Iraq oil exports decline in January

BAGHDAD (AP) — Iraq’s oil ministry says oil exports have declined slightly in January compared to the previous month.

Monday’s statement says last month oil exports averaged 2.107 million barrels per day, down from 2.145 million barrels per day in December.

The sales grossed $7.123 billion based on an average price of $109.081 per barrel. December’s revenues stood at $7.061 billion with an average price of $106.18 per barrel.

The oil was sold to 29 international oil companies.

Iraq relies on oil exports for 95 percent of its revenues, and the uncertainty in the market stemming from the conflict between the West and Iran over its controversial nuclear program has helped support global crude prices.

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Oil prices jumped to a nine-month high above $105 a barrel on Monday after Iran said it halted crude exports to Britain and France in an escalation of a dispute over the Middle Eastern country’s nuclear program.

By early afternoon in Europe, benchmark March crude was up $1.91 to $105.15 per barrel in electronic trading on the New York Mercantile Exchange. Earlier in the day, it rose to $105.21, the highest since May. The contract rose 93 cents to settle at $103.24 per barrel in New York on Friday.

Markets in the United States are closed Monday for the Presidents Day holiday.

Iran’s oil ministry said Sunday it stopped crude shipments to British and French companies in an apparent pre-emptive blow against the European Union after the bloc imposed sanctions on Iran’s crucial fuel exports. They include a freeze of the country’s central bank assets and an oil embargo set to begin in July.

Iran’s Oil Minister Rostam Qassemi had warned earlier this month that Tehran could cut off oil exports to “hostile” European nations. The 27-nation EU accounts for about 18 percent of Iran’s oil exports.

The EU sanctions, along with other punitive measures imposed by the U.S., are part of Western efforts to derail Iran’s disputed nuclear program, which the West fears is aimed at developing atomic weapons. Iran denies the charges, and says its program is for peaceful purposes.

Analysts said Iran’s announcement would likely have minimal impact on supplies, because only about 3 percent of France’s oil consumption is from Iranian sources, while Britain had not imported oil from the Islamic republic in six months.

“The price rise is more a reflection of concerns about the further escalation in tensions between Iran and the West,” said commodity analyst Caroline Bain of the Economist Intelligence Unit. “Banning the tiny quantities of exports to the U.K. and France involves very little risk for Iran — indeed quite the opposite, it catches the headlines and leads to a higher global oil price, which is something Iran is very keen to encourage.”

Exclusive: Nightline Goes Inside Apple Factories

The fuck is wrong with this dude?

Upon their son’s death, Rick and Karen Santorum opted not to bring his body to a funeral home. Instead, they bundled him in a blanket and drove him to Karen’s parents’ home in Pittsburgh. There, they spent several hours kissing and cuddling Gabriel with his three siblings, ages 6, 4 and 1 1/2. They took photos, sang lullabies in his ear and held a private Mass.

Full Article

Joe Weisenthal

As we predicted early last week, everyone is talking about gas prices today.

It’s the how new meme: Will gas prices be the thing that suffocates this economy?

We’ll pass on making a guess.

But we thought it’d be a good time to update one of our favorite charts: The S&P 500 divided by the cost of an average gallon of gasoline.

FRED

It’s kind of beautiful.

Chart above shows 5 minute bars of the S&P E-minis.

Read the full report here.

If I told you that there is an easy-to-exploit market anomaly that has enabled investors to consistently and substantially outperform the market with less risk for more than four decades, your first instinct might be to roll your eyes. After all, the unending quest to improve returns while lowering risk has yielded countless methods with initial promise that
subsequently collapse under further scrutiny.

Not so fast. What if I could show that this market anomaly is well-documented in the academic literature – that it is not just some esoteric theory? And that now some newly created ETFs provide a convenient way for advisors to access this strategy?

You might listen a little closer.

Read the rest here.

Joe Weisenthal

We’ve run this chart several times this year, and it still holds.

It’s a one-year look at the S&P 500 (red line) vs. the yield on the 10-year (blue line).

FRED

As you can see, the S&P and the 10-year yield moved closely up until about last December, when the stock market started taking off, and the yield stayed low.

Read the rest here.

The world’s first test-tube hamburger, created in a Dutch laboratory by growing muscle fibres from bovine stem cells, will be ready to grill in October, scientists believe.

“I am planning to ask Heston Blumenthal [the celebrity chef] to cook it,” Mark Post, leader of the artificial meat project at Maastricht University in the Netherlands, told the American Association for the Advancement of Science annual meeting in Vancouver.

Researchers believe that meat grown in factories, rather than on farms, will be a more sustainable and less environmentally harmful source of food. Live cattle and pigs are only 15 per cent efficient at converting vegetable proteins to meat from the grass and cereals they eat.

“If we can raise the efficiency from 15 to 50 per cent by growing meat in the lab, that would be a tremendous leap forward,” Professor Post said.

Starting with bovine stem cells, the Dutch researchers have grown muscle fibres up to 3cm long and 0.5mm thick. The fibres are tethered and exercised as they grow, like real muscles, by bending and stretching in the culture dishes. They feed on a broth of vegetable proteins and other nutrients, equivalent to the grass or grain diet of cattle.

At present the fibres are a pallid yellowish-pink colour, rather than the red of raw ground beef, because they do not contain blood, but Prof Post plans to improve their appearance.

Read the rest here.

It is often very difficult to determine how geopolitical events will play out in markets.  However, there are some cases where a structural change will have a very logical influence on a market and a substantial impact on investment strategies and outcomes.

Today there is news that in his recent budget proposal Obama outlines taxing dividends for top bracket earners as ordinary income up to 40% from the current 15%.  How will this impact the investment landscape?

Read the rest here.

via Jewish News 

A prostitute helped Thai police in the arrest of three Iranian terrorists involved in last week’s botched bomb plot. A fourth suspect, a woman, who arranged for renting a house for her and the terrorists, has fled to Iran.

Bombs that the men were putting together accidentally blew up in the house, and the trio have been arrested, two of them in Thailand and one in Malaysia.

Thai police discovered that the terrorists, all of them Iranians who had entered the country a week and a half ago, has been hanging around a city known for its brothels. A photograph published in a Bangkok newspaper showed the men with prostitutes while they sat in a bar with drinks and hookah pipes in the background, according to Newstrack India.

One of the women identified one of the terrorists, Mohammad Kharzei, and almost discovered the terror plot. Police said he stopped her from getting closer to a closet in his hotel room, where explosive materials were hidden.

Thai authorities said that a fourth suspect, Leila Rohani, fled to Iran and that there is no chance of her being extradited because of the lack of an extradition treaty between the two countries.

Police have confirmed that the terrorists intended to target Israelis, particularly diplomats. 

One of the terrorists, Saerb Morabi, blew off his own legs when he threw a bomb at police. The explosive device hit a nearby vehicle, bounced back to him and then exploded, leaving him on the ground and without one leg.Two other possible suspects still are at large, one of them a white-bearded man who is thought to be a bomb-maker. He was caught on a closed circuit camera as he fled the house where the explosion took place.   

The other suspect rented out the house to the Iranians along with Rohani.

(Reuters) – When Richard Peterson first started meeting with hedge funds about eight years ago to pitch using social media to predict market movement, investment managers looked at him as if he had just arrived from outer space.

Back then, what he was pitching them seemed pretty insane. Peterson, managing director of Santa Monica-based MarketPsych, said that social media can be mined for data about what people are thinking and feeling. And that, in turn, could translate into powerful investment ideas.

“People would say to me, ‘You’re crazy,'” says Peterson, who did postdoctoral studies in neuroeconomics at Stanford University. “‘You’re a psychiatrist telling me that funds should analyze social media? Come on.’ They didn’t think I was serious.”

They’re taking him seriously now. Usage of social media like Twitter has exploded in recent years, giving analysts a real-time reflection of popular sentiment. As a result, MarketPsych serves up reams of data to hedge funds (which swear Peterson to secrecy) and research firms like Titan Trading Analytics. Peterson even plans to roll out a hedge fund of his own.

“We’re champing at the bit to start trading,” says Peterson, who says his models work best in times of high volatility. “We’ve run simulations to see what would have happened by using our data in recent years, and we would’ve made 30 percent annually.”

Given the amount of irrelevant nonsense on Twitter, it’s natural to be highly skeptical of the strategy. The vast numbers of spambots, penny-stock touts and Justin Bieber fanatics aren’t helpful in generating any investment gains.

But think through the logic, and analyzing Twitter data isn’t such a bizarre idea.

A basic premise of behavioral economics is that the markets aren’t perfectly rational machines, but are expressions of human emotions like greed and fear. If you agree with that premise, and are looking for an immediate gauge of those human sentiments, then Twitter is one of the greatest tools ever invented.

“The importance of social media aggregation, and how that might influence the price of a stock, cannot be ignored,” said John Coulter, CEO of Atlanta-based Titan Trading Analytics, which uses MarketPsych’s data. “We’ve chosen to use it as one of many indicators, providing traders with alerts on events and by flagging socially expressed emotions which haven’t been picked up upon by traditional news outlets.”

The trick is how to crunch that data effectively and make some sense of the 250 million tweets generated every day. Peterson, for example, filters the data using 1,500 different factors, culling keywords to track global moods. His is essentially a contrarian take on the markets: If the public is overly bullish, it’s time to be cautious. If it is extremely gloomy, on the other hand, it might be time to snap up a bargain.

In that sense, it’s much like how some investment pros look at the American Association of Individual Investors’ sentiment readings as a contrarian indicator (link.reuters.com/dap66s).

But while those respondents answer a survey for a once-a-week reading, social-media sentiment analysis is immediate and ongoing.

Indeed, the Twitter-analysis trend seems to be just gearing up. Cayman-based Derwent Capital Absolute Return Fund Ltd., dubbed the first ‘Twitter Hedge Fund’ with $40 million in seed capital, was reported to have beaten the S&P by more than three percentage points in its first month of trading last July. More recent results were not available.

“It won’t make you a millionaire overnight, but it does work,” says Richard Gardner, president and CEO of Scottsdale, Arizona-based Modulus Financial Engineering, which amasses historic Twitter data for hedge funds and research firms to crunch. “The markets are moved by emotion, and I think this is going to be the future of trading. You can actually see global moods moving up and down in real time.”

Much of the excitement around Twitter trading stems from a paper by academics Johan Bollen and Huina Mao of Indiana University, and Xiao-Jun Zeng of the University of Manchester. The report found that gauging the investing public’s mood can be a startlingly predictive mechanism for the stock market. “We find an accuracy of 87.6 percent in predicting the daily up and down changes in the closing values of the Dow Jones industrial average,” the authors wrote.

Read the rest here.

Iran has stopped selling crude to British and French companies, the oil ministry said on Sunday, in a retaliatory measure against fresh EU sanctions on the Islamic state’s lifeblood, oil.

“Exporting crude to British and French companies has been stopped … we will sell our oil to new customers,” spokesman Alireza Nikzad was quoted as saying by the ministry of petroleum website.

The European Union in January decided to stop importing crude from Iran from July 1 over its disputed nuclear program, which the West says is aimed at building bombs. Iran denies this.

Iran’s oil minister said on Feb. 4 that the Islamic state would cut its oil exports to “some” European countries. The European Commission said last week that the bloc would not be short of oil if Iran stopped crude exports, as they have enough in stock to meet their needs for around 120 days.

Industry sources told Reuters on Feb. 16 that Iran’s top oil buyers in Europe were making substantial cuts in supply months in advance of European Union sanctions, reducing flows to the continent in March by more than a third – or over 300,000 barrels daily.

France’s Total [TOTF.PA  41.68    0.40  (+0.97%)   ] has already stopped buying Iran’s crude, which is subject to fresh EU embargoes. Market sources said Royal Dutch Shell [RDSA.L  2293.00    -1.00  (-0.04%)   ] has scaled back sharply. Among European nations, debt-ridden Greece is most exposed to Iranian oil disruption.

Read the rest here.

Jason Zweig

Index funds are often hailed for their low fees, solid performance and transparency.

Could they also be destabilizing the markets—and undermining the very diversification they have long promised?

Recently, leading investing experts—including Rodney Sullivan, editor of the Financial Analysts Journal, consultant James Xiong of Morningstar Investment Management and Jeffrey Wurgler, a finance professor at New York University—have been warning that index funds could destabilize the financial markets.

Unlike conventional funds run by highly paid stock-pickers who seek to buy the best securities and avoid the worst, index funds—including most exchange-traded funds, or ETFs—effectively buy and hold all the securities in a market benchmark such as the Standard & Poor’s 500-stock index.

According to James Bianco of Bianco Research, 2011 was a particularly rotten year for stock pickers: Only 17% of more than 4,000 funds that invest in large U.S. stocks beat their benchmark. In most years, fewer than half do.

Considering that index funds charge annual fees about one-10th of those levied by actively managed funds, it isn’t any wonder indexing has become a money magnet. A decade ago, 278 index mutual funds and 119 exchange-traded funds held $347 billion, or about 16% of all assets in U.S. stock funds. Today, according to Morningstar, 336 index funds and 1,148 ETFs hold $1.24 trillion, or fully one-third of all the money in U.S. stock funds.

That worries some analysts. “Markets work best when people think and act independently, not all together,” Mr. Sullivan says. When investors add money to an index fund, it generally will buy every security in the market that it tracks—hundreds, sometimes thousands at a time, regardless of price. When investors pull money out, the index fund has to sell across the board.

“These index-trading behaviors,” Mr. Sullivan says, “could interact with some unexpected event to cause significant and outsize consequences.” (Disclosure: Mr. Sullivan and I coedited a book about the value investor Benjamin Graham that was published in 2010.)

Analyzing how closely the returns of U.S. stocks moved up or down together, Mr. Sullivan found that this correlation has roughly quadrupled since the mid-1990s—coinciding with the rise of index-fund trading.

Read the rest here.

The Cancer of Debt and Deficits
By John Mauldin

What do Homer’s Odyssey, Boombustology, and “financialese” have to do with wealth management? Quite a lot, it turns out.

Let’s start with the Odyssey. In his presentation on utilizing behavioral finance in the management of client portfolios at the CFA Institute Wealth Management 2012 conference, Greg B. Davies, global head of behavioral and quantitative investment philosophy at Barclays Wealth, explored the concept of what he called “behavioralizing finance.”

“This is not behavioral finance versus classical finance,” he said. “We don’t believe that classical finance is something that should be thrown away. What we believe is that classical finance has not gone far enough; it has not considered what it truly means to be human. It has not considered certain aspects of our intuitive responses to the investment journey in order to make us better investors.”

Davies argued that there is a fundamental disconnect between helping clients invest for the long term and the fact that we live perpetually in the short term, or what he called “the zone of anxiety,” where we are buffeted financially and emotionally by uncertainty. (See “What Should I Do? Translating Long-Term Trends into Action” published in Compass in October 2011.)

Behavioral finance, he told attendees, “recognizes that decisions are always made in the zone of anxiety, but the end goal is always long term and what we have to do is help the decision maker attain that end goal.” One way to do that is to purchase emotional comfort — even if it comes at a cost. (This is further explained in a recent book Davies coauthored with Arnaud de Servigny titled Behavioral Investment Management: An Efficient Alternative to Modern Portfolio. “Successfully implementing one’s optimal portfolio requires emotional comfort and shying away from risky assets and sitting on cash is one way of acquiring this comfort,” they write. “However . . . it can be a very expensive way of doing so because it means that your portfolio will have dramatically lower risk and return than is optimal.”)

Read the rest here.

By Jason Kephart

Peter Chiappinelli, portfolio strategist at institutional money manager Grantham Mayo Van Otterloo & Co. is preparing for the worst from the Chinese stock market.

The firm is currently hedging its China exposure to near zero in the emerging-markets sleeves of its mutual funds, he said. The company has also taken a net short position on China in the hedge fund it operates.

The problem Mr. Chiappinelli sees is that there’s going to be no easy way out of the bubble that exists in China’s infrastructure and real estate.

“China is experiencing the mother of all bubbles,” he said today at the Bloomberg Portfolio Manager Mash-up in New York. “We don’t know when it’s going to pop or what’s going to cause it to pop, but there’s very little track record of countries successfully navigating a soft landing out of a bubble,” he said.

Read the rest here.

Posted by Brad Plumer

Americans have cut way back on driving in recent years. Total vehicle-miles traveled has stagnated since 2007. One big question is whether this is a temporary blip due to the downturn — unemployed people, after all, don’t commute — or evidence of a long-term structural shift.

Theories for a structural shift generally involve demographics: America’s swelling ranks of retirees don’t drive as much, while kids these days prefer Facebook to motoring around with friends. But there’s another possible factor: the torrid growth of online shopping. Phil Izzo has the numbers, which are striking. In the fourth quarter of 2011, e-commerce surged to 5.5 percent of all retail sales — and, if anything, that understates the trend, since brick-and-mortar stores include online sales in their own figures. When people order from their computers, of course, they save themselves a trip to the store.

Read the rest here.