For now nobody knows for sure and the assumptions of who is selling is more important…..

Source 

“Emerging market stocks are poised to do well according to Franklin Templeton’s emerging markets specialist Mark Mobius. Speaking with CNBC he pointed to two clear reasons.

First, he said the selloff in Treasuries will send more money into equities and at least a third of that into emerging market stocks.

Since emerging markets now account for about 30 percent of global market capitalization Mobius said we should expect a corresponding flow into EM stocks.

“People are now beginning to realize that they cannot be sitting on bonds that are paying one, two or even three percent, when inflation is running higher than that. …If you look at equities of course, the yields are much, much greater than the bonds.”

Second, he said emerging markets will benefit from quantitative easing. Mobius said markets can expect to see money supply increase since Fed chairman Ben Bernanke promised to increase liquidity until he saw sustained growth.

Mobius also said he was bullish on Africa because it would gain from investments from countries like Brazil, India and China. Mobius told CNBC that oil prices have not kept pace with inflation and that “there’s some catch up to do.” He said he was bullish on Russia because of the rise in oil prices.”

“(MoneyWatch) COMMENTARY A long-simmering debate about the future of money market funds is heating up, as the SEC signals it wants changes that a fund industry executive on Monday said were “outrageous.” The question, debated in Washington for nearly four years, is whether or not money market share prices should remain fixed at $1 per share, as they have since the first money market fund was created in the 1970s, or whether the share price should be required to “float” to reflect the value of the underlying securities it owns.

Arguing in favor of the fixed share price are fund managers and their trade group, the Investment Company Institute. They contend that a floating share price would scare investors away from money market funds, which would disrupt the financial markets and deprive corporate America of an important source of short-term capital.

Arguing in favor of a floating share price is, well, let’s put it this way: When the Wall Street Journal’s editors, the SEC chair, Paul Volcker, and a blue ribbon commission chartered by President Obama all come out in favor of a floating share price, it’s safe to say that the idea has a broad base of support.

Why is this issue important? Because a fixed share price connotes safety and stability — an investment that’s free from volatility. But while those might be appropriate ways to describe money market funds most of the time, they don’t apply all of the time. While it’s not common, it is possible for the holdings of money market funds to decline enough that the fund is in danger of “breaking the buck” — losing so much on its investments that it can’t return $1 per share to its investors.

When this happens — as it did with one of the nation’s largest money market funds in 2008 — it can create a “run on the bank” mentality as investors scramble to pull their money out before an artificially high $1 share price is lowered. This puts even more downward pressure on prices as fund managers try to sell their holdings to meet these redemptions….”

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“(AP) GENEVA – The global aviation industry could run up losses of over $5 billion this year if oil prices spike by more than anticipated in light of the tensions building up over Iran’s nuclear program, the industry’s trade group said Tuesday.

The International Air Transport Association, or IATA, says it now expects earnings will likely decline to $3 billion in 2012. That’s down from December’s forecast of $3.5 billion, based on an expectation that oil prices will average $115 a barrel. At present, the benchmark New York rate is trading at nine-month highs around $107 a barrel.

Tony Tyler, IATA’s chief executive, said the industry’s diminished profit forecast for 2012 could turn to losses of more than $5 billion if oil prices spike to $150 a barrel due to Western tensions with Iran.

“I must emphasize that the industry is fragile,” he said, pointing to global growth forecasts of 2 percent for this year. “Historically, if GDP falls below 2 percent, the industry returns a collective loss. So it would not take much of a shock to turn our very modest profit projection to a net loss.”

“Indeed, that shock could be oil,” he added. “Such a shock would link to a fall in GDP growth to 1.7 percent and we could see losses in excess of $5 billion.”…

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Source

Adobe Systems Inc. (ADBE) fell 4.2 percent to $33.05. The largest maker of graphic design software forecast lower profit than some analysts had projected, signaling that the new version of Creative Suite may not bring as much of a boost as anticipated.

Amazon.com Inc. (AMZN) decreased 0.9 percent to $183.88. The largest Internet retailer will buy Kiva Systems Inc., a material handling technology company, for $775 million in cash.

Michael Kors Holdings Ltd. (KORS) (KORS US) increased 2.7 percent to $46.55. The luxury-goods maker and retailer raised its forecast of fourth-quarter earnings excluding some items to a range of 14 cents to 16 cents a share, up from 10 cents to 12 cents.

Stifel Financial Corp. (SF) : The St. Louis-based financial-services company paid $13 million to settle a lawsuit with five Wisconsin school districts.

Targacept Inc. (TRGT) decreased 11 percent to $6.59. AstraZeneca Plc (AZN US) said it won’t seek regulatory approval of an experimental antidepressant licensed from Targacept after the compound failed in its last two late-stage studies.

Tiffany & Co. (TIF) gained 2.2 percent to $70.20. The world’s second-largest luxury jewelry retailer forecast 2012 earnings per share of at least $3.95, exceeding the average analyst estimate of $3.92. The company also estimated 2012 sales of $4 billion, beating the average analyst estimate of $3.9 billion.

Walt Disney Co. (DIS) dropped 1 percent to $43.01. The largest U.S. entertainment company said the box-office flop “John Carter” will lead to a quarterly operating loss of $80 million to $120 million for its film division. The film itself is forecast to lose about $200 million, Disney said in an e- mailed statement.

Williams Partners LP (WPZ) : The U.S. pipeline operator agreed to acquire a unit of Caiman Energy for about $2.5 billion to establish a “major footprint” in the natural-gas rich area of the Marcellus Shale.

Gapping up

PSTI +7%,  BPAX +13.7%, GMAN +11.1%, KORS +4.6%, FMCN +4.5%, LGF +1.8%, WMB +1.1%,  TAT +6.3%,  VOD +1.9%,  ANF +0.9%,

BAC+1% ,  AGU +0.6%, HOG +0.6%,

Gapping down

FRO -7%, AIXG -4.2%, RGP -4.1%, ADBE -4%, MT -3.1%, ARGN -2.8%, BBL -2.8%, BHP -2.7%, ASTM -2%, DB -1.4%, DIS -1%, HBC -2.3%, ING -2.3%,

BCS -1.8%, HMY -2.1%, CLF -2%, SLV -1.8%, GOLD -1.6%, GLD -1%, GDX -0.8%, SDRL -2.4%, E -2.1%, STO -1.8%, TOT -1.8%, CHK -1.4%, BP -1.2%,

FRO -4.6%, CA -1.4% ,  DPZ -1.9%, AMZN -0.9%, ASTM -2%

In Play

On the Wires 

Free mobile apps which use third-party services to display advertising consume considerably more battery life, a new study suggests.

Researchers used a special tool to monitor energy use by several apps on Android and Windows Mobile handsets.

Findings suggested that in one case 75% of an app’s energy consumption was spent on powering advertisements.

Read More

With prominent managers calling for a top in equities and the indices up over 100% since the March 2009 lows, Ritholtz asks, and then answers, “What’s an investor to do?“

Source

“With U.S. economic data continuing to show a strengthening recovery and Europe’s worries temporarily alleviated, it can come as little surprise that the S&P 500 is up +11.65% this year.

But there are a lot of reasons to doubt that this rally will continue, according to Barclays U.S. equities strategists Barry Knapp and Eric Slover in a note out late last week.

They write that this could easily be a “heads I win, tails you lose, scenario.” If past rounds of easing are any indication, then the coming end of the Federal Reserve’s “Operation Twist” will launch a pullback in equities:

Barclays Capital

The only way an end to Operation Twist doesn’t cause such a reaction is if economic data deteriorate and the Fed decides that more easing—likely in the form of sterilized QE—is necessary. This, too, has a downside risk for equities, since it means the economy is not as strong as investors expected it to be.

Knapp and Slover explain this Catch-22:

We believe that a sustainable period of equity market multiple expansion is unlikely until the Fed begins normalizing policy, despite the seemingly inevitable correction that will accompany the early stages of exit strategies. So, if the growth outlook deteriorates, a correction is probable; both of which will likely restart the QE3 debate. Conversely, if the Fed ends Operation Twist without any additional accommodation, we suspect index implied volatility will increase, the term structure will flatten, correlation will rise and downside put skew will remain expensive on a relative basis and richen in absolute terms. Simply put, stocks will pull back. In essence, the setup is the antithesis of August 2010 or August 2011, when following negative benchmark GDP revisions investors had become too bearish on the economic outlook and the Fed was on verge of additional monetary policy easing. In other words, if growth softens, stocks go down; if the Fed doesn’t ease investors will worry about monetary tightening and stocks go down as well. To be clear though, if we make it through 2012 without another round of unconventional monetary policy easing we would view that as an important step out of the post-crisis financial repression deleveraging period, thereby increasing the likelihood of a sustainable period of rising PE multiples. A pullback associated with investor concerns about monetary policy tightening would be a buying opportunity, but it’s a bit premature to consider your options in reaction to a correction that hasn’t occurred yet.”

Source

“In remarks this morning to a business group on Long Island, New York Federal Reserve President William Dudley noted that while US economic growth had picked up in the fourth quarter of 2011, we’ve all seen this before:

… the economic data looked brighter at this point in 2010 and again in 2011, only to fade as we got into the second and third quarters of those years.

Dudley believes that warmer winter weather has reduced heating bills and contributed to the bounce in construction starts. He notes, however, that these factors are temporary:

[R]eal economic activity has yet to be strong enough on a sustained basis to make a big dent in the overall amount of slack in the U.S. economy. While it is true that growth was stronger in the fourth quarter, most of that growth was due to inventory accumulation. Growth of final sales was actually quite weak. Historically, a quarter in which inventory investment makes a significant growth contribution is typically followed by a quarter in which that growth contribution is modest or even negative. That appears to be what is shaping up for the first quarter of this year. …

While growth of retail sales in February was reasonably strong in nominal terms, it was considerably less impressive when the large increase of gasoline prices that occurred that month is taken into account. Based on data for the first half of March, gasoline prices are continuing to move higher which will further sap consumers’ real purchasing power. And growth of business investment spending, which was quite strong in the second and third quarters of 2011, entered the new year with little forward momentum.

To put the recent pace of growth into perspective, we believe that the economy’s long-run sustainable growth rate (what economists call the potential growth rate) is around a 2 1/4 percent annual rate. We need sustained growth above that rate to absorb the substantial amount of unused productive capacity. Thus, our recent growth rates are barely keeping up with our potential.

Dudley also commented on the unemployment (not as good as it looks perhaps), housing construction, and what he called “fiscal drag” at all levels of government. Dudley’s speech is available here.”

Source

“This research note from Goldman’s Jan Hatzius has been making the rounds.  In it he provides the three reasons why he believes QE3 is still on the table.  He says:

“1. The improvement might not last.

With real GDP growth tracking just 2% in the first quarter and signs that at least some of the recent strength is probably due to the unusual warm weather and perhaps some seasonal adjustment distortions, question marks still surround the true pace of activity growth. In addition, there are still several actual or potential “headwinds” for growth, including a reduced boost from inventory accumulation, the recent increase in oil and gasoline prices, continued risks from the crisis in Europe, and the specter of fiscal retrenchment after the presidential election.

2. Even if the improvement does last, faster growth would be desirable to push down the unemployment rate more quickly.

Fed officials believe that the level of economic activity and employment is still far below potential. This means a large number of individuals are involuntarily unemployed, which not only causes hardship in the near term but may also translate into higher structural unemployment in the long term…This creates an incentive to find policies that speed up the return to full employment.

3. Not easing might be equivalent to tightening.

At a minimum, the bond market currently discounts some probability of QE3. This has kept financial conditions easier than they otherwise would have been, which has presumably supported economic activity. A decision not to ratify expectations of QE3 could therefore result in a tightening of financial conditions.”

“The Federal Reserve and other central banks will never take steps to rein in the inflation-fueling liquidity stemming from their loose monetary policies, and they also won’t reduce their balance sheets that have swollen via easing measures designed to jolt the economy, says Marc Faber, publisher of the Gloom, Boom and Doom report.

The Fed has cut interest rates to near zero and has also bought assets from banks in order to increase the amount of money in circulation with the aim of improving the economy.

That tool is called quantitative easing, and the Fed has done it twice, with the first round, known as QE1, involving the purchase of $1.7 trillion in assets from banks, namely mortgage-backed securities.

A second round of quantitative easing, known as QE2, wrapped up in June of 2011 and involved a $600 billion purchase of government bonds from banks.
Other central banks around the world have taken similar steps, and they should now focus on writing down those assets and take steps to mop up the excess liquidity in the economy, although they likely won’t, Faber says.

“I do not believe that the central banks around the world will ever, and I repeat ever, reduce their balance sheets. They’ve gone the path of money printing and once you choose that path you’re in it, and you have to print more money,” he tells chrismartenson.com, a finance site.

Furthermore, Federal Reserve officials base their decisions with not enough real-world experience.

“The Fed is about the worst economic forecaster you can imagine. They are academics. They never go to a local pub. They never go shopping — or they lie,” Faber says….”

Read more:  

Source

Aveo Pharmaceuticals Inc. (AVEO) : The maker of an experimental medicine for kidney cancer delayed its annual report filing and said it is evaluating its allocation agreement with Astellas Pharma Inc. (4503 JT).

BATS Global Markets Inc. (BATS): The company may be attractive as the third-biggest U.S. stock exchange operator prepares to sell 6.3 million shares to the public on March 22, Barron’s reported, without citing anyone.

Domino’s Pizza Inc. (DPZ) : The pizza-delivery chain completed its recapitalization and declared a special dividend of $3 a share.

LSB Industries Inc. (LXU) : The maker of chemical and climate-control products said its Pryor, Oklahoma, facility was shut down for unplanned maintenance because of excess heat. Operating income will be reduced by about $4 million.

Novartis AG (NOVN) : The Swiss drugmaker may rise if it improves earnings with a new pipeline of products and provides healthy dividend payments, Barron’s reported.

Qualcomm Inc. (QCOM) : The chipmaker is poised to rise 30 percent or more during the next year as its thousands of patents give it an advantage in mobile-market expansion, Barron’s reported.

Tenet Healthcare Corp. (THC) : The hospital owner may stall until management proves it’s capable of turning around business without being acquired, Barron’s reported in its “The Trader” column.

Total SA (FP) : The American depositary receipts of France’s biggest energy company may rise to the mid-$60s within a year if the oil producer boosts output, Barron’s reported.

YPF SA (YPFD) : The Argentine oil producer may be a risky investment as the government mulls control of the company, Barron’s reported in its “The Trader” column.

Gapping up

ABVT +16.9%, DPZ +5.9%, UNH +3.1%, ADGF +7.3% , AAPL +2.8%, UPS +2%, CRESY +9.6%,  DWRE +7%, DPZ +5.7% , BRCM +1.2%, DSCO +1.8% ,

STLD +2%, E +0.8%, PCX +0.3%

Gapping down

MHS -3.4% , ESRX -1.9%, S -4.8%, LXU -3.1%, DNKN -2.2%, DB -1.9%, CLNE -1.4%, WPCS -9.8% , PURE -8.6%, PBY -0.6%,

IRE -3.4%, CS -1.6%, BCS -1.5%, IBN -1.5%, DB -1.1%, ING -1%,  FRO -5%, CHMT -4.5% , ACI -2.8%, EBAY -2.2%,  AIXG-2.5%,

In Play

On the Wires 

“On January 25th we got word from the Fed that ZIRP would be extended until at least 2014. Bernanke’s guarantee of another two years of cheap-cheap money has lifted the market’s animal spirits. Since the Fed announcement (33 trading days), the S&P got a 7% lift. But that’s not the measure of Ben’s success. I’m seeing it in deal flow:

*There have been 29 IPO’s that raised $3.3B

*Another 35 deals got inked for secondary issuance of common, preferred and/or convertible stock totaling $3.7B

*The visible calendar for both IPOs and secondaries is big. $4.3B is registered for sale; another boatload of paper wants to get sold on top of that.

*The High Yield market blew out $70B of paper.

*Leveraged loan activity has totaled $75B.

I want to focus on six deals ….”

Read more: 

Related article: 50% of Investors Think The Fed is too Loose

Never yielding Hussman cries another bearish call…

“Media report says fire hit parts supplier

* Sorento, Santa Fe SUVs could see production losses -analyst

* Kia says sees little impact on sales

SEOUL, March 19 (Reuters) – South Korean carmaker Kia Motors said on Monday that it would suspend production at its U.S. plant on Monday and Tuesday, after media reported said a fire broke out at a parts supplier.

The news sent shares in Kia and parent Hyundai Motor down on concerns about possible output disruptions.

Kia’s U.S. plant in Georgia, with an annual production capacity of 300,000 vehicles, produces the Optima sedan, the Sorento SUV and Hyundai Motor’s Santa Fe SUV.

A South Korean media report said on Monday that a fire had struck a Georgia factory operated by Daehan Solution, an unlisted South Korean parts supplier for Kia. An official at Daehan Solution declined to comment…”

Full article

“There was disheartening news last week regarding the way the U.S. financial system operates. I’m not referring to the opinion piece by a departing Goldman Sachs Group Inc. employee, which suggested that the company has little respect for its customers.

If you have a complex derivatives transaction in place with Goldman — or any other big Wall Street firm — and you didn’t know they thought of you as a malleable “muppet,” it may be time to replace your chief financial officer.

Anyone who thinks this kind of hubris is new should read Frank Partnoy’s inside account, “F.I.A.S.C.O.,” published in 1999. Wall Street became a more aggressive and risk-loving place when trading increased as a line of business, but this happened way back in the 1980s by most accounts.

The truly dreadful news last week was conveyed in the resultsof the Federal Reserve’s latest bank stress tests. As presented by the Fed, most of the news was good. Some large financial institutions were judged likely to have sufficient equity capital even if the U.S. economy were to experience a significant downturn. With that, banks such as JPMorgan Chase & Co. were allowed to increase their dividends and buy back shares. Naturally, bank stocks rallied.

Economic Uncertainty

But there’s a problem, and it’s not a small one. If you buy the Fed’s view of what is likely to constitute stress, there is some justification for its action. Even then, you should ask the question that Anat Admati, a Stanford University finance professor, has been pressing: Why would we let banks reduce their capital in the face of so much financial and economic uncertainty around the world? If you leave shareholder equity on bank balance sheets, it still belongs to shareholders. Let it stay there as loss-absorbing capital in case the world turns nasty again.

Reducing bank capital, according to Admati and her colleagues, doesn’t help the economy. Bankers like lower capital levels because their pay is based on return-on-capital unadjusted for risk. Shareholders are willing to go along either because they don’t understand the risks of thinly capitalized and therefore highly leveraged businesses, or they expect to share in the downside protection that will be provided by the government.

Make no mistake: Lower equity at big banks means higher expected losses for taxpayers down the road. Don’t let anyone fool you into thinking that banking crises are costless. The disaster of 2008 caused about a 50 percent increase in U.S. debt relative to gross domestic product — the second largest shock to the country’s balance sheet after World War II. (The details of this calculation and a broader perspective on today’s fiscal risks are in my new book with James Kwak, “White House Burning: The Founding Fathers, Our National Debt, and Why It Matters to You,” which will be published April 3.)…”

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