WASHINGTON (MarketWatch) - The Federal Reserve on Wednesday held its
asset-purchase program steady, putting off any decision for tapering
until later in the year. By a 9-1 vote, the Fed plans to continue to buy
$85 billion a month in Treasurys and mortgage-backed bonds. The central
bank pointed to an elevated unemployment rate and said government
spending cuts and rising mortgage rates are "restraining economic
growth." The Fed said it will wait for "more evidence that progress will
be sustained" before it starts to cut its asset purchases. The move
surprised economists, who had expected a "tiny taper" in a range of $10
billion to $20 billion. And Wall Street could be unnerved by renewed Fed
concerns about the health of the U.S. economy. The Fed, in its
statement, sought to reassure investors by noting gradual improvement in
the economy over the past year. The bank said it still believes growth
will accelerate in the near future.
Wednesday, September 18, 2013
The Complete FOMC Announcement Preview
As we have not tired of showing over the past five years, and while
correlation is not causation, the near uniformity between the increase
in the Fed's balance sheet and the performance of risk assets shown in
the chart below (via Diapason), leaves zero doubt who, in the absence of
any self-sustained economic recovery, has been responsible for the
stock market's "outperformance" since the onset of the Great Financial
Crisis.
What we have also not shown constantly for years, is that as a result of the wealth transfer with each incremental program of central bank intervention in the capital markets, the rich got richer, the poor got poorer, the US middle class is ever closer to extinction, and as the WSJ added moments ago, "As QE winds down, it leaves a divided society."
With that said, today's FOMC announcement at 2:00 PM Eastern will certainly have a substantial impact on risk, and on the economy. One thing is known: when QE1 and QE2 were unwound, the hit to the S&P (and bond inversely, bond yields) was swift and sharp. Furthermore, the unwinds back then were said to take place at a time when the economy (also) was on the verge of a "self-sustaining" recovery. The fact that not only open-ended QE emerged but the unprecedented liquidity injection in Japan too, which inject more stimulus into the risk markets than the program launched at the depths of the market crisis, shows that it was all a lie. This time will not be different.
With all that out of the way, and with less than three hours to go, here is a succinct summary courtesy of RanSquawk, of all the outstanding issues, and potential options for Bernanke, as the 2:00 PM hour approaches.
Summary:
Most analysts are expecting the FOMC to begin to slow down their asset purchases from the current USD 85bln, made up of USD 45bln in Treasuries and USD 40bln in MBS. A New York think tank report last week showed the Fed could unveil USD 15bln taper of their QE3 program in USD 10bln in Treasury's and USD 5bln in MBS purchases. If the Fed do begin to taper asset purchases at this meeting, it is likely Fed Chairman Bernanke will try to calm markets following the announcement by saying that slowing down asset purchases is not a tightening of policy and also reiterating that policy will remain highly accommodative in the foreseeable future. Some have suggested, including Goldman Sachs, that the FOMC could adjust their forward guidance in an attempt to calm markets by lowering their threshold for a rate hike from the current 6.5%.
Many members on the FOMC have said that any tapering of asset purchases is data dependant and recent economic data has not been too favourable with the most recent Non-Farm Payrolls report showing 169K jobs created vs. Exp. 180K, below the monthly gain of 200K many members on the FOMC have said they would like to see consistently before a slow down of asset purchases. Another risk to the tapering argument comes from the looming fiscal situation in the US, with the current fiscal year ending on September 30th and still no sign of an agreement in Congress regarding sequestration, which is likely to have an impact on economic growth if an agreement is not reached. Other issues potentially having an impact could be the geopolitical situation in Syria and the volatility seen in emerging markets as Fed tapering started to be priced in. Furthermore, the FOMC are expected to lower their 2013 growth forecast when they release their economic projections, which some argue would be a reason not to taper at this meeting.
Another issue that may come into focus, particularly during Bernanke’s press conference, could be that of his successor. Bernanke’s term as chairman is due to come to an end in January with Obama set to nominate his successor during the Fall. Former Treasury Secretary Larry Summers has this week ruled himself out of the running for the job which supported Treasury's as the renowned dove, Janet Yellen, is now firm favourite for the role.
Market Reactions: obviously these refer to a world in which logic and a normal market applied. In the "new normal", neither is quite relevant.
If the FOMC do decide to taper asset purchases it is likely a knee-jerk reaction lower in Treasuries, equity markets and gold will be seen, with the USD strengthening, as liquidity is withdrawn from the market. With equities in the US trading around record highs, there is scope for downside, however Treasuries trade at their lowest levels since July 2011 with the 10y yield in the US recently trading above 3.0% for the first time in over two years. However if the Fed do begin to taper, the reaction in Treasuries could depend on how the central bank slow their buying. If the Fed just slow purchases in Treasuries, the long-end of the curve is likely to come under pressure as the majority of Fed purchases are in longer-dated Treasuries.
If the Fed lowers their forward guidance threshold, alongside tapering, Eurodollars would likely be subject to upside. Markets are currently pricing in a first rate hike by the Fed in Q4 2014 so red and green contracts could see the most volatility with any lowering of the forward guidance threshold. However, some do not expect the Fed to change their forward guidance as Bernanke can reiterate that a fall in the unemployment rate to 6.5% is not a trigger for a rate hike but rather a guide.
If the Fed unexpectedly abstains from tapering then it is likely the USD will come under very heavy selling pressure and upside will be observed in Treasuries, equity markets and gold, as it is largely priced in that the FOMC will taper at this meeting. However, as mentioned previously, equity markets are currently trading near record highs which could mean any scope for upside may be limited, although there would be room for a decline in yields which would help support stocks. If the Fed does not taper at this meeting then many expect them to refrain from doing so at the October meeting as there is no scheduled press conference after the announcement from Fed Chairman Bernanke. This would then mean the next opportunity to slow down asset purchases would be the policy meeting on December 18th.
Economic Projections from the June meeting
The following FOMC forecasts will be updated at 1900BST/1300CDT alongside the monetary policy statement. As a side note, the forecast horizon is expected to be increased to 2016 although these figures are likely to be similar to 2015.
Sees end 2013 unemployment rate at 7.2% - 7.3%
Sees end 2014 unemployment rate at 6.5% - 6.8%
Sees end 2015 unemployment rate at 5.8% - 6.2%
Sees 2013 GDP growth rate at 2.3% - 2.6%
Sees 2014 GDP growth rate at 3.0% - 3.5%
Sees 2015 GDP growth rate at 2.9% - 3.6%
Sees 2013 PCE inflation of 0.8% - 1.2%
Sees 2014 PCE inflation of 1.4% - 2.0%
Sees 2015 PCE inflation of 1.6% - 2.0%
What others are expecting...
What we have also not shown constantly for years, is that as a result of the wealth transfer with each incremental program of central bank intervention in the capital markets, the rich got richer, the poor got poorer, the US middle class is ever closer to extinction, and as the WSJ added moments ago, "As QE winds down, it leaves a divided society."
With that said, today's FOMC announcement at 2:00 PM Eastern will certainly have a substantial impact on risk, and on the economy. One thing is known: when QE1 and QE2 were unwound, the hit to the S&P (and bond inversely, bond yields) was swift and sharp. Furthermore, the unwinds back then were said to take place at a time when the economy (also) was on the verge of a "self-sustaining" recovery. The fact that not only open-ended QE emerged but the unprecedented liquidity injection in Japan too, which inject more stimulus into the risk markets than the program launched at the depths of the market crisis, shows that it was all a lie. This time will not be different.
With all that out of the way, and with less than three hours to go, here is a succinct summary courtesy of RanSquawk, of all the outstanding issues, and potential options for Bernanke, as the 2:00 PM hour approaches.
Summary:
- Expectations for Fed to begin to taper asset purchases by USD 10-15bln
- Ranges for pace of Treasury purchases: high USD 45bln, low USD 25bln
- Ranges for pace of MBS purchases: high USD 45bln, low USD 30bln
- Some see FOMC lowering unemployment threshold from current 6.5%
- Summary of Economic Projections and Press Conference from Fed Chairman Bernanke follow the announcement
Most analysts are expecting the FOMC to begin to slow down their asset purchases from the current USD 85bln, made up of USD 45bln in Treasuries and USD 40bln in MBS. A New York think tank report last week showed the Fed could unveil USD 15bln taper of their QE3 program in USD 10bln in Treasury's and USD 5bln in MBS purchases. If the Fed do begin to taper asset purchases at this meeting, it is likely Fed Chairman Bernanke will try to calm markets following the announcement by saying that slowing down asset purchases is not a tightening of policy and also reiterating that policy will remain highly accommodative in the foreseeable future. Some have suggested, including Goldman Sachs, that the FOMC could adjust their forward guidance in an attempt to calm markets by lowering their threshold for a rate hike from the current 6.5%.
Many members on the FOMC have said that any tapering of asset purchases is data dependant and recent economic data has not been too favourable with the most recent Non-Farm Payrolls report showing 169K jobs created vs. Exp. 180K, below the monthly gain of 200K many members on the FOMC have said they would like to see consistently before a slow down of asset purchases. Another risk to the tapering argument comes from the looming fiscal situation in the US, with the current fiscal year ending on September 30th and still no sign of an agreement in Congress regarding sequestration, which is likely to have an impact on economic growth if an agreement is not reached. Other issues potentially having an impact could be the geopolitical situation in Syria and the volatility seen in emerging markets as Fed tapering started to be priced in. Furthermore, the FOMC are expected to lower their 2013 growth forecast when they release their economic projections, which some argue would be a reason not to taper at this meeting.
Another issue that may come into focus, particularly during Bernanke’s press conference, could be that of his successor. Bernanke’s term as chairman is due to come to an end in January with Obama set to nominate his successor during the Fall. Former Treasury Secretary Larry Summers has this week ruled himself out of the running for the job which supported Treasury's as the renowned dove, Janet Yellen, is now firm favourite for the role.
Market Reactions: obviously these refer to a world in which logic and a normal market applied. In the "new normal", neither is quite relevant.
If the FOMC do decide to taper asset purchases it is likely a knee-jerk reaction lower in Treasuries, equity markets and gold will be seen, with the USD strengthening, as liquidity is withdrawn from the market. With equities in the US trading around record highs, there is scope for downside, however Treasuries trade at their lowest levels since July 2011 with the 10y yield in the US recently trading above 3.0% for the first time in over two years. However if the Fed do begin to taper, the reaction in Treasuries could depend on how the central bank slow their buying. If the Fed just slow purchases in Treasuries, the long-end of the curve is likely to come under pressure as the majority of Fed purchases are in longer-dated Treasuries.
If the Fed lowers their forward guidance threshold, alongside tapering, Eurodollars would likely be subject to upside. Markets are currently pricing in a first rate hike by the Fed in Q4 2014 so red and green contracts could see the most volatility with any lowering of the forward guidance threshold. However, some do not expect the Fed to change their forward guidance as Bernanke can reiterate that a fall in the unemployment rate to 6.5% is not a trigger for a rate hike but rather a guide.
If the Fed unexpectedly abstains from tapering then it is likely the USD will come under very heavy selling pressure and upside will be observed in Treasuries, equity markets and gold, as it is largely priced in that the FOMC will taper at this meeting. However, as mentioned previously, equity markets are currently trading near record highs which could mean any scope for upside may be limited, although there would be room for a decline in yields which would help support stocks. If the Fed does not taper at this meeting then many expect them to refrain from doing so at the October meeting as there is no scheduled press conference after the announcement from Fed Chairman Bernanke. This would then mean the next opportunity to slow down asset purchases would be the policy meeting on December 18th.
Economic Projections from the June meeting
The following FOMC forecasts will be updated at 1900BST/1300CDT alongside the monetary policy statement. As a side note, the forecast horizon is expected to be increased to 2016 although these figures are likely to be similar to 2015.
Sees end 2013 unemployment rate at 7.2% - 7.3%
Sees end 2014 unemployment rate at 6.5% - 6.8%
Sees end 2015 unemployment rate at 5.8% - 6.2%
Sees 2013 GDP growth rate at 2.3% - 2.6%
Sees 2014 GDP growth rate at 3.0% - 3.5%
Sees 2015 GDP growth rate at 2.9% - 3.6%
Sees 2013 PCE inflation of 0.8% - 1.2%
Sees 2014 PCE inflation of 1.4% - 2.0%
Sees 2015 PCE inflation of 1.6% - 2.0%
What others are expecting...
- Bank of America – Sees taper in December although risk is a “token-taper” of USD 10-15bln
- Goldman Sachs – Sees USD 10bln taper, all in Treasuries, and strengthening of forward guidance
- Citi – Sees USD 10-15bln taper and forward guidance to be shifted out
- JPMorgan – Sees USD 15bln taper of USD 10bln in Treasuries and USD 5bln in MBS
- Barclays - Sees small first taper and any lowering of 6.5% unemployment threshold as very unlikely
- Deutsche Bank - Sees USD 5bln taper in MBS and USD 10bln in Treasuries, does not expect adjustment to forward guidance
- Fed watcher Hilsenrath said Fed officials exploring how to justify low rates far into future and forecasts could show economy at "full employment" by 2016.
IBM to spend $1 Billion on Linux
IBM on Tuesday will announce that
it has committed $1 billion to convince its customers to use Linux, a
freely available open source operating system that competes with
Windows, reports The Wall Street Journal's Don Clark.
This is the second time that IBM coughed up $1 billion to promote
Linux. The first was way back in 2000, when Linux was a fledgling
operating system just finding its way into enterprise data centers and
beginning to threaten Microsoft.Microsoft spent years trying to scare customers away from Linux, at one point even saying that Linux violates 235 patents and hinting that enterprises using it could be sued.
But the scare tactics didn't work
and Linux adoption grew, in large part due to IBM's vote of confidence.
There's hardly an enterprise data center on the planet today that isn't
using Linux and it has become the operating system of choice for the world's biggest, fastest computers, as well as for huge Internet companies like Google and Facebook.
But Linux has not killed Windows Server. Not even close.Servers running Linux now command 23% of new server purchases by enterprises, where servers running Microsoft Windows command 49%, according to IDC's latest quarterly server report.
We'll see what happens now that IBM will pour another $1 billion in. IBM will use the money to create a “development cloud,” built with its own Power servers that run on Linux. Customers will be able to use it for free to test Linux applications remotely, reports Clark.
The money will also be spent on IBM's executive briefing centers where enterprises can do workshops and get demonstrations on Linux Power servers.
http://finance.yahoo.com/news/ibm-vows-spend-1-billion-003834438.html
http://www.pcworld.com/article/2048893/ibm-hopes-to-power-cloud-analytics-with-1-billion-linux-investment.html
Tuesday, September 17, 2013
Trader sues U.S. swap regulator to stop "unfounded" case
(Reuters) - A Chicago speed-trading firm sued
the U.S. swaps regulator on Tuesday, saying it acted to prevent the
agency from bringing an "unfounded" case against it for manipulating futures contracts.
DRW Investments and its founder Donald R. Wilson, for whom the firm is named, filed the lawsuit against the Commodity Futures Trading Commission in the U.S. District Court for the Northern District of Illinois.
"Any claim the CFTC may bring against DRW on this matter would be completely unfounded," the company said in a press release.
DRW has been the subject of a CFTC inquiry for nearly two years and found out about the probe when the CFTC requested documents in August 2011, Craig Silberberg, a DRW employee, said in a declaration filed in support of the case.
In April 2013, the CFTC's Division of Enforcement informed DRW that it intended to recommend that the Commission file an enforcement action, he added.
"DRW therefore understands that the filing of an enforcement action by the CFTC is imminent, unless the Enforcement Division's recommendation is rejected by the Commission," said Silberberg, who oversees some of DRW's trading operations.
http://www.reuters.com/article/2013/09/17/derivatives-drwinvestments-idUSL2N0HD1WS20130917?feedType=RSS&feedName=financialsSector
DRW Investments and its founder Donald R. Wilson, for whom the firm is named, filed the lawsuit against the Commodity Futures Trading Commission in the U.S. District Court for the Northern District of Illinois.
"Any claim the CFTC may bring against DRW on this matter would be completely unfounded," the company said in a press release.
DRW has been the subject of a CFTC inquiry for nearly two years and found out about the probe when the CFTC requested documents in August 2011, Craig Silberberg, a DRW employee, said in a declaration filed in support of the case.
In April 2013, the CFTC's Division of Enforcement informed DRW that it intended to recommend that the Commission file an enforcement action, he added.
"DRW therefore understands that the filing of an enforcement action by the CFTC is imminent, unless the Enforcement Division's recommendation is rejected by the Commission," said Silberberg, who oversees some of DRW's trading operations.
http://www.reuters.com/article/2013/09/17/derivatives-drwinvestments-idUSL2N0HD1WS20130917?feedType=RSS&feedName=financialsSector
Brazil Bails On US State Visit Over Illegal Spying; Demands "Full Public Apology"
While the White House is trying to play this
down currently in the press conference, Brazil's President Rousseff has
issued a statement postponing her trip to the US due to the illegal
espionage of the Americans:
Via AP,
And The White House's response,
- *BRAZIL SAYS U.S. HASN'T PROVIDED ADEQUATE EXPLANATION ON SPYING
- *BRAZIL'S SAYS IT NEEDS U.S. EXPLANATION BEFORE STATE VISIT
- *BRAZIL SAYS U.S. ILLEGAL MONITORING OF GOVT, COS. IS 'SERIOUS'
- *BRAZIL PRESIDENT ROUSSEFF POSTPONES STATE VISIT TO THE U.S.
Via AP,
Brazil's president has postponed a state visit to Washington in response to U.S. spying.
President Dilma Rousseff says Tuesday she's not making the trip next month, which was to include a state dinner.
Rousseff has been angered reports based on leaked National Security Agency documents. They've shown that her communications with top aides were intercepted.
The NSA espionage program also targeted state-run oil company Petrobras.
Brazil reportedly has been the top Latin American target for spying, with data on billions of emails and telephone calls swooped up in NSA programs.
President Barack Obama called Rousseff late Monday and tried to talk her into maintaining her trip, the Brazilian president's office said.
But Rousseff was demanding a full public apology from Obama for the spying, which she didn't get.
And The White House's response,
Statement by the Press Secretary on Postponement of the State Visit of President Dilma Rousseff of Brazil
Yesterday, the President spoke by telephone with President Dilma Rousseff of Brazil to follow-up on their meeting in St. Petersburg and Ambassador Rice’s meeting with the Foreign Minister of Brazil last week.
The United States and Brazil enjoy a strategic partnership rooted in shared democratic values and in the desire to advance broad-based economic growth and job creation. President Obama’s invitation to President Rousseff for the first State Visit of his second term is a reflection of the importance he places on this growing global partnership and the close bonds between the American and Brazilian people.
The President has said that he understands and regrets the concerns disclosures of alleged U.S. intelligence activities have generated in Brazil and made clear that he is committed to working together with President Rousseff and her government in diplomatic channels to move beyond this issue as a source of tension in our bilateral relationship. As the President previously stated, he has directed a broad review of U.S. intelligence posture, but the process will take several months to complete. President Obama and President Rousseff both look forward to the State Visit, which will celebrate our broad relationship and should not be overshadowed by a single bilateral issue, no matter how important or challenging the issue may be. For this reason, the presidents have agreed to postpone President Rousseff’s State Visit to Washington scheduled for October 23.
President Obama looks forward to welcoming President Rousseff to Washington at a date to be mutually agreed. Other important cooperation mechanisms, including the presidential dialogues on political, economic, energy, and defense cooperation, will continue.
Brazil looks to break from US-centric Internet
RIO DE JANEIRO
(AP) -- Brazil plans to divorce itself from the U.S.-centric Internet
over Washington's widespread online spying, a move that many experts
fear will be a potentially dangerous first step toward fracturing a
global network built with minimal interference by governments.
President
Dilma Rousseff ordered a series of measures aimed at greater Brazilian
online independence and security following revelations that the U.S.
National Security Agency intercepted her communications, hacked into the
state-owned Petrobras oil company's network and spied on Brazilians who
entrusted their personal data to U.S. tech companies such as Facebook
and Google.
The leader is so angered by the
espionage that she's considering cancelling a trip to Washington next
month where she's scheduled to be honored with a state dinner.
Internet
security and policy experts say the Brazilian government's reaction to
information leaked by former NSA contractor Edward Snowden is
understandable, but warn it could set the Internet on a course of
Balkanization.
"The global backlash is only
beginning and will get far more severe in coming months," said Sascha
Meinrath, director of the Open Technology Institute at the
Washington-based New America Foundation think tank. "This notion of
national privacy sovereignty is going to be an increasingly salient
issue around the globe."
While Brazil isn't
proposing to bar its citizens from U.S.-based Web services, it wants
their data to be stored locally as the nation assumes greater control
over Brazilians' Internet use to protect them from NSA snooping.
The
danger of mandating that kind of geographic isolation, Meinrath said,
is that it could render inoperable popular software applications and
services and endanger the Internet's open, interconnected structure.
The
effort by Latin America's biggest economy to digitally isolate itself
from U.S. spying not only could be costly and difficult, it could
encourage repressive governments to seek greater technical control over
the Internet to crush free expression at home, experts say.
In
December, countries advocating greater "cyber-sovereignty" pushed for
such control at an International Telecommunications Union meeting in
Dubai, with Western democracies led by the United States and the
European Union in opposition.
U.S. digital
security expert Bruce Schneier says that while Brazil's response is a
rational reaction to NSA spying, it is likely to embolden "some of the
worst countries out there to seek more control over their citizens'
Internet. That's Russia, China, Iran and Syria."
Rousseff
says she intends to push for international rules on privacy and
security in hardware and software during the U.N. General Assembly
meeting later this month. Among Snowden revelations: the NSA has created
backdoors in software and Web-based services.
Brazil
is now pushing more aggressively than any other nation to end U.S.
commercial hegemony on the Internet. More than 80 percent of online
search, for example, is controlled by U.S.-based companies.
Most
of Brazil's global Internet traffic passes through the United States,
so Rousseff's government plans to lay underwater fiber optic cable
directly to Europe and also link to all South American nations to create
what it hopes will be a network free of U.S. eavesdropping.
More
communications integrity protection is expected when Telebras, the
state-run telecom company, works with partners to oversee the launch in
2016 of Brazil's first communications satellite, for military and public
Internet traffic. Brazil's military currently relies on a satellite run
by Embratel, which Mexican billionaire Carlos Slim controls.
Rousseff
is urging Brazil's Congress to compel Facebook, Google and all
companies to store data generated by Brazilians on servers physically
located inside Brazil in order to shield it from the NSA.
If
that happens, and other nations follow suit, Silicon Valley's bottom
line could be hit by lost business and higher operating costs:
Brazilians rank No. 3 on Facebook and No. 2 on Twitter and YouTube. An
August study by a respected U.S. technology policy nonprofit estimated
the fallout from the NSA spying scandal could cost the U.S. cloud
computing industry, which stores data remotely to give users easy access
from any device, as much as $35 billion by 2016 in lost business.
Brazil
also plans to build more Internet exchange points, places where vast
amounts of data are relayed, in order to route Brazilians' traffic away
from potential interception.
And its postal
service plans by next year to create an encrypted email service that
could serve as an alternative to Gmail and Yahoo!, which according to
Snowden-leaked documents are among U.S. tech giants that have
collaborated closely with the NSA.
"Brazil
intends to increase its independent Internet connections with other
countries," Rousseff's office said in an emailed response to questions
from The Associated Press on its plans.
It
cited a "common understanding" between Brazil and the European Union on
data privacy, and said "negotiations are underway in South America for
the deployment of land connections between all nations." It said Brazil
plans to boost investment in home-grown technology and buy only software
and hardware that meet government data privacy specifications.
While
the plans' technical details are pending, experts say they will be
costly for Brazil and ultimately can be circumvented. Just as people in
China and Iran defeat government censors with tools such as "proxy
servers," so could Brazilians bypass their government's controls.
International
spies, not just from the United States, also will adjust, experts said.
Laying cable to Europe won't make Brazil safer, they say. The NSA has
reportedly tapped into undersea telecoms cables for decades.
Meinrath
and others argue that what's needed instead are strong international
laws that hold nations accountable for guaranteeing online privacy.
"There's nothing viable that Brazil can really do to protect its citizenry without changing what the U.S. is doing," he said.
Matthew
Green, a Johns Hopkins computer security expert, said Brazil won't
protect itself from intrusion by isolating itself digitally. It will
also be discouraging technological innovation, he said, by encouraging
the entire nation to use a state-sponsored encrypted email service.
"It's sort of like a Soviet socialism of computing," he said, adding that the U.S. "free-for-all model works better."
---
Associated Press writer Bradley Brooks reported this story in Rio de Janeiro and Frank Bajak reported from Lima, Peru.
---
Bradley Brooks on Twitter: http://www.twitter.com/bradleybrooks
Frank Bajak on Twitter: http://www.twitter.com/fbajak
Where Americans—Rich and Poor—Spent Every Dollar in 2012
Here it is, fresh from the Bureau of Labor Statistics: all of American spending in one big color wheel.
Since some of you (inexplicably) don't like pie charts, here's the same data in bars.
Averages are misleading, particularly when the rich are running away from the rest. So, digging deeper into BLS data, I broke out percent spending by category for the richest and poorest 20 percent.
For the poor, food, clothes, and housing account for more than 60 percent of all spending. The rich have more left over for leisure, insurance, and savings.
The term consumption takes on a more literal meaning when you see the difference between rich and poor spending. Cash-hungry families consume more of their income immediately, spending two in three dollars on absolute essentials like food and shirts. The rich are more predisposed to spend toward the future, with eight-times more of their income going toward insurance and even more going toward savings (although the bottom 20 percent includes lots of retirees on Social Security, the next quintile doesn't see much in the way of savings either).
There has been a good amount of research recently about how being poor changes your thinking about everything. "If you have very little, you often behave in such a way so that you'll have little in the future," Sendhil Mullainathan recently told Harold Pollack in Wonkblog. The poor don't plan as much for the coming years, because they can't afford to.
Thinking about the future is a form of luxury.
http://www.theatlantic.com/business/archive/2013/09/where-americans-rich-and-poor-spent-every-dollar-in-2012/279727/
Since some of you (inexplicably) don't like pie charts, here's the same data in bars.
Averages are misleading, particularly when the rich are running away from the rest. So, digging deeper into BLS data, I broke out percent spending by category for the richest and poorest 20 percent.
For the poor, food, clothes, and housing account for more than 60 percent of all spending. The rich have more left over for leisure, insurance, and savings.
The term consumption takes on a more literal meaning when you see the difference between rich and poor spending. Cash-hungry families consume more of their income immediately, spending two in three dollars on absolute essentials like food and shirts. The rich are more predisposed to spend toward the future, with eight-times more of their income going toward insurance and even more going toward savings (although the bottom 20 percent includes lots of retirees on Social Security, the next quintile doesn't see much in the way of savings either).
There has been a good amount of research recently about how being poor changes your thinking about everything. "If you have very little, you often behave in such a way so that you'll have little in the future," Sendhil Mullainathan recently told Harold Pollack in Wonkblog. The poor don't plan as much for the coming years, because they can't afford to.
Thinking about the future is a form of luxury.
http://www.theatlantic.com/business/archive/2013/09/where-americans-rich-and-poor-spent-every-dollar-in-2012/279727/
Monday, September 16, 2013
The Top 10 Questions About Twitter's Real Value
The number whispered on Wall Street is $10 billion (or $14-$15 if you ask The Saudis), but potential investors in the micro-blogger’s IPO will need more to go on than simple valuation math and guided judgment. As ConvergEx's Nick Colas notes, Tech firms are particularly dependent on innovation and human capital for their viability. So while Twitter may come out with a double-digit billion dollar IPO, Colas points out the most important question – Is it actually worth buying there?
The bottom line to the success of thriving tech companies (historically names such as Amazon, Google and Apple) is that they consistently and reliably build products that people want to purchase and use. Colas explores multiple avenues to determine whether Twitter has the engine to do this, or whether it could emerge more “Groupon” than “Google” in the public company tech arena – and the answer lies in how you weigh the pros and cons of our top 10 points related to the social network’s IPO.
As for Colas, he’d prefer a clearer picture of Twitter’s vision (i.e. a pipeline of new innovative product ideas) before tossing his dollars in the ring.
SEE THE WHOLE ARTICLE AND MORE LIKE THIS AT GLOBAL INTEL HUB, YOUR SOURCE FOR BREAKING MARKETS ANALYSIS
All Options Trading Halted, Or Another Day Another Exchange Breaks
Update, as supposedly things are unbroken again:
And promptly, BATS "self-helps" itself against OPRA:
And now Nasdaq:
Finally, IB chimes in:
http://www.zerohedge.com/news/2013-09-16/another-day-another-exchange-breaks
- as of 12:51 the CBOE and C2 are reopened and available for trading
And promptly, BATS "self-helps" itself against OPRA:
- BATS TO HALT OPTIONS TRADING FROM 1:30 PM UNTIL OPRA RESTORED
- BATS OPTIONS HALTS TRADING AT 1:30PM ON OPRA ISSUE
And now Nasdaq:
Finally, IB chimes in:
- Due to OPRA data dissemination issues all US OPTIONS trading venues have halted trading.
http://www.zerohedge.com/news/2013-09-16/another-day-another-exchange-breaks
At Least Six Dead In Washington Navy Yard; 3 Shooters (1 Dead, 2 "On The Loose") - Live Stream
- *NAVY OFFICIALS SAY AT LEAST 6 DEAD IN NAVY YARD SHOOTING: AP
- *TWO 'POTENTIAL OTHER SHOOTERS' ON THE LOSE, DC POLICE CHIEF
- *DC POLICE: POSSIBLE BLACK MALE SHOOTER MAY BE CARRYING LONG GUN
- *ONE SHOOTER MAY BE WHITE MALE IN KHAKI UNIFORM, DC CHIEF SAYS
- *NBC REPORTS AT LEAST 10 SHOT AT NAVY YARD, CITING POLICE
- *NBC REPORTS SHOOTER WAS CAPTURED OR `TAKEN DOWN'
- *NBC REPORTS FOUR KILLED, EIGHT INJURED IN SHOOTING
Live Stream from Local News:
NSA Spies on International Payments
The United States' NSA intelligence agency is interested in international payments processed by companies including Visa, SPIEGEL has learned. It has even set up its own financial database to track money flows through a "tailored access operations" division.
The National Security Agency (NSA) widely monitors international payments, banking and credit card transactions, according to documents seen by SPIEGEL.
The information from the American foreign intelligence agency, acquired by former NSA contractor and whistleblower Edward Snowden, show that the spying is conducted by a branch called "Follow the Money" (FTM). The collected information then flows into the NSA's own financial databank, called "Tracfin," which in 2011 contained 180 million records. Some 84 percent of the data is from credit card transactions.
Further NSA documents from 2010 show that the NSA also targets the transactions of customers of large credit card companies like VISA for surveillance. NSA analysts at an internal conference that year described in detail how they had apparently successfully searched through the US company's complex transaction network for tapping possibilities.
Their aim was to gain access to transactions by VISA customers in Europe, the Middle East and Africa, according to one presentation. The goal was to "collect, parse and ingest transactional data for priority credit card associations, focusing on priority geographic regions."
In response to a SPIEGEL inquiry, however, VISA issued a statement in which it said, "We are not aware of any unauthorized access to our network. Visa takes data security seriously and, in response to any attempted intrusion, we would pursue all available remedies to the fullest extent of the law. Further, its Visa's policy to only provide transaction information in response to a subpoena or other valid legal process."
The NSA's Tracfin data bank also contained data from the Brussels-based Society for Worldwide Interbank Financial Telecommunication (SWIFT), a network used by thousands of banks to send transaction information securely. SWIFT was named as a "target," according to the documents, which also show that the NSA spied on the organization on several levels, involving, among others, the agency's "tailored access operations" division. One of the ways the agency accessed the data included reading "SWIFT printer traffic from numerous banks," the documents show.
But even intelligence agency employees are somewhat concerned about spying on the world finance system, according to one document from the UK's intelligence agency GCHQ concerning the legal perspectives on "financial data" and the agency's own cooperations with the NSA in this area. The collection, storage and sharing of politically sensitive data is a deep invasion of privacy, and involved "bulk data" full of "rich personal information," much of which "is not about our targets," the document says.
SPIEGEL/kla
Sunday, September 15, 2013
Americans choose Guardian UK over main stream media
The fastest growing "newspaper" in America is based in Manchester, England. The Internet analytics firm Compete.com found that the number of visitors to the website of The Guardian grew by 1111.75% in August and an astounding 671,389.51% over the past year, signifying the desire for Americans to find real information about what's going on.
The main word that people going to The Guardian were searching for was "Syria," according to Compete's blog. That would indicate Americans appreciate The Guardian's skepticism of President Obama's plans to attack Syria and its reputation for honest reporting. It also indicates that average Americans no longer trust their own media and are increasingly turning to a foreign news source.
In polls previously reported by Anthony Gucciardi on Storyleak, it was found that the mainstream media has virtually lost all trust from the American people.
It's no coincidence that The Guardian has seen such explosive growth over the past year. It was Guardian journalist Glenn Greenwald who broke the story about the NSA documents Edward Snowden was leaking. The Guardian has been willing to print all the details of NSA surveillance and not bow to political pressure.
A TRADITION OF DISSENT
Even though it's new to Americans, The Guardian is hardly a new newspaper. It has been around in one form or another since 1821. The Guardian is the third most popular daily in Great Britain with a circulation of 197,000 paper copies and nine million online readers.
The interesting thing is that The Guardian is known as a fairly liberal newspaper in England, but it has a strong appeal to American conservatives and libertarians; probably because of its willingness to stand up for civil liberties and its opposition to surveillance.
Another reason for the paper's popularity and independence is that The Guardian is owned by the Scott Trust. The Trust is a charitable foundation that allows The Guardian to operate at a loss. In other words, The Guardian is not part of the corporate media, and its purpose is to report the news not to enhance a corporate bottom line.
Oddly enough, The Guardian has also become a major thorn in the side of President Obama. It has embarrassed him tremendously by exposing his administration's questionable activities. The paper was actually formed after authorities shut down another newspaper that supported radical reforms in 1821. The Guardian's online success shows how pathetic the American media has become. Hopefully, Jeff Bezos will be able to transform The Washington Post into something similar (but probably not).
http://www.sott.net/article/266355-Americans-rejecting-mainstream-media-for-UK-Guardian
In polls previously reported by Anthony Gucciardi on Storyleak, it was found that the mainstream media has virtually lost all trust from the American people.
It's no coincidence that The Guardian has seen such explosive growth over the past year. It was Guardian journalist Glenn Greenwald who broke the story about the NSA documents Edward Snowden was leaking. The Guardian has been willing to print all the details of NSA surveillance and not bow to political pressure.
A TRADITION OF DISSENT
Even though it's new to Americans, The Guardian is hardly a new newspaper. It has been around in one form or another since 1821. The Guardian is the third most popular daily in Great Britain with a circulation of 197,000 paper copies and nine million online readers.
The interesting thing is that The Guardian is known as a fairly liberal newspaper in England, but it has a strong appeal to American conservatives and libertarians; probably because of its willingness to stand up for civil liberties and its opposition to surveillance.
Another reason for the paper's popularity and independence is that The Guardian is owned by the Scott Trust. The Trust is a charitable foundation that allows The Guardian to operate at a loss. In other words, The Guardian is not part of the corporate media, and its purpose is to report the news not to enhance a corporate bottom line.
Oddly enough, The Guardian has also become a major thorn in the side of President Obama. It has embarrassed him tremendously by exposing his administration's questionable activities. The paper was actually formed after authorities shut down another newspaper that supported radical reforms in 1821. The Guardian's online success shows how pathetic the American media has become. Hopefully, Jeff Bezos will be able to transform The Washington Post into something similar (but probably not).
http://www.sott.net/article/266355-Americans-rejecting-mainstream-media-for-UK-Guardian
Beware the Fed is armed (literally)
The recent uproar over armed EPA agents descending on a tiny Alaska mining town is shedding light on the fact that 40 federal agencies – including nearly a dozen typically not associated with law enforcement -- have armed divisions.
The agencies employ about 120,000 full-time officers authorized to carry guns and make arrests, according to a June 2012 Justice Department report.
Though most Americans know agents within the Drug Enforcement Agency and the Federal Bureau of Prisons carry guns, agencies such as the Library of Congress and Federal Reserve Board employing armed officers might come as a surprise.
Read more: http://www.foxnews.com/politics/2013/09/14/armed-epa-agents-in-alaska-shed-light-on-70-fed-agencies-with-armed-divisions/?intcmp=latestnews#ixzz2f1Bm9itG
The Man In Charge Of The NSA Modeled His Office After The Bridge Of The Starship Enterprise
Privacy: the final frontier. These are the voyages of the NSA, as it enters every computer and pries whatever data can be stolen and recorded in perpetuity. Its ongoing mission: to explore the internet and all TCP/IP packets, to seek out new emails, phone records, backdoors, webcams and bank accounts, to boldly go where no man with or without a search warrant has gone before.
Those who will recall our brief biopic on the "Meet The Man In Charge Of America's Secret Cyber Army [5]" remember that before Keith Alexander was put in charge of the NSA, he "was a one-star general in charge of the Army Intelligence and Security Command, the military’s worldwide network of 10,700 spies and eavesdroppers. In March of that year he told his hometown Syracuse newspaper that his job was to discover threats to the country. “We have to stay out in front of our adversary,” Alexander said. “It’s a chess game, and you don’t want to lose this one.” But just six months later, Alexander and the rest of the American intelligence community suffered a devastating defeat when they were surprised by the attacks on 9/11. Following the assault, he ordered his Army intercept operators to begin illegally monitoring the phone calls and email of American citizens who had nothing to do with terrorism, including intimate calls between journalists and their spouses. Congress later gave retroactive immunity to the telecoms that assisted the government."
That much is known. What may come as a surprise is that during his tenure at the AISC, Alexander made it quite clear that he perceived himself as none other than Star Trek's James T. Kirk, or to a lesser extent, Jean-Luc Piccard, if only based on how he decorated his "office" - the amusingly titled "Information Dominance Center." Amusingly, because said information dominance failed completely to foresee the events of September 11.
An article in Foreign Policy [6]has this nugget:
"When he was running the Army's Intelligence and Security Command, Alexander brought many of his future allies down to Fort Belvoir for a tour of his base of operations, a facility known as the Information Dominance Center. It had been designed by a Hollywood set designer to mimic the bridge of the starship Enterprise from Star Trek, complete with chrome panels, computer stations, a huge TV monitor on the forward wall, and doors that made a 'whoosh' sound when they slid open and closed. Lawmakers and other important officials took turns sitting in a leather 'captain's chair' in the center of the room and watched as Alexander, a lover of science-fiction movies, showed off his data tools on the big screen.
"'Everybody wanted to sit in the chair at least once to pretend he was Jean-Luc Picard,' says a retired officer in charge of VIP visits."
Alexander wowed members of Congress with his eye-popping command center. And he took time to sit with them in their offices and explain the intricacies of modern technology in simple, plain-spoken language. He demonstrated a command of the subject without intimidating those who had none.
Today, courtesy of the Guardian's Glenn Greenwald, who tracked down the layout of said Information Dominance Center to designs prepared by DBI Architects [7]who supposedly were in charge of creating the General's work environs, we now have a glimpse of just how Star Trekishly the megalomaniac intercepting all US and global electronic communications and financial transactions thought of himself.
From Greenwald [8]:
It's a 10,740 square foot labyrinth in Fort Belvoir, Virginia. The brochure touts how "the prominently positioned chair provides the commanding officer an uninterrupted field of vision to a 22'-0" wide projection screen":
[9]
The glossy display further describes how "this project involved the renovation of standard office space into a highly classified, ultramodern operations center." Its "primary function is to enable 24-hour worldwide visualization, planning, and execution of coordinated information operations for the US Army and other federal agencies." It gushes: "The futuristic, yet distinctly military, setting is further reinforced by the Commander's console, which gives the illusion that one has boarded a star ship": [10]
[10]
Any casual review of human history proves how deeply irrational it is to believe that powerful factions can be trusted to exercise vast surveillance power with little accountability or transparency. But the more they proudly flaunt their warped imperial hubris, the more irrational it becomes.
Many US bridges old, risky and rundown
WASHINGTON (AP) -- Motorists coming off the Frederick Douglass Memorial Bridge into Washington are treated to a postcard-perfect view of the U.S. Capitol. The bridge itself, however, is about as ugly as it gets: The steel underpinnings have thinned since the structure was built in 1950, and the span is pocked with rust and crumbling concrete.
District of Columbia officials were so worried about a catastrophic failure that they shored up the horizontal beams to prevent the bridge from falling into the Anacostia River.
And safety concerns about the Douglass bridge, which is used by more than 70,000 vehicles daily, are far from unique.
An Associated Press analysis of 607,380 bridges in the most recent federal National Bridge Inventory showed that 65,605 were classified as "structurally deficient" and 20,808 as "fracture critical." Of those, 7,795 were both - a combination of red flags that experts say indicate significant disrepair and similar risk of collapse.
A bridge is deemed fracture critical when it doesn't have redundant protections and is at risk of collapse if a single, vital component fails. A bridge is structurally deficient when it is in need of rehabilitation or replacement because at least one major component of the span has advanced deterioration or other problems that lead inspectors to deem its condition poor or worse.
Engineers say the bridges are safe. And despite the ominous sounding classifications, officials say that even bridges that are structurally deficient or fracture critical are not about to collapse.
The AP zeroed in on the Douglass bridge and others that fit both criteria - structurally deficient and fracture critical. Together, they carry more than 29 million drivers a day, and many were built more than 60 years ago. Those bridges are located in all 50 states, plus Puerto Rico and the District of Columbia, and include the Brooklyn Bridge in New York, a bridge on the New Jersey highway that leads to the Lincoln Tunnel, and the Main Avenue Bridge in Cleveland.
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