"Build Your Own Fed Statement"

From Mortgage Daily News:

Parsing the Fed is everyone's favorite game, so before the Fed wraps its fifth meeting of 2013 this afternoon, it's time to play "Build Your Own Fed Statement!" It's easy to win, just choose your favorite answers from the bold options in the Ted Statement below.

Information received since the Federal Open Market Committee met in May suggests that (economic activity; MLB trading deadline drama; looming angst among Red Sox and Cardinals fans) has been expanding at a moderate pace.  

(Labor market conditions; renewed Twinkie supplies; Detroit municipal legal fees) have shown further improvement in recent months, on balance, but the (unemployment rate; distress levels for volume challenged lenders; A-Rod drama) remains elevated.

Household spending and business fixed investment advanced, and the housing sector has strengthened further, but fiscal policy is (restraining economic growth; disjointed per usual; coherent for imaginative economists). 

Partly reflecting (transitory influences; plummeting loan officers' payrolls; dwindling Biogenesis revenues), inflation has been running below the Committee's longer-run objective, but longer-term inflation expectations have remained stable.

Consistent with its statutory mandate, the Committee seeks to (foster maximum employment and price stability; ensure its legacy for posterity; achieve certain post term Ivy League employment).

The Committee expects that, with appropriate (policy accommodation; rampant federal spending; Wolverine box office receipts), economic growth will proceed at a moderate pace and the unemployment rate will gradually decline toward levels the Committee judges consistent with its dual mandate.

The Committee sees the downside risks to the outlook for the economy and the labor market as having diminished since the fall. The Committee also anticipates that (inflation; congressional approval ratings; Milwaukee Brewers' miniscule playoff prospects) over the medium term likely will run at or below its 2 percent objective....MORE 

A gallant attempt but no match for "Attention Journalists: 'How to write about pointless international organisations'":

The Financial Times' Alan Beattie wrote this bit of brilliance last year for the G8 meeting. His friend Gideon Rachman duly posted it on his FT Rachmanblog. I am reposting it in full to bookmark for future reference:

...Alan then forwarded me a generic column on international institutions that he has written. It really says it all - and I think I may simply reproduce it, every year, round about G8 time.
It goes as follows:

By reporters everywhere

An ineffectual international organisation yesterday issued a stark warning about a situation it has absolutely no power to change, the latest in a series of self-serving interventions by toothless intergovernmental bodies.

“We are seriously concerned about this most serious outbreak of seriousness,” said the head of the institution, either a former minister from a developing country or a mid-level European or American bureaucrat.

“This is a wake-up call to the world. They must take on board the vital message that my organisation exists.”

The director of the body, based in one of New York, Washington or an agreeable Western European city, was speaking at its annual conference, at which ministers from around the world gather to wring their hands impotently about the most fashionable issue of the day. The organisation has sought to justify its almost completely fruitless existence by joining its many fellow talking-shops in highlighting whatever crisis has recently gained most coverage in the global media.

“Governments around the world must come together to combat whatever this year’s worrying situation has turned out to be,” the director said. “It is not yet time to panic, but if it goes on much further without my institution gaining some credit for sounding off on the issue, we will be justified in labelling it a crisis.”...MUCH MORE

Potash and the Commodity Supercycle

The producers are all down, averaging around 6%.
From the Wall Street Journal's Heard on the Street column:

Collapse of a Potash-Market Cartel Slams Producer Stocks—and Is Another Blow to Commodities Bulls

The commodities supercycle, wobbly already, just skidded into the dirt—literally.

Russia's Uralkali, URALL -12.32% the world's largest potash producer by output, has pulled out of its sales partnership with Belarus that, according to CIBC, controlled about a third of global capacity for the fertilizer ingredient. This is a big deal, as the potash market is defined by such cartels: A second one, North America's Canpotex, controls another third. Stocks of big producers including Uralkali itself and Potash Corp. of Saskatchewan POT.T -5.57% plunged Tuesday.

This looks like a classic case of high prices and a hot growth story prompting a wave of new supply just in time for key markets to slow down. Potash demand was meant to spiral upward along with appetites in developing markets; spot prices went north of $1,000 a metric ton in 2008.

Today, potash is priced closer to $400. Demand growth has slowed along with emerging-markets economies. For Brazil and India, two key markets, this is compounded by a slide in their currencies, raising the cost....MORE

 ...Meanwhile, supply is rising. CIBC forecasts annual operating capacity to expand from about 62 million metric tons in 2012 to almost 71 million metric tons in 2015. Demand this year is put at just 54 million metric tons. Uralkali's proposal to run at 100% capacity in the second half of the year, against 70% in the first half, would add almost two million metric tons of extra supply alone....

Now, if only the International Parsley Cartel would back off their strong-arm tactics...

See also:
The Sicilian Mafia and the International Lemon Cartel

Venn In Wall Street... (JPM)

...do as the Wall Streeters do:

-williambanzai7

Lines on Charts: "Corn Seen Sliding Below $4.50 on Bear Flag"

Oops, there appears to be a problem with the chart, that's the September contract above while we have been looking at the December contract, last trade $4.75 down 2.5 cents.
From Bloomberg:

Corn may extend its slump this year to the cheapest level since 2010, according to technical analysis by INTL FCStone Inc.

After the December contract dropped to a then 31-month low of $4.895 a bushel on July 5, prices rebounded to $5.2825 on July 11, creating a so-called bear flag that signals a drop to $4.47, the lowest since September 2010, said Matt Ammermann, a commodity risk manager at FCStone in London. A bear flag, named for its resemblance to an inverted flag on a pole, occurs when a security is falling, pauses and consolidates, and continues its drop.

“The market now is going to be chewing lower, but it’s probably not going to be a drastic drop because yields are still a big question mark in the U.S.,” Ammermann said in a telephone interview yesterday. “Just going by technical support, we’re looking at $4.47, although psychological support would be $4.50.”...MORE

Previously:
"Corn Extends Drop to 33-Month Low on U.S. Crop; Soybeans Decline"
"Ideal weather sends corn, wheat prices to new lows"
US Farmland: Price Growth Slows, as Farm Profits Fall (corn now under $5.00)
"Deutsche slashes hopes for corn, soybean prices"
Macquarie Calling For Corn in the Low $4's 
Macquarie "Wheat 50% overvalued - corn to hit three-year low"
Corn: Deutsche sees potential for price below $4
"INSIGHT-Big U.S. harvest may hit grain prices, test high farmland values" 

Intrepid Potash to Report Tomorrow, Conference call on Wednesday (IPI)

They will be the first to talk to shareholders after the fertpocalypse unleashed by the low cost producer OAO Uralkali.
Intrepid is a very high cost producer (although not as high as Germany's K+S), $174 per ton cash cost as of the last earnings report.
In comparison Potash Corp. reported a cash cost of $US114 a tonne.

So why do I bring this up?

What if the whole thing is a bluff on Uralkali's part?
Uralkali brags that they are the lowest-cost producer ($65 tonne) and have the highest potash capacity so the announcements could be for real but what if it's just a negotiating ploy to hammer Belaruskali?
In that case you'd want the company most levered to realized prices.

Stay tuned.

"What Haven't We Securitized? I Know, Rent Payments"

That was the title of a post last September.
And here's today's news via ZeroHedge:

Here We Go Again: Step Aside RMBS, Rent-Backed Securities Are Here, And With Them The Beginning Of The End

Earlier today, when we reported that median asking rents in the US had just hit an all time high, we had a thought: how long until the hedge funds that also double down as landlords decide to bypass the simple collection the rental cash flows, and instead collateralize the actual underlying "securities"? One look at the chart below - which compares the median asking "for sale" price in black and the median rent in red - shows why.

The last time there was a great divergence (to the benefit of housing), Wall Street spawned an entire Residential Mortgage-Backed Securities industry where Paulson, Goldman willing sellers would package mortgages, often-times synthetically, slice them up in tranches of assorted riskiness, and sell them to willing idiots yield-starved buyers. As everyone knows, that particular securitization bubble ended with the bankruptcy of Lehman, the bailout of AIG and the near collapse of the financial system. As it turns out, the answer to our original question was "a few hours" because securitizations are back, baby, and this time they are scarier and riskier than ever. 

It appears that since America's financially innovative elite doesn't have the patience to wait until housing prices regain their previous all time highs in order to usher in the second great RMBS wave, they looked long and hard at the chart above, and especially the red rental line, and came up with a brilliant idea: "Hey, let's just securitize rents."

Sadly, we are not kidding. The WSJ reports:

Two major Wall Street firms are in detailed discussions to create and sell the world's first bond backed by home-rental payments, people familiar with the matter say.

Blackstone Group LP is in negotiations to bundle monthly rental payments on around 1,500 to 1,700 of its homes. The private-equity giant is among the firms that have spent billions buying homes out of foreclosure, an investment strategy that has helped to bolster demand and strengthen the U.S. housing market.

The bond comprised of the Blackstone homes would be structured and marketed to investors by Deutsche Bank AG, the people say....MORE

Why Do All Hollywood Movies Lose Money?

From Priceonomics:

Star Wars: Return of the Jedi. 

Forrest Gump. 

Harry Potter and the Order of the Phoenix. 

What do these three films have in common? Each was a blockbuster, among the first or second highest grossing films of the year. All three were also unprofitable.  

Two years after the re-release of Return of the Jedi in 1997, for example, David Prowse, the actor who played Darth Vader, told Equity Magazine that he still received letters informing him that Lucasfilm had no profits to share with him:

“I get these occasional letters from Lucasfilm saying that we regret to inform you that as Return of the Jedi has never gone into profit, we’ve got nothing to send you. Now here we’re talking about one of the biggest releases of all time. I don’t want to look like I’m bitching about it, but on the other hand, if there’s a pot of gold somewhere that I ought to be having a share of, I would like to see it.”

These films are not a cautionary tale about how wasteful spending can turn a commercial success into a net failure. They had perfectly average production budgets and expenses for movies of their scale. Their lack of profitability, in fact, is typical. Over 80% of Hollywood movies fail to turn a profit....MORE

Oil: Where We're At

One of the dumbest things you can do while at the market is have multiple positions across multiple markets that have the same core thesis but opposite positioning. For example we are looking for gold to continue the upmove that started at $1226 (actually $1179.40 but we were 15 hours and $46 bucks early).

Eventually the shiny stuff should get down to the 1980 high, $875 print in Hong Kong, but that's a way's away, sometime in 2014 maybe.

We've also been negative on WTI since July 22's "Oil Looks Extended: "Huge Backwardation In Crude Oil" (and what it means for equities)" at $107.03 and the 24ths "Oil: WTI Falls Most in a Month, Bakken at 7-week Low" at $105.18.

So, for now anyway, today's $103.13 (low $102.67) looks like a gift:

 

"Natural Gas Ends at Five-Month Low on Demand Concerns"

$3.4450 last.
Inching closer to our $3.24 target, natty traded as low as $3.4180. There is one fly in the ointment, if equities head south tomorrow, natural gas has been exhibiting an anti-correlation to stocks and with more and more specs getting short the counter-trend moves can be horrific.
From the Wall Street Journal:

--Nymex gas down 1.2% at $3.432/MMBtu
--Natural-gas prices end at lowest since Feb. 26
--Cooler-than-usual weather forecasts increase expectations of inventory build

 
   By Sarah Jacob 
 

NEW YORK--Natural-gas futures slipped for the fifth consecutive session, amid expectations of weak demand after forecasts continued to call for cooler temperatures through mid-August.
Natural gas for September delivery on the New York Mercantile Exchange settled 4 cents, or 1.2%, lower at $3.432 a million British thermal units, the lowest since Feb. 26.

Prices fell after weather forecasters said cool temperatures were expected across most of the central and eastern U.S. Temperatures much below average were "likely at times from the Plains to the Midwest," said private weather forecaster MDA in its six- to 10-day forecast....MORE 

Today's 5-minute chart via FinViz:

Tomorrow's GDP Report: Let's Just Tank This Market and Get It Over With

DJIA 15540; S&P 1688. How's about 1670 and 13,200 just for grins and giggles.
And while we're at it, gold up to $1360 would be nice.
From MarketWatch:

What to expect from the GDP report

The U.S. economy probably slowed in the second quarter, but the size of the drop is far from clear and analysts doubt there will be much carryover in the second half of the year.

The release of second-quarter GDP on Wednesday kicks off a busy day for Wall Street. The Federal Reserve could offer further clues about its interest-rate strategy after a two-day policy meeting and payroll-handler ADP will publish its latest tally of private-sector hiring in July. 

The economy, as measured by gross domestic product, is forecast to decline to 1.0% in the April-to-June period from 1.8% in the first quarter, according to analysts polled by MarketWatch. That’s well below the nation’s long-run average of 3.2%. 

Yet the range of the second-quarter forecasts is wider than usual: from a high of 2% growth to a low of a 0.7% decline. 

What’s complicating matters is the Labor Department’s periodic overhaul of how the government measures GDP. These “benchmark” revisions adopt new ways to determine the size of the economy and how fast it’s growing. The new methods are then extended all the way back to 1929....MORE

"The Robots Are Coming (To Mow Your Lawn)"

I understand that domestic employment for positions ranging from butler to valet to cook to gardener is booming but some people aren't able to afford servants.
For them there are robots.*

From Popular Mechanics:

Unwilling to waste one more sunny Saturday mowing, PopMech Senior Tech Editor Glenn Derene tests the new breed of grass-cutting robots.

For some people, mowing the lawn is a meditative experience—a chance to tune out while getting a little exercise walking behind the lawnmower, inhaling the scent of freshly cut grass. It's good old-fashioned domestic man's work, like your father did before you, his father before him, and so on. Well, not me. I hate mowing the lawn. It's a numbingly repetitive, sweaty, noisy waste of time. My father hated it too. And I'm pretty sure his dad did before him.

Tell you what I do like, though: robots—love 'em! In fact, I would gleefully surrender every thankless bit of home landscaping to an automaton. So I decided to see if I could piece together a system wherein my lawn essentially would take care of itself. Yes, I could have hired a landscaping crew, but to me that was a dodge. I didn't want to pass off my dirty work to someone else. That's the beauty of robots—one day they may take over the world, but for now, they get the grunt work.

PM editor Glenn Derene with his son Owen and their

 lawnmowing robot.

And, it's worth mentioning, I wanted a beautiful lawn—green, lush, carpetlike—something my family and I could really roll around on during a midsummer day. I just didn't want to sweat for it. The good news is that, for mowing, there's already a robot solution—a couple of them, in fact. Honda sells the Miimo; a company called LawnBott offers a variety of, well, lawn bots; and Friendly Robotics has a bunch of really friendly looking mowing robots. All of these systems seem pretty similar and promise essentially the same thing: to tame your turf with a minimum of human oversight.

I called up Husqvarna, a company with a long history in the grasscutting biz. Husqvarna also has deep experience with robotic lawnmowers; it introduced the first consumer model in 1995. Now it sells two: the Automower 230 ACX ($2700) and the Automower 265 ACX ($3700). A few weeks after my call, I got a big box with a 265 ACX and an appointment with company representatives Quinn Derby and Gent Simmons. They arrived a few days later, surveyed my postage-stamp-size lawn, looked at the box from their company, and concluded that the 265 was complete overkill. But the machine was there, so they decided to install it anyway....MORE

* I couldn't resist the supercilious tone. Sorry.
Here's The Guardian:
Who wants to serve a billionaire?

The rich are getting richer – and that means jobs on superyachts for those who can meet their employer's every whim. But first trainees must learn how to fold a towel ...

"...At the more arcane end of the spectrum are the people who staff superyachts, who need to be equipped with discretion, servility and good ironing skills..."

When the President Speaks at a Corporation: "stock prices for companies the president visits increase about three percent the day before an Obama appearance"

Amazon traded as low as $295.55 on Friday and as high as $313.00 yesterday, a bottom to top swing of 5.90%.
From the Atlantic Wire:

Obama's Business Visits Move the Stock Market More Than the Economy

On Tuesday, President Barack Obama will visit yet another American business to talk about the future of American job creation in his on-going quest to define Obama's Economy. A survey of his past such visits suggests almost no effect on those business sectors — but a small effect on stock prices.

Over the course of his time in office, Obama has visited at least 46 other American businesses, with the goal of presenting his outlook on where future job and industry growth is or should be. On Tuesday, Amazon and its 5,000 new shipping warehouse jobs become the latest focal point.

But how does that stack up against the actual economy? In an overview done by The Atlantic Wire, of the 47 businesses Obama has visited during his presidency, over a third of them fall into general manufacturing and another third and change are related to green energy — like the making of wind turbines, solar power, and electric vehicles. That data is in the chart below.

It's no surprise that these two industries have gotten particular attention from the administration, which put a lot of money into these sectors as a part of the stimulus package. Of those traditional manufacturing companies, six of them were big American car companies. The stimulus also allotted $90 billion for clean energy.

But, compared with the actual economy since Obama took office in 2009, those industries — which both fall under the "manufacturing" umbrella per the Bureau of Labor and Statistics — have barely seen growth, when compared to other sectors, like healthcare and education. The chart below shows the percent change of the American economy by sector, per BLS data. As you can see by mousing over, manufacturing (of things both green and not) has seen only a tiny bit of growth in 2011 and 2012 after huge drops in 2009 and 2010. Healthcare, on the other hand, has seen steady growth. And mining and logging has seen upticks every year since 2010.

The president's effect on businesses

How the president affects economic sectors is one thing. How a presidential speech affects the companies he visits? Another entirely.

Not all of the companies Obama has visited since his first term began have been listed on public exchanges (which makes sense, given that his focus is often to bolster growing businesses). For those that are, listed below, we took a look at the three days prior to and following the president's speech to get a sense for the effect it has on stock prices.

First, the big picture. We pegged prices and trade volume to the date three days prior to the president's visit at each company, tracking it through and past his appearance. This often includes days when no trading occurred (weekends, for example). On average, stock prices for companies the president visits increase about three percent the day before an Obama appearance — on volume that's 85 percent higher than two days prior....MORE

Blueprint For America: "Fascist Italy's Experiment With Economic Corporatism"

From our March 2013 post "Copyright Infringement Now Seen As Terrorism":

As Political Capitalism becomes indistinguishable from Mussolini's Corporatism it's getting close to the time where the West has to decide just what it wants to be when it grows up.

"The rich and powerful too often bend the acts of government to their selfish purposes, many of our rich men have not been content with equal protection and equal benefits, but have besought us to make them richer by acts of Congress."
Andrew Jackson (1830) Cited by Charles Sellers, The Market Revolution: Jacksonian America 1815-1846. New York: Oxford University Press, 1991, p. 62

"Capitalism's biggest political enemies are not the firebrand trade unionists spewing vitriol against the system but the executives in pin-striped suits extolling the virtues of competitive markets with every breath while attempting to extinguish them with every action."
Raghuram Rajan and Luigi Zingales, Saving Capitalism from the Capitalists. New York: Crown Business, 2003, p. 276. 

And yes, I know the distinction between Fascism and vertical syndicalist corporatism based on guilds. I'm just using a shorthand, readily understandable usage....

From Bloomberg Echoes:

What if the economy were organized in corporations, one for each trade and industry, each including owners and workers? Would capitalism’s fierce competition and wasteful failures be replaced by a cooperatively managed system?

As world economies struggled to recover from the Great Depression in the summer of 1933, politicians looked for alternatives to free-market capitalism.

In capitalism, "force plays the chief part in the settlement of industrial disputes and victory belongs to the stronger party, quite irrespective of the merits of the cases," the New York Times wrote. On the other hand, communism "recognizes no rights but those of the workers."

Italian fascism strove to find a middle way between the claims of capital and labor. Prime Minister Benito Mussolini chose the summer of 1933 to form corporatism’s key institutions: state-managed national corporations that would centralize control of production.

How to do this was a genuine puzzle, though. Guiding the process was the National Corporations Council, which was divided into sections -- agriculture, commerce, industry, land transportation, navigation, banking, liberal and artistic professions. If the sections could agree on policy, the council could regulate prices, production and markets.

Yet this didn’t entail only top-down control. If in any sector the employer and employee associations wished to restrict production by closing a factory, they could apply to their corporation on the council.

Noting the Italian program's partial resemblance to U.S. efforts to manage industrial output, competition, wages and consumption, the Economist drew several worrisome conclusions from the experiment.

First, such regulation would eventually be extended across the economy. The Soviet Union, Germany and the U.S. all confronted the Italian dilemma: How much control would be sufficient to kick-start economic renewal?...MORE 

To repeat, the West isn't doing the Mussolini "Corporatist" thing but we are doing a fascistic big business/big government hybrid that has been emerging for the last 50 years under governments of both parties.
Meet the new boss, same as the old boss.

"Fascism should more appropriately be called Corporatism because it is a merger of state and corporate power. "
-B. Mussolini via BrainyQuote

See also:
"Blaming Capitalism for Corporatism"
"The Left Right Paradigm is Over: Its You vs. [Big] Corporations"
Newsweek: Goldman Supplied 9 Pages of Proposed Changes to Derivatives Legislation (GS)

This Big Business, Big Government, Big Union (what the Italian fascists* called 'corporatism') is antithetical to democracy.
On the other hand the totalitarian impulse has its attractions, if that's what you're into....

*...The Labour Charter (Promulgated by the Grand Council ofr Fascism on April 21, 1927)—(published in the Gazzetta Ufficiale, April 3, 1927) [sic] (p. 133)
The Corporate State and its Organization (p. 133)
The corporate State considers that private enterprise in the sphere of production is the most effective and usefu [sic] [typo-should be: useful] instrument in the interest of the nation. In view of the fact that private organisation of production is a function of national concern, the organiser of the enterprise is responsible to the State for the direction given to production.
State intervention in economic production arises only when private initiative is lacking or insufficient, or when the political interests of the State are involved. This intervention may take the form of control, assistance or direct management. (pp. 135-136)

Benito Mussolini, 1935, Fascism: Doctrine and Institutions, Rome: 'Ardita' Publishers.

And many more. If you care to, use the site search box keyword Mussolini.

And finally, from "Breaking: 'Chavez to join the blogosphere'":

That's what the world needs, more goofy-assed dictator bloggers.
Mugabe anyone?
Just think what Mussolini could have done with the medium.*...

...*He did have stuff to bitch about:

From Drexel University's Smart Set:

Scent of a Führer
Hitler wanted to control the world. But he couldn't even control his flatulence.

Guests at the Berghof, Hitler’s private chalet in the Bavarian Alps, must have endured some unpleasant odors in the otherwise healthful mountain air....

Mussolini and Hitler
The dictator who smelt it, dealt it.

Holy Crap: Russia pulls out of cartel, potash prices expected to plunge (AGU; POT; MOS; GLEN)

In late pre-market trade Agrium is down 8.67% at $83.50, Mosaic is Down 24.07% at $40.36 while Potash corp is down 23.01% at $29.18. A year ago Glencore was able to overpay for potash producer Viterra.

We haven't talked about any of the fert companies since the grains started weakening a year ago, nor any other inputs (Monsanto, Syngenta, DuPont etc.).
This move might be offering a generational opportunity, more to come.

First up, Canada's Globe and Mail:

The landscape of the world’s fertilizer industry is about to change as Russia’s Uralkali is dismantling one of the world’s largest potash partnerships by leaving a venture with a partner in Belarus.

Shares in North American producers of potash plunged in premarket trading on news of an anticipated steep fall in global prices of the fertilizer ingredient.

Potash Corp. of Saskatchewan Inc. stock in U.S. trading was down almost 24 per cent, while shares in Mosaic Co. and Agrium Inc. were off more than 23 per cent and 14 per cent, respectively.

Investors are reacting to the decision by Russia’s Uralkali to pull out of one the world’s major potash cartels, the Belarus Potash Company (BPC).

Uralkali said it expects the move will result in the fall of global prices by 25 per cent.
BPC – a partnership between Uralkali and Belaruskali – will be broken up, leaving North America’s Canpotex as the dominant global potash export partnership; Canpotex includes Potash Corp., Agrium and Mosaic....MORE

And from Reuters:
Russia's Uralkali quits top potash cartel, sees global price fall

* Uralkali pulls out of Belarus venture after "deadlock"
* Leaves Canpotex as world's top potash exporter
* Expects prices to fall to $300 a tonne from $400 a tonne
* Uralkali's shares plunge 15 pct

By Polina Devitt and Natalia Shurmina

MOSCOW, July 30 (Reuters) - Russia's Uralkali has dismantled one of the world's largest potash partnerships by pulling out of a venture with its partner in Belarus, a move it expects will cause global prices to plunge by 25 percent.

The break-up of the Belarus Potash Company (BPC) leaves North America's Canpotex as the ruling potash export venture. BPC and Canpotex had accounted for 70 percent of global trade in potash, an important ingredient for fertilizer, and the duopoly had set identical prices in key markets such as China and India.
Uralkali said it was pulling out after reaching "deadlock" over sales and would export all potash via its Swiss-based Uralkali Trading.

The decision may lead to a fall in the global potash price to below $300 per tonne in the second half of 2013, from the current $400 per tonne, it said. Lower fertilizer prices could result in rising demand from price-sensitive farmers in Asia....MORE

"Treasury bill supply hits new lows"

From Sober Look:

Since the beginning of the year the US treasury curve has steepened substantially, with yields on the short-end actually declining.

There are two key reasons for treasury bill rates staying at such suppressed levels.

1. In a rising rate environment, durations are cut and demand for treasury bills increases. Investors want to stay liquid without taking rate risk, and there isn't much else out there that can provide both....MORE

"(Sm)art Investing: Rich Move Assets from Banks to Warehouses" ($4 trillion in 'treasure' assets)

From Der Spiegel:

Getty Images

To avoid paying taxes, the rich are emptying their bank accounts in Switzerland and investing in art. This has spawned a new business of storing such works tax- and duty-free in warehouses across the world.

 One of the world's most valuable art treasures is being stored in an extremely ugly place, a six-story concrete building known as the Geneva free port. Instead of windows, much of the façade of this giant safe for the world's wealthy is covered with gray panels.

 Anyone hoping to get into the walk-in lock boxes of this very special Swiss tax haven must first surmount a number of hurdles. At the first door, an employee has to type the right combination of numbers into a small screen. The next hurdle is a large steel barrier that has to be rotated counter-clockwise until it snaps into place, followed by a heavy steel door that resembles a submarine bulkhead. Behind it is a drab corridor with doors on both sides. Only the renters have keys to these doors. 

The employee of Geneva Free Ports & Warehouses Ltd. remains discreetly in the background while the owners of the locked-up treasures count their gold bars or examine their collection of paintings being stored in the warehouse.

The Nahmad dynasty of art dealers reportedly has 300 Picassos in storage in Geneva. Countless Degas, Monets and Rothkos are also stored on the inhospitable premises. The estimated value of the works is in the billions. Hardly any museum can boast such a valuable collection.

Those who use the warehouse are genuinely wealthy. According to the Capgemini World Wealth Report, there were 12 million millionaires in the world last year, with combined assets of $46.2 trillion (€35 trillion), or 10 percent more than in the previous year.

But even if the world's rich are getting richer, many of them are also worried. The financial crisis isn't over yet, and tax havens worldwide are under pressure to disclose the identities of people whose assets are parked in their banks.

Recently, even Swiss bankers have been sending letters to their clients, asking them to cooperate with tax authorities and consider turning themselves in. This only heightens fears of the tax authorities. "We assume that a total of hundreds of billions of francs will flow out of Switzerland," said the head of the asset management division of UBS, a major Swiss bank, in late 2012.

From Banks to Warehouses
But not everything the banks are losing is actually leaving Switzerland. Customers are admittedly emptying out their accounts and safe deposit boxes. But partly as a result of the many uncertainties in the financial markets, a growing share of the money is being invested in tangible assets, such as art, wine and classic cars. A total of $4 trillion has reportedly been invested in "treasure assets," a category including various kinds of precious objects.

This requires warehouse space that satisfies the most stringent security requirements. Swiss military bunkers blasted deep into Alpine rock are in great demand. But the free ports in Geneva and Zurich are even more popular because they offer what Swiss banks used to: the freedoms of a tax haven and maximum discretion....MUCH MORE

HT: Simoleon Sense

Too Funny: Another Earnings Report, Another Dividend For Ackman to Pay (HLF)

The last number I remember for Pershing Square's short position was 20 million shares.
At 30 cents per Mr. Ackman is going to have his account whacked for $6million.
HT up front to ZeroHedge on the divvy. That's gotta hurt Ackman almost as much as Icahn thanking him for all the nice money.

Here's the press release:
Herbalife Ltd. Announces Record Second Quarter 2013 and Raises 2013 Earnings Guidance

 Second quarter adjusted(1) EPS of $1.41 increased 29 percent compared to the prior year period.

--Raising FY'13 adjusted EPS guidance to a range of $4.83 to $4.95.

--Generated $214 million in operating cash flow during the second quarter

--Board of directors approved a $0.30 per share quarterly dividend.

...MORE 

Earlier today HLF's hometown paper, the LA Times published this handy chart:

Silicon Valley: The Startup Crowd Is Becoming an Actual Cult

Sometimes I have trouble deciding if the emphasized syllable is "Sili" or "con".
From ValleyWag:

When the Valley vanguard talks about itself as special, separate, and generally better than anyone not involved in a tech company, it's usually rhetoric. At least it used to be. Tech people with money are creating a new fantasy land, a mountaintop gathering called Summit Outside. Welcome to camp.

When conspiracy theorists squawk about kings of finance playing table tennis at Bohemian Grove, they quiver over the thought of one group with influence in finance, media, and politics, all hamming it up beneath the trees. But a new article in The Next Web shows that unlike AM radio night terrors, the cultish creep of startup-think is real. Palo Alto Syndrome. In the piece, Courtney Boyd Meyers—a former editor at the site, and now a company founder—gushes about a recent great outdoors tech conference of mostly white startup owners and their ilk, with all the zeal of an entrepreneurial Patty Hearst.

Tech conferences used to be one of the dullest and sterile of all possible confabs. Now, they increasingly resemble Summit: a large gathering of the well to do (or parvenue) in a secluded location, by invitation, at great cost, with TED Talk-y speakers during the day, DJs at night, and plenty of whimsy to lubricate it all. Think Sean Parker's wedding, only with more meetings and less redwood root damage.

Summit took place on a privately owned mountaintop town literally called Eden. Meyers slips into reporter-mode (it's so easy to do these days!) and writes of Summit—with no mention of the fact that she has a personal interest in the success of these events—as if it were the Eden of scripture:

Without WiFi or outlets, a group of the world’s most Internet-addicted human beings found immense freedom letting go of the digital world and reconnecting with nature.
[...]
After chucking bags into tents and strapping on hiking boots, attendees were delighted by surprises at every turn like a sonic meditation deck, a late-night noodle truck, a flash sale of coconuts and LeWeb founder Loic LeMeur giving office hours in the middle of a forest.
[...]
Just a 5-minute walk down the hill, Taylor Kuffner’s robotic orchestra, known as “The Gamelatron” was tied to trees in a forest of hammocks, providing an oasis of relaxation for weary Summiteers.

Sounds like a vacation, right? A quirky, twee-to-the-point-of-self-immolation vacation, but still pure leisure.

This isn't mere leisure to them—the conference is a place of worship, not to Baal or Shayṭān, but to Badoo and Sidecar, to the apps, innovators, venture capital firms, and spirit of false-progress that girds it all. Most of all, self-worship. They quite literally believe they are changing the world—not just in the Facebook sense. They are colonizing our planet anew...MORE

Also at ValleyWag:
Watch a Grown Man Defend His $10 Mil Grilled Cheese Startup Investment

Silicon Valley Arts and Crafts Instructor Gets $6 Million

Brit Morin profits, literally, from the Donald Rumsfeld school of reality: repeat something often enough and it will be so. Someone once called her the "Martha Stewart of Silicon Valley," and the label's been repeated in almost every article ever written about her, iota of talent not withstanding. Today, it pays off.

Silicon Valley Housing Explosion Means This Cottage Costs $1.1 Million

The little 7o-year-old house at 353 Carmelita Drive is about as unspectacular as American real estate gets: two bedrooms, one and a half baths, and a modest 960 square feet. Elsewhere in the country (or at least the state) you could probably snatch it up for around a quarter million, tops: but in Google's back yard,…

There's a Startup to Help People Make Startups

OK, now we're really heading past the Rubicon: a little app by the name of Elevatr has one task: help you crank out startup ideas as easily and quickly as possible. Because nothing says stable economic sector like a constant stream of easy business ideas.

In the meantime:

"What next for the 'Wall Street Refiners' as JPM exits physical commodities?"

Maybe Blythe Masters goes full coup d'état on Dimon's ass.
From Reuters:

As JPMorgan Chase & Co (JPM.N) prepares to exit physical commodities trading, the spotlight is turning to the future of the two banks that have dominated Wall Street's involvement in the natural resources supply chain for 30 years.

Goldman Sachs (GS.N) and Morgan Stanley (MS.N) two decades ago became known as the 'Wall Street Refiners' for their mastery of both financial and physical commodities.
But since 2012 Morgan Stanley has looked at selling its commodity arm and Goldman has made moves to scale back its physical operations.

Letters between the banks and the Federal Reserve, received by Reuters under the Freedom of Information Act, show both banks are in discussions on conforming or divesting activities that fall outside the normal scope of commercial banks.

Goldman has been looking at selling its Metro International metals warehouses firm since at least March, but it has also publicly reaffirmed its commitment to its J. Aron commodities business, where CEO Lloyd Blankfein started his career.

Morgan Stanley has been looking at a possible spin-off or sale of its commodity arm since last summer, but with little success. Recent moves suggest it may try to refocus on its vast physical oil trading arm and exit peripheral markets like Australian electricity.

The question is, in part, whether they will be able to choose their own future, or will the Federal Reserve's decision to review the entire role of Wall Street in physical commodities markets see regulators make the choice for them?

The past 10 days has seen unprecedented scrutiny of Wall Street's commodity trade, with a Senate hearing questioning whether banks should be allowed to own pipelines, warehouses and other commercial assets.
U.S. regulators and the Department of Justice have launched initial investigations into the metals warehousing business of banks and other big commodity traders, which have been accused of driving up the price of aluminum by drink can manufacturers.

While JPMorgan cited the growing regulatory pressures as one of the reasons it has decided to exit physical commodities trading, it was not clear if it was influenced by the banks' discussions with the Federal Reserve.
One person familiar with the matter said on Friday the bank had decided the profits from commodities were too slight to be worth the regulatory and reputational risks.

CEO Jamie Dimon has been trying to put the bank back on course after a series of costly trading moves and regulatory run-ins, including a potential $410 million settlement over alleged power market manipulation.
"I don't think it was any one thing, but a culmination of things, that drove (JPMorgan's) decision," said Craig Pirrong, a professor at the University of Houston and expert in commodity markets.

"The legal and reputational risks, the Fed's likely action to constrain - if not eliminate - this sort of trading, the increasing capital strains on banks, and especially the political heat being directed at the industry. In the scheme of things at JPMorgan, commodities just weren't big enough and profitable enough to be worth all this bother."

LETTERS FROM THE FED
Goldman Sachs and Morgan Stanley may hold one advantage over JPMorgan, as their long history of operating in physical commodities as less regulated banks may provide them with "grandfathered" ownership of assets like warehouses, pipelines and storage tanks that other commercial banks aren't allowed.

"I don't think there is a necessary or clear link between whatever the Fed's position is on JPMorgan's ownership of physical assets - if, in fact, it is the Fed that is pushing JPMorgan to divest - and the Fed's position on Goldman and Morgan Stanley," said Saule Omarova, associate professor of law at the University of North Carolina, who appeared at the Senate banking committee hearing last week....MORE

HT: Abnormal Returns

"Corn Extends Drop to 33-Month Low on U.S. Crop; Soybeans Decline"

Bankers serving ag regions are starting to get a bit nervous.
Corn $4.7175 down 4.25 cents, wheat $6.5150 up 1 1/4, soybeans $12.1275 down 15.75 cents.
From Bloomberg:

Corn extended declines to a 33-month low and soybeans fell on speculation that U.S. crops will benefit from cooler weather and rain in the next two weeks. Wheat rose.

Temperatures will average below normal over much of the Midwest in the next two weeks, helping to boost yields in areas with adequate soil moisture and reducing stress on crops that have not received significant rain this month, World Weather Inc. said in a report today. Fields from Kansas to Kentucky will get rain during the next two days and some crops in Nebraska and Iowa will benefit from moisture beginning Aug. 1, the private forecaster said.

“Corn and soybeans are in generally good condition, and the weather remains favorable for the next two weeks,” Jim Gerlach, the president of A/C Trading Co. in Fowler, Indiana, said in a telephone interview. “It’s too early to start worrying that current cool weather will result in early freeze and crop losses until later in August.”...MORE

See also:
"Ideal weather sends corn, wheat prices to new lows"
US Farmland: Price Growth Slows, as Farm Profits Fall (corn now under $5.00)
"Deutsche slashes hopes for corn, soybean prices"
Macquarie Calling For Corn in the Low $4's 
Macquarie "Wheat 50% overvalued - corn to hit three-year low"
Corn: Deutsche sees potential for price below $4
"INSIGHT-Big U.S. harvest may hit grain prices, test high farmland values"