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Monthly Archives: November 2012

Bowles: Probable ‘We’re Going Over the Cliff’

“The co-chairman of President Barack Obama’s 2010 fiscal commission said it’s unlikely the president and Congress will reach a deal by the end of this year to avert the so-called fiscal cliff.

Erskine Bowles, also a former chief of staff to President Bill Clinton, estimated there is a one-third probability the sides will strike a deal by the end of this year. Speaking Wednesday at a breakfast in Washington sponsored by the Christian Science Monitor, he said there’s another one-third chance that all sides will reach a deal early in 2013.

“I’m really worried,” Bowles told reporters. “I believe the probability is we’re going over the cliff.”

Bowles isn’t involved in the budget negotiations, though he said he met with Obama on Tuesday. He also plans to join a group of company leaders in a meeting with House Republicans today. Bowles didn’t describe his conversation with the president.

“There’s no scientific basis for me to say one-third, it’s just what I feel having spent my life as a negotiator,” Bowles said. As “people begin to react” and economic news comes out in the fourth quarter, there’s another one-third chance “you get something done real quick” in 2013, he said.

“That’s still leaves that one-third that we could actually have real chaos and no deal, and I think that would be a disaster,” Bowles said, a message he said he relayed to Obama.”
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SocGen Opines on 2013

“SocGen’s top cross-asset strategist Alain Bokobza and his team just put out their global investment outlook for 2013.

The title of the presentation – 2013: European Assets Strike Back – just about says it all. While Bokobza warns of turbulence ahead in U.S. markets as the “fiscal cliff” investors face remains unresolved, he also highlights a few developments that may make investing in Europe become more attractive in 2013.

However, Bokobza says Germany’s status as a safe haven may be at risk, and France, the other major “core” nation in the eurozone, has some major challenges ahead.

The SocGen team says it is upping its exposure to equities and decreasing its exposure to credit and alternative investments as we approach the new year.

The presentation also touches on several hot topics in markets right now, including potential sovereign credit rating downgrades in the pipeline, the yen trade, Apple stock, the Brent-WTI spread, and gold.

It’s very thorough and clear.”

See the presentation

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The Dollar Falls After Congress Expresses Optimism on Fiscal Cliff Talks

“The Dollar Index (SPX) fell for the first time in three days as comments from U.S. lawmakers fueled optimism the so-called fiscal cliff will be avoided.

The yen rose to a one-week high against the dollar as technical indicators signaled its recent decline may have been excessive. The euro pared losses against the greenback as stocks rebounded and amid speculation investors will accept Greece repurchasing its own bonds at below market prices. Brazil’s real fell against all its major counterparts on speculation the central bank will keep interest rates at record lows.”

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Market Update

U.S. equities ride a roller coaster off of fiscal cliff headlines. Senator Reid tanked the markets yesterday. Global markets took that cue and headed lower as worries over the fiscal cliff mounted.

The DOW was off nearly 100 points in the first hour of trade. Then John Boehner came out and said that he was optimistic a deal can be reached. This coinincided with indices touching down on the 200 moving average. Markets then reversed and road the roller coaster up a 100 DOW points.

Currently the DOW is up 79 points.

Gold and oil are getting slammed.

Market Update

3D heat map 

[youtube://http://www.youtube.com/watch?v=etebeZDt7Eo 450 300]


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Fun Times in Italy

[youtube://http://www.youtube.com/http://www.youtube.com/watch?v=mzr2iDQMKDo 450 300]

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Gapping Up and Down This Morning

Gapping up

GMCR +22.6%, KCG +9.4%, JVA +8.4%, CFI +7%, COST +4.7%, TNGO +3.1%, GRPN +2.3%,

ARMH +2.1%, IRE +1.6%, SODA +1.4%, PVH +1.2%, MO +1.1%, GALE +7%, NBR +1.8%,

HERO +1.1%, VOD +0.6%, JVA +8.4%,  SBUX +0.4%,  PFG +0.3%,  AEO +5.7%, YGE +1.4%,

Gapping down 

DVAX -16.7%, GWRE -10.2%, DWCH -7.5%, CBSH -7%, PRGX -5.7%, MCC -4%, CAP -3.3%,

ECTE -3.1%, ADI -2.8%, GFI -1.8%, FMCN -1.6%, DB -1.5%, SDRL -1.2%, WIN -2.5%,  MO -0.5%,

WFM -1.5%, CLH -0.9%, RIMM -2.1%, CBSH -6.8%, ACAD -6.3%, HMY -2%, GFI -1.8%, GG -1.8%,

AEM -1.8%, AU -1.8%, ABX -1%, SLW -0.8%, SLV -0.7%, GLD -0.3%, NBG -6.3%, DB -1.5%, SAN -1.4%,

BCS -1.1%, HBC -0.5%, TFM -9.5%, DWCH -7.5%, ADI -2.8%, FMCN -1.6%,

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Three Cheers: California is Making a Comeback

“After nearly five years of brutal economic decline, government retrenchment and a widespread loss of confidence in its future, California is showing the first signs of a rebound. There is evidence of job growth, economic stability, a resurgent housing market and rising spirits in a state that was among the worst hit by the recession.

California reported a 10.1 percent unemployment rate last month, down from 11.5 percent in October 2011 and the lowest since February 2009. In September, California had its biggest month-to-month drop in unemployment in the 36 years the state has collected statistics, from 10.6 percent to 10.2 percent, though the state still has the third-highest jobless rate in the nation.”

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Looking to Profit From Foreclosures? Here are the 10 Best States to Find Deals

“One in every 706 homes received a foreclosure filing in October, according to RealtyTrac’s latest foreclosure report.

These foreclosed homes often sell at significant discounts to similar non-distressed homes.

We drew on RealtyTrac’s report to highlight the 10 states that with the highest discounts on foreclosed homes.”

Full article

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Companies That May Gift a Christmas Dividend to Shareholders

Earlier this morning, Costco surprised its shareholders by announcing a special cash dividend of $7.00 per share. And the share price is surging.


Costco follows a slew of other companies announcing special dividends including Wynn Resorts, Las Vegas Sands, Sturm Ruger, and Brown-Forman, the maker of Jack Daniels.

So, why are companies suddenly dumping cash on their shareholders?

Well, the big catalyst seems to be the prospect of higher dividend tax rates as a consequence of the fiscal cliff.  If nothing is done by the end of the year, Bush-era tax cuts will expire causing the dividend income tax to surge from 15 percent to 43.4 percent.

“The 2001/2003 tax cuts were originally set to expire at the end of 2010, though, after months of political negotiations, the rates were extended in the final weeks of that year,”  wrote Robert Boroujerdi of Goldman Sachs. “Indeed, 2010 saw the highest number of one-time dividend announcements, more than double the run-rate of 2000-2011 period.”

Boroujerdi provided a list of companies he thought would surprise investors before the year ended. Indeed, some have already announced a dividend. NOTE: The ratios in the table below are based on September 21, 2012 stock prices:

Full article and predictions for dividends 

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$DD Does a Full Retard Nazi Dance

In order to enforce patent protection DuPont has sent former police out across North America to check on farmers that are collecting seeds, a practice of generations of farmers.

Patenting life and genomes is truly ridiculous imo.

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Calpers Files a Legal Motion Against the City of San Bernardino

“LOS ANGELES (Reuters) – America’s biggest public pension moved aggressively against the bankruptcity of San Bernardino, California, on Tuesday night over the city’s decision to halt payments to the fund.

The move laid bare a high-stakes battle shaping up between Wall Street and state pension funds over how they are treated when cities run out of money.

The powerful California Public Employees’ Retirement System (Calpers) filed a legal motion declaring its intention to sue San Bernardino for millions of dollars in pension arrears, a move that the fund has never before had to make in a municipal bankruptcy.

San Bernardino, a city of 210,000 about 60 miles east of Los Angeles, filed for bankruptcy protectionon August 1. Since then, it has halted its bi-weekly, $1.2 million payment to Calpers, saying it wants to defer any payments to the fund until fiscal year 2013-2014. Calpers says the city is already $6.9 million in arrears since August 1.

The San Bernardino bankruptcy is fast emerging as a precedent-setting case over how creditors, especially Wall Street bondholders and insurers, are treated in a municipal bankruptcy, because never before has a city seeking bankruptcy halted payments to Calpers or threatened its historical primacy as a creditor.”

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$COST Announces a Special $7 Dividend

“Costco says it will pay shareholders a special dividend of $7 per share next month in addition to the wholesale club operator’s regular quarterly dividend.

The Issaquah, Wash., company says the dividend will be payable Dec. 18 to shareholders of record Dec. 10. Costco Wholesale Corp.’s regular quarterly dividend of 27.5 cents per share will be paid Nov. 30 to shareholders of record as of Nov. 16.”

Full article

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IMF Research Warns on China Investments

“BEIJING (Reuters) – China’s economy relies on an excessively high level of investment and risks a potentially destabilizing increase if the government aims to keep growth around current levels for years to come, new International Monetary Fund research suggests.

Already running high as measured by a theory used by economists to assess capital-to-output ratios, investment accelerated between 2007 and 2011 to counter the effects of the global financial crisis, IMF staff wrote in a research paper on China’s soaring investment levels.

“Depending on precise assumptions, over this period, China may have been over-investing by between 12 and 20 percent of gross domestic product relative to its steady-state desirable value,” the report said.

“Even allowing for elevated investment levels associated with most economic take-offs, the econometric evidence suggests that China is over-investing,” it said. “China’s predicted investment norm over the last 30 years has ranged between 33-43 percent of GDP. In reality, it has fluctuated in a much broader band of 35-49 percent of GDP.”

The IMF says its working papers do not necessarily represent the organization’s policy, and that the reports describe research in progress that is published to spur debate.”

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