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Monthly Archives: July 2013

Currency Volatility Slows Down M&A in Japan

“Japanese companies made the fewest acquisitions in a decade during the first half as the yen’s volatility climbed to a four-year high, cooling buying interest.

The number of deals announced in the first half of 2013 was 997, with a total value of $45.7 billion, according to data compiled by Bloomberg. That’s the lowest number of deals and value since the first six months of 2004. Total deal value is 47 percent lower from the first half of 2012.

Since Prime Minister Shinzo Abe swept into power in December on promises to resurrect the economy by expanding stimulus measures and weakening the yen, the Japanese currency has whipsawed between 82.36 yen and 103.21 yen to the dollar. The yen’s 100-day volatility rose to 14.81 points in July, the highest since August 2009, and more than double the 6.97 figure at the start of the year.

“Companies had set their budgets for the year as of April-May under certain assumptions, but they’re not sure they will hold,” said Nobuhisa Ishizuka, a Tokyo-based partner specializing in mergers at Skadden, Arps, Slate, Meagher & Flom LLP. “This makes it difficult for a lot of them to pull the trigger.”

Currency options show volatility in the yen is set to continue, which could force companies to cut the size of deals or delay them. JPMorgan Chase & Co. (JPM)’s Group of Seven Volatility Index, based on currency-option premiums, climbed to 11.96 percent on June 24, the highest since January 2012.

Smaller Size…”

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Documentary: The End of America

Hope you had a smashing independence day America.

If you love America then you will consider this documentary  as a warning despite it being made five years ago. Do not think of this work as an attack on one particular administration. It has become increasingly clear, at least to me,that for a very long time no matter which party is in control of the Administration, House and  or Senate; what we are witnessing is the same foreign policy, the same favoritism,  and devotion to a common agenda. Think hydra here folks….

The realities presented herein, backed by research are most certainly why we are seeing a rash of S&Ms aka Snowdens and Mannings….

Cheers on your holiday weekend!

[youtube://http://www.youtube.com/watch?v=Skhd9NCseF4 450 300] [youtube://http://www.youtube.com/watch?v=v4HeY1Krw-Y 450 300]


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Got Solar ?

“I love this chart

Below is a daily chart of the Guggenheim Solar ETF (TAN):

Source: Stockcharts.com

The chart encapsulates a long, steady decline that actually dates back to early 2011. The 50-day MA (blue line) more or less served as resistance during this protracted downtrend. Price bottomed last November at around $12 and has since more than doubled before the recent pullback.

So many bullish things in the chart, I don’t know where to start….”

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$YHOO Makes a Small Qwiki Acquisition

“In another display of their intent to buy the entire Internet, Yahoo has just acquired Qwiki, an iOS app that helps users create movies out of the photos and videos in their camera roll.

When Qwiki first launched, it focused on generating short, informational videos on popular search terms. Search for Lady Gaga, for example, and it’d automatically compile a short description of the life of Ms. Stefani Germanotta, presumably narrated over a slideshow of meat-based clothing. That initial service saw some success — Apple picked it as an Editor’s Choice app in 2011, and, hey, it won TechCrunch Disrupt SF 2010 — but it never really blew up.

Earlier this year, the company shifted their focus a bit. In February, they re-launched as an iPhone-only app that focused on the user’s own content, using the technology they’d built before to create movies from the photos and videos in the user’s camera roll.

report from AllThingsD says that Qwiki was acquired for somewhere between 40 and 50 million dollars. The company had raised $10.5M to date, according to CrunchBase.….”

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Strategy Analytics: Mobile Data Traffic to Grow 300% by 2017

“With smartphones and tablets replacing PCs as the default computing device for many consumers, so, too, is data traffic shifting from fixed to wireless networks. The analysts at Strategy Analytics believe that this movement, combined with the wider trend for increasing time spent online, is going to translate to a huge increase in wireless data traffic — which is set to rise by some 300% by 2017 to a peak of 21 Exabytes, from just 5 Exabytes in 2012. Driving that rise are services like streaming video, but interestingly not apps.

Up to now the rise in smartphone usage has seen traffic “doubling annually,” according David MacQueen, executive director for Apps and Media at Strategy Analytics, although in coming years, as markets get more penetrated, this will slow down somewhat to around 32%.

MacQueen tells me that these figures include all data services covering all kinds of handsets globally, but it excludes tablet traffic. Most of this traffic, needless to say, comes from smartphone usage rather than more basic handsets. Low-end services like SMS messaging, he notes, fall into that smaller “other” category.

While a lot of the buzz today has to do with apps — and indeed in 2012 we saw a tipping point in one leading market, the U.S., where apps started to outweigh mobile websites in terms of usage — when it comes to actual data consumption, it’s a different story.

If you look at the table below, you’ll see that the growing popularity of data-intensive services like video streaming will be what drives this boom in mobile data traffic, which will grow by 42% by 2017. And even though mobile websites are often not as popular as apps, they are more intensive when it comes to network usage, and so when looking at mobile data traffic, mobile web browsing plays a much stronger role. It will grow by 30% until 2017. That’s also a good counterpoint to why apps remain popular today: they may simply just be easier and more efficient to use as a result. Interestingly, in Strategy Analytics’ table below, apps get lumped together with games — a huge activity on mobile devices, but also often as a “native experience” — and they still are a small part of activity compared to browsing and video. And in a sign of how prominent music streaming services are and will become, this, too, will remain a small piece of the pie….”

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U.S. Trade Deficit Widens by 12.1%

“WASHINGTON (MarketWatch) — The U.S. trade deficit widened by 12.1% in May to $45.0 billion, the Commerce Department said Tuesday. This is the largest deficit since last November and was well above expectations. Wall Street economists polled by MarketWatch had forecast a deficit of $40.3 billion. The deficit has jumped in two straight months after falling to $37.1 billion in March….”

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Are U.S. Stocks at Risk Due to NSA Security Deals?

“Whatever you think about Edward Snowden, the National Security Agency (NSA) data collection he unveiled is more than a privacy issue. Investors should pay attention, too. The company whose shares you own may be lying to you — while Uncle Sam looks the other way.

Let’s step through this. I think you will see the problem.

Fact 1: U.S. financial markets are the envy of the world because we have fair disclosure requirements, accounting standards and impartial courts. This is the foundation of shareholder value. The company may lose money, but they at least told you the truth.

Fact 2: We now know multiple public companies, including Microsoft (MSFT), Google (GOOG), Facebook (FB) and other, gave their user information to NSA. Forget the privacy implications for a minute. Assume for the sake of argument that everything complies with U.S. law. Even if true, the businesses may still be at risk.

Fact 3: All these companies operate globally. They get revenue from China, Japan, Russia, Germany, France and everywhere else. Did those governments consent to have their citizens monitored by the NSA? I think we can safely say no.

Politicians in Europe are especially outraged. Citizens are angry with the United States and losing faith in American brand names. Foreign companies are already using their non-American status as a competitive advantage. Some plan to redesign networks specifically to bypass U.S. companies.

By yielding to the NSA, U.S. companies likely broke laws elsewhere. They could face penalties and lose significant revenue. Right or wrong, their decisions could well have damaged the business.

Securities lawyers call this “materially adverse information” and companies are required to disclose it. But they are not. Only chief executives and a handful of technical people know when companies cooperate with the NSA. If the CEO can’t even tell his own board members he has placed the company at risk, you can bet it won’t be in the annual report.

The government also gives some executives immunity documents, according to Bloomberg. Immunity is unnecessary unless someone thinks they are breaking the law. So apparently, the regulators who ostensibly protect the public are actively helping the violators.

This is a new and different investment landscape. Public companies are hiding important facts that place their investors at risk. If you somehow find out, you will have no recourse because regulators gave the offender a “get out of jail free” card. The regulatory structure that theoretically protects you knowingly facilitates deception that may hurt you, and then silences any witnesses….”

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W.H. Delays Crucial Rule for Healthcare Law

“WASHINGTON — In a significant setback for President Obama’s signature domestic initiative, the administration on Tuesday abruptly announced a one-year delay, until 2015, in his health care law’s mandate that larger employers provide coverage for their workers or pay penalties. The decision postpones the effective date beyond next year’s midterm elections.

Employer groups welcomed the news of the concession, which followed complaints from businesses and was posted late in the day on the White House and Treasury Web sites while the president was flying home from Africa. Republicans’ gleeful reactions made clear that they would not cease to make repeal of Obamacare a campaign issue for the third straight election cycle.

While the postponement technically does not affect other central provisions of the law — in particular those establishing health insurance marketplaces in the states, known as exchanges, where uninsured Americans can shop for policies — it threatens to throw into disarray the administration’s effort to put those provisions into effect by Jan. 1.

“I am utterly astounded,” said Sara Rosenbaum, a professor of health law and policy at George Washington University and an advocate of the law. “It boggles the mind. This step could significantly reduce the number of uninsured people who will gain coverage in 2014.”

At the White House, Tara McGuinness, a senior adviser on the law, disputed that.

“Nothing in the new guidance regarding employer reporting and responsibility will limit individuals’ eligibility for premium tax credits to buy insurance through the marketplaces that open on Oct. 1,” she said….”

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Gapping Up and Down This Morning



Symb Last Change Chg %
KCG_w.N 12.24 +1.49 +13.86
PBYI.N 53.30 +5.82 +12.26
TXTR.N 28.85 +2.16 +8.09
RKUS.N 13.26 +0.64 +5.07
NGVC.N 33.69 +1.51 +4.69


Symb Last Change Chg %
TRMR.N 7.95 -0.65 -7.56
AGI.N 11.95 -0.66 -5.23
LOCK.N 10.98 -0.52 -4.52
AXLL.N 40.68 -1.76 -4.15
PBF.N 23.64 -1.00 -4.06



Symb Last Change Chg %
PNRG.OQ 49.42 +10.08 +25.62
NDLS.OQ 47.20 +9.02 +23.62
CHNR.OQ 4.36 +0.71 +19.45
CLNT.OQ 6.37 +0.98 +18.18
AMBI.OQ 8.43 +1.13 +15.48


Symb Last Change Chg %
ACHN.OQ 6.26 -2.10 -25.12
HDSN.OQ 2.45 -0.70 -22.22
MEIL.OQ 2.35 -0.58 -19.80
LINE.OQ 27.05 -6.24 -18.74
LNCO.OQ 30.90 -6.17 -16.64



Symb Last Change Chg %
ORM.A 9.10 +0.55 +6.43
EOX.A 6.99 +0.12 +1.75
FCSC.A 6.10 +0.06 +0.99
ORC.A 11.28 +0.08 +0.71


Symb Last Change Chg %
BTG.A 2.19 -0.38 -14.79
SAND.A 5.74 -0.41 -6.67
FU.A 3.47 -0.18 -4.93
REED.A 5.23 -0.18 -3.33
AKG.A 2.17 -0.04 -1.81

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Mortgage Applications Fall 11.7%

“The Mortgage Bankers Association (MBA) released its weekly report on mortgage applications this morning, noting a drop of 11.7% in the group’s seasonally adjusted composite index, following a drop of 3% for the previous week. Rates for all types of loans rose by more than 10 basis points during the week.

The seasonally adjusted purchase index decreased by 3% from the most recent report. On an unadjusted basis, the composite index dropped by 12% week-over-week. The unadjusted purchase index decreased by 4% for the week, and is up about 12% year-over-year.

The MBA’s refinance index fell 16% week-over-week to its lowest level since July 2011.

The share of refinancings fell from 67% to 64%, its lowest level since May 2011. Adjustable rate mortgage loans account for 8% of all applications, up from 7% last week….”


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European Crisis Part Deux

“The news today is that the Euro crisis has returned to the Eurozone.

Portugal is crashing to the tune of 6% on the resignation of the Finance Minister, who says he can no longer support such harsh austerity.

Other markets are getting clubbed in the fallout. Spain is off nearly 3%. Italy nearly 2%.

The reality of Europe is that it’s a gigantic economic and political mess, where unemployment in the common currency area has hit a record of 12.1%.

On the other hand, it’s not like there aren’t signs of life in the economy, which appears to be coming out of recession.

Monday’s manufacturing PMI figures showed broad improvement across the Eurozone.



But although these numbers are encouraging from a cyclical standpoint, these tiny greenshoots barely begin to make a dent in the gigantic economic problem, which will likely cause reverberations for whole generations….”

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The Fed Raises Capital Requirements for Large Banks

“The Federal Reserve Board has ratcheted up the amount of capital U.S. banks will need to hold. In the new rules approved by a vote in an open meeting today in Washington, the minimum capital U.S. banks will need to hold is higher than that set out in Basel III. Most banks are already in compliance with the rule, according to the Fed. Still, about 100 banks will end up raising $4.5 billion by 2019 to catch up to the rules.

Chairman Ben Bernanke complimented Fed staff for their work on the rule, which synthesized the positions of various agencies as well comments from the financial services industry. The Fed struck a “delicate balance” when it came to the needs of small banks, according to Bernanke, and he noted that between the stress test, capital reviews, and the new rules, regulation of large banks was coming together. He went on to say Fed examiners would have to keep a close eye on risk management.

The key elements of the new rule are the same for all banks, regardless of size. They include a new ratio—Tier 1 Common/risk weighted assets of 4.5 percent also known as the capital conservation buffer. (This would be 2.5 percent higher for the big internationally-active banks.) In addition, banks will have to have Tier 1 Capital of 6 percent of assets, vs. 4 percent under Basel III rules. They will have to keep total capital of 8 percent against risk-weighted assets, which is unchanged from the current Basel III rules.

One piece of the rules that has had banks and the markets worried is the leverage ratio, the amount banks can borrow to fund their activities, which can have a big impact on how much banks lend. There was talk the Fed would impose a higher leverage ratio than Basel III. Instead, the Fed stuck with a leverage ratio of 4 percent common equity to assets. Big banks would have to add a 3 percent cushion to that, with off balance sheet items being added to assets. This is the same treatment that Basel III proposed…..”

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June Layoffs Rise 5% YoY and 8% MoM

“A jump in job cuts in the computer and education sectors drove an increase in layoffs at U.S. firms in June, even as the pace of downsizing in the first half of the year improved overall, a report on Wednesday showed.

Employers announced 39,372 planned job cuts last month, up 8.2 percent from 36,398 in May, according to the report from consultants Challenger, Gray & Christmas, Inc. June’s layoffs were also up 4.8 percent from a year ago.

Still, the number of job cuts in the first half of the year was down 8.5 percent from the first six months of 2012.

With the third quarter typically a slow period for downsizing, that puts layoffs on track to see the second-lowest yearly total since 2000, said John Challenger, chief executive officer of Challenger, Gray & Christmas.

“Unless, there is a major shock to the economy in the second half of 2013, we could see layoff activity continue to decline toward pre-2000 levels,” Challenger said in a statement.

The report comes ahead of Friday’s key U.S. jobs report, which is forecast to show the pace of hiring cooled slightly in June, while the unemployment rate is expected to dip to 7.5 percent.

The computer industry led the increase in layoffs for June, with 10,133 workers losing their jobs. That was followed by the education sector, which cut 5,629 positions…..”

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Stockpile Worries & Egypt Tensions Send WTI Well Over a Hundo

“Crude oil advanced, with West Texas Intermediate surpassing $100 a barrel for the first time in nine months, on shrinking U.S. stockpiles and concern that political turmoil in Egypt may disrupt Middle Eastern supply.

Futures rose as much 2.6 percent in New York after climbing to the highest settlement price in 14 months. Crude inventories fell by 9.4 million barrels last week, the American Petroleum Institute said yesterday. A government report today may show a drop of 2.25 million, according to a Bloomberg News survey. Egypt’s President Mohamed Mursi rejected an ultimatum by the armed forces to solve the country’s political impasse, fanning concern that unrest may interrupt oil shipments through the Suez Canal or Suez-Med pipeline.

“People are expecting to see a large draw-down in inventories in Cushing, and that is supporting the WTI market much more than the Brent market,” Torbjoern Kjus, a senior oil analyst atDNB ASA (DNB) in Oslo, said by phone, referring to the Oklahoma town serving as a U.S. storage hub. “The Brent market is supported by geopolitical risks due to tensions in Egypt.”

WTI for August delivery increased as much as $2.58 to $102.18 a barrel in electronic trading on the New York Mercantile Exchange and was at $100.96 at 11:43 a.m. London time. The volume of all futures traded was more than four times the 100-day average. The contract gained $1.61 to $99.60 yesterday, the highest close since May 2012.


Brent for August settlement rose as much as $1.61, or 1.6 percent, to $105.61 a barrel on the London-based ICE Futures Europe exchange. The European benchmark grade was at a premium of $3.86 to WTI. The spread was $4.40 yesterday, the narrowest based on closing prices since Jan. 4, 2011. It was more than $23 in February.

UBS AG sees the spread widening again to $12 a barrel in the third quarter this year and narrowing later. Brent is set to rebound to $110 a barrel in the third quarter “on stronger short-term fundamentals and rising geopolitical risk,” Julius Walker, the bank’s global energy markets strategist, said in an e-mailed report today…..”

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Copper Bucks the Downtrend in Metals as Bearish Bets Get Closed Out

“Copper rose on the London Metal Exchange, the only gain among the six main metals traded on the bourse, as traders closed out bets on lower prices amid concern about supply.

Interruptions to output in recent months are affecting physical supply of copper, according toSociete Generale SA. Speculators are likely positioned “very short on the LME,” Standard Bank Group Ltd. said yesterday, referring to bets on a decline. Prices reached the lowest level since 2010 last week.

“There is an impression that the market is a bit short copper, so you have a little bit of a squeeze,” Jesper Dannesboe, a senior commodity strategist at Societe Generale in London, said by phone. He cited “the supply disruptions that hit the headlines several months ago,” as well as “some short-covering.”

Copper for delivery in three months climbed 0.5 percent to $6,946 a metric ton by 10:55 a.m. on the LME. Metal for immediate delivery was at a $1.50-a-ton premium to the three-month contract, narrowing from as much as $18 yesterday, the widest backwardation in a year. Copper for delivery in September rose 0.2 percent to $3.149 a pound on the Comex in New York.

Freeport-McMoRan Copper & Gold Inc. is awaiting approval to restart underground mining at Grasberg in Indonesia, the world’s second-biggest copper mine, after a deadly accident in May. A landslide in April reduced production at Rio Tinto Group (RIO)’s Bingham Canyon mine inUtah. Factory orders in the U.S. rose more than estimated in May, a report showed yesterday….”

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Germany’s Commerzbank Tanks, Worries Over Debt Exposure Mount Despite Increasing Capital Five Times

Commerzbank AG (CBK), the German bank forced to raise capital five times in the past four years, fell the most since March on concern that exposure to southern European debt may add to its financial woes.

Commerzbank dropped as much as 6.9 percent to 5.73 euros in Frankfurt, the lowest intraday price on record and taking losses this year to 46 percent. The 47-member Stoxx 600 Banks Index fell 3 percent.

“There seems to be renewed concern about holdings of peripheral bonds in Italy, Spain and Portugal given the public finance exposure the bank has,” Riccardo Rovere, an analyst at Mediobanca SpA (MB), said by telephone from Milan.

Commerzbank’s declines were surpassed only by lenders in Portugal and Spain in a sell-off sparked by the second resignation of a Portuguese government minister in two days, which sent the country’s 10-year bond yield to 8 percent for the first time since November.

Commerzbank had 2.9 billion euros ($3.8 billion) of exposure to debt in Portugal and 12.2 billion euros to Spain at the end of March, company filings show. Those figures combine sovereign, banking, commercial real estate and other debt.

’Nothing Attractive’….”

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