Yellow cab medallion up 49% over the past year and now trades for as much as $1.3 million, an all-time record

This “Yellow” Asset Is The Best Performer Of The Past Year (Hint: Not Gold)

Tyler Durden on 08/11/2013 19:37 -0400

The best returning asset class traded in the NY Metro area is yellow but doesn’t change hands on Wall Street. As ConvergEx’s Nick Colas notes, over the last 12 months New York City taxi medallions have risen 49% in price, besting the relatively humdrum returns of the S&P 500 (up 21%), the NASDAQ (22%) and the Dow (18%).  Medallions – essentially the right to operate a for-hail taxi in New York City – now trade for as much as $1.3 million, an all-time record.    Read more of this post

The Clinton-Era Roots of the Financial Crisis; Affordable-housing goals established in the 1990s led to a massive increase in risky, subprime mortgages

August 12, 2013, 6:55 p.m. ET

The Clinton-Era Roots of the Financial Crisis

Affordable-housing goals established in the 1990s led to a massive increase in risky, subprime mortgages.

Simply put, the financial crisis of 2008 was caused by a lot of banks making a lot of loans to a lot of people who either could not or would not pay the money back. But this explanation raises two key questions. Why did private lenders, whose job it was to assess credit risk, make those loans? And why did the army of financial regulators, with massive enforcement powers, allow 28 million high-risk loans to be made?

There’s a strong case that the answers can be traced to Sept. 12, 1992. On that day presidential candidate Bill Clinton proposed, in his campaign book “Putting People First,” using private pension funds to “invest” in government priorities, such as affordable housing, to “generate long-term, broad based economic benefits.” Seldom has such a radical proposal been so ignored during a campaign only to later lead to such devastating consequences. Read more of this post

Regulators Examine Analyst Ties in IPOs; Concern Resurfaces over Meetings With Companies Pursuing Offerings

August 12, 2013, 10:27 a.m. ET

Regulators Examine Analyst Ties in IPOs

Concern Resurfaces over Meetings With Companies Pursuing Offerings

TELIS DEMOS

A securities regulator is looking into meetings between stock analysts and companies pursuing initial public offerings, according to a person familiar with the inquiry, discussions that have long generated concerns about conflicts or inappropriate financial pressure on analysts whose research can be followed by investors. The enforcement division of the Financial Industry Regulatory Authority sent information requests to a handful of securities firms, according to this person, who said the inquiry is ongoing. Read more of this post

PerkStreet Financial, which offered rebates on purchases, said it was out of money and would shut next month but discontinue the rebates immediately

August 12, 2013

Banklike Company Offering Cash-back Rewards to Close

By ANN CARRNS

PerkStreet Financial, an upstart quasi-bank that aimed to offer generous cash-back debit-card rewards, announced Monday that it would cease operations next month because of a lack of financing. The company discontinued its perks cash-back rewards program and canceled all reward balances as of Monday; redemptions already requested will be processed, it said. Read more of this post

Pawnbrokers in trouble as gold price fallsl Shares in H&T, which is the biggest pawnbroker in the UK with more than 190 shops, fell by almost a quarter in one day

Pawnbrokers in trouble as gold price falls

The challenges facing pawnbrokers in Britain due to the tumbling gold price and regulatory pressure has been laid bare after H&T Group reported a slide in revenues and profits.

Shares in H&T, which is the biggest pawnbroker in the UK, fell by almost a quarter after it warned of difficult trading conditions

By Graham Ruddick

5:55PM BST 12 Aug 2013

The sterling gold price has fallen 25pc and pawnbrokers are facing increased competition following a wave of openings since the financial crisis. H&T, which has more than 190 shops, said this had led to “difficult” trading in the first half of 2013, with revenues down 23pc and pre-tax profits almost halving from £7.5m to £4.6m. Shares in H&T, which is the biggest pawnbroker in the UK, slid by 38½, or 23pc, to 132p following the update. Andrew Wade, analyst at Numis. said: “Aside from the gold price, there are much more fundamental shifts taking place in pawnbroking which are challenging the industry – over the last few years, we have seen the supply-demand dynamic change beyond all recognition. Read more of this post

Parents Losing Jobs a Hidden Cost to Head Start Cuts

Parents Losing Jobs a Hidden Cost to Head Start Cuts

By William Selway – Aug 12, 2013

A U.S. preschool program for low-income families allowed single mother Kelly Burford to take a $7.25-an-hour job as a department store clerk in Maryland. Her son, Bradyn, 2, spent the day with friends listening to stories, singing and drawing pictures — at no cost to Burford.

That ended in June, when Bradyn’s school in Taneytown, seventy miles north of Washington, closed after losing $103,000 because of automatic government spending cuts. Without support from the federal Head Start program, Burford, 35, said she had to quit her job and has seen her son’s progress slip.

“The teachers were really good — he was learning a lot,” she said. “Now, he’s fallen back.” Read more of this post

Moviemakers Beg Banks for Cash as Nollywood Goes Global

Moviemakers Beg Banks for Cash as Nollywood Goes Global

Obi Emelonye had to battle Lagos airport bureaucrats, indifferent banks and skeptical peers to release his plane-crash thriller, a movie production on a scale rarely seen in Nigeria’s film industry.

“The biggest challenge was negotiating the diplomatic nightmare, potholes, even land-mines — taking over 100 people every day and passing them through security to go air-side with technical equipment,” the writer-director-producer says in an interview in London, after flying in from the Seattle International Film Festival. Read more of this post

Off-color wordplay with the slogan “Get your chef together” from Kraft, part of a big marketing blitz to resonate with the young.

August 12, 2013

Off-Color Wordplay From Kraft, Part of a Big Marketing Blitz

By STUART ELLIOTT

The chefs Rocco DiSpirito and Carla Hall, portrayed as children, in Kraft ads with the slogan “Get your chef together.”

THE Kraft Foods Group is continuing a major marketing blitz with an initiative for a new product line — budgeted at more than $30 million in the first year — that seeks to tap into the current mania with all things chef. The new line of nine meal-starters, called Kraft Recipe Makers, is being introduced with a campaign that features two celebrity chefs, Rocco DiSpirito and Carla Hall, presented in commercials as if they were a smart-aleck brother and sister critiquing their parents’ ability to come up with new and different dinner menus. In keeping with efforts by Kraft Foods to reach younger consumers, the campaign also will run in a full range of nontraditional media that includes digital ads and a presence in social media like Twitter. Read more of this post

London’s Crafty Microbreweries Invade Posh Restaurants; “Craft is really accessible, it’s made with passion. Craft brewers do it for love and consumers really embrace that.”

London’s Crafty Microbreweries Invade Posh Restaurants

Tom Byng’s London patrons wash down their burgers with 11,000 craft beers a week, paying 13 percent more for the privilege of supping artisanal Camden Town Gentleman’s Wit rather than mass-produced Peroni Nastro Azzuro. “Craft is really accessible, it’s made with passion,” said Byng, founder of the Byron restaurant chain which has 29 London branches. “Craft brewers do it for love and consumers really embrace that.” Read more of this post

Cath Kidston’s florals are a hit with Asian market as sales boom to more than £100m for the first time since it was founded in 1993; Customers get the quirky Britishness and sense of humour of the brand. In Shanghai, there are a lot of bright printed products, so we fit in really well.

Cath Kidston’s florals are a hit with Asian market as sales boom

Design company now has more stores abroad than in the UK, with annual sales rising over £100m for the first time

Simon Neville

theguardian.com, Monday 12 August 2013 19.08 BST

Cath Kidston’s bright designs have proved to be a recipe for success in China, Japan, Thailand and Korea

Cath Kidston’s floral-print handbags and homeware have proved such a big hit with Asian customers the retailer now has more overseas stores than British ones for the first time. Booming sales in China, Japan, Thailand and Korea helped the designer reach annual sales of more than £100m for the first time since it was founded in 1993. International sales soared by more than 50%. The retailer’s chief executive, Kenny Wilson, said: “The products we sell are universal in their appeal. In Shanghai, for example, there are a lot of bright printed products, so we fit in really well. Customers get the quirky Britishness and sense of humour of the brand. Read more of this post

Regulators Examine Aluminum Warehousing; CFTC Sends Subpoenas to Firms that Store the Metal in Probe Over Prices

Updated August 12, 2013, 8:01 p.m. ET

Regulators Examine Aluminum Warehousing

CFTC Sends Subpoenas to Firms that Store the Metal in Probe Over Prices

SCOTT PATTERSON

WASHINGTON—Federal regulators have begun an investigation into whether some Wall Street banks artificially inflated the cost of aluminum and other metals at the expense of end users and consumers, according to people familiar with the matter. Commodity Futures Trading Commission enforcement officials sent subpoenas last week to firms responsible for storing and delivering aluminum, including Goldman Sachs Group Inc. GS -0.27% and J.P. Morgan Chase & Co., seeking documents related to their commodities operations as far back as January 2010, the people said. Read more of this post

Iron Ore Gluts Seen Through 2017 on Record Supply

Iron Ore Gluts Seen Through 2017 on Record Supply: Commodities

The seaborne iron ore market is poised for at least four years of expanding gluts as producers from Rio Tinto Group to Vale SA increase supply to a record just as growth in China drops to the slowest pace in a generation.

The surplus will reach 82 million metric tons in 2014, the most since at least 2008, and the glut will keep growing through 2017, according to Goldman Sachs Group Inc. Australia will account for about 66 percent of the supply gains next year, Morgan Stanley says. Iron ore will average $115 a ton in 2014, 17 percent less than now and the least since 2009, according to the median of 10 analyst estimates compiled by Bloomberg. Read more of this post

America’s Farm-Labor Pool Is Graying; Growers Say Reliance on Aging Workers Shows Urgent Need for Immigration Overhaul

Updated August 12, 2013, 2:50 p.m. ET

America’s Farm-Labor Pool Is Graying

Growers Say Reliance on Aging Workers Shows Urgent Need for Immigration Overhaul

MIRIAM JORDAN

David Cox, left, tends his almond trees with 20-year employee Domingo Cortez, 58. Mr. Cox says young American workers aren’t as productive. When Bruce Frasier surveys his sprawling south Texas farm during the harvest, he sees “a bunch of grandparents bunching onions,” he says. In California’s Central Valley, nurseryman David Cox says he sees young Americans stacking his trees who are less productive than the older, predominantly Mexican workers he lost to an immigration audit. From Vermont and Michigan to Texas and California, the nation’s long-standing pool of farm labor is graying. “You have to remember that the last amnesty happened 27 years ago,” says Mr. Frasier, referring to a U.S. immigration overhaul in 1986 that legalized 2.7 million immigrants. “The average age I have is pushing 50,” he adds. Government data confirm that the workers who got legal status nearly three decades ago are now 49 years old, on average. The average age of farm workers overall is around 37, according to the data, up from 31 in 2000. Read more of this post

CHART OF THE DAY: How Demographics Will Hinder GDP Growth Around The World For Decades

CHART OF THE DAY: How Demographics Will Hinder GDP Growth Around The World For Decades

ROB WILE AUG. 12, 2013, 5:49 PM 1,598 6

Are demographics the silent GDP killer? This weekend, Cumberland Advisors’ David Kotok pointed us to a recent note from Rob Arnott and Denis Chaves of Research Affiliates that seems to indicate that it’s so. First, they explained a model they developed, which shows that the contribution of real GDP growth per capita increases as ages increase into the mid-30s before turning down. “The average contribution to GDP growth becomes negative between 55 and 60,” they explain. “This does not mean that people begin to consume more GDP than they produce after age 55, only that—on average—workers above age 55 have passed their peak in productivity. Intuitively, the average 60-year-old is more productive than the average 40-year-old, but not so relative to the average 55-year-old. At ages 60 and above, the coefficients decline much more sharply: the mature worker exhibits falling productivity, and in retiring, a worker’s productivity simply falls off a cliff.” Arnott and Chaves then put together estimates of how much of a headwind (and looked back to how much of a tailwind) demographics are giving major economies, based on projected aging trends.

Read more of this post

Irish Banks Chasing Defaulters Who Sleep Well at Night

Irish Banks Chasing Defaulters Who Sleep Well at Night

At the headquarters of Allied Irish Banks Plc in Dublin’s embassy belt, Chief Executive Officer David Duffy is taking aim at borrowers who refuse to repay their home loans.

Strategic defaulters, homeowners who can pay but won’t, account for 20 percent of Allied Irish’s home-loan arrears, the nation’s biggest mortgage lender said on Aug. 1. The bank is fighting back after the government, responding to surging loan delinquencies in the wake of Western Europe’s worst real-estate collapse, made home repossessions easier.

“I want to get past that group as fast as possible because they’re not the people lying awake at night in deep distress,” said Duffy in an interview. Read more of this post

Fed Warns Leveraged ETFs Could Trigger 1987-Style “Cascade” In Stocks

Fed Warns Leveraged ETFs Could Trigger 1987-Style “Cascade” In Stocks

Tyler Durden on 08/12/2013 10:41 -0400

In a 43-page research report, the Federal Reserve has authored a rather concerning tome warning that the mechanical positive-feedback rebalancing of Leverage ETFs (LETFs) resembles the portfolio insurance strategies, which contributed to the stock market crash of October 19, 1987. The impact of LETFs on broad stock-market indexes become significant during periods of high volatility (shown empirically in 2008/9 and H2 2011) as they show that LETF rebalancing in response to a large market move could amplify the move and force them to further rebalance which may trigger a “cascade” reaction. Furthermore, executing orders within a short period of time, such as the last hour of trading, may cause disproportionate price changes (especially in financial stocks). The Fed warns that a significant price reduction at market close may also impair investor confidence with accelerating depressed prices at the close potentially driving large investor outflows overnight. Read more of this post

Louisiana Teachers’ Pension Fund to Invest in Global Junk Bonds

Louisiana Teachers’ Pension Fund to Invest in Global Junk Bonds

The Teachers’ Retirement System of Louisiana, the manager of $14.7 billion in public employee pension funds, hired AllianceBernstein LP (AB) last week to invest $325 million in global high-yield debt.

The retirement fund reallocated the money, it’s first foray into overseas speculative-grade bonds, to get higher returns in Europe and Asia than are available in the U.S., according to Dana Brown, the system’s director of public markets. Read more of this post

California aims to ‘bottle sunlight’ in energy storage push

California aims to ‘bottle sunlight’ in energy storage push

11:04am EDT

By Braden Reddall and Nichola Groom

SAN FRANCISCO/LOS ANGELES (Reuters) – California, whose green ambitions helped the solar and wind industries take root, is taking an essential next step by proposing a sharp rise in energy storage to better integrate renewable power with the rest of the grid. Power from sun and wind fluctuates dramatically, so capturing it for later use makes the supply more predictable. “We can’t just rely on sunlight,” Governor Jerry Brown told the Intersolar conference in San Francisco last month. “We’ve got to bottle the sunlight.” Read more of this post

Oil majors trapped in cycle of spending more but finding less

August 11, 2013 12:17 pm

Oil majors trapped in cycle of spending more but finding less

By Guy Chazan

For the oil majors, quarterly results were once a ticker-tape parade. Last week, they were more like a walk of shame. ExxonMobil, Chevron, Royal Dutch Shell,BP, and Total all suffered a drop in earnings year-on-year. Oil and gas output for all, bar Total, contracted, despite big hikes in capital spending. Costs were up and returns down – even with oil prices at more than $100 a barrel. Companies that just a few years ago bestrode the corporate world like colossi are now in the doghouse, unloved by investors and dismissed by many as dinosaurs. The majors seem trapped in a downward cycle of spending more and more to find and produce less and less oil. Increasingly, investors are ditching them for smaller, more nimble rivals, especially those in the vanguard of North American shale. Read more of this post

Mexico opens up its energy sector to End Mexico’s 75-Year Oil Monopoly; Potentially country’s biggest overhaul since launch of Nafta

August 12, 2013 7:22 pm

Mexico opens up its energy sector

By John Paul Rathbone in Rio de Janeiro and Eduardo Garcia in Mexico City

President Enrique Peña Nieto has unveiled plans to change Mexico’s constitution and open up the country’s energy sector to foreign investors for the first time in 75 years, a move that could unleash billions of dollars of investment from oil majorsstruggling to find new resources elsewhere.

His proposal to loosen the grip on Mexican energy of Pemex, the state oil monopoly, and invite in companies such as ExxonMobil and Royal Dutch Shell, is potentially the country’s biggest overhaul since the passage of the North American Free Trade Agreement in 1994. Read more of this post

The boom in corn prices that helped propel the U.S. farm economy is fading amid expectations for a record-high harvest

August 11, 2013, 8:11 p.m. ET

A Corn Boom Starts to Wilt

Expectations for a Record Harvest Sends Prices Tumbling

MARK PETERS And JESSE NEWMAN

OAKLEY, Ill.—The boom in corn prices that helped propel the U.S. farm economy is fading amid expectations for a record-high harvest. Prices are down more than 40% from last year’s all-time highs, to their lowest point in nearly three years. The decline is bringing relief to meat producers and other food companies hurt by steep costs for animal feed and other ingredients made from corn. Lower corn prices also could curb supermarket prices for beef. But the slide is bad news for farmers who saw their incomes surge to the highest levels since the early 1970s, adjusted for inflation, while farmland values ballooned so much that some analysts worried about a bubble. Lower corn prices will squeeze profit margins, farmers who rent land for their crops might struggle to make money, and sales of tractors and other farm supplies likely will suffer. Read more of this post

Reserving a Spot in the Shifting Oil World; For oil companies, resource data are too big to ignore. They carry vital clues about what today’s oil majors will look like tomorrow

August 11, 2013, 8:00 p.m. ET

Reserving a Spot in the Shifting Oil World

For oil companies, resource data are too big to ignore. They carry vital clues about what today’s oil majors will look like tomorrow.

LIAM DENNING

Anyone who watched “Dallas” knows it can be hard to trust oil barons. Yet investors do that every day, particularly on the question of how much oil a baron actually has. While many investors are familiar with proven reserves—which listed U.S. oil companies show in annual reports—executives are also keen to talk up the less-certain barrels beyond these. Despite their more nebulous nature, resource data are too big to ignore. They carry vital clues about what today’s oil majors will look like tomorrow. While there is no agreed definition of resources, energy consultancy Rystad Energy calculates its own estimates. Looking at a sample of 11 of the world’s biggest listed oil companies, there are clear tiers. Royal Dutch Shell,RDSB.LN +1.00% Russia’s Rosneft,PetroChina, 601857.SH +1.50% Exxon Mobil XOM -0.47% and Petróleo BrasileiroPETR4.BR +2.58% are at the top, each holding roughly between 50 billion and 60 billion barrels of oil equivalent, or BOE, under Rystad’s definition. Read more of this post