell 1.1% Wednesday, and Red Hat fell nearly 1% in the regular session.

For its fiscal Q1 ended May 31, Red Hat reported earnings per share minus items of 32 cents, up 6.7% from 30 cents in the year-earlier period. Revenue rose to $363 million. Analysts polled by Thomson Reuters had expected EPS of 31 cents on sales of $359.8 million.

For the current quarter, Red Hat expects EPS ex items of 32 cents or 33 cents on revenue of $370 million to $373 million. Analysts have been modeling 33 cents, up 18%, and $373.1 million, up 16%.

“We are pleased with the double-digit growth that we delivered across each of our key financial metrics,” Red Hat CEO Jim Whitehurst said in a conference call with analysts. “We are leveraging our open innovation development model and subscription business model to help define the next generation of the data center.”

While U.S. government spending slowed last quarter, “we are also seeing encouraging signs that our federal business will improve in the current quarter,” Charlie Peters, Red Hat’s chief financial officer, said on the call….”

Full report

Comments »

France Will Charge $GOOG a Privacy Fine If They Reject Transparency on Prism

“PARIS (AP) — France is giving Google three months to be more upfront about the data it collects from users — or be fined. Other European countries aren’t far behind.

Now it’s up to Google to decide whether the relatively small fines are enough of an incentive to rethink its privacy rules — the Internet giant risks a €300,000 euro ($402,180) penalty in France.

Europe’s a big market, but one where Google has no serious competition.

However, the company does have a reputation problem when it comes to protecting user privacy. Thursday’s legal action puts new pressure on Google, which is smarting from criticism over providing customer data to the U.S. government as part of its fight against foreign terrorists.

The French agency that regulates information technology says that five other European countries are taking similar steps in a staggered offensive against Google’s privacy policy between now and the end of July. It says Google largely ignored earlier recommendations from European regulators.

The French National Commission on Computing and Freedom, known as CNIL, says Spain joined France in the first wave of legal action Thursday, and that Britain, Germany, Italy and the Netherlands will join in the coming weeks.

The legal action accelerates a long-running European fight against Google over privacy, which is more rigorously protected in many European countries than in Google’s homeland, the United States.

A spokesman for Google said Thursday that it believes its privacy practices respect European laws.

“We have engaged fully with the authorities involved throughout this process, and we’ll continue to do so going forward,” said Al Verney.

Paris’ formal warning gives the company three months to make changes to its privacy practices. They include specifying to users what it is using personal data for, and how long it’s held.

Regulators also want Google to let users opt out of having their data centralized — for example, when data from online searches, Gmail and YouTube are crunched into a single location.

If not, Google risks a fine of up to 300,000 euros by France, which could eventually mean millions of euros in penalties across all six countries. By comparison, Google’s revenues were $14 billion in the first quarter of this year, much of that from advertising — which is boosted by the Internet giant’s ability to target users based on what they read, watch and buy online….”

Full article

Comments »

Emerging Markets and Their Currencies Get Smashed Hampering Borrowing Costs

“Emerging-market stocks tumbled the most in 20 months, currencies weakened and government borrowing costs rose after China’s cash crunch worsened and the Federal Reserve said it may reduce monetary stimulus this year.

The MSCI Emerging Markets Index slid 3.2 percent to 916.20 as of 12:11 p.m. in London, the most since Oct. 3, 2011. Turkey’s benchmark stock index lost 4.4 percent, the most among major emerging markets, as the lira and India’s rupee hit record lows. BYD Co. (1211) slumped 9.3 percent in Hong Kong, while KGHM Polska Miedz SA fell 8.5 percent in Warsaw. Yields on South Africa’s benchmark 10.5 percent bonds due December 2026 jumped 0.42 percentage point to 8.33 percent.

Fed Chairman Ben S. Bernanke said yesterday the central bank may start reducing bond purchases and end the program in 2014 should risks to the U.S. economy abate. China’s benchmark money-market rate climbed to a record and a private report showed manufacturing shrank at a faster pace this month. Funds investing in developing-nation assets saw outflows of more than $19 billion in the three weeks to June 12, the most since 2011, according to EPFR Global.

“After 10 years of solid inflows into emerging-market debt, we should prepare ourselves for a period of outflows,” Maarten-Jan Bakkum, an emerging-market strategist at ING Investment Management in The Hague, said by e-mail. “This should push currencies down more, lead to higher interest rates in emerging markets and make it necessary for investors to adjust their EM growth expectations downwards.”

Cheap Money….”

Full article

Comments »

The BoE Orders Five U.K. Banks to Raise $21 Billion

“Five U.K. banks must find 13.4 billion pounds ($21 billion) to plug a 27.1 billion-pound capital shortfall by the end of the year, the Bank of England said.

The five lenders, including Barclays Plc (BARC)Lloyds Banking Group Plc (LLOY) and Royal Bank of Scotland Group Plc (RBS), have already submitted plans to raise half the total, the London-based BOE said in a statement today. Lloyds must plan to raise an extra 7 billion pounds, while RBS and Barclays need 3.2 billion pounds and 1.7 billion pounds of additional capital.

“The challenge for the banks is that they have got many projects going on in the capital space,” Kevin Burrowes, a partner at PricewaterhouseCoopers, said in an e-mailed statement. “Many of those projects compete and some are duplicative. Banks need to align their projects and look at their business as a whole rather than in parts to get to the right capital position.”

The strength of Britain’s banking system is under scrutiny as the government considers selling its stake in Lloyds, which is 39 percent-owned by the state, and splitting up RBS. Chancellor of the Exchequer George Osborne said in a speech in London yesterday that the U.K. government would proceed only “if we get value for the taxpayer.”

Risk Weighted…”


Full article

Comments »

China’s Manufacturing Accelerates to the Downside Threatening European Recovery

“China’s manufacturing is shrinking at a faster pace this month, a trend that threatens to stem an economic recovery in the euro area from the currency bloc’s longest-ever recession.

A preliminary reading of 48.3 for the Chinese Purchasing Managers’ Index (EC11FLAS)released today by HSBC Holdings Plc and Markit Economics compares with the 49.1 median estimate in a Bloomberg News survey of 15 economists. In Europe, a composite index based on a survey of purchasing managers in the services and manufacturing industries rose to 48.9 from 47.7 in May, Markit Economics said. While that’s the highest in 15 months, a measure below 50 still indicates contraction.

China’s manufacturing weakness, along with a cash crunch in the nation’s money market, will test how far Premier Li Keqiang is willing to go in sacrificing short-term expansion for more-sustainable long-term growth. After record credit in the first four months of the year failed to stoke growth, China’s State Council, led by Li, said yesterday that the financial system needs to do a better job of supporting the economy.

The China PMI Index “is a reminder that a strong euro-zone export recovery is unlikely” to materialize soon, said Martin Van Vliet, senior euro-area economist at ING Bank NV in Amsterdam. “Any further recovery later in the year is likely to be very slow and bumpy.”

Euro Stagnation…”

Full article

Comments »

The Aussie Dollar Hits 3 Year Lows, Bond Yields Rise

“Australia’s dollar slid to the lowest in almost three years after a gauge of Chinese manufacturing contracted and the Federal Reserve signaled an exit from monetary easing. New Zealand’s bond yields surged the most since the collapse of Lehman Brothers Holdings Inc.

The Aussie slid for a fifth day, following the biggest decline since November 2011 yesterday, after Fed Chairman Ben S. Bernanke signaled the central bank could reduce monetary stimulus that tends to weaken the greenback. New Zealand’s dollar dropped for a fifth day after data showed the nation’s economic growth slowed more than economists forecast.

“The link between the China growth story and the Aussie dollar remains crucial,” said Michael Judge, a Sydney-based dealer at OZForex Pty Ltd., an online foreign-exchange company. “We all know the only way interest rates are heading in this country at the moment is south, and obviously weakening China growth doesn’t help that prognosis.”

The Australian dollar fell 0.7 percent to 92.29 U.S. cents as of 4:55 p.m. in Sydney from yesterday, when it tumbled 2 percent. It earlier touched 92.25, the lowest since Sept. 10, 2010. The New Zealand dollar weakened 0.8 percent to 78.33 U.S. cents after sliding 1.1 percent yesterday.

The yield on Australia’s benchmark 10-year government bond rose as much as 23 basis points to 3.65 percent, the highest since March 15. The extra yield it offers over 10-year U.S. debt yesterday narrowed to 107 basis points, or 1.07 percentage point, the least since November 2008. Commonwealth Bank of Australia (CBA) predicts the gap could shrink to the lowest since 2001.

China Slowdown…”

Full article

Comments »

The Greenback Soars Creating a Carry Trade Pitfall

“The dollar surged against counterparts worldwide ranging from Australia’s currency to Turkey’s lira as the Federal Reserve’s signal it is getting closer to reducing monetary stimulus pushed volatility to the highest in a year and spurred losses in carry trades.

The U.S. currency strengthened versus all of its 16-most-traded peers and Deutsche Bank AG’s G10 FX Carry Basket index fell to the lowest level since October as Fed Chairman Ben S. Bernanke yesterday outlined the case for reduced monetary stimulus this year if the U.S. economy keeps improving. India leads carry losses among the 31 most-traded currencies versus the dollar this month with a 4.8 percent decline while its central bank likely intervened to protect the rupee.

“QE3 is now likely to end in the middle of next year so we’ve had an initial rise in the dollar,” saidGavin Friend, a currency strategist at National Australia Bank Ltd. in London, referring to quantitative easing, or QE. “People are reading this as the end the cheap money that’s gone intoemerging markets from the U.S. and Europe. If today’s U.S. data is reasonable, the dollar will continue to rally against currencies like the Aussie in particular.”

The dollar rose 0.6 percent to $1.3211 per euro at 8:01 a.m. in New York, extending the biggest two-day gain since July 6, 2012. The U.S. currency advanced 1.5 percent to 97.86 per yen. TheJapan’s currency fell 0.9 percent to 129.39 per euro.

Dollar Measure….”

Full article

Comments »