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Monthly Archives: April 2013

Albert Edwards: $10k + Au, Stocks Will Melt Down, and Hyperinflation Will Come

“This is always reassuring. SocGen strategist Albert Edwards remains an ultra-bear, and predicts everything will go to hell.

In his new note he writes:

We still forecast 450 S&P, sub-1% US 10y yields, and gold above $10,000

My working experience of the last 30 years has convinced me that policymakers’ efforts to manage the economic cycle have actually made things far more volatile….”

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Documentary: Blood in the Mobile

Just got back from a little time off.

Not having a mobile phone is not enough for me to be disconnected every now and then.

Given the proliferation of the mobile; here is a topic not spoken about as with many hidden realities tied to our consumer culture.

Remember as a consumer we collectively have the power to force change. If we are not informed and make no demands upon corporations then they will always seek the cheapest means to produce products we consume; ultimately that means we are guilty of child slavery, murder, and disregard for the planet.

Cheers on your weekend!

Click here for documentary 

[youtube://http://www.youtube.com/watch?v=m5TwT69i1lU 450 300]

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Behold the Power of the Search Engine

“Google, as many researchers know well, is more than a search engine—it’s a remarkably comprehensive barometer of public opinion and the state of the world at any given time. By using Google Trends, which tracks the frequency particular search terms are entered into Google over time, scientists have found seasonal patterns, for example, in searches for information about mental illnesses and detected a link between searching behavior and a country’s GDP.

A number of people have also had the idea to use these trends to try achieving a more basic desire: making money. Several studies in recent years have looked at the number of times investors searched for particular stock names and symbols and created relatively successful investing strategies based on this data.

new study published today in Scientific Reports by a team of British researchers, though, harnesses Google Trends data to produce investing strategies in a more nuanced way. Instead of looking at the frequency that the names of stocks or companies were searched, they analyzed a broad range of 98 commonly used words—everything from “unemployment” to “marriage” to “car” to “water”—and simulated investing strategies based on week-by-week changes in the frequencies of each of these words as search terms by American internet users.

A listing of the 98 words used in the study, from most effective at predicting market declines (debt) to least effective (ring). Image via Scientific Reports/Preis et. al.

The changes in the frequency of some of these words, it turns out, are very useful predictors of whether the market as a whole—in this case, the Dow Jones Industrial Average—will go down or up (the Dow is a broad index commonly considered a benchmark of the overall performance of the U.S. stock market).

The strategy was relatively straightforward: The system tracked whether a word such as “debt” increased in search frequency or decreased in search frequency from one week to the next. If the term was suddenly searched much less frequently, the investment simulation bought all the stocks of the Dow on the first Monday afterward, then sold all the stocks one week later, essentially betting that the overall market would rise in value.

If a term such as “debt” was suddenly searched much more frequently, the simulation did the opposite: It bought a “short” position in the Dow, selling all its stocks on the first Monday and then buying them all a week later. The concept of a “short” position like this might seem a bit confusing to some, but the basic thing to remember is that it’s the exact opposite of conventionally buying a stock—if you have a “short” position, you make money when the stock goes down in price, and lose money when it goes up. So for any given term, the system predicted that more frequent searches meant the market as a whole would decline, and less frequent searched meant it would rise.

During the period of time studied (2004-2011), making investment choices based on a few of these words in particular would have yielded overall profits several times higher than a conservative investment strategy of simply buying and holding the stocks of the Dow for the entire time. For example, basing a strategy solely on the search frequency of the word “debt,” which turned out to be the single most profitable term in the study, would have generated a profit of 326% over the seven years studied—compared to a profit of just 16% if you owned all the stocks of the Dow for the whole period….”

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U.S. economy grows 2.5% in first quarter

WASHINGTON (MarketWatch) – The U.S. economy expanded at a 2.5% pace in the first three months of 2013, up from 0.4% in the fourth quarter, as consumer spending rose at the fastest rate in two years and businesses restocked warehouse shelves. Yet government spending fell sharply again ands imports surged to act as drags on economic growth, according to data released Friday by the Commerce Department. Economists surveyed by MarketWatch had forecast growth to rise to 3.2%, so the less-than-expected number could weigh on U.S. markets. Consumer spending – the motor of the U.S. economy – rose 3.2% to mark the sharpest gain since the end of 2010, though some of the increase was the result of higher oil prices. Inventories also soared to an estimated $50.3 billion after a scant $13.3 billion increase in the prior quarter, but that buildup is probably unsustainable. Final sales of U.S.-made goods and services, a more precise gauge of demand, rose a much smaller 1.5%. That matched the lowest increase in eight quarters. Investment in residential housing, a source of recent economic strength, jumped 12.6% to mark the third straight strong advance. Business spending on equipment and software rose 3%. In a bit of a surprise, military spending sank 11.5% after an unusually steep drop of 22.1% in the fourth quarter. And overall government spending fell 4.1% in the first three months of the year, perhaps partly reflecting federal spending cuts that began to take effect in early March. Meanwhile, imports surged 5.4% after falling 4.2% in the fourth quarter, spurred by higher oil prices. Americans had to pay more to fill up at the gas station. Exports climbed 2.9% after a 2.8% drop in the fourth quarter. Inflation as measured by the PCE price index rose at an annual rate of 0.9%, down from 1.6% in the prior two quarters. Core PCE rose slightly faster at 1.2% The GDP report will be refined through two further updates over the next few months.

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Boston Carjack Victim Speaks

The 26-year-old Chinese entrepreneur had just pulled his new Mercedes to the curb on Brighton Avenue to answer a text when an old sedan swerved behind him, slamming on the brakes. A man in dark clothes got out and approached the passenger window. It was nearly 11 p.m. last Thursday.

The man rapped on the glass, speaking quickly. Danny, unable to hear him, lowered the window — and the man reached an arm through, unlocked the door, and climbed in, brandishing a silver handgun.

“Don’t be stupid,” he told Danny. He asked if he had followed the news about Monday’s Boston Marathon bombings. Danny had, down to the release of the grainy suspect photos less than six hours earlier.

“I did that,” said the man, who would later be identified as Tamerlan Tsarnaev. “And I just killed a policeman in Cambridge.”


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Can the Fed Reverse What They Have Done?



“The political class set in motion the eventual obliteration of our economic system with the creation of the Federal Reserve in 1913. Placing the fate of the American people in the hands of a powerful cabal of unaccountable greedy wealthy elitist bankers was destined to lead to poverty for the many, riches for the connected crony capitalists, debasement of the currency, endless war, and ultimately the decline and fall of an empire. Ernest Hemingway’s quote from The Sun Also Rises captures the path of our country perfectly:

“How did you go bankrupt?”
Two ways. Gradually, then suddenly.”

The 100 year downward spiral began gradually but has picked up steam in the last sixteen years, as the exponential growth model, built upon ever increasing levels of debt and an ever increasing supply of cheap oil, has proven to be unsustainable and unstable. Those in power are frantically using every tool at their disposal to convince Boobus Americanus they have everything under control and the system is operating normally. The psychotic central bankers, “bought and sold” political class, mega-corporation soulless chief executives and corporate controlled media use propaganda techniques, paid “experts”, talking head “personalities”, captured think tanks, and the willful ignorance of the majority to spin an increasingly dire economic descent as if we are recovering and getting back to normal. Nothing could be further from the truth.

There is nothing normal about what Ben Bernanke and the Federal government have done over the last five years and continue to do today. Truthfully, nothing has been normal since the mid-1990s when Alan Greenspan spoke the last truthful words of his lifetime:

“Clearly, sustained low inflation implies less uncertainty about the future, and lower risk premiums imply higher prices of stocks and other earning assets. We can see that in the inverse relationship exhibited by price/earnings ratios and the rate of inflation in the past. But how do we know when irrational exuberance has unduly escalated asset values, which then become subject to unexpected and prolonged contractions as they have in Japan over the past decade?”

The Greenspan led Federal Reserve created two epic bubbles in the space of six years which burst and have done irreparable harm to the net worth of the middle class. Rather than learn the lesson of how much damage to the lives of average Americans has been caused by creating cheap easy money out of thin air, our Ivy League self-proclaimed expert on the Great Depression, Ben Bernanke, has ramped up the cheap easy money machine to hyper-speed. There is nothing normal about the path this man has chosen. His strategy has revealed the true nature of the Federal Reserve and their purpose – to protect and enrich the financial elites that manipulate this country for their own purposes.

Despite the mistruths spoken by Bernanke and his cadre of banker coconspirators, he can never reverse what he has done. The country will not return to normalcy in our lifetimes. Bernanke is conducting a mad experiment and we are the rats in his maze. His only hope is to retire before it blows up in his face. Just as Greenspan inflated the housing bubble and exited stage left, Bernanke is inflating a debt bubble, stock bubble, bond bubble and attempting to re-inflate the housing bubble just in time for another Ivy League Keynesian academic, Janet Yellen, to step into the banker’s box. This genius thinks Bernanke has been too tight with monetary policy. It seems inflated egos are common among Ivy League economist central bankers who think they can pull levers and push buttons to control the economy. Results may vary.

The gradual slide towards our national bankruptcy of wealth, spirit, freedom, self-respect, morality, personal responsibility, and common sense began in 1913 with the secretive creation of the Federal Reserve and the imposition of a personal income tax. Pandora’s Box was opened in this fateful year and the horrors of currency debasement and ever increasing taxation were thrust upon the American people by a small but powerful cadre of unscrupulous financial elite and the corrupt politicians that do their bidding in Washington D.C. The powerful men who thrust these evils upon our country set in motion a chain of events and actions that will undoubtedly result in the fall of the great American Empire, just as previous empires have fallen due to the corruption of its leaders and depravity of its people. Creating a private central bank, controlled by the Wall Street cabal, and allowing the government to syphon the earnings of workers through increased taxation has allowed politicians the ability to spend, borrow, and print money at an ever increasing rate in order to get themselves re-elected and benefit the cronies, hucksters and bankers that pay the biggest bribes. None of this benefit the average American, who sees their purchasing power systematically inflated and taxed away. This is not capitalism and it is not a coincidence that war and inflation have been the hallmarks of the last century.

“A system of capitalism presumes sound money, not fiat money manipulated by a central bank. Capitalism cherishes voluntary contracts and interest rates that are determined by savings, not credit creation by a central bank. It is no coincidence that the century of total war coincided with the century of central banking.” – Ron Paul

As you can see, the bankruptcy of our country and our culture began gradually, accelerated after Nixon closed the gold window in 1971, really picked up steam in 1980 when the debt happy Baby Boom generation came of age, and has “suddenly” reached maximum velocity as we approach the true fiscal cliff. There were many checkpoints along the way where fatefully bad choices were made. They include the New Deal, Cold War, Great Society, Morning in America, Dotcom New Paradigm, Housing Wealth Retirement Plan, Obamacare, and present belief that creating more debt will solve a problem created by too much debt. The Federal Reserve allowed interventionist politicians to fight two declared wars (World War I, World War II), fight five undeclared wars (Korea, Vietnam, Gulf, Afghanistan, Iraq), conduct hundreds of military engagements around the globe, occupy foreign countries, begin a war on poverty that increased poverty, begin a war on drugs that increased the amount of available drugs, and finally start a war on terror that has increased the number of terrorists and pushed us closer to national bankruptcy. The terrorists have already won, as the explosion of stupidity and irrational fear has allowed those in power to acquire more power and dominion over our lives.

Abnormality Reigns…”

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Fitch Warns About Bank Earnings for the Rest of 2013

“Is it possible that the great big bank stock rally is already done? Shortly before the closing bell on Tuesday came words of warning from Fitch Ratings that the U.S. banking sector’s improved results in the first quarter were going to difficult to sustain for the rest of 2013. We just recently highlighted some of the risks of this in our “Sell in May and Go Away” primer and blueprint for 2013 and this goes well beyond the bank sector risks. Fitch’s warnings go many steps further and the result is that unless bank stocks correct further then the share prices will be very hard to maintain…”

Some of the issues are very focused for investors. Fitch showed that overall revenues broadly fell for the large U.S. banks even though net income improved on a linked-quarter basis. Lower provision expenses and cost controls managed to mitigate poor revenue figures. While expected, Fitch also said that a decline in mortgage refinancing activities managed to helped bank earnings. Fitch did signal that it now expects mortgage revenues to decline throughout the banking sector in 2013 due to lower refinancing activities. Here were some additional points made….”

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Real vs Implied Reality

“For the last few years, the US equity market has soared through Q4 and into Q1 and macro-economic indications have trended with them in a virtuous circle ‘confirming’ that this time it’s different and recovery is ‘on’. Then just as investors get all bulled up, convinced by the market’s all-knowing-efficiency that the old normal is back and growth is returning, macro-economic data starts to disappoint expectations. This is initiallyshrugged off – “it’s a transitory dip”, “the market sees through this temporary weakness”, “where else are you going to put your money?” – and the stock buying continues through the Winter. But there comes a time, when the divergence from economic reality grows too wide and the ‘faith’ that the market knows best starts to fade; and sure enough, each time, the market drops back rapidly to reality. What is the common denominator for this winter surge?

Simple – massive global central bank bailouts/injections in the months just before winter that levitate the market (and psychologically create ‘hope’ that is then extrapolated into future economic expectations which then after a one- to two-quarter lag, leads to disappointment as real economic data can’t match the market’s implied reality).





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Recovery Bifurcation Blues

“Even as the U.S. economy began to rebound from the Great Recession, only the highest earning households in America actually felt the difference.

The richest 7% of American households saw their net worth grow by 28% to a whopping $3.2 million during between 2009 to 2011, according to a new study by the Pew Research Center.

In contrast, 93% of households lost money. Average household net worth for this group fell by 4% during the same period, down to about $133,800 per household. …”

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The Power of the Tweet

Today the DOW did a 150 point v shape move inside of 3 minutes; all thanx to an erroneous or hacked tweet appearing to come from AP.

The tweet described an explosion at the W.H. reporting injury to the president.

Fun times indeud!

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Food Roulette

Often times there is no real win when it comes to eating out. The higher the quality of the restaurant the better your chances are.

Perhaps drinking a lot of alcohol could be a strategy, but it will likely complicate things.

Good luck dining out is all i can say if your not willing to go haute.

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Uncertainty, Aggravation, and Embarrassment Looms for Air Travel as Sequester Locks in Furloughs

“NEW YORK (AP) — A day after flight delays plagued much of the nation, air travel was smoother Tuesday, but the government warned passengers that the situation could change by the hour as thousands of air-traffic controllers are forced to take furloughs because of budget cuts.

Meanwhile, airlines and members of Congress urged the Federal Aviation Administration to find other ways to reduce spending. Airlines are worried about the long-term costs late flights will have on their budgets and on passengers.

“I just can’t imagine this stays in place for an extended period of time. It’s just such terrible policy,”US Airways CEO Doug Parker said. “We can handle it for a little while, but it can’t continue.”

The delays are the most visible effect yet of Congress and the White House’s failure to agree on a long-term deficit-reduction plan.

Transportation Secretary Ray LaHood said no one should be surprised, noting that he warned about the potential for problems two months ago.

His solution: Blame Congress for the larger budget cuts that affected all of government, including a $600 million hit to the Federal Aviation Administration.

“This has nothing to do with politics,” LaHood said. “This is very bad policy that Congress passed, and they should fix it.”

Critics of the FAA insist the agency could reduce its budget in other ways that would not inconvenience travelers….”

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Former Reuters Editor Pleads Not Guilty in Anonymous Hacking Case

“SACRAMENTO (Reuters) – Former Reuters.com Deputy Social Media Editor Matthew Keys pleaded not guilty on Tuesday to federal charges that he aided members of the Anonymous hacking collective.

Keys, 26, on Monday said he was fired by Thomson Reuters , the parent company of Reuters News.

Keys was indicted in March by a federal grand jury in Sacramento on three criminal counts, alleging he entered an Internet chatroom used by members of the hacking collective Anonymous and helped hackers gain access to the computer system of Tribune Co. in December 2010. A story on the Tribune’s Los Angeles Times website was altered by one of those hackers, the indictment said.

The alleged events occurred before he joined Reuters in 2012, the indictment indicated….”

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$YUM Earnings Are Finger Licking Good Beating Down Bird Flu Fears

“(Reuters) – KFC parent Yum Brands Inc on Tuesday reported that quarterly profit fell less than Wall Street expected, despite a sharp drop in sales in its top China market, sending the company’s shares up nearly 6 percent.

The Louisville, Kentucky-based fast-food company also repeated its earnings forecast for the year, based on the better-than-expected first-quarter results.

Sales at established restaurants in China fell an expected 20 percent during the first quarter and Yum warned that fears surrounding a bird flu outbreak there were continuing to depress sales already struggling to recover from a previous food safety scare.

The fast-food operator reaps more than half of its overall sales in China, where most of its nearly 5,300 restaurants are KFCs.

Still, Yum expects sales to recover in China, where it is on track to add 700 new restaurants this year…..”

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A Buying Frenzy Depletes the U.S. Mint of Small Gold Eagle Coins

“The U.S. Mint ran out its smallest American Eagle gold coin after demand surged following the biggest drop in futures prices in 33 years.

Sales of the coins weighing a 10th of an ounce were suspended after demand more than doubled in 2013 from a year earlier, the Mint said today in a statement. Total sales of American Eagles in April have almost tripled from a month earlier, according to Mint data on the website.

On April 15, gold futures in New York plunged 9.3 percent, the most since 1980. Retail sales and jewelry demand soared in India, the world’s top buyer, and China, the second-biggest. Coin sales also surged in Australia.

“This week has been very busy for us,” Michael Kramer, the president of New York-based MTB Inc., a dealer authorized to purchase coins directly from the Mint. “We do not yet anticipate suspension” of heavier coins, he said….”

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The Nikkei Gaps Up Lifting Other Asian Markets

“Asian stocks rose as Japanese exporters advanced after the yen weakened and increased sales of new homes in the U.S. added to signs the world’s biggest economy is recovering.

Nissan Motor Co. (7201), a Japanese carmaker that gets 79 percent of sales overseas, climbed 1.9 percent. SK Hynix Inc., the world’s second-largest maker of computer memory chips, rose 1.2 percent in Seoul after posting profit that beat analyst estimates. Pharmaxis Ltd. plunged 43 percent to a record low after the Australian pharmaceutical company said it won’t proceed with a regulatory submission for a new drug after clinical trials were unsuccessful.

The MSCI Asia Pacific Index (MXAP) gained 0.5 percent 137.62 as of 10:08 a.m. in Tokyo, heading for its highest close since April 12. More than three shares rose for each that fell on the gauge. The measure climbed 5.8 percent this year through yesterday amid signs the U.S. economy is recovery as Japanese equities rallied on speculation the Bank of Japan will step up efforts to end deflation.

“The economy in the U.S. is hitting that sweet spot where it’s not bad enough to worry investors but not strong enough for theFederal Reserve to start withdrawing stimulus,” said Stan Shamu, a markets strategist at IG Markets Ltd. in Melbourne, a provider of trading services in currencies and equities. “It’s positive for the global economy. There are still heightened expectations of central-bank action.”

Weaker Yen

The Nikkei 225 Stock Average increased 1.3 percent, heading for its highest close since June 2008, as the yen dropped for a second day against the dollar. A weaker yen boosts the value of overseas income at Japanese exporters when repatriated….”

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$AAPL Fails to Impress Despite a Revenue Beat

$AAPL beats on revs, shows slow subscriber-ship growth in China, the U.S., and guides slightly lower than Wall st. forecasts. More downside action may be had as Cook says the next big thing comes in the latter half of 2014.

To soothe investors the company more than doubles its current capital plan by taking out a line of debt to fund a stock repurchase program.

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