The Wall Street Examiner http://wallstreetexaminer.com Get the facts. Sat, 25 Oct 2014 19:38:07 +0000 en-US hourly 1 Will The Stock Market Complete The Bullhorn? http://wallstreetexaminer.com/2014/10/will-the-stock-market-complete-the-bullhorn/ http://wallstreetexaminer.com/2014/10/will-the-stock-market-complete-the-bullhorn/#comments Fri, 24 Oct 2014 21:39:34 +0000 http://wallstreetexaminer.com/?p=214771 Short term cycle projections have edged up to 1990. That will probably not be the last word as there are yet to be projections on either the 6-7 week or 13 week cycles.

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Here’s Why Median New Home Sale Prices Collapsed In September http://wallstreetexaminer.com/2014/10/heres-why-median-new-home-sale-prices-collapsed-in-september/ http://wallstreetexaminer.com/2014/10/heres-why-median-new-home-sale-prices-collapsed-in-september/#comments Fri, 24 Oct 2014 20:46:27 +0000 http://wallstreetexaminer.com/?p=214760 The median price of new homes sold in the US in September fell to $259,000 from $286,800 in August. That’s an extraordinary drop. It left prices down 4% on a year to year basis. Does that mean that 3 years of breakneck housing inflation have come to an end? Probably not. At least we cannot conclude that from this data.

That’s because the change in median price was due to a huge change in the mix of sales. In August, 48% of sales were in the $300,000 and up range. In September 2013, that ratio was 42%. But last month, sales of $300,000 and above were just 37% of sales. The median price dropped because there were more sales of less expensive homes than is typical. It’s just one month of data, so we’ll have to see if the trend persists. Price gains in existing home sales have moderated in the past year, but there’s been no sign of outright decline yet.

Median New Home Sales Prices Drop- Click to enlarge

Median New Home Sales Prices Drop- Click to enlarge

 

Even With Growth, New Home Sales Still In A Depression

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Dollar Still In Major Uptrend, Bond Yields Rebound To Trend http://wallstreetexaminer.com/2014/10/dollar-still-in-major-uptrend-bond-yields-rebound-to-trend/ http://wallstreetexaminer.com/2014/10/dollar-still-in-major-uptrend-bond-yields-rebound-to-trend/#comments Fri, 24 Oct 2014 20:13:13 +0000 http://wallstreetexaminer.com/?p=214758 Treasuries and the Dollar rebounded from the previous week’s selling. Both were due to consolidate. The major trend is still up in the dollar, but may be in the process of reversing in the Treasuries.

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Even With Growth, New Home Sales Still In A Depression http://wallstreetexaminer.com/2014/10/new-home-sales-in-depression/ http://wallstreetexaminer.com/2014/10/new-home-sales-in-depression/#comments Fri, 24 Oct 2014 19:22:38 +0000 http://wallstreetexaminer.com/?p=214751 There seems to be lots of confusion about today’s Commerce Department release on new home sales. The report showed that new home sales were at a seasonally adjusted annual rate of 467,000. Part of the confusions stems from the fact that that is a completely bogus, made up, fictitious number in the first place. Seasonal adjustments are arbitrary attempts to create a smooth curve and they aren’t finalized until years after the fact. In addition, annualizing a single month is insane to begin with. Analysts are trying to make sense out of fiction. In the meantime, the headline number missed the Wall Street conomist guesspectation of 475,000.

The new home sales data has the benefit of being contract data reported just a few weeks after the survey date. It’s the closest thing we have to an official real time measure of the state of the housing market. All of the widely followed existing home sales data suffer from severe lag and the error is compounded by extreme smoothing in worthless measures like Case Shiller. By the time of the Case Shiller release, it represents an idealized market from deals that went under contract 5 months ago, not the market as it is today. The Commerce Department, to its credit, at least measures current contracts, and it does make available the actual, as reported, unsmoothed, unmanipulated data. The mainstream media, to its discredit, completely ignores the actual monthly data and only reports the made up, seasonally adjusted crap.

That being said, the actual data is also severely deficient, primarily because the survey sample is an infinitesimal, and therefore unreliable, slice of the market. As more data comes in during subsequent months, even the unmanipulated raw data is subject to large revisions. This month, the number for August was revised down by a whopping 10%. The July number suffered the same fate.

The data also suffers from the fact that the survey does not take into account contract cancellations. When the market is falling apart, cancellations can be epic. But they’re not subtracted from previous month’s data. We don’t see the impact until sales actually go off the cliff.

All that aside, the number of sales reported for September was 38,000. That’s the actual number of sales extrapolated from the builder survey sample taken early in the month. That number was 22.5% above September 2013. Any way you slice it, it’s a strong rebound after a series of down months on a year to year basis throughout 2014. On the other hand, 22.5% gain or not, compared with historically typical sales levels, single family housing construction remains in a historic depression. There’s just no way around that fact.

New Home Sales- Click to enlarge

New Home Sales- Click to enlarge

 

 

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This is the Most Self-Explanatory, Ridiculously Clear Chart About Amazon I’ve Ever Seen http://wallstreetexaminer.com/2014/10/this-is-the-most-self-explanatory-ridiculously-clear-chart-about-amazon-ive-ever-seen/ http://wallstreetexaminer.com/2014/10/this-is-the-most-self-explanatory-ridiculously-clear-chart-about-amazon-ive-ever-seen/#comments Fri, 24 Oct 2014 19:09:47 +0000 http://wolfstreet.com/?p=8477 This is a syndicated repost courtesy of Wolf Street. To view original, click here.

What’s wrong with Amazon? Here it is, the most self-explanatory and ridiculously clear chart that simply says it all:

Black Line: Endlessly soaring, totally out-of-whack, no-holds-barred, damn-the-torpedoes-full-steam-ahead operating expenses designed to demolish competitors that have their hands cuffed behind their backs by the requirement that they watch their expenses and keep them in line with revenues so that they can make a profit long-term and stay in business and make investors happy.

Green Line: Strongly rising revenues…. Alas, they’re not rising as fast as expenses, not nearly as fast. For every dollar spent, Amazon is getting less revenues as time goes on. Amazon’s spending model is becoming more wasteful, in terms of its impact on revenues. This is a business model for self-destruction, as normal businesses tend to find out because investors will sooner or later pull the plug. But apparently not Amazon investors. Amazon is directly plugged into the Wall Street hype machine, and investors can’t seem to unplug it.

Red Line: All of which translates into terrible operating income (or losses), year after year after year. This quarter’s loss was the worst in 14 years. It was ten times worse than last year. And there is no turnaround in sight.

Blue Line: But investors close their eyes…

READ THE REST of this post at WolfStreet.com

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Federal Tax Collections Rebounded This Week http://wallstreetexaminer.com/2014/10/federal-tax-collections-rebounded-this-week/ http://wallstreetexaminer.com/2014/10/federal-tax-collections-rebounded-this-week/#comments Fri, 24 Oct 2014 18:12:23 +0000 http://wallstreetexaminer.com/?p=214743 The Federal Government’s withholding tax collections have rebounded over the past week. This continues the usual pattern of quarterly fluctuations. The annual growth rate this week was around 4.7% in nominal terms and probably 2.2-2.7% in real terms. This report illustrates the trends, and covers the particulars and the implications for Treasury supply and the stock and bond markets.

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No Country is an Island? II http://wallstreetexaminer.com/2014/10/no-country-is-an-island-ii/ http://wallstreetexaminer.com/2014/10/no-country-is-an-island-ii/#comments Fri, 24 Oct 2014 17:22:44 +0000 http://alantonelson.wordpress.com/?p=1550 This is a syndicated repost courtesy of RealityChek. To view original, click here.

Two weeks ago, I wrote about the utter confusion in economics, business, and policy ranks about the spectacle of the United States continuing to grow much more strongly than the rest of the world on average. Unfortunately, the powers-that-be have made exactly zero progress in understanding this divergence and its implications for the United States.

The main problem continues to be an apparent determination to believe in and perpetuate myths about the (fortuitously linked) inevitability and desirability of global economic interdependence, and about the American and other government policies aimed at its intensification.

A recent Financial Times article, for example, illustrated the extent to which these misunderstandings have prevented recognition of fundamental causes of the 2007-8 financial crisis and its dismal aftermath, and therefore keep blinding policymakers to the most important steps needed to restore genuine financial health nationally and globally.

Author Chris Giles noted the uneven nature of the (disappointing) global recovery, which included strengthening American performance. Yet he painted a gloomy picture of U.S. And international economic prospects going forward because emerging markets, especially China, are now allegedly the countries whose successes are “most important for global trends,” and their growth has been slowing most dramatically.

What he – and so many others – have missed is that it was the outperformance of China and the other ostensible emerging markets that helped trigger the crisis, since their own superior vigor overwhelmingly depended on a global version of a Ponzi scheme. They amassed huge trade surpluses by selling to wealthier developed economies (especially America’s) whose factories and other productive, income-producing facilities they were increasingly replacing thanks largely to offshoring-friendly U.S. trade policies. Lending from these low-income and other surplus economies (like Japan’s) was the only way in which the resulting growth could be sustained, and six years ago, this particular global house of cards predictably tumbled down.

In other words, yes, according to some standard versions of counting growth and measuring its sources, the surplus countries led the global expansion before the crisis – and even until this year during the recovery. The trouble is, this has proven to be a disastrously unsound type of growth.

Especially strange: Giles noted that China’s unexpected acceleration in the last few months has been “driven by a resurgent export sector,” which of course reveals the crucial nature of third world net exporters’ markets, not the exporters themselves. Yet his China- and emerging “market”-centric portrait of the world economy remained unaffected.

The Wall Street Journal chipped in with its own version of the current globaloney with an October 21 article titled “Global Growth Woes Threaten to Beset U.S. Economy.” Just like the Financial Times‘ Giles, authors Josh Zumbrun and Chris Timiraos told readers that “Emerging economies, not the U.S., drove global growth for much of the last decade.” They went on to warn that gathering woes in these countries and Europe could “hobble the U.S. economy at a time when the world could use a reliable growth engine.”

The most important part of their article, however, presented evidence showing indisputably that the reality is anything but. Not only has America’s growth actually quickened as the rest of the world has slowed, but its economy is still relatively trade light (despite decades of bipartisan Washington efforts to increase its role). Hmmmm. Any chance that these twos facts are related?

Am I saying that the U.S. economy is out of the woods? Of course not. What I am saying is that America’s capacity for self-sufficiency and its resulting built-in immunity from the biggest international economic trends are invaluable strengths. Further, it is vital to preserve and enhance these strengths in the many industries and commodities where it’s feasible. Just as important is realizing that unless Washington is vigilant, its growth-hungry trade competitors will surely continue taking the path of least resistance by using U.S. openness to imports to grow at America’s expense by adding to their already high levels of U.S. marketshare.

New successes along these lines would spell trouble not only for the United States, but for the rest of the world as well – as it would refuel the same lopsided production, consumption, and lending patterns that helped trigger the last decade’s calamity in the first place. If Washington wants to keep strengthening global interdependence and interconnectedness, it will need to work much more effectively to ensure that the structure of this interdependence is actually durable. If it can’t, or until it can, its best economic strategy unquestionably will be acting unilaterally to speed up and improve the quality of its own growth.

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Will Treasury Cash Management Strategy Boost Markets In November-December? http://wallstreetexaminer.com/2014/10/will-treasury-cash-management-strategy-boost-markets-in-november-december/ http://wallstreetexaminer.com/2014/10/will-treasury-cash-management-strategy-boost-markets-in-november-december/#comments Fri, 24 Oct 2014 15:48:25 +0000 http://wallstreetexaminer.com/?p=214738 The Treasury Borrowing Advisory Committee (TBAC) is a committee of Primary Dealers that advises the Treasury on its financing needs. Its quarterly forecasts are a major tool in our analytical arsenal. Its current quarterly report forecasts large T-bill paydowns in early November and again in early December.

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Jamie Dimon: U.S. Must Create a “Safe Harbor” Where JPM’s Corruption Is Not “Punished” http://wallstreetexaminer.com/2014/10/jamie-dimon-u-s-must-create-a-safe-harbor-where-jpms-corruption-is-not-punished/ http://wallstreetexaminer.com/2014/10/jamie-dimon-u-s-must-create-a-safe-harbor-where-jpms-corruption-is-not-punished/#comments Fri, 24 Oct 2014 14:18:13 +0000 http://neweconomicperspectives.org/?p=8755 This is a syndicated repost courtesy of New Economic Perspectives. To view original, click here.

I want to give a hat tip to a recent Wall Street Journal article that brought to my attention two damning admissions by JPMorgan’s (JPM) CEO and Chairman of the Board, Jamie Dimon.  The irony is that Dimon was lulled into making these admissions because he was basking in the perfect calm created by the confluence of Sorkin’s and CNBC’s storied sycophancy at the one place on earth where elite bankers feel most loved, honored, and protected – the annual meeting of the ultra-wealthy in Davos, Switzerland.  Sorkin was the only interviewer, so Dimon faced no risk of tough questions.  It may well have been this perfect setting that caused Dimon to let slip the mask and reveal two illustrative sins of elite bankers reported in the WSJ article.

 

“A spokesman for J.P. Morgan declined to comment on the continuing investigations. Mr. Dimon said in a January 2014 interview on CNBC that it has been a ‘norm of business for years’ for banks to hire [ex government officials and the] sons and daughters of companies’ [controlling officers] and to give them ‘proper jobs’ without violating the law.

‘But we got to figure out exactly how to create a safe harbor for that so you don’t…end up getting punished,’ he told the interviewer, according to a CNBC transcript.”

Yes, you read that correctly.  It has been a “norm of business for years” for multinational corporations to hire the “sons and daughters of companies’ [controlling officials]” and to hire “ex government officials” in order to secure the favor of those powerful officials for the banks.  Dimon’s concern is that it is essential that firms should be able to continue to purchase this influence with other elites in this manner with no threat of ever “getting punished” for buying influence with such powerful foreign officials.”  JPM’s priority is “to figure out exactly how to create a safe haven for that.”  The elite firms’ “norm of business for years” is not an admission from Dimon’s perspective, but rather a claim of right.  Anything that elite firms have done successfully for years to purchase influence with other elites (including hiring “ex government officials”) is obviously something that they have a right to continue to do – with total impunity from “getting punished.”  It’s not bribery, it’s buying influence with powerful officials who run firms and government agencies and ministries.

I promptly found the CNBC interview transcript, and it was such a classic of its genre that one can see how Dimon could let down his guard and make these admissions, or as he presented them, legitimate demands on the U.S. government to create such a “safe harbor” for U.S. multinational corporations.

Two Good Ol’ Boys at Davos

The joy begins with the professional tone and distance that Sorkin brings to sycophancy.  Dimon reinforces this professionalism throughout the interview.  Their opening exchange sets the stage.

ANDREW ROSS SORKIN: Jamie Dimon, thanks for being here.

JAMIE DIMON: I’m thrilled to be here, Andrew.

The interview ends on the same high, professional tone.

ANDREW ROSS SORKIN: –thank you very much, Jamie. Appreciate it. Thanks.

Just two good ol’ buys shooting the breeze in Davos.

JPM’s “Chinese Princelings” and JPM’s “Purity”

Sorkin brings up the fact that JPM hires “Chinese princelings” to curry favor with their parents.  Dimon responds that “I’m not going to through any of the current” governmental investigations of JPM.  To Sorkin’s credit, he asks a follow-up about JPM losing a potential IPO engagement with a Chinese firm due to a “Chinese princeling” issue.  Dimon responds with this a fabulous line:  “we’re trying to make decisions that try to make us as pure as possible.”  Yes, Dimon rebrands JPM as purer than Ivory soap.  His very next argument is this is why it is essential that the governments create a “safe harbor” so that JPM can hire the princelings and ex government officials in order to curry favor with the elites that control firms and governmental agencies without any risk of “punishment.”  You know, “as pure as possible.”

Sorkin Closes for the Killer Interview Question to Dimon

It’s an incredible set up for Sorkin.  Sorkin pounces for the kill, leaping on his now helplessly hypocritical prey.  Or, alternative B, he doesn’t actually listen to Dimon’s amazing answer to his question and instead interrupts the answer just as Dimon demands the creation of a “safe harbor” under which firms like JPM can continue to hire “Chinese princelings” and “ex government officials” for the express purpose of buying corporate and governmental influence without any risk of “getting punished.”

ANDREW ROSS SORKIN: Is there anything in this–

JAMIE DIMON: –getting punished.

ANDREW ROSS SORKIN: –whole thing that you’ve read that’s made you uncomfortable?

JAMIE DIMON: I’m not– actually I don’t want to go anymore into that one, yeah.

When Dimon blows off Sorkin’s inane question about whether he has read anything that has made him “uncomfortable,” Sorkin switches to the perfect Davos question.  “Is the stock market out over its skis relative to where we are in the true economy?”

Who’s Your Daddy?

It never dawns on Sorkin during the interview that there might be something desperately wrong about Dimon’s belief that multinational corporations have the inalienable right to buy influence through their hires of “ex government officials” and “Chinese princelings” and that the duty of the U.S. government is to create a “safe harbor” for JPM’s officers so that they can be assured that they can freely buy influence with no risk of “getting punished.”  There epitome of merit-based hiring at JPM’s China operations is based on the answer to the colloquial question:  “who’s your daddy?”

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Gold in a Box http://wallstreetexaminer.com/2014/10/gold-in-a-box/ http://wallstreetexaminer.com/2014/10/gold-in-a-box/#comments Fri, 24 Oct 2014 13:14:08 +0000 http://wallstreetexaminer.com/?p=214721 Gold has set new short term trading range parameters that would need to be broken to indicate the direction of the next trend.

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