The Wall Street Examiner http://wallstreetexaminer.com Get the facts. Fri, 01 Aug 2014 02:18:19 +0000 en-US hourly 1 Huge Decline Was Ugly But Not Pivotal http://wallstreetexaminer.com/2014/07/huge-decline-was-ugly-but-not-pivotal/ http://wallstreetexaminer.com/2014/07/huge-decline-was-ugly-but-not-pivotal/#comments Fri, 01 Aug 2014 02:18:19 +0000 http://wallstreetexaminer.com/?p=203712 I will admit to some surprise at the ferocity of the decline today, but we were aware of the likelihood of weakness, both from the standpoint of cycle analysis and screening data, as well as the end of July liquidity shortage. This report explains the implications of this drop.

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World Stock Markets Trading Discussion – Energetic evacuation http://wallstreetexaminer.com/2014/07/world-stock-markets-trading-discussion-energetic-evacuation/ http://wallstreetexaminer.com/2014/07/world-stock-markets-trading-discussion-energetic-evacuation/#comments Fri, 01 Aug 2014 01:47:03 +0000 http://www.capitalstool.com/forums/index.php?showtopic=12259 This is a syndicated repost courtesy of The Daily Stool. To view original, click here.

Early openers embroiled in a flurry of selling: Kiwis -0.8%, Aussies -1.3%, Nikkers -0.2% and Sth Korea -0.1%.

Steep losses for Aussie sectors: Healthcare and REITS -1.8%, IT -1.6%, Energy -1.4%.
 

 

t?s=%5ENZ50

t?s=%5EAORD

 

 

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Few Bears Around To Enjoy Party http://wallstreetexaminer.com/2014/07/few-bears-around-to-enjoy-party/ http://wallstreetexaminer.com/2014/07/few-bears-around-to-enjoy-party/#comments Thu, 31 Jul 2014 22:03:33 +0000 http://wallstreetexaminer.com/?p=203690 The market threw a party for bears today. It seemed as though there were few of them around to enjoy it suggesting that this decline has farther to go. They usually don’t end until the cheering from the sidelines gets really loud. But today at least, price levels that were supposed to be support, weren’t. This report looks at where the real support levels may be and what to expect if they hold and if they don’t.

Click here to download complete report in pdf format (Professional Edition Subscribers). Try the Professional Edition risk free for thirty days. If, within that time, you don’t find the information useful, I will give you a full refund. It’s that simple. Click here to become a member and get instant access to the current report and all past reports.

Get daily updates on the 4 week, 6-7 week, 13 week, and 6 month cycle projections in the Wall Street Examiner Professional Edition Daily Market Update. In addition you get multiple time frame cyclical, regression channel, and equal width channel support and resistance chart updates, in essence, a roadmap to guide your trading, daily in the Wall Street Examiner Professional Edition Daily Market Update.

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The Brookings forecast misunderstanding http://wallstreetexaminer.com/2014/07/the-brookings-forecast-misunderstanding/ http://wallstreetexaminer.com/2014/07/the-brookings-forecast-misunderstanding/#comments Thu, 31 Jul 2014 20:15:00 +0000 http://wallstreetexaminer.com/?guid=f230c7f8de37f7a7455656889bdc1525 This is a syndicated repost courtesy of Sober Look. To view original, click here.

This WSJ chart has been bounced around the web a bit with comments pointing to how optimistic Wall Street economists are on US labor markets relative to the Brookings forecast. The reality is just the opposite. Brookings model assumes that as labor markets improve some of those who had left the labor force will return in an attempt to find work. That will increase the unemployment rate (more people “officially” looking for work). Wall Street economists on the other hand don’t believe many of those folks are coming back any time soon, as the unemployment rate continues to fall.

Source: WSJ

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(What’s Left of) Our Economy: It’s Still not “Built to Last” http://wallstreetexaminer.com/2014/07/whats-left-of-our-economy-its-still-not-built-to-last/ http://wallstreetexaminer.com/2014/07/whats-left-of-our-economy-its-still-not-built-to-last/#comments Thu, 31 Jul 2014 18:50:52 +0000 http://alantonelson.wordpress.com/?p=939 This is a syndicated repost courtesy of RealityChek. To view original, click here.

The government’s quarterly reports on the gross domestic product (GDP) are useful not only for measuring how fast the U.S. economy is growing or shrinking. They’re also useful for helping to measure whether American economic policy is achieving its most important objective – fostering growth that can be sustained because it’s based on a solid foundation, as opposed to growth that’s bound to implode because it’s based on gimmickry.

The message from the latest GDP report, released yesterday? Some progress has been made toward achieving this vital goal – described memorably by President Obama as creating “an economy built to last.” But although growth during the current economic recovery has been somewhat better balanced than before the financial crisis, its meager levels make clear that adequate substitutes haven’t been found for the engines of phony growth that helped inflate the 2000s bubble.

These trends can be tracked clearly by looking at the GDP report’s internals, and back to 1999 at the historical, interactive databases maintained by the Commerce Department’s Bureau of Economic Analysis. Housing and personal consumption were the main beneficiaries of the last decade’s credit boom, and their outsized growth is clear from the GDP details.

In the second quarter of 2014, this toxic combination comprised 71.34 percent of the total economy adjusted for inflation. That’s better than the 71.57 percent they made up of first quarter GDP. But it’s higher than the annual figures for 2013 and 2012 – 71.22 percent and 70.83 percent, respectively.

The latest figure is also higher than 69.70 percent of GDP recorded for 1999 – the earliest figure available. More encouragingly, it’s lower than the 73.09 percent level in 2005 – the bubble decade peak, and lower than the 71.91 percent level of 2007, the last pre-recession year. But the fourth quarter housing-plus-personal-consumption share of real GDP wasn’t that much lower than those bubble-era figures. And those were the years when the economy, as President Obama has so rightly noted, was in full “house of cards” mode.

So U.S. growth has been healthier, but it’s not significantly healthier. It’s true that slow rebalancing may be the best Americans realistically can hope for. But the recession began six and a half years ago, and the recovery just turned five. When does needed patience become denial?

Another reason for concern: However slow rebalancing has been, growth has been slower still. Acceptable levels of growth make up the second half of the rebalancing process. Their return would indicate that the economy has not simply gone cold turkey. It’s figured out how to prosper without economic narcotics.

In 1999, when personal consumption and housing hadn’t yet reached 70 percent of total real GDP, the economy grew by 4.7 percent. But maybe that’s not an entirely fair comparison, since that excellent performance stemmed largely from a tech spending bubble that was just as artificial and unsustainable as the following decade’s credit bubble.

Real growth in 2005, the peak bubble year, was 3.3 percent. Way too much of that 3.3 percent came from housing and personal consumption. But with the former, in particular, greatly shrunken since the bubble’s maximum bloat – from 6.13 percent of real GDP in 2005 to 3.11 percent last year — growth has fallen off as well. Real GDP expanded by 3.3 percent in 2005. Last year’s figure was 2.2 percent.

It’s not that alternate engines of growth aren’t available. The growing U.S. trade deficit is turning into a major obstacle to faster recovery. Just stopping this bleeding would produce better numbers; meaningfully cutting the trade shortfall would not only quicken recovery, but reduce the national debt’s increase. Business spending has been largely missing in action in this recovery as well. Trade policy overhaul could help solve this problem, too, by reducing the incentives to build so many of the factories and labs companies do plan to invest in overseas rather than in America.

Sadly, neither of the two major parties has offered an economic game plan that could both boost recovery and promote major economic healing. Until they do, put me in the secular stagnation camp– which believes that the United States has lost the ability to grow acceptably without blowing bubbles.

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Top Gold Refinery Loses 2.7 Tons of Gold http://wallstreetexaminer.com/2014/07/top-gold-refinery-loses-2-7-tons-of-gold/ http://wallstreetexaminer.com/2014/07/top-gold-refinery-loses-2-7-tons-of-gold/#comments Thu, 31 Jul 2014 18:32:51 +0000 http://moneymorning.com/?p=146159 Gold market news, July 30, 2014: On July 25, South Africa's Rand Refinery - the biggest processing facility for gold in Africa and one of the biggest worldwide - announced it will receive a shareholder loan to make up for "lost" 87,000 ounces (2.7 tons) of physical gold in its inventory. The press release describes what amounts to a $112 million loss at current gold prices, making this one of the strangest stories to hit the gold market in 2014.

The post Strangest Gold Market News of 2014: Top Refinery Loses 2.7 Tons of Gold appeared first on Money Morning - Only the News You Can Profit From.

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This is a syndicated repost courtesy of Money Morning. To view original, click here.

gold market

Gold market news, July 31, 2014: On July 25, South Africa’s Rand Refinery – the biggest processing facility for gold in Africa and one of the largest worldwide – announced it will receive a shareholder loan to make up for “lost” 87,000 ounces (2.7 tons) of physical gold in its inventory. The press release describes what amounts to a $112 million loss at current gold prices.

Rand Refinery typically processes around 380 tons of gold annually. Since its founding in 1920, it has refined approximately 50,000 tons of the yellow metal – nearly one-third of the world’s total gold mined worldwide. It’s also the largest integrated single-site precious metals refining and smelting facility on the globe.

According to Rand’s July 25 statement, the refinery could not draft its 2013 annual report due to an error in its recently adopted “enterprise resource planning” (ERP) software.

“Following the adoption of the ERP system in April last year, Rand Refinery experienced implementation difficulties which have led to a difference between the actual inventory and the accounting records of approximately 87,000 ounces of gold. Uncertainty around the true position has prevented the Company from being able to finalise its annual financial statements for the financial year ended 30 September 2013. This information has been shared with the Company’s regulators, shareholders, insurers and banks. Rand Refinery’s operations are unaffected by this matter and the processing of gold continues at full capacity.”

Rand “requested financial assistance from Shareholders as a precautionary measure, should resolution of the difficulties result in a financial loss for the Company.”

Major shareholders – some of the largest gold mining companies in the world – agreed to a R1.2 billion ($112 million) loan. AngloGold Ashanti Ltd. (NYSE ADR: AU), a 42.41% shareholder, agreed to provide R572 million. Sibanye Gold Ltd. (NYSE ADR: SBGL), a 33.15% shareholder, will provide R448.5 million. Harmony Gold Mining Co. (NYSE ADR: HMY) will pay R140.4 million and holds a 10.38% stake. Finally, Gold Fields Ltd. (NYSE ADR: GFI), with its smaller 2.76% stake, will provide R37.3 million. Eleven percent shareholder DRDGold Ltd. (NYSE ADR: DRD) agreed that the refinery should obtain support, but did not participate in the loan.

According to Sibanye Gold spokesman James Wellsted and reported by Business Report, customers of Rand have received the prices they were expecting, leading them to conclude the missing gold is indeed most likely an accounting problem, rather than theft.

The vanishing of 2.7 tons of gold from Rand’s inventory on a computer error is the second time the refinery made big gold market news this year…

In May 2014, Rand Refinery Chief Executive Officer Howard Craig resigned his position for unknown reasons.

Craig had served on Rand’s board of directors since 2007, and was appointed as CEO in October 2009. Mark Lynam, formerly senior vice president treasurer of AngloGold, is now serving as interim chief executive for Rand.

The latest incident comes at a time when investors are making a killing in gold mining stocks. Some that have delivered some eye-popping returns for investors in 2014 – and aren’t on the list of companies paying Rand Refinery for missing gold – include Osisko Mining Corp. (TSE: OSK), which has gained 83.44% year to date; Primero Mining Corp. (NYSE: PPP) is up 79.05%; and Agnico Eagle Mines Ltd. (NYSE: AEM) is up 54.51%.

Money Morning Resource Specialist Peter Krauth identified two gold mining stocks he predicts will continue to benefit in coming months – one company’s gold-equivalent production is expected to grow by 44% over the next three years, and the other just underwent an acquisition that Krauth believes will vault production up some 180% by 2016. You can get those picks – for free – here…

Do you invest in gold stocks? What companies do you have on your radar? Join the conversation on Twitter @moneymorning using #Gold, or connect with our Money MorningFacebook page.

The post Strangest Gold Market News of 2014: Top Refinery Loses 2.7 Tons of Gold appeared first on Money Morning – Only the News You Can Profit From

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Are Wages Really Rising or Has Wall Street Knee Jerk Media Missed The Story Again? http://wallstreetexaminer.com/2014/07/are-wages-really-rising-or-has-wall-street-knee-jerk-media-missed-the-story-again/ http://wallstreetexaminer.com/2014/07/are-wages-really-rising-or-has-wall-street-knee-jerk-media-missed-the-story-again/#comments Thu, 31 Jul 2014 18:06:26 +0000 http://wallstreetexaminer.com/?p=203677 The Wall Street-Washington, self congratulatory media echo chamber press release repeaters got all excited this morning about a bump in the seasonally adjusted headline number for the BLS employment cost index. That number rose by 0.7% on a quarter to quarter basis. The Wall Street economist crowd’s consensus guess was for an increase of 0.4%.

Seasonally adjusted numbers are fictional and subject to repeated after the fact revisions, so there’s really no way to know whether they accurately represent reality or not. The only way to do that is to do a little technical analysis on the actual, not seasonally adjusted data. That’s much easier than trying to analyze a number which does not exist in the real world and which will be changed several times as subsequent data becomes available.

The year over year gain in actual employment costs for all civilian workers was, are you ready for this–2%! That, indeed, is the highest it has been since 2011, when it spent the 2nd through 4th quarters rising at rates of 2-2.25%. Last year it never got above 1.9%. It’s a breakout! Or maybe not quite. This number is still within the same range of growth rates that it has been since the second quarter of 2010.

The gain, such as it was, was driven by gains of more than 2% in 6 major employment sectors. On the other hand, 4 broad sectors rose by less than 2%, and they can’t seem to get out of their own way. 3 of them have been wallowing below 2% since early 2011 and all 4 have been since early 2012.  Here’s a breakdown of the actual, not seasonally adjusted annual rate of gain by major sector.

Employment Cost Increases By Sector

Employment Cost Increases By Sector

Here’s how it looks on a graph.

Employment Costs By Sector- Click to enlarge

Employment Costs By Sector- Click to enlarge

Before you get all outraged about government workers leading the increases, note that they got screwed in 2011 and 2012, falling below private sector workers for more than a year. The current surge looks like catch-up for that time when they were not getting raises. At about 16% of the workforce the government sector may be big enough that had it not been for this apparently compensatory increase, the total aggregate number for all employees may not have made it to a new 2 year high.

Another notable factor is that the 5 sectors that rose less than 1.75% comprise more than half of all US workers. The majority of US workers are experiencing compensation increases that do not even keep up with CPI, which we know, in addition, to be understated. The standard of living of most Americans continues to decline. Just as a house divided against itself cannot stand, neither can an economy where nearly half of its actors are losing purchasing power. It steadily becomes a house more divided. It’s bad economically and bad for society.

Among the stronger sectors, Construction AND Extraction showed a gain of 2.1%. The problem there is that all of the gain is due to Extraction. Extraction means mining, and oil and gas production. Extraction is booming, while construction–not so much. In June, the BLS reported a year to year to year increase of 4.64% in average weekly earnings for mining and oil and gas extraction workers. But construction workers got virtually nothing, showing a gain of 0.24%. According to BLS data, there are approximately 850,000 employees in mining and oil and gas extraction. There are more than 6 million construction employees. How the BLS averaged those two together to come up with a 2.1% overall increase is beyond my ability to comprehend. I am the simple one.

So when you break these numbers down, recognizing the catching up of government workers which is probably temporary, and the likely overweighting of gains in mining and oil and gas extraction, that leaves just 4 sectors barely above a 2% increase.

One is Transport workers. They account for less than 3% of the US workforce. Their year to year increase is still below the peak levels of the past two years. The current uptick does not yet indicate that they’ve turned the corner.

Likewise those in another sector gaining more than 2%, Sales, saw an increase that remains well below the peaks of the past 2 years. Finally, managers and professionals and office and administrative workers have been flatlining at a 2% rate of increase for 2 years. There’s no breakout there either.

Looking at the 4 weaker sectors comprising the majority of US workers, the idea of a turn there is ludicrous.

Overall, private sector workers and those in education are not keeping pace with inflation, and the recent gains for non-education government workers could prove transitory. Considering the trends of the actual data in all of these major sectors, there’s no breakout here. The corner has not been turned. Overall employee compensation is probably still rising at a rate of less than 2%. That’s insufficient to keep up with inflation. It’s insufficient to prevent the majority of Americans from continuing to lose purchasing power. Eventually these trends will slow the US economy to a stall, followed by contraction.  Recent data suggests that the time until that happens is growing short. It may only be a few months, perhaps coinciding with the end of the QE intravenous drip into the patient’s veins.

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Beer Crisis in California http://wallstreetexaminer.com/2014/07/beer-crisis-in-california/ http://wallstreetexaminer.com/2014/07/beer-crisis-in-california/#comments Thu, 31 Jul 2014 16:55:57 +0000 http://wolfstreet.com/?p=5090 This is a syndicated repost courtesy of Wolf Street. To view original, click here.

I need to disclose upfront that I’m biased: I’m a beer lover. And I live in beer-paradise, the crazy state of California. Kicking back with a brewski from a local craft brewer, of which we have over 450, can make even the Fed’s capers less aggravating. But soon that beer-induced smile on my face may dry up.

California’s enduring drought that has turned into a water crisis is hitting beer production. Turns out, to get one gallon of beer, breweries use about four to seven gallons of water in their processes, including rinsing of equipment, etc. And there isn’t enough water, or not enough of the right kind of water.

California’s craft brewing industry is big. In 2012, according to the most recent dataavailable from the California Craft Brewers Association, the industry contributed $4.7 billion to the economy and employed 44,000 people who earned $1.7 billion in wages. So maybe not the highest-paid jobs, at about 39k per year on average. But it’s a cool industry with hot sales.

Overall, the beer industry in the US is sick. Total sales dropped 1.9% to 196.2 million barrels in 2013. Per-capita beer consumption has been dropping relentlessly since 1981, from 26 gallons per year to about 19 gallons. The statistics of a miserable industry.

But craft brewers use Yankee ingenuity to create the best beers in the world. And people are buying them! In 2013, according to the Brewers Association, craft brew sales in the US jumped 17.2% to 15.3 million barrels, and exports soared 49%. The world is catching on to our beers!

Of the stagnant $100 billion beer market in the US, craft brewers have conquered $14.3 billion, at the expense of industrial brewers and imports, giving them a market share in volume of 7.8% and in value of 14.3%. The difference between the two is largely due to the premium product.

The just-released 2014 midyear production data for the January-June periods require a good swig of perhaps an amber for full appreciation of the flavor: they more than doubled in five years!

US-brews-craft-midyear-production-2010-2014

That kind of growth, at the expense of industrial brewing companies and imports, is logical. The beer tastes awesome. The price, though higher, is fair. The product is genuinely American, brewed with the best, often American-grown hop. And breweries are popping up everywhere. Craft brewers range from tiny brewpubs that only sell to customers who walk through the door to California’s largest, Sierra Nevada. In 1975, there was just one of them in the US. By mid-2014, there were 3,040.

That said, this number changes constantly and is most likely already wrong. Just because you know how to brew an awesome beer doesn’t mean you get to stick around. And others open their taps even while I’m writing this. Over those three decades, industrial breweries in the US shrank from 54 to 20, now mostly owned by foreign multinational corporations.

This is not a business for the faint of heart! Note how the Great Recession decimated craft brewers. And note what has happened since:

US-Breweries-craft+industrial_1975-2014

In the midst of this frothy expansion drive, with sales booming, and with the world watching in rapt attention what is transpiring in the US beer market, my crazy state of California, the state with the most craft brewers, has been hit by a devastating water shortage.

READ THE REST of this post at WolfStreet.com

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No Tears For Argentina—-But A Swift Kick To The Greenspan Fed Is Warranted http://wallstreetexaminer.com/2014/07/no-tears-for-argentina-but-a-swift-kick-to-the-greenspan-fed-is-warranted/ http://wallstreetexaminer.com/2014/07/no-tears-for-argentina-but-a-swift-kick-to-the-greenspan-fed-is-warranted/#comments Thu, 31 Jul 2014 15:41:26 +0000 http://davidstockmanscontracorner.com/?p=16415 This is a syndicated repost courtesy of David Stockman's Contra Corner » Stockman’s Corner. To view original, click here.

Argentina has (apparently) defaulted again. This is the seventh time in its history, but no tears are warranted. For more than a half-century, its government has been a chronic fount of fiscal profligacy and statist economic schemes that have destroyed its once fabulous national wealth.

Perhaps now it will face that historic day of reckoning that has been for so long deferred. Hopefully, its long suffering citizens will finally come to realize that they have been governed by charlatans and crooks, and demand a clean break with the kind of destructive Peronist policies which have plagued the nation for most of the last 70 years. In this context, the short-run pain that the hedge fund “holdouts” are inflicting on the nation’s 41 million citizens is regrettable, but in pursuing their contractual rights and speculative gain they are, in fact, doing the work of the economic gods.

Yet there is an important back story in this saga that should not go unremarked. Argentina’s most recent plunge into national bankruptcy actually originated in the financial repression policies of the Greenspan Fed back in the 1990s. At that time, Argentina’s government under Carlos Menem attempted to cure the nation’s historic addiction to central bank money printing and periodic bouts of virulent hyper-inflation by enacting the so-called Convertibility Law.  This effectively put the Argentine central bank out of business and shackled its printing presses in favor of a de facto dollar standard. In effect, Argentina’s peso money supply could not expand by even one dollar equivalent unless a new US dollar was added to its reserves.

Needless to say, switching to a dollar standard and what amounted to an old fashioned fixed exchange rate in the external financial markets swiftly quashed the peso hyper-inflation that had brought its economy to ruins in the 1980s. Indeed, in theory it established a sound monetary foundation that would allow the labor and enterprise of the Argentine people to once again earn a higher standard of living.

Unfortunately, there was a huge fiscal chink in Menem’s armor. Once on the dollar standard, the days were numbered for the government’s historic fiscal profligacy. Large government deficits financed in the local peso market would swiftly crowd-out private investment, send interest rates soaring and the domestic economy into a tailspin.

And that’s as it should be. Under a system of honest money, there is no fiscal free lunch—no painless “monetization” of the public debt. Instead of being put off onto future generations, increases in the public debt dispense penalties and pain to current citizens and taxpayers, thereby providing the basis for politicians to exercise budgetary discipline and prioritize spending from the tax revenue actually available.

At the end of the day, Argentina’s chance for fiscal salvation broke down not due to the Convertibility Law and its quest for honest money at home, but owing to the temptations provided by dishonest money up north in New York. Specifically, Argentina began to finance billions of its public debt in the Wall Street bond market under New York law. The latter feature was crucial because bond fund managers were attracted by the extra yield on Argentina bonds versus US treasuries, but wanted their rights protected under a legal regime that could not be manipulated or corrupted by a future government in Buenos Aires.

So far, so good. Unfortunately, there was a huge problem in the New York bond market—-namely, Alan Greenspan and his merry band of money printers at the Fed. As shown below, the revolt of the bond vigilantes in 1994 sent 10-year treasury yields soaring to north of 8%. Owing to still large US budget deficits and the gathering collapse of the domestic savings rate, long-term interest rates in an honest market would have remained high—in the 7-9 percent range shown in the graph—- until the demand for borrowing and the supply of savings were rebalanced.

But the Greenspan Fed panicked and opened-up the monetary spigots, driving the yields down by 30 percent in short order. This tampering with honest price discovery in the bond market, in turn, caused bond prices to soar, thereby generating windfall gains for speculators and bond fund managers alike. In short order, the bond vigilantes learned that supply and demand were no longer relevant concepts in the fixed income markets.

Henceforth, the relevant consideration would be the actions and signals emanating from the monetary politburo in the Eccles Building. And even more to the point, the Fed would no longer allow the bond market to clear based on its own internals or allow rates to spike as they had done in 1994. Accordingly, the bond vigilantes became born again bulls, and the great bull market in US treasuries was off to the races.

The Argentina government went along for the ride. Public spending reached a historic high of 30% of GDP, deficits averaged about 5% of GDP and public debt grew by 15% per year during the mid-1990s. According to one authoritative analysis, on a purchasing power parity basis Argentina’s public debt soared from 48% of GDP in 1992 to more than 90% by the end of the decade.

By the time of the default crisis in 2001, Argentina’s public bonded debt totaled $96 billion, but $93 billion of that was in foreign currency— mainly dollars. What had happened was that the Greenspan bull market in New York had permitted Argentina to escape the fiscal discipline implicit in its sound money Convertibility Law by selling debt in New York at deeply sub-economic yields.

Stated differently, under the Fed’s financial repression policies the New York bond market had become a fountain of malinvestment. In an honest two-way market, the US treasury benchmark would have been in the high single digits and based on its pitiful fiscal history and current condition, the Argentina government would have faced a huge risk premium on top of the treasury rate.

But the Greenspan bull market negated both of these factors. This permitted  Argentina’s government to avoid the double digit borrowing rates it would have otherwise faced in the external dollar markets, and the powerful incentive they would have provided to get its fiscal house in order.

At the end of the day, Greenspan’s born-again bond bulls obviously did not force Argentina’s government to bury itself in debt, nor to blow the fresh start that its sound money Convertibility Law had provided. The ultimate responsibility for the 2001 default, and the sorry history of attempted Peronist recovery and restructuring since then, lies with the governments in Buenos Aires, and the nation which keeps electing them.

Yet financial repression by the world major central banks is truly an evil economic force in the world economy. Argentina’s fiscally incontinent governments are but a tiny exemplar of the manner in which trillions of unsustainable public and private debt have been incurred owing to the vast mis-pricing in fixed income markets that flows from monetary central planning.

The excellent attached essay provides additional background on the origins and technical dimensions of Argentina’s current default.

Read the rest of this post at David Stockman’s Contra Corner.  View original post.

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Tesla Earnings Preview: What to Watch for Today By Kyle Anderson http://wallstreetexaminer.com/2014/07/tesla-earnings-preview-what-to-watch-for-today-by-kyle-anderson/ http://wallstreetexaminer.com/2014/07/tesla-earnings-preview-what-to-watch-for-today-by-kyle-anderson/#comments Thu, 31 Jul 2014 15:34:29 +0000 http://moneymorning.com/?p=146135 Tesla Motors Inc. (Nasdaq: TSLA) to report earnings per share (EPS) of $0.04 on revenue of $810.6 million.]]> This is a syndicated repost courtesy of Money Morning. To view original, click here.

Tesla earnings will be reported after the bell today (Thursday) and analysts are expecting Tesla Motors Inc. (Nasdaq: TSLA) to report earnings per share (EPS) of $0.04 on revenue of $810.6 million.

Tesla Earnings

Those EPS estimates show a stark decline from last year’s EPS of $0.20, but the revenue estimate does show projected growth of nearly 47%. Tesla has beaten earnings estimates for four consecutive quarters and by an average of nearly 76%.

While the initial focus from the Tesla earnings report will be on EPS and revenue, there is much more that investors and analysts will be focusing on…

Tesla Earnings: What to Watch For

The first thing to watch in today’s Tesla earnings report is any update on the company’s delivery total. Earlier in the year, Chief Executive Officer Elon Musk stated that he wanted the company to deliver 35,000 vehicles by the end of 2014. Investors will want to see how TSLA is progressing toward that goal halfway through the year.

“I want to see a projection on car sales,” Money Morning‘s Defense and Tech Specialist Michael Robinson said. “They’re looking for 35,000 by the end of the year. They don’t need to hit that figure exactly, but I want to see that they’re on track. If they’re well below that projection that would concern me, because this is a growth company.”

Last week, Tesla announced that it was halting production at its Fremont, Calif., plant to perform upgrades that will allow it to begin producing its second vehicle – the crossover SUV named Model X. According to the company, production will be stopped for two weeks, but the factory upgrades will help the company increase overall production by 25%.

That production is another area investors will focus on. Musk has said he wants to reach weekly production of 1,000 vehicles by the end of 2014. Currently, Tesla is producing around 800 per week.

But delivery and production totals aren’t the only important factors for Tesla in today’s earnings report. Money Morning Members, keep reading for the rest of the areas that bear watching…

According to Robinson, it will be important to see how Tesla is progressing in the development of its “supercharger” network in Europe. The automaker has been steadily adding to its networks across the world, and Europe is a particularly important market.

“I want to see how they stand on their relationship to Europe and their superchargers,” Robinson said. “The market has become very green-centric in Europe. The EU is focusing on renewables and this is a big opportunity for them.”

Finally, any updates about the Tesla Gigafactory would be a huge story. It’s unlikely that the company will make any major announcement on the factory today, however – although Tesla did just announce a partnership with Panasonic.

Reportedly, Tesla is still deciding between locations in Arizona, California, Nevada, New Mexico, and Texas.

“I’m looking for anything to do with the Gigafactory, but I don’t think they’re going to announce anything just yet. I think they’re still deciding on a location,” Robinson said.

Following today’s earnings report, here’s what investors can expect for TSLA stock.

TSLA Stock After Tesla Earnings

Tesla Earnings chartAs a momentum stock, TSLA is very susceptible to the news, and today’s earnings report should showcase that. Any good or bad news from the report should send the stock moving several percentage points accordingly.

TSLA has been extremely volatile throughout 2014. Year to date, TSLA is up more than 52%, but that hasn’t been a smooth gain. From early March through early May, TSLA stock dipped more than 27%. In July, TSLA is down almost 5%.

Based on that volatility, TSLA is still not a short-term play at the moment. However, the innovation of the company and its visionary CEO, Elon Musk, make this a great long-term investors looking for an aggressive play.

“Tesla has enormous long-term potential. After the supercharger technology is in place and built up, it’s a much more marketable car,” Robinson said. “The best way to play the stock is for the long-haul. Musk is really a great visionary.”

Money Morning‘s Chief Investment Strategist Keith Fitz-Gerald also says that the long-term potential for TSLA stock is undeniable.

“I think Elon Musk is one of the most dynamic CEOs on the planet, and I believe he has the potential to make Tesla a $1,000 stock within the decade,” Fitz-Gerald said.

Today’s Top Story: The fourth iteration of the Central Bank Gold Agreement (CBGA) has just been signed. But the real story isn’t that the deal was signed, it’s who hasn’t signed… and what they’re doing with their gold…

The post Tesla Earnings Preview: What to Watch for Today appeared first on Money Morning – Only the News You Can Profit From.

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