We’ve been talking about this stuff for awhile now here on TRB, but no one was on top of the sovereign debt minefield like the Zero Hedge gang. In case you missed ignored it, they’ve basically been handing you what the market is awakening to now on a platter.
Bad news from Harrisburg, PA to Southern Europe to Los Angeles today. And those jobs numbers certainly didn’t help. We should be at roughly 0% employment by 2016 at this rate.
The Dow is down around 200 as we speak, flirting with the psychologically meaningful 10,000 level.
City workers and union members won a victory against financial prudence in Los Angeles today.
The city council spent all day yesterday discussing drastic cuts made necessary by LA’s $208 million budget gap. The city’s budget analysis proposed around 1,000 job cuts to save money.
And so the municipal unions went wild, packing the meeting with hundreds of workers.
In response, the city council voted to postpone budget-related layoffs for 30 days.
Frighteningly, on the same day the council members voted against cutting jobs and consolidating the disability, human services and environmental affairs department, it also agreed to discuss making jobs cuts in the police and fire departments.
Even worse, LA council members are talking about "unconventional ways" of addressing their looming financial crisis.
"If I’m facing hard times . . . I’m going to go to my uncles. I’m going to go to my aunt. I’m going to ask them to borrow money," Councilman Jose Huizar said, according to the LA Times. "But I’m going to tell them: ‘You know, I’ve got this ’67 Chevy. I could sell it a year from now and maybe I’ll pay you back with that.’ Can we do anything like that?"
The problem, of course, is that LA’s uncle is the State of California, which is facing a giant budgetary crisis of its own. It doesn’t have the money to bail out LA. And muni bond investors are unlikely to love the idea that LA will find some way to raise cash in the future to compensate for its inability to restrain spending now.
Will the ratings agencies wait 30 days before slamming LA? We’ll see.
With city officials declaring that "bankruptcy is not an option," Mayor Antonio Villaraigosa released a long-term plan for the city’s finances Thursday, including several billion dollars in potential savings and possible layoffs of 1,000 workers.
In a letter to City Administrative Officer Miguel Santana, the mayor and City Council leaders called for the start of steps needed to make layoffs and perform studies on dealing with this year’s continuing shortfall of $200 million and the projected $400 million deficit for next year.
"This mayor has no interest in going down the road to bankruptcy," said Deputy Mayor Matt Szabo, who has been assigned the task of developing the overall financial strategy for the city.
My Comment: It is irrelevant what the mayor wants now. The fate was sealed years ago with pensions. LA came to a fork in the road, and selected the road named "Bankruptcy". Now the mayor says LA has no interest going down that road. Well it is too late for that now, unless unions are ready to do some serious negotiation.
That’s the kicker, LA has no choice in the matter other than the mayor’s willingness to ask the unions for concessions. Whether or not LA goes bankrupt depends entirely on the response from the unions regarding wages and pension benefits.
The five-page letter from Villaraigosa, also signed by Council President Eric Garcetti and council members Bernard Parks, Jan Perry, Greig Smith and Dennis Zine, sets the stage for a series of decisions to reduce spending in the city’s $7.01 billion budget.
There are no plans to ask voters for a tax increase, but the mayor is looking at whether a ballot proposal will be needed to reform the city’s pension system.
My Comment: Good luck with that. You will need it.
Santana’s office also released a report showing the city’s revenues continue to decline, particularly in consumer-sensitive areas such as hotel and sales tax. Also, holiday season sales were much less than expected.
My Comment: Welcome to frugality, the new reality.…
In my larval, pre-blogging days, I always faced the back-to-school moment with abject dread. It meant returning to a program of the most severe, mind-numbing regimentation in the ghastly New York City public schools after a summer of idyllic unreality in the New Hampshire woods, where I went to a Lord of the Flies type of summer camp. And so here I am, many decades later, still uneasy as the final page of the August calendar flies away in a hot Santa Ana wind, and a great hellfire closes in on the far eastern reaches of Los Angeles, and the American money system falls into a peculiar limbo, and every fifth person is out of work, or going bankrupt, or glugging down the seawater of default, or being denied coverage by health insurance that he-or-she has already shelled out ten grand for this year, or getting shot in a trailer park.
I was in Los Angeles for a few days last week, as chance had it, marveling at the odd disposition of things there. I’ve been there many times over the years, but you forget how overwhelmingly weird it is. Altogether the LA metro area has the ambience of a garage the size of Rhode Island where someone happened to leave the engine running. To say that LA is all about cars is kind of like saying the Pacific Ocean is all about water. But one forgets the supernatural scale of the freeways, the tsunamis of vehicles, the cosmic despair of the traffic jams. The vistas of present-day LA make the Blade Runner vision of things look quaint in comparison.
You motor out of the LAX airport – personally, I love the name "LAX" because it so beautifully describes the collective ethos of the place – and you discover quickly that the taxi cab’s windows are not that dirty, it’s the air itself colored brown like miso soup. Going north on the 405 freeway, you see the looming Moloch of the downtown skyline through the brown miso soup. And you begin to understand why the products of the film industry are so fixated on the theme of machine apocalypse. Downtown LA looks like just such a gigantic machine as the FX crews would dream up, as if a day will come when those gleaming mirrored office towers will pull themselves
Until now, the terrible trail of dead bankers has been only among US and European financial executives. However, as Caixin reports, the increasing pressures on the Chinese banking system appear to have take their first toll. Li Jianhua, director of China's Banking Regulatory Commission (CBRC), died this morning due to a "sudden heart attack" - he was less than 49 years old. Li was among the main drafters on new "caveat emptor" market-based rules on China's shadowy banking system and recently said in an interview that "now is not only a time to control risk, but to transform the trust industry.. if it's ...
The six-day rally in the S&P 500, the longest since early September, came to a halt with a modest 0.22% decline at the close. Today's trading took place within the second narrowest intraday range of the year, a mere 0.31% -- slightly wider than the 0.29% on March 5th. The popular financial press blames today's loss on some pre-open earnings disappointments and a surprisingly weak New Home Sales report (see the interesting analysis of the latter by New Deal Democrat). Even more surprising was the market's indifference to the bad numbers. Today's market mentality was probably more focused expectations of Apple's quarterly earnings after the close, which has triggered a surge in futures as I type this.
Bunge Limited (BG) is the world’s largest processor of soybeans. It is also a major producer of vegetable oils, fertilizer, sugar and bioenergy.
When commodities got hot in 2007-08, Bunge’s EPS shot up and the stock followed, rising 185% in 19 months.
The Great Recession took its toll on operations, dropping EPS to a low of $2.22 in 2009. Since then profits have recovered. They ranged from $4.62 - $5.90 in the latest three years. 2014 appears poised for a large increase. Consensus views from multiple sources see BG earning $7.04 - $7.10 this year and then $7.83 - $7.94 in 2015.
Shares in Las Vegas Sands Corp. (Ticker: LVS) are up sharply today, gaining as much as 5.7% to touch $80.12 and the highest level since April 4th, mirroring gains in shares of resort casino operator Wynn Resorts Ltd. (Ticker: WYNN). The move in Wynn shares appears, at least in part, to follow a big increase in target price from analysts at CLSA who upped their target on the ‘buy’ rated stock to $350 from $250 a share. CLSA also has a ‘buy’ rating on Las Vegas Sands with a $100 price target according to a note from reporter, Janet Freund, on Bloomberg. Both companies are scheduled to report first-quarter earnings after the closing bell on Thursday.
Yesterday, the market continued its winning ways for the fifth consecutive day. The S&P 500 closed within 1% of its all-time high, and the DJI was even closer to its all-time high. Healthcare, Energy and Technology led the sectors while Financials, Telecom, and Utilities finished slightly in the red. All three sectors in the red are typically flight-to-safety stocks, so despite lower than average volume, the market appears poised to make new highs.
Mid-cap Growth led the style/caps last week, up 2.87%, and Small-cap Growth trailed, up 2.22%. This week will bring well over 100 S&P 500 stocks reporting their March quarter earn...
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[Facebook] The social network is only weeks away from obtaining regulatory approval in Ireland for a service that would allow its users to store money on Facebook and use it to pay and exchange money with others, according to several people involved in the process.
The authorisation from Ireland’s central bank to become an “e-money” institution would allow ...
I just wanted to be sure you saw this. There’s a ‘live’ training webinar this Thursday, March 27th at Noon or 9:00 pm ET.
If GOOGLE, the NSA, and Steve Jobs all got together in a room with the task of building a tremendously accurate trading algorithm… it wouldn’t just be any ordinary system… it’d be the greatest trading algorithm in the world.
Well, I hate to break it to you though… they never got around to building it, but my friends at Market Tamer did.
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Ladies and Gentlemen, hobos and tramps,
Cross-eyed mosquitoes, and Bow-legged ants,
I come before you, To stand behind you,
To tell you something, I know nothing about.
And so the circus begins in Union Square, San Francisco for this weeks JP Morgan Healthcare Conference. Will the momentum from 2013, which carried the S&P Spider Biotech ETF to all time highs, carry on in 2014? The Biotech ETF beat the S&P by better than 3 points.
As I noted in my previous post, Biotechs Galore - IPOs and More, biotechs were rushing to IPOs so that venture capitalists could unwind their holdings (funds are usually 5-7 years), as well as take advantage of the opportune moment...
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