The Big Picture

Succinct Summation of Week’s Events 12.12.14
The U.S. Economy Upshifts
The Russian Laundromat
The Truth About Bailouts, the Economy and Stock Markets
10 Friday AM Reads
FXXK: Ferrari’s New Car Name ?

Succinct Summation of Week’s Events 12.12.14

Posted: 12 Dec 2014 01:30 PM PST

Succinct Summations week ending December 12, 2014

Positives:

1. Average gasoline prices fell to $2.60, the lowest levels since 2009, as Crude Oil continues to crash.
2. U.S. retail sales rose 0.6% m/o/m, better then he 0.5% expected rise.
3. Consumer confidence came in at 93.88, which was the biggest beat relative to expectations since December 2013.
4. NFIB small business optimism came in at 98.1, the highest reading since early 2007.
5. Initial jobless claims came in at 294k, down 3k from last week and a touch lower than expected.
6. MBA refi applications rose 13.2% w/o/w.

Negatives:

1. It was a rough week for stocks; the Dow lost 3.7%, its worst week since 2011. The S&P 500 didn't fare much better, wiping out the last 5 weeks of gains.
2. Crude Oil continues to crash, falling 12.6% this week and down 49% from highs set in August.
3. Deflation alert: Producer prices fell 0.2%, bigger than the 0.1% expected decline.
4. The Athens stock market fell by 20%
5. Europe industrial production rose just 0.1% m/o/m, vs the paltry 0.2% expected.
6. Fitch cuts France to AA from AA+

Thanks, Mike!

The U.S. Economy Upshifts

Posted: 12 Dec 2014 08:15 AM PST

"Read narrowly, the results show that some survey data suggesting weak post-Thanksgiving Black Friday sales was misleading at best." — New York Times

No, this isn’t going to be a victory lap about the National Retail Federation and its always-wrong forecasts about holiday retail sales (that annual chest-pounding comes in January). Rather, this is about the recent U.S. economic acceleration and what it might mean for the stock market, the Federal Reserve and bonds.

The combination of falling oil prices, increasing job availability and rising wages bodes well for retail sales. Perhaps more significantly, the economy is now showing unmistakable signs of acceleration. Following several years of subpar job creation, jobs are now being added at a robust pace. As we noted last week, the U.S. is adding an average of 241,000 jobs a month. That's almost a 25 percent increase from 2013's monthly average of 194,000.

Some of you will no doubt be compelled to note that any economic recovery is artificial, the result of the Fed's bond-buying program of quantitative easing and its zero interest-rate policy. To which I say, you are in part right. But I am equally compelled to point out that many of these are the same folks who have been loudly complaining that QE and ZIRP weren’t working. Well, which is it? Is QE impotent or does it generate growth, albeit it artificial? Critics of the Fed can’t have it both ways.

Regardless, investors may want to consider the ramifications of accelerating economic growth:

No. 1. Economic activity is uncorrelated with the stock market.

Continues here

The Russian Laundromat

Posted: 12 Dec 2014 07:00 AM PST

Source: OCCRP

From OCCRP:

Call it the Laundromat. It's a complex system for laundering more than $20 billion in Russian money stolen from the government by corrupt politicians or earned through organized crime activity. It was designed to not only move money from Russian shell companies into EU banks through Latvia, it had the added feature of getting corrupt or uncaring judges in Moldova to legitimize the funds. The state-of-the-art system provided exceptionally clean money backed by a court ruling at a fraction of the cost of regular laundering schemes. It made up for the low costs by laundering huge volumes. The system used just one bank in Latvia and one bank in Moldova but 19 banks in Russia, some of them controlled by rich and powerful figures including the cousin of Russian President Vladimir Putin.

The Truth About Bailouts, the Economy and Stock Markets

Posted: 12 Dec 2014 05:45 AM PST

I sat down wiht the folks from Epic Times to talk about, well, everything:

Source: The Epoch Times

10 Friday AM Reads

Posted: 12 Dec 2014 04:45 AM PST

Its finally Friday after a torture laden week as Oil heads to $50. And, our morning train reads:

• The stock market is not even close to topping out (MarketWatch)
• Lessons Learned in 2014 (AllianceBernstein) see also Burt Malkiel: Walk Away from 2015 Know-It-Alls (Bloomberg)
• Misreading the Lessons From Financial Crises (NYT)
• November Retail results show that survey data suggesting weak post-Thanksgiving Black Friday sales were wrong (Upshot)
• My 2015 Wish List for DOL, SEC, States, CFP Board, NAPFA & You (Scholarly Financial Planner)

Continues here

FXXK: Ferrari’s New Car Name ?

Posted: 12 Dec 2014 03:00 AM PST

From Jalopnik:

Ferrari just unveiled the FXX K, a hybrid V12 track monster with 1,035 horsepower and 50 percent more downforce than the already bonkers LaFerrari. But the best part is that its name is basically Fuck. And Ferrari knew exactly what they were doing. Naming its fastest ever car after explicit coitus is brilliant.

Source: Jalopnik