Archives for August 2012

China, Germany to Settle More Trade in Yuan, Euros; What's That Mean for Gold, the Dollar?

Courtesy of Mish.

Inquiring minds note China, Germany Plan to Settle More Trade in Yuan, Euros.

Germany and China plan to conduct an increasing amount of their trade in euros and yuan, the two nations said in a joint statement after talks between Chancellor Angela Merkel and Chinese Premier Wen Jiabao in Beijing on Thursday.

“Both sides intend to support financial institutions and companies of both countries in the use of the renminbi and euro in bilateral trade and investments,” said the text of the statement.

It also said that both parties welcomed investments in China’s interbank bond market by German banks and supported the settlement of business in the yuan by German and Chinese banks and the issuance of yuan-denominated financial products in Germany.

Announcement Mean Anything?

That’s the announcement, and I have no doubt people who do not understand trade math will trump this up as if it’s news of big significance.

Well, it’s not. The announcement is a common sense function of math.

There is more bilateral trade between Germany and China, so fundamentally it makes sense that this agreement would be worked out. Indeed, mathematically, the markets would eventually force such an agreement.

If Germany goes back to the Deutschmark, then one should expect bilateral trade between the countries to be in Deutschmarks and Yuan.

The only relevance to the dollar is if Germany is taking away US trade with China. If not, the announcement is a meaningless function of math.

Mike “Mish” Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List

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China, Germany to Settle More Trade in Yuan, Euros; What’s That Mean for Gold, the Dollar?

Courtesy of Mish.

Inquiring minds note China, Germany Plan to Settle More Trade in Yuan, Euros.

Germany and China plan to conduct an increasing amount of their trade in euros and yuan, the two nations said in a joint statement after talks between Chancellor Angela Merkel and Chinese Premier Wen Jiabao in Beijing on Thursday.

“Both sides intend to support financial institutions and companies of both countries in the use of the renminbi and euro in bilateral trade and investments,” said the text of the statement.

It also said that both parties welcomed investments in China’s interbank bond market by German banks and supported the settlement of business in the yuan by German and Chinese banks and the issuance of yuan-denominated financial products in Germany.

Announcement Mean Anything?

That’s the announcement, and I have no doubt people who do not understand trade math will trump this up as if it’s news of big significance.

Well, it’s not. The announcement is a common sense function of math.

There is more bilateral trade between Germany and China, so fundamentally it makes sense that this agreement would be worked out. Indeed, mathematically, the markets would eventually force such an agreement.

If Germany goes back to the Deutschmark, then one should expect bilateral trade between the countries to be in Deutschmarks and Yuan.

The only relevance to the dollar is if Germany is taking away US trade with China. If not, the announcement is a meaningless function of math.

Mike “Mish” Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List

Continue Here

The Real Reverse Robin Hood: Ben Bernanke And His Merry Band Of Thieves

Courtesy of Charles Hugh-Smith of OfTwoMinds blog,

Away from the stifling media crush, staid Ben Bernanke is dashing Reverse Robin Hood, lackey pawn of the Neofeudalist Financial Lords who shamelessly steals from the poor to give to the parasitic super-rich.

Amidst electioneering chatter about a “reverse Robin Hood” who steals from the poor to give to the rich, it’s important to identify the real Reverse Robin Hood: Ben Bernanke and his Merry Band of Thieves, a.k.a. the Federal Reserve. It’s especially appropriate to reveal Ben as the real Reverse Robin Hood today, as the Chairman is as omnipresent in the media as Big Brother due to the Cargo-Cult confab in Jackson Hole, Wyoming.

Please answer the following questions before launching a rousing defense of the All-Powerful Fed and its chairman:

1. What is the nominal yield on your savings account, thanks to the Fed’s zero-interest rate policy (ZIRP)? (Answer: 0.25%)

2. What is the inflation-adjusted yield on your savings account? (Answer: – 2.25%)

3. What is the rate of interest the Fed charges banks for “free money”? (Answer: 0%)

4. What is the average interest rate for bank-issued credit cards? (Answer: 14.52%)

5. What is the interest rate for student loans? (Answer: 6.8%, and 7.9% or 8.5% for PLUS loans)

6. Does the Fed pay interest on the funds banks have borrowed from the Fed for 0% and then deposited with the Fed? (Answer: yes)

7. Exactly how has the average American worker benefited from the Fed’s policies? (Answer: interest on credit cards has declined from 19.9% to 14.52%, if the worker has outstanding credit, which few of the bottom 90% do.) Theoretically, workers could re-finance their homes at lower interest rates, but the vast majority are either underwater or no longer qualify. Ben and the Merry Thieves love pulling Catch 22.

8. How has the average parasitic Neofeudalist Financial Lord benefited from the Fed’s “rob the poor to give to the rich” policies? (Answer: Handsomely. The top 1%’s income and net worth has soared as Ben and his Merry Band of Thieves have stripmined interest income from the poor and pension funds and diverted it to the rich.)

 

9. Have the Fed’s Reverse Robin Hood policies narrowed income disparity in the U.S.? (Answer: no–income disparity has widened further as a result of Fed goosing of risk assets.)

10. How many of the nation’s 14.5 million unemployed have gotten jobs as a result of Fed policies who would not have gotten a job if the Fed had been abolished in 2009? (Answer: unknown, but the best guess is 17, including Bennie the part-time janitor, with a statistical error of + or – 17.)

11. How does Ben the Reverse Robin Hood justify his thievery? (Answer: he doesn’t. Officially sanctioned propaganda casts him in the role of selfless do-gooder, protecting saintly Neofeudalist Financial Lords from restless debt-serfs.)

Listen up, debt-serfs, you have it good here on the manor estate. You get three squares of greasy fast-food or heavily processed faux-food a day, and if Reverse Robin Hood and his Merry Band of Thieves is ripping you off it’s for a good reason: the predatory Neofeudalist Financial Lords need the money more than you do, as they have a lot of political bribes to pay: it’s an election year, and the bribes are getting increasingly costly. Poor things, we’re sure you understand. Now go back to work or watching entertainment (or “news,” heh) and leave the Lords alone.

Reprise: Simon Johnson On the Quiet Coup d'Etat in the Anglo-American Financial System

Reprise: Simon Johnson On the Quiet Coup d'Etat in the Anglo-American Financial System

Courtesy of Jesse's Cafe Americain

This is a reprise of an interview with MIT economist Simon Johnson which was posted here in February, 2009.

Have we heeded Simon Johnson's warning? Has he proven to be prescient? Is crony capitalism and the kleptocracy becoming bolder, more aggressive, ever more demanding? 

"I think I'm signaling something a little bit shocking to Americans, and to myself, actually. Which is the situation we find ourselves in at this moment, this week, is very strongly reminiscent of the situations we've seen many times in other places.

But they're places we don't like to think of ourselves as being similar to. They're emerging markets. It's Russia or Indonesia or a Thailand type situation, or Korea. That's not comfortable. America is different. America is special. America is rich. And, yet, we've somehow find ourselves in the grip of the same sort of crisis and the same sort of oligarchs…

But, exactly what you said, it's a small group with a lot of power. A lot of wealth. They don't necessarily – they're not necessarily always the names, the household names that spring to mind, in this kind of context. But they are the people who could pull the strings. Who have the influence. Who call the shots…

…the signs that I see this week, the body language, the words, the op-eds, the testimony, the way they're treated by certain Congressional committees, it makes me feel very worried.

I have this feeling in my stomach that I felt in other countries, much poorer countries, countries that were headed into really difficult economic situation. When there's a small group of people who got you into a disaster, and who were still powerful. Disaster even made them more powerful. And you know you need to come in and break that power. And you can't. You're stuck….

The powerful people are the insiders. They're the CEOs of these banks. They're the people who run these banks. They're the people who pay themselves the massive bonuses at the end of the last year. Now, those bonuses are not the essence of the problem, but they are a symptom of an arrogance, and a feeling of invincibility, that tells you a lot about the culture of those organizations, and the attitudes of the people who lead them…

But it really shows you the arrogance, and I think these people think that they've won. They think it's over. They think it's won. They think that we're going to pay out ten or 20 percent of GDP to basically make them whole. It's astonishing….

…these people are throughout the system of government. They are very much at the forefront of the Treasury. The Treasury is apparently calling the shots on their economic policies. 

This is a decisive moment. Either you break the power or we're stuck for a long time with this arrangement." 

Bill Moyer's Journal – Interview with Simon Johnson, February, 2009.

Johnson also wrote a piece in the Atlantic Magazine titled The Quiet Coup. It may be worth re-reading.

Here is the introduction to this in The Fall of the American Republic: The Quiet Coup d'Etat in August 2010.

"I am not so optimistic that this reform is possible, because there has in fact been a soft coup d'etat in the US, which now exists in a state of crony corporatism that wields enormous influence over the media and within the government. 

Let's be clear about this, the oligarchs are flush with victory, and feel that they are firmly in control, able to subvert and direct any popular movement to the support of their own fascist ends and unslakable will to power.

This is the contempt in which they hold the majority of American people and the political process: the common people are easily led fools, and everyone else who is smart enough to know better has their price. And they would beggar every middle class voter in the US before they will voluntarily give up one dime of their ill gotten gains.

But my model says that the oligarchs will continue to press their advantages, being flushed with victory, until they provoke a strong reaction that frightens everyone, like a wake up call, and the tide then turns to genuine reform."

As far as I can tell, we are right on track for a very bad time of it. And you might be surprised at how far a belief in exceptionalism and arrogant superiority can go before it finally ends, or more likely, falls.

Reprise: Simon Johnson On the Quiet Coup d’Etat in the Anglo-American Financial System

Reprise: Simon Johnson On the Quiet Coup d'Etat in the Anglo-American Financial System

Courtesy of Jesse's Cafe Americain

This is a reprise of an interview with MIT economist Simon Johnson which was posted here in February, 2009.

Have we heeded Simon Johnson's warning? Has he proven to be prescient? Is crony capitalism and the kleptocracy becoming bolder, more aggressive, ever more demanding? 

"I think I'm signaling something a little bit shocking to Americans, and to myself, actually. Which is the situation we find ourselves in at this moment, this week, is very strongly reminiscent of the situations we've seen many times in other places.

But they're places we don't like to think of ourselves as being similar to. They're emerging markets. It's Russia or Indonesia or a Thailand type situation, or Korea. That's not comfortable. America is different. America is special. America is rich. And, yet, we've somehow find ourselves in the grip of the same sort of crisis and the same sort of oligarchs…

But, exactly what you said, it's a small group with a lot of power. A lot of wealth. They don't necessarily – they're not necessarily always the names, the household names that spring to mind, in this kind of context. But they are the people who could pull the strings. Who have the influence. Who call the shots…

…the signs that I see this week, the body language, the words, the op-eds, the testimony, the way they're treated by certain Congressional committees, it makes me feel very worried.

I have this feeling in my stomach that I felt in other countries, much poorer countries, countries that were headed into really difficult economic situation. When there's a small group of people who got you into a disaster, and who were still powerful. Disaster even made them more powerful. And you know you need to come in and break that power. And you can't. You're stuck….

The powerful people are the insiders. They're the CEOs of these banks. They're the people who run these banks. They're the people who pay themselves the massive bonuses at the end of the last year. Now, those bonuses are not the essence of the problem, but they are a symptom of an arrogance, and a feeling of invincibility, that tells you a lot about the culture of those organizations, and the attitudes of the people who lead them…

But it really shows you the arrogance, and I think these people think that they've won. They think it's over. They think it's won. They think that we're going to pay out ten or 20 percent of GDP to basically make them whole. It's astonishing….

…these people are throughout the system of government. They are very much at the forefront of the Treasury. The Treasury is apparently calling the shots on their economic policies. 

This is a decisive moment. Either you break the power or we're stuck for a long time with this arrangement." 

Bill Moyer's Journal – Interview with Simon Johnson, February, 2009.

Johnson also wrote a piece in the Atlantic Magazine titled The Quiet Coup. It may be worth re-reading.

Here is the introduction to this in The Fall of the American Republic: The Quiet Coup d'Etat in August 2010.

"I am not so optimistic that this reform is possible, because there has in fact been a soft coup d'etat in the US, which now exists in a state of crony corporatism that wields enormous influence over the media and within the government. 

Let's be clear about this, the oligarchs are flush with victory, and feel that they are firmly in control, able to subvert and direct any popular movement to the support of their own fascist ends and unslakable will to power.

This is the contempt in which they hold the majority of American people and the political process: the common people are easily led fools, and everyone else who is smart enough to know better has their price. And they would beggar every middle class voter in the US before they will voluntarily give up one dime of their ill gotten gains.

But my model says that the oligarchs will continue to press their advantages, being flushed with victory, until they provoke a strong reaction that frightens everyone, like a wake up call, and the tide then turns to genuine reform."

As far as I can tell, we are right on track for a very bad time of it. And you might be surprised at how far a belief in exceptionalism and arrogant superiority can go before it finally ends, or more likely, falls.

On The Difference Between Bonds, Equities, and Gold; "No-QE-Without-A-Crash" Or "Flow Vs. Stock"

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

Is the reality of different time-horizons and event discounting really starting to tell on markets? Equities have now sagged back lower while Treasury yields are accelerating lower and Gold higher. It seems that stocks fully comprehend that QE does not come without more pain in the short-term and are starting to price for that – while given the low/no cost of carry for Treasuries and Gold, the eventual reality of further financial repression and money-printing can be discounted in from longer maturities. It seems somewhat in-the-stars that the Fed will do more as they have convinced themselves that all is well with their extreme policies and short-term benefits outweigh ultimate costs, but this afternoon's disconnect between the QE-to-the-moon feeling in Gold and Treasuries and the QE-not-so-soon feeling in Stocks may well be a trend to watch as the only sure thing is when not if The Fed acts.

The key, we suspect, is the fast money in equities awaiting the 'flow' (which is not coming soon); relative to the slower money in Gold and Bonds knowing the 'stock' is coming eventually

Gold up, Stocks down, Treasury yields down, USD down in last couple hours post Europe…

On The Difference Between Bonds, Equities, and Gold; “No-QE-Without-A-Crash” Or “Flow Vs. Stock”

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

Is the reality of different time-horizons and event discounting really starting to tell on markets? Equities have now sagged back lower while Treasury yields are accelerating lower and Gold higher. It seems that stocks fully comprehend that QE does not come without more pain in the short-term and are starting to price for that – while given the low/no cost of carry for Treasuries and Gold, the eventual reality of further financial repression and money-printing can be discounted in from longer maturities. It seems somewhat in-the-stars that the Fed will do more as they have convinced themselves that all is well with their extreme policies and short-term benefits outweigh ultimate costs, but this afternoon's disconnect between the QE-to-the-moon feeling in Gold and Treasuries and the QE-not-so-soon feeling in Stocks may well be a trend to watch as the only sure thing is when not if The Fed acts.

The key, we suspect, is the fast money in equities awaiting the 'flow' (which is not coming soon); relative to the slower money in Gold and Bonds knowing the 'stock' is coming eventually

Gold up, Stocks down, Treasury yields down, USD down in last couple hours post Europe…

Brussels Pushes for Another “All Powerful” Banking Committee, Headed by ECB, In Spite of Objections by ECB and Germany

Courtesy of Mish.

Once nannycrats grab on to an idea, they never relinquish it. Eurobonds are the perfect example.  Many other idea float around despite numerous objections in key places. Some of these ideas involve creation of more commissions and more working groups.

Here is a sampling of commissions and groups that I am aware of.

  • The European Commission is headed by president José Manuel Barroso
  • The European Council is headed by president Herman Van Rompuy
  • The Euro Group is headed by president Jean-Claude Juncker
  • The European parliament president is Martin Schulz
  • Numerous other committees set policy on trade, energy, and nearly everything else under the sun.

Barroso now wants another new commission, this one under the ECB with the task of being the “all powerful” banking supervisor.

As envisioned, Barroso’s plan would would create a 23-member board: a national representative from each eurozone country plus six independent members, including its chair and vice-chair.

No doubt there will be dozens if not hundreds of staff members all intent on expanding their own power.

The Financial Times has more details in Brussels pushes for wide ECB powers

The European Central Bank would be given sweeping authority over all 6,000 eurozone banks under a plan being drawn up by the European Commission, putting Brussels on a collision course with Germany and the ECB itself, which have urged a more decentralised first step towards “banking union”.

The plan, agreed at a meeting this week between top aides to José Manuel Barroso, commission president, and Michel Barnier, the EU’s senior financial regulator, would strip existing national supervisors of almost all authority to shut down or restructure their countries’ failing banks, giving those powers to Frankfurt.

The German government has resisted centralising all supervisory powers with the ECB, however, arguing that Frankfurt should be left to deal with just the eurozone’s 20-25 largest banks. National supervisors would then be left as independent and co-ordinating agencies for smaller banks.

Some senior ECB officials had taken a similar view in closed-door consultations with Brussels, EU officials said, though Mario Draghi, the ECB chief, is more sympathetic to the commission’s view.

Germany’s objections also stem from a desire to keep national control over smaller, politically connected regional savings banks.

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Everything You Think You Know About China Is Wrong

For the last 40 years, Americans have lagged in recognizing the declining fortunes of their foreign rivals. In the 1970s they thought the Soviet Union was 10 feet tall — ascendant even though corruption and inefficiency were destroying the vital organs of a decaying communist regime. In the late 1980s, they feared that Japan was going to economically overtake the United States, yet the crony capitalism, speculative madness, and political corruption evident throughout the 1980s led to the collapse of the Japanese economy in 1991.

Could the same malady have struck Americans when it comes to China? The latest news from Beijing is indicative of Chinese weakness: a persistent slowdown of economic growth, a glut of unsold goods, rising bad bank loans, a bursting real estate bubble, and a vicious power struggle at the top, coupled with unending political scandals. Many factors that have powered China's rise, such as the demographic dividend, disregard for the environment, supercheap labor, and virtually unlimited access to external markets, are either receding or disappearing.

Yet China's declining fortunes have not registered with U.S. elites, let alone the American public. President Barack Obama's much-hyped "pivot to Asia," announced last November, is premised on the continuing rise of China; the Pentagon has said that by 2020 roughly 60 percent of the Navy's fleet will be stationed in the Asia-Pacific region. Washington is also considering deployingsea-borne anti-missile systems in East Asia, a move reflecting U.S. worries about China's growing missile capabilities.

Keep reading: Everything You Think You Know About China Is Wrong – By Minxin Pei | Foreign Policy.

Bankia Gets 'Pre-Bailout' Bailout "Immediately" As Bad Loans Jump 44%

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

With Spain's new-found belief in its own incompetence omnipotence, they are now throwing bad money after bad in advance of the European bailout by pre-bailing out (bridge recap?) Bankia via the FROB (and it seems like they are in a hurry):

  • *SPAIN'S FROB SAYS TO INJECT CAPITAL IN BFA-BANKIA IMMEDIATELY

which makes sense given that:

  • *BANKIA GROUP BAD LOANS RATIO 11% IN JUNE VS 7.63% IN DEC. (a 44% rise!!)
  • *BANKIA 1H NET LOSS EU4.45 BLN VS EU201 MLN PROFIT A YR AGO

The bottomless pit will all be 'fixed' though by October (just like Dexia was?)

  • *BANKIA CHAIRMAN SAYS SPAIN, EU COMMENTS ARE `GREAT SUPPORT'

and just as jawboning helps:

  • *EUROGROUP WELCOMES BRIDGE RECAPITALIZATION OF BFA-BANKIA
  • *EUROGROUP SAYS BANKS BACKSTOP IN PLACE IF INTERVENTIONS NEEDED

Sublime to ridiculous… Is this just another move in the negotiation as now Spain has 'more' vested interest and therefore 'more' mutual destructive power if a banking union or mutualized benefit is not realized…

The Tragedy of the Euros – he who "prints most, deficit spends most, crashes" first wins…

Bankia Gets ‘Pre-Bailout’ Bailout “Immediately” As Bad Loans Jump 44%

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

With Spain's new-found belief in its own incompetence omnipotence, they are now throwing bad money after bad in advance of the European bailout by pre-bailing out (bridge recap?) Bankia via the FROB (and it seems like they are in a hurry):

  • *SPAIN'S FROB SAYS TO INJECT CAPITAL IN BFA-BANKIA IMMEDIATELY

which makes sense given that:

  • *BANKIA GROUP BAD LOANS RATIO 11% IN JUNE VS 7.63% IN DEC. (a 44% rise!!)
  • *BANKIA 1H NET LOSS EU4.45 BLN VS EU201 MLN PROFIT A YR AGO

The bottomless pit will all be 'fixed' though by October (just like Dexia was?)

  • *BANKIA CHAIRMAN SAYS SPAIN, EU COMMENTS ARE `GREAT SUPPORT'

and just as jawboning helps:

  • *EUROGROUP WELCOMES BRIDGE RECAPITALIZATION OF BFA-BANKIA
  • *EUROGROUP SAYS BANKS BACKSTOP IN PLACE IF INTERVENTIONS NEEDED

Sublime to ridiculous… Is this just another move in the negotiation as now Spain has 'more' vested interest and therefore 'more' mutual destructive power if a banking union or mutualized benefit is not realized…

The Tragedy of the Euros – he who "prints most, deficit spends most, crashes" first wins…

Eurozone jobless total hits record 18 mn

Eurozone jobless total hits record 18 mn (via AFP)

Jobless numbers across the eurozone hit a record 18 million in July, said grim new figures released Friday as recession takes grip across the debt-stricken 17-nation currency area. The 18,002,000 headline jobless figure released by Eurostat was the highest since records began in 1995 — and left the…

[Read more…]

Bernanke: US economy 'far from satisfactory'

Bernanke: US economy 'far from satisfactory' (via AFP)

US Federal Reserve Chairman Ben Bernanke expressed deep worry over the US economy Friday, calling the situation unsatisfactory and saying labor market stagnation was "a grave concern". In a much-anticipated speech to central bankers in Jackson Hole, Wyoming, the chief of the US central bank offered…

[Read more…]

Bernanke: US economy ‘far from satisfactory’

Bernanke: US economy 'far from satisfactory' (via AFP)

US Federal Reserve Chairman Ben Bernanke expressed deep worry over the US economy Friday, calling the situation unsatisfactory and saying labor market stagnation was "a grave concern". In a much-anticipated speech to central bankers in Jackson Hole, Wyoming, the chief of the US central bank offered…

[Read more…]

Algos Set New Speed Reading Record: 4549 Words In 20 Milliseconds

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

The market is indeed a discounting mechanism it appears. In a mere 20 milliseconds, the world's 'traders' had managed to read Bernanke's 4549-word script, interpret it (as bearish in this case – which apparently is wrong now?) and start to sell down the major equity indices. As Nanex points out, not only was the reaction lightning fast (actually faster than lightning) but it occurred in their newly created 'fantaseconds' as trades were timestamped 'before' the bids and offers were even seen in the data-feed. How long until the machines can interpret Bernanke's 'pre-QErimes' and really front-run reality?

Nanex ~ 31-Aug-2012 ~ Bernanke Speaks Fantaseconds

When the Bernanke speaks, the fantaseconds flow. See if you can spot them.

Charts below show the bid/ask spread (shaded) and trades (dots) color coded by exchange. Not all exchanges are shown for clarity. 

1. Nasdaq (black) and NY-Arca (red).



2. Nasdaq.

 



3. NY-Arca.

 



4. Nasdaq, NY-Arca and BATS.

 


 

Source: Nanex

Bad News For Super-Models: Computer-Generated Fashion Models Better Than Real Thing; Fashion Questions of the Day

Courtesy of Mish.

Here is an easy prediction: Price of fashion models in advertizements is going to collapse, if indeed the industry survives at all.

Why should retailers pay for fashion models when an advertizing department can generate models with the perfect height, weight, breast size, nationality, and complexion for whatever designs they want to promote?

Bad News For Super-Models

MarketWatch describes the setup in 5 computer-generated sales pitches

To save on costs—and perhaps assembly time—Swedish retailing giant IKEA created computer-generated images of its furniture for the new catalog, rather than hiring a photographer. By next year, a quarter of the scenes depicted in IKEA’s print and online advertising will be digitally drawn rather than photographed, The Wall Street Journal reported last week. In fact, IKEA says it is able to better depict its products with computer images than actual photography.

IKEA is not alone. Hollywood filmmakers increasingly create characters—and not just special effects—with CGI animation. And some fashion lines are finding that it’s less expensive to create the perfect specimen digitally than to track down America’s Next Top Model. These computer-generated realities may be cheaper, more appealing, and more versatile than the genuine articles.

Related Ideas

The MarketWatch article also discussed simulated driving of cars, movie special effects, and 3-D dream homes.

Special effects are nothing new. New car models come out only once a year. And I believe most people want real images of homes, not simulated models.

In contrast, clothing changes four times a year, with each season, and also varies by weight, height, size, nationality, skin color, age, etc.

Fashion Questions of the Day

Do I care if the person wearing a sweater in a printed image is generated or real? Why would I? How would I know in the first place?…

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Mainstream Economists Do Not Understand How Monetary Policy Is Transmitted

Courtesy of Lee Adler of the Wall Street Examiner

Barry Ritholtz called attention this morning to a Monetary Policy Transmission flow chart by Bloomberg’s Joe Bruesuelas this morning that purports to show the reason behind “ZIRP’s more modest impact on the broader economy than the outsized impact we see on risk assets.”  I don’t mean to single out Mr. Brusuelas here. He’s a great guy, and from the things I’ve seen of him, he’s usually right on target with his economic analyses. But like all other economists who are puzzled by the reason the Fed’s policies have not had much apparent impact on the economy as they have had on the markets, he misses the most important and critical access of the route through which Fed policy reaches the economy.  Here’s his flow chart.

What this chart illustrates is not so much the blockages to monetary policy transmission as the failure of mainstream economists and pundits to grasp the simplest and most important fact of how monetary policy is transmitted.

Fed Monetary policy actions are transmitted to the economy via the trading accounts of the Primary Dealers and the markets. That’s how money begins its path to reaching bank reserves and economic activity. The dealers are the transmission mechanism. The markets are the transmission mechanism from the dealers to the economy. The Primary Dealers get the cash first. They are the only deciders of how to distribute it. The only exception to this rule is when the Fed uses unconventional policy actions to lend directly to the end users, as it did with its alphabet soup programs beginning with the TAF  in 2007 and 2008.

We saw how well that went when the Fed deliberately circumvented the usual Primary Dealer transmission pipeline.  Things only turned up when the Fed began QE, a large scale program to pump reserves into the system via the traditional means- purchases of securities from the Primary Dealers.

When the Fed purchases Treasuries or MBS from the Primary Dealers, it credits the dealers’ accounts at the Fed for the purchase. Therefore, the first response to any Fed direct policy action is the decisions the dealers make about what to do with the cash via the markets. The cash comes in through their trading accounts and it leaves the same way. It’s their money. They can use it to buy Treasuries, and they do. They can use it to buy other bonds, and they do that sometimes.

They also make markets in everything else. They are the worldwide big dogs in every kind of market. They are the house. They can buy stocks; they can buy commodities; and they do, and they can finance their hedge fund customers, and they do that. Everything that happens in terms of monetary policy transmission is a derivative of those first trades the dealers make once the Fed has made the purchases from them. The Primary Dealers are the the first pipe through which all conventional monetary actions flow. That is why the markets respond first and foremost. The explanation is that simple. The money enters the economy via the financial markets. There’s no other reason for it.

This chart leaves that most fundamental fact out. It should be THE first and most important pipe in any flow chart showing how monetary actions flow into the economy. Leaving that out means that there’s no possibility of understanding why the system works the way it does.

Get regular updates the machinations of the Fed, Treasury, Primary Dealers and foreign central banks in the US market, in the Fed Report in the Professional Edition, Money Liquidity, and Real Estate Package. Click this link to try WSE's Professional Edition risk free for 30 days!

Copyright © 2012 The Wall Street Examiner. All Rights Reserved. The above may be reposted with attribution and a prominent link to the Wall Street Examiner.

When One Hilsenrath Is Just Not Enough, Here’s Another: “Bernanke Signals Readiness To Do More”

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

In the immortal words of the Jackson 5: "I'll Be There" seems to be the meme du jour – which appears to us to be the same message that Bernanke (and his proxy Hilsenrath) have been on for a few years now. However, in case you hadn't had enough sycophantic central-bank-fellating 'hope', the WSJ's front-man just reiterated for one and all that Ben's our man. In our subtle opinion, it seems however that perhaps Bernanke was a little disingenuous with his talk of 'policy tool effectiveness' – as clearly his efforts have not had the desired economic effect so far (or he would not need to reiterate the ability to do more of the same).

Jon Hilsenrath, WSJ: Bernanke Signals Readiness to Do More

Federal Reserve Chairman Ben Bernanke offered a robust defense of the effectiveness of the central bank's easy-money policies in his Friday speech at the Fed conference in Jackson Hole, Wyo., and left little doubt that he is looking toward doing more to give the economy a lift at the Fed's next policy meeting in September.

On The Economy [ZH – clearly helping the "it's still dismal out there" meme – let's hope it doesn't get better anytime soon, or he will really have to show how bad we are]:

Some market participants have been wondering if a run of moderately better economic data of late has changed the Fed's thinking about the economy. Mr. Bernanke left little doubt that he is still deeply dissatisfied with the outlook, describing the economic situation as "far from satisfactory."

[It's Cyclical Stupid]
Importantly, the Fed chairman also says that the job market's weakness, to date at least, is the result of cyclical problems in the economy (that is, a lack of demand) and not structural problems (such as a mismatch between the skills people have and the skills employers are looking for.)

[which means we are justified in our 'extreme' actions]
The Fed feels it can help address cyclical problems, but not structural problems. In other words, this is a problem where the Fed feels it can help. Of course, he also includes his "no panacea" caveat; Mr. Bernanke would love fiscal policy makers to take actions to support the economy and address long-run deficits. But he doesn't seem to see that as justification for inaction on his front.

[and the disingenuous comments begin… jobs, here's your jobs – what are you all complaining about?]
COSTS AND BENEFITS: Mr. Bernanke has said repeatedly that the Fed's decisions about how to use monetary policy depends on an analysis of the costs and benefits of different actions. His analysis, particularly of the Fed's controversial bond-buying programs, heavily emphasizes the benefits and plays down the costs. Two rounds of bond buying have raised overall economic output by 3%, he said, and increased payroll employment by 2 million jobs, he said his staff has estimated.

"A balanced reading of the evidence supports the conclusion that central bank securities purchases have provided meaningful support to the economic recovery while mitigating deflationary risks,"

[and finally – they have it all under control, so don't worry]

"The costs of nontraditional policies, when considered carefully, appear manageable, implying that we should not rule out further use of such policies if economic conditions warrant,"

Japan Manufacturing PMI Hits 16 Month Low, New Orders Plunge

Courtesy of Mish.

Markit reports Japan Manufacturing PMI Hits 16 Month Low

Key Points:

Output and new orders down at accelerated rates
Near-stagnation of employment
Purchasing costs fall to greatest extent since November 2009

Markit/JMMA Manufacturing PMI

After adjusting for seasonal factors, the headline Markit/JMMA Purchasing Managers’ Index™ (PMI™) posted 47.7 in August, down from 47.9 one month previously, signalling the sharpest worsening of Japanese manufacturing sector operating conditions since April 2011. Moreover, the latest deterioration in business conditions was broad-based across all three market groups.

Japanese manufacturing production declined further in August, with the rate of contraction accelerating to the fastest in 16 months. The latest reduction in factory output was the third in as many months.

Reflecting falling new orders and corresponding spare capacity, backlogs of work decreased further in August. The rate at which firms depleted work-in-hand (but not yet completed) was sharp, and the steepest since May 2009.

Japan is in its third deflationary decade in spite of massive fiscal stimulus, massive monetary stimulus, and the major industrial world’s highest debt-to-GDP ratio.

US demographics are not as bad, but US consumer debt overhang and student loans are worse. The deflationary forces facing Bernanke are massive.

Mike “Mish” Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List

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Reader Questions On Hyperinflation; Would Printing $50 Trillion Tomorrow Do Anything?

Courtesy of Mish.

In response to Economist Fired for Expressing Opinions on Max Keiser Show; Errors in Observation where I stated “The Fed Cannot Realistically Cause Hyperinflation” I received a couple of emails worth reviewing.

Reader Philip writes …

I do not understand how you could say that the Fed cannot cause hyperinflation. The government has a huge debt. The debt is manageable at super low rates. But, if rates rise due to some inflation or even just caution from abroad then the government starts paying a very large sum in interest. That takes away from its obligations even more than the current deficit amount. Either the Fed has to step in and monetize the debt by printing more and more money spiraling out of control.

Definition of Terms

As always, before one can have a rational discussion, one must agree on definitions. Hyperinflation is a complete loss of faith in currency. In other words, currency becomes worthless in a short period of time.

Is there a risk of high interest rates? Yes. But I do not think that risk is high in the near future. Even assuming I am wrong, high rates are not the same as hyperinflation.

The US dollar is not headed to zero given the US has the largest stash of gold of any country. That alone would preclude hyperinflation. There are many other reasons that I have touched upon that suggest interest rates are not going up fast.

Credit Markets

The Fed has tried to revive the credit markets but has essentially failed, except for student loans. Making debt slaves out of students is actually a hugely deflationary force.

Moreover and as I have stated many times, the Fed cannot give money away, spend it, or force anyone to spend it. That is a very tough battle for the Fed with attitudes where they are (and as I have mentioned, attitudes are very important).

Banks do not want to lend, credit-worthy businesses do not want to borrow, and consumers are still deleveraging. Those are extremely deflationary forces.

Would Printing $50 Trillion Tomorrow Do Anything?

Ignoring interest on excess reserves (a proviso I mentioned), printing $50 trillion dollars tomorrow might not do anything….

Continue Here

The Election: It's the Food-Stamps, Stupid!

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

In November 2008, President Barack Obama won the popular election for President by 9.5 million votes.  A burgeoning financial crisis and weakening economy helped his candidacy at the time, but four years on the sluggish pace of economic recovery is a headwind to his re-election.  Consider, for example, that there are currently 12.8 million people unemployed in the U.S., or that an estimated 8 million adults entered the SNAP (Food Stamp) program since November 2008 (total increase in enrollment: 15.6 million).  Presidential elections are won in the Electoral College, of course, so in today’s note ConvergEx's Nick Colas parses out this employment/food security economic stress for the key “Battleground” states.

 

Statewide data for unemployment and food stamps show that the jobless rate has increased in all but 3 states since the 2008 election cycle, and that every single state plus DC has experienced a gain in the number of residents receiving nutritional assistance from the federal government.  Seven of the 8 swing states this election year are more economically stressed than the national average in terms of unemployment and/or food stamps, while 2 of the 3 states “leaning” toward Obama are worse off than the national average.  Romney, behind in the electoral vote count by most analysts’ figures, theoretically stands to gain from a weak national economy, but he’ll have to earn the vote of an estimated 4 million Americans in 14 key battleground states to have a shot at the White House.

Nick Colas, ConvergEX: It's Jobs And Food Stamps, Stupid

Note from Nick:  I know three things about the upcoming U.S. Presidential election.

  • One: it will be close, likely decided by a few million votes in a handful of battleground states.
  • Two: the debate between incumbent and challenger will come back to the current state of the domestic economy from the current “Big ideas” smokescreen.
  • Three: many Americans, even after three years of economic “Recovery,” face fundamental questions over employment and food security.  Beth puts it all together in today’s note.

Are you better off now than you were 4 years ago?  The answer is likely dependent on whether or not you’ve got a job.  On average, real personal incomes are up 2.1% in the last 4 years, which is good news for those who are employed.  But for the incremental 3.4 million people who have lost their job in the last 4 years, well, this isn’t exactly relevant.

Ronald Reagan famously asked this same question during his enormously successful presidential campaign against Jimmy Carter in 1980.  The economy had endured a recession earlier that year, so for many voters the answer was a resounding “No”.  The 2012 election cycle is similar, though the magnitude of the Great Recession is decidedly greater.  Which naturally leads to the question: Are enough people worse off now than 4 years ago to allow Mitt Romney to capitalize on a weak economy in Reagan-esque fashion?

We’re not here to make election predictions or candidate endorsements – you’ll be flooded with enough of these in the coming weeks.  Our election analysis focuses on 2 state-by-state indicators of economic stress: unemployment and food stamp recipient count.  We’ve written repeatedly on these topics over the past few years and have a good handle on what makes these numbers “Tick.”

State unemployment rates are on average 24.2% higher now than they were during the 2008 election cycle.  In the table following the text, we show state-by-state unemployment rates for the 4 months leading up to and including the presidential election, as well as jobless rates for the past 4 months.  Our “election cycle” unemployment rate is simply an average of October and November 2008, and the current rates are based on July 2012, which is the most recent month for which data is available.  The biggest gainer is Utah, where the jobless rate is currently 6.0%, or 73.9% higher than its election cycle 2008 rate of 3.5%.  Only 4 states have lower unemployment rates now versus then: North Dakota (-13.0%), Massachusetts (-2.4%), Vermont (-1.0%) and interestingly enough, Michigan (-6.7%).  We can thank the auto bailout for that, along with the uptick in light vehicle demand since the cyclical lows in 2008/9.

Meanwhile, every single state saw an increase in the number of residents receiving food stamps over the past 4 years, with an average gain of 68.2%.  Also in the accompanying table, we show the number of people per state who received nutritional assistance from the federal government in 2008 and May 2012 (the most recent month for which data is available).  The number of food stamp recipients more than doubled in 4 states, led by Nevada at +146.2%.  Louisiana (+12.6%) and North Dakota (+20.6%) experienced by far the smallest rises.

Now in terms of the November election, the economic plight of certain states simply doesn’t matter in terms of predicting the outcome.  Their collective minds are made up; they’re voting either for President Obama or Governor Romney, and there’s not much either candidate can do to change the fact.  So those states aren’t highlighted in our comprehensive table following the text.  The states shaded in gray are pure swing states, according to yours truly and more importantly also according to most election analysts.  The Blue states are leaning toward a Barack Obama reelection, though Romney has a chance.  Similarly, the red states are favoring Romney, but Obama has hope.  We’ve displayed these 14 “battleground” states in a separate chart to outline which election-critical states are more economically stressed than the overall nation in terms of the 2 factors described above (unemployment and food stamp recipients).

Four battleground states are weaker than the nation in terms of both joblessness and food stamps: Colorado, Nevada, New Mexico and Wisconsin.  Unfortunately for Romney, none are a “catch” since they all have a relatively low number of electoral votes, and one (New Mexico) is already leaning toward Obama.  Three states are actually better off than the nation as a whole on both accounts: Michigan, Missouri and Ohio.  It’s therefore unlikely these states will be motivated purely by economic reasons to vote for Romney.  And two of them – Michigan and Ohio – benefited substantially from the auto bailouts of 2009, an economic outcome that candidate Romney has sharply criticized.

The remaining 7 states are worse off than the rest of the nation in terms of either unemployment or food stamps (but not both).  For example, Florida’s jobless rate is actually lower now (7.6%) than in November 2008 (7.8%), but the state saw the second-highest gain in the number of its residents receiving food stamps.  The labor market gets a ton of press, but signs of economic stress appear in more ways than unemployment.  So these 7 states still represent substantial opportunities to appeal to voters under economic duress.

By our calculus of economic stress, therefore, Florida is the most important battleground state on the list, should Romney choose to capitalize on a weak economy the way Reagan did.  It comes with 29 electoral votes, and while its unemployment rate is up “only” 15.8% from 4 years ago, the number of Floridians receiving food stamps grew a whopping 132.6% during that same time.  According to Real Clear Politics (http://realclearpolitics.com/epolls/2012/president/2012_elections_electo…) Romney is a near lock for 191 electoral votes, compared with the 237 votes already reserved for Obama.  Either candidate will need 270 votes to win the election, so Romney’s got to find 79 more to seal a victory.  The 23 states leaning “red” carry 36 electoral votes, so assuming Romney is able to secure those votes, he needs to earn 43 votes from the 8 true swing states.  Without Florida, he’d have to win Ohio, Virginia, Wisconsin AND one of the following: Colorado, Iowa, Nevada or New Hampshire.

However, one critical issue is worth noting.  Even though many people are receiving food stamps, unemployment benefits and other government transfer payments because of a weak economy, are they likely to vote for a candidate in favor of reducing such benefits?  Does the risk of receiving less government aid offset the risk that the economy doesn’t improve substantially?  We can’t answer these questions, but this could prove to be an important point as the election heats up.

Again, our goal isn’t to make predictions or recommendations.  It’s to highlight the economic stress level of key battleground states, and should Romney want to make an appeal to votes a la Ronald Reagan, then Florida, Wisconsin, Ohio and Virginia are good places to start

One last point, of a more general nature: we believe that the polling in this contest will tighten up this week and throughout the rest of the campaign.  It will, in our view, come down to the question of economic confidence because – as we have shown here – the state of the country on this count is far from robust.

Click chart for LARGE version…

The Election: It’s the Food-Stamps, Stupid!

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

In November 2008, President Barack Obama won the popular election for President by 9.5 million votes.  A burgeoning financial crisis and weakening economy helped his candidacy at the time, but four years on the sluggish pace of economic recovery is a headwind to his re-election.  Consider, for example, that there are currently 12.8 million people unemployed in the U.S., or that an estimated 8 million adults entered the SNAP (Food Stamp) program since November 2008 (total increase in enrollment: 15.6 million).  Presidential elections are won in the Electoral College, of course, so in today’s note ConvergEx's Nick Colas parses out this employment/food security economic stress for the key “Battleground” states.

 

Statewide data for unemployment and food stamps show that the jobless rate has increased in all but 3 states since the 2008 election cycle, and that every single state plus DC has experienced a gain in the number of residents receiving nutritional assistance from the federal government.  Seven of the 8 swing states this election year are more economically stressed than the national average in terms of unemployment and/or food stamps, while 2 of the 3 states “leaning” toward Obama are worse off than the national average.  Romney, behind in the electoral vote count by most analysts’ figures, theoretically stands to gain from a weak national economy, but he’ll have to earn the vote of an estimated 4 million Americans in 14 key battleground states to have a shot at the White House.

Nick Colas, ConvergEX: It's Jobs And Food Stamps, Stupid

Note from Nick:  I know three things about the upcoming U.S. Presidential election.

  • One: it will be close, likely decided by a few million votes in a handful of battleground states.
  • Two: the debate between incumbent and challenger will come back to the current state of the domestic economy from the current “Big ideas” smokescreen.
  • Three: many Americans, even after three years of economic “Recovery,” face fundamental questions over employment and food security.  Beth puts it all together in today’s note.

Are you better off now than you were 4 years ago?  The answer is likely dependent on whether or not you’ve got a job.  On average, real personal incomes are up 2.1% in the last 4 years, which is good news for those who are employed.  But for the incremental 3.4 million people who have lost their job in the last 4 years, well, this isn’t exactly relevant.

Ronald Reagan famously asked this same question during his enormously successful presidential campaign against Jimmy Carter in 1980.  The economy had endured a recession earlier that year, so for many voters the answer was a resounding “No”.  The 2012 election cycle is similar, though the magnitude of the Great Recession is decidedly greater.  Which naturally leads to the question: Are enough people worse off now than 4 years ago to allow Mitt Romney to capitalize on a weak economy in Reagan-esque fashion?

We’re not here to make election predictions or candidate endorsements – you’ll be flooded with enough of these in the coming weeks.  Our election analysis focuses on 2 state-by-state indicators of economic stress: unemployment and food stamp recipient count.  We’ve written repeatedly on these topics over the past few years and have a good handle on what makes these numbers “Tick.”

State unemployment rates are on average 24.2% higher now than they were during the 2008 election cycle.  In the table following the text, we show state-by-state unemployment rates for the 4 months leading up to and including the presidential election, as well as jobless rates for the past 4 months.  Our “election cycle” unemployment rate is simply an average of October and November 2008, and the current rates are based on July 2012, which is the most recent month for which data is available.  The biggest gainer is Utah, where the jobless rate is currently 6.0%, or 73.9% higher than its election cycle 2008 rate of 3.5%.  Only 4 states have lower unemployment rates now versus then: North Dakota (-13.0%), Massachusetts (-2.4%), Vermont (-1.0%) and interestingly enough, Michigan (-6.7%).  We can thank the auto bailout for that, along with the uptick in light vehicle demand since the cyclical lows in 2008/9.

Meanwhile, every single state saw an increase in the number of residents receiving food stamps over the past 4 years, with an average gain of 68.2%.  Also in the accompanying table, we show the number of people per state who received nutritional assistance from the federal government in 2008 and May 2012 (the most recent month for which data is available).  The number of food stamp recipients more than doubled in 4 states, led by Nevada at +146.2%.  Louisiana (+12.6%) and North Dakota (+20.6%) experienced by far the smallest rises.

Now in terms of the November election, the economic plight of certain states simply doesn’t matter in terms of predicting the outcome.  Their collective minds are made up; they’re voting either for President Obama or Governor Romney, and there’s not much either candidate can do to change the fact.  So those states aren’t highlighted in our comprehensive table following the text.  The states shaded in gray are pure swing states, according to yours truly and more importantly also according to most election analysts.  The Blue states are leaning toward a Barack Obama reelection, though Romney has a chance.  Similarly, the red states are favoring Romney, but Obama has hope.  We’ve displayed these 14 “battleground” states in a separate chart to outline which election-critical states are more economically stressed than the overall nation in terms of the 2 factors described above (unemployment and food stamp recipients).

Four battleground states are weaker than the nation in terms of both joblessness and food stamps: Colorado, Nevada, New Mexico and Wisconsin.  Unfortunately for Romney, none are a “catch” since they all have a relatively low number of electoral votes, and one (New Mexico) is already leaning toward Obama.  Three states are actually better off than the nation as a whole on both accounts: Michigan, Missouri and Ohio.  It’s therefore unlikely these states will be motivated purely by economic reasons to vote for Romney.  And two of them – Michigan and Ohio – benefited substantially from the auto bailouts of 2009, an economic outcome that candidate Romney has sharply criticized.

The remaining 7 states are worse off than the rest of the nation in terms of either unemployment or food stamps (but not both).  For example, Florida’s jobless rate is actually lower now (7.6%) than in November 2008 (7.8%), but the state saw the second-highest gain in the number of its residents receiving food stamps.  The labor market gets a ton of press, but signs of economic stress appear in more ways than unemployment.  So these 7 states still represent substantial opportunities to appeal to voters under economic duress.

By our calculus of economic stress, therefore, Florida is the most important battleground state on the list, should Romney choose to capitalize on a weak economy the way Reagan did.  It comes with 29 electoral votes, and while its unemployment rate is up “only” 15.8% from 4 years ago, the number of Floridians receiving food stamps grew a whopping 132.6% during that same time.  According to Real Clear Politics (http://realclearpolitics.com/epolls/2012/president/2012_elections_electo…) Romney is a near lock for 191 electoral votes, compared with the 237 votes already reserved for Obama.  Either candidate will need 270 votes to win the election, so Romney’s got to find 79 more to seal a victory.  The 23 states leaning “red” carry 36 electoral votes, so assuming Romney is able to secure those votes, he needs to earn 43 votes from the 8 true swing states.  Without Florida, he’d have to win Ohio, Virginia, Wisconsin AND one of the following: Colorado, Iowa, Nevada or New Hampshire.

However, one critical issue is worth noting.  Even though many people are receiving food stamps, unemployment benefits and other government transfer payments because of a weak economy, are they likely to vote for a candidate in favor of reducing such benefits?  Does the risk of receiving less government aid offset the risk that the economy doesn’t improve substantially?  We can’t answer these questions, but this could prove to be an important point as the election heats up.

Again, our goal isn’t to make predictions or recommendations.  It’s to highlight the economic stress level of key battleground states, and should Romney want to make an appeal to votes a la Ronald Reagan, then Florida, Wisconsin, Ohio and Virginia are good places to start

One last point, of a more general nature: we believe that the polling in this contest will tighten up this week and throughout the rest of the campaign.  It will, in our view, come down to the question of economic confidence because – as we have shown here – the state of the country on this count is far from robust.

Click chart for LARGE version…

Don’t Trust Brokerage Research Reports

Don’t Trust Brokerage Research Reports – Latest Example

Courtesy of Dr. Paul Price, Beating Buffett

Further Proof:  You Can’t Believe Brokerage Research

Brokerage analysts are always looking for an edge to show they offer ‘value-added’ information. If you’re not paying strict attention you might think they did. Here’s yet another example of how the cheating occurs.

Sterne, Agee & Leach made a bold call early Wednesday morning. They predicted Jos. A. Bank’s (JOSB) earnings would rise and they loved the shares at the current $41.63 price. As Will Shakespeare’s Hamlet once said, “Ay, there’s the rub.”

 

josb-barronscom-update-aug-29-2012-source-barronscom-sterne-agee-leach1

As it turned out, JOSB had already reported, and Reuters had broadcast JOSB’s much better than expected earnings and same store sales. Their shares were up 13.5% in premarket trading.

 

josb-reuters-report-aug-29-2012-source-reuters

 

JOSB had a gap opening at $48.00 – up $6.37 or + 15.3% from Tuesday’s close. Nobody could buy the stock today at anywhere close to the price where Sterne, Agee & Leach will take credit for putting on their recommendation.

Anyone silly enough to act on their research blurb by buying at the open was down 1.17% by 4 pm.

Why did Barrons lend their good name to this deceptive press release?

The day’s range was $47.29 – $49.48 with the intra-day low coming with just minutes to go. The chart speaks for itself.

 

josb-5-day-chart-source-morningstar

The Federal Bailout That Saved Mitt Romney

By TIM DICKINSON, Rolling Stone

Mitt Romney likes to say he won't "apologize" for his success in business. But what he never says is "thank you" – to the American people – for the federal bailout of Bain & Company that made so much of his outsize wealth possible.

According to the candidate's mythology, Romney took leave of his duties at the private equity firm Bain Capital in 1990 and rode in on a white horse to lead a swift restructuring of Bain & Company, preventing the collapse of the consulting firm where his career began. When The Boston Globe reported on the rescue at the time of his Senate run against Ted Kennedy, campaign aides spun Romney as the wizard behind a "long-shot miracle," bragging that he had "saved bank depositors all over the country $30 million when he saved Bain & Company."

In fact, government documents on the bailout obtained by Rolling Stone show that the legend crafted by Romney is basically a lie. The federal records, obtained under the Freedom of Information Act, reveal that Romney's initial rescue attempt at Bain & Company was actually a disaster – leaving the firm so financially strapped that it had "no value as a going concern." Even worse, the federal bailout ultimately engineered by Romney screwed the FDIC – the bank insurance system backed by taxpayers – out of at least $10 million. And in an added insult, Romney rewarded top executives at Bain with hefty bonuses at the very moment that he was demanding his handout from the feds.

Keep reading: The Federal Bailout That Saved Mitt Romney | Politics News | Rolling Stone.

Photo from Wiki: John Hancock Tower in Boston, Massachusetts. Bain occupies 210,000 sq. ft. from the 36th to 43rd floors. By RhythmicQuietude.