DEUTSCHE BANK: Communism Is Alive In America

“Bilal Hafeez, Deutsche Bank‘s Global Head of FX Strategy, recently gave a speech at the bank’s annual Chinese New Year Dinner in London earlier this week.

Hafeez took a sweeping tour across the global economic landscape, examining the big stories in the United States, Europe, and China.

With regard to China, Hafeez focused on the obvious need for the country to rebalance from a centralized, investment-driven model to a more consumption-driven economy.

What followed after that may not be as obvious: Hafeez advanced an interesting parallel between the U.S. economy and the communist ideal.

An excerpt from the speech is included below:

You may think that the US is the antithesis of the Marxist ideal. You may be mistaken.

In the Communist Manifesto published in 1848, Karl Marx and Friederich Engels demanded a list of immediate actions that capitalist economies should follow on the path to communism. What were they? Free education, well the US has that. Progressive tax system: which the US has. Curbs on inheritance: which the US has. Fair labour laws: which the US has….”

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” $CSCO  has $46 billion in cash, but CEO John Chambers says he is no longer willing to use it to acquire U.S. companies.

That’s because 80 percent of that cash is stored in overseas accounts and if Cisco spends it in the U.S., the company will have to fork over 35 percent in taxes.

For years, he has been trying to get the U.S. to change that tax rule. He’s said before that this prevents him from hiring more U.S. workers.

But now he’s said he’s also stopped shopping for acquisition targets in the U.S., too.

That’s a blow, as Cisco has historically been a company that acquires like crazy.

Cisco is not the only company hording cash overseas to avoid taxes. U.S. companies have about $1.7 trillion offshore. For instance, Microsoft‘s keeps about 87 percent of its $66.6 billion stored outside the U.S.; Oracle, 80 percent of its $31.6 billion; and Apple about 68 percent of its $121.3 billion, reports CNBC’s Jon Fortt.….”

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“Bloomberg is reporting on emails circulating among Wal-Mart executives calling February sales a “total disaster.”

The emails say February sales are off to the worst monthly start in seven years.

The executives attribute the dismal performance to the expiration of payroll tax cuts.

Bloomberg’s Renee Dudley reports:

“In case you haven’t seen a sales report these days, February MTD sales are a total disaster,” Jerry Murray, Wal-Mart’s vice president of finance and logistics, said in a Feb. 12 e-mail to other executives, referring to month-to-date sales. “The worst start to a month I have seen in my ~7 years with the company.”

…

“Have you ever had one of those weeks where your best-prepared plans weren’t good enough to accomplish everything you set out to do?” Geiger asked in a Feb. 1 e-mail to executives. “Well, we just had one of those weeks here at Walmart U.S. Where are all the customers? And where’s their money?”

The stock just tanked on the news and is now down more than 3 percent in intraday trading. Click on the chart below to enlarge the image.

Thinkorswim

Brian Sozzi, chief equities analyst at NBG Productions and a specialist in retail stocks, told Business Insider: …”

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“NEW YORK (Reuters) – Hedge fund billionaire Steven A. Cohen is feeling the pinch from the federal government’s insider tradingprobe as outside investors in his SAC Capital Advisors submitted a request to withdraw $1.68 billion from the firm by year’s end.

The dollar value of investor redemption notices exceeds the $1 billion figure Cohen had been telling the 900 employees at his $14 billion hedge fund to expect. The firm was bracing for withdrawals as the insider trading investigation increasingly focuses on the activities of former employees of Cohen’s fund.

But the figure likely will not impede SAC Capital’s operation in the near term, since those dollars will be returned over the course of year. And roughly 60 percent of the money managed by Cohen’s firm is either his or his employees’.

A representative for one of Cohen’s outside investors said even if all of the roughly $6 billion inoutside money was withdrawn from SAC Capital, the hedge fund would still be able to operate but would likely be smaller.

An employee of SAC Capital who did not want to be identified said, “SAC could handily cover all costs for operation,” in the unlikely event all the outside money was withdrawn.

A person familiar with the firm said the firm’s trading profits will help offset losses from the $1.68 billion investors are redeeming.

The deadline for outside investors to put in notices was Thursday night.

SAC’s biggest outside investor, Blackstone Group, is keeping most of its $550 million with the firm. The asset management arm of the private equity firm decided to stay with Cohen’s firm after negotiating more flexible redemption terms on behalf of all of the firm’s investors.

Right now investors who redeem in the first quarter will get their money, spread out over the four quarters of this year….”

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“Forecasters boosted expectations for U.S. economic growth in the first and second quarters of the year, with an improving labor market and a stable outlook for real output, a survey released on Friday showed.

Economists expect the economy to grow at an annual rate of 2.1 percent in the current quarter, up from the previous estimate of 1.7 percent growth, according to the Philadelphia Federal Reserve’s quarterly survey of 46 forecasters.

The economists pegged second quarter gross domestic product at 2.3 percent, up from the previous estimate of 2 percent.

However, GDP for all of 2013 was estimated at 1.9 percent, down slightly from a previous estimate of 2 percent. U.S. growth for 2014 was estimated at 2.8 percent, up marginally from the previous forecast of 2.7 percent.

The unemployment rate was forecast to average 7.8 percent in the first quarter compared with the previous estimate of 7.9 percent, while unemployment in the second quarter was forecast at 7.7 percent, down from 7.8 percent in the previous estimate. The third quarter jobless rate was estimated at 7.6 percent, down from the previous forecast of 7.8 percent….”

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There’s plenty of evidence supporting the belief that the dollar’s days as the preeminent currency are coming to an end, a development that would be catastrophic for the world’s largest economy.

“Generally speaking, it is not believed by the vast majority that the American dollar will be overthrown,” Dick Bove, vice president of equity research at Rafferty Capital Markets, said in a note obtained by CNBC. “But it will be, and this defrocking may occur in as short a period as five to 10 years.”

The greenback is declining as a percentage of the world’s currency supply. Compared with its peers, it has dropped to a 15-year low, as nations show a willingness to use other currencies to conduct business, according to the International Monetary Fund….”

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“Prominent hedge fund manager John Paulson continued to hold significant gold investments in the fourth quarter of 2012, even as other investors pulled out.

Notable institutional investors, including George Soros, Julian Robertson and Allianz’s Pimco reduced their bets on gold during the quarter, when bullion posted its biggest quarterly loss in more than four years.

Paulson & Co owned 21.8 million shares in the world’s largest gold-backed exchange-traded fund, SPDR Gold Trust, at the end of December, unchanged from Sept. 30, a filing with the U.S. Securities & Exchange Commission showed on Thursday.

“That’s a good sign as he’s a big player. It shows that he still has long-term faith in the market,” said Bill O’Neill, a partner in commodities investment firm LOGIC Advisors.

Paulson is by far the biggest shareholder of the SPDR gold ETF. He has often advocated gold to offset risks related to currency exposure and U.S. dollar depreciation.

The value of Paulson’s SPDR ETF holdings, however, dropped to $3.54 billion in the fourth quarter from $3.75 billion in the third, resulting in a paper loss of $215.5 million for his fund.

The decline was because of a 5 percent, or $100, drop in the price of spot gold during the fourth quarter.

Some analysts cited year-end hedge fund redemption for gold’s pullback in the quarter….”

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“Netflix succeeded in getting a shareholder lawsuit dismissed that had accused the company of inflating its share price by concealing rising costs, even as insiders like CEO Reed Hastings were selling millions of dollars in stock, reports Reuters.

The lawsuit was filed in January 2012 by shareholders led by the Arkansas Teacher Retirement System and State-Boston Retirement System, which claimed Netflix deceived them about its prospects. They also said Netflix misled shareholders by launching a stock buyback program, a sign that shares might be undervalued, even as Hastings and other insiders were selling off close to $85 million of their own shares. Hastings was also deemed not to have materially misled investors on a conference call on Dec. 8, 2012, when he said Netflix would benefit from a “virtuous cycle where it could add subscribers and streaming content while lessening the costs of its DVD-by-mail rental service….”

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“More journalists are now the target of cyber attacks, said the Committee to Protect Journalists. CPJ deputy director Robert Mahoney said cyber attacks on individuals and news organizations have increased notably over the past few years and that the practice serves as easy and inexpensive censorship. In a press conference with reporters, Mahoney cited the recent attacks on The New York Times, the Washington Post, Bloomberg News and The Wall Street Journal by Chinese hackers, but said other news organizations and journalists in Africa, the Middle East, Southeast Asia, and other regions had also been subjected to cyberattacks.

Attacks by hackers have ramped up so much that in a report last June, the CPJ said that it’s now “open season on online journalists,” with nation-states using customized software to exploit security flaws on personal computers and consumer Internet services in order to spy on users. Countries suspected in spying include the U.S., Israel and China. Journalists working in the latter country reported receiving regular warnings on their Gmail that their account had been targeted by what Google said was a “state-sponsored attack.”

Other countries include Myanmar, where several journalists who cover the country said earlier this week that they had received warnings from Google that their email accounts might have been hacked by “state-sponsored attackers.” This wasn’t the only case of cyberattacks and news Web sites in that country, where these incidents are calling into question the integrity of media reforms by the government.

CPJ wrote in its June report that:

The lesson of all of this activity is that many governments see these attacks as an effective, unregulated, and deniable way to target groups that would otherwise be too politically sensitive or independent to publically challenge or co-opt. That puts reporters, bloggers, and media companies high on the hit list….”

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Gold breaks what traders say is a crucial support of $1,625 per oz…

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“Burger King Worldwide Inc.’s BKW +2.05% fourth-quarter profit jumped 94% as the hamburger chain recorded a sharp drop in expenses, outweighing a slump in revenue driven by foreign-currency headwinds.

Shares of Burger King rose 3.7% to $17.20 in recent premarket trading as results beat Wall Street estimates. The stock has risen 8.4% in the past three months.

Burger King has been working to revive its menu and marketing strategy to expand beyond its core 20-something male customer. Earlier this week, the company said it is adding lattes and flavored coffee to its menu, representing another attempt to catch up to rivalMcDonald’s Corp. MCD +0.25%

Burger King hopes its new marketing and menu changes will help it reclaim its position as the No. 2 hamburger chain behind McDonald’s, measured by U.S. systemwide sales. Last year, Burger King fell behind Wendy’s Co.,WEN +0.38% which moved up to No. 2…..”

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:Feb 15 (Reuters) – Kraft Foods Group Inc said fourth-quarter revenue likely declined 10.7 percent from a year earlier, largely due to reductions in trade inventories.

The company, spun off late last year from Mondelez International, said it estimated earnings of 15 cents per share for the quarter ended Dec. 29.

Analysts on average were expecting earnings of 22 cents per share on revenue of $4.74 billion in the fourth quarter, according to Thomson Reuters I/B/E/S….”

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“A flurry of acquisitions announced within hours of each other Thursday, for everything from ketchup to airlines to drug wholesaling, suggests big-time deal-making is back after a nearly six-year absence from Wall Street.

Mergers and acquisitions took a sharp tumble after the financial crisis, as economic uncertainty and paranoia on corporate boards kept deal-making on the sidelines. This year, though, has been different.

The $40 billion-worth of deals struck Thursday brings the total value of M&A transactions announced since January to nearly $160 billion, the fastest start to a year since 2005, according to Dealogic. M&A volumes historically follow the lead of the stock market, and the 6.67% increase in the Standard & Poor’s 500 Index this year suggests more are on the way….”

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“…..An analyst named Peter Misek of Jefferies reported that Apple had wanted to release a forthcoming big-screened iPhone this year, but that manufacturing problems have forced the company to push back the launch until 2014.

Specifically, reports BI’s Jay Yarow, Misek says that Apple wanted to launch the larger model in October. But Apple’s screen suppliers were not able to manufacture enough screens in that timeframe:

Apple’s iPhone uses a technology called “in-cell,” which essentially meshes the touch screen with the glass screen into one thin display. Its partners can’t get good enough yields making those displays bigger to launch the iPhone 6 this year.

If Misek’s report is accurate (no guarantees, obviously–and given the steady stream of often-inaccurate reports about Apple’s future products, it’s best to regard it as a rumor), this is a major setback for Apple.

Samsung is currently gearing up for the launch of its next version of the Galaxy phone, which is expected this spring.

The next-generation Galaxy will likely have a screen that is as big or bigger than the current Galaxy S III. Samsung expects the phone to be so popular that it is reportedly gearing up to make 100 million of them this year. And it is planning to launch the phone with a massive marketing blitz.

If Samsung does launch the new Galaxy this spring, and Apple can’t launch its own new phone until next year, Samsung may have as long as 9-12 months to market and sell a new phone that many consumers will consider obviously superior to Apple’s iPhone before Apple is even in the market with a big-screened phone….”

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Capacity Utilization: Prior 78.8%, Market Expects 78.9%, Actual 79.1%

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CTL, CSCO, GRMN, GNRC, GFI, HAIN, HBAN, JCP, KGC, MWW, NTGR, GOLD, RIG, URBN, YNDX,

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