by ilene - April 25th, 2015 1:01 am
In Shenzhen's famous Huaqiangbei electronics shopping district, you won't need to stand in any lines or make an appointment for these smartwatches.
At 299 yuan—that's less than $50—you can pick up a smartwatch that looks quite similar to Apple's own creation, complete with replica Digital Crown and touch screen. Like the Cupertino original that went on sale today for seven times the price, the generic offering spotted in this bustling Chinese city features an activity tracker, chat apps, Web browser, and Bluetooth connectivity. A brief demo unveiled shortcomings in the browser with only the text loading on screen.
Spurred by the advent of fracking and other high-tech ways of getting at North America’s fossil fuel reserves, the oil and gas industry has, for the past decade, been drilling at an astounding rate of 50,000 wells per year.
This may be a large continent, but their impact on the landscape is nonetheless enormous. The industry’s total operations, say researchers at the University of Montana, Missoula in a new study, occupy land area three times the size of Yellowstone National Park, “transforming millions of hectares of the Great Plains into industrialized landscapes” that are rarely converted back after the drillers have gone on.
Elaine Wynn lost her bid for re-election to the board of Wynn Resorts Ltd. after failing to win over enough shareholders to back her dissident campaign.
Wynn, 72, was asking investors to keep her on the board of the casino company co-founded by her ex-husband, Chairman and Chief Executive Officer Steve Wynn, after other directors declined to renominate her. They said a legal dispute between the two over her voting rights is influencing board decisions.
Nomura Forecast: Q1 GDP at 1.0% (CalculatedRisk)
Adverse weather conditions, West Coast port disruptions, the stronger dollar and the decline in crude oil prices all likely hurt economic activity in
by ilene - April 24th, 2015 10:26 pm
Courtesy of Mish.
The San Francisco Bay Area Region Transportation system (BART) has a major problem: aging tracks that border on unsafe.
The San Francisco Chronicle details the problem in BART has New Problem: Old Tracks.
The nearly half-century-old system needs to replace its worn steel rails and cross ties. The problem has produced derailments, a drop in train speed in several trouble spots, and a repair schedule that will close the tracks in Oakland over an estimated 11 weekends.
Track maintenance is nothing new for transit systems as equipment and track wear out. But the scale of the problem and BART’s essential role in carting nearly 400,000 daily riders to work, school and appointments make the task important. It’s imperative that the system focus on improving service as quickly as it can — or risk public concerns about safety and reliability.
Rail Refresher Solution
The following video sent by reader Justin is the exact solution. Meet the "Rail Refresher"
That is one of the most amazing pieces of equipment I have ever seen.
How many workers will it replace?
Mike "Mish" Shedlock
by ilene - April 24th, 2015 10:05 pm
Presented with no comment… ok well one! WTF!?
No comment… not one… seriously.
by ilene - April 24th, 2015 9:30 pm
Courtesy of Charles Hugh-Smith, OfTwoMinds
Claiming to own X quantity of gold is one thing, and reporting how many times the gold has been pledged as collateral is another.
When introducing a new concept, it is best to start with the definition of the words to be used. In this case, the discussion of rehypothecation and how it places the world at risk with the fun and games played in the stock market.Rehypothecation:Rehypothecation occurs when your broker, to whom you have hypothecated — or pledged — securities as collateral for a margin loan, pledges those same securities to a bank or other lender to secure a loan to cover the firm's exposure to potential margin account losses.When you open a margin account, you typically sign a general account agreement with your broker, in which you authorize your broker to rehypothecate.Now, let’s put this into easy to understand language. Let’s say that you have ten dollars. You take it to the bank to let them “borrow” it, while paying you interest. What you have done, in reality, is given them your money to use as they see fit, while giving you a small percentage of the gains that they will earn. A bank would loan the money to a home buyer or perhaps a small business. At the very least, they can lend all the money in excess of their requirement to hold some cash as reserves--say 10% for ease of math.They now have nine dollars to invest. Their
by ilene - April 24th, 2015 9:22 pm
Michael Lewis explains the flash crash and Navinder Singh Sarao's role in it. Read also: Guy Trading at Home Caused the Flash Crash for background.
By Michael Lewis at Bloomberg View
The first question that arises from the Commodity Futures Trading Commission’s case against Navinder Singh Sarao is: Why did it take them five years to bring it?
A guy living with his parents next to London's Heathrow Airport enters a lot of big, phony orders to sell U.S. stock market futures; the market promptly collapses on May 6, 2010; it takes five years for the army of U.S. financial regulators to work out that there might be some connection between the two events. It makes no sense.
A bunch of news reports have suggested that the CFTC didn’t have the information available to it to make the case. After the flash crash, the commission focused exclusively on trades that had occurred that day, rather than orders designed not to trade — at least until some mysterious whistle-blower came forward to explain how the futures market actually worked. But this can’t be true.
Immediately after the flash crash, Eric Hunsader, founder of the Chicago-based market data company Nanex, which has access to all stock and futures market orders, detected lots of socially dubious trading activity that May day: high-frequency trading firms sending 5,000 quotes per second in a single stock without ever intending to trade that stock, for instance. On June 18, 2010, Nanex published a report of its findings.
The following Wednesday, June 23, the website Zero Hedge posted the Nanex report. Two days later the CFTC’s chief economist, Andrei Kirilenko, e-mailed Hunsader. “He invited me out to D.C. and I talked with everyone there (and I mean everyone — including a commissioner),” Hunsader says. “The CFTC then flew out a programmer to our offices where we showed him how to work with our data. Took all of a day. We sent him back with our flash crash data, and that was pretty much the last we heard about that project.”
by ilene - April 24th, 2015 5:30 pm
Courtesy of Lance Roberts via STA Wealth Management
With first quarter's earnings season launching into full swing it is interesting to see just how many companies are beating earnings expectations. Of course, these are the current downwardly revised earnings expectations that are being beat, but they are beating them nonetheless. However, if we just stepped back to the 4th quarter of 2014 and used THOSE expectations, well, with 100% of companies missing earnings the markets would likely not be quite as chipper.
Like I have said previously, the "beat the earnings game" is quite laughable in reality as it is the equivalent of "moving the target to the arrow."
Don't misunderstand me, I do understand the "need" for predictions as it supports the emotional biases of greed and speculation. However, logic suggests that a return to making investment decisions based solely on trailing reported earnings might somewhat reduce the ongoing "boom/bust" cycles that have devastated investors over the last couple of decades.
But I digress. The point I wanted to make about earnings versus revenue is this. Operating and reported earnings have turned sharply lower over recent quarters which has historically been associated with major market peaks. As shown below, it is also important to notice that revenue has tended to lag these downturns in earnings previously. This is because the measures used to substantially boost profitability from each dollar of revenue generated through accounting gimmickry, share repurchases, and cost cutting are finite in nature. When the effect of those manipulations fade, so does the inflated profitability generated from each dollar of revenue.
This will be something worth watching closely over the next few quarters particular as the commentary of a "continued secular bull market" continues to hit the headlines. The reality is that with earnings deteriorating, the economy weak and valuations elevated the outcomes of investments made today are likely to be far more disappointing than currently expected.
That is the context around this weekend's reading list which is a literal "soup" of thoughts and ideas that explore the markets, earnings, rates and investing in an effort to determine what is likely to happen next.
HEADLINE OF THE WEEK: Nasdaq To Hit 10,000 By 2016 by Shawn Langlois via MarketWatch
by ilene - April 24th, 2015 3:05 pm
Tim Knight strikes out against certain crazyass gold-lovers on Zero Hedge. When Paul Price wrote an article saying that gold was a bad investment over two years ago, some really nasty, pitiful comments ensued…
From Slope of Hope: Given the, errr, disposition of the ZH crowd, this probably isn't the right forum for this, but just for a change, let's have a little uncomfortable truth: I would like to make my own modest effort to put to rest a trite little phrase that gets trotted out every time silver and gold are getting trashed (which has been the case for years now). "I just checked, and my pile hasn't gotten any smaller."
These precious metals kooks – sometimes called "stackers" (since they stack up coins, as well as losses) somehow make the point that since their physical asset hasn't changed shape or amount, it hasn't really dropped in value. Not in a real sense. Honest Injun.
I don't think I've ever used this word before on this blog, but here we go: bullshit.
If I bought a house for $5,000,000 (which poor saps are doing in my fair city right now) and a few years later it is worth $2,500,000, I have lost $2,500,000. Period. End of story.
The analogous retort: "My house isn't any smaller!"
Ummm, yeah, that's right, you pinheaded moron. But you've still had a severe diminishment in asset value by the metrics we here on Earth like to use. Your house still has utility (which is far more than one can say of a bunch of shiny coins and bars), but you've had your ass handed to you anyway.
And I don't say this as a person pointing and laughing at precious metals kooks. I am one of them, as I accumulated a meaningful horde of silver and gold, largely prompted by the lunatic rantings (albeit very convincing rantings) of gold bugs over the past few years.
If the fabled "things will go wrong someday" ever does come, and precious metals soar in value versus meaningless fiat, well, great, then the kooks will have, in the end, be right. But that day may never, ever come, and owners of metals should recognize that their beloved stacks are indeed the same height, width, and depth…………but these people (and I) would have been a hell of a lot better off buying Amazon and Starbucks in the first place.
by ilene - April 24th, 2015 2:32 pm
[Picture by Geralt at Pixabay]
Courtesy of Mish.
In a move 100% guaranteed to blow up at a later date, the ECB Said to Start Buying Covered Bonds With Negative Yields.
The European Central Bank started buying covered bonds with negative yields as its asset-purchase program reduces the supply of the highly rated debt, according to two people familiar with the matter.
The central bank bought the debt in the past two weeks, said the people, who asked not to be identified because the information is private. The notes were from Germany, one of the people said.
The ECB has bought 69.7 billion euros ($75.5 billion) of covered bonds since October as part of its latest measures designed to stimulus growth in the euro area. The accumulation of assets is driving down yields and the central bank now holds about 15 percent of the market, according to ABN Amro Bank NV.
“The ECB has caused this situation by being a big buyer and has exacerbated the already negative net supply of covered bonds,” said Joost Beaumont, a fixed-income strategist at ABN Amro in Amsterdam. “If the ECB buys more, yields will go still lower and that’s going to affect the ECB itself.”
The ECB, which is also buying government bonds and asset-backed debt, has said it will buy negative-yielding securities up to its cash deposit rate of minus 0.2 percent.
An ECB spokesman declined to comment on its covered debt purchases.
“Supply in positive yields is getting scarce and the ECB may have no other choice to fulfill its targeted purchase volume than to buy negative-yielding bonds,” said Tobias Meyer, an analyst at Norddeutsche Landesbank in Hanover, Germany.
Trade Guaranteed to Blow Up
I agree with Beaumont's comment this is "going to affect the ECB itself".
In fact I will go one further and suggest this is a "trade guaranteed to blow up", I just cannot say when or even in precisely what ways.
Mike "Mish" Shedlock
by ilene - April 24th, 2015 2:27 pm
Courtesy of John Rubino.
Government statistics are always suspect, for at least one obvious reason: Modern economies are way too big and complex to measure in real-time. So virtually every number is revised in the months after its release, frequently to the point of saying something very different. But by then lots of new data has come out and no one cares about the old numbers.
So to the extent that any government report is trustworthy, it’s the trend and not the data point that matters. And lately a whole slew of data points have been coalescing into downtrends that should be taken seriously. Today’s example is durable goods, which measures the health of US factories making big, long-lasting things like cars, planes and refrigerators. Bloomberg this morning put out a good analysis showing how “core” capital goods orders — for things things that don’t bounce around by double-digit rates every month — is now firmly in a downtrend, featuring the following charts:
The obvious explanation is that the dollar’s exchange rate is way up, making US goods more expensive and foreign goods cheaper and leading the rest of world to buy less from us. Domestic factories are seeing their order books shrink and are as a result producing less. They’re also hiring fewer and/or firing more workers. And the downtrend seems to be gaining momentum. Core orders in particular turned down in mid-2014 and are now in free-fall.
Since the rest of the world isn’t likely to start buying larger quantities of US trains, planes and automobiles anytime soon, the trend probably won’t reverse without a favorable change in the terms of trade. That is, the dollar has to go down before US factories will pick up. And that won’t happen while the Fed is promising to raise interest rates (which would, other things being equal, boost the dollar).
So this looks set to continue until the Fed springs a surprise. And the longer that takes the bigger the subsequent reversal.
by ilene - April 24th, 2015 1:42 pm
Advances in EBay Inc. and Microsoft Inc. propelled the Nasdaq Composite Index past its all-time closing high, leaving the gauge at the brink of a record for the first time since the dot-com crash in 2000.
Unequal, Yet Happy (NY Times)
THE gaping inequality of America’s first Gilded Age generated strong emotions. It produced social reformers like Jane Addams, anarchist agitators like Emma Goldman, labor leaders like Eugene V. Debs and Progressive politicians like Theodore Roosevelt. By the 1920s, sweeping legislation regulating food and drugs and breaking up corrupt trusts had been passed. The road to the New Deal was paved.
But our current Gilded Age has been greeted with relative complacency. Despite soaring inequality, worsened by the Great Recession, and recent grumbling about the 1 percent, Americans remain fairly happy.
Deadly bird flu swelled in the poultry industry in Minnesota and neighboring Wisconsin amid speculation that winds may be carrying virus particles into facilities housing turkeys and chickens.
“This is a catastrophe for both the turkey and the egg industries,” William Rehm, the president of Daybreak Foods Inc., said after his company’s farm in Jefferson County, Wisconsin, with 800,000 egg-laying hens was infected by bird flu. “Some USDA veterinarians are starting to believe the virus is spreading from particulates in the air,” he said Wednesday in a telephone interview. (More)
Canadian Imperial Bank of Commerce (CM.TO) is in talks with several U.S. companies on a potential $2 billion wealth-management and private-banking acquisition, its top executive said in an interview.
The Reasons for a Meandering Market (Bloomberg)
During the past few years, I have referred to market breadth as one of the more important metrics of the stock market's health. As we close in on new highs in the cumulative advance-decline line, it is time to revisit