THE MACAU METRO MONITOR, AUGUST 30, 2013
CHINA TO REIN IN EXTRAVAGANT INVESTMENT TEAMS SENT TO HONG KONG, MACAU SCMP
The Ministry of Commerce has pledged to rein in extravagance by local government delegations sent to Hong Kong and Macau to drum up investment, following a highly critical article about such trips in People's Daily. Yao Jian, a ministry spokesman, said that Beijing was aware of the overblown nature of business delegations visiting Hong Kong and Macau, pointing out that some local governments had overstated the number of participants and the value of deals signed during their promotional activities.
"They were desperate to get a big number of foreign businesspeople attending the events and re-signed agreements which had previously been sealed to shore up the total transaction value," Yao said. "The phenomenon reflects a severe level of artificiality and extravagance."
This was the first time that a Communist Party mouthpiece had fired a salvo at such investment-promotion practices.
People'sDaily also said anti-graft officials would investigate and punish those who outrageously wasted money on trips, because their behaviour tainted the government's image.
TODAY’S S&P 500 SET-UP – August 30, 2013
As we look at today's setup for the S&P 500, the range is 38 points or 0.80% downside to 1625 and 1.52% upside to 1663.
CREDIT/ECONOMIC MARKET LOOK:
MACRO DATA POINTS (Bloomberg Estimates):
WHAT TO WATCH:
COMMODITY/GROWTH EXPECTATION (HEADLINES FROM BLOOMBERG)
The Hedgeye Macro Team
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Takeaway: We are at a critical crossroads in America right now.
“The physicists have known sin; and this is a knowledge which they cannot lose.” -Robert Oppenheimer
Do you have introspective accountability?
Six decades or so ago, shortly after he began to fully grasp the unspeakably fearsome reality of the nuclear weapons he helped unleash, Robert Oppenheimer—“The Father of the Atomic Bomb”—became a rather unpopular man with the U.S. government.
After provoking the ire of politicians with his outspoken opinions during the Second Red Scare, Oppenheimer’s security clearance was revoked in a much-publicized hearing in 1954, and he was effectively stripped of his direct political influence.
Oppenheimer once remarked that his creation brought to mind words from the Bhagavad Gita: "Now I am become Death, the destroyer of worlds." In essence, Oppenheimer ultimately held both himself and the government to account.
Now stop for a moment and ask yourself: Can you imagine a central planner of the Bernanke epoch holding themselves accountable for the highest levels of food, energy, education, etc. inflation in world history?
Most likely, the answer is no. That would require an incredibly uncomfortable un-spinning of the truth.
And the truth is that American “political scientists” who systematically engaged in devaluing the purchasing power of the American people to four-decade year lows in 2011 know that sin. It is market knowledge that history will not soon forget. Facts don’t lie, politicians do.
If you’ve ever sat across the table from me and my macro research team during the monetary mayhem and tumult of these last few years, you’ll know that I refuse to have a debate about mean reversion risks without contextualizing the post-Nixon low in the world’s reserve currency.
Since most global commodities settle in Dollars, why there’s been raging inverse correlation (Dollar Down = Commodities Inflation Up) alongside causality in this relationship is trivial to everyone other than the people who should be held responsible for it.
What is less trivial is all of the unintended consequences associated with the ultimate central planning sin (an un-elected overlord confiscating the purchasing power of The People). Here are some of the big ones:
Yep, that’s going to be a lot for Bernanke’s children (and theirs) to noodle over for the next century. That is, of course, unless the next guy or gal running the un-elected agency does what no modern Federal Reserve Chairman has ever not done – raise rates.
For the last year or so, I’ve spent a considerable amount of time ranting about these Global Macro Themes:
These are relatively easy long-term risk calls to make because all three of them are basically about unwinding all three of the aforementioned bubbles.
Once prices stop making all-time highs (commodities, bonds, or currencies), there’s this big little risk management critter Ben Bernanke has never mentioned under oath called asymmetry.
So, at this stage of the cycle this is what you get:
All the while, what we still get from the consensus TV circus that is “Government Access Media” is a bunch of uninformed people begging for more of the drugs that the political scientists got rich selling us.
If I am not clear on my long-term policy view, let me state it plainly – stop devaluing the Dollar. Stop trying to smooth economic gravity. Stop the monetary madness. Start tapering. Now.
If you ever want to see US growth expectations come back (yes, markets and business run on expectations, fyi), you have to let the US Dollar come back and let rates rise right alongside her.
Just this morning, we received additional support that the economy doesn’t need any more of the Fed’s monetary amphetamines. In case you missed it, the US jobless claims trend is near a six-year low. Meanwhile, Q2 US economic growth was revised up to a 2.5% annualized rate.
What will it take to get the Fed out of the way once and for all?
We are at a critical crossroads in America right now. Unwinding the monetary sin embedded in Bernanke’s post 2012 Jackson Hole policy is what markets have been doing for 10 months.
Collectively, we either have the responsibility within all of us to rise up against the tyranny of easy money and currency debauchery, or we do not. At this point, I can only hope the people who voted for this government hold it to account.
Robert Oppenheimer eventually got it. He had introspective accountability. The $3,600,000,000,000 question is whether Ben Bernanke ever will.
The charts below illustrate some of the important commodity trends for the restaurant industry.
Takeaway: The number of people filing initial jobless claims continues to drop at an accelerating rate year-over-year.
The Most Important Economic Data Series We Follow? It Remains ... Green
For many weeks now, Hedgeye Risk Management has been highlighting the accelerating strength in the US labor market. This week is no exception. Non seasonally adjusted (NSA) initial jobless claims were better year-over-year (YoY) by 11.2% this week, compared with 10.1% and 10.9% in the prior two weeks. Meanwhile, the 4-week rolling average NSA claims was lower YoY by 10.5%, and improvement from the prior week's 10.2%, and the second strongest rate of YoY improvement we've seen year-to-date.
The bottom line takeaway here is that the labor market is, in fact, stronger than most think and financials that are positively levered to ongoing improvement in labor conditions should continue to outperform. Moreover, given the growing shadow of uncertainty painting the recent tape, we'd look to this data series more than any other as a green light for buying weakness.
Prior to revision, initial jobless claims fell 5k to 331k from 336k week-over-week (WoW), as the prior week's number was revised up by 1k to 337k.
The headline (unrevised) number shows claims were lower by 6k WoW. Meanwhile, the 4-week rolling average of seasonally-adjusted claims rose 0.75k WoW to 331.5k.
The 4-week rolling average of NSA claims, which we consider a more accurate representation of the underlying labor market trend, was -10.5% lower YoY, which is a sequential improvement versus the previous week's YoY change of -10.2%
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