by TrendTrader - October 23rd, 2014 1:40 pm
Reminder: David is available to chat with Members, comments are found below each post.
by ilene - October 23rd, 2014 12:45 pm
Courtesy of Mish.
Lack of significant improvement in payments by IBEX companies to suppliers is yet another another sign there isn’t much of a recovery in Spain.
La Vanguardia reports Late Payments by Ibex Companies Hits €47 Billion, 169 days (nearly 3 times the legal time limit). Ibex is the name of the Spanish stock market exchange.
Via translation from La Vanguardia. <
Delinquency of the Ibex 35 exceeds 47 billion euros and the average payment is 169 days late, almost three times the limits set by law, according to the latest report of the Platform Multisectoral against delinquency (PMcM), made from the data published by the National Securities Market Commission (CNMV).
In 2012, the average payment of listed non-financial corporations was 191 days, while in 2013 totaled 184, down 4%.
Construction and real estate had a 10% improvement. Trade and services improved 4%. Despite this improvement, the data shows that the construction sector and real estate remains the one with the greatest delay in settlement of bills. Their average payment reached the 288 days in 2013, while in 2012 exceeded 300.
Behind them are trade and services, with 253 days, nine fewer than in 2012.
PMcM president, Antoni Cañete said that “these data show that some of these big companies are financed at the expense of their own providers, mostly SMEs and freelancers”. “This situation, is produced by the dominant position of Ibex companies, shows abuse and violation of the law, “added Cañete.
IBEX vs. DOW
La Vanguardia notes that in the DOW, the average collection period of industrial companies is 105 days, followed by service and trade at 70 days and energy at 60 days.
Mike “Mish” Shedlock
by Zero Hedge - October 23rd, 2014 12:37 pm
Submitted by Tyler Durden.
High-yield bond issuance has surged in recent days as 'wide' spreads have encouraged investors to take the dip once again (despite firms' record leverage and increasing desperation to roll the wall of maturing debt). However, it's not all guns blazing, as one manager noted, "while the market reopens, it reopens with issuers having to be a little more investor friendly." Despite Carl Icahn's warning that "the high-yield bond market is in a major bubble that's gonna burst," Bullard's "QE4" comments sparked Goldman to add US junk bonds and Aberdeen says selling EU and buying US corporate debt "is the trade that kind of screams at you right now." The dash-for-trash down-in-quality is back as CCC-demand surges and, as one trader notes the market's schizophrenia: "one day the market feels like it is shut down and you can’t sell anything and you wake up this morning and you can price any part of the curve."
There is nothing to fear but the lack of The Fed itself…
On the one hand…
"The Fed is really holding the market up…. The Fed turned this market around here because it let it be known that the Fed funds rate isn't going to be raised in March. I am concerned about the high yield market, I think that's in a major bubble, but nobody knows when it's gonna burst…"
and on the other…
Goldman Sachs Asset Management:
GSAM dded to its U.S. junk bond holdings amid recent selloff, according to money manager’s head of Asia-Pacific fixed income Philip Moffitt, seeing U.S. as ‘Beacon’ amid the recent rout.
High-yield bonds more attractive than investment-grade debt, Moffitt says in interview in Sydney
Says underlying structure of U.S. growth is quite strong
GSAM is “reasonably constructive” on high-yield market in Asia
Says he’s “worried about China” and expects a higher risk premium on assets related to the country
Aberdeen Asset Management:
New issuance has been heavy but concessions generous: "There was a good 10 to 15 basis-point concession probably because the underwriters on both wanted to get the deals done, done properly, and have them trade well."
"We have been sort
Meet Janet Dupree:72, Alcoholic, HIV-Positive, $16,000 In Student Debt: “I Won’t Live Long Enough To Pay It Off”
by Zero Hedge - October 23rd, 2014 12:29 pm
Submitted by Tyler Durden.
One would think that Janet Lee Dupree, 72, a self-professed HIV-infected alcoholic, would be slowly putting aside material worries as she prepares to set the intangibles in her life in order for one last time. One would be wrong.
Janet Dupree has had her wages garnished
As she admits, “I am an alcoholic and I have HIV,” she tells the BBC. “That’s under control.” So what is the cause of most if not all consternation in the final days of Dupree’s life? “I was sick and I didn’t worry about paying back the debt.” As a result, Dupree defaulted on her loan, and since she turned 65 she has had money withheld from her Social Security benefits.
“Just recently I received a notification that they are going to garnish my wages because I am still working,” says Dupree, who works 30 hours a week as a substance abuse counsellor.
The debt in question: Dupree owes $16,000 in student loans she acquired in 1971 and 1972.
Or make that “student loans” – debt which is crippling the last days of a person who hasn’t seen the inside of a classroom in four decades.
Dupree, who lives in Citra, Florida, admits she forgot for many years that she had borrowed the money – originally $3,000 – in order to complete her undergraduate studies in Spanish.
The stunning story of how the exponentially rising…
… notional amounts of (anything but) student debt is crushing millions of Americans as recounted by the BBC:
- Outstanding student loan debt in the US amounts to $1tr
- 3% of households headed by individuals 65 or over carry student debt (706,000 households)
- 24% of households headed by individuals 64 or under carry student debt (22 million households)
- The outstanding federal debt for older adults grew from $2.8bn in 2005 to $18.2bn in 2013
- 27% of federal student loans held by individuals aged 65 to 74 are in default, compared to 12% of loans to people between the ages of 25 and 49
In 2005, older adults owed $2.8bn (£1.61bn) in federal student debt. By 2013, that figure that had ballooned to $18.2bn, according to a report released last month by the Government Accountability Office (GAO).
by Chart School - October 23rd, 2014 11:53 am
Courtesy of Doug Short.
The Chicago Fed’s National Activity Index, which I reported on earlier today, is based on 85 economic indicators drawn from four broad categories of data:
The complete list is available here in PDF format.
In today’s Chicago Fed update, we learned that three of the four broad categories of indicators that make up the index made positive contributions to the index in September, and three of the four categories increased from August. Personal Consumption and Housing continues to be the significantly underperforming category. Let’s now take a look at the historical context, focusing on the less volatile 3-month moving average of the components.
A chart overlay of the complete multi-decade span of all four categories, even if we use the three-month moving averages, is quite challenging for visual clarity:
So here is a close-up view since 2000:
But a snapshot of the 21st century contains only two recessions, so it’s unclear how the individual components have behaved in during the seven recessions since the 1967 starting point for this data series.
Here is a set of charts showing each of the four components since 1967. Because of the highly volatile nature of the data, the charts are based on three-month moving averages, a smoothing strategy favored by the Chicago Fed economists. I’ve also highlighted the values for the months that the NBER subsequently identified as recession starts.
by Zero Hedge - October 23rd, 2014 11:51 am
Submitted by Tyler Durden.
As John McClane might respond to Hans Gruber’s tortured paraphrase.. “The circuits that cannnot be cut are cut automatically in response to a terrorist incident. You asked for miracles, Theo, I give you the [A Broken NYSE]“
- *NYSE EURONEXT EXPERIENCING INTERMITTENT MKT DATA ISSUES
So just as we requested yesterday…
Maybe the NYSE could break a little to give stocks a lift? pic.twitter.com/vyI4imyJsx
— zerohedge (@zerohedge) October 22, 2014
“Yippee ki-ay, motherfucker” to paraphrase the inimitable John McClane.
by Zero Hedge - October 23rd, 2014 11:38 am
Submitted by George Washington.
Accidents at Germ Labs Have Occurred Worldwide
Nations such as Russia, South Africa and the U.S. have long conducted research into how to make deadly germs even more deadly. And accidents at these research facilities have caused germs to escape, killing people and animals near the facilities.
For example, the Soviet research facility at Sverdlovsk conducted anthrax research during the Cold War. They isolated the most potent strain of anthrax culture and then dried it to produce a fine powder for use as an aerosol. In 1979, an accident at the facility released anthrax, killing 100.
The U.S. has had its share of accidents. USA Today noted in August:
More than 1,100 laboratory incidents involving bacteria, viruses and toxins that pose significant or bioterror risks to people and agriculture were reported to federal regulators during 2008 through 2012, government reports obtained by USA TODAY show.
In two other incidents, animals were inadvertently infected with contagious diseases that would have posed significant threats to livestock industries if they had spread. One case involved the infection of two animals with hog cholera, a dangerous virus eradicated from the USA in 1978. In another incident, a cow in a disease-free herd next to a research facility studying the bacteria that cause brucellosis, became infected ….
The issue of lab safety and security has come under increased scrutiny by Congress in recent weeks after a series of high-profile lab blunders at prestigious government labs involving anthrax, bird flu and smallpox virus.
The new lab incident data indicate mishaps occur regularly at the more than 1,000 labs operated by 324 government, university and private organizations across the country ….
"More than 200 incidents of loss or release of bioweapons agents from U.S. laboratories are reported each year. This works out to more than four per week," said Richard Ebright, a biosafety expert at Rutgers university in New Jersey, who testified before Congress last month at a hearing about CDC's lab mistakes.
The only thing unusual about the CDC's recent anthrax and bird flu lab incidents, Ebright said, is that the public found out about them. "The 2014 CDC anthrax event became known to
by Zero Hedge - October 23rd, 2014 11:15 am
Submitted by Tyler Durden.
Via Scotiabank’s Guy Haselmann,
Ever since Bullard’s agoraphobic performance last week on Bloomberg TV, it should be crystal clear to the FOMC and investors just how powerfully markets will react to any shifts in Fed policy or attempts at policy normalization. An equity market freefall abruptly took an about-face, resuming its ‘melt-up’ trade, after a worried Bullard merely hinted at the possibility of more QE stimulants.
The FOMC should take this as a warning sign. It would be irrational for the Fed to believe that after QE purposefully elevated asset prices and generated a one-way moral hazard spectacle, that there is not going to be some-type of reversal (reaction) when QE is withdrawn and the first hike nears.
The new flaw in Fed communication that has arisen recently, and that was amplified by Bullard’s interview, is how Fed policymakers fundamentally assess and mollify the trade-off between attempts at stimulating real economic activity and financial stability risks.
For several years, the FOMC has been confronted with the delicate balance between removing accommodation too slowly and removing it too quickly. Since the Fed is basically out of effective bullets and its balance sheet has ballooned to the practical limits of prudence, the Fed is therefore trying to err on the side of not removing accommodation too quickly. In this regard, the Fed has allowed the fog to roll in, by repeatedly and cunningly changing the markets’ focus in order to ‘buy time’. (As a case in point, the first hike never arrived when the unemployment rate hit 6.5% as the Fed initially said it would.)
Yet, how far can this asymmetrical leaning go before negative second-order effects and risks to financial stability via asset bubbles make this stance a (ever-growing) poor trade-off. It seems to me that if the Fed were truly data dependent then it would have ended QE a long time ago and even hiked rates already.
The Unemployment Rate is currently 5.9%; not far from the 5.5% level that is widely considered full-employment. It could be argued that technological advancements or demographic shifts alone could have structurally lifted the level considered full-employment. Given this, and the plenty of other economic indicators that look quite strong, I find it astonishing that the Fed is still providing depression-like policies, let alone not already…
by Zero Hedge - October 23rd, 2014 11:02 am
Submitted by Tyler Durden.
With its latest “coverage” of the European economy, the Economist may have finally jumped the parrot.
Hm, where else have we heard the “it’s only resting” excuse? Oh yes, Mr Panos of course.
So… Europe is not not Greece?
by Chart School - October 23rd, 2014 10:54 am
Courtesy of Doug Short.
The Latest Conference Board Leading Economic Index (LEI) for September is now available. The index rose 0.8 percent to 104.4. August was revised downward to 103.6 percent (2004 = 100). The latest number came in above the 0.6 percent forecast by Investing.com.
Here is an overview from the LEI technical notes:
The Conference Board LEI for the U.S. increased in September after no change in August. The financial components, along with initial claims for unemployment insurance and ISM® new orders, made the largest positive contributions this month. In the six-month period ending September 2014, the leading economic index increased 3.5 percent (about a 7.1 percent annual rate), faster than the growth of 2.7 percent (about a 5.6 percent annual rate) during the previous six months. Also, the strengths among the components became more widespread than weaknesses in the past six months. [Full notes in PDF]
Here is a chart of the LEI series with documented recessions as identified by the NBER.
And here is a closer look at this indicator since 2000. We can more readily see that the recovery from the 2000 trough weakened in 2012 but began trending higher in the latter part of the year.
For a more details on the latest data, here is an excerpt from the press release:
|“The LEI picked up in September, after no change in August, and the strengths among its components have been very widespread over the past six months,” said Ataman Ozyildirim, Economist at The Conference Board. “The outlook for improving employment and further income growth are expected to support the moderate expansion in the U.S economy for the remainder of the year.”|
“The financial markets are reflecting turmoil and unease, but the data on the leading indicators continue to suggest moderate growth in the short-term,” said Ken Goldstein, Economist at The Conference Board. “Meanwhile, the weak advances in the housing market remain a bigger risk to the outlook than short-term financial gyrations.”