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Monthly Archives: September 2012

Market Update

U.S. equities opend slightly lower.  After a bad ISM report the markets decided to tank a bit; down to the tune of 0.5-0.6%.

Oil pared all of its early morning gains and the seasonality for gold has begun as the shiny metal climbs today.

Markets are still in a wait and see mode as the ECB bond buying details should emerge on Thursday. Also the markets will await a decision out of Germany on September 12.

Place your bets.

Market update

3 D heat map

European boards

[youtube://http://www.youtube.com/watch?v=A66-XjIWILA 450 300]

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U.S. Companies Brace for an Exit From the Euro by Greece

” Even as Greece desperately tries to avoid defaulting on its debt, American companies are preparing for what was once unthinkable: that Greece could soon be forced to leave the euro zone.

Bank of America Merrill Lynch has looked into filling trucks with cash and sending them over the Greek border so clients can continue to pay local employees and suppliers in the event money is unavailable. Ford has configured its computer systems so they will be able to immediately handle a new Greek currency.

No one knows just how broad the shock waves from a Greek exit would be, but big American banks and consulting firms have also been doing a brisk business advising their corporate clients on how to prepare for a splintering of the euro zone.

That is a striking contrast to the assurances from European politicians that the crisis is manageable and that the currency union can be held together. On Thursday, the European Central Bank will consider measures that would ease pressure on Europe’s cash-starved countries.

JPMorgan Chase, though, is taking no chances. It has already created new accounts for a handful of American giants that are reserved for a new drachma in Greece or whatever currency might succeedthe euro in other countries.”


Full article

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Meet The “Job Creators”

” Eric Cantor the House Majority Leader, stirred up quite the controversy on Labor Day when hetweeted:

“Today, we celebrate those who have taken a risk, worked hard, built a business and earned their own success.”

Of course, Labor Day is a celebration of the worker class, not the capitalist class.  But his comments sparked a debate in some circles that has long been raging – this so-called debate about the “job creators” and who really drives job creation in the economy.  Unfortunately, the debate often falls on ideological lines as opposed to practical lines.  But this is the world we live in.  Everything is viewed in black and white when reality is usually somewhere in the middle.  This case is no different.  I’ll explain briefly.

Late last year I explained the role of the entrepreneur in the capitalist economy. In short, the entrepreneur seeks to provide superior goods and services that ultimately offer consumers a more efficient means of achieving some end.  This creates efficiencies which result in greater future consumption, economic expansion and more jobs in the future.  The example I’ve used in the past is Alexander Graham Bell, the inventor of the telephone.  When Bell invented the phone he destroyed thousands of jobs.  Messengers and telegram services were slowly defunct.  But Bell created efficiencies through making communication more convenient.  And in doing so he helped generate higher economic growth and ultimately more jobs in the future by streamlining what was once an arduous process – long distance communication.  Bell created countless jobs by creating this efficiency.  In this regard, capitalists, producers and innovators can be seen “job creators”.

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Beware of September Seasonality

“Traders figuring out their September trading strategies should definitely take note.

I’m not the first commentator to note September’s dismal seasonal tendencies, of course. But what I found particularly surprising: The odds are against September even in years like the current one — in which the stock market is rallying strongly, and coming a few short weeks prior to a presidential election.

Those at least are the conclusions that emerged upon feeding into my PC’s statistical software the data for the Dow Jones Industrial Average DJIA -0.54%   back to 1896, when that benchmark was created.”

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Vanguard’s Bogle: Financial Train Wreck Looms for Retirees

“Retirees hoping to live on the proceeds from their 401(k) savings or similar venues are due for a big surprise, as such holdings aren’t enough to sustain a decent lifestyle, which puts many aging Americans ill prepared for retirement, said John Bogle, founder of The Vanguard Group.

In an interview with USA Today, when asked what worries him the most, Bogle replied “the coming train wreck in the financial system.”

Too many people have not prepared enough for retirement.”

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Bank Runs in Spain are Now Worse Than the Asian Contagion

“As fear that the euro will unravel rises, Spaniards are pulling their cash out of banks and leaving the country, according to The New York Times.

One of the most worrisome trends is that the educated and entrepreneurial professionals have started withdrawing their money.

“No doubt there is a little bit of panic,” Jose Garcia Montalvo, an economist in Barcelona told The Times. “The wealthy people have already taken their money out. Now it’s the professionals and midrange people who are moving their money to Germany and London. The mood is very, very bad.”

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The Bow Tie: Fed Has Already Begun QE3 to Avoid ‘Egg on Their Face’

International investor Jim Rogers says that the Federal Reserve is secretly printing money to avoid “getting egg on their face again” after previous attempts to kick-start the faltering economy with more than $2 trillion of quantitative easing failed.

Since the downturn, the Federal Reserve has twice sought to spur the economy by buying assets like Treasury holdings or mortgage-backed securities held by banks, a monetary stimulus tool known as quantitative easing that pumps vast amounts of liquidity into the financial system to spur recovery.

Two previous rounds of quantitative easing (QE1 and QE2) pumped a collective $2.3 trillion into the economy and Fed officials say they remained poised to roll out a third round (QE3) if recovery doesn’t gain steam.

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Nomura: “Spain Will Need Full-Blown Bailout”

“While hardly saying anything new, more and more pundits are waking up to the reality that faced with an environment of epic capital outflows predicated by a complete loss in the system (see Greece), Spain simply can not survive. We wrote about the record outflow in Spanish deposits last week (here and here) and the fact that with banks urgently seeking to plug liquidity holes, coupled with soaring NPL levels, in the absence of actual profits they are forced to sell all those SPG bonds they had been purchasing during the open ponzi phase, where ECB funding would be recycled by local banks to meet primary market demand. Overnight even the New York Times has finally understood this simple identity: record outflows = the end. And now, the banks begin to chime in, pointing out what is patently obvious: from Nomura – “Spain will need full-blown bailout which will include more active role of ECB in Spanish bond markets.

More from Bloomberg:”

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June Foodstamp Recipients Hit All Time High As Three Times As Many Americans Enter Poverty

“Following a brief period in which it seemed that US foodstamp recipients may have peaked, with those living in poverty maxing out at 46.514 million in December 2011, and then declining modestly for the next few months, June saw a new surge in those Americans living in poverty and thus eligible for foodstamps, with 173,600 new entrants into the system, bringing the total to a new all time high of 46.670 million and once again rising fast. Furthermore, with subsequent emergency events affecting the heartland due to the drought, the administration has made sure even more Americans will be eligible going forward.”

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OECD Inflation Rate Falls Again


“The annual rate of inflation across developed economies fell for the fifth straight month in July and to its lowest level since November 2010, a development that opens the way for leading central banks to shore up faltering growth through additional stimulus measures.

Figures released by the Organization for Economic Cooperation and Development on Tuesday showed consumer prices in its 34 member countries rose by 1.9% in the 12 months to July, a smaller increase than the 2.0% rise in the 12 months to June.

The rate of inflation also fell in a number of large developing economies, most sharply in South Africa, but also in China and India.

The decline in inflation rates across so many leading economies gives central banks more room to cut their key interest rates or provide other forms of stimulus to counter a global economic slowdown.”

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Central Falls RI is About to Emerge From Bankruptcy, See What Recovery Looks Like

“(Reuters) – Central Falls, in Rhode Island, is close to emerging from bankruptcy with a plan that hammers its retired municipal employees but leaves bondholders unscathed, in a contrast with other recent U.S. municipal bankruptcies.

On Thursday, a state-appointed receiver overseeing the finances of the tiny, impoverished city is expected to win court approval for a plan that rescues Central Falls from financial collapse and should balance its budget for at least the next five years.

Unlike the approach of some other U.S. states such as California, which left struggling cities to try to fix their finances on their own, the plan for Central Falls reassured the credit markets, but scarred the city.

The smallest city in Rhode Island and the only one ever to file for bankruptcy will emerge with powerless elected officials, property owners facing tax hikes every year and retired public employees irate about having their pensions slashed.”

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Meet The Man Behind Facebook’s IPO Debacle

“It is David Ebersman’s fault. There is just no way around it. Mr. Ebersman is Facebook’s well-liked, boyish-looking 41-year-old chief financial officer. He’s not as well known as Mark Zuckerberg, Facebook’s founder and chief executive, or Sheryl Sandberg, its chief operating officer and recently appointed director.

But when it came to Facebook’s [FB  18.058       ]catastrophe of an initial public offering — the stock reached a new low on Friday, closing at $18.06 — it was Mr. Ebersman, not Mr. Zuckerberg or Ms. Sandberg, who was ultimately the one pulling the strings.

Now, three months after the offering, the company has lost more than $50 billion in market value. Let me say that again for emphasis: Facebook’s market value has dropped more than $50 billion in 90 days.”

Full article

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$AAPL Now Worth More Than Listed Firms in PIGS Combined

“Which matters more, next week’s rumored iPhone 5 launch or the European Central Bank rescue plan expected this Thursday? Speculation about an iPad Mini or the worsening economic slowdown in China?

Only a wild-eyed camper queuing all night outside an Apple [AAPL  665.24        ] store could argue the tech company’s plans mattered more to the economy. But in purely financial terms, the market value of Apple makes the question less silly.

Apple became the world’s most valuable-ever company two weeks ago. It is worth $624 billion, more than all the listed companies in Portugal, Ireland, Greece and Spain together. The employer of 63,300 people – each valued at $10 million – is more valuable than all the shares available to investors in the MSCI China index [MCHI  39.75  —  UNCH    ], the international benchmark.”

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Gapping Up and Down This Morning

Gapping up

NLP +60.6%, STEM +15.2%, VRX +9.2%, TEF +3.5%, BUD +3%, DEO +2%,

UN +1.2%, KO +1.1%,  TIVO +6.7%, GME +3% , MS +2.1%,  MT +1.4% ,

MRVL +1.4%, IBM +0.6% ,  QCOR +10.5%,  CPB +9.2%, MRX +37.5%, VRX +9.7%

Gapping down 

ARMH -3.8%, SFD -2.7%, ANR -2.4%, GOLD -1.5%, GSK -1.3%, BBL -1.1%, NVS -0.7%,

SWKS -1.5%, VOD -1.4%,  GIS -0.8%, NVDA -0.6% , ALJ -2.6%,  DDMG -17.9%,

MNKD -12.2%, ACI -2.6%, WLT -1.9%, BTU -1.8%, ANR -0.7%, GOLD -1.5%,  BBL -1.1%,

GFI -1.0%, BHP -0.7%,

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